CH-13-Appendix-A Managing Communication – Understanding Management : Book Guide

This Document Contains Chapters 13 to Appendix A CHAPTER 13 MANAGING COMMUNICATION Answers to End of Chapter Discussion Questions 1. What are the characteristics of an open communication climate? Answer: Open communication means sharing all types of information throughout the organization, across functional and hierarchical boundaries. In an open communication environment, people know where they stand and what rules they need to play by. Open communication helps people accept, understand, and commit to goals. People can see how their actions interact with and affect others in the organization. And when people have access to complete information, they are more likely to come up with creative solutions to problems and make decisions that are good for the company. Managers can build an open communication climate by breaking down conventional hierarchical and department boundaries that may be barriers to communication. Also, they can take care to communicate honestly with subordinates; keep people posted when things change in either a positive or negative direction; and help people see the financial impact of their decisions and actions. Centralized and decentralized networks are two characteristics of an open communication that can make effective open communication climate. In a centralized network, team members must communicate through one individual to solve problems or make decisions. This type of network can be effective for large teams because it limits the number of people involved in decision making. The result is a faster decision involving fewer people. In a decentralized network, individuals can communicate freely with other team members. Members process information equally among themselves until all agree on a decision. Decentralized communication is best for complex, difficult work environment where teams need a free flow of communication in all directions. 2. Describe the elements of the communication model in Exhibit 13.2. Give an example of each part of the model as it exists in the classroom during communication between teacher and students. Answer: The communication process begins with the encoding of an idea into a message, which is then sent through a channel to a receiver. The receiver decodes the message to interpret its meaning and may respond with feedback to the sender. In the classroom, encoding occurs when the professor conceives of an idea and translates it either into spoken words or into writing on the blackboard. The spoken or written words are the symbols that comprise the message. The channel is the spoken voice that is heard by the receiver or the writing that is interpreted visually by the receiver. The receiver decodes the symbols to interpret the message. Feedback occurs when students ask questions. Noise occurs when the flow of messages is disrupted. This could occur because someone is talking in the classroom, because the professor does not speak clearly, or because the handwriting on the blackboard is illegible. 3. Lana Lowery, a regional manager for a 100-person inside sales staff, notices that the team’s best performer is struggling. Her sales are down 20 percent from a year ago, and she frequently arrives late for work, looking upset. Lowery needs to find out why her performance is suffering. What advice would you give Lowery for communicating with this employee? Which communication channel should she use? What would be the relative importance of candor, listening, and asking questions? Explain. Answer: A face-to-face conversation seems to be the most ideal channel for Lowery to use to communicate with her subordinate. Personal, individual feedback, whether positive or negative, should always be communicated face to face if possible. This information-rich channel allows for dialogue and nonverbal communication, both of which are essential for successful feedback in any case, but especially when performance-corrective information is being conveyed. Studies also show that face-to-face and telephonic are the two channels of communications that are most commonly preferred when communicating difficult news, giving advice, or expressing affection which is applicable in the given case. Candor, listening, and asking questions are relatively important in making the communication most effective. Communicating with candor will be a confident, positive approach as this will acknowledge the subordinate’s perspective and opinion, yet at the same time will help Lowery be firm and specific about what she wants and why (they are having the conversation). Listening would help Lowery grasp both the facts and feelings involved to interpret the message’s genuine meaning; only then can she provide the appropriate response. Asking questions will help build trust and openness between Lowery and her subordinate, build critical thinking skills, and stimulate the subordinate’s mind giving him/her a chance to make a difference. 4. What are the characteristics of an effective listener? How would you rate yourself on those characteristics? Answer: Listening involves the skill of grasping both facts and feelings to interpret a message’s genuine meaning. Listening requires attention, energy, and skill. Good listening means shifting from thinking about self to empathizing with the other person and thus requires a high degree of emotional intelligence. But they should be reminded that people often consider themselves better listeners than they actually are, because we don’t like to think of ourselves as rude or inconsiderate by not paying attention to others. 5. Some senior managers believe they should rely on written information and computer reports because these yield more accurate data than do face-to-face communications. Do you agree? Why or why not? Answer: Face to face communication is the richest medium. Telephone conversations are next in the richness hierarchy, and standard computer reports are the lowest in richness. Ideally, managers will use both face-to-face communication and computer reports to develop the most complete and useful information. This can be done in a couple of ways. Managers can gather accurate but impersonal data from computer reports and then meet face to face with employees to learn about the “back story”—the history and nuances of the situation or problem. Alternatively, they can meet with employees in person first to get whatever information they can from them about the situation and then use the data to verify the factual aspects of that information. 6. During times of significant organizational change, such as downsizing and layoffs, the grapevine becomes more active as anxious employees share organizational news and rumors. As a manager, what communication strategies would you employ during a time of uncertainty in the workplace? What are the advantages and disadvantages of gossip during a time of uncertainty? Answer: During times of uncertainty, managers should use every communication channel they can to help employees understand the facts and to ease their anxiety. Because the grapevine is already highly active during these times, managers can take advantage of the grapevine by feeding the information they want employees to hear into the grapevine. However, because information passed through the grapevine is particularly vulnerable to distortion, managers must also use more formal communication channels to ensure that employees have accurate, truthful information to counter the distortions that occur in the grapevine. Gossip information moves throughout the organization incredibly quickly, so it can reach a large number of employees in a very short time, but it can also be rampant with distorted or even blatantly false information, which must be countered with factual, accurate information through other channels. 7. Assume you manage a small online business that sells herbal supplements. Without your knowledge, a disgruntled employee has posted damaging information about your company in the company’s blog, including false information about dangerous ingredients in your best-selling supplement. What specific steps would you take to minimize the impact of this crisis? Answer: Managers can develop four skills for communicating in a crisis. First, managers should stay calm and listen hard. Good crisis managers don’t allow themselves to be overwhelmed by the situation. Instead, they acknowledge the difficulty of the situation, but project hope and optimism. Second, managers should be visible. A manager’s job is to step out immediately, both to reassure employees and to respond to public concerns. In this situation, firing the disgruntled employee and making it known that the employee has been dismissed is a necessary part of that response. Third, managers should get the awful truth out—in this case, the truth that a disgruntled employee posted false information. Getting the truth out quickly prevents rumors and misunderstandings. Then, make sure the real truth gets out also, the truth that your products are indeed safe. Finally, managers in a crisis situation must communicate a vision for the future. People need to believe that the crisis has been managed, that appropriate steps have been taken to ensure a similar crisis can’t happen again, and that the company is moving forward with a positive outlook. 8. If you were asked to design a training program to help managers become better communicators, what would you include in the program? Answer: This question is designed to stimulate student thinking, and there is no single correct answer. Students will want to consider many of the topics covered in this chapter including communication channels, nonverbal communication, listening, and informal communications such as management by wandering around. These topics would help managers understand communication skills and acquire practice and efficiency with the techniques. The communication-training program might also consider organizational barriers to communication and how to overcome them. Students may have ideas of their own for training managers in additional communication areas such as speech making, writing, using organizational surveys, open door policies, and other techniques for enhancing organizational and personal communication. I'd include modules on active listening, clear and concise messaging, non-verbal communication, feedback techniques, conflict resolution, and emotional intelligence. Practical exercises, role-playing scenarios, and real-time feedback would be integral to the program. 