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CHAPTER 19 Managing Work Groups and Teams CHAPTER SUMMARY This chapter is about groups and teams in organizations. It opens with a discussion of general perspectives on groups. It then identifies and discusses several basic characteristics of groups and teams. Interpersonal and intergroup conflict are then described. Finally, the chapter concludes with a discussion of how conflict can be managed. LEARNING OBJECTIVES After covering this chapter, students should be able to: 1. Define and identify types of groups and teams in organizations, discuss reasons why people join groups and teams, and list the stages of group and team development. 2. Identify and discuss four essential characteristics of groups and teams. 3. Discuss interpersonal and intergroup conflict in organizations. 4. Describe how organizations manage conflict. The opening case describes the incidence of “wrong-site” surgery (where surgeons operate on a body part other than the one intended by patient and surgeon) in hospitals in the U.S. Surgery is performed by teams and it appears communication problems among team members is a leading cause of wrong-site surgeries. LECTURE OUTLINE I. GROUPS AND TEAMS IN ORGANIZATIONS A group consists of two or more people who interact regularly to accomplish a common purpose or goal. A. Types of Groups and Teams Teaching Tip: Stress to your students that most of the work in an organization results from people working together—in groups, teams, or other social units. 1. Functional groups are created by the organization to accomplish a number of organizational purposes with an indefinite time horizon. Extra Example: The local reservations staff of a Continental Airlines ticket office represents a functional group. The organization created the group and it generally meets the other criteria specified in the definition. 2. Informal or interest groups are created by the members of the groups themselves for purposes that may or may not be relevant to organizational goals. They also have unspecified time horizons. Extra Example: A group of Continental Airlines employees who bowl or go to movies together on the weekend constitute an informal group. 3. Task groups are groups created by the organization to accomplish a relatively narrow range of purposes within a stated or implied time horizon. Extra Example: The flight crew of a specific Continental Airlines flight is a task group. Its composition changes regularly, and it remains intact for only a single flight. Many organizations today are using a special form of task group called a team. a) A team is a group of workers that functions as a unit, often with little or no supervision, to carry out work-related tasks, functions, and activities. b) Other terms for teams include self-managed teams, cross-functional teams, or high-performance teams. c) If teams are cohesive and have high performance standards, and if they are managed effectively, they can make great contributions to the organization. Poorly-managed teams may contribute little or detract from organization performance. Extra Example: Continental also uses teams periodically to get specific projects completed. Teaching Tip: Note the various types of work teams identified and described in Table 19.1. B. Why People Join Groups and Teams 1. Interpersonal attraction draws people to groups; they are attracted to the members or the interests of the group. 2. Group activities may appeal to some people enough to get them to join. Extra Example: The passengers on a given flight would not ordinarily be thought of as a group. However, in the event of an emergency, such as terrorist activity onboard a plane, the passengers might work together for their mutual benefit and bond into an interest group. This actually happened on September 11, 2001, on United flight 93, which was hijacked and crashed in Pennsylvania. This is vividly captured in the recent movie Flight 93. Extra Example: Groups people join because of their activities include swing-dancing classes, Scrabble clubs, and softball leagues. 3. Group goals may motivate people to join if they subscribe to the goals. Extra Example: Many people join a political party if they feel that a party’s goals are important to them. On the other hand, people who whose goals are not compatible with any party’s may choose not to join. 4. Need satisfaction may be achieved by joining a group. 5. Instrumental benefits that follow from joining a group often motivate an individual to join. Extra Example: Childcare workers who join the professional association the National Association for the Education of Young Children (NAEYC) receive free subscriptions to helpful publications, low-cost training opportunities, and health and life insurance benefits. Discussion Starter: Ask students if they are likely to join one or more extra groups or clubs as they approach graduation in order to improve their job market opportunities. Discussion Starter: Ask students to identify various groups that they belong to. Ask them to discuss why they chose to join various ones. C. Stages of Group and Team Development When new groups are formed, they usually evolve through four stages of development. 1. During the forming stage, the group members get acquainted and begin to test the limits of acceptable behavior. Teaching Tip: Describe a hypothetical study group formed by some of your students to prepare for a test. Discuss how they spend their initial time—the forming stage—getting acquainted, exchanging telephone numbers, and so forth. 2. Storming begins with a lack of unity and uneven interaction patterns; there may be some conflict as well. Teaching Tip: The hypothetical study group may have some initial difficulties in agreeing on a time and place to study, as well as the study process they want to use. Some members of the group may drop out, and new members may join. This would be representative of the storming stage. 3. During norming, the group members determine their role in the group as well as how the group should interact and begin working toward goal accomplishment. Teaching Tip: The study group is then likely to work out its differences and set to work. People take the task seriously and start getting ready for the test. This is part of the norming stage. 4. Group members enact their roles and assess their performance during the performing stage. Teaching Tip: In the hypothetical study group, the members finish up and then take their test. If they perform well and feel that working together helped their grades, they will likely continue to study together. On the other hand, if they feel that studying together did not help, they will be less likely to do so again. Studying together represents the performing stage. II. CHARACTERISTICS OF GROUPS AND TEAMS Groups and teams have several key characteristics: role structures, behavioral norms, cohesiveness, and leadership. A. Role Structures Each member in the group has a part—or role—to play. A role consists of the part individuals play in groups in helping the group reach its goals. The group’s role structure is the set of defined roles and the interrelationships among those roles that the group members define and accept. If role structure is weak, several problems can arise. Discussion Starter: Ask students if they can describe different roles they have in different groups. 1. Role ambiguity arises when the sent role is unclear and the individual does not know what is expected of him or her. Extra Example: Note that students are likely to experience role ambiguity if their instructor does not provide them with a course outline and/or is vague and ambiguous about class assignments, grading, and so forth. Teaching Tip: Note that many new employees experience role ambiguity when they first join an organization. 2. Role conflict occurs when the message and cues composing the sent role are clear but contradictory or mutually exclusive. a) Interrole conflict occurs when a person has two roles that are in conflict with one another. b) Intrarole conflict occurs when a person gets conflicting information about one role he or she enacts. c) Intrasender conflict occurs when a single source sends contradictory messages. d) Person-role conflict occurs when the requirements of the role conflict with the values the enactor holds. Group Exercise: Have small groups of students identify personal examples of the various forms of role conflict they have experienced. 