CH-5-8 Managerial Planning and Goal Setting – Understanding Management : Book Guide

This Document Contains Chapters 5 to 8 CHAPTER 5 MANAGERIAL PLANNING AND GOAL SETTING Suggested Answers to End of Chapter Discussion Questions 1. Write a brief mission statement for a local business with which you are familiar. How might having a clear, written mission statement benefit a small organization? Answer: Student responses may vary; however, every small business should have a mission statement. An example of a mission statement might be: The purpose of this business is to create a quality product and service to its customer mix. The creation of customer satisfaction is relevant and the generation of a satisfactory return of profit is essential. There is a social responsibility of this business to its stakeholders and a commitment to manage its internal and external environments as well as possible. A clearly written mission statement provides the purpose and direction for the small business to be competitive. Each goal, strategy, and planning application should reflect and build upon the mission statement. Mission Statement: "GreenLeaf Market is dedicated to offering fresh, local produce and eco-friendly products to promote sustainable living and support our community." Benefits: 1. Clear Direction: Guides goals and strategies. 2. Consistency: Aligns actions with values. 3. Brand Loyalty: Strengthens customer connection. 4. Informed Decisions: Helps with strategic choices. 5. Employee Engagement: Motivates and unites the team. 2. What strategic plans could the college or university at which you are taking this management course adopt to compete for students in the marketplace? Would these plans depend on the school’s goals? Answer: Yes, strategies will depend on the school’s goals. For example, if a university adopted a goal of increasing the number of merit scholars who enroll each year from 50 to 60, then strategies could be to send letters to merit scholars, schedule visits of university representatives at the schools, or offer scholarships to entice the students to attend the university. If the goal is simply to increase the number of students, administrators could determine what attracts students to the university and attempt to adopt strategies related to them. The strategies might include the implementation of highly visible programs such as changing tuition rates, building additional dormitories, or striving to field a winning football team. 3. A new business venture must develop a comprehensive business plan to borrow money to get started. Companies such as FedEx and Nike say they did not follow the original plan closely. Does that mean that developing the plan was a waste of time for these eventually successful companies? Answer: No, it was not a waste of time for these companies. Developing a business plan also helps a company consider all aspects of the business. For example, an inventor may come up with a neat new product and not consider where or how to market it. He may not consider financing either. Developing a business plan helps the company devise options not previously considered. Even if the plan is not followed exactly, it provides many other benefits. 4. Assume that Southern University decides to: (1) raise its admission standards, and (2) initiate a business fair to which local townspeople will be invited. What types of plans might it use to carry out these two activities? Answer: Raising admission standards would require a standing plan to provide guidance for admissions performed repeatedly over the next several semesters. Within the concept of a standing plan, the university may use policies, procedures, or rules to enforce the new admission standards. A policy would define admission standards, in general, and procedures would describe how to admit students under the new policy. Specific rules might also be established for specifying exactly what action to take in specific admission situations. Initiating a business fair would probably require a single use plan. The single use plan develops a set of objectives that will not be repeated in the future. The business fair would probably be considered a project, for which participants would develop a set of short term objectives and plans to achieve the one time goal. 5. LivingSocial started with one “daily deal,” a $25 voucher for $50 worth of food at a Washington D.C., area restaurant. Since then, the company has grown at breakneck speed, has 46 million members in 25 countries, and has acquired a dozen companies that offer related deals and services. Why and how might a company such as LivingSocial want to use an intelligence team? Discuss. Answer: An intelligence team is a cross-functional group of managers and employees, usually led by a competitive intelligence professional, who work together to gain a deep understanding of a specific business issue, with the aim of presenting insights, possibilities and recommendations about goals and plans related to that issue. Intelligence teams are useful when the organization confronts a major intelligence challenge. Such teams can provide insights that help managers to make more informed decisions about goals and devise contingency plans and scenarios related to major strategic issues. 6. Some people say an organization could never be “prepared” for a disaster such as the shooting at an Aurora, Colorado, movie theater, the Japan nuclear disaster, or the huge BP oil spill in the Gulf of Mexico. Discuss the potential value of crisis planning in situations like these, even if the situations are difficult to plan for. Answer: The crisis management plan is a detailed written plan that specifies the steps to be taken, and by whom, if a crisis occurs. The plan should include the steps for dealing with various types of crises, such as natural disasters like fires or earthquakes, normal accidents like economic crises or industrial accidents, and abnormal events such as product tampering or acts of terrorism. The plan should be a living, changing document that is regularly reviewed, practiced, and updated as needed. A carefully thought-out and coordinated plan can be used to respond to any disaster. In addition, crisis planning reduces the incidence of trouble, much like putting a good lock on a door reduces burglaries. 7. Goals that are overly ambitious can discourage employees and decrease motivation, yet the idea of stretch goals is proposed as a way to get people fired up and motivated. As a manager, how might you decide where to draw the line between a “good” stretch goal and a “bad” one that is unrealistic? Answer: Students may have varying solutions for that decision. One possible suggestion might be that a manager encourage the employees to set their own stretch goals and monitor their progress in case it becomes obvious that the goals have become unrealistic and then suggest to employees that they consider revising them while still seeking as much stretch as possible. Whatever the student’s solution, the key thing is not so much the answer as the thought put into the answer. To balance stretch goals and avoid discouraging employees, consider these factors: 1. Alignment with Capabilities: Ensure the goal is challenging yet achievable based on the team's skills and resources. 2. Clear Milestones: Break the goal into smaller, actionable steps to maintain motivation and track progress. 3. Support and Resources: Provide necessary support and resources to help the team meet the goal. 4. Feedback and Adjustment: Be open to feedback and willing to adjust the goal if it's proving too difficult. 5. Realistic Expectations: Set goals that push boundaries but are grounded in reality, avoiding overly ambitious targets that seem out of reach. Balancing challenge with feasibility helps keep motivation high and prevents discouragement. 8. Perform a SWOT analysis for the school or university you attend. Do you think university administrators consider the same factors when devising their strategy? Answer: The following is a brief example of how SWOT analysis might apply to a specific university. The university’s strengths are the loyalty of former students who contribute millions of dollars each year, campus traditions that are good for the university and student body, high quality faculty concerned with both teaching and research, above average students who are serious and hardworking, new buildings and facilities, few sororities and fraternities so that student loyalties are to the university, and a high level of federal and state research dollars received. Weaknesses include insufficient student housing on campus, lack of access to business and government organizations because the campus is located in a small town, a rather bureaucratic, unresponsive organization structure, a senior administration that has been criticized for lack of management skills, and inability to transfer funds from declining to growing departments. Opportunities include the ability to attract a huge number of merit scholars to give the university scholarly visibility, the desire of many graduating high school students to attend the university, the opportunity to increase the student quality by enforcing high enrollment standards, large business and engineering colleges that are suited to the shifting preferences of high school students for professional schools over liberal arts, and the opportunity to increase faculty size and quality through controlled growth. The primary threat facing the university is from the balanced budget requirement by the state that could mean reduced spending on education for the next few years and reduced spending for social science research by the federal government. To a substantial extent, university administrators probably do consider these factors when devising their strategy. At this university, a great deal of energy is devoted to gaining support around the state to prevent the legislature from cutting the university’s budget. Moreover, the university takes advantage of its popularity to increase the quality of students and to attract new merit scholars. The university also takes advantage of the loyalty of students to reinforce current traditions and good teaching so that future donations will be forthcoming. 9. Fortune magazine and the Hay Group found that a clear, stable strategy is one of the defining characteristics of companies on the list of “The World’s Most Admired Companies.” Why might this be the case? Answer: A clear strategic direction is a key factor distinguishing winners from losers. Grand goals have to be translated into a clear blue print for execution, so that everyone’s actions are in line with mangers’ strategic intentions. Stable markets account for big portion of sales and profits. Hence, Fortune magazine and the Hay Group found that a clear, stable strategy is one of the defining characteristics of companies on the list of “The World’s Most Admired Companies.” 