LECTURE 4

CHAPTER 4

Managing in a Global Environment

Stages of Globalization
1. Domestic stage home country operation .
2. International multi domestic approach with international division to deal with the
marketing of products in other foreign country
3. Multinational- production facilities located many countries with more than 1/3 of its
sales outside the home country.
4. Global or stateless stage - ownership, control and top management tend to be dispersed
among several nationalities.
Getting started internationally Market entry strategies
1. Seek cheaper sources of raw materials and labor offshore ( Offshoring or global
outsourcing )
2. Develop markets for finished products outside the home country. Thru exporting,
licensing, and direct investing.
2.1
Exporting local production and its product for sale in foreign countries.
2.2
Outsourcing or offshoring is engaging in the in the international division of
labor so that work activities can be done in countries with the cheapest sources of
labor and supplies.
2.3
Licensing The licensor in one country makes a certain resources available to
companies in another country ( licensee), Franchising is when a francisee buys a
complete package of materials and services including equipment, product,
ingredients, trademark, managerial advice and standardized
3. Direct investing an entry strategy in which the organization is involved in managing its
productions facilities in a foreign country.
a. Joint venture
b. Wholly owned foreign affiliate is a foreign subsidiary over which an organization
has a complete control.
c. Greenfield venture a company build a subsidiary from a scratch in a foreign country.
China Inc. and Chindia combined powers of the two countries in international trade
dimension.
International management is the management of business operations conducted in more
than one country.
International Business Environment
1. Economic Environment represent the economy of the country
1.1
Economic development- developing countries or less developed countries
(LDCs) Asia , Africa, and south America. Developed countries are North
America, Europe and Japan
1.2
Infrastructure physical facilities that support economic activities such as
highways, airport, utilities, telephone.

1.3
1.4
1.5
1.6

Resource and product markets- refers to market demand for their products.
Per capita income Production income divide by no.of population.
Exchange rates country currency equivalent in exchanged to another
country.
Economic conditions- inflation, interest rates and economic growth.

2. Legal-Political Environment government supervision and regulation.

Political Risk the risk of loss of assets, earning power or managerial control due to
politically based event of actions by host government.
Political instability riots, revolutions, civil disorders, and frequent changes in the
government.
3. Sociocultural Environment a nations culture, values beliefs as well as the common
modes of behaviors and ways of thinking among members of the society. Perplexing
than political and economic factors.
3.1
Social values as developed by Geert Hofstede ( Hofstede Value Dimension)
1. Power distance
High power distance when people accept inequality in power among
institutions, org. and people. Like in the Phils, Malaysia & Panama
Low Power distance people expect equality in power. Denmark, Austria
and Israel.
2. Uncertainty avoidance
High Uncertainty avoidance means that members of a society feel
comfortable with uncertainty and ambiguity and thus supports beliefs the
promise certainty and conformity.
LOW Uncertainty avoidance people have high tolerance for the
unstructured, the unclear and unpredictable.
3. Individualism and collectivism. Individualist reflects a value for a loosely
knit social framework in which individual s are expected to take care of
themselves. Collectivism a preference for a tightly knit social framework
in which individual look after one another in organization protects their
members interest.
4. Masculinity/Femininity . Masculinity preference for achievement , heroism,
assertiveness, work centrality with resultant high stress. Femininity refers to
the values of relationship, cooperations, group decision making and quality
5. Long-term Orientation and Short term orientation.
Long-term orientation refer to a greater concern for the future and highly
values thrift and perseverance.

Short-term orientation Is more concern with the past and the present and
places a high value on tradition and meeting social obligations.

