Omc Reviewer
Omc Reviewer
Omc Reviewer
: Executive positions require far more conceptual skill and less use of technical skills in
most (but not all) situations
: First-line managers generally require more technical skills and fewer conceptual
skills.
: Human relations skills, or people skills, remain important for success at all three
levels in the hierarchy.
1. Technical skills. Managers must have the ability to use the tools, procedures, and
techniques of their special areas. An accountant must have expertise in accounting
principles, whereas a production manager must know operations management. These skills
are the mechanics of the job.
2. Human relations skills. Human relations skills involve the ability to work with people
and understand employee motivation and group processes. These skills allow the manager
to become involved with and lead his group.
3. Conceptual skills. These skills represent a manager’s ability to organize and analyze
information in order to improve organizational performance. They include the ability to see
the organization as a whole and to understand how various parts fit together to work as an
integrated unit. These skills are required to coordinate the departments and divisions
successfully so that the entire organization can pull together.
Decision-making is the action or process of thinking through possible options and selecting one.
It is important to recognize that managers are continually making decisions, and that the quality of
their decision-making has an impact—sometimes quite significant—on the effectiveness of the
organization and its stakeholders. Stakeholders are all the individuals or groups that are affected
by an organization (such as customers, employees, shareholders, etc.).
Poor decision-making by lower-level managers is unlikely to drive the entire firm out of
existence, but it can lead to many adverse outcomes such as:
• reduced productivity if there are too few workers or insufficient supplies,
• increased expenses if there are too many workers or too many supplies, particularly if the
supplies have a limited shelf life or are costly to store, and
• frustration among employees, reduced morale, and increased turnover (which can be costly
for the organization) if the decisions involve managing and training workers.
The human brain processes information for decision-making using one of two routes: a reflective
system and a reactive (or reflexive) system. The reflective system is logical, analytical,
deliberate, and methodical, while the reactive system is quick, impulsive, and intuitive, relying on
emotions or habits to provide cues for what to do next. Research in neuropsychology suggests
that the brain can only use one system at a time for processing information [Darlow & Sloman] and
that the two systems are directed by different parts of the brain. The prefrontal cortex is more
involved in the reflective system, and the basal ganglia and amygdala (more primitive parts
of the brain, from an evolutionary perspective) are more involved in the reactive system.
1. Reactive Decision-Making: fight-or-flight response kicks in that leads to immediate action
without methodically weighing all possible options and their consequences. Manager has
faced a similar situation in the past and has figured out how to deal with it, the brain shifts
immediately to the quick, intuitive decision-making system.
: These managers will not be able to explain the logic behind their decision, and will instead
say they just went with their “gut”, or did what “felt” right.
: has faced a similar situation in the past and has figured out how to deal with it
: the brain shifts immediately to the quick, intuitive decision-making system.
GROUP DECISION-MAKING
Involving more people in the decision-making process can greatly improve the quality of a
manager's decisions and outcomes. However, involving more people can also increase conflict
and generate other challenges.
Advantages of Group Decisions
1. An advantage to involving groups in decision-making is that you can incorporate different
perspectives and ideas. For this advantage to be realized, however, you need a diverse group. In
a diverse group, the different group members will each tend to have different preferences,
opinions, biases, and stereotypes. Because a variety of viewpoints must be negotiated and
worked through, group decision-making creates additional work for a manager, but (provided the
group members reflect different perspectives) it also tends to reduce the effects of bias on the
outcome.
2. Having more people involved in decision-making is also beneficial because each individual
brings unique information or knowledge to the group, as well as different perspectives on the
problem.
3. Additionally, having the participation of multiple people will often lead to more options being
generated and to greater intellectual stimulation as group members discuss the available options.
Brainstorming is a process of generating as many solutions or options as possible and is a
popular technique associated with group decision-making. All of these factors can lead to superior
outcomes when groups are involved in decision-making. Furthermore, involving people who will be
affected by a decision in the decision-making process will allow those individuals to have a greater
understanding of the issues or problems and a greater commitment to the solutions.
The organization’s environment is classified into two major environments namely: external and
internal environment.
The external environment is everything outside an organization’s boundaries that might affect it.
There are two separate external environments: the general environment and the task
environment.
The general environment is an inclusive concept that involves all outside factors and
influences that impact the operation of a business that an organization must respond or
react to in order to maintain its flow of operations.
1. The Economic Dimension. The economic dimension of an organization’s general
environment is the overall health and vitality of the economic system in which the
organization operates.
