CHAPTER 1

1. Explain briefly how the definition of a manager has changed over time.

Managers used to be defined as the organizational members who told others what to do
and how to do it. In the past, it was easy to differentiate managers from nonmanagerial
employees. Nonmanagers were organizational members who worked directly on a job
or task and had no one reporting to them. Managers were those who supervised other
employees. Today, the changing nature of organizations and work has blurred the
distinction between managers and nonmanagerial employees. Many traditional non
managerial jobs now include managerial activities. Most employees are multi-skilled and
are being cross trained. Within a single shift, an employee can be a team leader,
equipment operator, maintenance technician, quality inspector, or improvement planner.

2. Identify and discuss three reasons managers are still important even in the
changing organizational structures in use today.

• The first reason why managers are important is because organizations need their
managerial skills and abilities more than ever in uncertain, complex, and chaotic
times. As organizations deal with today's challenges–changing workforce
dynamics, the worldwide economic climate, changing technology, ever-
increasing globalization, and so forth–managers play an important role in
identifying critical issues and crafting responses.
• Another reason why managers are important to organizations is because they're
critical to getting things done. They create and coordinate the workplace
environment and work systems so that others can perform those tasks. Or, if
work isn't getting done or isn't getting done as it should be, they're the ones who
find out why and get things back on track. And these managers are key players
in leading the company into the future.
• Finally, managers do matter to organizations. The single most important variable
in employee productivity and loyalty isn't pay or benefits or workplace
environment–it's the quality of the relationship between employees and their
direct supervisors. The way a company manages and engages its people can
significantly affect its financial performance. Leadership is the single largest
influence on employee engagement. Managerial ability is important in creating
organizational value.

3. Briefly discuss the difference between efficiency and effectiveness.

• Efficiency refers to getting the most output from the least amount of inputs.
Because managers deal with scarce inputs-including resources such as people,
money, and equipment-they are concerned with the efficient use of resources.
It's often referred to as "doing things right"-that is, not wasting resources. For
instance, efficient manufacturing techniques can be implemented by doing things
such as cutting inventory levels, decreasing the amount of time to manufacture
products, and lowering product reject rates.
• Effectiveness is often described as "doing the right things"-that is, doing those
work activities that will help the organization reach its goals. For instance, goals
 can include meeting customers' rigorous demands, executing world-class
manufacturing strategies, and making employee jobs easier and safer. Through
various work initiatives these goals can be pursued and achieved. Whereas
efficiency is concerned with the means of getting things done, effectiveness is
concerned with the ends, or attainment of organizational goals.

4. List and explain the four basic functions of management.

The four basic functions of management are: (a) Planning, (b) Organizing, (c) Leading,
and (d) Controlling.

• When managers engage in planning, they set goals, establish strategies for
achieving those goals, and develop plans to integrate and coordinate activities.
• When managers organize, they determine what tasks are to be done, who is to
do them, how the tasks are to be grouped, who reports to whom, and where
decisions are to be made.
• When managers engage in leading, they motivate subordinates, help resolve
work group conflicts, influence individuals or teams as they work, select the most
effective communication channel, or deal in any way with employee behavior
issues.
• When managers control, they ensure that goals are being met and that work is
being done as it should be. They monitor and evaluate performance. They
compare actual performance with the set goals. If those goals aren't being
achieved, it's the manager's job to get work back on track. This process of
monitoring, comparing, and correcting is the controlling function.

5. Describe the three main types of managerial skills identified by Robert Katz.
Which skills are most important to each level of management, and why?

Robert L. Katz proposed that managers need three critical skills in managing: technical,
interpersonal, and conceptual.

• Technical skills are the job specific knowledge and techniques needed to
proficiently perform work tasks. These skills tend to be more important for first-
line managers because they typically manage employees who use tools and
techniques to produce the organization's products or service the organization's
customers. Often, employees with excellent technical skills get promoted to first-
line manager.
• Human skills involve the ability to work well with other people, both individually
and in a group. Because all managers deal with people, these skills are equally
important to all levels of management. Managers with good interpersonal skills
get the best out of their people. They know how to communicate, motivate, lead,
and inspire enthusiasm and trust.
• Conceptual skills are the skills managers use to think and to conceptualize
abstract and complex situations. Using these skills, managers see the
organization as a whole, understand the relationships among various subunits,
and visualize how the organization fits into its broader environment. These skills
are most important to top managers.
6. Briefly describe the importance of innovation and sustainability to the
manager's job.

Innovation means doing things differently, exploring new territory, and taking risks. It is
not just for high-tech or other technologically sophisticated organizations. Innovative
efforts can be found in all types of organizations. If a firm does not innovate, it
undertakes great risks. Innovation is critical to today's organizations.

The concept of managing in a sustainable way, has had the effect of widening corporate
responsibility not only to managing in an efficient and effective way, but also to
responding strategically to a wide range of environmental and societal challenges. From
a business perspective, sustainability is defined as a company's ability to achieve its
business goals and increase long-term shareholder value by integrating economic,
environmental, and social opportunities into its business strategies. Sustainability issues
are now moving up the agenda of business leaders and the boards of thousands of
companies. Running an organization in a more sustainable way means that managers
have to make informed business decisions based on thorough communication with
various stakeholders, understanding their requirements, and starting to factor economic,
environmental, and social aspects into how they pursue their business goals.

7. In a short essay, describe the importance of customers to the manager's job.

Organizations need customers. Without them, most organizations would cease to exist.
Yet, focusing on the customer has long been thought to be the responsibility of
marketing types. However, employee attitudes and behaviors play a big role in
customer satisfaction. Managers are recognizing that delivering consistent high-quality
customer service is essential for survival and success in today's competitive
environment and that employees are an important part of that equation. Managers must
create a customer-responsive organization where employees are friendly and
courteous, accessible, knowledgeable, prompt in responding to customer needs, and
willing to do what's necessary to please the customer.

8. Select three of the focuses of today's managers and discuss its importance to
the success of business. ( chọn 3 gạch đầu dòng tuỳ mình thích)

• Customer: By listening to customers, businesses can discover new opportunities

for products and services. They may also discover why some customers remain
loyal to the company and why others leave.
• Technology: Although technology cannot completely replace human interaction
and judgment, it can automate routine and hazardous tasks, thereby freeing
humans for more complex tasks. Technology can make humans more
productive, reducing costs and increasing profitability.
• Social Media: More and more businesses are turning to social media as a way to
connect to customers. Employees can use social media to support and promote
their employer and to cooperate and collaborate with each other.
• Innovation: Innovation is critical at all levels in the organization. Customers
demand new, better, more robust products and services. Innovation can provide
the competitive advantage necessary for continued success.
• Sustainability: What's emerging in the twenty-first century is the concept of
managing in a sustainable way, which has had the effect of widening corporate
responsibility not only to managing in an efficient and effective way, but also to
 responding strategically to a wide range of environmental and societal
challenges. Customers expect businesses to manage themselves in such a way
as to provide quality products and services with the smallest footprint possible,
preserving resources for future generations.
• Employee: Progressive companies recognize the importance of treating
employees well not only because it's simply the right thing to do, but also
because it is good business. Well-treated employees are more likely to go the
extra mile when performing their jobs. Employees who are treated well will treat
customers well, contributing to business success and profitability.

9. What is universality of management? Why is it important?

Answer: Management is needed in all types and sizes of organizations, at all

organizational levels and in all organizational work areas, and in all organizations, no
matter where they're located. This is known as the universality of management. In all
organizations, managers must plan, organize, lead, and control.

Management is universally needed in all organizations. So it is necessary to find ways

to improve the way organizations are managed. Organizations that are well managed
develop a loyal customer base, grow, and prosper, even during challenging times.
Those that are poorly managed find themselves losing customers and revenues. By
studying management and its universality, an individual will be able to recognize poor
management and work to get it corrected.

CHAPTER 2
1. Eight steps in the decision-making process.

• Identify a problem - The decision-making process begins with the existence of a

problem or a discrepancy between an existing and a desired state of affairs. However, a
discrepancy without pressure to take action becomes a problem that can be postponed.
• Identify decision criteria - Once the manager has identified a problem that needs
attention, the decision criteria important to resolving the problem must be identified. That
is, managers must determine what is relevant in making a decision.
• Allocate weights to the criteria - The decision maker must weigh the items in order to
give them the correct priority in the decision. A simple approach to doing this is to give
the most important criterion a weight of 10 and then assign weights to the rest against
that standard.
• Develop alternatives - The fourth step requires the decision maker to list the viable
alternatives that could resolve the problem. No attempt is made in this step to evaluate
the alternatives, only to list them.
• Analyze alternatives - Once the alternatives have been identified, the decision maker
must critically analyze each one. From this comparison, the strengths and weaknesses
of each alternative become evident.
• Select an alternative - The sixth step involves choosing the best alternative from
among those considered.
• Implement the alternative - Implementation involves conveying the decision to those
affected by it and getting their commitment to it. If the people who must carry out a
decision participate in the process, they are more likely to enthusiastically support the
outcome than if they are just told what to do.
• Evaluate decision effectiveness - The last step in the decision-making process
involves appraising the outcome of the decision to see if the problem has been resolved.
 If the desired result has not been achieved, the manager may consider returning to a
previous step or may even consider starting the whole decision process over.

2. Discuss briefly the assumptions of rationality and the validity of those assumptions.

A decision maker who is perfectly rational is fully objective and logical. The problem faced is
clear and unambiguous. The decision maker has a clear and specific goal. He is aware of all
possible alternatives and consequences. Making decisions consistently leads to selecting the
alternative that maximizes the likelihood of achieving that goal. These assumptions apply to any
decision-personal or managerial. For managerial decision making, an additional assumption is
that decisions are made in the best interests of the organization. However, most of these
assumptions of rationality are not very realistic.

3. What is meant by bounded rationality and satisfaction?

Despite the unrealistic assumptions of perfect rationality, managers are expected to be rational
when making decisions. It is understood that "good" decision makers are supposed to do certain
things and exhibit good decision-making behaviors as they identify problems, consider
alternatives, gather information, and act decisively but prudently. When they do so, they show
others that they are competent and that their decisions are the result of intelligent deliberation.
However, a more realistic approach to describing how managers make decisions is the concept
of "bounded rationality." According to this concept, managers make decisions rationally, but are
limited by their ability to process information. Because they cannot possibly analyze all
information on all alternatives, managers "satisfice," rather than maximize. That is, they accept
solutions that are "good enough." Thus, they become rational within the limits of their ability to
process information.

4. Give an example of the use of bounded rationality.

Answer: Students answers will vary, but must include an expectation of rationality, a limited
ability to process information, an inability to know all possible alternatives, and a probable lack
of maximization of the results of the decision

5. What is intuitive decision making? How does intuition affect the process of making a
decision?

Intuitive decision making is the process of making decisions on the basis of experience,
feelings, and accumulated judgment. Intuitive decision making can complement both rational
and bounded rational decision making. A manager who has had experience with a similar type
of problem or situation often acts quickly with limited information because of that past
experience. Managers who experienced intense feelings and emotions when making decisions
actually achieved higher decision-making performance, especially when they understood their
feelings as they were making decisions.

6. Give an example of evidence-based management. Remember to include all of the

essential elements.
Students answers will vary but must include
1) the decision-maker's expertise and judgment;
2) external evidence that has been evaluated by the decision maker;
3) opinions, preferences, and values of those who have a stake in the decision;
4) relevant organizational (internal) factors such as context, circumstances, and
organizational members.
7. Discuss structured problems, programmed decisions, unstructured problems, and
nonprogrammed decisions.

• Some problems are straightforward. The decision maker's goal is clear, the problem is
familiar, and information about the problem is easily defined and complete. Hence, these
are called structured problems. For instance, when a server spills a drink on a
customer's coat the customer is upset and the manager needs to do something.
Because it is not an unusual occurrence, there is some standardized routine for handling
it. For example, the manager offers to have the coat cleaned at the restaurant's
expense. This is called a programmed decision, a repetitive decision that can be
handled by a routine approach. Because the problem is structured, the manager does
not have to go to the trouble and expense of going through an involved decision
process.

• Not all the problems managers face can be solved using programmed decisions. Many
organizational situations involve unstructured problems, which are problems that are
new or unusual and for which information is ambiguous or incomplete. Whether to build
a new manufacturing facility in China is an example of an unstructured problem. When
problems are unstructured, managers rely on nonprogrammed decision making in order
to develop unique solutions. Nonprogrammed decisions are unique and nonrecurring
and involve custom-made solutions. Lower-level managers mostly rely on programmed
decisions because they confront familiar and repetitive problems. As managers move up
the organizational hierarchy, the problems they confront become more unstructured.
However, few managerial decisions in the real world are either fully programmed or
unprogrammed. Most fall somewhere in between.

8. Discuss the three types of programmed decisions that a manager depends on to

resolve structured problems.

• Usually a manager relies on one of three types of programmed decisions to counter

structured problems: procedure, rule, or policy. A procedure is a series of sequential
steps a manager uses to respond to a structured problem. Identifying the problem is a bit
difficult. Once it is clear, so is the procedure. For instance, a purchasing manager
receives a request from a warehouse manager for 15 PDA handhelds for the inventory
clerks. The purchasing manager knows how to make this decision by following the
established purchasing procedure.
• A rule is an explicit statement that tells a manager what can or cannot be done. Rules
are frequently used because they are simple to follow and ensure consistency. For
example, rules about lateness and absenteeism permit supervisors to make disciplinary
decisions rapidly and fairly.
• The third type of programmed decisions is a policy, which is a guideline for making a
decision. In contrast to a rule, a policy establishes general parameters for the decision
maker rather than specifically stating what should or should not be done. Policies
typically contain an ambiguous term that leaves interpretation up to the decision maker.

9. Discuss the three different decision-making conditions that managers usually face.
When making decisions, managers usually face three different conditions: certainty, risk, and
uncertainty.
• Certainty - The ideal situation for making decisions is one of certainty, which is a
situation where a manager can make accurate decisions because the outcome of every
alternative is known.
 • Risk - These are conditions in which the decision maker is able to estimate the
likelihood of certain outcomes. Under risk, managers have historical data from past
personal experiences or secondary information that lets them assign probabilities to
different alternatives.
• Uncertainty - This is a situation in which a decision maker has neither certainty nor
reasonable probability estimates available. Under these conditions, the choice of
alternative is influenced by the limited amount of available information and by the
psychological orientation of the decision maker. An optimistic manager follows a
maximax choice (maximizing the maximum possible payoff); a pessimist follows a
maximin choice (maximizing the minimum possible payoff); and a manager who desires
to minimize his maximum "regret" opts for a minimax choice.

10. Explain any five decision biases or errors that managers make. (chọn 5 gạch đầu
dòng mình thích)

• Overconfidence bias: When decision makers tend to think they know more than they do
or hold unrealistically positive views of themselves and their performance. Immediate
gratification bias: Decision makers tend to want immediate rewards and to avoid
immediate costs.
• Anchoring effect occurs when decision makers fixate on initial information as a starting
point and then, once set, fail to adequately adjust for subsequent information. First
impressions, ideas, prices, and estimates carry unwarranted weight relative to
information received later.
• Selective perception bias: When decision makers selectively organize and interpret
events based on their biased perceptions.
• Confirmation bias: Decision makers seek out information that reaffirms their past choices
and discount information that contradicts past judgments. These people tend to accept
at face value information that confirms their preconceived views and are critical and
skeptical of information that challenges these views.
• Framing bias: When decision makers select and highlight certain aspects of a situation
while excluding others.
• Availability bias: When decision makers tend to remember events that are the most
recent and vivid in their memory.
• Representation bias: When decision makers assess the likelihood of an event based on
how closely it resembles other events or sets of events.
• Randomness bias: Decision makers try to create meaning out of random events.
• Sunk costs error: When decision makers forget that current choices cannot correct the
past.
• Self-serving bias: Decision makers take credit for their successes and blame failure on
outside factors.
• Hindsight bias: The tendency for decision makers to falsely believe that they would have
accurately predicted the outcome of an event once that outcome is actually known.

11. What are the six characteristics of an effective decision-making process?

Experts say an effective decision-making process has these six characteristics: (1) it focuses on
what's important; (2) it's logical and consistent; (3) it acknowledges both subjective and
objective thinking and blends analytical with intuitive thinking; (4) it requires only as much
information and analysis as is necessary to resolve a particular dilemma; (5) it encourages and
guides the gathering of relevant information and informed opinion; and (6) it's straightforward,
reliable, easy to use, and flexible.

CHAPTER 3
1/ Define parochialism. Discuss why parochialism is a problem for U.S. managers and
discuss reasons why it is important to overcome parochialism in today's business
environment.

