An ad for a soft drink that uses the slogan: "life is good" is employing _____.

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Thomas S. Bateman McIntire School of Commerce

University of Virginia

Scott A. Snell Darden Graduate School of Business

University of Virginia

LEADING & COLLABORATING IN A COMPETITIVE WORLD

Management

ELEVENTH EDITION

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MANAGEMENT: LEADING & COLLABORATING IN A COMPETITIVE WORLD, ELEVENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2015 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2013, 2011, and 2009. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4

ISBN 978-0-07-786254-1 MHID 0-07-786254-6

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Library of Congress Cataloging-in-Publication Data Bateman, Thomas S. Management: leading & collaborating in a competitive world / Thomas S. Bateman, McIntire School of Commerce, University of Virginia, Scott A. Snell, Darden Graduate School of Business, University of Virginia.—ELEVENTH EDITION. pages cm Includes indexes. ISBN 978-0-07-786254-1 (alk. paper)—ISBN 0-07-786254-6 (alk. paper) 1. Management. I. Snell, Scott, 1958- II. Title. HD31.B369485 2015 658—dc23

2013037450

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

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For my parents, Tom and Jeanine Bateman,

and Mary Jo, Lauren, T.J., and James

and

My parents, John and Clara Snell,

and Marybeth, Sara, Jack, and Emily

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v

THOMAS S. BATEMAN Thomas S. Bateman is Bank of America Profes- sor and management area coordinator in the McIn- tire School of Com- merce at the University of Virginia. He teaches leadership courses and is director of a new lead- ership minor open to undergraduate students of all majors. Prior to joining the University of Virginia, he taught orga- nizational behavior at the Kenan-Flagler Business School of the University of North Carolina to undergraduates, MBA students, PhD students, and practicing managers. He also taught for two years in Europe as a visiting professor at the Institute for Management Development (IMD), one of the world’s leaders in the design and delivery of executive education. Professor Bateman completed his doctoral program in business administration in 1980 at Indiana University. Prior to receiving his doctorate, Dr. Bateman received his BA from Miami University. In addition to Virginia, UNC–Chapel Hill, and IMD, Dr. Bateman has taught at Texas A&M, Tulane, and Indiana universities.

Professor Bateman is an active management researcher, writer, and consultant. He serves on the editorial boards of the Academy of Management Review, the Academy of Management Journal, and the Asia Pacific Journal of Busi- ness and Management. His articles have appeared in pro- fessional journals such as the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Journal of Management, Business Horizons, Journal of Organizational Behavior, and Decision Sciences.

Tom’s current consulting and research center on practical wisdom in business executives, leadership in the form of problem solving at all organizational lev- els, various types of proactive behavior by employees at all levels, and the successful pursuit of long-term work goals. He works with organizations including Singapore Airlines, the Brookings Institution, the U.S. Chamber of Commerce, the Nature Conservancy, and LexisNexis.

SCOTT A. SNELL Scott Snell is Professor of Business Administration at the University of Vir- ginia’s Darden Graduate School of Business. He teaches courses in lead- ership, developing orga- nizational capability, and human capital consult- ing. His research focuses on human resources and the mechanisms by which organizations generate, transfer, and integrate new knowledge for com-

petitive advantage. He is co-author of four books: Man- aging People and Knowledge in Professional Service Firms, Management: Leading and Collaborating in a Competitive World, M: Management, and Managing Human Resources. His work has been published in a number of journals such as the Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Journal of Management Studies, and Human Resource Management, and he was recently listed among the top 100 most-cited authors in schol- arly journals of management. He has served on the boards of the Strategic Management Society’s human capital group, the Society for Human Resource Man- agement Foundation, the Academy of Management’s human resource division, the Human Resource Manage- ment Journal, the Academy of Management Journal and the Academy of Management Review. Professor Snell has worked with companies such as AstraZeneca, Deutsche Telekom, Shell, and United Technologies to align strategy, capability, and investments in talent. Prior to joining the Darden faculty in 2007, he was professor and director of executive education at Cornell Univer- sity’s Center for Advanced Human Resource Studies and a professor of management in the Smeal College of Business at Pennsylvania State University. He received a B.A. in psychology from Miami University, as well as M.B.A. and Ph.D. degrees in business administration from Michigan State University.

About the Authors

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vi

Preface

Welcome to our 11th edition! Thank you to everyone who has used and learned from previous editions. We are proud to present to you our newest and most exciting edition.

Our Goals Our mission with this text hasn’t changed from that of our previous editions: to inform, instruct, and inspire. We hope to inform by providing descriptions of the important concepts and practices of modern manage- ment. We hope to instruct by describing how you can take action on the ideas discussed. We hope to inspire not only by writing in an interesting and optimistic way but also by providing a real sense of the opportunities ahead of you. Whether your goal is starting your own company, leading a team to greatness, building a strong organization, delighting your customers, or generally forging a positive future, we want to inspire you to take constructive actions.

We hope to inspire you to be both a thinker and a doer. We want you to think about the issues, think about the impact of your actions, think before you act. But being a good thinker is not enough; you also must be a doer. Management is a world of action. It is a world that requires timely and appropriate action. It is a world not for the passive but for those who commit to positive accomplishments.

Keep applying the ideas you learn in this course, read about management in sources outside of this course, and keep learning about management after you leave school and continue your career. Make no mistake about it: Learning about management is a personal voyage that will last years, an entire career.

Competitive Advantage Today’s world is competitive. Never before has the world of work been so challenging. Never before has it been so imperative to your career that you learn the skills of management. Never before have people had so many opportunities and challenges with so many potential risks and rewards.

You will compete with other people for jobs, resources, and promotions. Your organization will

compete with other firms for contracts, clients, and cus- tomers. To survive the competition, and to thrive, you must perform in ways that give you an edge over your competitors, that make the other party want to hire you, buy from you, and do repeat business with you. You will want them to choose you, not your competitor.

To survive and thrive, today’s managers have to think and act strategically. Today’s customers are well educated, aware of their options, and demanding of excellence. For this reason, managers today must think constantly about how to build a capable workforce and manage in a way that delivers the goods and services that provide the best possible value to the customer.

By this standard, managers and organizations must perform. Six essential types of performance, on which the organization beats, equals, or loses to the competi- tion, are cost, quality, speed, innovation, service, and sus- tainability. These six performance dimensions, when managed well, deliver value to the customer and com- petitive advantage to you and your organization. We will elaborate on all of these topics throughout the book.

The idea is to keep you focused on a type of bottom line to make sure you think continually about delivering the goods that make both you and your organization a competitive success. This results-oriented approach is unique among management textbooks.

Leading & Collaborating Yes, business is competitive. But it’s not that simple. In fact, to think strictly in terms of competition is overly cynical, and such cynicism can sabotage your perfor- mance. The other fundamental elements in the success equation are collaboration and leadership. People work- ing with, rather than against, one another are essential to competitive advantage. Put another way, you can’t do it alone—the world is too complex, and business is too challenging.

