© farhan mir 2011 ims principles of management mba-i 1 st sec i & ii lecture 7,8,9 (the...

© Farhan Mir© Farhan Mir

20201111 IMSIMS

Principles of Principles of ManagementManagementMBA-I 1MBA-I 1st st Sec I & II Sec I & IILecture 7,8,9Lecture 7,8,9(The Constraints – (The Constraints – Organizational Culture & Organizational Culture & Environment)Environment)

By: Farhan MirBy: Farhan Mir


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TopicsTopicsIntroduction

ManagementManagement

Overview and key components

Management as a Field

What are Organizations?What are Organizations?

Management Functions & Roles & ImportanceManagement Functions & Roles & Importance

History and Evolution of Management

Important ContributionsImportant Contributions

Trends and IssuesTrends and Issues

Organizational & Environmental Constraints

Environmental EffectsEnvironmental Effects

Important Environmental ElementsImportant Environmental Elements

Internal Vs. External EnvironmentInternal Vs. External Environment

Global Environment & ManagementGlobal Environment & Management


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Management and Management and ConstraintsConstraintsManagement’s task becomes more difficult in the context of open system theory (as it has to manage internal as well as external factors)

The Organizational Environment is classified into two major categories

Internal (commonly known as “Culture”Internal (commonly known as “Culture”

External Environment (simply called External Environment (simply called “Environment”)“Environment”)

Specific General


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The ConstraintsThe Constraints

Two Perspectives on Two Perspectives on Management Management

Omnipotent View Vs. Symbolic Omnipotent View Vs. Symbolic ViewView


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The Manager: How Much The Manager: How Much Control?Control?

Omnipotent ViewManagers are directly responsible for an Managers are directly responsible for an organization’s success or failureorganization’s success or failure

The quality of the organization is determined The quality of the organization is determined by the quality of its managersby the quality of its managers

Managers are held most accountableManagers are held most accountablefor an organization’s performance,for an organization’s performance,yet it is difficult to attributeyet it is difficult to attributegood or poor performancegood or poor performancedirectly to their influencedirectly to their influenceon the organizationon the organization


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The Manager: How Much The Manager: How Much Control? (cont’d)Control? (cont’d)

Symbolic ViewMuch of an organization’s success or failure is Much of an organization’s success or failure is due to external forces outside of managers’ due to external forces outside of managers’ controlcontrol

The ability of managers to affect outcomes is The ability of managers to affect outcomes is influenced and constrained by external influenced and constrained by external factors:factors:

The economy, customers, governmental policies, competitors, industry conditions,technology, and the actions ofprevious managers

Managers symbolize control andManagers symbolize control andinfluence through their actioninfluence through their action


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Organizational CultureOrganizational Culture

Internal Environment (Heavily effected by the Internal Environment (Heavily effected by the norms and values shared by members of the norms and values shared by members of the organization)organization)

What is Organizational Culture?

The 7 Dimensions of Organizational Culture

Risk, Attention to Detail, Outcome Risk, Attention to Detail, Outcome Orientation, People Orientation, Team Orientation, People Orientation, Team Orientation, Aggressiveness & StabilityOrientation, Aggressiveness & Stability

Types (Strong Vs. Weak Culture)

Sources of Culture

How employees learn organizational culture

Stories, Rituals, Material Symbols & Stories, Rituals, Material Symbols & LanguageLanguage


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The Organization’s The Organization’s CultureCultureOrganizational Culture

A system of shared meanings and A system of shared meanings and common beliefs held by organizational common beliefs held by organizational members that determines, in a large members that determines, in a large degree, how they act towards each degree, how they act towards each other.other.

““The way we do things around here.”The way we do things around here.”Values, symbols, rituals, myths, and practices

Implications:Implications:Culture is a perception.Culture is shared.Culture is descriptive.


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Dimensions of Organizational Dimensions of Organizational CultureCulture


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Visible Elements- How new Visible Elements- How new employees learn cultureemployees learn culture

Rituals and

ceremonies

Symbols

Language & Slogans

Heroes Stories


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Strong versus Weak Strong versus Weak CulturesCulturesStrong Cultures

Are cultures in which key values are Are cultures in which key values are deeply held and widely held.deeply held and widely held.Have a strong influence on Have a strong influence on organizational members.organizational members.

Factors Influencing the Strength of Culture

Size of the organizationSize of the organizationAge of the organizationAge of the organizationRate of employee turnoverRate of employee turnoverStrength of the original cultureStrength of the original cultureClarity of cultural values and beliefsClarity of cultural values and beliefs


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Benefits of a Strong Benefits of a Strong CultureCultureCreates a stronger employee commitment to the organization.

