Robbins Mgmt15 Im01

Chapter 1
Managers and You in the Workplace

In this introductory chapter, your students will explore the concepts of management,
manager skills, and organizations in today’s dynamic business environment.
LEARNING OBJECTIVES
1. Tell who managers are and where they work.

2. Explain why managers are important to organizations.
3. Describe the functions, roles, and skills of managers.
4. Describe the factors that are reshaping and redefining the manager’s job.
5. Explain the value of studying management.
6. Describe the benefits of the Employability Skills Matrix (ESM).
CHAPTER OUTLINE
1.1 TELL WHO MANAGERS ARE AND WHERE THEY WORK

Managers may not always be what we expect. Today’s managers range from 18
to 80, they‘re found in a variety of different types of organizations, and they
perform a variety of jobs from the top to the bottom of the organization. Statistics
show an increasing number of women in management; however, while their
number is increasing, it is mostly in the area of lower and middle management,
not top management. Similarly, only 20 (4%) were minorities.
Who Is a Manager?
A. The changing nature of organizations and work often requires employees
in formerly nonmanagerial jobs to perform managerial activities. Students
who are preparing for careers on any organizational level can benefit from
acquiring management skills. Today’s employees need to be cross-
trained and multi-skilled.
B. How do we define a manager? A manager is someone who coordinates
and oversees the work of other people so that organizational goals can
be accomplished. However, keep in mind that managers may have
additional work duties not related to coordinating the work of others.
C. Managers can be classified by their level in the organization, particularly
in traditionally structured organizations—those shaped like a pyramid
(see Exhibit 1-1).
1. First-line (or front-line) managers (often called supervisors) are
typically involved with producing the organization’s products or
servicing the organization’s customers. These managers are
located on the lowest level of management.
2. Middle managers include all levels of management between the
first level and the top level of the organization. They may have
titles such as regional manager, project leader, store manager, or
division manager.
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Copyright © 2021 Pearson Education, Inc.
3. Top managers include managers at or near the top of the
organization who are responsible for making organization-wide
decisions and establishing plans and goals that affect the entire
organization.
Where Do Managers Work?
A. An organization is a deliberate arrangement of people to accomplish
some specific purpose. Organizations share three common
characteristics (See Exhibit 1-2): (1) each has a distinct purpose; (2)
each is composed of people; and (3) each develops some deliberate
structure so members can do their work.
B. Although these three characteristics are important in defining what an
organization is, the concept of an organization is changing. These
changes include: flexible work arrangements, employee work teams,
open communication systems, and supplier alliances. Organizations are
becoming more open, flexible, and responsive to changes.
Future Vision: Is It Still Managing When What You’re Managing Are

Robots?
While the text presents a fairly accurate description of today’s workplace, the
future is not certain. Work life in the future may be very different than today and
will likely include workers who are robots. How will a manager’s job be different?
How will working with robots affect human coworkers?
The following discussion questions are posed:

Talk About It 1: What’s your response to the title of this box: Is it still managing
when what you’re managing are robots? Discuss.
Talk About It 2: If you had to “manage” people and robots, how do you think your
job as manager might be different than what the chapter describes?
Student answers to these questions will vary.
1.2 WHY ARE MANAGERS IMPORTANT?

Managers have an important impact on both employees and the organizations in
which they work. The following three reasons address their importance:
A. Organizations need their managerial skills and abilities more than ever in
these uncertain, complex, and chaotic times.
B. Managers are critical to getting things done.
C. Managers do matter to organizations! According to a Gallup poll of tens of
thousands of managers and employees, the relationship of manager to
their employees and supervisors is the single most important variable in
employee productivity and loyalty.
1.3 MANAGEMENT VS. MANAGERS

What is Management?
A. Management involves coordinating and overseeing the work activities of
others so that their activities are completed efficiently and effectively.
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1. Coordinating and overseeing the work of others is what
distinguishes a managerial position from a nonmanagerial one.
2. Efficiency is getting the most output from the least amount of
inputs in order to minimize resource costs. Efficiency is often
referred to as “doing things right” (see Exhibit 1-3).
3. Effectiveness is completing activities so that organizational goals
are attained and is often described as “doing the right things” (see
Exhibit 1-3).
What Do Managers Do?
B. Management Functions.
Henri Fayol, a French industrialist in the early 1900s, proposed that
managers perform five management functions: POCCC (planning,
organizing, commanding, coordinating, and controlling).
1. Over time, Fayol’s five management functions have been
reorganized into four functions, which provide a foundation for the
organization of many current management textbooks (see Exhibit
1-4).
a. Planning involves defining goals, establishing strategies
for achieving those goals, and developing plans to
integrate and coordinate activities.
b. Organizing involves arranging and structuring work to
accomplish the organization’s goals.
c. Leading involves working with and through people to
accomplish organizational goals.
d. Controlling involves monitoring, comparing, and
correcting work performance.
2. In practice, managing is not always performed in a sequence as
outlined above. Since these four management functions are
integrated into the activities of managers throughout the workday,
they should be viewed as an ongoing process.
C. Management Roles
Henry Mintzberg, a management researcher, conducted a precise study
of managers at work. He concluded that managers perform 10 different
roles, which are highly interrelated.
1. Managerial roles refer to specific categories of managerial
behavior (see Exhibit 1-5).
a. Interpersonal roles include figurehead, leadership, and
liaison activities.
b. Informational roles include monitor, disseminator, and
spokesperson.
c. Decisional roles include entrepreneur, disturbance
handler, resource allocator, and negotiator.
2. Follow-up studies of Mintzberg’s role categories in different types
of organizations and at different managerial levels within
organizations generally support the idea that managers perform
similar roles.
3. Although the functions approach represents the most useful way
to describe the manager’s job, Mintzberg’s roles give additional
insight into managers’ work.
D. Management Skills.
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Managers need certain skills to perform the challenging duties and
activities associated with being a manager.
1. Robert L. Katz found through his research that managers need
three essential skills (see Exhibit 1-6).
a. Technical skills are job-specific knowledge and
techniques needed to proficiently perform specific tasks.
b. Human skills involve the ability to work well with other
people individually and in a group.
c. Conceptual skills involve the ability to think and to
conceptualize about abstract and complex situations.
d. Other skills are listed in Exhibit 1-7. These skills will be
highlighted in a feature at the end of each chapter.
2. Developing management skills is important for aspiring managers.
To help aid students in this respect, the authors have put together
several skill-building modules in mymanagementlab. These skills
reflect a broad cross-section of the important managerial activities
that are elements of the four management functions.
1.4 MANAGERIAL CHALLENGES TODAY AND INTO THE FUTURE

Security threats, corporate ethics scandals, global economic and political
uncertainties, and technological advancements should be discussed. While all
managers will not have to manage under tragically demanding circumstances,
how managers manage in today’s workplace is changing. These issues are
summarized in Exhibit 1-8.
A. Focus on Technology.
Cloud computing, social media, and robotics are all changing how things
get done in the workplace. Managers need to get employees on board
with new technology and ensure that they are comfortable with it, can use
it, and understand how it improves their lives.
Management History Module
In this chapter, we’re going to take a trip back in time to see how the field of study called
management has evolved. What you’re going to find out is that today’s managers still
use many elements of the historical approaches to management. Focus on the following
learning objectives as you read and study this chapter.
LEARNING OBJECTIVES
1. Describe some early management examples.