3. Role overload occurs when expectations for the role exceed the individual’s capabilities to perform. Clear and consistent role messages can reduce conflict and other problems. Extra Example: Students often experience role overload in college. They take heavy class loads, work, join various on-campus groups, and retain membership in families. B. Behavioral Norms Norms are standards of behavior that the group accepts and expects for its members. Teaching Tip: Provide some examples to your students about norms you have witnessed or experienced. For example, in some business schools, faculty members routinely wear professional attire and/or work normal “business” hours. In other business schools, however, faculty dress more casually and/or have more variability in their working hours. 1. Norms do not always generalize or transfer from one group to the next (a process known as norm generalization). What is accepted in one group may be frowned on in another. Extra Example: Professional athletes sometimes note that when they get traded to a different team they are surprised at the differences in work habits, dedication to winning, and similar norms. 2. Norm variation allows some variation within a group as long as it is not taken to an extreme. Extra Example: Some professional sports teams make exceptions for their star athletes. For example, they may be allowed to skip certain team meetings or functions, start practice a little late, and so forth. The Chicago Bulls routinely did this for Dennis Rodman. 3. Group members can either adapt to the norm (called norm conformity), or the individual can ignore the norm. Those who accept and conform are welcomed into the group, whereas those who ignore the norm may be ostracized. 4. The generalized norm conformity that occurs as a person makes the transition from being an outsider to becoming an insider is called socialization. Extra Example: When rookie athletes first join a professional sports team, they must often undergo a ritualistic learning process—somewhat like hazing—intended to help them become a true member of the group. Extra Example: The stronger and clearer the organization’s culture, the easier it is to socialize newcomers. The culture makes it easier for them to learn about the organization and what is and is not acceptable to it. C. Cohesiveness Cohesiveness is the extent to which members are loyal and committed to the group. 1. Factors that increase cohesiveness include intergroup competition, personal attraction to the group, favorable evaluations of the group as a whole, group members agreeing on group goals, and frequent interaction between group members. Extra Example: Athletic teams often go through a period of heightened cohesiveness after winning a championship or big game. Select a team of local interest that has done this and use it here to illustrate how success enhances cohesiveness. 2. Factors that reduce cohesiveness include intragroup competition, unpleasant experiences that the group shared, disagreement on group goals, a large group size, and domination by one or two group members. Extra Example: Similarly, athletic teams that lose a big game or that have a disappointing season often become less cohesive as a result. If applicable, also use a local team to illustrate how this works. Extra Example: An organization undergoing a period of layoffs and downsizing may experience a loss of cohesiveness among those employees who retain their jobs. 3. Consequences of cohesiveness include more group interaction, more norm conformity, and increased group performance. In groups that have high performance norms, cohesiveness can lead to high performance. Teaching Tip: A popular movie from several years ago called Remember the Titans, starring Denzel Washington, provides a good illustration of the development and consequences of group cohesiveness. Global Connection: Japanese work groups have traditionally been characterized by both high performance norms and high levels of cohesiveness. This characteristic may help explain why Japanese businesses are so competitive. D. Formal and Informal Leadership Formal groups have an appointed, formal leader and may have an informal leader also. Friendship and interest groups have an informal leader chosen by the group members. An informal leader is a person who engages in leadership activities but whose right to do so has not been formally recognized by the organization or group. An informal leader may be desirable from the standpoint of the organization if they work in the best interests of the organization. Extra Example: Before he founded Wal-Mart, Sam Walton was a strong informal leader. Many of his former classmates at the University of Missouri recall that he was frequently looked to for leadership and that they knew he would eventually be a big success. Extra Example: Another strong informal leader on campus was President Lyndon Baines Johnson, who was a popular and respected student at the University of Texas. LBJ also served as a formal leader when he was elected president of the UT student body. Discussion Starter: Ask students to identify recent and/or personal examples of informal leaders. III. INTERPERSONAL AND INTERGROUP CONFLICT A. The Nature of Conflict Conflict is a disagreement between two or more individuals or groups. 1. Organizational conflict results from disagreements between individual employees, work groups, or departments. 2. Conflict is an inevitable outcome of interpersonal relationships in organizations. A moderate level of conflict is usually optimal in ensuring high performance. Teaching Tip: Ask students to recall any recent instances of conflict that affected them. Ask them to identify any potentially beneficial aspects of that conflict. B. Causes of Conflict Several different things can cause conflict in organizations: 1. Interpersonal conflict—conflict between two or more people—can be caused by personality differences, different beliefs, different perceptions, or excessive competitiveness. Interesting Quote: “It were not best that we should all think alike; it is the difference of opinion that makes horse races.” (Mark Twain, Pudd’nhead Wilson, published in 1895) Discussion Starter: At some competitive M.B.A. programs, ambitious students will steal important library materials or make all-night prank phone calls in an attempt to lower the grades of other students, improving their own chances. Ask students: “Can this type of excessive competition and conflict ever be positive? If so, how?” In your students’ opinions, is this type of conflict more likely to occur in colleges of business, where competition is taught as an academic discipline, than in other fields? 2. Intergroup conflict is conflict between two or more groups, and it can be caused by interdependence, differences in goals, and resource competition. 3. Conflict between one organization and another in its environment is called interorganizational conflict. IV. MANAGING CONFLICT IN ORGANIZATIONS A. Stimulating Conflict Managers may find it necessary to stimulate a certain degree of conflict if groups are not motivated or if a change is needed. There are three common methods for doing this. 1. Increase competition. 2. Hire outsiders to shake things up. 3. Change established procedures. Discussion Starter: Ask students their thoughts on the wisdom of intentionally stimulating conflict. Extra Example: Whenever a college or university hires a new president from the outside, he or she usually reassigns some key administrators and often ends up creating at least a small amount of conflict. Discussion Starter: Ask students to discuss the ethics of intentionally stimulating conflict. B. Controlling Conflict Sometimes managers want to control conflict to keep it from becoming excessive. There are several methods that are useful in controlling conflict. 1. Increase the resource base. 2. Enhance coordination. 3. Focus group members on superordinate goals. 4. Match the personalities and work habits of employees. Discussion Starter: Ask students if they can think of other methods for controlling conflict. C. Resolving and Eliminating Conflict Managers often need to resolve and eliminate conflict. Common methods for resolving and eliminating conflict include the following. 1. Take steps to avoid it to begin with. 2. Convince the conflicting parties to compromise. 3. Bring the conflicting parties together to confront and negotiate the issues. Global Connection: Conflict among coworkers is much less acceptable in Japan than it is in the United States. CHAPTER 20 Basic Elements of Control Part VI introduces and discusses the fourth basic managerial function, control. Part VI consists of three chapters. Chapter 20 describes the basic elements of control. Chapter 21 focuses on managing for total quality. Finally, Chapter 22 addresses the management of information and information technology. CHAPTER SUMMARY Chapter 20 introduces and covers the basic elements of control in organizations. It first characterizes the nature of control. Subsequent sections discuss operations, financial, structural, and strategic control. Finally, the chapter concludes with a description of how the control process can be more effectively managed. LEARNING OBJECTIVES After covering this chapter, students should be able to: 1. Explain the purpose of control, identify different types of control, and describe the steps in the control process. 