Bygone japanese camera that merged with konica

M A N A G E M E N T

5 T H A S I A - P A C I F I C

E D I T I O N

D A N N Y S A M S O N

M A N A G E M E N T

R I C H A R D L . D A F T

Management 5th Edition Danny Samson Richard L. Daft

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First published as Management by Dryden Press in 2000. Authorised adaptation of the fifth edition by the Dryden Press, Orlando, Florida.

Adaptation first published in 2003 Second edition published in 2005 Third edition published in 2008 Fourth edition published in 2012

This fifth edition published in 2015

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National Library of Australia Cataloguing-in-Publication Data Author: Samson, Danny, author. Title: Management / Danny Samson, Richard L. Daft. Edition: 5th edition. ISBN: 9780170259798 (paperback) Notes: Includes bibliographical references and index. Subjects: Industrial management--Textbooks. Management--Textbooks. Other Authors/Contributors: Daft, Richard L, author. Dewey Number: 658

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v

PArT oNE INNOvATIve MANAgeMeNT FOR A CHANgINg WORLD 1

1 The changing world of management 2 2 The evolution of management thinking 48

PArT Two THe eNvIRONMeNT OF MANAgeMeNT 87 3 The environment and corporate culture 88 4 Managing in a global environment 134 5 ethics, social responsibility and sustainable development 178 6 The environment of entrepreneurship and small-business management 224

PArT ThrEE PLANNINg 269 7 Organisational planning and goal setting 270 8 Strategy formulation and implementation 308 9 Managerial decision making 350

PArT four ORgANISINg 387 10 Fundamentals of organising 388 11 Managing change and innovation 432 12 Human resource management 476 13 Managing diversity 516

PArT fivE LeADINg 555 14 Individual behaviour in organisations 556 15 Leading in organisations 602 16 Motivating employees 644 17 Communication in organisations 684 18 Teamwork in organisations 724

PArT Six CONTROLLINg 759 19 Managerial and quality control 760 20 Managing the value chain, information technology and e-business 798 Capstone Chapter: Making effective management happen 836

B r i e f c o n t e n t s

vi

c o n t e n t s Preface XvI Resources guide XX Features matrix XXvI Acknowledgements XXvIII About the authors XXIX

chapter 1 the changing world of management 2 Why innovative management matters ____________________6 Current Challenges for managers _______________________6

Challenges for government 6 Challenges for business 7 Challenges for the individual employee 9

managers Who make a differenCe _________________________9 the definition of management _____________________________10 the four management funCtions __________________________11

Planning 11 Organising 13 Leading 13 Controlling 14

organisational performanCe ______________________________15 management skills _______________________________________________ 17

Conceptual skills 18 Human skills 18 Technical skills 19 When skills fail 20

management types ________________________________________________ 21 Vertical differences 22 Horizontal differences 23

What is it like to be a manager? ____________________________ 24 Making the leap: becoming a new manager 24

manager aCtivities ______________________________________________ 26 Adventures in multitasking 26 Life on speed dial 27 Where does a manager find the time? 28 Manager roles 29

managing in small businesses and not-for-profit organisations_____________________________ 32 state-of-the-art management CompetenCies ________ 34 turbulent times: managing Crises and unexpeCted events _______________________________________ 36

Stay calm 36 Be visible 36 Put people before business 36 Tell the truth 36 Know when to get back to business 37

australia’s managers: improving from a loW base ___________________________________________________________ 38

Manager strengths 38 Manager weaknesses 38

sustainable development: noW a Core issue for managers ______________________________________________________41

Discussion questions 43 Ethical challenge 43

» Can management afford to look the other way? 43 Group challenge 44

» Your best and worst managers 44 Case for critical analysis 44

» SharpStyle Salons 44 On the job video case 45

» Camp Bow Wow: Innovative management for a changing world 45

CourseMate 47

Chapter CaSe StudIeS

India: A hotbed of competition for mobile phones 12 Extraordinary crisis management 37

chapter 2 the evolution of management thinking 48 management and organisation ___________________________ 53 ClassiCal perspeCtive __________________________________________ 55

Scientific management 56 Bureaucratic organisations 57 Administrative principles 59

humanistiC perspeCtive ________________________________________61 Early advocates 61

The human relations movement 61 The human resources perspective 63 The behavioural sciences approach 66 Management science 67

reCent historiCal trends ____________________________________ 69 Systems thinking 69 Contingency view 70 Total quality management 71

P a r t O n e

iNNovATivE MANAGEMENT for

A ChANGiNG world

1

viicontents

innovative management thinking for a Changing World _______________________________________________72

Contemporary management tools 72 Managing the technology-driven workplace 74 The shifting world of e-business 74 Knowledge management 76 Social media programs 76

sustainable development and management thinking ______________________________________________________________ 78

Discussion questions 80 Ethical challenge 80

» the supervisor 80 Group challenge 81

» turning points on the road to management 81 Case for critical analysis 81

» More hassle from hr? 81

On the job video case 82 » Barcelona restaurant Group: the evolution of

management thinking 82

CourseMate 84

Chapter CaSe StudIeS

Switching to green power 51 Brumby’s Bakeries cooking along 68 Atlassian: supporting collaboration and innovation 75 Enjo: a friend of its customers 77

Continuing Case: general motors part one: introduCtion to management _____________________________ 85

chapter 3 the environment and corporate culture 88 the external environment __________________________________ 92

