Management tenth edition

Stephen P. Robbins Mary Coulter

Dr Pham Hung Cuong

1–1
Reminding…
• On time
• No good reasons
• Taking notes
• Taking books/textbook/notes/slides
• No talking, no cellphone in class

1–2
 Learning Outcomes
1. Describe what management is, why
management is important, what managers do,…
2. Distinguish among planning, organizing,
leading, and controlling
3. Explain why managers should strive to create
ethical organizational cultures
4. Explain how managers group tasks into jobs
that are motivating and satisfying for employees
5. Explain why groups and teams are key
contributors to organizational effectiveness

1–3
 Content
• Chap 1: Introduction to Management
• Chap 2: Management History
• Chap 3: Organizational Culture and Environment
• Chap 4: Managing in a Global Environment
• Chap 5: SR and Managerial Ethics
• Chap 6: Managers as Decision Makers
• Chap 7: Foundations of Planning
• Chap 8: Strategic Management
• Chap 9: Organizational Structure and Design

1–4
 Content
• Chap 10: Human Resources Management
• Chap 11: Managing Teams
• Chap 12: Managing Change and Innovation
• Chap 13: Understanding Individual Behavior
• Chap 14: Managers and Communications
• Chap 15: Motivating Employees
• Chap 16: Managers As Leaders
• Chap 17: Introduction to controlling
• Chap 18: Managing operations

1–5
 References
1. Stephen P. Robbins/ Mary Coulter, 10th edition,
Prentice Hall, 2008.
2. Stephen Robbins/ Mary Coulter/ Rolf Bergman/
Ian Stagg, Prentice Hall, 2008.
3. Essentials of Contemporary Management, 3rd
edition, Gareth R. Jones/ Jennifer George,
McGraw-Hill, 2007.
4. Management: A Practical Introduction, Kinicki/
Williams, McGraw-Hill, 2008.
5. Principles of management, Charlse. W.L Hill/
Steven L. McShane, McGraw-Hill, 2008
1–6
 Course Evaluation
1. Attendance (10%)
2. Class Activities, Midterm, Presentation (30%)
3. Final paper (60%)

1–7
 Presentation
1. Group working (8-9 students/group)
2. Softcopy (phamhungcuong.cs2@ftu.edu.vn)
3. Evaluation:
- Content 20%
- IT skills 20%
- Contributions 20%
- Speaking skill 20%
- Case study 20%
4. Time max: 60 minutes/group
5. Schedule as planned

1–8
 Course schedule
Chap Name Group Date

1 Introduction to Management 9/11

2 Management History Reading

Organizational Culture and
3 11/11
Environment
4 Managing in a Global Environment

5 SR and Managerial Ethics Reading

6 Managers as Decision Makers 13/11

7 Foundations of Planning 16/11

8 Strategic Management Reading

Organizational Structure and
9 18/11
Design 1–9
 Course schedule
Chap Name Group Date

10 Human Resources Management 20/11

11 Managing Teams 25/11

Managing Change and
12 27/11
Innovation
13 Understanding Individual Behavior Reading

14 Managers and Communications 30/11

15 Motivating Employees 02/12

16 Managers As Leaders 04/12

17 Introduction to controlling 07/12

18 Managing operations Reading

1–10
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Introduction to
1 Management
and
Organizations
1–11
Learning outcomes
Follow this learning outline as you read and study this
chapter.
1.1 Who are managers?
1.2 What is management?
1.3 What do managers do?
1.4 What is an organization?
1.5 Why study management?

1–12
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Management
2 History

2–13
Learning outcomes
Follow this learning outline as you read and study this
chapter.

2.1 Historical background of management

2.2 Classical approach
2.3 Quantitative approach
2.4 Behavioral approach
2.5 Contemporary approach

2–14
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Organizational
3 Culture and
Environment
3–15
Learning outcomes
Follow this learning outline as you read and
study this chapter.
3.1 The manager: omnipotent or symbolic?
3.2 Organizational culture
3.3. Current organizational culture issues
3.4 The environment

3–16
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Managing in a
4 Global
Environment
4–17
Learning outcomes
Follow this learning outline as you read and study this
chapter.

4.1 What’s your global perspective?

4.2 Understanding the global environment
4.3 Doing business globally
4.4 Managing in a global environment

4–18
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Social
5 Responsibility and
Managerial Ethics
5–19
Learning outcomes
Follow this learning outline as you read and study this
chapter.

5.1 What is social responsibility?

5.2 Green management
5.3 Managers and ethical behavior
5.4 Encouraging ethical behavior
5.5 Social responsibility and ethics issues in
today’s world

5–20
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managers
6 as
Decision Makers
6–21
Learning outcomes
Follow this learning outline as you read and
study this chapter.

6.1 The decision-making process

6.2 Managers making decisions
6.3 Types of decisions and decision-making
conditions
6.4 Decision-making styles
6.5 Effective decision making in today’s world

6–22
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Foundations of
7 Planning

7–23
Learning outcomes
Follow this learning outline as you read and study this
chapter.

7.1 The what and why of planning

7.2 Goals and plans
7.3 Setting goals and developing plans
7.4 Contemporary issues in planning

7–24
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Strategic
8 Management

8–25
Learning outcomes
Follow this learning outline as you read and study this
chapter.
8.1 Strategic management
8.2 The strategic management process
8.3 Corporate strategies
8.4 Competitive strategies
8.5 Current strategic management issues

8–26
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Organizational
9 Structure and
Design
9–27
Learning outcomes
Follow this learning outline as you read and study this
chapter.
9.1 Defining organizational structure
9.2 Mechanistic and Organic structures
9.3 Common organizational designs

9–28
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managing
10 Human
Resources
10–29
 Learning outcomes
Follow this learning outline as you read and study this
chapter.
10.1 The human resource management process
10.2 Identifying and selecting competent employees
10.3 Providing employees with needed skills
and knowledge
10.4 Retaining competent, high performing employees
10.5 Contemporary issues in managing human
resources

10–30
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managing
11 Teams

11–31
Learning outcomes
Follow this learning outline as you read and study this
chapter.
11.1 Groups and group development
11.2 Work group performance and satisfaction
11.3 Turning groups into effective teams
11.4 Current challenges in managing teams

11–32
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Managing Change

12 and
Innovation
12–33
Learning outcomes
Follow this learning outline as you read and study this
chapter.
12.1 The change process
12.2 Managing organizational change
12.3 Managing resistance to change
12.4 Contemporary issues in managing change
12.5 Stimulating innovation

12–34
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Understanding
13 Individual
Behavior
13–35
Learning outcomes
Follow this learning outline as you read and study this
chapter.
13.1 Focus and goals of individual behavior
13.2 Attitudes and performance
13.3 Personality
13.4 Learning
13.5 Contemporary OB issues

13–36
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managers
14 and
Communications
14–37
Learning outcomes
Follow this learning outline as you read and study this
chapter.
14.1 The nature and function of communication
14.2 Methods of interpersonal communication
14.3 Effective interpersonal communication
14.4 Organizational communication
14.5 Information technology and communication
14.6 Communication issues in today’s organization

14–38
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Motivating
15 Employees

15–39
Learning outcomes
Follow this learning outline as you read and study this
chapter.
15.1 What is motivation?
15.2 Early theories of motivation
15.3 Contemporary theories of motivation
15.4 Current issues in motivation

15–40
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managers As
16 Leaders
16–41
Learning outcomes
Follow this learning outline as you read and study this
chapter.
16.1 Who are leaders and what is leadership
16.2 Early leadership theories
16.3 Contingency theories of leadership
16.4 Contemporary views of leadership
16.5 Leadership issues in the twenty-first
century

16–42
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Introduction
17 to
Controlling
17–43
Learning outcomes
Follow this learning outline as you read and study this
chapter.
17.1 What is control and why is it important?
17.2 The control process
17.3 Controlling organizational performance
17.4 Tools for measuring organizational
performance
17.5 Contemporary issues in control

17–44
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managing
18 Operations

18–45
Learning outcomes
Follow this learning outline as you read and study this
chapter.
18.1 The role of operations management
18.2 What is value chain management and why is
it important?
18.3 Managing operations by using value chain
management
18.4 Current issues in operations management

18–46
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Introduction to
1 Management
and
Organizations
1–47
Learning outcomes
Follow this learning outline as you read and study this
chapter.
1.1 Who are managers?
• Explain how managers differ from non-managerial
employees
• Describe how to classify managers in organizations
1.2 What is management?
• Define management
• Explain why efficiency and effectiveness are important
to management

1–48
Learning outcomes
1.3 What do managers do?
• Describe the four functions of management
• Explain Mintzberg’s managerial roles
• Describe Katz’s three essential managerial skills and
how the importance of these skills changes
depending on managerial level
• Discuss the changes that are impacting manager’s
jobs
• Explain why customer service and innovation are
important to the manager’s job

1–49
Learning outcomes
1.4 What is an organization?
• Explain the characteristics of an organization
• Describe how today’s organizations are structured
1.5 Why study management?
• Discuss why it’s important to understand
management
• Explain the universality of management concept
• Describe the rewards and challenges of being a
manager

1–50
1–50
Who are managers?
• Manager
 Someone who coordinates and oversees the work of
other people so that organizational goals can be
accomplished.

1–51
Classifying managers
• First-line managers
 Individuals who manage the work of non-managerial
employees.
• Middle managers
 Individuals who manage the work of first-line
managers.
• Top managers
 Individuals who are responsible for making
organization-wide decisions and establishing plans
and goals that affect the entire organization.

1–52
Exhibit 1–1 Women in managerial positions around
the world

Women in Women in Top

Management Manager’s Job

Australia 41.9 percent 3.0 percent

Canada 36.3 percent 4.2 percent
Germany 35.6 percent N/A
Japan 10.1 percent N/A
Philippines 57.8 percent N/A
United States 50.6 percent 2.6 percent

1–53
Exhibit 1–2 Managerial levels

1–54
What is management?

• Management involves coordinating and

overseeing the work activities of others so that
their activities are completed efficiently and
effectively.

1–55
What is management?
• Managerial concerns
 Efficiency: Hiệu quả
 “Doing things right” Doing things right: làm đúng cách
Tiết kiệm thgi, kinh phí, nguồn
– Getting the most output
lực, chi phí
for the least inputs Doing the right things: làm đúng
 Effectiveness: Năng suất việc
Đi đúng hướng, định hướng đã
 “Doing the right things” lựa chọn -> phải trả giá rất nhìu
– Attaining organizational
goals

1–56
Exhibit 1–3 Effectiveness and Efficiency in
management

1–57
What do managers do?
• Three approaches to defining what managers do
 Functions they perform
 Roles they play
 Skills they need

1–58
What do managers do?
• Functions manager’s perform
 Planning
 Defining goals, establishing strategies to achieve goals,
developing plans to integrate and coordinate activities
 Organizing
 Arranging and structuring work to accomplish organizational
goals
 Leading
 Working with and through people to accomplish goals
 Controlling
 Monitoring, comparing, and correcting work
Thực hiện cv thông qua nhân viên, ko là ng trực tiếp làm mà
thông qua cấp dưới,

1–59
Exhibit 1–4 Management functions

1–60
What do managers do?
• Roles manager’s play
 Roles are specific actions or behaviors expected of a
manager.
 Mintzberg identified 10 roles grouped around
interpersonal relationships, the transfer of information,
and decision making.

1–61
What do managers do?
• Management roles
(Mintzberg)
 Interpersonal roles
 Figurehead, leader, liaison
 Informational roles
 Monitor, disseminator,
spokesperson
 Decisional roles
 Entrepreneur, disturbance
handler, resource allocator,
negotiator

1–62
What do managers do?
(Mintzberg)
• Actions
 thoughtful thinking
 practical doing

1–63
 Exhibit 1.5 Mintzberg’s managerial roles
• Interpersonal roles
• Figurehead
• Leader
• Liaison
• Informational roles
• Monitor
• Disseminator
• Spokesperson
• Decisional roles
• Entrepreneur
• Disturbance handler
• Resource allocator
• Negotiator
Adapted from Mintzberg, Henry, The Nature of Managerial Work, 1st Edition, © 1980, pp. 93–94..

1–64
What do managers do?

• Skills managers need

 Technical skills
 Knowledge and proficiency in a specific field
 Human skills
 The ability to work well with other people
 Conceptual skills
 The ability to think and conceptualize about abstract and
complex situations concerning the organization

1–65
Exhibit 1–6 Skills needed at different
management levels

1–66
How is the manager’s job
changing?
• The increasing importance of customers
 Customers: the reason that organizations exist
 Managing customer relationships is the responsibility of all
managers and employees.
 Consistent high quality customer service is essential for
survival.
• Innovation
 Doing things differently, exploring new territory, and
taking risks
 Managers should encourage employees to be aware of and
act on opportunities for innovation.

1–67
Exhibit 1–8
Changes
affecting a
manager’s job

1–68
What is an organization?
• An organization defined
 A deliberate arrangement of people to accomplish
some specific purpose (that individuals independently
could not accomplish alone).
• Common characteristics of organizations
 Have a distinct purpose (goal)
 Composed of people
 Have a deliberate structure

1–69
Exhibit 1–9 Characteristics of organizations

1–70
Why study management?
• The value of studying management
 The universality of management
 Good management is needed in all organizations.
 The reality of work
 Employees either manage or are managed.
 Rewards and challenges of being a manager
 Management offers challenging, exciting and creative
opportunities for meaningful and fulfilling work.
 Successful managers receive significant monetary rewards
for their efforts.

1–71
Exhibit 1–10 Universal need for management

1–72
Exhibit 1–11 Rewards and challenges of
being a manager

1–73
 Terms to know
• manager • management roles
• first-line managers • interpersonal roles
• middle managers • informational roles
• top managers • decisional roles
• management • technical skills
• efficiency • human skills
• effectiveness • conceptual skills
• planning • organization
• organizing • universality of
• leading management
• controlling

1–74
 Successful manager?
Tö duy, tri thöù
c,

Taàm nhìn

Bieát Laéng nghe

Taøi aaên noù

i,
bieát ñoäng vieân

Coùtaâm,
coùtraù
c h nhieäm vôù i nhaân
Kyõnaêng
vieân, coäng ñoàng

Kheù
o leù
o trong
coâng vieäc

Vöõng vaøng

1–75
Who for manager?

1–76
Who for manager?

1–77
Who for manager?

1–78
Case study 1
There were 3 secretaries in an office. Deputy director
asked one of them for typing his handwritten text. A little
later, director also asked this secretary for typing his
handwritten text. The secretary said to the director that
she had to type for deputy director’s text. As a result, he
scolded her. “According to you, who has the higher
position, deputy director or director? Do you want to go
back to school?” Then, she typed for the director’s text.
Thus, she couldn’t finish the deputy director’s text in
time. 
1) What do you think about the Director & Deputy Director?
2) As a secretary, what will you do for enterprise culture?

1–79
Case study 2
An economy professor was invited to a hospital for a
management lecture. At the end of the lecture, Prof.
Doctor said that those knowledge was only suitable for
companies. They didn’t need management because they
were doctors.
1)If you were the economy professor, what would you
explain to let the doctor agree with you?
2)Do you think that a Prof. Doctor can speak like above?
Please explain the reasons for his statement?
3)If management is really important, why is it denied in
non-governmental organizations?

1–80
Case study 3
With support of an international organization, a health center was built in
Vietnam. During progress of preparation, some health workers were sent
to refresher courses in foreign countries. However, according to the
international organization’s requirement, it’s necessary to have a short-
term training course for all leaders and staff about management. A famous
professor in management field of a university was invited to present in this
management training course. He presented management theory,
emphasized importance of management in all organizations, instructed
methods to increase management effects. At the end of the training
course, 2 doctors discussed with each other. One of them said: “Although
we are so busy, the organization asks us for take part in a course which is
not relevant to us.” The other one responded: “Actually, what the
professor presented was also interesting but it’s suitable to people in
enterprises more than us.” What do you think about the conversation
between these 2 doctors? According to you, is management necessary for
non-government organization as the above health center? Why?

1–81
1) In the twenty-first century the four functions of
management are:
A) monitoring, organizing, suggesting, and
accommodating employees.
B) planning, organizing, controlling, and leading
employees.
C) planning, organizing, suggesting, and
accommodating employees.
D) monitoring, suggesting, journaling, and
accommodating employees.

1–82
2) Don MacKinnon, the person in charge of "Hear
Music" has been given goals related to the rollout and
sales of this subsidiary of Starbucks.  His success at
implementing the strategy will be assessed by
comparing actual performance against the goals. This
comparison is known as:
A) planning
B) organizing
C) implementing
D) controlling

1–83
3) The three main types of managers include:
A) general, specific, and frontline managers.
B) general, specific, and detailed managers.
C) general, functional, and frontline managers.
D) general, functional, and detailed managers.

1–84
4) Because GE is organized into different divisions, one
for each business, it is known as a:
A) multidivisional enterprise
B) poorly managed firm
C) multi-business unit
D) multi-corporate concern

1–85
5) The most demanding issues that managers encounter
in their first year on the job all have to do with:
A) learning the financial ratios of their department
B) learning to interface with the government
C) learning to scan the environment for things that
would influence their business strategy
D) people challenges

1–86
6) A successful person in which of the following
positions may be promoted to a management position?
A) a scientist
B) an accounting professional
C) an engineer
D) All of the above may lead to successful management
positions

1–87
7) One of the earliest and most enduring descriptions of
managerial roles comes from:
A) Adam Smith
B) Peter Drucker
C) Jack Welsh
D) Henry Mintzberg

1–88
8) In a spokesperson managerial role, a CEO may persuade
investment analysts that his or her company is pursuing a
good strategy.  What is the likely outcome of this?
A) The analysts may write a favorable investment report
that leads to a decrease in the company's stock price
B) The analysts may write a favorable investment report
that leads to an increase in the company's stock price
C) The analysts may write a favorable investment report
that increases the difficulty of raising new capital
D) The analysts may write a favorable investment report
that makes it difficult to issue new stock

1–89
9) Competencies include:
A) skills, IQ, and values
B) skills, IQ, and motivational preferences
C) IQ, values, and motivation
D) skills, values, and motivational preferences

1–90
10) When call center managers spend much of their
time monitoring customer calls and giving employees
feedback about how to improve their dialogue with
customers in the future, these managers are using
__________ skills.
A) technical
B) conceptual
C) situational
D) ethical

1–91
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Management
2 History

2–92
Learning outcomes
Follow this learning outline as you read and study this
chapter.
2.1 Historical background of management
• Explain why studying management history is important
• Describe some early evidences of management practice
• Describe two important historical events that are significant to
the study of management
2.2 Classical approach
• Describe the important contributions made by Frederick W.
Taylor and Frank and Lillian Gilbreth
• Discuss Fayol’s and Weber’s contributions to management
theory
• Explain how today’s managers use scientific management and
general administrative theory
2–93
Learning outcomes
2.3 Quantitative approach
• Explain what the quantitative approach has
contributed to the field of management
• Describe total quality management
• Discuss how today’s managers use the quantitative
approach
2.4 Behavioral approach
• Describe the contributions of the early advocates of
OB
• Explain the contributions of the Hawthorne Studies to
the field of management
• Discuss how today’s managers use the behavioral
approach

2–94
Learning outcomes
2.5 Contemporary approach
• Describe an organization using the systems approach
• Discuss how the systems approach helps us
understand management
• Explain how the contingency approach is appropriate
for studying management

2–95
Historical background of
management
• Ancient management
 Egypt (pyramids) and China (Great Wall)
 Venetians (floating warship assembly lines)
• Adam Smith
 Published The Wealth of Nations in 1776
 Advocated the division of labor (job specialization) to
increase the productivity of workers
• Industrial revolution
 Substituted machine power for human labor
 Created large organizations in need of management
2–96
Exhibit 2–1 Major approaches to management

2–97
Major approaches to
management
• Classical
• Quantitative
• Behavioral
• Contemporary

2–98
Scientific management
• Fredrick Winslow Taylor
 The “father” of scientific management
 Published Principles of Scientific Management (1911)
 The theory of scientific management
– Using scientific methods to define the “one best way” for a
job to be done:
• Putting the right person on the job with the correct tools
and equipment
• Having a standardized method of doing the job
• Providing an economic incentive to the worker

2–99
 Exhibit 2–2 Taylor’s scientific management principles

1. Develop a science for each element of an individual’s work, which will

replace the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the worker.
3. Heartily cooperate with the workers so as to ensure that all work is done
in accordance with the principles of the science that has been developed.
4. Divide work and responsibility almost equally between management
and workers. Management takes over all work for which it is better
fitted than the workers.

2–100
General administrative theory
• Henri Fayol
 Believed that the practice of management was distinct
from other organizational functions
 Developed principles of management that applied to
all organizational situations
• Max Weber
 Developed a theory of authority based on an ideal
type of organization (bureaucracy)
 Emphasized rationality, predictability, impersonality, technical
competence, and authoritarianism

2–101
Scientific management (cont’d)
• Frank and Lillian Gilbreth
 Focused on increasing worker productivity through
the reduction of wasted motion
 Developed the microchronometer to time worker
motions and optimize work performance
• How do today’s managers use scientific
management?
 Use time and motion studies to increase productivity
 Hire the best qualified employees
 Design incentive systems based on output

2–102
Exhibit 2–3 Fayol’s 14 principles of
management
1. Division of work 7. Remuneration

2. Authority 8. Centralization

3. Discipline 9. Scalar chain

4. Unity of command 10. Order

5. Unity of direction 11. Equity

6. Subordination of 12. Stability of tenure

individual interests to of personnel
the general interest 13. Initiative
14. Esprit de corps
2–103
Exhibit 2–4 Weber’s bureaucracy

2–104
Quantitative approach to
management
• Quantitative approach
 Also called operations research or management
science
 Evolved from mathematical and statistical methods
developed to solve WWII military logistics and quality
control problems
 Focuses on improving managerial decision making by
applying:
 Statistics, optimization models, information models, and
computer simulations

2–105
Exhibit 2–5 What is quality management?
Intense focus on the customer
Concern for continual improvement
Process-focused
Improvement in the quality of everything
Accurate measurement
Empowerment of employees

2–106
Understanding organizational
behavior
• Organizational behavior (OB)
 The study of the actions of people at work; people are
the most important asset of an organization
• Early OB advocates
 Robert Owen
 Hugo Munsterberg
 Mary Parker Follett
 Chester Barnard

2–107
Exhibit 2–6 Early advocates of OB

2–108
The Hawthorne Studies
•A series of productivity experiments conducted
at Western Electric from 1924 to 1932.
•Experimental findings
Productivity unexpectedly increased under imposed
adverse working conditions.
The effect of incentive plans was less than
expected.
•Research conclusion
Social norms, group standards and attitudes more
strongly influence individual output and work behavior
than do monetary incentives.

2–109
The systems approach
• System defined
 A set of interrelated and interdependent parts
arranged in a manner that produces a unified whole.
• Basic types of systems
 Closed systems
 Are not influenced by and do not interact with their
environment (all system input and output is internal).
 Open systems
 Dynamically interact to their environments by taking in inputs
and transforming them into outputs that are distributed into
their environments.

2–110
Exhibit 2–7 The organization as an open
system

2–111
Implications of the systems
approach
• Coordination of the organization’s parts is
essential for proper functioning of the entire
organization.
• Decisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
• Organizations are not self-contained and,
therefore, must adapt to changes in their
external environment.
2–112
The contingency approach
• Contingency approach defined
 Also sometimes called the situational approach.
 There is no one universally applicable set of
management principles (rules) by which to manage
organizations.
 Organizations are individually different, face different
situations (contingency variables), and require
different ways of managing.

2–113
Exhibit 2–8 Popular contingency variables

• Organization size
• As size increases, so do the problems of coordination.
• Routineness of task technology
• Routine technologies require organizational structures,
leadership styles, and control systems that differ from those
required by customized or non-routine technologies.
• Environmental uncertainty
• What works best in a stable and predictable environment may
be totally inappropriate in a rapidly changing and unpredictable
environment.
• Individual differences
• Individuals differ in terms of their desire for growth, autonomy,
tolerance of ambiguity, and expectations.

2–114
 Terms to know
• division of labor (or job • quantitative approach
specialization) • organizational behavior
• Industrial Revolution (OB)
• scientific management • Hawthorne Studies
• therbligs • system
• general administrative • closed systems
theory • open systems
• principles of management • contingency approach
• bureaucracy

2–115
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Organizational
3 Culture and
Environment
3–116
Learning outcomes
Follow this learning outline as you read and
study this chapter.
3.1 The manager: omnipotent or symbolic?
• Contrast the actions of managers according to the omnipotent
and symbolic views
• Identify the two constraints on managerial discretion

3.2 Organizational culture

• Identify the seven dimensions of organizational culture
• Discuss the impact of a strong culture on organizations and
managers
• Explain how a culture is formed and maintained
• Describe how culture affects managers
3–117
Learning outcomes
3.3 Current organizational culture issues
• Describe the characteristics of an ethical culture, an innovative
culture, and a customer-responsive culture
• Explain why workplace spirituality seems to be an important
concern
• Describe the characteristics of a spiritual organization
3.4 The environment
• List the components of the specific and general environments
• Explain the two dimensions of environmental uncertainty
• Identify the most common organizational stakeholders
• List the four steps in managing external stakeholder
relationships

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The manager: Omnipotent or
Symbolic?
• Omnipotent view of management
 Managers are directly responsible for an
organization’s success or failure.
 The quality of the organization is determined by the
quality of its managers.
 Managers are held accountable
for an organization’s performance,
yet it is difficult to attribute
good or poor performance
directly to their influence
on the organization.
3–119
The manager: Omnipotent or
Symbolic?
• Symbolic view of management
 Much of an organization’s success or failure is due to
external forces outside of managers’ control.
 The ability of managers to affect outcomes is
influenced and constrained by external factors.
 The economy, customers, governmental policies,
competitors, industry conditions,
technology, and the actions of
previous managers
 Managers symbolize control and
influence through their action.
3–120
Exhibit 3–1 Parameters of managerial discretion

3–121
The organization’s culture
• Organizational culture
 A system of shared meanings and common beliefs
held by organizational members that determines, in a
large degree, how they act towards each other.
 “The way we do things around here.”
 Values, symbols, rituals, myths, and practices
 Implications:
 Culture is a perception.
 Culture is shared.
 Culture is descriptive.

3–122
Exhibit 3–2 Dimensions of organizational culture

3–123
Strong versus Weak cultures
• Strong cultures
 Are cultures in which key values are deeply and
widely held.
 Have a strong influence on organizational members.
• Factors Influencing the strength of culture
 Size of the organization
 Age of the organization
 Rate of employee turnover
 Strength of the original culture
 Clarity of cultural values and beliefs

3–124
Exhibit 3–3 Contrasting organizational cultures

Dimension Organization A Organization B

Attention to Detail High Low
Outcome Orientation Low High
People Orientation Low High
Team Orientation Low High
Aggressiveness Low High
Stability High Low
Innovation and Risk Taking Low High

3–125
Benefits of a strong culture
• Creates a stronger employee commitment to the
organization.
• Aids in the recruitment and socialization of new
employees.
• Fosters higher organizational
performance by instilling and
promoting employee initiative.

3–126
Organizational culture
• Sources of organizational culture
 The organization’s founder
 Vision and mission
 Past practices of the organization
 The way things have been done
 The behavior of top management
• Continuation of the organizational culture
 Recruitment of like-minded employees who “fit”
 Socialization of new employees to help them adapt
to the culture

3–127
Exhibit 3–5 How an organization’s culture is
established and maintained

3–128
Exhibit 3–4 Strong versus Weak organizational
cultures

3–129
How employees learn culture
• Stories
 Narratives of significant events or actions of people that
convey the spirit of the organization
• Rituals
 Repetitive sequences of activities that express and
reinforce the values of the organization
• Material Symbols
 Physical assets distinguishing the organization
• Language
 Acronyms and jargon of terms, phrases, and word
meanings specific to an organization

3–130
How culture affects managers
• Cultural constraints on managers
 Whatever managerial actions the organization
recognizes as proper or improper on its behalf
 Whatever organizational activities the organization
values and encourages
 The overall strength or weakness of the
organizational culture

Simple rule for getting ahead in an organization:

Find out what the organization rewards and act accordingly.

3–131
Exhibit 3–6 Managerial decisions affected by culture
• Planning
• The degree of risk that plans should contain
• Whether plans should be developed by individuals or teams
• The degree of environmental scanning in which management
will engage
• Organizing
• How much autonomy should be designed into employees’ jobs
• Whether tasks should be done by individuals or in teams
• The degree to which department managers interact with each
other

3–132
Exhibit 3–6 Managerial decisions affected by culture
(cont’d)
• Leading
• The degree to which managers are concerned with increasing
employee job satisfaction
• What leadership styles are appropriate
• Whether all disagreements—even constructive ones—should
be eliminated
• Controlling
• Whether to impose external controls or to allow employees to
control their own actions
• What criteria should be emphasized in employee performance
evaluations
• What repercussions will occur from exceeding one’s budget

3–133
Organization culture issues
• Creating an ethical • Creating an innovative
culture culture
 High in risk tolerance  Challenge and
 Low to moderate involvement
aggressiveness  Freedom
 Focus on means as  Trust and openness
well as outcomes  Idea time
 Playfulness/humor
 Conflict resolution
 Debates
 Risk-taking

3–134
Exhibit 3–7 Creating a more ethical culture

• Be a visible role model

• Communicate ethical expectations
• Provide ethics training
• Visibly reward ethical acts and punish unethical
ones
• Provide protective mechanisms so employees can
discuss ethical dilemmas and report unethical
behavior without fear

3–135
Organization culture issues
(cont’d)
• Creating a customer-responsive culture
 Hiring the right type of employees (those with a strong
interest in serving customers)
 Having few rigid rules, procedures, and regulations
 Using widespread empowerment of employees
 Having good listening skills in relating to customers’
messages
 Providing role clarity to employees to reduce
ambiguity and conflict and increase job satisfaction
 Having conscientious, caring employees willing to
take initiative
3–136
Exhibit 3–8 Creating a customer-responsive culture

3–137
Spirituality and organizational
culture
•Workplace spirituality
 The recognition that people have an inner life that
nourishes and is nourished by meaningful work that
takes place in the context of community.
•Characteristics of a spiritual organization
 Strong sense of purpose
 Focus on individual development
 Trust and openness
 Employee empowerment
 Toleration of employees’ expression
3–138
Benefits of spirituality
• Improved employee productivity
• Reduction of employee turnover
• Stronger organizational performance
• Increased creativity
• Increased employee satisfaction
• Increased team performance
• Increased organizational performance

3–139
Defining the external
environment
• External environment
 Those factors and forces outside the organization that
affect the organization’s performance.
• Components of the external environment
 Specific environment: external forces that have a
direct and immediate impact on the organization.
 General environment: broad economic, socio-
cultural, political/legal, demographic, technological,
and global conditions that may affect the organization.

3–140
Exhibit 3–9 The external environment

3–141
Exhibit 3–10 Important legislation

• Occupational safety and health act of 1970

• Consumer product safety act of 1972
• Equal employment opportunity act of 1972
• Worker adjustment and retraining notification act of 1988
• Americans with disabilities act of 1990
• Civil rights act of 1991
• Family and medical leave act of 1993
• Child safety protection act of 1994
• U.S. economic espionage act of 1996
• Electronic signatures in global and national commerce act of 2000
• Sarbanes-oxley act of 2002
• Fair and accurate credit transactions act of 2003
3–142
How the environment affects
managers
• Environmental uncertainty
 The extent to which managers have knowledge of
and are able to predict change their organization’s
external environment is affected by:
 Complexity of the environment: the number of components
in an organization’s external environment.
 Degree of change in environmental components: how
dynamic or stable the external environment is.

3–143
Exhibit 3–11 Environmental uncertainty matrix

3–144
Stakeholder relationships
• Stakeholders
 Any constituencies in the organization’s environment
that are affected by the organization’s decisions and
actions

• Why manage stakeholder relationships?

 It can lead to improved organizational performance.
 It’s the “right” thing to do, given the interdependence
of the organization and its external stakeholders.

3–145
Managing stakeholder
relationships
1. Identify the organization’s external
stakeholders
2. Determine the particular interests and
concerns of the external stakeholders
3. Decide how critical each external stakeholder
is to the organization
4. Determine how to manage each individual
external stakeholder relationship
3–146
Exhibit 3–12 Organizational stakeholders

3–147
 Terms to know
• omnipotent view of • workplace spirituality
management • external environment
• symbolic view of • specific environment
management • general environment
• organizational culture • environmental
• strong cultures uncertainty
• socialization • environmental
complexity
• stakeholders

3–148
 Case study 4
Mr. Nam’s bookstore is the only one in town A, a development
town. Profit from the bookstore is not very much but stable. Few
months ago, one of domestic famous book publishing companies
opened a bookstore opposite his one. At first, he didn’t worry
about that because he thought that he could continue competition.
However, the new bookstore started to sell many books with low
prices and promotion for regular customers. Although he tried his
best, his bookstore just got half of turnover in comparison with
previous time. After nearly 6 months with quite low turnover, he
decided to close his bookstore because it couldn’t cover all
expenses. 
1)What were the reasons that Mr.Nam closed his bookstore?
2)If you were him, what would you do for survival and development?

3–149
 Case study 6
Enterprise X specializes in distributing machinery products for office and has 12 branches in
provinces & cities. The enterprise is organized according to function glands with deputy director in
charge of finance, technology, purchase, human resource, marketing, etc...Although the enterprise
still keeps interest, after a certain time, the director realizes that current framework of organization
cannot express responsibility of profit towards positions lower director and there are some
expressions showing weak coordination among glands. The director decides to reform framework
of organization. Specifically, the director operates the branch in HCMC directly. 11 branches in
different provinces are operated independently and responsible for profit. After 1 year of reform,
the director realized that branch directors managed business according to their own way to get
highest profit without following policies & strategies of the enterprise. The director realized that he
had gone to far in decentralization and decided to take back some authorities of those branch
directors. Specifically, branches are just allowed to implement issues such as choosing & fixing the
price of distributed products, marketing activities, investments, etc. after being approved by the
director. The branch directors were unsatisfied and complained that the director was not
consistent. He chose decentralization at first. Then, he changed it into centralization.
1) According to you, what was the mistake of the director when he let 11 branches in different
provinces operated independently?
2) Do you think that the director was right when he took back some authorities of the branch
directors?
3) What will you do if you were in this situation?

3–150
 Case study 7
Institute X is a unit specializing in designing products serving industry. The main work of
the institute focuses on design department. Mr.Phuoc, design manager, the only leader of
this department, is a good engineer and has prestige towards customers. There are 12
engineers in design department. Among of them, Mr.Phuoc specialy trusted in Mr. Tam.
Apart from finishing the task on time with high quality, he is not afraid of overtime work.
Because of many orders & Mr. Phuoc’s trust, he is always busy. To Mr. Phuoc, it’s very
hard to imagine how the department is without Mr. Tam. Recently, institute X has just
recruited an engineer who got overseas trainning. Due to busy work, Mr. Tam is so busy
that he cannot concentrate on revision of foreign laguage exam. As a result, although he
has worked in the institute for 15 years, he has bachelor’s degree only. Although Mr. Tuan
has less work experience & effect than Mr. Tam, he got overseas Master’s degree. When
he came back, Mr.Tuan amazed because of his knowledge & new working style. Early this
year, Mr.Phuoc was promoted to replace the previous director of institute who had retired.
He was so disturbed that he couldn’t recommend who would replace his previous position
as a design manager. Mr. Tam has work experience & good competence but his
qualifications don’t meet requirements of new postion. Mr. Tuan has suitable qualifications
but he doesn’t have much of contribution.
If you were Mr. Phuoc, whom you will promote? Please explain the reasons of your
promotion and list methods.