Parochialism is typically defined as viewing the world solely through one's own eyes and
perspectives. People with a parochial attitude do not recognize that others have different ways
of living and working. Parochialism is a significant obstacle for managers working in a global
business world. If managers fall into the trap of ignoring others' values and customs and rigidly
keep on applying an attitude of "ours is better than theirs" to foreign cultures, they'll find it
difficult to compete with other organizations around the world. Therefore, it is important to
overcome parochialism in order to succeed in today's global environment.

2. List and discuss the three attitudes managers might have toward international
business.
• Ethnocentric attitude - This is the parochialistic belief that the best work approaches and
practices are those of the home country. Managers with an ethnocentric attitude believe
that people in foreign countries do not have the needed skills, expertise, knowledge, or
experience to make the best business decisions as people in the home country do. They
don't trust foreign employees with key decisions
• Polycentric attitude - This is the view that employees in the host country know the best
work approaches and practices for running their business. Managers with a polycentric
attitude view every foreign operation as different and hard to understand. Thus, these
managers are likely to leave their foreign facilities alone and let foreign employees figure
out how best to do things.
• Geocentric attitude - This is a world-oriented view that focuses on using the best
approaches and people from around the globe. Managers with this type of attitude
believe that it's important to have a global view both at the organization's headquarters
in the home country and in the various foreign work facilities. Major issues and decisions
are viewed globally by looking for the best approaches and people regardless of origin.

3. Explain why countries would choose to participate in a regional trading alliance.

Countries enter into regional trading alliances for a variety of political and national security
reasons. Mainly, countries choose to participate with the goal of stimulating economic growth.
Reducing trade barriers such as tariffs or taxes imposed on imported goods opens new markets
for companies in participating countries. Firms may also be able to reduce labor costs by
employing workers in another country within the trading alliance. The interlocking trade
agreements may also discourage military conflict among trading partners. Barriers to travel,
employment, and investment may be removed, further facilitating trade. When the trading
partners subscribe to a common set of priorities, the alliance can exert considerable power such
as in the areas of climate change, energy generation and consumption, and political policy. By
combining their economic power, members of a trade alliance are in a better position to
compete against larger countries. Member nations may also see social and cultural benefits.

4. Explain some of the benefits and challenges faced by American businesses because
of America's membership in NAFTA.

Together Canada, the United States, and Mexico comprise the second largest trading bloc in
the world. Goods travel freely among the three nations without tariffs or quotas, thereby making
consumer goods more competitive relative to goods from countries not in NAFTA. U.S.
businesses can take advantage of lower wage rates in Mexico, again making their products
more competitive in both the domestic and global markets.

5. What is the purpose of the WTO? Give an example of the type of issue that might come
before this organization.

The goal of the World Trade Organization is to help countries conduct trade through a system of
rules. It plays a role in monitoring, promoting, and protecting global trade. The WTO ruled that
the European plane maker Airbus received improper European Union subsidies for the A380
super jumbo jet and several other airplanes, hurting its American rival, Boeing.

6. What is the International Monetary Fund? What does it do?

The IMF is an organization of 188 countries that promotes international monetary cooperation
and provides member countries with policy advice, temporary loans, and technical assistance to
establish and maintain financial stability and to strengthen economies. The IMF offers advice to
countries and governments to get them through difficulties.

7. What is the World Bank Group and what does it do?

The World Bank Group is a group of five closely associated institutions, all owned by its
member countries, that provides vital financial and technical assistance to developing countries
around the world. The goal of the World Bank Group is to promote long-term economic
development and poverty reduction by providing members with technical and financial support.
For instance, during the recent global recession, financial commitments by the World Bank
Group reached $100 billion as it helped nations respond to and recover from the economic
downturn

8. Explain the differences between a multidomestic corporation, a global company, and a

borderless organization. Include examples of companies for each of the types of
organizations discussed.

• A multidomestic corporation is a multinational corporation (MNC) that decentralizes

management and other decisions to the local country. Local employees are hired to
manage the business and marketing strategies are tailored to that country's unique
characteristics. This type of globalization reflects the polycentric attitude. Many
consumer companies manage their global businesses using this approach because they
must adapt their products and services to meet the needs of the local markets. With
operations in almost every country on the globe, Switzerland Based Nestle's managers
match the company's products to its consumers. In parts of Europe, Nestle sells
products that are not available in the United States or Latin America.

• A global company centralizes its management and other decisions in the home country.
These companies treat the world market as an integrated whole and focus on the need
for global efficiency. Although these companies may have considerable global holdings,
management decisions with company-wide implications are made from headquarters in
the home country. This approach to globalization reflects the ethnocentric attitude. Some
examples of companies that can be considered global companies include Sony,
Deutsche Bank AG, and Merrill Lynch.
 • Other companies are going international by eliminating structural divisions that impose
artificial geographical barriers. This type of MNC is called a transnational or borderless
organization, and reflects a geocentric attitude. Managers choose this form of
international organization to increase efficiency and effectiveness in a competitive global
marketplace. For example, IBM dropped its organizational structure based on country
and reorganized into industry groups. Thomson SA, based in France, has eight major
locations around the globe.

9. Describe the different approaches that a company may use when it decides to go
international.

Managers who want to get into a global market with minimal investment may start with global
sourcing (also called global outsourcing). This involves purchasing materials or labor from
around the world wherever it is cheapest. The goal here is to take advantage of lower costs to
be more competitive. The next step may involve exporting the organization's products to other
countries-that is, making products domestically and selling them abroad. In addition, an
organization might import, which involves acquiring products made abroad and selling them
domestically. Both usually entail minimal investment and risk. Managers also might use
licensing or franchising, which are similar approaches involving one organization giving another
organization the right to use its brand name, technology, or product specifications in return for a
lump sum payment or a fee usually based on sales. The only difference is that licensing is
primarily used by manufacturing organizations that make or sell another company's products
and franchising is primarily used by service organizations that want to use another company's
name and operating methods. When an organization has been doing business internationally
for a while and has gained experience in international markets, managers may decide to make
a greater direct foreign investment. One way to increase investment is through a strategic
alliance, which is a partnership between an organization and a foreign company partner in
which both share resources and knowledge in developing new products or building production
facilities. Finally, managers may choose to directly invest in a foreign country by setting up a
foreign subsidiary as a separate and independent facility or office. This subsidiary can be
managed as a multidomestic organization (local control) or as a global organization (centralized
control). This arrangement involves the greatest commitment of resources and poses the
greatest amount of risk.

10. Discuss four global economic issues and how they affect management decisions,
providing examples of each.
• Type of economy - There are two major types of economies. A market economy is one
in which resources are primarily owned and controlled by the private sector. A command
economy is one in which economic decisions are planned by a central government.
Managers need to know about a country's economic system because it has the potential
to constrain decisions and actions. As China shifts from a more planned economy to a
more free market, changing regulations and policies affect the decisions of managers
conducting business in that country.
• Currency exchange rates - A global firm's profits can vary dramatically depending on the
strength of its home currency and the currencies of the countries in which it operates.
Any revaluation of a nation's currency can affect the managers' decisions and the level
of a company's profits. For instance, prior to the overall global economic slowdown, the
rising value of the euro against both the dollar and the yen contributed to strong profits
for German companies.
• Inflation means that prices for products and services are going up. But it also affects
interest rates, exchange rates, the cost of living, and the general confidence in a
country's political and economic system. Managers need to monitor inflation trends so
that they can make good decisions and anticipate any possible changes in a country's
monetary policies. Inflation rates from -18.7% in South Sudan to +48.6% in Venezuela
impact the purchasing and pricing decisions of global managers.
 • Diverse tax policies are a major worry for a global manager. Some host countries are
more restrictive than the organization's home country. Others are far more lenient.
Managers need exact information on the various tax rules in countries in which they
operate to minimize their business's overall tax obligation. For the past several years,
small business investment decisions in the United States have been affected by the
uncertainty surrounding domestic tax policies.

11. List and explain Hofstede's five dimensions of national culture.

Geert Hofstede developed one of the most widely referenced approaches to helping managers
better understand differences between national cultures. His research found that countries vary
on five dimensions of national culture.
• Individualism versus collectivism - Individualism refers to a social framework where
people look after their own interests and those of their immediate family. The opposite of
this is collectivism, which is characterized by a social framework where people expect
others in the group that they are a part of to look after them and to protect them when
they are in trouble.
• Power distance - A high power distance society accepts wide differences in power in
organizations. Employees show a great deal of respect for those in authority. On the
other hand, a low power distance society plays down inequalities. Employees in a low
power distance organization are not afraid to approach their boss.
• Uncertainty avoidance - A society that is high in uncertainty avoidance is threatened with
ambiguity and characterized by a high level of anxiety among its people. A society that is
low in uncertainty avoidance is comfortable with taking risks and is also tolerant of
different behavior and opinions.
• Achievement and nurturing - Achievement is the degree to which values such as
assertiveness, the acquisition of money and material goods, and competition prevail.
Nurturing is an attribute that emphasizes relationships and concern for others. e. Long-
term and short-term orientation - People in a long-term orientation society look to the
future and value thrift and persistence. People in short-term orientation societies value
the past and emphasize respect for tradition.

12. Discuss the dimensions of the Global Leadership and Organizational Behavior
Effectiveness (GLOBE) framework. Describe how each dimension compares to
Hofstede's five dimensions of national culture.
The GLOBE model uses nine dimensions on which national cultures differ:
• Power distance: The degree to which members of a society expect power to be
unequally shared. Identical to Hofstede.
• Uncertainty avoidance: Similar to Hofstede's description, the GLOBE team defined this
dimension as a society's reliance on social norms and procedures to alleviate the
unpredictability of future events.
• Assertiveness: The extent to which a society encourages people to be tough,
confrontational, assertive, and competitive versus modest and tender. This is equivalent
to Hofstede's achievement-nurturing dimension.
• Humane orientation: This is defined as the degree to which a society encourages and
rewards individuals for being fair, altruistic, generous, caring, and kind to others. This is
similar to Hofstede's nurturing dimension.
• Future orientation: The extent to which a society encourages and rewards future-
oriented behaviors such as planning, investing in the future, and delaying gratification.
This is equivalent to Hofstede's long-term and short-term orientation.
• Institutional collectivism: This term was defined, as Hofstede did, as the degree to which
individuals are encouraged by societal institutions to be integrated into groups within
organizations and society.
• Gender differentiation: The extent to which a society maximizes gender role differences
as measured by how much status and decision-making responsibilities women have.
This dimension is an addition to Hofstede's framework.
 • In-group collectivism: The extent to which members of a society take pride in
membership in small groups, such as their family and circle of close friends, and the
organizations in which they're employed. This dimension has no equivalent in Hofstede's
framework.
• Performance orientation: The degree to which a society encourages and rewards group
members for performance improvement and excellence. This dimension is similar to
Hofstede's achievement orientation.

Chapter 4 Valuing a Diverse Workforce

1. Define "workplace diversity." Provide a brief description of the evolution of workplace

diversity over the last five decades.
Workplace diversity is defined as the ways in which people in an organization are different from
and similar to one another. This definition reinforces the belief that managers and organizations
should view employees as having qualities in common as well as differences that separate
them.
• The following table gives a description of the timeline of the evolution of workforce
diversity: 1960s to 1970s - Focus on complying with laws and regulations: Title VII of
Civil Rights Act; Equal Employment Opportunity Commission; affirmative action policies
and programs. Early 1980s - Focus on assimilating minorities and women into corporate
setting: Corporate programs developed to help improve self-confidence and
qualifications of diverse individuals so they can "fit in."
• Late 1980s - Concept of workforce diversity expanded from compliance to an issue of
business survival: Publication of Workforce 2000 opened business leaders' eyes about
the future composition of workforce-that is, more diverse; first use of term workforce
diversity. Late 1980s to Late 1990s - Focus on fostering sensitivity: Shift from
compliance and focusing only on women and minorities to including everyone; making
employees more aware and sensitive to the needs and differences of others.
• New Millennium - Focus on diversity and inclusion for business success: Workforce
diversity seen as core business issue; important to achieve business success,
profitability, and growth.

2. Briefly explain the demographic characteristics that affect workforce diversity.

• Answer: The demographic characteristics that we tend to think of when we think of

diversity age, race, gender, ethnicity, etc.-are just the tip of the iceberg. These
demographic differences reflect surface-level diversity, which are easily perceived
differences that may trigger certain stereotypes, but that do not necessarily reflect the
ways people think or feel. Such surface-level differences in characteristics can affect the
way people perceive others, especially when it comes to assumptions or stereotyping.
However, as people get to know one another, these surface-level differences become
less important and deep-level diversity-differences in values, personality, and work
preferences-becomes more important. These deep-level differences can affect the way
people view organizational work rewards, communicate, react to leaders, negotiate, and
generally behave at work.

3. Give a brief description of the people management benefits derived from workplace
diversity.

The people management benefits that organizations get because of their workforce diversity
efforts revolve around attracting and retaining a talented workforce. Organizations want a
talented workforce because it's the people-their skills, abilities, and experiences - who make an
organization successful. Positive and explicit workforce diversity efforts can help organizations
attract and keep talented diverse people and make the best of the talents those individuals bring
to the workplace. In addition, another important people management benefit is that as
companies rely more on employee teams in the workplace, those work teams with diverse
backgrounds often bring different and unique perspectives to discussions, which can result in
more creative ideas and solutions. However, recent research has indicated that such benefits
might be hard to come by in teams performing more interdependent tasks over a long period of
time. Such situations also present more opportunities for conflicts and resentments to build. But,
as the researchers pointed out, that simply means that those teams may need stronger team
training and coaching to facilitate group decision making and conflict resolution.

4. What benefits does workplace diversity afford an organization in terms of its

performance?

The performance benefits that organizations get from workforce diversity include cost savings
and improvements in organizational functioning. The cost savings can be significant when
organizations that cultivate a diverse workforce reduce employee turnover, absenteeism, and
the chance of lawsuits. Organizational performance can be enhanced through workforce
diversity because of improved problem-solving abilities and system flexibility. An organization
with a diverse workforce can tap into the variety of skills and abilities represented and just the
fact that its workforce is diverse requires that processes and procedures be more
accommodative and inclusive.

5. How is workplace diversity beneficial to organizations from a strategic perspective?

Workforce diversity is the key to extracting the best talent, performance, market share, and
suppliers from a diverse country and world. With a diverse workforce, organizations can better
anticipate and respond to changing consumer needs. Diverse employees bring a variety of
points of view and approaches to opportunities, which can improve how the organization
markets to diverse consumers. A diverse workforce also can be a powerful source of
competitive advantage, primarily because innovation thrives in such an environment. Tapping
into differing voices and viewpoints can be powerful factors in steering innovation. "Diversity
powers innovation, helping businesses generate new products and services."

6. How is workplace diversity beneficial to organizations from an ethical perspective?

From an ethical perspective, workforce diversity and effectively managing diversity is the right
thing to do. Although many societies have laws that say it's illegal to treat diverse people
unfairly, many cultures also exhibit a strong ethical belief that diverse people should have
access to equal opportunities and be treated fairly and justly. Businesses do have an ethical
imperative to build relationships that value and enable all employees to be successful.
Managers need to view workforce diversity as a way to bring different voices to the table and to
build an environment based on trusting relationships.

7. What are the significant trends occurring in the composition of the global workforce?
What are the likely repercussions of such trends?

According to United Nations forecasts, "The world is in the midst of an epochal demographic
shift that will reshape societies, economies, and markets over the next century." The total world
population in 2012 is estimated to be over 7 billion individuals. However, that number is
forecasted to hit 9 billion by 2050, at which point the United Nations predicts the total population
will either stabilize or peak after growing for centuries at an ever-accelerating rate. The main
reason for this major shift is the decline in birthrates as nations advance economically.
However, in developing countries in Africa, Asia, Latin America, the Caribbean, and Oceania,
birth rates remain high. One of the benefits is that many of these countries are likely to
experience a "demographic dividend: a rising proportion of young people entering the
workforce, driving productivity and economic growth." The world's population is now aging at an
unprecedented rate. People aged 65 and older will soon outnumber children under age 5 for the
first time in history. Also, the world's population aged 80 and over is projected to increase 233
percent by 2040. The implications of these trends for societies and businesses are profound-
from changing family structures to shifting patterns of work and retirement to emerging
economic challenges based on increasing demands on social entitlement programs, dwindling
labor supply, and declining total global savings rates. Such demographic shifts will reshape the
global workforce and organizational workplaces.

8. What are some of the fears held by employers regarding employment of disabled
persons? Describe the actual realities associated with such fears.

Employers fear that hiring people with disabilities leads to higher employment costs and lower
profit margins. In reality, absentee rates for sick time are virtually equal between employees with
and without disabilities. Also, workers' disabilities are not a factor in formulas calculating
insurance costs for workers' compensation. Employers fear that workers with disabilities lack job
skills and experience necessary to perform as well as their abled counterparts. However,
commonplace technologies such as the Internet and voice-recognition software have eliminated
many of the obstacles for workers with disabilities; many individuals with disabilities have great
problem-solving skills from finding creative ways to perform tasks that others may take for
granted. Employers are uncertain over how to take potential disciplinary action with a worker
with disabilities, not realizing that a person with a disability for whom workplace
accommodations have been provided has the same obligations and rights as far as job
performance. Employers believe that there are high costs involved with accommodating
disabled employees. In truth, most workers with disabilities require no accommodation but for
those who do, more than half of the workplace modifications cost $500 or less.