2. Explain the various theories in the classical approach.
3. Discuss the development and uses of the behavioral approach.
4. Describe the quantitative approach.
5. Explain the various theories in the contemporary approach.
Since the birth of modern management theory in the early 1900s, management experts
have developed theories to help organizations and their managers coordinate and
oversee work activities as effectively and efficiently as possible. In presenting the history
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of modern management, this supplement explores the evolution of management thought
and practice during the twentieth century. Students discover how knowledge of
management history can help us better understand current management practices while
avoiding some mistakes of the past.
CHAPTER OUTLINE
MH.1 EARLY MANAGEMENT

Many fascinating examples from history illustrate how management has been
practiced for thousands of years.
A. Organizations and managers have existed for thousands of years. The
Egyptian pyramids and the Great Wall of China were projects of
tremendous scope and magnitude, requiring the efforts of tens of
thousands of people. How was it possible for these projects to be
completed successfully? The answer is management. Regardless of the
titles given to managers throughout history, someone has always had to
plan what needs to be accomplished, organize people and materials, lead
and direct workers, and impose controls to ensure that goals were
attained as planned.
B. Adam Smith, author of the classical economics doctrine The Wealth of
Nations, argued brilliantly for the economic advantages that he believed
division of labor or job specialization (the breakdown of jobs into
narrow, repetitive tasks) would bring to organizations and society.
C. The Industrial Revolution is possibly the most important pre-twentieth-
century influence on management. The introduction of machine powers
combined with the division of labor made large, efficient factories
possible. Planning, organizing, leading, and controlling became
necessary activities.
D. Exhibit MH-1 illustrates the development of management theories.
MH.2 CLASSICAL APPROACH

A. Scientific management is defined as the use of the scientific method to
determine the “one best way” for a job to be done.
1. Frederick W. Taylor is known as the “father” of scientific
management. Taylor’s work at the Midvale and Bethlehem Steel
companies stimulated his interest in improving efficiency.
a. Taylor sought to create a mental revolution among both
workers and managers by defining clear guidelines for
improving production efficiency. He defined four principles
of management (Exhibit MH-2).
b. His pig iron experiment is probably the most widely cited
example of his scientific management efforts.
c. Using his principles of scientific management, Taylor was
able to define the “one best way” for doing each job.
d. Frederick W. Taylor achieved consistent improvements in
productivity in the range of 200 percent. He affirmed the
role of managers to plan and control and the role of
workers to perform as they were instructed.
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2. Frank and Lillian Gilbreth were inspired by Taylor’s work and
proceeded to study and develop their own methods of scientific
management.
a. Frank Gilbreth is probably best known for his experiments
in reducing the number of motions in bricklaying.
b. The Gilbreths were among the first to use motion picture
films to study hand-and-body motions in order to eliminate
wasteful motions.
c. They also devised a classification scheme to label 17 basic
hand motions called therbligs (Gilbreth spelled backward,
with the th transposed).
3. How Today’s Managers Use Scientific Management.
Guidelines devised by Taylor and others to improve production
efficiency are still used in today’s organizations. However, current
management practice is not restricted to scientific management
practices alone. Elements of scientific management still used
include:
a. Using time and motion studies
b. Hiring best qualified workers
c. Designing incentive systems based on output
B. General Administrative Theorists. This group of writers, who focused

on the entire organization, developed more general theories of what
managers do and what constitutes good management practice.
1. Henri Fayol, who was a contemporary of Frederick W. Taylor, was
the managing director of a large French coal-mining firm.
a. Fayol focused on activities common to all managers.
b. He described the practice of management as distinct from
other typical business functions.
c. He stated 14 principles of management (fundamental or
universal truths of management that can be taught in
schools; see Exhibit MH-3).
2. Max Weber (pronounced VAY-ber) was a German sociologist who
wrote in the early twentieth century.
a. Weber developed a theory of authority structures and
described organizational activity based on authority
relations.
b. He described the ideal form of organization as a
bureaucracy marked by a division of labor, a clearly
defined hierarchy, detailed rules and regulations, and
impersonal relationships (see Exhibit MH-4).
3. How Today’s Managers Use General Administrative Theories.
Some current management concepts and theories can be traced
to the work of the general administrative theorists.
a. The functional view of a manager’s job relates to Henri
Fayol’s concept of management.
b. Weber’s bureaucratic characteristics are evident in many
of today’s large organizations—even in highly flexible
organizations that employ talented professionals. Some
bureaucratic mechanisms are necessary in highly
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innovative organizations to ensure that resources are used
efficiently and effectively.
MH.3 BEHAVIORAL APPROACH

The field of study concerned with the actions (behaviors) of people at work is
organizational behavior. Organizational behavior (OB) research has
contributed much of what we know about human resources management and
contemporary views of motivation, leadership, trust, teamwork, and conflict
management.
A. Early Advocates of Organizational Behavior.
Four individuals—Robert Owen, Hugo Munsterberg, Mary Parker Follett,
and Chester Barnard—were early advocates of the OB approach. Their
ideas served as the foundation for employee selection procedures,
motivation programs, work teams, and organization environment
management techniques. (See Exhibit MH-5 for a summary of the most
important ideas of these early advocates.)
B. The Hawthorne Studies were the most important contribution to the
development of organizational behavior.
1. This series of experiments conducted from 1924 to the early
1930s at the Western Electric Company Works in Cicero, Illinois,
were initially devised as a scientific management experiment to
assess the impact of changes in various physical environment
variables on employee productivity.
2. After Harvard professor Elton Mayo and his associates joined the
study as consultants, other experiments were included to look at
redesigning jobs, make changes in workday and workweek length,
introduce rest periods, and introduce individual versus group wage
plans.
3. The researchers concluded that social norms or group standards
were key determinants of individual work behavior.
4. Although not without criticism (concerning procedures, analyses of
findings, and the conclusions), the Hawthorne Studies stimulated
interest in human behavior in organizational settings.
C. How Today’s Managers Use the Behavioral Approach.
1. The behavioral approach assists managers in designing jobs that
motivate workers, in working with employee teams, and in
facilitating the flow of communication within organizations.
2. The behavioral approach provides the foundation for current
theories of motivation, leadership, and group behavior and
development.
MH.4 QUANTITATIVE APPROACH

The quantitative approach to management, sometimes known as management
science, uses quantitative techniques to improve decision making. This approach
includes applications of statistics, optimization models, information models, and
computer simulations.
A. The quantitative approach originated during World War II as mathematical
and statistical solutions to military problems and was developed for
wartime use.
1. As often happens after wartime, methods that were developed
during World War II to conduct military affairs were applied to
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private industry following the war. For instance, a group of military
officers—the Whiz Kids—used quantitative methods to improve
decision making at Ford Motor Company in the mid-1940s.
2. In the 1950s, the ideas and techniques of W. Edwards Deming
and Joseph M. Juran were embraced by Japanese organizations.
Later Western managers also incorporated their ideas.
3. The management philosophy devoted to continual improvement
and responding to customer needs and expectations is total
quality management or TQM. (See Exhibit MH-6.)
4. TQM represents a counterpoint to earlier management theorists
who believed that low costs were the only road to increased
productivity.
5. The objective of quality management is to create an organization
committed to continuous improvement in work processes.
B. How Today’s Managers Use the Quantitative Approach.
1. The quantitative approach has contributed most directly to
managerial decision making, particularly in planning and
controlling.
2. The availability of sophisticated computer software programs has
made the use of quantitative techniques more feasible for
managers.
MH.5 CONTEMPORARY APPROACHES

