Download CHAPTER 2 - The Management Environment

CHAPTER 2 – THE MANAGEMENT ENVIRONMENT
LEARNING OUTCOMES
After reading this chapter students should be able to:
1. Describe the new economy and how it’s affecting the way organizations are managed.
2. Explain globalization and its impact on organizations.
3. Discuss how society’s expectations are influencing managers and organizations.
4. Describe how the workforce is changing and its impact on the way organizations are managed.
5. Explain the role that managers play in creating outstanding customer service.
Opening Vignette—Extreme Customer Service
SUMMARY
Managers at a Florida resort hotel felt that the instructional videos they used to train housekeepers on how
to quickly and effectively clean guest rooms didn’t seem to have a lasting impact. So they began doing
surprise inspections evaluating room cleanliness based on the video information. The $10.00 tests could
either reward or detract from the employee's pay dependent upon the inspection. Hilton Hotels
Corporation, its global workforce is undergoing intensive customer service training. Hilton’s director of
brand education says that the company is “zeroing in on employee behaviors that provide guests with
hassle-free, personalized, and informational service.” Although Hilton’s managers can’t control the
external environmental changes, they can control how the company is responding to those changes. One
of the biggest problems managers make today is failing to adapt to the changing world.
Teaching Notes
1. What will happen to traditional companies that don't react to the changing environment?
2. What else can companies do to thrive?
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Part I - Introduction
I. WHAT’S THE NEW ECONOMY LIKE?
A. Introduction
1. Organizations that are stagnant and bound by tradition are increasingly fading from the
limelight.
a) Computers often took up considerable space, quite unlike the 4-pound laptop today.
B. How has the Economy Changed?
1. In the early 1980s - the U.S. economy was growing and tax rates were low.
2. Individuals had money to spend and took risks by investing in the stock market, buying
homes, and starting their own businesses.
3. The economy expanded with low inflation and interest rates.
4. This “healthy” economy encouraged aggressive spending.
5. In 2008, the economy changed dramatically with adjustable mortgages raising, the credit
markets crashing and gasoline at record highs.
C. What Will the New Normal be Like?
1. U.S. economic system - based mostly on capitalistic principles
2. Trade and industry are controlled privately, not by the government.
3. The U.S. system included a corporate model of ownership and organization, large-scale
operations, open markets, formal organization structures with hierarchies and multiple
business divisions, and collective bargaining.
4. The new normal after the economy emerges from recession will include an expanded
government role.
5. Regulations will also likely increase as government spending increases.
6. The public is more concerned about the budget expenditures and the overall debt.
D. How Is the New Economy Affecting Organizations?
1.
“Business as usual” is a concept of the past.
2. The new economy has changed the management environment.
3. The changes will affect the management and organizational experience.
Technology and the Manager's Job
Changing and Improving the Way Managers Manage
Technology are the equipment, tools or operating processes to make work more efficient. Human labor
has been replaced by electronic and computer equipment. Technology has also impacted information
enabling work to be done anywhere and anytime. Management is impacted by technology while
attempting to manage virtual employees and in the way they plan, organize, lead and control.
Teaching Notes
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Chapter 2 - The Management Environment
II. WHAT IS GLOBALIZATION AND HOW DOES IT AFFECT ORGANIZATIONS?
A. The Globalization of Business
1. Management is no longer constrained by national borders.
a) BMW, a German-owned firm, builds cars in South Carolina.
b) McDonald’s sells hamburgers in China.
c) Exxon, a so-called American company, receives more than three fourths of its revenues
from sales outside the U.S.
d) The world has become a global village.
2. To be effective in this boundaryless world, managers need to adapt.
B. What Are the Different Types of Global Organizations?
1. Multinational companies or MNCs are any type of international company that maintains
operations in multiple countries.
a) Companies such as Procter & Gamble, Wal-Mart, Exxon, Coca-Cola, and Aflac are
examples.
2. Types of MNC's:
a) a multidomestic corporation - decentralizes management and other decisions to the
local country where it’s doing business.
b) global corporation - centralizes its management and other decisions in the home
country.
c) transnational or borderless organization - companies that use an arrangement that
eliminates artificial geographical barriers. IBM reorganized into industry groups.
C. How Do Organizations Go Global?
1. An organization going global typically proceeds through stages as shown in Exhibit 2-1.
2. The first step toward going international may start with global sourcing (also called global
outsourcing), which is purchasing materials or labor from around the world wherever it is
cheapest.
3. The next step may involve exporting - making products domestically and selling them
abroad.
4. An organization might do importing, or acquiring products made abroad and selling them
domestically.
a) Both usually entail minimal investment and risk
5. Licensing or franchising, involve 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.
a) This approach is used widely by pharmaceutical companies and fast-food chains.
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Part I - Introduction
6. Direct investments may include:
a) A global strategic alliance - a partnership between an organization and a foreign company
partner or partners.
b) Joint ventures are a specific type of strategic alliance in which the partners form a
separate, independent organization for some business purpose.