9. Identify and briefly describe each type of discrimination that occurs in the workplace.

Some of the more common forms of workplace discrimination are:

• discriminatory practices or policies - actions taken by representatives of the
organization that deny equal opportunity to perform or unequal rewards for
performance
• sexual harassment - unwanted sexual advances and other verbal and physical
conduct of a sexual nature that create a hostile or offensive work environment
• intimidation - overt threats or bullying directed at members of specific groups of
employees
• mockery or insults - jokes or negative stereotypes; sometimes the result of jokes
taken too far e. exclusion - exclusion of certain people from job opportunities,
social events, discussions, or informal mentoring; can occur unintentionally
• incivility - disrespectful treatment, including behaving in an aggressive manner,
interrupting a person, or ignoring his or her opinions

10. Discuss the negative consequences that can result from discrimination, whether
intentional or not.

In addition to lawsuits with expensive settlements, employers can experience reduced

employee productivity, negative and disruptive interpersonal conflicts, increased employee
turnover, and overall negative climate that can lead to serious problems for managers. These
conditions lead to lower profits and lower stock trading prices, loss of competitive advantage
and market share, and possible take-over or closure of the business.
11. Explain the concept of the "glass ceiling" in workplaces. What practices have aided in
the creation of the "glass ceiling"?
• Research has suggested that women are more likely than men to start out in entry-level
positions, even though they have the same educational qualifications as men. In the
1980s, the term glass ceiling was first used in a Wall Street Journal article to refer to the
invisible barrier that separates women and minorities from top management positions.
The idea of a "ceiling"means that there is something blocking upward movement and the
idea of "glass" is that whatever's blocking the way isn't immediately apparent.
• Research on the glass ceiling has looked at identifying the organizational practices and
interpersonal biases that have blocked women's advancement. Findings from those
studies have ranged from lack of mentoring, sex stereotyping, views that associate
masculine traits with leader effectiveness, and bosses' perceptions of family-work
conflict.

12. Give a brief description of diversity skills training in workplaces.

Our human nature is to not accept or approach anything that's different from us. But it doesn't
make discrimination of any type or form acceptable. We live and work in a multicultural context,
so the challenge for organizations is to find ways for employees to be effective in dealing with
others who aren't like them. That's where diversity skills training, specialized training to educate
employees about the importance of diversity and teach them skills for working in a diverse
workplace, comes in. Most diversity skills training programs start with diversity awareness
training. During this type of training, employees are made aware of the assumptions and biases
they may have. Once we recognize that, we can look at increasing our sensitivity and openness
to those who are different from us. Sounds simple, but it's not. But if people can be taught to
recognize that they're prejudging people and to consciously address that behavior, then the
diversity awareness training has been successful. Then, the next step is diversity skills training,
in which people learn specific skills on how to communicate and work effectively in a diverse
work environment

Chapter 5 Socially-Conscious Management

1.Compare and contrast the ideas of social obligation, social responsiveness, and social
responsibility.
Social obligation occurs when a firm engages in social actions because of its obligation
to meet its economic and legal responsibilities. The organization does only what it is
obligated to do and nothing more. This idea reflects the classical view of social
responsibility that says that management's only social responsibility is to maximize
profits. In contrast to social obligation, however, both social responsiveness and social
responsibility reflect the socioeconomic view. According to this view a manager's social
responsibilities go beyond making profits to include protecting and improving society's
welfare. This view is based on the belief that corporations are not independent entities
responsible only to stockholders, but have an obligation to the larger society. Social
responsiveness occurs when a company engages in social actions in response to some
popular social need. Managers are guided by social norms and values and make
practical, market-oriented decisions about their actions. A socially responsible
organization views things differently. It goes beyond what it is obligated to do or chooses
to do because of some popular social need and does what it can to help improve society
because it is the right thing to do. Social responsibility is defined as a business's
intention, beyond its legal and economic obligations, to do the right things and act in
ways that are good for society. A socially responsible organization does what is right
because it feels it has an ethical responsibility to do so.
2. Identify and describe the three levels and six stages of moral development.

An individual's moral development can be divided into three levels, each having two stages. At
each successive stage, an individual's moral judgment becomes less dependent on outside
influences and more internalized.
• The three levels of moral development are preconventional, conventional, and
principled. At the preconventional level, an individual's choice between right or wrong is
based on personal consequences from outside sources, such as physical punishment,
reward, or exchange of favors. This level includes stage 1 where an individual sticks to
the rules to avoid punishment and stage 2 where the individual follows the rules only
when doing so is in his or her immediate interest. At the conventional level, ethical
decisions rely on maintaining expected standards and living up to the expectations of
others. The third and fourth stages are in the conventional level. In stage 3, an individual
tries to live up to what is expected by people close to him or her. In stage 4, an individual
tries maintaining conventional order by fulfilling obligations to which he has agreed. At
the principled level, an individual defines moral values apart from the authority of the
groups to which he or she belongs. The 5th and 6th stages are a part of this level. At
stage 5, an individual values the rights of others and upholds absolute values and rights
regardless of the majority's opinion. Finally, at stage 6, an individual follows his or her
self-chosen ethical principles even if they violate the law.

2. Outline the two individual characteristics that play a role in determining whether a
person behaves ethically

Values and personality are the two individual characteristics that play a role in determining
whether a person behaves ethically. Each person comes to an organization with a relatively
entrenched set of personal values, which represent basic convictions about what is right and
wrong. An individual's values develop from a young age based on what he or she sees and
hears from parents, teachers, friends, and others. Thus, employees in the same organization
often possess very different values. Values are broad and cover a wide range of issues. Two
personality variables that influence an individual's actions according to his or her beliefs about
what is right or wrong are ego strength and locus of control. Ego strength measures the strength
of a person's convictions. People with high ego strength are likely to resist impulses to act
unethically and instead follow their convictions. Individuals high in ego strength are more likely
to do what they think is right and be more consistent in their moral judgments and actions than
those with low ego strength. Locus of control is the degree to which people believe they control
their own fate. People with an internal locus of control believe they control their own destinies.
They are more likely to take responsibility for consequences and rely on their own internal
standards of right and wrong to guide their behavior. They are also more likely to be consistent
in their moral judgments and actions. People with an external locus believe what happens to
them is due to luck or chance. They are less likely to take personal responsibility for the
consequences of their behavior and more likely to rely on external forces.

3. Write a short essay on the structural variables that can influence employees' ethical
behavior.

• An organization's structural design can influence whether employees behave ethically.

Those structures that minimize ambiguity and uncertainty with formal rules and
regulations and those that continuously remind employees of what is ethical are more
likely to encourage ethical behavior. Other structural variables that influence ethical
choices include goals, performance appraisal systems, and reward allocation
procedures. Although many organizations use goals to guide and motivate employees,
 those goals can create some unexpected problems. One study found that people who do
not reach set goals are more likely to engage in unethical behavior, even if they do or do
not have economic incentives to do so.
• An organization's performance appraisal system also can influence ethical behavior.
Some systems focus exclusively on outcomes, while others evaluate means as well as
ends. When employees are evaluated only on outcomes, they may be pressured to do
whatever is necessary to look good on the outcomes, and not be concerned with how
they got those results. Closely related to the organization's appraisal system is how
rewards are allocated. The more that rewards or punishment depend on specific goal
outcomes, the more employees are pressured to do whatever they must to reach those
goals, perhaps to the point of compromising their ethical standards.

4. Discuss the importance of an organization's culture as a factor that determines an

employee's ethical behavior.

• An organization's culture consists of shared organizational values. These values reflect

what the organization stands for and what it believes in as well as create an environment
that influences employee behavior ethically or unethically. When it comes to ethical
behavior, a culture most likely to encourage high ethical standards is one that is high in
risk tolerance, control, and conflict tolerance. Employees in such a culture are
encouraged to be aggressive and innovative, are aware that unethical practices will be
discovered, and feel free to openly challenge expectations they consider to be unrealistic
or personally undesirable.
• Because shared values can be powerful influences, many organizations are using
values-based management, in which the organization's values guide employees in the
way they do their jobs. An organization's managers play an important role here. They
are responsible for creating an environment that encourages employees to embrace the
culture and the desired values as they do their jobs. People look to see what those in
authority are doing and use that as a benchmark for acceptable practices and
expectations.
• A strong culture exerts more influence on employees than a weak one. If a culture is
strong and supports high ethical standards, it has a powerful and positive influence on
the decision to act ethically or unethically.

5. In a short essay, discuss some of the ways in which managers can encourage ethical
behavior and create a comprehensive ethics program.

• Employee selection - The selection process (interviews, tests, and background checks)
can be viewed as an opportunity to learn about an individual's level of moral
development, personal values, ego strength, and locus of control. However, a carefully
designed selection process is not foolproof and, even under the best circumstances,
individuals with questionable standards of right and wrong may be hired. Such an issue
can be overcome if other ethics controls are in place.
• Code of ethics and decision rules - A code of ethics is a formal statement of an
organization's values and the ethical rules it expects employees to follow. It is a popular
choice for reducing ambiguity about what is and is not ethical.
• Leadership - Doing business ethically requires a commitment from top managers. They
are the ones who uphold the shared values and set the cultural tone. They are role
models in terms of both words and actions. Top managers also set the tone by their
reward and punishment practices. The choices of whom and what are rewarded with pay
increases and promotions send a strong signal to employees.
 • Job goals and performance appraisal - Under the stress of unrealistic goals, otherwise
ethical employees may feel they have no choice but to do whatever is necessary to meet
those goals. Also, goal achievement is usually a key issue in performance appraisal. If
performance appraisals focus only on economic goals, ends will begin to justify means.
To encourage ethical behavior, both ends and means should be evaluated.
• Independent social audits - These evaluate decisions and management practices in
terms of the organization's code of ethics. To maintain integrity, auditors should be
responsible to the company's board of directors and present their findings directly to the
board. This arrangement gives the auditors clout and lessens the opportunity for
retaliation from those being audited.

6. Who are whistle-blowers? What can managers do to protect them?

• Whistle-blowers are individuals who raise ethical concerns or issues in an organization.

These individuals are a key part of a company's ethics program. It is important for
managers to assure employees who raise ethical concerns that they will face no
personal or career risks.
• In order to facilitate this, managers can set up toll-free ethics hotlines. Managers also
need to create a culture where bad news can be heard and acted on before it is too late.
The SarbanesOxley Act offers some legal protection to whistle-blowers. According to
one of its provisions, any manager who retaliates against an employee for reporting
violations faces a stiff penalty of a 10-year jail sentence.

Chapter 6 Managing Change

1. Discuss the four external factors that prompt change in an organization, giving an
example of each factor. Explain how the factor affects the organization

• When consumer preferences change, producers must make changes to their products
and/or services to remain competitive. Different generations expect different features
and benefits from products. Producers must adapt or lose market share. Example:
Consumers wanted improvements to the cameras in cell phones. Phones were
redesigned to include better cameras
• New and amended laws and regulations may change how products are made or
services provided. EPA regulations require automakers to increase the fuel economy of
vehicles; other rules require that carbon and greenhouse gasses generated in the
production process be reduced. This might require a complete change in production
methods. Coal-burning electricity generating plants had to install scrubbers to clean
carbon from the stacks before the smoke could be released into the air.
• As technology changes, employees must be retrained to interact with the equipment;
some positions may be eliminated. Production quotas may increase, requiring workers to
learn new skills and adjust their work pace. For example, a nail gun allows a roofer to lay
more shingles per day than a hammer. The nail gun thus requires the roofer to work
faster but not necessarily harder.
• d. A booming economy likely creates more sales, requiring the onboarding of additional
employees who may not have the same level of skill as existing workers. While this can
be overall a good situation, it does cause change in the work habits of existing
employees. Conversely, a recession may require the employer to reduce its workforce
and employ additional cost-cutting measures. Idling of production machinery could
cause many position changes for employees.
2. Discuss the four internal factors that cause change in an organization, giving an
example of each factor.

• When an organization changes its strategy, it will have to change methods and/or focus.
For instance, Target decided it could no longer compete head-to-head with WalMart on
pricing so it changed its strategy to compete on the quality of the products it offered and
charged a higher price for those products.
• As more women entered the workforce, the nature of how people are managed changed
from autocratic to team-based. Currently the ethnic and cultural mix has changed, again
prompting changes in employee interaction and diversity initiatives.
• Innovation drives change when it creates new equipment. When computers first entered
the workplace, many employees resisted their introduction because it meant learning a
new skill set and possible loss of a job or job status.
• Many people fear change because the outcome is unknown. Fear creates resistance.
Employees who were once cooperative may become disengaged or even defiant.
Attitudes toward the company and management may sour; job satisfaction could
plummet.

3. Describe and explain the "calm waters" view of organizational change.

The calm waters view of organizational change envisions the organization as a large ship
crossing a calm sea. The ship's captain and crew know exactly where they are going because
they have made the trip many times before. Change comes in the form of an occasional storm,
a brief distraction in an otherwise calm and predictable trip. In the calm waters metaphor,
change is seen as an occasional disruption in the normal flow of events. It is best illustrated by
Kurt Lewin's three-step description of the change process. According to Lewin, successful
change can be planned and requires unfreezing the status quo, changing to a new state, and
refreezing to make the change permanent. The status quo can be considered an equilibrium
state. To move from this equilibrium, unfreezing is necessary. Unfreezing can be thought of as
preparing for the needed change. It can be achieved by increasing the driving forces, which are
forces pushing for change; by decreasing the restraining forces, which are forces that resist
change and push behavior toward the status quo; or by combining the two approaches. Once
unfreezing is done, the change itself can be implemented. However, merely introducing change
does not ensure that it will take hold. The new situation needs to be refrozen so that it can be
sustained over time. Unless this last step is done, there is a strong chance that employees will
revert back to the old ways of doing things. The objective of refreezing, then, is to stabilize the
new situation by reinforcing the new behaviors. Lewin's three-step process treats change as a
move away from the organization's current equilibrium state. It is a calm waters scenario where
an occasional disruption means changing to deal with the disruption. Once the disruption has
been dealt with, however, things can continue on under the new changed situation.

4. Explain organizational change and briefly discuss the four types of change.

• Most managers, at one point or another, will have to make changes in some aspects of
their workplace. These changes are classified as organizational change, which is any
alteration of strategy, people, structure, or technology. Organizational changes often
need someone to act as a catalyst and assume the responsibility for managing the
change process-that is, a change agent. Change agents can be a manager within the
organization, but could also be a non-manager such as a specialist from the HR
department or even an outside consultant. For major changes, an organization often
hires outside consultants to provide advice and assistance. Managers face four main
types of change: strategy, structure, technology, and people. Changing strategy signifies
 a change in how managers ensure the success of the company. Changing structure
includes any change in structural variables such as reporting relationships, coordination
mechanisms, employee empowerment, or job redesign. Changes in the external
environment or in organizational strategies often lead to changes in the organizational
structure. Because an organization's structure is defined by how work gets done and
who does it, managers can alter one or both of these structural components. For
instance, departmental responsibilities could be combined, organizational levels
eliminated, or the number of persons a manager supervises could be increased. More
rules and procedures could be implemented to increase standardization. Or employees
could be empowered to make decisions so decision making could be faster. Another
option would be to make major changes in the actual structural design. For instance,
product divisions can be dropped, merged, or expanded. Structural design changes also
might include, for instance, a shift from a functional to a product structure or the creation
of a project structure design.

• Today, technological changes usually involve the introduction of new equipment, tools,
or methods; automation; or computerization. Competitive factors or new innovations
within an industry often require managers to introduce new equipment, tools, or
operating methods. Automation is a technological change that replaces certain tasks
done by people with tasks done by machines.

• Changing people involves changing attitudes, expectations, perceptions, and behaviors.

Organizational development is the term used to describe change methods that focus on
people and the nature and quality of interpersonal work relationships.

