CH-5-8 Ethics, Corporate Responsibility, and Sustainability – Management: Leading and Collaborating in a Competitive World : Book Guide

This Document Contains Chapters 5 to 8 Chapter 5 Ethics, Corporate Responsibility, and Sustainability DISCUSSION QUESTIONS 1. Consider the various ethical systems described early in the chapter. Identify concrete examples from your own past decisions or the decisions of others you have seen or read about. Students will need to review the information from the chapter and provide clear examples from their life regarding decisions they have made. 2. Choose one or more topics from Exhibit 5.3 and discuss the ethical issues surrounding them. The discussion of ethical issues may include Artistic control, brands, CEO pay, commercialism in schools, consumerism, frankenfoods, globalization, politics sweatshops, urban sprawl, and wages. While students may vary in the selection of the ethical topic to discuss, the following is a sample of the answers that can be provided. • Artistic control: Rock musicians, indie filmmakers, and other artists are rebelling against control by big media and retail companies. Artists are having their work reviewed, censured, rated and are fearful of losing their artistic talents. Musicians and artists have identified with the counterculture and are now being told what sells and what does not sell, what consumers will buy and not buy. • Brands: In-your-face marketing campaigns have sparked anti-brand attitudes among students. Brand name products are expensive and promise things that are not true. For instance; buy Nike shoes, and you can run faster and jump higher. Students “see corporations as self-serving organizations that violate human rights and pollute the earth.” • CEO pay: Nearly three-fourths of Americans see executive pay packages as excessive. CEOs earn multi-million dollar salaries yearly. Executives give themselves raises, and the employee does not benefit. Average wages have increased only slightly while production has skyrocketed. Employees work long hours while their bosses are out golfing. • Commercialism in schools: Parent groups have mounted battles in hundreds of communities against advertising in the public schools. Public schools provide a captive audience for the promotion of products. These students are impressionable and want to succeed, so companies that advertise in this realm are guaranteed to make sales. With products telling students how to think, look and act, parents’ concerns are valid. • Consumerism: Anger and frustration are mounting over high gasoline and drug prices, poor airline service, and HMOs that override doctors’ decisions. The latest fiasco: faulty auto tires. Gasoline prices have risen, and drug prices are skyrocketing in the United States while they sell for lower prices in the neighboring countries. Airlines are being cited for poor performance in areas of reservations and lower standards of upkeep for their planes. Medical insurance cost is rising higher, but services are being cut. • Frankenfoods: Europeans’ skepticism about genetically modified food is taking hold in the U.S., making targets of companies such as Monsanto. This has become an ethical dilemma for Monsanto. • Globalization: Environmentalists, students, and unionists’ charge that a global trade and economic bodies operate in the interests of multinational companies. Employees are being laid off, and there are fewer employment opportunities. The question of egalitarianism as to what is the greatest good for the greatest number is an ethical question. • Politics: Public revulsion over the corporate bankrolling of politicians has energized campaign-finance reform activists. The ethics of such practices can be forthcoming. • Sweatshops: Anti-sweatshop groups have sprung up on college campuses; they routinely picket clothing manufacturers, toymakers, and retailers. The ethical question of the exploitation of labor can be challenged. • Urban sprawl: Groups in more than 100 cities have blocked big-box superstores by Wal-Mart and other chains. These stores have a tendency to monopolize and buy market share and eliminate the independent retailer from the market. These practices can be ethically challenged because of the competitive edge the chain-store retailer over the small retailer. • Wages: Some 56 percent of workers feel they are underpaid, especially as wages since 1992 have topped inflation by 7.6 percent, while productivity is up 17.9 percent. Management continues to operate with the bottom line approach to increase profits through increased productivity. An important objective is to keep the stockholder satisfied and the employee is often sacrificed in achieving this goal. Ethical decisions by management can be challenged because of these practices. 3. Identify and discuss illegal, unethical, and socially responsible business actions in the news. Students might be instructed to define the three terms, then review the business pages of a local or national newspaper or a magazine such as Business Week to identify at least one example in each of the three categories. 4. Does your school have a code of ethics? If so, what does it say? Is it effective? Why or why not? Most schools include in their catalog(s) a section on academic and related regulations that deal with violations of academic integrity such as cheating, plagiarism, collusion, lying, vandalism, etc. This represents the institution’s code of ethics. It establishes what is acceptable and, more importantly, what is not acceptable and what will occur if a student breaks one of the rules? The instructor might ask how many students are (a)aware of the school’s policies and (b)have actually read them. This may suggest that they are not particularly effective. However, when a student is accused of any one of the violations, the policies may lay out a course of action for handling the problem. 5. You have a job that you enjoy, and you work 40 to 45 hours per week. How much off-the-job volunteer work would you do? What kinds of volunteer work? How would you react if your boss made it clear he or she wants you to cut back on the outside activities and devote more hours to your job? One can well argue that what you do off the job is totally independent of your regular employment. Some people who work 40 to 45 per week at their job put in the same amount of time in volunteer activities. Others do nothing at all. It is a matter of personal choice, as is the selection of the type of volunteer work. The only concern would be if volunteer work left the individual incapacitated or too tired to do the primary job or if there were a conflict of interest. A company might be delighted to see an employee give 30 hours a week to a local charity but might question the same amount of time being given, on a volunteer basis, to a for-profit organization in a competitive field. If the boss makes it clear that he or she wants you to cut back on your outside activities for valid reasons, then the employee has to make a decision; which is more important? If you are committed to the volunteer activity, then you either have to negotiate a satisfactory arrangement with your boss or find other employment. 6. What are the arguments for and against the concept of corporate social responsibility? Where do you stand, and why? Give your opinions, specifically, with respect to the text examples. Those who argue in favor of corporate social responsibility see the corporation as a member of society that enjoys the many benefits offered by that society. Relatively few organizations could function without roads, schools, airports, etc. Corporations have a responsibility, therefore, to actively participate in the community and the larger environment. They benefit from society and thus should give back to society. It is also felt that, by being actively involved in society, the company improves its image and may, in some cases, identify new business opportunities. It pays to be involved. The other perspective (espoused by Milton Friedman) is that corporations have a responsibility to maximize the return to their owners or stockholders. Profitability should be the goal, and the corporation should take a social perspective only when it is consistent with increasing the profitability of the company. By increasing its profitability, the company can increase the number of employees, make further investments, etc., and thus best serve the interests of society as a whole. 7. What do you think of the concept of a transcendent education, as described in the chapter? What can be done to implement such a vision for education? A transcendent education is a big undertaking, but one that will have as much of an impact on student’s lives as it does on their business practices. In order to implement transcendent education, it will be necessary to find teachers who can be role models and to give students extensive practice in the behaviors the program is trying to impart. 8. What is the current status of the Sarbanes-Oxley Act? What do executives think of it now? What impact has it had? All segments of the Sarbanes-Oxley Act are now implemented. It is, as noted in the text, still one of the most influential pieces of legislation to ever hit corporations. Most executives are unhappy with the act—the costs of which are enormous. According to one estimate, businesses will pay $1.4 trillion implementing the act. However, Alan Greenspan has spoken up in defense of the act, saying that he was surprised that a law passed so rapidly worked as well as it did. One interesting impact of the law is the increase in demand for accountants and auditors. According to Deloitte, large firms are spending an average of 70,000 additional man-hours complying with the law. 9. A company in England slaughters 70,000 baby ostrich chicks each year for their meat. It told a teen magazine that it would stop if they receive enough complaints. Analyze this policy, practice, and public statement using the concepts discussed in the chapter. In terms of analyzing this business decision, students may refer to the steps for ethical decision-making outlined in the chapter. These include: (1) defining the issue, (2) identifying the relevant values in the situation, (3) weighing the conflicting values and choosing an option that balances them, and (4) implementing the decision. 