CH-6-7 Understanding the Management Process – Business : Book Guide

This Document Contains Chapters 6 to 7 CHAPTER 6 Understanding the Management Process 6.7 TEXTBOOK ANSWER KEYS 6.7a Return to Inside Business IBM 1. Virginia Rometty worked for IBM for more than 30 years before she was named CEO. How do you think this experience affects her ability to plan, organize, lead, and control as CEO? Explain your answer. Students may have a number of ideas about how Virginia Rometty’s experience enables her to do a good job as CEO. For example, she will have gained the technical skills of managing at various levels, plus the interpersonal skills to deal with people in many parts of the organization, both of which help her in her role as CEO. Both types of skills allow her to lead and motivate with authority because she’s had so much experience with so many different employees and managers. She will also have extensive experience communicating orally and in writing, and in listening, because she was successful in her previous management positions within IBM—vital for effective organizing and controlling. Having tackled a variety of management challenges in her years with IBM, she will have developed the analytic skills to identify problems, consider various solutions, and control implementation, important for planning and controlling. Finally, Rometty understands the organization from the inside out, which can give her an advantage in seeing the big picture through conceptual skills for planning and organizing purposes. 2. Would you recommend that IBM use its closest competitors as the models for benchmarking technological innovation? Why or why not? Students who think IBM’s closest competitors are good models for benchmarking may say that technology companies face special challenges (such as the need for speedy product introduction and security of data). Therefore, benchmarking companies that are in a similar situation may help IBM address these kinds of innovation challenges, which everyone in the industry faces. Students who take the opposite position may say that IBM is likely to get new ideas by benchmarking companies outside its own industry. Companies that are not in technology often need to introduce new products on an accelerated schedule, for example, and also use technology in their operations. As a result, IBM may be able to get a new perspective from benchmarking what those firms do with technology. Also ask students whether they think competitors will be willing to share meaningful information with IBM, knowing that this will be used to make IBM a stronger competitor. In addition, mention that the case indicates Rometty wants IBM to be as nimble as a startup, which may suggest new avenues for benchmarking. 6.7b Review Questions 1. Define the term manager without using the word management in your definition. A manager is one who coordinates the resources of an organization so as to achieve the primary goals of that organization. 2. Identify and describe the basic management functions. The basic management functions are planning, organizing, leading and motivating, and controlling. Planning is the processs of establishing organizational goals and deciding how to accomplish them. Organizing is the grouping of resources and activities to accomplish some end result in an efficient and effective manner. Leading is the process of influencing people to work toward a common goal, while motivating is the process of providing reasons for people to work in the best interests of an organization. Controlling is the process of evaluating and regulating ongoing activities to ensure that goals are achieved. 3. What are the major elements of SWOT analysis? SWOT analysis is the identification and evaluation of a firm’s strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors that affect a company’s capabilities. Opportunities and threats exist independently of the firm. Opportunities refer to favorable conditions in the environment that could produce rewards for the organization. Threats are conditions that may prevent the firm from reaching its objectives. 4. How do a strategic plan, a tactical plan, and an operational plan differ? What do they all have in common? A strategy is an organization’s broadest set of plans, developed as a guide for major policy setting and decision making. It is generally designed to achieve the long-term goals of the organization. A tactical plan is a smaller-scale plan developed to implement the strategy. Most tactical plans cover a one- to three-year period. An operational plan is a type of plan designed to implement tactical plans. It is usually established for one year or less and deals with how to accomplish the organization’s specific objectives. What these three types of plans have in common is that they are outlines of actions by which the organization intends to accomplish its goals and objectives. 5. What exactly does a manager organize and for what reason? A manager organizes the firm’s resources to achieve the primary goals of the organization. The organizing function involves using the resources (human resources, financial resources, informational resources, etc.) in the most efficient and effective way to accomplish some end result. 6. Why are leadership and motivation necessary in a business in which people are paid for their work? Leading is the process of influencing people to work for a common goal. Motivating is the process of providing reasons for people to work in the best interests of the organization. Different people do things for different reasons. Some workers are motivated by money, whereas others are motivated by recognition, increased responsibility, and/or a host of other factors. Therefore, the manager must determine which factors motivate his or her subordinates. 7. Explain the steps involved in the control function. The control function involves the following three steps: setting standards or specific goals to which performance can be compared; measuring the actual performance and comparing it with the standard; and taking corrective action as necessary. 8. How are the two perspectives on kinds of managers—that is, level and area—different from each other? The level of management refers to the degree of responsibility. Top managers, middle managers, and first-line managers must coordinate their efforts to implement the goals of the organization. Area involves the various types of specialization such as finance, operations, marketing, and human resources among others. 9. What skills should a manager possess in order to be successful? To be successful, a manager must possess analytic, interpersonal, conceptual, communication, and technical skills. Managers must master and simultaneously utilize these skills; however, the level of management will influence how much each particular skill is used. For example, top managers should understand the technical side of business, but they may not be involved in the technical aspects of the work in the way middle or first-line managers would be. 10. Compare and contrast the major styles of leadership. In recent years, three styles of leadership have been identified. The autocratic leader holds all authority and responsibility, with communication moving from top to bottom. At the other extreme is the participative leader, who shares authority with employees by consulting with them. Communication flows horizontally among group members. The entrepreneurial leader is task-oriented and driven, inspiring employees to follow. However, because this type of leader tends to take the initiative and not consult with others, they are often puzzled when employees may not be as enthusiastic. 11. Discuss what happens during each of the four steps of the managerial decision-making process. Decision making is the process of developing a set of possible alternative solutions and choosing one alternative from among that set. The first step, identifying the problem or opportunity, is essential to solving the problem. The second step, generating alternatives, requires that managers be open to fresh, innovative ideas as well as to more obvious answers. The third step, selecting an alternative, requires that a manager reach a final decision. The fourth step, implementing the solution, requires time, planning, and preparation of personnel. 12. What are the major benefits of a total quality management program? The major benefits are higher levels of customer satisfaction, increased employee participation, improved relationships with suppliers, lower overall costs, higher market shares, and higher profits. 6.7c Discussion Questions 1. Does a healthy firm (one that is doing well) have to worry about effective management? Explain. A healthy firm must worry about effective management because, if it doesn’t, it will probably not remain solvent for long. A firm must continually plan for future goals and potential difficulties. Without a plan, it may be unable to survive even a minor difficulty. The firm must also continually reevaluate its organizational structure to determine if any changes are required to adapt the organization to new circumstances. In addition, it must continually lead and motivate its workforce. If the workforce has no leadership and becomes unmotivated, the firm will suffer. Finally, a firm will find it impossible to remain effective if it fails to control ongoing activities. 2. What might be the mission of a neighborhood restaurant? Of the Salvation Army? What might be reasonable objectives for these organizations? The mission of a neighborhood restaurant might be “To offer the best food at the lowest prices in the neighborhood.” The Salvation Army’s mission is “To preach the gospel of Jesus Christ and to meet human needs in His name without discrimination.” A reasonable objective for a neighborhood restaurant might be to generate a certain amount of profit in two years. A reasonable objective for the Salvation Army might be to increase the number of people it feeds, clothes, and shelters by a certain percent over the next two years. 3. Which of the management functions and skills do not apply to the owner-operator of a sole proprietorship? The function of leading and motivating doesn’t apply because the owner-operator has no one to lead or motivate. The owner-operator usually does not have the role of leader because, once again, there is no one to lead. The owner-operator usually will not be in the role of disseminator because there is no one to whom information can be given. 4. Which leadership style might be best suited to each of the three general levels of management within an organization? The leadership style best suited to top management could be the entrepreneurial style because upper-level managers are usually talented people who work best with very little supervision. They are usually self-directed and self-disciplined and thus can direct their efforts toward problems that only they can deal with. Middle managers could make the most effective use of the participative style of leadership. Since they are managers of managers, they need to allow for and actively solicit the input of their subordinates. First-line managers could be either autocratic or participative, depending on the type of job to be accomplished and the type of workers to be supervised. If the job is mundane and the workers are unskilled, the autocratic approach would probably be most successful. However, if the job is complicated and the workers are highly skilled, a participative approach would be much more appropriate. 