3–151
1) The general environment includes:
A) rivals
B) complementors
C) economic forces
D) buyers

1–152
2) SWOT stands for:
A) systems, weaknesses, origins, and threats.
B) strengths, weaknesses, opportunities, and threats.
C) strengths, weaknesses, origins, and threats.
D) strengths, weaknesses, opportunities, and treaties.

1–153
3) Which of the following gives buyers more power
according to the five forces model?
A) There are many buyers.
B) Switching costs are high.
C) They can choose between equivalent products from
many firms.
D) They purchase small quantities.

1–154
4) The existence of close substitutes for a product is a
strong competitive threat because this limits:
A) the advertising that can occur in the industry.
B) the available locations of companies in the industry.
C) the prices that companies in one industry can charge
for their goods.
D) the number of people willing to serve as employees
in the industry.

1–155
5) Intense rivalry between incumbents is a threat that:
A) increases sales of established enterprises.
B) reduces profits of established enterprises.
C) increases profits of established enterprises.
D) has no effect on profits of established enterprises.

1–156
6) Industry changes resulting from changes in laws and
regulations are called:
A) economic forces.
B) sociocultural forces.
C) international forces.
D) political and legal forces.

1–157
7) When the United States steel industry persuaded the
President to impose a 30 percent tariff on imports of
foreign steel into the U.S., the intensity of rivalry in
the U.S. steel market:
A) was increased.
B) stayed the same.
C) was reduced.
D) increased the intensity of rivalry in the foreign
marketplace.

1–158
8) Falling barriers to international trade __________
profitability in the domestic country.
A) increase
B) encourage the same level of
C) has no effect on
D) decrease

1–159
9) Changes that do not alter the basic nature of
competition in the task environment are called:
A) substantive changes.
B) continuous changes.
C) incremental changes.
D) equilibrium changes.

1–160
10) The flexible work practices that are used by SW
Airlines to boost productivity and reduce costs may be
categorized as which part of the internal environment
of SW?
A) tangible resources
B) human capital
C) internal organization
D) intangible resources

1–161
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Managing in a
4 Global
Environment
4–162
Learning outcomes
Follow this learning outline as you read and study this
chapter.

4.1 What’s your global perspective?

• Define parochialism
• Contrast ethnocentric, polycentric, and geocentric
attitudes towards global business
4.2 Understanding the global environment
• Describe the current status of the EU, NAFTA,
ASEAN and other Regional Trade Allowances
• Discuss the role of the WTO

4–163
Learning outcomes
4.3 Doing business globally
• Contrast multinational, multidomestic, global,
transnational, and born global organizations
• Describe the different ways organizations can go
international
4.4 Managing in a global environment
• Explain how the global legal-political and economic
environments affect managers
• Discuss Hofstede’s five dimensions for assessing
cultures
• Describe the challenges of doing business globally in
today’s world
4–164
Learning outcomes
4.4 Managing in a global environment
• Explain how the global legal-political and economic
environments affect managers
• Discuss Hofstede’s five dimensions for assessing
cultures
• Describe the challenges of doing business globally in
today’s world

4–165
The global marketplace
• Opportunities and Challenges
 Coping with the sudden appearance of new
competitors
 Acknowledging cultural, political, and economic
differences
 Dealing with increased uncertainty, fear, and anxiety
 Adapting to changes in the global environment
 Avoiding parochialism

4–166
What’s your global
perspective?
• Parochialism
 Is viewing the world solely through one’s own eyes
and perspectives.
 Is not recognizing that others have different ways of
living and working.
 Is a significant obstacle for managers working in a
global business world.
 Is falling into the trap of ignoring others’ values and
customs and rigidly applying an attitude of “ours is
better than theirs” to foreign cultures.

4–167
Adopting a global perspective
• Ethnocentric attitude
 The parochialistic belief that the best work
approaches and practices are those of the home
country.
• Polycentric attitude
 The view that the managers in the host country know
the best work approaches and practices for running
their business.
• Geocentric attitude
 A world-oriented view that focuses on using the best
approaches and people from around the globe.

4–168
Regional Trading Agreements
• The European Union (EU)
 A unified economic and trade entity
 Belgium, Denmark, France, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, the United
Kingdom, Germany, Austria, Finland, and Sweden

• North American Free Trade Agreement (NAFTA)

 Eliminated barriers to free trade (tariffs, import
licensing requirements, and customs user fees)
 United States, Canada, and Mexico

4–169
Exhibit 4–1 European Union

4–170
Regional Trading Agreements
• U.S.-Central America Free Trade Agreement (CAFTA)
• Free Trade Area of the Americas
• Southern Cone Common Market (Mercosur)
• Association of Southeast Asian Nations (ASEAN)
 Trading alliance of 10 Southeast Asian nations
• African Union
• South Asian Association for Regional Cooperation
(SARRC)

4–171
 Exhibit 4–2 ASEAN Members

Source: Based on J. McClenahen and T. Clark, “ASEAN at Work,” IW. May 19, 1997, p. 42.

4–172
The World Trade Organization
(WTO)
• Evolved from the General Agreement on Tariffs
and Trade (GATT) in 1995.
• Functions as the only global organization
dealing with the rules of trade among nations.
• Has 149 member nations and 32 observer
governments.
• Monitors and promotes world trade.

4–173
Different types of international
organizations
• Multinational Corporation (MNC)
 Maintains operations in multiple countries.
• Multidomestic Corporation
 Is an MNC that decentralizes management and other
decisions to the local country.
• Global Company
 Is an MNC that centralizes its management and other
decisions in the home country.

4–174
Different types of international
organizations (cont’d)

• Transnational corporation (Borderless

organization)
 Is an MNC that has eliminated structural divisions that
impose artificial geographic barriers and is organized
along business lines that reflect a geocentric attitude.

4–175
Exhibit 4–3 How organizations go global

4–176
Other forms of globalization
• Strategic alliances
 Partnerships between and organization and a foreign
company in which both share resources and
knowledge in developing new products or building
new production facilities.
• Joint venture
 A specific type of strategic alliance in which the
partners agree to form a separate, independent
organization for some business purpose.
• Foreign subsidiary
 Directly investing in a foreign country by setting up a
separate and independent production facility or office.

4–177
Managing in a global
environment
• The legal environment
 Stability or instability of legal and political systems
 Legal procedures are established and followed
 Fair and honest elections held on a regular basis
 Differences in the laws of various nations
 Effects on business activities
 Effects on delivery of products and services

4–178
The economic environment
• Economic systems
 Free market economy
 An economy in which resources are primarily owned and
controlled by the private sector.
 Planned economy
 An economy in which all economic decisions are planned by
a central government.
• Monetary and Financial factors
 Currency exchange rates
 Inflation rates
 Diverse tax policies

4–179
The cultural environment
• National culture
 Is the values and attitudes shared by individuals from
a specific country that shape their behavior and their
beliefs about what is important.
 May have more influence on an organization than the
organization culture.

4–180
 Exhibit 4–4 What are Americans like?

Americans are very informal.

Americans are direct.
Americans are competitive.
Americans are achievers.
Americans are independent and individualistic.
Americans are questioners.
Americans dislike silence.
Americans value punctuality.
Americans value cleanliness.
Sources: Based on M. Ernest (ed.), Predeparture Orientation Handbook: For Foreign Students and Scholars Planning to Study in the United States
(Washington, DC: U.S. Information Agency, Bureau of Cultural Affairs, 1984), pp. 103–05; A. Bennett, “American Culture Is Often a Puzzle for Foreign
Managers in the U.S.,” Wall Street Journal, February 12, 1986, p. 29; “Don’t Think Our Way’s the Only Way,” The Pryor Report, February 1988, p. 9; and
B.J. Wattenberg, “The Attitudes behind American Exceptionalism,” U.S. News & World Report, August 7, 1989, p. 25.

4–181
Hofstede’s framework for assessing
cultures
Individualism
Individualism
versus
versus
Collectivism
Collectivism

Long-Term
Long-Term
versus
versus Power
Power
Short-Term
Short-Term Distance
Distance
Orientation
Orientation Culture
Culture

Achievement
Achievement Uncertainty
Uncertainty
versus
versus Avoidance
Avoidance
Nurturing
Nurturing

4–182
Exhibit 4–5 Hofstede’s five dimensions of
national culture
(1) Individualistic — people look after their own and family interests
Collectivistic — people expect group to look after and protect them

Individualistic Collectivistic
United States, Canada Japan Mexico, Thailand
Australia

(2) High power distance—Accepts wide differences in power, great

deal of respect for those in authority
Low power distance—Plays down inequalities: employees are not
afraid to approach nor are in awe of the
boss

High power distance Low power distance

Mexico, Singapore, Italy, Japan United States, Sweden
4–183
Exhibit 4–5 Hofstede’s five dimensions of
national culture
(3) High uncertainty avoidance—Threatened with ambiguity and
experience high levels of anxiety
Low uncertainty avoidance— Comfortable with risks; tolerant of
different behavior and opinions

High uncertainty avoidance Low uncertainty avoidance

Italy, Mexico, France United Kingdom Canada, United States,
Singapore

(4) Achievement—Values such as assertiveness, acquiring money and goods,

and competition prevail
Nurturing—Values such as relationships and concern for others prevail

Achievement Nurturing
United States, Japan, Canada, Greece France, Sweden
Mexico

4–184
Exhibit 4–5 Hofstede’s five dimensions of
national culture

(5) Long-term orientation—People look to the future and value thrift

and persistence
Short-term orientation — People value tradition and the past
Short-term thinking Long-term thinking

Germany, Australia, China, Taiwan, Japan

United States, Canada

4–185
Exhibit 4–6 GLOBE highlights

Source: M. Javidan and R. J. House, “Cultural Acumen for the Global Manager: Lessons from Project GLOBE,” Organizational Dynamics,
Spring 2001, pp. 289–305. Copyright © 2001. Reprinted with permission from Elsevier.

4–186
Global management
in today’s world
• Challenges
 Openness associated with globalization
 Significant cultural differences (e.g., Americanization)
 Adjusting leadership styles and management
approaches
• Risks
 Loss of investments in unstable countries
 Increased terrorism
 Economic interdependence

4–187
 GROUP DISCUSSION
Form of
MNC MDC GC TNC
globalization
Unilever
Apple
Amazon
Walmart
Sony

1–188
 Terms to know
• parochialism • born globals
• ethnocentric attitude • global sourcing
• polycentric attitude • exporting
• geocentric attitude • importing
• European Union (EU) • licensing
• Euro • franchising
• North American Free Trade • strategic alliances
Agreement (NAFTA) • joint venture
• Association of Southeast Asian • foreign subsidiary
Nations (ASEAN) • market economy
• World Trade Organization •
(WTO) command economy
• • national culture
multinational corporations
(MNCs) • GLOBE
• multidomestic corporation • wikis
• global company • blogs
• transnational or borderless
organization
4–189
1) The process whereby national economies and
business systems are becoming deeply interlinked with
each other is called:
A) globalization.
B) localization.
C) internationalization.
D) global linking.

1–190
2) Which of the following statements identifies a key difference
between a market economy and a socialist economy?
A) In a market economy there is more government intervention
than in a socialist economy.
B) In a market economy prices are set by the interaction of supply
and demand, while in a socialist economy the prices are set by
the state.
C) In a market economy most large businesses are state owned,
while in a socialist economy only small businesses are state
owned.
D) In a market economy private producers are excluded from
certain commercial activities, while in a socialist economy there
are no exclusions for private producers.

1–191
3) According to data from the World Trade
Organization, from 1970 to 2004 the volume of world
merchandise trade expanded almost:
A) 26-fold.
B) 10 percent.
C) double.
D) 10-fold.

1–192
4) Which of the following is an example of the
globalization of production?
A) Coca-Cola sells their soft drinks worldwide.
B) Hospitals outsource some radiology work to India.
C) Caterpillar and Komatsu both sell earthmoving
equipment worldwide.
D) Boeing sells jet planes to firms in Japan.

1–193
5) The constraints limiting the pace of globalization
include which of the following?
A) protectionist countertrends
B) national differences in consumer behavior
C) national differences in business systems
D) All of the above limit the pace of globalization.

1–194
6) Protectionist countertrends to globalization include:
A) the idea that international trade promotes economic
growth and raises living standards.
B) the argument that international trade destroys jobs.
C) the suggestion that open foreign markets help the
American economy.
D) lower barriers to cross-border trade in agriculture.

1–195
7) Any business that has productive activities in two or
more countries is called a:
A) multilocational enterprise.
B) multinational enterprise.
C) multiglobal enterprise.
D) multilevel firm.

1–196
8) Which of the following statements is most consistent
with market expansion through globalization?
A) By serving domestic and international markets a firm
may be able to utilize its production facilities less
intensively.
B) Different locations around the world are more or less
suitable for performing different business activities.
C) Valuable skills are developed first at overseas and then
transferred to foreign operations.
D) When managers at a firm have built a valuable
competency or skill, going global is often the best way to
maximize the return on their investment.

1–197
9) Which of the following is a decision that must be
made when a firm goes global?
A) local standardization or global customization
B) how best to manage subsidiaries
C) whether to operate under host country or home
country laws
D) in a publicly traded firm, which sets of accounting
practices to use

1–198
10) Which of the following statements about global
standardization is most accurate?
A) An enterprise realizes substantial scale economies.
B) An enterprise varies some aspect of its products but
not its marketing messages.
C) An enterprise varies some aspect of its marketing
messages but not its products.
D) An enterprise is taking into account local business
systems and culture.

1–199
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Social
5 Responsibility and
Managerial Ethics
5–200
Learning outcomes
Follow this learning outline as you read and study this
chapter.

5.1 What is social responsibility?

• Differentiate between social obligation, social
responsiveness and social responsibility
• Discuss whether organizations should be socially
involved
• Describe what conclusion can be reached regarding
social involvement and economic importance

5–201
Learning outcomes
5.2 Green management
• Define green management
• Describe how organizations can go green
• Explain how green management can be evaluated

5.3 Managers and ethical behavior

• Define ethics
• Discuss the factors that influence whether a person behave
ethically or unethically
• Describe what managers need to know about international
ethics

5–202
Learning outcomes
5.4 Encouraging ethical behavior
• Describe manager’s important role in encouraging ethical
behavior
• Discuss specific ways managers can encourage ethical
behavior
5.5 Social responsibility and ethics issues in today’s world
• Discuss how managers can manage ethical lapses and social
responsibility
• Explain the role of social entrepreneurs
• Discuss how businesses can promote positive social change

5–203
Learning outcomes
5.5 Social responsibility issues in today’s world
• Discuss how managers and organizations can protect
employees who raise ethical issues or concerns
• Explain what role social entrepreneurs play
• Discuss how businesses can promote positive social
change

5–204
From obligation to responsiveness
to responsibility
• Social obligation
 The obligation of a business to meet its economic and
legal responsibilities and nothing more
• Social responsiveness
 When a firm engages in social actions in response to
some popular social need.
• Social responsibility
 A business’s intention, beyond its legal and economic
obligations, to do the right things and act in ways that
are good for society

5–205
What is social responsibility?

• The classical view

 Management’s only social responsibility is to
maximize profits (create a financial return) by
operating the business in the best interests of the
stockholders (owners of the corporation).
 Expending the firm’s resources on doing “social good”
unjustifiably increases costs that lower profits to the
owners and raises prices to consumers.

5–206
What is social responsibility?
• The socioeconomic view
 Management’s social responsibility goes beyond
making profits to include protecting and improving
society’s welfare.
 Corporations are not independent entities responsible
only to stockholders.
 Firms have a moral responsibility to larger society to
become involved in social, legal, and political issues.
 “To do the right thing”

5–207
 Exhibit 5–1 Social responsibility versus social responsiveness

Social responsibility Social responsiveness

Major consideration Ethical Pragmatic

Focus Ends Means
Emphasis Obligation Responses
Decision framework Long term Medium and short term

Source: Adapted from S.L. Wartick and P.L. Cochran, “The Evolution of the Corporate
Social Performance Model,” Academy of Management Review, October 1985, p. 766.

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Exhibit 5–2 Arguments for and against social responsibility

• For • Against
 Public expectations  Violation of profit
 Long-run profits maximization
 Ethical obligation  Dilution of purpose
 Public image  Costs
 Better environment  Too much power
 Discouragement of further  Lack of skills
governmental regulation  Lack of accountability
 Balance of responsibility
and power
 Stockholder interests
 Possession of resources
 Superiority of prevention
over cures
5–209
Does social responsibility pay?
• Studies appear to show a positive relationship
between social involvement and the economic
performance of firms.
 Difficulties in defining and measuring “social
responsibility” and “economic performance” raise
issues of validity and causation in the studies.
 Mutual funds using social screening in investment
decisions slightly outperformed other mutual funds.
• A general conclusion is that a firm’s social
actions do not harm its long-term performance.

5–210
 Exhibit 5–3 Trends in SRI

Source: Social Investment Forum Foundation.

5–211
The greening of management
• The recognition of the close link between an
organization’s decision and activities and its
impact on the natural environment.
 Global environmental problems facing managers:
 Air, water, and soil pollution from toxic wastes
 Global warming from greenhouse gas emissions
 Natural resource depletion

5–212
How organizations go green
• Legal (or Light Green) approach
 Firms simply do what is legally required by obeying laws, rules,
and regulations willingly and without legal challenge.
• Market approach
 Firms respond to the preferences of their customers for
environmentally friendly products.
• Stakeholder approach
 Firms work to meet the environmental demands of multiple
stakeholders—employees, suppliers, and the community.
• Activist approach
 Firms look for ways to respect and preserve environment and be
actively socially responsible.

5–213
 Exhibit 5–4 Green approaches

Source: Based on R.E. Freeman. J. Pierce, and R. Dodd. Shades of Green:

Business Ethics and the Environment (New York: Oxford University Press, 1995).

5–214
Evaluating the greening of
management
• Organizations become “greener” by
 Using the Sustainability Reporting Guidelines to
document “green” actions.
 Adopting ISO 14000 standards for environmental
management.
 Being named as one of the 100 Most Sustainable
Corporations in the World.

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Managerial ethics

Ethics defined
 Principles, values, and beliefs that define what is right
and wrong behavior.

5–216
Exhibit 5–5 Factors that determine ethical and unethical
behavior

5–217
 Factors that affect employee
ethics
• Moral development
 A measure of independence from outside influences
 Levels of Individual Moral Development
– Preconventional level
– Conventional level
– Principled level
 Stage of moral development interacts with:
 Individual characteristics
 The organization’s structural design
 The organization’s culture
 The intensity of the ethical issue
5–218
 Exhibit 5–6 Stages of moral development

Source: Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive-Development Approach,” in T. Lickona (ed.). Moral Development and
Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34–35.

5–219
Factors that affect employee
ethics
• Moral development
 Research Conclusions:
 People proceed through the stages of moral development
sequentially.
 There is no guarantee of continued moral development.
 Most adults are in Stage 4 (“good corporate citizen”).

5–220
Factors that affect employee
ethics
Individual characteristics
 Values
 Basic convictions about what is right or wrong.
 Personality
 Ego strength - A personality measure of the strength of a
person’s convictions
 Locus of Control
– A personality attribute that measures the degree to which
people believe they control their own life.
– Internal locus: the belief that you control your destiny.
– External locus: the belief that what happens to you is due
to luck or chance.
5–221
Factors that affect employee
ethics
• Structural variables
 Organizational characteristics and mechanisms that
guide and influence individual ethics:
 Performance appraisal systems
 Reward allocation systems
 Behaviors (ethical) of managers

5–222
 Factors that affect employee
ethics
• Organization’s culture
 Values-based management
 An approach to managing in which managers establish and
uphold an organization’s shared values.
 The purposes of shared values
 Guiding managerial decisions
 Shaping employee behavior
 Influencing the direction of marketing efforts
 Building team spirit

 The bottom line on shared corporate values

 An organization’s values are reflected in the decisions and
actions of its employees.
• Intensity of the ethical issue
5–223
Exhibit 5–7 Determinants of issue intensity

5–224
Ethics in an international context
• Ethical standards are not universal.
 Social and cultural differences determine acceptable
behaviors.
• Foreign corrupt practices Act
 Makes it illegal to corrupt a foreign official, yet “token”
payments to officials are permissible when doing so is
an accepted practice in that country.
• The global Compact

5–225
 Exhibit 5–8 Ten principles of the United Nations

Human Rights
Principle 1: Support and respect the protection of international human rights within their
sphere of influence.
Principle 2: Make sure business corporations are not complicit in human rights abuses.

Labor Standards
Principle 3: Freedom of association and the effective recognition of the right to collective
bargaining.
Principle 4: The elimination of all forms of forced and compulsory labor.
Principle 5: The effective abolition of child labor.
Principle 6: The elimination of discrimination in respect of employment and occupation.

Environment
Principle 7: Support a precautionary approach to environmental challenges.
Principle 8: Undertake initiatives to promote greater environmental responsibility.
Principle 9: Encourage the development and diffusion of environmentally friendly
technologies.
Principle 10: Businesses should work against corruption in all its forms, including extortion
and bribery.
Source: Courtesy of Global Compact.

5–226
How managers can improve
ethical behavior in an organization
1. Hire individuals with high ethical standards
2. Establish codes of ethics and decision rules
3. Lead by example
4. Set realistic job goals and include ethics in
performance appraisals
5. Provide ethics training
6. Conduct independent social audits
7. Provide support for individuals facing ethical
dilemmas
5–227
 Exhibit 5–9 Codes of ethics

Cluster 1. Be a dependable Cluster 2. Do not do anything unlawful or improper

organizational citizen that will harm the organization
1. Comply with safety, health, 1. Conduct business in compliance with all laws.
and security regulations. 2. Payments for unlawful purposes are prohibited.
2. Demonstrate courtesy, 3. Bribes are prohibited.
respect, honesty, and 4. Avoid outside activities that impair duties.
fairness. 5. Maintain confidentiality of records.
3. Illegal drugs and alcohol at 6. Comply with all antitrust and trade regulations.
work are prohibited. 7. Comply with all accounting rules and controls.
4. Manage personal finances 8. Do not use company property for personal benefit.
well. 9. Employees are personally accountable for company
5. Exhibit good attendance funds.
and punctuality. 10. Do not propagate false or misleading information.
6. Follow directives of 11. Make decisions without regard for personal gain.
supervisors. Cluster 3. Be good to customers
7. Do not use abusive 1. Convey true claims in product advertisements.
language. 2. Perform assigned duties to the best of your ability.
8. Dress inDavid,
Source: F. R. business attire.
“An Empirical Study 3.Ethics:
of Codes of Business Provide
A Strategicproducts and services of the highest
Perspective,” paper
presented at the 48 Annual Academy of Management Conference, Anaheim, California, August 1988.
th

9. Firearms at work are quality.

5–228
prohibited.
Effective use of a code of ethics
• Develop a code of ethics as a guide in handling
ethical dilemmas in decision making
• Communicate the code regularly to all
employees
• Have all levels of management continually
reaffirm the importance of the ethics code and
the organization’s commitment to the code
• Publicly reprimand and consistently discipline
those who break the code

5–229
 Exhibit 5–10 Twelve questions approach

1. Have you defined the problem accurately?

2. How would you define the problem if you stood on the other side of the fence?
3. How did this situation occur in the first place?
4. To whom and to what do you give your loyalty as a person and as a member of the
corporation?
5. What is your intention in making this decision?
6. How does this intention compare with the probable results?
7. Whom could your decision or action injure?
8. Can you discuss the problem with the affected parties before you make the decision?
9. Are you confident that your position will be as valid over a long period of time as it
seems now?
10. Could you disclose without qualm your decision or action to your boss, your chief
executive officer, the board of directors, your family, society as a whole?
11. What is the symbolic potential of your action if understood? If misunderstood?
12. Under what conditions would you allow exceptions to your stand?

Source: Reprinted by permission of Harvard Business Review. An exhibit from “Ethics Without the Sermon,” by L. L. Nash.
November–December 1981, p. 81. Copyright © 1981 by the President and Fellows of Harvard College. All rights reserved.

5–230
The value of ethics training
• Can make a difference in ethical behaviors
• Increases employee awareness of ethical issues
in business decisions
• Clarifies and reinforces the organization’s
standards of conduct
• Helps employees become more confident that
they will have the organization’s support when
taking unpopular but ethically correct stances

5–231
Exhibit 5–11 Being an ethical leader

• Be a good role model by being ethical and honest

° Tell the truth always
° Don’t hide or manipulate information
° Be willing to admit your failures
• Share your personal values by regularly communicating
them to employees
• Stress the organization’s or team’s important shared
values
• Use the reward system to hold everyone accountable to
the values

5–232
Managing ethical lapses and
social irresponsibility
• Provide ethical leadership
• Protect employees who raise ethical issues
(whistle-blowers)

5–233
Awareness of social issues
• Social entrepreneurs
 Are individuals or organizations who seek out
opportunities to improve society by using practical,
innovative, and sustainable approaches.
 Want to make the world a better place and have a
driving passion to make that happen.

5–234
Businesses promoting positive
social change
• Corporate philanthropy
 Campaigns
 Donations
 Funding own foundations

• Employee volunteering efforts

 Team volunteering
 Individual volunteering during work hours

5–235
DISCUSSION

• Social responsibilities/Social irresponsibilities

• Ethical actions / Unethical actions

5–236
 Terms to know
• classical view • ethics
• socioeconomic view • values
• social obligation • ego strength
• social responsiveness • locus of control
• social responsibility • code of ethics
• social screening • whistle-blower
• greening of management • social entrepreneur
• values-based
management

5–237
1) The quest to maximize profitability should be
constrained by:
A) unethical obligations.
B) lack of social responsibility.
C) stakeholders.
D) ethical obligations.

1–238
2) The process by which companies identify the most
important stakeholders is called:
A) stakeholder importance evaluation.
B) stakeholder impact analysis.
C) shareholder impact evaluation.
D) shareholder analysis.

1–239
3) If shareholders sell off their shares because they are
not pleased with management decisions, which of the
following is the most likely result?
A) Nothing adverse will happen.
B) Key employees will certainly leave.
C) Revenues will fall.
D) The cost of capital will rise.

1–240
4) Accepted principles of right or wrong governing the
conduct of businesspeople are called:
A) business values.
B) business ethics.
C) business principles.
D) business conduct.

1–241
5) __________ behavior tends to arise when mangers
decide to put the attainment of their own personal
goals, or the goals of the organization, above the
fundamental rights of one or more stakeholder groups.
A) Unethical
B) Confusing
C) Complementary
D) Situational

1–242
6) The main difference between utilitarianism and rights theories is:
A) utilitarianism establishes a minimum level of morally acceptable
behavior, whereas rights theories emphasize the greatest good for the
greatest number.
B) utilitarianism focuses on attaining a fair and equitable distribution of
economic goods and services, whereas rights theories emphasize the
greatest good for the greatest number.
C) utilitarianism holds that the moral worth of actions or practices is
determined by their consequences, whereas rights theories recognize
that human beings have fundamental rights and privileges.
D) utilitarianism holds that the moral worth of actions or practices is
determined by their consequences, whereas rights theories focus on
attaining a fair and equitable distribution of economic goods and
services.

1–243
7) Which of the following actions will likely lead to
organizational ethical behavior?
A) promoting moral courage
B) establishing an ethics office
C) developing strong governance processes
D) all of the above

1–244
8) Which of the following is one of the questions that
can be used to determine whether a decision is ethical?
A) Does my decision fall within the accepted values or
standards that typically apply in the organizational
environment?
B) Would the people with whom I have a significant
personal relationship approve of the decision?
C) Am I willing to see the decision communicated to all
stakeholders affected by it?
D) All of the above are questions that can be used to
determine whether a decision is ethical.

1–245
9) Strong corporate governance procedures are needed
to ensure that:
A) stock prices remain high.
B) managers carry out business unit plans.
C) managers adhere to ethical norms.
D) all of the above occur.

1–246
10) Socially responsible behavior:
A) never leads to improved financial performance.
B) has adverse impact on stakeholders.
C) is in a firm's self-interest.
D) results in ill-will from the community

1–247
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managers
6 as
Decision Makers
6–248
Learning outcomes
Follow this learning outline as you read and
study this chapter.

6.1 The decision-making process

• Define decision
• Describe the eight steps in the decision-making process

6.2 Managers making decisions

• Discuss the assumptions of rational decision making
• Describe the concepts of bounded rationality, satisficing, and
escalation of commitment
• Explain intuitive decision making
6–249
Learning outcomes

6.3 Types of decisions and decision-making

conditions
• Explain the two types of problems and decisions
• Contrast the three decision making conditions
• Explain maximax, maximin, and minimax decision choice
approaches
6.4 Decision-making styles
• Describe two decision-making styles
• Discuss the twelve decision-making biases
• Explain the managerial decision-making model

6–250
Learning outcomes

6.5 Effective decision making in today’s world

• Explain how managers can make effective decisions
in today’s world
• List the six characteristics of an effective decision
making process
• List the five habits of highly reliable organizations

6–251
Make decision
• When you have 1 bio dong
• What is the most important decision
in life?

1–252
Decision making
• Decision
 Making a choice from two or more alternatives
• The decision-making process
 Identifying a problem and decision criteria and
allocating weights to the criteria
 Developing, analyzing, and selecting an alternative
that can resolve the problem
 Implementing the selected alternative
 Evaluating the decision’s effectiveness

6–253
Exhibit 6–1
The decision-making
process

6–254
Step 1: Identifying the problem
• Problem
 A discrepancy between an existing and desired state
of affairs
• Characteristics of problems
 A problem becomes a problem when a manager
becomes aware of it.
 There is pressure to solve the problem.
 The manager must have the authority, information, or
resources needed to solve the problem.

6–255
Step 2: Identifying decision criteria
• Decision criteria are factors that are important
(relevant) to resolving the problem such as:
 Costs that will be incurred (investments required)
 Risks likely to be encountered (chance of failure)
 Outcomes that are desired (growth of the firm)

Step 3: Allocating weights to the criteria

• Decision criteria are not of equal importance:
 Assigning a weight to each item places the items in
the correct priority order of their importance in the
decision-making process.

6–256
Exhibit 6–2 Criteria and Weights for computer replacement
decision

Criterion Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3

6–257
Step 4: Developing alternatives
• Identifying viable alternatives
 Alternatives are listed (without evaluation) that can
resolve the problem.

Step 5: Analyzing alternatives

• Appraising each alternative’s strengths and
weaknesses
 An alternative’s appraisal is based on its ability to
resolve the issues identified in steps 2 and 3.

6–258
Exhibit 6–3 Assessed values of laptop
computers using decision criteria

6–259
Step 6: Selecting an alternative
• Choosing the best alternative
 The alternative with the highest total weight is
chosen.

Step 7: Implementing the alternative

• Putting the chosen alternative into action.
 Conveying the decision to and gaining commitment
from those who will carry out the decision.

6–260
Exhibit 6–4 Evaluation of laptop alternatives
against weighted criteria

6–261
Step 8: Evaluating the
decision’s effectiveness
• The soundness of the decision is judged by its
outcomes.
 How effectively was the problem resolved by
outcomes resulting from the chosen alternatives?
 If the problem was not resolved, what went wrong?

6–262
Exhibit 6–5 Decisions in the management functions

6–263
 Tôi cần một máy tính
Xác Định Vấn Đề

Xác Định các

Tiêu Chuẩn của Giá
Quyết Định Dịch vụ
Thời gian bảo hành
Độ tin cậy
Mẫu mã

Lượng Hóa các Độ tin cậy 100

Tiêu Chuẩn Dịch vụ 85
Thời gian bảo hành 70
Giá 30
Mẫu mã 20

Xây Dựng các

Phương Án Ac e r IB M De ll HP To s hiba

Đánh Giá các

Phương Án IB M
Ac e r

Lựa Chọn Acer

Phương Án Tối Ưu

Tổ Chức Thực Hiện

Quyết Định Acer

1–264
Đánh Giá Tính Hiệu Quả
của Quyết Định
Make decision
• To get motor with 10 mios
• To get cellphone with 5 mios
• To choose school
• To open buz
• To do after graduation

1–265
Making decisions
• Rationality
 Managers make consistent, value-maximizing choices
with specified constraints.
 Assumptions are that decision makers:
 Are perfectly rational, fully objective, and logical.
 Have carefully defined the problem and identified all viable
alternatives.
 Have a clear and specific goal
 Will select the alternative that maximizes outcomes in the
organization’s interests rather than in their personal interests.

6–266
Making decisions (cont’d)
• Bounded rationality
 Managers make decisions rationally, but are limited
(bounded) by their ability to process information.
 Assumptions are that decision makers:
 Will not seek out or have knowledge of all alternatives
 Will satisfice—choose the first alternative encountered that
satisfactorily solves the problem—rather than maximize the
outcome of their decision by considering all alternatives and
choosing the best.
 Influence on decision making
 Escalation of commitment: an increased commitment to a
previous decision despite evidence that it may have been
wrong.

6–267
The role of intuition

• Intuitive decision making

 Making decisions on the basis of experience, feelings,
and accumulated judgment.

6–268
 Exhibit 6–6 What is intuition?

Source: Based on L. A. Burke and M. K. Miller, “Taking the Mystery Out of Intuitive
Decision Making,” Academy of Management Executive, October 1999, pp. 91–99.

6–269
Types of problems and decisions
• Structured problems
 Involve goals that are clear.
 Are familiar (have occurred before).
 Are easily and completely defined—information about
the problem is available and complete.

• Programmed decision
 A repetitive decision that can be handled by a routine
approach.

6–270
Types of programmed decisions
• Procedure
 A series of interrelated steps that a manager can use
to respond (applying a policy) to a structured problem.
• Rule
 An explicit statement that limits what a manager or
employee can or cannot do.
• Policy
 A general guideline for making a decision about a
structured problem.

6–271
 Policy, Procedure, and Rule
Examples
• Policy
 Accept all customer-returned merchandise.

• Procedure
 Follow all steps for completing merchandise return
documentation.

• Rules
 Managers must approve all refunds over $50.00.
 No credit purchases are refunded for cash.
6–272
Problems and Decisions (cont’d)
• Unstructured problems
 Problems that are new or unusual and for which
information is ambiguous or incomplete.
 Problems that will require custom-made solutions.

• Nonprogrammed decisions
 Decisions that are unique and nonrecurring.
 Decisions that generate unique responses.

6–273
Exhibit 6–7 Programmed versus Nonprogrammed decisions

6–274
Decision-making conditions
• Certainty
 A situation in which a manager can make an accurate
decision because the outcome of every alternative
choice is known.
• Risk
 A situation in which the manager is able to estimate
the likelihood (probability) of outcomes that result
from the choice of particular alternatives.

