Fundamentals of Management - GBV

5th

Edition

Fundamentals of Management Ricky W. Griffin Texas A & M University

*% SOUTH-WESTERN ®c? CENGAGE LearningAustralia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States

Contents Preface

xv

PART

1

An Introduction to Management 1

Understanding the Manager's Job An Introduction to Management 3 Kinds of Managers 3 Basic Management Functions 5 Fundamental Management Skills 6 The Science and the Art of Management 8

Summary of Key Points 22 Discussion Questions 23 Building Effective Time-Management Skills 23 Building Effective Conceptual Skills 25 Building Effective Decision-Making Skills 25 Skills Self-Assessment Instrument 26 Experiential Exercise 27

The Evolution of Management 9 The Importance of History and Theory 9 The Historical Context of Management 10 The Classical Management Perspective 10 The Behavioral Management Perspective 13 The Quantitative Management Perspective 16 Contemporary Management Perspectives The Systems Perspective 17 The Contingency Perspective 19 Contemporary Management Challenges and Opportunities 19

2

CHAPTER CLOSING CASE: Home Depot's Failed Manager 28 YOU MAKE THE CALL: Marissa Mayer: Google's Top Designer 29 17

Test Prepper

30

Eye on Management: Managing for "Absolutely, Positively, Outrageous Customer Service" at Southwest Airlines 7

The Environments of Organizations and Managers The Organization's Environments The General Environment 33 The Task Environment 34 The Internal Environment 36

33

The Ethical and Social Environment of Management 38 The Individual Ethics in Organizations 38 Social Responsibility in Organizations 41 Managing Social Responsibility 43 The International Environment of Management 45 Trends in International Business 45 Levels of International Business Activity 46 The Context of International Business 47

31

The Organization's Culture 51 The Importance of Organization Culture 51 Determinants of Organization Culture 52 Managing Organization Culture 52 Summary of Key Points 53 Discussion Questions 54 Building Effective Diagnostic and Decision-Making Skills 54 Building Effective Interpersonal Skills 55 Building Effective Communication Skills 56 Skills Self-Assessment 57 Experiential Exercise 57

VII

VIII

CONTENTS CHAPTER CLOSING CASE: Coffee, Cafe, Kaffee, or Copi—Starbucks Spans the Globe 58 YOU MAKE THE CALL: Leading Lenovo: China's Foremost Global Capitalist 59

Test Prepper

60

Eye on Management: Global Competition at Subway 49

PART

Planning 3

Planning and Strategic Management Planning and Organizational Goals Organizational Goals 63 Kinds of Organizational Plans 65

63

The Nature of Strategic Management The Components of Strategy 66 Types of Strategic Alternatives 66

Operational Planning 77 Single-Use Plans 78 Standing Plans 78 Contingency Planning and Crisis Management

66

Using SWOT Analysis to Formulate Strategy Evaluating an Organization's Strengths 67 Evaluating an Organization's Weaknesses 68 Evaluating an Organization's Opportunities and Threats 68 Formulating Business-Level Strategies Porter's Generic Strategies 69 Strategies Based on the Product Life Cycle

67

Summary of Key Points 83 Discussion Questions 84 Building Effective Decision-Making Skills Building Effective Conceptual Skills 85 Building Effective Diagnostic Skills 87 Skills Self-Assessment Instrument 88 Experiential Exercise 88

80

84

CHAPTER CLOSING CASE: FEMA's Disastrous Response to Hurricane Katrina 91

68 70

Formulating Corporate-Level Strategies Single-Product Strategy 72 Related Diversification 72 Unrrelated Diversification 73

61

YOU MAKE THE CALL: The Video Game Wars 71

Test Prepper

92

93

Managing in Times of Change: PlayStation 2 Plays On 70

Tactical Planning 76 Developing Tactical Plans 76 Executing Tactical Plans 77

Managing Decision Making The Nature of Decision Making Decision Making Defined 96 Types of Decisions 97 Decision-Making Conditions 98

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96

Rational Perspectives on Decision Making The Classical Model of Decision Making 100 Steps in Rational Decision Making 100

Risk Propensity and Decision Making Ethics and Decision Making 108

99

Behavioral Aspects of Decision Making 105 The Administrative Model 106 Political Forces In Decision Making 107 Intuition and Escalation of Commitment 107

108

Group and Team Decision Making in Organizations 109 Forms of Group and Team Decision Making 109 Advantages of Group and Team Decision Making 110 Disadvantages of Group and Team Decision Making 111 Managing Group.and Team Decision-Making Processes 112

ix

CONTENTS

Summary of Key Points 112 Discussion Questions 113 Building Effective Conceptual Skills 113 Building Effective Decision-Making Skills 114 Building Effective Technical Skills 115 Skills Self-Assessment Instrument 115 Experiential Exercise 116