10. Using Porter’s competitive strategies, how would you describe the strategies of Wal-Mart, Macy’s, and Target? Answer: This answer will depend on how students perceive these companies. A reasonable answer is that Wal-Mart’s overall strategy can be characterized within the Porter’s model as a cost leadership strategy. Wal-Mart has a well controlled and tightly managed internal system, but it is innovative with respect to new and more efficient internal technology, and is aggressively growing and expanding in a dynamic environment. Wal-Mart is known for its low prices, which are a result of internal efficiency and are typical of cost leadership in the Porter’s model. Macy’s has a focus strategy in the Porter’s model. Macy’s focus strategy emphasizes differentiation because it is a high class store targeted at a particular market segment. Macy’s has strong marketing, a creative flair, a reputation for retail leadership, and the amenities to attract creative retail people. In the Porter’s model, Target might uses a combination of cost leadership and differentiation to some extent, although it is not particularly strong in either category. Target differentiates itself from Wal-Mart somewhat by selling many products from a slightly higher-quality tier than Wal-Mart’s product line, and Target competes with higher-end stores as a low cost provider, but not to the same degree as Wal-Mart. Wal-Mart: Cost Leadership - Wal-Mart focuses on being the low-cost provider through economies of scale, efficient supply chain management, and aggressive pricing. Macy’s: Differentiation - Macy’s emphasizes a broad selection of branded and upscale products, offering a distinct shopping experience and customer service to differentiate itself from competitors. Target: Cost Leadership and Differentiation - Target combines competitive pricing with a stylish, unique product range and a pleasant shopping environment, balancing cost leadership with elements of differentiation. 11. Walt Disney Company has four major strategic business units: movies (including Miramax and Touchstone), theme parks, consumer products, and television (the ABC TV network and the Disney Channel cable network). Place each of these SBUs on the BCG matrix based on your knowledge of them. Answer: Students may not be familiar with each of these divisions, but can attempt to place them on the model based on their experience as consumers. Movies would be considered a star on the BCG matrix because Miramax and Touchstone are doing so well. The business growth rate is high, and Miramax and Touchstone hold a significant market share. Theme parks would be considered a cash cow because they are well established. Consumer products would be considered a question mark on the BCG matrix. Walt Disney characters are now appearing on Coke cans, T shirts, and on hundreds of other products. The division is succeeding and may soon become a star. ABC TV and the cable television network are extremely successful. Despite the onslaught of cable television competition, ABC TV is doing well in the media industry, and Disney’s cable channels can now also be categorized as stars. Disney television has high market share and continues to grow. Apply Your Skills: Experiential Exercise Business School Ranking This exercise enables students to brainstorm about how to improve their own business schools. Students should develop ten-point plans to improve their schools, then meet in small groups of three or four to share their ideas and select the most helpful action steps that will be part of a final action plan that could be recommended to their deans. Apply Your Skills: Small Group Breakout SWOT Analysis This exercise asks each student to select a local eating establishment and write a statement of what the student believes is the business’s current strategy, key strengths and weaknesses, and opportunities and threats. Students should then interview the store managers or owners of their selected establishments to get those persons’ perspectives on the elements of SWOT. Students then set goals two years out and what steps they recommend to achieve those goals. Apply Your Skills: Ethical Dilemma Inspire Learning Corporation 1. Donate the $1,000 to Central High, and consider the $10,000 bonus a good return on your investment. Answer: This option will give the appearance of paying Central High to purchase the company’s product in order to get the bonus. It is unethical if not illegal, and should absolutely not be undertaken. 2. Accept the fact you didn’t quite make your sales goal this year. Figure out ways to work smarter next year to increase the odds of achieving your target. Answer: There is no reason Marge should accept defeat in achieving her sales goal without trying to do something. There may be some other way for Central High to get the $1,000 it needs to purchase the software without Marge donating it, so she should aggressively investigate other ethical ways for that to happen. 3. Don’t make the donation, but investigate whether any other ways are available to help Central High raise the funds that would allow them to purchase the much-needed educational software. Answer: This is the best option. Although time is short, she may be able to uncover some other ethical means for Central High to come up with the funds they need. If she can figure something out, the school will get its much-needed software, and Marge will make her sales goal and get the bonus. The key is in helping the school find a way to raise the money legitimately rather than donating the money herself. Apply Your Skills: Case for Critical Analysis Central City Museum 1. What goal or mission for the Central City Museum do you personally prefer? As director, would you try to implement your preferred direction? Explain. Answer: I would prefer that the Central City Museum be a major community resource rather than being exclusive for the elite. It should have lively contemporary exhibits too. A section of the museum could be given for training Ph.D. level students. As a director, I would like to implement my preferred direction as it is the most cohesive and holistic goal for the museum. 2. How would you resolve the underlying conflicts among key stakeholders about museum direction and goals? What action would you take? Answer: I would resolve the conflict among key stakeholders by uniting them toward a shared goal and get people to collaborate and cooperate for the larger good. I would build a coalition to support them too. 3. Review the Spotlight on Skills. Do you think that building a coalition and working out stakeholder differences in global preferences is an important part of a manager’s job? Why? Answer: Building a coalition and working out stakeholder differences in global preferences is an important part of a manager’s job as a manager can learn who believes in and supports a goal, and who opposes it. It is important for pursuing goals of quick growth and higher profit margins. On the Job Video Case Answers Modern Shed: Managerial Planning and Goal-Setting 1. What level of planning and goal setting does marketer Scott Pearl perform for Modern Shed? Answer: Students will encounter some difficulty answering this question because Modern Shed is organized as a vertical network, and assigning levels to the various types of plans and goals assumes a traditional vertical approach to organizational design. To answer the question, students must first recognize that Modern Shed is made up of a central hub of less than 20 employees, and that owner Ryan Smith outsources his marketing and sales activities to an outside contractor: Scott Pearl. Pearl acts as the head of Modern Shed’s virtual marketing and sales department. Technically, Pearl is not an employee and is therefore outside of the company’s executive-level management. As a result, he can’t define the company’s mission, nor does he set strategic companywide goals and plans that are developed by senior management. However, based on the information provided in the video, Scott Pearl carries out both tactical planning and operational planning for Modern Shed. For example, when Pearl decides what market Modern Shed ought to create and target for the sale of its products, he is carrying out tactical planning and goal setting. However, when he sets a specific goal to sell a certain number of sheds within a short time period, he is conducting lower-level operational planning and goal setting. Scott Pearl, a marketer for Modern Shed, engages primarily in tactical planning and operational goal setting. This involves developing and implementing marketing strategies and campaigns to achieve short- to medium-term objectives, such as increasing brand awareness and driving sales. 2. Do Scott Pearl’s goals meet the criteria of effective goal setting as discussed in the chapter? Explain. Answer: For goals to be effective, they have to be specific and measurable. Pearl’s goals contain specific sales targets that are both specific and measurable. Goals also need to be time bound, challenging, and linked to rewards to be effective. While not all of these criteria are discussed in the video, students should be able provide examples of how Pearl can make sure his goals possess those qualities. Scott Pearl’s goals meet effective goal-setting criteria if they are Specific, Measurable, Achievable, Relevant, and Time-bound (SMART). If his goals clearly define what is to be achieved, include measurable outcomes, are realistic, align with broader objectives, and have deadlines, then they adhere to these criteria. 3. What are some of the ways in which Scott Pearl’s plans and goals benefit Modern Shed as an organization? Are there potential downsides to such planning? Answer: Answers will vary, but goal setting and planning benefits organizations by providing legitimacy, a guide to action, a source of motivation, a rationale for decisions, and a standard for performance. This is especially important for a small startup company like Modern Shed, whose mission and purposes are under development and subject to radical change and revision. For example, Scott Pearl’s marketing plan builds legitimacy for Modern Shed in the eyes of employees and outside stakeholders by giving a clear explanation of the company’s market and consumer targets—this is critically important because Modern Shed is a new product concept without a clearly defined marketplace. In addition, Pearl’s planning and goal setting guides the actions of Modern Shed’s employees and sales personnel; without a plan in place, the company’s salespeople would lack direction for their efforts. Finally, Pearl’s goals provide a standard for performance that can be measured. Despite the many benefits of planning, some researchers argue that goals can create a false sense of certainty, cause rigidity in a turbulent changing environment, and stifle intuition and creativity. Modern Shed faces serious uncertainties surrounding the lack of an established market for its core product. Moreover, some of Scott Pearl’s sales ideas assume harsh economic conditions, and the economy can change quickly. To help anticipate areas of potential turbulence and change, Pearl should use the scenario building technique in which managers analyze current trends and then visualize potential future changes that could upset the current goals and plans. Scott Pearl’s plans and goals for Modern Shed likely focus on growth, innovation, and operational efficiency. Benefits include: 1. Increased Market Presence: Expanding product lines and marketing efforts can enhance brand recognition. 2. Operational Efficiency: Streamlined processes and improved technology can reduce costs and improve productivity. 3. Customer Satisfaction: Innovative designs and high-quality products can lead to higher customer satisfaction and loyalty. Potential downsides might include: 1. Overextension: Rapid expansion could strain resources and affect quality. 2. Risk of Innovation: New approaches carry the risk of not meeting customer expectations or market demand. 