General environment 93 Task environment 101

the organisation–environment relationship_______________________________________________________ 105

Environmental uncertainty 105 Adapting to the environment 106 Influencing the environment 110

the internal environment: Corporate Culture _____________________________________________ 112

Symbols 115 Stories 116 Heroes 116 Slogans 116 Ceremonies 117

types of Culture __________________________________________________118 Adaptability culture 118 Achievement culture 120 Involvement culture 120 Consistency culture 120

shaping Corporate Culture for innovative response _____________________________________122

Managing the high-performance culture 122 Cultural leadership 124 Changing and merging corporate cultures 125

sustainable development and the business environment ___________________________________127

Discussion questions 128 Ethical challenge 129

» Competitive intelligence predicament 129 Group challenge 129

» Should you go global? 129 Case for critical analysis 130 On the job video case 130

» Camp Bow Wow: the environment and corporate culture 130

CourseMate 133

Chapter CaSe StudIeS

Growing a business from scratch: lavender! 102 Green power 114 McDonald’s 119

chapter 4 managing in a global environment 134 a borderless World ___________________________________________ 139

Globalisation 140 Developing a global mindset 142

multinational Corporations _____________________________ 143 globalisation baCklash _____________________________________ 145

Serving the bottom of the pyramid (BOP) 145 getting started internationally_________________________ 148

Exporting 148

Outsourcing 149 Licensing 149 Direct investing 150

the international business environment _______________________________________________________ 151 the eConomiC environment ________________________________152

Economic development 152 Infrastructure 153

P a r t t w O

ThE ENviroNMENT of MANAGEMENT

87

viii contents

Economic interdependence 153 Resource and product markets 155 Exchange rates 155 Inflation, interest rates and economic growth 155

the legal–politiCal environment _______________________ 156 Political risk 156 Political instability 157 Laws and regulations 157

the soCioCultural environment ________________________ 158 Social values 158 Communication differences 163

the Changing international landsCape __________________________________________________________ 164

China, Inc. 164 India, the service giant 165 Brazil’s growing clout 165 International trade alliances 166

sustainable development: a global issue and opportunity ________________________________________________________ 171

Discussion questions 172 Ethical challenge 173

» Quality or closing 173 Group challenge 173

» Considerations for overseas expansion 173 Case for critical analysis 174

» Shui Fabrics 174 On the job video case 175

» holden Outerware: Managing in a global environment 175

CourseMate 177

Chapter CaSe StudIeS

Shifting international services and jobs 139 The axis of India 142 Globalising from an Australian base 144 LG Electronics 170

chapter 5 ethics, social responsibility and sustainable development 178 What is managerial ethiCs? __________________________________181

Ethical management today 183 ethiCal dilemmas: What Would you do? _______________ 185 Criteria for ethiCal deCision making _________________ 186

Utilitarian approach 186 Individualism approach 187 Moral rights approach 187 Justice approach 187 Practical approach 188

the individual manager and ethiCal ChoiCes _____ 189 The organisation 193

What is Corporate soCial responsibility? ___________ 194 organisational stakeholders ____________________________ 195 the green movement __________________________________________ 199

Sustainability and the triple bottom line 200 evaluating Corporate soCial responsibility _______ 201 managing Company ethiCs and soCial responsibility __________________________________________203

Codes of ethics 205 Ethical structures 206 Whistle-blowing 207

the business Case for ethiCs and soCial responsibility _________________________________________207

managerial ethiCs and sustainable development in australia ___________________________________ 210 organisational sustainable development __________ 210

The ‘why’ of sustainable development 212 The ‘what’ of sustainable development 213 The ‘when’ of sustainable development 214

taking managerial aCtion on sustainable development ____________________________________215

Discussion questions 216 Ethical challenge 217

» What is right? 217 Group challenge 218

» ethics and business costs 218 Case for critical analysis 218

» too much intelligence? 218 On the job video case 219

» theo Chocolate: managing ethics and social responsibility 219

CourseMate 222

Chapter CaSe StudIeS

Philanthropy goes up a gear 186 Ecomagination 199 A leadership dilemma at Timberland 201 A crisis to milk 209

chapter 6 the environment of entrepreneurship and small-business management 224 What is entrepreneurship? _________________________________ 227

Entrepreneurship as an option 229 entrepreneurship internationally ____________________ 229

Entrepreneurship and the business environment 231 Impact of entrepreneurial organisations 233 Organisational innovation 235

Who are entrepreneurs? ___________________________________239 Traits of entrepreneurs 240

soCial entrepreneurship: an innovative approaCh to small business _______________________________242 starting an entrepreneurial firm ______________________245

Start with the new-business idea 245 The business plan 246 Choosing a legal structure 247 Arranging financing 249 Tactics for becoming a business owner 251 Starting an online business 254

ixcontents

chapter 7 organisational planning and goal setting 270 goals, plans and performanCe __________________________ 273

Messages and values contained in goals and plans 274 goals in organisations ______________________________________ 277

Organisational mission 277 Planning a digital strategy 279 Goals and plans 279 Aligning goals with strategy maps 282 Aligned hierarchy of goals 283

Criteria for effeCtive goals _______________________________285 Management by objectives 287 Single-use and standing plans 291

benefits and limitations of planning _________________293 planning in a turbulent environment _______________294

Contingency plans 294 Scenario planning 294

Crisis planning___________________________________________________295 Prevention 295 Preparation 295 Containment 297

planning time horizons _____________________________________298 the neW planning approaCh _______________________________299

