CH-1-4 Managing and Performing – Management: Leading and Collaborating in a Competitive World : Book Guide

This Document Contains Chapters 1 to 4 Chapter 1 Managing and Performing DISCUSSION QUESTIONS 1. Identify and describe a great manager. What makes him or her stand out from the crowd? Students—especially those with very limited work experience—may find this a difficult question to answer especially since the word “great” is highly subjective. However, it can be answered from three perspectives. Those students who have worked with one or more organizations will be able to identify an individual who seemed to be a better manager than others will. They will probably mention his or her ability to communicate clearly, willingness to support and aid subordinates, and skill in providing motivation and leadership, etc. The question can also be answered in terms of business executives who are featured in magazines or appear on television. These managers stand out from the crowd because of their visions for the organization or their successes in either building up or turning around a business. These are (or have potential to be) successful managers. Also, this question can be addressed from the family perspective. A student’s parents, for example, may be great managers as they balance a number of different time-consuming activities despite ongoing problems and pressures. There are a number of issues that can be raised in connection with this question. Examples: •Are successful business executives always great managers? •Are all great managers successful? •What makes a manager the type of individual for whom a student would want to work? 2. Have you ever seen or worked for an ineffective manager? Describe the causes and the consequences of the ineffectiveness. Different students will have different levels of experience. However, most will have worked on a committee or as a member of a group and will thus have had some experience in an ineffective situation. Inefficiency results from a wide range of factors including lack of clarity and vision, failure to communicate effectively, poor organization, lack of leadership and motivation, lack of feedback, etc. In reality, ineffectiveness results from weaknesses in one or more of the four functional areas of management—planning, organizing, leading and controlling. 3. Describe, in as much detail as possible, how the Internet and globalization affect your daily life. The use of the Internet has become a part of everyone’s daily life. Increased information is now made available to benefit everyone that would use the Internet. The Internet allows a person to attend classes online, obtain their college degree, buy a car, send flowers or a card, and buy groceries and medications without leaving the privacy of their home. One can benefit from utilizing the Internet globally because it is possible to buy goods and services from around the globe in today’s market-driven economy. Interaction among individuals can transcend around the globe via Internet technology. In the age of information systems, an individual can access data that was previously not available. 4. Identify some examples of how different organizations collaborate “across boundaries.” Different organizations manage their resources across boundaries to build upon customer needs. P&G is getting customers to think creatively and talk with one another online to come up with new product and service ideas. WingspanBank.com, an offshoot of Bank One Corp., invites customers to help improve its services. 5. Name a great organization. How do you think management contributes to making it great? Students may name organizations they have worked for or are familiar with by reputation. A great organization is one that gains competitive advantage by employing management practices that satisfy both internal and external stakeholders. Great organizations focus on cost competitiveness, quality, speed, and innovation. Cost competitiveness means pricing goods or services so that they are attractive to customers, and ensuring that they add more value than the competitors. Quality refers to the excellence of the product or service and is more important than ever as customers’ expectations for high quality and value increase. Speed can be a critical factor in separating a great company from a good company. An organization that can deliver its goods or services quickly can increase customer loyalty and beat competitors to market with new products. Great organizations are leaders in innovation whether it is in the creation of new products and services or in continually improving internal processes that reduce costs, improve quality or increase speed. Great organizations also focus on continuous improvement and beating themselves rather than their competitors. Truly great companies are always asking the question, “How can we improve ourselves?” 6. Name an ineffective organization. What can management do to improve it? Students may name organizations they have worked for in the past or troubled organizations in the news media. An ineffective organization is one that has no clear sense of direction and is not structured appropriately. The leadership is weak, and the control processes are poor. As a result, the organization does not effectively utilize its resources, and often the decisions and actions facing the organization are allowed to slide. Management can improve their effectiveness by establishing an annual plan and communicating organizational goals will all employees. Good planning utilizes a bottom-up approach where teams “own” their part of the organization’s goals. Increased communication to formulate a vision will help every employee to be a part of a participatory approach. 7. Give examples you have seen of firms that are outstanding and weak on each of the four pillars of competitive advantage. Why do you choose the firms you do? The four pillars of competitive advantage are cost, quality, speed, and innovation. Students should be able to identify firms that are strong and weak in each of the areas. It is important that students recognize that firms often succeed by offering a combination of these pillars of competitive advantage. For example, a man can buy a suit off the peg at a local store at a very reasonable price. Its quality, however, may not be outstanding. By contrast, there are tailors in each of the major cities that offer top quality products but at a very high price, and it may take them weeks to complete a single suit. In Hong Kong, by contrast, you can have a suit made overnight. The quality can be quite good, and the cost can be relatively inexpensive. To a large degree, however, they are competing on the basis of speed. Students typically identify firms based on their exposure, experience, or insights they may have in the firm's operation. Student’s culture and value systems will differentiate thus highlighting different frames of reference. 8. Describe your use of the four management functions in the management of your daily life. Most students are aware of the importance of planning in managing their daily lives, particularly if students are attending school, working full-or part-time and involved in home and community activities. Planning allows students to analyze their different roles (such as student, co-worker, parent, etc.) and set goals and prioritize their daily activities. Students will also often find themselves organizing the activities of others both at home and at school, such as fellow students, co-workers, service personnel and family members. Many students will also play a role in leading and motivating others. They may have taken the lead on a group project, volunteered to coach soccer or have been selected to chair a committee. In terms of controlling, students are required to review plans and schedules for various projects and assignments and balance recreational activities with their studies. Also, many students review their long-term goals, such as earning a degree or learning to speak another language. 9. Discuss the importance of technical, conceptual, and interpersonal skills at school, and in jobs, you have held. At school, students have to be able to handle the technical aspects of each course - a break-even analysis in marketing, a cash flow problem in finance, a linear programming problem in operations research, etc. However, they do not go through the program in a vacuum. Conceptual skills are vitally important to top management because they must make decisions that will impact the whole organization. They also need strong interpersonal and communicational skills that will allow them to work with other members of a team or group. Being able to communicate effectively with the instructor is another key skill for students. These same skills are needed when working in a business or organization. Working at the local McDonalds’s requires that students be able to handle the day-to-day tasks. Furthermore, they must be able to interact and communicate with not only their peers and the manager but also the customers. The reputation of the franchise is, in large part, dependent on the image that employees project to customers. 10. What are your strengths and weaknesses as you contemplate your career? How do they correlate to the skills and behaviors identified in the chapter? Students should be able to list at least three or four major strengths and weaknesses vis-à-vis their future careers. The instructor might ask them to evaluate these strengths and weaknesses specifically against the four managerial functions: planning, organizing, leading, and control. 