10. A Nike ad in the U.S. magazine Seventeen showed a picture of a girl, aged perhaps 8 or 9. The ad read, “If you let me play… I will like myself more. I will have more self-confidence. I will suffer less depression. I will be 60 percent less likely to get breast cancer. I will be more likely to leave a man who beats me. I will be less likely to get pregnant before I want to. I will learn what it means to be strong. If you let me play sports.” Assess this ad in terms of chapter concepts surrounding ethics and social responsibility. What questions would you ask in doing this analysis? In analyzing this ad, a student should consider it in terms of corporate social responsiveness. The approaches to corporate social responsibility include (1) reactive, (2) defensive, (3) accommodative, and (4) proactive. The ad might provoke a debate regarding whether or not companies should focus on corporate social responsibility or simply stakeholder management. Examples of questions to address include: Is the ad ethical in terms of morals and business ethics? Who are Nike’s stakeholders (shareholders, public, loyal consumers, etc.) and how are they affected by this campaign? What is Nike’s social responsibility in terms of the pyramid of corporate social responsibility? 11. Should companies be held accountable for actions of decades past, then legal, but since made illegal as their harmful effects became known? Why or Why not? Yes, management should be held accountable for their actions and decisions they have made in the past. There is a statute of limitations that must be recognized. However, management of these companies must be held accountable and should take an ethics credo for the actions they have taken in the past. For example, in December 2001, GE was ordered by the EPA to spend $460 million to dredge PCBs it had dumped into the Hudson River in earlier decades. It fought bitterly against the decision, because of the cost and because the actions were taken decades ago when they were legal. In 2002, Monsanto faced the same problem from a facility in Mississippi that dumped PCBs, legally, from the 1930s to the 1970s. 12. Discuss courage as a requirement for ethical behavior. What personal examples can you offer, either as an actor or as an observer? What examples are in the news? Interestingly enough, Charles “Chuck” Prince, of Citigroup, is a good example of courage in the face of adversity. He was hired to put Citigroup back on course, and he is persisting in his work, even though his senior managers are leaving for other jobs, and there is general cynicism about the likelihood that Citigroup will overcome the poor lending practices that characterized it in the past. EXPERIENTIAL EXERCISES EXERCISE 5.1 - MEASURING YOUR ETHICAL WORK BEHAVIOR Objectives 1. To explore a range of ethically perplexing situations. 2. To understand your own ethical attitudes. Suggested Responses Situation 1 – Answer B is the most ethical approach for a student to take in this situation. A strong ethics code will influence the outcome of making this type of decision. Situation 2 – Answer C is appropriate assuming the individual has $300 to spend on the program. If not, Answer B would involve manually working with the numbers. Situation 3 – Answer B is the most ethical option to this situation because it is important to uphold an ethics credo and inform your customer. Situation 4 – Answer D is the most ethical decision because one must consider the long run effect of making this kind of decision. Situation 5 – The most ethical decision would be to exercise either option A or D. A strong ethics code will build long-run success where the benefits outweigh the costs of violating an ethics credo. Teaching Tips 1. As the students complete each situation, ask for a show of hands in favor of each of the various options. 2. Take the one situation out of the five that showed the class most divided and have those students supporting each position from a group (either three or four groups depending on which situation was selected) and have them discuss and present the arguments in favor of their position. EXERCISE 5.2 - ETHICAL STANCE Purpose: To allow participants to evaluate ethical situations and compare their judgments with others. Time: 20-30 min. Resources/Set-up: Copy of situations (in chapter). Activity Instructions: Participants are to read the situations and make ethical judgments about how the situations should be handled. Participants are to discuss their opinions in small or large groups. Teaching Tip This activity works well as a lead into a discussion or lecture on ethics. If done in a large group, you may want to have the participants rank these on a scale of 1-10, 1 being ethical (or OK) and 10 being the least ethical (or most offensive). As you discuss these situations, you may want to ask for rankings and post them on a board to examine the varying opinions of the different situations. Another approach to helping students understand different perspectives on ethics is to post large numbers (1-10) around the classroom, tell the students that the numbers represent “Strongly agree” to “Strongly disagree” and have students “vote by walking” to stand in front of the number that best represents their opinion about whether or not a given action is ethical. Discussion/Debrief: One take-away from this activity is that much like values, individuals possess different ethical perspectives. How might these differences play out in the workplace…between a boss and subordinate? …between members of a team? Discuss. CONCLUDING CASE Ma Earth Skin Care Tries to Stay Natural Case Summary: Going to work for Ma Earth Skin Care was a “dream come true” for Heather Franklin. She was proud to promote quality beauty products that were produced with a concern for the planet’s well-being. As she and her team prepared a promotion campaign for a new product line, Ore’ Essentials, she was interested to learn that the dye came from a plant extract called orellana. The company was harvesting this fruit with the assistance of a tribe in the Amazon rainforest. During a review of photos, one of the photographers commented that the tribe had gathered the fruit just for the photo shoot. It turns out that the tribe was not interested in farming or growing the fruit. After a little research, Heather discovered that the dye was actually an inexpensive dye purchased from a mainstream supplier. The next day, Heather asked her boss why the company pretended to care about a remote village if it was actually just a front to brand a product. Heather’s boss, Megan McDonough responded, “But we do care! We send them tens of thousands of dollars every year.” She went on to explain that the company would be glad to purchase all of the fruit from the village to produce the dye if only the tribe members were interested in growing and harvesting it. Megan stated, “Our aid has provided a school and a health clinic, not to mention food and clothing. We’ve helped the tribe members stay healthy and preserve their language and culture.” Heather tried to reconcile what she was hearing by asking, “So, does this mean we are using their culture to build an image for our brand, and in exchange, they get money from us to keep that culture alive?” Megan confirmed this was correct. Now Heather had a new challen could her initial idealism and enthusiasm withstand the disturbing knowledge that she had gained about how Ma Earth’s pursued its mission? Chapter Topics Related to the Case: • Discuss the term ethics. • Discuss the term social responsibility. • Describe the impact the concept of moral philosophy may have on a business such as the Garden Center. • Identify methods a company like Ma Earth Skin Care may engage to help it make ethical business decisions. • Describe the types of social responsibilities a company like Ma Earth faces. Case Discussion Questions: 1. What ethical issues is Heather facing in this situation? What possible marketing claims about the company’s relationship with the Amazonian tribe would cross a line into unethical territory? What claims could it make ethically? Suggested Response: As the case study clearly identifies, Heather is experiencing a strong sense of internal conflict over her company’s claims about being committed to using all natural ingredients, which are sustainably grown or mined. Students will have varying responses to this question. A suggested response might look like the following. An argument to support Heather’s continuing with the company might focus on the company’s assistance to the tribe in the Amazon rainforest. Heather might also use this opportunity to convince company leaders to purchase the product from another region or to seek a more sustainable and natural solution for purchasing the dye. 2. How could Ma Earth create an ethical climate that would help managers such as Heather ensure that they are behaving ethically? Suggested Response: Ma Earth could search for new natural sources to obtain their dyes. In addition, Ma Earth could establish its own organic farm to grow some of the rare or difficult to obtain products and pay its own employees to manage the growing process. Ma Earth should commit to “truth in advertising” and not exaggerate the truth or use false impressions to market their products. Some companies have 800 lines for employees or customers to call to report ethical violations. 3. How effectively do you think Ma Earth is practicing corporate social responsibility in this situation? Explain the reason behind your evaluation. Suggested Response: The student responses will reflect personal viewpoints regarding the degree of corporate social responsibility that each one feels is adequate for the company. However, each response should indicate some degree of commitment to preventing harm to others and conducting business transactions in an honorable manner. Chapter 6 International Management DISCUSSION QUESTIONS 1. Why is the world economy becoming more integrated? What are the implications of this integration for international managers? The global economy has become more integrated than ever before. Half a century of emphasis on free trade by major industrial countries such as the United States, Great Britain, and Germany has resulted in a gradual lowering of barriers to the free flow of goods, services, and capital among nation states. This has enabled both large and small companies to view the world, rather than a single country, as their marketplace. It has also enabled companies to disperse their manufacturing, marketing, and research facilities to locations around the globe where costs and production conditions are most favorable. Increased integration has the following implications for management: World trade is growing at a faster rate than the volume of world output. Foreign direct investment (FDI) is increasing. Imports are penetrating deeper into the world’s largest economies. Companies around the world are finding their home markets under attack from foreign competitors. Today’s managers in developed countries must constantly make decisions about whether and how to pursue opportunities around the globe. Managers must also consider potential foreign competition when making even routine strategy decisions. 