1) These partnerships provide a fast and less expensive way for companies to compete
globally than would doing it on their own.
c) A foreign subsidiary is a separate and independent facility or office. The greatest
commitment (and risk), occurs when the organization sets up a foreign subsidiary.
D. What Do Managers Need to Know About Managing in a Global Organization?
1. Business has new markets to conquer.
a) U.S. managers in the past held a rather parochial view of the world of business.
b) Parochialism is a narrow focus.
c) Seeing things solely through their own eyes and perspectives is an ethnocentric view.
d) They believed that their business practices were the best in the world.
e) Organizational success can come from a variety of managerial practices.
f) Example, status is perceived differently in different countries.
1) In France, status is the result of factors important to the organization, ascribed status.
2) In the United States, status is more a function of what individuals have personally
accomplished, achieved status.
g) Countries also have differences in their laws.
1) In the United States, laws guard against employers’ taking action against employees
solely on the basis of an employee’s age.
2) Similar laws do not exist in all other countries.
2. Viewing the global environment from any single perspective may be potentially problematic.
3. An appropriate approach is recognizing the cultural dimensions of a country’s environment.
4. A study of the differences of cultural environments was conducted by Geert Hofstede.
From the Past to the Present
Hofstede in the 1970'2 and 1980's surveyed over 116,000 employees in forty countries—all of whom
worked for IBM.
Found that managers and employees vary on five value dimensions of national culture.
1.
2.
3.
4.
5.
Power distance.
Individualism versus collectivism.
Quantity of life versus quality of life.
Uncertainty avoidance.
Long-term versus short-term orientation.
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Chapter 2 - The Management Environment
5. Highlights of conclusions from Hofstede’s research.
a) China and West Africa scored high on power distance; the United States and the
Netherlands scored low.
b) Most Asian countries were more collectivist than individualistic.
c) The United States ranked highest among all countries on individualism.
d) Germany and Hong Kong rated high on quantity of life.
e) Russia and the Netherlands rated low on quantity of life.
f) On uncertainty avoidance, France and Russia were high; Hong Kong and the United
States were low.
6. China and Hong Kong rated high on Long-Term Orientation while France and the U.S. rated
low.
7. The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research
program has updated Hofstede’s research.
a) Using data from 825 organizations in 62 countries, GLOBE identified 9 dimensions on
which
1) national culture differ:
2) Assertiveness
3) Future orientation
4) Gender differentiation
5) Uncertainty avoidance
6) Power distance
7) Individualism/collectivism
8) In-group collectivism
9) Performance orientation
10) Humane orientation
b) See Exhibit 2-2
c) The GLOBE study confirms that Hofstede’s original dimensions are still valid, and has
added some additional dimensions.
d) It also provides us with an update measure of where countries rate on each dimension.
1) For example, the United States led the world in individualism in the 1970s but today
scores in the mid-ranks of countries.
e) We can expect future cross-cultural studies of human behavior to increasingly use the
GLOBE dimensions to assess differences between countries.
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Part I - Introduction
Right or Wrong?
“Apple’s chief takes a medical leave after months of denial that his health is declining.
1. Should Steve Jobs be required to release more medical information.
2. What do you think? Do the heads of publicly traded firms have a right to medical privacy?
3. What ethical issues might arise in such a situation?
Teaching Notes
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III. WHAT DOES SOCIETY EXPECT FROM ORGANIZATIONS AND MANAGERS?
A. Introduction
1. The importance of corporate social responsibility (CSR) surfaced in the 1960s when the
activist movement began questioning the singular economic objective of business.
2. Before the 1960s, few people asked such questions. Good arguments can be made for both
sides of the social responsibility issue.
3. Managers are now regularly confronted with decisions that have a dimension of social
responsibility.
4. In a globally competitive world, few organizations can afford the bad press or potential
economic ramifications associated with being seen as socially irresponsible.
5. Few terms have been defined in as many different ways as social responsibility. Social
responsibility can include: philanthropy, pricing, employee relations, resource conversation,
product quality, and doing business in countries with oppressive
governments, etc.
6. Green management - when managers recognize and consider the impact of their
organization and its practices on the natural environment.
a) Whole Foods Market uses wind energy for all its electricity needs.
b) Marriott International’s uses real plates and compostable potato-based containers called
SpudWare.
7. Exhibit 2-3 shows arguments for and against CSR.
B. How Can Organizations Demonstrate Socially Responsible Actions?
1. According to the text, social responsibility is a business firm’s obligation, beyond that
required by the law and economics, to pursue long-term goals that are good for society.
a)
This definition assumes that business obeys the law and pursues economic
interests.
b) This definition views business as a moral agent.
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Chapter 2 - The Management Environment
2. Comparison with two similar concepts: social obligation and social responsiveness.
a) Social obligation is the foundation of a business’s social involvement. A business has
fulfilled its social obligation when it meets its economic and legal responsibilities. A firm
pursues social goals only to the extent that they contribute to its economic goals.
b) Social responsibility and social responsiveness go beyond meeting basic economic and
legal standards. This might mean respecting the community in which the company
operates, treating all employees fairly, respecting the environment, supporting women
and minorities, not doing business in countries where there are human rights violations,
etc.
