Principles of Business Management Assignment 1

Chapter 1

THE MANAGER’S JOB [PowerPoint Slide 1]

The purpose of Chapter 1 is to provide an overview of the nature of managerial work. It could be argued

that the entire book has a similar purpose. It is therefore necessary to touch upon topics in Chapter 1 that

are covered again in later chapters. The chapter provides information on key managerial topics such as (a)

the meaning of the term manager, (b) an overview of the process of management, (c) a discussion of

managerial roles, and (d) a summary of the major developments in the evolution of management thought.

Learning Objectives

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____________

1. Explain what the term manager means and identify different types of manager.

2. Describe the process of management, including the functions of management.

3. Describe the various managerial roles.

4. Identify the basic managerial skills and understand how they can be developed.

5. Identify the major developments in the evolution of management thought.

Chapter Outline and Lecture Notes

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____________

Managers play a vital role in society—they pull together resources to get important things accomplished.

I. WHO IS A MANAGER? [PowerPoint Slide 2]

A manager is a person responsible for the work performance of group members. He or she has the

formal authority to commit organizational resources. Management is the process of using

organizational resources to achieve organizational objectives through the functions of planning,

organizing and staffing, leading, and controlling.

A. Levels of Management [PowerPoint Slide 3] Managerial jobs are typically divided into three levels:

1. Top-Level Managers. Top-level managers, or executives, are empowered to

make major decisions affecting the present and future

of the firm. C-level manager

is a recent term to describe top-level managers because they usually have chief in

their title. About one percent of jobs in organizations

are truly executive positions.

A few of the recent c-level positions often found in large

organizations are (a) chief

of staff, (b) chief commercial officer, and (c) chief

privacy officer.

2. Middle-Level Managers. Middle-level managers are the layer between top- and first-level

managers. Much of their work involves the coordination of work, and the dissemination of

information. Middle-management jobs have declined in numbers as many organizations have

downsized but they still play a major role in operating an organization.

3. First-Level Managers. Managers who supervise operatives are

referred to as first-

level managers or supervisors. Supervisory jobs have been upgraded in many organizations, as a result of reducing the number of layers of management. The current emphasis on productivity and cost control

has also upgraded the supervisory role. The vast majority of students taking this course have at one time

reported to a first-level manager (supervisor).

II. TYPES OF MANAGERS [PowerPoint Slide 4]

Managerial jobs can be divided into functional and general managers, administrators, entrepreneurs and

small-business owners, and team leaders.

A. Functional and General Managers Functional managers supervise the work of employees engaged in specialized activities, such as accounting and quality control. General managers are responsible for the work of several different groups

performing a variety of functions. Company presidents and division heads are general managers. Key

tasks of general managers include shaping the work environment and crafting a strategic vision.

B. Administrators

An administrator is a manager who works in a public or nonprofit organization (including educational

institutions) rather than in a business firm. The fact that individual contributors in nonprofit

organizations are sometimes referred to as administrators often causes confusion.

C. Entrepreneurs and Small-Business Owners

Entrepreneurs are people who begin a new business based on an innovative idea for a product or service. A small-business owner operates a small business that is not necessarily entrepreneurial

(innovative). A major characteristic of both entrepreneurs and small-business owners is their passion for

their work.

Recent research has identified three roles, or activities, within entrepreneurial work that arouse passion:

opportunity recognition, venture creation, and venture growth.

D. Team Leaders

A team leader coordinates the work of a small group of people, while acting as a facilitator and catalyst.

Team leaders are found at many organizational levels, and are also referred to as project managers,

process managers, and task-force leaders.

All of the managerial jobs describe above vary considerably on the demands placed on the job holder, such

as some CEO jobs more demanding and stressful than others.

III. THE PROCESS OF MANAGEMENT [PowerPoint Slide 5]

Managerial work can be regarded as a process, a series of actions that brings about a goal. To achieve that

objective, the manager uses resources and carries out the four managerial functions.

A. Resources Used by Managers [PowerPoint Slide 6] Managers use four types of resources:

1. Human Resources. Human resources are the employees needed to get the job done.

2. Financial Resources. Any money used by the organization is classified as a

financial resource.

3. Physical Resources. Physical resources are the firm’s tangible goods and real estate,

including raw materials, office space, production facilities, office equipment, and vehicles.

