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Monday, 8 August 2011

Introduction to Management - Notes


Evolution of Management Thought - Lecture 2
To be able to distinguish between the following major management theories:
1. Classical Management Approaches

• Scientific Management
• Frederick W. Taylor
• Standard rules, processes, working conditions for every job – ‘one best way’
• Selection of workers
• Training of workers
• Incentives for workers
• Support for workers
• Frank Gilbreth
• Lillian Gilbreth
• Time and motion studies
• Lillian pioneered industrial psychology
• Administrative Principles
• Henri Fayol
• Planning
• Organising
• Commanding
• Coordinating
• Controlling
• Mary Parker Follett
• Groups as mechanisms for combining individual talents for a greater good.
• Organisations as cooperating ‘communities’ of managers and workers
• Employee ownership
• Private profits relative to public good
• Bureaucracy
• Max Weber
• Rational authority not personal/family/religious
• Rational authority based on structure and positions
• Therefore, rules and written records provide continuity
• Clear definitions of authority and responsibility
• Positions are organised hierarchically.
• Selection and promotion based on technical qualifications
• Administrative acts and decisions are recorded
• Management is separate from ownership.
• Rules and procedures are uniformly applied to all employees.
• Disadvantages
• Excessive paperwork or ‘red tape’
• Slowness in handling problems
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• Rigidity in the face of shifting needs


• Resistance to change
• Employee apathy
2. Behavioural Management Approaches

• Hawthorne Studies
• Series of experiments
• Illumination Study
• Both control (no change) and experimental group (illumination change)
increased productivity
• Relay Assembly Room
• Piece-work for 8 weeks
• Productivity went up
• Two five-minute rest periods for 5 weeks
• Productivity went up
• Rest periods lengthened to 10 minutes
• Productivity went up
• Provided with a free hot meal at the first break
• Productivity went up
• Dismissed at 4:30pm instead of 5:00pm
• Productivity/ output went up
• Dismissed at 4:00pm instead of 4:30pm
• Output remained the same
• Finally, all improvements removed
• 48 hour week, no piece-work
• Work Saturdays
• No extra breaks, no free meal
• Highest productivity ever – lasted 12 weeks
• Reasons for productivity increase:
• Group Atmosphere
• Participative Supervision
3. Quantitative Management Approaches
• Management Science
• Application of mathematics, statistics and other quantitative techniques to
managerial problems
• Also called Operations Research
• Techniques:
• Mathematical forecasting
• Inventory modelling
• Linear programming
• Queuing theory
• Network models
• Simulation

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4. Modern Management Approaches


• Systems theory
• System - Set of interrelated parts that function as a whole
• Subsystem - A smaller component of a larger system
• Open system - Interacts with the external environment
• Entropy – organisation will die without fresh inputs from the environment
• Synergy – whole is greater than the sum of its parts

• Contingency theory
• Solving organisational problems depends on managers identifying key variables in
the situation at hand
• Classical perspective = universalist
• Contingency view = each situation is unique (Eg industry, technology, the
environment and international cultures)

Ethical behavior and social responsibility - Lecture 4 - Text Chapter 13


• To define ethics and ethical behavior
• Ethics - The code of moral principles that sets standards of good or bad, or right or
wrong, in a person’s conduct and thereby guides the behaviour of that person or
group
• Ethical behaviour - What is accepted as ‘good’ and ‘right’, as opposed to ‘bad’ or
‘wrong’, in the context of the governing moral code.

• To distinguish alternative views of ethical behavior

• Utilitarian view of ethics — greatest good to the greatest number of people.


• Individualism view of ethics — primary commitment is to one’s long-term self-
interests.
• Moral-rights view of ethics — respects the fundamental rights of all people.
• Justice view of ethics — fair and impartial treatment of people according to rules and
standards. Includes Procedural, Distributive and Interactional Justice
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• Cultural relativism - Ethical behaviour is always determined by cultural context.


• Ethical imperialism - Behaviour that is unacceptable in one’s home environment
should not be acceptable anywhere else.

