CHAPTER 2 – THE MANAGEMENT ENVIRONMENT
LEARNING OUTCOMES (PPT 2-3, 2-4, 2-5)
After reading this chapter students should be able to:
1. Describe the three waves in modern social history and their implications for organizations.
2. Explain the importance of viewing management from a global perspective.
3. Identify the ways in which technology is changing the manager’s job.
4. Describe the difference between an e-business, e-commerce, and an e-organization.
5. Define social responsibility and ethics.
6. Explain what is meant by the term entrepreneurship and identify the components of the
entrepreneurial venture.
7. Describe the management implications of a diversified work force.
8. Identify which work-life concepts are currently affecting employees.
9. Explain why many corporations have downsized.
10. Describe the key variables for creating a customer-responsive culture.
11. Explain why companies focus on quality and continuous improvement.
Opening Vignette
SUMMARY
A team of managers from an organization that is a critical supplier of parts to your company
leaves the board room where you have been having extensive discussions surrounding the negotiations of
a new contract to purchase their products. As the team leaves for a break, you notice that they left behind
a folder marked “company private.” Knowing they are out of eyesight and will be for the next 10
minutes, do you quickly look at the materials inside the folder?
Employees at MCI are frequently posed with ethical dilemmas such as the one above as part of an
aggressive ethics campaign and training initiative. The driver for this influx of ethics awareness is
Michael Capellas, the current CEO of MCI. Capellas, who has been CEO for MCI since December,
2002, inherited one of the worst fraud situations in corporate history. For 3 years, officials at MCI
manipulated the financials of the company, improperly posting items on the financial statements, grossly
overstating MCI’s revenues by more than $9 billion.
Because of the fraud, MCI lost more than $200 billion in market value, and by July 2002 MCI was bankrupt.
Thousands of employees lost their jobs, and the organization was suspended from participating in lucrative federal
contracts.
MCI agreed to settle SEC disputes for $750 million and accept corporate monitoring by the former
SEC chairman. Capellas was brought in as the new CEO and a new Board of Directors was brought in.
Capellas, the Board of Directors, and Capella’s newly appointed Chief Ethicist were determined to restore
the credibility of the company and would not tolerate unethical or illegal behaviors.
Chapter 2 The Management Environment
Capellas’ approach to ethics is simple; he believes in setting a tone for how people are expected to act
at work. He has set a culture for direct communication by creating an environment for openness and
accessibility for employees to discuss matters that affect them. His very simple motto is “do the right
thing, because it’s the right thing to do.” He wants every MCI employee to live by that motto, and wants
them well trained in what is and what is not acceptable behavior. He wants all employees, in every one of
their dealings—with people inside or outside the company---to be viewed as trustworthy.
Capellas’ actions are working, and the employees believe they are as well. As one manager who
was attending an ethics seminar stated when presented with the situation described above answered---you
don’t look at the file---because that’s the right thing to do. Looks like Capellas’ message is being heard!
Teaching notes
1. This case provides an interesting opportunity to allow students to realize they may already have a
basic understanding of what makes an ethical company and that the information in this chapter can
help them refine and build on that knowledge.
2. Break students into teams and have them identify what they consider to be the 3-5 most ethical
companies in their local area and list the qualities they believe indicates that each of these companies
is ethical.
3. Allow each group five to ten minutes (depending on class size) to:

talk about the company they believe is the most ethical company in their local area;

talk about the factors they believe are responsible for this ethical culture; and