3. Social responsibility also adds an ethical imperative.
4. Social responsiveness refers to the capacity of a firm to adapt to changing societal conditions.
5. Social responsibility requires businesses to determine what is right or wrong and thus seek
fundamental ethical troths.
6. Social responsiveness is guided by social norms.
C. How Can Managers Become More Ethical?
1. Ethics commonly refers to a set of rules or principles that defines right and wrong conduct.
2. Exhibit 2-4 presents three views of ethical standards.
a) Utilitarian view of ethics
b) Rights view of ethics
c) Theory of justice
3. Code of Ethics -a formal document that states an organization’s primary values and the
ethical rules for managers and non-managerial employees.
a) Nearly 90 percent of Fortune 1000 companies have a stated code of ethics.
4. The effectiveness of ethical codes depends heavily on whether management supports them,
ingrains them into the corporate culture, and how employees who break the codes are treated.
Teaching Notes
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Part I - Introduction
Developing Your Ethics Skills
About the Skill
Making ethical choices often can be difficult for managers.
Acting responsibly in gray areas, where right and wrong are not easily defined can be difficult.
Steps in Practicing the Skill
1. Know your organization’s policy on ethics.
2. Understand the ethics policy.
3. Think before you act.
4. Ask yourself what-if questions.
5. Seek opinions from others.
6. Do what you truly believe is right.
Practicing the Skill
Find a copy of your school’s code of conduct or the code of ethics of any organization to which you
belong. Or obtain a copy of the code of ethics for a professional organization you hope to join after
graduating. Evaluate the code’s provisions and policies.
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Are you uncomfortable with any of the code’s provisions? Why?
Is any part of the code routinely violated?
Why do you think these violations occur?
What are the usual consequences of such violations?
Do you think these consequences are appropriate?
If you had trouble obtaining the code of conduct, find out why. Under what circumstances is it
normally distributed, posted, or otherwise made available to members?
Teaching Notes:
1. Why is this area so important?
2. Is it a future concern?
IV. WHAT IS TODAY’S WORKFORCE LIKE AND HOW DOES IT IMPACT THE WAY
ORGANIZATIONS ARE MANAGED?
A. Introduction
1. Workforce diversity refers to ways in which people in a workforce are similar and different
from one another in terms of gender, age, race, sexual orientation, ethnicity, cultural
background, and physical abilities and disabilities
2. Until very recently, managers took a “melting-pot” approach to differences in organizations.
3. They assumed that people who were different would somehow automatically want to
assimilate.
4. Managers found that employees do not set aside their cultural values and lifestyle preferences
when they come to work.
5. The melting-pot assumption is being replaced by the recognition and celebration of
differences.
B. What Does the Work Force Look Like Today?
1. Much of the change that has occurred in the work force is attributed to the passage of U.S.
a) federal legislation in the 1960s prohibiting employment discrimination.
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Chapter 2 - The Management Environment
2. Avenues began to open up for minority and female applicants and they have become
a) the fastest growing segment in the work force.
3. Workforce trends in the first half of the twenty-first century will be notable for three reasons:
a) changes in racial and ethnic composition,
b) an aging baby boom generation, and
c) an expanding cohort of Gen Y workers.
4. By 2050;
a) Hispanics will grow from today’s 13 percent of the workforce to 24 percent;
b) Blacks will increase from 12 percent to 14 percent,
c) Asians will increase from 5 percent to 11 percent.
5. The labor force is aging; Baby Boom population is also having a significant impact on the
work force.
6. Referred to as the “graying of the work force,” our work force is increasingly witnessing
those individuals who desire to work past “retirement” age.
a) Need to have a greater income to sustain current living standards, and
b) Desire to remain active.
7. More than 80 percent of the Baby Boom generation indicates they expect to work past 65.
8. Four generations working side-by-side:
a) The oldest, most experienced workers (those born before 1946); they make up 6 percent
of the workforce.
b) The baby boomers (those born between 1946 and 1964); they make up 41.5 percent of the
workforce.
c) Generation X (those born 1965 to 1977); they make up almost 29 percent of the
workforce.
d) Gen Y (those born 1978 to 1994); they make up almost 24 percent of the workforce.
MANAGING DIVERSITY| The Paradox of Diversity
When organizations bring in diverse individuals and socialize them into the culture, a paradox is created.
Managers want the new employees to accept the organization’s core cultural values and openly
acknowledge, embrace, and support the diverse perspectives and ideas that the new employees bring to
the workplace.
Strong organizational cultures pressure employees to conform. A manager’s challenge is to balance two
conflicting goals: to encourage employees to accept the organization’s dominant values and to encourage
employees to accept differences.
1. What challenges will this present?
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Part I - Introduction
C. How Are Organizations and Managers Adapting to a Changing Workforce?
1. Work/Life Balance Programs - Employees in the 1960s and 1970s showed up at the
workplace Monday through Friday and did their job in eight- or nine-hour chunks time.