11. Devise a plan for developing yourself and making yourself attractive to potential employers. How would you go about improving your managerial skills? The instructor can help the student through this exercise by providing a personal example: showing how he or she has used interpersonal, informational/technical, and decision-making skills to better position his or her career and other interests. The instructor may want to emphasize ways they improved managerial skills through education, training, and personal experiences. Recognizing the skills is important to seek to retrain and recognizing the skills required to be an effective manager. Technical or problem-solving skills include developing the product knowledge and the ability to listen, observe, and diagnose problem/opportunities. Conceptual and decision skills pertain to the ability to identify and resolve problems for the benefit of the organization and its members. Interpersonal and communication skills are people skills; the ability to lead, motivate oneself and others, and communicate effectively. 12. Consider the managers and companies discussed in the chapter. Have they been in the news lately, and what is the latest? If their image, performance, or fortunes have gone up or down, what has changed to affect how they fared? Many of the organizations listed in the chapter will have suffered setbacks or improved their status by the time the students read this text. Setbacks are typically caused by changes in market conditions, mismanagement, or unwise use of resources (for example, overexpansion.) Improvements can be tied to the four drivers of competitive advantage - innovation, speed, quality, and cost, as well as customer service and effective management. 13. Who are Business Week’s most recent “Best and Worst Managers” and why were they selected? This information can be found on the Business Week website if needed. BusinessWeek's "Best and Worst Managers" list highlights those who have significantly impacted their companies. The best managers focus on innovation, customer satisfaction, cooperation, and giving back to society. Conversely, the worst managers often engage in unethical practices, focus on manipulating numbers, and disregard the well-being of customers and employees EXPERIENTIAL EXERCISES EXERCISE 1.1 YOUR PERSONAL NETWORK Suggested Responses to Discussion Questions 1. What were some of the best primary sources identified by your group? Best primary sources will likely include teachers, parents, family, peers (colleagues), and current employers. 2. What were some of the best sources for secondary contacts identified by your group? The best sources for secondary contacts will differ from student to student, but most often include family, peers, and friends — people who have a personal interest in you. 3. What are some suggestions for approaching primary contacts? Primary contacts are people with whom you interact on a regular basis. Most of these people will be happy to help if asked directly for advice. You may also want to think about how to “reward” them for the information they give you — for example, taking someone to dinner or lunch to discuss your career. If someone is difficult to catch up with, students might contact them via email. 4. What were some suggestions for approaching secondary contacts? The most effective approach for a secondary contact is to ask for an informational interview. When approaching a secondary contact, you must be aware of their time — don’t ask for a lot of time. Also, preparation is important. Draw up a list of the most important questions you want to ask, and stick to that list. 5. What did you learn about yourself and others from this exercise? Hopefully, students now know that they have a wider circle of contacts that they may have thought previously. Also, they will have gained some tips for approaching secondary contacts, and perhaps gained some primary contacts as well! Teaching Tip Time: 30-40 min. Resources/Set-up: Participants will need a blank sheet of paper and the figure “Primary and secondary connections” (in the chapter) as a guide. Activity Instructions: This step can be assigned as a homework assignment and discussed at this time during the lecture. Follow the instructions in the text. You may want to give them an example of your network or a hypothetical network. You may want to assign a team member as timekeeper or call time for the class. Discussion/Debrief: See questions in the text; facilitate discussions using answers above, plus: Ask students to discuss in small groups what was easy, hard about doing this exercise. Ask small groups to report their suggestions for #3 and #4 to the entire group using suggestions discussed as well as personal experiences. EXERCISE 1.2 Are You an Effective Manager? OBJECTIVES 1. To recognize what behaviors contribute to being a successful manager. 2. To develop a ranking of critical behaviors that you personally believe are important for becoming an effective manager. INSTRUCTIONS 1. Following is a partial list of behaviors in which managers may engage. Rank these items in terms of their importance for effective performance as a manager. Put a 1 next to the item that you think is most important, 2 for the next most important, down to 10 for the least important. 2. Bring your rankings to class. Be prepared to justify your results and rationale. If you can add any behaviors to this list that might lead to success or greater management effectiveness, write them in. MANAGERIAL BEHAVIORS WORKSHEET _____ Collaborates with people from different parts of the organization. _____ Looks for ways to incorporate technology into the operation. _____ Ensures that services/products are of a high quality and delivered on time. _____ Keeps costs down and looks for ways to be more efficient. _____ Makes decisions to help achieve the goals of the organization. _____ Is organized and effectively allocates resources. _____ Motivates others to perform at a high level. _____ Makes sure goals are met and implements changes when necessary. _____ Exhibits good interpersonal and communication skills. _____ Is skilled at identifying and resolving problems. Source: Adapted from Lawrence R. Jauch, Arthur G. Bedeian, Sally A. Coltrin, and William F. Glueck, The Managerial Experience: Cases, Exercises, and Readings, 5th ed. © 1989 South-Western, a part of Cengage Learning, Inc. EXERCISE 1.3 Career Skills Development OBJECTIVES 1. To develop an understanding of your career-related strengths. 2. To identify career-related skills and behaviors requiring development. 3. To increase confidence in your marketability. INSTRUCTIONS Read the instructions for each activity, think about them, and then provide your response. Career Development Worksheet Think about a part- or full-time job, or a volunteer role that you’ve held. 1) Describe activities and skills at which you excelled and which helped you succeed: a) __________________________________________________________ b) __________________________________________________________ c) __________________________________________________________ d) __________________________________________________________ e) __________________________________________________________ 2) Identify activities and skills that you wanted to master but were unable to do so due to lack of training or time: a) __________________________________________________________ b) __________________________________________________________ c) __________________________________________________________ d) __________________________________________________________ e) __________________________________________________________ 3) Referring to your list in #2, what steps could you take now to develop these important activities and skills: a) __________________________________________________________ b) __________________________________________________________ c) __________________________________________________________ d) __________________________________________________________ e) __________________________________________________________ Suggested Responses to Discussion Questions 1. What were some of the best primary skills that you identified as helpful in your jobs? Skills may include relationtional, technical, and conceptual; Students may also discuss basic job skills such as arriving on time, being willing to do more and fitting into the organizational culture. 2. What were some of the skills you wished you had? Answers will vary; however, relationship and technical skills are frequently expressed. Some of the skills people often wish for include advanced leadership abilities, effective communication, and proficiency in technical areas like data analysis or coding. Additionally, skills like emotional intelligence and adaptability are commonly desired for personal and professional growth 3. What are some suggestions on acquiring the needed skills for career success? Student answer will vary; however, internships, mentors, and appropriate coursework are popular responses. To acquire the skills needed for career success, focus on continuous learning through courses, workshops, and mentorship opportunities. Additionally, seek out hands-on experiences and networking to gain real-world insights and grow professional connections 4. What did you learn about yourself and others from this exercise? Hopefully, students now know that they have a wider set of skills that they may have thought previously. In addition, they will have gained some tips for approaching skill acquisition. CONCLUDING CASE A New Manager at USA Hospital Supply Case Summary: This case provides students with insights into the thoughts and feelings that a new manager faces, especially if he or she is promoted within their existing company. Chapter Topics Related to the Case: •Discuss the concepts of being both a specialist and a generalist. •Identify the managerial and other skills that students need to bring to a job. •Show students that they can be in charge of their own careers (being self-reliant) rather than just doing what someone else tells them to do. •Show students that they must actively manage their relationship with their organization. •Focus students on the four pillars of management as a foundation for launching a new career as a manager: planning, organizing, leading and controlling. Case Discussion Questions: 1. How will Charlie’s approach to quality and service affect his company’s performance? Students should put themselves in the position of Charlie’s teammates and think about how they will be impacted by Charlie’s decision to “teach” them how to sell better. They should consider how Charlie might do things differently if he focused on the four pillars of management rather than simply on sales training. 