Management Principles, Two Papers each 2 and half min pages of full text MLA

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The Manager: Omnipotent or Symbolic? Two views

Omnipotent* View of Management - the view that managers are directly responsible for an organization’s success or failure.

Symbolic view of Management - the view that much of an organization’s success or failure is due to external forces outside managers’ control.

* almighty or infinite in power,; having very great or unlimited authority or power.

How much difference does a manager make in how an organization performs? The dominant view in management theory and society in general is that managers are

directly responsible for an organization’s success or failure. We call this perspective the omnipotent view of management. In contrast, others have argued that much

of an organization’s success or failure is due to external forces outside managers’ control. This perspective is called the symbolic view of management.

Exhibit 3-1 Constraints on Managerial Discretion

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In reality, managers are neither all-powerful nor helpless. But their decisions and actions are constrained.

External constraints come from the organization’s environment and internal constraints come from the organization’s culture.

Environmental Uncertainty and Complexity Dimensions

Environmental Uncertainty - the degree of change and complexity in an organization’s environment.

Environmental Complexity - the number of components in an organization’s environment and the extent of the organization’s knowledge about those components.

Another constraint posed by external environments is the amount of uncertainty found in that environment, which can affect organizational outcomes. 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, it’s a dynamic environment. If change is minimal, it’s a stable one.

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

Exhibit 3-2 Components of the External Environment

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The External Environment

The External Environment: Those factors and forces outside the organization that affect it’s performance. The external environment includes several different components.

Economic – Encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages.

Demographic – Concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income and family composition.

Political/Legal – Concerned with federal, state and local laws, and global laws.

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the External Environment (cont.)

Technological – Concerned with scientific or industrial innovations.

The Sociocultural – Concerned with societal and cultural factors such as values, attitudes, trends, traditions and lifestyles, beliefs, tastes, and patterns of behavior.

Global – Encompasses issues associated with globalization and a world economy.

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Organizational Stakeholders: Stakeholders - any constituencies in the organization’s environment that are affected by an organization’s decisions and actions. (3.4)

Exhibit 2-4 identifies some of an organization’s most common stakeholders. Note that these stakeholders include internal and external groups. Why? Because both can

affect what an organization does and how it operates.

Dimensions of Organizational Culture: Organizational Culture is the shared values, principles, traditions, and ways of doing things that influence the way organizational members act

Research suggests seven dimensions that seem to capture the essence of an organization’s culture. These dimensions (shown in Exhibit 2-5) range from low to high,

meaning it’s not very typical of the culture (low) or is very typical of the culture (high). Describing an organization using these seven dimensions gives a composite picture

of the organization’s culture. In many organizations, one cultural dimension often is emphasized more than the others and essentially shapes the organization’s personality

and the way organizational members work.

Organizational culture

Organizational Culture —The shared values, principles, traditions, and ways of doing things that influence the way organizational members act and that distinguish the organization from other organizations.

Cultural Values and practices evolve over time.

Organizational Culture is:

Perception — based on employee experience within the organization.

Descriptive — how members describe it.

Shared — employees share perception and experiences.

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Describing an organization using these seven dimensions gives a composite picture of the organization’s culture. In many organizations, one cultural dimension often is emphasized more than the others and essentially shapes the organization’s personality and the way the organization works.

Organizational Culture Comes From

Organization founder

Vision and mission: The original source of the culture; comes from the founder

Past practices: Doing the right thing (effectiveness) and things right (efficiency)

Top management behavior

Socialization Process - The process that helps employees adapt to the organization’s culture by learning the way the organization does things

The original source of the culture usually reflects the vision of the founders. Once the culture is in place, however, certain organizational practices help maintain it. For instance, during the employee selection process, managers typically judge job candidates not only on the job requirements, but also on how well they might fit into the organization. The actions of top managers also have a major impact on the organization’s culture. Through what they say and how they behave, top managers establish norms that filter down through the organization and can have a positive effect on employees’ behaviors. Finally, organizations help employees adapt to the culture through socialization, a process that helps new employees learn the organization’s way of doing things. For instance, new employees at Starbucks stores go through 24 hours of intensive training that helps turn them into brewing consultants (baristas).

Exhibit 3-8 Establishing and Maintaining Culture

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Establishing and Maintaining Culture

Philosophy of the Organization Founder - The original source of the culture; comes from the founder

Selection Criteria – Selecting employees at all levels for with views simpatico with the founder

Top Management - Those responsible for management/leadership functions for socialization.

Socialization - The process that helps employees adapt to the organization’s culture by learning the way the organization does things

Employees Learn Culture From

Stories - Narratives of significant events or people, e.g. organization founders, rule breaking, reaction to past mistakes etc.

Rituals – Repetitive sequences of activities that express and reinforce the important values and goals of the organization

Material Artifacts and Symbols - Convey the kinds of behavior that are expected, e.g. risk taking, participation, authority, etc.