2. Today’s employees are increasingly complaining that the line between work and non-work
time has become blurred, creating personal conflicts and stress.
a) The creation of global organizations means their world never sleeps.
b) Communication technology allows employees to do their work at home, in their car, or
on the beach in Tahiti.
c) Organizations are asking employees to put in longer hours.
d) Fewer families have only a single breadwinner.
3. Employees are increasingly recognizing that work is squeezing out their personal lives and
they want jobs that give them flexibility in their work schedules so they can better manage
work/life conflicts.
4. Organizations are offering family friendly benefits, with a wide range of scheduling options
that allow employees more flexibility at work.
5. Many large companies are converting some permanent jobs into temporary ones.
6. Organizations facing a rapidly changing environment must be in a position to adjust rapidly
to those changes.
a) Having a large number of permanent full-time employees limits the ability to react.
b) Organizations that rely heavily on contingent workers will have greater flexibility
because workers can be easily added or taken away as needed.
7. Contingent Jobs - part-time, temporary, and contract workers who are available for hire on
an as-needed basis.
a) Contingent workers may grow to 40% of the workforce by the end of the next decade.
8. What issues do contingent workers create for managers?
a) Each contingent worker may need to be treated differently in terms of practices and.
b) Managers must also make sure that contingent workers do not perceive themselves as
second-class workers.
c) They may not be as loyal, as committed to the organization, or as motivated on the job as
permanent workers are.
d) Today’s managers need to motivate their entire work force—full-time and employees—
and to build their commitment to doing good work!
9. Generational Differences - will present unique challenges.
a) Office attire will depends on the type of work being done and the size of the organization.
The key is flexibility.
b) Technology - Gen Y has grown up with ATMs, DVDs, cell phones, e-mail, texting,
laptops, and the Internet and they’re content to meet virtually to solve problems, while
baby boomers expect important problems to be solved with in-person meetings.
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Chapter 2 - The Management Environment
c) Management style - Gen Y employees want bosses who are open-minded; experts in their
field and mentors; not authoritarian or paternalistic; respectful of their generation;
understanding of their need for work/life balance.
Teaching Notes
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V. HOW DO ORGANIZATIONS MAKE THE CUSTOMER KING?
A. Introduction
1. Henry Ford said his customers could have any color car they wanted—as long as it was black.
2. Stew Leonard, the world’s largest dairy store in southern Connecticut, says it only has two
rules in his business.
a) Rule 1—the customer is always right.
b) Rule 2—if the customer is ever wrong, reread Rule 1.
3. Managers are being influenced by the Stew Leonards of the world.
a) Long-term success can be achieved only by satisfying the customer.
b) Customers have more choices than ever before, and are therefore more difficult to please.
c) Customers are demanding quicker service, higher quality, and more value for their
money.
4. Mass customization, toll-free service hotlines, the growth of e-commerce and mail order,
discount superstores, and managers who have become obsessed with quality are all responses.
5. Organizations are creating a customer-responsive culture, continuous improvements in
quality, and work process engineering.
B. Can Organizations Improve Customer Service?
1. American Express believes in customer service.
a) A customer service representative received a call at 10:30 p.m. that a gold card customer
left her card in a restaurant 30 miles away and had to catch a 7:30 a.m. flight the next
morning.
b) At 11:45 p.m. the same evening, the customer received a replacement card delivered by
courier to her front door!
2. The majority of employees today in developed countries work in service jobs.
a) 75 percent of all private sector jobs in the United States and Canada are in service
industries.
b) These jobs require substantial interaction with an organization’s customers.
3. In organizations in service industries, there is a clear chain of cause-and-effect running from
employee attitudes and behavior to customer attitudes and behavior to an organization’s
revenues and profits.
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Part I - Introduction
4. Sears found that a 5 percent improvement in employee attitudes leads to a 1.3 point increase
in customer satisfaction, which in turn translated into a 0.5 percent improvement in revenue
growth.
5. Sears also found that by training employees to improve the employee-customer interaction, it
was able to improve customer satisfaction by 4 percent over a 12-month period, which
generated an estimated $200 million in additional revenues.
6. Many an organization has failed because its employees failed to please the customer.
7. Management needs to create a customer-responsive culture—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. Can you create a customer-responsive culture?
a) French retailers have a well-established reputation for indifference to customers.
b) Most organizations today are trying very hard to be un-French-like.
c) Companies that have created customer-responsive cultures include Southwest Air,
FedEx, Johnson & Johnson, Nordstrom, and L. L. Bean.
1) They have built a strong and loyal customer base and have generally outperformed
their competitors in revenue growth and financial performance.
9. What are the key variables shaping customer-responsive cultures?
a) Five variables are routinely evident in customer-responsive cultures. (See Exhibit 2-5)
1) The employees are outgoing and friendly.
2) Service employees need to have the freedom to meet changing customer-service
requirements—rigid rules, procedures, and regulations make this difficult.
3) Employees need to be empowered—have the decision discretion to do what’s
necessary to please the customer.
4) Good listening skills—the ability to listen to and understand messages sent by the
customers.