ask them to list this information on the board or on flip chart pages that can be posted in the room.
4. Continue this process until all groups have had an opportunity to discuss the companies they
identified within their group. Then the faculty member may want to lead a discussion to have
students compare the factors for ethical cultures that have been posted for each company. What is
similar? Why? What is different? Why?
5. The faculty member should direct the discussion to include factors included in the opening vignette.
This would include open communication, ethics training, use of scenarios, and the appointment of a
Chief Ethicist.
6. The faculty member should encourage students to consider both the manager’s role and the role of
employees in creating ethical companies. How is the role for each similar and how is it different?
What factors impact these roles and in what ways (e.g., size of company, type of industry,
technology, geographic location, etc.)?
I. THE CHANGING ECONOMY
A. Introduction
1. Organizations that are stagnant and bound by tradition are increasingly fading from the
limelight.
See Exhibit 2-1, The Changing Economy.
49
Part I Introduction
2. One of the biggest problems in managing an organization is failing to adapt to change.
a) Just 25 years ago, no one had a fax machine, a cellular phone, or a notebook computer.
b) E-mail and modems were known to maybe, at best, a few hundred people.
c) Computers often took up considerable space, quite unlike the 4-pound laptop today.
d) The silicon chip and other advances in technology have permanently altered the
economies of the world and the way people work.
3. Alvin Toffler studied these changes, and predicted some of their implications.
4. He argued that modern civilization has evolved over three “waves.” (PPT 2-5
a) The first wave was driven by agriculture.
1) Until the late nineteenth century, all economies were agrarian.
2) Individuals were typically their own boss and performed a variety of tasks.
3) Their success—or failure—was contingent on how well they produced.
4) Now less than three percent of the global workforce is needed to provide our food.
b) The second wave was industrialization.
1) From the late 1800s until the 1960s, most developed countries moved to industrial
societies.
2) Work left the fields and moved into formal organizations.
3) The industrial wave forever changed the lives of skilled craftsmen.
4) Workers were hired into tightly structured and formal workplaces.
5) Mass production, specialized jobs, and authority relationships became common.
6) By the 1950s, industrial workers were the largest group in every developed country.
7) Today, blue-collar industrial workers account for less than 30 percent of the U.S.
workforce.
8) The shift since World War II has been away from manufacturing and toward service
jobs.
5. By the start of the 1970s, the information age was gaining momentum.
a) Technological advancements were eliminating many low-skilled, blue-collar jobs.
b) The information wave was transforming society from manufacturing to service.
50
Chapter 2 The Management Environment
c) Job growth in the past 20 years has been in low-skilled service and knowledge work.
(1) Knowledge workers as a group make up about a third of the U.S. work force.
d) The dot.com business has been the most powerful technological innovation to influence
business in the past decade.
(1) Using the Internet is completely changing the rules of business.
6. These waves also affect how we do business.
a) See Exhibit 2-1, The Changing Economy. (PPT 2-6)
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
II. A GLOBAL MARKET PLACE
A. The Globalization of Business
1. Management is no longer constrained by national borders.
a) BMW, a German-owned firm, builds cars in South Carolina.
b) McDonald’s sells hamburgers in China.
c) Exxon, a so-called American company, receives more than three fourths of its revenues
from sales outside the U.S.
d) Toyota makes cars in Kentucky.
e) General Motors makes cars in Brazil.
f) Mercedes makes SUVs in Alabama.
g) Parts for Ford Motor Company’s Crown Victoria come from Mexico, Japan, Spain,
Germany, and England.
h) The world has become a global village. (PPT 2-7)
2. To be effective in this boundaryless world, managers need to adapt.
3. In the 1960s, Canada’s prime minister described his country’s proximity to the United States
as analogous to sleeping with an elephant.
In the 2000s, we can generalize this analogy to the entire world.
51
Part I Introduction
International businesses have been with us for a long time. See exhibit 2-2.
a) Siemens, Remington, and Singer, were selling their products in many countries in the
nineteenth century.
b) By the 1920s, some companies, including Fiat, Ford, Unilever, and Royal Dutch/Shell,
had gone multinational.
c) Not until the mid-1960s were multinational corporations (MNCs) commonplace. (PPT 28)
4. The generic global organization, the transnational corporation (TNC). (PPT 2-8)
a) Decisions in TNCs are made at the local level.
b) Nationals are typically hired to run operations in each country.
c) The products and marketing strategies for each country are tailored to that country’s
culture.
d) Nestle, for example, is a transnational.
5. The borderless organization operates effectively by breaking down artificial geographic
barriers. (PPT 2-7)
a) IBM reorganized into 14 industry groups.
b) Ford merged its culturally distinct European and North American auto operations.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
B. How Does Globalization Affect Organizations?
1. An organization going global typically proceeds through three stages as shown in Exhibit 2-3.
(PPT 2-9)
2. Stage I, the first step toward going international, exporting the organization’s products.
a) This is a passive step involving minimal risk.
b) The organization fills foreign orders only when it gets them.
3. In Stage II, managers make an overt commitment to sell products or make products abroad.
a) Still no physical presence of company employees outside the company’s home country.
52
Chapter 2 The Management Environment
b) Sales through sending domestic employees on regular business trips to meet foreign
customers or by hiring foreign agents or brokers.
c) To manufacture, managers contract with a foreign firm to produce their products.
4. Stage III, a strong commitment to pursue international markets aggressively.
a) As shown in Exhibit 2-2, managers can do this in different ways.
b) License or franchise the right to use the brand name, technology, or product
specifications.
1) This approach is used widely by pharmaceutical companies and fast-food chains.
c) Joint ventures involve larger commitments; a domestic and a foreign firm share the cost
of developing new products or building production facilities in a foreign country.
1) These are called strategic alliances.
2) These partnerships provide a fast and less expensive way for companies to compete
globally than would doing it on their own.
d) The greatest commitment (and risk), occurs when the organization sets up a foreign
subsidiary.
1) Such subsidiaries can be managed as an MNC (with domestic control), a TNC (with
foreign control), or a borderless organization (with global control).
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
C. What Effect Does Globalization Have on Managers?
1. Whirlpool is the top manufacturer and distributor of appliances in the U.S., Latin America,
Europe, and Asia.
2. In the changing global environment, the spread of capitalism makes the world smaller.
a) Business has new markets to conquer.
b) The implementation of free markets in Eastern Europe further underscores the growing
interdependence between countries of the world.
3. A boundaryless world introduces new challenges for managers.
53
Part I Introduction
4. One specific challenge, one of the first issues to deal with, is the perception of “foreigners.”
(PPT 2-10)
5. U.S. managers in the past held a rather parochial view of the world of business.
a) Parochialism is a narrow focus.
b) Seeing things solely through their own eyes and perspectives, is an ethnocentric view.
c) They believed that their business practices were the best in the world.
d) They did not recognize different ways of doing things or living.
6. Countries have different values, morals, customs, political and economic systems, and laws.
7. Traditional approaches to international business sought to advance general principles.
a) Organizational success can come from a variety of managerial practices.
b) Example, status is perceived differently in different countries.
1) In France, status is the result of factors important to the organization, ascribed status.
2) In the United States, status is more a function of what individuals have personally
accomplished, achieved status.
c) Countries also have differences in their laws.
1) In the United States, laws guard against employers’ taking action against employees
solely on the basis of an employee’s age.
2) Similar laws do not exist in all other countries.
8.
Viewing the global environment from any single perspective may be potentially problematic.
9.
An appropriate approach is recognizing the cultural dimensions of a country’s environment.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
10. A study of the differences of cultural environments was conducted by Geert Hofstede. (PPT
2-10)
a) Surveyed over 116,000 employees in forty countries—all of whom worked for IBM.
b) Found that managers and employees vary on five value dimensions of national culture.
1) Power distance.
54
Chapter 2 The Management Environment
2) Individualism versus collectivism.
3) Quantity of life versus quality of life.
4) Uncertainty avoidance.
5) Long-term versus short-term orientation.
11. Highlights of conclusions from Hofstede’s research.
a) China and West Africa scored high on power distance; the United States and the
Netherlands scored low.
b) Most Asian countries were more collectivist than individualistic.
c) The United States ranked highest among all countries on individualism.
d) Germany and Hong Kong rated high on quantity of life.
e) Russia and the Netherlands rated low on quantity of life.
f) On uncertainty avoidance, France and Russia were high; Hong Kong and the United
States were low.
g) China and Hong Kong rated high on Long-Term Orientation while France and the U.S.
rated low.
12. The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research
program has updated Hofstede’s research. (PPT 2-11)
a) Using data from 825 organizations in 62 countries, GLOBE identified 9 dimensions on
which national culture differ:
1) Assertiveness
2) Future orientation
3) Gender differentiation
4) Uncertainty avoidance
5) Power distance
6) Individualism/collectivism
7) In-group collectivism
8) Performance orientation
55
Part I Introduction
9) Human orientation
b) See Exhibit 2-4 (PPT 2-12)
c) The GLOBE study confirms that Hofstede’s original dimensions are still valid, and has
added some additional dimensions.
d) It also provides us with an update measure of where countries rate on each dimension.
1) For example, the United States led the world in individualism in the 1970s
but today scores in the mid-ranks of countries.
e) We can expect future cross-cultural studies of human behavior to increasingly use the
GLOBE dimensions to assess differences between countries.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
III. EMPHASIS ON TECHNOLOGY (PPT 2-13)
A. Introduction
1. Suppose you need information on how well your unit is meeting its production standards.
a) Thirty years ago you would have submitted a requisition to the operations-control
department.
b) Today, a few keystrokes on your computer gets that information almost instantaneously.
2. Since the 1970s, U.S. companies such as General Electric, CitiGroup Technologies, WalMart, and 3M have been using automated offices, robotics, computer-assisted design
software, integrated circuits, microprocessors, electronic meetings, etc.
a) These technologies make organizations more productive and help them create and
maintain a competitive advantage.
3. Technology includes any equipment, tools, or operating methods that are designed to make
work more efficient.
a) Technological advances reflect integrating technology into a process for changing inputs
into outputs.
b) Technology made it possible to enhance production processes by replacing human labor
with electronic and computer equipment.
56
Chapter 2 The Management Environment
c) Technology is making it possible to better serve customers.
4. Technological advancements are also used to provide better, more useful information.
a) Most cars built today have an on-board computer circuit that a technician can use to
determine problems with the automobile, saving countless diagnostic hours.
b) And at Wal-Mart, technology has meant getting better and more timely information.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
B.
How Does an Organization Benefit From Information Technology? (PPT 2-13)
1. Technological changes, especially IT changes, have a significant effect on organizational
management.
2. IT has created the ability to circumvent the physical confines of doing work only in a
specified organizational location.
3. One important implication is that employees’ job skill requirements will increase.
4. Another implication is that IT tends to level the competitive playing field.
C. What is an E-Organization? (PPT 2-15)
1. E-commerce is becoming the standard label to describe the sales side of electronic business.
a) Encompasses presenting products on Web sites and filling orders.
b) Global e-commerce spending was $132 billion in 2000.
c) Global e-commerce spending is expected to be $6.8 trillion by the year 2004.
d) Ninety percent of e-commerce sales are business-to-business transactions.
2. E-business refers to the full breadth of activities included in a successful Internet-based
enterprise.
a) Developing strategies for running Internet-based companies.
b) Improving communication between employees, customers, and suppliers.
c) Collaborating with partners to electronically coordinate design and production.
3. E-organization (e-orgs) refers to applications of e-business concepts to all organizations.
57
Part I Introduction
a) The Internal Revenue Service is an e-organization because it now provides access to
taxpayers over the Internet.
b) There are three underlying concepts of the e-organization.
1)
The Internet—a worldwide network of interconnected computers.
2)
Intranets—an organization’s private Internet.
3)
Extranets—extended intranets, accessible only to selected employees and authorized
outsiders.
c) E-organizations are defined by the degree to which they use global (Internet) and private
(intranet and extranet) network linkages.
1)
2)
Type A—traditional organizations.
Type B—Contemporary organizations with heavy reliance on intranets and
extranets.
3)
Type C—small e-commerce firms.
4)
Type D—full e-organizations with completely integrated global and private
networks.
5)
See Exhibit 2-5. (PPT 2-16)
4. The Internet and E-organizations.
a) The Internet created thousands of new businesses,
b)
Changed the way organizations operated, and
c)
Left a lot of road kill.
d)
Growth of e-organizations is expected.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
D. In What Ways Does Technology Alter a Manager’s Job? (PPT 2-17)
1. Technology changed the manager’s job.
2. Organizations today have become integrative communication centers.
3. Managers can get complete information quickly, better formulate plans, make faster
decisions, more clearly define the jobs that workers need to perform, and monitor work.
58
Chapter 2 The Management Environment
a) Information technology enhanced a manager’s ability to more effectively and efficiently
perform the four primary activities of management.
4. Technology is also changing how a manager’s work is performed.
a) Historically, the work site was located close to a source of skilled labor.
b) Management could observe what work was being done and communicate face to face.
c) Managers are able to supervise employees in remote locations, and the need for face-toface interaction has decreased dramatically.