5. According to this chapter, the leadership style that is most effective depends on interaction among the employees, characteristics of the work situation, and the manager’s personality. Do you agree or disagree? Explain your answer. Each of the leadership styles described in this chapter—autocratic, participative, and entrepreneurial—can be effective in the right situation. In addition to the work situation, the interaction among the employees and the manager’s personality can influence the effectiveness of a leadership style in a given situation. 6. Do you think that people are really as important to an organization as this chapter seems to indicate? People are the most important aspect of any firm. Without people, the organization could not accomplish its goals. Even in this day of automation and industrial robots, people are necessary, albeit in varying capacities. 7. As you learned in this chapter, managers often work long hours at a hectic pace. Would this type of career appeal to you? Explain your answer. While students’ answers may vary, you may want to use their answers to this question to reinforce the need for good managers and the potential rewards for individuals who can “manage.” 6.7d Comments on Video Case 6.1 Suggestions for using this video case are provided in the Pride/Hughes/Kapoor Video Guide. L.L.Bean Relies on Its Core Values and Effective Leadership 1. What style of leadership do you think most L.L.Bean managers probably employ? Most L.L.Bean managers are probably consultative, participative leaders in that they appear to consult with workers on goal-setting and then delegate authority to their subordinates—such as by giving non-managers leadership of temporary teams during the holiday rush season. The two-way goal-setting process, the collaborative work culture, and the fact that management candidates are expected to demonstrate both analytical and interpersonal skills also suggest that consultative and participative leadership is the preferred management style rather than autocratic or entrepreneurial leadership. 2. To produce hot water in L.L.Bean’s flagship store, the company recently installed a solar hot water system that will offset almost 11,000 pounds of carbon dioxide emissions every year. Suggest some of the questions the company’s managers might have asked at each level of planning (strategic, tactical, operational, and contingency) for this project. Strategic planning questions likely revolved around how much the project would cost versus how much it would ultimately save in energy costs, and how it could enhance the company’s reputation for corporate social responsibility. Tactical questions might focus on identifying the right partners and suppliers for the project—engineers, solar heating specialists, architects, perhaps environmental groups, government agencies, and so on, while operational planning would answer the question, “How do we get this project done on time and on budget?” Contingency plans would cover any unanticipated events, such as missing parts or labor or cost overruns, as well as a plan to keep the original water heating system running in case of project delays. 3. Which managerial role or roles do you think the leaders of L.L.Bean’s temp teams fill? These leaders are expected to provide information and training for the temps, which describes the informational role, and to help them develop their skills and keep them motivated (many return each year), which describes the interpersonal role. 6.7e Comments on Case 6.2 What’s Next for “Earth’s Biggest Bookstore?” 1. Knowing that Amazon.com’s strength is technology, which can change rapidly and unpredictably, do you agree with Jeff Bezos’s method of looking up to a decade ahead for strategic planning purposes? Explain your answer. If students agree with Bezos’s method of looking a decade ahead, they may explain this answer by noting that strategic planning deals with broad decisions such as what business the company is in and what it wants to become in the future. Only by taking a long view can Bezos help Amazon set and achieve far-reaching goals that will shape its future business and profitability. Even though technology can change rapidly and unpredictably, how the technology is used to achieve business goals is what Bezos is looking at when he plans for the long term. If students disagree with what Bezos is doing, they may say that creating plans for a decade ahead carries the risk that Bezos will invest heavily in technology that is suddenly made obsolete by a new innovation he didn’t anticipate. Also, Bezos might not be able to plan for major shifts in the business environment that will fundamentally change the way Amazon operates or profits in the long term. Finally, Bezos might have to alter long-term goals if Amazon actually does much better than expected (or far worse than expected), and he would then have to find a way to alter his strategic plan to reflect this new reality. 2. Does Jeff Bezos appear to be an autocratic, a participative, or an entrepreneurial leader? What are the implications for Amazon.com? The case suggests that Bezos is an entrepreneurial leader, because he has vision and charisma, and he is constantly venturing into new areas. He spearheaded development of the Kindle when e-book readers weren’t yet established, and that vision resulted in success for Amazon, as the case describes. Because Amazon is known as a pioneering firm, it is likely to benefit from Bezos’s entrepreneurial leadership and his enthusiasm for trying new things. 3. How does Amazon.com apply total quality management, and why? Amazon is very careful about measuring its performance in areas that make a difference to customer satisfaction, such as how quickly its web pages load and whether delivery is delayed. It is constantly improving in these areas and innovating in other ways to satisfy its customers and become more productive. The CEO is clearly a strong supporter of total quality management, because he insists on high standards of performance and he reads customer letters to find out what they like and don’t like, with an eye toward improving operations even further. 6.7f Building Skills for Career Success 1. Social Media Exercise Crowdsourcing is a set of principles, processes, and platforms to get things done that includes putting out an open call to a group and managing the responses and output. Crowdsourcing can be like outsourcing in a bigger way because instead of contracting to one known entity, you are putting a call out to a bigger group, often a global online community, to either get many to participate or to find the person you need by casting a much wider net. There are crowdsourcing companies that perform specific types of work such as translations (MyGengo, Smartling), transcription (CastingWords), keyword marketing (Trada), even design and marketing work (Prova, 99Designs, CrowdSpring). Each company operates differently. In the case of transcription or translation, you give work to a company like CastingWords or MyGengo, and they in turn put the job out to their “crowd” of workers from around the world. They are like the middleman to helping you get the work done, and their distributed workforce can be less costly to them so they pass on their savings to your organization. 1. Check out a few of these crowdsourcing companies. What are your thoughts? Do you think they are effective? Why or why not? Crowdsourcing companies can be effective at supplying required information and feedback with significant time and financial savings. Companies can use crowdsourcing organiz-ations in lieu of hiring employees for the same work, thereby reducing staff and the significant associated costs. The down side is if companies are not using their own employees, the management process becomes very different. 2. Which type of leadership is most likely to include the use of crowdsourcing? Entrepreneurial leaders take initiative, venture into new areas, and are visionary. These characteristics are necessary for a leader to use crowdsourcing. This leader would embrace the benefits and work with the challenges—in fact, be inspired by the challenges. There would be aspects of participative leadership with the use of crowdsourcing. With this style, final decisions rest with the leader; however, decisions are not made in a vacuum. Consultative, democratic, and consensus leaders collaborate and negotiate with employees. Although crowdsourcing doesn’t use permanent employees of the firm, it uses collaboration and negotiation techniques. 3. Can you think of other areas in businesses that can benefit from the use of crowdsourcing? What are they? Students will suggest different areas of business. Most areas of business can benefit from crowdsourcing; however, companies might need to adjust their corporate cultures and management styles to effectively use it. 2. Journaling for Success This chapter discussed the crtitical management function of leading and motivating others to work in the best interests of an organization. Think about your current job or a job that you had previously. 1. Who is the most outstanding leader with whom you have worked? Student answers will vary depending on their experiences. The most outstanding leader I worked with was my previous manager, Sarah. She was a great communicator, always listened to feedback, and led by example. Her transparent decision-making and ability to empower the team created an environment of trust and collaboration. 2. What was his or her position and in what capacity did you work with the person? Student answers will vary depending on the types of jobs students have held. Some younger students may name coaches, counselors, teachers, parents, or even classmates or friends. It could be a formal or an informal leader. 3. What are this person’s outstanding leadership qualities? Again, the answers will vary, but it is likely that trustworthiness and competence might be mentioned. The younger students may also write about the person’s ability to nurture and to be supportive and even the ability to make work enjoyable. 4. Select the most outstanding leadership quality from question 3 and provide an example that demonstrates this quality. This is a very individualized answer. The most outstanding leadership quality is empathy. An example of this quality is a leader who listens actively to their team’s concerns, understands their challenges, and offers support. For instance, during a high-pressure project, a manager noticed team members were struggling with personal issues. The manager took the time to check in individually, adjusted workloads, and provided flexible hours, fostering a supportive environment and helping the team feel valued. 