5. Why do people resist change?

An individual is likely to resist change for the following reasons: uncertainty, habit, concern over
personal loss, and the belief that the change is not in the organization's best interest. Change
replaces the known with uncertainty. For example, when quality control methods based on
sophisticated statistical models are introduced into manufacturing plants, many quality control
inspectors have to learn the new methods. Some inspectors may fear that they will be unable to
do so and may, therefore, develop a negative attitude toward the change or behave poorly if
required to use them. Another cause of resistance is that people do things out of habit. Every
day, when going to work, people probably go the same way, whether walking, driving, or using
mass transit. Usually, they find a single approach and use it regularly. People do not want to
have to consider the full range of options for the hundreds of decisions they make every day. To
cope with this complexity, they rely on habits or programmed responses. But when confronted
with change, their tendency to respond in their accustomed ways becomes a source of
resistance. The third cause of resistance is the fear of losing something already possessed.
Change threatens the investment people have already made in the status quo. The more that
people have invested in the current system, the more they resist change. They fear the loss of
status, money, authority, friendships, personal convenience, or other economic benefits that
they value. This is why older workers tend to resist change more than younger workers. Older
employees have generally invested more in the current system and thus have more to lose by
changing. A final cause of resistance is a person's belief that the change is incompatible with
the goals and interests of the organization. For instance, an employee who believes that a
proposed new job procedure will reduce product quality or productivity can be expected to resist
the change. If the employee expresses his or her resistance positively, this actually can be
beneficial to the organization

6. List and explain the techniques for reducing resistance to change.

The various techniques for reducing resistance to change are:

• Education and communication-This helps reduce resistance to change by helping
employees see the logic of the change effort. This technique assumes that much of the
resistance lies in misinformation or poor communication.
• Participation-This involves bringing those individuals directly affected by the proposed
change into the decision-making process. Their participation allows these individuals to
express their feelings, increase the quality of the process, and increase employee
commitment to the final decision.
• Facilitation and support-This involves helping employees deal with the fear and anxiety
associated with the change effort. This help includes employee counseling, therapy, new
skills training, or a short paid leave of absence.
• Negotiation-This involves exchanging something of value for an agreement to lessen the
resistance to the change effort. This resistance technique is quite useful when the
resistance comes from a powerful source.
• Manipulation and cooptation-This refers to converting attempts to influence others about
the change. It involves distorting facts to make the change appear more attractive.
• Coercion-This involves the use of direct threats or force against the resisters.

7. Write a short essay on stress, particularly as it relates to the workplace.

Stress is the adverse reaction people have to excessive pressure placed on them from
extraordinary demands, constraints, or opportunities. Stress is not always bad. Although it is
often discussed in a negative context, stress does have a positive value, particularly when it
offers a potential gain. However, stress is more often associated with constraints and demands.
A constraint prevents an individual from doing what he desires. Demands refer to the loss of
something desired. When an employee has his annual performance review at work, he feels
stress because he confronts opportunity, constraints, and demands. A good performance
review leads to a promotion, greater responsibilities, and a higher salary. But a poor review
keeps him from getting the promotion. An extremely poor review might lead to his being fired.
Just because the conditions are right for stress to surface, however, does not always mean it
will. Two conditions are necessary for potential stress to become actual stress. First, there must
be uncertainty over the outcome, and second, the outcome must be important.

8. What are stressors? Discuss the five major categories of organizational stressors.

• Stress is caused by personal factors and by job-related factors called stressors. Change
of any kind-personal or job-related-has the potential to cause stress because it involves
demands, constraints, or opportunities.
• The five major categories of organizational stressors are: task demands, role demands,
interpersonal demands, organization structure, and organizational leadership. Task
demands are factors related to an employee's job. They include the design of a person's
job (autonomy, task variety, degree of automation), working conditions, and the physical
work layout. Work quotas can put pressure on employees when their outcomes are
perceived as excessive. The more the interdependence between an employee's tasks
and the tasks of others, the greater is the potential for stress. Autonomy, on the other
hand, tends to lessen stress. Jobs in which temperatures, noise, or other working
conditions are dangerous or undesirable can increase anxiety. So, too, can working in
an overcrowded room or in a visible location where interruptions are constant.
 • Role demands relate to pressures placed on an employee as a function of the
particular role he plays in the organization. Role conflicts create expectations that
may be hard to reconcile or satisfy. Role overload is experienced when the
employee is expected to do more than time permits. Role ambiguity is created
when role expectations are not clearly understood and the employee is not sure
what he has to do.
• Interpersonal demands are pressures created by other employees. Lack of social
support from colleagues and poor interpersonal relationships can cause
considerable stress, especially among employees with a high social need.
• Organization structure can increase stress. Excessive rules and an employee's
lack of opportunity to participate in decisions that affect him or her are examples
of structural variables that might be potential sources of stress.
• Organizational leadership represents the supervisory style of the organization's
managers. Some managers create a culture characterized by tension, fear, and
anxiety. They establish unrealistic pressures to perform in the short run, impose
excessively tight controls, and routinely fire employees who do not measure up.
This style of leadership filters down through the organization and affects all
employees.

9. List a few cultural characteristics that an innovative organization possesses.

An innovative organization has the following cultural characteristics:

• Accept ambiguity - Too much emphasis on objectivity and specificity constrains
creativity.
• Tolerate the impractical - Individuals who offer impractical, even foolish, answers to
what-if questions are not stifled. What at first seems impractical might lead to innovative
solutions.
• Keep external controls minimal - Rules, regulations, policies, and similar organizational
controls are kept to a minimum.
• Tolerate risk - Employees are encouraged to experiment without fear of consequences
should they fail. Mistakes are treated as learning opportunities. Employees do not fear to
put forth new ideas.
• Tolerate conflict - Diversity of opinions is encouraged. Harmony and agreement between
individuals or units are not assumed to be evidence of high performance.
• Focus on ends rather than means - Goals are made clear, and individuals are
encouraged to consider alternative routes toward meeting the goals. Focusing on ends
suggests that several right answers might be possible for any given problem.
• Use an open-system focus - Managers closely monitor the environment and respond to
changes as they occur. h. Provide positive feedback - Managers provide positive
feedback, encouragement, and support so employees feel that their creative ideas
receive attention.
• Exhibit empowering leadership - A leader of an innovative organization lets his
subordinates know that the work they do is significant. He provides organizational
members the opportunity to participate in decision making. He shows them that he is
confident that they can achieve high performance levels and outcomes. This has a
positive influence on creativity.

10. Explain why large organizations are less likely to create disruptive innovations.
Large organizations create rules and regulations to standardize operations. They create multiple
departments with defined areas of responsibility. And they create socialization processes–like
new-employee orientations and corporate handbooks--that convey to employees "the way we
do things around here." The result is that these successful organizations establish entrenched
cultures and values that, on one hand, guide employees; but, on the other hand, also act as
constraints on change. New ideas for products or services that differ significantly from the status
quo are a threat to the established power structure within large companies. Successful
organizations focus on what they do best. They repeat what has succeeded in the past and they
put their resources into the ventures that have the highest probability of generating maximum
profits. Small markets, which typically describe those applicable to early disruptive innovations,
don't fit with the growth needs of large organizations. Importantly, large organizations have
distinct cultures and values that define their capabilities and limit their ability to move into new
products or markets. Disruptive innovations, especially at the beginning, typically apply to
emerging or small markets and project lower profits than a firm's mainline products. And their
novelty has little or no appeal to the organization's most profitable customers.

Chapter 7 Constraints on Managers

1.In a short essay, differentiate between the symbolic view and the omnipotent view of
management. Include specific examples of each view to support your answer.

In the omnipotent view, differences in an organization's performance are assumed to be due to

decisions and actions of its managers. Good managers anticipate change, exploit opportunities,
correct poor performance, and lead their organizations. When things go well and profits are up,
managers take the credit and are rewarded-even if they had little to do with achieving the
positive outcomes. When profits are down, top managers are often fired in the belief that "new
blood" will bring improved results. Coaches are often released following a poor season as they
are considered the "managers" of their teams. b. The symbolic view holds that a manager's
ability to affect performance outcomes is influenced and constrained by external factors.
According to this view, it's unreasonable to expect managers to significantly affect an
organization's performance. Instead, performance is influenced by factors over which managers
have little control such as the economy, customers, governmental policies, competitors' actions,
industry conditions, and decisions made by previous managers. This view is labeled "symbolic"
because it's based on the belief that managers symbolize control and influence by developing
plans, making decisions, and engaging in other managerial activities to make sense out of
random, confusing, and ambiguous situations. However, the actual part that managers play in
organizational success or failure is limited. In the 1990s Cisco Systems was the picture of
success. Growing rapidly, it was widely praised by analysts for its "brilliant strategy, masterful
management of acquisitions and superb customer focus." As Cisco's performance declined
during the early part of the 21st century, analysts said that its strategy was flawed, its
acquisition approach was haphazard, and its customer service was poor. The symbolic view
would suggest that declining performance was due to the external circumstances beyond the
control of the managers.

2. Assume that medical science is able to extend the life expectancy in the United States
by 20 years, on average. Give examples of how this will affect the decisions managers
make. Respond in terms of the economic, demographic, political/legal, and sociocultural
contexts.

Students' answers will vary but should include aspects related to an aging population: more
demands on firms to provide products and services for older people; a larger burden on
government services to the elderly such as income supports; increasing demand for health care,
etc. One could also speculate that society's attitude toward early retirement may shift in favor of
a longer working career. If the larger 65+ age group has insufficient income to support
themselves, we might see parents moving in with their adult children or even grandchildren.

3. Define environmental uncertainty. Briefly discuss the dimensions of environmental

uncertainty.
• Environmental uncertainty refers to the degree of change and complexity in an
organization's environment. The first dimension of uncertainty is the degree of change. If
the components in an organization's environment change frequently and unpredictably, it
is a dynamic environment. If change is minimal or predictable, it's a stable one. A stable
environment might be one with no new competitors, few technological breakthroughs by
current competitors, little activity by pressure groups to influence the organization, and
so forth.
• The other dimension of uncertainty describes the degree of environmental complexity,
which looks at the number of components in an organization's environment and the
extent of the knowledge that the organization has about those components. An
organization with fewer competitors, customers, suppliers, government agencies, and so
forth faces a less complex and uncertain environment. Organizations deal with
environmental complexity in various ways. Complexity is also measured in terms of the
knowledge an organization needs about its environment.

4. Define organizational culture and discuss its three primary implications.

• Organizational culture is the shared values, principles, traditions, and ways of doing
things that influence the way organizational members act. In most organizations, these
important shared values and practices have evolved over time and determine, in large
degree, what employees perceive about their organizational experiences and how they
behave in the organization. When doing their work, the organizational culture-the "way
we do things around here"-influences what employees can do and how they view,
define, analyze, and resolve problems and issues.
• Our definition of culture implies three things. First, culture is a perception. Individuals
perceive the organizational culture on the basis of what they see, hear, or experience
within the organization. Second, even though individuals may have different
backgrounds or work at different organizational levels, they tend to describe the
organization's culture in similar terms. That's the shared aspect of culture. Finally,
organizational culture is descriptive. It's concerned with how members perceive the
organization, not with whether they like it. It describes rather than evaluates.

5. How do employees of an organization learn its culture? In a short essay, explain the
four primary methods and provide an example of each.

Culture is transmitted to employees in a number of ways. The most significant are stories,
rituals, material symbols, and language.
• Stories: Organizational "stories" typically contain a narrative of significant events or
people including such things as the organization's founders, reactions to past mistakes,
and so forth. For instance, managers at Nike feel that stories told about the company's
past help shape the future. Whenever possible, corporate "storytellers" (senior
executives) explain the company's heritage and tell stories that celebrate people getting
things done.
• Rituals: Corporate rituals are repetitive sequences of activities that express and reinforce
the values of the organization, what goals are most important, and which people are
important. Mary Kay Cosmetics' annual awards ceremony is a good example. The
company spends more than $50 million annually on rewards and price incentives.
 • Material Symbols: Material symbols convey to employees who is important and the kinds
of behavior that are expected and appropriate. Examples of material symbols include the
layout of an organization's facilities, how employees dress, the types of automobiles
provided to top executives, and the availability of corporate aircraft. At WorldNow, a
provider of Internet technology to local media companies, an important material symbol
is an old dented drill that the founders purchased for $2 at a thrift store. The drill
symbolizes the company's culture of "drilling down to solve problems."
• Language: Many organizations and units within organizations use language as a way to
identify and unite members of a culture. By learning this language, members attest to
their acceptance of the culture and their willingness to help preserve it. For instance, at
Cranium, a Seattle board game company, "chiff" stands for "clever, high-quality,
innovative, friendly, fun."

6. Discuss how culture constrains managers. Include specific examples to support your
answer.

• Because an organization's culture constrains what managers can and cannot do, it is
particularly relevant to managers. These constraints are rarely explicit. They're not
written down. It's unlikely that they'll even be spoken. But they're there, and all managers
quickly learn what to do and not to do in their organization.
• The link between values and managerial behavior is fairly straightforward. For example,
in a so-called "ready-aim-fire" culture, managers will study proposed projects first and
analyze them endlessly before committing to them. However, in a "ready-fire-aim"
culture, managers take action and then analyze what has been done. If an organization's
culture supports the belief that profits can be increased by cost cutting and that the
company's best interests are served by achieving slow but steady increases in quarterly
earnings, managers are unlikely to pursue programs that are innovative, risky, long term,
or expansionary.
• In an organization whose culture conveys a basic distrust of employees, managers are
more likely to use an authoritarian leadership style than a democratic one. Why? The
culture establishes for managers what is appropriate and expected behavior. Banco
Santander has been described as a "risk-control freak." The company's managers
adhered to "banking's stodgiest virtues – conservatism and patience."

7. In a short essay, explain the reasons behind the increasing importance of workplace
spirituality in recent years.

• Workplace spirituality is a culture in which organizational values promote a sense of

purpose through meaningful work taking place in the context of community.
Organizations with a spiritual culture recognize that people have a mind and a spirit,
seek to find meaning and purpose in their work, and desire to connect with other human
beings and be part of a community. Workplace spirituality is important now for a number
of reasons:
• Employees are looking for ways to counterbalance the stresses and pressures of a
turbulent pace of life.
• Contemporary lifestyles underscore the lack of community that many people feel. People
are looking for involvement and connection.
• Aging baby boomers are reaching mid-life and looking for something meaningful in their
lives, something beyond the job.
• Individuals desire to integrate their personal life values with their professional lives.
• For some, formalized religion hasn't worked. These individuals continue to look for
anchors to replace a lack of faith and to fill a growing sense of emptiness.
8. How can managers best promote workplace spirituality within their organizations?

• To increase workplace spirituality within their organizations, managers can work to

promote five primary characteristics:
• Strong sense of purpose: Spiritual organizations build their cultures around a meaningful
purpose. To build spiritual organizations, managers should emphasize that while profits
are important, they're not the primary values of the organization.
• Focus on individual development: Spiritual organizations recognize the worth and value
of individuals. To increase workplace spirituality, managers should seek to create
cultures in which employees can continually grow and learn.
• Trust and openness: Spiritual organizations are characterized by mutual trust, honesty,
and openness. To promote spirituality, managers shouldn't be afraid to admit mistakes.
They should be upfront with employees, customers, and suppliers.
• Employee empowerment: The high-trust climate in spiritual organizations, when
combined with the desire to promote learning and growth, leads to managers
empowering employees to make most work-related decisions. To promote spirituality,
managers should trust employees to make thoughtful and conscientious decisions.
• Tolerance of employee expression: Spiritually based organizations don't stifle employee
emotions. To promote workplace spirituality, managers should create environments in
which employees can express their moods and feelings without guilt or fear of
reprimand.

9. Discuss the criticisms of workplace spirituality.

• Workplace spirituality is a culture in which organizational values promote a sense of
purpose through meaningful work taking place in the context of community.
Organizations with a spiritual culture recognize that people have a mind and a spirit,
seek to find meaning and purpose in their work, and desire to connect with other human
beings and be part of a community.
• Critics of the spirituality movement have focused on two issues: legitimacy (Do
organizations have the right to impose spiritual values on their employees?) and
economics (Are spirituality and profits compatible?).
• An emphasis on spirituality clearly has the potential to make some employees uneasy.
Critics might argue that secular institutions, especially businesses, have no business
imposing spiritual values on employees. This criticism is probably valid when spirituality
is defined as bringing religion into the workplace. However, it's less valid when the goal
is helping employees find meaning in their work.
• The issue of whether spirituality and profits are compatible is certainly important. Limited
evidence suggests that the two may be compatible. One study found that companies
that introduced spiritually based techniques improved productivity and significantly
reduced turnover. Another found that organizations that provided their employees with
opportunities for spiritual development outperformed those that didn't. Others reported
that spirituality in organizations was positively related to creativity, ethics, employee
satisfaction, job involvement, team performance, and organizational commitment.

10. Discuss sustainability and provide at least three examples of methods a firm can use
to create and maintain a culture of sustainability.

• Answer: Sustainability is a company's ability to achieve its business goals and increase
long term shareholder value by integrating economic, environmental, and social
opportunities into its business strategies. Companies can create rituals to create and
maintain sustainability cultures. The company can tie employees' bonuses to meeting
 sustainability goals. And the new hire orientation process can incorporate stories of
successful sustainability efforts.