A. Systems Theory. Exhibit MH-7 identifies major events that affected
American business. Many of these events pre-date systems theory but all
had a major impact on efficiency, operations, and management. During
the 1960s, researchers began to analyze organizations from a systems
perspective based on the physical sciences. A system is a set of
interrelated and interdependent parts arranged in a manner that produces
a unified whole. The two basic types of systems are closed and open. A
closed system is not influenced by and does not interact with its
environment. An open system interacts with its environment (see Exhibit
MH-8).
1. Using the systems approach, managers envision an organization
as a body with many interdependent parts, each of which is
important to the well being of the organization as a whole.
2. Managers coordinate the work activities of the various parts of the
organization, realizing that decisions and actions taken in one
organizational area will affect other areas.
3. The systems approach recognizes that organizations are not self-
contained; they rely on and are affected by factors in their external
environment.
B. The Contingency Approach. The contingency approach recognizes that
different organizations require different ways of managing.
1. The contingency approach to management is a view that the
organization recognizes and responds to situational variables as
they arise.
2. Some popular contingency variables are shown in Exhibit MH-9.
Chapter 4
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Managing in a Global Environment
Every organization is affected in some way by the global environment. In this chapter,
you will learn what managers need to know about managing globally, including regional
trading alliances, how organizations go international, and cross-cultural differences.
Focus on the following learning objectives as you read and study this chapter.
LEARNING OBJECTIVES
1. Define globalization, nationalism, and parochialism; and contrast ethnocentric,

polycentric, and geocentric attitudes.
2. Describe the history of globalization.
3. Summarize the case for and against globalization.
4. Explain the different types of international organizations.
5. Describe the structures and techniques organizations use as they go international.
6. Explain the relevance of the political/legal, economic, and cultural environments to
global business.
CHAPTER OUTLINE
WHO OWNS WHAT?

Students may be astonished to discover the country of ownership origin for many
products they use. In taking this quiz and discussing their scores, students may
also be surprised to learn that a significant number of well-known companies
derive more than half of their revenues from global operations.
4.1 CLARIFYING TERMINOLOGY

We need to begin our discussion of the global environment by defining a few
terms.
4.A. Globalization refers to a process by which organizations develop Formatted: Left, Numbered + Level: 1 + Numbering Style:
influence or operations across international borders. A, B, C, … + Start at: 1 + Alignment: Left + Aligned at: 1.27
cm + Indent at: 2.54 cm, Font Alignment: Auto
A.B. Nationalism refers to patriotic ideals and policies that glorify a country’s
values.
B.C. Parochialism is viewing the world solely through your own perspectives,
leading to an inability to recognize differences between people.
Parochialism is an obstacle for many U.S. managers and stems from
monolingualism.
Managers might have one of three perspectives or attitudes toward international
business:
1. An ethnocentric attitude is the parochialistic belief that the best
work approaches and practices are those of the home country (the
country in which the company’s headquarters are located).
2. A polycentric attitude is the view that the managers in the host
country (the foreign country where the organization is doing
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business) know the best work approaches and practices for
running their business.
3. A geocentric attitude is a world-oriented view that focuses on
using the best approaches and people from around the globe.
4. To be a successful global manager, an individual needs to be
sensitive to differences in national customs and practices.
4.2 A BRIEF HISTORY OF GLOBALIZATION

Globalization moves in and out of favor. In recent history, globalization began to
grow following World War II. The Bretton Woods conference in 1944 established
a set of rules for commercial and financial relations between the US, Canada,
Western Europe, Australia, and Japan. Since that time a number of agreements
and events transpired including:
C.• The International Monetary Fund (IMF) is an organization of 189 countries Formatted: Bulleted + Level: 1 + Aligned at: 1.27 cm +
that promotes international monetary cooperation and provides member Indent at: 1.9 cm, Font Alignment: Auto
countries with policy advice, temporary loans, and technical assistance to

establish and maintain financial stability and to strengthen economies.
D.• The World Bank is an international financial institution that provides vital
financial and technical assistance to developing countries around the world.
E.• General Agreement on Tariffs and Trade (GATT) (1948) Gatt is an
agreement between countries to reduce or eliminate tariffs.
• The Organization for Economic Cooperation and Development was
formed in 1961. The 37 member nations from developed countries work to
stimulate economic growth and world trade through coordinating domestic
and international economic policies.
• The Association of Southeast Asian Nations (ASEAN) is a trading alliance
of Southeast 10 Asian nations with a common goal of accelerating growth.
• World Economic Forum (1974) This organization is a Swiss non-profit
foundation that brings world leaders together to discuss issues and find
solutions to economic and social issues that are common problems.
• Margaret Thatcher Elected PM in Great Britain (1979) Margaret Thatcher
was the Prime Minister of the UK from 1878 to 1990 and a big proponent of
free trade.
• Ronald Reagan Elected US President (1980) President Reagan introduced
numerous policies to deregulate industry and promoted global trade. His
policies are credited with the collapse of the Soviet Union and the
reunification of Germany.
F.• The Fall of the Soviet Union (1991) The Soviet Union officially dissolved in Formatted: Bulleted + Level: 1 + Aligned at: 1.27 cm +
December 1991 and is now comprised of nine different nations that are now Indent at: 1.9 cm, Font Alignment: Auto
known as the Commonwealth of Independent States. These include Russia,

Armenia, Tajikistan, and others.
• The European Union (EU) is a union of 28 European nations created as a
unified economic and trade entity (see Exhibit 4-1). The primary motivation
for the creation of the EU in February 1992 was to allow member nations to
reassert their position against the industrial strength of the United States and
Japan.
• The North American Free Trade Agreement (NAFTA) (1994) is an
agreement among the Mexican, Canadian, and U.S. governments to work
toward eliminating trade barriers.
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• The World Trade Organization (WTO) Formed in 1995 and evolving from
GATT, the WTO is the only global organization dealing with the rules of trade
among nations. Membership consists of 164 countries.
• Shanghai Cooperation Organization (2003) This eight-nation cooperative
represents half of the world’s population and members have pledged to
cooperate on free trade. Members include China, Russia, India, and
Pakistan.
• “We are the 99%” Protest Movement (2011) A protest movement that
attacked income and wealth inequality in the US. Their belief was that the top
1% of the US population controlled too much power and wealth.
• Made in China 2025 (2015) A Chinese government initiative to make China
the dominant global player in high-tech manufacturing by using subsidies and
other government roles to achieve this goal.
• British Vote to Exit the EU (2016) The June 2016 UK vote to leave the
European Union. Brexit is viewed as a return to nationalism.
• Donald Trump Elected President (2016) President Trump’s goals include
reducing regulation, renegotiating US trade deals, and fostering “America
First” policies.
• Trans-Pacific Partnership (2016) The TPP was a trade agreement involving
the US and other Pacific Rim nations including Japan, Australia, Peru, and
Vietnam. The US withdrew support after Trump’s election, so it was not fully
implemented.
• NAFTA 2.0 or USMCA (2018) The United States-Mexico-Canada
Agreement, or USMCA, was a result of President Trump’s renegotiation of
NAFTA. It established new labor and environmental regulations for Mexico,
updated intellectual property and data trade protections, and gave the US
increased access to Canada’s dairy markets.
Overall, the more recent developments highlight the growing movement away
from globalization. Exhibit 4-2 shows the global pendulum swing that is currently
underway.
4.3 THE CASE FOR AND AGAINST GLOBALIZATION

