MANAGEMENT SCIENCES

(Paper)

QUESTION # 1

What is social responsibility?

Social responsibility
A business’s intention, beyond its legal and Economic obligations, to do the right things and act
in ways that are good for society
Managers regularly face decisions that have a dimension of social responsibility in areas such as
employee relations, philanthropy, pricing, resource conservation, product quality and safety,
and doing business in countries that devalue human rights. What does it mean to be socially
responsible?

From Obligations to Responsiveness to Responsibility

The concept of social responsibility has been described in different ways. For instance, it’s been
called “profit making only,” “going beyond profit making,” “any discretionary corporate activity
intended to further social welfare,” and “improving social or environmental conditions.” We
can understand it better if we first compare it to two similar concepts: social obligation and
social responsiveness. Social obligation is when a firm engages in social actions because of its
obligation to meet certain economic and legal responsibilities. The organization does what it’s
obligated to do and nothing more. This idea reflects the classical view of social responsibility,
which says that management’s only social responsibility is to maximize profits. The most
outspoken advocate of this approach is economist and Nobel laureate Milton Friedman. He
argued that managers’ primary responsibility is to operate the business in the best interests of
the stockholders, whose primary concerns are financial. He also argued that when managers
decide to spend the organization’s resources for “social good,” they add to the costs of doing
business, which have to be passed on to consumers through higher prices or absorbed by
stockholders through smaller dividends. You need to understand that Friedman doesn’t say that
organizations shouldn’t be socially responsible. But his interpretation of social responsibility is
to maximize profits for stockholders.
The other two concepts—social responsiveness and social responsibility—reflect the
socioeconomic view, which says that managers’ social responsibilities go beyond making profits
to include protecting and improving society’s welfare. This view is based on the belief that
corporations are not independent entities responsible only to stockholders, but have an
obligation to the larger society. Organizations around the world have embraced this view as
shown by a survey of global executives in which 84 percent said that companies must balance
obligations to shareholders with obligations to the public good. But how do these two concepts
differ?
Social responsiveness is when a company engages in social actions in response to some popular
social need. Managers are guided by social norms and values and make practical, market-
oriented decisions about their actions. For instance, Ford Motor Company became the first
automaker to endorse a federal ban on sending text messages while driving. A company
spokesperson said that, “The most complete and most recent research shows that activity that
draws drivers’ eyes away from the road for an extended period while driving, such as text
messaging, substantially increases the risk of accidents.”7 By supporting this ban, company
managers “responded” to what they felt was an important social need. When the disastrous
earthquake hit Haiti in January 2010, many companies responded to the immense needs in that
region. For instance, UPS has a company-wide policy that urges employees to volunteer during
natural disasters and other crises. In support of this policy, UPS maintains a 20-person Logistics
Emergency Team in Asia, Europe, and the Americas that’s trained in humanitarian relief.
A socially responsible organization views things differently. It goes beyond what it’s obligated
to do or chooses to do because of some popular social need and does what it can to help
improve society because it’s the right thing to do. We define social responsibility as a
business’s intention, beyond its legal and economic obligations, to do the right things and act in
ways that are good for society.9 Our definition assumes that a business obeys the law and cares
for its stockholders, but adds an ethical imperative to do those things that make society better
and not to do those that make it worse. A socially responsible organization does what is right
because it feels it has an ethical responsibility to do so
Abet family member said,
“These actions weren’t just about costs, but about doing the right thing. We don’t do
everything just because of money.”
QUESTION # 2

What is green management and describe its types?

Green Management

Managers consider the impact of their organization on the natural environment.

Until the late 1960s, few people (and organizations) paid attention to the environmental
consequences of their decisions and actions. Although some groups were concerned with
conserving natural resources, about the only reference to saving the environment was the
ubiquitous printed request “Please Don’t Litter.” However, a number of environmental
disasters brought a new spirit of environmentalism to individuals, groups, and organizations.

Increasingly, managers have begun to consider the impact of their organization on the natural
environment, which we call green management. What do managers need to know about going
green?

