CONTENT

TOPIC

PAGES

TASK 1

3-5

TASK 2

6-19
20-24

TASK 3
REFERENCE
COURSEWORK

25
26-31

Page 1 of 30

Task 1
Two-way process of reaching mutual understanding, in which participants not
only exchange (encode-decode) information, news, ideas and feelings but
also create and share meaning. In general, communication is a means of connecting
people or places. In business, it is a key function of management-an organization cannot operate without communication between
levels, departments and employees. See also communications.
Communication is Any act by which one person gives to or receives from another
person information about that person's needs, desires, perceptions, knowledge, or
affective states. Communication may be intentional or unintentional, may involve
conventional or unconventional signals, may take linguistic or nonlinguistic forms,
and may occur through spoken or other modes.

Communication is also the transfer of information and understanding from one person
to another. Communication is simply defined as the transfer of information and
understanding. Communication is an activity that when you are a manager will have
to do a lot of.

So, in English! In your head you know what you want to say. So you put it into words
in a language you know and you "send it" to your receiver. You can send it through
talking, posting it on a message board, sending an e-mail, etc. This goes through a
channel which can have "noise" which interferes with the message. Your receiver gets
the message and "decodes" it. If this is done successfully they will understand your
message. Things that might hinder this would be if the other person doesn't speak the
same language as you.

Page 2 of 30

The nature of communication is the exchange of information between two people. It is

required that there be both a sender and a receiver for communication to take place.
Communication is reciprocal. So at any time the sender is sending a message the
receiver is also sending messages.

Effective communication entails the sender encoding a message and transmitting it to

the receiver where the receiver successfully decodes the message.

So, in English! In your head you know what you want to say. So you put it into words
in a language you know and you "send it" to your receiver. You can send it through
talking, posting it on a message board, sending an e-mail, etc. This goes through a
channel which can have "noise" which interferes with the message. Your receiver gets
the message and "decodes" it. If this is done successfully they will understand your
message. Things that might hinder this would be if the other person doesn't speak the
same language as you.
the following are the natures of communication.
(a) It elicits responses
(b) It is complex
(c) It is dynamic: this is because it is not static. also it is ongoing.
(d) It is behavioral interaction
(e) It is receiver's phenomenon

People define terms in different ways, and those differences in definition can have a
profound impact onthe extent to which we understand each other and the way we

Page 3 of 30

move forward with both academic and everyday pursuits. In other words, it is better to
evaluate definition in terms of their utility rather than in terms of their correctness. So
we should not assume that there is always a single right way to define a concept.
There is a great deal of variation in the definitions. Some are very abstract and some
are extremely specific. Few definitions are cited below. Given the variety of ways in
which words are used and understood, we are often ill-served to search for the single,
so-called correct definition of a term.

Communication is the process by which we understand others and in turn endeavor to

be understood by them. It is dynamic, constantly changing and shifting in response to
the total situation (Anderson, 1959). Communication is the process by which an
individual (the communicator) transmits stimuli (usually verbal) to modify the
behavior of other individuals (the audience). (Hovland Janis and Kelly in 1953).

Communication is all of the procedures by which one mind can affect another (W.
Weaver, 1949) Communication means that information is passed from one place to
another. (Miller, 1951). These definitions are incomplete in the sense that Weaver's
definition is incredibly broad; it includes all the procedures by which one "mind"
could have an effect on another, whereas the other definitions excludes too many
activities that we normally think of as communication. However through this
definitional turmoil many conceptual features have emerged as important points of
discussion.