5. Do most of your co-workers view this person as being an outstanding leader, too? Explain. Again, each student will give an individualized answer depending on the situation. The student may not be in a position to know what other people think in some cases. 3. Developing Critical-Thinking Skills Have several students each bring to class a copy of a company’s mission statement that they have downloaded from the Internet. Prepare enough copies for each student in the class. In the discussion, follow the instructions in the exercise. Focus on the philosophy of the company and its concern for employees, customers, and shareholders. Ask students to summarize the culture of each company. Emphasize that a mission statement is a direct reflection of a firm’s management culture. 4. Building Team Skills The students will realize how difficult it is to write a meaningful mission statement that reflects the purpose of the company and, at the same time, expresses concern for its employees, customers, and owners. The process must start with an understanding of why a company is in business. Remind the students that mission statements are important because they direct activities within companies. Personnel in companies spend many hours developing mission statements that all employees can understand and live by in their jobs. It is a process that should not be taken lightly and should have the input of as many employees as possible. Every job in a company should help fulfill the mission statement or the job should be abolished. 5. Researching Different Careers Career objectives must be specific. They must answer the following questions. What is to be accomplished? When will it be completed? Who will do the activity? Where will the activity occur? How will it be measured? What criteria will be used for measurement? The students’ objectives must be both realistic and accomplishable. Students find it is more challenging to set short-term objectives, where progress is rewarded more often, than to set long-term objectives where rewards seem too far away. 6.8 QUIZZES I AND II Quiz I True-False Questions Select the correct answer. 1. T F Of the four main resources available to management, perhaps the most important is the organization’s financial resources. 2. T F Strategic planning is the process of establishing an organization’s major goals and objectives and allocating the resources to achieve them. 3. T F Middle-level managers are generally responsible for developing an organization’s mission. 4. T F When a manager allocates resources between different departments, he or she is acting in a decisional role. 5. T F Of the three styles of leadership, the most effective is the participative style. Multiple-Choice Questions Circle the letter before the most accurate answer. 6. Tangible, physical resources that a manufacturer uses in carrying out its business are known as what type of resource? a. Human b. Inventory c. Material d. Financial e. Informational 7. Specific statements detailing what the organization intends to accomplish as it goes about its mission are known as its a. objectives. b. goals. c. contingency plans. d. strategy. e. policy. 8. Which one of the following is not considered an area of specialization in management? a. Finance b. Marketing c. Inventory d. Human resources e. Administration 9. A manager performing the functions of figurehead, liaison, or leader would be fulfilling a(n) __________ role. a. informational b. interpersonal c. diagnostic d. administrative e. decisional 10. Leadership is a. synonymous with management. b. the ability to influence others. c. characterized by legitimate power. d. coordinating people to achieve the goals of the company. e. the ability to coerce employees into changing their behavior. Quiz II True-False Questions Select the correct answer. 1. T F The informational resource should include information generated outside an organization, such as by the economy, consumer markets, and technology. 2. T F The most fundamental type of goal in an organization is its mission. 3. T F The administrative manager is charged with managing an organization’s human resource program. 4. T F Understanding the technical side of things is an effective management aid at every level. 5. T F The common leadership styles are authoritarian, democratic, and existential. Multiple-Choice Questions Circle the letter before the most accurate answer. 6. Steel, glass, and fiberglass would most likely be material resources for a. the Mayo Clinic. b. the University of Florida. c. Citicorp. d. General Motors. e. Kroger. 7. The process of providing reasons for people to work in an organization’s best interests is called a. planning. b. organizing. c. leading. d. motivating. e. controlling. 8. Part of Susan’s responsibilities is to create a work schedule for her employees and to motivate them. What type of manager is she? a. Entrepreneurial b. Middle c. Top d. Control e. First-line 9. If Mike Smith, a buyer for Ford, negotiates with a supplier on the price of a wheel, he is in a(n) __________ role. a. decisional b. interpersonal c. technical d. conceptual e. informational 10. Under an autocratic leader, communication a. usually moves from bottom to top. b. usually moves from top to bottom. c. does not occur. d. flows horizontally at the top only. e. flows horizontally among group members. 6.9 ANSWER KEY FOR QUIZZES I AND II Quiz I True-False Multiple-Choice 1. F 6. c 2. T 7. a 3. F 8. c 4. T 9. b 5. F 10. b Quiz II True-False Multiple-Choice 1. T 6. d 2. T 7. d 3. F 8. e 4. T 9. a 5. F 10. B 6.10 CLASSROOM EXERCISES 6.10a Homework Activities • Article Report. Have students bring in an article that shows an example of a manager. Have students identify the manager’s level and area and some of his or her skills and roles. • Interview a Manager. Have students interview a manager from a local organization to learn about how he or she performs each of the functions of management, the roles he or she plays, and the skills necessary to do the job. • Application Exercise—Management. Have students watch a movie or TV show that involves an organization. Have them identify as many management activities, skills, and roles as they can. • Explain a Company Mission Statement. Have students find information about a company’s mission statement and goals. What does the company seem to be doing in order to fulfill its mission and achieve its goals? How does the mission statement fit with the image of the company? 6.10b Classroom Activities • What’s Our Mission? Group Exercise. This is a 15- to 20-minute group exercise that asks the students to write a mission statement for the college bookstore. Divide students into groups of three or four and distribute the handout outlining the assignment. The objective is to help students understand the considerations that lead to a good mission statement. It would be interesting to have a representative from each group write their statement on the board as they finish prior to discussion. Instructor notes are included. • What Do We Do If … ? Group Exercise. This is a 30-minute group activity that asks students to develop a rudimentary contingency plan for the college in case of an extended power outage. The objective of the exercise is to help students understand the importance of a plan tied to a clear objective, which in this case is maintaining the academic process. It will also become quickly clear how much detail and planning goes into these types of efforts. Larger groups of five or six will work for this exercise. • Take Me to Your Leader! Self-Assessment. This is a five-minute quiz each student should take individually. The results do not need to be shared. After the students take the quiz, go through each of the questions or hand out the discussion points in the instructor notes. Scoring instructions are included in the notes. • What Should I Do? Group Exercise. This is a 15- to 20-minute group exercise that introduces students to the decision-making process. This is an exercise that can work in fairly large groups, as it utilizes a brainstorming element. One student in each group should be the note taker to make sure no ideas are missed. 6.10c Exercise Handouts Follow on Next Pages What’s Our Mission? In your groups, write a mission statement for the campus bookstore. A good mission statement says who you are, what you do, what you stand for, and why you do it. Mission statements are hard to write. It is easy to get too wordy. The best of them tell the story and ideals of the organization in 30 seconds or less. Three to five sentences should be sufficient. You have 15 minutes. Consider including some or all of the following: 1. Who is the target audience? 2. What products and services are offered? 3. In what geography does the store operate? 4. What is the moral/ethical position of the store? What are its values? 5. How much and in what ways does the store plan to grow? 6. What is the expectation of profitability? What’s Our Mission? Instructor Notes The mission statement developed by the students might include the following elements: • The mission of the Outstanding College Bookstore (OCB) is to serve the academic and personal support needs of the student body. OCB strives to provide everything students require for academic success, including textbooks and other materials, as well as personal items on a timely basis. • The bookstore is a nonprofit, self-supporting organization, with revenues covering costs. • As a member of the OC community, the bookstore is dedicated to providing a supportive and helpful resource for students. As such, OCB will grow and adapt to changing college and students’ needs. What Do We Do If … ? The past few years have clearly demonstrated that disasters—natural or manmade—disrupt business. Forty-three percent of businesses damaged in a disaster close for good, and that figure rises to 60 percent after one year. Yet it doesn’t have to be that way. Following the lethal subway terrorist bombings in the summer of 2005, most businesses, including London’s notoriously unreliable Underground Metro service, resumed most services within 24 hours. At least 100 companies implemented disaster recovery plans immediately. The Confederation of British Industry (CBI) said the business community had pre-pared for such an eventuality for a long time and had implemented contingency plans to ensure the greatest possible degree of business continuity. Contingency planning is like insurance in that you hope to never have to use it, but being prepared is wise. Read the situation below, then, in your groups, list the things you believe the administration (management) of the college should consider as part of their contingency planning. In your planning, take into ac-count the material, human, financial, and information resources the college uses. Some things to consider as you plan: 1. Determine critical functions and equipment. 2. Plan for alternative sites and/or activities. 