You need to work with your teammates. Leaders and followers need to work as collaborators more than as adversaries. Work groups throughout your organization need to cooperate with one another. Business and gov- ernment, often viewed as antagonists, can work produc- tively together. And today more than ever, companies

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Preface vii

• New text example of collaborating with customers via social media, focusing on L.L. Bean

• New example of car makers expanding production in the United States

• New In Practice about Mark Little, chief technology officer at GE

• New example of the importance of people skills to management success, beginning early in one’s career

• New In Practice about Anne Ackerley, chief market- ing officer of BlackRock, a money management firm

Chapter 2 • New Management Connection about Facebook and

Mark Zuckerberg

• New Figure 2.3 on employment trends following re- cent recessions

• New examples throughout chapter on cola wars and efforts, especially at PepsiCo, to include more healthful products in the mix

• New example of e-readers and eBooks as comple- mentary products

• New In Practice about the growth and challenges of using contingent workers

• New In Practice about Google’s organizational culture

Chapter 3 • New Management Connection about decisions

related to Boeing Dreamliner

• New example of logistics decisions to help Toys “R” Us compete with online-only retailers

• New Henry Ford example from The Greatest Business Decisions of All Time

• New text describing the significance of big data for decision making

• New In Practice about decision to launch Apple Maps

• New In Practice about GE and Virgin Airlines using social media to gather ideas for a “social airplane”

• New example of Pixar’s ideas for boosting creative thinking

• New Concluding Case: Soaring Eagle Skate Company

Chapter 4 • New Management Connection about Walt Disney

Company

that traditionally were competitors engage in joint ven- tures and find other ways to collaborate on some things even as they compete in others. Leadership is needed to make these collaborations happen.

How does an organization create competitive advan- tage through collaboration? It’s all about the people, and it derives from good leadership. Three stereotypes of leadership are that it comes from the top of the com- pany, that it comes from one’s immediate boss, and that it means being decisive and issuing commands. These stereotypes may contain grains of truth, but the real- ity is much more complex. First, the person at the top may or may not provide effective leadership—in fact, many observers believe that good leadership is far too rare. Second, organizations need leaders at all levels, in every team and work unit. This includes you, begin- ning early in your career, and this is why leadership is an important theme in this book. Third, leaders should be capable of decisiveness and of giving commands, but relying too much on this traditional approach isn’t enough. Great leadership is far more inspirational than this and helps people both to think differently and to work differently—including working collaboratively with a focus on results.

Leadership—from your boss as well as from you— generates collaboration, which in turn creates results that are good for the company and good for the people involved.

As Always, Currency and Variety in the 11th Edition It goes without saying that this textbook, in its 11th edi- tion, remains on the cutting edge of topical coverage, updated via both current business examples and recent management research. Chapters have been thoroughly updated, and students are exposed to a broad array of important current topics. As but two examples, we have expanded and strengthened our coverage of sustainabil- ity and social enterprise, topics on which we were early leaders and that we continue to care about as much as today’s students.

We have done our very best to draw from a wide vari- ety of subject matter, sources, and personal experiences. We continue to emphasize throughout the book themes such as real results, ethics, cultural considerations, and leadership and collaboration. Here is just a sampling of new highlights in the 11th edition—enough to convey the wide variety of people, organizations, issues, and contexts represented throughout the text.

Chapter 1 • New Management Connection about Jeff Bezos of

Amazon

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viii Preface

Chapter 7 • New Management Connection about Popchips

• New list of entrepreneurs in their 20s (Table 7.2)

• New example of Limor Fried, founder of Adafruit Industries

• New examples of SpaceX and Bigelow Aerospace

• New examples of itMD and Care at Hand—health care technology companies receiving grants in an area of new demand

• New In Practice about 3Cinteractive

• New example of Zipcar

• Material on financial needs of a start-up collected in one section, with the addition of material about crowdfunding expansion under the JOBS Act of 2012

• New In Practice about David Karp, founder of Tumblr

• New example of Neema Bahramzad and Caitlin Bales, founders of Locabal

• New Concluding Case: ScrollCo

Chapter 8 • New Management Connection about General

Motors

• New In Practice about Coca-Cola’s board of directors

• New example of outside directors helping companies during the Great Recession

• New example of Time Warner Cable

• New example of San Francisco Federal Credit Union

• New In Practice about enterprise social networks

Chapter 9 • New Management Connection about General

Electric

• Updated Walmart example

• New In Practice about Hewlett-Packard

• New example of DreamWorks Animation

• New In Practice about clothing customization by eShakti and Bow & Drape

• New example of Toyota

• New example of Japanese companies revisiting their approach to just-in-time, following the earthquake and tsunami’s impact

• New example of R. A. Jones & Co.

• New example of New York Community Bancorp

• New In Practice about the Bill and Melinda Gates Foundation

• New example of Procter & Gamble, including A. G. Lafley on importance of strategy

• New example of Zappos.com

• New example of QlikTech, including sample graphic for a SWOT analysis

• New example of General Electric

• New In Practice about Valve’s online distribution of video games at the Steam website

• New example of Bloomin’ Brands

• New example of Spirit Airlines

• New Concluding Case: Wish You Wood

Chapter 5 • New Management Connection about IBM (includ-

ing Smarter Planet initiative)

• New In Practice fictional example of an ethical di- lemma at a sign company

• New example applying ethical principles to decisions about fracking

• New Table 5.2 with updated current examples of ethical issues in business, including health care, so- cial media, and telework

• New In Practice about Red Frog Events

• New Table 5.4 of Unisys Corporation’s code of ethics

• New example of Siemens

Chapter 6 • New Management Connection about Lenovo

• New examples (e.g., General Motors) of Chinese manufacturing shifting toward more skilled manu- facturing aimed at serving its growing middle class

• South America information updated to include growth beyond Brazil

• New example of IBM finding opportunities in Africa

• New example of Cinnabon in the Middle East and Russia

• New In Practice about Starbucks

• New example of Panasonic

• New example of U.S. tariffs on Chinese solar panels

• New In Practice about Celtel

• New Concluding Case: Net-Work Docs

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Preface ix

• New example of Northeast Georgia Health System

• New In Practice about RescueTime auto-analytics for performance feedback

• New example of Parasole restaurant group

• New example of Plante Moran accounting firm

• New In Practice about Mars Inc.

Chapter 14 • New Management Connection about Whole Foods

Market

• New example of FLEXcon

• New example of Game Freak

• New example of Lockheed Martin

• New example of trend toward rapid team formation

• New In Practice about Menlo Innovations

• New example of National Information Solutions Cooperative

• New In Practice about Stand Up to Cancer Dream Teams

• New Concluding Case: Excel Pro Drilling Systems

Chapter 15 • New Management Connection about Yahoo

• New example of Cisco

• New example of misperception when communicat- ing with high-tech workers

• Updated emphasis on social media in discussion of electronic media as a communications channel

