What is Management?

� (Series of steps) A process

� (Four functions) Of planning, organizing, leading and controlling

� (Involves) Human and other organizational resources

� (Result) Towards the effective achievement of organizational goals

Management Functions (Fayol)

� Planning - deciding on an organization’s goals and strategies.

� Organizing - ensuring that tasks have been assigned and the structure of organizational relationships facilitates meeting goals.

� Leading - relating with others so that their work efforts achieve organizational goals.

� Controlling - ensuring actions are consistent with the organization’s values and standards.

Organization

� Goal-directed (planning)

� Deliberately structured (organizing)

� Group of people working together (leading)

� To achieve results (controlling)

What is “Effective” Management?

� Effectiveness

− Choosing the “right” organizational goals to pursue

− Deciding what is “right” - moral obligations

� Efficiency

− The level of output that is achieved with a given level of inputs

− Maximizing output while minimizing inputs

Two Basic Approaches to Define Effective Management

� MAINSTREAM

− MA-terialism

− IN-dividualism

MULTISTREAM

MULTI-ple forms of well-being

For MULTI-ple stakeholders

MAINSTREAM MANAGEMENT

� Maximizing productivity, profitability and competitiveness

� Self-interest serves organizational needs

− Example: sales quotas

MULTISTREAM MANAGEMENT

� Working with stakeholders towards creating a balance among multiple forms of well-being

− Examples: sourcing biodegradable packaging from suppliers who use recycled raw materials

− Working with companies specializing in environmental sanitation

Mainstream vs Multistream (1)

Mainstream Managers

� Perform effectively when organizational efficiency, productivity and competitiveness are maximized

− Planning via measurable goals and rationally-designed strategies

− Organizing via standardization, specialization, and centralization

− Leading via motivating others to achieve organizational goals

− Controlling via vigilant monitoring of performance

Mainstream vs Multistream (2)

Multistream Managers

� Perform effectively when virtues are practiced in community and happiness is achieved.

− Planning via practical wisdom, participation and higher-order goals

− Organizing via courage and experimentation

− Leading via relational self-control and treating members with dignity

− Controlling via fairness and being sensitive to sub-optimal conditions.

Why Study Two Approaches to Effective Management?

� Improve understanding of management

− It is not value-neutral – there are moral responsibilities involved in being a manager

� Develop critical thinking skills

� Reduce bias

� Determine where you and other managers are placed along a continuum

Takeaways from Chapter 1

� Management functions tend to build upon, or link to, each other

� Management roles cut across functions

� Human skills are critical no matter what type of manager one is

� Management perspectives differ depending on one's approach (Mainstream or Multistream)

� No manager is purely Mainstream or purely Multistream in approach – one person may, and often does, decide to undertake a combination of actions

� Management is not value-neutral

A Short History ofManagement Theory and Practice

� Origins: Industrial Revolution (circa 1760 in Britain)

� Characterized by:

− Formation of, and emphasis on, the values of individualism and materialism

− Increase in dominance and size of corporations

� Strong influence of the Church (religious beliefs, faith, values) on economic activity

Five Eras of Management Thought

1910-1930 Organizing: best structure

1930-1950 Leading: roles and styles

1950-1970 Planning: higher productivity

1970-1990 Controlling: orderly workplace

1990-? Reconsidering: paradigm shift

“Reconsidering” Era (1990 to Present)

� Characterized by interest in Multistream management

� Managers are increasingly being looked upon to help resolve many of the major problems facing humankind

− Ecological sustainability

− Social justice

− Physical well-being

− Aesthetic costs

− Spiritual interest

Takeaways from Chapter 2

� Management is not an “exact” science because it deals with people and situations, both of which are unpredictable at times.

� A “real-life” situation may not always be a cut-and-dried example of a particular management theory/concept – one situation may depict several concepts at the same time.

� The meaning of management is constantly being socially (re)constructed over time.

� The historical development of management has been influenced by two crucial factors:

− Emphasis on materialism and individualism

− The increasing number and size of corporations

� Management theories and concepts have evolved at a rapid pace in the 20th century.