2. Imagine you were the CEO of a major company; choose your favorite products or industry. . What approach to global competition would you choose for your firm: international, multinational, global, or transnational? Why? The approach selected would depend, at least conceptually, on the nature of the company, its goals, and objectives, its strengths and weaknesses, etc. Each of the approaches has advantages and disadvantages, and the CEO would need to determine which model was most consistent with the company’s needs. If the company has strong core capabilities, the international model (involving the establishment of subsidiaries in foreign countries) is an attractive one. Skills and know-how flow from the parent company to the subsidiaries, and thus the parent company maintains a high level of control. The multinational model, by contrast, gives far more autonomy to the local subsidiary that has its own functional units and is better able to respond to changes in the local market. This is the preferred approach if local responsiveness is a critical variable and the management of the parent company is not overly concerned about maintaining tight control of its worldwide operations. A CEO would choose the global organization model if the company was attempting to market a standardized set of products globally with manufacturing conducted in a limited number of markets. Under this approach, only the marketing and service functions are controlled by the subsidiaries. Selecting the transnational model results in certain functions (such as research) being centralized in the parent country with other functions concentrated in any country of the world. The main question being: Where is the most effective location for this function? A CEO would select this model if he or she felt comfortable with having key functions outside the home country and had faith in the company’s personnel’s ability to effectively coordinate activities and communicate among themselves. 3. Why have franchises been so popular as a method of international expansion in the fast-food industry? Contrast this with high-tech manufacturing where joint ventures and partnerships have been more popular. What accounts for the differences across industries? The key to the fast food industry is visibility, and that means locations. The franchiser has to be able to promote the product using mass media, and this requires as many locations as possible offering identical products. Franchising is the optimal approach because it allows for rapid expansion in terms of the number of locations (since the franchisee provides much of the financing). The franchise agreement requires that the franchisee operate in a specific manner (although as the text points out, maintaining quality control is not always easy). By contrast, a high-tech manufacturing firm is looking for a limited number of locations where the emphasis can be placed on quality production. While the manufacturer is highly skilled in the production end of the business, it is often not as familiar with the host country’s competitive conditions, culture, political system, etc., and thus needs a professional and knowledgeable local partner. In the case of franchising, the cost associated with one or two franchises failing is not particularly high. They can be readily replaced. However, the risk associated with establishing a high-tech manufacturing operation is much greater, and thus the manufacturer is usually looking for both hands-on control and a long-term relationship, and a partnership or joint venture better provides for this need. 4. What are the pros and cons of using expatriates, host-country nationals, and third-country nations to run overseas operations? If you were expanding your business, what approach would you prefer to use? There are advantages and disadvantages of each option. Expatriates generally have the advantage of being familiar with the parent company and how it functions. They have well-established contacts with top management and are familiar with their approach to business. They are, in effect, an extension of top management. On the negative side, using expatriates is an expensive approach. They tend to be paid higher salaries and often have families, which also need to be moved and housed overseas. Using host-country nationals has an advantage in terms of cost. They are often less expensive, and they don’t normally have to be moved. However, their experience with the parent company and its culture is less extensive, and thus moving a project forward aggressively may require more communication and involve more hurdles and challenges. Third-country nationals suffer from the weaknesses of both the expatriates and host country nationals in that they (a) have to move from one country to another and (b) may not be as familiar with the management style and culture of the parent company. They do, however, have the advantage of not being from the host country, and thus may be able to soften the political tensions between the parent company and the host country. Which would you use? Students probably will conclude that the decision will depend on the circumstances (what critical problems the company faces and how rapidly it wants to move ahead) and its resources (whom it was available with the necessary skills). If the critical task is that of establishing the operation, it might use an expatriate. However, if the main problem involves dealing with the local labor force, contractors, etc., one might use a host-country national. A third-country national might be the best individual if the company wants to smooth its relationships with the local government. 5. If you had entered into a joint venture with a foreign company but knew that women were not treated fairly in the culture, would you consider sending a female expatriate to handle the start-up? Why or why not? This is one of those circumstances where one is “damned if one does and damned if one doesn’t.” Some students may argue that if the female expatriate has the appropriate skills and experience for the position, then she certainly should be considered and that it would be discriminatory not to consider her. Some may think that all personnel in the company, irrespective of their sex, race, religion, etc., should have an equal opportunity when it comes to overseas postings. The reality, however, is that a female expatriate may find it extremely difficult, if not impossible, to succeed in business in a country where women are not treated fairly or are expected to play a very subordinate role. Sending a female to such an environment may not only jeopardize the success of the project but also harm the individual’s career. Sending a female in this instance could be construed as setting her up to fail. 6. Consider Hofstede’s four cultural dimensions. He identified them in a huge global corporation several decades ago. Do you think cultural differences since then have decreased due to globalization? What evidence do you draw from? As the world has become “smaller,” it is easy to see that closer interaction with other cultures has in itself promoted cultural understanding and may have led to some blending of cultures. It may be naïve, however, to suggest that all distinction is lost. As we interact more closely and more frequently with other cultures, an understanding of differences using tools such as Hofstede’s allows us to better understand perspectives and expectations. Specific examples will vary but one may anticipate U.S. students to be aware of differences in individualism and power distance to be particularly noticeable. 7. What are the biggest cultural obstacles that we must overcome if we are to work effectively in Mexico? Are there different obstacles in France? Japan? China? People in different countries have very different shared values and beliefs. As Geert Hofstede indicated, some societies value the quantity of life (accomplishments, money, etc.) far more than the quality of life (compassion, beauty, etc.). In some countries, the society believes firmly in collective decision-making, whereas in other countries, tremendous emphasis is placed on individualism. In Mexico, there is a relatively high level of both collectivism and power distance in that they tend to see the power in organizations as being distributed unequally. Rather surprisingly, Japan shows somewhat less emphasis on collectivism (although it is known for this characteristic), and society sees power more evenly spread in organizations. France, by contrast, is in the southeast quadrant and places a relatively high emphasis on individualism even though it is somewhat between Mexico and Japan on the power scale. More pragmatically, students will probably mention the importance of the siesta in Mexico and, possibly, the prevalence of bribery. In France, they may mention the cultural anti-Americanism, the love of wine, the August vacation period, and the importance of the Tour de France. In Japan, some of the popularly mentioned cultural characteristics are collective decision-making, the relatively low position of women in both society and business, the emphasis on continuing meetings at local geisha houses, etc. While some of these perceptions may be stereotypical (and not universally valid), they should be considered when dealing with the local culture. EXPERIENTIAL EXERCISES 6.1 Global Integration - Local Responsiveness Worksheet Objective To understand how companies compete in the global marketplace. Instructions An effective way to learn how companies respond to the competing pressures to be globally integrated and locally responsive is to study them in action. Referring back to Exhibit 6.3, search online for examples of companies that are currently using a global, transnational, international, or multinational organizational model. Please provide answers to the following questions: Part I: Global Model Name of company using a global organizational model: _____________________________ URL of website/article describing the company’s global strategy:______________________ Explain why the company uses a global strategy to complete: ___________________________________________________________________________ _______________________________________________________________________ __________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ Part II: Transnational Model Name of company using a transnational organizational model: _______________________ URL of website/article describing the company’s transnational strategy:______________ Explain why the company uses a transnational strategy to complete: ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ Part III: International Model Name of company using an international organizational model: ______________________ URL of website/article describing the company’s international strategy:______________ Explain why the company uses an international strategy to complete: __________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ Part IV: Multinational Model Name of company using a multinational organizational model: _______________________ URL of website/article describing the company’s multinational strategy:______________ Explain why the company uses a multinational strategy to complete: __________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ Source: Adapted from R.R. McGrath Jr., Exercises in Management Fundamentals, 1st, p. 177. Copyright 1985. 