• New IBM example of managing excessive e-mail

• New In Practice about Automattic

• New example of Exelon

• New In Practice about communications by Kaiser Permanente’s CEO

• New example of listening

• New example of horizontal communication at National Public Radio

Chapter 16 • New Management Connection about Best Buy

• New example of La-Z-Boy

• New example of BP

• New In Practice about McDonald’s

• New description of after-action reviews

• New example of Virginia Mason Medical Center

Chapter 10 • Updated Management Connection about Google

• New examples of Johnson & Johnson, Colgate

• New example of Ford Motor Company

• Updated Figure 10.2

• New In Practice about use of big data by Xerox and Catalyst IT Services

• Updated Table 10.1

• New example of Verizon

• Updated Figure 10.4

• Updated information about CEO pay

• New In Practice about Royal Dutch Shell

Chapter 11 • New Management Connection about NASCAR

• New Figure 11.2 about extent of diversity initiatives

• Updated information on gender gap in pay

• New information for Tables 11.1 and 11.2

• New Table 11.4

• New ranking of DiversityInc’s Best Companies for Diversity

• New In Practice about CVS Caremark

• New example of Etsy

• New In Practice about Ingersoll Rand

• New Concluding Case: Niche Hotel Group

Chapter 12 • New Management Connection about Meg Whitman

as leader of Hewlett-Packard

• New example of Maria Green at Illinois Tool Works

• New In Practice about Barbara Corcoran as leader of Corcoran Group

• New example of Jeff Bezos as leader of Amazon

• New In Practice about David Novak as leader of Yum Brands

• New example of John Heer as leader of Mississippi Health Services

• New Concluding Case: Breitt, Starr & Diamond LLC

Chapter 13 • New Management Connection about SAS

• New example of QuikTrip convenience-store chain

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x Preface

for yourself and for other people. What managers do matters tremendously.

Acknowledgments This book could not have been written and published without the valuable contributions of many individuals.

Ingrid Benson and her colleagues at Words & Numbers were instrumental in creating a strong 11th edition. Many thanks for their meticulous attention to detail, ideas, and contributions. Ingrid has become a valued friend throughout the process; we couldn’t have done it, or had as much fun, without Ingrid.

Special thanks to Lily Bowles, Taylor Gray, and Meg Nexsen for contributing their knowledge, insights, and research to Appendix B: Managing in Our Natural Environment.

Our reviewers over the last ten editions contrib- uted time, expertise, and terrific ideas that significantly enhanced the quality of the text. The reviewers of the 11th edition are

Laura L. Alderson University of Memphis Daniel Arturo Cernas Ortiz University of North Texas Claudia S. Davis Sam Houston State University Greg Dickens Sam Houston State University Michael Drafke College of DuPage Judson Faurer Metropolitan State University of Denver Shirley Fedorovich Embry-Riddle Aeronautical University Randall Fletcher Sinclair Community College Rebecca M. Guidice University of North Carolina-Wilmington Dan Hallock University of North Alabama Ivan Franklin Harber, Jr. Indian River State College David Lynn Hoffman Metropolitan State University of Denver Cathleen Hohner College of DuPage Carrie Hurst Tennessee State University Jacquelyn D. Jacobs University of Tennessee Donald E. Kreps Kutztown University Christopher McChesney Indian River State College

• New description of sustainability audits and the triple bottom line

• Updated In Practice about the Ritz Carlton

• New example of Ethicon

Chapter 17 • New Management Connection about Tesla Motors

• New paragraph on disruptive innovation

• New example of forces for innovation in higher edu- cation

• New In Practice about Square mobile payments

• New example of Rethink Robotics

• New example of GE’s ultra-tiny electronics cooling system

• New In Practice about manufacturing transformed by 3D printers

• New description of innovations as competency enhancing or competency destroying

• New example of acquisitions by Twitter

• New example of open innovation at Elmer’s Products

Chapter 18 • New Management Connection about Time Warner

• New example of resistance to a change in banking: use of universal agents with broad job descriptions

• New In Practice about change to open workspaces at American Express and other companies

• New example of Envision

• New paragraph updating Kotter’s model of change leadership for turbulent times

• New Concluding Case: EatWell Technologies

A Team Effort This book is the product of a fantastic McGraw-Hill team. Moreover, we wrote this book believing that we are part of a team with the course instructor and with students. The entire team is responsible for the learning process.

Our goal, and that of your instructor, is to create a positive learning environment in which you can excel. But in the end, the raw material of this course is just words. It is up to you to use them as a basis for further thinking, deep learning, and constructive action.

What you do with the things you learn from this course, and with the opportunities the future holds, counts. As a manager, you can make a dramatic difference

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Preface xi

Jeffrey E. McGee University of Texas at Arlington Jane Murtaugh College of DuPage Mansour Sharifzadeh Cal State Poly University-Pomona Qiumei Xu Northeastern Illinois University Many individuals contributed directly to our devel-

opment as textbook authors. Dennis Organ provided one of the authors with an initial opportunity and guid- ance in textbook writing. John Weimeister has been a friend and adviser from the very beginning. The entire McGraw-Hill Education team, starting with Executive Brand Manager Mike Ablassmeir (who spontaneously and impressively knew Rolling Stone ’s top three drum- mers of all time) provided great support and expertise to this new edition. Many thanks to Managing Devel- opment Editor Christine Scheid for so much good work on previous editions and for continued friendship.

And to our superb Senior Development Editor Laura Griffin, and to Elizabeth Trepkowski, marketing man- ager, thank you for your skills, professionalism, colle- giality, good fun, and for making the new edition rock! What a team!

Finally, we thank our families. Our parents, Jeanine and Tom Bateman and Clara and John Snell, provided us with the foundation on which we have built our careers. They continue to be a source of great support. Our wives, Mary Jo and Marybeth, demonstrated great encouragement, insight, and understanding through- out the process. Our children, Lauren, T. J., and James Bateman and Sara, Jack, and Emily Snell, inspire us in every way.

Thomas S. Bateman Charlottesville, VA

Scott A. Snell Charlottesville, VA

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Bottom Line The ability to manufacture even

customized products quickly

has become a competitive

requirement.

To meet this requirement, what

qualities would a company need

in its employees?

Bottom Line Most creative ideas come not

from the lone genius in the

basement laboratory, but from

people talking and working

together.

Why is listening part of

stimulating creativity?

Bottom Line In all businesses—services

as well as manufacturing—

strategies that emphasize good

customer service provide a

critical competitive advantage.

Name a company that has

delivered good customer service

to you.

Bottom Line As in this example, when you

want to pursue sustainability,

think in terms of the long-term

consequences of your decisions.

What might be the long-term

consequences of not investing in

energy efficiency?

In this ever more competitive environment, there

are six essential types of performance on which

the organization beats, equals, or loses to the

competition: cost, quality, speed, innovation,

service, and sustainability. These six performance

dimensions, when done well, deliver value to the

customer and competitive advantage to you and

your organization.

Throughout the text, Bateman and Snell remind

students of these six dimensions and their impact

on the bottom line with marginal icons. This

results-oriented approach is a unique hallmark of

this textbook.

Questions have also now been added to this edition

to emphasize the bottom line further. Answers to

these questions can be found in the Instructor’s

Manual.

Bottom Line Bottom Line

With increased competition

from foreign and domestic

companies, managers must pay

particular attention to cost.

Does low cost mean low quality?

Why or why not?

Bottom Line The Internet lets customers

quickly find products with the

cost and quality features they

want.

What might “flexible processes”

mean for a fast-food restaurant?

For an auto company?