3. Operational Strain: Scaling up quickly may lead to logistical and managerial challenges. CHAPTER 6 MANAGERIAL DECISION MAKING Answers To End Of Chapter Discussion Questions 1. You are a busy partner in a legal firm and an experienced administrative assistant complains of continued headaches, drowsiness, dry throat, and occasional spells of fatigue and flu. She tells you she believes that the air quality in the building is bad and would like something to be done. How would you respond? Answer: Students should apply the decision making steps to solve this problem. The first step is recognition of decision requirement. The manager must determine if there truly is a problem with the air quality that needs to be solved. Discussions with others and, if warranted, testing the air quality should help make this determination. If a problem does indeed exist, the next step is the diagnosis and analysis of the causes of the poor air quality. The testing may reveal this. If needed, further tests by experts in the field should be made to determine the cause. Once the cause has been determined, the development of alternatives to eliminate the cause should be developed. The selection of desired alternatives is the next step during which the risk must be considered and the pros and cons of each alternative must be weighed. After an alternative has been chosen, the chosen alternative should be implemented. After an appropriate time evaluation of the alternative should be made and feedback provided. I would acknowledge her concerns, express empathy, and assure her that we'll investigate the air quality. I’d promptly arrange for a professional to assess the building’s air quality and take appropriate action based on the findings to ensure a safe and healthy work environment. 2. Managers at Gap Inc., a once- popular retail chain, are reported to have made a series of decisions that hurt the company: they expanded so rapidly that the chain lost touch with customers; they tried to copy the successful approach of rivals rather than charting their own course; they cut quality to reduce costs; they shifted from one fashion approach to another as each failed to appeal to customers, and so on. What techniques would you recommend Gap managers use to improve the quality of their decisions? Answer: Decision making is especially important to effectiveness because it underlies all manager activity. Managers are faced with limited resources, competing demands, and a continuous stream of problems and opportunities. As a result, managers make decisions every day—and hence are often referred to as decision makers. They make decisions about virtually every aspect of an organization including its strategy, structure, control systems, innovations, and human resources. They must make decisions to perform the basic functions of planning, organizing, motivating, and controlling. Managerial decision making ultimately determines how well the organization solves its problems, allocates resources, and accomplishes its objectives. Some of the techniques that the managers of Gap can use to improve the quality of their decisions may include: a. Start with brainstorming b. Use hard evidence c. Engage in rigorous debate d. Avoid groupthink e. Know when to bail f. Do a postmortem 3. Explain the difference between risk and ambiguity. How might decision making differ for a risky versus an ambiguous situation? Answer: Risk means that the decision maker has most of the necessary information. The objectives of the decision are clear-cut, and alternatives can be identified. However, the future outcome of each alternative is not known for certain, although the probability of outcomes can be calculated, which is the source of risk. Ambiguity means the almost complete absence of information pertaining to a decision. Managers do not agree on the objectives to be achieved by the decision, alternatives are difficult to find, and outcomes cannot be predicted. Decision making approaches differ considerably for each situation. For decisions under risk, a rational, calculative approach is preferred. The managers’ responsibility is to obtain the available information and run necessary computations in order to predict outcomes and select the best alternative. Decisions under ambiguity are more difficult. In these cases managers do not have sufficient information to perform computations. They must rely on personal judgment and experience to define alternatives and to anticipate possible outcomes of each alternative. Under ambiguity, managers have to take a chance and push ahead with decisions, even though they have poor information and will be wrong a substantial percentage of the time. 4. Analyze three decisions you made over the past six months. Which of these were programmed and which were nonprogrammed? Which model—the classical, administrative, or political—best describes the approach you took to making each decision? Answer: A programmed decision would refer to a situation that has occurred often enough so that a student can use past experience and similar decision rules over and over again. Programmed decisions are considered routine. A nonprogrammed decision would refer to a novel, unique, and largely unstructured decision situation that requires a student to search for possible alternatives and information and to make a decision that has not been made previously. An example of a programmed decision might be where to go to lunch or where to park the car. A nonprogrammed decision could be the choice of a major field of study, a decision that the student may have made after taking aptitude tests and investigating a number of career choices. Although the student may already be studying for the chosen career field, whether the decision was correct still may not be perfectly clear. The specific decisions students choose, and the decision-making processes they used, will determine their answers to the last part of this question, but they should be able to explain why they believe a particular model best describes their approach. 5. What opportunities and potential problems are posed by the formation of more than one coalition within an organization, each one advocating a different direction or alternatives? What steps can you take as a manager to make sure that dueling coalitions result in constructive discussion rather than dissension? Answer: When more than one coalition forms within an organization, with each advocating a different direction or alternative, there are significant opportunities for constructive dialogue and enhanced decision making, but only if the coalitions are able to come together and work toward a direction or alternative that both coalitions can support. If that does not happen, the potential exists for serious fractures to develop among managers. The situation could devolve into widespread backbiting and undermining of coworkers, which would lead to substantial performance and morale problems in the organization. If dueling coalitions develop over a single issue, relevant managers should immediately begin working to bring the two (or more) coalitions together to work out a plan both can accept. This may initially mean working with the coalitions individually to find common ground that can later be emphasized in trying to work out an agreement. Once some common ground is identified, the individual coalitions can be brought together to work out a direction or alternative that both (all) coalitions can accept. 6. Can you think of a bad decision from your own school or work experience or from the recent business or political news that was made in an effort to correct or justify a past decision? As a new manager, how might you resist the urge to choose a decision alternative based on the idea that it might correct or validate a previous decision? Answer: Students’ descriptions of past bad decisions will obviously vary. As new managers, it will be important for them to avoid making decisions based on the idea that they might correct or validate previous decisions. This might be accomplished by first acknowledging that the original decision was a mistake, which is difficult for people to do. However, once this acknowledgment is made, managers can then move on to make decisions based on the facts at hand rather than in an attempt to correct or validate previous decisions. Another way to avoid making this mistake might be to have someone in the decision-making process tasked with challenging the assumptions related to the current decision; i.e., to specifically raise the question of whether the current decision is being made to justify some previous decision that was in error. One example of a poor decision is the implementation of costly "band-aid" fixes to address issues from a prior flawed decision, such as a company rebranding to recover from a failed product launch. As a new manager, resist this urge by focusing on data-driven decision-making, evaluating options based on their own merits, and seeking unbiased feedback rather than letting past decisions influence new choices. 7. Experts advise that most catastrophes in organizations result from a series of small problems or mistakes. As a new, entry-level manager, how might you apply this understanding to help your organization avoid making major mistakes? Answer: Finding ways to compensate for inexperience in decision making is critical to identifying the alternative most likely to succeed. A new, entry-level manager who fails to do so will soon be marginalized or even fired as a result of making too many poor decisions. Such a person simply does not have the requisite knowledge or wisdom to sort out the complex issues involved in many managerial decisions. New, entry-level managers can seek advice from a variety of coworkers as part of their decision-making process. They can also try to research the many facets of the decision at hand, including collecting information on how such decisions have been handled in the past. One of the best ways to meet the challenge of inexperience is to find someone in the organization who has substantial experience in the company and the industry who is willing to serve as a mentor. A mentor can serve as a sounding board for the new manager, offering suggestions for improvement of an idea or explaining why the idea should be dismissed altogether. Mentors have substantial wisdom that they can share with new managers to help them “learn the ropes”, including learning the ropes of decision making. 8. List some possible advantages and disadvantages to using computer technology for managerial decision making. Answer: Advantages of using computers in making managerial decisions would be increased accuracy, timeliness, and reliability of information to improve managerial decision making. A disadvantage of using computers in managerial decision making is that inputting the wrong data produces incorrect information that will be used in substantial managerial decisions. 9. Can intuition and evidence-based decision making coexist as valid approaches within an organization? How might managers combine their intuition with a rational, data-driven, evidence-based approach? Answer: Intuition or a “gut” feeling, especially where it is forthcoming from experience, can be useful in management decision making. When time is of the essence, intuition can be a valid predictor of decision making. Individuals can use intuition to become more creative and risk taking in making decisions. Intuition can be combined with a rational decision-making approach to improve decision making. A rational approach is developing a decision-making style that is based on more complete data. This approach, when utilized, develops criteria, alternative options, evaluation of alternatives, and attempts to improve decision making based on more complete data. This, in turn, minimizes risks and improves decision making when combining intuition with a rational approach. 