2. Which of the basic functions of management has Charlie considered? How well is he preparing to carry out these functions? Charlie briefly considered planning when he made out a list of salespeople. Additional discussion might pursue ways that Charlie could implement each of these four foundational elements as a new manager. 3. Which management skills does Charlie have? In what areas do you think he has the greatest need to develop skills? How can he actively manage his development as a manager? From what we read in the case, it appears that Charlie possesses a good set of interpersonal skills as well as strong technical skills in sales. However, he may need to develop his conceptual skills, his organizational skills, and his decision-making skills in order to be successful as a manager. To manage his development as a manager, he might consider asking a senior manager to mentor him as well as enrolling in a management training program. Continuous learning is the key to ongoing growth and development, and Charlie now must learn to develop a new set of tools to advance his career as a manager. Chapter 2 The External and Internal Environments DISCUSSION QUESTIONS 1. This chapter’s opening quote by Peter Drucker said, “The essence of a business is outside itself.” What do you think this means? Do you agree? Students may ask: What is meant by the word “essence?” It has a number of meanings. However, according to the dictionary, it means “that which makes something what it is.” It is important to remember that the purpose of a successful business is to get customers and to retain customers. Using the definition above, Drucker’s statement can be interpreted to mean that it is the outside environments that determine the nature of business. This can be illustrated through the use of an example. A new automobile manufacturer entering the U.S. market is faced with three large domestic companies and a number of well-established foreign firms. The newcomer’s strategy has to take this external environment into consideration. This can be contrasted with a new company entering a business in which the competition is limited to three or four small firms. However, one can argue that even though the external environments can have a dramatic impact on a business, it is still management’s responsibility to develop a strategy to enable the organization to grow and prosper. 2. What are the most important forces in the macroenvironment facing companies today? In order to answer this question, the student probably needs to recognize that different companies operate in different industries and a critical macroenvironment force facing one company may be a minor factor for another. Three examples are given below: Economy. The economy is always a factor. A booming economy may allow a new business to grow and prosper while a depressed economy would cause it to fail. Some businesses do very well in booming economies whereas others (notably the entertainment industry) seem to flourish during times when the economy is weak. Technology. Consider the impact of rapidly changing technology in the computer industry. Most of the early innovators are no longer in business, and many of the current leaders might not survive another dramatic change in technology. And yet, in other industries (such as candy making), the technology has been unchanged for many years. Political/legal. This factor is having a major impact on the television/telephone/computer interface. Political efforts to increase competition in the cable television industry will probably be a major factor for many years to come. Students should be able to identify industries in which each of the forces in the macroenvironment is playing a major role or, at least, have done so in the past. 3. What are the main differences between the macroenvironment and the competitive environment? The macroenvironment consists of the major forces (international, economic, social and natural, demographic, technological, and political/legal) which affect all businesses to some degree. While the competitive environment is also part of the external environment, it is viewed separately from the macroenvironment in that it focuses on the competitive forces that are specific to each business. 4. What kinds of changes do companies make in response to environmental uncertainty? Organizations may adapt to the environment by altering their work structures and work processes in order to reduce uncertainty. When uncertainty arises due to environmental complexity, many organizations adopt more decentralized decision-making structures. This allows people with the most direct knowledge of a particular product or operation to make important decisions rather than a centralized unit that may be more removed from the daily business activities. When uncertainty arises due to changes in the environment, many organizations adopt more flexible structures. When technologies, customers, and competitors change rapidly, a highly rigid, bureaucratized organization is less able to respond effectively. Thus responsiveness and innovation become priorities Organizations can adapt to uncertainty by buffering at both the input and output sides of their boundaries. They may do this by hiring temporary workers during rush periods on the input side, and by maintaining adequate inventory in order to manage a rush of orders on the output side. Organizations may also adapt at their core by establishing flexible processes such as mass customization which allows an organization to produce large quantities at low cost, yet still offer individual customization. 5. We outlined several proactive responses organization can make to the environment. What examples have you seen recently of an organization responding effectively to its environment? Did the effectiveness of the response depend upon whether the organization was facing a threat or an opportunity? A number of proactive responses to the environment are identified in the text: Independent strategies: The firm acts on its own to change some aspect of the current environment through competitive aggression, competitive pacification, public relations, voluntary action, legal action, or political action. Cooperative strategies: The firm collaborates with another organization to either reduce their costs and risks or increase their power relative to the environment. Strategic maneuvering: The firm attempts to change the boundaries of its competitive environment through domain selection (entering new markets with limited competition or regulation), diversification (investing in different types of business), mergers and acquisitions, or divestiture. Challenge students to identify firms that are adopting each of these strategies and whether or not they are doing so in response to a threat or an opportunity. 6. Select two organizations that you are interested in. Research information about the firms or talk with an employee if possible. What types of cultures do they have? Write a paragraph that describes each culture. EXAMPLE: “Company X seems to really care about their new employees. The employee I spoke to told me that the company actively encourages employees to move from job to job within the organization—that sounded great to me. In addition, I found out that people have a lot of flexibility to work on their terms—for example, being in the office at 9 AM doesn’t matter as much as whether or not you get the job done. To me, this company looks like it has a group culture.” 7. When you visited colleges to decide where to attend, were there cultural differences in the campuses that made a difference in your choice? Did these differences help you decide which college to attend? Student responses to this question will differ widely, but if they understand the concept of culture, they should talk about the “feeling” a place has—organized, productive, friendly, etc. If students have visited several college campuses, they should definitely be able to talk about the difference in culture for each campus. For example, in California, one might have perceived USC as being very sports-oriented, Occidental as being very arts-oriented and exclusive, UCSD as a school that produced “renaissance people,” CalTech as being a place for brains and geeks, and San Diego State as a party school. Note that all of these perceptions of culture have value judgments attached to them, and they may or may not be accurate. EXPERIENTIAL EXERCISES EXERCISE 2.1: EXTERNAL ENVIRONMENT ANALYSIS Objective: To give students the experience of performing an analysis of a company’s external environment. Responses to the external environment questions will vary depending on the companies and industries the students discuss. Suggested Responses to Discussion Questions 1. What has the company done to adapt to its environment? Using the music industry as an example, explain how in order adapt to the environment, music companies are taking over more of the supply chain, manufacturing their own CDs and managing their own music clubs. They are making deals with online music distributors to sell individual songs. They are also increasing their online marketing efforts, as in letting AOL offer its customers music video and song samples. 