9. Suppose that you manage an employee who is spending too much time using social media at work. The result is that he has missed three important deadlines in one week. You are planning a face-to-face conversation to address this performance problem and your goal is to communicate with candor. Using “I statements” as described in this chapter, how would you begin this conversation? Answer: Students’ responses can vary. However, the statements or responses should focus on the specific perception of the situation that they as a manager (i.e., “I”) have, how they feel about it, and the effect it is having on them, rather accusing or blaming the employee. To address the issue with candor, start the conversation with: "I’ve noticed that you've missed three important deadlines this week, and I’m concerned that this may be affecting your work performance. I’d like to discuss how we can address this issue and support you in managing your time more effectively." 10. Describe specific ways that an organization might use social media to communicate with customers. How about with employees? Answer: Social media is a group of Internet-based applications that allow the creation and exchange of user-generated content. It covers a broad number of applications including wikis, blogs, micro-blogs, content communication, social networking sites, and virtual social networks. It is reinventing how people in organizations communicate. The rapidly changing digital environment is bringing sweeping changes to workplace communication. Use of email, Twitter, and Facebook has increased dramatically in the past few years. This significant increase in the use of social media signals a growing appetite among users for instant access and immediate sharing of information. Popular collaboration tools, such as podcasts, blogs, and wikis, are also opening up opportunities for organizations to interact with employees and customers and improve collaboration among teams. Social media has been used for only two or three years for most companies, largely for communicating with customers and enhancing employee collaboration. Important corporate news can be quickly communicated to customers through the use of social media. Also, a company can engage in online conversation to address concern for a crisis. Managers can use new communication technologies in a wide variety of ways to manage employees, connect with existing customers, reach new customers, and enhance relationships with suppliers. Social networking, both through public sites and corporate networks, offer peer-to-peer-communication channels where employees interact in an online community, sharing personal and professional information and photos, producing and sharing all sorts of ideas and opinions. Apply Your Skills: Experiential Exercise Personal Assessment of Communication Apprehension If students are honest with themselves as they respond to this questionnaire, many if not most will find they can assess their communication apprehension. Since communication is such a big part of everyone’s life, it is easy to identify which situations produce communication apprehension---public speaking, meetings, group discussions, and interpersonal conversations. With awareness and practice it is possible to improve communication and reduce communication apprehension. Apply Your Skills: Small Group Breakout Listen Like a Pro Students are asked to form groups and, within their groups, form pairs of two. They then sit face to face and each gazes into his or her partner’s left eye. Once they’re comfortable with eye contact, one should describe an annoying experience to the other, while the first maintains eye contact but does not respond verbally. Then, students switch roles, and finally discuss their feelings during that part of the exercise. Students select another partner and repeat the exercise, except that they now paraphrase the speaker’s story of annoyance. Finally, they select a third partner and repeat the exercise, this time asking five questions during the speaker’s story. Then, all students in the group discuss their experiences in the three scenarios. Apply Your Skills: Ethical Dilemma On Trial 1. Agree with Cathy Putnam. Despite your personal feelings, accept that Firoz Bahmani is not capable of carrying out the accountant assistant’s responsibilities. Make the break now, and give him his notice on the grounds that he cannot carry out one of the key stated job requirements. Advise him that a position that primarily involves paperwork would be a better fit for him. Answer: This is a poor choice. Achieving and supporting diversity in a firm is not easy, but it is essential in today’s world. There will always be cultural and language barriers when employees of different nationalities are working together. Beatrice Werner believes Firoz will eventually be an asset to the firm, and she should provide him the opportunity to grow and learn. 2. Place Firoz with a more sympathetic account manager who is open to finding ways to help him improve his English and has the time to help him develop his assertiveness and telephone skills. Send Cathy Putnam to diversity awareness training. Answer: This is probably the best option. Werner should place Firoz with another account manager who is more tolerant and is willing to find ways to help Firoz develop his language skills. If possible, she could lessen the manager’s caseload somewhat as well. Firoz appreciates the job and seems more than willing to please; he is not going to resent strong guidance. In addition, working with a more encouraging and supportive manager will help Firoz feel more confident about his language skills, which will in turn help him be more willing to make the necessary calls to customers and clients. Cathy’s comments suggest that she does not fully embrace diversity. In fact, they betray a certain level of prejudice. Although she may resent it initially, diversity awareness training might her be more accepting of others. 3. Create a new position at the firm that will allow Firoz to do the reports and reconciliations for several account managers, freeing the account assistants to concentrate on public contact work. Make it clear that he will have little chance of future promotion unless his English improves markedly. Answer: Sticking Firoz in a dead end job that does not involve customer contact is a waste of his potential, and Werner has already assured him of his opportunities for advancement. Apply Your Skills: Case for Critical Analysis E-mail Adventure 1. What is the underlying communication mistake in this case? Why do you think Howard Tannenbaum sent those e-mails? Answer: The underlying communication mistake in the case is the fact that Howard sent those e-mails while he was bursting with anger, something that one should always avoid when using e-mail as a communication channel. He should have probably waited till he cooled off his anger, because increased anger can disable one’s ability to communicate effectively. Then, he would have been more able to choose the most constructive way to convey his emotions, the fact that he was upset. Howard Tannenbaum sent those e-mails when he was angry and upset because of the breach of product design information in the company. Tannenbaum was very passionate about this product (a new line of toys); so, he was emotionally charged when the information about it was leaked way before its completion, and suspected everyone in the company. Sending the angry e-mails was his way of venting out his emotions. 2. How do you think Tannenbaum should have communicated his concerns about the information link? Why? Answer: Howard should not have sent those e-mails while he was bursting with anger. One should always avoid using e-mail as a communication channel when he/she is angry. He should have probably waited till he cooled off his anger, because increased anger can disable one’s ability to communicate effectively. Then, he would have been more able to choose the most constructive way to convey his emotions, the fact that he was upset. A better communication channel should have been selected. Like, in this case, as the message in the e-mail contains nonroutine messages, it involves great potential for misunderstanding. Therefore, a rich communication channel, like, face to face should have been a better choice. This will ensure that the employees hear the message in the most positive way. The visual and verbal cues will allow for interaction and feedback, making the communication more effective. 3. What should Tannenbaum do now to try to recover from the negative impact of his e-mails? Suggest specific steps. Answer: To recover from the negative impact of his e-mails Tannenbaum can probably arrange for a face-to-face communication and meet all his subordinates in person in order to clear out the misunderstandings, and apologize for it. Visual and verbal cues will allow for interaction and feedback making the communication more effective. This might help him in restoring the damaged relationship with them. On the Job Video Case Answers Plant Fantasies 1. Using the concept of channel richness, explain why leaders at Plant Fantasies place a high value on face-to-face communication. Answer: Channel richness is the amount of information that can be transmitted during a communication episode. Face-to-face discussion is considered the richest communication channel because it permits direct experience, multiple information cues, immediate feedback, and personal focus. In the video, the executive-level managers at Plant Fantasies discuss communication methods in the context of building customer relationships. In these business situations, low-richness channels such as e-mail, Twitter, or texting are too impersonal and one-way to enable relationships to be established or strengthened. Relationship building involves important nonroutine messages, and these messages require a rich medium. As seen in the video, Plant Fantasies reserves e-mail and texting for more routine situations and messages, such as coordinating daily itineraries for delivery trucks and laborers. 