6–275
Exhibit 6–8 Expected value for revenues
from the addition of one ski lift

Expected
Expected × Probability = Value of Each
Event Revenues Alternative
Heavy snowfall $850,000 0.3 = $255,000
Normal snowfall 725,000 0.5 = 362,500
Light snowfall 350,000 0.2 = 70,000
$687,500

6–276
Decision making conditions
• Uncertainty
 Limited information prevents estimation of outcome
probabilities for alternatives associated with the
problem and may force managers to rely on intuition,
hunches, and “gut feelings.”
 Maximax: the optimistic manager’s choice to maximize the
maximum payoff
 Maximin: the pessimistic manager’s choice to maximize the
minimum payoff
 Minimax: the manager’s choice to minimize maximum regret.

6–277
Exhibit 6–9 Payoff matrix

6–278
Exhibit 6–10 Regret matrix

6–279
Decision-making styles
• Linear thinking style
 A person’s preference for using external data and
facts and processing this information through rational,
logical thinking

• Nonlinear thinking style

 A person’s preference for internal sources of
information and processing this information with
internal insights, feelings, and hunches

6–280
Exhibit 6–11 Common decision-making errors and biases

6–281
Decision-making biases and errors
• Heuristics
 Using “rules of thumb” to simplify decision making

• Overconfidence bias
 Holding unrealistically positive views of oneself and
one’s performance

• Immediate gratification bias

 Choosing alternatives that offer immediate rewards
and that to avoid immediate costs

6–282
Decision-making biases and errors
• Anchoring effect
 Fixating on initial information and ignoring subsequent
information
• Selective perception bias
 Selecting organizing and interpreting events based on
the decision maker’s biased perceptions.
• Confirmation bias
 Seeking out information that reaffirms past choices
and discounting contradictory information.

6–283
Decision-making biases and
errors (cont’d)
• Framing bias
 Selecting and highlighting certain aspects of a
situation while ignoring other aspects.
• Availability bias
 Losing decision making objectivity by focusing on the
most recent events.
• Representation bias
 Drawing analogies and seeing identical situations
when none exist.
• Randomness bias
 Creating unfounded meaning out of random events.
6–284
Decision-making biases
and errors
• Sunk costs errors
 Forgetting that current actions cannot influence past
events and relate only to future consequences.
• Self-serving bias
 Taking quick credit for successes and blaming outside
factors for failures.
• Hindsight bias
 Mistakenly believing that an event could have been
predicted once the actual outcome is known (after-
the-fact).

6–285
Exhibit 6–12 Overview of managerial decision making

6–286
Decision making for today’s world
• Guidelines for making effective decisions:
 Understand cultural differences.
 Know when it’s time to call it quits.
 Use an effective decision making process.
• Habits of highly reliable organizations (HROs)
 Are not tricked by their success.
 Defer to the experts on the front line.
 Let unexpected circumstances provide the solution.
 Embrace complexity.
 Anticipate, but also anticipate their limits.

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Characteristics of an effective
decision-making process
• It focuses on what is important.
• It is logical and consistent.
• It acknowledges both subjective and objective thinking
and blends analytical with intuitive thinking.
• It requires only as much information and analysis as is
necessary to resolve a particular dilemma.
• It encourages and guides the gathering of relevant
information and informed opinion.
• It is straightforward, reliable, easy to use, and flexible.

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 Terms to know
• decision • policy
• Decision-making process • unstructured problems
• problem • nonprogrammed decisions
• decision criteria • certainty
• rational decision making • risk
• bounded rationality • uncertainty
• satisficing • directive style
• escalation of commitment • analytic style
• intuitive decision making • conceptual style
• structured problems • behavioral style
• programmed decision • heuristics
• procedure • business performance
• rule management (BPM) software

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Case study 8
Philip A.Mos is the owner of a food company in the US. One day, when he
was reading newspaper, an article about spreading of cattle epidemic in
Mexico drew his attention. A.Mos instantly thought: If Mexico has an
epidemic, it must be from California and Texas at the US border area because
Mexico only imports cattle from these two states, and they are also the main
supply of meat in the whole US. If the epidemic is really happening in Mexico,
the meat-providing market will be strained, and the meat prices will boom. For
sure, A.Mos has sent his staff to Mexico to confirm the news. After a few days,
his staff was back and admitted that the pandemic was actually raging. Then,
A.Mos continued to let his men monitor the companies which specialized in
importing and processing cattle, and he was informed that almost all
corporations had restricted or paused importing and processing cattle meat.
Different from enterprises avoiding “the bad way”, A.Mos immediately
collected his money and moved to Texas to buy cows and pigs, then quickly
transported them to the east of the US to store.

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Case study 8
As he had expected, the epidemic soon spread across the
states near western America. The government enforced a
strict ban on transporting cattle from one state to another,
especially to the east of the US. Immediately, meat became
scarce in the entire of the US, and the price rose rapidly.
A.Mos took this opportunity to put the amount of the stored
cattle meat on the market. As a result, he earned a large
number of money up to 9 billion dollars.
1)What do you learn from the way A.Mos catched and
handled the information?
2)Please assess the information’s value in making a decision.

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Case study 9
A leading shoe firm in Northern Europe has realized the signs of
saturation after examining and analyzing the domestic market.
BOD appointed the staff of MAR Department to carry out a survey
of infiltrating ability towards foreign market. 2 experienced staff
were delegated to an African country. After observing and
gathering information, both of them have realized that no one
wears shoes in this country. They decided to inform this news with
their suggestions to the leader. Expert 1 thinks that no one wears
shoes here, so this is a potential market, and the company should
take this chance. Expert 2 thinks that no one will buy shoes
because people here don’t wear shoes.
1.According to you, Who is wrong? Who is right? Why?
2.If you were the director, what would you decide?

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Case study 10
You have 1 billion dong, and you are unable to
make up your mind to choose one of the
following ways to use your money effectively:
1.Open a coffee shop with a friend
2.Send all money to the bank
3.Buy shares of company X
What information do you need to know when
you meet a counselor?

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Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Foundations of
7 Planning

7–294
Learning outcomes
Follow this learning outline as you read and study this
chapter.
7.1 The what and why of planning
• Define planning
• Describe the purposes of planning
• Explain what studies have shown about the relationship between
planning and performance
7.2 Goals and plans
• Define goals and plans
• Describe the types of goals organizations might have
• Describe each of the different types of plans

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Learning outcomes
7.3 Setting goals and developing plans
• Discuss how traditional goal setting and MBO work
• Describe well written goals and explain hw to set them
• Discuss the contingency factors that affect planning
• Describe the approaches to planning

7.4 Contemporary issues in planning

• Explain the criticisms of planning
• Describe how managers can effectively plan in today’s dynamic
environment

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What is planning?
• Planning
 A primary managerial activity that involves:
 Defining the organization’s goals
 Establishing an overall strategy for achieving those goals
 Developing plans for organizational work activities

 Formal planning
 Specific goals covering a specific time period
 Written and shared with organizational members

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Why do managers plan?
• Purposes of planning
 Provides direction
 Reduces uncertainty
 Minimizes waste and redundancy
 Sets the standards for controlling

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Planning and Performance
• The relationship between planning and
performance
 Formal planning is associated with:
 Higher profits and returns on assets.
 Positive financial results.
 The quality of planning and implementation affects
performance more than the extent of planning.
 The external environment can reduce the impact of
planning on performance.
 Formal planning must be used for several years
before planning begins to affect performance.

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How do managers plan?
• Elements of planning
 Goals (also Objectives)
 Desired outcomes for individuals, groups, or entire
organizations
 Provide direction and evaluation performance criteria
 Plans
 Documents that outline how goals are to be accomplished
 Describe how resources are to be allocated and establish
activity schedules

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Types of goals
• Financial goals
 Are related to the expected internal financial
performance of the organization.
• Strategic goals
 Are related to the performance of the firm relative to
factors in its external environment (e.g., competitors).
• Stated goals versus real goals
 Broadly-worded official statements of the organization
(intended for public consumption) that may be
irrelevant to its real goals (what actually goes on in
the organization).

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Exhibit 7–1 Types of plans

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Types of plans
• Strategic plans
 Apply to the entire organization.
 Establish the organization’s overall goals.
 Seek to position the organization in terms of its
environment.
 Cover extended periods of time.
• Operational plans
 Specify the details of how the overall goals are to be
achieved.
 Cover a short time period.

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Types of plans
• Long-term plans
 Plans with time frames extending beyond three years
• Short-term plans
 Plans with time frames of one year or less
• Specific plans
 Plans that are clearly defined and leave no room for
interpretation
• Directional plans
 Flexible plans that set out general guidelines and
provide focus, yet allow discretion in implementation

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Types of plans
• Single-use plan
 A one-time plan specifically designed to meet the
need of a unique situation.
• Standing plans
 Ongoing plans that provide guidance for activities
performed repeatedly.

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 Setting goals and developing
plans
• Traditional goal setting
 Broad goals are set at the top of the organization.
 Goals are then broken into sub-goals for each
organizational level.
 Assumes that top management knows best because
they can see the “big picture.”
 Goals are intended to direct, guide, and constrain from
above.
 Goals lose clarity and focus as lower-level managers
attempt to interpret and define the goals for their areas
of responsibility.

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Exhibit 7–2 The downside of traditional goal setting

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Setting goals and developing
plans
• Maintaining the hierarchy of goals
 Means–Ends chain
 The integrated network of goals that results from establishing
a clearly-defined hierarchy of organizational goals.
 Achievement of lower-level goals is the means by which to
reach higher-level goals (ends).

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 Setting goals and developing
plans
• Management By Objectives (MBO)
 Specific performance goals are jointly determined by
employees and managers.
 Progress toward accomplishing goals is periodically
reviewed.
 Rewards are allocated on the basis of progress
towards the goals.
 Key elements of MBO:
 Goal specificity, participative decision making, an explicit
performance/evaluation period, feedback

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Exhibit 7–3 Steps in a typical MBO program
1. The organization’s overall objectives and strategies are formulated.
2. Major objectives are allocated among divisional and departmental
units.
3. Unit managers collaboratively set specific objectives for their units with
their managers.
4. Specific objectives are collaboratively set with all department
members.
5. Action plans, defining how objectives are to be achieved, are specified
and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and feedback is
provided.
8. Successful achievement of objectives is reinforced by performance-
based rewards.

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Does MBO work?
• Reason for MBO Success
 Top management commitment and involvement
• Potential problems with MBO programs
 Not as effective in dynamic environments that require
constant resetting of goals.
 Overemphasis on individual accomplishment may
create problems with teamwork.
 Allowing the MBO program to become an annual
paperwork shuffle.

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Exhibit 7–4 Well-Written goals

• Written in terms of • Challenging yet attainable

outcomes, not actions  Low goals do not motivate.
 Focuses on the ends, not  High goals motivate if they
the means. can be achieved.
• Measurable and • Written down
quantifiable  Focuses, defines, and
 Specifically defines how the makes goals visible.
outcome is to be measured • Communicated to all
and how much is expected.
necessary organizational
• Clear as to time frame members
 How long before measuring  Puts everybody “on the
accomplishment. same page.”

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Steps in goal setting
1. Review the organization’s mission statement.
Do goals reflect the mission?
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?

3. Determine goals individually or with others.

Are goals specific, measurable, and timely?
4. Write down the goals and communicate them.
Is everybody on the same page?
5. Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?

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Developing plans
• Contingency factors in a manager’s planning
 Manager’s level in the organization
 Strategic plans at higher levels
 Operational plans at lower levels
 Degree of environmental uncertainty
 Stable environment: specific plans
 Dynamic environment: specific but flexible plans
 Length of future commitments
 Commitment Concept: current plans affecting future
commitments must be sufficiently long-term to meet those
commitments.

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Exhibit 7–5 Planning in the hierarchy of
organizations

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Approaches to planning
• Establishing a formal planning department
 A group of planning specialists who help managers
write organizational plans.
 Planning is a function of management; it should never
become the sole responsibility of planners.

• Involving organizational members in the process

 Plans are developed by members of organizational
units at various levels and then coordinated with other
units across the organization.

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Contemporary issues
in planning
• Criticisms of planning
 Planning may create rigidity.
 Plans cannot be developed for dynamic
environments.
 Formal plans cannot replace intuition and creativity.
 Planning focuses managers’ attention on today’s
competition not tomorrow’s survival.
 Formal planning reinforces today’s success, which
may lead to tomorrow’s failure.
 Just planning isn’t enough.
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Contemporary issues in
planning (cont’d)
• Effective planning in dynamic environments
 Develop plans that are specific but flexible.
 Understand that planning is an ongoing process.
 Change plans when conditions warrant.
 Persistence in planning eventually pay off.
 Flatten the organizational hierarchy to foster the
development of planning skills at all organizational
levels.

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 Terms to know
• planning • directional plans
• goals • single-use plan
• plans • standing plans
• stated goals • traditional goal setting
• real goals • means-ends chain
• framing • management by
• strategic plans objectives (MBO)
• operational plans • mission
• long-term plans • commitment concept
• short-term plans • formal planning
• department
specific plans

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1–320
 Case study 11
As a deputy director of a local manufacturing company, Mr. Nguyen
Anh Dung is making a new plan for company. However, he is not
sure about some issues. He doesn’t know to whom he should
assign the tasks making plans. Besides, many other issues are
waiting to be solved such as labour union, interest rate, etc. In
addition, he has to care for the issue that many potential suppliers
want to extend contracts 5 years more and manufacturing plant is
being opened in foreign countries during 4 years coming.
1)What will he do to make the plans with this situation? Please
analyse every content as follows: To whom the activities of
operational planning will be assigned? What are his missions &
other top leaders?
2)What are challenges of the company from its operational
environment? How influence on the company’s plans?

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1) Planning includes which of the following steps?
A) choosing goals
B) identifying actions
C) reviewing performance
D) all of the above

322
2) Planning is a primary function of :
A) front-line staff.
B) management.
C) the marketing department.
D) the accounting department.

323
3) The strategy concerned with deciding which
industries a firm should compete in and how the firm
should enter or exit industries is a(n):
A) strategic plan.
B) business-level strategy.
C) corporate-level strategy.
D) operating strategy.

324
4) The plan that human resource personnel might
develop for hiring a sales force to sell a new product
the division has developed is called a(n):
A) operating plan.
B) unit plan.
C) operating strategy.
D) business-level plan.

325
5) Plans that address unique events that do not reoccur
are called:
A) single-use plans.
B) standing plans.
C) strategic plans.
D) operating plans.

326
6) Which of the following statements about preparing
for a crisis is most accurate?
A) Preparation requires everyone in the organization to
be a spokesperson for the organization.
B) Preparation requires a general plan of how to deal
with the crisis.
C) Managing the aftermath of the crisis is taken care of
in the containment stage.
D) Preparation requires an organization to designate a
crisis management team.

327
7) The strategic planning process begins with:
A) feedback from employees.
B) performing a SWOT analysis.
C) defining the mission, vision, and values of the
organization.
D) drafting an action plan.

328
8) Kodak's mission statement is to provide "customers
with the solutions they need to capture, store, process,
output, and communicate images—anywhere,
anytime." It is an example of a good mission statement
because:
A) it focuses on the product Kodak produces.
B) a functional component is included.
C) it focuses on Kodak's customers.
D) all of the above apply.

329
9) Which of the following statements is true of strategic
planning?
A) Planning is a central task of the accounting function.
B) Strategic planning has no impact on company
performance.
C) Some management theorists assert that the best
strategies arise in the absence of planning, and that
planning can limit creativity and freedom of action.
D) Planning is not part of a good strategy formulation
process because the environment changes so quickly.

330
10) The rational decision-making model is:
A) a perfect model for decision-making.
B) reasonable except for one problem: dialectic inquiry.
C) reasonable except for one problem: bounded
rationality.
D) reasonable except for one problem: the outside view

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Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Strategic
8 Management

8–332
Learning outcomes
Follow this learning outline as you read and study this
chapter.
8.1 Strategic management
• Define strategic management, strategy, and business model
• Give three reasons why strategic management is important

8.2 The strategic management process

• Describe the six steps in the strategic management process
• Define SWOT (strengths, weaknesses, opportunities, and
threats)

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Learning outcomes
8.3 Corporate strategies
• Describe the three major types of corporate strategies
• Explain how the BCG matrix and how it’s used to
manage corporate strategies

8.4 Competitive strategies

• Describe the role of competitive advantage
• Explain Porter’s five forces model
• Describe Porter’s three competitive strategies

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Learning outcomes
8.5 Current strategic management issues
• Explain why strategic flexibility is important
• Describe e-business strategies
• Discuss what strategies organizations might use to
become more customer oriented and to be more
innovative

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Strategic management
 What managers do to develop an organization’s
strategies
• Strategies
 The decisions and actions that determine the long-run
performance of an organization.
• Business model
 Is a strategic design for how a company intends to profit from its
strategies, work processes, and work activities.
 Focuses on two things:
 Whether customers will value what the company is providing.
 Whether the company can make any money doing that.

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Xác định chiến lược của doanh nghiệp
• Làm thế nào để làm hài lòng khác hàng?

• Làm thế nào để đối phó với những thay

đổi của thị trường? Chiến lược

• Làm thế nào để chiến thắng đối thủ là làm thế
nào để…
cạnh tranh?

• Làm thế nào để phát triển hoạt động kinh doanh?

• Làm thế nào để quản lý các hoạt động chức năng và phát triển
các năng lực cần thiết?

• Làm thế nào để đạt được các mục tiêu tài chính và chiến
lược?
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Why is strategic management
important?

1. It results in higher organizational performance.

2. It requires that managers examine and adapt
to business environment changes.
3. It coordinates diverse organizational units,
helping them focus on organizational goals.

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Exhibit 8–1 The strategic management process

8–339
Strategic management process
• Step 1: Identifying the organization’s current
mission, goals, and strategies
 Mission: a statement of the purpose of an
organization
 The scope of its products and services
 Goals: the foundation for further planning
 Measurable performance targets

• Step 2: Doing an external analysis

 The environmental scanning of specific and general
environments
 Focuses on identifying opportunities and threats

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Exhibit 8–2 Components of a mission statement

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Strategic management process
• Step 3: Doing an internal analysis
 Assessing organizational resources, capabilities, and activities:
 Strengths create value for the customer and strengthen the
competitive position of the firm.
 Weaknesses can place the firm at a competitive disadvantage.

 Analyzing financial and physical assets is fairly easy, but

assessing intangible assets (employee’s skills, culture, corporate
reputation, and so forth) isn’t as easy.

• Steps 2 and 3 combined are called a SWOT analysis.

(Strengths, Weaknesses, Opportunities, and Threats)

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Strategic management process
• Step 4: Formulating strategies
 Develop and evaluate strategic alternatives
 Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors
 Match organizational strengths to environmental
opportunities
 Correct weaknesses and guard against threats

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 Strategic management process
• Step 5: Implementing strategies
 Implementation: effectively fitting organizational
structure and activities to the environment.
 The environment dictates the chosen strategy;
effective strategy implementation requires an
organizational structure matched to its requirements.

• Step 6: Evaluating results

 How effective have strategies been?
 What adjustments, if any, are necessary?

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Exhibit 8–3 Types of organizational strategies

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Types of organizational
strategies
• Corporate strategies
 Top management’s overall plan for the entire
organization and its strategic business units

• Types of corporate strategies

 Growth: expansion into new products and markets
 Stability: maintenance of the status quo
 Renewal: examination of organizational weaknesses
that are leading to performance declines

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Corporate strategies
• Growth strategy
 Seeking to increase the organization’s business by
expansion into new products and markets.

• Types of growth strategies

 Concentration
 Vertical integration
 Horizontal integration
 Diversification

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Corporate strategies
• Concentration
 Focusing on a primary line of business and increasing
the number of products offered or markets served.

• Vertical integration
 Backward vertical integration: attempting to gain
control of inputs (become a self-supplier).
 Forward vertical integration: attempting to gain control
of output through control of the distribution channel or
provide customer service activities (eliminating
intermediaries).

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Corporate strategies
• Horizontal integration
 Combining operations with another competitor in the
same industry to increase competitive strengths and
lower competition among industry rivals.
• Related diversification
 Expanding by combining with firms in different, but
related industries that are “strategic fits.”
• Unrelated diversification
 Growing by combining with firms in unrelated
industries where higher financial returns are possible.

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Corporate strategies
• Stability strategy
 A strategy that seeks to maintain the status quo to
deal with the uncertainty of a dynamic environment,
when the industry is experiencing slow- or no-growth
conditions, or if the owners of the firm elect not to
grow for personal reasons.

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Corporate strategies
• Renewal strategies
 Developing strategies to counter organization
weaknesses that are leading to performance declines.
 Retrenchment: focusing of eliminating non-critical
weaknesses and restoring strengths to overcome current
performance problems.
 Turnaround: addressing critical long-term performance
problems through the use of strong cost elimination
measures and large-scale organizational restructuring
solutions.

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Corporate portfolio analysis
• Managers manage portfolio (or collection) of businesses
using a corporate portfolio matrix such as the BCG
Matrix.
• BCG matrix
 Developed by the Boston Consulting Group
 Considers market share and industry growth rate
 Classifies firms as:
 Cash cows: low growth rate, high market share
 Stars: high growth rate, high market share
 Question marks: high growth rate, low market share
 Dogs: low growth rate, low market share

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Exhibit 8–4 The BCG matrix

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Competitive strategies

• Competitive strategy
 A strategy focused on how an organization will
compete in each of its SBUs (strategic business
units).

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The role of competitive
advantage
• Competitive advantage
 An organization’s distinctive competitive edge.

• Quality as a competitive advantage

 Differentiates the firm from its competitors.
 Can create a sustainable competitive advantage.
 Represents the company’s focus on quality
management to achieve continuous improvement and
meet customers’ demand for quality.

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The role of competitive
advantage (cont’d)
• Sustainable competitive advantage
 Continuing over time to effectively exploit resources
and develop core competencies that enable an
organization to keep its edge over its industry
competitors.

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 Exhibit 8–5 Five forces model

Source: Based on M.E. Porter, Competitive Strategy: Techniques for

Analyzing Industries and Competitors (New York: The Free Press, 1980).
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Five competitive forces
• Threat of new entrants
 The ease or difficulty with which new competitors can
enter an industry.
• Threat of substitutes
 The extent to which switching costs and brand loyalty
affect the likelihood of customers adopting substitutes
products and services.
• Bargaining power of buyers
 The degree to which buyers have the market strength
to hold sway over and influence competitors in an
industry.

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Five competitive forces
• Bargaining power of suppliers
 The relative number of buyers to suppliers and
threats from substitutes and new entrants affect the
buyer-supplier relationship.
• Current rivalry
 Intensity among rivals increases when industry
growth rates slow, demand falls, and product prices
descend.

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Types of competitive strategies
• Cost leadership strategy
 Seeking to attain the lowest total overall costs relative
to other industry competitors.
• Differentiation strategy
 Attempting to create a unique and distinctive product
or service for which customers will pay a premium.
• Focus strategy
 Using a cost or differentiation advantage to exploit a
particular market segment rather a larger market.

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Strategic management today
• Strategic flexibility
• New directions in organizational strategies
 E-business
 Customer service
 Innovation

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 Exhibit 8–6 Creating strategic flexibility
• Know what’s happening with strategies currently being
used by monitoring and measuring results.
• Encourage employees to be open about disclosing
and sharing negative information.
• Get new ideas and perspectives from outside the
organization.
• Have multiple alternatives when making strategic
decisions.
• Learn from mistakes.

Source: Based on K. Shimizu and M. A. Hitt, “Strategic Flexibility: Organizational Preparedness to Reverse
Ineffective Strategic Decisions,” Academy of Management Executive, November 2004, pp. 44–59.
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Strategies for applying
e-Business techniques
• Cost leadership
 On-line activities: bidding, order processing, inventory
control, recruitment and hiring
• Differentiation
 Internet-based knowledge systems, online ordering
and customer support
• Focus
 Chat rooms and discussion boards, targeted Web
sites

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Customer service strategies
• Giving the customers what they want.
• Communicating effectively with them.
• Providing employees with customer service
training.

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Innovation strategies
• Possible events
 Radical breakthroughs in products
 Application of existing technology to new uses
• Strategic decisions about innovation
 Basic research
 Product development
 Process innovation
• First mover
 An organization that brings a product innovation to
market or use a new process innovations

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Exhibit 8–7 First-mover Advantages–Disadvantages
• Advantages • Disadvantages
 Reputation for being  Uncertainty over exact
innovative and industry direction technology and
leader market will go
 Cost and learning benefits  Risk of competitors imitating
 Control over scarce innovations
resources and keeping  Financial and strategic risks
competitors from having  High development costs
access to them
 Opportunity to begin
building customer
relationships and customer
loyalty

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 Terms to know
• strategic management • SWOT analysis
• strategies • corporate strategy
• business model • growth strategy
• strategic management process • stability strategy
• mission • renewal strategy
• opportunities • BCG matrix
• threats • competitive strategy
• resources • strategic business units
• capabilities • competitive advantage
• core competencies • functional strategies
• strengths • strategic flexibility
• weaknesses • first mover

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1) Which of the following actions does Wal-Mart take to
lower its prices?
A) Wal-Mart uses distribution centers.
B) Wal-Mart invests in state-of-the-art information
systems.
C) Sam Walton's stores are self-service.
D) Wal-Mart does all of the above to lower its prices.

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2) For most business firms superior performance most
likely means:
A) generating high profits and increasing profits over
time.
B) giving back to the community.
C) providing flexible customer services.
D) having effective government relationships.

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3) A unique strength that rivals lack is called a:
A) legacy constraint.
B) distinctive competency.
C) scope advantage.
D) horizontal advantage.

1–370
4) There is no codebook or book of blueprints a rival
can purchase to learn how to operate like 3M. 3M has
distinctive processes for generating new product ideas
and taking those ideas from conception to market
introduction that are embedded deep within the
company. These processes serve as a:
A) copyright.
B) patent.
C) trademark.
D) barrier to imitation.

1–371
5) Cost advantages derived from a large sales volume
are called economies of:
A) scale.
B) scope.
C) location.
D) density.

1–372
6) A firm with efficient internal operations and unique
strengths to support its low-cost position is likely
operating on the:
A) differentiation curve.
B) low-cost cycle.
C) efficiency frontier.
D) low-cost frontier.

1–373
7) To use segmentation to achieve competitive
advantage, a segment must have:
A) a similarity to other segments in the market.
B) an ability to change with the times.
C) Internet access.
D) enough demand for the segment to be served
profitably.

1–374
8) Activities having to do with the design, creation, and
delivery of the product; its marketing; and its after-
sales service are called:
A) secondary activities.
B) support activities.
C) primary activities.
D) fundamental activities.

1–375
9) Marketing and sales can create value for the firm by:
A) affecting consumers' perceptions of a product.
B) communicating consumer needs back to the R&D
department.
C) discovering consumer needs.
D) doing all of the above.

1–376
10) __________ are the ability of senior managers to
elicit high levels of performance from the constituent
businesses of a diversified enterprise.
A) External governance skills
B) Internal diversification skills
C) Internal governance skills
D) Relational management skills

1–377
 CASE STUDY 1: VINAMILK
• Sau cổ phần hóa năm 2003, đến năm 2006 Vinamilk niêm yết trên thị trường
chứng khoán và đạt mức vốn hoá trên thị trường là 530 triệu USD. Sau 5
năm, đến đầu năm 2011 mức vốn hoá đạt 2 tỷ USD, tăng gần 4 lần. Trên cơ
sở đó, Vinamilk đã định hướng phát triển thành tập đoàn thực phẩm và nước
giải khát đa ngành (sữa, các chế phẩm từ sữa, bia, cà phê...) mang thương
hiệu Vinamilk. Thế nhưng các dự án sản xuất bia và cà phê không như mong
đợi, nên Vinamilk đã phải chuyển nhượng lại 2 dự án này để bảo toàn vốn.
• Hiện nay, Vinamilk chỉ tập trung nguồn lực vào ngành sữa. Gần đây, Vinamilk
đã mua cổ phần trong các Công ty sữa Thanh Hóa và Bình Định; đồng thời,
đang nghiên cứu đầu tư vào một số công ty sữa khác… Năm 2010, Vinamilk
là doanh nghiệp duy nhất của Việt Nam lọt vào danh sách 200 doanh nghiệp
tốt nhất tại khu vực Châu Á do Tạp chí Forbes Asia bình chọn. Vinamilk đặt
mục tiêu đến năm 2017 đứng vào top 50 công ty sữa lớn nhất thế giới với
doanh thu 3 tỷ USD mỗi năm.
Bạn hãy phân tích chiến lược của Vinamilk và đánh giá triển vọng của
chiến lược đó. Đồng thời, đưa ra các đề xuất bổ sung mà bạn cho là
thích hợp để hoàn thiện chiến lược của Vinamilk.

1–378
 CASE STUDY 2: INTEL
• Năm 2007, Tập đoàn Intel đã xây dựng Nhà máy lắp ráp và kiểm định
chip bán dẫn tại Khu công nghệ cao Tp. Hồ Chí Minh trên mặt bằng 4,6
ha và vốn đầu tư 1 tỉ USD. Nhà máy đã hoàn thành và đi vào hoạt động từ
năm 2010, tạo việc làm cho hơn 4.000 lao động.
• Trong kế hoạch mở rộng sản xuất (vốn đầu tư 6 tỉ USD) của Intel, đây là
nhà máy lắp ráp và kiểm định thứ 7 trong hệ thống toàn cầu, cùng 6 nhà
máy khác ở Penang và Kulim (Malaysia), Cavite (Philippines), Thành Đô
và Thượng Hải (Trung Quốc), San Jose (Hoa Kỳ). Việt Nam được chọn
làm một mắt xích trong hệ thống sản xuất toàn cầu của Intel, vì Intel đánh
giá Việt Nam có lực lượng lao động trẻ và năng động, hệ thống giáo dục
và cơ sở hạ tầng ngày càng được cải thiện, an ninh chính trị tốt và chính
phủ có tầm nhìn chiến lược.
Hãy phân tích tình hình và cho biết Intel đã áp dụng chiến lược gì
trong trường hợp này? Theo bạn, triển vọng của chiến lược ra sao?
Và bạn có đề xuất gì để phát huy hiệu quả của chiến lược đó tốt
hơn?

1–379
 CASE STUDY 3: VIETTEL
• Từ 15/05/2012, Viettel đã chính thức hoạt động kinh doanh viễn thông
tại Mozambique (châu Phi). Sau hơn một năm đầu tư tại đây, Công ty
Movitel (thương hiệu viễn thông của Viettel tại Mozambique) đã sở hữu
mạng lưới lớn nhất, phủ sóng rộng nhất tại Mozambique với 1.800 trạm
phát sóng (2G và 3G) phủ 100% quận, huyện, đóng góp hơn 50% hạ
tầng mạng điện thoại di động của Mozambique. Movitel cũng xây dựng
hệ thống kênh phân phối với 50 cửa hàng và 25.000 điểm bán, đại lý
đến từng huyện, xã.
• Tính đến nay, Viettel đã đầu tư tại 4 quốc gia: Lào, Campuchia, Haiti và
Mozambique. Doanh thu năm 2011 của Viettel đạt gần 6 tỉ USD. Với 60
triệu thuê bao đang hoạt động trên toàn cầu, Viettel nằm trong tốp 15
công ty viễn thông lớn nhất thế giới về số lượng thuê bao.
Bạn hãy phân tích chiến lược của Viettel và đánh giá triển vọng của
chiến lược đó. Đồng thời, đưa ra các đề xuất bổ sung mà bạn cho
là thích hợp để hoàn thiện chiến lược của Viettel.

1–380
 CASE STUDY 4: MICROSOFT
• Microsoft từ lâu vẫn trung thành với quan điểm: chỉ phát triển phần mềm
và cung cấp cho các hãng phần cứng thay vì cho ra mắt một sản phẩm
riêng gây khó dễ cho chính đối tác của mình. Nhưng điều đó đã thay đổi
từ ngày 18/6/2012, khi họ tung ra tablet Surface tại Mỹ.
• Surface có hệ điều hành Windows 8, có các ứng dụng văn phòng, là máy
tính thực thụ dù đang khoác trên mình dáng vẻ của một tablet. Người
dùng có thể thao tác với màn hình cảm ứng hoặc gắn bàn phím, bút... để
làm việc như trên laptop trong những hoàn cảnh khác nhau. Surface
chính là một bước đi quan trọng nữa để Microsoft tiến đến "hệ sinh thái
hợp nhất", nơi PC, tablet, điện thoại, TV, máy chơi game... có thể chạy
trên cùng một nền tảng, giúp người sử dụng không cảm thấy xa lạ khi tiếp
xúc nhiều thiết bị khác nhau.
Hãy phân tích tình hình và cho biết Microsoft đã áp dụng chiến lược
gì trong trường hợp này? Theo bạn, triển vọng của chiến lược ra
sao? Và bạn có đề xuất gì để phát huy hiệu quả của chiến lược đó
tốt hơn?

1–381
 CASE STUDY 5: APPLE
• Theo Reuters, Apple đã tăng mức tiêu thụ iPhone từ 18,7 triệu chiếc
trong quí I lên 20,3 triệu chiếc trong quí II-2011. Trong khi đó, Nokia lại
giảm mức bán ra từ 24,2 triệu chiếc xuống còn 16,7 triệu chiếc trong
cùng kỳ. Đây là lần đầu tiên Apple vượt qua Nokia để trở thành nhà sản
xuất điện thoại thông minh (smartphone) lớn nhất thế giới.
• Tuy nhiên, trong hơn một năm qua Apple đã phải đối mặt với sức ép
cạnh tranh vô cùng quyết liệt của các dòng smartphone chạy Andorid
giá rẻ hơn nhiều của HTC, Samsung, LG…, khiến họ phải tính đến
phương án tham gia phân khúc thị trường smartphone giá trung bình để
có thể tiếp tục duy trì vị thế nhà sản xuất điện thoại thông minh hàng đầu
thế giới.
Bạn hãy phân tích chiến lược của Apple và đánh giá triển vọng của
chiến lược đó. Đồng thời, đưa ra các đề xuất bổ sung mà bạn cho
là thích hợp để hoàn thiện chiến lược của Apple.

1–382
 CASE STUDY 6: NOKIA
• Từ năm 1990 Nokia đã liên tục dẫn đầu trên thị trường điện thoại di
động, chủ yếu là nhờ các dòng điện thoại bình dân, và kể từ năm 1996
trở về sau là nhờ các dòng điện thoại thông minh.
• Tuy nhiên, trong vòng 3 năm trở lại đây Nokia liên tục thất bại trên thị
trường smartphone trước sự cạnh tranh quyết liệt từ Apple (iPhone) và
các dòng điện thoại chạy Andorid của HTC, Samsung, LG... Đến giữa
năm 2011 Nokia mất vị thế số một vào tay Apple, rồi rơi luôn xuống vị trí
thứ ba (sau cả Samsung) vào cuối năm 2011.
• Trước tình hình đó, Nokia đã cố gắng vươn lên với dòng Lumia chạy
Windowsphone trên cả hai phân khúc giá cao và trung bình. Đến nay, có
thể nói vị thế cạnh tranh của Nokia đã được cải thiện đáng kể.
Bạn hãy phân tích chiến lược của Nokia và đánh giá triển vọng của
chiến lược đó. Đồng thời, đưa ra các đề xuất bổ sung mà bạn cho
là thích hợp để hoàn thiện chiến lược của Nokia.