10. What do you think is your dominant decision style? Is your style compatible with group techniques such as brainstorming and engaging in rigorous debate? Discuss. Answer: Students’ responses will, of course, be very different. They should, however, demonstrate an understanding of the various decision styles. The directive style is used by people who prefer simple, clear-cut solutions to problems. Managers who use this style often make decisions quickly because they do not like to deal with a lot of information and may consider only one or two alternatives. People who prefer the directive style generally are efficient and rational and prefer to rely on existing rules or procedures for making decisions. These students may be more comfortable with jobs in which the work is fairly regimented and where most decisions will be programmed decisions. People with an analytical style like to consider complex solutions based on as much data as they can gather. These individuals carefully consider alternatives and often base their decisions on objective, rational data from management control systems and other sources. They search for the best possible decision based on the information available. These students may be more comfortable in highly technical jobs where large volumes of data can be gathered and applied to the decision-making process. People who tend toward a conceptual style also like to consider a broad amount of information. However, they are more socially oriented than those with an analytical style and like to talk to others about the problem and possible alternatives for solving it. Managers using a conceptual style consider many broad alternatives, rely on information from both people and systems, and like to solve problems creatively. These students may be more comfortable in jobs that involve many nonprogrammed decisions that require strong conceptual skills. The behavioral style is often the style adopted by managers having a deep concern for others as individuals. Managers using this style like to talk to people one-on-one, understand their feelings about the problem, and consider the effect of a given decision upon them. People with a behavioral style usually are concerned with the personal development of others and may make decisions that help others achieve their goals. These students may be more comfortable in flatter, more participative organizations where employees are heavily involved in decision making and are empowered to generate innovative solutions. My dominant decision style is analytical, focusing on data and systematic evaluation. This style is compatible with group techniques like brainstorming and rigorous debate, as it values diverse input and evidence, helping to refine ideas and make well-informed decisions. Apply Your Skills: Experiential Exercise What’s Your Personal Decision Style? Student responses will vary regarding their own decision-making style. For additional information, one is encouraged to review decision-making styles in the chapter. Personal decision style refers to differences among people with respect to how they perceive problems and make decisions. A suggestion would be to discuss the four decision-making styles: directive, analytical, conceptual, and behavioral. The directive style is used by people who prefer simple, clear-cut solutions to problems. Managers who use this style often make decisions quickly because they do not like to deal with a lot of information and may consider only one or two alternatives. People who prefer the directive style generally are efficient and rational and prefer to rely on existing rules or procedures for making decisions. People with an analytical style like to consider complex solutions based on as much data as they can gather. These individuals carefully consider alternatives and often base their decisions on objective, rational data from management control systems and other sources. They search for the best possible decision based on the information available. People who tend toward a conceptual style also like to consider a broad amount of information. However, they are more socially oriented than those with an analytical style and like to talk to others about the problem and possible alternatives for solving it. Managers using a conceptual style consider many broad alternatives, rely on information from both people and systems, and like to solve problems creatively. The behavioral style is often the style adopted by managers having a deep concern for others as individuals. Managers using this style like to talk to people one-on-one, understand their feelings about the problem, and consider the effect of a given decision on them. People with a behavioral style usually are concerned with the personal development of others and may make decisions that help others achieve their goals. Apply Your Skills: Small Group Breakout A New Approach to Making Decisions Managers are typically effective at focusing on problems and diagnosing what is wrong and how to fix it when they have to make a decision. A new approach to decision making known as outcome-directed thinking focuses on future outcomes and possibilities rather than on the causes of the problem. This exercise asks students to think of problems they have in their lives at the present time and write a brief summary of the problems, then answer four questions provided in the text. Finally, students should share their answers to the questions in small groups. Apply Your Skills: Ethical Dilemma The No-Show Consultant 1. Give Carpenter a month’s notice and terminate. He’s known as a good consultant, so he probably won’t have any trouble finding a new job, and you’ll avoid any further problems associated with his emotional difficulties and his possible alcohol problem. Answer: Option 1 is not the course of action to take. Alcoholism is not an uncommon disease, and it can be treated; however, the urgency of this matter is the important factor. It is important to recognize that Andrew can have a future with this organization if he seeks help. Acceptable behavior is an important requirement of this job. 2. Let it slide. Missing the New York appointment is Carpenter’s first big mistake. He says he is getting things under control, and you believe that he should be given a chance to get himself back on track. Answer: Option 2 is not desirable. Care must be taken and concerns expressed to Andrew. He is beginning to develop a pattern of behavior. If the alcohol abuse continues, require him to attend a treatment program or find another job. There should be an employee assistance program to permit Andrew to get help and external counseling. 3. Let Carpenter know that you care about what he’s going through, but insist that he take a short paid leave and get counseling to deal with his emotional difficulties and evaluate the seriousness of his problems with alcohol. If the alcohol abuse continues, require him to attend a treatment program or find another job. Answer: This is probably the best course of action. Andrew needs support and help, but cannot continue his present pattern of behavior. Apply Your Skills: Case for Critical Analysis The Office 1. What mistakes do you think John Mitchell made with the way he solved the problem of limited office space? Explain. Answer: It seems obvious that John Mitchell settled for a satisficing rather than a maximizing solution for the problem. His approach to decision making is based on the administrative model, which is considered to be descriptive, meaning that it describes how managers actually make decisions rather than how they should make them. The concept of bounded rationality and satisficing shapes this model. Bounded rationality means people have limits, or boundaries, on the amount of information they can process in making a decision. Because managers do not have the time or cognitive ability to process complete information about complex decisions, they must satisfice. Satisficing means that decision makers choose the first solution alternative that satisfies minimal decision criteria. Rather than pursue all alternatives, managers will opt for the first solution that appears to solve the problem. The decision maker cannot justify the time and expense of obtaining complete information. Mitchell knew his decision would affect Acklen and her staff; in spite of which he ignored all the factors and the complete information regarding the issue. He did not consider it important to consult the matter with Acklen to pursue other possible alternatives. 2. What approach would you have used if you were Mitchell? Why? Answer: The classical model of decision making would have been a better approach for Mitchell. This model is considered to be normative, which means it defines how a decision maker should make decisions. It is based on rational economic assumptions and manager beliefs about what ideal decision making should be. It does not describe how managers actually make decisions so much as it provides guidelines on how to reach an ideal outcome for the organization. The classical model is most valuable when applied to programmed decisions and to decisions characterized by certainty or risk because information is available and probabilities can be calculated. The classical model is often associated with high performance for organizations in stable environments. The four assumptions of this model include: a. The decision maker operates to accomplish goals that are known and agreed upon. b. The decision maker strives for conditions of certainty, gathering complete information. c. Criteria for evaluating alternatives are known. d. The decision maker is rational and uses logic to assign values, order preferences, evaluate alternatives, and make the decision to maximize goals. 3. What are Krista Acklen’s options for responding to Mitchell’s decision? What should she do now? Why? Answer: Following are the possible ways in which Krista Acklen can respond to Mitchell’s decision: a. Start with brainstorming b. Use hard evidence c. Engage in rigorous debate d. Avoid groupthink e. Know when to bail f. Do a postmortem One of the best known techniques for rapidly generating creative alternatives is brainstorming, which possibly could also be the best option for Acklen to pursue now in order to come up with a solution. Brainstorming uses a face-to-face interactive group to spontaneously suggest a broad range of alternatives for decision making. The keys to effective brainstorming are that people can build on one another’s ideas, all ideas are acceptable no matter how crazy they seem, and criticism and evaluation are not allowed. The goal is to generate as many ideas as possible. On the Job Video Case Answers Plant Fantasies 1. Did Plant Fantasies owner Teresa Carleo follow the rational decision-making process to launch Plant Fantasies? Explain. Answer: According to Carleo, the decision to quit her old job and start Plant Fantasies was characterized by whim and emotion. Her process was not consistent with the rational decision making model. She was emotionally upset at her former employer, and she had little experience with horticulture or operating a business. Nevertheless, she made a choice: “I just made the decision, I just went for it,” Carleo states. In the rational decision-making process, the decision maker strives for conditions of certainty, gathers complete information, and evaluates all known alternatives to ensure good results. In real management settings, however, decision making can never purely rational due to time constraints, limited knowledge of possible alternatives, bias, and human error. In addition, people and groups encounter decision-related problem areas like groupthink, escalating commitment, and uncertainty. In most decision making situations, people employ bounded rationality and end up satisficing—making a satisfactory rather than optimal decision. Satisficing causes managers to select the first acceptable alternative that meets minimal decision criteria, even though better alternatives may exist. 