Page 4 of 30

Task 2
Meanings are in words. The idea that meanings are in words is perhaps the most
common misconception about communication. This misconception can lead to much
misunderstanding between two people and thwart the effectiveness of communication
between supervisor and subordinate. What a particular word means to us may not be
what it means to someone else. The word stimulates a meaning in our minds that is
different from the meaning it stimulates in the mind of our colleague. For example,
the word evaluation carries different meanings for people at different levels in the
organization. The lower-level employees might feel this means the end of them. The
upper-level management might feel this means support for their work. The point we
wish to make about words and their meanings is that no word has meaning apart from
the person using it. No two people share precisely the same meanings for all words.
Meanings are in people, not words. Therefore/ we must realize that what we say to
others in the organization might not stimulate in their minds the meaning we want or
intend to be stimulated. This requires that we adapt our ideas to the background and
experiences of our colleagues so that they can adapt to our ideas.

Telling is communicating. Many employees and managers feel that if they have
"said it to her" or "told him about it," they have communicated. They may have tried
to communicate, but that is no guarantee they have communicated. It is very naive to
think that this is all there is to communication. Telling is only part of communication
often a small part. People who believe that telling people something is equal to
communicating with them fail to acknowledge the active role of receivers. Sources
have to consider what meaning a receiver might attach to the message, what a
receiver's background is, what a receiver thinks and feels. If anything, telling is only

Page 5 of 30

half of communicating. To be effective communicators, we have to be sensitive to the

other person's views and communication skills. If your boss makes this mistake/ you
can be assured you will be blamed for the boss's mistake. Consequently, you must
take an active role in communicating with your supervisor to be certain you fully
understand anything you are told. Although it is not fair to hold you responsible for
inadequate communication on the part of the boss/ that is the reality with which you
must be prepared to deal.

Communication is a good thing. Ask 10 people you encounter at work today, "Is
communication a good thing?" Probably over half, maybe all 10, will look at you a bit
strangely and answer "Certainly," or words to that effect. Since, as we noted above,
many people think communication will solve all our problems, it is reasonable they
would also think of communication as "good." In reality, communication is neither a
good nor a bad thing.
Communication is a tool, and like any tool, communication can be used for good or
bad purposes.
The way a person uses communication determines its goodness or badness. For
example, take a computer. If we use this tool for its intended purposeto process
informationwe can say that it is a good and useful device. Put that computer in the
hands of an irate employee and he or she can use it to destroy data and information. Is
the computer bad? No, it is simply being used in a bad way. It is the same for
communication. We can use our communication for good or evil purposes.
Hopefully, this book will suggest ways in which to use communication as a positive
tool to

Page 6 of 30

enhance our work environment and our work relationships.

Communication can break down. We often communicate unsuccessfully and

sometimes we stop talking to someone, but in neither instance has communication
broken down. As one learns early in the study of non-verbal communication, one
cannot not communicate. Although this phrase is the English teacher's nightmare, it
expresses very well the nature of communication between human beings. Such
communication is ongoing, even if words are not being exchanged. Non-verbal
messages are likely to continue and, even in the extreme, silence and the absence of
new verbal messages in itself communicates. When people feel a need to place blame
for their poor decisions, their interpersonal incompetence, their failure to consult with
wiser persons before taking action, we hear the phrase "communication breakdown."
Human communication does not break down, although electronic communication
systems can do so.

Communication is a verbal process. When most people, whether they are top
management or have just taken an entry-level position, think about communication,
they think chiefly about wordswritten or spoken. How we say something is as
important as what we say, and often more important. How we act is as important as
what we say, and often more important.
Nonverbal actions often contradict verbal messages, and when they do most people
believe the nonverbal over the verbal. Thus, the process a/communication is both
verbal and nonverbal, They rarely focus on the relevance of the nonverbal aspect of
communication. Yet much of communication is nonverbal. In fact, when we talk to

Page 7 of 30

someone, our verbal communication is always accompanied by nonverbal messages

as well.