d) Telecommuting capabilities make it possible for employees to be located anywhere on
the globe.
e) Many employers no longer have to consider locating a business near its work force.
(1) Example, Progressive Auto Insurance in Omaha, Nebraska could hire qualified
workers in Berlin, Maryland; provide them with computer equipment and appropriate
ancillaries; and the work could be done hundreds of miles away and transmitted to
the home office.
5. Management’s two biggest challenges—effectively communicating with individuals in
remote locations, as well as ensuring that performance objectives are being met.
a) Addressing these challenges will focus on training managers in establishing performance
standards and ensuring appropriate work quality and on-time completion.
b) Need for more employee involvement with emphasis on output, not means.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
IV.
WHAT DOES SOCIETY EXPECT FROM ORGANIZATIONS AND ITS MANAGERS?
A. Introduction
1. The importance of corporate social responsibility surfaced in the 1960s when the activist
movement began questioning the singular economic objective of business.
2. Before the 1960s, few people asked such questions. Good arguments can be made for both
sides of the social responsibility issue.
59
Part I Introduction
See Exhibit 2-6. (PPT 2-19)
3. Managers are now regularly confronted with decisions that have a dimension of social
responsibility.
4. In a globally competitive world, few organizations can afford the bad press or potential
economic ramifications associated with being seen as socially irresponsible.
5. Few terms have been defined in as many different ways as social responsibility.
6. Some of the more popular meanings.
a) Profit making only.
b) Going beyond profit making.
c) Voluntary activities.
d) Concern for the broader social system.
e) Social responsiveness.
7. The debate has focused at the extremes.
a) The classical—or purely economic—view that management’s only social responsibility is
to maximize profits.
b) The socioeconomic position, which holds that management’s responsibility goes well
beyond making profits, to include protecting and improving society’s welfare.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
B. How Can Organizations Demonstrate Socially Responsible Actions? (PPT 2-18)
1. According to the text, social responsibility is a business firm’s obligation, beyond that
required by the law and economics, to pursue long-term goals that are good for society.
a) This definition assumes that business obeys the law and pursues economic interests.
b) This definition views business as a moral agent.
2. Comparison with two similar concepts: social obligation and social responsiveness.
a) Social obligation is the foundation of a business’s social involvement. A business has
fulfilled its social obligation when it meets its economic and legal responsibilities. A firm
pursues social goals only to the extent that they contribute to its economic goals.
60
Chapter 2 The Management Environment
b) Social responsibility and social responsiveness go beyond meeting basic economic and
legal standards. This might mean respecting the community in which the company
operates, treating all employees fairly, respecting the environment, supporting women
and minorities, not doing business in countries where there are human rights violations,
etc.
3. Social responsibility also adds an ethical imperative.
4. Social responsiveness refers to the capacity of a firm to adapt to changing societal conditions.
5. Social responsibility requires businesses to determine what is right or wrong and thus seek
fundamental ethical troths.
6. Social responsiveness is guided by social norms.
C. How Do Managers Become More Socially Responsible?
1. Ethics commonly refers to the rules or principles that define right and wrong conduct. (PPT
2-20)
a) Corporate scandals at companies such as Adelphia, Enron, and ImClone have resulted
in a lack of trust for management.
b) Exhibit 2-7 presents three views of ethical standards. (PPT 2-21)
2. Whether a manager acts ethically or unethically will depend on several factors, including:
a) the individual’s morality.
b) values.
c) personality and experiences.
d) the organization’s culture.
e) the issue in question.
3. People who lack a strong moral sense are much less likely to do the wrong things if they are
constrained by rules, policies, job descriptions, or strong cultural norms.
4. Codes of ethics are an increasingly popular tool for reducing that ambiguity. (PPT 2-20)
a) A formal document that states an organization’s primary values and the ethical rules it
expects managers and operative employees to follow.
b) Nearly 90 percent of Fortune 1000 companies have a stated code of ethics.
5. The effectiveness of ethical codes depends heavily on whether management supports them,
ingrains them into the corporate culture, and how employees who break the codes are treated.
61
Part I Introduction
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
V.
WHAT IS ENTREPRENEURSHIP?
A. Introduction (PPT 2-22)
1. Entrepreneurship—a process where an individual or a group of individuals risk time and
money in pursuit of opportunities to create value and grow through innovation regardless of
the resources they control.
2. Three important themes in this definition.
a) The pursuit of opportunities—to grow a business by changing, revolutionizing,
transforming, or introducing new products or services.
b) Innovation.
c) Growth.
3. Entrepreneurs create entrepreneurial ventures—characterized by innovative practices with
growth and profitability as their primary goals.
4. Small businesses—independently owned, operated, and financed with fewer than 500
employees—may or may not engage in any new or innovative practices.
B. Is There an Entrepreneurial Process?
1. Four key steps that entrepreneurs must address as they start and manage their entrepreneurial
ventures. (PPT 2-22)
a) Exploring the entrepreneurial context.
1) Includes the realities of the new economy, society’s laws and regulations that
compose the legal environment, and the realities of the changing world of work.
b) Identifying opportunities and possible competitive advantages.
c) Starting the venture.
d) Managing the venture.
C. What Do Entrepreneurs Do?
1. Entrepreneurs are creating something new—searching for change, responding to it, and
exploiting it.
62
Chapter 2 The Management Environment
2. Assessing the potential for the entrepreneurial venture and then dealing with start-up issues.
3. Researching the venture’s feasibility—uncovering business ideas, looking at competitors, and
exploring financing options.
4. Developing a viable organizational mission, exploring organizational culture issues, and
creating a well-thought-out business plan.
5. Organizing the venture—choosing a legal form of business organization, addressing other
legal issues such as patent or copyright searches, and coming up with an appropriate
organizational design for structuring how work is going to be done.
6. Launching the venture—setting goals and strategies, and establishing the technologyoperations methods, marketing plans, information systems, financial-accounting systems, and
cash flow management systems.
7. Managing the entrepreneurial venture—making decisions, establishing action plans,
analyzing external and internal environments, measuring and evaluating performance, and
making needed changes.
8. Managing the people-related activities—selecting and hiring, appraising and training,
motivating, managing conflict, delegating tasks, and being an effective leader.
9. Managing the venture’s growth—developing and designing growth strategies, dealing with
crises, exploring various avenues for financing growth, placing a value on the venture, and
perhaps eventually exiting the business.
D. Can Large Organizations Have Entrepreneurs?
1. The entrepreneurial spirit is not limited solely to the small business.
2. Some companies are attempting to model the activities of the entrepreneur.
a) Entrepreneurs are better able to respond to a changing environment.
b) The owner-manager is usually close to the customer.
c) The owner-manager is the main decision maker; the result is a flatter organization.
3. Intrapreneurs—people who demonstrate entrepreneurial characteristics in large organizations.
a) Can entrepreneurs exist in every large, established organization?
b) The answer depends on one’s definition of entrepreneur.
4. Peter Drucker argues that they can.
a) An entrepreneurial manager is someone confident in his/her abilities, who seizes
opportunities for change, and who not only expects surprises but capitalizes on them.
b) Contrasted with the traditional manager, who feels threatened by change, is bothered by
uncertainty, prefers predictability, and is inclined to maintain the status quo.
63
Part I Introduction
c) Drucker’s use of the term “entrepreneurial” is misleading.
1) By any definition of good management, his entrepreneurial type would be preferred
to the traditional type.
2) Intrapreneurship can never capture the autonomy and riskiness inherent in true
entrepreneurship.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
VI.
WHAT WILL THE WORK FORCE OF 2010 LOOK LIKE?
A. Introduction
1. Until very recently, managers took a “melting-pot” approach to differences in organizations.
2. They assumed that people who were different would somehow automatically want to
assimilate.
3. Managers found that employees do not set aside their cultural values and lifestyle preferences
when they come to work.
4. The melting-pot assumption is being replaced by the recognition and celebration of
differences.
B. What Does the Work Force Look Like Today? (PPT 2-23)
1. Much of the change that has occurred in the work force is attributed to the passage of U.S.
federal legislation in the 1960s prohibiting employment discrimination.
2. Avenues began to open up for minority and female applicants and they have become the
fastest growing segment in the work force.
3. Birthrates in the United States began to decline.
4. As globalization became more pronounced, Hispanic, Asian, and other immigrants came to
the United States and sought employment.
5. Work-force diversity will be heterogeneous: males and females; whites and people of color;
gays and straights; Hispanics, Asians, and Native Americans; the disabled, and the elderly.
6. The aging Baby Boom population is also having a significant impact on the work force.
7. Referred to as the “graying of the work force,” our work force is increasingly witnessing
those individuals who desire to work past “retirement” age.
64
Chapter 2 The Management Environment
a) Need to have a greater income to sustain current living standards, and
b) Desire to remain active.
8. More than 80 percent of the Baby Boom generation indicate they expect to work past 65.
9. The U.S. Congress passed the Senior Citizen’s Freedom to Work Act which eliminated the
benefits penalty for those individuals on Social Security who earn more than $17,000 per
year.
10. We can expect our work force to continue to get older, with 70- and 80-year-old workers no
longer uncommon.
11. Multi-culturalism is also reshaping the labor pool as the proportion of people of Hispanic,
Asian, Pacific Island, and African origins has increased significantly over the past two
decades.
C. How Does Diversity Affect Organizations?
1. More diversity leads to adapting human resource practices to reflect those changes.
2. Many organizations today, like Bank of America, have work force diversity programs.
a) Hire, promote and retain minorities.
b) Encourage vendor diversity.
c) Provide diversity training for employees.
3. Some, like Coca-Cola, Motorola, and Mars actually conduct cultural audits to ensure that
diversity is pervasive. (See Exhibit 2-8) (PPT 2-24)
a) The diversity that exists in the work force requires managers to be more sensitive to the
differences that each group brings to the work setting.
b) Managers may have to shift their philosophy to recognizing individual differences and
responding to those differences in ways that will ensure employee retention and greater
productivity.
4)
1)
Recognize and deal with the different values, needs, interests, and expectations of
employees;
2)
Avoid any practice or action that can be interpreted as being sexist, racist, or
offensive to any particular group;
3)
Not illegally discriminate against any employee; and
Find ways to assist employees in managing work/life issues.
65
Part I Introduction
D. How Can Organizations Help Employees Balance Work/Life Concepts?
1. Employees in the 1960s and 1970s showed up at the workplace Monday through Friday and
did their job in eight- or nine-hour chunks of time.
2. Today’s employees are increasingly complaining that the line between work and non-work
time has become blurred, creating personal conflicts and stress.
a)
The creation of global organizations means their world never sleeps.
b) Communication technology allows employees to do their work at home, in their car, or
on the beach in Tahiti.
c) Organizations are asking employees to put in longer hours.
d) Fewer families have only a single breadwinner.
3. Employees are increasingly recognizing that work is squeezing out their personal lives and
they want jobs that give them flexibility in their work schedules so they can better manage
work/life conflicts.
4. Organizations that don’t help their people achieve work/life balance will find it increasingly
hard to attract and retain the most capable and motivated employees.
VII.
IS LABOR IN SHORT SUPPLY?
A. Introduction
1. There is both an abundance and a shortage of skilled labor in the United States.
B. Why Do Organizations Lay Off Workers? (PPT 2-25)
1. Corporate America used to follow a simple rule—in good times you hire employees; in bad
times, you fire them.
2. Since the late 1980s that “rule” no longer holds true; most Fortune 500 companies made
significant cuts in their overall staff.
In February 2004 alone, more than 200,000 jobs were cut in the Fortune 500; more than 2.5
million jobs were lost in 2003.
a) Jobs are being eliminated in almost all industrialized nations.
3. Organizations are attempting to increase their flexibility to better respond to change.
4. Quality emphasis programs are creating flatter structures and redesigning work to increase
efficiency.
a) The result is a need for fewer employees.
66
Chapter 2 The Management Environment
5. Downsizing as a strategy is here to stay.
a) It’s part of a larger goal of balancing staff to meet changing needs.
6. A better term might be rightsizing. Rightsizing involves linking staffing levels to
organizational goals.
a) Rightsizing promotes greater use of outside firms for providing necessary products and
services—outsourcing—in an effort to remain flexible and responsive to the everchanging work environment.
7. Why is there a need for flexible and rapid response systems? (PPT 2-26)
a) Thousands of organizations are converting many jobs into temporary or part-time
positions—giving rise to what is commonly referred to as the contingent work force.
1) See Exhibit 2-9. (PPT 2-27)
b) Many large companies are converting some permanent jobs into temporary ones.
c)
Organizations facing a rapidly changing environment must be in a position to adjust
rapidly to those changes.
1) Having a large number of permanent full-time employees limits the ability to react.
2) Organizations that rely heavily on contingent workers will have greater flexibility
because workers can be easily added or taken away as needed.
8. What issues do contingent workers create for managers?
a)
Each contingent worker may need to be treated differently in terms of practices and
policies.
b) Managers must also make sure that contingent workers do not perceive themselves as
second-class workers.
c)
They may not be as loyal, as committed to the organization, or as motivated on the job as
permanent workers are.
d)
Today’s managers need to motivate their entire work force—full-time and temporary
employees—and to build their commitment to doing good work!
Ethical Dilemma in Management
The Contingent Work Force
SUMMARY
Hiring contingent workers can be a blessing for both organizations and individuals.