2. List an example of a programmed decision at Plant Fantasies. Identify a nonprogrammed decision at Plant Fantasies. Answer: A programmed decision is a decision made in any situation that has occurred often enough to enable decision rules to be developed and applied in the future. Programmed decisions tend to involve simple routine matters for which a manager has a familiar set of options. One programmed decision at Plant Fantasies is the daily process of maintaining healthy plants for clients: a maintenance manager examines plants at client location, determines if the landscape has a healthy or unhealthy garden condition, and sends a purchase order to Teresa Carleo for new replacement plants. This routine activity is a core function of the Plant Fantasies service. Another example of a programmed decision is discussed when Carleo says she selects tulips for a client that has a long history of ordering and reordering the same plants and colors. A nonprogrammed decision is a decision made in any situation that is unique, unstructured, unpredictable, or highly consequential. These decision situations involve complex challenges that require creative solutions. A nonprogrammed decision at Plant Fantasies occurs whenever Teresa Carleo has to collaborate with an outside landscape architect to install a garden. There are many complicated and unknown factors that arise when working with an outside firm or designer. As a result, a typical and routine garden installation may require creative thinking, negotiation, and group consensus to get the job done. 3. How might managers at Plant Fantasies conduct the final evaluation stage of the decision-making process when installing a new garden for a client? Answer: Maintenance teams can observe and track their progress during installations. In addition, Teresa Carleo can conduct customer satisfaction surveys over a period of months to ensure that clients remain satisfied with landscaping solutions. Evaluation and feedback is an important part of the decision making process because feedback provides managers with useful information that can precipitate a new decision cycle. If an evaluation determines that a decision failed to meet its objectives, this information will stimulate a new problem analysis and evaluation of alternatives. CHAPTER 7 DESIGNING ADAPTIVE ORGANIZATIONS Answers to End of Chapter Discussion Questions 1. Sandra Holt, manager of Electronics Assembly, asked Hector Cruz, her senior technician, to handle things in the department while Sandra worked on the budget. She needed peace and quiet for at least a week to complete her figures. After ten days, Sandra discovered that Hector had hired a senior secretary, not realizing that Sandra had promised interviews to two other people. Evaluate Sandra’s approach to delegation. Answer: An evaluation of Sandra’s approach to delegation can be made by using the manager’s Shoptalk box entitled “How to Delegate.” The guidelines provided there include delegating the whole task. It appears that Sandra did not want to delegate the hiring of the senior secretary, which violates this guideline. The second guideline of selecting the right person seems to have been complied with, since Sandra chose her senior technician who was apparently capable and not afraid of making decisions. Delegating responsibility and authority seems to have been complied with also, since Hector had no problem in completing the hiring process. Giving thorough instructions seems to be lacking in this situation. If Sandra wanted the other two people interviewed before the decision was made, she should have told Hector. Feedback seemingly has not been maintained, since Sandra did not find out about the hiring until sometime later. There is no mention of how well Sandra evaluated and rewarded Hector’s performance. 2. How does relational coordination differ from teams and task forces? Do you think relational coordination seems more valuable for a service technology or a manufacturing technology? Explain your answer. Answer: Relational coordination refers to frequent, timely, problem-solving communication carried out through employee relationships of shared goals, knowledge, and mutual respect. Teams, which are the most widespread trend in departmentalization, consist of the vertical chain of command as the powerful means of control; however, passing all decisions up the hierarchy takes too long and keeps responsibility at the top. A task force is a temporary team or committee designed to solve a problem involving several departments. Task force members represent their departments and share information that enables coordination. Companies also set up cross-functional teams for coordination which work with continuing rather than temporary problems that might exist for several years. As an organization grows and evolves, new positions and departments are added to meet the changing needs, and it grows more complex performing incredibly diverse activities. This leads to a need for coordination among these departments. Relational coordination, which is the highest level of horizontal coordination, seems more valuable for a service technology than for a manufacturing technology. Service technology characterizes departments such as legal, human resources, finance, and market research in large corporations. Service technology involves intangible output—services are perishable and, unlike physical products, cannot be stored in inventory; and direct contact with customers—employees and customers interact directly to provide and purchase the service. And also, production and consumption are simultaneous. Therefore, relational coordination would prove to be more valuable in such an organization as it is not based on formal coordination roles or mechanisms; rather it is part of the very fabric and culture of the organization. People can share information freely across departmental boundaries, and interact on a continuous basis to share knowledge and solve problems. 3. An organizational consultant was heard to say, “Some aspect of functional structure appears in every organization.” Do you agree? Explain. Answer: The consultant is probably correct. In all organizations, people who do similar jobs are grouped together in functional departments. For example, functional departments exist in a divisional structure, although they are smaller than if the organization had a functional structure. The hybrid structure and the matrix structure also take advantage of functional departments. Thus, at the lowest levels in all organizations, there are functional groupings. These functional departments, however, may be grouped together into a divisional, matrix, hybrid, or functional structure for the organization as a whole. 4. Some people argue that the matrix structure should be adopted only as a last resort because the dual chains of command can create more problems than they solve. Discuss. Do you agree or disagree? Why? Answer: Many experts would agree that the matrix structure should be adopted only after other structures have been tried. If the organization is in a functional structure and that doesn’t work, and then reorganizes into a divisional structure and that doesn’t work either, a matrix structure may be appropriate. The matrix structure requires extensive training to help people understand the dual hierarchies, and it may take one or two years to complete the implementation. Often, after the matrix structure has been implemented, it evolves back into either a functional or divisional structure if one side of the matrix becomes more powerful than the other. Dual chains of command create more problems than they solve if the matrix structure is not suited to the situation. The situation must demand equality along the two lines of authority, the sharing of functional resources across divisions, and a rapid response to a changing environment. Recent thinking on organization structure suggests that the matrix is appropriate in only a few situations. Most organizations can get by with other forms, such as a functional structure with lateral relationships, to meet the needs for coordination. 5. What is the virtual network approach to structure? Is the use of authority and responsibility different compared with other forms of departmentalization? Explain. Answer: In the virtual network approach, the organization becomes a small central broker, electronically connected to other organizations that perform vital functions. Each department is an independent contracting service to the broker for a profit and can be located anywhere. The central broker, or headquarters, has only contractual arrangements with the departments and, therefore, very little authority. Total responsibility for the component of the product or service is given to each department, and each has complete authority over its own operation. The major difference is that the headquarters has very little control over the departments and cannot exercise authority over them very well. 6. The Hay Group published a report that some managers have personalities suited to horizontal relationships such as project management that achieve results with little formal authority. Other managers are more suited to operating roles with much formal authority in a vertical structure. What type of structure—functional, matrix, team, or virtual network—do you believe your personality would best fit? Which structure would be the most challenging for you? Give your reasons. Answer: Students should demonstrate a clear understanding of the structures they select, and how those structures work, as they explain why they would feel more comfortable or more challenged operating within those structures. Students who seek more formal authority should be more comfortable with a functional or matrix structure and more challenged by a team or virtual network structure. Students who seek more flexibility and autonomy should be more comfortable with a team or virtual network structure and more challenged by a functional or matrix structure. Based on your personality traits, if you excel in achieving results with minimal formal authority, you might best fit a matrix structure. This structure relies on collaboration across different functions and allows you to leverage influence and interpersonal skills effectively. Conversely, a functional structure could be the most challenging for you, as it relies heavily on formal authority and clear hierarchical lines, which might not align well with your strengths in informal leadership and project-based roles. 