Chapter 8 Planning and Goal-Setting

1.White Forest Financials is a small investment firm, operating in an extremely volatile

environment. One of the company's two owners, David White, is of the opinion that it
would be futile for the company to engage in formal planning as the business
environment is constantly shifting. However, the co-owner, Marsha Forest, believes that
planning is essential for the company's success. Whom would you support? Why?

Marsha Forest is correct in her observation that planning is essential to a company's success.
Generally speaking, formal planning is associated with positive financial results. Planning offers
several advantages to companies. It establishes coordinated effort and gives direction to
managers and non-managers alike. It reduces overlapping and wasteful activities. Planning also
establishes goals or standards that are used in controlling. Planning reduces uncertainty by
forcing companies to look ahead, anticipate change, consider the impact of change, and
develop appropriate responses. It also clarifies the consequences of actions companies might
take in response to change. Even though planning can't eliminate change, companies plan in
order to anticipate changes and develop the most effective response to them. Even when the
environment is highly uncertain, it's important to continue formal planning in order to see any
effect on organizational performance. It's the persistence in planning that contributes to
significant performance improvement. In an uncertain environment, managers should develop
plans that are specific, but flexible. Managers need to recognize that planning is an ongoing
process. The plans serve as a road map although the destination may change due to dynamic
market conditions. They should be ready to change directions if environmental conditions
warrant.

2. Discuss the impact of planning on organizational performance.

• Numerous studies have looked at the relationship between planning and performance.
Although most showed generally positive relationships, we can't say that organizations
that formally plan always outperform those that don't plan.
• Generally speaking, formal planning is associated with positive financial results-higher
profits, higher return on assets, and so forth. Also, it seems that doing a good job
planning and implementing those plans play a bigger part in high performance than how
much planning is done. Next, in those studies where formal planning didn't lead to higher
performance, the external environment often was the culprit. When external forces-say,
governmental regulations or powerful labor unions-constrain managers' options, it
reduces the impact planning has on an organization's performance. Finally, the
planning-performance relationship seems to be influenced by the planning time frame. It
seems that at least four years of formal planning is required before it begins to affect
performance.

3. Distinguish between the stated and the real goals of an organization. Illustrate the
difference with an example.

An organization's stated goals are official statements of what an organization says, and what it
wants its stakeholders to believe its goals are. However, stated goals-which can be found in an
organization's charter, annual report, public relations announcements, or in public statements
made by managers-are often conflicting and influenced by what various stakeholders think
organizations should do. Such statements are vague and probably better represent
management's public relations skills than being meaningful guides to what the organization is
actually trying to accomplish. It shouldn't be surprising then to find that an organization's stated
goals are often irrelevant to what actually goes on. If you want to know an organization's real
goals-those goals an organization actually pursues-observe what organizational members are
doing. Actions define priorities. For example, a company may publicly commit to increasing
worker participation in management, while actually practicing a hierarchical, top-down approach.
Knowing that real and stated goals may differ is important for recognizing what you might
otherwise think are inconsistencies.

4. In a short essay, describe the different classifications of plans.

Strategic plans are plans that apply to the entire organization, establish the organization's
overall goals, and seek to position the organization in terms of its environment. Plans that
specify the details of how the overall goals are to be achieved are called operational plans.
Strategic plans tend to cover a longer time frame and a broader view of the organization.
Strategic plans also include the formulation of goals whereas operational plans define ways to
achieve the goals. Also, operational plans tend to cover shorter time periods. We define long
term plans as those with a time frame beyond three years. Short-term plans are those covering
one year or less. Specific plans are plans that are clearly defined and that leave no room for
interpretation. They have clearly defined objectives. There's no ambiguity and no problem with
misunderstanding. The drawbacks of specific plans are that they require clarity and a sense of
predictability that often do not exist. When uncertainty is high and managers must be flexible in
order to respond to unexpected changes, directional plans are preferable. Directional plans are
flexible plans that set out general guidelines. They provide focus but don't lock managers into
specific goals or courses of action. However, the flexibility inherent in directional plans must be
weighed against the loss of clarity provided by specific plans. A single-use plan is a one-time
plan specifically designed to meet the needs of a unique situation. In contrast, standing plans
are ongoing plans that provide guidance for activities performed repeatedly. Standing plans
include policies, rules, and procedures.

5. In a short essay, define management by objectives (MBO) and list four elements of this
type of goal setting.

Management by objectives (MBO) is a management system in which specific performance

goals are jointly determined by employees and their managers, progress toward accomplishing
these goals is periodically reviewed, and rewards are allocated on the basis of this progress.
Rather than using goals only as controls, MBO uses them to motivate employees as well.
Management by objectives consists of four elements: goal specificity, participative decision
making, an explicit time period, and performance feedback. Its appeal lies in its focus on
employees working to accomplish goals they have had a hand in determining.

6. In a short essay, list and discuss six characteristics of well-designed goals.

(1) A well-designed goal should be written in terms of outcomes rather than actions. The desired
end result is the most important element of any goal and, therefore, the goal should be written
to reflect this. (2) Next, a goal should be measurable and quantifiable. It's much easier to
determine if a goal has been met if it's measurable. In line with specifying a quantifiable
measure of accomplishment. (3) A well-designed goal should also be clear as to a time frame.
Although open-ended goals may seem preferable because of their supposed flexibility, in fact,
goals without a time frame make an organization less flexible because a manager is never sure
when the goal has been met or when he or she should call it quits because the goal will never
be met regardless of how long he or she works at it. (4) Next, a well-designed goal should be
challenging but attainable. Goals that are too easy to accomplish are not motivating and neither
are goals that are not attainable even with exceptional effort. (5) Well-designed goals should be
written down. Although actually writing down goals may seem too time consuming, the process
of writing the goals forces people to think them through. In addition, the written goals become
visible and tangible evidence of the importance of working toward something. (6) Finally, well
designed goals are communicated to all organizational members who need to know the goals.
Making people aware of the goals ensures that they're "on the same page" and working in ways
to ensure the accomplishment of the organizational goals.

7. In a short essay, discuss the three planning contingency factors that influence the
choice of plans and illustrate how these factors influence planning.

Three contingency factors affect planning: level in the organization, degree of environmental
uncertainty, and length of future commitments. The planner's level in the organization is likely to
determine whether the plan is more strategic versus more operational. For the most part,
operational planning dominates managers' planning at lower levels of the organization, while at
upper levels, planning is more strategy oriented. Environmental uncertainty is the second
contingency factor. When uncertainty is high, plans should be specific, but more flexible. Under
these conditions, managers may sometimes need to abandon an existing plan in favor of a new
one. Under low uncertainty, management is more likely to adhere to existing plans. Lastly, the
time frame of existing plans is likely to influence new and emerging plans. The more current
plans affect future commitments, the longer the time frame is for which managers must plan.

8. In a short essay, describe how managers can effectively plan when the external
environment is continually changing.

In an uncertain environment, managers want to develop plans that are specific, but flexible.
Although this may seem contradictory, it's not. To be useful, plans need some specificity, but
the plans should not be cast in stone. Managers must recognize that planning is an ongoing
process. The plans serve as a roadmap although the destination may be changing constantly
due to dynamic market conditions. They should be willing to change directions if environmental
conditions warrant. This flexibility is particularly important as plans are implemented. Managers
must stay alert to environmental changes that could impact the effective implementation of
plans and make changes as needed. Keep in mind, also, that it's important to continue formal
planning efforts, even when the environment is highly uncertain, in order to see any effect on
organizational performance. It's the persistence in planning efforts that contributes to significant
performance improvement. It seems that, as with most activities, managers "learn to plan" and
the quality of their planning improves when they continue to do it. Finally, effective planning in
dynamic environments means flattening the organizational hierarchy as the responsibility for
establishing goals and developing plans is shoved to lower organizational levels because
there's little time for goals and plans to flow down from the top. Managers must train their
employees in setting goals and establishing plans and then trust that they will do so.

9. What is competitor intelligence? Identify some of the sources of competitor

intelligence. Discuss the legal and ethical issues related to this concept.

Competitor intelligence involves gathering information about competitors that allows managers
to anticipate competitors' actions rather than merely react to them. It is one of the fastest-
growing forms of environmental scanning. It seeks basic information about competitors: Who
are they? What are they doing? How will what they're doing affect us? Advertisements,
promotional materials, press releases, reports filed with government agencies, annual reports,
want ads, newspaper reports, information on the Internet, and industry studies are readily
accessible sources of information. Specific information on an industry and associated
organizations is increasingly available through electronic databases. Managers can literally tap
into this wealth of competitor information by purchasing access to databases. Attending trade
shows and debriefing your own sales staff also can be good sources of information on
competitors. In addition, many organizations even regularly buy competitors' products and ask
their own employees to evaluate them to learn about new technical innovations. Managers do
need to be careful about the way information, especially competitor intelligence, is gathered to
prevent any concerns about whether it's legal or ethical. Difficult decisions about competitor
intelligence arise because often there's a fine line between what's considered legal and ethical
and what's considered legal but unethical. Some people or companies will go to any lengths-
some unethical-to get information about competitors. Many who study competitor intelligence
suggest that much of the competitor-related information managers need to make crucial
strategic decisions that are available and accessible to the public. In other words, competitor
intelligence isn't corporate espionage.

Chapter 9 Strategic Planning

1.In a short essay, explain strategic management and why it is important.

• Strategic management is what managers do to develop the organization's strategies. It

is an important task involving all the basic management functions-planning, organizing,
leading, and controlling.
• There are three reasons as to why strategic management is important.
• The most significant one is that it can make a difference in how well an organization
performs.
• Generally, there is a positive relationship between strategic planning and performance.
• Generally, organizations that use strategic management have higher levels of
performance.
• Another reason it is important has to do with the fact that managers in organizations of
all types and sizes face continually changing situations. They cope with this uncertainty
by using the strategic management process to examine relevant factors and decide what
actions to take. Finally, strategic management is important because organizations are
complex and diverse. Each part needs to work together toward achieving the
organization's goals; strategic management helps do this.
• Today, strategic management has become so important that both business
organizations and not for-profit organizations use it.

2. Identify the six steps in the strategic management process and briefly explain what
happens in each step.
• Step 1: Identify the Organization's Current Mission, Goals, and Strategies - Every
organization needs a mission-a statement of its purpose. Defining the mission forces
managers to identify what it's in business to do. These statements provide clues to what
these organizations see as its purpose.
• Step 2: Do an External Analysis - Managers do an external analysis so they know, for
instance, what the competition is doing, what pending legislation might affect the
organization, or what the labor supply is like in locations where it operates. In an external
analysis, managers should examine the economic, demographic, political/legal,
sociocultural, technological, and global components to see the trends and changes.
• Step 3: Do an Internal Analysis - This provides important information about an
organization's specific resources and capabilities. After completing an internal analysis,
managers should be able to identify organizational strengths and weaknesses. The
 combined external and internal analyses are called the SWOT analysis, which is an
analysis of the organization'' strengths, weaknesses, opportunities, and threats.
• Step 4: Formulate Strategies - The three main types of strategies managers will
formulate include corporate, competitive, and functional.
• Step 5: Implement Strategies - Once strategies are formulated, they must be
implemented. No matter how effectively an organization has planned its strategies,
performance will suffer if the strategies are not implemented properly.
• Step 6: Evaluate Results - The final step in the strategic management process is
evaluating results.

3. List and discuss the different types of corporate strategies.

The three main types of corporate strategies are growth, stability, and renewal.
• Growth - A growth strategy is when an organization expands the number of markets
served or products offered, either through its current businesses or through new
businesses. Because of its growth strategy, an organization may increase revenues,
number of employees, or market share. Organizations grow by using concentration,
vertical integration, horizontal integration, or diversification.
• Stability - A stability strategy is a corporate strategy in which an organization continues
to do what it is currently doing. Examples of this strategy include continuing to serve the
same clients by offering the same product or service, maintaining market share, and
sustaining the organization's current business operations. The organization does not
grow, but does not fall behind, either.
• Renewal - When an organization is in trouble, something needs to be done. Managers
need to develop strategies, called renewal strategies, that address declining
performance. The two main types of renewal strategies are retrenchment and
turnaround strategies.

4. Discuss the methods by which an organization grows. Give relevant examples.

• Organizations grow by using concentration, vertical integration, horizontal integration, or

diversification. An organization that grows using concentration focuses on its primary line
of business and increases the number of products offered or markets served in this
primary business. For instance, Bose Corporation of Framingham, Massachusetts,
which focuses on developing innovative audio products has become one of the world's
leading manufacturers of speakers for home entertainment, automotive, and pro audio
markets with sales of more than $2 billion by using this strategy.
• A company also might choose to grow by vertical integration, either backward, forward,
or both. In backward vertical integration, the organization becomes its own supplier so it
can control its inputs. For instance, eBay owns an online payment business that helps it
provide more secure transactions and control one of its most critical processes. In
forward vertical integration, the organization becomes its own distributor and is able to
control its outputs. For example, Apple has more than 287 retail stores worldwide to
distribute its product.
• In horizontal integration, a company grows by combining with competitors. For instance,
French cosmetics giant L'Oreal acquired The Body Shop.
• Finally, an organization can grow through diversification, either related or unrelated.
Related diversification happens when a company combines with other companies in
different, but related, industries. For example, American Standard Cos., based in
Piscataway, New Jersey, is in a variety of businesses including bathroom fixtures, air
conditioning and heating units, plumbing parts, and pneumatic brakes for trucks.
Although this mix of businesses seems odd, the company's '"strategic fit'" is the
efficiency-oriented manufacturing techniques developed in its primary business of
 bathroom fixtures, which it has transferred to all its other businesses. Unrelated
diversification is when a company combines with firms in different and unrelated
industries. For instance, the Tata Group of India has businesses in chemicals,
communications and IT, consumer products, energy, engineering, materials, and
services. In this case, there is no strategic fit among the businesses.

5. Discuss the corporate portfolio matrix and the Boston Consulting Group (BCG) matrix.

When an organization's corporate strategy encompasses a number of businesses, managers

can manage this collection, or portfolio, of businesses using a tool called a corporate portfolio
matrix. This matrix provides a framework for understanding diverse businesses and helps
managers establish priorities for allocating resources.
• The first portfolio matrix-the BCG matrix-was developed by the Boston Consulting Group
and introduced the idea that an organization's various businesses could be evaluated
and plotted using a 2 × 2 matrix to identify which ones offered high potential and which
were a drain on organizational resources. The horizontal axis represents market share
(low or high) and the vertical axis indicates anticipated market growth (low or high). A
business unit is evaluated using a SWOT analysis and placed in one of the four
categories: dogs, cash cows, stars, and question marks.
• Dogs - They should be sold off or liquidated as they have low market share in markets
with low growth potential.
• Cash Cows - These have low anticipated growth rate but high market share. Managers
should "milk" them for as much as they can, limit any new investment in them, and use
the large amounts of cash generated to invest in stars and question marks with strong
potential to improve market share.
• Stars - These have a high anticipated growth rate and high market share. Heavy
investment in stars will help take advantage of the market's growth and help maintain
high market share. The stars eventually develop into cash cows as their markets mature
and sales growth slows.
• Question Marks - These have a high anticipated growth rate but low market share. The
hardest decision for managers relates to the question marks. After careful analysis,
some will be sold off and others strategically nurtured into stars.

6. List and discuss the three levels of strategy that a large organization must develop.

• Corporate Strategy - This strategy determines what businesses a company is in or wants

to be in, and what it wants to do with those businesses. It is based on the mission and
goals of the organization and the roles each business unit of the organization will play. It
also helps top managers decide what to do with the businesses: grow them, keep them
the same, or renew them.
• Competitive Strategy - This is a strategy for how an organization will compete in its
businesses. For a small organization in only one line of business or the large
organization that has not diversified into different products or markets, its competitive
strategy describes how it will compete in its primary or main market. For organizations in
multiple businesses, however, each business will have its own competitive strategy that
defines its competitive advantage, the products or services it will offer, and the
customers it wants to reach.
• Functional Strategy - This is the strategy used by an organization's various functional
departments to support the competitive strategy.

7. Discuss the concept of competitive advantage and explain how quality is a competitive
advantage.
 • In order to develop an effective competitive strategy, managers should understand their
competitive advantage, which is what sets their organization apart-that is, the
organization's distinctive edge. The distinctive edge can come from the organization's
core competencies by doing something that others cannot do or by doing it better than
others. For example, Southwest Airlines has a competitive advantage because of its
skills at giving passengers what they want - convenient and inexpensive air passenger
service. Or competitive advantage can come from the company's resources because the
organization has something that its competitors do not have. For instance, Walmart's
state-of-the-art information system allows it to monitor and control inventories and
supplier relations more efficiently than its competitors, which Walmart has turned into a
cost advantage.
• Quality as a competitive advantage: If implemented properly, quality can be a way for an
organization to create a sustainable competitive advantage. That is why many
organizations apply quality management concepts in an attempt to set themselves apart
from competitors. If a business is able to continuously improve the quality and reliability
of its products, it may have a competitive advantage that cannot be taken away.