2. How does the company attempt to influence its environment? Continuing with the music industry example, students might indicate that in order to influence the environment, music companies pay slotting fees to retailers to gain shelf space, and pay fees to ensure play time on radio stations. They heavily market new releases. They are aggressively seeking to enforce copyright laws forbidding illegal copying—their success in shutting down Napster is an example of that. They are also enlisting the artists themselves in an effort to educate and influence the public on the illegal copying issue. In the U.S., they are also asking the government to pressure China to reduce the widespread music piracy in that country. EXERCISE 2.2: CORPORATE CULTURE PREFERENCE SCALE Objectives •To expose students to different types of corporate cultures. •To help students identify the kind of organization in which they would most like to work. •To help students see how classroom cultures can differ along the same lines as corporate cultures. Case Discussion Questions: 1. Review the four types of corporate cultures outlined in the exercise. Working in small groups, give examples of classes you have taken that correspond to each of the different types of corporate culture dimensions. Student responses will vary, but in general, you can expect to see the following differences across different types of classrooms: Control Culture: These classes have professors that are firmly in charge of the class, and they let students know it. Typically, professors in a control culture will take roll, have large amounts of homework (which may or may not be meaningful to the students), and will give difficult tests that may or may not be related to the work done previously in class. Control culture classes often place a lot of emphasis on memorization as a learning tool. Performance Culture: These classes have professors that are interested in learning and who foster a learning environment with their students. Class assignments are typically relevant and give students new skills, and although tests may be difficult, they are clearly related to what has been presented in class. Students often describe these classes as challenging, but fair and interesting. In a performance culture, the primary emphasis is on learning and growth. Relationship Culture: These classes have professors that become ‘friends’ with students. Students feel that their opinions count, that their voices are heard, and that they contribute to learning, along with the professor. Responsive Culture: This class is constantly changing to keep up with the latest changes in the field. It may be taught online, or it may evolve as students bring in additional information. 2. How do you know what kind of culture a class has? What do you look for that tells you how the class is going to be? Again, student responses will vary, but students are likely to talk about professor behavior (business practices), the class syllabus (corporate mission statement and official goals), ritualized behaviors such as distributing paperwork and taking roll (symbol, rites, and ceremonies), and student reviews of the class (the stories people tell.) CONCLUDING CASE Tata Motors: From Cheap to Awesome? Case Summary: This case reveals how important it is to organizations of all sizes to be prepared and ready to change both marketing and manufacturing strategies. When Tata introduced the Nano, it stated that the car would be sold for $2,000 to $2,500, but it was later found out that this price could not be sustained. Moreover, there were numerous safety issues with the car. This led to a change in the features of the Nano, and the entire pricing model, to stay competitive with competitors such as Suzuki. Chapter Topics Related to the Case: •Discuss how environmental forces impact organizations •Describe the purpose of an environmental analysis •Discuss how organizations like the Tata operation can conduct environmental analyses •Discuss how organizations such as Tata change culture Case Discussion Questions: 1. Which barriers to entry contributed most to Tata Motors lack of success with the original Nano? Tata Motors suffered from a cost analysis mistake in the way it priced its model. It was not able to enter the market competitively against Suzuki. There was also an issue with the brand as there were numerous safety issues reported. 2. Which macroenvironment factors did Tata Motors consider when adjusting the marketing and manufacturing strategies to achieve success with the more recent Twist and LX models? Tata focused on technology and demographics in revamping the Nano. It focused on young urban customers instead of first-time rural buyers. There were also technological upgrades such as power steering, Bluetooth connectivity and other enhanced interior and exterior features. 3. To what degree of you believe Tata Motors will succeed in delivering a successful low-cost vehicle to consumers in India and other developing economies? The new focus on a different set of demographics, as well as technological advances, puts Tata Motors in good shape for competing with companies like Suzuki. The car is a bit more expensive, but the market focus is a bit different, and there are some advancements that may justify the higher price. The buying power of this demographic is a bit more, and the technological advancements are what this set of demographics also demands. Chapter 3 Managerial Decision Making DISCUSSION QUESTIONS 1. Discuss Uber’s success and crises in terms of risk, uncertainty, and how its managers handled the company’s challenges. What is the current news on this company? Uber essentially created a new product using emerging technology and innovative employment practices. As an innovator, their business was a proof of concept and thus wrought with risk. The rapid success of the model brought issues to the new corporation perhaps faster than the management team and practices could mature. Uber is faced with customer concerns regarding their personal safety, and there is competition entering the ridesharing market. Emerging technology, including the potential for self-driving cars, will necessitate Uber’s continual evolution if it is to remain relevant. The managers handled the risks of cost overruns by bringing in many suppliers; this approach turned out to be more difficult to manage than anticipated. It handled the resulting problems by tackling each one, correcting mistakes, and bringing more of the work in-house. As of this writing, Boeing determined that it had corrected the problems causing battery fires, and some airlines have begun flying the Dreamliner. 2. Identify some risky decisions you have made. Why did you take the risks? How did they work out? Looking back, what did you learn? Students may have problems relating to this question since they may not see themselves as having made very many “risky decisions.” For some of them, going to college was a risky decision. It certainly represented a major commitment of both time and money. Why did they decide to go to college? How is it working out? What do they think they have learned from the experience? A decision to report a fellow worker for stealing, or for the use of inappropriate language, or a refusal to work overtime might be examples of risky decisions in a work environment. Declining to go out with a gang or group of friends or buying a secondhand car might be good examples in a personal context. 3. Identify a decision you made that had important unintended consequences. Were the consequences good, bad or both? Should you and could you have done anything differently in making the decision? Very seldom do managers have all the information they need to precisely predict all the consequences of a decision. Even when a manager can assess the likelihood of various consequences, the risk exists if the probability of a particular action is less than 100 percent. Students may describe both positive and negative unintended consequences. Attempt to have them identify or articulate whether the decision was high to low uncertainty and high to low risk. In addition, have students notice whether they used the formal six-stage decision-making model, if they operated purely from intuition, or used some combination of both. In each student’s particular case, ask if one approach would have been more effective than the other would. 4. What effects does time pressure have on your decision-making? In what ways do you handle it well and not so well? Time pressure both enhances and inhibits decision making. Students who are procrastinators are likely to respond that they need a deadline or some other form of time pressure in order to make a decision at all. Other students make talk about the fact that making quick decisions may prevent them from making the best decision because they don’t take time to explore enough options. 5. Recall a recent decision that you had difficulty making. Describe it in terms of the characteristics of managerial decisions. Students probably will answer this question in very different terms. For example, they might discuss the problems inherent in buying a secondhand car: Lack of structure There is no specific or structured decision-making process for buying a secondhand car. Uncertainty The purchaser, in most cases, knows very little about the car and its condition. Even an expert can be fooled. Risk The risk is that they will find they have bought a lemon and thus lost their money. Conflict The individual may not want to buy a used car but may not have the money to buy or lease a new one. The individual’s parents may wish him or her to buy a safe, reliable vehicle while a close friend may be urging something sporty. 