2. What impact might gender have on the communication styles of Teresa Carleo and Steve Martucci? Give examples. Answer: Generally speaking, communication by women tends to focus on connection and the feeling of relative closeness. For women, conversation is a way to establish meaningful contact and negotiate relationships. When speaking of Sales Director Steve Martucci, she says, “He knows me, knows what’s important to me—we’re good together.” In nonverbal communication, women generally tend to use more submissive gestures, such as using less body space, tilting the head, and lowering eyes often. As seen in the video, Carleo uses expressive hand gestures. In discussing her e-mail habits, Carleo says she once worried that her usage was “too invasive.” Above all, Carleo believes in being personal, and she has been known to use hand-written letters to make a personal connection with customers. In contrast, men tend to use verbal language to exhibit knowledge, pass on information, or assert power. In body language, men tend to take up more space, use broad sweeping gestures, and stare. When contrasting his communication style with that of Teresa Carleo, Steve Martucci says that Carleo “tends to get into the relationship” whereas he’s more into the specifics.” Martucci adds that the two leaders “listen differently” and even form different perceptions of the same meeting. When discussing his communication with clients, Martucci emphasizes speed of information gathering: “You have only so much time face to face with a client, so you need to get as much information as you can. Just be really blunt.” When discussing his close monitoring of employees, he says, “I don’t think you can ever be too annoying.” Finally, Martucci prefers phone calls to e-mail because e-mail is time consuming. 3. Which of the three types of formal organizational communication would you expect to originate from Teresa Carleo and Steve Martucci, and why? Answer: The three types of formal organizational communication that flow within the chain of command are upward, downward, and horizontal. Of these three, downward communication is the type that originates uniquely from top-level executives like Teresa Carleo and Steve Martucci. Downward communication is sent from the top of the organization and flows downward to lower-level managers and employees. In addition, these formal messages are typically used to implement goals and strategies, provide job instructions, establish procedures and practices, offer performance feedback, and indoctrinate employees. CHAPTER 14 LEADING TEAMS Answers to End of Chapter Discussion Questions 1. One company had 40 percent of its workers and 20 percent of its manager’s resign during the first year after reorganizing into teams. What might account for this dramatic turnover? How might managers ensure a smooth transition to teams? Answer: One of the difficult experiences for companies that begin the revolution toward empowerment and teamwork is that many employees are not comfortable in the new culture. Approximately one third of employees embrace the change enthusiastically, one third will go along, and one third will resist. The resisters typically are employees who do not have the social and personal skills to work in partnership with others on teams, and who want narrowly defined jobs with little decision-making responsibility. These employees prefer working alone within the vertical hierarchy to teamwork. They often seek that kind of situation in a new job. Companies that spend too much time trying to convert the resisters threaten the smooth transition process. These people leave, as a natural part of the change process seems to work best. 2. Have you experienced any of the five contributions of teams shown in Exhibit 14.2 with a team you have participated in? Describe your experience and why you think that the team was able to make that specific contribution. Answer: Yes, I've experienced all five contributions of teams, but the most notable was improved creativity and innovation. In a group project, we collaborated on a new marketing campaign. The diversity of ideas and perspectives led to creative breakthroughs that none of us would have achieved alone. I believe the team's open communication, trust, and a clear shared goal enabled this contribution. 3. Suppose that you are the leader of a team that has just been created to develop a new registration process at your college or university. How can you use an understanding of the stages of team development to improve your team’s effectiveness? Answer: As a leader of an employee group charged with development of a new registration process would be challenging. As a leader of this project, it will be important to develop stage one “forming” to formulate the employee group or team as to identifying the role of each team member. Responsibility must be assigned and this group must meet on a regular basis. In stage two “storming”, the group will participate, share ideas, agree and disagree on issues relating to student registration. In stage three “norming”, the team will start to come together and will seek innovative techniques to problem solve and improve upon student registration. In stage four “performing”, the team is collaborating, working together and functioning as an effective team. Recommended operating procedures are forthcoming to improve the effectiveness of student registration. Finally, in stage five “adjourning”, this team is disbanded due to the recommended strategies of improving the registration process. 4. Imagine yourself as a potential member of a team responsible for designing a new package for a breakfast cereal. Do you think interpersonal skills would be equally important if the team is organized face to face versus a virtual team? Why or why not? Might different types of interpersonal skills be required for the two types of teams? Be specific. Answer: Although students may have differing opinions, it is likely that interpersonal skills would be more important when a team is organized face to face than for a virtual team. While interpersonal skills are still important for both types of teams, the relative isolation of members in a virtual team reduces the potential for personality clashes, power struggles, and other interpersonal issues among those members. In a team that is organized face to face, the need for interpersonal skills will probably center more on resolving interpersonal conflicts, whereas the need for interpersonal skills in a virtual team will probably center more on achieving cooperation and coordination among members separated by time and distance. 5. If you were the leader of a special-purpose team developing a new computer game and conflicts arose related to power and status differences among team members, what would you do? How might you use the various conflict-resolution techniques described in the chapter? Answer: The leader of a special purpose team of formulating and innovating a computer game would evolve from the creativity of this group. The intuition and idea generation would come from individuals possessing a right hemisphere of the brain approach. Team members will have different views and ideas and a power struggle may result among the team. A natural phenomenon is conflict, and will become a reality especially in researching a new product. The method of managing conflict is healthy, and is a challenge to management. A manager may be required to stimulate conflict when the team is complacent. However, conflict must be resolved when there is a power struggle or status given to certain members of the team. The way to resolve this conflict is either to force, accommodate, compromise, and/or collaborate with the members of the team. The means of reducing conflict will vary, based on the situation or environment the leader is exposed to. 6. Experts say that for teams to function well, members have to get to know one another in some depth. What specifically would you do to facilitate this in a colocated team? What about in a global virtual team? Answer: One good way to facilitate team members getting to know one another in a co-located team is to encourage participation together in activities outside of work. As members participate together in service or recreational activities outside work, they can become better acquainted and begin to build trust among themselves. There are also the more traditional team-building interventions such as ropes courses, retreats, and others. For a global virtual team, it might be useful to create some “virtual recreational activities” in which members could participate. Although this approach would probably not be as effective as the face to face activities in which members of a co-located team could participate, if designed properly, these online activities could still be effective in helping members of a global virtual team get to know each other in a setting not directly related to work. 7. Think of your favorite sports team, or observe a sports team at your university. Can you identify which members seem to play task specialist roles and who might play a socioemotional role? What behaviors did you observe for each type of role? Answer: In my university's basketball team, the point guard often plays the task specialist role, focusing on strategy, scoring, and directing plays. They are highly goal-oriented and take charge during crucial moments. Meanwhile, the team captain tends to play the socioemotional role, offering support, motivating teammates, and helping resolve conflicts on and off the court. They show empathy and foster team cohesion by encouraging others during stressful situations. 8. Some people argue that the presence of an outside threat correlates with a high degree of team cohesion. Would you agree or disagree? Explain your answer. Answer: Most students will probably agree that an outside threat does correlate with a high degree of team cohesion. The reason is that people tend to draw together when threatened by an outside force, just as with family members who may fight among themselves but stand together to fight someone from outside the family who threatens them. As a general rule, team cohesion is associated with higher performance. However, an interesting find from research is that the cohesive team can define performance. If the goal of the cohesive team is to reduce performance because of a poor relationship with management, the cohesive team will perform terribly. When teams have a good relationship with management and the performance norms are high, then highly cohesive teams will outperform teams that are lower in cohesiveness. 