6.2 Cross-Cultural Anthropologist Assume you are a cross-cultural anthropologist. In this role, please visit multiple public places that are frequented by one or more ethnic or cultural groups. Observe four to five behaviors that strike you as unique or different compared to what you consider to be “normal.” After you make your observations, walk to a quiet location and record what you observed in a notebook or mobile device. Think about why these behaviors caught your attention in the first place and then analyze them from the perspective of Hofstede’s cultural dimensions (individualism, power distance, uncertainty avoidance, and masculinity). Learning Objectives: 1. To help students interpret in a more culturally neutral manner non-verbal communication. 2. To encourage students to understand their own reactions to different cultural behaviors. 3. To reinforce the importance of observation skills in cross-cultural encounters. Steps: 1. Visit multiple public places where you can observe the behaviors of one or more ethnic or cultural groups. Example include major airports, ethnic associations, foreign consulates, religious entities, cultural centers, museums, and cultural or affinity groups at universities. 2. Bring a notebook or mobile device and: a. On the left side of the page, make a column entitled: “Observation/description” i. In this section, describe what you saw. Any behavior that strikes you as different, frustrating, funny, confusing, is appropriate. Stick to the facts when describing these behaviors. Write down 5-10 observed behaviors. b. On the right side of the page, make a column entitled: “How This Observation Relates to Hofstede’s Dimensions” i. In this section, interpret the behaviors by using Hofstede’s dimensions (individualism/collectivism, uncertainty avoidance, power distance, and masculinity). How can these dimensions help explain what you observed? Explain. 3. Type and hand-in your anthropologist’s analysis. This should include: a. Your name, date, and the name of each public place you visited. b. Include 5-10 observed behaviors (left side of notebook) that you made while visiting the place(s) and how these observations relate to Hofstede’s cultural dimensions (right side of notebook). Source: Adapted from L.R. Kohls and J.M., Knight, Cross-cultural journal in Developing Intercultural Awareness: A Cross-cultural Training Handbook (Yarmouth, Maine: Intercultural Press, 1994), p. 67. CONCLUDING CASE A Global Launch for Net-Work Docs Case Summary: Net-Work Docs is a start-up company founded to help business clients create and manage their documents electronically. Its founders, Nina Jones and Matt Smith, are planning to launch Net-Work Docs as a global company, serving clients in any country. They assume businesses around the world need to document policies and procedures, and the software and support will be easy to distribute online. However, potential investors have questioned whether a company can operate globally before it has built a local reputation for good service. The founders believe that by setting up an English-language website, they will start by serving English-speaking clients whose culture will not be much different from theirs. Chapter Topics Related to the Case: • Discuss the impact of globalization on a company such as Net-Work Docs • Describe the various methods available for a company like Net-Work Docs to use to enter the foreign market arena • Discuss the concepts of exporting and • Identify and discuss the impact of cultural differences on international operations Case Discussion Questions: QUESTIONS 1. What are some possible advantages of Net-Work Docs serving a global market? Suggested Response: The obvious advantage is a larger pool of potential customers. In addition, Net-Work Docs may find that some countries’ markets are only beginning to switch to electronic documents, and in such markets, the company can establish a good reputation and brand recognition before much competition arrives. 2. How are the founders balancing pressures for global integration and local responsiveness? Is their global strategy likely to succeed? Why or why not? Suggested Response: The founders seem to hope they can succeed by offering businesses worldwide a service designed for their local market, rather than researching each country’s business needs. To some extent, needs for documentation do exist worldwide. However, the founders are likely to find many differences in the specific requirements and business practices of business customers in other countries. The plan to minimize differences by creating an English-only website is a risky one. First, English is spoken as a first language or business language in a wide variety of countries. Second, it is possible to attract non-English-speaking customers who have used translation software to render the website in their own languages. 3. What skills of a global manager could help Net-Work Docs succeed? Suggested Response: Relevant skills of a global manager include integrity, insightfulness, commitment, risk-taking, and sensitivity to cultural differences (useful in selling and providing after-sales services). Managers using feedback, being culturally adventurous and flexible, being open to criticism, and seeking opportunities to learn also would help Net-Work Docs succeed. Chapter 7 Entrepreneurship DISCUSSION QUESTIONS 1. On a scale of 1 to 10, what is your level of personal interest in becoming an independent entrepreneur? Why did you rate yourself as you did? Each student should be instructed to rate his or her level of interest in becoming an independent entrepreneur on either a “high-medium-low” scale or on a “1 to 10” scale. Then, they should each list one or two reasons for their rating. 2. How would you assess your capability of becoming a successful entrepreneur? What are your strengths and weaknesses? How could you increase your capability? Refer the students to the section entitled, “What Does It Take, Personally?” and have them rate themselves on each of the six characteristics. (“High-medium-low” scale should be sufficient although it could be done on a numerical basis.) 1) Commitment and determination 2) Leadership 3) Opportunity obsession 4) Tolerance of risk, ambiguity, and uncertainty 5) Creativity, self-reliance, and ability to adapt 6) Motivation to excel Have the students make a list of their strengths and weaknesses and rank them in order of importance relative to starting a business. Then, ask students to identify how they might leverage their top two strengths to achieve greater success. Finally, ask students to identify the training that would improve their two biggest weaknesses. 3. Most entrepreneurs learn the most important skills they need after age 21. How does this affect your outlook and plans? Most entrepreneurs learn and develop their skills after age 21 in the area of taking on additional responsibility, sense of achievement, risk-taking, and want feedback. To be able to launch a small business, one must understand the requirements of a business plan and the construction thereof. One must understand the essential components of a business plan and develop financial relationships. A business plan is developed by understanding marketing, finance, and production. This requires experience and must be learned through skill enhancement of what it takes to become a successful entrepreneur. This level of knowledge typically comes after the age of 21. 4. Identify and discuss new ventures that fit each of the four cells in the entrepreneurial strategy matrix. High innovation/Low risk – new products, without competition that are backed by large firms with an abundance of loss-absorbing capital or new products that are relatively inexpensive to make, such as Lego blocks. High innovation/High risk – new products produced at great expense, such as automobiles and drugs. Low innovation/High risk – ventures in well-established industries, such as restaurants, that require a large initial outlay. 5. Brainstorm a list of ideas for new business ventures. Where did the ideas come from? Which ones are most and least viable, and why? Divide the class into a number of small groups to facilitate the brainstorming process. The text suggests that opportunities arise from technological discoveries, demographic changes, lifestyle and taste changes, etc., and business probably generates many of their ideas in this manner. Students without business experience will generally indicate that their ideas arose from a personal interest (collecting baseball memorabilia) or a problem they have experienced with a product (not being able to find their keys) or a service (not being able to pick up groceries). In order to help the students determine which ideas are the most and least viable, refer them to Table 7.4 and have them rate the ideas against the first two items: the “fit with your skills and experience” and the “fit with the market. 6. Identify some businesses that have recently opened in your area. What are their chances of survival and why? How would you advise the owners or managers of those businesses to enhance their success? Most students will be able to identify one or more retail businesses that have recently opened in the area. They will recognize that their chances of survival will depend on a number of factors including the nature of the business, the target market relative to the local population, its location, and its ability to attract walk-in trade. By contrast, students may find it more difficult to evaluate the likely success of nonretail businesses (manufacturing or wholesaling operations) since they normally depend on attracting business from a far wider geographic market for their success. Location and local business are far less important. Some of the steps that students might suggest a recently opened (retail) business could take to enhance the likelihood of success might include advertising in the local press, special promotions, and discounts, direct mailings to potential customers, etc. Signs and billboards might also help as might advertising on radio or television. 7. Assume you are writing a story about what it’s really like to be an entrepreneur. To whom would you talk and what questions would you ask? The ideal person to talk to would be an individual who started a business at about the same age as the students with very little money and who had experienced a number of “ups and downs” before building a very successful business. Among the questions one might ask are: What motivated you to start the business? Where did you get the idea? What were the major problems you experienced in starting up the business? Which individuals were most helpful in the early stages of the business? What, in your opinion, are the keys to success? 