How Organizations Go Green

Managers and organizations can do many things to protect and preserve the natural
environment.
Some do no more than what is required by law—that is, they fulfill their social obligation.
However, others have radically changed their products and production processes. For instance,
Fiji Water is using renewable energy sources, preserving forests, and conserving water. Carpet-
maker Mohawk Industries uses recycled plastic containers to produce fiber used in its carpets.

1) Light green approach

The first approach, the legal (or light green) approach, is simply doing what is required legally.

In this approach, which illustrates social obligation, organizations exhibit little environmental
sensitivity. They obey laws, rules, and regulations without legal challenge and that’s the extent
of their being green.
As an organization becomes more sensitive to environmental issues, it may adopt the market
approach, and respond to environmental preferences of customers.
Whatever customers demand in terms of environmentally friendly products will be what the
organization provides. For example, DuPont developed a new type of herbicide that helped
farmers around the world reduce their annual use of chemicals by more than 45 million
pounds. By developing this product, the company was responding to the demands of its
customers (farmers) who wanted to minimize the use of chemicals on their crops. This is a good
example of social responsiveness, as is the next approach.

In the stakeholder approach, an organization works to meet the environmental demands of

multiple stakeholders such as employees, suppliers, or community. For instance, Hewlett
Packard has several corporate environmental programs in place for its supply chain (suppliers),
product design and product recycling (customers and society), and work operations (employees
and community).

2) Dark green approach

Finally, if an organization pursues an activist (or dark green) approach, it looks for ways to
protect the earth’s natural resources. The activist approach reflects the highest degree of
environmental sensitivity and illustrates social responsibility. For example, Belgian company
Ecover produces ecological cleaning products in a near-zero-emissions factory. This factory (the
world’s first ecological one) is an engineering marvel with a huge grass roof that keeps things
cool in summer and warm in winter and a water treatment system that runs on wind and solar
energy. The company chose to build this facility because of its deep commitment to the
environment.
QUESTION # 3

What is Strategic management, describe its process?

Strategic management

Strategic management is what managers do to develop the organization’s strategies. It’s an

important task involving all the basic management functions—planning, organizing, leading,
and controlling.

What are an organization’s strategies? They’re the plans for how the organization will do
whatever it’s in business to do, how it will compete successfully, and how it will attract and
satisfy its customers in order to achieve its goals.

Strategic management process

The strategic management process is a six-step process that encompasses strategy planning,
implementation, and evaluation. Although the first four steps describe the planning that must
take place, implementation and evaluation are just as important! Even the best strategies can
fail if management doesn’t implement or evaluate them properly.

Step 1: Identifying the Organization’s Current Mission,

Goals, and Strategies
Every organization needs a mission—a statement of its purpose. Defining the mission forces
managers to identify what it’s in business to do. For instance, the mission of Avon is “To be the
company that best understands and satisfies the product, service, and self-fulfillment needs of
women on a global level.” The mission of Facebook is “a social utility that connects you with the
people around you.” The mission of the National Heart Foundation of Australia is to “reduce
suffering and death from heart, stroke, and blood vessel disease in Australia.” These statements
provide clues to what these organizations see as their purpose.

Step 2: Doing an External Analysis

Analyzing that environment is a critical step in the strategic management process. Managers do
an external analysis so they know, for instance, what the competition is doing, what pending
legislation might affect the organization, or what the labor supply is like in locations where it
operates. In an external analysis, managers should examine the economic, demographic,
political/legal, sociocultural, technological, and global components to see the trends and
changes.
Once they’ve analyzed the environment, managers need to pinpoint opportunities that the
organization can exploit and threats that it must counteract or buffer against. Opportunities
are positive trends in the external environment; threats are negative trends.