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58

P R

O G

R E

S S

R E

P O

R T

M

A N

A G

E R

’S B

R IE

F

O N

W A

R D

Even as technology transformed the macroenvironment

for Facebook, its competitive environment is shifting

almost as rapidly. Four Internet-era giants—Facebook,

Amazon, Apple, and Google—once ruled separate

domains but now are increasingly fighting for the same

territory. Amazon started as a bookstore but now sells

information for its Kindle e-reader, making it a competitor

with Apple. Google created a social-networking service

(Google 1 ), and Facebook launched a search tool for its

site. Some observers predict Google and Facebook will

be players in the market for mobile devices, to drive more

usage of their services.

As they seek ever-larger shares of online activity, Face-

book and these competitors rely on their customer data.

As you saw at the beginning of this chapter, details about

consumers and their behavior make advertising on Face-

book valuable. Facebook has commissioned studies of the

value of social marketing. In one case, it found that if Face-

book users were fans of Starbucks (by “liking” the brand’s

page and therefore getting messages from the brand),

they and their friends bought from Starbucks more often.

Promoting such results helps Facebook charge more for

promotions on its site. The other Internet giants gather

different kinds of data. Amazon has information about

product searches and purchases. Google knows what a

person is searching for but not necessarily the person’s

Management Connection FACEBOOK’S FIERCELY COMPETITIVE ENVIRONMENT

opinions about the content. Until it launched Google 1 ,

Google would not have known personal details such as

age, interests, and relationships; adding a social network

delivers a powerful combination of information sources.

No wonder, then, that Facebook launched its own

search tool. But can a social search engine compete with

Google? It’s handy for discovering what restaurants your

friends like. But it won’t give you a weather forecast or

directions to your job interview; for that, Facebook’s search

engine has partnered with Microsoft’s Bing. Facebook’s

hope is that the tools will be helpful enough to keep people

from leaving Facebook. If it can do so, it will have succeeded

against a formidable competitor. So far, Google is taking in

three-quarters of the ad spending on search ads (the links

that show up beside users’ search results). Some people

see Facebook at a disadvantage because it waited until

recently to offer a search function; others see Google 1 as

far behind Facebook in the social-networking arena. 32

• Are Amazon, Apple, and Google competitors in Face-

book’s competitive environment or sellers of comple-

ments? Explain.

• Facebook has two major kinds of customers: the users

of its site and the advertisers on its site. What chal-

lenges does Facebook face from Google in serving

each customer group?

Environmental Analysis If managers do not understand how the environment affects their o rganizations or cannot identify opportunities and threats that are likely to be important, their abil- ity to make decisions and execute plans will be severely limited. For example, if little is known about customer likes and dislikes, organizations will have a difficult time designing new products, scheduling production, or developing marketing plans. In short, timely and accurate environmental information is critical for running a business.

But information about the environment is not always readily available. For example, even economists have difficulty predicting whether an upturn or a downturn in the economy is likely. Moreover, managers find it difficult to forecast how well their own products will sell, let alone how a competitor might respond. In other words, manag- ers often operate under conditions of uncertainty. Environmental uncertainty means that managers do not have enough information about the environment to under- stand or predict the future. Uncertainty arises from two related factors: complexity and dynamism. Environmental complexity refers to the number of issues to which a manager must attend as well as their interconnectedness. For example, industries that

LO 5

43

Some managers transform an industry; many others are

swept up by change. Some do both. In the unprecedented

pace of the Internet era, a few managers do both within

a mere decade. One of those is Facebook founder Mark

Zuckerberg.

Zuckerberg started Facebook in 2004, when as a

Harvard student, he developed a way for his classmates to

connect online. The service quickly spread from Harvard

to other universities, then high schools, and eventually to

anyone with an e-mail address. Today, Facebook, with

more than a billion active users a month, is the largest

online social network.

To carry out its mission to “make the world more

open and connected,” Facebook added capabilities mak-

ing it easier to post photos, video clips, and links to web-

sites. The ever-present Like button encourages users to

signal their opinions to all their friends—and to Face-

book’s database. Facebook’s user database thus becomes

its most precious resource. For users, Facebook can

deliver more relevant links, ads, and services. It also can

sell highly targeted advertising.

Driven by Zuckerberg’s vision to connect individuals

more and more, Facebook has redefined how we com-

municate socially. When we want to share a thought or

pictures of our vacation, we don’t write e-mail or print

photos, we post to our Timeline or use Facebook’s mes-

saging service. As Facebook became part of everyday life,

the only thing holding back even more enormous growth

seemed to be cash from eager investors. So Facebook

made an initial public offering of stock.

Yet technology almost left Facebook behind. The Inter-

net underwent a mobile revolution. Spurred by the launch

of the powerful iPhone and iPad tablet computer, people

began wanting to be online always, everywhere. While

Facebook continued adding features and advertising to its

main website, people were switching to mobile devices;

in 2013, for the first time, the number of mobile devices

in use exceeded the number of personal computers

(desktops and laptops). More people now access Face-

book via its mobile app—the most- downloaded app for

the iPhone—than at computers. Unfortunately for Face-

book, most of its ads were displaying on the computer

website—and what mobile advertising it sold went for a

lower rate. Therefore, just as the company began selling

stock, investors were seeing trouble.

In the initial days of trading, Facebook’s stock price

fell. However, Facebook’s managers scrambled to catch

up to the mobile Internet. They improved their mobile

site and began pushing up ad rates; in less than a year,

mobile ad revenues went from 0 percent of revenues to

23 percent. Stock prices have begun to trend upward.

Does this mean the uncertainty is over for Facebook’s

managers? Far from it. Technology will continue advanc-

ing, and computer users will keep looking for the next

big thing. 1

Management Connection CAN MARK ZUCKERBERG STEER FACEBOOK

THROUGH A TURBULENT ENVIRONMENT?

Technology and social behavior are just two of the forces shaping the

environment in which Facebook operates. As you study this chapter,

consider what other forces Facebook’s managers should be monitoring and

engaging with.

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72 Part One Foundations of Management

An organization’s climate and its culture both shape the experience of working there and the organization’s effectiveness. However, because organizational climate is easier to measure, managers often find that dimensions of organizational climate are more manageable. Later chapters explore a variety of management responsibilities that shape organizational climate, including ethical conduct (Chapter 5), creating a struc- ture for the organization (Chapter 8), appraising and rewarding performance (Chap- ter 10), valuing diversity (Chapter 11), leading (Chapter 12), motivating employees (Chapter 13), fostering teamwork (Chapter 14), communicating (Chapter 15), and leading change (Chapter 18). An organization is most effective when it has a climate that motivates and enables workers to achieve the organization’s strategy. As you read “Management Connection: Onward,” consider how a healthy organizational climate would strengthen Facebook under the leadership of Mark Zuckerberg.

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Several actions by Mark Zuckerberg and his management

team suggest the future they have forecast for Facebook.

At the Facebook-sponsored f8 conference for developers

of the social web a few years ago, Zuckerberg said, “Our

development is guided by the idea that every year, the

amount that people want to add, share, and express is

increasing.”

Facebook has addressed this expectation by making it

easier for web users to share what they are doing. Using

Facebook’s Open Graph service, media providers such as

ESPN.com and Hulu let users share with their social net-

work what articles they’re reading or TV shows they’re

watching. The benefit for Facebook members is that

they can get involved in the same interests. The objec-

tive for Facebook and its partners is getting minute-by-

minute details of computer users’ activities. It also helps

keep members engaged on Facebook longer—important

in markets such as the United States and Britain, where

so many people already use Facebook that there is little

potential for membership growth.