Communication will solve all our problems. For years, people have tried to
convince us that communication will solve all our problems. If the wife and the
husband are not getting along, get them to sit down and talk it outthat will solve the
problem. If the parent and the child are not getting along, get them to sit down and
talk it outthat will solve the problem. If the supervisor and the subordinate cannot
get along, get them to sit down and talk it outthat will solve the problem.
Unfortunately, it just is not so. Communication can either create or help overcome
problems. The parties should be separated, not forced to communicate. Yet in many
organizations, some individuals always think communication can solve problems, so
they put two people or two groups together who hate each other. They force them to
communicate and cannot understand why matters only get worse. Effective
organizational communication may allow us to solve some problems, but it cannot be
expected to solve all problems. Communication is no magic elixir. It will not cure
cancer, it will not overcome weight problems, and it will not solve all the problems in
an organization. But we can, by communicating more effectively, avoid making some
things worse.

The more communication, the better. If it is a good thing/ and it will solve all our
problems, then of course the more of it the better. This myth is tied to the two
previous ones. This myth is so prevalent in American society that it has assumed the
position of a stereotype. If one meeting is good, two would be better. If one memo is
good, two would be better. If one evaluation review conference is good, two would be

Page 8 of 30

better. People often do not recognize that it is the quality of communication that is
important, not the pure quantity of it. In many "white-collar" occupations, meetings
are the bane of people's existence. Some people spend more than 75 percent of their
working hours in meetings with other employees. Although much of this time no
doubt is spent productively, interviews with hundreds of such workers convince us
that a very large portion of that time is wasted. It is based on the assumption that the
more people talk to one another, the better will be the decision that is made. Not
necessarily so. Pooling ignorance does not produce intelligence.

Communication is a natural ability. Just as Myth 7 is used as a substitute for our

failures and foul-ups, this myth is used as an excuse for not trying to be a better
communicator. If people are born with or without the ability to communicate, so the
thinking goes, how can I be blamed for being a poor communicator? Sorry, no excuse.
Communication is a learned ability. While our personality and temperament may be
primarily determined by our genes, we acquire our communication skills from our
experiences and our education. If what we have acquired is inadequate, it is up to us
to see to it that we take the initiative to overcome our inadequacy. Communication
competence can be learned, and practice can help us improve.

Seven ways in which nonverbal communication is expressed are through

(a) interpersonal space
(b) eye contact
(c) facial expressions
(d) body movements and gestures

Page 9 of 30

(e) touch
(f) setting
(g) time

Barriers to successful communication include message overload (when a person

receives too many messages at the same time). The common barriers to success
include the following:
1. Ambiguity of words/phrases results when the communicator uses words that sound
the same but have different meanings.

2. Individual linguistic ability is important to consider as the use of jargon; difficult or

inappropriate words in communication can prevent the recipients from understanding
the message. Poorly explained or misunderstood messages can also result in
confusion.

3. Attitudinal barriers come about as a result of problems with staff in an organization.

These may be brought about, for example, by such factors as poor management or
lack of consultation with employees.

4. Physical barriersare often due to the nature of the environment, such as outdated
equipment or staff shortages.

5. System design faults refer to problems with the structures or systems in place in an
organization. Examples might include an organizational structure, which is unclear,
and, therefore, makes it confusing to know who to communicate with.

Page 10 of 30

6. Physiological barriers may result from an individual's personal discomfort caused,

for example, by ill health, poor eyesight, or hearing difficulties.

7. Presentation of informationis important to aid understanding. Simply put, the

communicator must consider the audience before making the presentation itself and in
cases where it is not possible, the presenter can at least try to simplify her vocabulary
so that the majority can understand.

The first once we will talk about interpersonal space. This ranges from 18 inches 4
feet, and is the zone generally reserved for good friends or intimate partners in a
social setting. The near aspect is reserved for couples or very close friends whereas
the far phase is used by acquaintances or friends.

There are public distance also. This is described as 12 feet or greater; It is subdivided
into near phase such as the distance between a speaker and an audience, and the far
phase being the distance for example between the public and an important public
figure.