Most economists are proponents of free trade since it is believed that free trade
benefits all countries. The following sections highlight the arguments for and
against free globalization and the managerial implications.
A. The Win-Win Argument.
The “every country wins” argument is largely based on the law of
comparative advantage that maintains countries should focus production
on the goods or services they can produce at the lowest opportunity cost
and then engage in trade to obtain other nations’ output. This was the
dominant view from the mid-1940s to about 2015.
B. The Downside of Globalization.
The middle class in both North America and Europe, suffering from wage
stagnation, began to question globalization. They charged global firms
with shipping production to cheaper labor countries in Asia and keeping
wages suppressed in the developed nations. Considerable evidence
supports the position that some sectors, groups, and countries are
harmed by free markets and open borders. The “America First” and
“Brexit” movements were spawned by the harmful effects of globalization.
C. Globalization Today.
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Opposition to globalization and the movement toward nationalism and
protectionism is louder today than it has been in 80 years. However,
globalization will not disappear due to these factors:
1. Global firms employ tens of millions of workers worldwide and
have billions invested in infrastructure and the supply chains that
support globalization. There is little political will to undo this level
of investment.
7.2. The evidence is overwhelming that free trade is not the cause of Formatted: Left, Indent: Left: 2.54 cm, Hanging: 1.27 cm,
unemployment. Research shows that workers have been Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start
at: 1 + Alignment: Left + Aligned at: 0.63 cm + Indent at:
displaced due to technology. Automation was the cause of over 1.27 cm, Font Alignment: Auto
80% of the manufacturing job loss in the US between 2000 and
2010.
2.3. Most people still believe the benefits of globalization outweigh the
costs. Consumers like lower prices and investors like higher
profits. And, high-skilled workers in developed nations end up with
higher wages, as do workers in developing nations, all due to
globalization.
D. What Does This Mean for Managers?
Since globalization is here to stay managers and those that want to be
managers must develop the skills needed for global management.
Managers need to be flexible and willing to work with people from other
cultures. Gaining international experience is very beneficial and speaking
another language, such as Spanish or Mandarin, would open doors for
your entire career. Managers that have entrepreneurial interests need to
gain an understanding of global markets and the various ways to enter
those markets.
4.4 DIFFERENT TYPES OF INTERNATIONAL ORGANIZATIONS

A. Different Types of International Organizations.
Business has been conducted internationally for many years (e.g.,
DuPont conducted business in China in 1863, H. J. Heinz has been
manufacturing their brands in the United Kingdom since 1905, and Ford
established its first overseas sales branch in France in 1908).
Multinational corporations did not become popular until the mid-1960s.
Global organizations can be classified in the following categories:
1. The term multinational corporation (MNC) is a broad term that
refers to any and all types of international companies that
maintain operations in multiple countries.
2. One type of MNC is a multidomestic corporation, which
decentralizes management and other decisions to the local
country.
3. Another type of MNC is a global company, which centralizes its
management and other decisions in the home country.
4. A transnational corporation (TNC), sometimes called a
borderless organization, is a type of international company in
which artificial geographical barriers are eliminated.
Your students should keep in mind that neither the national origin of a
company nor the national origin of its employees is any longer a good
measure of where that company conducts business.
4.5 HOW ORGANIZATIONS GO INTERNATIONAL
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Organizations often use different approaches when they go international.
There are essentially three stages, illustrated in Exhibit 4-3, that an
organization typically progresses through.
1. Companies that go international may begin by using global
sourcing (also called global outsourcing). In this stage of going
international, companies purchase materials or labor from around
the world, wherever the materials or labor are least expensive.
Beyond the stage of global sourcing, each successive stage to
become more international involves more investment and risk.
2. In the next stage, companies may go international by exporting
(making products domestically and selling them abroad) or
importing (acquiring products made abroad and selling the
products domestically). Both exporting and importing require
minimal investment and risk.
3. In the early stages of going international, managers may also use
licensing (giving another organization the right to make or sell its
products using its technology or product specifications) or
franchising (giving another organization the right to use its name
and operating methods).
4. After an organization has done international business for a period
of time, managers may decide to make more of a direct
investment in international markets by forming a strategic
alliance, which is a partnership between an organization and a
foreign company partner(s). In a strategic alliance, partners share
resources and knowledge in developing new products or building
production facilities.
5. A joint venture (a specific type of strategic alliance) may be
undertaken to allow partners to form a separate, independent
organization for some business purpose.
6. Managers may decide to make a direct investment in a foreign
country by establishing a foreign subsidiary, in which a company
sets up a separate and independent production facility or office.
Establishing a foreign subsidiary involves the greatest
commitment of resources and the greatest risk of all of the stages
in going international.
4.6 MANAGING IN A GLOBAL ENVIRONMENT

Managing in a global environment entails challenges.
A. The Political/Legal Environment.
The legal-political environment does not have to be unstable or
revolutionary to be a challenge to managers. The fact that a country’s
political system differs from that of the United States is important to
recognize.
B. The Economic Environment.
The economic environment also presents many challenges to foreign-
based managers, including fluctuations in currency exchange rates,
inflation, and diverse tax policies.
1. In a free market economy, resources are primarily owned by the
private sector.
2. In a planned economy, all economic decisions are planned by a
central government.
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C. The Cultural Environment.
Countries have different cultures, just as organizations do. National
culture is the values and attitudes shared by individuals from a specific
country that shape their behavior and their beliefs about what is
important. See Exhibit 4-4 for a synopsis of American national culture.
An approach developed by Geert Hofstede serves as a valuable
framework for understanding differences between national cultures.
Exhibit 4-5 illustrates Hofstede’s five dimensions of national culture.
1. Hofstede studied individualism versus collectivism.
Individualism is the degree to which people in a country prefer to
act as individuals rather than as members of groups. Collectivism
is characterized by a social framework in which people prefer to
act as members of groups and expect others in groups of which
they are a part (such as a family or an organization) to look after
them and to protect them.
2. Another cultural dimension is power distance, which measures
the extent to which a society accepts the fact that power in
institutions and organizations is distributed unequally.
3. Uncertainty avoidance describes the degree to which people
tolerate risk and prefer structure over unstructured situations.
4. Hofstede identified the dimension of achievement versus
nurturing. Achievement is the degree to which values such as
assertiveness, the acquisition of money and material goods, and
competition prevail. Nurturing emphasizes sensitivity in
relationships and concern for the welfare of others.
5. Long-term and short-term orientation. People in countries
having long-term orientation cultures look to the future and value
thrift and persistence. Short-term orientation values the past and
present and emphasizes a respect for tradition and fulfilling social
obligations.
The Global Leadership and Organizational Behavior Effectiveness
(GLOBE) research program is an assessment that updates Hofstede’s
studies.
a. GLOBE began in 1993 and identified nine dimensions on which
national cultures differ: Assertiveness, future orientation, gender
differentiation, uncertainty avoidance, power distance,
individualism/collectivism, in-group collectivism, performance
orientation, and humane orientation.
b. GLOBE confirms Hofstede’s dimensions are still valid. Managers
need to understand these dimensions and use them to understand
the cultures they deal with when working abroad or managing
people from other cultures.
Chapter 6
Managing Social Responsibility and Ethics
14
How important is it for organizations and managers to be socially responsible and
ethical? In this chapter, we’re going to look at what it means to be socially responsible
and ethical and what role managers play in both. Focus on the following learning
objectives as you read and study this chapter.
LEARNING OBJECTIVES
1. Discuss what it means to be socially responsible and what factors influence that
decision.
2. Explain green management and how organizations can go green.
3. Discuss the factors that lead to ethical and unethical behavior.
4. Describe management’s role in encouraging ethical behavior.
5. Discuss current social responsibility and ethics issues.
CHAPTER OUTLINE
INTRODUCTION
This chapter discusses issues involving social responsibility and managerial
ethics and their effect on managerial decision making. Both social responsibility
and ethics are responses to a changing environment and are influenced by
organizational culture.
6.1 WHAT IS SOCIAL RESPONSIBILITY?