4. Information Resources. Data used to accomplish the job are classified as

information resources.

As originally designated by Peter Drucker, managers are knowledge workers and

therefore rely heavily on information resources. Managers must convert data into information which is

not an easy task.

B. The Four Managerial Functions [PowerPoint Slide 7]

The classical, or standard, functions of management remain a useful way of

understanding management.

1. Planning. Planning involves setting goals and figuring out ways of reaching them.

Planning is the central function of management.

2. Organizing and Staffing. Organizing is the process of making sure the necessary

human and physical resources are available to carry out a plan and achieve

organizational goals. Staffing involves ensuring there are the necessary human

resources to achieve organizational goals. Hiring is a typical staffing activity. (Organizing and

staff is now often referred to as talent management.)

3. Leading. Leading is the managerial function of influencing others to achieve

organizational objectives. Leadership is the interpersonal aspect of management.

According to Henry Mintzberg, effective leaders develop the sense of community or

shared purpose that is essential for cooperative effort in all organizations. Leaders

also execute.

4. Controlling. Controlling is the managerial function of ensuring that performance

conforms to plans. Controlling involves comparing actual performance to a

predetermined standard. Computerized controls are widely used.

Managerial level influences how much time managers spend on the four managerial functions. Executives

spend more time on strategic (high-level and long-range) planning than do middle- or first-level

managers. First-level managers spend the most time in face-to-face leadership of employees.

IV. THE SEVENTEEN MANAGERIAL ROLES [PowerPoint Slides 8, 9]

A role is an expected set of activities or behaviors stemming from one’s job. Roles are another important

way of understanding managerial work.

A. Planning

The two planning roles are strategic (long-range and high-level) planner and operational (day-by-day)

planner.

B. Organizing and Staffing

�� Five roles fit the organizing function: organizer, liaison, staffing

coordinator, resource

allocator, and task delegator. Talent management is included in the organizing and

staffing roles.

C. Leading

Eight roles are part of the leadership function: motivator and coach, figurehead, spokesperson,

negotiator, team builder, team player, technical problem solver, and entrepreneur.

D. Controlling

The monitoring role is virtually identical to controlling. The disturbance handler role can also be

classified as a controlling role because it brings disruptions back in line.

E. Managerial Roles Currently Emphasized [PowerPoint Slide 10]

Managerial work has shifted substantially away from the controller and director role to

that of coach, facilitator, and supporter. Many managers today work as partners with

team members to jointly achieve results.

F. The Influence of Management Level on Managerial Roles [PowerPoint Slide 11]

A manager’s level of responsibility influences which roles he or she is likely to engage in most frequently.

For example, the most important roles for top-level managers are liaison, spokesperson, figurehead, and

strategic planner.

G. Management as a Practice [PowerPoint Slides 12, 13]

Management is more of a practice, than a science or profession. Managers sometimes

make use of systematic knowledge, yet they also rely on the intuition that stems from experience.

Management is not a profession in the sense of being a licensed occupation such as law, medicine, or

electrician. Another point of view is that to gain public trust, management needs to become a profession

that follows an ethical code.

Management could become more professionalized with the use of evidence-based management, the

systematic use of the best available evidence to improve managerial practice. To use this approach,

managers would rely on both scientific evidence as well as local business evidence.

V. THE FIVE MANAGERIAL SKILLS [PowerPoint Slides 14, 15]

To be effective, managers need to possess technical, interpersonal, conceptual, diagnostic,

and political skills.

A. Technical Skill

Technical skill involves an understanding of and proficiency in a specific activity

that

involves methods, processes, procedures, or techniques. Budget preparation is an example of a technical

skill.

B. Interpersonal Skill Interpersonal (or human relations) skill is the manager’s ability to work effectively as a

team member and to build cooperative effort in the unit. Communication skills are an

example of an important interpersonal skill. An important subset of interpersonal skills

for managers is multiculturalism, or the ability to work effectively and conduct business

with people from different cultures. Many managers at all levels ultimately fail because

their interpersonal skills are not good enough for the demands of the job.

C. Conceptual Skill

Conceptual skill is the ability to see the organization as a total entity (the “big picture”). Strategic planning

requires conceptual skill. The need for conceptual skill continues to grow.