• To understand how culture impacts on ethics
• To describe ethical dilemmas in the workplace and the factors that influence ethical
managerial ethical behavior
• An ethical dilemma is a situation that although offering potential benefit or gain is also
unethical.
• Unethical behaviour can be rationalised by convincing yourself that:
• The behaviour is not really illegal
• The behaviour is really in everyone’s best interests
• Nobody will ever find out
• The organisation will ‘protect’ you

• To identify how high ethical standards can be maintained


• Ethics training
• Whistleblower protection
• Laws vs organisational barriers
• Ethical role models
• Codes of ethics
• Examples: Workforce diversity, bribes and kickbacks, honesty of books or records,
confidentiality of corporate information
• To define Corporate Social Responsibility and the leadership beliefs underpinning it
• Ethics – individual level of behaviour
• Corporate social responsibility - organisational level
• CSR is the obligation of an organisation to act in ways that serve both its own
interests and the interests of its external stakeholders.
• Leadership beliefs that guide CSR:
• People do their best with a balance of work and family life.
• Organisations perform best in healthy communities.
• Organisations gain by respecting the natural environment.
• Organisations must be managed and led for long-term success.
• Organisations must protect their reputations.
• Triple Bottom Line:
• Corporate success should be measured not just by the traditional financial bottom
line, but also by its social/ethical and environmental performance.
• The overall fulfilment of obligations to communities, employees, customers, and
suppliers should be measured, calculated, audited and reported.
• Arguments against social responsibility
• Reduced business profits
• Higher business costs
• Dilution of business purpose
• Too much social power for business
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• Lack of public accountability.


• Arguments in favour of social responsibility:
• Adds long-run profits
• Better public image
• Avoids more government regulation
• Businesses have resources and ethical obligation
• Better environment
• Public wants it.
• To distinguish between the different perspectives on the value of CSR
• Classical perspective
• Management’s only responsibility is to maximise profits.
• Milton Friedman: “Few trends could so thoroughly undermine the very foundations
of our free society as the acceptance by corporate officials of a social
responsibility other than to make as much money for their stockholders as
possible” (2002: 133)
• Socioeconomic perspective
• Management must be concerned for the broader social welfare, not just profits.
• Thomas Kochan observed that the root cause of the recent corporate scandals in
the United States lies in this “over-emphasis American corporations have been
forced to give in recent years to maximizing shareholder value without regard for
the effects of their actions on other stakeholders” (2002:139)
• To distinguish between different strategies of CSR
• Strategies for pursuing social responsibility
• Obstructionist — meets economic responsibilities
• Defensive — meets economic and legal responsibilities
• Accommodative — meets economic, legal and ethical responsibilities
• Proactive — meets economic, legal, ethical and discretionary responsibilities

• To understand the role of government on CSR


• Common areas of government regulation of business affairs
• Occupational safety and health
• Fair labour practices
• Consumer protection
• Environmental protection.
• How organisations influence government
• Personal contacts and networks
• Public relations campaigns
• Lobbying
• Political action committees.

Leading - Lecture 5 - Text Chapter 5


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• To define leadership
• Leadership: the process of inspiring others to accomplish important tasks.
• To distinguish between leaders and managers and to understand the impact of different
sources of power on leadership
• Power : the ability to get someone else to do something you want or to make things
happen the way you want.

• What is the impact of power?


• Reward or legitimate power temporary compliance
• Coercive power temporary compliance plus resistance
• Expert or referent power commitment
• How is each source of power developed?
• Position power – centrality, support, visibility
• Personal power – expertise, likable personality
!
• The importance of personal power means the real leader in the workplace may not
always be the manager … that is, Leader and Manager are not equivalent terms
• Empowerment: the process through which managers enable others to gain power
and achieve influence within the organisation

• To distinguish between the three major historical approaches to the study of leadership
• Trait theory
• Traits that are important for leadership success:
• Drive
• Self-confidence
• Creativity
• Cognitive ability
• Business knowledge
• Motivation
• Flexibility
• Honesty and integrity.
• But traits alone are not sufficient for successful leadership – only a
precondition. Researchers next looked at how leaders behave…

• Behavioural theories
• Leadership style – recurring patterns of behaviours exhibited by a leader

• Contingency approaches
• Contingency approaches try to understand the how the conditions for leadership
success vary with the situation:
• Fiedler’s contingency model
• Determining leadership style:
• Task-oriented leaders
• Relationship-oriented leaders
• Diagnosing situational control:

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• Quality of leader–member relations (good or poor)


• Degree of task structure (high or low)
• Amount of position power (strong or weak).
• Hersey-Blanchard situational leadership model
• Leaders adjust their styles depending on the readiness of their followers to
perform in a given situation.