� The five eras of management thought have produced distinct concepts due to emphasis on different issues.

− The organizing era (1910-1930) saw the development of basic concepts such as division of labor and bureaucracy.

− The leading era (1930-1950) focused on the importance of recognizing the informal organization, treating people with dignity and respect, and developing teams and groups.

− The planning era (1950-1970) emphasized the need to manage organizational inputs and outputs, thereby laying the foundation for future work in strategic management.

− The controlling era (1970-1990) highlighted how managers influence behavior by setting the organization's values, standards, and culture.

− The reconsidering era (1990 to present) reflects a shift away from the materialist – individualist worldview and toward Multistream management theory and practice.

� There seems to be a growing realization that the “one best way” of doing things in any organization may apply in terms of efficiency, but not always in terms of effectiveness.

Three Basic Levels of the Environment for Managers

Task Environment of Management

� Has the greatest immediate influence on

managers

� Key Stakeholders (persons/groups within/outside the organization who are directly affected by its actions, and have a stake in its performance)

− Customers

− Members

− Owners

− Other organizations (suppliers, competitors)

Mainstream Approach to Tasks

� Serving customers benefits the organization's financial viability (more customers = more profit)

� Members (managers, staff) should be as productive as possible (low input, high output = efficient)

� Managers maximize the owners' financial well-being (bottom line: profitability)

� Managers try to gain relative power over other organizations (win-lose situation)

Mainstream Aspects of Relationships with Key Stakeholders in the Task Environment

Multistream Approach to Tasks

� An organization's financial viability permits serving customers

� Members should be engaged and productive (effective – doing the “right” thing)

� Managers serve owners' multiple forms of well-being

� Managers nurture mutually beneficial relationships among organizations (win-win)

Multistream Aspects of Relationships with Key Stakeholders in the Task Environment

Macro Environment of Management

� Key Dimensions

− Sociocultural (norms, customs, values)

− Natural (physical environment)

− Political-legal (laws, rules, governments)

− Economic-technological (financial resources, equipment, skills)

Mainstream Management

� Managers nurture and satisfy materialist-individualist values and norms

� Managers find inexpensive inputs and inexpensive means to dispose of waste

� Managers lobby for their own rights and financial self-interests

� Acquisitive economics – focuses on short term, promotes financial self-interests, money-based

Mainstream Aspects of Relationships with Key Dimensions of the Macro Environment

Multistream Management

� Managers nurture values and norms promoting overall well-being

� Proactive approach for sustainable development (e.g., biodegradable inputs, organic products, recycling)

� Managers lobby for stakeholder rights and interests

� Sustenance economics – focuses on long term, community interests, overall well-being

Multistream Aspects of Relationships with Key Dimensions of the Macro Environment

Common Considerations:Task Environment

All managers must pay attention to key

stakeholders to:

– Ensure that they are in tune with customer needs and want to serve them adequately

– Attract and retain an adequately qualified workforce

– Ensure that owners’ needs are met

– Develop and maintain relationships with suppliers, competitors and neighbors

Common Considerations: Macro Environment

Managers must pay attention to the key dimensions

of their macro environment to:

– Monitor socio-cultural trends and changes in demographics, health care, education and other social

institutions

– Consider how sensitive they will be with respect to the

natural environment

– Keep informed of developments in the political-legal environment

– Pay close attention to economic opportunities and

threats and remain technologically competitive

Some International Business Terms

� Multinational Corporation (MNC)

− an organization that receives more than 25 percent of its total sales revenue from outside its home country

− manages production facilities located in different countries

� to produce the same or similar products, or

� to produce products that serve as input to its production establishments in other country/countries

− Examples: McDonald's, Microsoft

− The first MNC was the East India Co.