5) Customer-responsive cultures have employees who exhibit organizational citizenship
behavior.
(a) They are conscientious in their desire to please the customer.
(b) They’re willing to take the initiative, even when it’s outside their normal job
requirements, to satisfy a customer’s needs.
10. What managerial actions are needed?
a) There are seven actions management can take to make its culture more customer
responsive and to create employees with the competence, ability, and willingness to solve
customer problems as they arise.
b) Selection—hiring service-contact people with the personality and attitudes consistent
with a high service orientation.
1) Southwest Airlines puts its job applicants through an extensive interview process to
assess whether a candidate has the outgoing and fun-loving personality that it wants
in all its employees.
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Chapter 2 - The Management Environment
c) Training—making its current employees more customer-focused.
1) General Motors, Shell, and J.P. Morgan have used training focusing on such areas as
improving product knowledge, active listening, showing patience, and displaying
emotions to help employees move away from their product focus.
2) Even new employees who have a customer-friendly attitude may need to understand
management’s expectations.
3) Even the most customer-focused employees can lose direction every once in a while
and benefit from regular training updates where the organization’s customer-focused
values are restated and reinforced.
d) Organizing—give employees more control.
1) Reducing rules and regulations. Allow employees to adjust their behavior to the
changing needs and requests of customers.
e) Empowerment—allows service employees to make on-the-spot decisions to completely
satisfy customers.
f) Leadership—conveying a customer-focused vision and demonstrating by their continual
behavior that they are committed to customers.
g) Evaluation—based on such measures as how they behave or act—on criteria such as
effort, commitment to teamwork, friendliness, and the ability to solve customer
problems—rather than on measurable outcomes they achieve.
h) Rewards—reward good service.
1) Provide ongoing recognition to employees who have demonstrated extraordinary
effort to please customers and who have been singled out by customers for “going the
extra mile.”
2) Make pay and promotions contingent on outstanding customer service.
C. How Have Organizations Shown An Increased Concern with Quality?
1. There is a quality revolution.
a) The generic term that has evolved to describe this revolution is quality management, or
continuous improvement.
b) Inspired by quality experts like Joseph Juran and the late W. Edwards Deming.
2. An American, Deming found few managers in the United States interested in his ideas.
a) In 1950, he went to Japan and began advising many top Japanese managers.
b) Central to his methods, the use of statistics to analyze variability in production processes.
c) A well-managed organization was one in which statistical control reduced variability and
resulted in uniform quality and predictable quantity of output.
3. Deming developed a 14-point program for transforming organizations.
4. Today, Deming’s original program has been expanded into a philosophy of management that
is driven by customer needs and expectations (See Exhibit 2-6).
5. Quality management expands the term “customer” to include everyone involved with the
organization, either internally or externally—encompassing employees and suppliers as well
as the people who buy the organization’s products or services.
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Part I - Introduction
a) The objective is to create an organization committed to continuous improvement, or as
the Japanese call it, “kaizen.”
6. Quality management is a departure from the earlier management theories that were based on
the belief that low costs were the only road to increased productivity.
a) The Japanese demonstrated that it was possible for the highest-quality manufacturers to
be among the lowest-cost producers.
b) Managers in American auto manufacturing facilities and in other industries soon
recognized the importance of quality management and implemented many of its basic
components.
c) The elements and the goals of quality management and continuous improvements are
essential characteristics in achieving an effective and lean workplace.
D. Why Must Managers Think in Terms of Quantum Changes Rather Than Continuous
Improvement?
1. Continuous improvement methods provide useful innovations; they focus on incremental
change.
2. Such action—a constant and permanent search to make things better—is intuitively
appealing.
3. Many organizations, however, operate in an environment of rapid and dynamic change and a
continuous improvement process may keep them behind the times.
a) A focus on continuous improvements may provide a false sense of security.
b) Incremental change may avoid facing up to the possibility that what the organization may
really need is radical or quantum change, referred to as work process engineering.
c) Continuous change may also make managers feel as if they are taking progressive action
while avoiding quantum changes that will threaten organizational members.
4. Aren’t these contradictory statements?
a) Continuous improvement can lead to organizational improvements, but it may not be the
right approach initially.
b) That's the case if you are producing a new improved version of an outdated product when
a complete overhaul might be required.
c) After the overhaul, then continuous improvement can have its rightful place.
5. Electronic organizer business example, continuous improvement approach.
a) Frame of reference, an electronic search capability for names and addresses, calendar of
tasks, an expanded keyboard function, and the like.
b) Your continuous improvement focus—more memory, larger storage capabilities, or
longer-lasting batteries.
6. A competitor reengineers the design process.
a) Your competitor asks, “How can we design an electronic organizer that is more useful,
expandable, and provides greater mobility?”
b) Starting from scratch, your competitor completes a redesign for a “wireless personal data
assistant.”
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Chapter 2 - The Management Environment
c) You are now competing against technology that may make your product obsolete.
7. In this theoretical example, both companies made progress.
a) But who made the most progress given the dynamic environment they face?