A rich set of diverse skills on an as-needed basis.
67
Part I Introduction

Hired precisely when the specific work is to begin is very cost effective.

Individuals who desire part-time work can keep their skills sharp.

Contingent workers can balance their commitment to personal matters and their careers.
The blessings for individuals depend on the individual choosing to be a contingent worker.
Being part of the contingent work force might not be so bad if employees received benefits
typically offered to full-time core employees. Although hourly rates sometimes are higher for the
contingent workers, these individuals have to pay themselves for the benefits that organizations typically
provide. Another added expense to the contingent worker is having to pay for one’s office supplies and
equipment. As for time off with pay benefits, forget about it. When you don’t work, you don’t get paid!
Nearly two decades ago, there were 619,000 temporary jobs in the United States. Today that
number is over 2.5 million. It’s probably accurate to say that the majority of the work force prefers
permanent, full-time employment. But in a world of rapid change, permanent employees sometimes limit
management’s flexibility. So we can expect employers to increasingly rely on temporaries to fill new and
vacated positions.
Questions
Do you believe organizations that hire contingent workers who would rather have permanent employment
are exploiting them?
Should organizations be legally required to provide some basic level of benefits—such as health
insurance, vacation, sick leave, and retirement—to contingent workers? What’s your opinion?
Teaching notes
1. This issue is really a philosophical question. Help students see this by beginning with a discussion of
questions such as these:

What is the purpose of a business?

Does an employer or owner “owe” employees a job?

If forced to choose between layoffs or shutting down, which choice should a company make?