5

CHAPTER CLOSING CASE: The Decision-Making Mind of Microsoft 118 YOU MAKE THE CALL: Making Tough Choices at Wal-Mart 119 Test Prepper

120

Eye on Management: Team Decision Making at the Riverwood Clinic 110

Entrepreneurship and New Venture Management The Nature of Entrepreneurship 123 The Role of Entrepreneurship in Society Job Creation 125 Innovation 126 Importance to Big Business 127

121

Reasons for Success 123

Strategy for Entrepreneurial Organizations Choosing an Industry 127 Emphasizing Distinctive Competencies 132 Writing a Business Plan 133 Entrepreneurship and International Management Structure of Entrepreneurial Organizations Starting the New Business 136 Financing the New Business 137 Sources of Management Advice 139 Franchising 140 The Performance of Entrepreneurial Organizations 142 Trends in Small-Business Start-Ups 142 Reasons for Failure 145

127

134 135

146

Summary of Key Points 146 Discussion Questions 147 Building Effective Diagnostic Skills 148 Building Effective Interpersonal Skills 148 Building Effective Conceptual Skills 150 Skills Self-Assessment Instrument 150 Experiential Exercise 151 CHAPTER CLOSING CASE: Entrepreneurial Spirit Flies High at JetBlue 152 YOU MAKE THE CALL: Founding Facebook Test Prepper

153

154

Meeting of the Minds: Parts One and Two: Managing in the Soft-Drink Industry 155 Eye on Management: Sandwich Chef: A Start Up 134

PART

Organizing 6

Organization Structure and Design The Basic Elements of Organizing 159 Job Specialization 159 Alternatives to Specialization 160 Grouping Jobs: Departmentalization 162 Establishing Reporting Relationships 164 Distributing Authority 165 Coordinating Activities 166 The Bureaucratic Model of Organization Design 169 Situational Influences on Organization Design 170

157 Core Technology 170 Environment 171 Organizational Size and Life Cycle

172

Basic Forms of Organization Design Functional (U-Form) Design 173 Conglomerate (H-Form) Design 174 Divisional (M-Form) Design 174 Matrix Design 175 Hybrid Designs 177 Emerging Issues in Organization Design The Team Organization 178

173

177

CONTENTS

7

The Virtual Organization 178 The Learning Organization 179

CHAPTER CLOSING CASE: Manufacturing Jobs, Japanese-Style 185

Summary of Key Points 180 Discussion Questions 180 Building .Effective Conceptual Skills 181 Building Effective Technical Skills 181 Building Effective Decision-Making Skills 182 Skills Self-Assessment Instrument 183

YOU MAKE THE CALL: Did You Hear the One A b o u t . . . Delegation? 186 Test Prepper

Eye on Management: Managing Reporting Relationships in Teams 167

Organization Change and Innovation The Nature of Organization Change Forces for Change 190 Planned Versus Reactive Change 192

190

Managing Change in Organizations 193 Steps in the Change Process 193 Understanding Resistance to Change 195 Overcoming Resistance to Change 196 Areas of Organization Change 197 Changing Organization Structure and Design 197 Changing Technology and Operations 197 Changing People, Attitudes, and Behaviors 199 Changing Business Processes 199 Organization Development 201

188 The Failure to Innovate 206 Promoting Innovation in Organizations

Organizational Innovation The Innovation Process 203 Forms of Innovation 205

203

207

Summary of Key Points 209 Discussion Questions 209 Building Effective Time-Management Skills Building Effective Diagnostic Skills 211 Building Effective Technical Skills 212 Skills Self-Assessment Instrument 215 Experiential Exercise 216

210

CHAPTER CLOSING CASE: Whole Foods Changes the Grocery Industry 217 YOU MAKE THE CALL: Innovative Ikea Test Prepper

8

187

218

219

Managing in Times of Change: Out With the Old, In

With the New 205

Managing Human Resources in Organizations

220

The Environmental Context of Human Resource Management 222 • The Strategic Importance of HRM 222 The Legal Environment of HRM 223

Managing Workforce Diversity The Meaning of Diversity 237 The Impact of Diversity 238 Managing Diversity in Organizations

Attracting Human Resources 226 Human Resource Planning 226 Recruiting Human Resources 228 Selecting Human Resources 229

Managing Labor Relations How Employees Form Unions Collective Bargaining 241

Developing Human Resources Training and Development 231 Performance Appraisal 232 Performance Feedback 234 Maintaining Human Resources Determining Compensation 235 Determining Benefits 237

231

235

237

238

240 240

New Challenges in the Changing Workplace Managing Knowledge Workers 243 Contingent and Temporary Workers 243 Summary of Key Points 245 Discussion Questions 246 Building Effective Decision-Making Skills 246 Building Effective Communication Skills 247 Building Effective Technical Skills 248