3.2 Communication differences

1. High context culture people are sensitive to circumstances
surrounding social exchanges. Relationship and trust are more important than
business and the welfare and harmony of the group are valued.
2. Low context culture communication is used to primarily exchange
business facts and information, thus, business transaction is more important than
building relationship.
Other Cultural characteristics
1. Language
2. Religion
3. Social organization
4. Education
5. And attitudes
Etnocentrism a natural tendency of people to regard their own culture as a superior
and to downgrade or dismiss other cultural values.
Polycentric companies oriented toward the market of individual foreign host
company.
Geocentric companies world-oriented and favor no specific country.
International trade alliances and trade agreements
1. General agreement on tariffs and trade (GATT)
2. World trade Organization ( WTO )
3. European Economic community formed the European union (EU)
Euro European currency that replaced 15 national currencies.
4. NAFTA ( North American free Trade Agreement )
THE GLOBALIZATION BACKLASH
1. Loss of jobs
2. Low revenues
3. Shift of technology

MNCs = stateless corporation, global corporations, transnational corporations more

than 25% of the total global sales revenue derived from outside the home country.
Distinctive characteristics
1. An MNC is managed as an integral worldwide business system in which foreign
affiliates act in close alliance and cooperation with one another.
2. An MNC is ultimately controlled by a single management authority that makes
key strategic decisions relating to parent and affiliates.
3. MNC top managers are presumed to exercise global perspective.

Managing in Global Environment

1. Developing cultural intelligence- refers to a persons ability to use reasoning and
observation skills to interpret unfamiliar gestures and situation and devise
appropriate behavioral responses.
2. Managing Cross-culturally - a manager need to interpret the culture and develop
the sensitivity require to avoid making costly cultural mistakes.
Expatriates are employees who live and work in a country other than their own.
a. Human resources
b. Leading typical use of warm personalized approach with employees.
c. Decision-making
d. Motivating
e. Controlling

LECTURE 5 CHAPTER 5 MANAGING SOCIAL RESPONSIBILITY

Ethics is the code of moral principles and values that governs the behavior of a
person or group with respect to what is right or wrong.
Three domain of Human Action
Domain of Codified Law

Domain of Ethics

Domain of Free Choice

( Legal Standard )
High

( Social Standard )
Amount of
Explicit control

( Personal Standard )
low

Ethical decision making

1. Utilitarian approach moral behavior produces the greatest good for the greatest number.
Select a decision that optimizes the benefits for the greatest number of people.
2. Individualism approach - when they promote the individuals best long term interests.
3. Moral-rights Approach asserts that human beings have fundamental rights and liberties
that cannot be taken away .
1. The right of free consent to be treated only as they freely consent to be treated.
2. The right to privacy to have control of information about their private life.
3. The right of freedom of conscience may refrain from carrying out any order that
violates their moral and religious norms
4. The right of free speech may criticize truthfully
5. The right to due process- right to impartial hearing and fair treatment
6. The right to life and safety- to live without endangerment or violation of their health
and safety.
4. Justice Approach must be based on standards of equity, fairness and impartiality.
1. Distributive justice Individual who are similar in ways relevant to a decision should
be treated similarly.
2. Procedural justice rules should be administered fairly.
3. Compensatory justice - individual should be compensated for the cost of their
injuries by the party responsible.
Factor affecting Manager ethical choice.
1. Individual personality and behavioral traits to the job- Personal needs, family influence
Level 3:
and religious background.
Postconventional
2. Specific personality characteristics ego strength, self-confidence
and strong sense of
independence
Follows self-chosen
3. Moral development

Level 2:
Conventional
Lives up to the
expectation of
others. Fulfills
duties and
obligations of social
system. Upholds the
laws.

principles of justice
and right. Aware that
people hold different
values and seek
creative solutions to
ethical dilemmas.
Balances concern
for individual with
concern for common
goods.

Level 1: Preconventional
Follows rules to avoid
punishment. Act in own
interest. Obedience for
its own sake.

Leadership style: Aristocratic/coercive

transformingor servant
Leadership
Employee
Behavior:
Task accomplishment
empowered employee,

Guiding and encouraging

work group collaboration

Full participation

3- Levels of Personal Moral Development

Corporate social responsibility is the managements obligation to
make choices and take actions that will contribute to the welfare and interest
of society as well as the organization. It involves moral, legal and economic
consideration.
1. Stakeholders Responsibility to whom?
2. The bottom of the Pyramid Concept (BOP) proposes that corporation
can alleviate poverty and social ills as well as make significant
profits, by selling to the worlds poorest people.
Ethics of sustainability refers to economic development that generates
wealth and meets the needs of the current generation, while saving the

environment, so future generations can meet their needs as well.