D. Diagnostic Skill

Diagnostic skill involves investigating a problem and then choosing a course of action to solve it.

E. Political Skill

Political skill is the ability to acquire the power necessary to reach objectives. Managers

high in political skill possess a keens sense of astuteness and understanding of people.

Negotiating and forming alliances are examples of political skills. Political skill should

be regarded as a supplement to job competence and other basic skills.

VI. DEVELOPMENT OF MANAGERIAL SKILLS [PowerPoint Slides 16, 17] Experience and education—including formal training—are both important for

the

development of management skills. You can learn managerial concepts from a book, or

lecture, and then apply them using the general learning model: (1) conceptual

information and behavioral guidelines, (2) conceptual information demonstrated by

examples, (3) skill-development exercises, (4) feedback on skill utilization, or

performance, from others, and (5) frequent practice of what you have learned, including

making adjustments from feedback.

We emphasize again that experience is important for the development of management skills. Yet

experience is likely to be more valuable if it is enhanced with education.

VII. THE EVOLUTION OF MANAGEMENT THOUGHT

Management as a practice has an almost unlimited history. As a formal study,

management began in the 1700s as part of the Industrial Revolution.

A. The Classical Approach to Management [PowerPoint Slide 18]

The classical approach to management encompasses scientific

management and

administrative management. The focus of scientific management was on the

application of scientific methods to increase individual workers’ productivity.

Administrative management was concerned primarily with how organizations should be managed and structured. One of the key contributions of the classical

school has been to study management from the framework of planning, organizing,

leading, and controlling. Alfred D. Chandler J., the Harvard University business historian, was a key

figure in promoting the importance of the classical approach to management. His famous thesis is that a

firm’s structure is determined or chosen by its strategy; other wise the firm becomes inefficient.

B. The Behavioral Approach [PowerPoint Slide 19]

The behavioral approach to management emphasizes improving management

through the psychological makeup of people. The theme of the behavioral (or human

resources) approach is to focus on understanding people. Three direct cornerstones of

the human resources approach are the Hawthorne studies, Theory X and Theory Y,

and Maslow’s need hierarchy.

1. The Hawthorne Studies. Workers in the Hawthorne experiments reacted

positively because management cared about them. The Hawthorne effect is the tendency of

people to behave differently when they receive attention because they respond to the demands of the

situation.

2. Theory X and Theory Y of Douglas McGregor [PowerPoint Slide 20]

Theory X is a set of traditional assumptions about people. Managers who

hold

these assumptions are pessimistic about workers’ capabilities. They believe that

workers dislike work, seek to avoid responsibility, are not ambitious, and must be

supervised closely. Theory Y is an alternative and optimistic set of assumptions.

3. Maslow’s need Hierarchy [PowerPoint Slide 21]

Maslow suggested that

humans are motivated by efforts to satisfy a hierarchy

of needs, ranging from basic

needs to those for self-actualization, or reaching

one’s potential. The need hierarchy prompted managers to think about ways of satisfying a wide

range of worker needs to keep them motivated.

C. Quantitative Approaches to Management [PowerPoint Slide 22]

The quantitative approach to management is a group of methods to

managerial

decision making that is based on the scientific method. Frequently used quantitative tools and techniques

of the quantitative approach include statistics, linear programming, network analysis, decision trees, and

computer simulations. Frederick Taylor’s work provided the foundation for the quantitative approach to

management. However, operations research stemming from World War II is the true beginning of

quantitative approaches to management.

D. The Systems Perspective [PowerPoint Slide 23]

The systems perspective is a way of viewing problems more than a specific approach to management.

It is based on the concept that an organization is a system, or an entity of interrelated parts. If you adjust

one part of the system, other parts will be affected automatically. From a systems viewpoint, the

organization also interacts with the outside world, transforming inputs (such as money and material) into

outputs (such as products and services). Two other systems concepts are important. Entropy is the

tendency of a system to run down and die if it does not receive fresh inputs from its environment.

Synergy means that the whole is greater than the sum of its parts.

E. The Contingency Approach [PowerPoint Slide 24]

The contingency approach of management emphasizes that there

is no one best

way to manage people or work. A method that leads to high productivity or morale in one situation may

not achieve the same results in another. The contingency approach is derived from the study of leadership

and organization structures. Common sense also contributes heavily to the contingency approach.