� Globalization

− changes in the four dimensions of the external environment resulting in increased interdependence and integration among people and organizations around the world

− from a Mainstream perspective, increased global trade improves economic condition of everyone because each region can specialize in its strengths (competitive advantage)

Ways to Internationalize an Organization

� Exporting

− an organization manufactures products in its home country and transports them to other countries for sale there

� Importing

− a finished product is brought in from another country for resale domestically

� Licensing

− an organization in one country sells specific resources (e.g., patent, trademark) to an organization in another country

� Franchising

− a franchisor (owner) in one country sells to a franchisee (“investor”) in another country a complete package required to set up an organization

� Strategic Alliance

− managers from organizations in at least two countries agree to pool their organizations’ resources and “know-how” in order to share the risks and rewards for developing a new market or product

� Joint Venture

− partnering organizations agree to form a separate, independent, jointly-owned organization

� Foreign Subsidiaries

− business operations in special locations with certain advantages (e.g., lower taxes/duty rates, lower business costs, etc.)

Four Dimensions of the International Environment

� Socio-Cultural

− National culture vs. Self-reference

� Economic-Technological

− Use of technology (e.g., four modes of supply)

− Flow of jobs, skills, information, money

� Natural (physical environment)

� Political-Legal

− National laws and regulations

− Trade agreements

− Institutions

Mainstream View of Relationships Between the Four Dimensions of the International Environment

Multistream View of Relationships Between the Four Dimensions of the International Environment

Overview of Hofstede’s Five Dimensions of National Culture

Hofstede’s Dimensions of National Culture

� Individualism vs. Collectivism

− the extent to which the cultural emphasis is on the individual’s self-interests versus the interests of the group

� Materialism vs. Quality of Life

− the extent to which the cultural emphasis is on acquiring material possessions, money, and extrinsic rewards versus relationships, social welfare, and intrinsic enjoyment and meaningful work

Relative Emphasis of Countries on Hofstede’s Materialism/Individualism Scores

Ethics

� Ethics

− A set of principles or moral standards that differentiate right from wrong

� Management Ethics

− The study of moral standards and how they influence managers’ actions

� Emphasis on Ethics

− A rapidly changing world

− Unethical decisions by managers are receiving more attention

− Managers are moral agents

Four Types of Sources of Ethics

� Ethical Climate

− The informal shared perceptions of what are appropriate practices and procedures

Levels of Personal Moral Development

� Pre-conventional (rewards and punishment)

� Conventional (social norms, external standards)

� Post-conventional (use of reason, conscience)

Moral Points-of-View and Ethical Decision-Making

Mainstream Multistream

Recognize as ethical (awareness) issues those which threaten or promote owner’s wealth

Recognize as ethical (awareness) issues those which threaten or promote overall well-being

Gather information and develop alternatives that are consistent with facts and policies

Gather information and develop alternatives that are consistent with listening to others

Evaluate information and make ethical choices that maximizes profit within legal bounds

Evaluate information and make ethical choices that nurture overall well-being

Implement ethical decisions, which may require courageously challenging norms

Implement ethical decisions, which often take the form of courageous experiments

Mainstream Moral Point-of-View

� Overarching Goals

− To maximize productivity, efficiency, profitability, and competitiveness

� General Rationale

− Consequentialist utilitarianism—actions that benefit the greatest number are ethical

� Key Practices

− Effective management focuses the functions of management on promoting measurable improvements in productivity or profits

Mainstream Moral Philosophies� Consequentialist Theory

− Considers the consequences of an action in determining what is ethical

� Utilitarianism

− Holds that ethical managers strive to produce “the greatest good for the greatest number”

� Best “generic” measure of good is wealth or money

� Reward people for investing their resources into economic activity

� Egoism

− Utility of an option depends on the consequences for the decision maker in deciding which option “benefits me the most”

Multistream Point-of-View

� Overarching Goals

− To provide meaningful work

− To operate sustainably

− To be attentive to internal and external stakeholders

− To facilitate servant leadership

� General Rationale

− Virtue Theory – practicing and fostering virtuous character is the best “generic” way to improve overall societal well-being