Traditional approaches to planning 299 Modern approaches to planning 300 Innovative approaches to planning 300

sustainable development and goal setting ________303 Discussion questions 304 Ethical summary 304

» repair or replace? 304 Group challenge 305

» Course goal setting 305 Case for critical analysis 305

» hId 305 On the job video case 306

» Modern Shed: managerial planning and goal setting 306

Chapter CaSe StudIeS

Planning and implementing an amazing country growth strategy 286 Siemens 289

chapter 8 strategy formulation and implementation 308 thinking strategiCally ________________________________________ 311

What is strategic management? 312 Purpose of strategy 312 Levels of strategy 317

the strategiC management proCess ____________________320 Strategy formulation versus execution 323 SWOT analysis 323

formulating Corporate-level strategy _____________326 The portfolio strategy 326 The BCG matrix 327 Diversification strategy 328

formulating business-level strategy _________________330 Porter’s competitive forces and strategies 330

formulating funCtional-level strategy ____________334

stages of groWth _______________________________________________ 257 Planning 258 Organising 258 Decision making 259 Leading 259 Controlling 260

intrapreneurship in a groWing business ____________ 262 sustainability and the small or start-up organisation _____________________________________________________263

Discussion questions 264 Ethical challenge 264

» to grow or not to grow? 264 Group challenge 265

» What counts? 265 Case for critical analysis 265

» emma’s parlour 265

On the job video case 266 » urban escapes: managing small business start-ups 266

Chapter CaSe StudIeS

Cleanevent (division of Spotless Group) 233 Competitive innovation in the mining industry 238 Wesfarmers 239 HealthMastery: entrepreneurship in the NZ health services industry 245 Entrepreneurship in solar energy 250 The high and lows of franchising entrepreneurship 252 Franchises in Australia and New Zealand 253 Entrepreneurship: from ‘sparky’ to CEO 257

Continuing Case: general motors part tWo: the environment of management ______________________268

P a r t t h r e e

PlANNiNG

269

x contents

neW trends in strategy _______________________________________335 Innovation from within 335 Strategic partnerships 336

global strategy __________________________________________________ 337 Multidomestic strategy 339 Transnational strategy 339

strategy exeCution ____________________________________________ 341 Implementing global strategies 343 Testing the quality of strategy 343

developing a sustainability strategy as part of business strategy ___________________________________________344

Discussion questions 345 Ethical challenge 346

» a great deal for whom? 346

Group challenge 346 » developing strategy for a small business 346

Case for critical analysis 346 » Starbucks coffee 346

On the job video case 347 » theo Chocolate: strategy formulation and execution 347

CourseMate 349

Chapter CaSe StudIeS

Austal Ltd 315 MYOB 316 Apple Inc.’s strategy: much more than iPod, iPhone, iPad and Mac 319 Chip competition in overdrive 323 Ferragamo: family business or not? 334

chapter 9 managerial decision making 350 types of deCisions and problems ________________________353

Programmed and non-programmed decisions 354 Certainty, risk, uncertainty and ambiguity 356

deCision-making models ____________________________________362 The classical model: rational decision making 362 The administrative model: how managers actually make decisions 363 The political model 365

deCision-making steps ________________________________________ 367 Recognition of decision requirement 367 Diagnosis and analysis of causes 368 Development of alternatives 368 Selection of desired alternative 370 Implementation of chosen alternative 370 Evaluation and feedback 371

personal deCision frameWork ___________________________ 374 innovative deCision making _______________________________ 376

Start with brainstorming 376 Engage in rigorous debate 377 Avoid groupthink 378 Know when to pull the plug 378

sustainable development deCisions ___________________ 379 Discussion questions 380 Ethical challenge 381

» the unhealthy hospital 381 Group challenge 381 Case for critical analysis 382

» decisions at paradox 382 On the job video case 383

» plant Fantasies: managerial decision making 383 CourseMate 384

Chapter CaSe StudIeS

Len Jury Limited, stamp dealer 355 Pepsi-Cola 359

Continuing Case: general motors part three: planning __________________________________________385

chapter 10 fundamentals of organising 388 organising the vertiCal struCture ____________________392

Work specialisation 393 Chain of command 394 Authority, responsibility and delegation 395 Span of management 397 Centralisation and decentralisation 400 Formalisation 400

departmentalisation __________________________________________ 401 Vertical functional approach 402 Divisional approach 405

Matrix approach 408 Hybrid structure 410 Team-based approach 411 Network approach 413

organising for horizontal Coordination_________ 418 The need for Coordination 418 Task forces, teams and project management 419 Relational coordination 420

faCtors shaping struCture ________________________________423 Structure follows strategy 423

P a r t f O u r

orGANiSiNG

387

xicontents

organising for sustainable development __________425 Discussion questions 427 Ethical challenge 427

» Caught in the middle 427 Group challenge 428

» Family business 428 Case for critical analysis 428

» abraham’s Grocery 428

On the job video case 429 » Modern Shed: designing adaptive organisations 429

CourseMate 431

Chapter CaSe StudIeS

Fonterra’s global management structure 392 Strida Bicycles: a globally networked company 416

chapter 11 managing change and innovation 432 turbulent times and the Changing WorkplaCe _________________________________________________________435 innovation and the Changing WorkplaCe __________435 Changing things: neW produCts and teChnologies _____________________________________________________437