F. The Information Technology Era and Beyond [PowerPoint Slide 25]

The information technology era began in the 1950s with data processing. By the late

1980s, the impact of information technology and the Internet began to influence how

managers manage work and people. Two economists report that the impact of the Internet on business is

similar to the impact of electricity at the beginning of the 20th century.

The history of management is being written each year in the sense that the practice of management

continues to evolve. An example of a leading-edge approach to management is evidence-based

management whereby managers translate principles based on best evidence into management practices

(as described above).

Chapter 2

INTERNATIONAL MANAGEMENT AND CULTURAL DIVERSITY [PP Slide 1]

The purpose of Chapter 2 is to help managerial workers better understand two related prominent forces in

their environment: the internationalization of management and cultural diversity. Understanding should

lead to improved ability to deal with the challenges presented by these pervasive forces. To achieve its

purpose, the chapter describes multinational corporations, along with cultural diversity, both in the

international and domestic realms.

Learning Objectives

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________

1. Describe the importance of multinational corporations in international business.

2. Recognize the importance of sensitivity to cultural differences in international enterprise.

3. Identify major challenges facing the global managerial worker.

4. Explain various methods of entry into world markets.

5. Pinpoint success factors in the global marketplace, and several positive and negative

aspects of globalization.

6. Describe the scope of diversity and the competitive advantage of a culturally diverse

workforce.

7. Summarize organizational practices to encourage diversity.

Chapter Outline and Lecture Notes

______________________________________________________________________________

I. INTERNATIONAL MANAGEMENT [PowerPoint Slide 2]

The internationalization (or global integration) of business and management exerts a major

influence on the manager’s job. The impact of global integration is dramatized by the fact

that many complex manufactured products are built with components from several countries.

The internationalization of management is part of the entire world becoming

more global (the world is flat). One challenge is to work well with organizations and people from

other countries.

A. The Multinational Corporation [PowerPoint Slide 3] The heart of international trade is the multinational corporation (MNC), a firm with

units in two or more countries in addition to its own. An MNC has headquarters in one

country and subsidiaries in others. The transnational corporation is a special type of

MNC that operates worldwide without having one national headquarter. Operations in

other countries are not regarded as “foreign operations.” Globalization has resulted in

many large companies merging with each other, leaving a small number of

competitors.

B. Trade Agreements Among Countries [PowerPoint Slide 4]

Four agreements have facilitated international trade.

1. The North American Free Trade Agreement (NAFTA)

NAFTA establishes liberal trading relationships among the United States, Canada, and Mexico. Many

companies have benefited from NAFTA, yet some labor unions believe the agreement has resulted in

some job losses. By the tenth anniversary of NAFTA, at least one-half million U. S. workers had been

displaced.

2. The Central American Free Trade Agreement (CAFTA) [PowerPoint Slide 5]

The United States-Dominican Republic-Central American Free Trade Agreement

(CAFTA) grants six countries, so far, relatively open access to American markets

for their goods, while at the same time facilitating U. S. entry into their markets. The ultimate hope of

CAFTA is a 34-nation Free Trade Agreement covering all countries in the Western Hemisphere except

Cuba.

3. The European Union (EU) [PowerPoint Slide 6]

The European Union is a 27-nation alliance that virtually turns member countries into a single

marketplace for ideas, goods, services, and investment strategies. The EU trades with member

nations, the United States and Canada, and other countries throughout the world.

The Schengen Agreement ended passport control and customs checks at many borders have been

eliminated creating a single space where EU citizens can travel, work, and invest. Eleven countries use

the euro as their currency.

4. The World Trade Organization (WTO) [PowerPoint Slide 7]

The World Trade Organization liberalizes trade among many nations throughout the world and attempts

to lower trade barriers. According to the most favored nationclause, each member country is supposed to

grant all other member countries the most favorable treatment it grants any country with respect to

imports and exports. An important function of the WTO is to settle disputes between two countries. The

World Trade Organization now has about 153 member countries, accounting for about 95 percent of world

trade.

A concern about facilitating global trade is that trade liberalization leads to continuous job cuts and

downward pressure on wages in industrialized nations. The counterargument is that free trade, in the

long run, creates more job opportunities by facilitating exports.