2. Identify and explain the three forms of operations control. 3. Describe budgets and other tools for financial control. 4. Identify and distinguish between two opposing forms of structural control. 5. Discuss the relationship between strategy and control, including international strategic control. 6. Identify characteristics of effective control, why people resist control, and how managers can overcome this resistance. Jamie Dimon, the CEO of JP Morgan Chase, the U.S. bank with the largest market capitalization, helped his firm survive the mortgage crisis by establishing control systems He is using control systems as the primary vehicle to achieve his strategic plans. The case cites a number of instances where strict controls generate additional profits. Management Update: JP Morgan Chase had a market capitalization of $129.90 billion in early September 2011, revenues of $92.68 billion and net income of $18.63 billion in 2010. LECTURE OUTLINE I. THE NATURE OF CONTROL Control is the regulation of organizational activities in such as way as to facilitate goal attainment. Teaching Tip: A good analogy to use to describe control is that of a space flight to Mars. After a rocket is launched, NASA scientists continually monitor its progress toward its target or goal. During the flight, they may have to make periodic corrections to nudge it back on course. Some corrections may be large, others small; some will be in one direction, others in a different direction; and there will be some periods when no corrections are needed. This process of monitoring progress toward the goal and then making required corrections is control. Teaching Tip: To some people, the very idea of control conjures up images of Big Brother and a loss of personal freedom. The manager’s job is to maintain adequate control without infringing on individual rights. A. The Purpose of Control Control has a number of functions in organizations. Teaching Tip: Note Figure 20.1 and its depiction of the four basic purposes of control. 1. A properly designed control system can help managers anticipate, monitor, and respond to changing circumstances. Cross-Reference: We described environmental change in detail in Chapter 3. Extra Example: The common room thermostat is also a control device. When the temperature reaches a certain level, a climate control system is activated. When the temperature changes to the targeted level, the system shuts down. Discussion Starter: Ask students to discuss whether a control system can completely deal with environmental change, or if—at best—it can only provide partial assistance. 2. Over time, small mistakes may accumulate and become serious. An adequate control system will help prevent this from happening. Extra Example: An example of error accumulation would be a manufacturer with a small error in its production system that gets carried through hundreds or thousands of products before it is discovered. Extra Example: Some time ago, a series of small flaws in Microsoft’s XP operating system allowed hackers to take control of other people’s PCs and use them for unethical or illegal activities. The firm had to issue over a dozen small corrections in an attempt to stop the hackers, but the problem was not completely resolved. 3. As organizations expand and create a variety of products, organizational complexity increases. Control cannot be maintained without a well-planned and well-developed control system. Teaching Tip: Though control is important to any organization, it is especially important in large, complex organizations. Problems and weaknesses in these kinds of settings can go undetected and become ever more serious if control systems do not identify them on a timely basis. Global Connection: To carry the preceding idea further, international firms have even more complex control requirements. This point is covered later in the chapter. 4. Effective control can help to minimize costs and boost output. B. Types of Control 1. Control is part of many different areas of the firm, as it is concerned with efficiently and effectively combining an organization’s physical, financial, human, and information resources into appropriate outputs. Extra Example: Effective control is credited with Wal-Mart’s success. While its primary competitor, Kmart, was concentrating on marketing and advertising, Wal-Mart managers were focusing on cutting costs, improving efficiency, enhancing operations, and so forth. 2. Control can also be classified by level, such as operations, financial, structural, or strategic. a) Operations control focuses on the processes the organization uses to transform resources into products or services. b) Financial control is concerned with the organization’s financial resources. c) Structural control is concerned with how the elements of the organization’s structure are serving their intended purpose. d) Strategic control focuses on how effectively the organization’s strategies are succeeding in helping the organization meet its goals. 3. Responsibility for control resides with all managers. Responsibility for control also can reside with one or more specialized management positions called controller, which is a person in organizations that helps line managers with their control activities. More and more often, control resides with employees as well. Cross-Reference: As discussed in Chapter 19 and other spots in this book, many organizations today are relying on work teams. To make work teams most effective, the organization must empower them to make decisions and do their own work. In addition, it must allow them to handle much of their own control function as well. C. Steps in the Control Process 1. Establish standards. A control standard is a target against which subsequent performance is compared. Standards should be derived from the organization’s goals, expressed in measurable terms, and focused on important and relevant performance indicators. Teaching Tip: Note the performance standards that you have set for this class regarding attendance, participation, and exam expectations. 2. Measure performance. Performance refers to that which managers are attempting to control. How it is measured varies across area and function. Teaching Tip: Note that the grades you assign on papers and tests represent a measure of performance. 3. Compare performance against standards. Comparing performance against standards will result in one of three outcomes: performance that is higher, lower, or even with the standards. Extenuating circumstances must also be considered. Teaching Tip: Stress the fact that comparing performance against a control standard is not always a cut-and-dried process. 4. Consider corrective action. Once the comparison between performance and standards has been made, an action must be taken. Three choices exist: (1) do nothing, (2) take corrective action, or (3) change the standard. Teaching Tip: As you look over final grades, you may go with a strict 90-80-70-60 percent cutoff for grades (maintaining the status quo). Alternatively, you may apply a curve if grades are too far out of line (changing the standard). II. OPERATIONS CONTROL Operations control focuses on the processes used by the organization to transform inputs into finished products or services. Operations control has three forms. Most firms use multiple control systems. A. Preliminary Control Preliminary control consists of attempts to monitor the quality or quantity of financial, physical, human, and information resources before they actually become part of the system. Extra Example: Ford Motor Company is increasing its emphasis on preliminary control. It has raised the product quality standards that must be met by its suppliers, for example, and is pressuring them to lower their costs so that Ford itself can lower its own costs. Teaching Tip: Preliminary control is also called steering control or feedforward control. B. Screening Control Screening control takes place during the transformation process and relies heavily on the feedback process. As the outputs are produced, they are screened at checkpoints to make sure they meet the standards. Teaching Tip: Screening control is also called yes/no control or concurrent control. C. Postaction Control Postaction control focuses on determining if the outputs of the organization after the transformation process are complete. Extra Example: Levi Strauss relies heavily on postaction control. The firm requires that every pair of jeans it makes be inspected before leaving the factory. Teaching Tip: Stress the fact that most firms use more than one form of operations control. For example, even though Ford is forcing its suppliers to improve the quality of the parts they ship to the automaker, Ford still pays attention to screening and postaction control as well. III. FINANCIAL CONTROL Financial control is the control of financial resources as they flow into the organization, are held by the organization, and flow out of the organization. Teaching Tip: Interestingly, even though most managers probably consider human resources to be the most critical resource for organizations, financial resources are probably a more important resource to be controlled. A. Budgetary Control A budget is a plan expressed in numerical terms. Discussion Starter: Ask students if they use budgets. If they do, discuss with them how they use budgets, what kinds of budgets they use, how formal they are, and so forth. 