Another goal is to improve Facebook’s revenues.

Facebook members don’t have to pay to post status

updates or send messages—yet. And as we saw earlier,

more users are accessing Facebook with mobile devices,

where advertising rates are lower. By one account, ad

revenue per mobile user is only about one-fifth of ad rev-

enue per desktop user. To explore the possibility of rev-

enue from members, Facebook has experimented with

paid messages. One test involved the option to send paid

messages to people outside a member’s own network;

for example, sending a message to Zuckerberg or chief

operating officer Sheryl Sandburg would cost $100. In

another test, members could pay $7 to broadcast pic-

tures or announcements to a wider audience. Concerning

ad revenues, Zuckerberg remains optimistic. He expects

that as members use Facebook more and more from

their mobile devices, the frequency of use will drive up

revenues.

In addition, Facebook takes a global view of its mar-

ketplace. Recall that its mission is to make the world more

open and connected. After the United States, Facebook’s

largest group of members is in Brazil, where social-media

use has been soaring. (Brazil is also the number two mar-

ket for Twitter and for Google-owned YouTube.) Brazil

is an attractive market for social media because it has an

outgoing culture, large population, and expanding econ-

omy. So far, Brazilian marketers are not spending much

for online advertising, but eMarketer, a research firm,

expects online ad spending in Brazil to double over four

years. 63

• How well do you think Facebook has been responding

to its fast-changing environment? Name one or two

actions it could take to improve its response.

• How can Mark Zuckerberg strengthen Facebook’s

culture to help the company fulfill its mission?

Management Connection—Onward FACEBOOK’S WAY FORWARD

xiii

In CASE You Haven’t Noticed . . . Bateman and Snell have once again put together

an outstanding selection of case studies of various

lengths that highlight companies’ ups and downs,

stimulate learning and understanding, and chal-

lenge students to respond.

Instructors will find a wealth of relevant and

updated cases in every chapter, using companies—

big and small—that students will enjoy learning

about.

CHAPTER UNFOLDING CASES

Each chapter begins with a “Management Connection: Manager’s Brief” section that describes an actual organizational situation, leader, or company. The Manager’s Brief is referred to again within the chapter in the “Progress Report” section, showing the student

how the chapter material relates back to the company, situation, or leader highlighted in the chapter opener. At the end of the chapter, the “Onward” section ties up loose ends and brings the material full circle for the student. Answers to Management Connection section questions can be found in the Instructor’s Manual.

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Managerial Decision Making Chapter 3 87

okay. You do not expend the time or energy to gather more information. Instead you make the expedient decision based on readily available information.

Let’s say you are purchasing new equipment, and your goal is to avoid spending too much money. You would be maximizing if you checked out all your options and their prices and then bought the cheapest one that met your performance requirements. But you would be satisficing if you bought the first adequate option that was within your budget and failed to look for less expensive options.

Satisficing is sometimes a result of laziness; other times, there is no other known option because time is short, information is unavailable, or other constraints make maximizing impossible. When the consequences are not huge, satisficing can even be the ideal approach. But in other situations, when managers satisfice, they fail to con- sider options that might be better.

Optimizing means that you achieve the best possible balance among several goals. Perhaps, in purchasing equipment, you are interested in quality and durability as well as price. So instead of buying the cheapest piece of equipment that works, you buy the one with the best combination of attributes, even though there may be options that are better on the price criterion and others that are better on the quality and durability criteria. The same idea applies to achieving business goals: One marketing strategy could maximize sales, whereas a different strategy might maximize profit. An optimiz- ing strategy is the one that achieves the best balance among multiple goals.

optimizing

Achieving the best possible

balance among several goals.

In Practice REPLACING GOOGLE WITH APPLE MAPS

The first versions of the Apple iPhone included Google Maps as a default app—a logical

choice, given that people often use their mobile devices to get directions and Google Maps

was the most popular mapping software. However, Google became more of a competitor

after it financially backed and later purchased the Android operating system for smart phones.

That created a tough decision for Apple when it prepared to launch iOS 6, its operat-

ing system for mobile phones. Apple terminated its agreement with Google and replaced

Google Maps with its own Apple Maps. Unfortunately, Apple Maps was far from rady for

the big time. Information was missing and incorrect. For example, Apple Maps users’ posted

photos of places such as the Washington Monument tagged blocks from the satellite image

of it and creepy 3D images of roads surging into the air or bridges dipping into the river. The

Australian government even warned people not to use Apple Maps after police were called

to rescue people misdirected into arid wilderness. Consumers also complained about the

lack of directions for public transit systems.

Why did Apple release its mapping application? Managers evidently concluded that compet-

ing with Google outweighed the technical problems. Some believe that Google was unwilling

to share data needed for the app to offer turn-by-turn directions, a feature Apple considered

essential. Yet state-of-the-art mapping software requires so much data, so many functions, and

so many licensing agreements on a global scale that creating a fully functional product would

have taken years longer. In the end, Apple added Google Maps to its App Store. 27

• Where and how did Apple fail in its decision-making processes in this example?

Implementing the Decision The decision-making process does not end once a choice is made. The chosen alterna- tive must be implemented. Sometimes the people involved in making the choice must put it into effect. At other times, they delegate the responsibility for implementation

106 Part One Foundations of Management

PART ONE SUPPORTING CASE

SSS Software In-Basket Exercise

One way to assess your own strengths and weaknesses in man-

agement skills is to engage in an actual managerial work expe-

rience. The following exercise gives you a realistic glimpse of

the tasks faced regularly by practicing managers. Complete the

exercise and then compare your own decisions and actions with

those of classmates.

SSS Software designs and develops customized software for

businesses. It also integrates this software with the customer’s

existing systems and provides system maintenance. SSS Software

has customers in the following industries: airlines, automotive,

finance/banking, health/hospital, consumer products, electron-

ics, and government. The company has also begun to attract

important international clients. These include the European Air-

bus consortium and a consortium of banks and financial firms

based in Kenya.

SSS Software has grown rapidly since its inception just over a

decade ago. Its revenue, net income, and earnings per share have

all been above the industry average for the past several years.

However, competition in this technologically sophisticated field

has grown very rapidly. Recently, it has become more difficult

to compete for major contracts. Moreover, although SSS Soft-

ware’s revenue and net income continue to grow, the rate of

growth declined during the past fiscal year.

SSS Software’s 250 employees are divided into several oper-

ating divisions with employees at four levels: nonmanagement,

technical/professional, managerial, and executive. Nonmanage-

ment employees take care of the clerical and facilities support

functions. The technical/professional staff perform the core

technical work for the firm. Most managerial employees are

group managers who supervise a team of technical/professional

employees working on a project for a particular customer. Staff

who work in specialized areas such as finance, accounting, human

resources, nursing, and law are also considered managerial

employees. The executive level includes the 12 highest-ranking

employees at SSS Software. The organization chart in Figure A

illustrates SSS Software’s structure. There is also an employee

As a child, Stan Eagle just knew he loved riding his skateboard

and doing tricks. By the time he was a teenager, he was so pro-

ficient at the sport that he began entering professional contests

and taking home prize money. By his twenties, Eagle was so suc-

cessful and popular that he could make skateboarding his career.