2. The Technological Dimension. The technological dimension of the general
environment is made up of the methods available for converting resources into
products or services.
3. The Political–Legal Dimension. The political–legal dimension of the general
environment consists of government regulation of business and the relationship
between business and government.
This dimension is important for three basic reasons. First, the legal system partially
defines what an organization can and cannot do. Second, pro- or anti-business
sentiment in government influences business activity. Finally, political stability has
ramifications for planning.
Task environment provides useful information more readily than the general environment
because the manager can identify environmental factors of specific interest to the
organization, rather than deal with the more abstract dimensions of the general
environment.
1. Competitors - An organization’s competitors are other organizations that compete
with it for resources.
2. Customers - A second dimension of the task environment is customers, or
whoever pays money to acquire an organization’s products or services.
On the other hand, organization’s internal environment consists of conditions and forces within
the organization.
- consists of their owners, board of directors, employees, and physical work environment.
1. Owners. The owners of a business are, of course, the people who have legal property rights
to that business. Owners can be a single individual who establishes and runs a small business,
partners who jointly own the business, individual investors who buy stock in a corporation, or
other organizations.
2. Board of Directors. A corporate board of directors is a governing body that is elected by the
stockholders and charged with overseeing a firm’s general management to ensure that it is run
to best serve the stockholders’ interests. Some boards are relatively passive: They perform a
general oversight function but seldom get actively involved in how the company is really run.
3. Employees. An organization’s employees are also a major element of its internal
environment. Of particular interest to managers today is the changing nature of the workforce,
which is becoming increasingly more diverse in terms of gender, ethnicity, age, and other
dimensions. Workers are also calling for more job ownership—either partial ownership in the
company or at least more say in how they perform their jobs.
4. Physical Work Environment. A final part of the internal environment is the organization’s
actual physical environment and the work that people do. Some firms have their facilities in
downtown skyscrapers, usually spread across several floors. Others locate in suburban or rural
settings and may have facilities more closely resembling a college campus.
1. Managerial Ethics - Managerial ethics consists of the standards of behavior that guide
individual managers in their work. One important area of managerial ethics is the treatment
of employees by the organization. It includes, for example, hiring and firing, wages and
working conditions, and employee privacy and respect.
2. Managing Ethical Behavior - Spurred partially by increased awareness of ethics
scandals in business and partially by a sense of enhanced corporate consciousness about
the distinction between ethical and unethical behaviors, many organizations have
reemphasized ethical behavior on the part of employees.
3. Emerging Ethical Issues -Ethical scandals have become almost commonplace in
today’s world. Ranging from business and sports to politics and the entertainment industry,
these scandals have rocked stakeholder confidence and called into question the moral
integrity of our society.
4. Ethical Leadership - In recent years, the media have been rife with stories about
unscrupulous corporate leaders. For every unethical senior manager, of course, there are
many highly ethical ones. This leadership, in turn, is expected to help set the tone for the
rest of the organization and to establish both norms and a culture that reinforce the
importance of ethical behavior.
5. Corporate Governance - A related area of emerging concern is ethical issues in
corporate governance. As discussed earlier in this chapter, the board of directors of a public
corporation is expected to ensure that the business is being properly managed and that the
decisions made by its senior management are in the best interests of shareholders and
other stakeholders.
6. Ethics and Information Technology - A final set of issues that has emerged in recent
times involves information technology. Among the specific focal points in this area are
individual rights to privacy and individuals’ potential abuse of information technology.
Indeed, online privacy has become a hot topic as companies sort out the related ethical and
management issues.
b. Licensing - is an arrangement whereby a firm allows another company to use its brand
name, trademark, technology, patent, copyright, or other assets.
In return, the licensee pays a royalty, usually based on sales.
Franchising, a special form of licensing, is also widely used in international business.
c. Strategic Alliances - In a strategic alliance, two or more firms jointly cooperate for
mutual gain. For example, Unisys and Oracle have a strategic alliance that provides
customers with the service and technology of Unisys and the enterprise software of Oracle.
A joint venture is special type of strategic alliance in which the partners actually share
ownership of a new enterprise. Strategic alliances have enjoyed a tremendous upsurge in
the past few years.
d. Direct Investment - Another level of commitment to internationalization is direct
investment. Direct investment occurs when a firm headquartered in one country builds or
purchases operating facilities or subsidiaries in a foreign country.
The foreign operations then become wholly owned subsidiaries of the firm.