1. Most organizations use three types of budgets—financial, operating, and nonmonetary budgets. Extra Example: Some students use nonmonetary budgets based on time to plan their studying—a certain number of hours on this day to study for one course, a different number of hours on that day for another course, and so forth. 2. Budges are traditionally developed through a top-down process. Many organizations today, however, are beginning to allow more participation by all managers in the budget development process. Teaching Tip: As noted in the text, many organizations today are allowing more people at lower levels of the organization to participate in the budgeting process. This process is consistent with the topics of participation, empowerment, decentralization, and work teams discussed in various other chapters. 3. Strengths of budgeting include: increased ease of monitoring, better ability to pinpoint problems, facilitating communication and coordination, better records of performance, and usefulness as an aid in planning. 4. Weaknesses of budgeting include: managers can apply them too rigidly, inflexibility in making adjustments, time-consuming development, and the chance that they may limit innovation. Discussion Starter: If your students use budgets for their personal affairs, ask them to discuss positive and negative experiences with budgets. You can then relate these experiences to the strengths and weaknesses of budgets as noted here in the text. Extra Example: Tenneco and Texas Instruments are firms that have cut back on the budgets they use. However, managers at both firms stress the fact that budgets cannot be eliminated altogether and that the budgets they have retained play a vital role in their respective organizations. B. Other Tools of Financial Control 1. Financial statements are a profile of some aspect of an organization’s finances. Common financial statements are the balance sheet—a list of assets and liabilities of an organization at a specific point in time, and the income statement—a summary of financial performance over a period of time. Teaching Tip: Obtain copies of an income statement and a balance sheet from one or more corporate annual reports. Use them here to illustrate their “look” and the basic information they contain. 2. Ratio analysis consists of the calculation of one or more financial ratios. Liquidity, debt, return, coverage, and operating ratios are usually assessed. Group Exercise: If you obtain financial statements from annual reports, give a copy to small groups of students and have them calculate some of the basic financial ratios listed here. Compare and contrast different ratios, especially across different organizations. Point out that an acceptable ratio in one industry may be considered exceptionally high or low in another industry. 3. Financial audits are an independent appraisal of the firm’s financial control processes. Financial audits can be external (performed by independent external auditors) or internal (performed by the organization itself). Audits may be done internally by employees of the firm, or they may be done externally by independent experts. Teaching Tip: Note that auditing is a specialization within the accounting profession. Discuss whether your school offers this specialization. Extra Example: Whether or not they have an internal auditing staff, publicly traded corporations must have their financial statements audited by an external firm. If you obtained corporate annual reports in response to the Teaching Tip provided earlier in this manual, note that the report includes a statement from the firm’s auditors. IV. STRUCTURAL CONTROL Structural control deals with the effectiveness of the firm’s organization design. A. Bureaucratic Control Bureaucratic control is characterized by formal and mechanistic structural arrangements designed to extract employee compliance. Extra Example: General Motors is an example of a firm that relies on bureaucratic control. Myriad rules, regulations, and standard operating procedures dictate what people and operating units can and cannot do. Extra Example: Most colleges and universities also rely heavily on bureaucratic control. B. Decentralized Control Decentralized control is based on informal and organic structural arrangements such as group norms and organizational culture to obtain self-controlled behavior of employees. Extra Example: Microsoft uses decentralized control. Its members generally support the organization and work well together. Consequently, they need fewer rules and regulations. V. STRATEGIC CONTROL Strategic control is aimed at ensuring that the organization is maintaining an effective alignment with its environment and moving toward achieving its strategic goals. A. Integrating Strategy and Control To ensure strategic control, an organization must focus on how well its structure, leadership, technology, human resources, and information and operational control systems are working to enact the strategic path selected. Cross-Reference: The basic elements of strategic control parallel the concepts of strategy implementation as discussed in Chapter 8. B. International Strategic Control Strategic control is especially important for international businesses due to their complexity and geographic diversity. Some international businesses use a centralized control system, whereas others favor decentralization. Global Connection: Some German firms today are struggling because of inadequate strategic control. They have continued to focus so much attention on quality without balancing that quality against cost that today their sales are slipping. Their products are known to be of high quality, but they cost so much more than competing products that people have more trouble buying them. Extra Example: Daimler-Benz, the manufacturer of Mercedes automobiles, is a good example of a firm experiencing the kinds of troubles noted above. Indeed, these costs were a major factor in the firm’s decisions to construct an assembly plant in the United States and to merge with Chrysler. VI. MANAGING CONTROL IN ORGANIZATIONS A. Characteristics of Effective Control 1. The more explicit and precise the linkages between planning and control are, the more effective the control system will be. To achieve this, one must account for the control system as the plans are developed. Teaching Tip: In some ways, planning and control are the two most integrated management functions. Planning helps determine what the organization wants to do, and control keeps it on track toward doing it. 2. The control system itself must be flexible enough to accommodate changes. 3. Control systems must be accurate to be effective. 4. Information must be presented from the control system in a timely fashion, that is, at the time when it will do the most good. 5. The information provided by the control system must be as objective as possible. Extra Example: Waterford Crystal suffered some performance problems because of flaws in its control system. One source of difficulty for the firm was that its accounting system was inadvertently camouflaging higher-than-projected production costs. Extra Example: Another control problem at Waterford resulted from the fact that inadequately trained employees were subjectively interpreting important information before managers ever saw it. Cross-Reference: The lifeblood of effective control is information. We discuss information separately in Chapter 22. B. Resistance to Control There are several reasons for resistance to control. 1. Overcontrol occurs when an organization attempts to control too many things. Employees tend to resist if too many controls are placed on them. 2. An inappropriately-focused control system may focus too much on quantitative variables or have a focus that is too narrow, which causes problems. 