Evaluating corporate social responsibility
4. Discretionary Responsibility
Contribute to the Community; Be a good Corporate citizen
3. Ethical responsibility

Be ethical, Do what is right, Avoid Harm

2. Legal Responsibility
Obey the laws
1. Economic responsibility
Be Profitable
Criteria for corporate social performance
Managing company ethics and social responsibility
Management is responsible for creating and sustaining conditions in which
people are likely to behave themselves.
1. Ethical Leadership managers are honest and trustworthy air in their
dealings with employees and customers , and behave ethically in both
their personal and professional lives.
2. Code of ethics is a formal statement of the company values concerning
ethics and social issues.
a. Principle- based statements designed to affect corporate culture.
They define fundamental values and contain general language
about company responsibilities, quality of product, treatment of
employees ( company Credo )
b. Policy-based statements outline the procedure to be used in specific
ethical situations. It includes marketing practices, conflict of
interest, observance of laws, proprietary information, political gifts
and equal opportunities.
3. Ethical structures refers to various systems, positions and program a
company can undertake to implement ethical behavior.
a. Ethics committee group of executives appointed to oversee
company ethics.
b. Chief ethic officer
c. Ethics hotlines
d. Ethics training
e. Support for whistle blowers
WHISTLE BLOWERS
a person who report illegal or unethical
activities.
Employee disclosure of illegal, immoral or illegitimate practices on the
employers part.
LECTURE 6 CHAPTER-6 MANAGERIAL PLANNING AND GOAL SETTING
GOAL is a desired future state that the organization attempts to realize.
Organization exist for a purpose and goal define and state that purpose.

An

PLAN is a blueprint for goal achievement and specifies the necessary resources
allocation, schedules, task and other actions.
Goal specify the future ends; plans specify the means. The concept of planning
incorporates both ideas; it means determining the organizations goals and defining
the means for achieving them.

Mission
Statement

Strategic Goal /Plans

Senior Management
( Organization as a whole )

Tactical Goals/Plans
Middle Management
(Major Divisions, Functions )

Operational Goals/Plans
Lower Management
( Departments, Individuals )

Levels of Goals/Plans and their importance

Purpose of Goals and Plans

1. Legitimacy mission identify the overall purpose and reason for existence. It
symbolizes legitimacy to external audiences such as investors, customers,
suppliers and local community.
2. Source of motivation and commitment

3.
4.
5.
6.

Resource allocation
Guides to action provides a sense of direction
Rationale for decision
Standard of performance also serve as performance criteria.

The Organizational planning process

1. The manager develop the overall plan for the organization by clearly defining
MISSION AND STRATEGIC GOALS.
2. Translate the plan into action, which includes defining the tactical plans and
objectives, developing a strategic map to align goals, formulating
contingencies and scenario plans , and identifying intelligence teams to
analyze competitive issues.
3. Manager layout the operational factors needed to achieve the goals
4. Execute the plans
5. Monitor and learn
Mission the organizations reason for existence. It describe the organizations
values, aspirations and reason for being.
Mission statement a broadly stated definition of purpose .
It focuses on the market and customers and identifies desired field of endeavor,
it describes company values, product quality, location of facilities and attitude
towards employees.
STRATEGIC GOALS OR OFFICIAL GOALS a broad statement
describing where the organization wants to be in the future.
1. Strategic Plans define the action steps by which the company intend to
attain strategic goals.
2. TACTICAL PLANS Designed to help execute the major strategic plans
( Middle management )
3. OPERATIONAL PLANS action steps toward achieving operational goals and
to support tactical plans
STRATEGY MAP a visual representation of the key drivers of an organizations
success and how specific goals and plans in each area are linked.