6. What do you think are some advantages and disadvantages to using computer technology in decision-making? The advantage of utilizing computers in executing decisions would be that the computer not only makes more information available to the manager for decision-making but also enables him or her to apply statistical methodologies to this information. The manager can, for example, input a mass of data into a previously defined model and determine which course of action is consistent with the model. In this sense, computer technology improves the “rationality” of the decision-making process. It is a logical decision given the data provided to the computer and the model that the computer used. Disadvantages would include “garbage in, garbage out.” Another disadvantage is where the computer requires judgment or experience on the part of the manager. Judgment cannot be substituted unless an expert system is used. The computer can only handle those aspects of the decision that can be quantified. Many other factors (both organizational and personal) are normally taken into consideration when making a decision. Furthermore, in the end, the manager must still make the final decision. He or she must take into consideration a number of intangible factors before making a final decision. 7. Do you think that when managers make decisions they follow the decision-making steps as presented in this chapter? Which steps are apt to be overlooked or given inadequate attention? What can people do to make sure they do a more thorough job? Exhibit 3.3 illustrates a six-step process which decision makers should take, beginning with (1) identifying and diagnosing the problem, (2) generating alternative solutions, (3) evaluating alternatives, (4) making the choice, (5) implementing the decision, and (6) evaluating the decision. The key word is “should.” Only rarely does a decision-maker have perfect information and unlimited time in which to make a decision. Most decisions are made under pressure with limited information. As to which steps are apt to be overlooked or given inadequate attention, an argument can be made for each step—under different circumstances: Identifying and diagnosing the problem. While the problem is usually easy to identify, the diagnosis is often bypassed in a rush to implement a change. The result is that managers often implement actions, which do not address the true nature of the problem. Generating alternative solutions. The typical manager is often content with two or three whereas further thought might well suggest a far wider range of alternatives—some of them much more creative than those selected. Analysis of alternatives. This is possibly the area most overlooked. A manager under pressure is likely to make a decision on qualitative rather than quantitative information and on the available information rather than on perfect information. Furthermore, the analysis is often relatively superficial as opposed to an in-depth evaluation. Making the choice. A manager bases his or her decision on the information available at the point in time when a decision has to be made, even if delaying the decision would allow for the gathering of more information and thus a better decision. Implementation of the decision. One often sees wide variations between the original decision and the way it was implemented for two reasons: •The attention of the individual who made the decision is now often focused on other issues. He or she is no longer focusing on the implementation. •Implementation is often passed on to a subordinate who may not have a complete understanding of the decision or who may choose to implement it in a very different way from that intended. Evaluating the decision. This step is often ignored although it can be a highly valuable step in the learning experience. It is ignored because the manager has other more pressing issues to consider and because there is often a reluctance to conduct a post-mortem on one’s actions—especially when the outcome was not the one intended. Managers can do a lot to make sure they do a thorough job. A group meeting, for example, may result in a far better understanding and diagnosis of the problem, and a brainstorming session may result in a far wider, more creative set of alternatives. An analysis of the data needed to make a rational decision will help steps three and four and a detailed set of implementation procedures accompanied by assigned responsibilities and reporting deadlines will help in implementing the decision. Conducting an evaluation of the decision can be helped by a formalized reporting process (the completion of a form at the end of the project or activity) and by leadership from top management in the interest of ensuring that future decisions are more thorough. 8. Discuss the potential advantages and disadvantages of using a group to make decisions. Give examples in your experience. Advantages: More information is available when several people are making the decision. Wider range of perspectives and approaches to problem solving. Better analysis: “Two heads are better than one.” Intellectual stimulation: A group session can unleash people’s creativity. Group members will understand the decision better if they were part of the process. There will be greater commitment to the decision. Disadvantages: Domination of the group process by one individual. A tendency to compromise so that all members of the group are satisfied, leading too poorer decision making. Pressure to avoid disagreement. Goal displacement with the original goal of the group being replaced by another goal. 9. Suppose you are the CEO of a major corporation and one of your company’s oil tanks has erupted, spilling thousands of gallons of oil into a river that empties into the ocean. What do you need to do to handle the crisis? There are a number of very different elements affecting the CEO’s decision-making process under these circumstances, and it may be useful to have the student’s list and prioritize the actions. Students probably will not agree as to the order in which they should be handled. Contact the appropriate local, state, and federal authorities—a number of notifications will be legally required, and this will enable the authorities to mobilize their resources. Alert the communities downriver—again so that they can take whatever steps are necessary to minimize the effect of the spill. Mobilize the company’s own resources to handle the spill—hopefully, the company will have a definitive, written plan of action ready to be implemented. Prepare a statement for the media indicating the nature of the spill and the steps, which are being taken to minimize the effect. Ensure that you are available at all time to the media and that you present a realistic and cooperative posture. While the spill itself is important, the public relations aspects are equally so, and it is important that the CEO handle this aspect of the disaster in a professional manner. The instructor might ask students whether or not they feel the CEO should be totally honest in dealing with the media. Are there dangers inherent in being honest? 10. Identify some problems you want to solve. Brainstorm with others a variety of creative solutions. This question represents a good opportunity for some lively and amusing discussion. For example, how to get a good grade in this class might be an appropriate topic for discussion! Or how to ask somebody to a dance? Or how to propose marriage? Or you might use the example of the two attorneys who share a reception area and two offices. They want to replace the dark brown color with something more attractive but can’t agree on what color to adopt. Children under 10 can normally suggest 30 or 40 possible solutions (including the shooting of one partner by the other). College students are often limited to 20 ideas or less due to the tendency to “self-reject” solutions or choices during the brainstorming process. The instructor might ask students to create a short list of three to five problems or challenges they want to solve. Then have students write the names of three to five people who might be a good source for useful solutions. Challenge students to talk with the people on the list they created about their problems before the next class period and see how many “solutions” they are able to discover. EXPERIENTIAL EXERCISES EXERCISE 3.1 DECISION MAKING IN ACTION Objective Learn how to improve your ability to make good decisions. Instructions Refer back to Exhibit 3.3 in the chapter. Think back to a recent expensive purchase you made. It could have been a bike, mobile device, suit for interviews, and so forth. In order to evaluate the quality of your decision, please think about your purchase when answering each of the questions below. Decision-Making Worksheet 1. What problem did you hope to solve by making this purchase? ______________________________________________________________________________ ______________________________________________________________________________ 2. What alternative (or competing) products did you consider? ______________________________________________________________________________ ______________________________________________________________________________ 3. How did you evaluate the different alternative (or competing) products? Did you identify each product’s strengths and weaknesses? ______________________________________________________________________________ ______________________________________________________________________________ 4. When you made the final choice, was is a maximizing, satisficing, or optimizing outcome? ______________________________________________________________________________ ______________________________________________________________________________ 5. After purchasing the product, how frequently did you test it out? ______________________________________________________________________________ ______________________________________________________________________________ 6. Was your decision to make the purchase a positive or negative one? Did it satisfy your original need(s)? ______________________________________________________________________________ ______________________________________________________________________________ EXERCISE 3.2 GROUP PROBLEM SOLVING AT A SOCIAL ENTERPRISE Objective To understand the dynamics of group decision-making through role-playing a meeting between a president and her employees. Instructions 1. Identify 5 students to play the roles of the employees. Ask these five individuals to read their roles below. 