3. When departments that end the fiscal year in the red get a budget increase, this is an example of rewarding inefficiency. 4. The fact that accountability for one’s work is increased when control systems are in place may promote resistance. Global Connection: Many managers in India are especially prone to resist control. They view the presence of control measures and systems as indicators that their organization lacks confidence in their managerial abilities. C. Overcoming Resistance to Control Resistance can be partially overcome if the control systems are integrated into the planning system. Control systems must also be flexible, accurate, timely, and objective. In addition, people should not be overcontrolled or rewarded for inefficiency. 1. If employees participate in developing the control systems, there is generally less resistance to them. 2. Use checks and balances to ensure that the control systems are providing the data needed to compare performance against standards, and use multiple systems to crosscheck the accuracy usefulness of the control system reports. Teaching Tip: One of the biggest challenges facing managers is finding the appropriate balance of control. They need to have sufficient control to avoid problems, but they also need to avoid overcontrol. Teaching Tip: The reliance on work teams and empowered employees needs to be accompanied by an increase in self-control if employees are to feel that they really have a voice in their own work. CHAPTER 21 Managing Operations, Quality, and Productivity CHAPTER SUMMARY Chapter 21 first defines the nature of operations management and then discusses the design of operations systems. Organizational technologies and supply chain management are described. Total quality is then covered, and the chapter concludes with a section focusing on productivity. LEARNING OBJECTIVES After covering this chapter, students should be able to: 1. Describe and explain the nature of operations management. 2. Identify and discuss the components involved in designing effective operations systems. 3. Discuss organizational technologies and their role in operations management. 4. Identify and discuss the components involved in implementing operations systems through supply chain management. 5. Explain the meaning and importance of managing quality and total quality management. 6. Explain the meaning and importance of managing productivity, productivity trends, and ways to improve productivity. The Orpheus Chamber Orchestra is unique in that its symphonies are played without a conductor. Orpheus believes that its product (i.e., the music) is of the highest quality when its workers (the musicians) are highly satisfied with their jobs. Orpheus, thus, has a new approach to motivation and quality. Discussion Starter: Orpheus Chamber Orchestra’s website is Students should be encouraged to look at this website and click the “Musicians” tab to find out more about the musicians who are part of this orchestra. Can what Orpheus does work in other settings? LECTURE OUTLINE I. THE NATURE OF OPERATIONS MANAGEMENT Operations management is the total set of managerial activities used by an organization to transform resource inputs into products, services, or both. A. The Importance of Operations Operations management provides utility to the organization. In a manufacturing environment, operations management provides form utility by combining many dissimilar inputs to create an output. In a service organization, operations management provides time and place utility. B. Manufacturing and Production Operations Manufacturing is a form of business that combines and transforms resource inputs into tangible outcomes. Extra Example: Other examples of large manufacturing firms include Merck (healthcare products), Cummins Engine Company (diesel engines), Herman Miller (office furniture), and Procter & Gamble (Cover Girl makeup, Crest toothpaste, Folgers coffee, Gillette, and more). C. Service Operations A service organization is one that transforms resources into services, which are intangible outputs. Extra Example: Other large service organizations include American Airlines (transportation), Citigroup (financial services), Accenture (management consulting), Marriott (lodging), and Regis Corporation (owner of SuperCuts and other salon chains beauty services). Teaching Tip: Point out to students that whether a company is a manufacturing or service firm is sometimes not very clear cut. For example, is Red Lobster selling food (a product) or service? What about a hair salon that cuts hair and then sells the customer a bottle of shampoo? Clearly, the concepts of “manufacturing” and “service” are not two mutually-exclusive categories, but they exist on the two extreme ends of a scale, and many organizations fall somewhere between the two extremes. Teaching Tip: Note that many organizations today are beginning to operate in both manufacturing and service businesses. General Electric, for example, makes jet engines, operates a television network, and owns a financial services business. Discussion Starter: Is it possible for an economic system such as that of the United States to move totally away from manufacturing and become purely a service economy? D. The Role of Operations in Organizational Strategy Operations management affects strategy, and strategy affects operations. Group Exercise: Have small groups of students relate different approaches to operations to the different types of strategies discussed in Chapter 8. II. DESIGNING OPERATIONS SYSTEMS A. Determining Product-Service Mix The product-service mix determines how many and what kinds of products and services (or both) to offer. Decisions about product-service mix are based on the firm’s strategies. B. Capacity Decisions Capacity decisions involve choosing the amount of products, services, or both that can be produced by an organization. This will involve determining for the organization the conversion capacity that is appropriate for the demand. This decision is critical because if overestimated, the resources required to build the facility may never be recouped, and if underestimated market opportunities may be lost. Extra Example: Some firms can manipulate their capacity by extending or compressing their operating hours. For example, when Disney’s popular Animal Kingdom theme park opened in mid-1998, the company started opening the park at 7:00 a.m. and staying open until late in the evening. This helped spread the huge crowds out over a longer period of each day, essentially increasing the park’s capacity. Extra Example: Similarly, in some college towns some merchants close early during the summer because of reduced customer traffic. C. Facilities Decisions Facilities are the physical locations where products or services are created, stored, and distributed. 1. Location is the organization’s physical positioning or geographic site. Location is determined by what amenities (railroads, airports, etc.) or customers (mall shoppers, downtown shoppers) it must be near. 2. Layout is the choice of the physical configuration of the facilities. a) A product layout is a physical configuration arranged around the product and is appropriate when large quantities of a single product are needed. b) A process layout is arranged around the process and is used when a variety of products are created using a similar process. c) A fixed-position layout is arranged around a single work area and should be used when the organization is creating a few very large and complex products. d) A cellular layout is used when families of products can follow similar flow paths. Group Exercise: Have students work together and identify different examples to illustrate each of the three layouts noted in the text. Teaching Tip: Note the interrelationships between layout and technology, which is discussed next. III. ORGANIZATIONAL TECHNOLOGIES Technology is the set of processes and systems used by organizations to convert resources into products or services. Cross-Reference: Note that we also discuss technology in Chapter 12. A. Manufacturing Technology 1. Automation is the process of designing work so that it can be completely or almost completely performed by machines. In the long run, automation creates more jobs than it eliminates. However, the new jobs require workers with good technology skills, and so automation may permanently displace some low-skilled workers. Discussion Starter: Ask students to discuss the pros and cons of automation. Can any production process ever be truly automated? Extra Example: Automatic teller machines (ATMs) are a form of automation. 