Exploration 438 Cooperation 443 Entrepreneurship and innovation roles 449

Changing people and Culture ____________________________ 451 Training and development 453 Organisation development 454

implementing Change _________________________________________458 Need for change 459 Resistance to change 460 Force-field analysis 461 Implementation tactics 464

implementing sustainable development in the organisation ___________________________________________467

Discussion questions 469 Ethical challenge 469

» Crowdsourcing 469 Group challenge 470

» are you ready to implement personal change? 470 Case for critical analysis 471

» Malard Manufacturing Company 471 On the job video case 471

» holden Outerwear: managing change and innovation 471 CourseMate 474

Chapter CaSe StudIeS

Building a better mouse . . . 437 General Electric 453 3M 462 A mini crisis of culture and performance 466

chapter 12 human resource management 476 the strategiC role of hrm is to drive organisational performanCe ____________________________479

The strategic approach 479 Competitive strategy _________________________________________ 480

Building human capital to drive performance 480 External forces 482

the Changing nature of Careers ________________________483 The changing social contract 483 Innovations in HRM 485

finding the right people ____________________________________486 Human resource planning 487 Recruiting 488 Assessing jobs 488 Selecting 491

managing talent: developing an effeCtive WorkforCe _____________________________________496

Training and development 496 Performance appraisal 500

maintaining an effeCtive WorkforCe ________________ 504

Compensation 504 Benefits 505 Termination 506

sustainability and people ___________________________________509 Discussion questions 510 Ethical challenge 510

» research for sale 510 Group challenge 511

» Management competencies 511 Case for critical analysis 511

» the right way with employees? 511 On the job video case 512

» Barcelona restaurant Group: managing human resources 512

CourseMate 515

Chapter CaSe StudIeS

Container Store 491 VIVO Cafe: all in the family … the business is people 503 Biotechnology companies in turbulent environments

and challenging times 507

chapter 13 managing diversity 516 valuing diversity ________________________________________________ 519

Diversity in the corporate world 522 The changing nature of diversity in Australia 522

diversity on a global sCale ________________________________524 Diversity of perspective 525 Inclusion 526 Dividends of workplace diversity 526

xii contents

chapter 14 individual behaviour in organisations 556 understanding yourself and others _________________560

The value of knowing yourself 560 attitudes ____________________________________________________________562

High-performance work attitudes 562 Conflicts among attitudes 566

perCeption _________________________________________________________ 567 attributions _______________________________________________________569 personality and behaviour ________________________________570

Personality traits 570 Attitudes and behaviours influenced by personality 573 Problem-solving styles and the Myers-Briggs Type Indicator 576

emotions ____________________________________________________________ 579 Positive and negative emotions 579

emotional intelligenCe ______________________________________580 managing yourself ____________________________________________582

Basic principles for self-management 583 A step-by-step guide for managing your time 583

stress and stress management ___________________________586 Challenge stress and threat stress 587 Type A and Type B behaviour 587 Causes of work stress 588 Innovative responses to stress management 589

sustainability and organisational behaviour ____594 Discussion questions 595 Ethical challenge 596

» Should I fudge the numbers? 596 Group challenge 596

» personality role play 596 Case for critical analysis 597

» Volkswagen’s Ferdinand piëch 597 On the job video case 598

» Mitchell Gold 1 Bob Williams: understanding individual behaviour 598

CourseMate 601

Chapter CaSe StudY

The Carlson companies 575

chapter 15 leading in organisations 602 the nature of leadership ___________________________________605 Contemporary leadership _________________________________605

Level 5 leadership 606 Servant leadership 607

Authentic leadership 608 Gender differences 609

from management to leadership_________________________ 611 Leadership traits 612

P a r t f i v e

lEAdiNG

555

faCtors shaping personal bias ___________________________ 527 Workplace prejudice, discrimination and stereotypes 527 Ethnocentrism 529

faCtors affeCting Women’s Careers ____________________531 The glass ceiling 531 The opt-out trend 532 The female advantage 533

the Changing WorkplaCe ___________________________________534 Diversity challenges 534

impliCations of a globally diverse WorkforCe __536 aChieving Cultural CompetenCe ________________________538 Current responses to diversity _________________________ 540

Enhancing structures and policies 540 Expanding recruitment efforts 540 Establishing mentor relationships 540 Increasing awareness of sexual harassment 541 Using multicultural teams 542 Positive assistance for women at work in Australia 542

driving sustainability through effeCtively managing diversity ____________________________________________546

Discussion questions 547

Ethical challenge 548 » Sunset prayers 548

Group challenge 548 » personal diversity 548

Case for critical analysis 549 » Waterway Industries 549

On the job video case 550 » Mitchell Gold 1 Bob Williams:

managing diversity 550

CourseMate 552

Chapter CaSe StudIeS

Lenovo Corp. 537 Australian Federal Police on the case 545 Diversity still a big issue, problem and opportunity 546

Continuing Case: general motors part four: organising ________________________________________553

xiiicontents

Behavioural approaches 613 Task versus people 613 The Leadership Grid 614

ContingenCy approaChes __________________________________ 616 The situational model of leadership 616 Fiedler’s contingency theory 618

situational substitutes for leadership ________________621 CharismatiC and transformational leadership__________________________________________________________623

Charismatic leadership 624 Transformational versus transactional leadership 625

folloWership _____________________________________________________ 627 poWer and influenCe _________________________________________629

Position power 630 Personal power 630 Other sources of power 631 Interpersonal influence tactics 632