GOAL CHARACTERESTICS
1. Specific and measurable
2. Define time period
3. Cover key result areas

4. Challenging but realistic

5. Linked to rewards.
MANAGEMENT BY OBJECTIVES (MBO) IS A SYSTEM whereby managers and
employees define goals for every department, project and person and use
them to monitor subsequent performance.
1. Set Goals Strategic Goals, Department Goals and Individual Goals
2. Develop Action Plans
3. Review Progress and take corrective actions
4. Appraise overall performance.
Planning in turbulent environment
1. Contingency Planning company responses to be taken in case of
emergencies, setbacks or unexpected conditions.
2. Building Scenarios - - looking at current trends and discontinuities and
visualizing future possibilities. Just in case when a best laid plans collapse,
what shall a best manager do?
3. Crisis Planning
Crisis prevention prevent crisis from occurring and to detect warning
signs of potential crises.
1. Build relationship
2. Detect signals from environment
Crises Preparation planning to handle the crises when it occurs
1. Designate crisis management team and spokesperson
2. Create detailed crisis management plans
3. Set up effective communications system.
Planning for high performance
1. Traditional approaches to planning creating a central planning departmentgroup of planning specialist who report directly to the CEO
2. High Performance Approaches
a. Decentralized Planning planning experts works with managers
throughout the company and come up with their own solutions to
the problems. Planning comes alive when employees are involvech
goals for excellence. Big hairy audacious Goal ( BHAG)
b. Use Performance Dashboard gauge their progress toward
achieving goals.
c. Organizing intelligence team a cross functional group of
managers and employees
led by a competitive intelligence
professional, who work together to gain a deep understanding of a
specific business issue.
Lecture 7 ( Chapter 7 ) Strategy Formulation and Implementation
Thinking strategically to take the long term view and to see the big picture, including the organization
and the competitive environment and consider how they fit together.

Strategic management refers to the set of decisions and actions used to formulate and execute strategies
that will provide a competitively superior fit between organization and its environment so as to achieve
the organizational goals.
Strategy the plan of action that prescribes resource allocation and other activities for dealing with the
environment , achieving a competitive advantage and attaining organization goals.
Competitive advantage refers to what sets the organization apart from others and provides it with a
distinctive edge for meeting customers or clients needs in the marketplace.
Purpose of Strategy ( Why the org. will be different )
1. Exploit core competencies something the firm does especially well in comparison to its
competitors. It can be in the area of superior research and development, expert technological
know how, process efficiency or exceptional customer service.
2. Build synergy- It is the condition that exits when the organizational s parts interact to produce
a joint effect that is greater than the sum of the parts acting alone.; the concept that the whole
is greater than the sum of the its parts.
3. Deliver value to customers the combination of benefits received and cost paid.
Levels of Strategy ( Org. level to which strategic issues apply)
1. Corporate Level Strategy : What Business are we in?
2. Business Level Strategy: How do we compete?
3. Functional Level Strategy : How do we support the business level strategy?
Level

ACTION PLAN

Corporate level strategy pertains to the org.

as a whole and the combination of business
units and product lines that make-up the
corporate entity.

Acquisition of new businesses

Addition or divestment s of business units,
plants, or product lines
Joint venture with other corporation in new
areas.

Business Level Strategy pertains to each

business units or product lines

Functional Level strategy refers to the major

functional dept. within the business unit.
Scan the
Identify
External
Strategic
Environme
factors
nt

Nationa
l
Global

Opportunities
Threats

Advertising
Direction and extent of research and
development
Product changes, new product development,
equipment facilities
Expansion or contraction of product and
service lines
Finance
Research and development
Marketing and mfg.

Evaluate
Current:

MISSION
Goals
Strategie
s

SWOT

Define
New:

FORMULA
TE

MISSION

STRATEGY

GOALS

Scan the
Internal
Environmen
t
Core
Competencies
Synergy
Value
creation

Identify
Strategic
factors

GRAND
STRATEG
Y

Corporate
Busness
Functional

IMPLEMENT
STRATEGY
via
Changes in:
Leadership/
Culture
Structure
Information
& Control
system

Strenghts
Weakness
es

The Strategic Management Process

Strategic formulation includes the planning and decision making that lead to the
establishment of the company goals and the development of the specific strategic plan.
This may include the assessing the external and internal problems and integrating the
results into goals and strategy.

Strategic execution is the administration and implementation of the strategic plan.

The use of managerial and organizational tools to direct resources toward
accomplishing strategic results.