7. Describe the primary differences between manufacturing and service technology. How do these differences influence the type of structure that will be most effective? Answer: Joan Woodward described the following three types of manufacturing technology: • Small-batch and unit production. • Large-batch and mass production. • Continuous process production. The difference among these manufacturing technologies is technical complexity which is the degree to which machinery is involved in the production to the exclusion of people. With a complex technology, employees are hardly needed except to monitor the machines. Woodward found that the relationship between the structure and technology was directly related to company performance. Low-performing firms tend to deviate from the preferred structural form, often adopting a structure appropriate for another type of technology. Service organizations include consulting companies, law firms, brokerage houses, airlines, hotels, advertising companies, amusement parks, and educational organizations. Service technology also characterizes departments such as legal, human resources, finance, and market research in large corporations. Service technology involves: • Intangible output—services are perishable and, unlike physical products, cannot be stored in inventory; and • Direct contact with customers—employees and customers interact directly to provide and purchase the service. Production and consumption are simultaneous. One distinct feature of service technology that directly influences structure is the need for employees to be close to customers. 8. Experts say that organizations are becoming increasingly decentralized, with authority, decision-making responsibility, and accountability being pushed farther down into the organization. How will this trend affect what will be asked of you as a new manager? Answer: The trend toward increased decentralization, with authority, decision-making responsibility, and accountability being pushed farther down into the organization will require new managers to have good delegating skills and very strong interpersonal skills. They must be able to work effectively in a flexible environment in which they rely on subordinates to make a wide variety of important decisions. New managers in such an environment must be able to work through cooperation and influence rather than by telling others what to do. 9. The chapter suggested that structure should be designed to fit strategy. Some theorists argue that strategy should be designed to fit the organization’s structure. With which theory do you agree? Explain. Answer: If the company is an already existing company, the argument for adapting strategy to structure is stronger simply because the structure may be very difficult to change. It does not make much sense for a local, bricks-and-mortar “mom and pop” store to have a multidomestic strategy; a small company like that will not have the resources to pursue such a strategy. If the company is new, the argument for adapting structure to strategy is stronger. The major point to understand is that structure and strategy must be compatible, regardless of which comes first. 10. Would you expect the structure of a company such as Facebook that operates almost entirely online to differ from the structure of a bricks-and-mortar company such as AT&T that uses the Internet for some things, such as customer service and business-to-business transactions? Why or why not? Answer: Both companies are service organizations, but because AT&T provides Internet, television, and telephone services to its customers, all of which require installation and/or repair work, it must operate a “field” service component to meet these requirements. Facebook doesn’t need a field operation. AT&T also operates bricks-and-mortar stores across the country to sell their services and mobile phone products. The field service and stores components of AT&T’s structure not only require the inclusion of entirely different categories of employees from Facebook, but also involve the operation and maintenance of equipment and vehicles, which Facebook also does not require. As a result, the structures of the two companies will be quite different. Apply Your Skills: Small Group Breakout Family Business In this exercise, students assume the role of consultant to a family business and rank the priority of departmental functions in order of importance for assigning additional resources to improve business in the future. Students rank functions individually first, then discuss their individual rankings in groups and develop a group ranking. Finally, they analyze what they learned about organizational structure and design from the exercise. Apply Your Skills: Ethical Dilemma A Matter of Delegation 1. Prepare a memo to Golopolus, summarizing the new safety guidelines that affect the Rockingham product line and requesting his authorization for implementation. Answer: This course of action would probably have no effect. Golopolus is already aware of the guidelines and hasn’t done anything about them yet. 2. Mind your own business. Golopolus hasn’t said anything about the new guidelines and you don’t want to overstep your authority. You’ve been unemployed and need this job. Answer: Tom Harrington is in a tough position. He feels loyalty to his boss, but he is also concerned about product safety as well as the company’s reputation. This option would clearly be unethical. Harrington is aware of the safety guidelines, which have been devised to ensure the safety of children, so he cannot just “look the other way.” 3. Send copies of the reports anonymously to the operations manager, who is Golopolus’s boss. Answer: The operations manager is ultimately responsible for whether Rockingham’s toys meet federal guidelines and he or she needs to be aware of what those guidelines are. By sending the reports to the operations manager anonymously, Harrington does not have to criticize his boss or accuse him of wrong-doing; but he is making sure that higher-level managers are aware of the new safety standards. Tom is right that he does not have the authority to monitor the federal regulations, but the operations manager does have that authority. Apply Your Skills: Case for Critical Analysis Abraham’s Grocery 1. Based on the information available in the case, sketch a picture of the original structure within an Abraham’s store and the store managers’ relationship with district specialist managers. What type of structure is this? Explain. Answer: The original structure within the store was a functional structure which can be represented as below: Functional structure is the grouping of positions into departments based on similar skills, expertise, work activities, and resource use. The major departments under the president are groupings of similar expertise and resources, such as the meat, grocery, and produce departments. Each of the functional departments is concerned with the organization as a whole. This functional structure is a strong vertical design. Information flows up and down the vertical hierarchy, and the chain of command converges at the top of the organization. It does not enable the organization to be flexible or innovative and reflects barriers across the departments. 2. Based on the information available in the case, sketch a picture of the consultant’s recommended structure within the store and the relationship of store department managers with district specialist managers. What type of structure is this? Explain. Answer: The consultant’s recommended structure within the store is a divisional structure. Divisional structure occurs when departments are grouped together based on similar organizational outputs. In the divisional structure, divisions are created as self-contained units for producing a single product. The new divisional structure recommended by the consultant within the store and the relationship of store department managers with district specialist managers are represented as below: 3. What are some of the advantages and disadvantages you see for the two types of structures? Which structure do you think will work best for Abraham’s? Why? Answer: Advantages of functional structure: • Grouping employees by common task permits economies of scale and efficient resource use. • Functional structure enhances development of in-depth skills because people work on a variety of related problems and are associated with other experts within the department. • The convergence of the chain of command at the top offers a way to centralize decision making and provide unified direction from top managers. Disadvantages of functional structure: • Barriers exist across departments. • Communication and coordination are poor as people are separated into distinct departments, causing a slow response to environmental change. • Innovation and change require involvement of several departments. • Decisions involving more than one department may pile up at the top of the organization and be delayed. Advantages of divisional structure: • Organization will be more flexible and responsive to change. • Coordination across functional departments is better because employees are grouped together in a single location and committed to one product line Disadvantages of divisional structure: • Poor coordination across division • Duplication of resources and the high cost of running separate divisions • Loss of efficiency and economies of scale • Small size of departments within each division may result in a lack of technical specialization, expertise, and training. Divisional structure will work best for Abraham’s as it will ensure more coordination across the departments and also be more flexible and responsive to change. On the Job Video Case Answers Modern Shed 1. Which of the five approaches to structural design is used at Modern Shed, and how are the company’s departments organized and coordinated? Answer: Modern Shed uses the virtual network approach to departmentalization. The Seattle shed builder has a core hub of just 12 to 14 employees (mostly designers and managers). These top managers outsource most aspects of business operations to outside specialists. As discussed in the video, Modern Shed’s marketing and sales activities are outsourced to independent marketing consultants. The company’s manufacturing process involves close collaboration with dozens of outside vendors who specialize in the creation and delivery of components used in the sheds—everything from paneling and electric to hardware and transport. The contractors coordinate through monthly conference calls, and they come together to build projects and product lines planned by Modern Shed’s Seattle office. 2. What are the advantages and disadvantages of Modern Shed’s organizational structure? Answer: The advantages of operating as a virtual network include fast response to market needs; access to marketing, manufacturing, and sales personnel, without the overhead costs; and the capacity to serve a rapidly changing niche market. Disadvantages of a virtual network include lack of control over outside supply chain partners, high demands on managers in the company’s core hub, and tenuous loyalty from independent contractors. 