• House’s path-goal theory


• An effective leader clarifies paths through which followers can achieve both
task-related and personal goals.
• Leadership style should contribute what is missing or is weak in the situation:
• Directive leadership
• Supportive leadership
• Achievement-oriented leadership
• Participative leadership
• Substitutes and neutralizers
• Substitutes for leadership !
• A situational variable that makes a leadership style redundant or unnecessary.
• Eg Subordinate characteristics, Task characteristics, Organisational
characteristics
• Neutralisers
• A situational variable that counteracts a leadership style.
• Eg. Being physically removed from employees
• To explain the various models which make up each of the major approaches – what does
each model say about effective leadership?
• Critique of Contingency Approaches
• Strengths:
• Moved beyond trait and behavioural approaches to consider the role of context
or situation in leader effectiveness
• Weaknesses:
• List of possible contingencies is endless
• Research is yet to identify which are the most important contingencies that
affect leader effectiveness
• Leaders can also control and change contingencies. That is, leaders are not
passively subject to situational contingencies… This has led researchers more
recently to look at change theories
• To identify contemporary issues in leadership
• Charismatic leader
• Someone who develops special
leader–follower relationships and inspires others in extraordinary ways.

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• Charismatic Leaders unify and motivate people around grand visions of an


idealized future. They inspire people toward change.
• Transformational leader
• Someone who is truly inspirational as a leader and who arouses others to seek
extraordinary performance accomplishments.
• Transformational Leaders are agents of change. They are the ideal managers to
have during major organizational change because they have the visionary
component of the charismatic leader but also have the staying power and energy
to see change through to completion.
• Transactional leader
• Someone who is methodical as a leader and keeps others focused on progressing
towards goal accomplishment.
• Transactional Leadership is effectively what good management is all about: It’s
the paperwork, the budgeting, the scheduling with a bit of psychological support of
employees thrown in for good measure.
• Some argue that transactional leadership is not enough to effectively lead
organizations in contemporary competitive climates

External Environment and Organisational Culture - Lecture 6 - Chapter 7


• To explain the environment of an organisation and its importance within an open systems
view

• To distinguish between the external and internal environment of an organisation


• External environment
• Everything outside the boundaries of the organisation that have the potential to
affect it
• Internal environment
• Conditions and forces within an organisation
• To distinguish between the general and specific environment as the two layers of the
external environment
• General environment
• The set of broad background conditions in an organisation’s surroundings that
provides the general context for management decision making
• Specific environment
• The people and groups with whom an organisation interacts on a day-to-day basis
and which directly influence its basic operations and performance
• To identify and analyse the conditions that make up the general environment of an
organisation

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• Economic conditions
• The overall health of the economic system
of the country (countries) and regions in
which the organisation operates
• Sociocultural conditions:
• The customs, social values,
educational trends and demographic
characteristics of the society in which
the organisation functions
• Legal-political conditions
• The prevailing philosophy of the
political system and party or parties
running government as well as the
general relationship between business
and government, including government
regulation of business in general
• Technological conditions
• The development and availability of technology in the
industry and society at large, including advances in the methods available for
converting resources into products and services
• Natural environment conditions
• The general state of the natural environment, including levels of public concern
expressed through environmentalism
• International conditions
• Events originating in foreign countries, as well as opportunities for local
organisations in other countries
• To identify and analyse the conditions that make up the specific environment of an
organisation
• Customers
• Consumer or client groups, individuals and organisations that purchase the
organisation’s goods and/or services
• Suppliers
• Provide the human, information and financial resources and raw materials that the
organisation uses to produce its output
• Competitors
• Other organisations in the same industry or type of business that offer the same
or similar goods and services to the same consumer or client groups
• Regulators
• Specific government agencies and representatives that enforce laws and
regulations affecting the organisation’s operations
• To understand organisational culture as a major factor in the internal environment of an
organisation, including both observable culture and core culture
• The internal environment comprises factors inside the boundaries of the organisation
• Internal environments are important because they affect what people think, feel and
do at work
• A key component of the internal environment is organisational culture, which is the
system of shared beliefs and values that develops within an organisation and guides
the behaviour of its members
• Observable culture!
• What can be observed directly in the daily life of an organisation
• Seen = Surface level
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• Symbolic artifacts such as dress codes and office layout


• Heard = Expressed values and beliefs
• What people say
• How decisions are made and explained
• Through observable culture, new members learn the organisation’s culture and all
members share and reinforce its special aspects over time
• Core culture
• Deeper level of culture that is the foundation of observable culture
• Determines why things are the way they are
• Core values and underlying beliefs and assumptions that influence behaviour and
give rise to observable culture
• Unwritten but shared understandings of the way things are done in the
organisation eg “the customer is always right”, “don’t dob in your mates”, “it’s us
versus them”