Step 3: Doing an Internal Analysis

Now we move to the internal analysis, which provides important information about an
organization’s specific resources and capabilities. An organization’s resources are its assets—
financial, physical, human, and intangible—that it uses to develop, manufacture, and deliver
products to its customers. They’re “what” the organization has. On the other hand, its
capabilities are its skills and abilities in doing the work activities needed in its business—“how”
it does its work. The major value-creating capabilities of the organization are known as its core
competencies. Both resources and core competencies determine the organization’s
competitive weapons.
After completing an internal analysis, managers should be able to identify organizational
strengths and weaknesses. Any activities the organization does well or any unique resources
that it has are called strengths. Weaknesses are activities the organization doesn’t do well or
resources it needs but doesn’t possess.

Step 4: Formulating Strategies

As managers formulate strategies, they should consider the realities of the external
environment and their available resources and capabilities in order to design strategies that will
help an organization achieve its goals. The three main types of strategies managers will
formulate include corporate, competitive, and functional. We’ll describe each shortly.

Step 5: Implementing Strategies

Once strategies are formulated, they must be implemented. No matter how effectively an
organization has planned its strategies, performance will suffer if the strategies aren’t
implemented properly.
Step 6: Evaluating Results
The final step in the strategic management process is evaluating results. How effective have the
strategies been at helping the organization reach its goals? What adjustments are necessary?
After assessing the results of previous strategies and determining that changes were needed.

QUESTION # 4

What is cooperate strategies and describe its three types?

Corporate Strategies
As we said earlier, organizations use three types of strategies: corporate, competitive, and
functional. Top-level managers typically are responsible for corporate strategies, middle-level
managers for competitive strategies, and lower-level managers for the functional strategies. In
this section, we’ll look at corporate strategies.

What Is Corporate Strategy?

A corporate strategy is one that determines what businesses a company is in or wants to be in,
and what it wants to do with those businesses. It’s based on the mission and goals of the
organization and the roles that each business unit of the organization will play.

What Are the Types of Corporate Strategy?

The three main types of corporate strategies are growth, stability, and renewal. Let’s look at
each type.
1) GROWTH. A growth strategy is when an organization expands the number of markets
served or products offered, either through its current business or through new business.
Because of its growth strategy, an organization may increase revenues, number of employees,
or market share. Organizations grow by using concentration, vertical integration, horizontal
integration, or diversification.
2) STABILITY. A stability strategy is a corporate strategy in which an organization continues to
do what it is currently doing. Examples of this strategy include continuing to serve the same
clients by offering the same product or service, maintaining market share, and sustaining the
organization’s current business operations. The organization doesn’t grow, but doesn’t fall
behind, either.
3) RENEWAL. When an organization is in trouble, something needs to be done. Managers need
to develop strategies, called renewal strategies that address declining performance. The two
main types of renewal strategies are retrenchment and turnaround strategies. A retrenchment
strategy is a short-run renewal strategy used for minor performance problems. This strategy
helps an organization stabilize operations, revitalize organizational resources and capabilities,
and prepare to compete once again. When an organization’s problems are more serious, more
drastic action—the turnaround strategy—is needed. Managers do two things for both renewal
strategies: cut costs and restructure organizational operations. However, in a turnaround
strategy, these measures are more extensive than in a retrenchment strategy.

QUESTION # 5

Organizational design, structure and its elements?

The basic concepts of organization design formulated by early management writers, offered
structural principles for managers to follow.
We defined organizing as arranging and structuring work to accomplish organizational goals.
It’s an important process during which managers design an organization’s structure.
Organizational structure is the formal arrangement of jobs within an organization.
When managers create or change the structure, they’re engaged in organizational design, a
process that involves decisions about six key elements: work specialization,
departmentalization, chain of command, span of control, centralization and decentralization,
and formalization.

Six key Elements

1) Work Specialization
Work specialization makes efficient use of the diversity of skills that workers have. In most
organizations, some tasks require highly developed skills; others can be performed by
employees with lower skill levels. If all workers were engaged in all the steps of, say, a
manufacturing process, all would need the skills necessary to perform both the most
demanding and the least demanding jobs.
At the Wilson Sporting Goods factory in Ada, Ohio, 150 workers (with an average tenure
exceeding 20 years) make every football used in the National Football League and most of
those used in college and high school football games. To meet daily output goals, the workers
specialize in job tasks such as molding, stitching and sewing, lacing, and so forth.5 This is an
example of work specialization, which is dividing work activities into separate job tasks.
Individual employees “specialize” in doing part of an activity rather than the entire activity in
order to increase work output. It’s also known as division of labor, a concept we introduced in
the management history module.