1–383
 CASE STUDY 7: VBL
• Đến cuối năm 2010, Công ty liên doanh Nhà máy Bia Việt Nam (VBL) –
thành viên của Tập đoàn APB (Singapore) tại Việt Nam, đã hoạt động
với công suất tối đa 300 triệu lít/năm, bao gồm các loại bia mang nhãn
hiệu Heineken, Fosters, Tiger, Larger, Larue, BGI. Vào đầu năm 2011,
VBL đã được chính phủ cho phép tăng công suất thêm 100 triệu lít/năm
để đưa tổng công suất lên 400 triệu lít/năm.
• Được biết, thị trường bia Việt Nam đang tăng trưởng với nhịp độ cao (từ
15 – 18%/năm). Nên không chỉ có các nhà máy bia thuộc khu vực FDI
mở rộng đầu tư, mà hai đại gia của ngành bia nội địa là Tổng công ty
Bia - Rượu - Nước giải khát Sài gòn (SABECO) và Tổng công ty Bia -
Rượu - Nước giải khát Hà Nội (HABECO) cũng đã gia tăng mạnh năng
lực sản xuất.
Bạn hãy phân tích chiến lược của VBL tại Việt Nam và đánh giá
triển vọng của chiến lược đó. Đồng thời, đưa ra các đề xuất bổ
sung mà bạn cho là thích hợp để hoàn thiện chiến lược của VBL.

1–384
 CASE STUDY 8: AMAZON
• Hãng thương mại điện tử lớn nhất thế giới Amazon đã chính thức bước
chân vào lãnh địa máy tính bảng bằng “Ngọn lửa” Kindle Fire chỉ nặng
vỏn vẹn 413 g và giá chỉ bằng một nửa so với Apple iPad. Sản phẩm
không được trang bị camera, micro và 3G nhưng bù lại giá chỉ 200 USD
trong khi Apple iPad 2 bản không có 3G đã là 400 USD.
• Amazon cũng đã khoác lớp áo mới cho hệ điều hành Android bằng một
giao diện tươi mới, dễ dùng và gắn bó mật thiết với thư viên khổng lồ về
phim, tạp chí, nhạc… của họ. Người mua sẽ được dùng thử dịch vụ
Amazon Prime (vốn có giá 79 USD/năm) trong vòng 30 ngày. Vừa qua,
Amazon cũng đã tuyên bố hợp tác bản quyền với CBS và Twentieth
Century Fox, bổ sung hơn 4.000 phim và chương trình TV mới vào kho
nội dung trực tuyến Prime.
Bạn hãy phân tích chiến lược của Amazon khi tham gia sản xuất kinh
doanh máy tính bảng và đánh giá triển vọng của chiến lược đó.
Đồng thời, đưa ra các đề xuất bổ sung mà bạn cho là thích hợp để
hoàn thiện chiến lược của hãng này.

1–385
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Organizational
9 Structure and
Design
9–386
Learning outcomes
Follow this learning outline as you read and study this
chapter.
9.1 Defining organizational structure
• Discuss the traditional and contemporary views of
work specialization, chain of command, and span of
control
• Describe each of the five forms of departmentalization
• Differentiate, authority, responsibility, and unity of
command
• Explain how centralization – decentralization and
formalization are used in organizational design

9–387
Learning outcomes
9.2 Mechanistic and Organic structures
• Contrast mechanistic and organic organizations
• Explain the contingency factors that affect
organizational design
9.3 Common organizational designs
• Contrast the three traditional organizational designs
• Describe the contemporary organizational designs
• Discuss the organizational design challenges facing
managers today

9–388
Designing organizational structure
• Organizing
 Arranging and structuring work to accomplish an organization’s
goals
• Organizational structure
 The formal arrangement of jobs within an organization
• Organizational design
 A process involving decisions about six key elements:
 Work specialization
 Departmentalization
 Chain of command
 Span of control
 Centralization and decentralization
 Formalization

9–389
Exhibit 9–1 Purposes of organizing

• Divides work to be done into specific jobs and

departments.
• Assigns tasks and responsibilities associated with
individual jobs.
• Coordinates diverse organizational tasks.
• Clusters jobs into units.
• Establishes relationships among individuals, groups,
and departments.
• Establishes formal lines of authority.
• Allocates and deploys organizational resources.

9–390
Organizational structure
• Work specialization
 The degree to which tasks in the organization are
divided into separate jobs with each step completed
by a different person.
 Overspecialization can result in human diseconomies
from boredom, fatigue, stress, poor quality, increased
absenteeism, and higher turnover.

9–391
Departmentalization by type
• Functional • Process
 Grouping jobs by functions  Grouping jobs on the basis
performed of product or customer flow
• Product • Customer
 Grouping jobs by product  Grouping jobs by type of
line customer and needs
• Geographical
 Grouping jobs on the basis
of territory or geography

9–392
Exhibit 9–2 The five common forms of departmentalization

9–393
Exhibit 9–2 (cont’d) Geographical departmentalization

9–394
Exhibit 9–2 (cont’d) Product departmentalization

9–395
Exhibit 9–2 (cont’d) Process departmentalization

+ More efficient flow of work activities

– Can only be used with certain types of products

9–396
Exhibit 9–2 (cont’d) Customer departmentalization

+ Customers’ needs and problems can be met by specialists

- Duplication of functions
- Limited view of organizational goals

9–397
Organizational structure (cont’d)
• Chain of command
 The continuous line of authority that extends from
upper levels of an organization to the lowest levels of
the organization and clarifies who reports to whom.

9–398
Organizational structure (cont’d)
• Authority
 The rights inherent in a managerial position to tell
people what to do and to expect them to do it.
• Responsibility
 The obligation or expectation to perform.
• Unity of command
 The concept that a person should have one boss and
should report only to that person.

9–399
Organizational structure (cont’d)
• Span of control
 The number of employees who can be effectively and efficiently
supervised by a manager.
 Width of span is affected by:
 Skills and abilities of the manager
 Employee characteristics
 Characteristics of the work being done
 Similarity of tasks
 Complexity of tasks
 Physical proximity of subordinates
 Standardization of tasks
 Sophistication of the organization’s information system
 Strength of the organization’s culture
 Preferred style of the manager

9–400
Exhibit 9–3 Contrasting spans of control

9–401
Case study 5
Increasing span of control in management has
very important meaning for organizations. For
example, there are 2 enterprises and each side
has 4,096 staff. Span of control in the
enterprise A is 4 and in the enterprise B is 8. In
condition that the enterprises have foreign
investment, if average salary of a manager is
30,000 USD/ year,
How much does the enterprise B save for
span of control extension?
3–402
Organizational structure (cont’d)
• Centralization
 The degree to which decision making is concentrated
at upper levels in the organization.
 Organizations in which top managers make all the decisions
and lower-level employees simply carry out those orders.
• Decentralization
 Organizations in which decision making is pushed
down to the managers who are closest to the action.
• Employee empowerment
 Increasing the decision-making authority (power) of
employees.

9–403
Exhibit 9–4 Factors that influence the amount of
centralization and decentralization

• More centralization
 Environment is stable.
 Lower-level managers are not as capable or experienced at
making decisions as upper-level managers.
 Lower-level managers do not want to have a say in decisions.
 Decisions are relatively minor.
 Organization is facing a crisis or the risk of company failure.
 Company is large.
 Effective implementation of company strategies depends on
managers retaining say over what happens.

9–404
Exhibit 9–4 (cont’d) Factors that influence the amount
of centralization and decentralization

• More decentralization
 Environment is complex, uncertain.
 Lower-level managers are capable and experienced at making
decisions.
 Lower-level managers want a voice in decisions.
 Decisions are significant.
 Corporate culture is open to allowing managers to have a say in
what happens.
 Company is geographically dispersed.
 Effective implementation of company strategies depends on
managers having involvement and flexibility to make decisions.

9–405
Organizational structure (cont’d)
• Formalization
 The degree to which jobs within the organization are
standardized and the extent to which employee
behavior is guided by rules and procedures.
 Highly formalized jobs offer little discretion over what is to be
done.
 Low formalization means fewer constraints on how
employees do their work.

9–406
Exhibit 9–5 Mechanistic versus Organic organization

• High specialization • Cross-functional teams

• Rigid departmentalization • Cross-hierarchical teams
• Clear chain of command • Free flow of information
• Narrow spans of control • Wide spans of control
• Centralization • Decentralization
• High formalization • Low formalization

9–407
Contingency factors
• Structural decisions are influenced by:
 Overall strategy of the organization
 Organizational structure follows strategy.
 Size of the organization
 Firms change from organic to mechanistic organizations as
they grow in size.
 Technology use by the organization
 Firms adapt their structure to the technology they use.
 Degree of environmental uncertainty
 Dynamic environments require organic structures;
mechanistic structures need stable environments.

9–408
Contingency factors (cont’d)
• Strategy frameworks:
 Innovation
 Pursuing competitive advantage through meaningful and
unique innovations favors an organic structuring.
 Cost minimization
 Focusing on tightly controlling costs requires a mechanistic
structure for the organization.

9–409
Contingency factors (cont’d)
• Strategy and structure
 Achievement of strategic goals is facilitated by
changes in organizational structure that
accommodate and support change.

• Size and structure

 As an organization grows larger, its structure tends to
change from organic to mechanistic with increased
specialization, departmentalization, centralization,
and rules and regulations.

9–410
Contingency factors (cont’d)
• Technology and structure
 Organizations adapt their structures to their
technology.
 Woodward’s classification of firms based on the
complexity of the technology employed:
 Unit production of single units or small batches
 Mass production of large batches of output
 Process production in continuous process of outputs
 Routine technology = mechanistic organizations
 Non-routine technology = organic organizations

9–411
Exhibit 9–6 Woodward’s findings on technology,
structure, and effectiveness

9–412
Contingency factors (cont’d)
• Environmental uncertainty and structure
 Mechanistic organizational structures tend to be most
effective in stable and simple environments.
 The flexibility of organic organizational structures is
better suited for dynamic and complex environments.

9–413
Common organizational designs
• Traditional designs
 Simple structure
 Low departmentalization, wide spans of control, centralized
authority, little formalization
 Functional structure
 Departmentalization by function
– Operations, finance, marketing, human resources, and
product research and development
 Divisional structure
 Composed of separate business units or divisions with limited
autonomy under the coordination and control the parent
corporation.

9–414
Exhibit 9–7 Strengths and weaknesses of traditional
organizational designs

9–415
Exhibit 9–8 Contemporary organizational designs
Team Structure
• What it is: A structure in which the entire organization is made up of
work groups or teams.
• Advantages: Employees are more involved and empowered. Reduced
barriers among functional areas.
• Disadvantages: No clear chain of command. Pressure on teams to perform.

Matrix-Project Structure
What it is: A structure that assigns specialists from different functional
areas to work on projects but who return to their areas when
the project is completed. Project is a structure in which
employees continuously work on projects. As one project is
completed, employees move on to the next project.
• Advantages: Fluid and flexible design that can respond to environmental
changes. Faster decision making.
• Disadvantages: Complexity of assigning people to projects. Task and
personality conflicts.

9–416
Exhibit 9–8 (cont’d ) Contemporary organizational
designs

Boundaryless Structure
What it is: A structure that is not defined by or limited to artificial
horizontal, vertical, or external boundaries; includes virtual
and network types of organizations.
• Advantages: Highly flexible and responsive. Draws on talent wherever it’s
found.
• Disadvantages: Lack of control. Communication difficulties.

9–417
Organizational designs (cont’d)
• Contemporary organizational designs
 Team structures
 The entire organization is made up of work groups or self-
managed teams of empowered employees.
 Matrix and project structures
 Specialists from different functional departments are
assigned to work on projects led by project managers.
 Matrix and project participants have two managers.
 In project structures, employees work continuously on
projects; moving on to another project as each project is
completed.

9–418
Organizational designs (cont’d)
• Contemporary organizational designs (cont’d)
 Boundaryless organization
 An flexible and unstructured organizational design that is
intended to break down external barriers between the
organization and its customers and suppliers.
 Removes internal (horizontal) boundaries:
– Eliminates the chain of command
– Has limitless spans of control
– Uses empowered teams rather than departments
 Eliminates external boundaries:
– Uses virtual, network, and modular organizational
structures to get closer to stakeholders.

9–419
Removing external boundaries
• Virtual organization
 An organization that consists of a small core of full-time
employees and that temporarily hires specialists to work on
opportunities that arise.
• Network organization
 A small core organization that outsources its major business
functions (e.g., manufacturing) in order to concentrate on what it
does best.
• Modular organization
 A manufacturing organization that uses outside suppliers to
provide product components for its final assembly operations.

9–420
Today’s organizational design
challenges
• Keeping Employees Connected
 Widely dispersed and mobile employees
• Building a Learning Organization
• Managing Global Structural Issues
 Cultural implications of design elements

9–421
Organizational designs (cont’d)
• The learning organization
 An organization that has developed the capacity to
continuously learn, adapt, and change through the
practice of knowledge management by employees.
 Characteristics of a learning organization:
 An open team-based organization design that empowers
employees
 Extensive and open information sharing
 Leadership that provides a shared vision of the organization’s
future.
 A strong culture of shared values, trust, openness, and a
sense of community.

9–422
 Terms to know
• organizing • mechanistic organization
• organizational structure • organic organization
• organizational chart • unit production
• organizational design • mass production
• work specialization • process production
• departmentalization • simple structure
• cross-functional teams • functional structure
• chain of command • divisional structure
• authority • team structure
• responsibility • matrix structure
• unity of command • project structure
• span of control • boundaryless organization
• centralization • virtual organization
• decentralization • network organization
• employee empowerment • learning organization
• formalization

9–423
1) The values and assumptions shared within an
organization are called the organizational:
A) DNA.
B) values.
C) culture.
D) lifestyle.

1–424
2) Yahoo's DNA or "what makes it tick" according to its
website are excellence, innovation, customer fixation,
teamwork, community, and fun. These are examples of
Yahoo's:
A) espoused values.
B) collaborative values.
C) common values.
D) top-tier values.

1–425
3) Those subcultures that directly oppose the
organization's core values are called:
A) dominant cultures.
B) collective subcultures.
C) countervailing cultures.
D) countercultures.

1–426
4) The observable symbols and signs of an
organization's culture are called:
A) its cultural dcor.
B) its cultural design.
C) artifacts.
D) cultural formatting.

1–427
5) The speed with which employees walk around
BMW's corporate offices is an example of its:
A) corporate ceremonies.
B) corporate rituals.
C) corporate legends.
D) corporate action plans.

1–428
6) Corporate culture __________ refers to how widely
and deeply employees hold the company's dominant
values and assumptions.
A) depth
B) breadth
C) strength
D) character

1–429
7) A(n) __________ exists when employees focus on
the changing needs of customers and other
stakeholders and support initiatives to keep pace with
these changes.
A) adaptive culture
B) responsive culture
C) aligning culture
D) complying culture

1–430
8) Which of the following statements about organization
culture is most accurate?
A) The organization's culture begins with its employees.
B) The founder is often the visionary who provides a
powerful role model for others to follow.
C) The board of directors, not the founder sets the tone,
emphasizing what is most important.
D) All of the above are accurate.

1–431
9) Rewards systems can be developed to:
A) create a better place to work.
B) reward good performance.
C) reduce poor performance.
D) do all of the above.

1–432
10) The practice of diagnosing cultural relations
between companies and determining the extent to
which cultural clashes will likely occur is called:
A) an organizational audit.
B) a cultural audit.
C) a clash sheet.
D) a bicultural audit

1–433
11) The totality of a firm's organization, including
formal organization structure, control systems,
incentive systems, organizational culture, and people
is referred to as:
A) organization architecture.
B) corporate culture.
C) organization structure.
D) human capital.

1–434
12) Which of the following statements about
organizational architecture is most correct?
A) Organizational architecture refers to the buildings in
which the organization is housed.
B) Organizational architecture is the same regardless of
industry or strategy used.
C) Strategy supports the architecture of the firm.
D) The various components of organization architecture
are not independent of each other.

1–435
13) Organization structure can be thought of in terms of
three dimensions:
A) vertical coordination, horizontal coordination,
integrating mechanisms.
B) vertical integration, horizontal integration,
integrating mechanisms.
C) vertical differentiation, horizontal differentiation,
integrating mechanisms.
D) vertical differentiation, horizontal differentiation,
collaboration.

1–436
14) Vesting decision-making authority in lower-level
managers or other employees is called:
A) decentralization.
B) centralization.
C) localization.
D) distributed authority.

1–437
15) Organizations with many layers of management are
called:
A) wide.
B) multi-layered.
C) tall.
D) narrow.

1–438
16) Jonathon owns a small factory that makes wood
products for the construction industry. Initially the factory
had just one manager and 10 employees. As the factory
got more orders, more people were hired including sales
people, accountants, and a factory manager. These people
allowed Jonathon to focus more on strategic issues facing
the business. This is an example of how companies often
become:
A) wide.
B) tall.
C) narrow.
D) flat.

1–439
17) In a __________ structure the structure of the
organization follows the obvious division of labor
within the firm.
A) multidivisional
B) geographic
C) matrix
D) functional

1–440
18) Which of the following statements about the functional
structure of an enterprise is most accurate?
A) Within a functional structure the firm is divided into different
product divisions.
B) The profitability of each distinct business is easily discerned
when using a functional structure for an enterprise that runs
many businesses.
C) A functional structure can work well for a firm that is active
in a single line of business and focuses on a single geographic
area.
D) Poor organizational control may result from using a
functional structure in an organization that runs many
businesses.

1–441
19) A formal integrating mechanism is used to:
A) reward managers.
B) consolidate profitability results across the
organization.
C) help achieve organizational coordination.
D) do all of the above.

1–442
20) Which organizational structure is designed to
maximize integration among subunits?
A) matrix
B) functional
C) geographic
D) multidivisional

1–443
Management tenth edition

Stephen P. Robbins Mary Coulter

Appendix Managing
A Entrepreneurial
Ventures
A–444
Learning outcomes
Follow this learning outline as you read and study this
chapter.
A1. The context of entrepreneurship
• Differentiate between entrepreneurial ventures and small
businesses.
• Explain why entrepreneurship is important in the United States
and globally.
• Describe the four key steps in the entrepreneurial process.
• Explain what entrepreneurs do.
• Discuss why social responsibility and ethics are important
considerations for entrepreneurs.

A–445
Learning outcomes
A2. Start-up and planning issues
• Discuss how opportunities are important to
entrepreneurial ventures.
• Describe each of the seven sources of potential
opportunity.
• Explain why it’s important for entrepreneurs to
understand competitive advantage.
• List possible financing options for entrepreneurs.
• Describe the six major sections of a business plan.

A–446
Learning outcomes
A3. Organizing issues
• Contrast the six different forms of legal organization.
• Describe the organizational design issues that
entrepreneurs face.
• Discuss the unique human resource management
issues entrepreneurs face.
• Describe what an innovation-supportive culture looks
like.

A–447
Learning outcomes
A4. Leading issues
• Explain what personality research shows about entrepreneurs.
• Discuss how entrepreneurs can empower employees.
• Explain how entrepreneurs can be effective at leading employee
work teams.

A5. Controlling issues

• Describe how entrepreneurs should plan, organize, and control
growth.
• Describe the boiled frog phenomenon and why it’s useful for
entrepreneurs.
• Discuss the issues an entrepreneur needs to consider when
deciding whether to exit the entrepreneurial venture.

A–448
The context of entrepreneurship
• What is entrepreneurship?
 Entrepreneurship is the process of starting new businesses,
generally in response to opportunities.
• Entrepreneurial ventures
 Organizations that pursue opportunities, are characterized by
innovative practices, and have growth and profitability as their
main goals.
• Small business
 A firm that is independently owned, operated, and financed; has
fewer than 100 employees; doesn’t necessarily engage in new or
innovative practices, and has relatively little impact on its
industry.

A–449
Why is entrepreneurship
important?
• Innovation
 Engage in the creative destruction process
 Act as agents of change
• Number of new startups
 Increasing numbers of new firms
• Job creation
 New ventures create 60-80% of net new jobs

A–450
The entrepreneurial process

Exploring
Exploringthe
theentrepreneurial
entrepreneurialcontext
context

Identifying
Identifyingopportunities
opportunitiesand
and
possible
possiblecompetitive
competitiveadvantages
advantages

Starting
Startingthe
theventure
venture

Managing
Managingthe
theventure
venture

A–451
Potential sources of opportunity

The
Theunexpected
unexpected

New
Newknowledge
knowledge The
Theincongruous
incongruous

Environmental
Environmental
Changes
Changesinin context
context The
Theprocess
processneed
need
perception
perception

Industry
Industryand
and
Demographics
Demographics market
marketstructures
structures

A–452
Exhibit A–1 Evaluating potential ideas
Personal considerations: Marketplace considerations:
•Do you have the capabilities to do what • Who are the potential customers for your
you’ve selected? idea: who, where, how many?
•Are you ready to be an entrepreneur? • What similar or unique product features
•Are you prepared emotionally to deal does your proposed idea have
with the stresses and challenges of being compared to what’s currently on the
an entrepreneur? market?
•Are you prepared to deal with rejection • How and where will potential customers
and failure? purchase your product?
•Are you ready to work hard? • Have you considered pricing issues and
•Do you have a realistic picture of the whether the price you’ll be able to
charge will allow your venture to survive
venture’s potential?
and prosper?
•Have you educated yourself about
• Have you considered how you will need
financing issues?
to promote and advertise your proposed
•Are you willing and prepared to do
entrepreneurial venture?
continual financial and other types of
analyses?

A–453
Exhibit A–2 Feasibility study
A. Introduction, historical background, description of product or
service:
1. Brief description of proposed entrepreneurial venture
2. Brief history of the industry
3. Information about the economy and important trends
4. Current status of the product or service
5. How you intend to produce the product or service
6. Complete list of goods or services to be provided
7. Strengths and weaknesses of the business
8. Ease of entry into the industry, including competitor analysis

B. Accounting considerations:
1. Proforma balance sheet
2. Proforma profit and loss statement
3. Projected cash flow analysis
A–454
Exhibit A–3 Feasibility study (cont’d)
C. Management considerations:
1. Personal expertise—strengths and weaknesses
2. Proposed organizational design
3. Potential staffing requirements
4. Inventory management methods
5. Production and operations management issues
6. Equipment needs.
D. Marketing considerations:
1. Detailed product description
2. Identify target market (who, where, how many)
3. Describe place product will be distributed (location, traffic, size, channels,
etc.)
4. Price determination (competition, price lists, etc.)
5. Promotion plans (personal selling, advertising, sales promotion, etc.)
A–455
Exhibit A–3 Feasibility study (cont’d)
E. Financial considerations:
1. Start-up costs
2. Working capital requirements
3. Equity requirements
4. Loans—amounts, type, conditions
5. Breakeven analysis
6. Collateral
7. Credit references
8. Equipment and building financing—costs and methods
F. Legal considerations:
1. Proposed business structure (type; conditions, terms, liability, responsibility;
insurance needs; buyout and succession issues)
2. Contracts, licenses, and other legal documents
G. Tax considerations: (sales/property/employee; federal, state, and local)
H. Appendix: charts/graphs, diagrams, layouts, resumes, etc.
A–456
Researching competitors
• Competitor intelligence:
 What types of products or services are competitors offering?
 What are the major characteristics of these products or services?
 What are their products’ strengths and weaknesses?
 How do they handle marketing, pricing, and distributing?
 What do they attempt to do differently from other competitors?
 Do they appear to be successful at it? Why or why not?
 What are they good at?
 What competitive advantage(s) do they appear to have?
 What are they not so good at?
 What competitive disadvantage(s) do they appear to have?
 How large and profitable are these competitors?

A–457
Exhibit A–3 Possible financing options
• Entrepreneur’s personal resources (personal savings, home equity,
personal loans, credit cards, etc.)
• Financial institutions (banks, savings and loan institutions, government-
guaranteed loan, credit unions, etc.)
• Venture capitalists—external equity financing provided by professionally-
managed pools of investor money
• Angel investors—a private investor (or group of private investors) who
offers financial backing to an entrepreneurial venture in return for equity
in the venture
• Initial public offering (IPO)—the first public registration and sale of a
company’s stock
• National, state, and local governmental business development programs
• Unusual sources (television shows, judged competitions, etc.)

A–458
Investing in entrepreneurial
ventures
• Venture capitalists
 External equity financing provided by professionally-
managed pools of investor money.
• Angel investors
 A private investor (or group of private investors) who
offers financial backing to an entrepreneurial venture
in return for equity in the venture.
• Initial public offering (IPO)
 The first public registration and sale of a company’s
stock.
A–459
Developing a business plan
• Business plan
 A written document that summarizes a business
opportunity and defines and articulates how the
identified opportunity is to be seized and exploited.
• Elements of a business plan
 Executive summary
 Analysis of opportunity
 Analysis of context
 Description of the business
 Financial data and projections
 Supporting documentation

A–460
Exhibit A–4 Legal forms of business organization
Ownership
Structure Requirements Tax Treatment Liability Advantages Drawbacks

Sole One owner Income and Unlimited Low start-up costs Unlimited personal
proprietorship losses “pass personal Freedom from most liability
through” to liability regulations Personal finances
owner and are Owner has direct at risk
taxed at control Miss out on many
personal rate
All profits go to business tax
owner deductions
Easy to exit Total responsibility
business May be more
difficult to raise
financing

General Two or more Income and Unlimited Ease of formation Unlimited personal
partnership owners losses “pass personal Pooled talent liability
through” to liability Pooled resources Divided authority
partners and are and decisions
taxed at Somewhat easier
access to financing Potential for conflict
personal rate
Some tax benefits Continuity of
flexibility in
transfer of
profit-loss ownership
allocations to
partners

A–461
Exhibit A–4 Legal forms of business organization
(cont’d)
Ownership
Structure Requirements Tax Treatment Liability Advantages Drawbacks

Limited Two or more Income and Limited, Good way to Cost and
liability owners losses “pass although acquire capital from complexity of
partnership through” to one limited partners forming can be
(LLP) partner and are partners high
taxed at must Limited partners
personal rate; retain cannot participate
flexibility in unlimited in management of
profit-loss liability business without
allocations to losing liability
partners protection

C corporation Unlimited number Dividend income Limited Limited liability Expensive to set up
of shareholders; is taxed at Transferable Closely regulated
no limits on types corporate and ownership Double taxation
of stock or voting personal Continuous
arrangements shareholder existence Extensive record
levels; losses keeping
Easier access to
and deductions resources Charter restrictions
are corporate

A–462
Exhibit A–5 Legal forms of business organization
(cont’d)

Ownership
Structure Requirements Tax Treatment Liability Advantages Drawbacks

S corporation Up to 75 share- Income and Limited Easy to set up Must meet certain
holders; no losses “pass Enjoy limited requirements
limits on types through” to liability protection May limit future
of stock or partners and are and tax benefits of financing options
voting taxed at personal partnership
arrangements rate; flexibility in Can have a tax-
profit-loss exempt entity as a
allocation to
shareholder
partners

Limited Unlimited Income and Limited Greater flexibility Cost of switching

liability number of losses “pass Not constrained by from one form to
company “members”; through” to regulations on C this can be high
(LLC) flexible partners and are and S corporations Need legal and
membership taxed at personal Taxed as partner- financial advice in
arrangements rate; flexibility in forming operating
ship, not as
for voting rights profit-loss corporation agreement
and income allocations to
partners

A–463
Human resource management
issues in entrepreneurial ventures
• Employee recruitment concerns
 Locating high potential employees who:
 can perform multiple roles
 are willing to “buy-in” (commitment)

 Filling critical skill gaps

• Employee retention issues
 Potential for damage to client/customer relationships
due to loss of employees
 Need to offer desirable benefits
 Compensation: base pay and incentives
A–464
Exhibit A–5 Suggestions for achieving a supportive
growth-oriented culture
• Keep the lines of communication open—inform employees about major issues.
• Establish trust by being honest, open, and forthright about the challenges and
rewards of being a growing organization.
• Be a good listener—find out what employees are thinking and facing.
• Be willing to delegate duties.
• Be flexible—be willing to change your plans if necessary.
• Provide consistent and regular feedback by letting employees know the outcomes
—good and bad.
• Reinforce the contributions of each person by recognizing employees’ efforts.
• Continually train employees to enhance their capabilities and skills.
• Maintain the focus on the venture’s mission even as it grows.
• Establish and reinforce a “we” spirit since a successful growing venture takes the
coordinated efforts of all the employees.

A–465
Leading issues
• Personality characteristics of entrepreneurs
 High level of motivation, abundance of self-
confidence, ability to be involved for the long term,
high energy level, persistent problem solver, high
degree of initiative, ability to set goals, and moderate
risk-taker.
• Proactive personality
 Individuals who are more prone to take actions to
influence their environment—that is, they’re more
proactive.

A–466
Leading issues (cont’d)
• Motivating employees through empowerment
 Empowerment
 Giving employees the power to make decisions and take
actions on their own to solve problems
 Benefits of empowerment
 Improved flexibility and speed
 Stronger work motivation
 Higher morale
 Better work quality
 Higher job satisfaction
 Lower turnover
 Higher productivity
 Improved quality

A–467
Leading issues (cont’d)
• Empowering employees
 Participative decision making
 Delegation
 Redesigning jobs

A–468
The entrepreneur as leader
• Leading employee work teams
 Empowered teams
 Have the authority to plan and implement process
improvements
 Self-directed teams
 Are nearly autonomous and responsible for many managerial
activities
 Cross-functional teams
 Are composed of individuals from various specialties who
work together on various tasks

A–469
Controlling issues

Managing
Managinggrowth
growth

Managing
Managingdownturns
downturns

Exiting
Exitingthe
theventure
venture

Managing
Managingpersonal
personallife
life
choices
choicesand
andchallenges
challenges

A–470
Controlling issues (cont’d)
• Managing growth • Managing downturns
 Planning for growth  Recognizing crisis
 Organizing for growth situations—avoiding the
 Financing growth boiled frog phenomenon
  Dealing with downturns,
Finding people
declines, and crises
 Creating a growth-oriented
culture
 Controlling for growth

A–471
Exiting the venture
• Why leave?
 Desiring to harvest the value of the venture
 Facing serious organizational performance problems
 Desiring to pursue other interests/opportunities
• Business valuation methods
 Asset valuations
 Earnings valuations
 Cash flow valuations

A–472
Managing personal life choices
and challenges
• Balancing work and personal life
 Become a good time manager
 Seek professional business advice when needed
 Deal with conflicts as they arise
 Developing a network of trusted friends and peers
 Recognize when personal stress levels are too high

A–473
 Terms to know
• entrepreneurship
• entrepreneurial ventures
• small business
• feasibility study
• venture capitalists
• angel investors
• initial public offering (IPO)
• business plan
• sole proprietorship
• general partnership

A–474
 Terms to know
• limited liability partnership (LLP)
• corporation
• closely held corporation
• S corporation
• limited liability company (LLC)
• operating agreement
• proactive personality
• “boiled frog” phenomenon
• harvesting

A–475
Management tenth edition

Stephen P. Robbins Mary Coulter

Appendix Planning Tools

B and
Techniques
B–476
Learning outcomes
Follow this learning outline as you read and study this
chapter.

Techniques for assessing the environment

• List the different approaches to assess the
environment.
• Explain what competitor intelligence is and ways
that managers can do it legally and ethically.
• Describe how managers can improve the
effectiveness of forecasting.
• List the steps in the benchmarking process.

B–477
Learning outcomes
Techniques for allocating resources
• List the four techniques for allocating resources.
• Describe the different types of budgets.
• Explain what a Gantt chart and a load chart do.
• Describe how PERT network analysis works.
• Understand how to compute a breakeven point.
• Describe how managers can use linear programming.

B–478
Assessing the environment
• Environmental scanning
 The screening of large amounts of information to
anticipate and interpret change in the environment.
 Competitor Intelligence
 The process of gathering information about competitors—
who they are; what they are doing
– Is not spying but rather careful attention to readily
accessible information from employees, customers,
suppliers, the Internet, and competitors themselves.
 May involve reverse engineering of competing products to
discover technical innovations.

B–479
Assessing the environment

• Environmental scanning (cont’d)

 Global scanning
 Screening a broad scope of information on global forces that
might affect the organization.
 Has value to firms with significant global interests.
 Draws information from sources that provide global
perspectives on worldwide issues and opportunities.

B–480
Assessing the environment
(cont’d)
• Forecasting
 The part of organizational planning that involves
creating predictions of outcomes based on
information gathered by environmental scanning.
 Facilitates managerial
decision making.
 Is most accurate in
stable environments.

B–481
Assessing the environment
(cont’d)
• Forecasting techniques
 Quantitative forecasting
 Applying a set of mathematical rules to a series of hard data
to predict outcomes (e.g., units to be produced).
 Qualitative forecasting
 Using expert judgments and opinions to predict less than
precise outcomes (e.g., direction of the economy).
• Collaborative planning, forecasting, and
replenishment (CPFR) software
 A standardized way for organizations
to use the Internet to exchange data.
B–482
Exhibit B–1 Forecasting techniques

• Quantitative
• Time series analysis
• Regression models
• Econometric models
• Economic indicators
• Substitution effect
• Qualitative
• Jury of opinion
• Sales force composition
• Customer evaluation

B–483
Making forecasting more
effective
1. Use simple forecasting methods.
2. Compare each forecast with its corresponding “no
change” forecast.
3. Don’t rely on a single forecasting method.
4. Don’t assume that the turning points in a trend can
be accurately identified.
5. Shorten the time period covered by a forecast.
6. Remember that forecasting is a developed
managerial skill that supports decision making.

B–484
Benchmarking
• The search for the best practices among
competitors and noncompetitors that lead to
their superior performance.
• By analyzing and copying these practices, firms
can improve their performance.

B–485
 Exhibit B–2 Steps in benchmarking

Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking

for Superior Performance,” Long Range Planning. February 1993, p. 42.

B–486
Allocating resources
• Types of resources
 The assets of the organization
 Financial: debt, equity, and retained earnings
 Physical: buildings, equipment, and raw materials
 Human: experiences, skills, knowledge, and competencies
 Intangible: brand names, patents, reputation, trademarks,
copyrights, and databases

B–487
Allocating resources:
Budgeting
• Budgets
 Are numerical plans for allocating resources (e.g.,
revenues, expenses, and capital expenditures).
 Are used to improve time, space, and use of material
resources.
 Are the most commonly used
and most widely applicable
planning technique for
organizations.

B–488
 Exhibit B–3 Types of budgets

Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.

B–489
Exhibit B–4 Suggestions for improving budgeting
• Collaborate and communicate.
• Be flexible.
• Goals should drive budgets—budgets should not
determine goals.
• Coordinate budgeting throughout the organization.
• Use budgeting/planning software when appropriate.
• Remember that budgets are tools.
• Remember that profits result from smart management,
not because you budgeted for them.

B–490
Allocating resources:
Scheduling
• Schedules
 Plans that allocate resources by detailing what
activities have to be done, the order in which they are
to be completed, who is to do each, and when they
are to be completed.
 Represent the coordination of various activities.