Contemporary leaders ______________________________________634 leadership of sustainable development _____________638

Discussion questions 639 Ethical challenge 640

» does wage reform start at the top? 640 Group challenge 640

» Which leadership styles are more effective? 640 Case for critical analysis 640

» dGL International 640 On the job video case 641

» Camp Bow Wow: Leadership 641

Chapter CaSe StudIeS

News Corporation 615 In the hands of a matador 625 Asea Brown Boveri 626

chapter 16 motivating employees 644 the ConCept of motivation _________________________________647

Individual needs and motivation 647 Managers as motivators 650

Content perspeCtives on motivation __________________650 The hierarchy of needs 650 ERG theory 653 A two-factor approach to motivation 654 Acquired needs theory 656

proCess perspeCtives on motivation __________________658 Goal setting 658 Equity theory 660 Expectancy theory 661

reinforCement perspeCtive on motivation _________664 Direct reinforcement 664 Social learning theory 666

Job design for motivation __________________________________ 667 Job enrichment 668 Job characteristics model 668

innovative ideas for motivating ________________________670 Building a thriving workforce 671

Empowering people to meet higher needs 671 Giving meaning to work through engagement 672

keeping staff motivated in australia and neW zealand_______________________________________________________ 675 motivation for sustainability _____________________________ 677

Discussion questions 678 Ethical challenge 679

» Compensation showdown 679 Group challenge 679

» Should, need, like, love 679 Case for critical analysis 680

» Lauren’s balancing act 680 On the job video case 681

» urban escapes: motivating employees 681 CourseMate 683

Chapter CaSe StudIeS

Managing motivation at Degussa Peroxide Ltd 647 ACER Group Computers: coping with fierce competition

in the world’s PC market 652 Outback Steakhouse 657 Hilcorp Energy 672

chapter 17 communication in organisations 684 CommuniCation is the manager’s Job __________________687

What is communication? 688 A model of communication 688

CommuniCating among people ___________________________690 Open communication climate 690 Communication channels 692 Communicating to persuade and influence others 695 Communicating with candour 695 Asking questions 698 Listening 699 Non-verbal communication 700

organisational CommuniCation ________________________702 Formal communication channels 702 Personal communication channels 706

WorkplaCe CommuniCation _______________________________ 710 Social media 710 Listening to customers 711 Communicating to customers 711 Connecting employees 711 Crisis communication 712

CommuniCations and sustainability ____________________717 Discussion questions 718

xiv contents

chapter 19 managerial and quality control 760 the meaning of Control ____________________________________ 763 feedbaCk Control model ___________________________________764

Steps of feedback control 764 The balanced scorecard 767

budgetary Control ____________________________________________ 769 Expense budget 770 Revenue budget 770 Cash budget 770 Capital budget 771 Zero-based budget 771

finanCial Control _____________________________________________ 772 Financial statements 772 Financial analysis: interpreting the numbers 774

the Changing philosophy of Control ________________ 777 Hierarchical versus decentralised approaches 777

Open-book management 779 total quality management (tqm) _________________________ 782

TQM techniques 783 TQM success factors 786

trends in quality and finanCial Control ___________788 International quality standards 788 Corporate governance 789

qualities of effeCtive Control systems ______________790 sustainable development and management Control ________________________________________ 792

Discussion questions 793 Ethical challenge 794

» the wages of sin? 794 Group challenge 794

» Create a group control system 794

P a r t s i x

CoNTrolliNG

759

Ethical challenge 719 » the voice of authority 719

Group challenge 719 » Listen like a professional 719

Case for critical analysis 720 » Wa manufacturing 720

On the job video case 720 » plant Fantasies: managing communication 720

CourseMate 722

Chapter CaSe StudIeS

General Electric 696 Susan Williams 705 Rhonda White achieved her vision 707

chapter 18 teamwork in organisations 724 the value of teams ______________________________________________ 727

What is a team? 728 Contributions of teams 728 Types of teams 729

the dilemma of teams _________________________________________ 732 Model of team effectiveness 734 Virtual teams 736

team CharaCteristiCs _________________________________________ 739 Size 739 Diversity 739 Member roles 739

team proCesses___________________________________________________ 742 Stages of team development 742 Team cohesiveness 744 Team norms 745

managing team ConfliCt ____________________________________ 747 Types of conflict 747 Balancing conflict and cooperation 747 Causes of conflict 748 Styles to handle conflict 748

negotiation _______________________________________________________ 749 Types of negotiation 750 Rules for reaching a win-win solution 751

implementing sustainable development through teamWork ____________________________________________ 752

Discussion questions 753 Ethical challenge 753

» Consumer safety or team commitment? 753 Group challenge 754

» Feedback exercise 754 Case for critical analysis 754

» are we a team? 754 On the job video case 755

» holden Outerware: leading teams 755 CourseMate 757

Chapter CaSe StudIeS

The team’s the thing 727 The Aconex team in Melbourne 738 Transport Corporation of India (TCI) 740

Continuing Case: general motors part five: leading _______________________________________________ 758

xvcontents

glossary 860 Name index 872 Subject index 879

Case for critical analysis 795 » Lincoln electric 795

On the job video case 796 » Barcelona restaurant Group: managing

quality and performance 796

CourseMate 797

Chapter CaSe StudIeS

Semco’s open-book policy 781 A lesson in quality from China 782 The honeybee style 784

chapter 20 managing the value chain, information technology and e-business 798 the organisation as a value Chain _____________________802