3. How did Ryan Smith determine whether his company needed a mechanistic structure with a formal vertical hierarchy or an organic one involving free-flowing partnerships? Answer: A firm’s organizational structure is determined largely by the company’s business strategy. Modern Shed designs innovative and customizable studio dwellings for a rapidly changing niche market. The company’s virtual network structure allows for greater innovation, flexibility, and differentiation. Company size is another factor in Smith’s choice of organizational design. Whereas large manufacturers have the equipment and personnel to create and assemble products in house, Modern Shed is a small startup company with few resources. The company’s small size and limited resources force owner Ryan Smith to outsource many business processes. CHAPTER 8 MANAGING CHANGE AND INNOVATION Answers to End of Chapter Discussion Questions 1. Times of shared crisis, such as the September 11, 2001, terrorist attack on the World Trade Center or the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, can induce many companies that have been bitter rivals to put their competitive spirit aside and focus on cooperation and courtesy. Do you believe this type of change will be a lasting one? Discuss. Answer: Many organizations still have a competitive approach within the industry in which they compete. This competitive challenge will depend on the firm, the industry, and the communication of these organizations with one another. A trend supports partnering in the vertical chain, as well as increased communication, cooperation, and developing trust. This can be the result of terrorist activity, as well as foreign competition in this country. This change has resulted in increased coordination of activities built upon communication and openness in the supply chain. Integration of safety and health related issues will continue to be a primary focus for many firms in diversified industries. This type of change will be a lasting one due to the complex worldly activities that continue to go on by terrorists in this country and throughout the globe. There is a strong anti-American feeling that will continue to be felt by many that creates the need for organizations to plan for change to take into account a diversified workforce and population. 2. A manager of an international chemical company said that few new products in her company were successful. What would you advise the manager to do to help increase the company’s success rate? Answer: The manager should understand that all companies have a poor success rate with new products. New products involve a great deal of risk, and improving the new product development process can bring major benefits to organizations. Based on the horizontal linkage model, the manager should explore three things. First, do people in marketing have a good understanding of customer needs? Marketing must know the customer well, not only through market surveys but also through face to face contact. Second, does the R&D department have an understanding of the latest technology? It should bring the latest techniques to bear in the design of new products. Next, and perhaps most important, are members from key departments cooperating in the development of new products? Do the research and development specialists listen to what marketing people have to say about customer needs? Do marketing people listen to what R&D has to say about new technological developments and work with them to decide how these developments can be used in new products? Only by selflessly working together can these departments increase the rate of success of new produce. If each department fails to do its own job, or fails to cooperate with other departments, new products have little chance. 3. As a manager, how would you deal with resistance to change when you suspect employees’ fears of job loss are well founded? Answer: The best way to deal with a situation like this is to be as open and honest about it as possible. Employees should be given all the information that is available, as soon as it becomes available, so that they can begin to plan for the transition. If possible, arrangements should be made to help affected employees find new positions in the company or with another employer. Ignoring the situation or giving false hope to these employees will only increase their feelings of betrayal and frustration. 4. If you were a manager responsible for floor cleaning products at a consumer products company, how might you apply crowdsourcing to identify a new product that would meet customer needs? Answer: Crowdsourcing is an approach to open innovation. It can be used to gather creative ideas to identify a new product that would meet customer needs. With the use of the Internet the company will be able to tap into ideas globally and let hundreds of thousands of people contribute to the innovation process of creating a new product for the company based on their own needs. 5. To tap into the experience of battle-tested soldiers, the U.S. Army recently began encouraging personnel from all ranks to go online and collaboratively rewrite some of the Army’s field manuals in a Wikipedia-like fashion. When the rank and file showed little interest, one retired colonel suggested top leaders should make soldiers participate. Does coercion seem like a good way to implement this type of change? Discuss. Answer: Coercion means managers use formal power to force employees to change. Resisters are told to accept the change or lose rewards or their jobs. In most cases, this approach should not be used because employees feel like victims, are angry at change managers, and may even sabotage the changes. Coercion may be necessary in crisis situations when a rapid response is urgent. There is no need for a rapid response in this situation, and if soldiers are forced to participate in this project, they are likely to be angry and may even sabotage the project by entering false or incorrect information into the field manuals as a means of revenge against their supervisors. Incorrect or subversive information in field manuals could result in the deaths of soldiers at some point in the future and Army commanders cannot afford to take that chance. A better approach might be to gather together a group of interested soldiers of different ranks and have them use a similar process to create the manuals. 6. Analyze the driving and restraining forces of a change you would like to make in your life. Do you believe understanding force-field analysis can help you more effectively implement a significant change in your own behavior? Answer: Force-field analysis examines change with respect to the social forces impinging on it. Kurt Lewin proposed that change was the result of competition between driving and restraining forces. By identifying and analyzing these forces, managers can enhance the driving forces and reduce the restraining forces, thereby enabling the change to be implemented. The important thing for students in answering the first part of this question is to practice analyzing the social forces that work in favor of a change and those that work against it. In that way, students can learn to understand and use force-field analysis to implement changes in their lives and in their behavior. 7. Which role or roles—the inventor, champion, sponsor, or critic—would you most like to play in the innovation process? Why do you think idea champions are so essential to the initiation of change? Could they be equally important for implementation? Answer: Students should demonstrate an understanding of the roles they choose as those they would most like to play and would be least comfortable playing. The idea champion role is important because change does not occur by itself. Personal energy and effort are required to successfully promote a new idea. Idea champions fight to convince managers of the merit of a new idea and provide the passionate commitment needed to push a new product or idea through to completion despite rejection by others. I’d most like to play the role of an idea champion. Champions are essential to initiating change because they advocate for the idea, mobilize support, and navigate organizational barriers. They generate enthusiasm and sustain momentum, which is crucial for transforming a concept into reality. Yes, they are equally important for implementation as they help overcome resistance, secure resources, and ensure that the innovation is effectively executed and integrated. 8. You are a manager, and you believe the expense reimbursement system for salespeople is far too slow, taking weeks instead of days. How would you go about convincing other managers that this problem needs to be addressed? Answer: Students are likely to express a variety of ideas on how to convince the other managers. One thought would be to tie sales force satisfaction to the timeliness of expense reimbursement by suggesting that speeding up the reimbursement process will increase satisfaction among salespeople, leading to higher commitment and larger sales volume. Another approach might be to suggest that a faster reimbursement process would facilitate increased opportunities for salespeople to meet with clients by eliminating concerns of over-extending expense accounts. To convince other managers, I would: 1. Present Data: Show specific examples and metrics highlighting the delays and their impact on salespeople’s productivity and morale. 2. Illustrate Costs: Quantify the financial impact of the slow process, including potential lost sales and administrative costs. 3. Propose Solutions: Offer potential improvements or alternatives that could streamline the process and explain their benefits. 4. Gather Support: Highlight any feedback from salespeople or other departments affected by the delays to build a case for change. 5. Show ROI: Demonstrate how addressing the issue can lead to increased efficiency, higher morale, and better overall performance. This approach builds a strong case for why the reimbursement system needs improvement and shows the potential positive outcomes of making changes. 9. Do the underlying values of organization development differ from assumptions associated with other types of change? Discuss. Answer: The underlying values and assumptions of OD were made explicit in the chapter. They include: “people desire personal growth and development,” “work groups can satisfy important needs for individuals,” and “organizations can be designed to meet the needs of individuals and groups and enhance their contributions to organization performance.’’ These assumptions and values have a humanistic quality and are primarily concerned with human values within the organization. Values and assumptions for technology, structure, and product changes were not explicitly described in the chapter. Students should be encouraged to think about what the underlying values are. They might assume that the primary value is to increase organizational efficiency and effectiveness. They may also mention that little credibility is given to the human side of change because it is assumed that performance can be improved through changes in technology, products, and structure. Another difference in assumption might be called rationality; that is, rational procedures are used to initiate and implement change. Technology, products, and structural changes are presumed to arise to meet genuine needs, and it is expected that people will go along with these changes if they understand the needs. Often human beings do not act in rational ways, however, and the OD approaches tend to display an appreciation for the complex needs and behaviors of employees. 