B–491
Allocating resources:
Charting
• Gantt chart
 A bar graph with time on the horizontal axis and
activities to be accomplished on the vertical axis.
 Shows the expected and actual progress of various
tasks.
• Load chart
 A modified Gantt chart that lists entire departments or
specific resources on the vertical axis.
 Allows managers to plan and control capacity
utilization.
B–492
Exhibit B–5 A Gantt chart

B–493
Exhibit B–6 A load chart

B–494
Allocating resources:
Analysis
• Program evaluation and review technique (PERT)
 A flow chart diagram that depicts the sequence of activities
needed to complete a project and the time or costs associated
with each activity.
 Events: endpoints for completion.
 Activities: time required for each activity.
 Slack time: the time that a completed activity waits for another
activity to finish so that the next activity, which depends on the
completion of both activities, can start.
 Critical path: the path (ordering) of activities that allows all tasks to
be completed with the least slack time.

B–495
Exhibit B–7 Steps in developing a PERT network

1. Identify every significant activity that must be achieved for a

project to be completed.
2. Determine the order in which these events must be completed.
3. Diagram the flow of activities from start to finish, identifying each
activity and its relationship to all other activities.
4. Compute a time estimate for completing each activity.
5. Using the network diagram that contains time estimates for each
activity, determine a schedule for the start and finish dates of
each activity and for the entire project.

B–496
Exhibit B–8 Events and activities in constructing an
office building

B–497
Exhibit B–9 A visual PERT network for constructing
an office building

Critical Path: A - B - C - D - G - H - J - K

B–498
Allocating resources: Analysis
(cont’d)
• Breakeven analysis
 Is used to determine the point at which all fixed costs
have been recovered and profitability begins.
 Fixed cost (FC)
 Variable costs (VC)
 Total Fixed Costs (TFC)
 Price (P)

• The Break-even formula:

Total Fixed Costs
Breakeven :
Unit Price - Unit Variable Costs
B–499
Exhibit B–10 Breakeven analysis

B–500
Allocating resources: Analysis
(cont’d)
• Linear programming
 A technique that seeks to solve resource allocation
problems using the proportional relationships
between two variables.

B–501
Exhibit B–11 Production data for cinnamon-
scented products

B–502
Exhibit B–12 Graphical solution to linear
programming problem

Max.
Assembly
Max.
Manufacturing

Max.
Profits

Max.
Assembly
Max.
Manufacturing

B–503
Contemporary planning
techniques
• Project
 A one-time-only set of activities that has a definite
beginning and ending point time.

• Project management
 The task of getting a project’s activities done on time,
within budget, and according to specifications.
 Define project goals
 Identify all required activities, materials, and labor
 Determine the sequence of completion

B–504
 Exhibit B–13 Project planning process

Source: Based on R.S. Russell and B.W. Taylor III, Production and Operations
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.

B–505
Contemporary planning
techniques (cont’d)
• Scenario
 A consistent view of what the future is likely to be.
• Scenario planning
 An attempt not try to predict the future but to reduce
uncertainty by playing out potential situations under
different specified conditions.
• Contingency planning
 Developing scenarios that allow managers determine
in advance what their actions should be should a
considered event actually occur.
B–506
 Terms to know
• environmental scanning • PERT network
• competitor intelligence • events
• forecasts • activities
• quantitative forecasting • slack time
• qualitative forecasting • critical path
• benchmarking • breakeven analysis
• resources • linear programming
• budget • project
• scheduling • project management
• Gantt chart • scenario
• load chart

B–507
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managing
10 Human
Resources
10–508
 Learning outcomes
Follow this learning outline as you read and study this
chapter.
10.1 The human resource management process
• Explain why the HRM process is important
• Discuss the environmental factors that most directly affect the HRM
process
10.2 Identifying and selecting competent employees
• Define job analysis, job description, and job specification
• Discuss the major sources of potential job candidates
• Describe the different selection devices and which works best for
different jobs
• Explain why a realistic job preview is important

10–509
Learning outcomes
10.3 Providing employees with needed skills
and knowledge
• Explain why orientation is so important
• Describe the different types of training and how that training can
be provided
10.4 Retaining competent, high performing employees
• Describe the different performance appraisal methods
• Discuss the factors that influence employee compensation and
benefits
• Describe skill-based and variable pay systems

10–510
Learning outcomes
10.5 Contemporary issues in managing human
resources
• Explain how managers can manage downsizing
• Discuss how managers can manage workforce
diversity
• Explain what sexual harassment is and what
managers need to know about it
• Describe how organizations are dealing with work-life
balance issues
• Discuss how organizations are controlling HR costs

10–511
The importance of Human
Resource Management (HRM)
• As a significant source of competitive advantage
 People-oriented HR creates superior shareholder
value
• As an important strategic tool
 Achieve competitive success through people by
treating employees as partners
• To improve organizational performance
 High performance work practices lead to both high
individual and high organizational performance.

10–512
 Exhibit 10–1 Examples of high-performance work
practices
• Self-managed teams
• Decentralized decision making
• Training programs to develop knowledge, skills,
and abilities
• Flexible job assignments
• Open communication
• Performance-based compensation
• Staffing based on person–job and person–
organization fit
Source: Based on W. R. Evans and W. D. Davis, “High-Performance Work Systems
and Organizational Performance: The Mediating Role of Internal Social Structure,”
Journal of Management, October 2005, p. 760. 10–513
The HRM process
• Functions of the HRM process
 Ensuring that competent employees are identified and
selected.
 Providing employees with up-to-date knowledge and
skills to do their jobs.
 Ensuring that the organization retains competent and
high-performing employees.

10–514
Exhibit 10–2 Human Resource Management process

10–515
Environmental factors affecting
HRM
• Employee labor unions
 Organizations that represent workers and seek to
protect their interests through collective bargaining.
 Collective bargaining agreement
– A contractual agreement between a firm and a union
elected to represent a bargaining unit of employees of the
firm in bargaining for wage, hours, and working conditions.
• Governmental laws and regulations
 Limit managerial discretion in hiring, promoting, and
discharging employees.
 Affirmative Action: Organizational programs that enhance the
status of members of protected groups.
10–516
Exhibit 10–3 Major U.S. Federal laws and regulations
related to HRM
1963 Equal Pay Act
1964 Civil Rights Act, Title VII (amended in 1972)
1967 Age Discrimination in Employment Act
1973 Vocational Rehabilitation Act
1974 Privacy Act
1978 Mandatory Retirement Act
1986 Immigration Reform and Control Act
1988 Worker Adjustment and Retraining Notification Act
1990 Americans with Disabilities Act
1991 Civil Rights Act of 1991
1993 Family and Medical Leave Act of 1993
1996 Health Insurance Portability and Accountability Act of 1996
2004 FairPay Overtime Initiative

10–517
Managing Human Resources
• Human Resource (HR) planning
 The process by which managers ensure that they
have the right number and kinds of people in the right
places, and at the right times, who are capable of
effectively and efficiently performing their tasks.
 Helps avoid sudden talent shortages and surpluses.
 Steps in HR planning:
 Assessing current human resources
 Assessing future needs for human resources

10–518
Current assessment
• Human Resource inventory
 A review of the current make-up of the organization’s
current resource status.
 Job analysis
 An assessment that defines a job and the behaviors
necessary to perform the job.
 Requires conducting interviews, engaging in direct
observation, and collecting the self-reports of employees and
their managers.

10–519
Current assessment (cont’d)
• Job Description
 A written statement that describes a job.
• Job Specification
 A written statement of the minimum qualifications that
a person must possess to perform a given job
successfully.

10–520
Meeting future Human Resource
needs
Supply of employees Demand for employees

Factors affecting staffing

Strategic goals
Forecast demand for products and services
Availability of knowledge, skills, and abilities

10–521
Recruitment and Decruitment
• Recruitment
 The process of locating, identifying, and attracting
capable applicants to an organization
• Decruitment
 The process of reducing a surplus of employees in
the workforce of an organization
• Online recruiting
 Recruitment of employees through the Internet
 Organizational Web sites
 Online recruiters

10–522
Exhibit 10–4 Major sources of potential job candidates

10–523
Exhibit 10–5 Decruitment options

10–524
Selection
• Selection process
 The process of screening job applicants to ensure
that the most appropriate candidates are hired.
• What is selection?
 An exercise in predicting which applicants, if hired,
will be (or will not be) successful in performing well on
the criteria the organization uses to evaluate
performance.
 Selection errors:
 Reject errors for potentially successful applicants
 Accept errors for ultimately poor performers

10–525
Exhibit 10–6 Selection decision outcomes

10–526
Validity and Reliability
• Validity (of prediction)
 A proven relationship between the selection device
used and some relevant criterion for successful
performance in an organization.
• Reliability (of prediction)
 The degree of consistency with which a selection
device measures the same thing.
 Individual test scores obtained with a selection device are
consistent over multiple testing instances.

10–527
Exhibit 10–7 Selection tools

• Application forms
• Written tests
• Performance simulations tests
• Interviews
• Background investigations
• Physical examinations

10–528
Application forms

• Strengths and Weaknesses:

 Almost universally used
 Relevant biographical data and facts that can be
verified
 Can predict job performance
 Weighted-item applications are difficult and expensive
to create and maintain

10–529
Written tests
• Types of tests
 Intelligence: How smart are you?
 Aptitude: Can you learn to do it?
 Attitude: How do you feel about it?
 Ability: Can you do it now?
 Interest: Do you want to do it?
• Legal challenges to tests
 Lack of job-relatedness of test items or interview
questions to job requirements
 Discrimination in equal employment opportunity
against members of protected classes

10–530
Performance simulation tests
• Testing an applicant’s ability to perform actual
job behaviors, use required skills, and
demonstrate specific knowledge of the job.
 Work sampling
 Requiring applicants to actually perform a task or set of tasks
that are central to successful job performance.
 Assessment centers
 Dedicated facilities in which job candidates undergo a series
of performance simulation tests to evaluate their managerial
potential.

10–531
Other selection approaches
• Interviews
 Although used almost universally, managers need to
approach interviews carefully.
• Background investigations
 Verification of application data
 Reference checks:
 Lack validity because self-selection of references ensures
only positive outcomes.
• Physical examinations
 Useful for physical requirements and for insurance
purposes related to pre-existing conditions.

10–532
Other selection approaches
(cont’d)
• Realistic job preview (RJP)
 The process of relating to an applicant both the
positive and the negative aspects of the job.
 Encourages mismatched applicants to withdraw.
 Aligns successful applicants’ expectations with actual job
conditions, reducing turnover.

10–533
Employee needed skills and
knowledge
• Orientation
 Education that introduces a new employee to his or
her job and the organization.
 Work unit orientation
 Organization orientation

• Employee training
 Types of training
 Training methods

10–534
 Exhibit 10–8 Types of training

Type Includes
General Communication skills, computer systems application
and programming, customer service, executive
development, management skills and development,
personal growth, sales, supervisory skills, and
technological skills and knowledge
Specific Basic life/work skills, creativity, customer education,
diversity/cultural awareness, remedial writing, managing
change, leadership, product knowledge, public
speaking/presentation skills, safety, ethics, sexual
harassment, team building, wellness, and others

Source: Based on “2005 Industry Report—Types of Training,” Training, December 2005, p. 22.
10–535
Exhibit 10–9 Training methods

• Traditional • Technology-based
training methods training methods
 On-the-job  CD-ROM/DVD/videotapes/
audiotapes
 Job rotation
 Videoconferencing/
 Mentoring and coaching
teleconferencing/
 Experiential exercises satellite TV
 Workbooks/manuals  E-learning
 Classroom lectures

10–536
Employee performance
management
• Performance management system
 A process of establishing performance standards and
appraising employee performance.

10–537
Exhibit 10–10 Advantages and Disadvantages of performance
appraisal methods

Method Advantage Disadvantage

Written Simple to use More a measure of evaluator’s writing
essays ability than of employee’s actual
performance
Critical Rich examples; behaviorally Time-consuming; lack quantification
incidents based
Graphic Provide quantitative data; Do not provide depth of job behavior
rating scales less time-consuming than assessed
others
BARS Focus on specific and Time-consuming; difficult to develop
measurable job behaviors
Multiperson Compares employees with Unwieldy with large number of
comparisons one another employees; legal concerns
MBO Focuses on end goals; Time-consuming
results oriented
360-degree Thorough Time-consuming
appraisals
10–538
Compensation and Benefits
• Benefits of a fair, effective, and appropriate
compensation system
 Helps attract and retain high-performance employees
 Impacts the strategic performance of the firm
• Types of compensation
 Base wage or salary
 Wage and salary add-ons
 Incentive payments
 Skill-based pay
 Variable pay
10–539
Exhibit 10–11 Factors that influence compensation
and benefits

Sources: Based on R.I. Henderson, Compensation Management, 6th ed. (Upper Saddle River, NJ: Prentice Hall,
1994), pp. 3–24; and A. Murray, “Mom, Apple Pie, and Small Business,” Wall Street Journal, August 15, 1994, p. A1
10–540
Contemporary issues in
managing Human Resources
• Managing downsizing
 The planned elimination of jobs in an organization
 Provide open and honest communication.
 Provide assistance to employees being downsized.
 Reassure and counseling to surviving employees.

• Managing workforce diversity

 Widen the recruitment net for diversity
 Ensure selection without discrimination
 Provide orientation and training that is effective

10–541
Exhibit 10–12 Tips for managing downsizing

• Communicate openly and honestly:

° Inform those being let go as soon as possible
° Tell surviving employees the new goals and expectations
° Explain impact of layoffs
• Follow any laws regulating severance pay or benefits
• Provide support/counseling for surviving employees
• Reassign roles according to individuals’ talents and
backgrounds
• Focus on boosting morale:
° Offer individualized reassurance
° Continue to communicate, especially one-on-one
° Remain involved and available

10–542
Current issues in HRM (cont’d)
• Sexual harassment
 An unwanted activity of a sexual nature that affects
an individual’s employment.
 Unwanted sexual advances, requests for sexual favors, and
other verbal or physical conduct of a sexual nature when
submission or rejection of this conduct explicitly or implicitly
affects an individual’s employment.
 An offensive or hostile environment
 An environment in which a person is affected by elements of
a sexual nature.
• Workplace romances
 Potential liability for harassment

10–543
Current issues in HRM (cont’d)
• Work-life balance
 Employees have personal lives that they don’t leave
behind when they come to work.
 Organizations have become more attuned to their
employees by offering family-friendly benefits:
 On-site child care
 Summer day camps
 Flextime
 Job sharing
 Leave for personal matters
 Flexible job hours

10–544
Current issues in HRM (cont’d)
• Controlling HR costs
 Employee health care
 Encouraging healthy lifestyles
– Financial incentives
– Wellness programs
– Charging employees with poor health habits more for
benefits
 Employee pension plans
 Reducing pension benefits
 No longer providing pension plans

10–545
 Terms to know
• high-performance work • selection
practices • validity
• human resource • reliability
management process • work sampling
• labor union • assessment centers
• affirmative action • realistic job preview (RJP)
• human resource planning • orientation
• job analysis
• performance
• job description management system
• job specification • written essay
• recruitment • critical incidents
• decruitment • graphic rating scales
10–546
 Terms to know
• behaviorally anchored
rating scales (BARS)
• multiperson comparisons
• 360 degree feedback
• skill-based pay
• variable pay
• career
• downsizing
• sexual harassment
• family-friendly benefits

10–547
 MID-TERM TEST
1. What is the job analysis? Give an example
for job description’s sales manager and
and job specification’s sales manager?
2. Discuss advantages and disadvantages of
the major sources of potential job
candidates
3. Discuss contemporary issues in managing
human resources

1–548
Case study 13
University X is urgently improving standard of its teaching group to
renovate programs, have effective training methods, and meet
requirements improving teaching quality in the context of integration.
The university also created many good conditions for young lecturers
with good ability to get overseas training. In general, all selected
lecturers completed their courses well. However, after the training
courses, many lecturers were invited to work in many enterprises with
attractive salary and working environment having many chances to
show their ability. Thus, some of them quit current jobs and some other
were in waver. With this situation, the rector has much of pressure to
overcome it. However, it’s quite difficult because of government’s
current inadequate management mechanism relating to salary inclining
average and working environment without motivation for capable
lecturers. If you were the rector, what would you do to solve this
problem? According to you, is there anything wrong in implement of the
rector?
10–549
1) The human resource staffing process begins with:
A) planning human resource needs.
B) recruiting job applicants.
C) organizational strategy and planning.
D) developing employees.

1–550
2) The process of ensuring that the organization has the
right kinds of people in the right places at the right time
is known as human resource:
A) planning.
B) staffing.
C) recruiting.
D) selection.

1–551
3) A written statement of a job analysis is called a:
A) job statement.
B) job examination.
C) job document.
D) job description.

1–552
4) Estimating how may current employees will be in
various jobs within the organization at some future
date is which part of the HR planning process?
A) conducting a job analysis
B) estimating future internal HR supply
C) estimating HR demand
D) documenting current HR supply

1–553
5) Which of the following statements about job analysis
is most accurate?
A) An increasing number of companies have increased
their reliance on job descriptions.
B) Job descriptions have become more precise relevant
to a specific job.
C) Job analysis allows managers to categorize work.
D) Job descriptions are an important part of HR
planning but are not a legal requirement.

1–554
6) Differences in the demographic, cultural, and
personal characteristics of employees are known as:
A) conceptual diversity.
B) workforce differences.
C) workforce multiplicity.
D) workforce diversity.

1–555
7) Which of the following is a disadvantage of attracting
as many job applicants as possible?
A) There are no disadvantages. This is an excellent
strategy.
B) A high rejection rate may increase the risk of
discrimination lawsuits.
C) It costs less money overall to recruit more people.
D) The company must accept more people with a poor
fit to the job.

1–556
8) __________ refers to an applicant's job performance
or skills and abilities that are required for future
performance as well as how well the employee's
values and interpersonal skills fit the organization's
culture.
A) Suitability
B) Recruitment
C) Selection
D) Reliability

1–557
9) One type of application form that uses statistics to
identify information in the application form that best
predicts the applicant's suitability for a job is called:
A) a reliable application form.
B) a suitable predictive form.
C) a weighted application blank.
D) a significant application form.

1–558
10) The first training that employees should receive is
__________, the organization's systematic process of
helping new employees make sense of and adapt to the
work context.
A) the job preview
B) performance gap analysis
C) employee orientation
D) CBT

1–559
11) Employees' emotional and cognitive motivation,
their perceived ability to perform the job, their clear
understanding of the organization's vision and their
specific role in that vision, and their belief that they
have been given the resources to get the job done is
known as:
A) employee engagement.
B) motivational engagement.
C) ability.
D) employee connection.

1–560
12) The drive to form social relationships and develop
mutual caring commitments with others is referred to as
the drive to:
A) care.
B) nurture.
C) bond.
D) connect.

1–561
13) Which of the following statements about four-drive
theory is most accurate?
A) One drive is not inherently inferior or superior to
another drive.
B) All four drives are fixed in our brains through
evolution.
C) The four drives determine which emotions are
triggered in each situation.
D) All of the above statements are accurate.

1–562
14) Goal setting provides the critical linkage between
the:
A) organization's financial statements and individual
motivation.
B) organization's financial statements and the HR
department.
C) organization's competition and the marketing
department.
D) organization's strategic plans and individual
motivation.

1–563
15) According to expectancy theory an individual's
effort level depends on their:
A) effort-to-performance.
B) drive for affiliation.
C) safety needs.
D) drive for power.

1–564
16) A positive emotional experience resulting directly
and naturally from the individual's behavior or results
is called a(n):
A) drive-to-bond.
B) intrinsic reward.
C) motivator.
D) extrinsic reward.

1–565
17) To improve performance appraisals an employer
might measure the number of people served per hour
in a restaurant for example. The likely reason that this
type of measure will improve the appraisal is:
A) it is an objective measure of performance.
B) it is a 360-degree feedback mechanism.
C) managers always need to be trained in providing this
type of feedback.
D) All of the above are reasons it will improve the
appraisal.

1–566
18) The theory that explains how people develop
perceptions of fairness in the distribution and
exchange of resources is called:
A) four-drive theory.
B) exchange theory.
C) expectancy theory.
D) equity theory.

1–567
19) The job characteristics model suggests that which of
the following job dimensions contributes to
meaningfulness?
A) autonomy
B) feedback from job
C) skill variety
D) knowledge of results

1–568
20) Employees who feel empowered care about their
work and believe that what they do is important. This
dimension of empowerment is called:
A) self-determination.
B) competence.
C) meaning.
D) impact

1–569
21) Physiological, behavioral, and psychological
episodes experienced toward an object, person, or
event that create a state of readiness are called:
A) emotions.
B) cognitions.
C) moods.
D) attitudes.

1–570
22) Surveys suggest that more than __________ percent
of Americans are satisfied with their jobs.
A) 85
B) 65
C) 50
D) 35

1–571
23) The employee-customer-profit-chain model
suggests that:
A) satisfied clients lead to lower turnover.
B) organizational practices lead to lower turnover.
C) higher profit leads to hiring happier employees.
D) higher profits lead to organizational practices.

1–572
24) An employee's calculative attachment to an
organization, whereby an employee is motivated to
stay only because leaving would be costly is known
as:
A) organizational commitment.
B) devotional commitment.
C) organizational allegiance.
D) continuance commitment.

1–573
25) When managers are continually paying attention to
the fairness of their decisions, they are exhibiting
__________, which should lead to organizational
commitment.
A) shared values
B) trust
C) justice and support
D) employee involvement

1–574
26) Which of the following is a symptom of stress?
A) loose muscles
B) slower breathing
C) increased heart rate
D) less blood to the brain

1–575
27) Any environmental conditions that place a physical
or emotional demand on a person are known as:
A) stressors.
B) distressors.
C) eustressors.
D) stress demands.

1–576
28) One way to manage workplace stress is to take a
vacation. This is an example of:
A) changing stress perceptions.
B) withdrawing from the stressor.
C) controlling stress consequences.
D) receiving social support.

1–577
29) Companies can help employees to experience more
work-life balance by offering:
A) personal leave.
B) flexible hours.
C) telecommuting.
D) all of the above.

1–578
30) People who are careful, dependable, and self-
disciplined are likely to score high on which one of the
following personality dimensions?
A) agreeableness
B) openness to experience
C) conscientiousness
D) extroversion

1–579
31) Power that subordinates have over their superiors is
known as:
A) opposing power.
B) countervailing power.
C) subordinating power.
D) subsidiary power.

1–580
32) Which of the following statements about power is
most accurate?
A) People with power have to exercise it to get things
done.
B) Power is a one-way street.
C) A manager that controls the resources that his or her
employees need has countervailing power.
D) Person A has power over person B by controlling
something of value that person B needs to achieve his
goals.

1–581
33) In an organization, power comes from:
A) substitutability.
B) centrality.
C) formal position within a hierarchy.
D) influence.

1–582
34) Power over rewards and sanctions is bounded by:
A) norms.
B) laws.
C) a need to maintain legitimacy.
D) all of the above.

1–583
35) These __________ are not sources of power, rather
they determine the extent to which people can
leverage the power they have to make things happen
within organizations.
A) incidents of power
B) power externalities
C) contingencies of power
D) possibilities of power

1–584
36) At one time a strike by telephone employees would
have shut down operations in a telephone company;
but computerized systems and other technological
innovations have reduced the need for telephone
operators. In this example technology is an example of
__________ one of the contingencies of power.
A) centrality
B) discretion
C) substitutability
D) visibility

1–585
37) __________ occurs when someone complies with a
request because of role expectations and the
requester's legitimate hierarchical power.
A) Silent authority
B) Assertiveness
C) Network building
D) Implicit tactics

1–586
38) Which of the following statements about influence
tactics is most accurate?
A) Influence tactics are a way to use power but not a
way of accumulating power.
B) Even junior managers who lack substantial sources
of power can have an impact on the CEO if influence
tactics are used correctly.
C) Influence tactics are a way to accumulate power but
not an effective way to use power.
D) People with limited power cannot use influence
tactics.

1–587
39) When one party perceives that its interests are being
opposed or negatively influenced by another party it is
known as:
A) conflict.
B) resistance.
C) opposition.
D) challenge.

1–588
40) People who sit face-to-face during a negotiation are
most likely to:
A) develop a win-win orientation toward the conflict
situation.
B) develop a win-lose orientation toward the conflict
situation.
C) negotiate a solution in a shorter time.
D) make excessive concessions

1–589
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managing
11 Teams

11–590
Learning outcomes
Follow this learning outline as you read and study this
chapter.
11.1 Groups and group development
• Define the different types of groups
• Describe the five stages of group development
11.2 Work group performance and satisfaction
• List the major components that determine group performance
and satisfaction
• Describe how external conditions and group member resources
affect group performance and satisfaction
• Discuss how group structure influences group performance and
satisfaction
• Describe how group processes and group tasks influence group
performance and satisfaction

11–591
Learning outcomes
11.3 Turning groups into effective teams
• Compare groups and teams
• Describe the four most common types of teams
• List the characteristics of effective teams
11.4 Current challenges in managing teams
• Discuss the challenges of managing global teams
• Explain the role of informal (social) networks in
managing teams

11–592
Groups and Group development
• Group
 Two or more interacting and interdependent
individuals who come together to achieve specific
goals.
 Formal groups
 Work groups defined by the organization’s structure that have
designated work assignments and tasks.
– Appropriate behaviors are defined by and directed toward
organizational goals.
 Informal groups
 Groups that are independently formed to meet the social
needs of their members.

11–593
Exhibit 11–1 Examples of formal groups

• Command groups
 Groups that are determined by the organization chart
and composed of individuals who report directly to a
given manager.

• Task groups
 Groups composed of individuals brought together to
complete a specific job task; their existence is often
temporary because once the task is completed, the
group disbands.

11–594
Exhibit 11–1 Examples of formal groups (cont’d)

• Cross-functional teams
 Groups that bring together the knowledge and skills of
individuals from various work areas or groups whose
members have been trained to do each others’ jobs.

• Self-managed teams
 Groups that are essentially independent and in
addition to their own tasks, take on traditional
responsibilities such as hiring, planning and
scheduling, and performance evaluations.

11–595
Stages in group development
• Forming • Performing
 Members join and begin the  A fully functional group
process of defining the group’s structure allows the group to
purpose, structure, and focus on performing the task at
leadership. hand.
• Storming • Adjourning
 Intragroup conflict occurs as  The group prepares to disband
individuals resist control by the and is no longer concerned
group and disagree over with high levels of
leadership. performance.
• Norming
 Close relationships develop as
the group becomes cohesive
and establishes its norms for
acceptable behavior.

11–596
Exhibit 11–2 Stages of group development

11–597
Exhibit 11–3 Group performance satisfaction model

11–598
External conditions imposed on
the group

 Organization’s strategy
 Authority relationships
 Formal regulations
 Available organizational resources
 Employee selection criteria
 Performance management (appraisal) system
 Organizational culture
 General physical layout of work space

11–599
Group member resources
• Knowledge
• Skills
 Interpersonal skills such as conflict management and resolution,
collaborative problem solving, and communication determine
how effectively members perform in a group
• Abilities
 Determine what members can do
• Personality traits
 Positive traits tend to be positively related to group productivity
and morale

11–600
Group structure
• Role
 The set of expected behavior patterns attributed to
someone who occupies a given position in a social
unit that assists the group in task accomplishment or
maintaining group member satisfaction.
 Role conflict: experiencing differing role expectations
 Role ambiguity: uncertainty about role expectations

11–601
Group structure (cont’d)
• Norms
 Acceptable standards or expectations that are shared
by the group’s members.
• Common types of norms
 Effort and performance
 Output levels, absenteeism, promptness, socializing
 Dress
 Loyalty

11–602
Group structure (cont’d)
• Conformity
 Individuals conform in order to be accepted by
groups.
 Group pressures can have an effect on an individual
member’s judgment and attitudes.
 The effect of conformity is not as strong as it once
was, although still a powerful force.
 Groupthink
 The extensive pressure of others in a strongly cohesive or
threatened group that causes individual members to change
their opinions to conform to that of the group.

11–603
Exhibit 11–4 Examples of cards used in the asch
study

11–604
Group structure (cont’d)
• Status system
 The formal or informal prestige grading, position, or
ranking system for members of a group that serves as
recognition for individual contributions to the group
and as a behavioral motivator.
 Formal status systems are effective when the perceived
ranking of an individual and the status symbols accorded that
individual are congruent.

11–605
Group structure: Group size
• Small groups • Social Loafing
 Complete tasks faster than  The tendency for
larger groups. individuals to expend less
 Make more effective use of effort when working
facts. collectively than when
working individually.
• Large groups
 Solve problems better than
small groups.
 Are good for getting diverse
input.
 Are more effective in fact-
finding.

11–606
Group structure (cont’d)
• Group cohesiveness
 The degree to which members are attracted to a
group and share the group’s goals.
 Highly cohesive groups are more effective and productive
than less cohesive groups when their goals aligned with
organizational goals.

11–607
Exhibit 11–5 The relationship between cohesiveness
and productivity

11–608
Group processes: Group decision
making
• Advantages • Disadvantages
 Generates more complete  Time consuming
information and knowledge
 Minority domination
 Generates more diverse
 Pressures to conform
alternatives
 Ambiguous responsibility
 Increases acceptance of a
solution
 Increases legitimacy of
decision

11–609
Exhibit 11–6 Techniques for making more creative
group decisions

11–610
Group processes: Conflict
management
• Conflict
 The perceived incompatible differences in a group
resulting in some form of interference with or
opposition to its assigned tasks.
 Traditional view: conflict must be avoided.
 Human relations view: conflict is a natural and inevitable
outcome in any group.
 Interactionist view: conflict can be a positive force and is
absolutely necessary for effective group performance.

11–611
Group processes: Conflict
management (cont’d)
• Categories of conflict
 Functional conflicts are constructive.
 Dysfunctional conflicts are destructive.
• Types of conflict
 Task conflict: content and goals of the work
 Relationship conflict: interpersonal relationships
 Process conflict: how the work gets done

11–612
Exhibit 11–7 Conflict and group performance

11–613
Group processes: Conflict
management (cont’d)
• Techniques to manage conflict:
 Avoidance
 Accommodation
 Forcing
 Compromise
 Collaboration

11–614
 Exhibit 11–8 Conflict-management techniques

Source: Adapted from K.W. Thomas,

“Conflict and Negotiation Processes in
Organizations,” in M.D. Dunnette and L.M.
Hough (eds.) Handbook of Industrial and
Organizational Psychology, vol. 3, 2d ed.
(Palo Alto, CA: Consulting Psychologists
Press, 1992), p. 668. With permission

11–615
Group tasks and group
effectiveness
• Highly complex and interdependent tasks
require:
 Effective communications: discussion among group
members.
 Controlled conflict: More interaction among group
members.

11–616
Advantages of using teams
• Teams outperform individuals.
• Teams provide a way to better use employee
talents.
• Teams are more flexible and responsive.
• Teams can be quickly
assembled, deployed,
refocused, and disbanded.

11–617
What is a work team?
• Work team
 A group whose members work intensely on a specific
common goal using their positive synergy, individual
and mutual accountability, and complementary skills.
• Types of teams
 Problem-solving teams
 Self-managed work teams
 Cross-functional teams
 Virtual teams

11–618
Exhibit 11–9 Groups versus teams

11–619
Exhibit 11–9 Groups versus teams

11–620
Types of teams
• Problem-solving teams
 Employees from the same department and functional
area who are involved in efforts to improve work
activities or to solve specific problems.

• Self-managed work teams

 A formal group of employees who operate without a
manager and responsible for a complete work
process or segment.

11–621
Types of teams (cont’d)
• Cross-functional teams
 A hybrid grouping of individuals who are experts in
various specialties and who work together on various
tasks.

• Virtual teams
 Teams that use computer technology to link physically
dispersed members in order to achieve a common
goal.

11–622
Exhibit 11–10 Characteristics of effective teams

11–623
Characteristics of effective
teams •
• Have a clear Are unified in their
understanding of their commitment to team goals
goals • Have good communication
• Have competent systems
members with relevant • Possess effective
technical and negotiating skills
interpersonal skills
• Have appropriate
• Exhibit high mutual trust leadership
in the character and
• Have both internally and
integrity of their members
externally supportive
environments
11–624
Current challenges in managing
teams
• Getting employees to:
 Cooperate with others
 Share information
 Confront differences
 Sublimate personal
interest for the greater
good of the team

11–625
Managing global teams
• Group member resources
 Unique cultural characteristics of team members
 Avoiding stereotyping
• Group structure
 Conformity—less groupthink
 Status—varies in importance among cultures
 Social loafing—predominately a Western bias
 Cohesiveness—more difficult to achieve
• Group processes—capitalize on diverse ideas.
• Manager’s role—a communicator sensitive to the type of
global team to use.
11–626
Exhibit 11–11 Drawbacks and benefits of global
teams

Source: Based on N. Adler, International Dimensions in Organizational Behavior,

4th ed. (Cincinnati, OH: South-western
Publishing, 2002), pp. 141–147

11–627
Understanding social networks
• Social network
 The patterns of informal connections among
individuals within groups.
• The importance of social networks
 Relationships can help or hinder team effectiveness.
 Relationships improve team goal attainment and
increase member commitment to the team.

11–628
 Terms to know
• group • traditional view of conflict
• forming stage • human relations view of conflict
• storming stage • interactionist view of conflict
• norming stage • functional conflicts
• performing stage • dysfunctional conflicts
• adjourning stage • task conflict
• role • relationship conflict
• norms • process conflict
• groupthink • work teams
• status • problem-solving team
• social loafing • self-managed work team
• group cohesiveness • cross-functional team
• conflict • virtual team
• social network structure
11–629
Exhibit 11–2 Stages of group development

11–630
Discussion
• Use a specific project to analyse
the group development

11–631
Case study 12
You are in charge of a design team in a company of
drilling rig construction. Phong and Giang are the
two experienced members of the team.
Unfortunately, it seems that they cannot work
together. They always quarrel and dispute with each
other. They usually argue about the problems
relating to the project they are together working on,
and they blame each other for interfering in their
own jobs. In fact, they have no cooperation spirit,
and their behaviors are influencing the work
effectiveness of the whole team. What will you do
to solve this matter?
9–632
1) Teams:
A) are groups of people who have lunch together.
B) are individuals who work on the same manufacturing
line.
C) typically provide superior customer service because
they provide more breadth of knowledge and expertise
to customers than individual "stars" can offer.
D) have members who are expected to work
individually to finish the project at hand.

1–633
2) Which of the following statements about teams is
accurate?
A) Team members are held together by their
interdependence and need for collaboration.
B) Teams require some form of communication.
C) Teams exist to fulfill some purpose.
D) All of the above are true.

1–634
3) Teams organized around work processes that
complete an entire piece of work requiring several
interdependent tasks and have substantial autonomy
over the execution of those tasks are:
A) self-directed teams.
B) advisory teams.
C) departmental teams.
D) virtual teams.

1–635
4) Team members at Whole Foods are responsible for
the entire processes in their areas, such as food
preparation, display, inventory, and some purchasing.
The team plans, organizes, and controls work activities
with little or no direct involvement of someone with
higher formal authority. Based upon this information,
Whole Foods uses:
A) virtual teams.
B) skunkworks.
C) self-directed teams.
D) production teams.

1–636
5) The team's effect on the organization, individual team
members, and the team's existence is called team:
A) awareness.
B) effort.
C) robustness.
D) effectiveness.