Service and manufacturing operations 804 Supply chain management 805

faCilities layout _________________________________________________806 Process layout 808 Product layout 809 Cellular layout 809 Fixed-position layout 810

teChnology automation ____________________________________ 810 Radio-frequency identification (RFID) 810 Digital manufacturing systems 811 Lean thinking 812

inventory management ______________________________________ 813 The importance of inventory 814 Just-in-time inventory 815

operations deliver outComes ____________________________ 816 information teChnology has transformed management _______________________________________________________817

Boundaries dissolve; collaboration reigns 817 Knowledge management and Web 2.0 818 Enterprise resource planning systems 821

the internet and e-business ________________________________822 e-business strategy: market expansion 824 e-business strategy: increasing efficiency 824

operations management, information and sustainable development ____________________________826

Discussion questions 828 Ethical challenge 829

» Manipulative or not? 829 Group challenge 829

» developing an online strategy 829 Case for critical analysis 830

» SunBright Outdoor Furniture, Inc. 830 CourseMate 833

Chapter CaSe StudIeS

Managing the professional services firm 803 IKEA 813 Profiting in a depressed smoke stack industry 815 NTT DoCoMo: the leading edge of the mobile phone business 818 Harvest FreshCuts 827

Continuing Case: general motors part six: Controlling ______________________________________________________834

capstone chapter making effective management happen 836 fundamental praCtiCes Common to Winning organisations __________________________________839

Leadership practices 840 People management practices 844 Customer focus practices 848 Quality management practices 849 Innovation practices 851 Knowledge management practices 852

deeper prinCiples Common to the World’s best organisations _____________________________________________853

putting it all together: the organisation as a system __________________________________________________________ 857

Discussion questions 858 Group challenge 859

» understanding how an organisation works 859 CourseMate 859

Chapter CaSe StudIeS

Google: a great place to search – and work 847 Values can come from Mars 856

xvi

TAkINg THe LeAD The world seems to be changing ever faster, with social, technological, economic and

political forces reverberating around the globe every day. Volatility seems to be increasing: just consider the 2011 earthquakes in New Zealand and Japan, and the 2008–10 global financial

crisis, the recent financial difficulties in Greece and Spain and the political and military problems in Syria and Ukraine. Managers need to know what is going on in their industries and economies on

a current and ongoing basis. In Australia, New Zealand and other Asia–Pacific countries, the challenges and opportunities facing managers have never been greater. New technology and globalisation mean that

managers in these countries must not just be competitive with the organisation ‘down the road’ or across the country, but must also recognise that the only realistic standard for comparison of performance in the new

millennium is ‘world’s best’. The announced demise of Australia’s automotive assembly industry (effective 2017) after more than 50 years of operations demonstrates the intensity of global competitive forces. In every industry, competition

is becoming fiercer each month, and there are always winners and losers. Winners grow and prosper, but uncompetitive companies quickly wither away and their shareholders lose their investments, while managers and other staff lose their jobs. Not-for-profit organisations such as government service suppliers, charities and clubs must also excel in their focus and use of resources, since their employees, consumers and suppliers have high expectations of effectiveness and output.

Technological change is accelerating and driving exciting new competitive dynamics in most industries. This includes new process technologies such as manufacturing automation, and in particular the web-based and social networking technologies such as Facebook, Instagram, Google and Twitter that are making information available to people as never before. The Internet has a profound effect on all forms of organisation, business and consumer behaviour. Consider how Amazon and EBay have impacted on consumer shopping habits. New business models and innovative ways to combine products and services are made possible by the Internet, as well as much richer, faster, cheaper and more detailed information exchange between businesses. The cost of close coordination between organisations is lower as a result of these new technologies, leading to new networks of collaboration within supply networks.

Another major trend that will impact on managers and businesses all over the world is the coming of age of the Chinese economy and, behind that, India, Brazil and others. These low-wage countries, which have over half of the world’s people living in them and hence huge internal developing markets, provide both opportunity and threat for all Asia–Pacific-based companies and countries. In addition, political instability, terrorism, disease such as bird flu, climate change and other unanticipated events, coupled with the rise of regional trade blocs and free trade agreements, will impact substantially on the opportunities for companies to export and trade globally. Managers must be capable of planning and leading their organisations under both stable and unstable conditions.

Risk management and crisis management are new processes with which managers must formally engage and become competent. Further, brought on by the collapse of major companies such as Lehman Brothers and many others as part of the global financial crisis, managers must now demonstrate the quality of governance in their systems and decisions, through compliance with strict new procedures, as legislated by governments and required by shareholders.

And through all this, the fundamental management requirements – being highly competent in managing people, processes, customers, products and services; devising and planning strategies; organising resources; and leading and controlling work – have not gone away and never will. Rather, they must now be conducted at higher standards than ever in order to keep customers, employees and shareholders satisfied. A further requirement comes with the challenge of ‘sustainable development’, of being socially and environmentally responsible, while still maximising profits and behaving with high standards of ethics and integrity.

This book gives the reader a realistic perspective of what management is and what managers really do. Management as a profession is dynamic, challenging and exciting for those who want to excel at it. Each day brings new and often unanticipated challenges despite the plans made by even the best managers and leaders. The relatively new challenges of sustainable development are integrated into every chapter of this book.