3. What tasks will need to be accomplished and who will tackle them? 4. Assume the worst—whatever can go wrong will. 5. Who is in charge of implementation of the plan? 6. What, if any, training is required? Situation: You have been hired as consultants to a small liberal arts college in the Midwest that attracts students from across the country. The college has excellent fire, disaster, and even terrorist attack plans. Now it wants to develop a plan for a complete electrical outage that would affect heat, light, computer, and other equipment across the whole campus for a week or longer. The objective of the plan is to devise ways in which students can be fed and housed; continue to remain in contact with their professors, the library, and other re-sources; and, in short, learn. Academically, the college does not want its students to fall behind. Be creative in your problem solving. You have 30 minutes. What Do We Do If … ? Instructor Notes Encourage your students to begin with the identification of the critical tasks and equipment needed to achieve the primary function of continuing to learn. These might include: • Physical needs: heat, light, water, food, medical, etc. • Academic resources: texts, lectures, professors, library and Internet research materials • Social needs: study groups, discussion, and recitation contact with instructors The second item the group should consider is whether the college wants the students affected by the power outage to stay on campus or leave. This is one of the critical issues. If they stay on campus, a different set of issues exists than if the college makes plans to house them in local hotels/homes or send them home. One possibility might be to have alumni from nearby areas with power take in students. If students are to be sent home, then plans will have to detail how and who pays. If the decision is made to try to keep students on campus, then the focus will have to be on backup emergency generators in key locations (perhaps moving all the students into one or two dorms) with plans to bring in food. The library would have to be backed up with emergency generators as well as medical and other key facilities. If the students are to leave campus, plans must be made to enable classes to be held online. It would be necessary to make sure that students took their computers with them if they left. Also, the college network must be maintained in an alternate network. Take Me to Your Leader! This is a five-minute self-assessment. Pick the answer that applies to you in most situations. a. I try to do the right thing. 1. I don’t think about it. 2. I try to do the right thing sometimes. 3. I try to do the right thing most of the time. 4. I always try to do the right thing. b. I help others to do better. 1. I never help others to do better. 2. I sometimes help others to do better. 3. I help others to do better most of the time. 4. I always help others to do better. c. I pick my battles. 1. I always defend my position. 2. I sometimes defend my position. 3. I defend my position most of the time. 4. I always think first before I defend my position. d. I know what needs to be done and do it. 1. I usually wait for someone to tell me. 2. I sometimes do what needs to be done. 3. I do what needs to be done most of the time. 4. I always do what needs to be done. e. I don’t hesitate to tell people what needs to be done. 1. People should know for themselves what needs to be done. 2. I sometimes tell people what needs to be done. 3. I tell people what needs to be done most of the time. 4. I tell people what needs to be done all the time. f. If I fail, I 1. feel bad and blame myself. 2. figure out why things went wrong. 3. figure out how to fix it or how to do it differently next time. 4. forget about it. g. When things change in unexpected ways, I 1. get upset. 2. try to stop it. 3. go with the flow. 4. figure out ways it can benefit me. h. When it comes to the future, I 1. wait to see what happens. 2. try to plan for it. 3. see how I can take advantage of predicted changes. 4. see how I can impact the future. Your instructor will tell you how to score the assessment. Take Me to Your Leader! Instructor Notes Scoring: Tell the students to give themselves one point for every number 1 answer, two points for every number 2, three points for every number 3, and four points for every number 4. Then ask them to add up the points (maximum points is 32). 32–28 Positively glowing with leadership star quality 27–23 Clearly showing leadership potential 22–16 Potential is there, but work is needed 15 and under Not quite ready to be a leader yet Why the Answers Matter a. I try to do the right thing. Good leaders are trustworthy. People will forgive and even forget mistakes. They do not forget dishonesty or poor ethics. Being treated fairly is desired by everyone. b. I help others to do better. Leadership is all about influencing people to achieve organizational or other goals. One of the major tasks of a leader is to provide a culture where people can perform at their best. c. I pick my battles. Leaders do not waste social capital on constant confrontation. If they have to engage in conflict, they make sure it is over things that really matter in the long run. d. I know what needs to be done and do it. Leaders are focused on goals, and they are disciplined in achieving them. Leaders do their homework and are prepared. e. I don’t hesitate to tell people what needs to be done. People need to understand what the long-term vision is and what their part is in achieving that vision. It is the task of the leader to communicate, not the task of the follower to figure out what needs to be done. It is especially important to deal with unpleasant issues quickly and directly. f. If I fail, I There will be times when everything will go wrong. It is then that people most need their leaders to be consistent, positive, and either fix the problem or move on. Feeling bad will help no one. Good leaders learn from their and others’ mistakes. Leaders who are afraid of failure do not remain leaders long. g. When things change in unexpected ways, I Leaders keep a firm eye on the future and understand that change is one of the constants of life. They deal with problems quickly and do not allow them to worsen. Leaders need to be flexible, and they need to be problem solvers. h. When it comes to the future, I Leaders have a vision and are passionate about the challenges ahead. While they respect the traditions of the past, they are constantly looking to improve on them. They never lose sight of what the future can be, and they encourage others to join in that vision. What Should I Do? Over a 10-year period, consumer prices rose 29 percent, while the price of clothing fell over 8 percent. Melissa Richardson, the owner of a trendy teen clothing shop in a major city, has benefited from this trend. But she knows this is about to change in 2013 as manufacturers deal with higher prices for cotton, transportation costs, and increased wages in China, where so much clothing is made. Melissa likes to plan ahead and has defined the problem she faces as a choice between decreased profits if she doesn’t raise her prices, or decreased sales if she does. In the next 15 to 20 minutes, your team should: 1. Review Melissa’s definition of her problem. Are there any issues she is missing? 2. Generate alternatives to solve her problem. 3. Select the alternative you believe to be most practical and effective. 4. Decide what action(s) Melissa should take to implement her solution. What Should I Do? Instructor Notes Problem Definition: At this stage, ask the students if they should consider rephrasing the problem in a more positive manner. Alternative Generation: Urge the students to brainstorm alternatives and to not reject any ideas too quickly, no matter how quirky they may seem. They can always eliminate some before they get to the next stage. Some of the alternatives they might suggest could include: Suggestions to avoid raising prices: • Purchase lower-quality basic goods that cost less to avoid raising prices on trendier items. This could include khakis, socks, etc. • Institute cost savings in areas other than merchandise—hire less-expensive labor, reduce heating bills, improve ordering and billing technology, etc. Suggestions to maintain sales and profits with increased prices: • Appeal to more upscale shoppers with more high-end clothing • Increase prices minimally across all items, whether their cost has gone up or not. This will prevent any one price increase from being too noticeable. • Only increase prices at the beginning of a new season or when a new trend comes on the market. This again, will make it less noticeable. Alternative Selection: Urge the students to set some criteria by which they could measure each alternative. They could consider factors such as difficulty of implementation, risk of losing customers, etc. Chapter 6 Video Case: L.L.Bean Relies on Its Core Values and Effective Leadership RUNNING TIME: 7:20 Chapter 6 outlines the management process. Management involves coordinating people and other resources to achieve the goals of an organization. Managers are concerned with four types of resources: material, human, financial, and informational. Managers perform four basic functions, including planning, organizing, leading, and controlling. There are top managers, middle managers, and first-line managers who deal with the areas of finance, operations, marketing, human resources, and administration. Managers need a variety of skills in order to run a successful and efficient business, including conceptual skills, analytical skills, interpersonal skills, technical skills, and communication skills. Managers’ effectiveness often depends on their styles of leadership, which include autocratic, participative, and entrepreneurial leadership. Decision making is the process of developing a set of possible alternatives to a problem and choosing one option from among the set. Total quality management is directed at improving customer satisfaction, increasing employee participation, strengthening supplier partnerships, and facilitating continuous quality improvement. Concepts Illustrated in the Video • Catalog Business • Competition • Core Values • Culture • Entrepreneurship • Evolution of the Business • Leadership • Retail Business • Stakeholders VIDEO CASE SUMMARY L.L.Bean began in 1912 as a tiny mail-order company headquartered in Freeport, Maine. Today, the company has grown to include 14 retail stores in ten states, an online store, and a popular catalog. With annual sales of over $1.5 billion, L.L.Bean has always been privately held. Managers at the company have many opportunities for using their planning, organizing, leading, and controlling skills. Employees are encouraged to develop their own personal goals, such as learning a new skill or gaining a better appreciation of the way L.L.Bean makes business decisions. The company has a strong collaborative work culture in which it is equally important to work through your supervisor, your co-workers, and your subordinates. That means everyone is a leader to some extent. Critical-Thinking Questions Using information from the case and the video, answer the following questions: 1. What style of leadership do you think most L.L.Bean managers probably employ? The three primary styles of leadership include autocratic, participative, and entrepreneurial. L.L.Bean has a corporate culture that is highly collaborative. Supervisors, subordinates, and peers are encouraged to work together on tasks, and the company strongly encourages partnering with employees from various functional areas. As a result, most students would agree that L.L.Bean managers use the participative leadership style most effectively. 