8. Conduct interviews with entrepreneurs, asking whatever questions most interest you. Share your findings with the class. How do the interviews differ from one another and what do they have in common? Many students may not be personally familiar with any entrepreneurs, and thus the simplest way of handling this question may be to invite two local entrepreneurs to the class and have the students ask them questions during the class. 9. Read Exhibit 7.1, some myths about entrepreneurs. Which myths did you believe? Do you still? Why or why not? Interview entrepreneurs by asking each myth as a true-or-false question. Then ask students to elaborate on their answers. What did they say? What do you conclude? This exercise could be handled by handing out a sheet listing the nine myths and asking students whether they agree or disagree with the statements. One might also ask students whether or not they think myth #1 is, in fact, a myth. Many will argue that it is a true statement. Anyone can start a business. If one considers the incorporation of a company as its starting point, then one can start numerous businesses in a single hour. The problem, as pointed out, is surviving. The vast majority of new businesses are out of business within a year. 10. With your classmates, form small teams of skunkworks. Your task is to identify an innovation that you think would benefit your school, college, or university, and to outline an action plan for bringing your idea to reality. The term “skunkworks” is used to describe a project team designated to produce a new product within a specified time frame. This exercise will test the students’ creativity, and it may be useful to have them walk around the campus as a group looking at areas and activities that might be improved or problems that might be resolved. Some topics that might be raised (since they cause problems on most campuses) are registration, advisement, job hunting, etc. Once the group has identified its new product, it should then specify what steps will be taken, by what date they will be taken, and who will be responsible for ensuring that the steps are taken by the specified date. 11. Identify a business that recently folded. What were the causes of the failure? What could have been done differently to prevent the failure? This exercise can be approached in two ways. The first involves a search of publications (such as Business Week) and the local presses to identify a company that folded and see what reasons were stated in the press for its demise. The other way is to identify a retail store that used to be in business, track down its owner, and interview that individual to determine why it folded. Students will find that businesses that failed during the first year of operations do so usually for lack of financial resources and an inability to develop sales volume. Poor management is often stated as a reason for failure in more mature companies, as is the strength of the competition. 12. Does franchising appeal to you? What kind of franchises would have the most and least interest and why? Students will differ in their responses to the first question. Often, people who are attracted to franchises are entrepreneurs who are lower in innovation, but higher in general management and networking skills. The degree of structure, the amount of corporate support, and the cost of the franchise will all play a role in a number of interest students feel in the process. For example, McDonald’s requires that people who are interested in opening a franchise have a minimum of over $500,000 in non-borrowed personal resources before they are considered for franchise training. 13. The chapter specified some of the changes in the external environment that can provide business opportunity (technological discoveries, lifestyle and taste changes, and so on.) Identify some important recent changes or current trends in the external environment and the business opportunities they might offer. As the “baby boom” population ages, caring for the elderly will offer multiple business opportunities—everything from providing health care to providing assistance with the day-to-day tasks of living. Opportunities may also arise in assistive technology, which compensates for the reduced hearing, vision, and mobility that are often associated with old age. Natural disasters, such as hurricanes and forest fires, provide opportunities for entrepreneurs. Roofing contractors, for example, are booked ahead by as many as three years in Florida and other locales after natural disasters such as a major hurricane. In Southern California, sales of fireproof roofing materials shot up in the wake of the Malibu and Laguna Beach fires. 14. Choose an Internet company with which you are familiar and brainstorm ideas for how its services or approach to business can be improved. How about starting a new Internet company altogether—what would be some possibilities? Student responses to this question will be different, but encourage students to be creative, and keep the customer in mind when responding. Students may also want to take innovative features from one website and apply them to another—for example, Amazon.com‘s recommendations feature might be adapted to a clothing company like Dirtbag Clothing, which offers clothes for skateboarders. (www.dirtbagclothing.com) 15. Find some inspiring examples of social entrepreneurship and describe them to your class. Bill Drayton the founder of Ashoka: Innovators for the Public was one of the first social entrepreneurs. Other notable social entrepreneurs include Enterprise Community Partners, Do Something, Mercy Corps, DataDyne, The Institute for One World Health, and Hopelab. Create small groups and have each one report on a social entrepreneurship to the class in 1-2 minutes. Discuss the impact of these organizations. What commonalities do they see between social entrepreneurships? 16. Brainstorm some new ideas for social enterprise. What challenges do you foresee and how would you proceed? Based on class discussion from the previous question, have students share ideas in small groups for new social enterprises. Have each group report one or two ideas to the class. Hold a discussion regarding challenges that each social enterprise might face. How might their challenges be similar to those faced by for-profit entrepreneurs? EXPERIENTIAL EXERCISES EXERCISE 7.1 - TAKE AN ENTREPRENEUR TO DINNER Objectives 1. To get to understand what an entrepreneur does, how she or he got started, and what it took to succeed. 2. To interview a particular entrepreneur in depth about her or his career and experiences. 3. To acquire a feeling for whether you might find an entrepreneurial career rewarding. Sample Response The individual entrepreneur selected in my area is Charles Craft, an owner/operator of a Dairy Queen franchise. The appointment should have sufficient lead-time to develop interview questions. Approximately 1 to 2 hours will be sufficient time to interview this entrepreneur. Interview questions should include: “How did you come up with this idea?” “Have you completed any marketing research for this market?” “Do you have a business plan to present to investors?” “How will you launch this business successfully to get it up and running?” “What are the essential traits that you possess to create a successful entrepreneur?” Make sure to record and/or write down the responses to the above-mentioned questions. What you will learn are the successful traits required for an effective entrepreneur. You will also learn the essential elements of a business plan, whether this is a business that will go or not go successfully at this point in time. The thank-you note should read, “I would like to thank you for taking the time and energy in responding to my questions of what it takes to be a successful entrepreneur.” Sincere appreciation must be forthcoming to permit the education and learning that is taking place to be successful and observe the pitfalls of competing in the marketplace. Teaching Tip 1. It may be easier to invite an entrepreneur to visit the classroom for the interview than having each student attempt to identify an entrepreneur. If you take this approach, it may be useful to have the students prepare their questions in advance. This will allow you to guide the question and answer session. 2. If students cannot find people to interview before class, have a guest speaker start the class, then structure your class discussion around how the guest speaker’s comments relate to the material in the textbook. 3. Ask the students prior to the interview to rate themselves (on a 1 to 10 scale) as to whether or not they feel they might find an entrepreneurial career rewarding. Ask the question again following the interview to determine if any student’s scores changed dramatically. If it did, in which direction? Ask why? EXERCISE 7.2 STARTING A NEW BUSINESS Objectives 1. To introduce you to the complexities of going into business for yourself. 2. To provide hands-on experience in making new-business decisions. Suggested Responses 1. Product A customer need that will be satisfied is a fresh submarine sandwich shop. Sandwiches will be customized, made-to-order, and freshly cut. Our product is unique because of fresh rolls baked on the premises, freshly cut meat, and the size shape and thickness. 2. Customer Customer profile will include businesspersons, college students, and a market segment comprised of youth who would like a good hearty sandwich. 3. Competition The competition is the Subway franchise and individual, privately owned submarine sandwich shops. The competition strength is a quality sandwich that advertises and promotes specials from time to time. A weakness would include that our competitors’ products are excessively priced, and we could use price differential as a primary marketing tool. They can respond by meeting our price or increase advertising to attract a different marketing segment. 4. Suppliers Suppliers will be local and should continue to provide reliability, dependability, quality, and price as the primary marketing tools of purchasing. The business practices are long hours, good location, cash and carry, etc. The relationship is to partner and attempt to communicate price differential and different market segmentation. 5. Location Location is extremely important, and we must locate in a primary business district. Location costs should average $20-30 per square foot. The legal limitations have advantages and disadvantages for sole proprietorship, partnership, corporation, and limited liability company. Each must be studied as to the advantages outweighing the disadvantages. 