9. Discuss how the dilemmas of teamwork might be intensified in a virtual team. What dilemmas do you feel when you have to do class assignments as part of a team? Discuss. Answer: There are three primary reasons teams present a dilemma for most people. First, people have to give up their independence. When people become part of a team, their success depends on the team’s success; therefore, they are dependent on how well other people perform, not just on their own individual initiative and actions. This can easily be exacerbated by the geographic distance between people that can act to increase the psychological distance, or perceived anonymity, between them, thus increasing the anxiety associated with depending on someone you don’t know very well. Second, people have to put up with free riders. The term free rider refers to a team member who attains benefits from team membership but does not actively participate in and contribute to the team’s work. Closely related to the issue of depending on others for success, the increase in perceived anonymity also increases the likelihood of some members acting as free riders. It may be much easier to avoid active participation in the team in a virtual setting. Third, teams are sometimes dysfunctional. Many teams have great success, but others experience significant failure. The ways in which teams are managed plays the most critical role in determining how well they function. The potential for dysfunction is also increased by the geographic and psychological distance among members of a virtual team. 10. If you were the leader of a newly formed team, what might you do to make sure that the team developed norms of high performance? Answer: The emphasize the following points. A team norm is a standard of conduct that is shared by team members and guides their behavior. Norms identify key values, clarify role expectations, and facilitate team survival. Norms begin to develop in the first interactions among members of a new team. Other influences on team norms include critical events in the team’s history, as well as behaviors, attitudes, and norms that members bring from outside the team. Norms that apply to daily behavior, employee output, and performance evolve, letting everyone know what is acceptable and directing actions toward acceptable performance. Four common ways in which norms develop human behavior are: • Critical events: Critical events establish precedent and lead to the creation of a norm. For example, one critical event occurred when an employee at a forest products plant was injured. This led to the norm that team members regularly monitor one another. • Primacy: Primacy means that the first behaviors that occur in a team often set team expectations. For example, the team leader at a company raised an issue and then “led” team members until he got the solution he wanted. This became a pattern of unproductive behavior. • Carryover behaviors: Carryover behaviors bring norms into the team from outside. An example is the strong norm against smoking in many teams, which is a carryover behavior developed outside the team. • Explicit statements: With explicit statements, team leaders or members establish norms. This can be a highly effective way for leaders to influence or change team norms. Apply Your Skills: Experiential Exercise This and That: Best Team–Worst Team Students are to think of two teams of which they have been members–their best teams and their worst teams in terms of personal satisfaction and team performance. Then, in small groups, they will tell each other the stories of their best and worst team experiences, and then go on with the remaining parts of the exercise. The exercise helps them identify key behaviors that account for their best and worst team experiences, what factors influence the presence of those behaviors, what personal changes they should made as individuals to demonstrate more of the positive behaviors and less of the negative behaviors, and how to help team leaders attain more positive behaviors and less negative behaviors within their teams. Apply Your Skills: Small Group Breakout Team Feedback Exercise Students form groups of three to four, think about recent experiences working in teams at work or school, and answer four questions provided in the exercise. Students then share their experiences with group members, looking for common themes, important themes, and implications of their experiences. Apply Your Skills: Ethical Dilemma One for All and All for One? 1. Vote to exonerate the three group members who didn’t cheat. You’re convinced they had no reason to suspect Paul Colgan of dishonesty. Exonerating them is the right thing to do. Answer: This may be a viable option for two primary reasons. First, the professor’s policy is open to interpretation in that it may have simply been intended to mean that each member of the group must contribute equally to the final product, not that they were each equally accountable for the other’s academic dishonesty. Second, the professor’s policy could be considered unreasonable in that the three students in question had no way of knowing Paul had cheated, nor did they have any real means of oversight to ensure that Paul did not cheat on the project. If the appeals committee is nothing more than a rubber stamp for professors’ policies, there is no point is having an appeals process. 2. Vote in support of Hank Zierden’s decision to hold each member accountable for the entire project. The professor clearly stated his policy at the beginning of the semester, and the students should have been more vigilant. The committee should not undercut a professor’s explicit policy. Answer: This course of action will send a message to students that they are accountable for things over which they have no effective means of control. Even in business, employees should not be held accountable for things over which they have no effective means of control. The three students had no reason to suspect that Paul had cheated, and Paul is not subordinate to them in any way, so holding them accountable for his actions will only demoralize them. 3. Vote to reduce each of the three students’ penalties. Instead of a zero, each student will receive only half the possible total points for the project, which would be an F. You’re still holding students responsible for the group project, but not imposing catastrophic punishment. This compromise both undercuts the professor’s policy and punishes “innocent” to some extent, but not as severely. Answer: This compromise still sends the wrong message to all of the students in the class who did not cheat on their projects. To compromise on the penalties, propose that each student receives half the total points for the project, resulting in an F rather than a zero. This approach still holds students accountable but reduces the severity of the punishment, addressing concerns about fairness while respecting the professor’s policy. Apply Your Skills: Case for Critical Analysis Are We a Team? 1. What type of team does the new CIO have? What do you see as the key problem with the team? Answer: The new CIO has a dysfunctional team lacking trust, respect, cohesion, and a breakdown of genuine communication. Although, the talent pool of the team is amazing, however the team performance as a whole was disappointing. Even with much talent in the teams of the company, it was not able to grow at a faster rate. The main problem was that the teams consisted of groups of individualists who didn’t know how to play as a team. There is lack of trust and communication among the members of the teams and teams of different departments. Commitment toward mutual success is absent in the teams. 2. How do you think the team evolved to this low level of cooperation and cohesiveness? Answer: Team cohesiveness concerns the extent to which members are attracted to the team and motivated to remain in the team. Determinants of team cohesiveness are: • Team interaction: The greater the contact among members, the more cohesive the team will be. • Shared goals: Agreeing on purpose and direction binds the team together. • Personal attraction to the team: Members have similar attitudes and values and enjoy being together. • Presence of competition: This causes the group to want to win. • Team success: Success is a favorable evaluation of the team by outsiders. The team lacked all of the above factors. From the consistent remarks and opinions in the one-on-one meetings, it was evident that the previous CIO, Bob, was obviously awed by the talent level of team members. This led to the regional heads into believing that the CIO wanted them to succeed by doing as they thought best for themselves. High performers were territorial and the “each division for itself” attitude started becoming the cultural norm in the company. 3. What suggestion do you have for the CIO to help her turn this collection of individual regional and departmental heads into a top-performing team? Explain. Answer: Work team effectiveness is based on three outcomes: • Productive output—the quality and quantity of task outputs as defined by team goals. • Personal satisfaction—the team’s ability to meet the personal needs of its members to maintain their membership and commitment. • Capacity to adapt and learn—the ability of teams to bring greater knowledge and skills to job tasks and enhance the potential of the organization to respond to new threats or opportunities. The factors that influence team effectiveness begin with the organizational context in which the team operates—the structure, strategy, environment, culture, and reward systems. Managers define teams within that context. Important team characteristics are the type of team, the team structure, and the team composition. These team characteristics influence processes internal to the team, which affect output and satisfaction. Good team leaders understand and manage stages of team development, cohesiveness, norms, and conflict to establish an effective team. On the Job Video Case Answers Holden Outerwear: Leading Teams 1. Is Design Manager Nikki Brush a part of a group, or part of a team? Explain the difference. Answer: Groups differ from teams. Although groups and teams are comprised of multiple members, a team implies a shared sense of mission, goals, and responsibility. Nikki Brush is part of a team at Holden Outerwear because she works collaboratively with others on collective work projects, interacts regularly with team members, and sets shared performance goals. Groups, in contrast to teams, emphasize individual accountability and individual work products. 