8. Discuss the five forces model and the various competitive strategies that an
organization may use.

In any industry, five competitive forces dictate the rules of competition. Together, these five
forces determine industry attractiveness and profitability, which managers assess using these
five factors:
• 1. Threat of new entrants. How likely is it that new competitors will come into the
industry?
• 2. Threat of substitutes. How likely is it that other industries' products can be substituted
for our industry's products?
• 3. Bargaining power of buyers. How much bargaining power do buyers (customers)
have?
• 4. Bargaining power of suppliers. How much bargaining power do suppliers have?
• 5. Current rivalry. How intense is the rivalry among current industry competitors? Once
managers have assessed the five forces and done a SWOT analysis, they are ready to
select an appropriate competitive strategy-that is, one that fits the competitive strengths
(resources and capabilities) of the organization and the industry it's in. According to
Porter, no firm can be successful by trying to be all things to all people. He proposed that
managers select a strategy that will give the organization a competitive advantage,
either from having lower costs than all other industry competitors or by being significantly
different from competitors.
• a. Cost Leadership Strategy - When an organization competes on the basis of having
the lowest costs (costs or expenses, not prices) in its industry, it's following a cost
leadership strategy. A low-cost leader is highly efficient. Overhead is kept to a minimum,
and the firm does everything it can to cut costs.
• b. Differentiation Strategy - A company that competes by offering unique products that
are widely valued by customers is following a differentiation strategy. Product differences
might come from exceptionally high quality, extraordinary service, innovative design,
technological capability, or an unusually positive brand image.
• c. Focus Strategy - This involves a cost advantage (cost focus) or a differentiation
advantage (differentiation focus) in a narrow segment or niche. Segments can be based
on product variety, customer type, distribution channel, or geographical location.
9. Discuss how social media can create a competitive advantage.

Successful social media strategies should help people inside and outside the organization
connect and reduce costs or increase revenue possibilities, or both. Firms can gather
information from and about their customers. Employees can monitor trends to anticipate
changes in customer preferences. Social media tools can be used to boost productivity through
the sharing of data and ideas.

10. Discuss how managers can formulate e-business strategies that contribute to the
development of a sustainable competitive advantage in today's environment.

• Managers use e-business strategies to develop a sustainable competitive advantage. A

cost leader can use e-business to reduce costs in a variety of ways. It might use online
bidding and order processing to eliminate the need for sales calls and to decrease sales
force expenses; it could use Web-based inventory control systems that reduce storage
costs; or it might use online testing and evaluation of job applicants.

• A differentiator needs to offer products or services that customers perceive and value as
unique. For instance, a business might use Internet-based knowledge systems to
shorten customer response times, provide rapid online responses to service requests, or
automate purchasing and payment systems so that customers have detailed status
reports and purchasing histories. Finally, because the focuser targets a narrow market
segment with customized products, it might provide chat rooms or discussion boards for
customers to interact with others who have common interests; design niche Websites
that target specific groups with specific interests, or use Web sites to perform
standardized office functions such as payroll or budgeting.

11. Explain the term "first mover" and then list the advantages and disadvantages of
being a first mover in the market.

• An organization that is first to bring a product innovation to the market or to use a new
process innovation is called a first mover. The advantages of being a first mover are:
• Reputation for being innovative and industry leader
• Cost and learning benefits
• Control over scarce resources and keeping competitors from having access to them
• Opportunity to begin building customer relationships and customer loyalty
• The disadvantages of being a first mover are:
• a. Uncertainty over exact direction technology and market will go
• b. Risk of competitors imitating innovations
• c. Financial and strategic risks
• d. High development costs

Chapter 10 Fostering Entrepreneurship

1.Explain the differences between an entrepreneurial venture and a small business.

An entrepreneurial venture is an organization that pursues opportunities, is characterized by
innovative practices, and has growth and profitability as its main goal. A small business is
independently owned, operated, and financed; has fewer than 100 employees; doesn't
necessarily engage in any new or innovative practices, and has relatively little impact on its
industry.
2. Compare and contrast self-employment and entrepreneurship.

Self-employment refers to individuals who work for profit or fees in their own business,
profession, trade, or farm. This arrangement focuses on established professions. Both
entrepreneurs and self-employed individuals understand market needs but each approaches
that need in a different way. A self-employed individual is more likely to use traditional means
and established practices whereas an entrepreneur will use innovation to develop new products
or services or radically change the way the product and/or service is delivered to the customer.
Entrepreneurs may be self-employed but they may also be employees of the company they
started. Self-employed people always work for themselves; they are not paid employees of
another company and rely on their own initiative to ensure income generation. Also, self
employed individuals make all the business decisions about how the work gets done. However,
self-employment does not preclude having one or more employees. Tax requirements and
certain laws require that both entrepreneurs and self-employed individuals create a legally
recognized organization.

3. Discuss three of the seven potential sources of opportunity for entrepreneurial

ventures.
• The unexpected. Ideas can be found in the unexpected. When situations and events are
unanticipated, opportunities can be found.
• The incongruous. When something is inconsistent and incompatible with the way it
appears– when things are not the way they ought to be–opportunities are present.
• The process need. Small pockets of opportunity appear along the way as researchers
and technicians continue to work for the monumental breakthrough.
• Industry and market structures. When changes in technology change the structure of an
industry and market, existing firms can become obsolete if they are not attuned to the
changes or are unwilling to change. Even changes in social values and consumer tastes
can shift the structures of industries and markets. These markets and industries become
open targets for nimble and smart entrepreneurs.
• Demographics. Changes in demographics influence industries and markets by altering
the types and quantities of products and services desired and customers' buying power.
• Changes in perception. When changes in perception take place, the facts do not vary
but their meanings do. Changes in perception lead to changes in what people value,
what they believe in, and what they care about. Changes in these attitudes and values
create potential market opportunities for alert entrepreneurs.
• New knowledge. New knowledge is a significant source of entrepreneurial opportunity.
Entrepreneurs must be able to do something with that knowledge and to protect
important proprietary information from competitors.

4. Identify at least three sources or areas where entrepreneurs can find ideas. What
should entrepreneurs look for as they explore these idea sources?
• Some entrepreneurs find ideas within their own industry; others find them in personal
interests or hobbies, looking at familiar and unfamiliar products and services, and
opportunities in the external environment. About a third of entrepreneurs said their ideas
came from a sudden insight or chance.
• Entrepreneurs should look for limitations of what is currently available; new and different
approaches, advances and breakthroughs, unfilled niches, or trends and changes.

5. What kind of questions should entrepreneurs ask before embarking on a new venture?
 • Questions about personal considerations would include all of the following: Do you have
the capabilities to do what you've selected? Are you ready to be an entrepreneur? Are
you prepared emotionally to deal with the stresses and challenges of being an
entrepreneur? Are you prepared to deal with rejection and failure? Are you ready to work
hard? Have you educated yourself about financing issues? Are you willing and prepared
to do continual financial and other types of analyses?
• Questions about marketplace considerations include the following: Who are the potential
customers for your idea: who, where, how many? What similar or unique product
features does your proposed idea have compared to what's currently on the market?
How and where will potential customers purchase your product? Have you considered
pricing issues and whether the price you'll be able to charge will allow your venture to
survive and prosper? Have you considered how you will need to promote and advertise
your proposed entrepreneurial venture?

6. Identify and describe the six sections of the business plan, including the type of
information that should appear in each section
• The executive summary summarizes key points about the venture, including a brief
mission statement; primary goals; a brief history of the venture; key people involved; the
nature of the business; concise product or service descriptions; brief explanations of the
market niche, competitors, and competitive advantage; proposed strategies, and
selected key financial information. In essence, it is a pared-down version of the entire
plan.
• The analysis of the opportunity section includes the demographics of the target market,
industry trends, and identification and evaluation of competitors.
• The analysis of the context describes broad external changes and trends taking place in
the economic, political-legal, technological, and global environments.
• The description of the business describes how the venture will be organized, launched,
and managed. It includes a thorough description of the mission statement; a description
of the desired organizational culture; marketing plans including overall marketing
strategy, pricing, sales tactics, service-warranty policies, and advertising and promotion
tactics; product development plans; operational plans; human resources plans;
composition of the board of directors; and an overall schedule and timetable of events.
• The financial data and projection section includes financial plans for the first three years,
projected income statements, pro forma cash flow analysis, pro forma balance sheets,
breakeven analysis, and cost controls. It also describes expected costs for major
equipment of capital purchases and available collateral. Notes should explain any
apparent contradictions.
• The final section contains such supporting documentation as charts, graphs, tables,
photos, or other visual tools to illustrate details in other sections.

7. Identify each of the six legal forms of organizations. Discuss the responsibilities of
owners, their liability, and the tax treatment of profits of each form.
• In a sole proprietorship, the single owner has complete control of all management
decisions but is also personally and completely liable for all business debts. This means
the owner's personal assets are at risk. Profits are taxed as the owner's personal
income.
• A general partnership involves at least two people who jointly assume management
duties and financial liability for the business debts. Personal assets are at risk. Profits
are shared according to the written agreement between the partners. Profits are taxed
as personal income to the partners.
• A limited liability partnership must have at least one general partner who manages the
business and assumes unlimited liability for the business's debts. The limited partners
 are passive in that they do not participate in the decision-making or management of the
business but they retain the right to inspect the business and make copies of business
records. Limited partners are entitled to a share of the business's profits as agreed in the
partnership agreement even though their risk is limited to the amount of their investment.
Profits are taxed as personal income to the partners.
• The C corporation is the most complex form of ownership. The C corporation is a legal
entity separate from the owners, giving it the right to make contracts, engage in business
activities, own property, sue and be sued, and pay taxes at the corporate tax rate.
Owners' liability is limited to the amount of their investment.
• The S corporation has the regular characteristics of a C corporation but profits are taxed
as a partnership. Several restrictions are imposed on this type of organization; violation
of any one of them will cause the corporation to lose its S status.
• The limited liability company is a hybrid between a partnership and a corporation. It
offers the liability protection of a corporation, the tax benefits of a partnership, and fewer
restrictions than an S corporation. As with either of the other corporate forms of
ownership, legal counsel is advised to guide the owners in the creation of the operating
agreement, making the LLC expensive to set up.

8. Explain why it is difficult for a young business to recruit and retain employees.

• Entrepreneurs are looking for high-potential people who can perform multiple roles
during the various stages of venture growth. They look for individuals who "buy into" the
venture's entrepreneurial culture–individuals who have a passion for the business.
Unlike their corporate counterparts who often focus on filling a job by matching a person
to the job requirements, entrepreneurs look to fill in critical skills gaps. They're looking
for people who are exceptionally capable and self-motivated, flexible, multi-skilled, and
who can help grow the entrepreneurial venture. While corporate managers tend to focus
on using traditional HRM practices and techniques, entrepreneurs are more concerned
with matching characteristics of the person to the values and culture of the organization;
that is, they focus on matching the person to the organization.
• A unique and important employee retention issue entrepreneurs must deal with is
compensation. Whereas traditional organizations are more likely to view compensation
from the perspective of monetary rewards (base pay, benefits, and incentives), smaller
entrepreneurial firms are more likely to view compensation from a total rewards
perspective. For these firms, compensation encompasses psychological rewards,
learning opportunities, and recognition in addition to monetary rewards.

9. In what ways does empowering employees benefit the entrepreneurial venture? How
can employees be empowered?
When employees are motivated, they feel energized and willing to work hard. Empowerment
can create that motivation. Empowered employees are less likely to leave the organization and
more willing to contribute ideas. The quality of their work improves. Although giving up control is
often difficult for entrepreneurs, they can begin by allowing employees to participate in decisions
then move on to delegation of specific tasks and decisions and finally to full empowerment.
Allowing employees to work on whole projects rather than small pieces of it increases their
feelings of autonomy which increases their job satisfaction. Giving employees discretion over
the way they do their work improves their effectiveness and efficiency through the use of
creativity, imagination, knowledge, and skills.

10. How can downturns be managed successfully?

 • The first step is to recognize that the business is in or heading for trouble. An
entrepreneur should be alert to the warning signs of a business in trouble. These signals
include inadequate or negative cash flow, excess number of employees, unnecessary
and cumbersome administrative procedures, fear of conflict and taking risks, tolerance of
work incompetence, lack of a clear mission or goals, and ineffective or poor
communication within the organization. While entrepreneurs may be able to recognize
crises, they may be less able to recognize a slowly deteriorating situation.
• Next, the entrepreneur should have a plan in place to deal with a business in trouble–
before it happens, much like mapping exits from a burning home before the fire starts.
The plan should focus on providing specific details for controlling the most fundamental
and critical aspects of running the venture–cash flow, accounts receivable, costs, and
debt. Other actions would involve identifying specific strategies for cutting costs and
restructuring the venture.

Chapter 11 Organization Design

1.Define the process of organizing and explain how it helps an organization.

Organizing is defined as arranging and structuring work to accomplish organizational goals. It is
an important process during which managers design an organization's structure. Some of the
purposes of organizing are the following.
• a. It helps in dividing the work to be done into specific jobs and departments.
• b. It helps in assigning tasks and responsibilities associated with individual jobs.
• c. It helps in coordinating diverse organizational tasks.
• d. It helps in clustering jobs into units.
• e. It helps in establishing relationships among individuals, groups, and departments.
• f. It helps in establishing formal lines of authority.
• g. It helps in allocating and deploying organizational resources.

2.Write a short essay on work specialization. How does specialization affect

productivity? How does it affect a firm's cost structure?

Work specialization, also known as division of labor, is the process of dividing work activities
into separate job tasks. Individual employees "specialize" in doing part of an activity rather than
the entire activity in order to increase work output. It makes efficient use of the diverse skills that
workers have. In most organizations, some tasks require highly developed skills; others can be
performed by employees with lower skill levels. If all workers were engaged in all the tasks, all
would need the skills necessary to perform both the most and the least demanding jobs. Thus,
except when performing the most highly skilled or highly sophisticated tasks, employees would
be working below their skill levels. In addition, skilled workers are paid more than unskilled
workers, and, because wages tend to reflect the highest level of skill, all workers would be paid
at highly skilled rates to do easy tasks-an inefficient use of resources. Early proponents of work
specialization believed that it could lead to great increases in productivity. At the beginning of
the twentieth century, that generalization was reasonable. Because specialization was not
widely practiced, its introduction almost always generated higher productivity. But, at some
point, the human diseconomies from division of labor-boredom, fatigue, stress, low productivity,
poor quality, increased absenteeism, and high turnover-exceed the economic advantages.
Today, most managers continue to see work specialization as important because it helps
employees be more efficient. However, managers should remember that, at some point, work
specialization no longer leads to productivity. Thus, they should plan and organize accordingly.

3.What is meant by departmentalization? In a short essay, list and discuss the five
common forms of departmentalization, their advantages and disadvantages.
Departmentalization is the basis by which jobs are grouped together. There are five common
forms:
• Functional - Jobs are grouped by the functions (i.e., marketing, finance, human
resources) performed, leading to increased efficiency because people with similar
specialties, common skills, knowledge, and orientations are put together. It also leads to
an increased coordination within functional areas. On the flip side, it gives a limited view
of the organizational goals.
• Product - Jobs are grouped by product line. This allows the managers to specialize in
particular products and services and helps managers to become experts in their
industry. On the other hand, it leads to duplication of functions and gives a limited view
of organizational goals.
• Geographical - Jobs are grouped on the basis of a geographic region. This helps in more
effective and efficient handling of specific regional issues that arise and in serving the
needs of unique geographic markets. On the flip side, it leads to duplication of functions.
• Process – Jobs are grouped on the basis of product or customer flow. This approach
efficiently manages the flow of work activities. Unfortunately, it can only be used with
certain types of products.
• Customer - Jobs are grouped on the basis of specific and unique customers who have
common needs, allowing specialists to handle customers' needs and problems. But this
also leads to duplication of functions and causes departments to have a limited view of
organizational goals. Most large organizations continue to use combinations of most or
all of these types of departmentalization.
• Currently, a popular departmentalization trend is the increasing use of customer
departmentalization. Because getting and keeping customers is essential for success,
this approach works well because it emphasizes monitoring and responding to changes
in customers' needs.