C. Global Outsourcing as Part of International Trade [PowerPoint Slide 8] Trade agreements facilitate sending work overseas. Outsourcing refers to the practice

of hiring an individual or another company outside the organization to perform work.

Global outsourcing is frequently referred to as offshoring. The number of industries immune to outsourcing

is shrinking. Many building components are outsourced, as so are aspects of financial and legal work. A major

force behind global outsourcing is the pressure discount retailers such as Wal-Mart, Target, and Dollar

General exert on manufacturers to keep their prices low.

1. The Case for Global Outsourcing[PowerPoint Slide 9]

Sending jobs overseas can create new demand for lower-priced goods, ultimately leading to new jobs in

the United State, with consumer electronics being an example. As in the argument for free trade, slashing

production costs through global outsourcing can help a company become more competitive.

Outsourcing can also lead to reciprocity from the overseas country receiving the work For example, an

overseas company that receives work from the U.S. might hire American workers for its U.S. operations.

2. The Case against Global Outsourcing [PowerPoint Slide 10]

Many Americans believe that offshoring is responsible for the permanent loss of

jobs in the United States as well as slow job creation. Yet, more job loss appears to

stem from increased productivity than from offshoring. Another concern is that

American employers can offer low wages to domestic employees because their

work could be sent overseas. Outsourcing call centers to foreign countries can result

in language barriers that make it difficult to resolve customer problems.. Another

negative factor with outsourcing is that its true cost savings may be elusive.

C. Sensitivity to Cultural Differences [PowerPoint Slide 11]

The guiding principle for people involved in international enterprise is

sensitivity to

cultural differences. Cultural sensitivity is the awareness of local and national customs and their

importance in effective interpersonal relationships. Being culturally sensitive helps a person become a

multicultural worker who enjoys learning about other cultures. Candidates for foreign assignments

generally receive training in the language and customs of the country they will work in. Cultural

differences, such as with respect to negotiating the need for change, can also be important to learn.

A study showed that personality factors as well as cultural understanding contribute to expatriate

effectiveness. Expatriates in Hong Kong, Japan, and Korea who function well are emotionally stable,

extraverted, and open to new experiences. Cross-cultural competencies such as being able to focus on

tasks and people are also important for expatriate success.

II. CHALLENGES FACING THE GLOBAL MANAGERIAL WORKER [PP Slide 12]

Global managerial workers face many challenges, as described next.

A. Developing Global Leadership Skills [PowerPoint Slides, 12, 14]

Managerial workers occupying leadership positions need to develop global leadership

skills, the ability to deal effectively with people from other cultures. Having such skills

is a combination of cultural sensitivity and leadership skills. Welcoming other cultures is helpful. Global

leadership skills also include understanding how well management principles from one’s own culture

transfer to another. For example, most Western companies are willing to switch suppliers to cut costs,

whereas Japanese executives frequently have long-term or personal relationships with key people at their

suppliers.

B. Currency Fluctuations [PowerPoint Slide 12]

The international manager may have to respond to changes in the value of currencies in the home country

and elsewhere. If the currency of a country suddenly gains in value, it may be difficult to export products

made in that country. However, when a country’s currency weakens versus the currency of other

countries, it is easier to export goods because the good are significantly less expensive and competitive in

other countries. A weak U.S. dollar helps close the trade gap.

C. Balance of Trade Problems [PowerPoint Slide 12]

A concern at the broadest level to an international manager is a country's balance

of

trade, the difference between exports and imports in both goods and services. Many people believe that it is to a country’s advantage to export more than it imports. Yet in 2009, the total international deficit in

goods and services for the United States was

$375 billion. For goods, the deficit was $485 billion; for services, the surplus was $110 billion. A concern

about the U. S. trade deficit is that it contributes to the loss of domestic manufacturing jobs. Yet the free

traders point out that the U.S. consumer can purchase low-price imports.

D. Human Rights Violations, Corruption, and Violence [PowerPoint Slide 12]

Trading in countries with human rights violations can create problems. Many

customers protest, yet doing business in country that violates human rights might help

raise the standard of living of its citizens. The subject of human rights violations is

complicated and touchy. Amnesty International contends that the U.S. violates many

human rights of its own including the use of foreign and domestic sweatshops, and the

death penalty.

