Management Practices
Lecture-28
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Recap
• Socialization
– The Socialization Process
– Managerial Decisions Affected by Culture
– External Environment
– Key Stakeholders
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Organizational Stakeholders
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Today’s Lecture
• Social Responsibility
– Obligation to Responsiveness
– Factors That Affect Employee Ethics
– Stages of Moral Development
– Effect of Technological Change
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What Is Social Responsibility?
• The Classical View
– Management’s only social responsibility is to
maximize profits (create a financial return) by
operating the business in the best interests of the
stockholders (owners of the corporation).
– Expending the firm’s resources on doing “social
good” unjustifiably increases costs that lower
profits to the owners and raises prices to
consumers.
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What Is Social Responsibility? (cont’d)
• The Socioeconomic View
– Management’s social responsibility goes beyond
making profits to include protecting and improving
society’s welfare.
– Corporations are not independent entities responsible
only to stockholders.
– Firms have a moral responsibility to larger society to
become involved in social, legal, and political issues.
– “To do the right thing”
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To Whom is Management Responsible?
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From Obligation to Responsiveness to
Responsibility
• Social Obligation
– The obligation of a business to meet its economic
and legal responsibilities and nothing more.
• Social Responsiveness
– When a firm engages in social actions in response to
some popular social need.
• Social Responsibility
– A business’s intention, beyond its legal and economic
obligations, to do the right things and act in ways
that are good for society.
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Johnson & Johnson Credo
Figure 4.7
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Managerial Ethics
• Ethics Defined
– Principles, values, and beliefs that define what is
right and wrong behavior.
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Factors That Affect Ethical and Unethical Behavior
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Factors That Affect Employee Ethics
• Moral Development
– A measure of independence from outside influences
• Levels of Individual Moral Development
– Preconventional level
– Conventional level
– Principled level
– Stage of moral development interacts with:
•
•
•
•
Individual characteristics
The organization’s structural design
The organization’s culture
The intensity of the ethical issue
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Stages of Moral Development
Source: Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive-Development
Approach,” in T. Lickona (ed.). Moral Development and Behavior: Theory, Research, and Social
Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34–35.
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Factors That Affect Employee Ethics
• Moral Development
– Research Conclusions:
• People proceed through the stages of moral
development sequentially.
• There is no guarantee of continued moral
development.
• Most adults are in Stage (“good corporate citizen”).
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Individual Characteristics Affecting
Ethical Behaviors
• Values
– Basic convictions about what is right or wrong on
a broad range of issues
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Individual Characteristics
• Personality Variables
– Ego strength
• A personality measure of the strength of a person’s
convictions
– Locus of Control
• A personality attribute that measures the degree to which
people believe they control their own life.
• Internal locus: the belief that you control your destiny.
• External locus: the belief that what happens to you is due to
luck or chance.
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Other Variables
• Structural Variables
– Organizational characteristics and mechanisms
that guide and influence individual ethics:
• Performance appraisal systems
• Reward allocation systems
• Behaviors (ethical) of managers
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Technology
Technology refers to the skills, knowledge,
experience, body of scientific knowledge, tools,
computers, machines used in the design and
production of goods and services.
Quantum technological change: fundamental
shift in technology that results in innovation.
• The Internet and genetic engineering are examples.
–
Incremental technological change: refinements of
current technology over time.
• Most firms seek incremental product innovations which
allows constant, but small, improvements.
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Effect of Technological Change
• Many products undergo constant change and
improvement.
• Electronic products provide a great example.
–
This change can be a threat to firms that are slow to
improve but provides benefits to firms that adjust.
• Technological change is both a threat and an opportunity.
– Smith Corona typewriter company missed out on word
processing and is now out of business.
– Microsoft was quick to embrace graphic user interface programs
and now is dominant in the software business.
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Product Life Cycles
–
Refers to demand changes for a product over time.
• Embryonic stage: product is not widely accepted and has
minimal demand.
• Growth stage: many consumers seek out the product and
buy it for the first time.
• Mature stage: demand peaks since most buyers already
have the product and only buy replacements.
• Decline stage: demand falls off perhaps since the product
is obsolete.
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Product Life Cycles
Demand
Embryonic
Stage
Growth
Stage
Mature
Stage
Decline
Stage
Time
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Relationship Between Technological
Change and Life Cycle Duration
Rate of Technological
Change
Length of Product Life Cycles
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Rate of Technological Change
–
The rate of change determines the length of the
product life cycle demand curve.
• The computer industry, life cycle is about 18 months; in the
steel industry, it is many years.
–
Fads and fashions also impact the life cycle duration.
• Style changes alter the demand for goods.
• Usually, goods subject to fads and fashion changes will
experience shorter life cycles.
–
In general, life cycles are getting shorter, forcing
managers to be more responsive to customers.
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The Four Goals of New Product
Development
Reduce Product
Cycle Time
Maximize
Product Quality
New Product
Development
Goals
Maximize Fit with
Customer needs
Maximize
Manufacturability
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The Four Goals of New Product
Development
1) Reduce Product Cycle Time: reduce time needed to
develop a product from conception to market
introduction.
– Early to market products can command premium prices and will
have a longer life cycle.
– Can add new features before competitors
2) Maximize fit with Customer Needs: most products fail
because they were not designed to fit customer needs.
– Ensure customers want the product features before adding
them to the product.
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The Four Goals of New Product
Development
3) Maximize Product Quality: be sure new products are
of superior quality.
– Poor quality in a new product can doom its acceptance even
if quality is fixed later on.
– Quality problems usually result from rushing product to
market.
4) Maximize Manufacturability: the efficiency with
which the product is built impacts its time to market.
– Ease of production can shorten development time.
– Efficient production can also avoid production problems and
improve quality.
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Stage-Gate Development Funnel
Principles
–
Principle 1: Use a Stage-Gate Development Funnel;
managers often try to fund too many projects at
once.
• Stage 1 considers all new ideas. Those that are feasible
and meet the strategic goals of the firm go through Gate
1.
• Stage 2 focuses on the product development plan and
then evaluated at Gate 2. Only the best continue.
• Stage 3 issues a contract book and focuses on
responsibilities, budgets, resources, etc. This is the
symbolic launch of the formal development.
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Stage-Gate Development Funnel
Gate 1
Gate 2
Ideas
Ship
Stage 1
Stage 2
Stage 3
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Summary
• Social Responsibility
– Obligation to Responsiveness
– Factors That Affect Employee Ethics
– Stages of Moral Development
– Effect of Technological Change
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Next Lecture
• Managing in a Global Environment
•
I.
II.
III.
IV.
Four key questions :
Global Perspectives
Different Types of International Organizations
How organizations go global (Important)
Managing in a global environment
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