8. Our example demonstrates why companies such as Thermos, Ryder Trucks, and Casio
Computer are opting for work process engineering rather than incremental change.
E. Some Concluding Remarks
1. Both organizations and managers need to be more flexible and respond to change.
2. Frederick Taylor, the father of scientific management (See History Module), argued nearly a
century ago for the division of work and responsibility between management and workers.
3. Workers today are far better educated and trained than they were in Taylor’s day.
a) Today’s workers may be considerably more knowledgeable than those who manage them
about how best to do their jobs.
4. Managers are transforming themselves from bosses into team leaders.
a) Managers are finding that they become more effective when they focus on motivating,
coaching, and cheerleading.
b) Managers also recognize that they can often improve quality, productivity, and employee
commitment by redesigning jobs to increase the decision-making discretion of workers.
5. We call this process empowering employees.
6. The empowerment movement is being driven by two forces.
a) First is the need for quick decisions by those people who are most knowledgeable about
the issues.
b) Second is the reality that the large layoffs in the middle-management ranks that began in
the late 1980s have left many managers with considerably more people to supervise than
they had in the past.
Teaching Notes
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Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall
Part I - Introduction
REVIEW AND APPLICATIONS
CHAPTER SUMMARY
2.1 Describe the new economy and how it’s affecting the way organizations are managed. The main
characteristic of the new economy is the global economic crisis. Foreclosures, financial recession, a
huge public debt, and widespread social problems from job losses are a few of its features. Also, this
new economy is characterized by public anger at business leaders, which has led to a lack of trust in
business. Experts believe that when the economy emerges from recession, it will be a “new” normal.
The biggest change is likely to be in the role of government in financial markets and consumer
protection and in increased enforcement and oversight of regulations. This new economy will affect
organizations in the way they do business globally, how they deal with the expectations of society to
act responsibly and ethically, how they treat their workforce, and how they deal with skeptical and
demanding consumers.
2.2 Explain globalization and its impact on organizations. Organizations are considered global if they
exchange goods and services with consumers in other countries, if they use managerial and technical
employee talent from other countries, or if they use financial sources and resources outside their
home country. Businesses going global are usually referred to as multinational corporations (MNCs).
As an MNC, they may operate as a multidomestic corporation, a global corporation, or a transnational
or borderless organization. When a business goes global, they may start with global sourcing, move to
exporting or importing, use licensing or franchising, pursue a global strategic alliance, or set up a
foreign subsidiary. In doing business globally, managers need to be aware of different laws and
political and economic systems. But the biggest challenge is in understanding the different country
cultures. Two cross-cultural frameworks that managers can use are Hofstede’s and GLOBE.
2.3 Discuss how society’s expectations are influencing managers and organizations. Society expects
organizations and managers to be responsible and ethical. An organization’s social involvement can
be from the perspective of social obligation, social responsiveness, or social responsibility. Whether a
manager behaves ethically depends on several factors including personal morality, values,
personality, and experiences; the organization’s culture; and the ethical issue being faced.
Organizations attempt to reduce the ambiguity over what is ethical by using codes of ethics. However,
managers also need to be good ethical role models in words and in actions.
2.4 Discuss how the workforce is changing and its impact on the way organizations are managed.
The workforce continues to reflect increasing diversity. Other trends include changes in racial and
ethnic composition, an aging baby boom generation, and an expanding cohort of Gen Y workers.
Organizations and managers are responding with work/life balance programs, contingent jobs, and
recognition of generational differences.
2.5 Explain the role that managers play in creating outstanding customer service. As customers have
become increasingly skeptical, cautious, frugal, and more difficult to please, customer service is ever
more critical. To create outstanding customer service, organizations and managers are relying on
several activities such as creating a customer-responsive culture, continually improving quality, and
reengineering work processes.
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Chapter 2 - The Management Environment
To check your understanding of outcomes 2.1 – 2.5, go to mymanagementlab.com and try the chapter
questions.
UNDERSTANDING THE CHAPTER
1. How is the new economy affecting what managers do? Find examples in current business
periodicals of activities and practices that organizations are using. Discuss them in light of the
changed management environment.
Answer: The new economy is presently unfolding. 'Business as usual' is a concept of the past and
employees have watched their savings decrease, while the federal deficit has skyrocketed. The
selection of article will contribute to variable answers from the students.
2. Describe the shifts in the workforce. What implications have these shifts created for today’s
managers?
Answer: Organizations that are stagnant and bound by tradition are increasingly fading from the
limelight. One of the biggest problems in managing an organization is failing to adapt to change. By
the start of the 1970s, a new age was gaining momentum. This is based on information. Technological
advancements were eliminating many low-skilled, blue-collar jobs. The information wave was
transforming society from manufacturing to service. Knowledge workers are at the cutting edge of the
third wave. Their jobs are designed around the acquisition and application of information. The
number of blue-collar workers shrank dramatically. Managers must respond to all of the changes in
technology, the amount of available information and the generational workforce.
3. What are the managerial implications of Hofstede’s research on cultural environments? The
GLOBE study?