� Key Practices

− Promoting overall well-being in community

Multistream Moral Philosophies

� Virtue Theory

− Acting virtuously is the best “generic” way to improve overall societal well-being

� Key Virtues

− Serving others

− Fostering human development through work

− Nurturing community by including all stakeholders

− Balancing human and ecological concerns (sustaincentrism)

OSR vs. CSR

� Organization-specific Responsibility (OSR)

− Managers' obligation to ensure that plans serve the financial interests and goals of the organization's owner(s)

� Corporate Social Responsibility (CSR)

− Managers' obligation to act in ways that protect and improve the welfare of society over and above the owners' self-interests

− Social audit - a systematic analysis of the effect an organization is having on its stakeholders and society as a whole

Moral Points-of-View and Management Functions

Mainstream Function Multistream

Focuses on organizational specific responsibilities Planning Focuses corporate social

responsibilities

Emphasizes deterrence of negative behavior in its structures and systems Organizing

Emphasizes promotion of positive behavior

Utilizes a transactional form of leadership to evoke ethical behavior Leading

Promotes and models servant leadership

Stresses compliance to formal and informal codes and rules of behavior Controlling

Stresses commitment to growth and empowerment

Takeaways from Chapter 5

� Management is value-laden

− Managers bring their values to bear when making management actions/decisions

− The values of managers and stakeholders affect the organization and the task environment

− Collective values (private/public, formal/informal) affect the macro and international environments of business

� However, we are not “demonizing” Mainstream management or “idolizing” Multistream management

− Choice of approach depends on one's values

Entrepreneurship

� Entrepreneurship

− Conceiving an opportunity to offer new or improved goods or services

− Showing the initiative to pursue that opportunity

− Making plans

− Mobilizing the resources necessary to convert the opportunity into reality

� “Intrapreneurship”

− Examples: work teams developing new products; members leaving an organization to form a new organization (Intel, Hewlett Packard, YouTube)

The Four Steps of the Entrepreneurial Process

Factors That Influence the Likelihood of Exhibiting Entrepreneurial Initiative

Life-Path Circumstances

� Time of Transition

− Graduating from school

− Getting married, starting a family

− Losing a job

� Push Factors (pushed away from “status quo”)

− Current job “unsatisfying” (or having a hard time finding “meaningful work”)

− Women and cultural minorities

� Pull Factors (pulled into entrepreneurial ventures)

− Positive influences (financial support, encouragement)

− Intrapreneurship

Four Steps of Mainstream Entrepreneurship

Step 1: Identifying opportunities Envisioning offering a product or service that meets a need that people are willing to pay for.

Step 2: Showing entrepreneurialinitiative

Entrepreneurs who, because of their personality traits, have a predisposition to see financial opportunities, a need for achievement, and self-confidence coupled with life-path circumstances (transition, push, pull).

Step 3: Developing plans Plans for the new venture emphasize financial costs and benefits.

Step 4: Mobilize resources Focus is especially on attracting the required start-up financing

Four Steps of Multistream Entrepreneurship

Step 1: Identifying opportunities Envisioning offering a product or service that meets or eliminates needs that people have.

Step 2: Showing entrepreneurial initiative

Entrepreneurs who, because of their personality traits, have a predisposition to see opportunities that enhance multiple forms of well-being, a need to help, and confidence in their community coupled with life-path circumstances (transition, push, pull).

Step 3: Developing plans Plans for the new venture emphasize financial, social and ecological costs and benefits.

Step 4: Mobilize resources Focus is especially on attracting support from other stakeholders.

Comparing Mainstream and Multistream Plans for New Ventures

The “Sweet Spot” in the Triple-bottom-line Approach

Takeaways from Chapter 6

� Entrepreneurship, like management, is a process involving a series of steps

� Identifying the right opportunity to offer a product or service is just as important as conceiving/ thinking of the product/service offered

� Be aware of trends and social movements in the wider environment

− Business practices: Social entrepreneurship, Corporate Social Responsibility

− Economic trends: microfinancing, boom/bust cycle in the economy

− Political developments: anti-corruption, democratization