2. To produce hot water in L.L.Bean’s flagship store, the company recently installed a solar hot water system that will offset almost 11,000 pounds of carbon dioxide emissions every year. Suggest some of the questions the company’s managers might have asked at each level of planning (strategic, tactical, operational, and contingency) for this project. L.L.Bean managers should address all types of plans when making any decisions that have a significant impact on the business. An example of a strategic question would be: “How will this help us achieve long-term company objectives?” An example of a tactical questions is: “What is the best way to communicate this decision to our customers?” An operational planning decision would be: “Who should be charged with installing the solar hot water system?” And finally, a contingency question would be: “What will we do in the winter when there are very few hours of sunlight to supply energy for the solar hot water system?” 3. Which managerial role or roles do you think the leaders of L.L.Bean’s temp teams fill? Leaders of L.L.Bean temp teams have numerous opportunities for using planning, organizing, leading, and controlling skills. These leaders have to establish a plan on how to effectively handle the busy holiday season while accommodating and training temporary workers each year. They must reorganize the smaller permanent teams to larger teams during the holidays. Regular employees not currently in leadership positions are asked to head the teams of temps by providing collaborative leadership. Finally, L.L.Bean leaders must control by obtaining feedback from customers and employees to ensure that the strategy is running smoothly. Chapter 6 Lecture Launcher: Who’s Their Boss? … I Don’t Know VIDEO SUMMARY Urban Farmz has made it through its first year, grown 50 percent during that time, and has 25 employees and even an IT system. However, there is a problem, Jake and Sylvie tell Caleb. Nobody knows who is in charge, including the company’s drivers, warehouse workers, and the farmers it works with. “In my experience, small growing companies like yours need to establish a boss early on: a leader,” explains Sylvie. “As you grow, it’s only going to become more difficult for the new employees to find their way.” Jake agrees, telling Caleb that employees will lose motivation if they don’t know who is in charge. Are Sylvie and Jake right? Caleb doesn’t think so. “It sounds like you’re adding layers of bureaucracy to me,” he tells them. “Next thing you tell me we’re going to have an HR department, time cards, and cubicles.” CHAPTER 7 Creating a Flexible Organization 7.7 TEXTBOOK ANSWER KEYS 7.7a Return to Inside Business Kraft Foods 1. Would you expect the two spinoffs to be flatter or taller, compared with the structure of Kraft Foods before the split? Why? The case states that some jobs were cut as the two spinoffs finalized their structure and determined who would fill each position. Because of this, their structures are likely to be flatter than that of Kraft Foods prior to the split. Also, standard operating procedures are probably being carried over from Kraft, and most of the managers and employees will know each other. This makes a wide span of management (flat structure) more workable than a narrow span of management (tall structure). 2. The structure of the two spinoffs is geared toward location, for responsiveness to local needs. How can each of the spinoffs use this structure as a global strength, not just a local strength? Students will suggest a variety of answers to this question. One answer is that managers from each location should be sharing ideas on a regular basis so they can learn from each other, turning local strengths into global strengths. Specifically, a new product that succeeds in one location might be tested in another location to determine its appeal. Internal processes that work in one location might be tested in other locations, as well. Corporate culture in both spinoffs can influence such sharing. 7.7b Review Questions 1. In what way do organization charts create a picture of an organization? Organization charts are diagrams that represent positions in the organization and the relationships among them. They also illustrate the five considerations in the organizing process: specialization, departmentalization, centralization, span of management, and chain of command. 2. What is the chain of command in an organization? The chain of command is the line of authority that extends from the highest to the lowest levels of the organization. Chains can be long as is typical in a large organization, or chains can be short as is typical in a small business. No matter what the length, the communication along the chain must be clear. 3. What determines the degree of specialization within an organization? The degree of specialization within an organization is determined through division of the entire organization’s work into separate parts and assignment of those parts to positions within the organization. The ability to separate the activities into distinct tasks and having the people to efficiently perform those tasks will help determine the degree of specialization. 4. Describe how job rotation can be used to combat the problems caused by job specialization. In job rotation, each employee is shifted periodically to a different job. The idea behind job rotation is to provide a variety of tasks so that workers are less likely to get bored and dissatisfied. 5. What are the major differences among the four departmentalization bases? The four most common bases of departmentalization are by function, by product, by location, and by type of customers. Departmentalization by function groups jobs that relate to the same organizational activity. Departmentalization by product groups activities related to a particular good or service. Departmentalization by location groups activities according to the defined geographic area in which they are performed. Departmentalization by customer groups activities according to the needs of various customer populations. 6. Why do most firms employ a combination of departmentalization bases? A departmentalization base is the scheme by which jobs are grouped into units. In fact, few organizations exhibit only one departmentalization base. The most common bases are function, product, location, and customer. The decision to use multiple bases is usually based on the specific needs of the corporation and on the determination of which combination of bases will enable the organization to accomplish its goals and objectives. 7. What three steps are involved in delegation? Explain each. The three steps involved in delegation are (1) assigning responsibility, which is the duty to perform the job or task; (2) granting authority, which is the power within the organization to accomplish the task or job; and (3) creating accountability, which is the obligation of a subordinate to accomplish an assigned task or job. 8. How does a firm’s top management influence its degree of centralization? If top management consciously attempts to spread authority widely to the lower levels of management, the firm is decentralized. If top management works to keep authority at the upper levels, the firm is centralized. 9. How is organizational height related to the span of management? If the span of management is generally narrow, more levels of management are needed, resulting in a tall organization. If the span of management is wider, fewer levels are needed and the organization is flat. 10. What are the key differences between line and staff positions? Line managers have line authority, meaning they can make decisions and issue directives that relate to the organization’s goals. Staff managers, by contrast, generally have either advisory or functional authority. 11. Contrast line-and-staff and matrix forms of organizational structure. The line-and-staff structure is characterized by a. A chain of command line structure coupled with specialists (staff managers) who support the line managers b. Departmentalization by function c. Formal patterns of delegation d. A high degree of centralization e. Clearly defined line and staff positions, with formal relationships between the two The matrix structure features a. Vertical and horizontal lines of authority b. Departmentalization superimposed on a functionally departmentalized organization c. Workers who report to more than one supervisor at a time d. Cross-functional teams that include project managers 12. What is corporate culture? Describe the major types. Corporate culture is generally defined as the inner rites, rituals, heroes, and values of a firm. It can have a powerful influence on how its employees think and act, as well as determine how the public perceives the organization. There are four distinct types of corporate culture: a. Networked culture is a relaxed and informal environment. There is a strong commitment and a feeling of loyalty to the organization, characterized by a base of trust and friendship among employees. b. In the mercenary culture, employees are very intense, focused, and determined to win. In addition to employees working to earn money, feelings of passion, energy, sense of purpose, and excitement for one’s work play a large role in motivating an organization’s employees. c. Fragmented culture suggests that employees do not necessarily become friends but have a high degree of autonomy, flexibility, and equality. Employees in this type of culture consider themselves as working “at” the organization, not “for” it. d. In the communal culture, the positive traits of the networked culture and the mercenary culture are combined. Traits such as friendship, commitment, high focus on performance, and high energy contribute to the organization resulting in an environment where success by anyone is celebrated by all. 13. Which form of organizational structure probably would lead to the strongest informal organization? Why? The matrix organization would probably lead to the strongest informal organization because it allows interaction both vertically and horizontally. On the other hand, a line structure, especially where staff members have very similar positions and status, could also lead to a strong informal organization. 