Answer: Geert Hofstede surveyed over 116,000 employees in forty countries—all of whom worked
for IBM. Hofstede’s data indicated that, in general, national culture has a major impact on employees’
work-related values and attitudes. He classified those values and attitudes into five specific
dimensions of national culture: power distance, individualism versus collectivism, quantity of life
versus quality of life, uncertainty avoidance, and long-term versus short-term orientation.
The managerial implication would be to place U.S. managers where they fit best, identify those
countries that are most and least like the United States on the four dimensions. In terms of
individualism, power distance, uncertainty avoidance and quantity of life: Ireland, England, Canada,
New Zealand, etc.
4. How can managers help employees deal with work/life balance issues?
Answer: Managers can help employees deal with work/life issues by providing flexibility in their
work schedules so they can better manage work/life conflicts. Managers can be aware of the impact
of the global organization where their world never sleeps and how that may affect an employee’s
need to communicate with other employees around the world. Managers can also consider the
fairness of the demands they make on employees when technology makes it possible for them to work
out of the office. Organizations are typically asking employees to put in longer hours. Managers
need to help employees find the time to fulfill work commitments as well as commitments to home,
spouse, children, parents, and friends.
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Part I - Introduction
5. What does social responsibility mean to you personally? Do you think businesses should be
socially responsible? Explain.
Answer: Student answers will be based on their opinions. Corporate social responsibility is now
widely accepted as an organizational imperative as part of the legal, economic and community
contribution and involvement. It is a cost of doing business.
6. Describe the characteristics and behaviors of someone you consider to be an ethical person.
How could the types of decisions and actions this person engages in be encouraged in a
workplace?
Answer: Ethics commonly refers to the rules or principles that define right and wrong conduct.
Exhibit 2-4 presents three views of ethical standards. Whether a manager acts ethically or unethically
will depend on several factors, including:





The individual’s morality.
Values.
Personality and experiences.
The organization’s culture.
The issue that is being called into question.
The behavior can be encouraged through the organizational culture, code of conduct and the firm's
reward system.
7. This question was posed in an article in USA Today: “Is capitalism going to be the salvation of
the world or the cause of its demise?” Discuss.
Answer: Capitalism by itself is a sound foundational concept. Managers and employees need to
respond ethically and morally. Organizations with effective leadership contributes to effective
principle-centered practices. Corporate social responsibility efforts are also being adapted by many
companies with the realization that they are an integral part of the community.
8. Discuss the implications of hiring contingent workers from the perspectives of the organization
and the contingent worker.
Answer: Thousands of organizations are converting many jobs into temporary or part-time
positions—giving rise to what is commonly referred to as the contingent work force. Organizations
facing a rapidly changing environment must be in a position to adjust rapidly to those changes.
Organizations that rely heavily on contingent workers will have greater flexibility because workers
can be easily added or taken away as needed. Opportunities to capitalize on new markets, obtaining
someone who possesses a special skill for a particular project, point to a need to be able to rapidly
adjust staffing levels. Many employees have indicated a preference to their contingent status. Some
may have greater flexibility and autonomy.
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Chapter 2 - The Management Environment
UNDERSTANDING YOURSELF
Am I Well-Suited for a Career as a Global Manager?
In today’s global economy, being a manager often means being a global manager. But, unfortunately, not
all managers are able to transfer their skills smoothly from domestic environments to global ones. Take
this self-assessment to help you determine whether your skills align with those needed to succeed as a
global manager.
INSTRUMENT Indicate the extent to which you agree or disagree with each of the 14 statements in
terms of how well they describe you. Use the following rating scale for your responses:
1 = Very strongly disagree
2 = Strongly disagree
3 = Disagree
4 = Neither agree or disagree
5 = Agree
6 = Strongly agree
7 = Very strongly agree
1. When working with people from other cultures, I work hard to understand their
perspectives.
1234567
2. I have a solid understanding of my organization’s products and services.
1234567
3. I am willing to take a stand on issues.
1234567
4. I have a special talent for dealing with people.
1234567
5. I can be depended on to tell the truth regardless of circumstances.
1234567
6. I am good at identifying the most important part of a complex problem or issue.
1234567
7. I clearly demonstrate commitment to seeing the organization succeed.
1234567
8. I take personal as well as business risks.
1234567
9. I have changed as a result of feedback from others.
1234567
10. I enjoy the challenge of working in countries other than my own.
1234567
11. I take advantage of opportunities to do new things.
1234567
12. I find criticism hard to take.
1234567
13. I seek feedback even when others are reluctant to give it.
1234567
14. I don’t get so invested in things that I cannot change when something doesn’t work.
1234567
SCORING KEY To calculate your score, add up all your responses, except reverse your score for item
12.
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Part I - Introduction
ANALYSIS AND INTERPRETATION This instrument has been designed to tap dimensions
associated with success as a global executive. These include general intelligence, business knowledge,
interpersonal skills, commitment, courage, cross-cultural competencies, and the ability to learn from
experience.