Aids in the recruitment and socialization of new employees.

Fosters higher organizational performance by instilling and promoting employee initiative.


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Contrasting Organizational Contrasting Organizational CulturesCultures

Organization A

• Managers must fully document all decisions

• Creative decisions, change, and risks are not encouraged.

• Extensive rules and regulations exist for all employees.

• Productivity is valued over employee morale.

• Employees are encouraged to stay within their own department.

• Individual effort is encouraged.

Organization B

• Management encourages and rewards risk-taking and change.

• Employees are encouraged to “run with” ideas, and failures are treated as “learning experiences.”

• Employees have few rules and regulations to follow.

• Productivity is balanced with treating its people right.

• Team members are encouraged to interact with people at all levels and functions.

• Many rewards are team based.


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Organization Culture Organization Culture IssuesIssues Creating an Ethical Culture

High in risk High in risk tolerancetolerance

Low to moderate Low to moderate aggressivenessaggressiveness

Focus on means as Focus on means as well as outcomeswell as outcomes

Creating an Innovative Culture

Challenge and Challenge and involvementinvolvement

FreedomFreedom

Trust and Trust and opennessopenness

Idea timeIdea time

Playfulness/humorPlayfulness/humor

Conflict resolutionConflict resolution

DebatesDebates

Risk-takingRisk-taking


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A Case Study on A Case Study on Organizational Culture: Organizational Culture: Excellence at XeroxExcellence at XeroxXerox

IntroductionIntroduction

Digital solution provider and world’s top computer hardware manufacturer (Especially Copiers) and helps develop smarter document management

Helps Analyzing how employees can most efficiently share documents and knowledge in the office

Among the Fortune 500 with 55,200 employees worldwide, including 29,700 in the United States (December 31, 2005)

The company's operations are guided by customer-focused and employee-centered core values

such as social responsibility, diversity and quality

passion for innovation, speed and adaptability


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Excellence at XeroxExcellence at XeroxXerox StrategyXerox Strategy

They are committed towards quality products for their customers and for providing a world-class working environment for their employees

To do so they need to attract and retain world-class people

Xerox Employment Trademark “eXpress yourself” yields for them innovation and leading working environment due to:

PassionPassion

DiversityDiversity

IdeasIdeas

Contribution from everyoneContribution from everyone


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Xerox: ExcellenceXerox: ExcellenceThe Problem Era

Just few years back the company was fighting for it’s survival Just few years back the company was fighting for it’s survival and no focus on improving it’s HR practicesand no focus on improving it’s HR practicesIn year 2000 the company was facing $17 billion in debt and In year 2000 the company was facing $17 billion in debt and it’s stock price dropped from $63 to about $4it’s stock price dropped from $63 to about $4Company suffered loses for 7 consecutive quarters and Company suffered loses for 7 consecutive quarters and investigations were called against the accounting mattersinvestigations were called against the accounting matters

The ComebackShifted it’s product mix and offered desktop copiers for offices Shifted it’s product mix and offered desktop copiers for offices and quality printers for publishersand quality printers for publishersCompany had an increased income to $222 million from just Company had an increased income to $222 million from just $19 million$19 millionThe reasons behind this turnaroundThe reasons behind this turnaround

Focus on Customers

Thinking about employees as a core (People Orientation)With strong values of social responsibility, diversity, quality and innovation


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Diversity for Success: Case Study on Diversity for Success: Case Study on UPSUPS

UPSIntroductionIntroduction

Founded in 1907 as a messenger company in the United States the world's largest package delivery company and a leading global provider of specialized transportation and logistics servicesManage the flow of goods, funds, and information in more than 200 countries and territories worldwide.The Company has got a global postureUPS´s workforce is multicultural, multidimensional, and reflective of the broad attributes of our global communitiesFORTUNE® magazine as one of the "50 Best Companies for Minorities


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UPS and Diversity UPS and Diversity

Views about workforceViews about workforce

It is not about race or gender or background rather the focus is about how much employees care about the company or good at their jobs

1/3 of the employees are from minorities

Representation of minorities is also at each level of the organization

Has a supplier diversity Program encouraging small and minority group suppliers

Diversity driving UPS towards success (may be Diversity driving UPS towards success (may be other factors but diversified workforce with new other factors but diversified workforce with new ideas and flavors is a strong contributing factor ideas and flavors is a strong contributing factor


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UPS and DiversityUPS and Diversity

African-Americans, Hispanics, Asian-Pacific Americans and other minorities make up 35 percent of the company´s 348,400 employees in the United States.

Minorities accounted for half of UPS´s new employees in 2005.

Women represent 28 percent of the U.S. management team and 20 percent of the overall workforce, holding jobs from package handlers, to drivers, to senior management and to the UPS Board of Directors.