6. Physical Facilities/Equipment It is to our advantage to rent at first to get the business off the ground. Possibly negotiating a lease option to buy. The same consideration should be given to the purchase of equipment to save working capital. 7. Human Resources The availability of Human Resources will be competitive. One three-week training period for each employee will be given. 8. Legal/Regulatory Environment There are licenses required, city ordinances, labor and industry standards all must be met to gain social acceptance in the community. 9. Cultural/Social Environment The cultural issues include understanding the customs and practices of the community. It is important to create a philosophy of management that is conducive and acceptable with the business community we will live and work. 10. International Environment International issues will become relevant if there is expansion in a boundaryless United States. Teaching Tips 1. This exercise can be assigned before class—have the students discuss their results at this point in the lecture. 2. Designate a general location for each of the five businesses. For example, the XYZ shopping center for the submarine shop or the city of ABC for the chimney sweep services. 3. At the end of the exercise, ask each team to evaluate what they feel is the likelihood that the business will be a success. CONCLUDING CASES Rolling Out ScrollCo Case Summary: The entrepreneur behind ScrollCo is Mandy Toberman, an engineer who grew tired of the routine work she had been doing on existing products. On her own time, Mandy designed the Scroll, an e-reader made of flexible materials that can be rolled up for handy storage. Mandy tried interesting her employer in the Scroll, but meeting resistance, she quit her job and prepared a business plan. Now she needs management and entrepreneurial skills to translate her product idea into a viable business. Chapter Topics Related to the Case: •Discuss the personality characteristics associated with entrepreneurship •Describe the challenges associated with entrepreneurship that individuals like Mandy Toberman may face •Identify and discuss methods to increase the chance of success for entrepreneurs like Mandy •Evaluate the kinds of business climates that foster or discourage intrapreneurship Case Discussion Questions: 1. What actions could Acme Electronics take to foster intrapreneurship? What consequences does it suffer from failing to foster it? Suggested Response: Acme Electronics could encourage intrapreneurship by setting up a skunkworks and by tolerating or even encouraging bootlegging such as Mandy’s design of the Scroll on her own time. Acme’s management should demonstrate some tolerance of failure and avoid relying too much on a single product idea or pursuing so many ideas that none are adequately funded. Managers also can adopt an entrepreneurial orientation—allowing independent action, innovating, taking risks, being proactive, and being competitively aggressive. By failing to foster intrapreneurship, the company is at risk for lagging in innovation, and it may lose its most creative thinkers when they become bored and leave. Acme even could find itself competing with former employees who leave to pursue their ideas. 2. What information should Mandy include in her business plan? Suggested Response: Mandy’s business plan should lead off with an executive summary of the overall business concept and opportunity, her strategy, competitive advantages, and costs, and the product she has developed. The sections of the report then flesh out the key areas of her business idea: her industry and company (including the type of product she developed); the results of market research; the business economics such as margins, costs, and profit potential; her marketing plan; the product development, including its status, patents, and so on; the plan for making the product; her management team; the schedule for start-up; any risks and problems she can identify; and a financial plan. 3. Describe three nonfinancial resources likely to be important for the future of ScrollCo. How can Mandy ensure that her business has those resources? Suggested Response: Important nonfinancial resources for a start-up include legitimacy in the minds of the public and networks of advice and support. Legitimacy comes from establishing goals and methods consistent with societal values. Mandy should be sure her company will conform to all applicable laws, meet standards of good engineering work, and deliver a product that will be valued. She also should build social capital from a strong network of people who mutually support one another with ideas and expertise. She should look for people with complementary skills to serve on her top management team and as an advisory board. Given her strength in engineering, she may want to consider bringing in a partner whose strength is in business management. PART II SUPPORTING CASE Will Foxconn Remain Apple’s Top Supplier of iGadgets? Case Overview This case examines some of the key issues facing Foxconn; the primary manufactures of Apple’s iPad, iPhone, and Sony PlayStation, Nintendo Wii, along with Dell and HP computers. These issues include problems with working conditions following the suicides of several workers. In the following year, an explosion at one of Foxconn’s plants was blamed on improper ventilation which allowed metal dust to accumulate. This ultimately led to the explosion which killed 3 and injured 15 workers. Foxconn launched an employee hotline, a morale-boosting campaign, and brought in counselors to talk with workers. The company took action to improve ventilation and began giving raises to workers, whose wages have more than doubled. Currently turnover has fallen, and suicides have ended. However, higher costs have reduced profits, and Foxconn’s stock has tumbled forcing the company to look for lower cost locations for new manufacturing plants. New locations may allow for Foxconn to hire workers at lower wages and could contribute to good morale by allowing workers to live closer to their hometowns and families. Teaching Objectives •Use a SWOT analysis to identify the appropriate corporate strategy initiatives for an organization to address situations such as the one that Foxconn has experienced. •Identify which level of corporate responsibility best defines an organization’s actions. •Recommend strategies to improve an organization’s image and performance. Purpose and Relationship to the Part The purpose of this case is two-fold: 1) to show the serious consequences of “unethical” business decisions and strategies companies can use to overcome the results of prior bad decisions; 2) to analyze the environmental factors affecting an organization’s performance and determine what strategies might be appropriate to improve that performance. Overall, this case requires that students think both in terms of ethics and strategy. The case connects three of the four chapters in this part: “Planning and Strategic Management,” “Ethics and Corporate Responsibility,” and “International Management.” Case Discussion Questions 1. What strengths, weaknesses, opportunities, and threats can you identify at Foxconn? How is it addressing these with its strategy? Suggested Response Student responses to this question may vary, but students should consider the following factors in their analysis: •Strengths: Cash flow/profitability, Size, Manufacturing experience •Weaknesses: Reputation for poor working conditions, lack of concern for employees, Low wages and lack of opportunity for workers to visit their families •Opportunities: Relationships with Turkey, Slovakia, and Brazil •Threats: China’s government bureaucracy, living conditions, and poor travel options Based on the SWOT analysis, students might consider having Foxconn emulate other international corporations known for good employee relations. 2. If Foxconn’s management hired you to offer advice on improving its ethical decision-making and corporate social responsibility, what measures would you suggest? Why? Suggested Response Corporate responsibility is defined as the obligations toward employees, the community, and society assumed by business. Foxconn was trying to meet its corporate responsibilities at the time this case was written. As a follow-up question, have students go to the Foxconn website and look to see what evidence they can find to indicate that the company is doing better in this regard. Students may also explore the web to discover new locations for Foxconn’s manufacturing locations. 3. For Foxconn, what management challenges arise from running an exporting business based in China and serving developed nations such as the United States? What management skills does it need under these circumstances? Suggested Response It can be very challenging for business leaders in less developed countries to understand and implement the same levels of working conditions, labor relations, and business strategies that are viewed as the “norm” in the United States and other developed nations. Managers would benefit from visiting manufacturers in more developed countries and discussing plans for implementing better working conditions and improving labor relations. Chapter 8 Organization Structure DISCUSSION QUESTIONS 1. Based on the description of General Motors in this chapter, give some examples of differentiation in that organization. In other words, what specialized tasks have to be performed, and how is labor divided at General Motors? Also, how does General Motors integrate the work of these different units? Based on what you have learned in this chapter, would you say General Motors has an effective structure? Why or why not? Before Akerson’s arrival, GM’s structure was a divisional structure based on regions (North America, South America, Europe, and International Operations). Before that, it had a divisional structure based on product lines (Chevrolet, Buick, Cadillac, and so on). Under Akerson, GM was restructured to place more authority in the hands of functional executives, including Dan Ammann as the head of finance and Mary Barra in charge of global product development. GM integrates the work of these units through goal setting, procedures and policies such as Barra’s rules for moving ahead with product development, and computer systems such as the accounting system and information technology. GM’s performance as of this writing leaves it up in the air whether the structure will be effective enough to maintain the company’s turnaround. Students’ opinions will vary. 2. What are some advantages and disadvantages of being in the CEO position? The advantage of being a CEO is that, from an organizational perspective, it is the position of decision making and power. In theory, whatever the CEO says is implemented. It is a position that provides the individual with an opportunity to focus on the overall strategy and development of the company. A CEO’s compensation generally consists of relatively high salary and a bonus package as well as perks such as a company car, an expense account, etc. The disadvantages of the position are that the CEO is usually responsible to a board of directors and stockholders. He or she is the person on whom everybody focuses when things go wrong. The position usually involves a lot of work and can be extremely stressful. 