2. Computer-assisted manufacturing is a technology that relies on computers to design or manufacture products. a) Computer-aided design (CAD) involves using computers to design parts and complete products so that prototypes need not be constructed. b) Computer-aided manufacturing (CAM) is the use of computers to plan and control manufacturing processes. c) Computer-integrated manufacturing (CIM) allows for coordination among all manufacturing activities. d) Computer-controlled movement of materials from one part of the system to another is usually included in flexible manufacturing systems (FMS). Extra Example: Most computers today are designed with computer-aided design techniques and then manufactured with computer-aided manufacturing techniques. 3. A robot is any artificial device that is able to perform functions ordinarily thought to be appropriate for human beings. Robots are common on many factory floors. Discussion Starter: Note that robots were originally envisioned to look like human beings. In reality, however, most industrial robots today bear little resemblance to humans. Discussion Starter: Robots have played a big role in many science fiction movies such as Star Wars, AI, and others. Ask students to identify other movies featuring robots. Discuss the realism (or lack of same) in these movies. B. Service Technology Examples of automation in the service industry include automatic teller machines used by banks, patient information systems used by hospitals to track patients, and computerized reservation systems used by hotels. Discussion Starter: Solicit student suggestions for other illustrations of service technology. IV. IMPLEMENTING OPERATIONS SYSTEMS THROUGH SUPPLY CHAIN MANAGEMENT Supply chain management is the process of managing operations control, resource acquisition and purchasing, and inventory so as to improve overall efficiency and effectiveness. A. Operations Management as Control Operations management as control can be obtained by coordinating it with other functions. Teaching Tip: Stress the fundamental role of operations management as control in organizations. Operations management is often called upon to coordinate the activities of other units, so control is a very important consideration. B. Purchasing Management Purchasing management is concerned with buying the materials and resources needed to produce products and services. Teaching Tip: Some business programs offer specialized courses in purchasing management. Indicate whether your school offers such a course. C. Inventory Management Inventory management deals with the process of inventory control, which manages raw materials, work-in-progress, finished-goods, and in-transit inventories. The just-in-time (JIT) method of inventory control reduces the organization’s investment in storage space for raw materials and in finished-goods inventory by arranging for materials to arrive just as they are needed. Group Exercise: Have student groups identify five different kinds of organizations, and then identify potential examples of each type of inventory. Extra Example: Sometimes managers use the concept of inventory in creative ways. For example, the EEOC currently has a backlog of several thousand discrimination cases it simply does not have the staff to handle. But the agency refuses to use the term “backlog,” instead calling the cases “inventory.” Discussion Starter: Students may have an especially keen understanding of the concept of “just-in-time” if they are procrastinators or if their work loads do not permit working ahead of schedule. Ask them to comment on the benefits and potential pitfalls of a just-in-time system based on their experiences. V. MANAGING TOTAL QUALITY A. The Meaning of Quality Quality is the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs. 1. The eight dimensions of quality include: performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality. 2. Quality is relevant for both goods and services and is judged relative to other goods or services. B. The Importance of Quality The Malcolm Baldrige Award, a prestigious U.S. government award, is given to U.S. firms that achieve major quality improvements. Group Exercise: Have students research the most recent firms to win a Baldrige Award. Discussion Starter: Ask students if they have had any personal experiences with recent Baldrige Award-winning firms, and, if so, if they agree with the merits of the award for that particular firm. 1. Quality has become one of the most competitive points in business today. 2. Productivity and quality are related but not as much as they were in the past. It is not true that if you increase output, quality will decrease. It is possible for both to go up. 3. Improved quality can also lower costs with fewer returns, less maintenance, and fewer customer complaints. Discussion Starter: There is a potential dark side to quality. A major point to stress is that it is possible for a firm to stress quality so much that it loses sight of other aspects of effective management. C. Total Quality Management Total quality management, or TQM, is a strategic commitment by top management to change its whole approach to business to make quality a guiding factor in everything the organization does. 1. To undertake TQM, there must be a strategic commitment from top management. 2. Almost all successful quality enhancement programs involve making the person responsible for doing the job also responsible for making sure that it is done right. 3. New forms of technology such as robotics and automation can help improve quality. 4. To improve quality, an organization can improve the quality of the material that it uses to produce its products. Extra Example: Note that improving materials is not always a straightforward decision. In the early days of notebook computers, manufacturers used metal cases. More recent models, however, use lighter-weight plastic. The new computers are also much lighter than the earlier models, but not as sturdy. 5. Improving the operating systems used by the organization during the actual transformation process is another approach to improving quality. D. TQM Tools and Techniques 1. Value-added analysis is the comprehensive evaluation of all work activities, material flows, and paperwork to determine the value that they add for customers. This analysis can be used to reveal areas for improvement. 2. Benchmarking is the process of learning how other firms do things in an exceptionally high quality manner. Teaching Tip: One recent study found that 31 percent of U.S. firms benchmark regularly, while only 7 percent never benchmark at all. Extra Example: IBM conducts around one hundred benchmarking studies a year. AT&T conducts around forty to fifty studies a year. 3. Some firms boost quality by outsourcing—subcontracting services and operations to other firms that can perform them cheaper and/or better. Extra Example: Many colleges and universities today have begun to outsource. Popular areas for outsourcing include food services, equipment and supplies, housing services, and health services. 4. Cycle time refers to the time needed by the organization to accomplish activities such as developing, making, and distributing products or services. Reducing cycle time is another way to improve quality. 5. ISO 9000:2000 is a set of quality standards created by the International Organization for Standardization as revised in 2000. Firms that can meet standards find that quality improves. 6. ISO 14000 is a set of standards put forth by the International Organization for Standardization related to environmental performance. It requires firms to document their acquisition of raw materials, pollution, energy usage, and so on. Teaching Tip: The correct pronunciation of ISO 9000 is not “I-S-O 9000,” but instead is “ICE´ oh 9000,” with the stress on "ICE." 7. Statistical quality control is a set of specific statistical techniques that can be used to monitor quality; includes acceptance sampling and in-process sampling. Techniques include acceptance sampling and in-process sampling. VI. MANAGING PRODUCTIVITY A. The Meaning of Productivity Productivity is an economic measure of efficiency that summarizes what is produced relative to the resources used to produce it. 1. The level of productivity refers to the units of analysis used to calculate or define productivity. Productivity may be defined at the country, industry, company, unit, or individual level (from highest to lowest level). 