242

XI

CONTENTS Skills Self-Assessment Instrument Experiential Exercise 250

Test Prepper

249

253

Meeting of the Minds: Part Three: Managing in the Soft-Drink Industry 254

CHAPTER CLOSING CASE: REI: A Place for Serious Fun 251

Eye on Management: Equality

239

YOU MAKE THE CALL: Results-Only Work Environment at Best Buy 252

PART

4

Leading 9

Basic Elements of Individual Behavior in Organizations Understanding Individuals in Organizations The Psychological Contract 260 The Person-Job Fit 261 The Nature of Individual Differences 262 Personality and Individual Behavior The "Big Five" Personality Traits 263 The Myers-Briggs Framework 264 Other Personality Traits at Work 265 Emotional Intelligence 267

263

Attitudes and Individual Behavior 268 Work-Related Attitudes 268 Affect and Mood in Organizations 269 Perception and Individual Behavior Basic Perceptual Processes 270 Perception and Attribution 271

270

260

258

Types of Workplace Behavior Performance Behaviors 280 Withdrawal Behaviors 280 Organizational Citizenship 281 Dysfunctional Behaviors 281

280

Summary of Key Points 282 Discussion Questions 283 Building Effective Diagnostic Skills 283 Building Effective Conceptual Skills 284 Building Effective Time-Management Skills Skills Self-Assessment Instrument 285 Experiential Exercise 286

284

CHAPTER CLOSING CASE: Steve Jobs: "The Leading-Edge Guy in the World" 287 YOU MAKE THE CALL: W. L. Gore Nurtures Talent and Creativity 288

Stress and Individual Behavior 272 Causes and Consequences of Stress 273 Managing Stress 275

Test Prepper

289

Managing in Times of Change: Managing the Flood of Ideas 278

Creativity in Organizations 276 The Creative Individual 276 The Creative Process 277 Enhancing Creativity in Organizations 279

10 Managing Employee Motivation and Performance The Nature of Motivation 292 Content Perspectives on Motivation The Needs Hierarchy Approach 293 The Two-Factor Theory 295 Individual Human Needs 296 Process Perspectives on Motivation Expectancy Theory 297 Equity Theory 300

Goal-Setting Theory 293

296

290 300

Reinforcement Perspectives on Motivation Kinds of Reinforcement in Organizations 302 Providing Reinforcement in Organizations 303 Popular Motivational Strategies 303 Empowerment and Participation 304 Alternative Forms of Work Arrangements 304

302

XII

CONTENTS Using Reward Systems to Motivate Performance 306 Merit Reward Systems 306 Incentive Reward Systems 306 Team and Group Incentive Reward Systems 308 Executive Compensation 310 New Approaches to Performance-Based Rewards 312

Building Effective Decision-Making Skills 314 Building Effective Conceptual and Diagnostic Skills 315 Skills Self-Assessment Instrument 316 Experiential Exercise 316

Summary of Key Points 312 Discussion Questions 313 Building Effective Interpersonal and Communication Skills 314

YOU MAKE THE CALL: Motivation Without Borders 320

CHAPTER CLOSING CASE: You've Got to Love This Job 319

Test Prepper

321

322

1 1 Leadership and Influence Processes Political Behavior in Organizations Common Political Behaviors 343 Impression Management 343 Managing Political Behavior 344

The Nature of Leadership 324 The Meaning of Leadership 324 Leadership and Management 324 Leadership and Power 325 Generic Approaches to Leadership Leadership Traits 328 Leadership Behaviors 329

328

Situational Approaches to Leadership 331 LPC Theory 331 Path-Goal Theory 334 Vroom's Decision Tree Approach 335 The Leader-Member Exchange Approach 338 Related Approaches to Leadership Substitutes for Leadership 339 Charismatic Leadership 339 Transformational Leadership 340

339

Emerging Approaches to Leadership Strategic Leadership 341 Cross-Cultural Leadership 341 Ethical Leadership 342

342

Summary of Key Points 345 Discussion Questions 346 Building Effective Diagnostic Skills 346 Building Effective Decision-Making Skills 347 Building Effective Conceptual Skills 348 Skills Self-Assessment Instrument 348 Experiential Exercise 349 CHAPTER CLOSING CASE: Stan O'Neal Leads Merrill Lynch 351 YOU MAKE THE CALL: Watch Out Bud, Miller Is Catching Up 352 Test Prepper

341

353

Managing in Times of Change: Measuring Excellent Leadership 326

12 Communication in Organizations Communication and the Manager's Job A Definition of Communication 356 Characteristics of Useful Information 357 The Communication Process 358