1–637
6) The extent to which team members must share
common inputs to their individual tasks, need to
interact while performing their work, or receive
outcomes that are partly determined by the
performance of others is called:
A) task effectiveness.
B) task interdependence.
C) task interaction.
D) team tasking.

1–638
7) During this stage of the team development model
people tend to be polite and will defer to the existing
authority of a formal or informal leader.
A)Storming
B)norming
C) performing
D) forming

1–639
8) Norms develop because:
A) the boss requires each team to provide norms.
B) the company's revenues directly depend on norm
formation.
C) government regulation specifies company norms.
D) people need to predict how others will act.

1–640
9) A logical calculation that other team members will
act appropriately because they face sanctions if their
actions violate reasonable expectations is called:
A) sanctions-based trust.
B) knowledge-based trust.
C) calculus-based trust.
D) identification-based trust.

1–641
10) Conflict that occurs when team members perceive
that the conflict is in the task or problem rather than
each other is called:
A) destructive conflict.
B) coordination conflict.
C) constructive conflict.
D) process conflict

1–642
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Managing Change

12 and
Innovation
12–643
Learning outcomes
Follow this learning outline as you read and study this
chapter.
12.1 The change process
• Explain Lewin’s three-step model of the change
process
• Contrast the calm waters and white-water rapids
metaphors of change
12.2 Managing organizational change
• Define organizational change
• Explain how managers might change structure,
technology, and people
12–644
Learning outcomes
12.3 Managing resistance to change
• Explain why people resist change and how resistance
might be managed
12.4 Contemporary issues in managing change
• Explain why changing organizational culture is so
difficult and how managers can do it
• Describe employee stress and how managers can
help employees deal with stress
• Discuss what it takes to make change happen
successfully

12–645
Learning outcomes
12.5 Stimulating innovation
• Explain how creativity and innovation differ from one
another
• Describe the structural, cultural, and human resource
variables that are necessary for innovation

12–646
Exhibit 12–1 External and internal forces for change

• External • Internal
• Changing consumer • New organizational
needs and wants strategy
• New governmental laws • Change in composition
• Changing technology of workforce
• Economic changes • New equipment
• Changing employee
attitudes

12–647
What is change?

• Characteristics of change
 Is constant yet varies in degree and direction
 Produces uncertainty yet is not completely
unpredictable
 Creates both threats and opportunities
• Managing change is an integral part
of every manager’s job.

12–648
The change process
• The Calm Waters Metaphor
 Lewin’s description of the change process as a break
in the organization’s equilibrium state
 Unfreezing the status quo
 Changing to a new state
 Refreezing to make the change permanent

• White-Water Rapids Metaphor

 The lack of environmental stability and predictability
requires that managers and organizations continually
adapt (manage change actively) to survive.

12–649
Exhibit 12–2 The change process

12–650
Organizational change and
change agents
• Organizational change
 Any alterations in the people, structure, or technology
of an organization
• Change agents
 Persons who act as catalysts and assume the
responsibility for managing the change process.
• Types of change agents
 Managers: internal entrepreneurs
 Nonmanagers: change specialists
 Outside consultants: change implementation experts
12–651
Exhibit 12–3 Three types of change

12–652
Types of change
• Structure
 Changing an organization’s structural components or its
structural design
• Technology
 Adopting new equipment, tools, or operating methods that
displace old skills and require new ones
 Automation: replacing certain tasks done by people with machines
 Computerization
• People
 Changing attitudes, expectations, perceptions, and behaviors
of the workforce

12–653
Organizational development
• Organizational development (OD)
 Techniques or programs to change people and the
nature and quality of interpersonal work relationships.
• Global OD
 OD techniques that work for U.S. organizations may
be inappropriate in other countries and cultures.

12–654
Exhibit 12–4 Popular OD techniques

12–655
Managing resistance to change
• Why people resist change?
 The ambiguity and uncertainty that change introduces
 The comfort of old habits
 A concern over personal loss of status, money,
authority, friendships, and personal convenience
 The perception that change is incompatible with the
goals and interest of the organization

12–656
Exhibit 12–5 Reducing resistance to change

12–657
Issues in managing change
(cont’d)
• Changing organizational cultures
 Cultures are naturally resistant to change.
 Conditions that facilitate cultural change:
 The occurrence of a dramatic crisis
 Leadership changing hands
 A young, flexible, and small organization
 A weak organizational culture

12–658
Exhibit 12–6 Strategies for managing cultural change
• Set the tone through management behavior; top managers,
particularly, need to be positive role models.
• Create new stories, symbols, and rituals to replace those currently
in use.
• Select, promote, and support employees who adopt the new values.
• Redesign socialization processes to align with the new values.
• To encourage acceptance of the new values, change the reward
system.
• Replace unwritten norms with clearly specified expectations.
• Shake up current subcultures through job transfers, job rotation,
and/or terminations.
• Work to get consensus through employee participation and creating
a climate with a high level of trust.

12–659
Issues in managing change
(cont’d)
• Handling employee stress
 Stress
 The adverse reaction people have to excessive pressure
placed on them from extraordinary demands, constraints, or
opportunities.
 Functional Stress
– Stress that has a positive effect on performance.
 How potential stress becomes actual stress
 When there is uncertainty over the outcome.
 When the outcome is important.
12–660
Exhibit 12–7 Symptoms of stress

12–661
Issues in managing change
(cont’d)
• Reducing stress
 Engage in proper employee selection
 Use realistic job interviews for reduce ambiguity
 Improve organizational communications
 Develop a performance planning program
 Use job redesign
 Provide a counseling program
 Offer time planning management assistance
 Sponsor wellness programs

12–662
Issues in managing change
(cont’d)
• Making change happen successfully
 Embrace change—become a change-capable
organization.
 Create a simple, compelling message explaining why
change is necessary.
 Communicate constantly and honestly.
 Foster as much employee participation as possible—
get all employees committed.
 Encourage employees to be flexible.
 Remove those who resist and cannot be changed.
12–663
Exhibit 12–8 Characteristics of change-capable
organizations

• Link the present and • Ensure diverse teams

the future • Encourage mavericks
• Make learning a way of • Shelter breakthroughs
life
• Integrate technology
• Actively support and
encourage day-to-day • Build and deepen trust
improvements and
changes

12–664
Stimulating innovation

• Creativity
 The ability to combine ideas in a unique way or to
make an unusual association.
• Innovation
 Turning the outcomes of the creative process into
useful products, services, or work methods.

12–665
 Exhibit 12–9 World’s most innovative companies

Source: “The World’s Most Innovative Companies by Region,” BusinessWeek, BusinessWeekOnline, April 15, 2008, businessweek.com

12–666
 Exhibit 12–10 Systems view of innovation

Source: Adapted from R.W. Woodman, J.E. Sawyer, and R.W. Griffin, “Toward a Theory
of Organizational Creativity,” Academy of Management Review, April 1993, p. 309.
12–667
Exhibit 12–11
innovation
variables

12–668
Stimulating innovation
• Structural variables
 Adopt an organic structure
 Make available plentiful resources
 Engage in frequent inter-unit communication
 Minimize extreme time pressures on creative
activities
 Provide explicit support for creativity

12–669
Stimulating innovation (cont’d)
• Cultural variables
 Accept ambiguity
 Tolerate the impractical
 Have low external controls
 Tolerate risk taking
 Tolerate conflict
 Focus on ends rather than means
 Develop an open-system focus
 Provide positive feedback

12–670
Stimulating innovation (cont’d)
• Human resource variables
 Actively promote training and development to keep
employees’ skills current.
 Offer high job security to encourage risk taking.
 Encourage individual to be “champions” of change.
• Idea champion
 Dynamic self-confident leaders who actively and
enthusiastically inspire support for new ideas, build
support, overcome resistance, and ensure that
innovations are implemented.

12–671
Terms to know
• organizational change
• change agent
• organizational
development (OD)
• stress
• creativity
• innovation
• idea champion

12–672
1) A __________ occurs when a new technology or
business model comes along that dramatically alters
the nature of demand and competition.
A) paradigm shift
B) model shift
C) archetype shift
D) exemplar shift

1–673
2) In the 1980s and 1990s IBM saw its traditional
mainframe computer business shrink in the face of new
competition from the companies that were driving the
personal computer revolution, including Microsoft,
Intel, and Dell. This was most likely a result of:
A) indifferent management.
B) changing government regulations.
C) a falling economy.
D) a technological paradigm shift.

1–674
3) Internal and external forces that make it difficult to
change the strategy or organization architecture of an
enterprise are collectively known as:
A) cognitive schema.
B) organizational inertia.
C) organizational culture.
D) organizational standards.

1–675
4) The ability of established airlines such as United to
respond to low-cost competitors such as Jet Blue and
Southwest, for example, has been hindered by strong labor
unions that have resisted attempts to change aspects of
their employment contracts and to restructure pensions,
which has kept the cost structure of United Airlines high.
This is an example of a(n) __________, which slows
United's ability to meet low-cost competition.
A) external institutional constraint
B) strategic commitment
C) internal political constraint
D) organizational culture type

1–676
5) In many cases change is __________ instead of
__________ because leaders are unable to recognize
quickly enough that change is necessary.
A) reactive; proactive
B) bad; good
C) proactive; reactive
D) unneeded; needed

1–677
6) An important first step in moving the organization is:
A) disposing of assets.
B) firing employees.
C) building a top management team committed to
change.
D) shifting the culture of the enterprise.

1–678
7) Startling employees out of their comfort zone is an
example of which of the following actions managers
can take to ensure successful organizational change?
A) creating a powerful guiding coalition
B) providing a compelling vision
C) removing the obstacles to change
D) establishing a sense of urgency

1–679
8) An organization architecture that continues to foster
old habits is an example of which of the following
actions managers should avoid when implementing
organizational change?
A) not establishing a great enough sense of urgency
B) failing to remove obstacles to the change effort
C) not creating a powerful enough guiding coalition
D) not planning for and creating short-term wins

1–680
9) Innovations that incorporate new technology and
disrupt competition, shifting the dominant paradigm
are known as __________ innovations.
A) dominant
B) quantum
C) super-
D) incremental

1–681
10) One reason that new products fail is because the
demand for innovations is inherently uncertain. To
reduce this uncertainty a firm can:
A) rely on good market research.
B) hire the best scientists to invent excellent items.
C) hire a famous ad agency to promote the product.
D) do all of the above

1–682
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Understanding
13 Individual
Behavior
13–683
Learning outcomes
Follow this learning outline as you read and study this
chapter.
13.1 Focus and goals of individual behavior
• Explain why the concept of an organization as an iceberg is
important to understanding organizational behavior
• Describe the focus and the goals of organizational behavior
• Define the six important employee behaviors that managers
want to explain, predict, and influence
13.2 Attitudes and performance
• Describe the three components of an attitude
• Explain the four job-related attitudes
• Describe the impact job satisfaction has on employee behavior

13–684
Learning outcomes
13.3 Personality
• Contrast the MBTI® and the big five model of
personality
• Describe the five personality traits that have proved to
be most powerful in explaining individual behavior in
organizations
• Explain how emotions and emotional intelligence
impact behavior
13.4 Learning
• Explain how operant conditioning helps managers
• Describe the implications of social learning theory
• Discuss how managers can shape behavior

13–685
Learning outcomes
13.5 Contemporary OB issues
• Describe the challenges managers face in managing
Gen Y workers
• Explain what managers can do to deal with workplace
misbehavior

13–686
Exhibit 13.1 The Organization as an iceberg

13–687
The focus and goals of
individual behavior
• Organizational behavior (OB)
 The actions of people at work
• Focus of organizational behavior
 Individual behavior
 Attitudes, personality, perception, learning, and motivation
 Group behavior
 Norms, roles, team building, leadership, and conflict
 Organizational
 Structure, culture, and human resource policies and practices

13–688
Goals of organizational behavior
 To explain, predict and influence behavior
• Employee Productivity
 A performance measure of both efficiency and
effectiveness
• Absenteeism
 The failure to report to work when expected
• Turnover
 The voluntary and involuntary
permanent withdrawal from
an organization

13–689
Important employee behaviors
(cont’d)
• Organizational citizenship behavior (OCB)
 Discretionary behavior that is not a part of an
employee’s formal job requirements, but which
promotes the effective functioning of the organization.
• Job satisfaction
 The individual’s general attitude
toward his or her job

13–690
Important employee behaviors
(cont’d)
• Workplace misbehavior
 Any intentional employee behavior that has negative
consequences for the organization or individuals
within the organization.
 Types of misbehavior
 Deviance
 Aggression
 Antisocial behavior
 Violence

13–691
Psychological factors affecting
employee behavior
•• Employee
Employee
Productivity
Productivity
•• Attitudes
Attitudes •• Absenteeism
Absenteeism
•• Personality •• Turnover
Turnover
Personality
•• Organizational
Organizational
•• Perception
Perception Citizenship
Citizenship
•• Job
Job Satisfaction
Satisfaction
•• Learning
Learning •• Workplace
Workplace
Misbehavior
Misbehavior
13–692
Psychological factors – attitudes
• Attitudes
 Evaluative statements—either favorable or
unfavorable—concerning objects, people, or events
• Components of an attitude
 Cognitive component: the beliefs, opinions,
knowledge, or information held by a person
 Affective component: the emotional or feeling part
of an attitude
 Behavioral component: the intention to behave in a
certain way

13–693
Psychological factors – attitudes
• Job satisfaction
 Job satisfaction is affected by level of income earned
and by the type of job a worker does.
• Job satisfaction and productivity
 The correlation between satisfaction and productivity
is fairly strong.
 Organizations with more satisfied employees are
more effective than those with fewer satisfied
employees.

13–694
Psychological factors – attitudes
• Job satisfaction and absenteeism
 Satisfied employees tend to have lower levels of
absenteeism, although satisfied employees are bound
to take company approved days off (e.g. sick days)
• Job satisfaction and turnover
 Satisfied employees have lower levels of turnover;
dissatisfied employees have higher levels of turnover.
 Turnover is affected by the level of employee
performance.
 The preferential treatment afforded superior employees
makes satisfaction less important in predicting their turnover
decisions.

13–695
Psychological factors – attitudes
• Job satisfaction and customer satisfaction
 The level of job satisfaction for frontline employees is
related to increased customer satisfaction and loyalty.
 Interaction with dissatisfied customers can increase
an employee’s job dissatisfaction.
 Actions to increase job satisfaction for customer
service workers:
 Hire upbeat and friendly employees
 Reward superior customer service
 Provide a positive work climate
 Use attitude surveys to track employee satisfaction

13–696
Psychological factors – attitudes

• Job satisfaction and organizational citizenship

behavior (OCB)
 Relationship between job satisfaction and OCB is
tempered by perceptions of fairness
 Individual OCB is influenced by work group OCB
• Job satisfaction and workplace misbehavior
 Dissatisfied employees will respond somehow
 Not easy to predict exactly how they’ll respond

13–697
Psychological factors – attitudes

• Job involvement
 The degree to which an employee identifies with his
or her job, actively participates in it, and considers his
or her performance to be important to his or her self-
worth.
 High levels of commitment are related to fewer absences and
lower resignation rates.

13–698
Psychological factors – attitudes
• Organizational commitment
 Is the degree to which an employee identifies with a
particular organization and its goals and wishes to
maintain membership in the organization.
 Leads to lower levels of both absenteeism and
turnover.
 Could be becoming an outmoded measure as the
number of workers who change employers increases.

13–699
Psychological factors – attitudes
• Perceived organizational support
 Is the general belief of employees that their
organization values their contribution and cares about
their well-being.
 Represents the commitment of the organization to the
employee.
 Providing high levels of support increases job
satisfaction and lower turnover.

13–700
Exhibit 13–2 Key employee engagement factors

13–701
Attitudes and Insistency
• People seek consistency in two ways:
 Consistency among their attitudes.
 Consistency between their attitudes and behaviors.
• If an inconsistency arises, individuals:
 Alter their attitudes
or
 Alter their behavior
or
 Develop a rationalization for the inconsistency

13–702
Cognitive dissonance theory
• Cognitive dissonance
 Any incompatibility or inconsistency between attitudes
or between behavior and attitudes.
 Any form of inconsistency is uncomfortable and individuals
will try to reduce the dissonance.
 The intensity of the desire to reduce the dissonance is
influenced by:
 The importance of the factors creating the dissonance.
 The degree to which an individual believes that the factors
causing the dissonance are controllable.
 Rewards available to compensate for the dissonance.

13–703
Attitude surveys
• Attitude surveys
 A instrument/document that presents employees with
a set of statements or questions eliciting how they
feel about their jobs, work groups, supervisors, or
their organization.
 Provide management with feedback on employee
perceptions of the organization and their jobs.

13–704
Exhibit 13–3 Sample employee survey

• To measure employee attitudes, some KFC and

Long John Silver’s restaurants ask employees
to react to statements such as:
• My restaurant is a great place to work.
• People on my team help out, even if it is not their job.
• I am told whether I am doing good work or not.
• I understand the employee benefits that are available
to me.

13–705
The importance of attitudes
• Implication for managers
 Attitudes warn of potential behavioral problems:
 Managers should do things that generate the positive
attitudes that reduce absenteeism and turnover.
 Attitudes influence behaviors of employees:
 Managers should focus on helping employees become more
productive to increase job satisfaction.
 Employees will try to reduce dissonance unless:
 Managers identify the external sources of dissonance.
 Managers provide rewards compensating for the dissonance.

13–706
Psychological factors –
personality
• Personality
 The unique combination of emotional, thought and
behavioral patterns that affect how a person reacts
and interacts with others.

13–707
Classifying personality traits
• Myers Briggs Type Indicator (MBTI®)
 A general personality assessment tool that
measures the personality of an individual using four
categories:
 Social interaction: Extrovert or Introvert (E or I)
 Preference for gathering data: Sensing or Intuitive (S or N)
 Preference for decision making: Feeling or Thinking (F or T)
 Style of decision making: Perceptive or Judgmental (P or J)

13–708
 Exhibit 13.4 Examples of MBTI® Types
Type Description
INFJ (introvert, intuitive, Quietly forceful, conscientious, and concerned for others. Such
feeling, judgmental) people succeed by perseverance, originality, and the desire to do
whatever is needed or wanted. They are often highly respected for
their uncompromising principles.
ESTP (extrovert, sensing, Blunt and sometimes insensitive. Such people are matter-of-fact and
thinking, perceptive) do not run back, worry or hurry. They enjoy whatever comes along.
They work best with real things that can be assembled or
disassembled.
ISFP (introvert, sensing, Sensitive, kind, modest, shy, and quietly friendly. Such people
feeling, perceptive) strongly dislike run back disagreements and will avoid them. They
are loyal followers and quite often are relaxed about getting things
done.
ENTJ (extrovert, intuitive, Warm, friendly, candid, and decisive; also usually skilled in anything
thinking, judgmental) that requires reasoning and intelligent talk, but may sometimes
overestimate what they are capable of doing.

Source: Based on I. Briggs-Myers, Introduction to Type (Palo Alto, CA: Consulting Psychologists Press, 1980), pp. 7–8.

13–709
The Big-Five Model
• Extraversion • Emotional Stability
 Sociable, talkative, and  Calm, enthusiastic, and
assertive secure or tense, nervous,
and insecure
• Agreeableness
 Good-natured, cooperative,
• Openness to Experience
and trusting  Imaginative, artistically
sensitive, and intellectual
• Conscientiousness
 Responsible, dependable,
persistent, and
achievement oriented

13–710
Additional personality insights
• Locus of control
 Internal locus: persons who believe that they control
their own destiny.
 External locus: persons who believe that what
happens to them is due to luck or chance (the
uncontrollable effects of outside forces).
• Machiavellianism (Mach)
 The degree to which an individual is pragmatic,
maintains emotional distance, and seeks to gain and
manipulate power—ends can justify means.

13–711
Additional personality
insights
• Self-esteem (SE)
 The degree to which people like or dislike themselves
 High SEs
 Believe in themselves and expect success.
 Take more risks and use unconventional approaches.
 Are more satisfied with their jobs than low SEs.
 Low SEs
 Are more susceptible to external influences.
 Depend on positive evaluations from others.
 Are more prone to conform than high SEs.

13–712
Additional personality
insights
• Self-monitoring
 An individual’s ability to adjust his or her behavior to
external, situational factors.
 High self-monitors:
 Are sensitive to external cues and behave differently in
different situations.
 Can present contradictory public persona and private selves
—impression management.
 Low self-monitors
 Do not adjust their behavior to the situation.
 Are behaviorally consistent in public and private.
13–713
Additional personality
insights
• Risk taking
 The propensity (or willingness) to take risks.
 High risk-takers take less time and require less information
than low risk-takers when making a decision.
 Organizational effectiveness is maximized when the
risk-taking propensity of a manager is aligned with
the specific demands of the job assigned to the
manager.

13–714
Personality types in different
cultures
• The Big Five model is used in cross-cultural
studies.
 Differences are found in the emphasis of dimensions.
• No common personality types for a given
country
 A country’s culture influences the dominant
personality characteristics of its people.
• Global managers need to understand
personality trait differences from the perspective
of each culture.
13–715
Emotions
• Emotions
 Intense feelings (reactions) that are directed at
specific objects (someone or something)
 Universal emotions:
 Anger
 Fear
 Sadness
 Happiness
 Disgust
 Surprise

13–716
Emotional intelligence
• Emotional intelligence (EI)
 The ability to notice and to manage emotional cues
and information.
 Dimensions of EI:
 Self-awareness: knowing what you’re feeling
 Self-management: managing emotions and impulses
 Self-motivation: persisting despite setbacks and failures
 Empathy: sensing how others are feeling
 Social skills: handling the emotions of others

13–717
Implications for managers
• Employee selection
 Holland’s Personality-Job Fit Theory
• Helps in understanding employee behavior(s)
• By understanding others’ behavior(s), can work
better with them

13–718
 Understanding personality
differences
• Personality Job Fit Theory (Holland)
 An employee’s job satisfaction and likelihood of
turnover depends on the compatibility of the
employee’s personality and occupation.
 Key points of the theory:
 There are differences in personalities.
 There are different types of jobs.
 Job satisfaction and turnover are related to the match
between personality and job for an individual.

13–719
 Exhibit 13.5 Holland’s typology of personality and
sample occupations

Source: Based on J. L. Holland, Making Vocational Choices: A Theory of Vocational Personalities

and Work Environments (Odessa, FL: Psychological Assessment Resources, 1997).

13–720
Psychological factors – perception
• Perception
 A process by which individuals give meaning (reality)
to their environment by organizing and interpreting
their sensory impressions.
• Factors influencing perception:
 The perceiver’s personal characteristics—interests,
biases and expectations
 The target’s characteristics—distinctiveness, contrast,
and similarity
 The situation (context) factors—place, time, location
—draw attention or distract from the target

13–721
Exhibit 13.6 Perception challenges: What do you see?

13–722
How we perceive people
• Attribution theory
 How the actions of individuals are perceived by others
depends on what meaning (causation) we attribute to
a given behavior.
 Internally caused behavior: under the individual’s control
 Externally caused behavior: due to outside factors
 Determining the source of behaviors:
 Distinctiveness: different behaviors in different situations
 Consensus: behaviors similar to others in same situation
 Consistency: regularity of the same behavior over time

13–723
Exhibit 13.7 Attribution theory

13–724
How we perceive people
(cont’d)
• Attribution theory – errors and biases (cont’d)
 Fundamental attribution error
 The tendency to underestimate the influence of external
factors and to overestimate the influence of internal or
personal factors.
 Self-serving bias
 The tendency of individuals to attribute their successes to
internal factors while blaming personal failures on external
factors.

13–725
Shortcuts used in judging
others
• Assumed similarity
 Assuming that others are more like us than they
actually are.
• Stereotyping
 Judging someone on the basis of our perception of a
group he or she is a part of.
• Halo effect
 Forming a general impression of a person on the
basis of a single characteristic of that person.

13–726
Implications for managers
• Employees react to perceptions
• Pay close attention to how employees perceive
their jobs and management actions

13–727
Psychological factors – learning
• Learning
 Any relatively permanent change in behavior that
occurs as a result of experience.
 Almost all complex behavior is learned.
 Learning is a continuous, life-long process.
 The principles of learning can be used to shape behavior.

• Theories of learning:
 Operant conditioning
 Social learning

13–728
Learning (cont’d)
• Operant conditioning (B.F. Skinner)
 The theory that behavior is a function of its
consequences and is learned through experience.
 Operant behavior: voluntary or learned behaviors
 Behaviors are learned by making rewards contingent to
behaviors.
 Behavior that is rewarded (positively reinforced) is likely to be
repeated.
 Behavior that is punished or ignored is less likely to be
repeated.

13–729
Learning (cont’d)
• Social learning
 The theory that individuals learn through their
observations of others and through their direct
experiences.
 Attributes of models that influence learning:
 Attentional: the attractiveness or similarity of the model
 Retention: how well the model can be recalled
 Motor reproduction: the reproducibility of the model’s
actions
 Reinforcement: the rewards associated with learning the
model behavior

13–730
Shaping: A managerial tool
• Shaping behavior
 Attempting to “mold” individuals by guiding their
learning in graduated steps such that they learn to
behave in ways that most benefit the organization.
 Shaping methods:
 Positive reinforcement: rewarding desired behaviors.
 Negative reinforcement: removing an unpleasant
consequence once the desired behavior is exhibited.
 Punishment: penalizing an undesired behavior.
 Extinction: eliminating a reinforcement for an undesired
behavior.

13–731
Implications for
managers
• If managers want behavior A but reward
behavior B, employees will engage in behavior
B.
• Employees will look to managers as models.
Good manager behavior will promote good
employee behavior.

13–732
Contemporary issues in OB
• Managing generational differences in the
workplace
 Gen Y: individuals born after 1978
 Bring new attitudes to the workplace that reflect wide arrays
of experiences and opportunities
 Want to work, but don’t want work to be their life
 Challenge the status quo
 Have grown up with technology

13–733
 Exhibit 13.8 Gen Y workers

Source: Bruce Tulgan of Rainmaker Thinking. Used with permission.

13–734
Contemporary issues in OB
• Managing negative behavior in the workplace
 Tolerating negative behavior sends the wrong
message to other employees
 Both preventive and responsive actions to negative
behaviors are needed:
 Screening potential employees
 Responding immediately and decisively to unacceptable
behavior
 Paying attention to employee attitudes

13–735
 Terms to know
• behavior • behavioral component
• organizational behavior • job involvement
• employee productivity • organizational
• absenteeism commitment
• turnover • perceived organizational
• support
organizational citizenship
behavior • cognitive dissonance
• job satisfaction • attitude surveys
• workplace misbehavior • personality
• attitudes • Big Five Model
• cognitive component • locus of control
• affective component • Machiavellianism
13–736
 Terms to know
• self-esteem • halo effect
• self-monitoring • learning
• impression management • operant conditioning
• emotions • social learning theory
• emotional intelligence (EI) • shaping behavior
• perception
• attribution theory
• fundamental attribution
error
• self-serving bias
• assumed similarity
• stereotyping
13–737
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managers
14 and
Communications
14–738
Learning outcomes
Follow this learning outline as you read and study this
chapter.
14.1 The nature and function of communication
• Define communication, interpersonal communication and
organizational communication
• Discuss the functions of communication
14.2 Methods of interpersonal communication
• Describe the components of the communication process
• Discuss the criteria that managers can use to evaluate
the various communication methods
• List the communication methods managers might use

14–739
Learning outcomes
14.3 Effective interpersonal communication
• Explain the barriers to effective interpersonal
• Discuss ways to overcome the barriers to effective
interpersonal communication
14.4 Organizational communication
• Contrast formal and informal communication
• Explain communication flow in an organization
• Describe the three common communication networks
• Discuss how managers should handle the grapevine

14–740
Learning outcomes
14.5 Information technology and communication
• Describe how technology affects managerial communication
• Explain how information technology affects organizations
14.6 Communication issues in today’s organization
• Discuss the challenges of managing communication in an
Internet world
• Explain how organizations can manage knowledge
• Explain why communicating with customers is an important
managerial issue
• Explain how political correctness is affecting communication

14–741
What is communication?
• Communication
 The transfer and understanding of meaning
 Transfer means the message was received in a form that can
be interpreted by the receiver.
 Understanding the message is not the same as the receiver
agreeing with the message.
 Interpersonal communication
 Communication between two or more people
 Organizational communication
 All the patterns, network, and systems of communications
within an organization

14–742
Four functions of
communication

Control
Control Motivation
Motivation

Functions
Functionsof
of
communication
communication

Emotional
Emotional
Information
Information expression
expression

14–743
Functions of communication
• Control
 Formal and informal communications act to control
individuals’ behaviors in organizations.
• Motivation
 Communications clarify for employees what is to
done, how well they have done it, and what can be
done to improve performance.

14–744
Functions of communication
(cont’d)
• Emotional expression
 Social interaction in the form of work group
communications provides a way for employees to
express themselves.
• Information
 Individuals and work groups need information to
make decisions or to do their work.

14–745
Exhibit 14–1 The interpersonal communication
process

14–746
Interpersonal communication
• Message
 Source: sender’s intended meaning
• Encoding
 The message converted to symbolic form
• Channel
 The medium through which the message travels
• Decoding
 The receiver’s retranslation of the message
• Noise
 Disturbances that interfere with communications

14–747
Distortions in communications
• Message encoding
 The effect of the skills, attitudes, and knowledge of
the sender on the process of encoding the message
 The social-cultural system of the sender
• The message
 Symbols used to convey the message’s meaning
 The content of the message itself
 The choice of message format
 Noise interfering with the message

14–748
Distortions in communications
(cont’d)
• The channel
 The sender’s choice of the appropriate channel or
multiple channels for conveying the message
• Receiver
 The effect of skills, attitudes, and knowledge of the
receiver on the process of decoding the message
 The social-cultural system of the receiver
• Feedback loop
 Communication channel distortions affecting the
return message from receiver to sender
14–749
Interpersonal communication
methods
• Face-to-face • Hotlines
• Telephone • E-mail
• Group meetings • Computer conferencing
• Formal presentations • Voice mail
• Memos • Teleconferences
• Traditional Mail • Videoconferences
• Fax machines
• Employee publications
• Bulletin boards
• Audio- and videotapes
14–750
Evaluating communication
methods
• Feedback • Time-space constraint
• Complexity capacity • Cost
• Breadth potential • Interpersonal warmth
• Confidentiality • Formality
• Encoding ease • Scanability
• Decoding ease • Time consumption

14–751
 Exhibit 14–2 Comparison of communication methods

Note: Ratings are on a 1–5 scale where 1 = high and 5 = low. Consumption time refers to who
controls the reception of communication. S/R means the sender and receiver share control.

Source: P. G. Clampitt, Communicating for Managerial Effectiveness (Newbury Park, CA: Sage Publications, 1991), p. 136.
14–752
Interpersonal communication
(cont’d)
• Nonverbal communication
 Communication that is transmitted without words.
 Sounds with specific meanings or warnings
 Images that control or encourage behaviors
 Situational behaviors that convey meanings
 Clothing and physical surroundings that imply status
 Body language: gestures, facial expressions, and
other body movements that convey meaning.
 Verbal intonation: emphasis that a speaker gives to
certain words or phrases that conveys meaning.
14–753
Interpersonal communication
barriers
Filtering
National
culture Emotions

Language Interpersonal Information

communication overload

Defensiveness

14–754
Barriers to effective
interpersonal communication
• Filtering
 The deliberate manipulation of information to make it
appear more favorable to the receiver.
• Emotions
 Disregarding rational and objective thinking
processes and substituting emotional judgments
when interpreting messages.
• Information overload
 Being confronted with a quantity of information that
exceeds an individual’s capacity to process it.

14–755
Barriers to effective
interpersonal communication
(cont’d)
• Defensiveness
 When threatened, reacting in a way that reduces the
ability to achieve mutual understanding.
• Language
 The different meanings of and specialized ways
(jargon) in which senders use words can cause
receivers to misinterpret their messages.
• National culture
 Culture influences the form, formality, openness,
patterns, and use of information in communications.
14–756
Overcoming the barriers to
effective interpersonal
communications

• Use Feedback
• Simplify Language
• Listen Actively
• Constrain Emotions
• Watch Nonverbal Cues

14–757
 Exhibit 14–3 Active listening behaviors

Source: Based on P.L. Hunsaker, Training in Management

Skills (Upper Saddle River, NJ: Prentice Hall, 2001).
14–758
Types of organizational
communication
• Formal communication
 Communication that follows the official chain of
command or is part of the communication required to
do one’s job.
• Informal communication
 Communication that is not defined by the
organization’s structural hierarchy.
 Permits employees to satisfy their need for social interaction.
 Can improve an organization’s performance by creating
faster and more effective channels of communication.

14–759
Communication flows

nal
ago
Di
U D
p o
w Lateral w
a n
r w
d a
r
d

14–760
Direction of
communication flow
• Downward
 Communications that flow from managers to
employees to inform, direct, coordinate, and evaluate
employees.
• Upward
 Communications that flow from employees up to
managers to keep them aware of employee needs
and how things can be improved to create a climate
of trust and respect.

14–761
Direction of communication flow
(cont’d)
• Lateral (Horizontal) communication
 Communication that takes place among employees
on the same level in the organization to save time and
facilitate coordination.
• Diagonal communication
 Communication that cuts across both work areas and
organizational levels in the interest of efficiency and
speed.

14–762
 Types of organizational
communication networks
• Chain network
 Communication flows according to the formal chain of
command, both upward and downward.
• Wheel network
 All communication flows in and out through the group
leader (hub) to others in the group.
• All-channel network
 Communications flow freely among all members of
the work team.

14–763
Exhibit 14–4 Three common organizational
communication networks and how they
rate on effectiveness criteria

14–764
The grapevine
• An informal organizational communication
network that is active in almost every
organization.
 Provides a channel for issues not suitable for formal
communication channels.
 The impact of information passed along the grapevine
can be countered by open and honest communication
with employees.

14–765
Understanding information
technology
• Benefits of information technology (IT)
 Increased ability to monitor individual and team
performance
 Better decision making based on more complete
information
 More collaboration and
sharing of information
 Greater accessibility
to coworkers

14–766
Information technology (cont’d)
• Networked computer • E-mail
systems • Instant messaging (IM)
 Linking individual
• Blogs
computers to create an
organizational network for • Wikis
communication and • Voicemail
information sharing.
• Fax machines
• Electronic Data Exchange
(EDI)
• Teleconferencing
• Videoconferencing
• Web conferencing

14–767
Information technology (cont’d)
• Types of network systems
 Intranet
 An internal network that uses Internet
technology and is accessible only to
employees.
 Extranet
 An internal network that uses Internet
technology and allows authorized users
inside the organization to communicate
with certain outsiders such as customers
and vendors.
 Wireless (WIFI) capabilities

14–768
How IT affects organization
• Removes the constraints of time and distance
 Allows widely dispersed employees to work together
• Provides for the sharing of information
 Increases effectiveness and efficiency
• Integrates decision making and work
 Provides more complete information and participation
for better decisions
• Creates problems of constant accessibility to
employees
 Blurs the line between work and personal lives

14–769
Current communication issues
• Managing communication in an Internet world
 Legal and security issues
 Inappropriate use of company e-mail and instant messaging
 Loss of confidential and proprietary information due to
inadvertent or deliberate dissemination or to hackers.
 Lack of personal interaction
 Being connected is not the same as face-to-face contact.
 Difficulties occur in achieving understanding and
collaboration in virtual environments.