SWOT ANAYLSIS- Analysis of strengths, weakness, opportunities and threats that

affect organizational performance.
Strengths are internal positive characteristics that the organizational can exploit to
achieve its strategic performance goals.
Weaknesses are internal characteristics that might inhibit or restrict the organizationals
performance.
Opportunities the external characteristic that have a potential to help the organization
achieve or exceed its strategic goals.
Threats the external characteristics that may prevent organization in achieving its
strategic goal.

Analyzing Organizational strengths

Areas
Management &
Organization
Marketing

Particular
Management quality, Staff Quality, Degree of centralization,
Organizational Charts, Planning information, control system
Distribution Channels, Market Share, Advertising efficiency,

Human Resources
Finance
Operations/Productio
n
Research &
Development

Customer satisfactions, Product quality,

Service reputation, Sales force turn-over
Employee experience, union , employee turnover,
absenteeism, work satisfaction, grievances
Profit margin, debt-equity ratio
Inventory ratio. Return of investment, credit ratings
Plant location, machinery status, purchasing system, quality
control, productivity/ efficiency.
Basic applied research, Laboratory capabilities
Research program, new product innovations, technology
innovations

Formulating Corporate-level Strategy

1. Portfolio Strategy pertains to the mix of business units and product lines that
fit together in a logical way to provide synergy and competitive advantage for the
corporation.
The Boston Consulting Group Matrix (BCG Matrix) evaluates SBUs with respect to
the dimensions of business growth rate and market share.
Business Growth rate pertains to how rapidly the entire industry is increasing,
Market share whether a business has a larger or smaller share than competitors.

STAR Rapid growth and

expansion

QUESTION MARK

CASH COW Milk to finance question mark and Star

DOG no investment , keep if some profit, consider

divestment.

2. Diversification Strategy moving into new lines of business.

1. Related Diversification when the new business is related to the existing
business activities.
2. Unrelated Diversification when the organization expands in a totally new
line of business.
3. Vertical integration expanding into businesses that either produce the
supplies needed to make products or that distribute and sell those products.
Formulating Business-Level Strategy formulation within the SBU in which the
concern is how to compete.
1. Michel Porters PORTERS FIVE COMPETITIVE FORCES.
1. Potential new Entrants - capital requirements, and economies of scales
are examples of two potential barriers to entry that can keep out new
competitors
2. Bargaining power of buyers
3. Bargaining power of the suppliers
4. Threats of substitute products
5. Rivalry among competitors

PORTERS STRATEGIES

1. Differentiation strategy involves an attempt to distinguish the firms

product or services from others in the industry. Org. may use creative ads,
distinctive product features, exceptional service or new technology to
achieve a product perceived as unique.
2. Cost leadership pursues cost reductions and uses cost controls to
produce products more efficiently than competitors.
3. Focus strategy concentrates on a specific regional market or buyer
group.
New Trends in strategy ( Other than Mergers and acquisition)
1. Innovation from within or dynamic capabilities which means that
managers focus on leveraging and developing more from the companys
existing assets, capabilities and core competencies in a way that will
provide a sustained competitive advantage
2. Strategic Partnership collaboration with other organization, sometimes
even with competitors.
GLOBAL STRATEGY
1. GLOBALIZATION strategy it means that product design and advertising
strategies are standardized throughout the world.
Example Coke and McDonald
2. Multidomestic Strategy - it means competition is each country is handled
independently of industry competition in other countries.
3. Transnational strategy-seeks to achieve global integration and national
responsiveness. Example Caterpillar

Strategy Execution How strategy is implemented.

1. Leadership ability to influence people. To adopt to the new behaviors
needed for putting the strategy to action. Persuasion, motivation and
cultural values to support the strategy.
2. Structural Design pertains to managers responsibilities , their degree of
authority, and the consolidation of facilities, departments and divisions . It
also refers to the centralization and decentralization and the design of job
tasks.
3. Information and control system. Includes reward systems, pay incentives,
budgets for allocating resources, information technology systems and the
org. rules, policies and procedures.
4. Human resources employees recruit, select, train transfer promote and
lay-off.

LECTURE 8 Chapter 8 Managerial Decision Making.

Decision is a choice made from available alternatives.
Decision making is the process of identifying problems and
opportunities and then resolving them.