Managers regularly face decisions that have dimensions of social responsibility.
Examples include employee relations, philanthropy, pricing, resource
conservation, product quality and safety, and doing business in countries that
violate human rights.
A. Two Opposing Views. There are two opposing views of social
responsibility.
1. The classical view is the view that management’s only social
responsibility is to maximize profits. Economist and Nobel laureate
Milton Friedman is the most outspoken advocate of this view.
Friedman argues that managers’ primary responsibility is to
operate the business in the best interests of the stockholders—the
true owners of the organization.
2. The socioeconomic view is the view that management’s social
responsibility goes beyond the making of profits, to include
protecting and improving society’s welfare. This view purports that
corporations are not independent entities responsible only to
stockholders.
B. From Obligations to Responsiveness to Responsibility. Social
obligation occurs when a firm engages in social actions because of its
obligation to meet certain economic and legal responsibilities. Social
responsiveness is seen when a firm engages in social actions in
response to some popular social need. Social responsibility is a
business’s intention, beyond its legal and economic obligations, to do the
right things and act in ways that are good for society. Exhibit 6-2 shows
the differences between social responsibility and social responsiveness.
15
C. Social Responsibility and Economic Performance. How do socially
responsible activities affect a company’s economic performance? Exhibit
6-1 details the arguments for and against social responsibility. A majority
of studies have found a positive relationship between social involvement
and economic performance, but some caution in this regard is necessary
because of methodological questions associated with the measurement
of social responsibility and economic performance. A recent meta-
analysis of 53 studies encompassing 16,000 firms found overwhelming
support for the argument that social responsibility and financial
performance are linked. There is little evidence that social responsibility
can hurt performance.
6.2 GREEN MANAGEMENT AND SUSTAINABILITY

Many managers are considering the impact of their organization on the natural
environment. Nike Inc. has launched an app called Making, which allows its
design engineers to see the environmental effects of their material choices on
water, energy and waste, and chemistry. Fairmont Hotel’s use of rooftop
beehives to help dwindling honeybee populations is also generating a lot of buzz.
These companies are practicing green management, which considers the
company’s impact on the natural environment.
A. How Organizations Go Green. Approaches include the legal (or light
green) approach, the market approach, the stakeholder approach, and
the activist approach. See Exhibit 6-3 for a continuum of green
approaches.
B. Evaluating Green Management Actions. As
organizations become “greener,” they are reporting their commitment to
being green in several ways, including fulfilling of guidelines issued by the
Global Reporting Initiative (GRI); meeting ISO 14000 standards; and
appearing on the list of the 100 Most Sustainable Corporations in the
World.
6.3 MANAGERS AND ETHICAL BEHAVIOR

The term ethics refers to principles, values, and beliefs that define what is right
and wrong behavior. This section examines the ethical dimensions of managerial
decision making. Exhibit 6-4 contains some tests a manager can use to help
make a decision when facing an ethical dilemma. And Exhibit 6-5 shows some
of the factors that determine ethical and unethical behavior.
A. Factors That Determine Ethical and Unethical Behavior.
1. Stage of Moral Development. Research confirms three levels of
moral development (see Exhibit 6-6). Each level has two stages.
a. The first level is called preconventional. At this level, the
individual’s choice between right and wrong is based on
the personal consequences involved.
b. At the second stage, which is labeled conventional, moral
values reside in maintaining expected standards and living
up to the expectations of others.
c. At the third level—the principled level—the individual
makes a clear effort to define moral principles apart from
the authority of the groups to which the person belongs.
d. Research on the stages of moral development indicates
that people proceed sequentially through the six stages of
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these three levels, with no guarantee of continued
development at any stage. The majority of adults are at
Stage 4. The higher the stage an employee reaches, the
more likely that he or she will behave ethically.
2. Individual Characteristics. A person joins an organization with a
relatively entrenched set of values.
a. Values are basic convictions about what is right and
wrong. Values are broad and cover a wide variety of
issues.
b. Ego strength is a personality measure of the strength of a
person’s convictions. Individuals who score high on ego
strength are likely to resist impulses to act unethically and
will likely do what they themselves think is right.
c. Locus of control is a personality attribute that measures
the degree to which people believe they control their own
fate. Individuals with an internal locus of control think that
they control their destiny, while persons with an external
locus of control are less likely to take personal
responsibility for the consequences of their behavior and
are more likely to rely on external forces. Externals believe
that what happens to them is due to luck or chance.
3. Structural Variables. A third factor influencing managerial ethics is
structural variables. The existence of structural variables such as
formal rules and regulations, job descriptions, written codes of
ethics, performance appraisal systems, and reward systems can
strongly influence ethical behavior.
4. Organization’s Culture. The content and strength of an
organization’s culture influences ethical behavior.
a. An organizational culture most likely to encourage high
ethical standards is one that is high in risk tolerance,
control, and conflict tolerance.
b. A strong culture exerts more influence on managers than a
weak one does.
c. However, in organizations with weak cultures, work groups
and departmental standards strongly influence ethical
behavior.
5. Issue Intensity. Finally, issue intensity influences ethical behavior.
Not all issues are strongly held by everyone. Exhibit 6-7 shows
six characteristics that determine issue intensity. When an ethical
issue is important, employees are more likely to behave ethically.
B. Ethics in an International Context. Are ethical standards universal?

Hardly! Social and cultural differences between countries are
environmental factors that play an influential role in determining ethical
and unethical behavior.
The Foreign Corrupt Practices Act (FCPA) makes some actions, such as
bribing foreign officials, illegal. However, many issues are not black and
white. In 2017, the US Department of Justice brought 13 FCPA
enforcement actions and collected $1.13 billion in fines.
17
Exhibit 6-8 lists the ten principles of The Global Compact. At the 1999
World Economic Forum, the United Nations Secretary-General
challenged world business leaders to “embrace and enact” this particular
document that gives guidelines for doing business globally in the areas of
human rights, labor, and anti-corruption.
6.4 ENCOURAGING ETHICAL BEHAVIOR

Organizations can take a number of actions to cultivate ethical behavior among
members. In this section of the text, eight suggestions are explored:
A. Employee Selection. The selection process for bringing new employees
into organizations should be viewed as an opportunity to learn about an
individual’s level of moral development, personal values, ego strength,
and locus of control.
B. Codes of Ethics. A code of ethics is a formal statement of an
organization’s primary values and the ethical rules it expects employees
to follow. In addition, decision rules can be developed to guide managers
in handling ethical dilemmas in decision making.
C. Leadership at the Top. Top management’s leadership and commitment
to ethical behavior is extremely important since the cultural tone for an
organization is established by its top managers.
D. Job Goals and Performance Appraisal. Employees’ job goals should
be tangible and realistic because clear and realistic goals reduce
ambiguity and motivate rather than punish. Job goals are usually a key
issue in the performance appraisal process. If an organization wants
employees to uphold high ethical standards, this dimension must be
included in the appraisal process. Performance appraisals should include
this dimension, rather than focusing solely on economic outcomes.
E. Ethics Training. Ethics training should be used to help teach ethical
problem solving and to present simulations of ethical situations that could
arise. At the least, ethics training should increase awareness of ethical
issues.
F. Independent Social Audits. Independent social audits evaluate
decisions and management practices in terms of the organization’s code
of ethics and can be used to deter unethical behavior.
6.5 CURRENT ISSUES IN SOCIAL RESPONSIBILITY AND ETHICS