If students choose laying off workers, then how close to failure must a company be to justify layoffs?
2. Next, brainstorm with students what an employer would have to do to treat contingency workers
fairly, in their opinion.
3. Then discuss what this would cost the business or organization.
4. These questions and the related discussion should help students see the difficulty of this choice.
Movies and TV have created an image of managers laying off workers without any feelings about it.
In reality, layoffs are the hardest thing a manager can do.
C. Is There a Pending Labor Shortage in the United States?
68
Chapter 2 The Management Environment
1. In the late 1990s, most employers found it difficult to find skilled workers to fill vacancies.
2. In 2001, layoffs were widespread and the supply of skilled workers became much more
plentiful.
3. A labor shortage is expected in the United States and most of Europe for at least another 10 to
15 years.
4. The U.S. labor shortage is a function of two factors—birth rates and labor participation rates.
a) There are 76 million Baby Boomers (those born between 1946 and 1965) in the work
force.
b) There are 30 million fewer Gen-Xers (those born after 1965) to replace them when they
retire.
c) Around 2010, the major exodus of Boomers from the workplace will be in full force,
anticipating that nearly 6 million jobs will be unfilled.
d) There is declining interest by older workers to stay in the labor force.
1)
In 1950, nearly 80 percent of all 62-year-old men were still working.
2)
Today, only slightly more than half are.
5. In tight labor markets, those managers who don’t understand human behavior and fail to treat
their employees properly, risk having no one to manage!
VIII.
HOW DO ORGANIZATIONS MAKE THE CUSTOMER KING?
A. Introduction
1. Henry Ford said his customers could have any color car they wanted—as long as it was black.
2. Stew Leonard, the world’s largest dairy store in southern Connecticut, says it only has two
rules in his business.
a) Rule 1—the customer is always right.
b) Rule 2—if the customer is ever wrong, reread Rule 1.
3. Managers are being influenced by the Stew Leonards of the world.
a) Long-term success can be achieved only by satisfying the customer.
b) Customers have more choices than ever before, and are therefore more difficult to please.
c) Customers are demanding quicker service, higher quality, and more value for their
money.
69
Part I Introduction
4. Mass customization, toll-free service hotlines, the growth of e-commerce and mail order,
discount superstores, and managers who have become obsessed with quality are all responses.
B. Can Organizations Improve Customer Service?
1. American Express believes in customer service.
a) A customer service representative received a call at 10:30 p.m. that a gold card customer
left her card in a restaurant 30 miles away and had to catch a 7:30 a.m. flight the next
morning.
b) At 11:45 p.m. the same evening, the customer received a replacement card delivered by
courier to her front door!
2. The majority of employees today in developed countries work in service jobs.
a) 75 percent of all private sector jobs in the United States and Canada are in service
industries.
b) These jobs require substantial interaction with an organization’s customers.
3. In organizations in service industries, there is a clear chain of cause-and-effect running from
employee attitudes and behavior to customer attitudes and behavior to an organization’s
revenues and profits.
4. Sears found that a 5 percent improvement in employee attitudes leads to a 1.3 point increase
in customer satisfaction, which in turn translated into a 0.5 percent improvement in revenue
growth.
5. Sears also found that by training employees to improve the employee-customer interaction, it
was able to improve customer satisfaction by 4 percent over a 12-month period, which
generated an estimated $200 million in additional revenues.
6. Many an organization has failed because its employees failed to please the customer.
7. Management needs to create a customer-responsive culture—where employees are friendly
and courteous, accessible, knowledgeable, prompt in responding to customer needs, and
willing to do what’s necessary to please the customer.
8. Can you create a customer-responsive culture?
a) French retailers have a well-established reputation for indifference to customers.
b) Most organizations today are trying very hard to be un-French-like.
c) Companies that have created customer-responsive cultures include Southwest Air,
FedEx, Johnson & Johnson, Nordstrom, and L. L. Bean.
1)
They have built a strong and loyal customer base and have generally outperformed
their competitors in revenue growth and financial performance.
70
Chapter 2 The Management Environment
9. What are the key variables shaping customer-responsive cultures?
a) Five variables are routinely evident in customer-responsive cultures. (See Exhibit 2-10)
(PPT 2-29)
1) The employees are outgoing and friendly.
2) Service employees need to have the freedom to meet changing customer-service
requirements—rigid rules, procedures, and regulations make this difficult.
3) Employees need to be empowered—have the decision discretion to do what’s
necessary to please the customer.
4) Good listening skills—the ability to listen to and understand messages sent by the
customers.
5) Customer-responsive cultures have employees who exhibit organizational citizenship
behavior.
(a) They are conscientious in their desire to please the customer.
(b) They’re willing to take the initiative, even when it’s outside their normal job
requirements, to satisfy a customer’s needs.
10. What managerial actions are needed? (PPT 2-28)
a) There are seven actions management can take to make its culture more customer
responsive and to create employees with the competence, ability, and willingness to solve
customer problems as they arise.
b) Selection—hiring service-contact people with the personality and attitudes consistent
with a high service orientation.
1)
Southwest Airlines puts its job applicants through an extensive interview process to
assess whether a candidate has the outgoing and fun-loving personality that it wants
in all its employees.
c) Training—making its current employees more customer-focused.
1) General Motors, Shell, and J.P. Morgan have used training focusing on such areas as
improving product knowledge, active listening, showing patience, and displaying
emotions to help employees move away from their product focus.
2) Even new employees who have a customer-friendly attitude may need to understand
management’s expectations.
3) Even the most customer-focused employees can lose direction every once in a while
and benefit from regular training updates where the organization’s customer-focused
values are restated and reinforced.
d) Organizing—give employees more control.
71
Part I Introduction
Reducing rules and regulations.
1) Allow employees to adjust their behavior to the changing needs and requests of
customers.
e) Empowerment—allows service employees to make on-the-spot decisions to completely
satisfy customers.
f) Leadership—conveying a customer-focused vision and demonstrating by their continual
behavior that they are committed to customers.
g) Evaluation—based on such measures as how they behave or act—on criteria such as
effort, commitment to teamwork, friendliness, and the ability to solve customer
problems—rather than on measurable outcomes they achieve.
h) Rewards—reward good service.
1)
Provide ongoing recognition to employees who have demonstrated extraordinary
effort to please customers and who have been singled out by customers for “going
the extra mile.”
2)
Make pay and promotions contingent on outstanding customer service.
C. How Have Organizations Shown An Increased Concern with Quality?
1. There is a quality revolution.
a) The generic term that has evolved to describe this revolution is quality management, or
continuous improvement.
b) Inspired by quality experts like Joseph Juran and the late W. Edwards Deming.
2. An American, Deming found few managers in the United States interested in his ideas.
a) In 1950, he went to Japan and began advising many top Japanese managers.
b) Central to his methods, the use of statistics to analyze variability in production processes.
c) A well-managed organization was one in which statistical control reduced variability and
resulted in uniform quality and predictable quantity of output.
3. Deming developed a 14-point program for transforming organizations.
4. Today, Deming’s original program has been expanded into a philosophy of management that
is driven by customer needs and expectations (See Exhibit 2-11). (PPT 2-31)
5. Quality management expands the term “customer” to include everyone involved with the
organization, either internally or externally—encompassing employees and suppliers as well
as the people who buy the organization’s products or services. (PPT 2-30)
72
Chapter 2 The Management Environment
a) The objective is to create an organization committed to continuous improvement, or as
the Japanese call it, “kaizen.”
6. Quality management is a departure from the earlier management theories that were based on
the belief that low costs were the only road to increased productivity.
a) The Japanese demonstrated that it was possible for the highest-quality manufacturers to
be among the lowest-cost producers.
b) Managers in American auto manufacturing facilities and in other industries soon
recognized the importance of quality management and implemented many of its basic
components.
c) The elements and the goals of quality management and continuous improvements are
essential characteristics in achieving an effective and lean workplace.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
D. Why Must Managers Think in Terms of Quantum Changes Rather Than Continuous
Improvement?
1. Continuous improvement methods provide useful innovations; they focus on incremental
change.
2. Such action—a constant and permanent search to make things better—is intuitively
appealing.
3. Many organizations, however, operate in an environment of rapid and dynamic change and a
continuous improvement process may keep them behind the times.
a) A focus on continuous improvements may provide a false sense of security.
b) Incremental change may avoid facing up to the possibility that what the organization may
really need is radical or quantum change, referred to as work process engineering.
c) Continuous change may also make managers feel as if they are taking progressive action
while avoiding quantum changes that will threaten organizational members.
4. Aren’t these contradictory statements?
a) Continuous improvement can lead to organizational improvements, but it may not be the
right approach initially.
73
Part I Introduction
b) That's the case if you are producing a new improved version of an outdated product when
a complete overhaul might be required.
c) After the overhaul, then continuous improvement can have its rightful place.
5. Electronic organizer business example, continuous improvement approach.
a) Frame of reference, an electronic search capability for names and addresses, calendar of
tasks, an expanded keyboard function, and the like.
b) Your continuous improvement focus—more memory, larger storage capabilities, or
longer-lasting batteries.
6. A competitor reengineers the design process.
a) Your competitor asks, “How can we design an electronic organizer that is more useful,
expandable, and provides greater mobility?”
b) Starting from scratch, your competitor completes a redesign for a “wireless personal data
assistant.”
c) You are now competing against technology that may make your product obsolete.
7. In this theoretical example, both companies made progress.
a) But who made the most progress given the dynamic environment they face?
8. Our example demonstrates why companies such as Thermos, Ryder Trucks, and Casio
Computer are opting for work process engineering rather than incremental change.
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
IX.
SOME CONCLUDING REMARKS
1. Both organizations and managers need to be more flexible and respond to change.
2. Frederick Taylor, the father of scientific management (See History Module), argued nearly a
century ago for the division of work and responsibility between management and workers.
3. Workers today are far better educated and trained than they were in Taylor’s day.
a) Today’s workers may be considerably more knowledgeable than those who manage them
about how best to do their jobs.
4. Managers are transforming themselves from bosses into team leaders.
74
Chapter 2 The Management Environment
a) Managers are finding that they become more effective when they focus on motivating,
coaching, and cheerleading.
b) Managers also recognize that they can often improve quality, productivity, and employee
commitment by redesigning jobs to increase the decision-making discretion of workers.
5. We call this process empowering employees.
6. The empowerment movement is being driven by two forces.
a) First is the need for quick decisions by those people who are most knowledgeable about
the issues.
b) Second is the reality that the large layoffs in the middle-management ranks that began in
the late 1980s have left many managers with considerably more people to supervise than
they had in the past.
7. Letting go and stretching can be likened to the role of a sports team coach.
a) Consider the job of head coach of a college football team.
b) This individual establishes the game plan and readies the players for the task.
c) The players execute the game plan.
d) During the game what the coach does depends on how well the plan is working.
e) Thus, the coach deals with the exceptions.
8. This coaching role is increasingly becoming an accurate description of today’s managers!
Teaching Notes _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
Review, Comprehension, Application
Chapter Summary
1. The first wave was agriculture and individuals were their own bosses, responsible for performing a
variety of tasks. The second wave was industrialization when work left the fields and moved into
formal organizations with workers hired into tightly structured and formal workplaces dominated by
mass production, specialized jobs, and authority relationships. The third wave is information
technology and has significantly reduced low-skilled, blue-collar jobs in manufacturing. It has also
created abundant opportunities for educated and skilled technical specialists, professionals, and other
knowledge workers.
2.
Competitors are no longer defined within national borders. Managers must think globally, be
prepared to deal with the changes globalization fosters, and be able to work with individuals from
diverse cultures.
75
Part I Introduction
3. Technology provides managers with immediate access to information that will help them in making
decisions. It also allows managers to supervise employees in remote locations with little face-to-face
interaction. Effectively communicating with individuals in remote locations as well as ensuring that
performance objectives are being met will become major challenges.
4. The term e-commerce encompasses presenting products on Web sites and filling orders. E-business
includes developing strategies for running Internet-based companies; improving communication
between employees, customers, and suppliers; and collaborating with partners to electronically
coordinate design and production. The term e-organization (e-orgs) refers to applications of ebusiness concepts to all organizations.
5. Entrepreneurship is a process where an individual or a group of individuals risk time and money in
pursuit of opportunities to create value and grow through innovation, regardless of the resources they
control. The components of entrepreneurial ventures are organizations that are pursuing
opportunities, that are characterized by innovative practices, and that have growth and profitability as
their primary goals.
6. The work force of 2010 will witness heterogeneity of gender, race, and ethnicity. It will also include
the physically disabled, gays and lesbians, the elderly, and those who are significantly overweight.
The most important requirement for managers is sensitivity to the differences among individuals.
7. Employees are increasingly focusing on the balance between work and personal time. Global
organizations, customer responsiveness, technology, and longer work hours have all contributed to
this debate. Employees are recognizing that work is squeezing our their personal lives and they want
“a life” as well as a job!
8. Many corporations have downsized in an attempt to increase their flexibility. Continuous
improvements and work process engineering activities have created flatter structures and redesigned
work to increase efficiency.
9. Variables routinely evident in customer-responsive cultures include hiring service-oriented, outgoing,
and friendly employees; giving service employees the freedom to meet changing customer-service
requirements; empowering employees, giving them decision discretion to do what’s necessary to
please the customer; ensuring that employees have good listening skills; ensuring that employees are
conscientious in their desire to please the customer, and that they’re willing to take the initiative, even
when it’s outside their normal job requirements, to satisfy a customer’s needs.
10. Today’s educated consumer demands quality and continuous improvement. These are also strategic
initiatives in an organization designed to make the operation more efficient and effective.
Companion Website
We invite you to visit the Robbins/DeCenzo Companion Website at www.prenhall.com/robbins for the
chapter quiz and student PowerPoints.
OneKey Online Courses
We invite you to visit www.prenhall.com/onekey for the part-ending ethics scenarios, diversity exercises,
and learning modules.