Types of decision
1. Programmed decision is a decision made in response to a
situation that has occurred often enough to enable decision rules
to be developed and applied in the future.
2. Non programmed decisions - are made in response to situations
that are unique, are poorly define and largely unstructured and
have important consequences for the organization.
Facing Certainty and uncertainty

Organizational Problems

LOW

Failure
Possibility of

CERTAINTY

uncertainty

HIGH
AMBIQUITY

RISK
PROGRAMMED
UNPROGRAMED

PROBLEM SOLUTION
Conditions that affect the Possibility of Decision Failure

Certainty - that all information the decision maker needs is fully

available.
Risk The a decision has clear-cut goal and that good information is
available, but the future outcomes associated with each alternative are

subject to change. Future events will render the probabilities of success

or failures.

Uncertainty that the manager knows which goals they wish to achieve
, but information about the alternatives and future events is incomplete
Ambiguity- is by far the most difficult decision situation. It means that
the goals to be achieved or the problem to be solved is unclear. ,
alternatives are difficult to define and information about outcomes is
unavailable.

Three decision making approaches

1. Classical model is the ideal and rational model of decision making
2. Administrative Model- more descriptive of how manager s actually
make decisions
3. Political Model takes into consideration the discussion and
coalition building that many decisions involve

Classical Model based on rational economic assumptions and

manager beliefs about what ideal decision making should be.
4 assumptions

1. The decision maker operates to accomplish goals that are know

and agreed on. Problems are precisely formulated and defined.
2. The decision maker strives for conditions of certainty, gathering
complete information. All alternatives and the potentials results of
each are calculated.
3. Criteria for evaluating alternatives are known.
4. The decision maker is rational and uses logic to assign values,
order of preferences, evaluates alternatives and make the decision
that will maximize the attainment of org. goal.
Administrative Model describes how a manager actually makes
decisions.
a. Bounded rationality people have limits or boundaries on how
rational they can be.
b. Satisficing- means the decision maker choose the first solution
alternative that satisfies minimal decision criteria.
c. Intuition - represent a quick apprehension of a decision situation
based on past experience but without conscious thought.

4-Assumptions.
1. Decision goals are vague, conflicting and lack consensus
2. Rational procedures are not always used.
3. Managers searches for alternative are limited because of
constraints

4. Most manager settle for a satisficing rather than a maximizing

solution.

POLITICAL MODEL useful when making unprogrammed decision

when conditions are uncertain, information is limited.
Coalition building is the process of forming alliances among
managers who support a specific alternate
4 assumptions
1. Orgs are made up of groups with diverse interest , goals and
values.
2. Information is ambiguous and incomplete.
3. Manager do not have time, resources and mental capacity to
identify all dimensions of the problem.
4. Managers engage in the push and pull of debate to decide goals
and discuss alternatives.

Six steps in the managerial decision making process

1. Recognition of Decision requirement ( Problem or opportunity )
2. Diagnosis and Analysis of Causes
3. Development of Alternatives

4. Selection of desired Alternative

5. Implementation of Chosen alternative
6. Evaluation and feedback

WHY MANAGERS make a bad decisions?

1.
2.
3.
4.
5.
6.

Being influenced by initial impressions.

Justifying past decisions.
Seeing what you want to see,
Perpetuating the status quo
Being influenced by problem framing
Over confidence

Innovative Group decision making

1. Start by brainstorming
2. Engage in rigorous debate
3. Avoid groupthink tendency of the people to suppress contrary
opinions.
4. Know when to bail.
Escalating commitment continuing to invest in time and resources
in a failing decision.
FAIL EARLY, FAIL OFTEN AND PULL THE PLUG EARLY.

Quiz no 4.

Discuss : Decisions are made as part of a group. In

addition, involving lower level employees in decision
making contributes to individual and organizational

learning. How can you support innovative group

decision making?