14–770
Current communication issues
(cont’d)
• Managing the organization’s knowledge
resources
 Build online information databases that employees
can access.
 Create “communities of practice” for groups of people
who share a concern, share expertise, and interact
with each other.

14–771
Communication and customer
service
• Communicating effectively with customers
 Recognize the three components of the customer
service delivery process:
 The customer
 The service organization
 The service provider

 Develop a strong service culture focused on the

personalization of service to each customer.
 Listen and respond to the customer.
 Provide access to needed service information.

14–772
“Politically correct”
communication
• Do not use words or phrases that stereotype,
intimidate, or offend individuals based on their
differences.
• However, choose words carefully to maintain as
much clarity as possible in communications.

14–773
 Terms to know
• communication • body language
• interpersonal • verbal intonation
communication • filtering
• organizational • selective perception
communication • information overload
• message • jargon
• encoding • active listening
• channel
• formal communication
• decoding • informal communication
• communication process • downward communication
• noise
• upward communication
• nonverbal communication
14–774
 Terms to know
• lateral communication • teleconferencing
• diagonal communication • videoconferencing
• communication networks • Web conferencing
• grapevine • intranet
• e-mail • extranet
• instant messaging (IM) • communities of practice
• blog
• wiki
• voicemail
• fax
• electronic data
interchange (EDI)
14–775
1) The process by which information is exchanged and
understood between people is called:
A) communication.
B) interaction.
C) transmission.
D) transfer effect.

1–776
2) Which of the following statements about the
communication process is most accurate?
A) Communication is a one-way process.
B) The sender forms a message and decodes it into
symbols, words, gestures or other signs.
C) The meaning of the communication to the receiver is
always what the sender intended when the sender crafts
a wonderful message.
D) Communication channels are also called media.

1–777
3) __________ includes any part of communication that
does not use words.
A) Verbal communication
B) Non-oral communication
C) Nonverbal communication
D) Non-vocal communication

1–778
4) The most media-rich channel for exchanging
information is:
A) e-mail communication.
B) face-to-face communication.
C) telephone communication.
D) written memos.

1–779
5) Systems of officially sanctioned channels within an
organization that are used regularly to communicate
information are called:
A) official channels.
B) recognized channels.
C) informal channels.
D) formal channels.

1–780
6) Part of the management philosophy at Google is that
employees should spend 10 percent of their work time on "far-
out ideas" that might one day become a business opportunity
for Google. To present their ideas to Google's founders,
employees must first develop a polished proposal, backed up by
hard data, to Marissa Mayer, Google's director of consumer
Web products. If she decides they can present to the founders,
then the employees are given 20 minutes to present their idea.
This type of communication channel is most likely:
A) downward communication.
B) horizontal communication.
C) upward communication.
D) informal communication.

1–781
7) Our perceptions are shaped by:
A) our psychology.
B) our experiences.
C) our mental models of how the world works.
D) all of the above.

1–782
8) There is evidence that attractive people command an
income premium in the labor market of 5-10 percent
over the incomes of average-looking people. These
"beauty premiums" are solely based on looks and
seem unrelated to actual abilities. This most likely an
example of __________ based on looks.
A) stereotyping
B) trait selection
C) social selection
D) job typing

1–783
9) Which of the following is a strategy that can help
receivers manage information overload?
A) collecting
B) buffering
C) connecting
D) outlining

1–784
10) Ambiguous and non-routine situations enhance the
chances of noise. Limiting this noise requires:
A) the use of lean media.
B) the use of rich media.
C) different mental models.
D) delayed feedback

1–785
GROUP WORKING
1) Discuss ways to overcome the barriers
to effective interpersonal
communication in your company
2) What are the opportunities and
challenges of communication? If you
are the director of the company, what
should you do to manage your staff’s
communication?

1–786
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Motivating
15 Employees

15–787
Learning outcomes
Follow this learning outline as you read and study this
chapter.
15.1 What is motivation?
• Define motivation
• Explain the three key elements of motivation
15.2 Early theories of motivation
• Describe Maslow’s hierarchy of needs and how it can be used to
motivate
• Discuss how Theory X and Theory Y managers approach
motivation
• Describe Herzberg’s motivation-hygiene theory
• Describe the three-needs theory

15–788
Learning outcomes
15.3 Contemporary theories of motivation
• Explain how goal-setting and reinforcement theories
explain employee motivation
• Describe job design approaches to motivation
• Discuss the motivation implications of equity theory
• Explain the three key linkages in expectancy theory
and their role in motivation

15–789
Learning outcomes
15.4 Current issues in motivation
• Describe the cross-cultural challenges of motivation
• Discuss the challenges managers face in motivating
unique groups of workers
• Describe open-book management, employee
recognition, pay-for-performance, and stock option
programs

15–790
What is motivation?
• Motivation
 Is the result of an interaction between the person and
a situation; it is not a personal trait.
 Is the process by which a person’s efforts are
energized, directed, and sustained towards attaining
a goal.
 Energy: a measure of intensity or drive
 Direction: toward organizational goals
 Persistence: exerting effort to achieve goals
 Motivation works best when individual needs are
compatible with organizational goals.

15–791
Early theories of motivation
• Maslow’s Hierarchy of Needs
• McGregor’s Theories X and Y
• Herzberg’s Two-Factor Theory
• McClelland’s Three Needs Theory

15–792
Early theories of motivation
• Maslow’s Hierarchy of Needs Theory
 Needs were categorized as five levels of lower- to
higher-order needs.
 Individuals must satisfy lower-order needs before they can
satisfy higher order needs.
 Satisfied needs will no longer motivate.
 Motivating a person depends on knowing at what level that
person is on the hierarchy.
 Hierarchy of needs
 Lower-order (external): physiological, safety
 Higher-order (internal): social, esteem, self-actualization

15–793
Exhibit 15–1 Maslow’s Hierarchy of Needs

15–794
Early theories of motivation
(cont’d)
• McGregor’s Theory X and Theory Y
 Theory X
 Assumes that workers have little ambition, dislike work, avoid
responsibility, and require close supervision.
 Theory Y
 Assumes that workers can exercise self-direction, desire
responsibility, and like to work.
 Assumption:
 Motivation is maximized by participative decision making,
interesting jobs, and good group relations.

15–795
Early theories of motivation
(cont’d)
• Herzberg’s Motivation-Hygiene Theory
 Job satisfaction and job dissatisfaction are created by
different factors.
 Hygiene factors: extrinsic (environmental) factors that
create job dissatisfaction.
 Motivators: intrinsic (psychological) factors that create job
satisfaction.
 Attempted to explain why job satisfaction does not
result in increased performance.
 The opposite of satisfaction is not dissatisfaction, but rather
no satisfaction.
15–796
Exhibit 15–2 Herzberg’s Motivation-Hygiene Theory

15–797
Exhibit 15–3 Contrasting views of satisfaction-
dissatisfaction

15–798
Motivation and needs
• Three-Needs Theory (McClelland)
 There are three major acquired needs that are major
motives in work.
 Need for achievement (nAch)
– The drive to excel and succeed
 Need for power (nPow)
– The need to influence the behavior of others
 Need of affiliation (nAff)
– The desire for interpersonal relationships

15–799
Exhibit 15–4 Examples of pictures used for assessing
levels of nAch, nAff, and nPow

15–800
Contemporary theories of
motivation
• Goal-setting theory
• Reinforcement theory
• Designing motivating jobs
• Equity theory
• Expectancy theory

15–801
Motivation and goals
• Goal-setting theory
 Proposes that setting goals that are accepted,
specific, and challenging yet achievable will result in
higher performance than having no or easy goals.
 Is culture bound to the U.S. and Canada.
• Benefits of participation in goal-setting
 Increases the acceptance of goals.
 Fosters commitment to difficult, public goals.
 Provides for self-feedback (internal locus of control)
that guides behavior and motivates performance (self-
efficacy).

15–802
Exhibit 15–5 Goal-setting theory

15–803
Motivation and behavior
• Reinforcement theory
 Assumes that a desired behavior is a function of its
consequences, is externally caused, and if reinforced,
is likely to be repeated.
 Positive reinforcement is preferred for its long-term effects on
performance.
 Ignoring undesired behavior is better than punishment which
may create additional dysfunctional behaviors.

15–804
Designing motivating jobs
• Job design
 The way into which tasks can be combined to form
complete jobs.
 Factors influencing job design:
 Changing organizational environment/structure
 The organization’s technology
 Employees’ skill, abilities, and preferences

 Job enlargement
 Increasing the job’s scope (number and frequency of tasks)
 Job enrichment
 Increasing responsibility and autonomy (depth) in a job.

15–805
Designing motivating jobs
(cont’d)
• Job Characteristics Model (JCM)
 A conceptual framework for designing motivating jobs
that create meaningful work experiences that satisfy
employees’ growth needs.
 Five primary job characteristics:
 Skill variety: how many skills and talents are needed?
 Task identity: does the job produce a complete work?
 Task significance: how important is the job?
 Autonomy: how much independence does the jobholder
have?
 Feedback: do workers know how well they are doing?
15–806
• Hòa bình là một công ty thương mại chuyên
nhập khẩu và bán phụ tùng xe hơi. Bộ phận kế
toán của cty có 4 nhân viên, 01 kế toán trưởng,
01 kế toán thanh toán, 01 kế toán công nợ và 01
thủ quỹ. Nhân viên kế toán thanh toán vừa xin
nghỉ việc và kế toán trưởng đề nghị người thay
thế. Vào thời điểm kế toán trưởng đề nghị tuyển
người thay thế thì Giám đốc công ty đang đi
công tác ở nước ngoài. Theo quy định của công
ty, mọi quyết định tuyển nhân viên đều phải
được sự chấp thuận của Giám đốc.

1–807
• Vì vậy, việc tuyển dụng phải hoãn lại 01 tháng. Kế
toán trưởng phải bố trí công việc của bộ phận kế
toán. Theo đó, công việc của kế toán thanh toán
được chia sẽ cho thủ quỹ và kế toán công nợ.
Thủ quỹ sẽ kiêm thêm trách nhiệm thực hiện các
giao dịch thanh toán trong nước, còn kế toán
công nợ kiêm thêm trách nhiệm thực hiện các
giao dịch thanh toán với các nhà cung cấp nước
ngoài. Một tháng trôi qua và công việc của bộ
phận kế toán vẫn tiến triển tốt đẹp mặc dù đó là
giai đoạn bận rộn nhất trong năm.

1–808
• Xem xét lại tình hình kinh doanh của công ty, kế
toán trưởng nhận thấy công ty định hướng trở
thành một công ty chuyên cung cấp các mặt
hàng cao cấp do đó chỉ lựa chọn một số nhà
cung cấp uy tín. Như vậy, số lượng các nhà
cung cấp sẽ giảm mạnh và công việc của kế
toán thanh toán sẽ giảm theo. Kế toản trưởng
quết định không tuyển thêm nhân viên nữa.

1–809
 Exhibit 15–6 Job Characteristics Model

Source: J.R. Hackman and J.L. Suttle (eds.). Improving Life at Work
(Glenview, IL: Scott, Foresman, 1977). With permission of the authors.

15–810
 Exhibit 15–7 Guidelines for job redesign

Source: J.R. Hackman and J.L. Suttle (eds.). Improving Life at Work
(Glenview, IL: Scott, Foresman, 1977). With permission of the authors.

15–811
Designing motivating jobs
(cont’d)
• Suggestions for using the JCM
 Combine tasks (job enlargement) to create more
meaningful work.
 Create natural work units to make employees’ work
important and whole.
 Establish external and internal client relationships to
provide feedback.
 Expand jobs vertically (job enrichment) by giving
employees more autonomy.
 Open feedback channels to let employees know how
well they are doing.
15–812
Equity theory
 Proposes that employees perceive what they get from
a job situation (outcomes) in relation to what they put
in (inputs) and then compare their inputs-outcomes
ratio with the inputs-outcomes ratios of relevant
others.
 If the ratios are perceived as equal then a state of equity
(fairness) exists.
 If the ratios are perceived as unequal, inequity exists and the
person feels under- or over-rewarded.
 When inequities occur, employees will attempt to do
something to rebalance the ratios (seek justice).

15–813
Equity theory (cont’d)
 Employee responses to perceived inequities:
 Distort own or others’ ratios.
 Induce others to change their own inputs or outcomes.
 Change own inputs (increase or decrease efforts) or
outcomes (seek greater rewards).
 Choose a different comparison (referent) other (person,
systems, or self).
 Quit their job.
 Employees are concerned with both the absolute and
relative nature of organizational rewards.

15–814
Exhibit 15–8 Equity theory

15–815
Equity theory
(cont’d)
 Distributive justice
 The perceived fairness of the amount and allocation of
rewards among individuals (i.e., who received what).
– Influences an employee’s satisfaction.
 Procedural justice
 The perceived fairness of the process use to determine the
distribution of rewards (i.e., how who received what).
– Affects an employee’s organizational commitment.

15–816
Expectancy theory
 States that an individual tends to act in a certain way
based on the expectation that the act will be followed
by a given outcome and on the attractiveness of that
outcome to the individual.
 Key to the theory is understanding and managing
employee goals and the linkages among and between
effort, performance and rewards.
 Effort: employee abilities and training/development
 Performance: valid appraisal systems
 Rewards (goals): understanding employee needs

15–817
Exhibit 15–9 Simplified expectancy model

15–818
Expectancy theory
• Expectancy relationships
 Expectancy (effort-performance linkage)
 The perceived probability that an individual’s effort will result
in a certain level of performance.
 Instrumentality
 The perception that a particular level of performance will
result in the attaining a desired outcome (reward).
 Valence
 The attractiveness/importance of the performance reward
(outcome) to the individual.

15–819
Exhibit 15–10 Integrating contemporary theories
of motivation

15–820
Current issues in motivation
• Cross-cultural challenges
 Motivational programs are most applicable in cultures
where individualism and achievement are cultural
characteristics
 Uncertainty avoidance of some cultures inverts Maslow’s
needs hierarchy.
 The need for achievement (nAch) is lacking in other cultures.
 Collectivist cultures view rewards as “entitlements” to be
distributed based on individual needs, not individual
performance.
 Cross-Cultural Consistencies
 Interesting work is widely desired, as is growth, achievement,
and responsibility.

15–821
Motivating unique groups
of workers
• Motivating diverse workforce
 Motivating a diverse workforce through flexibility:
 Men desire more autonomy than do women.
 Women desire learning opportunities, flexible work
schedules, and good interpersonal relations.

15–822
Motivating unique groups
of workers
• Motivating diverse workforce
 Compressed workweek
 Longer daily hours, but fewer days
 Flexible work hours (flextime)
 Specific weekly hours with varying arrival, departure, lunch
and break times around certain core hours during which all
employees must be present.
 Job sharing
 Two or more people split a full-time job.
 Telecommuting
 Employees work from home using computer links.

15–823
Motivating unique groups
of workers
• Motivating professionals
 Characteristics of professionals
 Strong and long-term commitment to their field of expertise.
 Loyalty is to their profession, not to the employer.
 Have the need to regularly update their knowledge.
 Don’t define their workweek as 8:00 am to 5:00 pm.
 Motivators for professionals
 Job challenge
 Organizational support of their work

15–824
Motivating unique groups
of workers
• Motivating contingent workers
 Opportunity to become a permanent employee
 Opportunity for training
 Equity in compensation and benefits
• Motivating low-skilled, minimum-wage
employees
 Employee recognition programs
 Provision of sincere praise

15–825
Current issues in
motivation
• Designing appropriate rewards programs
 Open-book management
 Involving employees in workplace decision by opening up the
financial statements of the employer.
 Employee recognition programs
 Giving personal attention and expressing interest, approval,
and appreciation for a job well done.
 Pay-for-performance
 Variable compensation plans that reward employees on the
basis of their performance:
– Piece rates, wage incentives, profit-sharing, and lump-
sum bonuses

15–826
Designing appropriate rewards
programs (cont’d)

 Stock option programs

 Using financial instruments (in lieu of monetary
compensation) that give employees the right to purchase
shares of company stock at a set (option) price.
 Options have value if the stock price rises above the option
price; they become worthless if the stock price falls below the
option price.

15–827
From theory to practice:
guidelines for motivating
employees
• Recognize individual • Check the system for
differences equity
• Match people to jobs • Use recognition
• Use goals • Show care and concern
• Ensure that goals are for employees
perceived as attainable • Don’t ignore money
• Individualize rewards
• Link rewards to
performance
15–828
 Terms to know
• motivation • three-needs theory
• hierarchy of needs theory • need for achievement
• physiological needs (nAch)
• safety needs • need for power (nPow)
• social needs • need for affiliation (nAff)
• esteem needs • goal-setting theory
• self-actualization needs • self-efficacy
• Theory X • reinforcement theory
• Theory Y • reinforcers
• Two Factor theory • job design
• hygiene factors • job scope
• motivators • job enlargement
15–829
 Terms to know
• job enrichment • procedural justice
• job depth • expectancy theory
• job characteristics • compressed workweek
model (JCM) • flexible work hours (flextime)
• skill variety • job sharing
• task identity • telecommuting
• task significance • open-book management
• autonomy • employee recognition
• feedback programs
• equity theory • pay-for-performance
• referents programs
• distributive justice • stock options
15–830
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managers As
16 Leaders
16–831
Learning outcomes
Follow this learning outline as you read and study this
chapter.
16.1 Who are leaders and what is leadership
• Define leaders and leadership
• Explain why managers should be leaders

16.2 Early leadership theories

• Discuss what research has shown about leadership traits
• Contrast the findings of the four behavioral leadership theories
• Explain the dual nature of a leader’s behavior

16–832
Learning outcomes
16.3 Contingency theories of leadership
• Explain Fiedler’s contingency model of leadership
• Describe situational leadership theory
• Discuss how path-goal theory explains leadership
16.4 Contemporary views of leadership
• Differentiate between transactional and
transformational leaders
• Describe charismatic and visionary leadership
• Discuss what team leadership involves

16–833
Learning outcomes
16.5 Leadership issues in the twenty-first
century
• Describe the five sources of a leader’s power
• Discuss the issues today’s leaders face

16–834
Who are leaders and what is
leadership?
• Leader – Someone who can influence others and who has
managerial authority
• Leadership – What leaders do; the process of influencing a
group to achieve goals
• Ideally, all managers should be leaders
• Although groups may have informal leaders who emerge,
those are not the leaders we’re studying

Leadership research has tried to answer: What is an effective

leader?

16–835
Early leadership theories
• Trait Theories (1920s -1930s)
 Research focused on identifying personal
characteristics that differentiated leaders from non-
leaders was unsuccessful.
 Later research on the leadership process identified
seven traits associated with successful leadership:
 Drive, the desire to lead, honesty and integrity, self-
confidence, intelligence, job-relevant knowledge, and
extraversion.

16–836
 Exhibit 16–1 Seven traits associated with leadership

Source: S. A. Kirkpatrick and E. A. Locke, “Leadership: Do Traits Really Matter?” Academy of Management Executive, May 1991, pp. 48–60; T. A. Judge,
J. E. Bono, R. llies, and M. W. Gerhardt, “Personality and Leadership: A Qualitative and Quantitative Review,” Journal of Applied Psychology, August 2002,
pp. 765–780.

16–837
Early leadership theories
(cont’d)
• Behavioral theories
 University of Iowa studies (Kurt Lewin)
 Identified three leadership styles:
– Autocratic style: centralized authority, low participation
– Democratic style: involvement, high participation, feedback
– Laissez faire style: hands-off management
 Research findings: mixed results
– No specific style was consistently better for producing better
performance.
– Employees were more satisfied under a democratic leader
than an autocratic leader.

16–838
 Early leadership theories
• Behavioral theories (cont’d)
 Ohio State Studies
 Identified two dimensions of leader behavior:
– Initiating structure: the role of the leader in defining his
or her role and the roles of group members.
– Consideration: the leader’s mutual trust and respect for
group members’ ideas and feelings.
 Research findings: mixed results
– High-high leaders generally, but not always, achieved high
group task performance and satisfaction.
– Evidence indicated that situational factors appeared to
strongly influence leadership effectiveness.

16–839
Early leadership theories
• Behavioral theories (cont’d)
 University of Michigan Studies
 Identified two dimensions of leader behavior:
– Employee oriented: emphasizing personal relationships
– Production oriented: emphasizing task accomplishment
 Research findings:
– Leaders who are employee oriented are strongly
associated with high group productivity and high job
satisfaction.

16–840
The managerial grid
• Managerial grid
 Appraises leadership styles using two dimensions:
 Concern for people
 Concern for production
 Places managerial styles in five categories:
 Impoverished management
 Task management
 Middle-of-the-road management
 Country club management
 Team management

16–841
Exhibit 16–3
The
managerial
grid

Source: Reprinted by permission of Harvard Business Review. An exhibit from “Breakthrough in Organization Development” by Robert R. Blake, Jane S. Mouton,
Louis B. Barnes, and Larry E. Greiner, November–December 1964, p. 136. Copyright © 1964 by the President and Fellows of Harvard College. All rights reserved.

16–842
Exhibit 16–2 Behavioral theories of leadership

16–843
Exhibit 16–2 (cont’d) Behavioral theories of
leadership

16–844
Contingency theories of
leadership
• The Fiedler Model
 Proposes that effective group performance depends
upon the proper match between the leader’s style of
interacting with followers and the degree to which the
situation allows the leader to control and influence.
 Assumptions:
 A certain leadership style should be most effective in different
types of situations.
 Leaders do not readily change leadership styles.
– Matching the leader to the situation or changing the
situation to make it favorable to the leader is required.
16–845
Contingency theories of
leadership
• The Fiedler Model (cont’d)
 Least-preferred co-worker (LPC) questionnaire
 Determines leadership style by measuring responses to 18
pairs of contrasting adjectives.
– High score: a relationship-oriented leadership
style
– Low score: a task-oriented leadership style
 Situational factors in matching leader to the situation:
 Leader-member relations
 Task structure
 Position power
16–846
Exhibit 16–4 Findings of the Fiedler Model

16–847
Contingency theories of
leadership
• Hersey and Blanchard’s situational leadership
theory (SLT)
 Argues that successful leadership is achieved by
selecting the right leadership style which is contingent
on the level of the followers’ readiness.
 Acceptance: leadership effectiveness depends on whether
followers accept or reject a leader.
 Readiness: the extent to which followers have the ability and
willingness to accomplish a specific task.
 Leaders must relinquish control over and contact with
followers as they become more competent.
16–848
Contingency theories of
leadership
• Hersey and Blanchard’s situational leadership
theory (SLT) (cont’d.)
 Creates four specific leadership styles incorporating
Fiedler’s two leadership dimensions:
 Telling: high task-low relationship leadership
 Selling: high task-high relationship leadership
 Participating: low task-high relationship leadership
 Delegating: low task-low relationship leadership

16–849
Contingency theories of
leadership
• Hersey and Blanchard’s situational leadership
theory (SLT) (cont’d)
 Posits four stages follower readiness:
 R1: followers are unable and unwilling
 R2: followers are unable but willing
 R3: followers are able but unwilling
 R4: followers are able and willing

16–850
Contingency theories of
leadership
• Path-Goal Model
 States that the leader’s job is to assist his or her
followers in attaining their goals and to provide
direction or support to ensure their goals are
compatible with organizational goals.
 Leaders assume different leadership styles at
different times depending on the situation:
 Directive leader
 Supportive leader
 Participative leader
 Achievement oriented leader
16–851
Exhibit 16–5 Path-Goal Theory

16–852
Contemporary views of
leadership
• Transactional leadership
 Leaders who guide or motivate their followers in the
direction of established goals by clarifying role and
task requirements.
• Transformational leadership
 Leaders who inspire followers to transcend their own
self-interests for the good of the organization by
clarifying role and task requirements.

16–853
Contemporary views of
leadership
• Charismatic leadership
 An enthusiastic, self-confident leader whose
personality and actions influence people to behave in
certain ways.
 Characteristics of charismatic leaders:
 Have a vision.
 Are able to articulate the vision.
 Are willing to take risks to achieve the vision.
 Are sensitive to the environment and follower needs.
 Exhibit behaviors that are out of the ordinary.

16–854
Contemporary views of
leadership
• Visionary leadership
 A leader who creates and articulates a realistic,
credible, and attractive vision of the future that
improves upon the present situation.
• Visionary leaders have the ability to:
 Explain the vision to others.
 Express the vision not just verbally but through
behavior.
 Extend or apply the vision to different leadership
contexts.
16–855
Contemporary views of
leadership
• Team leadership characteristics
 Having patience to share information
 Being able to trust others and to give up authority
 Understanding when to intervene
• Team leader’s job
 Managing the team’s external boundary
 Facilitating the team process
 Coaching, facilitating, handling disciplinary problems,
reviewing team and individual performance, training, and
communication
16–856
Exhibit 16–6 Specific team leadership roles

16–857
Leadership issues in the 21st
century
• Managing power
 Legitimate power  Expert power
 The power a leader has as  The influence a leader can
a result of his or her exert as a result of his or
position. her expertise, skills, or
knowledge.
 Coercive power
 The power a leader has to
 Referent power
punish or control.  The power of a leader that
arise because of a person’s
 Reward power
desirable resources or
 The power to give positive admired personal traits.
benefits or rewards.

16–858
Developing trust
• Credibility (of a Leader)
 The assessment of a leader’s honesty, competence,
and ability to inspire by his or her followers
• Trust
 Is the belief of followers and others in the integrity,
character, and ability of a leader
 Dimensions of trust: integrity, competence, consistency,
loyalty, and openness
 Is related to increases in job performance,
organizational citizenship behaviors, job satisfaction,
and organization commitment

16–859
Exhibit 16–7 Suggestions for building trust

Practice openness.
Be fair.
Speak your feelings.
Tell the truth.
Show consistency.
Fulfill your promises.
Maintain confidences.
Demonstrate competence.

16–860
Empowering employees
• Empowerment
 Involves increasing the decision-making discretion of
workers such that teams can make key operating
decisions in develop budgets, scheduling workloads,
controlling inventories, and solving quality problems
 Why empower employees?
 Quicker responses problems and faster decisions
 Addresses the problem of increased spans of control in
relieving managers to work on other problems

16–861
Cross-cultural leadership
• Universal elements of
effective leadership
 Vision
 Foresight
 Providing encouragement
 Trustworthiness
 Dynamism
 Positiveness
 Proactiveness

16–862
 Exhibit 16–8 Selected cross-cultural leadership
findings
• Korean leaders are expected to be paternalistic toward employees.
• Arab leaders who show kindness or generosity without being asked to
do so are seen by other Arabs as weak.
• Japanese leaders are expected to be humble and speak frequently.
• Scandinavian and Dutch leaders who single out individuals with public
praise are likely to embarrass, not energize, those individuals.
• Effective leaders in Malaysia are expected to show compassion while
using more of an autocratic than a participative style.
• Effective German leaders are characterized by high performance
orientation, low compassion, low self-protection, low team orientation,
high autonomy, and high participation.

Source: Based on J. C. Kennedy, “Leadership in Malaysia: Traditional Values, International Outlook,” Academy of Management Executive, August
2002, pp. 15–16; F.C. Brodbeck, M. Frese, and M. Javidan, “Leadership Made in Germany: Low on Compassion, High on Performance,”
Academy of Management Executive, February 2002, pp. 16–29; M. F. Peterson and J. G. Hunt, “International Perspectives on International
Leadership,” Leadership Quarterly, Fall 1997, pp. 203–31; R. J. House and R. N. Aditya, “The Social Scientific Study of Leadership: Quo Vadis?”
Journal of Management, vol. 23, no. 3, (1997), p. 463; and R. J. House, “Leadership in the Twenty-First Century,” in A. Howard (ed.), The
Changing Nature of Work (San Francisco: Jossey-Bass, 1995), p. 442.

16–863
Gender differences and
leadership
• Research findings
 Males and females use different styles:
 Women tend to adopt a more democratic or participative style
unless in a male-dominated job.
 Women tend to use transformational leadership.
 Men tend to use transactional leadership.

16–864
 Exhibit 16–9 Where female managers do better:
a scorecard

Source: R. Sharpe, “As Leaders, Women Rule,” BusinessWeek, November 20. 2000, p. 75.

16–865
Leader training
 More likely to be successful with individuals who are
high self-monitors than with low self-monitors.
 Individuals with higher levels of motivation to lead are
more receptive to leadership development
opportunities
• Can teach:
 Implementation skills
 Trust-building
 Mentoring
 Situational analysis

16–866
Substitutes for leadership
• Follower characteristics
 Experience, training, professional orientation, or the
need for independence
• Job characteristics
 Routine, unambiguous, and satisfying jobs
• Organization characteristics
 Explicit formalized goals, rigid rules and procedures,
or cohesive work groups

16–867
 Terms to know
• leader • least-preferred co-worker
• leadership (LPC) questionnaire
• behavioral theories • leader-member relations
• autocratic style • task structure
• democratic style • position power
• laissez-faire style • situational leadership theory
• initiating structure (SLT)
• readiness
• consideration
• • leader participation model
high-high leader
• • path-goal theory
managerial grid
• transactional leaders
• Fiedler contingency
model
16–868
 Terms to know
• transformational leaders
• charismatic leader
• visionary leadership
• legitimate power
• coercive power
• reward power
• expert power
• referent power
• credibility
• trust
• empowerment

16–869
1) The process of motivating, influencing, and directing
others in the organization to work productively in
pursuit of organization goals is known as:
A) leadership.
B) management.
C) charisma.
D) strategic thinking.

1–870
2) Which of the following statements describes a key
difference between managers and leaders according to
Bennis and Kotter?
A) Managers do the right things, whereas leaders do
things right.
B) Managers focus on vision, mission, and goals, whereas
leaders focus on efficiency.
C) Management is about coping with change, whereas
leadership is about coping with complexity.
D) Leaders see themselves as promoters of change,
whereas managers focus on preserving the status quo.
1–871
3) The ability of a leader to get high performance from
his or her subordinates is known as:
A) efficient leadership.
B) high-performance leadership.
C) effective leadership.
D) community leadership.

1–872
4) William Bratton, former commissioner of the New York City Police
Department advocated zero-tolerance policing. This included
prosecution of panhandlers and vandals. His push was opposed by the
city's courts, which feared the policy would swamp the court system
with small crime cases. Bratton elicited the help of New York Mayor
Rudolph Giuliani who explained that although zero-tolerance policing
would initially increase the workload of the courts, over time this would
decline as the crime rate fell in New York. Bratton and Giuliani then
had a series of press conferences on the subject. The courts dropped
their opposition. Bratton's power in this example most likely flows from
his:
A) network of allies.
B) expertise.
C) individual attributes.
D) legitimate power.

1–873
5) Which of the following is something that a leader
with people-oriented behavior would most likely do?
A) establish stretch goals
B) challenge employees
C) ensure employees follow company rules
D) listen to employee suggestions

1–874
6) Which of the following statements about the behavior
perspective on leadership is most accurate?
A) The best leaders are those that are task-oriented.
B) Effective leaders such as Jack Welsh are task-
oriented and not people oriented.
C) Generally absenteeism is worse in subordinates who
work for leaders with low levels of people-oriented
leadership behaviors.
D) All of the above statements are correct.

1–875
7) Which of the following is a contingency theory of
leadership?
A) power-influence theory
B) Fiedler's theory
C) trait theory
D) emotional intelligence theory

1–876
8) Which of the following is an assumption that Fiedler
makes?
A) Leaders can change their style to fit the situation.
B) The effectiveness of a leaders should be judged on
his or her own performance.
C) Leaders cannot change their style.
D) There are three main types of leaders.

1–877
9) A leader who helps an organization achieve its
current objectives is known as a(n):
A) achievement-oriented leader.
B) directive leader.
C) transactional leader.
D) objective leader.

1–878
10) Transformational leaders:
A) make meaningful changes in the activities and
architecture of the organization.
B) communicate with some of the staff irregularly
because they are busy communicating with other
stakeholders.
C) practice "do as I say" rather than "do as I do"
because they realize that everyone cannot do the same
thing.
D) realize that they have the answers and employees
help them to carry out the solutions

1–879
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter Introduction
17 to
Controlling
17–880
Learning outcomes
Follow this learning outline as you read and study this
chapter.
17.1 What is control and why is it important?
• Define controlling
• Discuss the reasons why control is important
• Explain the planning-controlling link
17.2 The control process
• Describe the three steps in the control process
• Explain why what is measured is more critical than how it’s
measured
• Explain the three courses of action managers can take in
controlling

17–881
Learning outcomes
17.3 Controlling organizational performance
• Define organizational performance
• Describe three most frequently used measures of organizational
performance

17.4 Tools for measuring organizational performance

• Contrast feedforward, concurrent, and feedback controls
• Explain the types of financial and information controls managers
can use
• Describe how balanced scorecards and benchmarking are used
in controlling

17–882
Learning outcomes
17.5 Contemporary issues in control
• Describe how managers may have to adjust controls
for cross-cultural differences
• Discuss the types of workplace concerns managers
face and how they can address those concerns
• Explain why control is important to customer
interactions
• Define corporate governance

17–883
What is control?
• Controlling
 The process of monitoring activities to ensure that
they are being accomplished as planned and of
correcting any significant deviations.
• The purpose of control
 To ensure that activities are completed in ways that
lead to accomplishment of organizational goals.

17–884
Why is control important?
• As the final link in management functions:
 Planning
 Controls let managers know whether their goals and plans
are on target and what future actions to take.
 Empowering employees
 Control systems provide managers with information and
feedback on employee performance.
 Protecting the workplace
 Controls enhance physical security and help minimize
workplace disruptions.

17–885
Exhibit 17–1 The Planning–Controlling link

17–886
The control process
• The process of control
1. Measuring actual
performance
2. Comparing actual
performance against a
standard
3. Taking action to correct
deviations or inadequate
standards

17–887
Exhibit 17–2 The control process

17–888
Measuring: how and what we
measure
• Sources of • Control criteria
information (How) (What)
 Personal observation  Employees
 Statistical reports  Satisfaction

 Oral reports
 Turnover
 Absenteeism
 Written reports
 Budgets
 Costs
 Output
 Sales 17–889
Exhibit 17–3 Common sources of information for
measuring performance

17–890
Comparing
• Determining the degree of variation between
actual performance and the standard.
 Significance of variation is determined by:
 The acceptable range of variation from the standard (forecast
or budget).
 The size (large or small) and direction (over or under) of the
variation from the standard (forecast or budget).

17–891
Exhibit 17–4 Defining the acceptable range of
variation

17–892
Exhibit 17–5 Example of determining significant
variation

17–893
Taking managerial action
• Courses of action
 “Doing nothing”
 Only if deviation is judged to be insignificant.
 Correcting actual (current) performance
 Immediate corrective action to correct the problem at once.
 Basic corrective action to locate and to correct the source of
the deviation.
 Corrective Actions
– Change strategy, structure, compensation scheme, or
training programs; redesign jobs; or fire employees

17–894
Taking managerial action

• Courses of action (cont’d)

 Revising the standard
 Examining the standard to ascertain whether or not the
standard is realistic, fair, and achievable.
– Upholding the validity of the standard.
– Resetting goals that were initially set too low or too high.