Total scores will fall between 14 and 98. The higher your score, the greater your potential for success as a
global manager. While the authors of this instrument provided no specific cutoffs, it seems reasonable to
assume that scores of 70 or higher indicate relatively strong potential for success in a global management
position.
Overview
The analysis notes that the instrument is designed to assess the dimensions associated with success as an
international executive. They include general intelligence, business knowledge, interpersonal skills,
commitment, courage, cross-cultural competencies, and the ability to learn from others.
This instrument is very important in our world of globalized competition. Many students will end up
working in a company that is transnational. They will probably be assigned to another nation for some
period. If they stay stateside, they will still be dealing with people from other cultures. In fact, the reality
of working with other cultures is a sure thing in the United States. Think of Los Angeles, San Francisco,
Seattle, Boston, Atlanta, Miami, Houston, and New York; they are all major multicultural cities. You are
always dealing and working with diversity in these cities and in almost every other larger city in the
United States. In effect, we have globalization right in our own back yard. Our students will need to be
adept at understanding, honoring, and working with people that are different from them in many ways.
This is perhaps the greatest challenge that most managers and employees face whether here or around the
globe.
Teaching Notes
This may be a good place to talk about the globalization of companies in terms of how the students think
about relocating to Sri Lanka, Indonesia, Thailand, Brazil, Chile, Costa Rica, France, Sweden, Germany,
Italy, Egypt, Israel, the Congo, Nigeria, South Africa, Poland, Belarus, Russia, Japan, Australia, Canada,
or Denmark. They could do research on a country that intrigues them and then present their findings in
class.
If you have students that have lived in another nation for a period of time, been raised in another culture,
or have newly immigrated relatives, you might have them share what these nations are like in comparison
to the United States, including the roles of management.
Exercises
1. The World Is Your Playground. Hold a class discussion on the implications of the globalization to
the United States economy and required managerial skills.
Learning Objective(s): To illustrate how the global economy affects U.S. organizations.
Preparation/Time Allotment: This should be about a 15-minute class discussion.
Advantages/Disadvantages/Potential Problems: Make sure you have plenty of examples to discuss
with the students. They may not have much to offer if you have not covered international business, or
if they do not have much global experience. You might also discuss how seemingly local
organizations need to think globally. Discuss this in the context of how U.S. organizations have to
consider outsourcing, for example.
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Chapter 2 - The Management Environment
2. Multiple Management Styles. Ask the students to do research on a company such as
DaimlerChrysler that has combined companies from two countries. Have them focus on the potential
cultural clashes around management. Then have them discuss their findings in class. Airbus is
another possible in that it involves four European nations.
Learning Objective(s): To illustrate the management challenges associated with two cultures merging.
Preparation/Time Allotment: Allow the students 2-weeks to do the research. Allow about 10 minutes
for each group to discuss their findings with the entire class.
Advantages/Disadvantages/Potential Problems: Make sure you assign them the organizations to look
at. This way, you will insure that they are examining mergers within two different cultures. Also,
remind them to focus on the management issues specifically. Many of these case studies focus on
other business topics, such as product quality, design, or marketing.
FYIA - (For Your Immediate Attention)
Delaney Environmental services
To: Sandy Burk, Director of Operations
From: J. Delaney, Managing Director
Subject: Global Expansion
DES is looking at expanding its global market opportunities. With our experience we have a lot to offer
the Latin American market, particularly in Mexico. Specifically, I would like for you to cover: (1) cultural
differences we would need to consider; (2) the current currency rate of exchange and how it has changed
over the last three years; and (3) any legal or political situations we need to be aware of.
1. What will be potential obstacles or challenges for Sandy?
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Part I - Introduction
Case Application
Held Hostage
Discussion Questions
1. What’s your reaction to these events? Do you think your reaction is influenced by the culture,
values, and traditions of the country in which you find yourself? Explain.
Answer: Student opinions will be varied. Yes, this is not a traditional response by Americans since
this is not the way we handle issues and most companies are not unionized.
2. Look at what Hofstede’s and the GLOBE findings say about France. How would you explain
these workers’ actions given these findings?
Answer: France has a low humane orientation and a moderate power distance. Students can describe
the actions according to these two dimensions.
3. We’ve said throughout this chapter that it’s important for managers to be aware of external
environmental forces. Discuss this in light of these events.
Answer: Managers cannot operate with their head in the sand. They must be continuously attuned to
change and the pulse of their people. Continuous communication may have averted this strife in the
French workplace.
4. What might the French managers have done differently in this situation, especially prior to the
point where workers felt they had to make their point by taking them hostage? Explain.
Answer: They could have used some sort of grievance procedure or communication channel that
could have been less disruptive. Being known as aggressive and radical may not be the best way to
handle conflict or disagreements.
5. Do you think something like this could happen in the United States? Why or why not?
Answer: Students answers will vary. It may not happen in a hostage type atmosphere, but employees
are working more hours with fewer resources and the economic environment is unstable. Wages have
been frozen or reduced in many companies and workers may revert to unique and varied ways of
communication and activities to voice their displeasure.
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