2. What type of team did Nikki Brush participate in when she was a freelancer? What type of team does she participate in as a full-time employee at Holden? Answer: When Nikki Brush was an outside freelancer working on Holden projects, she was a member of a virtual team. Virtual teams are comprised of members who are geographically dispersed but who share work assignments using collaboration software, intranets, wikis, videoconferencing, and e-mail. Though led and organized by company managers, virtual teams often include outside consultants, contractors, members of partner organizations, and other non-employees of the firm. Now that Ms. Brush is a full-time design and development manager at Holden, she is a member of a formal team, which is a team that operates within the organization’s formal structure. Formal teams may operate either vertically or horizontally in the organizational hierarchy. In her interviews, Ms. Brush expresses a noteworthy difference between virtual teams and formal teams: “Freelancing is interesting because you’re not invested in the company, and you don’t know one-hundred percent where they’ve been or where they’re going.” Brush adds that companies share very little information or authority with the outside members of virtual teams. 3. What are potential disadvantages of these teams for Holden’s apparel designers? What can managers do to help avoid these downsides? Answer: Answers will vary, but apparel design is highly creative work, and poorly managed teams are susceptible to negative performance issues that can stifle creativity. Top downsides of teams include social loafing, conformity, groupthink, loss of independence, and conflict. In the video, Nikki Brush says she experienced group performance dilemmas in college. Managers at Holden can promote effective teamwork by defining roles, establishing norms, and setting goals. In particular, managers need to establish the proper organizational context (e.g., establish proper team type, team characteristics and team composition), oversee team processes (e.g., development stages, cohesiveness, norms, and conflict), and assess team effectiveness (e.g., monitor productive output, member satisfaction, and the capacity to adapt and change). Disadvantages: 1. Limited Perspective 2. Groupthink 3. Conflict 4. Dependency Manager Actions: 1. Encourage Diversity 2. Foster Open Communication 3. Set Clear Goals 4. Balance Autonomy and Collaboration CHAPTER 15 MANAGING QUALITY AND PERFORMANCE Answers to End of Chapter Discussion Questions 1. You have been hired to manage a 20-person staff for Nightlight Travels, a travel agency in Las Vegas. For five years, sales have been hammered by the global recession, and staff morale has plummeted as star employees have left for positions in more secure industries. Key customer relationships have been damaged by the sloppy and unprofessional work habits of the remaining staff members. Your first responsibility as new manager is to create next year’s budget for all planned expenditures. But first you must decide if you will adopt a hierarchical approach or a decentralized approach to control. Which one would you choose, and why? Answer: A decentralized approach to control seems favorable for the above scenario. Decentralized control relies on shared values and goals to control employee behavior. Managers operate on the assumption that employees are trustworthy and willing to perform effectively without extensive rules and close supervision. The organization places great emphasis on the selection and socialization of employees to ensure that workers have the values needed to influence behavior which meets goals. Self-discipline and self-control are what keep workers performing their jobs up to expected standards. Empowerment of employees, effective socialization, and training can contribute to internal standards that provide self-control. With a decentralized approach, power will be dispersed and based on knowledge and experience as much as position. The organization structure is flat and horizontal with flexible authority, and teams of workers solving problems and making improvements. This will be a great way to improve the sloppy and unprofessional work habits of the remaining staff members, as everyone will be involved in the quality control on an ongoing basis. Managers can not only make use of extrinsic rewards, but also intrinsic rewards for meaningful work and the opportunity to learn and grow. With decentralized control, the culture is adaptive, and managers recognize the importance of culture for uniting individual, team, and organizational goals for greater overall control. 2. You’re a manager who employs a participative control approach. You’ve concluded that corrective action is necessary to improve customer satisfaction, but first you need to convince your employees that the problem exists. What kind of evidence do you think employees will find more compelling: quantitative measurements or anecdotes from your interactions with customers? Explain your answer. Answer: Students may suggest that some employees will be more convinced by quantitative measurements because they consider them to be objective and factual rather than subjective and story bound. Indeed, a few employees may be more convinced by quantitative evidence; however, recall from the discussion in Chapter 13 that presenting hard facts and figures rarely has the same power as storytelling. Stories draw on people’s imaginations and emotions, which help managers make sense of a fast-changing environment in ways that people can understand and share. Managers who use symbols, metaphors, and stories to deliver their messages have an easier time influencing and persuading others. Evidence of the compatibility of stories with human thinking was demonstrated by a study at Stanford Business School in which students presented with a vivid story alone (as opposed to a story and quantitative data or quantitative data alone) were most convinced that the company truly practiced a policy of avoiding layoffs. Employees are likely to find quantitative measurements more compelling because they provide objective, data-driven evidence of the problem. While anecdotes can illustrate issues, quantitative data offers clear, measurable proof that highlights the scope and impact of the problem, making it harder to dismiss or ignore. 3. Describe the advantages of using a balanced scorecard to measure and control organizational performance. Suppose you created a balanced scorecard for Walmart. What specific customer service measures would you include? Answer: The balanced scorecard is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company’s critical success factors. A balanced scorecard contains four major perspectives: financial performance, customer service, internal business processes, and the organization’s capacity for learning and growth. Within these four areas, managers identify key performance metrics the organization will track. The financial perspective reflects a concern that the organization’s activities contribute to improving short- and long-term financial performance. It includes traditional measures such as net income and return on investment. Customer service indicators measure such things as how customers view the organization, as well as customer retention and satisfaction. Business process indicators focus on production and operating statistics, such as order fulfillment or cost per order. The final component looks at the organization’s potential for learning and growth, focusing on how well resources and human capital are being managed for the company’s future. Metrics may include such things as employee retention, business process improvements, and the introduction of new products. The components of the scorecard are designed in an integrative manner. The balanced scorecard helps managers focus on key performance measures and communicate them clearly throughout the organization. It has become a core management control system for many organizations today, and can be applied to most any business. Obviously, the magnitude of this type of control system will be much less in a small, localized storefront business than in a large corporation, with a similar contrast in the benefit to be derived from implementing such a system. Some specific customer service measures students’ might mention in relation to Walmart include length of wait in cashier lines, ease of finding desired products, availability of desired products, store cleanliness, and in-store services such as eye-care centers, banking facilities, fast food franchises, etc. 4. In zero-based budgeting, every account starts at $0, and every dollar added to the budget is reflected by an actual, documented need. Identify the possible advantages of bottom-up budgeting. Answer: In bottom-up budgeting, lower-level managers anticipate their departments’ resource needs and pass them up to top management for approval. Companies of all kinds are involving line managers in the budgeting process. This can help in redirecting resources as needed to achieve goals within budget constraints. 5. Most companies have policies that regulate employees’ personal use of work computers during work hours. Some even monitor employee e-mails and track the Web sites that have been visited. Do you consider this type of surveillance an invasion of privacy? What are the advantages of restricting employee use of the Internet and e-mail at work? Answer: Computers used for Internet and e-mail at work belong to the employer, not the employee, which gives the employer the right to monitor how its computers are used. Restricting use of the Internet and e-mail prevent employees from engaging in inappropriate (i.e., not work related) Internet surfing and personal e-mail communication. Moreover, such restrictions keep employees more focused on work by preventing them from abusing (i.e., wasting) company time surfing the Internet or reading/writing personal e-mails. 6. Think of a class you’ve taken in the past. What standards of performance did your professor establish? How was your actual performance measured? How was your performance compared to the standards? Do you think the standards and methods of measurement were fair? Were they appropriate to your assigned work? Why or why not? Answer: Performance standards are normally set forth by the professor in determining the grading procedure of a course. An example could be 90-100 A’s, 80-89 B’s, 70-79 C’s, etc. The actual performance is determined through student test grades, case method analysis, research papers, participation in class, and other assessment methods. The teacher can compare performance against the standards when these assessment measures are evaluated. When these results are given back to students, corrective action can be forthcoming based on the performance when compared against the standard. Performance standards and measurement methods should be administered in a manner consistent with the syllabus and the general practices of the university, and should be directly related to stated expectations of performance. 