• To explain the relationship between organizational culture and external environment


• Strong organisational cultures are those where the core values are uniformly held by
organisational members
• Strong culture organisations operate with a small but enduring set of organisational
values
• Highly successful organisations typically emphasise values of quality, performance
excellence, innovation, social responsibility, integrity, worker involvement, customer
service, and teamwork
• These core values make it more likely the organisation will identify opportunities and
threats in the external environment and be able to adapt and respond to them in
appropriate ways
• Leaders in the organisation should establish and maintain core values that are:
• Relevant – core values should support key performance objectives
• Pervasive – be known by all members of the organisation
• Strong – be accepted by everyone involved!
• Leaders can use the observable culture to establish and maintain a desired culture
eg stories, symbols etc.
• Leaders can influence culture by:
• What they pay attention to and notice
• Their reactions to problems and crises
• Role modelling, coaching and mentoring
• Criteria for reward, promotion, punishment
• Organisational sub-cultures can develop as different groups form different
interpretations and feelings about the imposed culture based on shared work
responsibilities and/or personal characteristics.
• Examples of common subcultures include:
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• Occupational
• Functional
• Ethnic
• Racial
• Generational
• Gender.
• The presence of subcultures which have values that do not support the core
values of the organization may make it more difficult to respond in appropriate
ways to the external environment

Strategic Management - Lecture 7 - Text Chapter 8


• To define strategy and the importance of competitive advantage
• Strategy
• A comprehensive action plan providing long-term direction and guiding resource
utilisation to accomplish organisational goals to create and sustain a competitive
advantage
• Competitive advantage
• Means operating in a successful way that is difficult for competitors to imitate.
• Sustainable Competitive Advantage
• Consistently dealing with market and environmental forces better than competitors
eg cost, quality, knowledge, speed
• Strategic management
• The process of formulating and implementing strategies to accomplish long-term
goals and sustain competitive advantage.
• Strategy formulation
• Process of creating strategy
• Strategy implementation
• Process of allocating resources and putting strategies into action
• To describe the process of strategic management

• Step 1. Analysis of Current Organisation


• Mission statement (covered in lecture 3) – organisation’s reason for being
• Core values (covered in lecture 6on org culture)
• Objectives (covered in lecture 3) – eg profitability, market share, cost efficiency,
product quality, innovation etc
• Step 2: Analysis of Environment & Industry
• Analysis of environment
• Assessing Strengths and Weaknesses in the internal environment of the
organisation along with Opportunities and Threats in the external environment
• Objective is to identify core competencies - special strengths that give an
organisation a competitive advantage because they are rare, difficult for
competitors to imitate and are strategically valuable or important

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• Examples of core competencies – special knowledge or expertise or


superior technologies

• Analysis of the Industry - Porter’s Five Forces Model


• Michael Porter’s Five Forces model helps an organisation determine the
attractiveness of the industry in which it is competing or plans to compete.

• Step 3: Choices for levels of strategy


• Levels of strategy
• Corporate strategy sets long-term direction for the total enterprise.
• Business strategy identifies how a division or strategic business unit will
compete in its product or service domain.
• Functional strategies guide use of organizational resources to implement
business strategy in a functional area of operations.

• Corporate-level strategies
• Growth Strategies = Expansion of organisation’s current operations
• Concentration
• Growth in same business area
• Diversification
• Growth in new or different business areas
• Vertical Integration

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• Acquiring suppliers or distributors