LECTURE`- 9 CHAPTER -9
ORGANIZATIONS

DESIGNING ADAPTIVE

Organizing function the deployment of organizational resources to

achieve strategic goals. The deployment of the resources is reflected in
the organizations division of labor into specific departments and jobs,
formal lines of authority and mechanism for coordinating diverse
organizational tasks.
Strategy defines what to do , organizing defines how to do it

Org. Structure is 1. The set of formal tasks assigned to individuals

and departments; 2. Formal reporting relationships, including lines of
authority, decision responsibility; number of hierarchical levels and span
of managers control and 3. the design of systems to ensure effective
coordination of employees across departments.
Organizational Chart- the visual representation of an organizations
structure.
Fundamental characteristics of org. structure.
1. Work specialization ( Division of Labor) is the degree to which
organizational tasks are subdivided into separate jobs. Employees
within the dept. perform only the task relevant to their specialized
function.
2. Chain of Command is an unbroken line of authority that links all
persons in an org. and show who reports to whom.
a. Unity of command each employee is held accountable to only
one supervisor.
b. Scalar principle refers to a clearly defined line of authority in
the organization that includes all employees.
Authority is the formal and legitimate right of a manager to make
decisions, issue orders and allocate resources to achieve
organizationally desired outcomes.
Authority characteristics
1. Authority is vested in organizational positions, not people.
2. Authority is accepted by subordinates
3. Authority flows down vertical hierarchy
RESPONSIBILITY is the duty to perform the task assigned.

ACCOUNTABILITY that people with authority and

responsibility are subject to reporting and justifying task
outcomes to those above them in the chain of command.
Line authority that people in management position have formal
authority to direct and control immediate subordinates.
Staff Authority the right to advise, recommend and counsel in the
staff specialists area of expertise.
4. Span of Management ( Span of Control is the number of
employees reporting to a supervisor
Factors that are associated with less supervisors involvement
thus larger spans of controls
1. Work performed by subordinates is stable and routine
2. Subordinates perform similar work tasks
3. Subordinates are concentrated in a single location
4. Subordinates are highly trained and need little directions
5. Rules and procedures defining task are available
6. Support systems and personnel are available for the manager
7. Little time is required in non-supervisory activities such as
coordination with other departments or planning
8. Managers personal preferences and styles favor a large span
Centralization that decision authority is located near the top of
the organization.
Decentralization decision authority is pushed downward to
lower organization levels.
Factors that affects Centralization or decentralization
1. Greater change and uncertainty in the environment are
usually associated with decentralization

2. The amount of Centralization or decentralization should fit

the firms strategy
3. In time of crisis or risk of company failure, authority may be
centralized at the top.
4. Departmentalization grouping positions into departments and
departments into the total organization.
I Traditional approaches
1. Vertical Functional Approach grouping of positions into
dept. Based on similar skills, expertise, work activities and
resource use.
2. Divisional Approach based on similar organizational outputs
3. Matrix Approach combines the aspects of both functional
and divisional structures
II. Innovative Approaches
1. Team approach Gives manager a way to delegate authority,
push responsibility to lower levels and be more flexible and
responsive in the competitive global environment.
2. The Virtual Network Approach the firm subcontracts most
of its major functions to separate companies and coordinates
their activities from a small headquarters organization.

Advantages and disadvantages of Approaches

ADVANTAGES
1. Functional
Effective use of
resources. Skills
specialization and
development
Top manager
direction and control

DISADVATAGES
Poor Communication
across functional dept.
Slow response to
external change. Top
decision concentrated
at the TOP. Creating

2. Divisional

3. Matrix

4. Team

5. Virtual Network

delays
Fast response,
Duplication
of
Flexibility and
resources.
Poor
excellent
coordination
across
coordination
divisions
More efficient use of Frustrations
and
resources.
confusions from dual
Flexibility to change chain of command.
Many
meetings
,
discussions than action
Reduced
barriers Dual Loyalties and
among depts..
conflicts.
Shorter
response
time,

Can
draw
on
expertise worldwide,
reduced
overhead
cost.

Lack of control, weak

boundaries,
greater
demand on managers
Employee
loyalty
weakened

Coordination refers to the quality of collaboration across

departments,
Task Force temporary team or committee designed to solve a
short term problem involving several departments.

Reengineering ( Business process reengineering is the radical

redesign of business processes to achieve dramatic improvement
in cost, quality, service and speed.