Another ethical and legal problem the international manager faces is dealing with

corruption by foreign officials. A string of officials may demand payments to facilitate

allowing foreigners to conduct business or speed an approval of an operating license. A

life-threatening risk for U. S. multinational companies is for its employees to be

trapped in violent acts in the overseas country, including terrorist attacks.

E. Culture Shock [PowerPoint Slide 13]

Another problem for the international manager is culture shock, a group of physical

and psychological symptoms that can develop when a person is abruptly placed in a

foreign culture. Culture shock contributes to the relatively high rate of expatriates who

return home early because they are dissatisfied with their assignments. Another

potential contributor to culture shock is that the expatriate may work in one time zone

while contacts in company headquarters work in a time zone with a time difference of

six or more hours.

F. Differences in Negotiating Style [PowerPoint Slide 13]

International workers may also have to use a different negotiation style. American

negotiators, for example, often find that they must be more patient, use a team

approach, and avoid being too informal. One study showed that differences in cultural

values and norms between U. S. and Japanese negotiators influence negotiating tactics,

and the outcome of negotiation. When people negotiate with others form their own

culture, they are more likely to achieve mutual gains.

G. Piracy of Intellectual Property Rights and Other Merchandise [PowerPoint Slide 13]

A major challenge facing the international business manager is that considerable

amounts of revenue may be lost because firms in other countries might illegally copy

his or her product. Among those products widely reproduced illegally are fine watches,

perfume, DVDs, CDs, high-status, brand-name clothing, and software. The global cost of software piracy

is estimated at about $40 billion annually. In recent years, the Chinese government has invested

resources in protecting intellectual property rights which includes forbidding software piracy.

H. Coping with Dangerous and Defective Products [PowerPoint Slide 13]

Yet another potential risk for the international worker is coping with dangerous and or

defective imported products. The international manager may be involved in such activities as assisting

with a product recall, and dealing with angry customers, government agencies and attorneys. A more

widespread problem of coping with dangerous and defective products is the unintentional important of

infected bugs and plants.

III. METHODS OF ENTRY INTO WORLD MARKETS [PowerPoint Slide 15] Six methods of entering the international market are as follows:

1. Exporting.

2. Licensing and franchising.

3. Local assembly and packaging. Components rather than

finished products are

shipped to company-owned facilities in other countries.

4. Strategic alliance and joint ventures. (In a joint venture, the companies in alliance

produce, warehouse, transport, and market products. A joint venture is therefore a

special type of strategic alliance.)

5. Direct foreign investment.

6. Global startup. The global startup is a small firm that comes into existence by

serving an international market. By so doing the firm circumvents the stages described above. Selling

through the Internet facilitates a global start-up.

Exporting offers the least protection for the company doing business in

another

country. Direct foreign investment is the best way to protect the

company’s

competitive advantage.

IV. SUCCESS FACTORS IN THE GLOBAL MARKETPLACE [PowerPoint Slide 16]

Following the right strategies and tactics can improve chances for success in the global

marketplace.

A. Think Globally, Act Locally [PowerPoint Slide 16]

Local representatives behave as though their primary mission is to serve the local customer. A major

aspect of thinking globally, yet acting locally is for the multinational corporation to compete successfully

against well-established, well-managed domestic (local) companies. .

B. Recruit and Select Talented Nationals [PowerPoint Slide 16]

A major success factor in building a business in another country is to hire talented

citizens of that country to fill important positions. After the host-company nationals

are hired, they must be taught the culture of the parent company. Staffing in other

countries may require a modification of U. S. ideas about good candidates, such as

Chinese candidates being more subdued than Americans. Home country employees

also have to be of high caliber to compete well in the international arena.

C. Hire or Develop Multicultural Workers [PowerPoint Slide 16]

Multiculturalism enhances acceptance of your firm by overseas personnel and

customers. Speaking the native language helps. To help workers and their family members become

multicultural, many companies offer cultural training. An important insight for workers is that although

the United States and Northern Europe are task oriented, most other cultures are relationship oriented.

D. Research and Assess Potential Markets [PowerPoint Slide 16]

Acquire valid information about the firm’s target markets. Trade statistics usually

provide a good starting point. Wal-Mart carefully researches which overseas

markets—and consumer reaction—would fit its retailing model. Nevertheless, the

company has done poorly in a few foreign markets.