Intimate distance. This tends to be somewhere between 01018 inches. The closest
distance is generally the domain of those who have an intimate relationship with each
other, but also includes situations where the social rules allow contact, for example in
a wrestling match. Hall distinguishes between near situations requiring body contact
(lovemaking) and far distances which require being very close but not in contact
(whispering). This distinction is rather artificial since whether contact occurs will

Page 11 of 30

depend on a variety of things such as the social and physical setting.

Public distance. This is described as 12 feet or greater; It is subdivided into near phase
such as the distance between a speaker and an audience, and the far phase being the
distance for example between the public and an important public figure.
There are some factors that will affect interpersonal space.

Personality. There is some evidence of personality difference but effects here need to
be treated with caution given the situational dependence of traits. Extraverted and
gregarious persons tend to require smaller personal space, while cold and quarrelsome
people require a larger interpersonal distance (Gifford, 1982).
Gender. Males interacting with other males require the largest interpersonal distance,
followed by females interacting with other females, and finally males interacting with
females (Gifford, 1987). However it probably depends on the situation, or the
relationship, or the age group and so on as well.

Age. Some evidence suggests that personal space gets bigger as we grow older
(Hayduk, 1983). Children tend to be quite happy to be physically close to each other,
something which changes as awareness of adult sexuality develops. In addition the
gender difference does tend to also appear at this time.
Culture. Hall (1959) identified the importance of cultural variation. He suggested
that while all cultures use personal space to communicate, and tend to conform to
the different categories, the size of the space within the categories varies across
cultures. Hall also identified the essential issue in inter-cultural difference as the
Page 12 of 30

tendency to interpret invasions of personal space as an indication of aggression.

"The eyes are the mirror of the soul". Eyes can captivate an audience and express
what words may not be able to deliver. A word is a word, but a word expressed
upon the sincerity of the eyes will allow the words spoken to reach the minds of
those they are spoken to. This is why eye contact is important.

When you maintain eye contact, you present an air of confidence in yourself and
what you are communicating. People who are listening to what you are saying will
take you more seriously, and will take what you say as important. If you lose eye
contact or focus on everything else but the person you are speaking to, you may
not be taken seriously and the truth in your points may be lost.

Eye contact is a non-verbal ability to communicate, and it often equals to our

ability to verbally express a thought. Interestingly, we are least aware of our nonverbal communication skills like body language and especially eye contact, yet
these non-verbal skills often speak louder than our words.

Eye contact can relay our inner most intimate thoughts and desires. It can let the
person we are speaking with know our emotional connection and interest in what
we are conversing about. A longing stare or the ability to smile with your eyes like
a super model can often deliver the subtle message of interest. On the flip side,
anger, disgust, and dissatisfaction can also be easily delivered with through our
eye contact.

Page 13 of 30

Failing to maintain eye contact during a conversation can send mixed signals to
the person you are speaking with. It is often construed as a tell-tale-sign that you
might not be forthcoming or truthful in what you are saying---liars tend to not
keep eye contact. If the lack of eye contact is not construed as a lie the person may
be trying to conceal, it is often perceived as lack of interest or an indication of a
short attention span.

The way we use our eye contact can also enhance an intimidating conversation,
making the message of the words more resounding. We have often heard stories
that recount horrific circumstances where the person describes their attacker or
intimidator as having pure evil in their eyes. Many criminals have been described
as having empty and blank stares, which is said to indicate their lack of remorse or
lack of understanding of what they took part in.

Eye contact can relay our inner most intimate thoughts and desires. It can let the
person we are speaking with know our emotional connection and interest in what
we are conversing about. A longing stare or the ability to smile with your eyes like
a super model can often deliver the subtle message of interest. On the flip side,
anger, disgust, and dissatisfaction can also be easily delivered with through our
eye contact.

Have you thought about eye contact as a skill? As adults, using appropriate eye
contact can be difficult. What about youth? Eye contact can be tied to so many life
skills that its important for our youth to practice and learn about eye contact as a
communication skill. Consider for a moment using eye contact to show empathy,

Page 14 of 30

concern for others, to manage feelings or to help with communication. Those are
all life skills that youth will grow and develop as they mature into successful
adults.