• Retrenchment Strategies = Reducing scale of current operations
• Liquidation
• Restructuring or downsizing for efficiency
• Divestment
• Sell of parts of organisation to refocus
• Co-operative Strategies = Strategic alliances to partner with other
organisation(s) for mutual benefit
• Eg outsourcing, supplier and distribution alliances
• E-business Strategies
• Using Internet to gain competitive advantage
• Business-level strategies
• Porter’s Generic Strategies
• Cost leadership strategy
• Seek to operate with lower costs than competitors
• Differentiation strategy
• Offer products that are unique and different from competitors
• Focus strategies
• Focused cost leadership
• Low cost operations in special market segment
• Focused differentiation
• Unique product to special market segment
• Step 4: Implementation
• Challenges and Problems in Implementing Strategy
• Failures of substance
• Inadequate attention to major strategic planning elements
• Failures of process
• Poor handling of strategy implementation
• Lack of participation error
• Not including key people
• Goal displacement error
• Planning becomes an end in itself
• Emergent strategy
• Not all strategies are systematically and deliberately formulated prior to
implementation
• Strategies emerge over time as managers learn from experience
• Issues of Corporate Governance
• System of control and performance monitoring of top management
• Leadership
• How to get people to engage in the continuous change, refinement and
implementation of strategy
• To explain the steps in the strategic management process
• To analyse the environment and industry in formulating strategy
• To distinguish between corporate and business levels of strategy
• To distinguish different corporate strategies and understand when each is appropriate
• To distinguish the generic types of competitive strategies at the business level and
understand when each is appropriate
• To explain the challenges in strategic implementation

Organisational Design - Lecture 8 - Text Chapter 9 and 10


• To understand the basic concepts of organising as a management function
• Organising
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• The process of assigning tasks, allocating resources, creating operational


systems, and arranging activities to implement plans
• Organisational structure
• The system of tasks, workflows, reporting relationships and communication
channels that link together diverse individuals and groups.
• Formal structure
• The official structure of the organisation
• Expressed in an organisation chart
• Positions, job titles and the lines of authority and communication between
them
• Informal structure
• Lies behind the formal structure
• Unofficial working relationships between members
• Interpersonal networks of support
• Departmentalization
• The process of grouping together people and jobs into work units
• Traditional organisation structures which achieve departmentalisation are:
• Functional structures
• Divisional structures
• Matrix structures
• Newer organisation structures are:
• Team structures
• Network structures
• Boundaryless organisations
• To distinguish between different types of organisational structures and to evaluate their
usefulness (functional, divisional, matrix, team, network and boundaryless structures)
• Functional Structures
• People with similar skills and performing similar tasks are grouped together into
work units
• Works well for small organisations producing few products or services

• Advantages
• Economies of scale and efficient resource use
• Task assignment consistent with expertise and training
• In-depth training and skill development within functions
• Clear career paths within functions
• High quality technical problem solving
• Disadvantages
• Poor communication and coordination across functions – ‘functional chimneys
problem’
• Slow response to external changes
• Decisions concentrated at top leading to delay
• Responsibility for problems difficult to pinpoint
• Limited view of organisational goals by employees
• Limited general management training for employees
• Divisional Structures
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• Group together people who work on the same product or process, serve similar
customers and/or are located in the same area or geographical region
• Common in complex organisations
• Avoid problems associated with functional structures.

• Advantages
• Fast response, flexible in uncertain environment
• Expertise focused on specific customers, products or regions
• Improved coordination across functional departments
• Easy to pinpoint responsibility for product problems
• Develops general management skills
• Disadvantages
• Duplication of resources across divisions
• Less technical depth and specialisation
• Poor coordination across divisions
• Less top management control
• Competition between divisions for corporate resources
• Emphasis on division goals to detriment of organisation as a whole
• Matrix Structures
• Combines functional and divisional structures to gain advantages and minimise
disadvantages of each

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• Advantages
• Better interfunctional cooperation
• Increased flexibility
• Better customer service
• Better performance accountability
• Improved strategic management
• Improved decision making at the team level
• Develop generalists and specialists
• Disadvantages
• Frustration and confusion for matrix members from dual chain of command
• Power struggles between functional supervisors and team leaders
• Many meetings, more discussion than action
• Team loyalties may cause loss of focus on organisational goals
• Increased cost of adding team leaders to the matrix structure
• Team Structures
• Cross-functional teams to solve problems and complete special projects – may be
permanent or temporary
• Advantages
• Reduced barriers among departments
• Quicker decisions
• Improved morale due to cross-functional interaction
• Disadvantages
• Conflicting loyalties
• Time and resources spent on meetings

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• Network Structures
• A central core that is linked through networks
of relationships with contractors and outside suppliers of essential services
• Advantages
• Organisations can work with fewer full-time employees and less complex
internal systems
• Reduced operating costs and increased efficiency
• Disadvantages
• Control and coordination problems may arise from network complexity
• Potential loss of control over outsourced activities
• May lack cohesive corporate culture

• Boundaryless Organisations
• Eliminates internal boundaries among parts and external boundaries with the
external environment
• Combination of team and network structures
• Internally
• Teamwork and intense communication take the place of formal lines of
authority
• Externally
• Shifting mix of outsourcing contracts and operating alliances that form and
disband with changing circumstances