Language - Acts as a common denominator that bonds members

Employees “learn” an organization’s culture in a number of ways. The most common are stories, rituals, material symbols, and language. Organizational “stories” typically contain a narrative of significant events or people, including such things as the organization’s founders, rule breaking, reactions to past mistakes, and so forth. Managers at Southwest Airlines tell stories celebrating employees who perform heroically for customers.

Corporate rituals are repetitive sequences of activities that express and reinforce the important values and goals of the organization. One of the best-known corporate rituals is Mary Kay Cosmetics’ annual awards ceremony for its sales representatives. The company spends more than $50 million annually on rewards and prize incentives

Creating an Innovative Culture

What does an innovative culture look like?

Challenge and involvement

Freedom

Trust and openness

Idea time

Playfulness/humor

Conflict resolution

Debates

Risk-taking

In a recent survey of senior executives, over half said that the most important

driver of innovation for companies was a supportive corporate culture. What does an innovative culture look like? According to Swedish researcher Goran Ekvall, it would be characterized by the following:

Challenge and involvement—Are employees involved in, motivated by, and committed to long-term goals and success of the organization?

Freedom—Can employees independently define their work, exercise discretion, and take initiative in their day-to-day activities?

Trust and openness—Are employees supportive and respectful to each other?

Idea time—Do individuals have time to elaborate on new ideas before taking action?

Playfulness/humor—Is the workplace spontaneous and fun?

Conflict resolution—Do individuals make decisions and resolve issues based on

the good of the organization versus personal interest?

Debates—Are employees allowed to express opinions and put forth ideas for

consideration and review?

Risk-taking—Do managers tolerate uncertainty and ambiguity, and are

employees rewarded for taking risks

Spirituality and Organizational Culture

Workplace Spirituality - a culture/company where organizational values promote a sense of purpose through meaningful work that takes place in the context of community

Characteristics of a Spiritual Organization

Strong sense of purpose

Focus on individual development

Trust and openness

Employee empowerment

Toleration of employees’ expression

What is workplace spirituality? It’s 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

Five cultural characteristics of spiritual organizations

Research indicates that Spiritual Organizations have five characteristics:

Strong sense of purpose, culture built around meaningful purpose.

Focus on individual development, recognize worth and value of individuals.

Trust and openness, characterized by mutual trust, honesty, and openness.

Employee empowerment, managers trust employees to make good decisions.

Tolerance of employee expression, employees free to express emotions.

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Managing in a Global Environment

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What’s Your Global Attitude?(4.1)

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Parochialism – viewing the world solely through your own perspectives, leading to an inability to recognize differences between people.

Ethnocentric Attitude – the parochialistic belief that the best work approaches and practices are those of the home country…avoid if to succeed.

Polycentric attitude – the view that the managers in the host country know the best work approaches and practices for running their business.

Geocentric Attitude – a world-oriented view that focuses on using the best approaches and people from around the globe…the best attitude for success

Monolingualism is one sign that a nation suffers from parochialism—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. They ignore others’ values and customs and rigidly apply an attitude of “ours is better than theirs” to foreign cultures.

This type of narrow, restricted attitude is one approach that managers might take, but it isn’t the only one. In fact, there are three possible global attitudes. Let’s look at each more closely.

First, an ethnocentric attitude is the belief that the best work approaches and practices are those of the home country (the country in which the company’s parochialistic headquarters are located). Managers with an ethnocentric attitude believe that people in foreign countries don’t have the needed skills, expertise, knowledge, or experience to make the best business decisions as people in the home country do.

Types of International Organizations

Multinational Corporation (MNC) - a broad term that refers to any and all types of international companies that maintain operations in multiple countries.

Multi-domestic Corporation - an MNC that decentralizes management, tailors marketing strategies, and other decisions to the local country’s unique characteristics

Global Company - an MNC that centralizes management and other decisions in the home country.

Transnational or Borderless Organization - an MNC in which artificial geographical barriers are eliminated.

Today, few companies don’t do business internationally. However, there’s not a generally accepted approach to describe the different types of international companies; different authors call them different things. We use the terms multinational, multidomestic, global, and transnational.

A multinational corporation (MNC) is any type of international company that maintains operations in multiple countries. One type of MNC is a multidomestic corporation, which decentralizes management and other decisions to the local country. This type of globalization reflects the polycentric attitude. A multi-domestic corporation doesn’t attempt to replicate its domestic successes by managing foreign operations from its home country. Instead, local employees typically are hired to manage the business and marketing strategies

are tailored to that country’s unique characteristics

How Organizations Go Global(4.2)

Global Sourcing - purchasing materials or labor from around the world wherever it is cheapest.

Exporting - making products domestically and selling them abroad & Importing - acquiring products made abroad and selling them domestically.