3. Would you like to sit on a board of directors? Why or why not? If you did serve on a board, what kind of organization would you prefer? As a board member, in what kinds of activities do you think you would most actively engage? The idea of serving on a board of directors will appeal to some students and not to others. Some will see it as an opportunity to be involved, on a limited basis, in the direction of an organization, and some may mention the financial benefits of board membership (although many board members serve on a voluntary basis—especially in the case of nonprofit organizations). Others, however, will be afraid of the responsibility given the increased visibility of board members and their growing legal responsibility for the actions of the organization. As to the type of organization they would prefer, many may choose a nonprofit essentially as a means of serving society. They may feel there is great satisfaction to be gained from giving time and effort to helping those who are less fortunate. Others might see serving on the board of a business entity as a more meaningful role, and there may be additional compensation! Students will see their potential involvement in terms of their own interests. Some may see themselves serving on the finance committee while others may feel more comfortable on the compensation committee. 4. Interview a member of a board of directors and discuss the member’s perspectives on his or her role. Suggest to the students that they ask some of the following questions: How much time do you devote each month to the board’s activities? Do you think this is sufficient? Or too much? Do you feel you really understand what is going on in the organization? Or do you sometimes feel that you are getting a distorted view? Do you really understand the financial data with which you are provided? Are you given all of the financial data that is needed to gain a realistic picture of the organization’s results? Are the board meetings meaningful? Or do you sometimes feel they are a waste of time? What would you like to see changed so that the board might be more effective in its role? 5. Pick a job you have held and describe it in terms of span of control, delegation, responsibility, authority, and accountability. Students who have not held a management position may not relate to the aspects of authority and span of control. However, they should be able to describe the responsibilities that were delegated to them and the ways in which they were accountable. Students who have held a managerial position may be able to demonstrate the various factors (such as span of control, delegation, and etc.) by drawing an organization chart and showing the working relationships. 6. Why do you think managers have difficulty delegating? What can be done to overcome these difficulties? Ultimately, in any organization, managers are responsible for the activities of those individuals who report to them. If they do something themselves, they know that it was done correctly (or at least in the way they think it should be done). Delegating responsibility represents a loss of control, and managers are often reluctant to do so because it puts their reputation and, possibly their career, in the hands of someone else. What can be done to overcome this? Managers can be trained how to delegate effectively. There are numerous courses offered on “how to delegate” and “effective delegation for the manager.” From a practical point of view, managers can delegate a task to subordinates, oversee their efforts, and ensure ongoing reporting so that, at no time is the task out of control. Once a task is delegated, the manager should serve as a resource person and check in with the employee repeatedly to ensure that progress is made towards achieving the task. Then, as subordinates learn and demonstrate their ability, the supervision and reporting can be withdrawn until, eventually, the manager can be confident that the subordinates will do the task as well as the manager would. 7. Consider an organization in which you have worked, draw its organization chart, and describe it using terms in this chapter. How did you like working there, and why? Most students have held a position in some organization and thus should be able to draw the organization chart. It may help for them to do it by name rather than position. Among the terms that should be used are span of control, delegation, responsibility, and authority. In terms of whether or not they liked working there, it may be helpful to ask whether or not the organization’s structure (i.e., the organization chart and the reporting relationships) helped in making it enjoyable or perhaps the organizational structure was one of the reasons why students did not enjoy working for the organization. 8. Would you rather work in a functional or divisional organization? Why? A functional organization is one in which the unit or group focuses on one activity (e.g., production, marketing, finance, etc.), whereas, in a divisional or product organization, the group handles all the functional activities (such as production and marketing) for the product. Some students may prefer the functional organization because they wish to specialize and become highly skilled in some specialization. They may comment that they “want to be accountants, not marketers.” Others may see the product organization as giving them a much wider range of opportunities and may state that it will: “offer the opportunity to learn everything about the business.” Question: Why do some students select one approach and some another? Answer: They have different personality types, different goals, and objectives, etc. 9. If you learned that a company had a matrix structure, would you be more or less interested in working there? Explain your answer. How would you prepare yourself to work effectively in a matrix? It might be appropriate to start the discussion question with another question, namely: What difference do you think working for a company with a matrix organization has from the employee’s perspective. Some students will welcome the idea of working for two superiors. They will feel that it will give them a broader perspective on the company and provide more opportunities for learning and advancement. Others, however, will view the prospect of working for two superiors rather frightening. They will feel uncomfortable working in an environment with multiple demands and, sometimes, conflicting orders. The key to working for two bosses is communication and working in a matrix organization probably means that the individual has to be more proactive or assertive in determining the exact requirements and in communicating effectively with both individuals when there is conflict or ambiguity. 10. Brainstorm a list of methods for integrating interdependent work units. Discuss the activities that need to be undertaken and the pros and cons of each approach. This may be a challenging question for students to answer. Some typical responses might include: •Clarify the vision or common goal that people share. •Help people get to know one another’s strengths. •Focus on the things that each person brings “to the table” and recognize efforts to succeed as well as those who get results. •Emphasize effective communication and follow through on tasks. •Specify the person who is accountable for any new tasks assigned and follow-up to make sure task is completed in a satisfactory manner. •Students may offer other ideas. The goal here is to help students think about the future and to challenge them to think about the outcomes of their actions. EXPERIENTAL EXERCISES EXPERIENTIAL EXERCISE 8.1 - THE BUSINESS SCHOOL ORGANIZATIONAL CHART Teaching Tip Students can do the first part of this assignment (identifying the org. chart for their school) prior to coming to class, then the second part (designing a new organization) can be assigned after you have covered the material in the chapter. Objectives 1. To clarify the factors that determine the organizational structure. 2. To provide insight into the workings of an organization. 3. To examine the working relationships within an organization. Suggested responses Recommended changes would include a finance division to be added to the organization structure One strength of this organization’s structure is that it has a functional approach to its structure. It is simplistic, easy to understand, and is able to meet the mission of this institution. Strategic plans are implemented to permit growth and meet the student needs. A weakness would be to create a matrix organization to have members of the staff cross over and formulate a team approach to resolve some of the academic issues. Suggested Responses to Discussion Questions 1. Is your business school well organized? Why or why not? Most students probably will conclude that, in a general sense, their business school is well organized. However, some students may, as a result of their interviews, have received comments suggesting that while the school is well organized in some areas (such as teaching), it is not well organized in others such as research, community service, and etc. 2. Is your school’s organization organic or mechanistic? In what ways? Students tend to see their school as being mechanistic. They likely view it as being bureaucratic, inflexible, fragmented, and possibly indifferent to the needs of students. 3. In what ways is the school’s structure designed to suit the needs of students, faculty, staff, the administration, and the business community? Students are apt to consider the school to be organized to suit administrative tasks and to functionalize the faculty relationships and believe that too little is done to serve the needs of the students. They may fail to consider the needs of staff and the business community. Teaching Tip The instructions call for each student to explore the organizational structure of the school and to draw an actual and proposed organization. You might add a behavioral element to the exercise by dividing the class into small groups and proceeding as follows: 1. Each small group of students begins by holding two brainstorming sessions—the first to identify the organizational structure as they know it and the second to identify those organizational factors that need to be investigated (levels of administration, spans of control, chain of command, working relationships, etc.). 