2. There are many different forms of productivity. a) Total factor productivity is an overall indicator of how well an organization uses all of its resources to create its products and services. b) Firms also calculate partial productivity ratios that use only one category of resource instead of all of them. B. The Importance of Productivity Two reasons why productivity is important are that it determines (1) the organization’s ability to survive and (2) people’s standard of living. C. Productivity Trends One trend in productivity is that the United States remains one of the most productive countries in the world. Though other countries gained ground during the 1980s, productivity growth in the United States picked up steam in the 1990s, and is generally keeping pace with growth in most other industrialized countries. Global Connection: While most experts have focused concern on productivity growth rates in Japan and Germany, productivity in Canada and France have actually crept the closest to that of the United States. D. Improving Productivity 1. One way to improve operations is to spend more on research and development. Another way is to revamp transformation facilities. 2. Increasing employee involvement can improve productivity as workers participate in more and receive more cross-training. However, it is important that rewards are provided for employee involvement to make participation really work. Cross-Reference: Note that increasing employee involvement is discussed in numerous other locations in the book, including Chapters 2, 12, 16, and 19. CHAPTER 22 Managing Information and Information Technology CHAPTER SUMMARY This chapter deals with the management of information and information technology. It first relates information to the manager’s job, then describes the basic kinds of information systems used by organizations. The management of information systems is then discussed. The chapter concludes with
a description of the impact of information systems on organizations. LEARNING OBJECTIVES After covering this chapter, students should be able to: 1. Describe the role and importance of information in the manager’s job and identify the basic building blocks of information technology. 2. Discuss the basic factors that determine an organization’s information technology needs and describe the basic types of information systems used by organizations. 3. Discuss how information systems can be managed. 4. Describe how information systems affect organizations. is an Internet fact-checking site that aims to put a damper on the growth of the hoax and misinformation business via the Internet. Run by David and Barbara Mikkelson, Snopes scrutinizes Internet claims to determine if they are genuine. Discussion Starter: What do students think about the reliability of the information via email or the Internet?
LECTURE OUTLINE I. INFORMATION AND THE MANAGER A. Role of Information in the Manager’s Job Managers process data and information as they communicate, make decisions, work with others, and perform all the other tasks of management. Cross-Reference: As noted in the text, Chapters 1 and 18 of this book have already underscored the role and importance of communication in the manager’s job. Teaching Tip: Point out to students that while the study of management is not all that old (around one hundred years), the study of information and information technology has an even shorter history. 1. Data are raw figures and facts reflecting a single aspect of reality. Teaching Tip: Using data from The Wall Street Journal, list two or three stock prices as examples
of data. Then describe how these prices reflect gains or losses from the previous day to illustrate information. 2. Information is data presented in a way or form that has meaning. 3. Information technology, or IT, refers to the resources an organization uses to manage
the information it needs to carry out its mission. B. Characteristics of Useful Information 1. Information needs to be accurate, that is, to provide a valid and reliable reflection
of reality. 2. Information must be available in time for appropriate managerial action. 3. Complete information gives the manager all of the information he or she needs. 4. Relevant information is useful to a manager, depending on his or her particular needs
and circumstances. Teaching Tip: Using grades, registration information, or degree requirements, illustrate for students how and why they need information that is accurate, timely, complete, and relevant. Teaching Tip: Point out to students, however, that it is possible to become too concerned with the characteristics of useful information. That is, it is important that information be accurate. But
if accuracy to two decimal places is sufficient, it may be inefficient to continue to pursue accuracy to four decimal places. Discussion Starter: Ask students for examples of when they received information that was
not accurate, timely, complete, and/or relevant. C. Information Management as Control Information is a vital component of the control process. Extra Example: One reason for the Enron scandal is that the Board of Directors, outside auditors, and government regulators simply did not have enough information about activities at the firm, and
so illegal or unethical actions went unnoticed. D. Building Blocks of Information Technology Whether information technology is manual or computer-based, it generally relies on five basic parts. 1. An input medium gets information into the system. 2. A processor manipulates the data. 3. The data is stored for later use by a storage device. 4. An output medium is used to communicate the information to others. 5. A control system monitors and controls the entire process. Teaching Tip: Many colleges and universities today have complex information technology systems.
If yours does, use it as an example to illustrate the various kinds of information technology. Teaching Tip: Many people seem surprised when they realize that an information system need not be computerized. Indeed, paper-based systems can work very effectively in some settings. II. TYPES OF INFORMATION SYSTEMS A. User Groups and System Requirements 1. There are four user groups: top managers, middle managers, first-line (or operational) managers, and knowledge workers—information specialists and professionals. Extra Example: Some top executives are still reluctant to use computers for one or more of the factors identified in Chapter 12 as reasons for resistance to change. Extra Example: In contrast, younger managers are much more comfortable with computers and are more likely to make extensive use of them in their organizations. 2. Each functional area, such as marketing, operations, and so on, has its own unique set
of information management needs. Extra Example: Many organizations today have invested in elaborate human resource information systems. These systems allow managers to quickly determine who in the organization is best prepared to handle various assignments, tasks, projects, and so forth. Each unique business process, e.g., supply chain management, has its own set of information needs. B. Major Systems by Level These systems are described in order from simplest to most complex. 1. A transaction-processing system, or TPS, is an application of information processing for basic day-to-day business transactions, handling routine and recurring transactions within the business Extra Example: The Limited makes extensive use of transaction-processing systems. For example, every purchase made in a Limited store is electronically transmitted to the firm’s central computer system for inventory monitoring. 2. Systems for knowledge workers and office applications include programming and data processing systems as well as systems for clerical support and communication. 3. Systems for operations/data workers perform maintenance and monitoring of computer systems and also data entry in some firms. 4. Management information systems, or MIS, gather comprehensive data, organize and summarize them in a form that is of value to functional managers, and then provide those same managers with the information that they need to do their work. Teaching Tip: Management information systems are still the most common form of information technology in organizations today. Global Connection: International businesses have been especially committed to developing management information systems as a way to link their myriad global operations. 5. A decision support system, or DSS, is an interactive system that locates and presents information needed to support the decision making process. These elaborate and quite powerful systems that can automatically search for, manipulate, and summarize information needed by managers for specific decisions. Extra Example: The Limited uses decision support systems. For example, whenever sales figures
in the TPS reach a certain level, the DSS takes over and sends replacement orders to the factory. 6. Executive support systems, or ESS, are a quick-reference, easy-access application of information systems specially designed for instant access by upper-level managers.