• To describe organisational design and distinguish the two major choices in organisational
design (mechanistic vs adaptive designs)
• Organisational design
• Choosing and implementing structures that best arrange resources to serve the
organisation’s mission and objectives
• Chandler argued structure should follow strategy
• Two broad choices:
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• Mechanistic design (bureaucratic organisation)


• Organic design (adaptive organisation)

• Good organisational design uses contingency thinking


• Does the design fit well with the major problems and opportunities of the external
environment?
• Does the design support implementation of strategies and the accomplishment of
key operating objectives?
• Does the design support core technologies and allow them to be used to best
advantage?
• Can the design handle changes in organisational size and different stages in the
organisational life cycle?
• Does the design support and empower workers and allow their talents to be used
to best advantage?

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• To explain the contingency factors that influence the choice of organisational design
• To identify contemporary organising trends
• Shorter chains of command
• Less unity of command
• Wider spans of control
• More delegation and empowerment
• Decentralisation with centralisation
• Reduced use of staff

Human Resource Management - Lecture 9 - Text Chapter 12


• To explain the process of Human Resources Management and how it fits with strategy
• Involves attracting, developing and maintaining a talented and energetic workforce to
support the organisation’s mission, objectives and strategies
• HRM matters because:
• People are key to organisational success or failure
• Diversity can be a source of competitive advantage ie broadens the talent pool and
brings different perspectives to problem solving and strategy formulation.
• HRM is a strategic process
• To distinguish between attracting, developing and maintaining a quality workforce
• Attracting involves:
• HR Planning

• Consider key factors eg emerging new technologies; volume of business, staff


turnover
• Job analysis: study what is done, when, where, how, why and by whom in
existing or potential new jobs

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• Job description: written statement of job duties and responsibilities


• Job specification: qualifications required
• Job analysis → Job description → Job specification
• Recruiting
• Activities designed to attract a qualified pool of job applicants to an
organisation
• Steps in the recruitment process:
• Advertisement of a job vacancy
• Preliminary contact with potential job candidates
• Initial screening to create a pool of qualified applicants.
• Recruitment methods
• Internal and External recruitment
• Realistic Job Previews
• New approaches eg Internet
• Legal considerations
• Affirmative Action
• Equal Employment Opportunity
• Selecting
• Choosing from a pool of the best-qualified job applicants
• Examples of selection devices:
• Application forms
• Interviews and/or site visits
• Employment tests
• Reference and background checks
• Selection devices must be valid and reliable
• Reliable
• Device measures consistently over repeated uses
• Valid
• Device has a demonstrated link with future job performance

• To understand what is involved in attracting a quality workforce and why this is important
to management
• To understand what is involved in developing an effective workforce and why this is
important to management
• Employee Orientation
• Set of activities designed to familiarise new employees with their jobs, coworkers
and key aspects of the organisation. Eg mission, policies and procedures etc
• Begins the process of socialising newcomers ie influences the expectations,
behaviour and attitudes of a new employee in a way considered desirable by the
organisation
• Training and Development
• Training
• Teaching low-level or technical employees how to do their present jobs
• Development
• Teaching managers and professionals the skills needed for both present and
future jobs
• On-the-job training
• Job rotation
• Coaching
• Mentoring
• Modelling

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• Off-the-job training
• Management development
• Performance Management Systems
• Sets standards, assesses results and plans for performance improvements
• Important component of Performance Management System is Performance
Appraisal:
• Process of formally evaluating performance and providing feedback to the job
holder
• Evaluation purpose
• Manager acts in judgmental role
• Development purpose
• Manager acts in counseling role
• Performance Appraisal methods:
• Graphic rating scales
• Behaviourally anchored rating scale
• Critical-incident technique
• Multiperson comparisons
• New approaches
• eg peer appraisal, upward appraisal, 360º feedback

• To understand what is involved in maintaining an effective workforce and why this is


important to management
• Maintaining a quality workforce, especially in dynamic environments, requires
consideration of:
• Career development
• Work-life balance
• Compensation and benefits
• Retention and turnover
• Career Development
• Career
• A sequence of jobs that constitute what a person does for a living
• Career path
• Career planning
• Career plateau
• Work-life Balance
• How people balance career demands with personal and family needs
• Contemporary work-life balance issues:
• Single parents
• Dual-career couples
• Family-friendliness as screening criterion used by candidates.
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• Compensation and benefits