17–895
Exhibit 17–6 Managerial decisions in the control
process

17–896
Controlling for organizational
performance
• What is performance?
 The end result of an activity
• What is organizational
performance?
 The accumulated end results of all of the
organization’s work processes and activities
 Designing strategies, work processes, and work activities.
 Coordinating the work of employees.

17–897
Organizational performance
measures
• Organizational productivity
 Productivity: the overall output of goods and/or
services divided by the inputs needed to generate
that output.
 Output: sales revenues
 Inputs: costs of resources (materials, labor expense, and
facilities)
 Ultimately, productivity is a measure of how efficiently
employees do their work.

17–898
Organizational performance
measures (cont’d)
• Organizational effectiveness
 Measuring how appropriate organizational goals are
and how well the organization is achieving its goals.
 Systems resource model
– The ability of the organization to exploit its environment in
acquiring scarce and valued resources.
 The process model
– The efficiency of an organization’s transformation process
in converting inputs to outputs.
 The multiple constituencies model
– The effectiveness of the organization in meeting each
constituencies’ needs.
17–899
Industry and company rankings
• Industry rankings on: • Corporate Culture
 Profits Audits
 Return on revenue • Compensation and
 Return on shareholders’ benefits surveys
equity • Customer satisfaction
 Growth in profits surveys
 Revenues per employee
 Revenues per dollar of
assets
 Revenues per dollar of
equity

17–900
Exhibit 17–7 Popular industry and company rankings

17–901
Tools for measuring
organizational performance
• Feedforward control
 A control that prevents anticipated problems before
actual occurrences of the problem.
 Building in quality through design.
 Requiring suppliers conform to ISO 9002.

• Concurrent control
 A control that takes place while the monitored activity
is in progress.
 Direct supervision: management by walking around.

17–902
Tools for measuring
organizational performance
(cont’d)
• Feedback control
 A control that takes place after an activity is done.
 Corrective action is after-the-fact, when the problem has
already occurred.
 Advantages of feedback controls:
 Provide managers with information on the effectiveness of
their planning efforts.
 Enhance employee motivation by providing them with
information on how well they are doing.

17–903
Exhibit 17–8 Types of control

17–904
Financial controls
• Traditional controls
 Ratio analysis
 Liquidity
 Leverage
 Activity
 Profitability
 Budget Analysis
 Quantitative standards
 Deviations

17–905
 Exhibit 17–9 Popular financial ratios

Objective Ratio Calculation Meaning

17–906
 Exhibit 17–9 Popular financial ratios (cont’d)

Objective Ratio Calculation Meaning

17–907
Financial controls

• Managing earnings
 “Timing” income and expenses to enhance current
financial results, which gives an unrealistic picture of
the organization’s financial performance.
 New laws and regulations require companies to clarify
their financial information.

17–908
Tools for measuring organizational
performance (cont’d.)
• Balanced scorecard
 Is a measurement tool that uses goals set by
managers in four areas to measure a company’s
performance:
 Financial
 Customer
 Internal processes
 People/innovation/growth assets
 Is intended to emphasize that all of these areas are
important to an organization’s success and that there
should be a balance among them.
17–909
Information controls
• Purposes of information controls
 As a tool to help managers control other
organizational activities.
 Managers need the right information at the right time and in
the right amount.

 As an organizational area that managers need to

control.
 Managers must have comprehensive and secure controls in
place to protect the organization’s important information.

17–910
Information controls (cont’d)
• Management information systems (MIS)
 A system used to provide management with needed
information on a regular basis.
 Data: an unorganized collection of raw, unanalyzed facts
(e.g., unsorted list of customer names).
 Information: data that has been analyzed and organized
such that it has value and relevance to managers.

17–911
Benchmarking of best practices
• Benchmark
 The standard of excellence against which to measure
and compare.
• Benchmarking
 Is the search for the best practices among
competitors or noncompetitors that lead to their
superior performance.
 Is a control tool for identifying and measuring specific
performance gaps and areas for improvement.

17–912
Contemporary issues in control
• Cross-cultural issues
 The use of technology to increase direct corporate
control of local operations
 Legal constraints on corrective actions in foreign
countries
 Difficulty with the comparability of data collected from
operations in different countries

17–913
Contemporary issues in control
(cont’d)
• Workplace concerns
 Workplace privacy versus workplace monitoring:
 E-mail, telephone, computer, and Internet usage
 Productivity, harassment, security, confidentiality, intellectual
property protection
 Employee theft
 The unauthorized taking of company property by employees
for their personal use.
 Workplace violence
 Anger, rage, and violence in the workplace is affecting
employee productivity.
17–914
Exhibit 17–11 Top Internet video sites viewed
at work
Top 10 Internet video brands viewed in the U.S. while
at work for January 2008, in millions of streams
YouTube 674.2
Yahoo 156.5
Fox Interactive Media 92.8
MSN/Windows Live 74.2
ESPN 68.3
CNN Digital 41.6
Turner Entertainment 41.4
NBC Universal 30.5
Disney Online 27.2
Source: Bobby White, “The New Nickelodeon 23.5
Workplace Rules: No Video
Watching,” Wall Street Journal,
March 4, 2008, p. B3.
17–915
Exhibit 17–12 Controlling employee theft

Sources: Based on A.H. Bell and D.M. Smith. “Protecting the

Company Against Theft and Fraud,” Workforce Online
(www.workforce.com) December 3, 2000; J.D. Hansen. “To Catch
a Thief,” Journal of Accountancy, March 2000, pp. 43–46; and J.
Greenberg, “The Cognitive Geometry of Employee Theft,” in
Dysfunctional Behavior in Organizations: Nonviolent and Deviant
Behavior, eds. S.B. Bacharach, A. O’Leary-Kelly, J.M. Collins, and
R.W. Griffin (Stamford, CT: JAI Press, 1998), pp. 147–93.

17–916
 Exhibit 17–13 Workplace violence

Witnessed yelling or other verbal abuse 42%

Yelled at co-workers themselves 29%
Cried over work-related issues 23%
Seen someone purposely damage
machines or furniture 14%
Seen physical violence in the workplace 10%
Struck a co-worker 2%

Source: Integra Realty Resources, October-November Survey of Adults 18 and Over, in “Desk Rage.” BusinessWeek, November 20, 2000, p. 12.

17–917
Exhibit 17–14 Controlling workplace violence

Sources: Based on M. Gorkin, “Five Strategies and Structures for Reducing

Workplace Violence,” Workforce Online (www.workforce.com). December
3, 2000; “Investigating Workplace Violence: Where Do You Start?”
Workforce Online (www.forceforce.com), December 3, 2000; “Ten Tips on
Recognizing and Minimizing Violence,” Workforce Online
(www.workforce.com), December 3, 2000; and “Points to Cover in a
Workplace Violence Policy,” Workforce Online (www.workforce.com),
December 3, 2000.

17–918
Contemporary issues in control
(cont’d)
• Customer interactions
 Service profit chain
 Is the service sequence from employees to customers to
profit.
 Service capability affects service value which impacts
on customer satisfaction that, in turn, leads to
customer loyalty in the form of repeat business
(profit).

17–919
Contemporary issues in control
(cont’d)
• Corporate governance
 The system used to govern a corporation so that the
interests of the corporate owners are protected.
 Changes in the role of boards of directors
 Increased scrutiny of financial reporting (Sarbanes-Oxley Act
of 2002)
– More disclosure and transparency of corporate financial
information
– Certification of financial results by senior management

17–920
 Terms to know
• controlling • productivity
• market control • organizational
• bureaucratic control effectiveness
• clan control • feedforward control
• control process • concurrent control
• range of variation • management by walking
• immediate corrective around
action • feedback control
• basic corrective action • economic value added
• performance (EVA)
• organizational • market value added
performance (MVA)
17–921
Terms to know
• management information
system (MIS)
• data
• information
• balanced scorecard
• benchmarking
• employee theft
• service profit chain
• corporate governance

17–922
1) To make sure an organization is operating efficiently
and in a manner consistent with its intended strategy
managers use:
A) controls.
B) financial statements.
C) substandards.
D) coercion.

1–923
2) In the case of a business enterprise, the major goals at
the top of the organizational hierarchy are normally
expressed in terms of:
A) revenue.
B) profitability.
C) expenses saved.
D) asset turnover.

1–924
3) Making sure through personal inspection and direct
supervision that individuals and units behave in a way
that is consistent with the goals of an organization is
called:
A) output control.
B) personal control.
C) bureaucratic control.
D) self-control.

1–925
4) What was the name of the first person to describe
bureaucratic controls?
A) Peter Drucker
B) Adam Smith
C) Max Weber
D) Jack Welch

1–926
5) Which of the following is the most likely form of
control used by a firm with a functional structure and
low integration?
A) bureaucratic controls
B) output controls
C) cultural controls
D) all of the above are used

1–927
6) Defects per thousand products is a(n) __________
control in a firm with a functional structure and low
integration.
A) output
B) bureaucratic
C) personal
D) cultural

1–928
7) A control approach that suggests managers use
several different financial and operational metrics to
track performance and control of an organization is
called:
A) the lean approach.
B) the balanced scorecard approach.
C) the six-sigma approach.
D) the unified supply chain approach.

1–929
8) According to its inventors, the balanced scorecard is
most like which of the following?
A) a school report card
B) measuring spoons and cups
C) financial statements
D) the dials and indicators in an airplane cockpit

1–930
9) An informal channel through which managers can
collect important information is called a(n):
A) backchannel.
B) informational network.
C) information flow channel.
D) contact channel.

1–931
10) Starbucks CEO Jim Donald calls 5 to 10 stores each
morning to talk to the managers and other employees
there to get a sense of how their stores are performing.
This behavior best helps Jim Donald develop:
A) a relationship with external stakeholders.
B) a balanced scorecard.
C) a lean company.
D) a backchannel.

1–932
Management tenth edition

Stephen P. Robbins Mary Coulter

Chapter
Managing
18 Operations

18–933
Learning outcomes
Follow this learning outline as you read and study this
chapter.
18.1 The role of operations management
• Define operations management
• Contrast manufacturing and services organizations
• Describe managers’ role in improving productivity
• Discuss the strategic role of operations management
18.2 What is value chain management and why is it
important?
• Define value chain and value chain management
• Describe the goal of value chain management
• Describe the benefits of successful value chain
management
18–934
Learning outcomes
18.3 Managing operations by using value chain
management
• Discuss the requirements for successful value chain
management
• Explain the obstacles to value chain management
18.4 Current issues in operations management
• Discuss technology’s role in manufacturing
• Explain ISO 9000 and Six Sigma
• Describe mass customization and how operations
management contributes to it

18–935
What is operations management?
• Operations management
 The design, operation, and control of the
transformation process that converts such resources
as labor and raw materials into goods and services
that are sold to customers.
• The importance of operations management
 It encompasses both services and manufacturing.
 It is important in effectively and efficiently managing
productivity.
 It plays a strategic role in an organization’s
competitive success.
18–936
Exhibit 18–1 The operations system

18–937
Manufacturing and services
• Manufacturing organizations
 Use operations management in the transformation
process of turning raw materials into physical goods.
• Service organizations
 Use operations management in creating nonphysical
outputs in the form of services (the activities of
employees interacting with customers).

18–938
Managing productivity
• Productivity
 The overall output of goods or services produced
divided by the inputs needed to generate that output.
 A composite of people and operations variables.

• Benefits of increased productivity

 Economic growth and development
 Higher wages and profits without inflation
 Increased competitive capability due to lower costs

18–939
 Exhibit 18–2 Deming’s 14 points for improving
productivity
• Plan for the long-term future. • Raise the quality of your line
• Never be complacent concerning the supervisors.
quality of your product. • Drive out fear.
• Establish statistical control over your • Encourage departments to work closely
production processes and require your together rather than to concentrate on
suppliers to do so as well. departmental or divisional distinctions.
• Deal with the best and fewest number • Do not adopt strictly numerical goals.
of suppliers. • Require your workers to do quality
• Find out whether your problems are work.
confined to particular parts of the • Train your employees to understand
production process or stem from the statistical methods.
overall process itself.
• Train your employees in new skills as
• Train workers for the job that you are the need arises.
asking them to perform.
• Make top managers responsible for
implementing these principles.
Source: W.E. Deming, “Improvement of Quality and Productivity Through
Action by Management,” National Productivity Review, Winter 1981–1982,
pp. 12–22. With permission. Copyright 1981 by Executive Enterprises, Inc.,
22 West 21st St., New York, NY 10010-6904. All rights reserved.

18–940
Strategic role of
operations management
• The era of modern manufacturing began in the U.S. over
100 years ago.
• After WWII, U.S. manufacturers focused on functional
areas other than manufacturing.
• By the 1970’s, foreign competitors integrated
manufacturing technologies were producing quality
goods at lower costs.
• U.S manufacturers responded by investing in updated
technology, restructuring organizations, and including
production requirements in their strategic planning.
18–941
Value chain management
• Value
 The performance characteristics, features and
attributes, and any other aspects of goods and
services for which customers are willing to give up
resources (i.e., spend money).
• The value chain
 The entire series of organizational work activities that
add value at each step beginning with the processing
of raw materials and ending with the finished product
in the hands of end users.

18–942
Value chain management
(cont’d)
• What is value chain management?
 The process of managing the entire sequence of
integrated activities and information about product
flows along the entire value chain.
• Goal of value chain management
 To create a value chain strategy that fully integrates
all members into a seamless chain that meets and
exceeds customers’ needs and creates the highest
value for the customer.

18–943
Exhibit 18–3 Value chain strategy requirements

18–944
Value chain management
(cont’d)
• Requirements for value chain management
 A new business model incorporating:
 Coordination and collaboration
 Investment in information technology
 Changes in organizational processes
 Committed leadership
 Flexible jobs and adaptable, capable employees
 A supportive organizational culture and attitudes

18–945
 Benefits of value chain
management
Improved
Improved Improved
Improved
procurement
procurement logistics
logistics

Benefits
Benefitsof
of
value
valuechange
change
management
management

Enhanced
Enhanced Improved
Improved
customer
customerorder
order product
product
management
management development
development

18–946
Exhibit 18–4 Obstacles to successful value chain
management

18–947
Value chain management
(cont’d)
• Obstacles to value chain management
 Organizational barriers
 Refusal or reluctance to share information
 Reluctance to shake up the status quo
 Security issues

 Cultural attitudes
 Lack of trust and too much trust
 Fear of loss of decision-making power

 Required capabilities
 Lacking or failing to develop the requisite value chain
management skills

18–948
Value chain management

• Obstacles to value chain management (cont’d)

 People
 Lacking commitment to do whatever it takes
 Refusing to be flexible in meeting the demands of a changing
situation
 Not being motivated to perform at a high level
 Lack of trained managers to lead value chain initiatives

18–949
Current issues in managing
operations
• Technology’s role in manufacturing
 Increased automation and integration of production
facilities with business systems to control costs.
 Predictive maintenance, remote diagnostics, and utility cost
savings
• The concept of quality
 The ability of a product or service to reliably do what
it’s supposed to do and to satisfy customer
expectations.

18–950
Current issues in managing
operations
• Quality initiatives
 Planning for quality
 Organizing and leading for quality
 Controlling for quality

• Quality goals
 ISO 9000 certification
 Six Sigma standards

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 Exhibit 18–5 Product quality dimensions

1. Performance—Operating characteristics
2. Features—Important special characteristics
3. Flexibility—Meeting operating specifications over some period of
time
4. Durability—Amount of use before performance deteriorates
5. Conformance—Match with preestablished standards
6. Serviceability—Ease and speed of repair or normal service
7. Aesthetics—How a product looks and feels
8. Perceived quality—Subjective assessment of characteristics
(product image)
Sources: Adapted from J.W. Dean, Jr., and J.R. Evans, Total Quality: Management, Organization and Society (St. Paul, MN: West Publishing Company,
1994); H.V. Roberts and B.F. Sergesketter, Quality is Personal (New York: The Free Press, 1993): D. Garvin, Managed Quality: The Strategic and
Competitive Edge (New York: The Free Press, 1988); and M.A. Hitt, R.D. Ireland, and R.E. Hoskisson, Strategic Management, 4th ed. (Cincinnati, OH:
SouthWestern, 2001), p. 211.

18–952
 Exhibit 18–5 (cont’d) Service quality dimensions

1. Timeliness—Performed in promised period of time

2. Courtesy—Performed cheerfully
3. Consistency—Giving all customers similar experiences each time
4. Convenience—Accessibility to customers
5. Completeness—Fully serviced, as required
6. Accuracy—Performed correctly each time

Sources: Adapted from J.W. Dean, Jr., and J.R. Evans, Total Quality: Management, Organization and Society (St. Paul, MN: West Publishing Company,
1994); H.V. Roberts and B.F. Sergesketter, Quality is Personal (New York: The Free Press, 1993): D. Garvin, Managed Quality: The Strategic and
Competitive Edge (New York: The Free Press, 1988); and M.A. Hitt, R.D. Ireland, and R.E. Hoskisson, Strategic Management, 4th ed. (Cincinnati, OH:
SouthWestern, 2001), p. 211.

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 Current issues in managing
operations
• Mass customization
 Is a design-to-order concept that provides consumers
with a product when, where, and how they want it.
 Makes heavy use of technology (flexible manufacturing
techniques) and engages in a continual dialogue with
customers.
• Benefits of mass customization
 Creates an important relationship between the firm and
the customer in providing loyalty-building value to the
customer and in garnering valuable market information
for the firm.
18–954
 Terms to know
• operations management
• manufacturing organizations
• service organizations
• productivity
• value
• value chain
• value chain management
• organizational processes
• RFID
• intellectual property
• quality
• ISO 9000
• Six Sigma
• mass customization
• Cellular manufacturing
18–955
 Case study14
Household plastic company of district 11 with the General director called Mr.Hai
has a plan to reconsider and adjust anual bonus & benefit policies towards staff of
company. The purpose of this plan is staff retention & tallent atraction. Over 3
months ago, human resource manager surveyed the satff’s suggestions and
consulted other companies in the same business field about new policies & salary
regulations. Basing on analysis about data & information, the human resource
manager suggests a new bonus & salary calculation. Bonus policy will be
cancelled and all bonus will be added to salary. According to this suggestion, there
will be big changes towards anual income of many staff who enjoyed benefits from
weak points of current bonus calculation. Mr.Hai also imagined their responses.
- According to you, who should be the chairman of this meeting?
- What should the chairman prepare for the meeting?
- What contents will you advice the chairman to deploy the meeting?
- Does the chairman need to prepare anything else for his presentation beside the
content?
- Why do we have to try to express our opinions in a meeting?
- What is a valuable suggestion?

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 Case study 14
On Monday, Mr.Sang, an office manager, got a mission that he had to collate,
write down address, check information, put 20,000 messages into envelopes
& send them to the customers by post. Everything mus be done before Friday.
His beginning was quite good. He made a fully worked-out plan for this
mission and made schedules for every part of work. He assigned the task to 4
staff and instrusted them carefully. The work would be implemented according
to specific rules & standards with available equipments in office. Mr. Sang was
confident that everything had been arranged well and the work would progress
according to his plan. Therefore, he didn’t care implementation of his staff.
After few days, he saw that the “letter sending group” was still doing their
mission hurriedly. On Friday, Mr.Sang amazingly realized that they had just
sent 13,000 letters. With that situation, he had to ask his staff for overtime
work in the evening of Friday & in the morning of Saturday to finish the
remainder of letters. However, the completion was one day later in comparison
with requirement.
1)What is serious fault of Mr.Sang in process of control?
2)If you were Mr.Sang, what would you do to ensure the time-limit of work?

18–957
Case study 15
Company X is a unit belonging to General company Y. It was time for the
director retired. Because of some reasons, the deputy director cannot be
promoted. Therefore, leader of the general company gave the deputy
director rights of temporary management. The deputy director thought
that he just hold on power temporarily and it is not necessary to cause
any “gratitude and rancour”. Thus, he based his operation on managers
completely. For example, the deputy director organized weekly meetings
with the managers and he just made decision if a certain issue got 100%
of unanimity from those managers. If a certain issue needed to be solved
urgently, the deputy director assigned it to relevant manager and his
decision was made basing on the relevant manager’s suggestion. The
way making decision of the deputy director seemed quite effective
beause the decisions based on consensus. Hence, everybody
implemented them joyfully. Although some decisions didn’t meet
expected result, no one complained them because they were from
consensus of all managers.

18–958
Case study 15
Mrs. Lan is the director of a company belonging to General company Z which
has similar functions in comparison with company X. She is a resolute &
dynamic woman with many achievements of management in her current
company. General company Y trusted in her and invited her to become the
director of company X with promise that she would be promoted to deputy
general director position of General company Y after 1 tenure. Because of
many different administrative procedures, after nearly 1 year, there was
appointment decision of company X’s director position. After inauguration, she
organized a meeting with the whole company and stated that she needed time
to learn about all issues in the company and the deputy director could operate
everything as before. After 2 weeks, she would start her new position officially.
During the time of learning about the company, she met some staff, joined in 2
meetings with managers, and realized that all issues of the company were
mostly decided by managers. It was dangerous that managers’ suggestions
inclined to “choosing ease & rejecting difficulty” and “getting the best thing for
own department”. Human resource also increased when managers helped their
acquaintance join into their own department.

18–959
 Case study 15
After 2 weeks, Mrs. Lan organized meeting within the company and stated that she started her
position officially. In her presentation, she praized effort of the whole staff during the time they
had no director. Also, she indicated drawbacks needing to overcome. At last, she finalized
necessary things and some changes in the time coming. There were 3 main points as follows:
1) In the past, the company just handled regular jobs without long-term development strategies.
Therefore, this issue will be her priority job.
2) Because of absence of a director, the company was run according to collective regime. From
now on, she will run the company according to her power. In addition, she will be responsible
for everything in the company. Weekly meetings with managers are no longer necessary.
Instead of that, the company will have monthly meetings with the whole staff. In these
meetings, she will reported old jobs and inform new jobs in the time coming. She will listen to
everybody’s suggestions. To daily activities, whenever she needs consultancy, she will discuss
with relevant managers & experts to collect suggestions before decision.
3) For discipline & scientific operation of the company, during 2 weeks coming, the managers
have to describe their own staff’s jobs in detailed, build work processes, recalculate human
resources and give suggestions. She authorized the deputy director implement this issue
directly.
Although it was just the first statement, the manegers & staff understood that they would have
new style of management.

18–960
Case study 15
After 2 weeks, she asked the managers for submitting job descriptions, working
process, and human resource assessment but no one submitted them with
many reasons such as they were on work trip, they didn’t know how to do it, the
time was very limited, etc. Then, she extended the deadline 1 more week and
said that she would guide people whom didn’t know how to do it. After that, she
criticized the deputy director because he didn’t implement his mission well. He
kept silence and said nothing.
After expiration, only 8 departments among 10 departments submitted their
documents but they were very negligent and mainly coped with her. As a
result, she organized an unscheduled meeting to criticized the deputy director &
managers strictly because they didn’t implement her direction seriously and this
situation was not accepted. She asked them for completing everything after 5
days more. Otherwise, they would be disciplined. After the meeting, everybody
gathered together to discuss and some dissatisfaction & challenge appeared.
Some managers quietly encouraged their close staff showing objection. In
general, working atmosphere in the company became stressful and working
efficiency also decreased.

18–961
Case study 15
It was the climax of this problem when a customer called her to
complain that a staff of a certain department had raised difficulties
for him and asked him for extra money. She immediately called
this staff and asked him for submitting report but this staff didn’t
admit his fault in the report and blamed that the customer
calumniated him. Manager of this staff also advocated him. She
was very angry and asked for meeting Discipline Council. The
Discipline Council listened to the staff’s statement, direct
manager’s comment. She also analyzed that protection of the
manager towards his staff was not right, wrong action of the staff
was very clear. These thing would affect the company’s prestige.
Therefore, relevant people must be disciplined. There were 2
criticized votes, 6 discipline skipping votes, and 3 white votes. She
was very angry with this result but she didn’t know how to solve it.

18–962
Case study 15
When closing date came, she got enough job description, working
process, etc. from departments. However, these document was
used to cope with her. Thus, they are useless. The deputy didn’t
resist her and he even agreed with all her policies but he did
nothing. The managers were dissatisfied with her. Annual leave,
sick leave, family leave, etc. also increased significantly. The most
important thing is that higher authority informed her that they had
received letter of denunciation. According to this letter, she was
very autocratic, broke solidarity, and made a stressful atmosphere
in the company. Thus, she had to explain these things. She was
very sad & anxious, and her confidence decrease significantly.
What do you think about management style of the deputy director
& Mrs. Lan? What were the mistakes of Mrs. Lan during process
of her management change?

18–963
Case study 16
Center X is a Professional Administrative Unit in need of the Service
Y. Director of the center is a good-natured person and has no
knowledge of finance. Therefore, deputy director almost decides all
the financial issues. When the center had just been founded, there
were a few members, its economy was difficult, and everybody
behaved as a family. At that time, beside the government basic
salary, welfare is equally divided for everyone. Thanks to the
advantage of some exclusive products, the center was developing,
and got more revenues. Therefore, the welfare fund providing for
workers was rising in spite of the increase on labor force. Three years
ago, manager of Finance Department suggested that the deputy
director shoud set up an audit system to deal with the state’s salary
regulations (it mustn’t be beyond the given norm), and to help
employees cut down tax of private income. All relevant managers
accepted this suggestion, and the director also approve it.

18–964
Case study 16
Ten years ago, after graduating from university, Kim started to
work for this center. Thanks to her professional capacity,
responsibility, inquiring mind, open living style, etc., she was
promoted to the Professional Deputy Director. Recently, Kim has
heard that some inferior officers complain about the equal
division of the office’s income: everyone is just different in
coefficient of salary (it is just a very small amount), and welfare is
equally divided to everybody – from the senior to the inferior. It
seems that everyone has quite the same income. Moreover,
because of many reasons, some staff, who are considered
unnecessary people in the center, still have high income as well
as skilled and hard staff. All these things led to envy. Especially,
there were some signs that enthusiasm of skilled labors
decreased.

18–965
 Case study 16
Kim had just had a discussion with the board about promoting her to the
center’s director position because the current director would retire after
6 months coming. She accidentally met on an old friend, a director has
just been dismissed for lack of responsibility in financial management.
Actually, it was violation in management. The friend told her that a
director had to pay attention to financial management. If you made any
mistake in content, although it was serious, you would be just warned or
criticized. However, if you made any mistake in finance, you would lose
your position or even be imprisoned. Kim felt very nervous and tried to
observe and study what was happening in this center. At the first sight,
the center seemed quite normal but it really had many inadequate
things. Firstly, there were 2 urgent matters needing to be revised: the
accounting of the center had to follow the laws (a record system), and
structure of welfare had to be built in the way that brought equity to
everyone.

18–966
 Case study 16
On the first day of work, as a director, Kim had a discussion
with Administrative Director, and suggested the deputy
director help her find a way to solve these 2 urgent problems.
After discussion, the deputy director told Kim that her
intention, in theory, was very good and timely; but to make it
practice, she had to face 2 unexpected problems:
1) If we followed the state regulations of accounting, the
earnings of everyone would decrease, and the private income
tax would increase.
2) If we divided welfare according to the way “who does more
gets more”, it would cause internal divisions because the
number of skilled employees is quite small.

18–967
Case study 16
The Deputy Administrative Director was also a kind person,
and he also wanted to help Kim but he was afraid of bothering
others. A week later, he submitted her calculations. According
to his calculations, if their accounting followed state
regulations, the average income of everyone would be cut
down by 1/3. If they divided welfare fund in the new way and if
difference between the person who got highest welfare & the
person who got lowest welfare is around only 3 times, there
would be ¾ of number of staff being decreased their income.
He also said that everything would be under Kim’s control, and
he could only help her find information but he couldn’t help her
put this project into practice because he couldn’t stand other
people’s criticisms.

18–968
Case study 16
Kim was very worried and she didn’t know how to deal with it.
She really wanted to be a Professional Deputy Director as
before, but things were predestined, and she couldn't resign.
She didn’t know how to make right decision. If she made
changes, it could cause protest, and she would be blamed
that she didn’t care about employees’ lives. Besides, she
might cope with denunciations and complaints. But if she did
nothing, she would be responsible for difficult future problems.
Moreover, what would happen towards the company’s future if
she couldn’t encourage skilled officers working excitedly?
According to you, what leading behavior was showed through
Kim’s intention? Should Kim implement her thought? Please
suggest suitable methods.

18–969
Case study 17
It is the first time when Van has been appointed to be the director of a
company directly under the General Company. She also knows that in the
meeting deciding her position, some people thought that she didn’t have
enough experience to do this job while this company was a unit bringing a
large amount of earnings to the General Company. Now, Van has to make
the first important decision: she needs to set the targets for the company’s
next year plans. She understands that if she does this job well, she will be
able to develop internal prestige, and clear parts of the doubts about her
management ability. She is worried, but she is still confident because she
has just finished the course of “Making Decision Skills.” Besides, she has
a month to complete her plan, so she has no pressure of time. According
to management theory, she thinks that she should let employees
participate in the management process, and when she has their
agreement about her plan, it won’t be difficult to put this plan into practice.
Therefore, she has used the model of groups to carry out the plan.

18–970
 Case study 17
After that, Van convened a meeting with 23 key officers and employees
relating to the target of the plan, and presented to them the necessary
decision: What are the targets for the next year? Van, of course, had her
own ideas, but she thought that the datas of her staff could be closer to
reality. At the meeting, she said: ”We all know that we must make our
decision. I want you all to decide our targets for the next year. Let’s
discuss this matter.” The ideas in the meeting have made Van surprised.
- “We should keep targets like last year.”
- “We can raise our target up to 20% if you all follow my suggestion…”
- “10% is the best”
- “I think we should select more people if we want to raise the target”
- “If the Administrative Department still works ineffectively, we cannot
even reach the last year target.”
- “Will we be higher – paid if we raise the target?”

18–971
Case study 17
That was the way the meeting occurred. They had no agreement.
The meeting finished without making a decision. Van had held
another meeting before the deadline, but it was still useless. She
thought that if they couldn’t reach the agreement, she would let
them vote for the suggesting target.
On Friday, Van rearranged another meeting. Before the meeting
stared, she orientated that she had considered carefully the
company targets of the past 3 years, and realized that the target
of the following year were always 2% to 5% higher than the
previous year. The last year target was 12%, and she wanted this
year targets must be at least 2% higher than last year. Specifically,
it should be14%. Then, she asked everyone to vote. As a result,
there were 6 of 23 members voted to rise 13 - 14%, 14 other
members voted to rise 10 - 12%, and the rest voted to rise 7 – 9%.

18–972
 Case study 17
Van is really worried. According to the poll, her unit has to set
lower targets, or at least equal to last year. If she, herself, set
higher targets in comparison to last year to satisfy the leaders’
expectation towards her ability, this means that she doesn’t
care about the participation of employees in making decisions
that she has encouraged strongly. But if she tells the superior
that the target of this year cannot pass the last year’s, they will
be disappointed with her management capacity.
1)Was Van wrong when she chose the model of group to make
decisions? According to you, what is the best way we should
choose in this situation? Why?
2)How will you give Van the advice in this situation?

18–973
1) The different activities involved in creating an
organization's products and services are called:
A) operations.
B) productivity.
C) capitalism.
D) creative endeavors.

1–974
2) Which of the following is the likely outcome of
managing operations efficiently and effectively?
A) Costs will go up.
B) The company will likely reach the efficiency frontier
in their industry.
C) Products will become more similar.
D) The company will be unlikely to reach the efficiency
frontier in their industry.

1–975
3) The production system of an organization refers to:
A) how the flow of work is configured.
B) the enterprise system software in use.
C) the people who make the product.
D) how the organization trains its employees on
production equipment.

1–976
4) Consider a management-consulting firm. Each job
undertaken may differ depending on the needs of the
client, requiring the firm to develop a different service
for each client. The production system most likely
used in this situation would be:
A) a small batch system.
B) a large volume production system.
C) a job shop production system.
D) a continuous flow production system.

1–977
5) Firms that use __________ production systems
charge higher prices to recoup their costs.
A) assembly-line
B) large batch
C) job shop
D) continuous flow

1–978
6) Learning effects were first documented in:
A) the aircraft industry during World War II.
B) the early classrooms of the late 1800s.
C) a lighting factory in New Hampshire.
D) 1955 in the shipbuilding industry.

1–979
7) The extent to which assets are "working," generating
income for the organization is referred to as asset:
A) completion.
B) generation.
C) income.
D) utilization.

1–980
8) Which of the following is a source of cost savings
when a product is reliable?
A) decreased productivity
B) improved reputation
C) higher scrap and rework costs
D) higher warranty costs

1–981
9) Which of the following refers to inventory that enters
a production process just as it is needed?
A) turnover inventory
B) just in time inventory
C) low quantity inventory
D) economic order inventory

1–982
10) Which of the following developed the TQM
philosophy?
A) Joseph Juran
B) W. Edwards Deming
C) A.V. Feigenbaum
D) all of the above

1–983
 Topics for exams
• Distinguish among planning, organizing, leading, and
controlling
• Explain the relationships between managerial levels and
managerial skills
• Explain how managers group tasks into jobs that are
motivating and satisfying for employees
• Explain why groups and teams are key contributors to
organizational effectiveness and why efficiency and
effectiveness are important to management
• Discuss the impact of culture on organizations and
managers

1–984
 Topics for exams
• Describe the decision-making process and give
evidences to support
• Explain the relationship between planning and
performance
• Discuss what strategies organizations might use to
become more customer oriented and to be more
innovative
• Discuss the organizational design challenges facing
managers today
• Explain why the HRM process is important

1–985
 Topics for exams
• Discuss the environmental factors that most directly
affect the HRM process
• Discuss the major sources of potential job candidates
• Describe how external conditions and group member
resources affect group performance and satisfaction
• Discuss how group structure influences group
performance and satisfaction
• Describe how group processes and group tasks
influence group performance and satisfaction

1–986
 Topics for exams
• Describe the impact job satisfaction has on employee
behavior
• Discuss ways to overcome the barriers to effective
• Describe Maslow’s hierarchy of needs and the three -
needs theory. How it can be used to motivate
• Define leaders and leadership and explain why
managers should be leaders
• Discuss the types of workplace concerns managers face
and how they can address those concerns

1–987
 FUNDAMENTAL OF MANAGEMENT
END-MODULE ASSIGNMENT
Choose a specific company and:
1)Explain the relationships between managerial levels and
managerial skills in the chosen company.
2)Discuss the impact of culture on organizations and managers in
the chosen company.
3)Describe Maslow’s hierarchy of needs. How it can be used to
motivate in the chosen company.
4)Describe the decision-making process and give evidences to
support in the chosen company.
5)Discuss ways to overcome the barriers to effective interpersonal
communication

1–988
 LƯU Ý
Yêu cầu trình bày:
•Đánh máy, ít nhất 10 mặt giấy A4, đóng cuốn, có bìa
màu xanh, không mùi, không đóng bìa nylon.
•Cách dòng 1.5; Cỡ chữ: 14; Font: Times New Roman
Nộp bài:
•Nộp GVCN vào 15 giờ 30 chiều T5, 16/01/2020
•SV phải trực tiếp nộp, ký tên vào danh sách nộp bài,
không được nhờ người khác nộp thay.

1–989