Enhancing your Skill in Ethical Decision Making
76
Chapter 2 The Management Environment
New to this edition is an online interactive feature designed to give students experience in making
management decisions about hypothetical yet realistic ethical issues. Introductory paragraphs at the ends
of Parts 1, 2, 3, 4, and 5 provide background about the company (Boeing) and set up the situation for each
set of exercises. After they have studied the chapters in each part, have students log onto
www.prenhall.com/onekey and work through the two multiple choice questions and two short-essay
questions. You may want to hold classroom debates, assign students to conduct role-plays, or have
students work in teams to explore the decision alternatives involved in some of these ethical challenges.

Diversity Perspectives: Communication and Interpersonal Skills, by Carol Harvey and June
Allard
1. What perceptions could the workers have of the new Division Manager?
On one hand the workers could see him as the “Savior” of the workplace and their jobs if they realize
the precariousness of the division’s position.
On the other hand, workers may resent this man who first of all is an “outgroup” person (i.e., not a
member of their ethnic group) and secondly, is replacing one of their own. Those who owe their jobs
to the departing manager could feel this way very strongly.
In addition, some of the perceptions of the new manager could be affected by the stereotypes and/or
prejudices that workers may hold about the manager’s ethnicity and/or religion. Further, not all
workers may feel that the division’s failure is due to the departing manager. They may blame company
policies, foreign competition, etc. and therefore could resent the old manager being “forced out” as well
as the arrival of the new manager.
In a good economy, younger workers may not be very concerned about their jobs as there are other
employers in their community and the ease of getting another job may color their perceptions. No
matter what the economy however, older workers are generally not as employable as those who are
younger and so may be more likely to accept most any leadership if there is a chance to save their jobs.
2. What perceptions could the new Division Manager have of the workers?
In part this will depend upon his stereotypes and prejudices about their ethnicity. If he has strong
prejudices against their ethnicity, then his perceptions will be negative. Because the division has
performed poorly he could perceive the workers as lazy and uncooperative. On the other hand, he
could feel that the division’s problems are totally due to the previous manager and if he sees this as an
opportunity to improve the division he could see the workers as part of a positive opportunity.
His past success in turning troubled operations around implies that he knows something about
managing diverse ethnic groups and he could be viewing the ethnicity of the workers in terms of
learning about their cultural values rather than making judgments about them.
3. What kinds of things might you say in a press release announcing the new manager’s arrival to the
division and to the community at large?
You could dwell upon the manager’s previous successes and stress how he has come to save the
division and their jobs; downplay his “otherness” and create the perception that he and they are all in
the effort together.
4. If you were the supervisor of the new Division Manager, what kinds of things could you say to him
to prepare him for supervising this division?
Hopefully the discussion will recognize that the more information the new manager has about the
values of the community, the strength of their ethnic identity and the strength of their solidarity, the
better prepared he will be to deal effectively with them. In addition, the more information he has about
the plant atmosphere and worker expectations of management, the better prepared he will be.
Note. The following web site is helpful for understanding Hofstede’s cultural work-related
dimensions of power distance, individualism-collectivism, understand avoidance and long-term—shortterm orientation. http://cyborlink.com/besite/hofstede.htm
77
Part I Introduction
Reading for Comprehension
1. Describe the shifts in the types of jobs in the work force during the past 100 years. What implications
have these shifts created for today’s managers?
Answer – Organizations that are stagnant and bound by tradition are increasingly fading from the
limelight. One of the biggest problems in managing an organization is failing to adapt to change. By
the start of the 1970s, a new age was gaining momentum. This is based on information. Technological
advancements were eliminating many low-skilled, blue-collar jobs. The information wave was
transforming society from manufacturing to service. Knowledge workers are at the cutting edge of the
third wave. Their jobs are designed around the acquisition and application of information. The
number of blue-collar workers shrank dramatically. See Exhibit 2-1.
2. Explain the managerial implications of a global village.
Answer – In the changing global environment, the spread of capitalism makes the world smaller. A
boundaryless world introduces new challenges for managers. U.S. managers in the past held a rather
parochial view of the world of business. They did not recognize that people from other countries had
different ways of doing things or that they lived differently from Americans. Traditional approaches
to international business sought to advance general principles. Viewing the global environment from
any single perspective may be too narrow and potentially problematic. A more appropriate approach
is to recognize the cultural dimensions of a country’s environment.
3. What are the managerial implications of Hofstede’s research on cultural environments? The Globe
study? In what countries do you believe U.S. managers would have to make the most adjustments?
Answer – Geert Hofstede surveyed over 116,000 employees in forty countries—all of whom worked
for IBM. Hofstede’s data indicated that, in general, national culture has a major impact on employees’
work-related values and attitudes. He classified those values and attitudes into five specific
dimensions of national culture: power distance, individualism versus collectivism, quantity of life
versus quality of life, uncertainty avoidance, and long-term versus short-term orientation.
U.S. managers would have to adjust to China and West Africa’s different preferences on Power
Distance (the United States scored low while China and West Africa scored high). U.S. managers
would also have to adjust to most Asian countries’ preference for collectivism (the United States
scored highest among all countries on individualism). U.S. managers would also have to adjust to
France and Russia’s strong preferences for uncertainty avoidance (the United States scored low).
Finally, U.S. managers would have to adjust to China and Hong Kong’s preference for a long-term
orientation (the United States scored low on this value).
To place U.S. managers where they fit best, identify those countries that are most and least like the
United States on the four dimensions. In terms of individualism, power distance, uncertainty
avoidance and quantity of life: Ireland, England, Canada, New Zealand, etc.
4. Describe the managerial implications of growing organizational diversity.
Answer – More diversity leads to adapting human resource practices to reflect those changes. Many
organizations today, like BankAmerica, have work force diversity programs. Some, like Coca-Cola,
Motorola, and Mars actually conduct cultural audits to ensure that diversity is pervasive. Managers
may have to shift their philosophy from treating everyone alike to recognizing individual differences
and responding to those differences in ways that will ensure employee retention and greater
productivity. Managers must be in a position to:
78
Chapter 2 The Management Environment




