Chapter Six
Managing in the Global
Environment
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
What Is the Global Environment?
Global Environment
≈ Set of forces and conditions in the world
outside the organization’s boundaries that
affect the way it operates and shape its
behavior
≈ Changes over time
≈ Presents managers with opportunities and
threats
5-2
Task Environment
Task Environment
≈ Set of forces and conditions that originate with
suppliers, distributors, customers, and
competitors
≈ Affects an organization’s ability to obtain inputs
and dispose of its outputs
≈ Most immediate and direct effect on managers
5-3
The General Environment
Economic Forces
≈ factors that affect the general health and wellbeing of a country or world region
≈ Interest rates, inflation, unemployment, economic
growth
5-4
Process of Globalization
Globalization
≈ Set of specific and general forces that work
together to integrate and connect economic,
political, and social systems across countries,
cultures, or geographical regions
≈ Result is that nations and peoples become
increasingly interdependent
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Hofstede’s Model of National Culture
Figure 6.4
5-6
Hofstede’s Model of National Culture
Individualism
≈ A worldview that values individual freedom and
self-expression and adherence to the principle
that people should be judged by their individual
achievements rather their social background.
Collectivism
≈ A worldview that values subordination of the
individual to the goals of the group and
adherence to the principle that people should be
judged by their contribution to the group
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Hofstede’s Model of National Culture
Power Distance
≈ Degree to which societies accept the idea that
inequalities in the power and well-being of their
citizens are due to differences in individuals’
physical and intellectual capabilities and heritage
5-8
Hofstede’s Model of National Culture
Achievement versus Nurturing
Orientation
≈ Achievement-oriented societies value
assertiveness, performance, and success and
are results-oriented.
≈ Nurturing-oriented cultures value quality of life,
personal relationships, and service.
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Hofstede’s Model of National Culture
Uncertainty Avoidance
≈ Societies and people differ in their tolerance for
uncertainty and risk.
≈ Low uncertainty avoidance cultures (e.g., U.S.
and Hong Kong) value diversity and tolerate a
wide range of opinions and beliefs.
≈ High uncertainty avoidance societies (e.g., Japan
and France) are more rigid and expect high
conformity in their citizens’ beliefs and norms of
behavior.
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Hofstede’s Model of National Culture
Long-term vs. Short-term Orientation
≈ Cultures with a long-term orientation rest on
values such as thrift and persistence in achieving
goals
≈ Cultures with a short-term orientation are
concerned with maintaining personal stability or
happiness and living for the present
5-11
Chapter Seven
Decision Making,
Learning, Creativity and
Entrepreneurship
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
The Nature of Managerial
Decision Making
Decision Making
≈ The process by which managers respond to
opportunities and threats that confront them by
analyzing options and making determinations
about specific
organizational
goals and courses
of action.
5-13
Decision Making
Programmed Decision
≈ Routine, virtually automatic process
≈ Decisions have been made so many times in the
past that managers have developed rules or
guidelines to be applied when certain situations
inevitably occur
5-14
The Classical Model of Decision Making
Figure 7.1
5-15
The Administrative Model
Administrative Model
≈ An approach to decision making that explains
why decision making is inherently uncertain and
risky and why managers can rarely make
decisions in the manner prescribed by the
classical model
5-16
Six Steps in Decision Making
Figure 7.4
5-17
Group Decision Making
Superior to individual making
Choices less likely to fall victim to bias
Able to draw on combined skills of group
members
Improve ability to generate feasible
alternatives
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Organizational Learning and Creativity
Organizational learning
≈ Managers seek to improve a employee’s desire
and ability to understand and manage the
organization and its task environment so as to
raise effectiveness.
Learning organization
≈ Managers try to maximize the people’s ability to
behave creatively to maximize organizational
learning.
5-19
Organizational Learning and Creativity
Creativity
≈ The ability of the decision maker to discover
novel ideas leading to a feasible course of action.
 A creative management
staff and employees are
the key to the learning
organization.
5-20
Building Group Creativity
Nominal Group Technique
≈ Provides a more structured way to generate
alternatives in writing and gives each manager
more time and opportunity to come up with
potential solutions
≈ Useful when an issue is controversial and when
different managers might be expected to
champion different courses of action
5-21
Chapter Eight
The Manager as a
Planner and Strategist
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Planning and Strategy
Planning
≈ Identifying and selecting appropriate goals and
courses of action for an organization.
 The organizational plan that results from the
planning process details the goals and specifies
how managers will attain those goals.
5-23
Levels of Planning
Corporate-Level Plan
≈ Top management’s decisions pertaining to the
organization’s mission, overall strategy, and
structure.
≈ Provides a framework for all other planning.
Corporate-Level Strategy
≈ A plan that indicates in which industries and
national markets an organization intends to
compete.