356

Forms of Communication in Organizations 359 Interpersonal Communication 359 Communication in Networks and Work Teams 361 Organizational Communication 362

354 Electronic Communication Information Systems 363 Personal Electronic Technology

363 366

Informal Communication in Organizations The Grapevine 368 Management by Wandering Around 369 Nonverbal Communication 369

367

xiii

CONTENTS Managing Organizational Communication Barriers to Communication 371 Improving Communication Effectiveness 373

370

Summary of Key Points 375 Discussion Questions 376 Building Effective Technical Skills 377 Building Effective Communication Skills 377 Skills Self-Assessment Instrument 378 Experiential Exercise 379

CHAPTER CLOSING CASE: Communicating the Truth About Smoking 380 YOU MAKE THE CALL: Talking With Sports Fans 381 Test Prepper

382

Managing in Times of Change: Communicating via Craigslist 367

13 Managing Work Groups and Teams Groups and Teams in Organizations 385 Types of Groups and Teams 385 Why People Join Groups and Teams 388 Stages of Group and Team Development 389 Characteristics of Groups and Teams Role Structures 391 Behavioral Norms 393 Cohesiveness 395 Formal and Informal Leadership 397 Interpersonal and Intergroup Conflict The Nature of Conflict 398 Causes of Conflict 399 Managing Conflict in Organizations Stimulating Conflict 401 J Controlling Conflict 402 Resolving and Eliminating Conflict 403

391

383 Summary of Key Points 404 Discussion Questions 404 Building Effective Decision-Making Skills 405 Building Effective Conceptual Skills 407 Building Effective Communication Skills 408 Skills Self-Assessment Instrument 408 Experiential Exercise 409 CHAPTER CLOSING CASE: Who Can Head Team Nike? 410

398

YOU MAKE THE CALL: Teamwork for the Tampa Bay Devil Rays 411 Test Prepper 412

401

Meeting of the Minds: Part Four: Managing in the Soft-Drink Industry 413 Managing in Times of Change: Don't Let a Dream Team Become a Nightmare 393

PART

Controlling 14 Basic Elements of Control The Nature of Control 417 The Purpose of Control 417 Types of Control 419 Steps in the Control Process 421

Structural Control 430 Bureaucratic Control 431 Decentralized Control 431 Strategic Control 432 Integrating Strategy and Control 432 International Strategic Control 433

Operations Control 423 Preliminary Control 424 Screening Control 424 Postaction Control 424 Financial Control 425 Budgetary Control 425 Other Tools for Financial Control

415

Managing Control in Organizations Characteristics of Effective Control 434 Resistance to Control 435 Overcoming Resistance to Control 437 428

434

XIV

CONTENTS Summary of Key Points 438 Discussion Questions 439 Building Effective Time-Management Skills 439 Building Effective Decision-Making and Diagnostic Skills 440 Building Effective Technical Skills 441 Skills Self-Assessment Instrument 441 Experiential Exercise 442

CHAPTER CLOSING CASE: Is Too Much Control Hurting Dell? 444 YOU MAKE THE CALL: Effective Controls at McDonald's Boost Performance 445 Test Prepper

446

Managing in Times of Change: Bringing Accountability to Toys "R" Us 432

447

15 Managing Operations, Quality, and Productivity The Nature of Operations Management 449 The Importance of Operations 449 Manufacturing and Production Operations 450 Service Operations 450 The Role of Operations in Organizational Strategy 451

Managing Productivity 467 The Meaning of Productivity 467 The Importance of Productivity 468 Productivity Trends 468 Improving Productivity 469

Designing Operations Systems 451 Determining Product-Service Mix 452 Capacity Decisions 452 Facilities Decisions 452

Summary of Key Points 470 Discussion Questions 471 Building Effective Communication Skills 472 Building Effective Diagnostic Skills 472 Building Effective Conceptual Skills 473 Skills Self-Assessment Instrument 473 Experiential Exercise 474

Organizational Technologies Manufacturing Technology 454 Service Technology 457

454

Implementing Operations Systems Through Supply Chain Management 457 Operations Management as Control 458 Purchasing Management 458 Inventory Management 459 Managing Total Quality 460 The Meaning of Quality 460 The Importance of Quality 461 Total Quality Management 462 TQM Tools and Techniques 463

CHAPTER CLOSING CASE: E-Tailing at Amazon.Com 475 YOU MAKE THE CALL: Competing Through Operations 476 Test Prepper

477

Meeting of the Minds: Part Five: Managing in the Soft-Drink Industry 478 Eye on Management: Outsourcing

465

Appendix Interpretations of Skills Self-Assessment Instruments Answers to Test Preppers 492 Chapter Notes 493 Name Index 511 Organization and Product Index 514 Subject Index 519 Photo Credits 529

481