Among the company´s 63,000 U.S. managers, minorities hold nearly 30 percent of those executive positions. Positions held include district managers, the UPS Management Committee, and UPS´s Board of Directors.


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The The External External

EnvironmenEnvironmentt


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Task EnvironmentTask EnvironmentTask EnvironmentTask EnvironmentTask Environment: forces from suppliers, distributors, customers, and competitors.Suppliers: provide organization with inputs

Managers need to secure Managers need to secure reliable input reliable input sourcessources..

Suppliers provide raw materials, components, Suppliers provide raw materials, components, and even labor.and even labor.

Working with suppliers can be hard due to shortages, unions, and lack of substitutes.Suppliers with scarce items can raise the price and are in a good bargaining position.

Managers often prefer to have many, similar Managers often prefer to have many, similar suppliers of each item.suppliers of each item.


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Task EnvironmentTask EnvironmentTask EnvironmentTask Environment

Distributors: organizations that help others to sell goods.

Compaq Computer first used special computer Compaq Computer first used special computer stores to sell their computers but later sold stores to sell their computers but later sold through discount stores to reduce costs.through discount stores to reduce costs.

Some distributors like Wal-Mart have strong Some distributors like Wal-Mart have strong bargaining power.bargaining power.

They can threaten not to carry your product.

Customers: people who buy the goods.

Usually, there are several groups of customers.Usually, there are several groups of customers.For Compaq, there are business, home, & government buyers.


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Task EnvironmentTask EnvironmentTask EnvironmentTask EnvironmentCompetitors: other organizations that produce similar goods.

Rivalry between competitorsRivalry between competitors is usually the is usually the most serious force facing managers.most serious force facing managers.

High levels of rivalry often means lower prices.High levels of rivalry often means lower prices.Profits become hard to find.

Barriers to entry keep new competitors out Barriers to entry keep new competitors out and result fromand result from::

Economies of scale: cost advantages due to large scale production.Brand loyalty: customers prefer a given product.


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Organizational Organizational EnvironmentEnvironmentOrganizational Organizational EnvironmentEnvironment

Organizational Environment: those forces outside its boundaries that can impact it.

Forces can change over time and are made up of Forces can change over time and are made up of Opportunities and Threats.Opportunities and Threats.

Opportunities: openings for managers to enhance revenues or open markets.

New technologies, new markets and ideas.New technologies, new markets and ideas.

Threats: issues that can harm an organization.

economic recessions, oil shortages.economic recessions, oil shortages.

Managers must seek opportunities and avoid threats.


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The General EnvironmentThe General EnvironmentThe General EnvironmentThe General Environment

Consists of the wide economic, technological, demographic and similar issues.

Managers usually cannot impact or control Managers usually cannot impact or control these.these.

Forces have profound impact on the firm.Forces have profound impact on the firm.

Economic forces: affect the national economy and the organization.

Includes interest rate changes, Includes interest rate changes, unemployment rates, economic growth.unemployment rates, economic growth.

When there is a strong economy, people When there is a strong economy, people have more money to spend on goods and have more money to spend on goods and services.services.


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Technological forces: skills & equipment used in design, production and distribution.

Result in new opportunities or threats to managers.Result in new opportunities or threats to managers.

Often make products obsolete very quickly.Often make products obsolete very quickly.

Can change how we manage.Can change how we manage.

Socialcultural forces: result from changes in the social or national culture of society.

Social structure refers to the relationships between Social structure refers to the relationships between people and groups.people and groups.

Different societies have vastly different social structures.

National culture includes the values that characterize a National culture includes the values that characterize a society.society.

Values and norms differ widely throughout the world.

These forces differ between cultures and over time.These forces differ between cultures and over time.


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Demographic forces: result from changes in the nature, composition and diversity of a population.

These include gender, age, ethnic origin, etc.These include gender, age, ethnic origin, etc.For example, during the past 20 years, women have entered the workforce in increasing numbers.

Currently, most industrial countries are aging.Currently, most industrial countries are aging.This will change the opportunities for firms competing in these areas.New demand for health care, assisting living can be forecast.


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Political-legal forces: result from changes in the political arena.

These are often seen in the laws of a society. These are often seen in the laws of a society.

Today, there is increasing deregulation of many state-Today, there is increasing deregulation of many state-run firms.run firms.

Global forces: result from changes in international relationships between countries.

Perhaps the most important is the increase in Perhaps the most important is the increase in economic integration of countries.economic integration of countries.

Free-trade agreements (GATT, NAFTA, EU) decreases Free-trade agreements (GATT, NAFTA, EU) decreases former barriers to trade.former barriers to trade.