4.In a short essay, explain authority and responsibility

• Authority was a major concept discussed by the early management writers; they viewed
it as the glue that held an organization together. Authority refers to the rights inherent in
a managerial position to tell people what to do and to expect them to do it. Managers in
the chain of command had authority to do their job of coordinating and overseeing the
work of others. Authority could be delegated downward to lower-level managers, giving
them certain rights while also prescribing certain limits within which to operate. These
writers emphasized that authority was related to one's position within an organization
and had nothing to do with the personal characteristics of an individual manager.
• As organizations get larger and more complex, line managers find that they do not have
the time, expertise, or resources to get their jobs done effectively. In response, they
create staff authority functions to support, assist, advise, and generally reduce some of
their informational burdens. Responsibility - When managers use their authority to
assign work to employees, those employees take on an obligation to perform those
assigned duties. This obligation or expectation to perform is known as responsibility.
Assigning work authority without responsibility and accountability can create
opportunities for abuse. Likewise, no one should be held responsible or accountable for
work tasks over which he or she has no authority to complete those tasks. Unity of
command - The unity of command principle, which is one of Fayol's 14 management
principles, states that a person should report to only one manager. Without unity of
command, conflicting demands from multiple bosses may create problems.

5. Discuss the differences between line and staff authority.

The early management writers also distinguished between two forms of authority: line authority
and staff authority. Line authority entitles a manager to direct the work of an employee. It is the
employer-employee authority relationship that extends from the top of the organization to the
lowest echelon, according to the chain of command. As a link in the chain of command, a
manager with line authority has the right to direct the work of employees and to make certain
decisions without consulting anyone. In the chain of command, every manager is also subject to
the authority or direction of his or her superior. As organizations become larger and more
complex, they create staff authority functions to support, assist, advise, and generally reduce
some of the burden of line managers.

6. Explain why unity of command is less important today than during the time when the
principle was developed.

Information technology has made the concept of unity of command less relevant because
employees can access in a few seconds information that used to be available only to managers.
Employees can communicate with anyone else in the organization without going through the
chain of command. Many employees, especially in organizations where work revolves around
projects, find themselves reporting to more than one boss.

7. Explain the traditional view of span of control.

How many employees can a manager efficiently and effectively manage? That is what span of
control is all about.
• The traditional view was that managers could not-and should not-directly supervise more
than five or six subordinates. Determining the span of control is important because to a
large degree, it determines the number of levels and managers in an organization-an
important consideration in how efficient an organization will be. All other things being
equal, the wider or larger the span, the more efficient an organization is.

8. Explain the contemporary view of span of control.

The contemporary view of span of control recognizes that there is no magic number of people
for a manager to supervise. Many factors influence the number of employees that a manager
can efficiently and effectively manage. These factors include the skills and abilities of the
manager and the employees, and the characteristics of the work being done. For instance,
managers with well-trained and experienced employees can function well with a wider span.
Other contingency variables that determine the appropriate span include similarity and
complexity of employee tasks, the physical proximity of subordinates, the degree to which
standardized procedures are in place, the sophistication of the organization's information
system, the strength of the organization's culture, and the preferred style of the manager. The
trend in recent years has been toward larger spans of control, which is consistent with
managers' efforts to speed up decision making, increase flexibility, get closer to customers,
empower employees, and reduce costs. Managers are beginning to recognize that they can
handle a wider span when employees know their jobs well and when those employees
understand organizational processes.

9.Explain centralization and decentralization. How do these relate to employee

empowerment?

Centralization is the degree to which decision making takes place at upper levels of the
organization. If top managers make key decisions with little input from below, then the
organization is more centralized. On the other hand, the more that lower-level employees
provide input or actually make decisions, the more decentralization there is. Centralization
Decentralization is not an either-or concept. The decision is relative, not absolute-that is, an
organization is never completely centralized or decentralized. The goal is the optimum and
efficient use of employees. Traditional organizations were structured in a pyramid, with power
and authority concentrated near the top of the organization. But organizations today have
become more complex and responsive to dynamic changes in their environments. As such,
many managers believe that decisions need to be made by those individuals closest to the
problems, regardless of their organizational level. In fact, the trend over the past several
decades-at least in U.S. and Canadian organizations-has been a movement toward more
decentralization in organizations. Today, managers often choose the amount of centralization or
decentralization that will allow them to best implement their decisions and achieve
organizational goals. What works in one organization, however, won't necessarily work in
another, so managers must determine the appropriate amount of decentralization for each
organization and work units within it. As organizations have become more flexible and
responsive to environmental trends, there has been a distinct shift toward decentralized
decision making. This trend, also known as employee empowerment, gives employees more
authority (power) to make decisions. In large companies especially, lower-level managers are
"closer to the action" and typically have more detailed knowledge about problems and how best
to solve them than do top managers.

10. List and discuss the four contingency variables that should be considered while
designing an appropriate organizational structure.

• Strategy and structure - An organization's structure should facilitate the achievement of

goals. Since goals are influenced by the organization's strategies, it is logical that
strategy and structure should be closely linked. The flexibility and free-flowing
information of the organic structure works well when an organization is pursuing
meaningful and unique innovations. The mechanistic organization with its efficiency,
stability, and tight controls works best for companies wanting to tightly control costs.
• Size and structure - There is considerable evidence that an organization's size
significantly affects its structure. Large organizations-typically considered to be those
with 2,000 employees tend to have more specialization, departmentalization,
centralization, and rules and regulations than do small organizations. However, once an
organization grows past a certain size, size has less influence on structure.
• Technology and structure - Every organization uses some form of technology to convert
its inputs into outputs. The processes or methods that transform an organization's inputs
into outputs differ by their degree of routineness. In general, organizations adapt their
structures to their technology depending on how routine their technology is for
transforming inputs into outputs. In general, the more routine the technology, the more
mechanistic the structure can be, and organizations with more non-routine technology
are more likely to have organic structures.
• Environmental uncertainty and structure - Some organizations face stable and simple
environments with little uncertainty; others face dynamic and complex environments with
a lot of uncertainty. Managers try to minimize environmental uncertainty by adjusting the
organization's structure. In stable and simple environments, mechanistic designs can be
more effective. On the other hand, the greater the uncertainty, the more an organization
needs the flexibility of an organic design.

11. Discuss the three traditional organizational designs and highlight the strengths and
weaknesses of each.

The three traditional organizational designs are: the simple structure, functional structure, and
divisional structure. These structures tend to be more mechanistic in nature.
• Simple structure displays low departmentalization, wide spans of control, authority
centralized in a single person, and little formalization. These structures are fast, flexible,
and inexpensive to maintain. However, these structures are not appropriate when the
 organization starts growing and the reliance on one person is risky. As employees are
added, the structure tends to become more specialized and formalized. Rules and
regulations are introduced, work becomes specialized, departments are created, levels
of management are added, and the organization becomes increasingly bureaucratic. At
this point managers might choose a functional or divisional structure.
• A functional structure groups similar or related occupational specialties together. This
structure enjoys cost-saving advantages from specialization. However, the constant
pursuit of functional goals can cause managers to lose sight of what is best for the
overall organization. Moreover, the functional specialists become insulated and have
little understanding of what other units are doing.
• The divisional structure is made up of separate business units or divisions with limited
autonomy, with a division manager who has authority over his or her unit and is
responsible for performance. In divisional structures the parent corporation typically acts
as an external overseer to coordinate and control the various divisions, and often
provides support services such as financial and legal. The major strength of this
structure is that it focuses on results by holding division managers responsible for what
happens to their products and services. But the duplication of activities and resources
encountered in such structures increases the cost and reduces the efficiency of the
organization.

12. Compare and contrast the team and project structures.

• A team structure is one in which the entire organization is made up of work teams that
do the organization's work. Employee empowerment is crucial because no line of
managerial authority flows from top to bottom. Employee teams design and do work in
the way they think best, but teams are held responsible for all work performance results
in their respective areas. In large organizations, the team structure complements what is
typically a functional or divisional structure and allows the organization to have the
efficiency of a bureaucracy and the flexibility that teams provide. The type of work
performed by teams remains fairly constant for the life of the team, as in a mass
production setting.
• In a project structure, employees continually work on projects. When the current project
is finished, project members move on to other teams and other projects because there
are no formal departments for them to return to. Employees join project teams because
they bring needed skills and abilities to that project. Project structures tend to be more
flexible organizational designs, without the departmentalization or rigid organizational
hierarchy that can slow down making decisions or taking action. In this structure,
managers serve as facilitators, mentors, and coaches. They eliminate or minimize
organizational obstacles and ensure that teams have the resources they need to
effectively and efficiently complete their work.

Chapter 12 Organizing Around Teams

1. Describe the differences between formal and informal groups, giving examples of
each.

• Answer: Formal groups are work groups defined by the organization's structure and
have designated work assignments and specific tasks directed at accomplishing
organizational goals. Four different types are command and task groups, and cross-
functional and self-managed teams. Informal groups are social groups that occur
 naturally in the workplace and tend to form around friendships and common interests.
For example, employees from different departments who regularly each lunch together
are an informal group.

2. List and discuss the five stages of group development.

Research shows that groups pass through a standard sequence of five stages. These five
stages are forming, storming, norming, performing, and adjourning.
• The first stage, forming, has two aspects. First, people join the group either because of a
work assignment, in the case of a formal group, or for some other benefit desired (such
as status, self esteem, affiliation, power, or security), in the case of an informal group.
Once the group's membership is in place, the second part of the forming stage begins:
the task of defining the group's purpose, structure, and leadership. This phase is
characterized by a great deal of uncertainty. Members are "testing the waters" to
determine what types of behavior are acceptable. This stage is complete when members
begin to think of themselves as part of a group.
• The storming stage is one of intragroup conflict. There is conflict over who will control
the group. When this stage is complete, there will be a relatively clear hierarchy of
leadership within the group and agreement on the group's direction.
• The third stage is one in which close relationships develop and the group demonstrates
cohesiveness. There's now a strong sense of group identity and camaraderie. This
norming stage is complete when the group structure solidifies and the group has
assimilated a common set of expectations of what defines correct member behavior.
• The fourth stage is performing. The group structure at this point is fully functional and
accepted. Group energy has moved from getting to know and understand each other to
performing the task at hand. Performing is the last stage in the development of
permanent work groups. Temporary groups-such as committees, task forces, and similar
groups-that have a limited task to perform have a fifth stage, adjourning.
• In the adjourning stage, the group prepares to disband. High levels of task performance
are no longer the group's top priority. Instead, attention is directed at wrapping up
activities. Responses of group members vary at this stage. Some are upbeat, basking in
the group's accomplishments. Others may be saddened by the loss of camaraderie and
friendships gained during the work group's life.

3. Describe various aspects of group structure.

• a. Roles refer to behavior patterns expected of someone occupying a given position in a
social unit. In a work group, these roles tend to be oriented toward either task
accomplishment or toward maintaining group member satisfaction.
• b. Norms are standards or expectations that are accepted and shared by a group's
members and that dictate work output levels, absenteeism, promptness, and the amount
of socializing allowed on the job. Common organizational norms focus on effort and
performance, dress, and loyalty.
• c. Because individuals want to be accepted by groups to which they belong, they're
susceptible to conformity pressures. As group members we often want to be considered
one of the group and to avoid being visibly different. So we conform. When an
individual's opinion of objective data differs significantly from that of others in the group,
the group often exerts extensive pressure on the individual to align his or her opinion to
conform to others' opinions, a phenomenon known as groupthink.
• d. Status systems are an important factor in understanding behavior. They're a
significant motivator and have behavioral consequences when individuals see a disparity
between what they perceive their status to be and what others perceive it to be.
• e. If the goal of the group is to find facts, a larger group of a dozen or more members
should be more effective. Smaller groups of seven or fewer are better at doing
 something productive with those facts. One important finding related to group size is
social loafing, the tendency for an individual to expend less effort when working
collectively than when working individually.
• f. Group cohesiveness, the degree to which members are attracted to a group and share
the group's goals, is important because it has been found to be related to a group's
productivity. g. Group processes concern such things as communication, decision
making, conflict management, etc. These processes influence group performance and
satisfaction.

4. Identify the advantages and disadvantages of group decision making.

• Answer:
Advantages
• a. Generate more complete information and knowledge: A group brings a diversity of
experience and perspectives to the decision process that an individual cannot.
• b. More diverse alternatives: Because groups have a greater amount and diversity of
information, they can identify more diverse alternatives than an individual.
• c. Increased acceptance of a solution: Group members are reluctant to fight or
undermine a decision they have helped develop.
• d. Increased legitimacy: Decisions made by groups may be perceived as being more
legitimate than decisions made unilaterally by one person.

Disadvantages
• a. Time consuming: Groups almost always take more time to reach a solution than it
would take an individual.
• b. Minority domination: The inequality of group members creates the opportunity for one
or more members to dominate others. A dominant and vocal minority frequently can
have an excessive influence on the final decision.
• c. Pressures to conform: Groupthink undermines critical thinking in the group and
eventually harms the quality of the final decision.
• d. Ambiguous responsibility: Group members share responsibility, but the responsibility
of any single member is diluted.

5. List and describe the four most common types of teams likely to be found in today's
organizations.

• Answer:
• a. Problem-solving teams-these teams are teams from the same department or
functional area who are involved in efforts to improve work activities or to solve specific
problems. In problemsolving teams, members share ideas or offer suggestions on how
work processes and methods can be improved. However, these teams are rarely given
the authority to unilaterally implement any of their suggested actions.
• b. Self-managed teams-these teams are formal groups of employees who operate
without a manager and are responsible for a complete work process or segment. The
self-managed team is responsible for getting the work done and for managing
themselves. This usually includes planning and scheduling of work, assigning tasks to
members, collective control over the pace of work, making operating decisions, and
taking action on problems.
• c. Cross-functional teams-these teams are a hybrid grouping of individuals who are
experts in various specialties and who work together on various tasks.
 • d. Virtual teams-these are teams that use computer technology to link physically
dispersed members in order to achieve a common goal. In a virtual team, members
collaborate using communication links such as wide area networks, videoconferencing,
fax, e-mail, or even Web sites where the team can hold online conferences. Virtual
teams can do all the things that other teams can–share information, make decisions, and
complete tasks; however, they miss the normal give-and-take of face-to-face
discussions. Because of this omission, virtual teams tend to be more task oriented,
especially if the team members have never personally met.

6. Discuss the major issues associated with group structure in global teams.

• Answer: Some of the structural areas where we see differences in managing global
teams include conformity, status, social loafing, and cohesiveness. Research suggests
that Asch's findings are culture-bound. Despite this, however, groupthink tends to be
less of a problem in global teams because members are less likely to feel pressured to
conform to the ideas, conclusions, and decisions of the group. The importance of status
varies between cultures. Managers should be sure to understand who and what holds
status when interacting with people from a culture different from their own. Social loafing
has a Western bias and is consistent with individualistic cultures, which are dominated
by self-interest. It's not consistent with collectivistic societies, in which individuals are
motivated by in-group goals. Cohesiveness is another group structural element where
managers may face special challenges. In global teams, cohesiveness is often more
difficult to achieve because of higher levels of mistrust, miscommunication, and stress.

7. How can a manager of a global team enhance the team's efficiency and effectiveness?
• Answer: Because communication skills are vital, managers should focus on developing
those skills. Managers must consider cultural differences when deciding what type of
global team to use. Evidence indicates self-managed teams do not fare well in
collectivist cultures. Managers must be sensitive to the unique differences of each
member of the global team, and team members must be sensitive to each other.

Chapter 13 Human Resource Management

1. Discuss three reasons managing human resources effectively is important.

• Answer:
• a. Studies have concluded effective human resource management can be a significant
source of competitive advantage. People-oriented HR gives an organization an edge in
creating superior shareholder value. Human capital is the key source of sustained
economic value.
• b. HRM is an important part of organizational strategies. The HR function is no longer
considered only an administrative or support function; it enables the business strategy.
• c. The way the organization treats its people has been found to significantly impact
organizational performance. Improving work practices could increase market share by as
much as 30 percent. High-performance work practices increase an organization's ability
to efficiently adapt to changing and challenging markets.
2. Explain high-performance work practices and list a few examples of such practices.