Dont worry if eye contact is something you struggle with. Its likely that
everyone will have a conversation sometime where they can identify some
characteristics of odd eye contact, as well as characteristics of really great eye
contact. Remember to learn from that. Whichever extreme you experience take a
mental note of what you liked and didnt like.

As a conclusion, we need to stares communicate hostility, eye contact opens and

closes communication, high status people are looked at, and look more while
talking than listening, increased eye contact is associated with credibility and
dominance and lack of contact and blinking are interpreted as submissive.

The human face is extremely expressive, able to express countless emotions

without saying a word. And unlike some forms of nonverbal communication,
facial expressions are universal. The facial expressions for happiness, sadness,
anger, surprise, fear, and disgust are the same across cultures.

The concept of facial expression includes :

(a) a characteristic of a person that is represented, i.e., the signified;
(b) a visual configuration that represents this characteristic, i.e., the signifier;
(c) the physical basis of this appearance, or sign vehicle, e.g., the skin, muscle
movements, fat, wrinkles, lines, blemishes, etc.; and

Page 15 of 30

(d) typically, some person or other perceiver that perceives and interprets the
signs.
Pay attention to inconsistencies. Nonverbal communication should reinforce what is
being said. Is the person is saying one thing, and their body language something else?
For example, are they telling you yes while shaking their head no?

Trust your instincts. Dont dismiss your gut feelings. If you get the sense that
someone isnt being honest or that something isnt adding up, you may be picking up
on a mismatch between verbal and nonverbal cues.

Look at nonverbal communication signals as a group. Dont read too much into a
single gesture or nonverbal cue. Consider all of the nonverbal signals you are
receiving, from eye contact to tone of voice and body language. Taken together, are
their nonverbal cues consistentor inconsistentwith what their words are saying?
You can use your body to communicate positively with the audience by following
Hamlets advice to suit the action to the word and the word to the action through
natural, not mechanical body movements.

The gesture is subordinate to the message. Make sure that the audience can see your
hands above the lectern. Hold you hands at least waist-high and make sure to put your
notes or other objects on the lectern or podium so your hands are free to move.

Upper body toward the audience - You might want to lean into the audience to bridge
the space of separation. Stand still without movement - If you are listening to a

Page 16 of 30

question, you can stand still without movement to show your interest. Arms and chestIf you cross your arms in front of you, what does this mean to the audience? It could
be construed as confrontational or that are you in deep thought about a question from
an audience member. Feet and legs - You may move purposefully from one side to the
other to show a transition from one point to another.

Gestures may be made with almost any movable part of the body. Our focus will be
speech related gestures, primarily of the hand and arm. Gestures can be categorized as
either speech independent or speech related. You may use one gesture to support your
message one day and another on a different day.

You might count off the points on your finger, you may point with your full arm
extended to some object or direction, you may outline sizes and shapes, or you might
use a gesture to show emphasis. If you are troubled by your gestures, or a lack of
gestures, attend to the cause, not the effect. It will not help matters to tack a few
mechanical movements onto your delivery.

Touching conveys an impression of warmth and caring and can be used to create a
personal bond between people. Be careful about touching people from diverse
cultures, however, as norms for touching may vary significantly around the world.

Communication in relationship is incomplete without touch just like an eye contact or

smile. In fact, touch can establish, repair or even ruin a relationship. Touch has very
crucial importance to express feelings for other person.

Page 17 of 30

Skin covers largest part of our body and protects vital organs supported by
muscles and bones. Skin is the major part of body that is exposed to outer world. Its
the largest sensory organ. It senses temperature, humidity, pressure, and vibrations. It
regulates the temperature of body with help of hypothalamus. Most important above
all, skin can sense of pain and pleasure.

the one-armed hug, the manly shoulder bump, the A-frame clasp with handshake in
the middle, the mutual back-slap

Setting influences communication because emotions depend on the environment. If

you're in a dark basement with someone, odds are you'll feel a bit uncomfortable, or
even scared. If you're at a fancy restaurant, you may feel important and classy. When
you make a person feel comfortable in their setting, it's much easier to communicate
with them because of this level of comfort. A person most likely won't open up to
another if they don't feel safe or relaxed in their place.