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Management involves creating and conducting the affairs of organisations so as to achieve valuable outcomes for many different stakeholders, particularly staff, owners, and clients or customers. In order to do this well, leaders in organisations must achieve many things at high levels – including motivating staff and themselves, ensuring that their products and services match customer requirements, efficiently managing finances and resources, and, above all else, assembling all this into an overall strategy that makes sense for all participants. Good managers need to understand and apply the fundamentals of fields as diverse as economics and psychology, as well as using various analytical techniques.

We chose a sporting theme and analogy for this book because the challenges facing managers have so much in common with those of competitive sports. In both sports and management, no matter how well you’re doing, improvement is always possible. There is no such thing as the perfect tennis game, golf swing or score, and no such thing as the perfect manager or organisation. There is always room for improvement. In both sport and management, planning and strategising usually helps. What are our competitors likely to be doing? What are the conditions in the field, economy or marketplace that we participate in? In both sport and management, the best-laid plans often don’t come to fruition because things keep changing, so adjustments, sometimes radical, must be made to the planned business or sporting tactics. Decisions must be made under pressure – whether it’s during a tennis match or a business day – because unforeseen events occur, and unanticipated consequences develop in real time. At its extreme, this is referred to as ‘crisis management’.

Finally, in both sport and management, there are always new competitors, new technologies, new strategies developing and new products that we must adapt to and find ways to turn into opportunities. Just like sport, management is dynamic and challenging. Just as new technologies, such as graphite tennis racquets and titanium golf clubs, changed those games and allowed for new levels of performance, so, too, has the Internet significantly created new opportunities and business strategies. Learning and innovation are the keys. For those who excel, the personal rewards that come from the satisfaction of achievement – as well as the creation of value for many stakeholders in the community – can be immense.

While the challenges of achieving competitiveness and organisational effectiveness through excellent leadership and management have never been greater, the other side of the same coin is that for those who ‘get it right’, the opportunities have never been greater! Products and services can be developed by small and large companies and sold globally over the Internet. Consider Apple’s success with its iPhone and iPad, or the achievements of Samsung, Google or General Electric. Entrepreneurs are springing up and starting companies in all industries, challenging market leaders as never before. A small, new software company in Auckland, New Zealand, can now effectively sell and distribute its products in Sydney, Perth, Fiji, Moscow and New York – which would have been far too expensive to contemplate in the ‘pre-Internet’ world of just a decade ago. These new international sales or ‘extended market reach’ will only occur if the products and services offered by the company are competitive and provide superior value for customers.

One vital thing that all successful organisations need, no matter whether their products are very simple or incredibly sophisticated, is solid management. Even the strongest of technological leadership in a product or industry will not lead to commercial success if the enterprise that owns and controls it is not managed well.

The field of management is continually changing, yet some fundamental foundations remain the same. Demands made on today’s managers go well beyond the techniques and ideas traditionally taught in management courses. The traditional management paradigm assumes that the purpose of management is to control and limit people, enforce rules and regulations, seek stability and efficiency, design a top-down hierarchy to direct people and achieve bottom-line results. The emerging paradigm recognises that today’s managers need different skills to engage workers’ hearts and minds, as well as take advantage of their physical labour. The emerging management paradigm focuses on leadership, on harnessing people’s creativity and enthusiasm, finding shared vision and values, and sharing information and power. Teamwork, collaboration, participation and learning are guiding principles that help managers and employees. One of the key skills of great managers is the ability to achieve a blending and balancing of controls needed within a business with the leadership actions to achieve high levels of human motivation across the organisation. It’s all about balance and ‘shades of grey’, not ‘black and white’.

Both the new and the traditional paradigms are guiding management actions in the world today. Our vision for Management is to explore the new paradigm in a way that is interesting and valuable to students, while retaining the best

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of traditional management ideas. To achieve this vision, we have included the most recent management thinking and research, as well as the contemporary application of management ideas in organisations. The combination of established scholarship, new ideas and real-life applications gives students a taste of the energy, challenge and adventure inherent in the dynamic field of management. We have worked together to provide a textbook better than any other at capturing the excitement of organisational management.

We wrote Management to provide a book of the highest quality – one that will create in students both respect for the changing field of management and confidence that they can understand and master it. The textual portion of this book has been enhanced by an engaging, easy-to-understand writing style and many in-text examples and boxed items that bring concepts to life for students.

ORgANISATION The chapter sequence in Management is organised around the management functions of planning, organising, leading and controlling. These four functions effectively encompass both management research and real-life characteristics of the manager’s job.

Part One introduces the world of management, including the nature of management, the emerging management paradigm, the learning organisation and historical perspectives on management.

Part Two examines the environments of management and organisations. This section includes material on the business environment and corporate culture, the global environment, ethics and social responsibility, the natural environment, and the environment of entrepreneurship and small-business management.

Part Three presents chapters on planning, including organisational goal setting and planning, strategy formulation and implementation, and the decision-making process.

Part Four focuses on organising processes. These chapters describe the dimensions of structural design, the design alternatives managers can use to achieve strategic objectives, structural designs for promoting innovation and change, the design and use of the human resource function, and the ways managing diverse employees are significant to the organising function.

Part Five is devoted to leadership. This section begins with a chapter on organisational behaviour, providing a grounding in understanding people in organisations. This foundation paves the way for subsequent discussions of leadership, motivating employees, communication and team management.

Part Six describes the controlling functions of management, including basic principles of quality improvement, the design of control systems, information technology and techniques for control of operations management.