2. Each group member is assigned a particular organizational feature to investigate through interviews with faculty, staff, administrators, student leaders, advisory personnel, etc. 3. Each small group reconvenes and shares the results of the investigations. Another brainstorming session is used to draw both an actual and a proposed organization chart. 4. The whole class reconvenes and hears presentations by the small-group spokespersons. Then the class brainstorms a final organization chart proposal. EXERCISE 8.2 - DESIGNING A STUDENT-RUN ORGANIZATION THAT PROVIDES CONSULTING SERVICES Overview Designing a student-run organization is a good beginning activity, as it helps students realize that design involves far more than an organization chart and job descriptions. Students find it easy to relate to the task. We have found it useful to introduce the topic of organization design in the prior class session, by showing Galbraith’s “star” model and discussing the importance of integrating multiple design dimensions (Strategy, Task, Structure, Information Technology, and Decision Making, People, and Rewards). Activity Procedure The following is the sequence of activities, the necessary time required and some tips. Tasks 1 and 2: The activity takes little introduction, and in fact is helped if the instructor’s beginning comments are brief. Announce that the entire class session will be devoted to this design activity. The sequence will be instructions, working for 40-60 minutes in a group of (10-20) students, sharing the results (20 minutes), and finally, instructor’s concluding remarks (10-20 minutes). Read the learning objectives along with other objectives you may have for the session. Read the background statement and be prepared to answer student questions about the task. Typical questions including “Is the $20,000 separate from the space, equipment, and materials money?” (yes). “Can we spend the money on anything we think is needed?” (yes, subject to faculty advisor approval). “Who do we have to satisfy with this organization design?” (the dean). Teaching Tip We have found that it is important to emphasize that the task involves Total Organization Design. That is, they are to brainstorm all design dimensions to be dealt with, before working on a single dimension, such as organization structure. You can provide them examples, if needed, such as a mission statement and set of goals. Some Specific Suggestions: 1. Ask them to appoint a facilitator and recorder. 2. Ask them to determine who will report out—the facilitator and recorder can do it as a team. Regardless, assign responsibility ahead. 3. Visit each group during the discussion. Give advice only if they are off track (for example, too narrow concept of their task). 4. Make sure that the groups are ready to report out on time, and that they are building a product that can be shown to the class (on the whiteboard, chart pad, etc.). 5. If the room allows it, it is useful to have groups get up and move to the presenting group’s location/board to hear the reports. Encourage questions and discussion with the audience, and encourage other group members to chime in when elaboration is needed. Merged Results from Several Student Groups Designing the Total Organization Consulting Services Provided to Nonprofit Organizations Environment •Scan the environment •Assess community needs •Assess competitor organizations •Assess interest among undergraduates, graduate students Strategy •Learning experience, education as an overall theme •Students will design the organization and will create mission statement, vision, goals, guidelines for consulting, and list of services to be offered •To help nonprofit groups to be more successful and efficient •The focus must be clear, such as supporting organizations that help youth, e.g., YMCA •Nonprofit, student-run, offering low cost and innovative services Transformation Process •Based on a model of consulting – students take a course to select and modify the consulting process •Students from all programs and concentrations are involved to bring a variety of ideas to the consulting process •Generalists make initial contacts, followed by multifunctional teams which diagnose specific client needs •Faculty and community executives provide oversight during start-up and beyond •Relies on unique college capabilities including information technology •Relies on strong project management system, intranet, and internet Structure •A flat organization with little or no hierarchy •Based on a “club” concept, emphasizing fun activities and social support •Links to existing functional clubs in the college, such as accounting, marketing •Functional expertise and resources brought together based on project needs (matrix) •A team leader is point of contact both internally and externally to the client, but otherwise, leadership is shared •Beyond the teams, support groups are needed to sustain this organization, such as internal fund-raising, social events planning, advising, etc. •Some jobs such as team leader require experience People •Recruitment of skilled personnel, resolution mechanisms needed for staffing •Orientation, training issues •Guidelines for gaining experience and for advancing in the organization •Building a community – through work that is socially worthwhile, allowing creativity and learning Rewards •Incentives to participate: course credit, internships, senior projects •Challenging assignments, personal and professional growth •Team and individual recognition •Social events Other •Formal linkage to the college, legal liability considerations met, long-term financial viability considered •Develop the actual start-up steps for establishment of this organization EXERCISE 8.3 – WHEN SHOULD A COMPANY DECENTRALIZE? Objective To explore the conditions under which a company should decentralize its structure and decision-making. Instructions The following scenarios describe situations faced by hypothetical companies that currently have a centralized organizational structure. As you review each of the scenarios, provide your opinion as to whether the company should move to a more decentralized organizational structure. 1. Company X produces one specialized product line for heart surgeons in the United States. ☐ Maintain current centralized organizational structure or ☐ Move to a more decentralized organizational structure Defend your choice: ___________________________________________________________________________ ___________________________________________________________________________ 2. Company Y makes over 100 electronic products and has to respond rapidly to the moves of its competitors. ☐ Maintain current centralized organizational structure or ☐ Move to a more decentralized organizational structure Defend your choice: ___________________________________________________________________________ ___________________________________________________________________________ 3. Company Z’s managers are becoming increasingly comfortable with delegating tasks and responsibilities to subordinates in order to develop their decision-making skills. ☐ Maintain current centralized organizational structure or ☐ Move to a more decentralized organizational structure Defend your choice: ___________________________________________________________________________ ___________________________________________________________________________ SOURCE: Adapted from R. R. McGrath Jr., Exercises in Management Fundamentals (Englewood Cliffs, NJ: Prentice-Hall, 1985), pp. 59–60. CONCLUDING CASE Stanley Lynch Investment Group Case Summary: The Stanley Lynch Investment Group is a large investment firm headquartered in New York. It has 12 major investment funds, each with analysts in a separate department. Part of their strategic advantage is its advanced information technology system. However, with IT employees assigned to specific funds, it was nearly impossible to obtain consistent or comprehensive information. A new manager, J.T. Kundra, decided to have his employees download all of their programs to a wiki and he convinced other high-level managers to require their employees to do the same as part of their performance appraisals. The IT employees discovered that the wiki would help them perform more effectively and it provided a trail of information from the original documents to the more recent documents on any topic which was downloaded. The wiki eventually came to be viewed as one of their most important systems. Chapter Topics Related to the Case: •Discuss the concept of organizing people and information. •Discuss how the concept of decentralization may impact a company like Stanley Lynch. •Identify how managerial issues such as span of control and authority may affect a company like Stanley Lynch. •Identify how the concepts of decentralization and collaboration may affect individuals such as the IT associates of Stanley Lynch. Case Discussion Questions: 1. Discuss the topic of decentralization and when it commonly occurs in organizations? Suggested Response: Various organizational charts are to be expected in the individual student response to this question. However, acceptable responses must incorporate the following guidelines and information: (1) the greater the diversity of products, the greater the decentralization, (2) the larger the organization, the greater the decentralization, (3) a rapidly changing environment demands greater decentralization, and (4) designing timely control processes and training managers how to delegate effectively are key factors in managing decentralization. 2. What are the benefits of decentralization? Suggested Response: While decentralization reduces direct control by strategic leaders over employees’ daily work, it does empower employees to address problems, respond to opportunities, and to take action to protect the best interests of their assigned areas of responsibility. Decentralization builds on the belief that specialists can obtain better results in situations that require a great deal of knowledge, information, and insight. 3. What are shortcomings of decentralization? Suggested Response: Decentralization tends to limit the communication between departments and units in a company. It can also be a source of infighting and internal discord as employees act to protect their own interests without regard for the impact of their decisions and actions on other units. Decentralization can also produce a considerable amount of redundancy in the organization in areas of business services and employee positions. Solution Manual for Management: Leading and Collaborating in a Competitive World Thomas S. Bateman, Scott A. Snell, Robert Konopaske 9781259927645, 9781259546945