Page 18 of 30

Task 3
1. Identification of issues and problems
a) Overview of this case study
After read through and knowing well about this case study, I identify the most
dominant problem cause the lack of communication. First, we can know that there is
no any pre-alert message has been received from Bangalore office. Although there
was excess booking by other logistic companies and there was no any space that result
in cargo officials of all airlines refused to accept the load. Ravi also needed to send a
pre-alert message to tell that there was no any load be connected through the flight.
By this, the executive at airport will not worry about it.

Second, Ravi, the staff of Bangalore office switch off his mobile and did not inform
the executive at airport. We need to make sure that our mobile phone is always active.
It is easy for other to stay connected with us if there is any immediate problems
happen. Apart from that, from the study case, Ravi know that he will always find a
space for the cargo or load so that the load will be send through flight. This kind of
action has become a daily routine for the executive at airport.The executive at airport
need to retrieve the load and confirms the receipt of the same to the Bangalore office.
If there was a sudden adjustment in the middle of this process, all the people involved
will feel strange and started to think about where get wrong? In order to prevent such
kinds of incident happen, the best way is to ask each other who are involved in the job
and find out the root cause. In the study case, Ravi is the one who know well about
the whole incident but he himself switched off the phone. So how come the executive
at airport and assistant manager know the whats going on.

Page 19 of 30

Ravi knew the situation by his own and did not inform others who were involved
in the job. This will cause problem arose and result in communication breakdown.

b) identifying the problems

there are minor and major problems in the case study. The minor problems of this case
are there is no any pre-alert message has been received by the executive at airport.
The problem occur was started from the person in charge who was Ravi. Besides,
Ravis phone was switched off all the night. There was no address of Ravi stated in
the personal documents.

The major problem is the load was put to a halt and it might cause the loss by
Bargalore office since Ravi did not inform his situation.

There was also underlying causes in the case study. The underlying causes are all
about the barriers to communication. The person in charge should be responsible to
inform his supervisor about the matter.

The working experience is one of the causes and barriers to communication. Ravi did
not use the best method to solve the problem. There will also the physical barriers
such as sound, time, space and so on.

c) there are three important theory that link to the problems. The first once is vertical
communication. The vertical communication is the flow of messages up and down the
hierarchy. The most dominant that Razi lacked is Upward communication. It means
communication from bottom to top. Razi should inform his supervisor that the all the

Page 20 of 30

airlines refused to accept their load. So there is no load was connected. He needed to
at least send a pre-alert message to tell supervisor the truth. Razi also need to inform
the executive at airport and supervisor that he had done booking for morning flight
and load will be connected through morning flight. Razi should give information and
suggestions for improvements. Razi should learn to report what had happened to the
upper part.

The second type of communication will be horizontal communication It is within and

between work units horizontal communication.flows within and between work units:
its main purpose is coordination. Ravi should ask helps from his other colleague. He
can ask the one who has the same job as Ravi which is sending the a pre-alert
message to the other party to let them know the load has sent.

The last theory to the problems is External Communication. This type of

communication is happen outside the organization, that means external
communication flows between people inside and outside the organization. Ravi
should tell the staff in the airport about this matter. He can inform the specific or
particular staff in the airport by calling to the counter or we call it as information
centre of airport. When the staff can figure out the real situation, all the things will be
solve. This is to make them rest assure.