2. Identify 1 student to play the role of the president of the social enterprise. Ask this individual to read his/her role below. 3. Set up a table with 6 chairs at the front of the classroom. 4. Ask the remaining students in the audience to observe how the 6 individuals behave and then answer the discussion questions (below). 5. When everyone is ready, Taylor Johnson joins the others at the table in her office, and the scene commences. 6. The meeting continues until there is a successful close unless an argument develops and no progress is made after 10-15 minutes. Discussion Questions 1. How did each member frame the problem? What did each member discuss? 2. How effectively did the group generate and evaluate alternatives? 3. What was their final decision? 4. Evaluate the effectiveness of the group’s decision making? 5. How could the group’s effectiveness be enhanced? Overview The role-playing exercise is based on a meeting between a manager of a social enterprise and her five employees. Each character’s role is designed to re-create a realistic business meeting. Each character brings to the meeting a unique perspective on a major problem confronting the social enterprise as well as some personal views of the other characters developed over several years of knowing them in business and social contexts. Cast of Characters Taylor Johnson, the president, founded the enterprise 10 years ago as a way to connect outstanding teachers who have recently earned their teaching degrees with students in schools located in economically disadvantaged areas. The new teachers agree to serve in the disadvantaged schools for a three-year period in exchange for a reasonably good salary and forgiveness of up to $30,000 of their student loans. Taylor is well known for her hard-driving, selfless style of leadership. A charismatic leader, she is highly skilled at bringing diverse stakeholders together. However, Taylor admits that she lacks knowledge related to online classroom and teaching technologies. In the old days, this wouldn’t be an issue. However, Taylor’s competitors are beginning to overtake the social enterprise by offering new teachers training, mobile devices, and online learning tools (e.g., online homework, interactive videos, eBooks, and so forth) to help them create high-performance classrooms. She doesn’t know whether the enterprise should continue doing what it does best (placing new teachers into traditional face-to-face teaching environments) or begin preparing its recruits to teach online and hybrid (combining face-to-face with online modules) classes. Amit Patel, head of information technology, has worked for the enterprise for 6 months. A recent college graduate, Amit reports directly to Taylor. She is on a mission to modernize the way the enterprise does its work. She feels strongly that the enterprise should be shifting more of its IT operations to the cloud. Also, Amit feels that a great deal of insight could be mined from 10 years of data currently stored in antiquated servers at the enterprise. Amit believes she could make these changes without spending a lot of funds. Unfortunately, Amit’s zeal for rapid change has been a cause of concern for Felipe and Taylor who prefer a more methodical approach to change. Felipe Rodriguez, director of fundraising, reports directly to Johnson. He has held this position for 8 years and is a very close friend of Taylor’s. Donations and grants for the most recent year are down by 10 percent. Prior to joining the enterprise, he worked as a fundraiser for a major university in the region. The university offered a wide variety of online and hybrid courses. Felipe would often refer to these innovations when seeking donations from alumni. He was widely viewed as successful at his work. Mike Clarke, the manager in charge of recruiting new teachers, works for Felipe. After working for the enterprise as an entry-level recruiter for two years, Mike was recently promoted to this position. Though a persuasive recruiter of new teachers, he has noticed a recent decline in the number of recruits willing to teach in traditional face-to-face learning environments. He is progressive in his thinking and believes that the enterprise needs to change how it does business in order to keep up with the competitors. Mike and Amit feel they are agents of change and want to modernize the enterprise. Today’s Meeting Taylor has called the meeting with these three managers to decide whether the social enterprise should begin preparing its new recruits to not only teach traditional face-to-face classes but also hybrid and online classes. This decision has to be made within 15 minutes because the enterprise’s largest client just called and asked to meet with Taylor immediately. Taylor is concerned that the school may be on the verge of discontinuing the contract with the enterprise. If that’s the case, Taylor wants the managers to help her decide on a counteroffer to win the client school back. Losing this client school is not an option given that it makes up 40 percent of the enterprise’s revenue. CONCLUDING CASE Soaring Eagle Skate Company Case Summary: The initial growth of Soaring Eagle Skate Company has slowed as skateboarding is no longer a growth sport. Founder and skateboarding pro Stan Eagle has found that expanding into other lines of business is risky. A clothing venture failed, and Stan’s partner is suggesting expansion into inline skates and ice skates, but Stan is reluctant to take more risks. Chapter Topics Related to the Case: •Discuss the concept of decision making. •Identify advantages of group versus individual decision making. •Discuss the disadvantages of group versus individual decision making. •Identify and discuss methodologies for effectively managing group decision making. •Identify constraints that face decision makers of organizations such as Wallingford. Case Discussion Questions: 1. How do the characteristics of management decisions—uncertainty, risk, conflict, and lack of structure—affect the decisions facing Stan Eagle? Suggested Responses: The business owners have discovered that they have insufficient information to know the consequences of expanding into different product lines; this is the condition of risk. With more sophisticated market research, they could estimate the risks they face—that is, they would not be certain of what they could sell at what price, but they could estimate the likelihood of losses or gains. The two partners are experiencing conflict because Pete Williams is eager to pursue growth, and Stan Eagle is more concerned with simply preserving what he has. The decisions lack structure because there are many possibilities for how to address a situation in which a business is not growing—many ways to seek growth as partners or by bringing in new ownership, as well as the options of getting out of the business by selling it or closing it down. 2. What steps can Eagle take to increase the likelihood of making the best decision in this situation? Suggested Responses: Ways of improving a decision include following a careful, thorough decision-making process that includes identifying and diagnosing the problem, generating alternative solutions, evaluating the alternatives, making a choice, implementing the decision, and evaluating the decision to make corrections as needed. The evaluation of alternatives should involve careful logic, prediction of the consequences, quantifiable measures of success, and creation of contingency plans. Some practical ways to improve decision making would be for Eagle to manage stress, get enough rest, put distractions aside, define the goals and how to measure success, encourage debate, and then take responsibility for ending the debate and acting on a choice. PART 1 SUPPORTING CASE Zappos Eliminates All Managers and Titles Recently, Zappos’ CEO Tony Hsieh surprised many observers in the business world by announcing that the e-retailer was doing away with job titles, managers, and other artifacts associated with traditional top-down management and replacing it with a system where employees are expected to act like mini entrepreneurs. This new approach or holacracy encourages employees to self-manage and self-organize, thus eliminating the need for bosses. A holacracy organizes employees into circles of responsibility—similar to functional areas like marketing and customer service, and employee special interest areas like career development and so forth. Though democratic and self-governing, the circles do not operate in a vacuum as they are arranged in a hierarchy (circles report to higher-level circles) and follow detailed procedures for running meetings and making decisions. Are the employees at Zappos happy about their expanded responsibilities and freedom to self-govern? How are the managers accepting this change? It’s mixed. In a recent e-mail to all staff at the company, Hsieh said that everyone had a choice to make: either embrace the new holacratic