14. What is the role of the informal organization? The role of the informal organization is whatever the group members who created it wish the role to be. As indicated in the text, workers may create an informal group to go bowling, form a union, get a particular manager fired or transferred, or share lunch. The members determine the role and the rules. 7.7c Discussion Questions 1. How does the corporate culture of a local Best Buy store compare to that of a local McDonald’s? Best Buy appears to be a mercenary culture in that its workers appear to be goal oriented and competitive as they sell high-priced electronics products and accessories. McDonald’s is more of a communal culture in that its workers are much more regimented as they work in teams for the common goal of superior customer service. 2. Which kinds of firms probably would operate most effectively as centralized firms? As decentralized firms? Production firms would probably operate most effectively as centralized firms because the degree of specialized technical knowledge required is usually limited. Research firms, by contrast, need to be decentralized because of the great degree and variety of specialized knowledge required to do the job in such firms. 3. How do decisions concerning span of management and the use of committees affect organizational structure? Decisions concerning span of management and the use of committees affect basic organizational structure by altering chains of command, delegation chains, individual authorities, accountabilities, and so on. 4. How might a manager go about formalizing the informal organization? A manager can formalize the informal organization by officially recognizing its presence and structure. He or she can also rewrite the informal organization chart to more closely approximate the formal organization IF that makes sense for the organization. Because the informal organization comes from personal relationships, it might be better to recognize its existence and “work with it” rather than attempting to formalize the informal organization. 7.7d Comments on Video Case 7.1 Suggestions for using this video case are provided in the Pride/Hughes/Kapoor Video Guide. At Numi Organic Tea, Teams and Organizational Culture Are Critical 1. Numi’s customer service manager, Cindy Graffort, says the company is like a “living, breathing organism.” What does she mean? How does the company’s culture reflect this belief? The customer service manager likely means the company is constantly growing and changing to meet the needs of its customers, suppliers, employees, and community. Flexibility is the key to this type of organic growth, and the company’s culture encourages flexibility in its operations—for instance, workers are trained to do more than one task in their department, flextime permits individuals to create their own shifts, and team meetings allow for changes in the way the group gets its work done. 2. Numi’s distribution manager, Dannielle Oviedo, says her philosophy of management means she gets involved in what her team is doing: “I do what I ask folks to do.” Do you think she is a good delegator? Why or why not? The distribution manager seems to be an excellent delegator, as demonstrated by her strategy of training everyone in her department to complete multiple tasks, which grants them authority and responsibility for their work. She also takes time to explain the reasons for changing things, empowering her people to act on their own by giving them the bigger picture of the team’s and the company’s goals. 3. What can you infer about Numi’s basis for departmentalization and its chain of command? Numi’s basis for departmentalization is probably functional, since it clearly has a customer service department and a distribution center. It likely has a marketing department as well, which is probably responsible for its Facebook and MySpace pages and the company blog. Since it operates abroad, it may also have separate domestic and international sales departments. Although Numi does not appear to have many layers of management, its chain of command is likely narrow (few workers per manager) simply because the company is small. 7.7e Comments on Case 7.2 HP’s Corporate Challenge: To Remain Agile and Responsive in an Ever-Changing Environment 1. How is corporate culture likely to affect HP’s ability to integrate acquired companies into its organizational structure? Students will be aware that any company HP acquires will already have a corporate culture in place. If the corporate cultures clash or if employees have negative attitudes toward acquisition, HP will have difficulty integrating a newly acquired company into its organizational structure. As a result, HP’s executives must consider how to build on corporate culture to help an acquisition fit within the parent company’s structure (and with other divisions within HP). Students may suggest other ways that corporate culture might influence HP’s ability to integrate acquisitions. 2. Analyze HP’s use of departmentalization. Why are its choices appropriate for a technology company? HP organizes its business according to function, product, and customer, a multi-pronged approach to departmentalization that allows the company to use its resources productively while being nimble enough to respond to technological developments and customer needs. For example, organizing by function allows HP to make efficient use of centralized technology groups such as data-center operations, rather than duplicating these functions in every unit. Departmentalizing by product allows HP to focus on specific technology products that its customers want and need. Departmentalizing by customer helps HP stay close to its markets, understand any changes, and prepare for opportunities and threats that new technology might bring. 3. Analyze HP’s approach to delegation and decentralization. Are its choices appropriate for a technology company? Why or why not? HP has delegated and decentralized day-to-day decisions so managers of each unit can take action without needing or waiting for upper-management approvals. This is appropriate for a technology company because managers often have to make quick decisions to contend with rapid changes in the business environment, including technical breakthroughs or competitive moves. If managers had to wait for upper-level approvals, HP might miss valuable opportunities or see its business threatened by unexpected environmental shifts. At the same time, HP has centralized some functions (such as research and development). Senior managers for the corporation now decide how many projects HP Labs will pursue at one time and have set standards for evaluating ongoing projects. 7.7f Building Skills for Career Success 1. Social Media Exercise Zappo’s is a company that embraces the notion that customers come first. It is well known that this company is customer-centered. One of the ways that is allows employees to communicate with customers is through it blog www.zapposinsights.com/blog. 1. Take a look at this blog. What can you tell about the corporate culture of Zappo’s? The following information was taken directly from the blog: The words corporate culture still have many definitions to many people. At the base level, corporate culture is how the individual team members, teams, and managers act on a daily basis. If you were to write out a list of actions that you want your people to display on a daily basis, “trust” should be close to the top. One of the phrases that our manager Robert Richman said that has stuck with me is, “The quickest way to trust is through transparency.” This culture of trust and transparency builds employee loyalty and commitment. 2. How do they approach customer service? Do you think it works? Why or why not? The following information was taken directly from the blog: Having a strong company culture is great, but the best culture in the world doesn’t matter if you do not take care of your customers. From the Web site: “We are not an average company, our service is not average, and we don’t want our people to be average. We expect every employee to deliver WOW.” These messages are communicated throughout the organization, and the messages are part of the culture. When a company embraces a philosophy as part of its core, and the philosophy is not just a message but internal to every part of the organization, it works! 2. Journaling for Success Assume that after leaving school, you are hired by your “dream company.” 1. What are the major corporate culture dimensions of your dream company? In answering this question, students should examine the inner rites, rituals, heroes, and values of a firm. Values are probably the most important and easiest to articulate. Some potentially attractive values might include reward for performance, demonstrated caring for employees, advancement from within, etc. In terms of heroes, students might suggest that people with integrity and proven ability ought to be heroes. Rites and rituals might include aspects of socialization that are so important to young people when they leave the ready-made social setting of college. 2. Before accepting a job at your “dream company,” how will you find out about the company’s corporate culture? Information is readily available on the Internet, whether from corporate press releases, Web sites, or news articles from sites such as www.findarticles.com. Better yet, students should try to speak to young employees at the company, or even walk around if possible. 3. From Figure 7.7, identify the type of corporate culture that you prefer and explain why. This is a personal preference question. Students should be encouraged to provide thoughtful reasons for their choice. 4. Thinking back to previous jobs that you have had, describe the worst corporate culture you have ever experienced. Again, this is a personal preference question. The instructor might consider having the students compare answers to see if there are any consistent elements. 3. Developing Critical-Thinking Skills Factors that influence the cultural environment within a company include the attitudes and beliefs of employees; the decision-making process; the communications system; the reward and promotion program; the organizational structure; rules, regulations, and policies; ethnic diversity; risk taking; the training program; and dress and behaviors of employees. To improve a company’s cultural environment, the employees must understand and support the mission of the company. The mission sets the priorities, determines values, and influences decisions. Employee behavior must be consistent with the mission. The communication system must provide the proper flow of information to the sources where it is needed. Managers must be examples that reflect the desired culture. Skills must be continually upgraded, if employees are expected to perform at certain levels. Changes in technology and in the industry can impact companies and be reflected in their cultural environment. 