7. Some critics argue that Six Sigma is a collection of superficial changes that often result in doing a superb job of building the wrong product or offering the wrong service. Do you agree or disagree? Explain. Answer: Based on the Greek letter sigma, which statisticians use to measure how far something deviates from perfection, Six Sigma is a highly ambitious quality standard that specifies a goal of no more than 3.4 defects per million parts. In recent years, Six Sigma has deviated from this precise definition to become a generic term for a quality-control approach that takes nothing for granted and emphasizes a disciplined and relentless pursuit of higher quality and lower costs. The discipline is based on a five-step methodology that provides a structured way for organizations to approach and solve problems. While saving time and money and reducing defects is an admirable and certainly worthwhile pursuit, Six Sigma does nothing to determine whether the organization is saving time and money and reducing defects with regard to the right products or services. Thus, one can make a valid argument that it is rather superficial and useless if the company is producing goods or offering services with little demand. On the other hand, Six Sigma was not intended to be a business strategy improvement model; it assumes the strategy and product/service mix are correct at the outset and is aimed at cost reduction and improvement of product/service quality. 8. What types of analysis can managers perform to help them diagnose a company’s financial condition? How can a review of financial statements help managers diagnose other kinds of performance problems as well? Answer: Managers can perform a financial analysis of an income statement and balance sheet of a company to ascertain its strengths and weaknesses. The balance sheet shows the firm’s financial position with respect to assets and liabilities at a specific point in time. The balance sheet provides three types of information: assets, liabilities, and owners’ equity. Assets are what the company owns, and they include current assets (those that can be converted into cash in a short time period) and fixed assets (such as buildings and equipment that are long term in nature.) Liabilities are the firm’s debts, including both current debt (obligations that will be paid by the company in the near future) and long-term debt (obligations payable over a long period.) Owners’ equity is the difference between assets and liabilities and is the company’s net worth in stock and retained earnings. The income statement, sometimes called a profit-and-loss statement or “P&L” for short, summarizes the firm’s financial performance for a given time interval, usually one year. The income statement shows revenues coming into the organization from all sources and subtracts all expenses, including cost of goods sold, interest, taxes, and depreciation. The bottom line indicates the net income—profit or loss—for the given time period. Financial statements are indicators of performance problems. For example, a sales decline may signal problems with products, customer service, or sales force effectiveness. Managers need to be able to evaluate financial reports that compare their organization’s performance with earlier data or industry norms. These comparisons enable them to see whether the organization is improving and whether it is competitive with others in the industry. 9. Why is benchmarking an important component of TQM programs? Do you believe a company could have a successful TQM program without using benchmarking? Answer: Benchmarking is an important component of total quality management because it is defined as “the continuous process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders.” Benchmarking is a major TQM component and without it the program is not going to be successful. The key to successful benchmarking lies in analysis. Starting with its own mission statement, a company should honestly analyze its current procedures and determine areas for improvement. As a second step, a company carefully selects competitors worthy of copying. Companies can emulate internal processes and procedures of competitors, but must take care to select companies whose methods are compatible. Once a strong, compatible program is found and analyzed, the benchmarking company can then devise a strategy for implementing a new program. 10. What is ISO certification? Why would a global company like General Electric want ISO certification? Answer: ISO certification refers to International Quality Standards. Many countries have endorsed a universal framework for quality assurance called ISO 9000, a set of international standards for quality management adopted in the late 1980s by more than 50 nations, including the United States. These standards set uniform guidelines defining what manufacturing and service organizations should do to ensure their products conform to high-quality requirements. Many companies around the world will not do business with other companies that are not ISO certified. Even a global company like General Electric wants ISO certification so that it will not be deterred from doing business with other companies. Apply Your Skills: Experiential Exercise Is Your Budget in Control? Students will range from having the most disciplined budgeting habits, to adequate budgeting habits, to the poorest budgeting habits. Suggestions are made on how to improve personal budgeting. Apply Your Skills: Small Group Breakout Create a Group Control System Students are asked to form groups and assume one member has been assigned to write a major paper for which each person in the group must do his or her part. Then, they develop a list of rules and identify statistics by which to control the behavior of group members, as well as consequences for breaking the rules. The students then discuss the importance of rules and the advantages and disadvantages of having many rules versus few rules for a student group. Apply Your Skills: Ethical Dilemma The Wages of Sin? 1. Continue Westwind’s zero-tolerance policy toward shoplifting. It’s the right thing to do—and it will pay off in the end in higher profitability because the chain’s reputation for being tough on crime will reduce overall losses from theft. Answer: Although this option upholds Ross’s father’s lofty moral ideals, it isn’t particularly realistic given the competition Westwind faces, and the company’s tough reputation will probably not actually increase profitability in the long run anyway. 2. Adopt Chris Dykstra’s proposed changes and show more leniency to first-time offenders. It is a more cost-effective approach to the problem than the current policy, plus it stays close to your father’s original intent. Answer: This is probably the best approach. As Chris noted, by adopting this policy Westwind can reduce its costs of prosecuting shoplifters, which will help them keep costs lower for customers and compete more effectively with their competitors. Moral ideals aside, it doesn’t make good business sense to spend more money on prosecution of shoplifters than the cost of the items being stolen. The $20 minimum is relatively low, so the policy does stay somewhat close to the founder’s intent. 3. Adopt Chris Dykstra’s proposed changes with an even higher limit than the proposed $20 amount (say, $50 or $100), but which is still less than the cost of prosecution. In addition, make sure the policy isn’t publicized. That way you’ll reduce costs even more and still benefit from your reputation for prosecuting all shoplifters. Answer: This may be an option to consider if the $20 minimum doesn’t achieve the desired cost savings from prosecutions. Adopt Chris Dykstra’s proposed changes by setting a higher limit for the amount (e.g., $50 or $100), ensuring it remains below the cost of prosecution. Keep the policy confidential to minimize costs further while maintaining a strong deterrent and upholding the reputation for prosecuting shoplifters. Apply Your Skills: Case for Critical Analysis Five Stars 1. What do you see as the major strengths and flaws in the feedback control system used in the schools in this scenario? What changes do you recommend to overcome the flaws? Answer: There are major strengths and flaws in the feedback control system used in the schools. The major strengths being the fact that performance goal was set for each school district and for each teacher. Intensive training sessions were conducted for principals and designated master teachers who would conduct the evaluations based on four class observations per teacher. Also, officials used standardized achievement tests to derive value-added scores that measure student learning over the year. The major flaw being the fact that criteria varied by state even though the system was under the guidance of the National Council of Teacher Quality. The observations made by the principal and master teacher would be subjective because there are personal factors that affect a true outcome. In the upper-income district, the schools are overflowing with children from wealthy families, who will be applying to Ivy League schools. As no principal will indicate that their students are receiving an education that is less than perfect, the rankings are crammed with 5s. So, the principal being under pressure claims a higher level of motivation for students and thus the selection of an elite team of educators. While on the other hand, principals in the rural district schools know everyone and have longstanding relationships with everyone in the country. Therefore, the scores are based on personal history. So, the high or low scores are predictable even before the observation happens. In most situations, principals feel pressure to align scores with state expectation. The flaws in the system can be overcome by a well-designed control system which consists of the following four key steps: • Establish standards of performance. • Measure actual performance. • Compare performance to standards. • Feedback. 