2) Departmentalization
Does your college have a department of student services or financial aid department? Are you
taking this course through a management department? After deciding what job tasks will be
done by whom, common work activities need to be grouped back together so work gets done in
a coordinated and integrated way? How jobs are grouped together is called
departmentalization.
Five common forms of departmentalization are used, although an organization may develop its
own unique classification. (For instance, a hotel might have departments such as front desk
operations, sales and catering, housekeeping and laundry, and maintenance.)

3) Chain of Command
Suppose you were at work and had a problem with some issue that came up. What would you
do? Who would you go to help you resolve that issue? People need to know who their boss is.
That’s what the chain of command is all about. The chain of command is the line of authority
extending from upper organizational levels to lower levels, which clarifies who reports to
whom. Managers need to consider it when organizing work because it helps employees with
questions such as “Who do I report to?” or “Who do I go to if I have a problem?” To understand
the chain of command, you have to understand three other important concepts: authority,
responsibility, and unity of command.

4) Span of Control
How many employees can a manager efficiently and effectively manage? That’s what span of
control is all about. The traditional view was that managers could not—and should not—
directly supervise more than five or six subordinates. Determining the span of control is
important because to a large degree, it determines the number of levels and managers in an
organization—an important consideration in how efficient an organization will be. All other
things being equal, the wider or larger the span, the more efficient and organization is. Here’s
why.
Assume two organizations, both of which have approximately 4,100 employees. If one
organization has a span of four and the other a span of eight, the organization with the wider
span will have two fewer levels and approximately 800 fewer managers. At an average
manager’s salary of $42,000 a year, the organization with the wider span would save over $33
million a year! Obviously, wider spans are more efficient in terms of cost. However, at some
point, wider spans may reduce effectiveness if employee performance worsens because
managers no longer have the time to lead effectively.

5) Centralization and Decentralization

One of the questions that needs to be answered when organizing is “At what organizational
level are decisions made?” Centralization is the degree to which decision making takes place at
upper levels of the organization. If top managers make key decisions with little input from
below, then the organization is more centralized. On the other hand, the more that lower-level
employees provide input or actually make decisions, the more decentralization there is. Keep in
mind that centralization-decentralization is not an either-or concept. The decision is relative,
not absolute—that is, an organization is never completely centralized or decentralized.
Early management writers proposed that the degree of centralization in an organization
depended on the situation. Their goal was the optimum and efficient use of employees.
Traditional organizations were structured in a pyramid, with power and authority concentrated
near the top of the organization. Given this structure, historically centralized decisions were the
most prominent, but organizations today have become more complex and responsive to
dynamic changes in their environments. As such, many managers believe that decisions need to
be made by those individuals closest to the problems, regardless of their organizational level.

6) Formalization
Formalization refers to how standardized an organization’s jobs are and the extent to which
employee behavior is guided by rules and procedures. In highly formalized organizations, there
are explicit job descriptions, numerous organizational rules, and clearly defined procedures
covering work processes. Employees have little discretion over what’s done, when it’s done,
and how it’s done. However, where formalization is low, employees have more discretion in
how they do their work.
QUESTION # 6

Traditional organizational design, describe briefly?

Traditional Organizational Designs

In this chapter, we’re going to describe the traditional organizational designs.
When designing a structure, managers may choose one of the traditional organizational
designs. These structures tend to be more mechanistic in nature. A summary of the strengths
and weaknesses of each can be found below

1) Simple Structure
Most companies start as entrepreneurial ventures using a simple structure, which is an
organizational design with low departmentalization, wide spans of control, authority
centralized in a single person, and little formalization. As employees are added, however, most
don’t remain as simple structures. The structure tends to become more specialized and
formalized. Rules and regulations are introduced, work becomes specialized, departments are
created, levels of management are added, and the organization becomes increasingly
bureaucratic. At this point, managers might choose a functional structure or a divisional
structure.