Recognize and deal with the different values, needs, interests, and expectations of employees;
Avoid any practice or action that can be interpreted as being sexist, racist, or offensive to any
particular group;
Not illegally discriminate against any employees; and
Find ways to also assist employees in managing work/life issues.
5. How can managers help employees deal with work/life issues?
Answer – Managers can help employees deal with work/life issues by providing flexibility in their
work schedules so they can better manage work/life conflicts. Managers can be aware of the impact
of the global organization where their world never sleeps and how that may affect an employee’s
need to communicate with other employees around the world. Managers can also consider the
fairness of the demands they make on employees when technology makes it possible for them to work
out of the office. Organizations are typically asking employees to put in longer hours. Managers
need to help employees find the time to fulfill work commitments as well as commitments to home,
spouse, children, parents, and friends.
6.
Identify the characteristics and behaviors of an ethical manager.
Answer – Ethics commonly refers to the rules or principles that define right and wrong conduct.
Exhibit 2-5 presents three views of ethical standards. Whether a manager acts ethically or unethically
will depend on several factors, including:
 The individual’s morality.
 Values.
 Personality and experiences.
 The organization’s culture.
 The issue that is being called into question.
7. Explain how organizations can create a more customer-responsive environment.
Answer – Organizations can create a more customer-responsive environment by focusing on five
variables that shape customer-responsive cultures (See Exhibit 2-8):
 Hire properly—successful, service-oriented organizations hire employees who are outgoing and
friendly.
 Provide service employees with the freedom to meet changing customer-service requirements—
rigid rules, procedures, and regulations make this difficult.
 Empower employees—be sure they have the decision discretion to do what’s necessary to please
the customer.
 Be sure employees have good listening skills—the ability to listen to and understand messages
sent by the customer.
 Be sure employees exhibit organizational citizenship behavior—being conscientious in their
desire to please the customer and being willing to take the initiative, even when it’s outside their
normal job requirements, to satisfy a customer’s needs.
8. Explain the increased popularity of continuous improvements and work process engineering in the
past 20 years.
Answer – An American who found few managers in the United States interested in his ideas, W.
Edwards Deming went to Japan in 1950 and began advising many top Japanese managers on ways to
improve their production effectiveness. His original program has been expanded into a philosophy of
management that is driven by customer needs and expectations. American companies learned from
the Japanese who had used Deming’s ideas that it was possible for the highest-quality manufacturers
to be among the lowest-cost producers.
79
Part I Introduction
Work process engineering involves radical or quantum change. If you are producing an outdated
product, a complete overhaul might be required. Work process engineering can lead to major gains in
cost, service, or time as well as assist an organization in preparing to meet the challenges technology
changes foster.
Linking Concepts to Practice
1. Small business owners are entrepreneurs. Do you agree or disagree with the statement? Explain.
Answer – Entrepreneurship is the process of initiating a business venture, organizing the necessary
resources, and assuming the risks and rewards. Because they usually start small, most fall within the
definition of a small business—one that is independently owned, operated, and financed and has
fewer than 500 employees. A small business isn’t necessarily entrepreneurial because it’s small. To
be entrepreneurial means being innovative and seeking out new opportunities. Even though
entrepreneurial ventures may start small, they pursue growth. Some new small firms may grow, but
many remain small businesses by choice or by default.
2. Continuous improvement programs include contributions from all historical management
contributors. Do you agree or disagree with this statement? Discuss.
Answer – Continuous improvement methods is a positive start; it focuses on incremental change.
Such action—a constant and permanent search to make things better—is intuitively appealing.
Students may agree or disagree. If they agree, they should note things like doing this the right way,
the use of empowerment, etc.
3. Customer-responsive cultures are only applicable in smaller organizations. Coordination of activities
in large organizations makes it nearly impossible to implement a customer responsive culture. Do
you agree or disagree with this statement? Defend your position.
Answer – Whether the organization is large or small, long-term success is primarily achieved by
satisfying the customer, for it’s the customer who ultimately pays the bills. 75 percent of all private
sector jobs in the United States and Canada are in service industries. Organizations in service
industries need to include attention to customer needs and requirements in assessing their
effectiveness because there is a clear chain of cause-and-effect running from employee attitudes and
behavior to customer attitudes and behavior to an organization’s revenues and profits. Sears,
definitely not a smaller organization, has carefully documented this chain. The company’s
management found that a 5 percent improvement in employee attitudes leads to a 1.3 point increase in
customer satisfaction, which in turn translated into a 0.5 percent improvement in revenue growth.
More specifically, Sears found that by training employees to improve the employee-customer
interaction, it was able to improve customer satisfaction by 4 percent over a 12-month period, which
generated an estimated $200 million in additional revenues.
4. Coaching and empowering employees will replace the traditional management functions of planning,
organizing, leading, and controlling. Do you agree or disagree with this statement? Explain.
Answer – Workers today are far better educated and trained than they were in Taylor’s day.
Managers are transforming themselves from bosses into team leaders. Managers also recognize that
they can often improve quality, productivity, and employee commitment by redesigning jobs to
increase the decision-making discretion of workers. We call this process empowering employees. The
empowerment movement is being driven by two forces: first is the need for quick decisions by those
people who are most knowledgeable about the issues; second is the reality that the large layoffs in the
middle-management ranks that began in the late 1980s have left many managers with considerably
more people to supervise than they had in the past. Letting go and stretching can be likened to the role
of a sports team coach.
80
Chapter 2 The Management Environment
5. Discuss the implications of hiring contingent workers from both the organizational and contingent
worker perspective.
Answer – Thousands of organizations are converting many jobs into temporary or part-time
positions—giving rise to what is commonly referred to as the contingent work force. See Exhibit 2-7.
Organizations facing a rapidly changing environment must be in a position to adjust rapidly to those
changes. Organizations that rely heavily on contingent workers will have greater flexibility because
workers can be easily added or taken away as needed. Opportunities to capitalize on new markets,
obtaining someone who possesses a special skill for a particular project, point to a need to be able to
rapidly adjust staffing levels. Many employees have indicated a preference to their contingent status.
Management Workshop
Team Skill-Building Exercise:
Understanding Cultural Differences
Purpose: To increase student awareness of diversity and the challenge to cooperation and understanding
it may pose.
Time: 1 hour outside of class, 45 minutes in class
Instructions:
1. Consider having students conduct this exercise in small groups of three to reduce the number of
international students needed as subjects.
2. Contact Student Affairs or the International Students Association and discuss the exercise for making
the assignment to enhance its accomplishment.
3. Identify and contact 3-5 people from a different country. The international student association or
Student Affairs office should be able to help students identify the interviewees.
4. Sample questions:

What country do you come from?