2. Is 1-5 grading system by principals and master teachers a valuable part of a feedback control system for teachers? Why? Answer: The 1-5 grading system by principals and master teachers does not seem to be a valuable part of a feedback control system for teachers as it is not an objective tool. Students’ responses may differ. Yes, a 1-5 grading system for principals and master teachers can be valuable in a feedback control system for teachers. It provides a structured and standardized way to assess performance, identify areas for improvement, and track progress over time. By offering clear ratings, it facilitates targeted feedback and helps in setting specific goals for professional development. However, its effectiveness depends on the clarity of criteria and the quality of the feedback provided. 3. How might the state control the accuracy of principals who are conducting teacher evaluations? Explain. Answer: The state can monitor and make it a strict rule for principals to make the number of mandatory school visits that is required. The principals’ area of expertise should also be taken into consideration when evaluating performance for a teacher from a certain course area. On the Job Video Case Answers Barcelona Restaurant Group 1. How do managers at Barcelona control the company’s financial performance? Answer: In the video, Barcelona uses multiple methods of controlling financial performance. First, managers hold weekly meetings during which chefs and general managers review financials. The exchanges get heated at times as everyone reviews P&L numbers, and owner Andy Pforzheimer puts managers on the spot if they don’t know the costs of a suckling pig or are letting food costs rise above 25 percent. Second, each of Barcelona’s seven restaurants generates monthly financial statements, and managers of each restaurant track their own financial progress against the financials of the other restaurants. This friendly competition between Barcelona restaurants motivates managers to improve food and service while maintaining low overhead costs. Third, to incentivize managers to grow the business, Barcelona offers a 12 percent bonus on annual restaurant sales earned above the company’s base operating profit. The bonus money is significant and can be adjusted upward or downward slightly to reflect the scores from the Secret Shopper reports. 2. What is the “balanced scorecard” approach to measuring corporate performance, and in what ways does Barcelona utilize this approach? Answer: Traditionally, most businesses have measured and controlled their financial performance by analyzing sales, revenue, and profit. The balanced scorecard approach expands the bases around which a company’s progress is measured, adding components such as customer service, business process, and learning and growth. These aspects of the business are then quantified and analyzed to measure growth and achievement. Barcelona Restaurant Group measures financial performance using traditional accounting methods, but the company also measures its customer service performance with the aid of five “feedback loops” that gather and assess customer feedback data. Quantifying customer service is especially important for businesses in the restaurant industry, where customer satisfaction depends on intangible qualities such as pleasant servers, food preparation, and short wait times. 3. List the four steps of the feedback control model and describe an instance where Barcelona followed this process to improve its performance. Answer: The feedback control model consists of four key steps: establish standards, measure performance, compare performance to standards, and make corrections if performance fails to meet standards. Student answers will vary regarding situations where Barcelona followed this process to measure and control business performance. The four steps of the feedback control model are: 1. Set Standards: Define clear performance goals. 2. Measure Performance: Track actual performance against those standards. 3. Compare Performance: Assess if there are any deviations from the standards. 4. Take Corrective Action: Implement changes to address any discrepancies. Instance with Barcelona: In the 2017-2018 season, FC Barcelona set the goal of winning La Liga. They measured performance through match results and player statistics. Noticing a drop in performance during mid-season, they analyzed issues such as tactical weaknesses and player fatigue. Corrective actions included adjusting tactics, improving player fitness, and rotating the squad. These steps helped Barcelona secure the La Liga title that season. APPENDIX A MANAGING SMALL BUSINESS START-UPS Suggested Answers to Discussion Questions 1. You are interested in being your own boss, and have the chance to buy a franchise coffee and baked goods store that is for sale in your city. You will need outside investors to help pay the franchise fees and other start-up costs. How will you determine if this is a good entrepreneurial opportunity and make your decision about buying the store? Answer: Whether or not this is a good opportunity depends on several factors. One major factor is the availability of outside investor funding for this venture. Of course, it would also be critical to investigate the company (i.e. the franchisor) thoroughly, with careful attention paid to the success of its franchise stores and what factors appear to make some stores more successful than others. This also includes obtaining a copy of the franchisor disclosure statement. I would also need to determine whether I was willing to work within the rules and guidelines established by the franchisor, and whether I was willing to assume any risks associated with this particular business. 2. Over the past 20 years, entrepreneurship has been the fastest-growing course of study on campuses throughout the country. Do you think it is possible to teach someone to be an entrepreneur? Why or why not? Answer: Students’ opinions will differ. Some people seem to have a knack for entrepreneurship, much the same way some people have a knack for sports or other activities. That would seem to support an argument that people are “born” to be entrepreneurs; however, it is certainly true that the business techniques related to entrepreneurship can be taught and mentors can help struggling entrepreneurs learn to employ those techniques better. To that extent, entrepreneurship can be taught. Yes, it is possible to teach someone to be an entrepreneur to some extent. While innate traits like risk tolerance and creativity play a role, entrepreneurship courses can provide valuable skills, knowledge, and frameworks for business planning, problem-solving, and strategic thinking. However, practical experience and personal drive are also crucial for developing a successful entrepreneurial mindset. 3. Why would small business ownership have great appeal to immigrants, women, and minorities? Answer: Many established corporations have informal barriers to top management for these groups. It is human nature to hire and promote persons who are like you, and that usually excludes immigrants, women, and other minorities. Small business ownership provides these persons with the opportunity to be their own bosses and to go as far as they are able to go based on their own drive and abilities rather than on social barriers. 4. Consider the seven characteristics of entrepreneurs described in the chapter. Which two traits do you think are most like those of managers in large companies? Which two are least like those of managers in large companies? Answer: Self confidence and need to achieve may be most likely to also be found in managers in large companies. High energy and high tolerance for ambiguity are probably least likely to be found in managers in large companies. 5. How would you go about deciding whether you wanted to start a business from scratch, buy an existing business, or buy into a franchise? What information would you collect and analyze? Answer: Starting a new business from scratch takes a long time, a great deal of effort, and perhaps substantial financing. There is no established clientele, and people often learn by the mistakes they make. Buying an existing business or a franchise avoids many of these problems. The clientele may or may not be established with the franchise, but you avoid the stress and trials of starting from scratch. The existing business, if it is already profitable, avoids almost all of these problems. To start from scratch, you would need to do an extensive research on the market, demographics, location, funding, and other aspects to gather all the information you need for a thorough business plan. To buy an existing business or franchise, you would want to research the firm’s or franchise’s current profitability and potential for growth, and for the franchise you would want to collect information on potential for success in the local market and find a suitable location. In buying an existing business, you would want to find out as much as possible about the company’s current practices and procedures, as well as the extent of good will or ill will that exists within the customer base and/or the community toward the business. 