A skateboard maker sponsored him in competitions and demon-

strations around the world.

The sponsorship and prize money paid enough to support him

for several years. But then interest in the sport waned, and Eagle

knew he would have to take his business in new directions. He

believed skateboarding would return to popularity, so he decided

to launch into designing, building, and selling skateboards under

his own brand. To finance Soaring Eagle Skate Company, he

pooled his own personal savings with money from a friend, Pete

Williams, and came up with $75,000. Sure enough, new young

skaters began snapping up the skateboards, attracted in part by

the products’ association with a star.

As the company prospered, Eagle considered ideas for expan-

sion. Another friend had designed a line of clothing he thought

would appeal to Eagle’s skateboarding fans, and Eagle’s name on

the product would lend it credibility. At the friend’s urging, Eagle

branched out into clothing for skateboarders. However, he dis-

covered that the business of shorts and shirts is far different from

the business of sports equipment. The price markups were tiny,

and the sales channels were entirely different. Three years into

the expansion, Soaring Eagle had invested millions of dollars in

the line but was still losing money. Eagle decided to sell off that

part of the business to a clothing company and cut his losses.

Soon after that experiment, cofounder Williams proposed

another idea: They should begin selling other types of sports

equipment—inline roller skates and ice skates. Selling equipment

for more kinds of sports would produce more growth than the

company could obtain by focusing on just one sport. Eagle was

doubtful. He was considered one of the most knowledgeable

people in the world about skateboarding. He knew nothing about

inline skating and ice skating. Eagle argued that the company

would be better off focusing on the sport in which it offered the

most expertise. Surely there were ways to seek growth within

that sport—or at least to avoid the losses that came from invest-

ing in industries in which the company lacked experience.

Williams continued to press Eagle to try his idea. He pointed

out that unless the company took some risks and expanded

into new areas, there was little hope that Williams and Eagle

could continue to earn much of a return on the money they

had invested. Eagle was troubled. The attempt at clothing deliv-

ered, he thought, a message that they needed to be careful

about expansion. But he seemed unable to persuade Williams

to accept his point of view. He could go along with Williams and

take the chance of losing money again, or he could use money

he had earned from his business to buy Williams’s ownership

share in the company and then continue running Soaring Eagle

on his own.

DISCUSSION QUESTIONS

1. How do the characteristics of management decisions—

uncertainty, risk, conflict, and lack of structure—affect the

decision facing Stan Eagle?

2. What steps can Eagle take to increase the likelihood of

making the best decision in this situation?

CONCLUDING CASE

SOARING EAGLE SK ATE COMPANY

Communicating Chapter 15 523

sure Paul understood his job. His favorite responsibility, though,

was greeting customers and listening to them carefully, trying to

guess the unspoken needs that Best Trust might be able to meet.

When customers were upset about a problem, he used to get

nervous; but with experience, he became an expert at listening

attentively, helping the customer find the best possible solution,

and speaking in a respectful tone that almost always soothed any

frayed nerves.

Now that Paul is an executive vice president, he rarely talks

with Best Trust’s customers, and more of his communications

are structured and formal. Although he cares about attracting,

motivating, and retaining employees in all positions, he knows he

cannot possibly have a dialogue with 73,000 people in dozens of

countries. In fact, he can’t even have personal conversations with

all of the HR employees—Best Trust has more than 800 of them,

including several at each facility.

Consequently, Paul looks for a variety of ways to communi-

cate. He meets weekly with all the department and functional

heads involved in formulating strategy. The meeting’s agenda

includes reviewing HR issues such as leadership development,

succession planning, diversity management, and employee satisfac-

tion. Paul is well prepared because he meets at least weekly with

each of the managers who report directly to him. In these one-

on-one meetings, Paul and the manager review progress on the

issues handled by that manager. Paul also uses those meetings to

learn what challenges the manager is facing so he can offer coach-

ing and encouragement. And Paul looks for ways to meet with as

many employees outside HR as he can. For example, he attends

an annual employee recognition gathering held to honor the com-

pany’s 800 top-performing employees. There he talks to as many

people as he can. He asks open-ended questions such as “What

are you happy about at Best Trust? What could we do better?”

Talking one on one to employees can feel like an escape from

one of the chief annoyances of his job: poorly written messages

from many of the bank’s middle managers. It seems that Best

Trust has excelled at finding people with strong analytic and cus-

tomer service skills, but many of these people stumble at present-

ing an idea or summarizing their progress in e-mails and reports.

Paul feels intense time pressure, and if he gets a suggestion but

can’t figure out the main idea in the first couple of sentences, he

simply passes it to one of his managers for a possible follow-up.

Paul suspects that good ideas and real problems are being missed.

Rambling reports and presentations loaded with jargon seem to

have become a norm at Best Trust, and Paul is thinking about

adding a new training program to improve writing skills.

To get out the word about the bank’s policies, benefits, and

other initiatives, Paul uses a variety of media. He gives presenta-

tions at events such as the employee recognition gathering and

at branches around the world. Four times a year, he records a

video that is posted on the bank’s intranet. Topics range from a

summary of HR resources to interviews with key leaders at Best

Trust. Also on the intranet, Paul leads regular town hall meetings,

a live video feed that allows employees to post questions and

ideas, which Paul and other executives answer immediately on

the video.

Promotions to the executive level are not the only reason

communication has changed for Paul at Best Trust. Another

source of change is technology. When Paul was a teller, the Inter-

net was just a concept, and transmitting data online was a major

undertaking that required computer experts. Now the Internet

is a basic tool. On the plus side, it helps Paul deliver information

efficiently and keep up with far-flung colleagues. But Paul also has

a whole set of policy concerns related to the Internet, such as

whether to allow employees to access social networking sites

and how closely to monitor blogs and other public information

for company-related posts. When Paul thinks about it, he realizes

that his communication skills have barely grown as fast as the

communication demands of his work.

QUESTIONS

1. How has the media richness of Paul’s communications

changed since the days when he was a teller?

2. What sender and receiver skills are described in this case?

Which ones need improvement? Offer one suggestion for

improving the weak skills.

3. How might Paul improve upward communication and the

communication culture more generally at Best Trust?

PART FOUR SUPPORTING CASE

Leading and Motivating When Disaster Strikes: Magna Exteriors and Interiors

The name of Magna Exteriors and Interiors Corporation cap-

tures its product mix of vehicle components that give each car

or truck model its distinctive look. Some of Magna’s exterior

products are trim, roof systems, body panels, and front and rear

end fascia; interior products include trim, cockpit systems, and

cargo management systems. Nowadays auto companies don’t

make all these components but, instead, create the designs and

handle the final assembly of components from suppliers such as

Magna, delivered to the auto company as needed to meet pro-

duction plans.

Magna Exteriors and Interiors is a unit of Magna International,

which describes itself as “the most diversified automotive sup-

plier in the world.” Magna has 263 manufacturing operations plus

sales and engineering centers in 26 countries of North America,

South America, Africa, Europe, and Asia. These meet the needs

of more than two dozen customers, including General Motors,

xiv

SUPPLEMENTARY CASES

At the end of each part, an additional case is provided for professors who want students to delve further into part topics.

IN PRACTICE

In Practice boxes have been added to this edition to reinforce concepts learned in the chapter. Answers to In Practice box questions are also included in the Instructor’s Manual.