What is your first language?

Describe your country’s culture in terms of, for example, form of government, emphasis on
individual versus group, role of women in the work force, benefits provided to employees, and
how managers treat their employees.

What were the greatest difficulties in adapting to your new culture?

What advice would you give me if I had a management position in your country?
5. In groups of 3-5 class members, discuss your findings.

Are there similarities in what each of you found? If so, what are they? Are there differences?
Describe them.

What implications for managing in the global village has this exercise generated for you and your
group?
81
Part I Introduction
Understanding Yourself:
Before you can develop other people, you must understand your present strengths. To assist in this
learning process, we encourage you to complete the following self-assessments from the Prentice-Hall
Self-Assessment Library 3.0:

How do My Ethics Rate? (#24)

Am I Likely to Become an Entrepreneur? (#29)

Am I Well Suited for a Career as a Global Manager? (#48)

What Are My Attitudes About Workplace Diversity? (#9). (Also available in this chapter, p. 68)
After you complete these assessments, we suggest that you print out the results and store them as part of
your “portfolio of learning.”
Developing Your Ethics Skill:
Guidelines for Acting Ethically
About the Skill: Making ethical choices can often be difficult for managers. This exercise will help
students realize the difficulty and practice making ethical decisions.
Time: Will vary depending on how much work you want the students to complete outside of class. You
could complete the exercise in one class period if students were instructed to bring materials with them to
work with or if you brought copies of the school’s code of conduct or the code of ethics from one or more
organizations for students to work with.
Instructions:
1. Study the following guidelines for enhancing your managerial abilities in acting ethically.

Know your organization’s policy on ethics.

Understand the ethics policy.

Think before you act.

Ask yourself what-if questions.

Seek opinions from others.

Do what you truly believe is right.
2. Have students evaluate the code’s provisions and policies answering such questions as:

Are there any provisions and/or policies that you are uncomfortable with? Why?

Are there any that are routinely violated? Why do you think this is happening?

What are the usual consequences of such violations? Do you think they are appropriate?
82
Chapter 2 The Management Environment
If you or the students had trouble obtaining the code of conduct, you might want to find out why. Under
what circumstances is it normally distributed, posted, or otherwise made available to members?
A Case Application
Developing Your Diagnostic and Analytical Skills
Baxter Balances Work and Life
Harry M. Jansen Kramer, Jr. is the CEO of Baxter, International, one of the world’s largest
producers of medical products. Kraemer believes that while work is important, one’s family is more
important. On any given workday, you may find Kraemer staying home to care for his infant son, take his
daughter to school, or coach his daughter’s softball team. He rarely works after 6:00 pm, and he won’t
accept work related calls after hours. He keeps family time scared, and doesn’t let work interfere with
family matters. However, he works hard, sometimes upwards of 80 hours per week---just at his own
pace.
Kramer has created an example for employees to live by. One employee, David Olsen, works at
home every Friday and every other Thursday. He says he gets more done because no one is stopping by
his office. Other employees have similar beliefs.
Since this balanced work/life culture was implemented nine years ago, Baxter has hit earnings
targets every quarter. They’ve nearly doubled their profit goal with revenues and profits rising at double
digit rates. Employment has grown to more than 48,000 employees, and the company has successfully
acquired five major companies over a 16-month period. By allowing employees to alter their work
schedules and work at home, the organization has been able to attract top notch employees, who in turn
have generated greater productivity for the company. Based on these performance measures, you could
say that Kramer’s plan has been beneficial.
Questions:
1. What role, if any, does work/life balance play in the success of an organization? Explain.
Answer – Work/life balance can play an enormous role in the success of an organization. As more
and more households have dual career situations, life is becoming more complex and it is difficult to
manage family time. Having work/life balance programs can alleviate a great deal of stress for
employees by giving them flexibility, such as in the example above. This decreased stress will aid in
the productivity and retention of high potential employees, which in turn will aid in the success of the
organization.
2. How does diversity in an organization affect the organization’s work/life balance? What ethical
considerations exist that may drive the organization to be more work/life balanced?
Answer – Workforce diversity goes hand in hand with the need for work/life balance. In particular,
women find themselves needing more flexible arrangements, as they are traditionally the ones who
must care for sick children, etc. Moreover, diversity introduces different religious practices, some of
which require prayer time during the day, etc. Ethically, organizations must consider their
employees human rather than as instruments for profit, and must consider what is “right” by
standards of humanity rather than of profitability. Giving work/life balance options is “right” when
employees are considered as humans with lives outside of work.
3. Do you believe the balanced work/life plan at Baxter would work as well if the CEO was not one of
its primary supporters? Explain your position.
Answer –
Student answers may vary here but in general look for thoughts that it is necessary for
the leader of an organization to “walk the talk” and to demonstrate that it is ok and expected for
83
Part I Introduction
employees to utilize the policies and programs the organization espouses. Therefore, no, the
balanced work/life plan at Baxter would probably not work as well if the CEO was not one of its
primary supporters.
Enhancing Your Communication Skills
1. Select an industrialized country. Research information about a particular business practice in that
country. For instance, you might compare U.S. employment discrimination laws with laws in your
selected country and the differences that may exist. Or you may want to explore the ethics of “giftgiving” to political leaders.
2. Prepare a report on e-organizations. How successful have they been in the past three years? What are
they doing differently from other businesses that are not “e” related?
3. Develop a report on the pros and cons of the work/life conflict. Prepare your report from either the
organization’s or the person’s perspective. [Note: This would make for a good debate by having one
individual take the organization’s perspective and one person taking the individual’s perspective.]
Team Exercises Based on Chapter Material
1. Break the class into two groups of 15 or smaller groups of 5, which you can then assign to one side or
the other. Have each side assign a record keeper (they need a pen and paper).
Then, giving the class 15 minutes of time, have one side (1/2 of the class) compile a list of pros
(positives) about telecommuting and working virtually with people around the globe. Have the other
side/half of the class generate a list of cons (potential negatives) that could come with telecommuting
and/or working virtually with people around the globe. Encourage them to think about either the pros or
cons regarding individuals, teams, and organizations overall.
After the 15 minutes are over, list one of each sides reasons at a time on the board (draw a line down the
middle of the board to keep the issues separate), alternating pro, then con, etc.
After the reasons are all on the board, ask the students if they’d like to telecommute, work virtually with
others around the globe, and why or why not. Ask them what kinds of interview questions they’d ask to
determine if they would be likely to encounter those types of work arrangements in their first jobs.
2. Break the students into groups of 5 and have them create a table on a piece of paper (one table per
group). In the first column, they should list each of their group members’ names. Give them 10 minutes
to generate 10 different dimensions they might be different on (e.g., religion, country of birth, age, work
experience, gender, socio-economic upbringing, rural vs. urban upbringing, educational experiences, --but let them struggle to arrive at the categories---the discussion is part of the learning.)
Then, have them take the list of the categories, and as a group, on a separate piece of paper, create a short
explanation in 20 minutes about what kinds of differences would manifest themselves at work, and what
kinds of problems they might create in an organizational setting. If you have time, have the groups
present their thoughts to the class; otherwise have them turn them in. Note that this exercise doesn’t ever
have the table completed with individual information; the learning is in the discussions that result from
making the outline of the table.
84
Chapter 2 The Management Environment
3. In 10 minutes, have each student write down the time that they had the best customer experience of
their lives. Ask them to identify (on paper) which of the managerial actions (selection, training,
organizing, empowerment, leadership, rewards) do they suspect were in place, and how did they know
(students may answer, for example, that they knew the org. had empowerment because the representative
was able to adjust their bill without asking anyone).
Then have the students form into groups of 5 and share those experiences with their group. (10 minutes).
Next, have each group choose one of the organizations that a member identified, and give them 20
minutes to go online (they can work together or all disperse in a computer lab or on their laptops) and try
to complete the rest of the dimensions and what the organization does in each of those areas that resulted
in such great customer service.
At the end of the 20 minutes, give the groups 5 minutes to prepare their presentation, and then have the
groups present their findings in 2 minutes or less to the class.
85