• Answer: Work practices that lead to both high individual and high organizational
performance are known as high-performance work practices. These practices involve
improving the knowledge, skills, and abilities of employees; increase their motivation;
reduce loafing on the job; and enhance the retention of quality employees. High-
performance work practices include:
• a. Self-managed teams
• b. Decentralized decision making
• c. Training programs to develop knowledge, skills, and abilities
• d. Flexible job assignments
• e. Open communication
• f. Performance-based compensation
• g. Staffing based on person– job and person– organization fit
• h. Extensive employee involvement
• i. Giving employees more control over decision making
• j. Increasing employee access to information

3. Explain why human resource management (HRM) is important to organizational

success.
• Answer: HRM is an important task that involves having the right number of the right
people in the right place at the right time. A major HRM challenge for managers is
ensuring that their company has a high-quality workforce. Getting and keeping
competent and talented employees is critical to the success of every organization.
• HRM is important for three main reasons.
• First, various studies have concluded that an organization's human resources can be a
significant source of competitive advantage. The Human Capital Index, a comprehensive
study of over 2,000 global firms has concluded that people-oriented HR gives an
organization an edge by creating superior shareholder value.
• Second, HRM is an important part of organizational strategies. In order to achieve
competitive success through people, managers must change the way they think about
their employees and also the way they view the work relationship. Managers must stop
treating people as costs to be minimized or avoided. Rather, they should treat them as
partners.
• Finally, it has been found that the way organizations treat their people significantly
impacts the organizational performance. For instance, one study reported that
significantly improving an organization's HRM practices could increase its market value
by as much as 30 percent

4. Discuss the two purposes of human resource planning.

• Answer: Human resource (HR) planning is the process by which managers ensure that
they have the right number and kinds of capable people in the right places and at the
right times. This allows the organization to avoid sudden people shortages and
surpluses. The process of HR planning entails two steps: (1) assessing current human
resources, and (2) meeting future HR needs.
 • Current Assessment - Managers begin the HR planning by inventorying current
employees. This inventory usually includes information on employees such as name,
education, training, prior employment, languages spoken, special capabilities, and
specialized skills. Job analysis is an important part of current assessment. Job analysis
is an assessment that defines a job and the behaviors necessary to perform it.
Information for a job analysis is gathered by directly observing individuals on the job,
interviewing employees individually or in a group, having employees complete a
questionnaire or record daily activities in a diary, or having experts identify a job's
specific characteristics.
• Using the information from job analysis, managers develop or revise job descriptions
and job specifications. A job description is a written statement describing a job, job
content, environment, and conditions of employment. A job specification states the
minimum qualifications that a person must possess to successfully perform a given job.
It identifies the knowledge, skills, and attitudes needed to do the job effectively. Both the
job description and job specification are important documents when managers begin
recruiting and selecting. Meeting future HR needs - Future HR needs are determined by
the organization's mission, goals, and strategies. Demand for employees also results
from demand for the organization's products or services.
• Assessing current capabilities and future needs allow managers to estimate the areas in
which the organization will be understaffed or overstaffed.

5. What is recruitment? What are the commonly used recruitment sources?

• Answer: Recruitment is the process of locating, identifying, and attracting capable

applicants. Commonly used recruitment sources are:
• a. The Internet - This reaches a large number of people and can get immediate
feedback. But, it also generates many unqualified candidates.
• b. Employee referrals - The knowledge about the organization is provided by the current
employees. This can generate strong candidates because a good referral reflects on the
recommender. But, this may not increase the diversity and mix of employees in the
organization.
• c. The company Web site - This has a wide distribution. It can be targeted to specific
groups But on the flip side, it also generates many unqualified candidates.
• d. College recruiting - This allows access to a large centralized body of candidates. But,
this source can be only used for filling entry-level positions in the organization.
• e. Professional recruiting organizations - They have a good knowledge of industry
challenges and requirements. But, on the negative side, they have very little commitment
to specific organizations.

6. Define decruitment and discuss the various decruitment options.

• Answer: Decruitment is the process by which an organization reduces its workforce. The
various decruitment options available to an organization are:
• a. Firing - This refers to permanent involuntary termination of employees.
• b. Layoffs - These refer to temporary involuntary termination of employees. Layoffs may
last only for a few days or extend up to years.
• c. Attrition - This is achieved when an organization does not fill the openings created by
voluntary resignations or normal retirements of its employees.
 • d. Transfers - This happens when employees are moved either laterally or downward.
This usually does not reduce costs but, it can reduce intra-organizational supply-demand
imbalances.
• e. Reduced workweeks - This is achieved by having employees work fewer hours per
week, share jobs, or perform their jobs on a part-time basis.
• f. Early retirements - Here, the organization provides incentives to older and more senior
employees for retiring before their normal retirement date.
• g. Job sharing - This is achieved by having employees share one full-time position.

7. In a short essay, define selection and list some of the selection tools used by managers.
• Answer: Selection is the process of screening job applicants to determine who is best
qualified for the job in question. It involves predicting which applicants will be successful
if hired. A manager may use any of the following selection tools:
• a. Application Forms - These are almost universally used. These are most useful for
gathering information and can help predict job performance. But, it is difficult to create an
application form that can give all the required information.
• b. Written Tests - The manager has to see to it that the tests are job related. The tests
include intelligence, aptitude, ability, personality, and interest tests. These tests are
popular. They are also a relatively good predictor for supervisory positions.
• c. Performance-Simulation Tests - These kind of tests use actual job behaviors. Work
sampling is a type of performance-simulation test that tests the applicants on tasks
associated with the job. Work sampling is appropriate for selecting people for routine or
standardized work. Assessment centers are performance-simulation tests that simulate
jobs. Assessment centers are appropriate for evaluating managerial potential.
• d. Interviews - Like application forms, these are also universally used. The interviewer
must know what can and cannot be asked in the interview.
• e. Background Investigations - These are used for verifying application data and
reference checks.
• f. Physical Examinations - These are best suited to select candidates for jobs that have
certain physical requirements. These are mostly used for insurance purposes.

8. What is orientation? Discuss the two types of orientation.

• Answer: The process of introducing a person to his new job is known as orientation.
There are two types of orientation: work unit orientation and organization orientation.
Work unit orientation familiarizes the employee with the goals of the work unit, clarifies
how his or her job contributes to the unit's goals, and includes an introduction to his or
her new coworkers. Organization orientation informs the new employee about the
company's goals, history, philosophy, procedures, and rules.

9. Discuss the various traditional and technology-based training methods that managers
use to improve employee skill sets.
• Answer: The various traditional training methods are:
• a. On-the-job training - Employees learn how to do tasks simply by performing them,
typically after an initial introduction to the task.
• b. Job rotation - Employees work at different jobs in a particular area and thus, gain
exposure on a variety of tasks.
 • c. Mentoring and coaching - Employees work with an experienced worker who provides
information, support, and encouragement.
• d. Experiential exercises - Employees participate in role playing, simulations, or other
face-toface types of training.
• e. Workbooks/manuals - Employees refer to training workbooks and manuals for
information.
• f. Classroom lectures - Employees attend lectures designed to convey specific
information.
•

The various technology-based training methods are:

• a. CD-ROM/DVD/videotapes/audiotapes/podcasts - Employees listen to or watch
selected media that convey information or demonstrate certain techniques.
• b. Videoconferencing/teleconferencing/satellite TV - Employees listen to or participate as
information is conveyed or techniques demonstrated.
• c. E-learning - This is an Internet-based learning where employees participate in
multimedia simulations or other interactive modules.

10. List four of the seven major performance appraisal methods.

• Answer: The seven major performance appraisal methods are:

• a. Written essay - This is a technique in which an evaluator writes out a description of an
employee's strengths and weaknesses, past performance, and potential. He also makes
suggestions for improvement.
• b. Critical incidents - This focuses the evaluator's attention on critical or key behaviors
that separate effective from ineffective job performance.
• c. Graphic rating scale - This method lists a set of performance factors. The evaluator
goes down the list and rates each employee on each factor using an incremental scale.
• d. BARS - Behaviorally Anchored Rating Scales (BARS) combine major elements from
the critical incident and graphic rating scale approaches. The appraiser rates the
employee according to items along a numerical scale. The items here are examples of
actual job behaviors.
• e. Multiperson comparison - This approach compares one person's performance with
that of others.
• f. MBO - Management by objectives (MBO) is also an effective performance appraisal
method. Here, employees are evaluated on specific goals that were established jointly
by them and the manager.
• g. 360-degree appraisal - This method utilizes feedback from supervisors, employees,
and coworkers of the employee.

11. What can managers do to manage downsizing?

• Answer: Downsizing or layoffs is the planned elimination of jobs in an organization.

When an organization has too many employees-which can happen when it's faced with
an economic recession, declining market share, too aggressive growth, or poorly
managed operations-one option for improving profits is to eliminate some of those
excess workers. In order to manage downsizing, managers should:
• a. Communicate openly and honestly - Managers must inform those being let go as soon
as possible. They should also tell the surviving employees the new goals and
expectations and also explain the impact of layoffs to them.
 • b. Follow all the laws regulating severance pay or benefits.
• c. Provide support/counseling for surviving employees.
• d. Reassign roles according to individuals' talents and backgrounds.
• e. Focus on boosting morale - Managers should offer individualized reassurance,
continue to communicate, especially one-on-one, and remain involved and available.
• f. Have a plan for the empty office spaces/cubicles so it is not depressing for surviving
employees.

12. Explain why communication is important to managers and organizations. What four
functions does it serve?

• Answer: Communication serves four major functions: control, motivation, emotional

expression, and information. Communication acts to control employee behavior in
several ways. Organizations have authority hierarchies and formal guidelines that
employees are expected to follow. For instance, when employees are required to
communicate any job-related grievance first to their immediate manager, to follow their
job description, or to comply with company policies, communication is being used to
control. But informal communication also controls behavior. When work groups tease a
member who's working too hard or producing too much (making the rest of the group
look bad), they're informally controlling the member's behavior. Communication
encourages motivation by clarifying to employees what is to be done, how well they're
doing, and what can be done to improve performance if it's not up to par. As employees
set specific goals, work toward those goals, and receive feedback on progress toward
goals, communication is required. For many employees, their work group is a primary
source of social interaction. The communication that takes place within the group is a
fundamental mechanism by which members share frustrations and feelings of
satisfaction. Communication, therefore, provides a release for emotional expression of
feelings and for fulfillment of social needs. Finally, individuals and groups need
information to get things done in organizations. Communication provides that
information. None of these four functions is more important than the others. For groups
to work effectively, they need to maintain some form of control over members, motivate
members to perform, provide a means for emotional expression, and make decisions.
You can assume that almost every communication interaction that takes place in a group
or organization is fulfilling one or more of these four functions.

13. 76) List the seven elements of the communication process and explain the process of
interpersonal communication. Answer: The seven elements of the communication process are:
(1) the communication source, (2) the message, (3) encoding, (4) the channel, (5) decoding, (6)
the receiver, and (7) feedback. Before communication can take place, a purpose, expressed as
a message to be conveyed, must exist. It passes between a source (the sender) and a receiver.
The message is converted to a symbolic form (called encoding) and passed by way of some
medium (channel) to the receiver, who retranslates the sender's message (called decoding).
The result is the transfer of meaning from one person to another. The entire process is
susceptible to noise-disturbances that interfere with the transmission, receipt, or feedback of a
message. Typical examples of noise include illegible print, phone static, inattention by the
receiver, or background sounds of machinery or coworkers. Anything that interferes with
understanding can be noise, and noise can create distortion at any point in the communication
process.
14. Discuss the two best-known types of nonverbal communication. Include a specific
example of each type of nonverbal communication to support your answer.

• Answer: An important part of interpersonal communication is nonverbal communication-

that is, communication transmitted without words. Body language refers to gestures,
facial expressions, and other body movements that convey meaning. A person frowning
"says" something different from one who's smiling. Hand motions, facial expressions,
and other gestures can communicate emotions or temperaments such as aggression,
fear, shyness, arrogance, joy, and anger. Verbal intonation refers to the emphasis
someone gives to words or phrases that conveys meaning. To illustrate how intonations
can change the meaning of a message, consider the student who asks the instructor a
question. The instructor replies, "What do you mean by that?" The student's reaction will
vary, depending on the tone of the instructor's response. A soft, smooth vocal tone
conveys interest and creates a different meaning from one that is abrasive and puts a
strong emphasis on saying the last word.

15. List and discuss the barriers to effective communication that managers face. Include a
specific example of each barrier to support your answer.

• Answer:
• a. COGNITIVE-Information overload occurs when the amount of information a person is
required to work with exceeds that individual's processing capacity. When this happens
people tend to select out, ignore, pass over, or forget information. Or they may put off
further processing until the overload situation is over. Filtering is the deliberate
manipulation of information to make it appear more favorable to the receiver. For
example, when a person tells his or her manager what the manager wants to hear, that
individual is filtering information.
• b. EMOTIONS-How a receiver feels when a message is received influences how he or
she interprets it. Extreme emotions are most likely to hinder effective communication. In
such instances, people often disregard rational and objective thinking processes and
substitute emotional judgments. When people feel threatened, they tend to react in ways
that reduce their ability to achieve mutual understanding. They may verbally attack
others, make sarcastic remarks, be overly judgmental, and question others' motives
• c. SOCIOCULTURAL-Words mean different things to different people. Age, education,
and cultural background are three of the more obvious variables that influence the
language a person uses and the definitions he or she gives to words. People may speak
the same language, but use of that language is far from uniform. Senders tend to
assume that the words and phrases they use mean the same to the receiver as they do
to them. This is incorrect.
• d. NATIONAL CULTURE-Interpersonal communication isn't conducted in the same way
around the world. In the United States, communication patterns tend to be individually
oriented and clearly spelled out. U.S. managers rely heavily on memoranda,
announcements, position papers, and other formal forms of communication to state their
positions on issues. In collectivist countries, such as Japan, there's more interaction for
its own sake and a more informal manner of interpersonal contact.

16. How are town hall meetings used by organizations to communicate with employees?
 • Answer: Town hall meetings are increasingly popular informal public meetings where top
executives relay information, discuss issues, or bring employees together to celebrate
accomplishments. They are a form of downward communication, but also facilitate the
multilateral sharing of information and solicitation of input.

17. Explain formal and informal communication within an organization.

• Answer: Communication within an organization is described as formal or informal.
Formal communication refers to communication that takes place within prescribed
organizational work arrangements.
• For example, when a manager asks an employee to complete a task, that's formal
communication. Another example of formal communication occurs when an employee
communicates information or a problem to his or her manager.
• Informal communication is organizational communication not defined by the
organization's structural hierarchy. When employees talk with each other in the lunch
room, as they pass in hallways, or as they're working out at the company wellness
facility, they engage in informal communication. Employees form friendships and
communicate with each other. The informal communication system fulfills two purposes
in organizations: (1) it permits employees to satisfy their need for social interaction, and
(2) it can improve an organization's performance by creating alternative, and frequently
faster and more efficient, channels of communication.

18. Describe and explain the different directions of communication flow within an
organization.

• Answer: Downward communication flows from a manager to employees. It's used to

inform, direct, coordinate, and evaluate employees. Managers use downward
communication when they assign goals to their employees, provide employees with job
descriptions, inform them of organizational policies and procedures, point out problems
that need attention, or evaluate their performance.
• Upward communication flows from employees to managers who rely on their employees
for information. Some examples of upward communication include performance reports
prepared by employees, suggestion boxes, employee attitude surveys, grievance
procedures, manageremployee discussions, and informal group sessions in which
employees have the opportunity to discuss problems with their manager or
representatives of top-level management. Communication that takes place among
employees on the same organizational level is called lateral communication. In today's
dynamic environment, horizontal communications are frequently needed to save time
and facilitate coordination. Cross-functional teams rely heavily on this form of
communication interaction. However, conflicts can arise if employees don't keep their
managers informed about decisions they've made or actions they've taken. Diagonal
communication crosses both work areas and organizational levels. Because of its
efficiency and speed, diagonal communication can be beneficial. Increased e-mail use
facilitates diagonal communication. In many organizations, any employee can
communicate by e-mail with any other employee, regardless of organizational work area
or level, even with upper-level managers. However, diagonal communication also has
the potential to create problems if employees don't keep their immediate managers
informed.

19. Briefly describe three common communication networks, or patterns of communication,

that emerge in organizations. Is any one network preferable to others? If so, why? If not, what
factors decide which network is best for a particular situation? Answer: The vertical and
horizontal flows of organizational communication can be combined into a variety of patterns
called communication networks. a. Chain network-Communication flows according to the formal
chain of command, both downward and upward. If accuracy is important, the chain network
works well. b. Wheel network-Communication flows between a clearly identifiable and strong
leader and others in a work group or team. The leader serves as a hub through which
communication passes. If having a strong, identifiable leader is important to the organization or
work unit, the wheel network is the best communication network. Accuracy is also very high with
the wheel network. c. All-channel network-Communication flows freely among all members of a
work team. If high member satisfaction is a concern, the all-channel network is preferable.

20. What is the role of the informal communication network in organizations? How can
managers ensure that this network is beneficial to the organization? Answer: The informal
organizational communication network in organizations is known as the grapevine. The
grapevine is active in almost every organization. It is an important source of information for
employees, many of whom hear about important matters first through rumors or gossip on the
grapevine. Acting as both a filter and a feedback mechanism, it pinpoints those bewildering
issues that employees consider important. More importantly, from a managerial point of view, it
is possible to analyze what is happening on the grapevine-what information is being passed,
how information seems to flow, and what individuals seem to be key information conduits. By
staying aware of the grapevine's flow and patterns, managers can identify issues that concern
employees, and, in turn, use the grapevine to disseminate important information. Because the
grapevine can't be eliminated, managers should "manage" it as an important information
network. Rumors that flow along the grapevine also can never be eliminated entirely. However,
managers can minimize the negative consequences of rumors by communicating openly, fully,
and honestly with employees, particularly in situations where employees may not like proposed
or actual managerial decisions.