2) Functional Structure
A functional structure is an organizational design that groups similar or related occupational
specialties together. You can think of this structure as functional departmentalization applied to
the entire organization.
3) Divisional Structure
The divisional structure is an organizational structure made up of separate business units or
divisions. In this structure, each division has limited autonomy, with a division manager who
has authority over his or her unit and is responsible for performance. In divisional structures,
however, the parent corporation typically acts as an external overseer to coordinate and
control the various divisions, and often provides support services such as financial and legal.
Walmart, for example, has two divisions: retail (Walmart Stores, International, Sam’s Clubs, and
others) and support (distribution centers).

QUESTION # 7

Define motivation and its theories?

Motivation refers to the process by which a person’s efforts are energized, directed, and
sustained toward attaining a goal. This definition has three key elements: energy, direction, and
persistence.
The energy element is a measure of intensity, drive, and vigor. A motivated person puts forth
effort and works hard. However, the quality of the effort must be considered as well as its
intensity. High levels of effort don’t necessarily lead to favorable job performance unless the
effort is channeled in a direction that benefits the organization. Effort that’s directed toward,
and consistent with, organizational goals is the kind of effort we want from employees. Finally,
motivation includes a persistence dimension. We want employees to persist in putting forth
effort to achieve those goals.
Maslow’s Hierarchy of Needs Theory
The best-known theory of motivation is probably Abraham Maslow’s hierarchy of needs
theory. Maslow was a psychologist who proposed that within every person is a hierarchy of five
needs:

1. Physiological needs: A person’s needs for food, drink, shelter, sex, and other physical
requirements.
2. Safety needs: A person’s needs for security and protection from physical and emotional
harm, as well as assurance that physical needs will continue to be met.
3. Social needs: A person’s needs for affection, belongingness, acceptance, and friendship.
4. Esteem needs: A person’s needs for internal esteem factors such as self-respect, autonomy,
and achievement and external esteem factors such as status, recognition, and attention.
5. Self-actualization needs: A person’s needs for growth, achieving one’s potential, and self-
fulfillment; the drive to become what one is capable of becoming.
Maslow argued that each level in the needs hierarchy must be substantially satisfied before the
next need becomes dominant. An individual moves up the needs hierarchy from one level to
the next. In addition, Maslow separated the five needs into higher and lower levels.
Physiological and safety needs were considered lower-order needs; social, esteem, and self-
actualization needs were considered higher-order needs. Lower-order needs are predominantly
satisfied externally while higher-order needs are satisfied internally.

McGregor’s Theory X and Theory Y

Douglas McGregor is best known for proposing two assumptions about human nature:
Theory X and Theory Y.
Theory X is a negative view of people that assumes workers have little ambition, dislike work,
want to avoid responsibility, and need to be closely controlled to work effectively.
Theory Y is a positive view that assumes employees enjoy work, seek out and accept
responsibility, and exercise self-direction.
McGregor believed that Theory Y assumptions should guide management practice and
proposed that participation in decision making, responsible and challenging jobs, and good
group relations would maximize employee motivation.
Unfortunately, no evidence confirms that either set of assumptions is valid or that being a
Theory Y manager is the only way to motivate employees. For instance, Jen-Shun Huang,
founder of NVidia Corporation, an innovative and successful microchip manufacturer, has been
known to use both reassuring hugs and tough love in motivating employees. But he has little
tolerance.
QUESTION # 8

What is leadership and defines its early theories? (Trait and behavior theory)
Our definition of a leader is someone who can influence others and who has managerial
authority. Leadership is what leaders do. It’s a process of leading a group and influencing that
group to achieve its goals.

1) Leadership Trait Theories

Well, that’s also what leadership trait theories have attempted to do—identify certain traits
that all leaders have.
Leadership research in the 1920s and 1930s focused on isolating leader traits—that is,
characteristics—that would differentiate leaders from non-leaders. Some of the traits studied
included physical stature, appearance, social class, emotional stability, fluency of speech, and
sociability. Despite the best efforts of researchers, it proved impossible to identify a set of traits
that would always differentiate a leader from a non-leader.