system or accept a three-month severance package and resign. Two hundred and ten (or 14 percent) of the staff resigned. Of those who left the company, 20 (or 7 percent) were managers. Does that mean that the 86 percent of staff who decided to stay did so because they believe in the new holacratic approach? Time will tell. One may speculate that the individuals who chose to remain at Zappos did so because they are either “believers” or lack the interest or motivation to switch jobs at the moment. DISCUSSION QUESTION To what degree do you think that Zappos’ new holacratic approach to organizing will enhance its competitive advantage in innovation, quality, service, speed, and cost competitiveness? Explain. Zappos' adoption of a holacratic approach enhances innovation by empowering employees to make decisions and contribute creatively without hierarchical constraints. It fosters quality and service by promoting accountability and collaboration across self-managed teams. Speed improves as decentralized decision-making reduces bottlenecks. Cost competitiveness benefits from streamlined processes and reduced managerial overhead. However, its success depends on employees' adaptability and alignment with Zappos' organizational culture. CASE INCIDENTS Employee Raiding Litson Cotton Yarn Manufacturing Company decided to relocate its plant to Fairlee. Because of ineffective HR practices in the other three textile mills located within a 50-mile radius of Fairlee, Litson was receiving applications from some of the most highly skilled and trained textile operators in the state and hired 260 applicants. The managers of the three other textile companies, faced with resignations from their most efficient and best-trained employees, approached the Litson managers with the complaint that their labor force was being “raided.” The dilemma was compounded when the manager of one community plant reminded Litson that his plant was part of a nationwide chain supplied with cotton yarn from Litson. He implied that Litson’s attempts to continue operations in Fairlee could result in cancellation of orders and the possible loss of approximately 18 percent market share. It was also suggested to Litson managers that actions taken by the nationwide textile chain could result in cancellation of orders from other Litson’s president held an urgent meeting of his top subordinates to (1) decide what to do about the situation in Fairlee, (2) formulate a written policy statement indicating Litson’s position regarding employee raiding, and (3) develop a plan for implementing the policy. How would you prepare for the meeting, and what would you say at the meeting? Effective Management Dr. Sam Perkins, a graduate of the Harvard University College of Medicine, had a private practice in internal medicine for 12 years. Fourteen months ago, he was persuaded by the Massachusetts governor to give up private practice to be director of the State Division of Human Services. He soon realized his past training and experiences were of a clinical nature with little exposure to effective management techniques. Perkins decided to research literature on the subject of management available to him at a local university. Perkins soon realized that management scholars are divided on the question of what constitutes effective management. Because a state university was located nearby, Perkins contacted the dean of its college of business administration. The dean referred him to the director of the college’s management center, Professor Joel McCann. Discussions between Perkins and McCann resulted in a tentative agreement that the management center would organize a series of management training sessions for the State Division of Human Services. Before agreeing on the price tag for the management conference, Perkins asked McCann to prepare a proposal reflecting his thoughts on the following questions: 1. How will the question of what constitutes effective management be answered during the conference? 2. What will be the specific subject content of the conference? 3. Who will the instructors be? 4. What will be the conference’s duration? 5. How can the conference’s effectiveness be evaluated? 6. What policies should the State Division of Human Services adopt regarding who the conference participants should be and how they should be selected? Chapter 4 Planning and Strategic Management DISCUSSION QUESTIONS 1. The chapter opened with a quote from former CEO of GE Jack Welch: “Manage your destiny, or somebody else will.” What does “managing your destiny” mean for strategic management? What does it mean when Welch adds, “…or somebody else will”? The first part of Jack Welch’s quote means it is up to the management team of a company to have a clearly defined vision for the organization’s future and to follow a set of strategies that will enable it to reach its goals. Strategic managers define where the company is going, and how it is going to get there. If management does not have a clear understanding of what it is trying to achieve and the steps it will take to achieve the company’s goals, the second part of the quote comes into play. The external environment including competitors, potential customers, former customers, and other factors can block the way to success. Other organizations, with a better-defined mission and more detailed strategies, will act to achieve their goals, and as a result, management will be forced to continually react to the leadership of others. 2. List the six steps in the formal planning process. Suppose you manage a local business and you want to launch a new website. What activities would you carry out during each step to create the site? The six steps in the formal planning process are: 1) Situational analysis; 2) Alternative goals and plans; 3) Goal and plan evaluation; 4) Goal and plan selection; 5) Implementation; and 6) Monitor and control. As the manager of a local business wanting to launch a Web site, you would first need to analyze the business situation using the SWOT approach (what are the company’s strengths, weaknesses, opportunities, and threats?). Then you would review alternative goals and plans (create your own website, hire a contractor to design and create a website for you, partner with a company that has an existing website, etc.). Next, it would be important to evaluate the pros and cons of each of the different possible plans (for example, one drawback of partnering with a company that already has a website is that your store may lose business to that company.) After evaluating all the possible strategies, the company would pick the one that best fits its long-range strategic plans, and implement it. Finally, it would be important to monitor sales through the website, in order to determine whether or not the online plan is a success. 3. Your friend is frustrated because he is having trouble selecting a career. He says, “I can’t plan because the future is too complicated. Anything can happen, and there are too many choices.” What would you say to him to change his mind? Your friend needs to think about the consequences of not planning. By planning now, many of the choices that crop up later can be fit into a framework for his decisions and dealt with in a ration manner. If your friend doesn’t have a plan, the choices can be overwhelming, and he or she may not be able to make any decision at all. 4. How do strategic, operational, and tactical planning differ? How might the three levels complement one another in an organization? Strategic planning involves making decisions about the long-term goals and strategies for the organization. Strategic plans typically involve an in-depth evaluation of the external environment, normally involve heavy participation on the part of top management, and cover a relatively long time frame (from three to five years, although some Japanese companies develop 20-year plans). Tactical planning translates the strategic plans into detailed goals and plans that are relevant to a specific part of the organization, often a functional area such as marketing or manufacturing. Tactical plans focus on the major actions required for the unit to fulfill its part of the strategic plan. Tactical planning is typically done by middle management with a six-month or one-year focus. Operational planning identifies the specific procedures and processes required at lower levels of the organization. Operational plans usually cover short periods of time (one to two weeks) and focus on the routine tasks (production runs, delivery schedules, etc.) as required to support the larger work unit in achieving its tactical plans and goals. Front-line managers usually carry out operational planning. It is, of course, vitally important that an organization’s strategic, tactical, and operational plans are in agreement with each other. If a company’s strategic goal is to enter the European market with a new product, it is essential that the tactical plans specify the construction of the appropriate manufacturing facilities and that the operational plans detail the production of an appropriate number of units for that market. 5. How might an organization such as Urban Outfitters use a strategy map? With your classmates and using Exhibit 4.4 as a guide, develop a possible strategy map for the company. Urban Outfitters is a trendy store that caters to young people. Selling everything from magnets to clothing, they aim to mock social stereotypes, often by flaunting them. Students should use Exhibit 4.5 as a guide. 