5-24
Levels of Planning
Business-Level Plan:
≈ Long-term divisional goals that will allow the
division to meet corporate goals
≈ Division’s business-level and structure to
achieve divisional goals
5-25
Levels of Planning
Functional-Level Plan
≈ Goals that the managers of each function will
pursue to help their division attain its businesslevel goals
Functional Strategy
≈ A plan of action that managers of individual
functions can take to add value to an
organization’s goods and services
5-26
Determining the Organization’s
Mission and Goals
Defining the Business
≈ Who are our customers?
≈ What customer needs are being satisfied?
≈ How are we satisfying customer needs?
Establishing Major Goals
≈ Provides the organization with a sense of
direction
5-27
Planning and Strategy Formulation
Figure 8.5
5-28
The Five Forces
Level of rivalry in an industry
Potential for new entrants
Power of large suppliers
Power of large customers
Threat of substitute products
5-29
Formulating Business-Level Strategies
Low-Cost Strategy
≈ Driving the organization’s total costs down
below the total costs of rivals.
Differentiation
≈ Distinguishing the organization’s products from
those of competitors on one or more important
dimensions.
5-30
Formulating Business-Level Strategies
Focused Low-Cost
≈ Serving only one market segment and
being the lowest-cost organization serving
that segment.
Focused Differentiation
≈ Serving only one market segment as the
most differentiated organization serving
that segment.
5-31
Four Ways to Expand Internationally
Figure 8.7
5-32
Chapter Nine
Value-Chain Management:
Functional Strategies for
Competitive Advantage
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Four Ways to Create a Competitive
Advantage
Figure 9.1
5-34
Functional Strategies and Value-Chain
Management
Functional-level strategy
≈ plan of action to improve the ability of each of an
organization’s departments to performs its taskspecific activities in ways that add value to an
organization’s goods and services
5-35
Functional Strategies and Value-Chain
Management
Value-chain management
≈ development of a set of functional-level
strategies that support a company’s businesslevel strategy and strengthen its competitive
advantage
5-36
What Do Customers Want?
1.
2.
3.
4.
A lower price to a higher price
High-quality products
Quick service and good after-sales service
Products with many useful or valuable
features
5. Products that are tailored to their unique
needs
5-37
Impact of Increased Quality on
Organizational Performance
Figure 9.4
5-38
Total Quality Management
Total quality management (TQM)
≈ focuses on improving the quality of an
organization’s products and stresses that all of
an organization’s
value-chain activities
should be directed
toward this goal
5-39
Facilities Layout, Flexible Manufacturing, and
Efficiency
Facilities Layout
≈ strategy of designing the machine-worker
interface to increase production system efficiency
Flexible Manufacturing
≈ strategy based on the use of IT to reduce the
setup costs associated with a product assembly
process
5-40
Facilities Layout
Product layout
≈ machines are organized so that each operation is
performed at work stations arranged in a fixed
sequence
Process Layout
≈ self contained work stations not organized in a
fixed sequence
5-41
Facilities Layout
Fixed-Position Layout
≈ the product stays in a fixed spot and components
produced at remote stations are brought the
product for to final assembly
5-42
Just-in-Time Inventory and Efficiency
Just-in-time (JIT) inventory system gets
components to the assembly line just as they
are needed to drive down costs
Major cost savings can result from increasing
inventory turnover and reducing inventory
holding costs
5-43
Chapter Ten
Managing Organizational
Structure and Culture
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Organizational Structure
Organizational Architecture
≈ The organizational structure, control systems,
culture, and human resource management
systems that together determine how
efficiently and
effectively
organizational
resources are used.
5-45
Designing Organizational Structure
Organizing
≈ The process by which managers establish
working relationships among employees to
achieve goals.
Organizational Structure
≈ Formal system of task and reporting
relationships showing how workers use
resources.
5-46
Factors Affecting Organizational Structure
Figure 10.1
5-47
Job Design
Job Design
≈ The process by which managers decide how to
divide tasks into specific jobs.
≈ The appropriate division of labor results in an
effective and efficient workforce.
5-48
Job Design
 Job Simplification
≈ The process of reducing the tasks each worker performs.
 Job Enlargement
≈ Increasing the number of different tasks in a given job by
changing the division of labor
 Job Enrichment
≈ Increasing the degree of responsibility a worker has over
a job
5-49
Grouping Jobs into Functions
Functional Structure
≈ An organizational structure composed of all the
departments that an organization requires to
produce its goods or services.
5-50
Divisional Structures
Divisional Structure
≈ Managers create a series of business units to
produce a specific kind of product for a specific
kind of customer
≈ Product, market, geographic
5-51
Matrix Design Structure
Matrix Structure
≈ An organizational structure that simultaneously
groups people and resources by function and
product.
≈ The structure is very flexible and can respond
rapidly to the need for change.
≈ Each employee has two bosses
5-52
Product Team Design Structure
Product Team Structure
≈ Does away with dual reporting relationships
and two-boss managers
≈ Functional employees are permanently
assigned to a cross-functional team that is
empowered to bring a new or redesigned
product to work
5-53
Hybrid Structures
Hybrid Structure
≈ The structure of a large organization that has
many divisions and simultaneously uses many
different organizational structures
Figure 10.7
5-54