E. The Advantages and Disadvantages of Globalization [PowerPoint Slide 17]

Globalization may be inevitable and desirable, yet for many managers, business

owners, and individual workers, the internationalization of the workplace has created more problems

than opportunities. Exhibit 2-4 outlines the major pros and cons of globalization. For example,

productivity grows when a company exercises its comparative advantage. However, millions of Americans

have lost jobs due to imports or production shifts abroad.

V. THE SCOPE AND COMPETITIVE ADVANTAGE OF MANAGING DIVERSITY

The globalization of business requires that the managerial worker deal effectively

with

people from other countries, and different cultural groups within one's own company and country.

Diversity refers to a mixture of people with different group identities within the same work environment.

Demographic diversity refers to the mix of group characteristics in the organization.Cultural diversity

refers to the mixture of cultures and subcultures to which the organization's workforce belongs.

A. The Scope of Diversity [PowerPoint Slide 18]

The true meaning of valuing diversity is to respect and enjoy a wide range of cultural

and individual differences. To be diverse is to be different in some measurable way

(whether or not the difference is visible). The diversity umbrella is supposed to

include everybody in an organization.

Working well with different generations has become an important part of both cultural and

demographic diversity in organizations, with the goal of people of all ages working well together.

Another cultural and demographic group being emphasized for full inclusion in the workforce is

people who are gay, lesbian, bisexual, and transgender (GLBT).

B. The Competitive Advantage of Diversity [PowerPoint Slide 19]

Encouraging diversity is socially responsible, and also brings a competitive

advantage to a firm.

1. Managing diversity well offers a marketing advantage, including

increased

sales and profits.

2. Effective management of diversity can reduce costs. (Job

satisfaction may

increase thereby reducing turnover and absenteeism.)

3. Companies with a favorable record in managing diversity are at a

distinct

advantage in recruiting talented people.

4. Workforce diversity can provide a company with useful ideas for favorable

publicity and advertising.

5. Workforce diversity, including using the services of a culturally diverse

advertising agency, can help reduce cultural bloopers and hidden biases.

6. Workforce heterogeneity may also offer a company a creativity advantage.

The implication for managers is that diversity initiatives should be explained in terms

of tangible business purposes to achieve the best results.

C. Potential Problems Associated with Diversity [PowerPoint Slide 20]

Cultural diversity initiatives are usually successful in assembling heterogeneous

groups, but the group members do not necessarily work harmoniously. When group

members are supportive toward each other, the benefits of group diversity such as

more creative problem solving will be forthcoming. . .

VI. ORGANIZATIONAL PRACTICES TO ENCOURAGE DIVERSITY [PP Slide 21]

Organizations can take several initiatives to manage diversity well.

A. Corporate Policies Favoring Diversity. [PowerPoint Slide 21]

Many companies formulate policies that encourage and foster diversity. To create a culturally and

demographically diverse organization, some companies monitor recruitment and promotions to assure

that diverse people are hired and promoted into key jobs.

B. Employee Network Groups [PowerPoint Slide 21]

An employee network group is composed of employees throughout the company who affiliate on the

basis of a group of characteristics such as race, ethnicity, sexual

orientation, or physical ability status. Group members have similar interests, and share information about

getting ahead. Sometimes the network groups might help in product development, such as the Frito -Lay

group development the Doritos Guacamole Flavored Tortilla Chips.

C. Diversity Training [PowerPoint Slides 21, 22]

Diversity training attempts to bring about workplace harmony by teaching people how to get along better with diverse work associates. Quite often the program is aimed at minimizing open expressions of

racism and sexism. All forms of diversity training center around increasing people’s awareness of and

empathy for people who are different from themselves. An essential part of relating more effectively to

diverse groups is to empathize with their point of view.

A study found that diversity training is likely to have a strong impact on retaining people of color when

the program is tied to business strategy and the CEO is committed to the program.

D. The English Language as a Force for Unity [PowerPoint Slide 23]

To compete globally, international workers have to communicate effectively with each other. As a

consequence, more and more European business firms are making English their official language. In

many Asian countries also, English is widely used in business. The Internet is another force encouraging

the use of English.