They use internal and external data and often are very simple to use and flexible. 7. Artificial intelligence, or AI, is the construction of computer systems, both hardware and software, to imitate human behavior; that is, to perform physical tasks, use thought processes, and learn. An expert system is one use of AI, and it imitates the thought processes of human experts in a particular field. Global Connection: The cargo harbor at Singapore uses an elaborate expert system to guide containerized ships into and out of the harbor. Once they are docked, another expert system coordinates their loading and unloading. C. The Internet The Internet is a gigantic network of networks serving millions of computers offering information on business, science, and government and providing communication flows among hundreds of thousands of separate networks around the world. It creates ready access to
a variety of information and also transmits electronic messages, e-mail, through an Internet Service Provider, or ISP—a commercial firm that maintains a permanent connection to the Net and sells temporary connections to subscribers. Discussion Starter: Ask your students about their Internet use. Ask how and when they use it, how often they use it, and so forth. In addition, ask those students who do not use it why they don’t. 1. The World Wide Web (WWW) is a universally accepted format for storing, retrieving, and displaying information on the Internet. It uses Uniform Resource Locator (URL) codes
to identify unique web addresses. 2. Webmasters are persons responsible for maintaining web sites. Web servers are large computers dedicated to supporting web sites. Web browsers are software programs that allow users to access information on the web. 3. Companies such as Yahoo! maintain directories that provide an index of web content. Another way to access web sites is through the use of a search engine, such as Bing or Google, that searches for web sites that meet the user’s search criteria. Extra Example: Many search engines were developed by academics, computer scientists who were interested in researching search algorithms. For example, was founded by two Stanford Ph.D. candidates, Page and Brin, who developed an improved algorithm. 4. Intranets are communication networks similar to the Internet but operating within the boundaries of a single organization. These private networks operate on the Internet, but they are accessible only to a company’s employees. 5. Extranets are communication networks that allow selected outsiders limited access to an organization’s internal information system or intranet. For example a distributor might allow customers and suppliers to view the status of shipments on the distributor’s network. III. MANAGING INFORMATION SYSTEMS A. Creating Information Systems There are six steps in establishing an information system. 1. Determine information needs, establish goals, and select task force members. 2. Develop a database and determine hardware and software needs. 3. Integrate the database, hardware, and operating system and install controls. Extra Example: Big computer companies like IBM sell fully developed and integrated information systems. Alternatively, Accenture will take basic hardware purchased from other vendors and write custom software to create an integrated information system for its customers. 4. Document the system and train the users. 5. Test the system and modify it when needed. 6. Monitor its long-term effectiveness and modify it if needed. Group Exercise: Have small groups of students describe how they would develop and implement
an information system for your class. B. Integrating Information Systems Integrating information systems involves linking them within the organization or with other organizations as well. Firms must either develop an entire system at once or use a standard system so that future additions will be compatible with the original system. Extra Example: Quaker State uses an IBM system to integrate its various internal information systems. The firm bought the entire system from IBM, and IBM installed the system and trained Quaker State employees in its use. Extra Example: Exxon’s information system also uses IBM equipment. However, the operating software was written for the firm by EDS. C. Using Information Systems 1. Ideally, an information system should be simple to use and nontechnical. 2. The ultimate criterion for information system effectiveness is how well users like it. 3. Information systems can allow organizations to become flatter. Also, firms with effective information systems find it easier to communicate with other firms. D. Managing Information Security Information security is an area of growing concern to today’s managers. 1. Firewalls are software and hardware systems that allow employees access to both the Internet and the company’s internal computer network while barring access by outsiders. 2. Encryption is a system for scrambling data, using a secret code, so that unauthorized viewers will not be able to understand the information they see. Encryption protects information contained in electronic communication such as email. Discussion Starter: Until January 2000, the U.S. government prohibited the sale of most encryption software outside the U.S. for fear of criminal or terroristic misuse. Today, such sales are legal. Discuss with your students the impact this change will have on organizations such as security software developers, university researchers, the CIA, and multinational firms. 3. People are the weakest link in any information system. Violations of security procedures can have disastrous consequences. E. Understanding Information System Limitations 1. Information systems are expensive and difficult to develop and implement . 2. Information systems are not suitable for all tasks problems. 3. Managers sometimes rely on information systems too much. 4. Information provided to managers may not be as accurate, timely, complete, or relevant as it first appears. 5. Managers may have unrealistic expectations of what the information system can do. 6. The information system may be subject to sabotage, computer viruses, or downtime. Extra Example: Computer scientists have long had a term to describe the concept that any system’s output is only as good as its input. They say, “GIGO,” which stands for “Garbage In; Garbage Out.” IV. THE IMPACT OF INFORMATION SYSTEMS ON ORGANIZATIONS A. Leaner Organizations More efficient and direct communications can allow more work to be accomplished with fewer employees. This creates smaller, flatter organizations, with simpler structures. B. More Flexible Operations Electronic networks allow businesses to do mass-customization, whereby products can be custom-ordered with the customer’s choice of features. The businesses experience faster delivery times and greater product variety. Extra Example: Dell Computers is one company that has built its business almost entirely upon mass-customization. Customers order PCs directly from the company’s web site, specifying the options and features they desire. The PCs are then assembled one at a time and shipped to customers. C. Increased Collaboration Electronic communications make it cheaper and easier for employees to communicate with others both inside and outside the organization. Information systems help to create business-to-business (often referred to as B2B) relationships in which organizational buyers and suppliers become so closely networked that they sometimes seem to be working for one organization. The virtual organization, in which various companies are brought together to collaborate, has been made possible by the increased communications capabilities of digital networks. D. More Flexible Work Sites Telecommuting, virtual businesses, and e-businesses that subcontract most of their work are all examples of changes in work locations that have resulted from the explosive growth of automation and the Internet. E. Improved Management Processes Instantaneous information and the improved ability to target problem areas by using detailed data have allowed managers to do a better job of coordination and control. F. Changed Employee Behaviors Information systems can make individuals more efficient and effective and may increase the fun each receives from the job if the employee enjoys working with the new technology. However, IT can also lead to isolation in that all of the information needed to perform a job
is available to the worker without ever having to talk to another person face-to-face. Instructor Manual for Management Ricky W. Griffin, 9781111969714

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