10. What do you see as the major advantages and disadvantages of a company moving to open innovation? Answer: Open innovation means extending the search for and commercialization of new ideas beyond the boundaries of the organization and even beyond the boundaries of the industry, sharing knowledge and resources with other organizations and individuals outside the firm. With open innovation, even customers are brought into the innovation loop. This allows the company to get many perspectives and develop products and services that result from a host of diverse ideas. However, this could also lead the company to losses, for example, loss of control over the external resources, increased complexity in managing innovation, higher costs for the company, possible loss of competitive advantage, etc. Apply Your Skills: Experiential Exercise Is Your Company Creative? An organization’s culture has a tremendous influence on how receptive employees are to change. This in turn influences the effectiveness of an attempted organizational change. This exercise measures the culture/climate of an organization for which students worked or with which they are familiar. Once students have completed the questionnaire and have determined how effectively their organization fosters creativity, ask them to consider how important creativity is to the success of that organization. Some organizations may not benefit substantially from creativity. Of course, many would argue that creativity and innovation are becoming increasingly important to most organizations given the complexity and rate of change in the external environment (e.g., international competition). You might ask students to identify specific actions organizations can take to foster creativity. What actions stifle creativity? Apply Your Skills: Small Group Breakout AN ANCIENT TALE The purpose of the exercise is to understand, analyze, and improve organizations, which requires carefully thinking through the issue of who is responsible for what activities in different organizational settings. The exercise could be conducted on either an individual or group basis. It provides an opportunity to see how different individuals assign responsibility for an event. It is also a good opportunity to discuss the concept of organizational boundaries (what is the organization, who is in or out, etc.) This is followed by an action learning exercise in which the students are asked to analyze how they have handled change in the past. The case study or tale has implications regarding the impact of the organization on the individual, the ability to protect him- or herself in the organization, and how to manage the organization to accomplish objectives which are in the best interest of the organization as well as the participants. Role-Play Option If you want to bring life to the case, you could ask students to perform role-plays; to act out, for example, a scene between the Lord and the Princess, between the Princess and the Godfather, or the Princess and the Knight. I have used this with much success in class. Group Discussion Format One suggestion is to use a group discussion format for the case as follows: 1. Prior to class, assign members to read the case and answer the questions at the end of the case. 2. Divide class members into groups of four to eight members. 3. Assign each group to discuss the five questions and to arrive at a consensus decision. This should take about 10-20 minutes. 4. With the entire class, have each group report their responses to the questions, noting especially the criteria for making their decisions. 5. After each group has made a presentation, follow the Class Discussion guidelines which follow to highlight the implications of the case for individuals within organizations. Simulated Court Trial Another way (optional) of stimulating discussion on “An Ancient Tale” is through the use of a court trial. 1. Prior to the class in which the story will be discussed, assign individuals to play the role of each of the seven characters and “defense attorneys” for each character (Princess, Lord/Husband, Dragon, Vagabond, Sorcerer, Godfather, White Knight). 2. Instruct each role player to be prepared to explain in the next session why he/she (or his/her client) is not responsible for the death of the Princess (who will be brought back from the dead to defend herself). 3. Select an articulate student (or have the instructor) perform the role of prosecuting attorney (have this individual prepare arguments as to why each person should be held responsible for the death of the Princess). 4. On the day of the trial, a jury is selected (volunteers) along with a jury foreman, and the classroom is arranged in the following manner: The trial proceeds in the following manner: 1. The defendant and “defense attorneys” for each character proclaim the defendant’s innocence (two minutes per character). 2. After each character proclaims his/her innocence, the prosecutor presents the case for their guilt. The prosecutor will present the case for guilt after each character’s defense (two minutes per character). 3. After all the characters have been tried, the jury retires (maximum period – 10 minutes) and passes a verdict on each separate defendant. The jury foreman announces the verdict on each character with a brief explanation. After the trial, discussion follows. Apply Your Skills: Ethical Dilemma Crowdsourcing 1. Go to the meeting and argue for abandoning crowdsourcing for now in favor of maintaining the artistic integrity and values that Off the Hook has always stood for. Answer: This is an option that could put you at odds with the CEO. You have to decide whether it’s worth the risk to your relationship with him to stand up for your views. Because the CEO is strongly in favor of crowdsourcing, you are likely to lose the argument and you may have created bad feelings between yourself and the CEO to no avail. 2. Accept the reality that because Off the Hook’s CEO Rob Taylor strongly favors crowdsourcing, it’s a fait accompli. Be a team player and help work out the details of the new design approach. Prepare to lay off graphic designers as needed. Answer: This option is one that many would probably take, but you will have to live with the fact that you knowingly signed on to something you didn’t believe in that would cause your graphic designers to lose their jobs. 3. Accept the fact that converting Off the Hook to a crowdsourcing business model is inevitable, but because it violates your own personal values, start looking for a new job elsewhere. Answer: This may be the best option, except that you will still probably end up laying off at least some of your graphic designers before you find a new job. Of course, if you have the resources and the desire to do it, you can always start your own graphic design company and hire the graphic designers who are being laid off from Off the Hook. Apply Your Skills: Case for Critical Analysis Cleaver’s Sausage House 1. What do you think are the reasons for people’s resistance to the MRP implementation? Explain. Answer: People at Cleaver’s Sausage House were resistant to the MRP implementation for many reasons: a. Self-interest: Employees typically resist a change they believe will take away something of value. A proposed change in job design, structure or technology may lead to a perceived loss of power, prestige, pay, or company benefits. The fear of personal loss is perhaps the biggest obstacle to organizational change. Implementing the MRP idea would require a radical overhaul of every facet of the Cleaver’s operation. Making the system work would require at least 25 managers and employees to change how they did their jobs. b. Lack of understanding and trust: Employees often do not understand the intended purpose of a change or distrust management’s intentions for the change. If previous working relationships with an idea champion have been negative, resistance may occur. The CFO expressed a doubt about implementing it. c. Uncertainty: Uncertainty is the lack of information about future events. Uncertainty represents a fear of the unknown, as employees do not know how a change will affect them. Uncertainty is especially threatening for employees who have a low tolerance for change and fear the unusual. Cleaver’s senior staff warned that the change could be a costly disaster as it involved serious money for a company of 350 employees. The vice president of sales doubted whether the MRP system could provide the solid sales forecasts that Cleaver needed and feared it would result in shortages of raw materials. Even the director of logistics warned about the problems associated with the maintenance of an MRP system which can lead to customer dissatisfaction. d. Different assessments and goals: Employees who will be affected by innovation may assess the proposed change differently than an idea champion or new venture team. Critics voice legitimate disagreements over the proposed benefits of a change. It was obvious to Allison Elam, the idea champion, the idea of MRP implementation was not a priority topic for the other VPs and department head, as it was to her. These reasons for resistance are legitimate in the eyes of employees affected by the change. 2. What is the value of the task force idea suggested by the CEO as a way to facilitate implementation? Explain. Answer: The task force idea suggested by the CEO would not hold much value. Elam believes in the technology and its implementation like any no one else in the organization so she feels that only she can get it done. She feels that the task force will only slow her down in the process. 3. Which implementation tactics do you think Elam should follow? Why? Answer: To get the visible support of top management seems to be the most probable implementation tactics for Elam to follow as it would help overcome the people’s resistance to change. Top management support symbolizes to all employees that the change is important for the organization. Top management support is essentially important when a change involves multiple departments or when resources are relocated among departments; the MRP implementation involves these same requirements. Without top management support the desired change will probably not happen. On the Job Video Case Answers Holden Outerwear 1. Identify the type of change that Holden’s leaders are managing on a daily basis. Answer: Holden is engaged in managing product change, not organizational change or technology change. Product change and innovation is the primary way in which organizations adapt to competition in the market. 2. Is Holden’s creative approach to outerwear an example of disruptive innovation? Why or why not? Answer: Holden’s mission to inject fashion into the world of snow-sport apparel is groundbreaking, but it is only mildly “disruptive.” Disruptive innovation refers to innovations that radically change an industry’s rules of the game—as when CDs replaced the phonograph. Holden’s contributions are disruptive, however. The snow and ski apparel industry now must think of style and fashion when designing performance apparel. It is no longer acceptable for snowboarding garment makers to think only in terms of comfort and performance. 3. What resistance has Holden encountered while introducing innovative garment designs? Answer: Holden is a small company that does not own its own factories or fabric mills. To produce any garment, the company needs cooperation from outside vendors, which is not always guaranteed. In the video, designer Nikki Brush says that being highly innovative means doing things differently. This requires managers to push on outside apparel manufacturers and vendors in ways that may cause conflict. Owner Mikey LeBlanc states that outside partners often give an “it’s not possible” response to Holden’s proposed concepts. Elsewhere in the video, Nikki Brush notes that rising costs throughout the industry make vendor cooperation even more uncertain, as outside manufacturers don’t want to risk money or resources on untested products. Mikey LeBlanc identifies a powerful counter to this resistance: the market rewards hot new trends with big sales. Moreover, Holden has a reliable track record of successful innovation, and Mikey LeBlanc is an effective idea champion. Solution Manual for Understanding Management Dorothy Marcic, Richard L. Daft 9781285421230, 9781305313347