Page 21 of 30

Solutions
Asking another colleague

Advantages
Someone is there to carry

Disadvantages
The replacement might just encounter some

to replace his duty at night

the responsibility and

emergencies or personal reasons and things. H

continue the job.

could not hold the test well. The colleague wh

replace the job might not have the thinking of

misunderstanding can be solve through
Explained to his supervisor He would be regarded as a

communication
Be blamed or regarded as not capable at all to

in advanced

run out the task. He will be losing many

responsible staff

chances of performing new task in the future.

2. Solutions

Page 22 of 30

3. Recommentation
a) The Logistic Company
The leader or the boss of the company should educate the staff about the importance
of communication. The leader should tell them all of the misunderstanding is just
because lack of communication between each other.

Secondly, the leader or boss of company should give some method in order to
avoid next incidence happen again. If same kind of incidence still happen all the staff
can solve by they own.

Thirdly, the management section of company must set rules and regulations if there
is anyone who break the rules again.

Page 23 of 30

Reference
1. http://www.merriam-webster.com/dictionary/communication
2. http://www.businessdictionary.com/definition/communication.html
3. http://curiosity.discovery.com/question/touch-nonverbal-communication
4. http://www.helpguide.org/mental/eq6_nonverbal_communication.htm

Page 24 of 30

COURSEWORK
1) Explain carefully FOUR phases of strategic managements.
1.

To Adapt to Change & Uncertainty Markets shift. Consumer tastes change.

New competitors appear. Technologies are reborn. New materials are invented.
Government regulations are altered. All organizations must deal with these kinds of
environmental changes and uncertainties. Control systems can help managers
anticipate, monitor, and react to these changes. Example: As is certainly apparent by
now, the issue of global warming has created a lot of change and uncertainty for many
industries. The restaurant industry in particular is feeling the pressure to become
"greener," since restaurants are the retail world's largest energy user, with a restaurant
using five times more energy per square foot than any other type of commercial
building, according to Pacific Gas & Electric's Food Service Technology Center.
Nearly 80% that commercial food service spends annually for energy use is lost in
inefficient food cooking, holding, and storage. In addition, a typical restaurant
generates 100,000 pounds of garbage per location per year. Thus, restaurants are being
asked to reduce their "carbon footprints" by instituting tighter controls on energy use.
2.

To Discover Irregularities & Errors Small problems can mushroom into big

ones.
Cost overruns, manufacturing defects, employee turnover, bookkeeping errors, and
customer dissatisfaction are all matters that may be tolerable in the short run. But in
the long run, they can bring about even the downfall of an organization. Example:
You might not even miss a dollar a month looted from your credit card account. But
an Internet hacker who does this with thousands of customers can undermine the
confidence of consumers using their credit cards to charge online purchases at
Page 25 of 30

Amazon.com, Priceline.com, and ether Web retailers. Thus, a computer program that
monitors Internet charge accounts for small, unexplained deductions can be a valuable
control strategy.
3.

To Reduce Costs, Increase Productivity, or Add Value Control systems can

reduce labor costs, eliminate waste, increase output, and increase product delivery
cycles. In addition, controls can help add value to a product so that customers will be
more inclined to choose them over rival products. For example, as we have discussed
early in the book (and will again in this chapter), the use of quality controls among
Japanese car manufacturers resulted in cars being produced that were perceived as
being better built than American cars.
4.

To Detect Opportunities Hot-selling products. Competitive prices on materials.

Changing population trends. New overseas markets. Controls can help alert managers
to opportunities that might have otherwise gone unnoticed.
Example: A markdown on certain grocery-store items may result in a rush of customer
demand for those products, signaling store management that similar items might also
sell faster if they were reduced in price.
5.

To Deal with Complexity Does the right hand know what the left hand is

doing? When a company becomes larger or when it merges with another company, it
may find it has several product lines, materials-purchasing policies, customer bases,
even workers from different cultures. Controls help managers coordinate these
various elements. Example: In recent years, Macy's Inc. has twice had to deal with
complexity. In 2006, it pulled together several chains with different namesMarshall
Field's, Robinsons-May, Kaufrnann's, and other local storesinto one chain with one
name, Macy's, and a much-promoted national strategy. But after losing money in
Page 26 of 30

2007, CEO Terry Lundgren began altering course from a one-size-fits-all nationwide
approach to a strategy that tailors the merchandise in local stores to cater to local
tastes.
6.