4. Building Team Skills The organization chart on the following page is a line-and-staff structure. There are three staff positions: one payroll and billing position and two appointment coordinators. The other positions are line positions. In this organization, the span of control ranges from zero to seven people. The executive vice-president works with builders to establish their programs and provides the center managers with training, guidelines, and expectations. It is the responsibility of the managers to run their centers in a courteous and profitable manner. 5. Researching Different Careers The answers will vary. Emphasize that honesty is important in completing the assessment. Nothing changes unless a plan is prepared to improve weaknesses. Possessing excellent skills, knowing how to network, understanding one’s accomplishments, and having a positive attitude are key factors in being promoted within a company, as well as in being hired to fill a better position with another company. 7.8 QUIZZES I AND II Quiz I True-False Questions Select the correct answer. 1. T F The step that distributes responsibility and authority within an organization is called delegation. 2. T F Job specialization is the systematic shifting of employees from one job to another. 3. T F The obligation of a worker to accomplish an assigned job or task is called accountability. 4. T F Span of management and span of control are synonymous terms. 5. T F There are fewer conflicts when the areas of responsibility for line managers and staff managers are clearly defined. Multiple-Choice Questions Circle the letter before the most accurate answer. 6. The line of authority extending from the top to the bottom of the organization is known as a(n) a. informal organization. b. line structure. c. line-and-staff structure. d. chain of command. e. matrix structure. 7. In his book, The Wealth of Nations, __________ emphasized the power of specialization. a. Karl Marx b. Victor Vroom c. George Washington d. Adam Smith e. Frederick Taylor 8. Grouping all jobs related to the same organizational activity is departmentalization by a. function. b. employee. c. location. d. customer. e. product. 9. The act of distributing part of a manager’s work and power to workers is called a. departmentalization. b. organizing. c. delegation. d. decentralization. e. job sharing. 10. When authority is spread to lower-level management, a business is said to be a. centralized. b. decentralized. c. progressive. d. tall. e. upwardly mobile. Quiz II True-False Questions Select the correct answer. 1. T F The span of management is the number of subordinates who will report to each manager. 2. T F There seems to be a movement from variety in jobs to more specialization. 3. T F Most small and new organizations base departmentalization on customers. 4. T F When a manager has many subordinates, a wide span of management exists. 5. T F Staff managers usually provide support, advice, and expertise to line managers. Multiple-Choice Questions Circle the letter before the most accurate answer. 6. Two or more people working together in a predetermined way to achieve common goals is known as a(n) a. organization. b. chain of command. c. structure. d. enterprise. e. functional arrangement. 7. All of the following are reasons for job specialization except that a. boredom from repetition is eliminated. b. special equipment can be produced to do a specific job. c. most jobs are too large for one person to handle. d. a specialized job can be efficiently learned. e. there is no loss of time by switching from one operation to another. 8. Employees at a chemical factory are systematically moved every two weeks among three different departments in the organization. This is called a. job trading. b. specialization. c. departmentalization by function. d. job enlargement. e. job rotation. 9. All of the following are departmentalization bases except a. function. b. product. c. location. d. customer. e. employee. 10. A subordinate’s obligation to accomplish an assigned job is called a. accountability. b. responsibility. c. job requirements. d. delegation. e. authority. 7.9 ANSWER KEY FOR QUIZZES I AND II Quiz I True-False Multiple-Choice 1. T 6. d 2. F 7. d 3. T 8. a 4. T 9. c 5. T 10. b Quiz II True-False Multiple-Choice 1. T 6. a 2. F 7. a 3. F 8. e 4. T 9. e 5. T 10. a 7.10 CLASSROOM EXERCISES 7.10a Homework Activities • Developing an Organizational Chart. Have students research their favorite sports team on the Internet and develop an organization chart for its management. Have them identify whether it is a line-and-staff structure, a matrix organization, etc. • Researching and Following a Company Throughout the Course (continuing assignment). Have students research how their company is organized. Does it seem to be organized by function, product, location, customer, or some combination of bases? • Comparing Organizational Charts. Have students contact two very different local organizations (retailing firm, manufacturing firm, church, civic club, etc.) and interview managers to develop organization charts for each organization. How do they account for the similarities and differences between them? 7.10b Classroom Activities • The Delegator Exercise. Make enough copies of “The Delegator” handout for each student. In class, each student should have no more than five minutes to fill out the questionnaire. At the end of five minutes, give students the scoring key and discuss the results. This assessment test helps show each student his or her own willingness to delegate. Every task listed in the test would be a suitable task for an administrative assistant to handle. A variation of this test is to see if students’ answers would change if the administrative assistant had been with them for only six months (or for five years). • What’s My Culture? Group Exercise. Place students into groups of four or five and have them review the snippets of information contained in the handout. They should have approximately 15 minutes to consider the values of each of the five cultures outlined and develop a point of view as to which one or ones they prefer. After 15 minutes, ask each group to report their conclusions and review the pros and cons of each of the cultures outlined. • Virtual Network Structure Exercise. Have students form groups of four. Consider assigning background research such as the tasks faced by a motion picture company, which will give the students an idea of the complexity of tasks involved in bringing a group of contractors together. This is a longer exercise where it might be appropriate to stop at intervals to determine how students are progressing in each of their groups. • Boxed Insert: Dell Restructures to Jump-Start Innovation. Have students read the information in the Going for Success feature. Then go to the Dell Web site at www.dell.com and view the information on its corporate structure. Discuss how Dell is organized and the impact the restructuring will have on the company’s goals. Is this an effective restructuring strategy? Why or why not? 7.10c Exercise Handouts Follow on Next Pages The Delegator You are a manager for a busy, medium-sized company. You have recently been ill, and the doctor has told you that you have to cut your workload in half. Your administrative assistant offers to take over a number of the jobs you currently handle. The assistant has been with you for one year and has been an excellent employee. Which activities will you delegate and to what degree? Respond using the scale below. 0 Do not delegate. 1 Investigate and report back. 2 Investigate and recommend action. 3 Investigate and advise on action planned. 4 Investigate and take action; advise on action taken. 5 Investigate and take action. ____ 1. Reviewing your mail and e mail, deciding what to discard, what to answer directly, and what to pass along to you. ____ 2. Screening your calls and voice mail, deciding who gets to talk to you, who leaves a message, and who is handled personally. ____ 3. Keeping your calendar, setting appointments, and deciding how much time each person needs after discussing it with the caller. ____ 4. Tracking the budget for your department, making sure spending is in line with expectations, and letting you know of any major discrepancy. ____ 5. Coordinating the absence reports for the nonmanagerial employees on the staff, getting the information from each person every two weeks, filling in the forms, and sending them to Human Resources. ____ 6. Calculating the numbers for the monthly revenue reports, generating revenue figures and matching them to expense figures, highlighting the unusual changes for you to discuss in the comments section of the reports. ____ 7. Handling the inquiries from field operations, including trying to find the answer to their issues before discussing them with you. ____ 8. Handling inquiries from clients, including trying to find the answers to their issues before discussing them with you. ____ 9. Supervising the word-processor and the file clerks, coordinating their work loads, and managing their performance, including discipline if necessary. ____ 10. Tracking your projects and reminding you when deadlines are coming or when something needs to be followed up. The scoring for the test is shown here: Level of Delegation Score Do not delegate. 0 points Investigate and report back. 1 point Investigate and recommend action. 2 points Investigate and advise on action planned. 3 points Investigate and take action; advise on action taken. 4 points Investigate and take action. 5 points Overall Score 0–25: Not an effective delegator. You will constantly be monitoring other people’s work rather than getting your own work done. This is a nonproductive stage to be in for long. The exception to this is with new employees, to make sure they can handle their responsibilities. 26–35: You will have more time free but will still spend a great deal of time simply reviewing other people’s work. After a few reviews to make sure the work is done properly, this is a waste of time. 36–45: You understand delegation. While still maintaining some connection with the work of subordinates, you are free to focus on the specifics of your job. 46–50: You may be too far removed from the work of subordinates. In some areas, particularly when it comes to handling client and field concerns, you may want to have information on what happened and what was done. Delegation does not mean ignoring what goes on in your department. What’s My Culture? In your groups, review and discuss the following corporate cultures. If these short descriptions were all you knew about each culture, would you consider working there? Why or why not? Hint: Consider what the “values” (a value being a conviction that certain behaviors are superior to others) of each of these organizations might be. You have 15 minutes. 1. Joe Powers is the personnel director for ABC Company. The primary job of his department is to make sure that all procedures are followed as ordered by top management. All procedures are written down in great detail, and employees are obliged to write reports confirming that they have followed all procedures correctly. 