Seven Traits Associated with Leadership

1. Drive. Leaders exhibit a high effort level. They have a relatively high desire for achievement,
they are ambitious, they have a lot of energy, they are tirelessly persistent in their activities,
and they show initiative.
2. Desire to lead. Leaders have a strong desire to influence and lead others. They demonstrate
the willingness to take responsibility.
3. Honesty and integrity. Leaders build trusting relationships with followers by being truthful or
no deceitful and by showing high consistency between word and deed.
4. Self-confidence. Followers look to leaders for an absence of self-doubt. Leaders, therefore,
need to show self-confidence in order to convince followers of the rightness of their goals and
decisions.
5. Intelligence. Leaders need to be intelligent enough to gather, synthesize, and interpret large
amounts of information, and they need to be able to create visions, solve problems, and make
correct decisions.
6. Job-relevant knowledge. Effective leaders have a high degree of knowledge about the
company, industry, and technical matters. In-depth knowledge allows leaders to make well-
informed decisions and to understand the implications of those decisions.
7. Extraversion. Leaders are energetic, lively people. They are sociable, assertive, and rarely
silent or withdrawn.
2) Leadership Behavior Theories

Researchers hoped that the behavioral theories approach would provide more definitive
answers about the nature of leadership than did the trait theories. The four main leader
behavior studies are summarized below.

THE OHIO STATE STUDIES. The Ohio State studies identified two important dimensions of
leader behavior. Beginning with a list of more than 1,000 behavioral dimensions, the
researchers eventually narrowed it down to just two that accounted for most of the leadership
behavior described by group members. The first was called initiating structure, which referred
to the extent to which a leader defined his or her role and the roles of group members in
attaining goals. It included behaviors that involved attempts to organize work, work
relationships, and goals. The second was called consideration, which was defined as the extent
to which a leader had work relationships characterized by mutual trust and respect for group
members’ ideas and feelings. A leader who was high in consideration helped group members
with personal problems, was friendly and approachable, and treated all group members as
equals. He or she showed concern for (was considerate of) his or her followers’ comfort, well-
being, status, and satisfaction. Research found that a leader who was high in both initiating
structure and consideration (a high–high leader) sometimes achieved high group task
performance and high group member satisfaction, but not always.
UNIVERSITY OF MICHIGAN STUDIES. Leadership studies conducted at the University of
Michigan at about the same time as those being done at Ohio State also hoped to identify
behavioral characteristics of leaders that were related to performance effectiveness. The
Michigan group also came up with two dimensions of leadership behavior, which they labeled
employee oriented and production oriented.10 Leaders who were employee oriented were
described as emphasizing interpersonal relationships. The production-oriented leaders, in
contrast, tended to emphasize the task aspects of the job. Unlike the other studies, the
Michigan researchers concluded that leaders who were employee oriented were able to get
high group productivity and high group member satisfaction.

THE MANAGERIAL GRID. The behavioral dimensions from these early leadership studies
provided the basis for the development of a two-dimensional grid for appraising leadership
styles. This managerial grid used the behavioral dimensions “concern for people” (the vertical
part of the grid) and “concern for production” (the horizontal part of the grid) and evaluated a
leader’s use of these behaviors, ranking them on a scale from 1 (low) to 9 (high). Although the
grid had 81 potential categories into which a leader’s behavioral style might fall, only five styles
were named: impoverished management (1,1 or low concern for production, low concern for
people), task management (9,1 or high concern for production, low concern for people),
middle-of-the-road management (5,5 or medium concern for production, medium concern for
people), country club management (1,9 or low concern for production, high concern for
people), and team management (9,9 or high concern for production, high concern for people).
Of these five styles, the researchers concluded that managers performed best when using a 9,9
style. Unfortunately, the grid offered no answers to the question of what made a manager an
effective leader