LECTURE-10 CHARPTER 10 - MANAGING CHANGE AND

INNOVATION
Organizational change is the adoption of a new idea or behavior by an
organization.
AMBIDEXTROUS APPROACH incorporating structures and process that are
appropriate for both the creative impulse and for the systematic implementation of
innovations.
Key Aspects of change in Organizations
1. Changing Products and Technologies
2. Changing people and culture
Product Change a change in the organizational product or service outputs. Ex.
Apples iPhone, e-file

Technology change change in the organizations production process.

3 Innovation strategies for changing products and technologies
1. Exploration designing the organization to encourage creativity and initiation of new
ideas.
2. Cooperation-creating conditions and systems to facilitate internal and external
coordination and knowledge sharing
3. Entreprenuership means that the managers put in place processes and structures to
ensures that new ideas are carried forward for acceptance and implementation.
Exploration

Creativity
Experimentatio
n
Idea Incubators

Cooperation

Entreprenuership

Horizontal
coordination
Customers,
partners
Open
Innovation

Idea
Champions
New Ventures
Teams
Skunkworks
New Venture
Fund

Creativity refers to the generation of novel ideas that might meet perceived needs or respond to
opportunities for the organization.
Idea Incubator safe harbor where ideas from employees can be developed without interference
from company bureaucracy or politics.
Open innovation means extending the search for and commercialization of new idea beyond the
boundaries of the organization or even beyond the boundaries of the industry.
Idea champion is a person who sees the need for and champions productive change within the
organization.
Skunkworks is a separate small, informal highly autonomous and often secretive group that
focuses on breakthrough ideas for the business.
CHANGING PEOPLE AND CULTURE How employees think changes in mind set.
Tool to Change People and culture
1. Training and Development

2. Organizational Development is a planned, systematic process of change that uses

behavioral science knowledge and techniques to improve an organizations health and
effectiveness through its ability to adapt to the environment., improve internal
relationships and increase learning and problem solving capabilities. OD can help
managers at least three types of current problems
1. Mergers/acquisition
2. Organizational Decline
3. Conflict management
OD Activities
1. Team building
2. Survey-feedback
3. Large group intervention
OD STEPS /STAGES FOR BEHAVIORAL AND ATTIUDE CHANGE
1. Unfreezing people are made aware of problems and the need for change.
Motivation
2. Changing occurs when individual experiments with new behavior and learn new
skills to be used in the workplace.
3. Freezing When individual acquire new attitude or values and are rewarded for them
by the organization.
Factors of Implementing change
1. Reasons people resist change
2. Techniques to enlist employee cooperation
Need for change using performance gap a disparity between existing and desired
performance levels.
Resistance to change
1. Self interest
2. Lack of understanding and trust
3. Uncertainty
4. Different assessment and goals

Force- Field Analysis change is a result of the competition between driving and restraining
forces. By selectively removing restraining forces, the driving forces will be strong to enable
implementation.
Driving Forces are problems or opportunities that provide motivation for change within the
organization.
Restraining Forces are the barriers to change, such as a lack of resources, resistance from
managers or inadequate employees skills.

Driving Forces
( Need for Change)
forces

Restraining Forces
( barriers to Change)

Driving Forces

Reduced
Restraining

Implementation tactics
1. Communication, education
2. Participation
3. Negotiation
4. Coercion
5. Top Management support

Lecture -11 Chapter 11 Managing Human Resource

The Strategic role of HRM is to drive organization performance.

( employees productivity and stronger financial results )

HUMAN RESOURCE MANAGEMENT refers to the design

and application of formal systems in an organization to ensure
the effective and efficient use of human talent to accomplish
organizational goals.
Strategic approach to HRM

1. All managers are involved in human resource management

2. Employees are viewed as assets. Employees give a
company its competitive edge.
3. HRM is a matching process, integrating the organizations
strategy and goals with the correct approach to managing
human capital
Primary goal of HRM
1. Find the Right people HRM Planning, job analysis,
forecasting, Recruiting, Selecting
2. Manage the talent Training, Development and Appraisal
3. Maintain an effective workforce wage and salary,
benefits, labor relations, Terminations
Human Capital refers to the economic value of the
combined knowledge, experience, skills and capabilities of
employees
Assignment :
Research and discuss the following:
1. Employees Rights and
2. Benefits of employee in the Philippines.