To Decentralize Decision Making Facilitate Teamwork Controls allow top

management to decentralize decision making at lower levels within the organization

and to

encourage employees to work together in teams. Example: At

General Motors, former chairman Alfred Sloan set the level of return on investment
he expected his divisions to achieve, enabling him to push decisionmaking authority
down to lower levels while still maintaining authority over the sprawling GM
organization. Later GM used controls to facilitate the team approach in its joint
venture with Toyota at its California plant.
The six reasons are summarized below. (See Figure 4.3.)

Figure 4.3 Six

Reasons Why Control Is Needed

Page 27 of 30

2) Explain carefully the SIX reasons why control is needed.

Phase 1 Basic financial planning: Managers initiate serious planning when they a
requested to propose the following year's budget. Projects are proposed on the basis <
very little analysis, with most information coming from within the firm. The sales
force usually provides the small amount of environmental information. Such
simplistic operational planning only pretends to be strategic management, yet it is
quite tin consuming. Normal company activities are often suspended for weeks while
managers t to cram ideas into the proposed budget. The time horizon is usually one
year.
Phase 2 Forecast-based planning: As annual budgets become less useful
stimulating long-term planning, managers attempt to propose five-year plans. At this
point they consider projects that may take more than one year. In addition to intern
information, managers gather any available environmental datausually on an ad he
basisand extrapolate current trends five years into the future. This phase is also tin
consuming, often involving a full month of managerial activity to make sure all tl
Page 28 of 30

proposed budgets fit together. The process gets very political as managers compete fi
larger shares of funds. Endless meetings take place to evaluate proposals and justii
assumptions. The time horizon is usually three to five years.

Phase 3 Externally oriented (strategic) planning: Frustrated with highly political y

ineffectual five-year plans, top management takes control of the planning process I
initiating strategic planning. The company seeks to increase its responsiveness 1
changing markets and competition by thinking strategically. Planning is taken out of
the hands of lower-level managers and concentrated in a planning staff whose task is
develop strategic plans for the corporation. Consultants often provide the sophistical
and innovative techniques that the planning staff uses to gather information and
forecast future trends. Ex-military experts develop competitive intelligence units.
Upper-level managers meet once a year at a resort "retreat" led by key members of the
planning staff to evaluate and update the current strategic plan. Such top-down
planning emphasizes formal strategy formulation and leaves the implementation
issues to lower management levels. Top management typically develops five-year
plans with help from consultants but minimal input from lower levels.
Phase 4Strategic management: Realizing that even the best strategic plans are
worthless without the input and commitment of lower-level managers, top
management forms planning groups of managers and key employees at many levels,
from various departments and workgroups. They develop and integrate a series of
strategic plans aimed at achieving the company's primary objectives. Strategic plans
at this point detail the implementation, evaluation, and control issues. Rather than

Page 29 of 30

attempting to perfectly forecast the future, the plans emphasize probable scenarios and
contingency strategies.
The sophisticated annual five-year strategic plan is replaced with strategic thinking
at all levels of the organization throughout the year. Strategic information, previously
available only centrally to top management, is available via local area networks and
intranets to people throughout the organization. Instead of a large centralized planning
staff, internal and external planning consultants are available to help guide group
strategy discussions. Although top management may still initiate the strategic
planning process, the resulting strategies may come from anywhere in the
organization. Planning is typically interactive across levels and is no longer top down.
People at all levels are now involved. General Electric, one of the pioneers of strategic
planning, led the transition from strategic planning to strategic management during
the 1980s. By the 1990s, most other corporations around the world had also begun the
conversion to strategic management.

Page 30 of 30