This section discusses four current issues in management; protecting whistle-
blowers, promoting social entrepreneurship, social media and social
responsibility, and corporate philanthropy.
A. Protecting Whistle-Blowers. Whistle-blowing is defined as an act of an
individual within an organization who discloses information to report and
correct corruption.
1. Management commitment. Above all, managers must set an
ethical example by demonstrating a commitment to addressing
employee concerns about potential violations of the law.
2. Compliance concern response system. Managers need to
establish procedures to enable employees to confidentially report
concerns and ensure a fair and effective resolution.
3. Anti-retaliation response system. Firms should designate clear
reporting channels for concerns and guarantee timely responses.
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4. Anti-retaliation training. All employees, including management,
need training to understand the law and their rights and
responsibilities with regard to whistle-blowers.
5. Program oversight. Firms need to develop and implement rigorous
monitoring programs and conduct independent audits to ensure
compliance.
B. Promoting Social Entrepreneurship. A social
entrepreneur is an individual or organization who seeks out opportunities
to improve society by using practical, innovative, and sustainable
approaches.
C. Social Media and Social Responsibility. Social
media has been shown to enhance a company’s reputation when
evidence of social initiatives are posted online. It has also been a vehicle
to bring attention to corporate wrongdoing. Management can shape the
organization’s image using social media.
D. Corporate Philanthropy. Giving to charitable
foundations and causes is not limited to individuals. Organizations,
through their ability to coordinate large projects and their access to
capital, have made great strides in improving community and social
efforts.
Chapter 8
Foundations of Planning
In this chapter, we begin our study of the first of the management functions: planning.
Planning is important because it establishes what an organization is doing. We’ll look at
how managers set goals as well as how they establish plans. Focus on the following
learning objectives as you read and study this chapter.
LEARNING OBJECTIVES
1. Define the nature and purposes of planning.

2. Classify the types of plans organizations might use.
3. Identify the key contingency factors in planning.
4. Compare and contrast approaches to objective setting.
5. Discuss contemporary issues in planning.
CHAPTER OUTLINE
INTRODUCTION
Planning is one of the four functions of management. Fundamental information
about managerial planning is presented in this chapter; the text discusses the
nature and purposes of planning, strategies for effective planning, and
contemporary planning issues.
19
8.1 THE WHAT AND WHY OF PLANNING
A. What is Planning? Planning involves defining the organization’s goals,
establishing an overall strategy for achieving these goals, and developing
plans for organizational work activities. The term planning as used in this
chapter refers to formal planning.
B. Why Do Managers Plan? Planning serves a number of significant
purposes.
1. Planning gives direction to managers and nonmanagers of an
organization.
2. Planning reduces uncertainty.
3. Planning minimizes waste and redundancy.
4. Planning establishes goals or standards used
in controlling.
C. Planning and Performance. Although organizations that use formal
planning do not always outperform those that do not plan, most studies
show positive relationships between planning and performance.
1. Effective planning and implementation play a
greater part in high performance than does the amount of planning
done.
2. Studies have shown that when formal
planning has not led to higher performance, the external
environment is often the reason.
8.2 TYPES OF PLANS

Planning is often called the primary management function because it establishes
the basis for all other functions. Planning involves two important elements: goals
and plans. Plans are documents that outline how goals are going to be met. They
can be described by their breadth, time frame, specificity, and frequency of use
(see Exhibit 8-1).
A. Strategic Versus Operational Plans.
Breadth: Strategic versus operational plans. Strategic plans (long-term
plans) are plans that apply to the entire organization, establish the
organization’s overall goals, and seek to position the organization in
terms of its environment. Operational plans (short-term plans) are plans
that specify the details of how the overall goals are to be achieved.
B. Short-Term Versus Long-Term Plans.
Time frame: Short-term versus long-term plans. Short-term plans are
plans that cover one year or less. Intermediate-term plans cover from
one to five years and long-term plans are plans with a time frame
beyond five years.
C. Specific Versus Directional Plans.
Specificity: Specific versus directional plans. Specific plans are plans
that are clearly defined and leave no room for interpretation. Directional
plans are flexible plans that set out general guidelines. Exhibit 8-2
shows an example of specific versus directional plans.
D. Single-Use Versus Standing Plans.
Frequency of use: Single-use versus standing plans. A single-use plan
is a one-time plan specifically designed to meet the needs of a unique
situation. Standing plans are ongoing plans that provide guidance for
activities performed repeatedly.
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8.3 CONTINGENCY FACTORS IN PLANNING
Different situations call for different types of plans. Therefore, in this section we
identify three contingency factors in planning.
A. Level in the Organization.
Exhibit 8-3 illustrates the relationship between managerial level in an
organization and the type of planning that is conducted. As managers rise
up through the ranks, their planning role shifts to strategic planning.
B. Degree of Environmental Uncertainty.
The greater the degree of environmental uncertainty, the more plans
should focus on directional planning and a short-term time horizon.
C. Length of Future Commitments.
The final contingency factor is the commitment concept. The more that
current plans affect future commitments, the longer the time frame for
which management should plan.
8.4 OBJECTIVES: THE FOUNDATION OF PLANNING

Objectives are goals. We use the term interchangeably. They refer to desired
outcomes for individuals, groups, or the entire organization.
A. Stated Versus Real Objectives.
Stated objectives are official statements of what the organization says
and what it wants the public to believe. Real objectives are what an
organization actually pursues, as defined by the actions of its members.
Stated and real objectives can differ, so managers need to keep that in
mind.
B. Traditional Objective-Setting.
Traditional objective-setting is an approach to setting objectives in
which objectives are set at the top level of the organization and then
broken into subgoals for each level of the organization.
1. Traditional goal-setting assumes that top managers know
what is best because of their ability to see the “big picture.”
Employees are to work to meet the goals for their particular area
of responsibility.
2. This traditional approach requires that goals must be made more
specific as they flow down to lower levels in the organization. In
striving to achieve specificity, however, objectives sometimes lose
clarity and unity with goals set at a higher level in the organization
(see Exhibit 8-4).
3. When the hierarchy of organizational goals is clearly defined, it
forms an integrated means-end chain—an integrated network of
goals in which the accomplishment of goals at one level serves as
the means for achieving the goals, or ends, at the next level.
C. Management by objectives (MBO). MBO is a process of setting
mutually agreed-upon goals and using those goals to evaluate employee
performance. Exhibit 8-5 lists the steps in a typical MBO program.
1. Studies of actual MBO programs confirm that MBO can increase
employee performance and organizational productivity. However,
top management commitment and involvement are important
contributions to the success of an MBO program.
WORKPLACE CONFIDENTIAL: When you Face a Lack of Clear Directions

The workplace of today exhibits rapid change. While some people thrive on
21
ambiguity, others find it frustrating and stressful. So, how do you handle it when your
boss gives you ambiguous guidelines or a lack of clear directions? Here are three
suggestions to help you handle those situations:
1. Suppress your urge to control things. Learn to accept the fact that you can’t
control everything related to your job.
2. Learn to act without the complete picture. In the real world we don’t always know
everything but have to act anyway.
3. You can make decisions based on the information you have, even if the
information is not complete. Sometimes a wrong decision is better than none.
Don’t be afraid to move ahead and make a decision.
8.5 CONTEMPORARY ISSUES IN PLANNING

The concluding section of Chapter 8 examines how managers can plan
effectively in dynamic environments as well as addressing the concept of
environmental scanning.
A. Environmental Scanning
1. A manager’s analysis of the external environment may be
improved by environmental scanning, which involves screening
information to detect emerging trends. Competitive intelligence
is the process of gathering information about competitors that
allows managers to anticipate competitors’ actions.
2. Competitive intelligence is not corporate espionage – much
competitor-related information is publicly available. Purchasing
access to databases as well as searches on the Internet can
provide key information.
3. Global information can be garnered through subscriptions to news
services. Exhibit 8-6 lists various environmental elements and
examples of where you might locate information about these
elements.
4. Social media is becoming an important source of competitive
intelligence. LinkedIn, Facebook, and Twitter provide a wealth of
information about consumer opinions and patterns.
B. Virtual Reality.
1. Virtual reality (VR) refers to a three-dimensional, interactive,
computer-generated experience that takes place in a simulated
environment.
2. VR tools can help with facility design, product design, and a host
of other planning issues that require modelling. VR has also been
utilized in financial planning and other collaborative projects.
Chapter 2
Making Decisions
In this chapter, students will explore the importance of decision making to managers and
learn how to make effective decisions.
LEARNING OBJECTIVES
22
1. Describe the eight steps in the decision-making process.
2. Explain the five approaches managers can use when making decisions.
3. Classify decisions and decision-making styles.
4. Describe how biases affect decision making.
5. Identify cutting-edge approaches for improving decision making.
CHAPTER OUTLINE
2.1 THE DECISION-MAKING PROCESS