6. What accounts for the shift from strategic planning to strategic management? In which industries is this essential? Why? Strategic planning often emphasizes a top-down approach. Senior management and specialized strategic planning units develop goals and objectives that are then given to the next level of management for implementation. The problem with this approach is that it ignores the ideas and perspectives of managers throughout the organization who are typically much closer to the day-to-day realities of the marketplace. Strategic management evolved in the 90s and expanded the concept of strategic planning to the entire management structure. Under this approach, all managers are involved in the formulation and implementation of the company’s goals and strategies. Furthermore, these managers are encouraged to think strategically and, in some instances, given far more autonomy to act strategically. This trend towards strategic management has been most visible in companies in rapidly changing industries or environments. When rapid response was essential, the organization was forced to rely more on the front-line manager handling the situation. There just wasn’t enough time to allow for a formal review of the proposed action by top management. 7. Review Exhibit 4.6, which lists the components of an environmental analysis. Why is this so vitally important to a company’s strategic planning process? By analyzing the components of the external environment, a company can see changes in advance, and understand what changes need to be made in order to keep up with the environment. The more accurately a company can forecast changes in the environment, the more likely it will be to establish itself as a competitor in that environment. 8. What are the core competencies of Harley-Davidson Motor Company motorcycles? How do these capabilities help Harley-Davidson compete against foreign competitors such as Yamaha and Suzuki? A “core competency” is defined as something that a company does especially well relative to its competitors. Examples of core competencies might be a firm’s technological innovations, its engineering skills, its quality assurance program, the quality of its post-sales service, or its marketing. Note that Harley-Davidson is not mentioned in this chapter, so unless students are familiar with the company, they may have a hard time answering this question. According to Dave Mauer, the Phyllis Gough Huffington Professor of Finance at the SMU Cox School of Business, “The competitive strategy used by Harley Davidson—a highly differentiated range of products combined with a build-to-order manufacturing capability—enabled them to survive intense Japanese competition and define a new product concept in a highly mature market.” 9. How could SWOT analysis help newspaper companies remain competitive in the new media environment? Newspaper companies which use a SWOT analysis would be able to more clearly see niche opportunities that cannot be fulfilled by other types of media. •Strengths: Newspapers are truly portable—they require no wires, batteries, or electricity to operate. In addition, newspapers offer the kind of in-depth analysis and reporting that simply isn’t possible from Internet news sources. By capitalizing on these strengths, and taking advantage of new technologies as they emerge (an environmental analysis) newspapers would be able to develop a strategic plan to get themselves through these hard times. •Weaknesses: Lower readership and fewer subscribers have produced an economic crisis for many newspapers. •Opportunities: Offer online subscriptions and push the news out to subscribers several times a day, so they get “breaking news” as soon as events occur. Customers may be more willing to pay a premium to get news in a timelier manner. Online subscribers could also receive “coupon blasts” and other promotions which might attract more advertisers to utilize the newspaper media for marketing their products directly to the customer for a premium fee. •Threats: Online national news sources such as MSN and MSNBC or CNN have better name recognition. Local newspapers need to focus on their niche market via greater emphasis on local news and organizations. 10. What are the key challenges in strategy implementation? What are some barriers to success, and what can you do about them? The two key trends in strategy implementation are the: 1) Adoption of a comprehensive view—ensuring that the organizational structure, technology, human resources, reward systems, information systems, organizational culture, and leadership style are taken into consideration. 2) Involvement of managers at all levels of the organization—ensuring that the managers who are responsible for implementation are also involved in the planning and formulation stages. The following are barriers to the implementation of strategic management: Top-down or laissez-faire senior management style Unclear strategy and conflicting priorities An ineffective senior management team Poor vertical communication Poor coordination across functions, businesses, or borders Inadequate down-the-line leadership skills and development EXPERIENTIAL EXERCISES EXERCISE 4.1 – BUSINESS STRATEGIES NEED ADJUSTING Objective To study why and how a company adjusts its business strategy to adapt to changing external environments. Instructions Using an Internet browser or a college’s library research portal, identify a recent article from such business news outlets as The Wall Street Journal, Bloomberg Business, Forbes, or Fast Company that describes a company that is changing its short and long-term business strategies. Please read the article and provide answers the following questions: How would you describe the company’s former business strategy? ___________________________________________________________________________ ___________________________________________________________________________ __________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ Why is the company changing its strategy? What external forces are encouraging it to change? __________________________________________________________________________ __________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ How would you describe the new business strategy? ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ What strategic goals or major targets does the company hope to achieve? ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ How does the company intend to translate its new strategic goals into tactical or operational plans? Which levels of management will carry out these plans? __________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ To what extent do you think the new strategy will be successful in addressing or adapting to the external forces? Explain. ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ Source: Adapted from R.R. McGrath Jr., Exercises in Management Fundamentals, 1st, p. 15. Teaching Tip 1. Select a company and provide the students with a set of references, which they can use to address the question, thus ensuring that (a) students are focusing on the same company and (b) there is adequate information in the articles to conduct the analysis. Make sure to address the four questions stated above. 2. Divide the class into two sections with one group focusing on a selected for-profit organization and the other on a non-profit organization to see whether or not students feel that the SWOT analysis applies equally to both types of organizations. 3. Ask students whether they found it easier to identify the strengths of the organization or the weaknesses and whether or not they were very different. In most cases, the strengths tend to be generic in nature while the weaknesses are far more specific. And weaknesses are often easier to identify than strengths. CONCLUDING CASE Wish You Wood Toy Store Case Summary: Jim and Pam Klein operate a toy store in a resort town and expanded by offering the same products online. However, their website generated few sales, other than to their already-loyal store customers. The owners tried partnering with Amazon.com and saw an initial jump in online sales. However, Amazon began competing with lower prices on their most popular and profitable items. Jim and Pam need to decide whether to continue selling online and, if so, how. Chapter Topics Related to the Case: • Identify how to analyze external opportunities and threats to a company like Wish You Wood • Identify how to analyze internal strengths and weaknesses of a company like Wish You Wood • Discuss methodologies to select a strategy in a company such as Wish You Wood Case Discussion Questions: 1. Prepare a SWOT analysis for Wish You Wood, based on the information given. Suggested Response: Strengths: positive reputation; loyal customer base; attractive products Weaknesses: small size relative to competition; little name recognition outside existing customer base Opportunities: Internet sales; innovation in new products Threats: online competition from Amazon and other large retailers 2. Using the SWOT analysis, what general corporate strategy would you recommend for Wish You Wood? Should the store continue or change its current approach? Suggested Response: Student responses to this question will vary contingent upon their responses provided to the first question. Given the store’s strengths and weaknesses, it seems that it will need to continue serving a niche market. It might expand into other tourist locales and/or deepen its product knowledge to continue offering unusual items online before the big retailers offer the same items at a lower price. It could become known as the online retailer that finds new items first, perhaps by cultivating relationships with local craftworkers and artisans. Students may argue for continue the current approach, but they should acknowledge that the current approach will limit growth, so the owners must be satisfied with their current size. Solution Manual for Management: Leading and Collaborating in a Competitive World Thomas S. Bateman, Scott A. Snell, Robert Konopaske 9781259927645, 9781259546945