CONCLUDING CASES

Each chapter ends with a case based on disguised but real companies and people that reinforces key chapter elements and themes.

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xv

bank provides tagging for the learning objective that the question covers, so instructors will be able to test material covering all learning objectives, thus ensuring that students have mastered the important topics.

Assurance of Learning ① This 11th edition contains revised learning objectives for each chapter, and ② learning objectives are called out within the chapter where the content begins. ③ The summary for each chapter ties the learning objectives back together as well. ④ Our test

152

CHAPTER 5

Ethics, Corporate Responsibility, and Sustainability

C H

A P

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E

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S

It’s a Big Issue

It’s a Personal Issue

Ethics

Ethical Systems

Business Ethics

The Ethics Environment

Ethical Decision Making

Courage

Corporate Social Responsibility

Contrasting Views

Reconciliation

The Natural Environment and Sustainability

A Risk Society

Ecocentric Management

Environmental Agendas for the Future

After studying Chapter 5, you will be able to:

Describe how different ethical perspectives guide decision making. p. 156

Explain how companies influence their ethics environment. p. 159

Outline a process for making ethical decisions. p. 164

Summarize the important issues surrounding corporate social responsibility. p. 167

Discuss reasons for businesses’ growing interest in the natural environment. p. 171

Identify actions managers can take to manage with the environment in mind. p. 172 and Appendix B.

LO 1

LO 2

LO 3

LO 4

LO 5

LO 6

It is truly enough said that a corporation has no conscience; but a corporation

of conscientious men is a corporation with a conscience. — HENRY DAVID THOREAU

①

Ethics The aim of ethics is to identify both the rules that should govern people’s behavior and the “goods” that are worth seeking. Ethical decisions are guided by the underly- ing values of the individual. Values are principles of conduct such as caring, being honest, keeping promises, pursuing excellence, showing loyalty, being fair, acting with integrity, respecting others, and being a responsible citizen. 7

Most people would agree that all of these values are admirable guidelines for behav- ior. However, ethics becomes a more complicated issue when a situation dictates that one value overrules others. An ethical issue is a situation, problem, or opportunity in

which an individual must choose among several actions that must be evaluated as morally right or wrong. 8

Ethical issues arise in every facet of life; we concern ourselves here with business ethics in

particular. Business ethics comprises the moral principles and standards that guide behavior in the world of business. 9

Ethical Systems Moral philosophy refers to the principles, rules, and values people use in deciding what is right or wrong. This is a simple definition in the abstract but often terribly complex and difficult when facing real choices. How do you decide what is right and wrong? Do you know what criteria you apply and how you apply them?

LO 1

Ethics becomes a more complicated

issue when a situation dictates that one

value overrules others.

ethical issue

Situation, problem, or opportunity in

hi h i di id l t h

business ethics

The moral principles and standards that

id b h i i th ld f b i

moral philosophy

Principles, rules, and values people use in

d idi h t i i ht

②

business ethics, p. 156

carbon footprint, p. 172

Caux Principles, p. 157

compliance-based ethics programs,

p. 164

corporate social responsibility

(CSR), p. 168

ecocentric management, p. 172

economic responsibilities, p. 168

egoism, p. 158

ethical climate, p. 161

ethical issue, p. 156

ethical leader, p. 163

ethical responsibilities, p. 168

ethics, p. 154

integrity-based ethics programs, p. 164

Kohlberg’s model of cognitive moral

development, p. 159

legal responsibilities, p. 168

life-cycle analysis (LCA), p. 172

moral philosophy, p. 156

philanthropic responsibilities, p. 168

relativism, p. 158

Sarbanes-Oxley Act, p. 160

sustainable growth, p. 172

transcendent education, p. 169

triple bottom line, p. 168

universalism, p. 157

utilitarianism, p. 158

virtue ethics, p. 158

KEY TERMS

Now that you have studied Chapter 5, you should be able to:

LO 1 Describe how different ethical perspectives guide decision making.

The purpose of ethics is to identify the rules that govern human

behavior and the “goods” that are worth seeking. Ethical deci-

sions are guided by the individual’s values or principles of con-

duct such as honesty, fairness, integrity, respect for others, and

responsible citizenship. Different ethical systems include uni-

versalism, egoism and utilitarianism, relativism, and virtue ethics.

These philosophical systems, as practiced by different individu-

als according to their level of cognitive moral development and

other factors, underlie the ethical stances of individuals and

organizations.

LO 2 Explain how companies influence their ethics environment.

Different organizations apply different ethical perspectives and

standards. Ethics codes sometimes are helpful, although they

must be implemented properly. Ethics programs can range

from compliance-based to integrity-based. Ethics codes address

employee conduct, community and environment, sharehold-

t li d t t liti l ti it d

LO 3 Outline a process for making ethical decisions.

Making ethical decisions requires moral awareness, moral judg-

ment, and moral character. When faced with ethical dilemmas,

the veil of ignorance is a useful metaphor. More precisely, you

can know various moral standards (universalism, relativism, and

so on), use the problem-solving model described in Chapter 3,

identify the positive and negative effects of your alternatives on

different parties, consider legal requirements and the costs of

unethical actions, and then evaluate your ethical duties.

LO 4 Summarize the important issues surrounding corporate social responsibility.

Corporate social responsibility is the extension of the corpo-

rate role beyond economic pursuits. It includes not only eco-

nomic but also legal, ethical, and philanthropic responsibilities.

Advocates believe managers should consider societal and human

needs in their business decisions because corporations are mem-

bers of society and carry a wide range of responsibilities. Critics

of corporate responsibility believe managers’ first responsibility

is to increase profits for the shareholders who own the corpo-

ration. The two perspectives are potentially reconcilable, espe-

ll f h dd f l b l

SUMMARY OF LEARNING OBJECTIVES

③

④

ASSURANCE OF LEARNING READY

Many educational institutions today are focused on the notion of assurance of learning, an important element of some accreditation standards. The edition of Management: Leading & Collaborating in a Competitive World is designed specifically to support your assurance of learning initiatives with a simple yet powerful solution.

Each test bank question for Management: Leading & Collaborating in a Competitive World, 11e, maps to a specific chapter learning outcome/objective listed in the text. You can use our test bank software, EZ Test and EZ Test Online, or Connect Management to query easily for learning outcomes/objectives that directly relate to the learning objectives for your course. You can then use the reporting features of EZ Test to aggregate student results in similar fashion, making the collection and presentation of assurance of learning data simple and easy.

AACSB STATEMENT

The McGraw-Hill Companies are a proud corporate member of AACSB International. Understanding the importance and value of AACSB accreditation, Management: Leading & Collaborating in a Competitive World, 11e, recognizes the curricula guidelines detailed in the AACSB standards for business accreditation by connecting selected questions in the text and/or the test bank to the six general knowledge and skill guidelines in the AACSB standards.

The statements contained in Management: Leading & Collaborating in a Competitive World, 11e, are provided only as a guide for the users of this textbook. The AACSB leaves content coverage and assessment within the purview of individual schools, the mission of the school, and the faculty. Although this book and the teaching package make no claim of any specific AACSB qualification or evaluation, we have within Management: Leading & Collaborating in a Competitive World, 11e, labeled selected questions according to the six general knowledge and skills areas.