A decision is a choice made from two or more alternatives. The decision-
making process is a set of eight steps that include identifying a problem,
selecting an alternative, and evaluating the decision’s effectiveness. (See
Exhibit 2-1 for an illustration of the decision-making process.)
A. Step 1: Identify a Problem. A problem is a discrepancy between an
existing and a desired condition. In order to identify a problem, you, as a
manager, should recognize and understand the three characteristics of
problems:
1. You must be aware of the problem. Be sure to identify the actual
problem rather than a symptom of the problem.
2. You must be under pressure to act. A true problem puts pressure
on the manager to take action; a problem without pressure to act
is a problem that can be postponed.
3. You must have the authority or resources to act. When managers
recognize a problem and are under pressure to take action but do
not have the necessary resources, they usually feel that
unrealistic demands are being put upon them.
B. Step 2: Identify Decision Criteria. Decision criteria are criteria that
define what is relevant in a decision.
C. Step 3: Allocate Weights to the Criteria. The criteria identified in Step 2
of the decision-making process do not have equal importance, so the
decision maker must assign a weight to each of the items in order to give
each item accurate priority in the decision. Exhibit 2-2 lists the criteria
and weights for Amanda’s purchase decision for new computers.
D. Step 4: Develop Alternatives. The decision maker must now identify
viable alternatives that could resolve the problem.
E. Step 5: Analyze Alternatives. Each of the alternatives must now be
critically analyzed by evaluating it against the criteria established in Steps
2 and 3. Exhibit 2-3 shows the values that Amanda assigned to each of
her alternatives for a new computer. Exhibit 2-4 reflects the weighting for
each alternative, as illustrated in Exhibits 2-2 and 2-3.
F. Step 6: Select an Alternative. This step to select the best alternative
from among those identified and assessed is critical. If criteria weights
have been used, the decision maker simply selects the alternative that
received the highest score in Step 5.
G. Step 7: Implement the Alternative. The selected alternative must be
implemented by effectively communicating the decision to the individuals
who will be affected by it and winning their commitment to the decision.
H. Step 8: Evaluate Decision Effectiveness. This last step in the decision-
making process assesses the result of the decision to determine whether
or not the problem has been resolved.
23
2.2 APPROACHES TO DECISION MAKING
At this point in the study of Chapter 2, students will learn about the manager as a
decision maker and how decisions are actually made in organizations. Exhibit 2-
5 shows how decision making fits into the four functions of management.
In this section, students examine how decisions are made, the types of problems
and decisions faced by real-life managers, the conditions under which managers
make decisions, and decision-making styles.
A. Rationality. Managerial decision making is assumed to be rational—that
is, making choices that are consistent and value-maximizing within
specified constraints. If a manager could be perfectly rational, he or she
would be completely logical and objective.
1. Rational decision making assumes that the manager is making
decisions in the best interests of the organization, not in his or her
own interests.
2. The assumptions of rationality can be met if the manager is faced
with a simple problem in which (1) goals are clear and alternatives
limited, (2) time pressures are minimal and the cost of finding and
evaluating alternatives is low, (3) the organizational culture
supports innovation and risk taking, and (4) outcomes are
concrete and measurable.
B. Bounded Rationality. In spite of these limits to perfect rationality,
managers are expected to be rational as they make decisions. Because
the perfectly rational model of decision making isn’t realistic, managers
tend to operate under assumptions of bounded rationality, which is
decision-making behavior that is rational, but limited (bounded) by an
individual’s ability to process information.
1. Under bounded rationality, managers make satisficing decisions, in
which they accept solutions that are “good enough.”
2. We may satisfice due to time constraints that inhibit our ability to
fully search out all possible alternatives.
C. Intuition. Managers also regularly use their intuition. Intuitive decision
making is a subconscious process of making decisions on the basis of
experience and accumulated judgment. Exhibit 2-6 describes the five
different aspects of intuition.
1. Making decisions on the basis of gut feeling doesn’t necessarily
happen independently of rational analysis; the two complement
each other.
2. Although intuitive decision making will not replace the rational
decision-making process, it does play an important role in
managerial decision making.
D. Evidence-Based Management. The premise behind evidence-based
management (EBMgt) is that any decision-making process is likely to be
enhanced through the use of relevant and reliable evidence. EBMgt
promotes the use of the best available evidence to improve management
practice.
1. The four essential elements of EBMgt are the decision maker’s
expertise and judgment; external evidence that’s been evaluated
by the decision maker; opinions, preferences, and values of those
who have a stake in the decision; and relevant organizational
24
(internal) factors such as context, circumstances, and
organizational members.
2. The strength or influence of each of these elements on a decision
will vary with each decision.
3. The key for managers is to recognize and understand the mindful,
conscious choice as to which element(s) are most important and
should be emphasized in making a decision.
E. Crowdsourcing. Crowdsourcing involves relying on a network of people
outside the organization’s traditional set of decision makers. Managers
solicit input and ideas via the Internet.
8.1. One example of crowdsourcing is Hershey’s use of a competition Formatted: Indent: Left: 2.54 cm, Hanging: 1.27 cm,
to find a solution to keep their chocolates cool when shipping Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start
at: 1 + Alignment: Left + Aligned at: 3.81 cm + Indent at:
during the summer months. 4.44 cm, Font Alignment: Auto
9.1. Crowdsourcing can be used to solicit input from customers,
suppliers, any stakeholder group, or other external parties.
1. Managers can get a diverse set of opinions to help them make
better-informed decisions.
2.3 TYPES OF DECISIONS AND DECISION-MAKING STYLES

A. Types of Decisions. Managers encounter different types of problems
and use different types of decisions to resolve them.
1. Structured problems are straightforward, familiar, and easily
defined. In dealing with structured problems, a manager may use
a programmed decision, which is a repetitive decision that can be
handled by a routine approach. Managers rely on three types of
programmed decisions:
a. A procedure is a series of interrelated sequential steps that
can be used to respond to a structured problem.
b. A rule is an explicit statement that tells managers what
they can or cannot do.
c. A policy is a guideline for making decisions.
2. Unstructured problems are problems that are new or unusual
and for which information is ambiguous or incomplete. These
problems are best handled by a nonprogrammed decision that
is a unique decision that requires a custom-made solution.
3. Exhibit 2-7 describes differences between programmed versus
nonprogrammed decisions.
a. At higher levels in the organizational hierarchy, managers
deal more often with difficult, unstructured problems and
make nonprogrammed decisions in attempting to resolve
these problems and challenges.
b. Lower-level managers handle routine decisions
themselves, using programmed decisions. They let upper-
level managers handle unusual or difficult decisions.
B. Decision-Making Styles.
1. Each person has an individual decision-making style.
2. Research shows there are four different individual approaches to
making decisions. People differ along two dimensions: way of
thinking and tolerance for ambiguity. Exhibit 2-8 shows this
Decision-Style Model.
3. The matrix generates four types of decision makers which are:
25
a. Directive – people with a directive style have low tolerance
for ambiguity and seek rationality. They are efficient and
logical but may be prone to making decisions too fast with
limited information.
b. Analytic – analytic decision makers are more comfortable
with ambiguity relative to directive styles. They are more
willing to adapt to change or new situations.
c. Conceptual – conceptual decision makers have a broad
scope and consider many alternatives. They are good at
finding creative solutions to problems.
d. Behavioral – behavioral decision makers work well with
others. They tend to avoid conflict and seek acceptance
from others. This tendency makes them receptive to
suggestions from others.
While each of the four categories is distinct, people typically
display characteristics from more than one style. Most business
students score high on the analytic style.
2.4 DECISION-MAKING BIASES AND ERRORS