• Base compensation - monetary
• Wages, salaries
• May be:
• Skill-based
• Competency-based
• Job-based
• Fringe benefits: non-monetary forms of compensation
• Some are required by law eg Superannuation, holiday leave loading, worker’s
compensation
• Others can be provided by the organisation eg health insurance, company car,
onsite fitness centres, subsidised child care
• Flexible benefits allow employee to choose from a range of options
• Retention and Turnover
• Replacement is the management of promotions, transfers, terminations, layoffs and
retirements.
• Replacement decisions relate to:
• Transferring or promoting people between positions within the organisation
• Retirement
• Voluntary Turnover
• Involuntary turnover eg mergers, cutbacks, poor performance
• To identify contemporary issues in human resource management
• Discrimination in employment
• Equal employment opportunity
• Affirmative action
• Diversity management
• Occupational health and safety
• Industrial relations
• International HRM

International Strategic Management - Lecture 10 - Text Chapter 11


• To understand the process of international strategic management
• International management involves managing operations in more than one country
• This arises because organisations develop and implement strategies in more than
one country

• To explain the reasons why organisations expand internationally
• Increased market size
• Build on competitive advantage in the domestic market by transferring
competencies to international markets where local competitors lack such skills
(eg. Yellowtail wines)
• Improve return on investment
• Particularly in R & D intensive industries (eg. Biotechnology, Pharmaceuticals)
• Protect innovation as patent protection requires a global perspective
• Economies of scale and learning
• Economies of scale result from expanding the size and/or scope of markets
• Develop learning and experience curve
• Realise location advantage
• Economies that arise from performing a value creation activity in the optimal
location for that activity (Beefeater BBQs in China)
• Lower cost effects: raw materials and labour
• Differentiation effects: access to key suppliers
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• To distinguish between the corporate-level strategies that organisations can adopt for
their international operations and to understand when each strategy is appropriate
• Type of corporate strategy selected will have an impact on the selection and
implementation of the business-level strategies (low cost or differentiation)
• Four Corporate-Level Strategies for International Operations
• International Strategy
• Transfer core competencies to foreign markets lacking these
• Centralise product development at home
• Establish manufacturing facilities and marketing function in host countries
• Very limited local customisation, if any
• Strong home country, head office control over foreign operations
• Multidomestic Strategy
• Strategy and operating decisions are decentralised to strategic business units
(SBU) in each country
• Products and services are tailored to local markets
• Business units in each country are independent of each other
• Assumes markets differ by country or regions
• Focus on competition in each market
• Prominent strategy among European firms due to broad variety of cultures and
markets in Europe

• Global Strategy
• Products are standardised across national markets
• Decisions regarding business-level strategies are centralised in the home
office
• Strategic business units (SBU) are assumed to be interdependent
• Emphasises economies of scale
• Often lacks responsiveness to local markets
• Requires resource sharing and coordination across borders (which also makes
it difficult to manage)
• Transnational Strategy
• Seeks to achieve both global efficiency and local responsiveness
• Difficult to achieve because of simultaneous requirement for strong central
control and coordination to achieve efficiency and local flexibility and
decentralisation to achieve local market responsiveness
• Must pursue organisational learning to achieve competitive advantage
High

Need for
Global
Integration:
Cost
Pressures International

Low
Low High
Need for Local Market Responsiveness

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• To identify the modes of entry into foreign markets and to understand when each mode is
appropriate
• Exporting
• Common way to enter new international markets
• No need to establish operations in other countries
• Establish distribution channels through contractual relationships
• May have high transportation costs
• May encounter high import tariffs and other trade barriers
• May have less control over marketing and distribution
• Difficult to customise products
• Licensing
• Firm authorises another firm to manufacture and sell its products
• Licensing firm is paid a royalty on each unit produced and sold
• Licensee takes risks in manufacturing investments
• Least risky way to enter a foreign market
• Licensing firm loses control over product quality and distribution
• Relatively low profit potential
• A significant risk if the licensor learns technology and competes when license
expires
• Strategic Alliances
• Enable firms to shares risks and resources to expand into international ventures
• Most joint ventures (JVs) involve a foreign company with a new product or
technology and a host company with access to distribution or knowledge of local
customs, norms or politics
• May experience difficulties in merging disparate cultures
• May not understand the strategic intent of partners or experience divergent goals
• Acquisitions
• Enable firms to make most rapid international expansion
• Can be very costly
• Legal and regulatory requirements may present barriers to foreign ownership
• Usually require complex and costly negotiations
• Potentially disparate corporate cultures
• New Wholly-Owned Subsidiary
• Most costly and complex of entry alternatives
• Achieves greatest degree of control
• Potentially most profitable, if successful
• Maintain control over technology, marketing and distribution
• May need to acquire expertise and knowledge that is relevant to host country
• Could require hiring host country nationals or consultants at high cost