Licensing - an organization gives another organization the right to make or sell its products using its technology or product specifications.

Franchising - an organization gives another organization the right to use its name and operating methods.

Strategic Alliance - a partnership between an organization and one or more foreign company partner(s) in which both share resources and knowledge in developing new products or building production facilities & - Joint Venture - a specific type/form of strategic alliance in which the partners agree to form a separate, independent organization/firm for some business purpose.

Foreign Subsidiary - directly investing in a foreign country by setting up a separate and independent production facility or office. (greatest risk of all)

When organizations do go international, they often use different approaches. Managers who want to get into a global market with minimal investment may start with global sourcing (also called global outsourcing), which is purchasing materials or labor from around the world wherever it is cheapest. The goal: take advantage of lower costs in order to be more competitive.

The next step in going international may involve exporting the organization’s products to other countries—that is, making products domestically and selling them

abroad.

Exhibit 4-3 How Organizations Go Global

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Exhibit 4-3 shows the different approaches to doing business internationally. Although global sourcing may be the first step to going international for many companies, they often continue to use this approach because of the competitive advantages it offers. Each successive stage of going international beyond global sourcing, however, requires more investment and thus entails more risk for the organization.

Managing in a Global Environment

The Political/Legal Environment

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U.S. managers are accustomed to a stable legal and political system

Managers must stay informed of the specific laws in countries where they do business

Some countries have risky political climates

U.S. managers are accustomed to a stable legal and political system. Changes tend to be slow, and legal and political procedures are well established. Elections are held at regular intervals, and even when the political party in power changes after an election, it’s unlikely that anything too radical will happen. The stability of laws allows for accurate predictions. However, this certainly isn’t true for all countries.

Managers must stay informed of the specific laws in countries where they do business. For instance, the president of Zimbabwe is pushing ahead with plans to force foreign companies to sell majority stakes to locals.

Also, some countries have risky political climates. For instance, BP could have warned Exxon about the challenges of doing business in Russia. During its long involvement in the country, BP has “had so many police run-ins that its stock price often nudges up or down in response to raids or the arrests of employees.”

Keep in mind that a country’s political/legal environment doesn’t have to be risky or unstable to be a concern to managers. Just the fact that it differs from that of the home country is important. Managers must recognize these differences if they hope to understand the constraints and opportunities that exist.

The Economic Environment

Free Market Economy – an economic system in which resources are primarily owned and controlled by the private sector.

Planned Economy – an economic system in which economic decisions are planned by a central government.

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A global manager must be aware of economic issues when doing business in other countries. First, it’s important to understand a country’s type of economic system. The two major types are a free market economy and a planned economy. A free market economy is one in which resources are primarily owned and controlled by the private sector.

A planned economy is one in which economic decisions are planned by a central government. Actually, no economy is purely a free market or planned. For instance, the United States and United Kingdom are toward the free market end of the spectrum but do have governmental intervention and controls. The economies of Vietnam and North Korea are more planned. China is also a more planned economy, but until recently had been moving toward being a more free market economy.

Tax policies can be a major economic worry. Some countries’ tax laws are more restrictive than those in an MNC’s home country. Others are more lenient.

About the only certainty is that they differ from country to country. Managers need accurate information on tax rules in countries in which they operate to minimize their business’s overall tax obligation.

The Cultural Environment

National Culture – the values and attitudes shared by individuals from a specific country that shape their behavior and beliefs about what is important.

Hofstede’s framework for assessing cultures – one of the most widely referenced approaches to helping managers better understand differences between national cultures.

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As we know from Chapter 3, organizations have different cultures. Countries have cultures, too. National culture includes the values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important. Legal, political, and economic differences among countries are fairly obvious. Getting information about cultural differences isn’t quite that easy! The primary reason? It’s difficult for natives to explain their country’s unique cultural characteristics to someone else.

Global Management in Today’s World

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The Challenge of Openness

The increased threat of terrorism by a truly global terror network

Economic interdependence of trading countries

intense underlying and fundamental cultural differences—differences that encompass traditions, history, religious beliefs, and deep-seated values.

Globalization also creates challenges because of the openness that’s necessary for it to work. One challenge is the increased threat of terrorism by a truly global terror network. Globalization is meant to open up trade and to break down the geographical barriers separating countries. Yet, opening up means just that—being open to the bad as well as the good.

Another challenge from openness is the economic interdependence of trading countries. As we saw over the last couple of years, the faltering of one country’s economy can have a domino effect on other countries with which it does business. So far, however, the world economy has proved to be quite resilient.

The far more serious challenge for managers in the openness required by globalization comes from intense underlying and fundamental cultural differences—differences that encompass traditions, history, religious beliefs, and deep-seated values. Managing in such an environment can be extremely complicated.

Exhibit 3-6(4.4) A Global Mind-Set: Attributes that allow a leader to be effective in cross-cultural environments