Managers use different styles and “rules of thumb” (heuristics) to simplify their
decision making.
A. See Exhibit 2-9 for the common decision-making biases.
1. Overconfidence bias occurs when decision makers tend to think
that they know more than they do or hold unrealistically positive
views of themselves and their performance.
2. Immediate gratification bias describes decision makers who tend
to want immediate rewards and avoid immediate costs.
3. The anchoring effect describes when decision makers fixate on
initial information as a starting point and then, once set, fail to
adequately adjust for subsequent information.
4. Selective perception bias occurs when decision makers selectively
organize and interpret events based on their biased perceptions.
5. Confirmation bias occurs when decision makers seek out
information that reaffirms their past choices and discount
information that contradicts their past judgments.
6. Framing bias occurs when decision makers select and highlight
certain aspects of a situation while excluding others.
7. Availability bias is seen when decision makers tend to remember
events that are the most recent and vivid in their memory.
8. Decision makers who show representation bias assess the
likelihood of an event based on how closely it resembles other
events or sets of events.
9. Randomness bias describes the effect when decision makers try
to create meaning out of random events.
10. The sunk costs error is when a decision maker forgets that current
choices cannot correct the past. Instead of ignoring sunk costs,
the decision maker cannot forget them. In assessing choices, the
individual fixates on past expenditures rather than on future
consequences.
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11. Self-serving bias is exhibited by decision makers who are quick to
take credit for their successes and blame failure on outside
factors.
12. Hindsight bias is the tendency for decision makers to falsely
believe, once the outcome is known, that they would have
accurately predicted the outcome.
Managers need to be aware of these decision-making biases so they can avoid

them. Research shows that training can help managers learn to recognize
situations where these biases occur.
2.5 CUTTING-EDGE APPROACHES FOR IMPROVING DECISION MAKING

Today’s business world revolves around making decisions when faced with rapid
technological change. However, some of the advances in technology can help
managers make better decisions. In this section we will review some of those
cutting-edge approaches to decision making that are attributed to changes in
technology.
WORKPLACE CONFIDENTIAL: Making Good Decisions

Decisions are an essential part of our lives, personally and professionally. Each and
every day is a series of decisions, from minor to significant, and everything in between.
Good decision making is a skill, and like any skill, it can be learned and improved. So,
how can you improve your decision-making skills? Here are a few suggestions you can
use to improve your decision-making skills:
1. Know, understand, and use the decision-making process. Yes, there is a “method” to making decisions
that takes you from identifying problems to evaluating the effectiveness of your decision. It works. Know
it. Understand it. Use it.
2. Know when and how to use rational or intuitive decision making or both. Different types of problems
and different conditions will influence how you approach making a decision.
3. Know your decision-making style. Not everyone approaches decision making the same way. But you do
need to recognize how you’re most comfortable when making a decision—and how others around you
make decisions.
4. Know, recognize, and understand the biases and errors that may influence your decision making. Biases
and errors can creep into your decision making. You may think you’re making good decisions and may not
even recognize you are being affected by biases.
Student answers to these questions will vary.
A. Design Thinking and Decision Making.

Design thinking has been described as “approaching management
problems as designers approach design problems.” It can be useful
when identifying problems and when identifying and evaluating
alternatives. Design thinking involves asking the “what if” questions and
using observation and inquiry skills instead of relying solely on rational
analysis.
B. Big Data and Artificial Intelligence.
Big data is the vast amount of quantifiable information that can be
analyzed by highly sophisticated data processing. One IT expert
described big data with “3V’s: high volume, high velocity, and/or high
27
variety information assets.” With this type of data at hand, decision
makers have very powerful tools to help them make decisions. Big data
has opened the door to the widespread use of artificial intelligence and
other powerful decision-making tools.
Artificial Intelligence (AI) harnesses computing power to replicate the
decision-making functions of humans. AI now has the ability to learn and
solve complex problems such as the technology used in self-driving
autos.
Machine learning is a method of data analysis facilitated by AI. Machine
learning involves pattern identification, learning from those patterns, and
then using that information to make decisions with little or no human
assistance.
Deep learning is a subset of machine learning. Deep learning simulates
functions of the human brain by using algorithms to create a hierarchical
level of artificial neural networks. This network of connected nodes
processes information in a nonlinear fashion and has been used to
improve the identification of skin cancers.
Analytics is the use of mathematics, statistics, predictive modeling, and
machine learning to find meaningful patterns in data sets. Analytics are
now being used in professional sports to help make decisions about
whether to kick a field goal or go for it on fourth down. There are
numerous other applications.
28

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Chapter 1

Managers and You in the Workplace

1. Tell who managers are and where they work.

1.1 TELL WHO MANAGERS ARE AND WHERE THEY WORK

Future Vision: Is It Still Managing When What You’re Managing Are

The following discussion questions are posed:

Student answers to these questions will vary.

1.2 WHY ARE MANAGERS IMPORTANT?

1.3 MANAGEMENT VS. MANAGERS

1.4 MANAGERIAL CHALLENGES TODAY AND INTO THE FUTURE

1. Describe some early management examples.

MH.1 EARLY MANAGEMENT

MH.2 CLASSICAL APPROACH

B. General Administrative Theorists. This group of writers, who focused

MH.3 BEHAVIORAL APPROACH

MH.4 QUANTITATIVE APPROACH

MH.5 CONTEMPORARY APPROACHES

1. Define globalization, nationalism, and parochialism; and contrast ethnocentric,

WHO OWNS WHAT?

4.1 CLARIFYING TERMINOLOGY

4.2 A BRIEF HISTORY OF GLOBALIZATION

countries with policy advice, temporary loans, and technical assistance to

known as the Commonwealth of Independent States. These include Russia,

4.3 THE CASE FOR AND AGAINST GLOBALIZATION

4.4 DIFFERENT TYPES OF INTERNATIONAL ORGANIZATIONS

4.5 HOW ORGANIZATIONS GO INTERNATIONAL

4.6 MANAGING IN A GLOBAL ENVIRONMENT

6.1 WHAT IS SOCIAL RESPONSIBILITY?

6.2 GREEN MANAGEMENT AND SUSTAINABILITY

6.3 MANAGERS AND ETHICAL BEHAVIOR

B. Ethics in an International Context. Are ethical standards universal?

6.4 ENCOURAGING ETHICAL BEHAVIOR

6.5 CURRENT ISSUES IN SOCIAL RESPONSIBILITY AND ETHICS

1. Define the nature and purposes of planning.

8.2 TYPES OF PLANS

8.4 OBJECTIVES: THE FOUNDATION OF PLANNING

WORKPLACE CONFIDENTIAL: When you Face a Lack of Clear Directions

8.5 CONTEMPORARY ISSUES IN PLANNING

2.1 THE DECISION-MAKING PROCESS

2.3 TYPES OF DECISIONS AND DECISION-MAKING STYLES

2.4 DECISION-MAKING BIASES AND ERRORS

Managers need to be aware of these decision-making biases so they can avoid

2.5 CUTTING-EDGE APPROACHES FOR IMPROVING DECISION MAKING

WORKPLACE CONFIDENTIAL: Making Good Decisions

Student answers to these questions will vary.

A. Design Thinking and Decision Making.

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