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xvi

this in mind, we used a wide array of pedagogical features—some tried and true, others new and novel:

Outstanding Pedagogy Management: Leading & Collaborating in a Competitive World is pedagogically stimulating and is intended to maximize student learning. With

END-OF-CHAPTER ELEMENTS

• Key terms are page-referenced to the text and are part of the vocabulary-building emphasis. These terms are defined again in the glossary at the end of the book.

• A Summary of Learning Objectives provides clear, concise responses to the learning objectives, giving students a quick reference for reviewing the important concepts in the chapter.

• Discussion Questions, which follow the Summary of Learning Objectives, are thought-provoking questions on concepts covered in the chapter and ask for opinions on controversial issues.

• Experiential Exercises in each chapter bring key concepts to life so students can experience them firsthand.

business strategy, p. 141

concentration, p. 138

concentric diversification, p. 138

conglomerate diversification, p. 139

core capability, p. 136

corporate strategy, p. 138

differentiation strategy, p. 141

functional strategy, p. 142

goal, p. 121

low-cost strategy, p. 141

mission, p. 130

operational planning, p. 126

plans, p. 122

resources, p. 134

scenario, p. 123

situational analysis, p. 120

stakeholders, p. 132

strategic control system, p. 144

strategic goals, p. 125

strategic management, p. 129

strategic planning, p. 125

strategic vision, p. 130

strategy, p. 125

SWOT analysis, p. 137

tactical planning, p. 126

vertical integration, p. 138

KEY TERMS

Now that you have studied Chapter 4, you should be able to:

LO 1 Summarize the basic steps in any planning process.

The planning process begins with a situation analysis of the

external and internal forces affecting the organization. This

examination helps identify and diagnose issues and problems

and may bring to the surface alternative goals and plans for the

firm. Next, the advantages and disadvantages of these goals and

plans should be evaluated against one another. Once a set of

goals and a plan have been selected, implementation involves

communicating the plan to employees, allocating resources, and

making certain that other systems such as rewards and budgets

support the plan. Finally, planning requires instituting control

systems to monitor progress toward the goals.

procedures and processes required at lower levels of the

organization.

LO 3 Identify elements of the external environment and internal resources of the

firm to analyze before formulating a strategy.

Strategic planning is designed to leverage the strengths of a firm

while minimizing the effects of its weaknesses. It is difficult to know

the potential advantage a firm may have unless external analysis is

done well. For example, a company may have a talented marketing

department or an efficient production system. However, the orga-

nization cannot determine whether these internal characteristics

are sources of competitive advantage until it knows something

about how well the competitors stack up in these areas.

SUMMARY OF LEARNING OBJECTIVES

DISCUSSION QUESTIONS

1. This chapter opened with a quote from former CEO of GE

Jack Welch: “Manage your destiny, or someone else will.”

What does this mean for strategic management? What does

it mean when Welch adds, “or someone else will”?

2. List the six steps in the formal planning process. Suppose

you are a top executive of a home improvement chain and

you want to launch a new company website. Provide exam-

ples of activities you would carry out during each step to

create the site.

3. Your friend is frustrated because he’s having trouble

selecting a career. He says, “I can’t plan because the future

is too complicated. Anything can happen, and there are

too many choices.” What would you say to him to change

his mind?

4 H d i i l d i l l i diff ?

5. How might an organization such as Urban Outfitters use a

strategy map? With your classmates and using Figure 4.3 as

a guide, develop a possible strategy map for the company.

6. What accounts for the shift from strategic planning to stra-

tegic management? In which industries would you be most

likely to observe these trends? Why?

7. Review Table 4.1 , which lists the components of an environ-

mental analysis. Why would this analysis be important to a

company’s strategic planning process?

8. In your opinion, what are the core capabilities of Harley-

Davidson Motor Company motorcycles? How do these

capabilities help Harley-Davidson compete against foreign

competitors such as Yamaha and Suzuki?

9. How could SWOT analysis help newspaper companies

EXPERIENTIAL EXERCISES

4 .1 STR ATEGIC PL ANNING

OBJECTIVE

To study the strategic planning of a corporation recently in the news.

INSTRUCTIONS

Bloomberg Businessweek magazine frequently has articles on the

strategies of various corporations. Find a recent article on a

corporation in an industry of interest to you. Read the ar

and answer the following questions.

Follow your instructor’s directions for turning in

responses with a copy of the article or a link to the art

online.

Strategic Planning Worksheet 1. Has the firm clearly identified what business it is in and how it is different from its competitors? Explain.

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MCGRAW-HILL CONNECT MANAGEMENT

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McGraw-Hill Connect Management is an online assignment and assessment solution that connects students with the tools and resources they’ll need to achieve success.

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MCGRAW-HILL CONNECT MANAGEMENT

FEATURES

Connect Management offers a number of powerful tools and features to make managing assignments easier, so faculty can spend more time teaching. With Connect Management, students can engage with their coursework anytime and anywhere, making the learning process more accessible and efficient. Connect Management offers you the features described next.

Diagnostic and Adaptive Learning of Concepts:

LearnSmart Students want to make the best use of their study time. The LearnSmart adaptive self- study technology within Connect Management provides students with a seamless combination of practice, assessment, and remediation for every concept in the textbook. LearnSmart’s intelligent software adapts to every student response and automatically delivers concepts that advance the student’s understanding while reducing time devoted to the concepts already mastered. The result for every student is the fastest path to mastery of the chapter concepts.

• Applies an intelligent concept engine to identify the relationships between concepts and to serve new concepts to each student only when he or she is ready.

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• Integrates diagnostics as part of the learning experience.

Comprehensive Supplements

INSTRUCTOR’S MANUAL

Authored by Carrie Hurst, Tennessee State University, the Instructor’s Manual was revised and updated to include thorough coverage of each chapter as well as time-saving features such as an outline, key student questions, class prep work assignments, guidance for using the unfolding cases, video supplements, and, finally, PowerPoint slides.

TEST BANK

The Test Bank includes more than 100 questions per chapter in a variety of formats. It has been revised for accuracy and expanded to include a greater variety of comprehension and application (scenario-based) questions as well as tagged with Bloom’s Taxonomy levels and AACSB requirements. EZ Test is a flexible and easy-to-use electronic testing program that allows instructors to create tests from book-specific items. A downloadable desktop version can be found on the IRCD. And EZ Test Online ( www.eztestonline. com ) allows you to access the test bank from the OLC virtually anywhere and anytime. EZ Test–created exams and quizzes can be administered online, providing instant feedback for students.

POWERPOINT PRESENTATION SLIDES

Prepared by Brad Cox, Midlands Technical College, the PowerPoint presentation collection contains an easy-to-follow outline including figures downloaded from the text. In addition to providing lecture notes, the slides also include questions for class discussion as well as company examples not found in the textbook. This versatility allows you to create a custom presentation suitable for your own classroom experience.

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Lectures 24/7: Tegrity Campus is a service that makes class time available 24/7 by automatically capturing every lecture in a searchable format for students to review when they study and complete assignments. With a simple one-click start-and- stop process, you capture all computer screens and corresponding audio. Students can replay any part of any class with easy-to-use browser-based viewing on a PC or Mac.

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