2. Keith Kelly loves being the CEO of the company he founded several years ago and is committed to high levels of rapid growth. Highly charismatic, he trusts his “gut” in decision making and makes sure he is involved in everything. After all, it is his company and he knows best! 3. Vicki Smith enjoys working at XYZ Corp. All the bosses and other employees are her friends. Everybody is so polite, and confrontation is frowned upon. When she was ill, everyone covered for her. She doesn’t have to worry about being criticized, even if her performance is off a little now and then. Better yet, she doesn’t feel pressured to show initiative and figure out new ways to do things. Everybody knows what to do. 4. Heather Huezo is really excited about her new job. She is young, but knows that she will be promoted if she is productive and responsive to the marketplace. She has been looking a long time for a place where people are rewarded based on performance not on seniority. Heather has always enjoyed being the winner; she is certain that will be the case now. 5. Peter has had a little difficulty explaining his new job to his parents, one of whom was a teacher and the other in the military. His job is to develop new ideas for the company, to be creative, and to make mistakes. He has been told if he doesn’t take risks and make any mistakes he will be underperforming. “Just keep the ideas coming, young man! If they are good we will make them work!” What’s My Culture? Instructor Notes 1. ABC most likely has a fragmented culture, where there is very little trust among employees, including top management. In fact, top management appears to be very controlling and suspicious of the activities of their employees and does not seem to trust them to do their job. It is unlikely that students would wish to work in such an organization. Some of the values of this organization might be conformity, obedience, and adherence to rules. 2. Working for Keith Kelly might be great fun. He is charismatic and involved in everything. On the other hand, it is clear that he always believes he is right. Such an attitude might lead to risk taking that could have adverse consequences. Students might wish to work for such a company for a while, but there are real pitfalls in this culture where the boss is king. Some of the values of this organization might be risk taking, respect for the leader, and growth. 3. Wow, on the surface XYZ sounds like the answer to a dream come true for most employees. Upon closer reflection, however, there clearly is no pressure for performance, and innovation does not seem to be valued. In fact, it is possible that slackers are allowed to remain on the payroll. Again, this is not an environment conducive to a good future. The values of this organization might be compassion, concern for employees, and lifelong employment. 4. Heather’s company appears to have some of the characteristics of the “mercenary” culture. The key to reward is performance, and it would appear to be highly competitive. For the right individual, who is willing to perform and enjoys competition, this would be a great place to work. This culture appears to prize competition, performance, and achievement toward a goal. 5. This is a culture focused on entrepreneurship, creativity, and adaptability. It also appears to be very tolerant and flexible as long as people exhibit those characteristics. Again, for the right individual, a great place to work. The values here are creativity, risk taking, flexibility, and tolerance. Virtual Network Structure In a network structure, there are a few permanent administrative employees consisting of top management and clerical services. All other functions, such as manufacturing, marketing, and finance, are contracted out. In this exercise, you are to construct a virtual network for a hypothetical local live entertainment company. This company can put on plays, bring in singers or comedians, or even sponsor sports events. In your teams of four class members, first decide who will be the president, vice president, treasurer, and secretary. Then decide what entertainment services you wish to provide to the college community. List all of the functions that will have to be performed by outside contractors. Be as detailed as possible. Finally, choose a spokesperson to present your findings to the class. Virtual Network Structure Instructor Notes This exercise can take anywhere from 30 minutes to an hour depending on the level of detail you request from the students. You may also wish to provide students with background data regarding how a Hollywood movie gets made, which will give them some idea of the complexity involved. See http://www.essortment.com/lifestyle/hollywoodmovies_sxmv.htm for an example. Encourage each team to first focus on specific types of entertainment determining the functions that must be performed before moving on to a different type. For example, bringing in singers and comedians will generate a different set of function needs than will a visit from a circus. They will quickly find that they cannot get overly ambitious in their efforts. It would also be helpful to have them think in terms of individual tasks, which can later be placed in groups to be done by specific contractors. A variation of this exercise could be to assign each team of students a specific event. The events could include a circus, musical groups, plays, etc. Chapter 7 Video Case: At Numi Organic Tea, Teams and Organizational Culture Are Critical RUNNING TIME: 8:03 Chapter 7 discusses organizational characteristics. An organization is a group of two or more people working together to achieve a common set of goals. Five specific characteristics—job design, departmentalization, delegation, span of management, and chain of command—help to determine what an organization chart and the organization itself look like. Job specialization is the separation of all the activities within an organization into smaller components and the assignment of those different components to different people. Departmentalization is the grouping of jobs into manageable units. Delegation is the assigning of part of a manager’s work to other workers. The span of management is the number of workers who report directly to a manager. There are four basic forms of organizational structure: The line structure, the line-and-staff structure, the matrix structure, and the network structure. Corporate culture has both internal and external effects on an organization. Committees and task forces are used to develop organizational structure within an organization. Informal groups are created by group members to accomplish goals that may or may not be relevant to the organization, and they can be very powerful forces. Concepts Illustrated in the Video • Change • Distribution and Shipping • Effectiveness • Efficiency • Flexibility • Leadership • Lead Times • Supply Chain • Teamwork • Turbulence VIDEO CASE SUMMARY Numi Organic Tea is a seller of premium organic and Fair Trade teas based in Oakland, California. The company’s 25 different tea products and gift packs are sold in Whole Foods and Safeway markets, as well as in individual natural food and grocery stores in the United States and in 20 overseas countries. With a relatively small staff of about 50 people and a recent growth rate of 180 percent a year, Numi needs to remain nimble and responsive. Numi’s distribution center recently came under pressure to reduce lead times on international orders. The company brought on a new distribution center manager to improve efficiency. Although some turbulence resulted from the transition, Numi’s new manager was able to get the job done. By encouraging communication and helping employees to understand how each job fits into the big picture, a sense of teamwork began to grow. Employees were encouraged to learn all critical tasks of the job so they could pitch in during crunch times. This new flexibility reduced lead times for overseas orders to about five days and cut the time for domestic orders in half. Critical-Thinking Questions Using information from the case and the video, answer the following questions: 1. Numi’s customer service manager, Cindy Graffort, says the company is like a “living, breathing organism.” What does she mean? How does the company’s culture reflect this belief? Cindy is referring to the fact that the company is constantly evolving and changing. Not only is the company growing rapidly, but the business demands have also changed drastically in recent years. Numi managers must be able to evolve and grow with the company. A company culture of flexibility and teamwork is essential for the continued success of the company. 2. Numi’s distribution manager, Dannielle Oviedo, says her philosophy of management means she gets involved in what her team is doing: “I do what I ask folks to do.” Do you think she is a good delegator? Why or why not? Delegation assigns part of a manager’s work and power to other workers. To be an effective manager, Dannielle must assign responsibility, grant authority, and create accountability for her employees to complete tasks effectively. Most would agree that Dannielle is a good delegator because she is able to obtain employees’ respect by being a hands-on manager. However, some may argue that because she steps in to do what she asks of other workers, she is not delegating effectively and should perhaps spend less time doing the work and more time delegating the tasks to her team. 3. What can you infer about Numi’s basis for departmentalization and its chain of command? Departmentalization is the process of grouping jobs into manageable units. The common forms of departmentalization are grouping by function, by product, by location, and by customer. As a smaller and newer company, and with a distribution center that operates as a single manageable unit, Numi uses the departmentalization by function method. Chain of command is the line of authority that extends from the highest to the lowest levels of the organization. With Numi’s emphasis on flexibility and teamwork, a shorter chain of command works best to promote efficiency and speed. Chapter 7 Lecture Launcher: I’m in Charge of the Mission Statement VIDEO SUMMARY In this scene, the business partners struggle to determine who is in charge of what. Sylvie urges Jake and Caleb to figure that out by coming up with a formal organizational structure and deciding on their respective roles. She suggests that Jake be given formal leadership responsibility to, as Caleb derisively puts it, “boss people around.” Sylvie assures Caleb that he has strengths as well (his personality and creativity), which give him a certain role to play at Urban Farmz but one that is different from Jake’s. Can he come up with a mission statement that preserves the culture of Urban Farmz and a document that clearly defines the roles in the business? Solution Manual for Business William M. Pride, Robert J. Hughes, Jack R. Kapoor 9781133595854, 9780538478083, 9781285095158, 9781285555485, 9781133936671, 9781305037083