6. Many successful entrepreneurs say that they did little planning, perhaps scratching notes on a legal pad. How was it possible for them to do well, even so? Answer: If an entrepreneur comes up with a product or service that is needed and not being supplied, this demand can often be strong enough to compensate for the lack of planning. It may also make up for other mistakes that are made. If planning had been done, chances are the success of these entrepreneurs would have been even more spectacular. Not planning is a chance that one should not take. 7. What personal skills do you need to keep your financial backers feeling confident in your new business? Which skills are most useful when you’re dealing with more informal sources such as family and friends versus receiving funds from stockholders, a bank, or a venture capital firm? Would these considerations affect your financing strategy? Answer: Communication skills and persuasion skills would be very important in maintaining financial backers’ confidence. You would need good communication skills to keep them informed of your progress, of any changes in plans that have been made necessary along the way, and of your ongoing expectations for success. Persuasion skills would be especially important when things do not go as well as expected, which is almost always the case in some respects. At that point, you would need to be able to persuade your financial backers that their investment is still sound. With family and friends you can probably rely more on the strength of the relationship itself to keep people interested. Although you will still need to keep them informed and confident of your ability to succeed, they will be much more likely to believe in you because of the closeness they feel, and will be slower to lose confidence. Of course, if the business fails and the investments are lost, you also risk losing those valued relationships. Formal sources of funds (stockholders, bank, or venture capital firm) will want to see organization and planning, as well as formally prepared financial reports. If you are a less formal or less organized person, or a more relationship-oriented person, you will probably look for financial backing from family and friends. If you are a detailed planner with good organizational skills and feel more comfortable with formal business relationships, you will probably seek your financial backing from stockholders, banks, and/or a venture capital firm. 8. Many people who are successful at the start-up stage of a business are not the right people to carry the venture forward. How do you decide whether you’re better suited to be a serial entrepreneur (start the business and then move on to start another), or whether you can guide the venture as it grows and matures? Answer: The early stages of a new business require tremendous energy as the owner handles nearly all of the tasks by himself or herself. Even as the company begins to grow somewhat and hire a few others, the owner may still be the only manager. These early stages are well suited to individuals who want to be in charge and have the freedom and flexibility to do what they want to when they want to do it with regard to the company and their own schedules. Those same individuals may begin to feel constrained by their responsibilities as the company moves into the success stage of growth. Moreover, they may find it difficult to delegate management to others and, though highly motivated themselves, may not be interested in or able to motivate others. A person who wants a great deal of freedom and flexibility, or a high-energy idea person with excellent task skills but less exceptional people skills, would be better suited to be a serial entrepreneur. A person whose vision is to create a large company, or a person who has the task skills to get the business going but also has strong interpersonal skills and wants the stability of staying with the new business instead of going through the difficulty of starting something new every few years would be better suited to staying with the original start-up throughout its growth to maturity. 9. How does starting an online business differ from starting a small business such as a local auto repair shop or delicatessen? Is it really possible for businesses that operate totally in cyberspace to build close customer relationships? Discuss. Answer: Starting an Internet business requires lower start-up capital because the initial “bricks and mortar” investment can be nonexistent. At the beginning, it may only require Web space and alliances with other companies to supply, store, and deliver products. If it is a service provider, the Internet company could be entirely online. An auto repair shop or small delicatessen would involve renting, leasing, or buying real assets such as a building, equipment, and/or inventory and supplies. This type of investment would require increased start-up capital, marketing research, and production planning. Building a successful online business requires, at minimum, start-up capital for the necessary computer equipment to go online and to promote the business. Fast, efficient service with a customer-driven approach can create a successful online service without partnering and/or strategic alliances with other companies. Online product providers should participate in vertical and horizontal integration with other businesses when it is economically feasible. Each business opportunity must be weighed and analyzed before any decision is made for this type of integration. It takes a great deal of time and energy to develop close customer relationships for a business operating totally in cyberspace, but it can be done. 10. Describe the benefits of using social media to help a start-up gain traction during the early stages of its life cycle. What are some possible disadvantages of using social media? Answer: Social media sites, such as Facebook, Twitter, and YouTube have the potential to be powerful tools for small business owners. The benefits of using social media include gaining valuable feedback on products and services, building communities of loyal followers, and promoting special events and pricing. For some start-ups, social media will help them grow and for others it is the basis of business. Some of the possible disadvantages of using social media include negative publicity, privacy and security issues, time consuming, and government restrictions. Apply Your Skills: Experiential Exercise What’s Your Entrepreneurial IQ? Students should total the score for the 15 items. A score of 50-60 points suggests a strong entrepreneurial IQ is acquired. A score of 30-50 indicates good entrepreneurial possibilities. The chance of starting a successful entrepreneurial business is good if the student has the desire and motivation. If the score is below 30, the student probably doesn’t have much entrepreneurial potential. Apply Your Skills: Small Group Breakout What Counts? This exercise asks students to rank eight qualities experts suggest are required to be a successful entrepreneur from most important to least important. Students share their rankings in groups, then create a single ranking for the group as a whole, and discuss questions provided in the exercise. Apply Your Skills: Ethical Dilemma Closing the Deal 1. Say nothing about the false numbers. Of course, the company will miss the projections and have to come up with a good explanation, but after all, isn’t that par for the course among fledgling high-tech companies? Chances are the whole thing will blow over without a problem. Answer: This course of action could lead to legal problems for the firm and should not be taken. 2. Go ahead and close the deal, but come clean later. Explain that the controller had been on an extended leave of absence and, because you had been on the job only a few days, you had not had time to personally do an analysis of the numbers. Answer: This option still requires knowingly misleading the investors. It could also lead to legal problems and, therefore, is not a viable option. 3. Take swift action to notify the venture capitalists of the truth of the situation—and start cleaning house to get rid of people who would knowingly lie to close a deal. Answer: This is the only option there is to avoid potential legal issues later. Chuck Campbell should come clean and take immediate action to notify investors, company personnel, etc. shortly after being apprised of the error made. His reputation is at stake. He must have integrity, ethics, and timeliness. Campbell should have a meeting with personnel affected by any decisions forthcoming. He must deal with this issue honestly and forthrightly to prevent his company from gaining a negative reputation. Apply Your Skills: Case for Critical Analysis Black-Jack Antiques 1. If you were Kevin how would you initiate a conversation with Jeremy? What would you want to learn? What would you say? Answer: If I were Kevin, I would initiate the conversation by asking about the problems faced by Jeremy and then ask about his planning for the future. I would learn about the problems faced by Jeremy and try to convince him not to leave. 2. What does this case illustrate about the risks of starting a business with a partner? How might those risks be minimized? Explain Answer: This case illustrates the disadvantages of partnerships that include the unlimited liability of the partners and the disagreements that occur among people. These risks can be minimized by drawing up and signing a formal partnership agreement with the help of an attorney. 3. Do you think Kevin could make a go of the business alone? Should he try? Discuss. Answer: Kevin could make a try at business alone if he is sure that the antique side of business can carry all the weight. Kevin should try, even more so because he is not sure of other job prospects. On the Job Video Case Answers Urban Escapes 1. Are Maia Josebachvili and Bram Levy entrepreneurs, social entrepreneurs, or both? Explain. Answer: As individuals who initiated a business venture, organized resources, and assumed the risks and rewards of their endeavor, Maia Josebachvili and Bram Levy are entrepreneurs. In particular, Josebachvili developed a viable idea for a business and identified the finances and people necessary to undertake the venture. Although Josebachvili and Levy are successful entrepreneurs, they are not examples of social entrepreneurs. Social entrepreneurs are entrepreneurs who launch business ventures with the goal of enacting social change. While social entrepreneurs operate businesses, they primarily seek to improve society, not maximize profits. 2. Describe the personality traits of the Urban Escapes founders. Answer: Researchers have identified numerous personality traits that contribute to entrepreneurial success. Josebachvili and Levy have an internal locus of control—they believe the future is in their own hands. Both owners are young and possess high energy levels, which helps with overcoming inevitable obstacles. As ambitious college graduates and thrill-seeking outdoor adventurers, Josebachvili and Levy show that they have a need to achieve challenging goals. In addition, both demonstrate the self-confidence necessary to act decisively as well as interact with customers and business leaders. Finally, they have a tolerance for ambiguity, as is clear from Josebachvili’s determination to start the business with limited cash and experience. 3. How did the founders of Urban Escapes finance the company’s growth, and what options did they have for additional funding? Answer: Josebachvili and Levy state that Urban Escapes avoided many financial concerns because customers had to pay before going on trips. As a result, the founders always had cash on hand to deliver the service. However, entrepreneurs generally have many sources of funding. The Urban Escapes founders could have obtained debt financing in the form of credit cards, bank loans, family loans, or angel investors. Solution Manual for Understanding Management Dorothy Marcic, Richard L. Daft 9781285421230, 9781305313347