1. The Cultural Environment - One significant contextual challenge for the international
manager is the cultural environment and how it affects business. A country’s culture
includes all the values, symbols, beliefs, and language that guide behavior. Cultural values
and beliefs are often unspoken; they may even be taken for granted by those who live in a
particular country. Cultural factors do not necessarily cause problems for managers when
the cultures of two countries are similar.
2. Controls on International Trade - Another element of the international context that
managers need to consider is the extent to which there are controls on international trade.
These controls include tariffs, quotas, export restraint agreements, and “buy national” laws.
A tariff is a tax collected on goods shipped across national boundaries. Tariffs can be
collected by the exporting country, by countries through which goods pass, or by the
importing country. Import tariffs, which are the most common, can be levied to protect
domestic companies by increasing the cost of foreign goods.
3. Economic Communities - Just as government policies can either increase or
decrease the political risk that international managers face, trade relations between
countries can either help or hinder international business. Relations dictated by quotas,
tariffs, and so forth can hurt international trade.
4. The Role of the GATT and WTO - The context of international business is also
increasingly being influenced by the General Agreement on Tariffs and Trade (GATT)
and the World Trade Organization (WTO).
The GATT was first negotiated following World War II in an effort to avoid trade wars
that would benefit rich nations and harm poorer ones. Essentially, the GATT is a
trade agreement intended to promote international trade by reducing trade barriers
and making it easier for all nations to compete in international markets.
The World Trade Organization (WTO) came into existence on January 1, 1995.
The WTO replaced the GATT and absorbed its mission. The WTO is headquartered
in Geneva, Switzerland, and currently includes 140-member nations and 32 observer
countries. Members are required to open their markets to international trade and to
follow WTO rules. The WTO has three basic goals:
1. To promote trade flows by encouraging nations to adopt nondiscriminatory
and predictable trade policies
2. To reduce remaining trade barriers through multilateral negotiations
3. To establish impartial procedures for resolving trade disputes among its
members
Purposes of Goals
1. Goals provide guidance and a unified direction for people in the organization. Goals can
help everyone understand where the organization is going and why getting there is
important.
2. Goal-setting practices strongly affect other aspects of planning. Effective goal setting
promotes good planning, and good planning facilitates future goal setting. Specifically, the
firm will need to work aggressively to boost both profits and cash flow to meet its goals.
3. Goals can serve as a source of motivation for an organization's employees. Goals that
are specific and moderately difficult can motivate people to work harder, especially if
attaining the goal is likely to result in rewards.
4. Goals provide an effective mechanism for evaluation and control. This means that
performance can be assessed in the future in terms of how successfully today's goals are
accomplished.
Kinds of Goals
1. An organization's mission is a statement of its "fundamental, unique purpose that sets a
business apart from other firms of its type and identifies the scope of the business's operations in
product and market terms."
2. Strategic goals are set by and for an organization's top management. They focus on broad,
general issues.
COMPONENTS OF STRATEGY
Organizational strengths are skills and capabilities that enable an organization to create
and implement its strategies. Strengths may include things like a deep pool of managerial
talent, surplus capital, a unique reputation and/or brand name, and well-established
distribution channels.
Mission - An organization's fundamental purpose
SWOT Analysis - To formulate strategies that support the mission
Good Strategies - Those that support the mission and exploit opportunities and
strengths - neutralize threats- avoid weaknesses
Organizational weaknesses are skills and capabilities that do not enable an organization
to choose and implement strategies that support its mission. An organization has essentially
two ways of addressing weaknesses.
TACTICAL PLANNING
tactical plans are developed to implement specific parts of a strategic plan. You have probably
heard the saying about winning the battle but losing the war. Tactical plans are to battles what
strategy is to a war: an organized sequence of steps designed to execute strategic plans. Strategy
focuses on resources, environment, and mission, whereas tactics focus primarily on people and
action.
OPERATIONAL PLANNING
Another critical element in effective organizational planning the development and implementation
of operational plans. Operational plans are derived from tactical plans and are aimed at achieving
operational goals. Thus, operational plans tend to be narrowly focused, have relatively short time
horizons, and involve lower-level managers
Contingency planning is a useful technique for helping managers cope with uncertainty and
change. However, crisis management, by its very nature, is more difficult to anticipate. But
organizations that have a strong culture, strong leadership, and a capacity to deal with the
unexpected stand a better chance of successfully weathering a crisis than other organizations.