Provide new opportunities and threats to managers.Provide new opportunities and threats to managers.


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How the Environment How the Environment Affects ManagersAffects Managers Environmental Uncertainty

The extent to which managers have The extent to which managers have knowledge of and are able to predict knowledge of and are able to predict change their organization’s external change their organization’s external environment is affected by:environment is affected by:

Complexity of the environment: the number of components in an organization’s external environment.

Degree of change in environmental components: how dynamic or stable the external environment is.


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Reducing Environmental Reducing Environmental ImpactImpactReducing Environmental Reducing Environmental ImpactImpact

Managers can counter environmental threats by reducing the number of forces.

Many firms have sought to reduce the number of Many firms have sought to reduce the number of suppliers it deals with which reduces uncertainty.suppliers it deals with which reduces uncertainty.

All levels of managers should work to minimize the potential impact of environmental forces.

Examples include reduction of waste by first line Examples include reduction of waste by first line managers, determining competitor’s moves by managers, determining competitor’s moves by middle managers, or the creation of a new strategy middle managers, or the creation of a new strategy by top managers.by top managers.


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Exhibit 3.10Exhibit 3.10

Environmental Uncertainty Environmental Uncertainty MatrixMatrix


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Responding To The Responding To The EnvironmentEnvironmentAdapting to the environment

company adjusts its structures and work processescompany adjusts its structures and work processes

in uncertain environment caused by in uncertain environment caused by complexitycomplexity, , companies tend to decentralize decision makingcompanies tend to decentralize decision making

empowerment - process of sharing power with employees

enhances their confidence in their ability to enhances their confidence in their ability to perform their jobs perform their jobs

engenders beliefs that they are influential engenders beliefs that they are influential contributors to the firmcontributors to the firm

in uncertain environments caused by in uncertain environments caused by dynamismdynamism, , companies tend to establish more flexible structurescompanies tend to establish more flexible structures

bureaucracy - suited for stable environments (low dynamism)

organic - provides flexibility required for changing environments (high dynamism)


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Boundary SpanningBoundary SpanningBoundary SpanningBoundary SpanningManagers must gain access to information needed to forecast future issues.Boundary spanning is the practice of relating to people outside the organization.

Seek ways to respond and influence stakeholder Seek ways to respond and influence stakeholder perception.perception.

By gaining information outside, managers can By gaining information outside, managers can make better decisions about change.make better decisions about change.

More management levels involved in spanning, yields better overall decision making.


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Boundary Spanning RolesBoundary Spanning RolesBoundary Spanning RolesBoundary Spanning Roles

Managers in boundaryspanning roles feedback

information to other managers


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Scanning and MonitoringScanning and MonitoringScanning and MonitoringScanning and MonitoringEnvironmental scanning is an important boundary spanning activity.

Includes reading trade journals, attending Includes reading trade journals, attending trade shows, and the like.trade shows, and the like.

Gatekeeping: the boundary spanner decides what information to allow into organization and what to keep out.

Must be careful not to let bias decide what Must be careful not to let bias decide what comes in.comes in.

Interorganizational Relations: firms need alliances globally to best utilize resources.

Managers can become agents of change Managers can become agents of change and impact the environment.and impact the environment.


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Stakeholder Stakeholder RelationshipsRelationshipsStakeholders

Any constituencies in the Any constituencies in the organization’s external environment organization’s external environment that are affected by the organization’s that are affected by the organization’s decisions and actionsdecisions and actions

Why Manage Stakeholder Relationships?

It can lead to improved organizational It can lead to improved organizational performance.performance.

It’s the “right” thing to do given the It’s the “right” thing to do given the interdependence of the organization interdependence of the organization and its external stakeholders.and its external stakeholders.


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Managing Stakeholder Managing Stakeholder RelationshipsRelationships1. Identify the organization’s external

stakeholders.

2. Determine the particular interests and concerns of the external stakeholders.

3. Decide how critical each external stakeholder is to the organization.

4. Determine how to manage each individual external stakeholder relationship.


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Organizational Organizational StakeholdersStakeholders


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Managers MustManagers Must

Remain alert to internal and external environments.

Must forecast and plan for the changes they suspect will come.

Must cultivate a sensible and controlled reactive behavior toward changes.

Provide an imaginative program to manage and capitalize on changes.


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Influencing Environments

Influence legislation.

Use the power of the media to influence public opinion

and public policy.

Build alliances and raise funds to push their

agendas.

© farhan mir 2011 ims principles of management mba-i 1 st sec i & ii lecture 7,8,9 (the...

Documents

organizational members

organizational culturestories

organizations success

organizations performance

cultureexternal environment

strong influence

key values

external forces