• To explain how national culture impacts on the management of international operations


• Differences in National Cultures
• Culture is the shared set of beliefs, values and patterns of behaviour common to a
group of people.
• Dimensions on which national cultures vary include:
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• Language – low-context vs high-context


• Time – monochronic vs polychronic
• Values – Hofstede’s model

• Management theories are not universal – most theories in this course are framed
from a North American and Western European perspective
• Cross-cultural differences mean management practices cannot always be
transferred successfully from one national culture to another


• To describe how political risk, economic risk and ethics affect the management of
international operations
• Political risk
• Possible loss of investment or control over a foreign asset because of political
changes in the host country
• Economic risk
• Exchange rate fluctuations and differences in inflation rates may affect ability to
compete
• Ethics
• Corruption, sweatshops, child labour, sustainable development

Innovation and Change - Lecture 11 - Text Chapter 6


• To understand the difference between innovation and invention and their importance to
management
• Invention
• The act of discovery of a new idea
• Innovation

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• Occurs when that invention is developed and commercialised for a market … It is


the act of converting new ideas into usable applications that ideally have positive
economic or social consequences
• Innovation = Invention + Commercial Exploitation
• To distinguish between different types of innovation
• Process innovation
• Involves new or improved ways of manufacturing the product or service (ie results
in better ways of doing things)
• Product innovation
• The use of new or improved design principles or technologies for incorporation in
products or services (ie results in new products or services)
• Incremental innovations
• New products or processes that modify existing ones
• Radical
• Breakthrough products that are new-to-the-world and offer significant performance
solutions to a consumer problem
• To understand the forces driving innovation
• The need to stay competitive:
• Schumpeter (1942) described innovation as a process of creative destruction
• Radical innovations may destroy the competitive advantage of existing firms so
firms have to be open to new opportunities and possibilities to survive
• Potential to lower costs of production
• Possibility of first-mover advantages:
• That is, Customers may be willing to pay a higher price because the product/
service is the first-of-its-kind and offers them unique benefits

• BUT…research shows that being first-to-market is not always best. Often it’s the
fast second or third follower who goes on to be the market leader.
• Why?
• Fast followers learn from the costly mistakes of the pioneer in product
development and can watch how the market responds
• Also, the 2nd mover usually does not suffer from ‘public backlash’ because
they are not in the limelight. For example, Adidas versus Nike, Burger King
versus McDonalds

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• To explain the innovation process, including the roles and uncertainties within that
process

• Roles for managers and staff in the innovation process:


• Idea generators
• Create new insights from internal discovery or external awareness
• Information gatekeepers
• Serve as links between the organisation and external sources
• Product champions
• Advocate for innovation and change generally and for adoption of specific
product or process ideas in particular
• Project managers
• Perform technical functions needed to keep project on track with resource
support
• Innovation leaders
• Encourage, sponsor and coach others to keep innovation values and goals in
place
• Uncertainties in the innovation process:
• Market
• Will customers actually buy the product/service?
• Competitive
• How will competitors respond?
• Technological
• Will the concept actually work?
• Organizational
• Can we get product development/service delivery to work in an organizational
setting?
• Production
• Is it cost-effective to produce/deliver?
• Financial
• Will the product/service create the required return?
• Managing the uncertainties in the innovation process requires:
• External collaborations
• (eg industry clusters or learning regions)
• Change leadership
• In which management supports innovation and change ie expect innovation,
accept failure, and be willing to take risks

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• Change agent
• A person or group who takes leadership responsibility for changing the
existing pattern of behaviour of another person or social system.
• Change leadership
• Forward-looking
• Proactive
• Embraces new ideas.
• Managing Change
• Resistance to change
• Causes:
• Eg: Fear of the unknown, disrupted habits, loss of control, poor timing,
work overload
• Methods for dealing with resistance:
• Eg: Education and communication, participation, facilitation and
support, implicit or explicit coercion
• To understand the connection between innovation and organisational change

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