Finally, our Capstone chapter integrates many of the themes of management and considers ‘best practices’ in organisations, at the cutting edge of our dynamic field. It provides a practical yet integrative way to think about the ‘world of work’, and how to succeed in it.

SPeCIAL FeATuReS One major goal of this book is to offer better ways of using the textbook medium to convey management knowledge to the reader. To this end, the book includes several special features.

● Chapter outline and objectives. Each chapter begins with a clear statement of its learning objectives and an outline of its contents. These devices provide an overview of what is to come and can also be used by students to see whether they understand and have retained important points.

● Management challenge and response. The text portion of each chapter begins with a real-life problem faced by organisation managers. The problem pertains to the topic of the chapter and will heighten students’ interest in chapter concepts. The questions posed in the Management challenge are resolved in the Response at the end of the chapter, where chapter concepts guiding management’s actions are highlighted.

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● Contemporary examples from all over the Asia–Pacific region – and, indeed, the world. Every chapter contains a number of examples of real-life management incidents. These are placed at strategic points in the chapters and are designed to demonstrate the application of management concepts in specific companies. These in-text examples include well-known companies such as National Australia Bank, BHP Billiton, McDonald’s, ANZ, General Electric and Google, as well as less-well-known companies and not-for-profit organisations such as Austel, Dryen Australia and TAC. These examples put students in touch with the real world of organisations so they can appreciate the value of management concepts.

● Exhibits. Many aspects of management are research based, and some concepts tend to be abstract and theoretical. To enhance students’ awareness and understanding of these concepts, many exhibits have been included throughout the book. These exhibits consolidate key points, indicate relationships among variables and visually illustrate concepts. They also make effective use of colour to enhance their imagery and appeal.

● Glossary. Learning the management vocabulary is essential to understanding contemporary management. This process is facilitated in three ways. First, key terms and concepts are coloured and defined where they first appear in the text. Second, brief definitions are set out in the margin for easy review and follow-up. Third, a glossary summarising all key terms and definitions appears at the end of the book for handy reference.

● ‘Remember this’ summaries and Discussion questions. Each chapter contains a number of Remember this boxes, summaries of key points that students should retain. The end-of-chapter discussion questions are a complementary learning tool that will enable students to check their understanding of key issues, to think beyond basic concepts and to determine areas that require further study. The Remember this summaries and Discussion questions help students to discriminate between the text’s main and supporting points, and provide mechanisms for self-teaching.

● Management in practice exercises. Management in practice, Ethical challenge, Group challenge, Case for critical analysis and New manager self-test exercises provide students with an opportunity to experience management issues in a personal way. These exercises take the form of questionnaires, scenarios and activities, and also provide opportunities for students to work in teams.

● Video cases. The chapters of the book conclude with video cases that illustrate concepts discussed in the text. The videos will enable students to consider the practical applications of management theory.

● Continuing Case. Each Part of the book finishes with a contemporary continuing case study, of General Motors (US) and its Australian business, Holden, which face many managerial challenges and opportunities.

● New icons. A Linkage icon and an Entrepreneurship icon have been added to this new edition. The Linkage icon highlights links between topics within and across chapters, and the Entrepreneurship icon points to examples and issues related to new value creation.

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Learning objectives are listed at the start of each chapter, and give a clear sense of what you can expect to learn from the chapter.

Chapter outlines are also listed at the start of each chapter, clearly outlining each main heading for the chapter’s key topics.

FOR THe STuDeNT As you read this text you will find a number of features designed to enhance your study of management, and to help you understand how management is applied in the real world.

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New manager self-tests encourage you to analyse how you would respond in certain managerial situations, and provide insight into what to expect and how you might perform.

The Management challenge at the start of each chapter presents a real-life management scenario that relates to key chapter concepts, and encourages you to think about how best to resolve it.

Later in each chapter, the Response to the management challenge offers a conclusion to this scenario, describing how the issue was overcome.

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FOR THe STuDeNT As you read this text you will find a number of features designed to enhance your study of management, and to help you understand how management is applied in the real world.

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Remember this lists throughout chapters summarise the key points covered in preceding sections. They are useful for quick reference and assisting with revision.

Take a moment pop-ups provide tips and suggestions about how you might apply the concepts discussed in the text as a practising new manager. They also direct you to relevant ‘New manager self-tests’ and specific end-of- chapter materials.

Innovative way boxes highlight companies and managers at the forefront of innovation in the field of contemporary management practice, in both an Australian and global context.

When key terms are used for the first time, they are bolded for easy identification, and a definition of the term is provided in the margin.These definitions are collected in the Glossary at the back of the text.

Australian manager profiles provide a candid window into some of the individual and organisational challenges that Australian managers have had to overcome in their careers.

Management in practice boxes highlight a specific aspect of management and offer in-depth, practical advice about how to address it in a work context.

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Linkage icons draw attention to connections between topics within individual chapters and across the text; an in-text reference adjacent to the icon directs you to the relevant material.

Entrepreneurship icons highlight discussion of contemporary entrepreneurship and related activities throughout the text, such as innovation.

Case study boxes give real-world examples of how management theory is being applied by some of its leading practitioners. Cases marked with a Green icon deal with topics related to sustainability.

Sustainable development boxes describe aspects of sustainability that are relevant to the management concepts described in each chapter.

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Concept revision and Concept extension icons refer you to online exercises that will reinforce and expand your knowledge of management concepts. This material is available on the Management CourseMate website.

At the end of each chapter, you will find several tools to help you to review each chapter’s contents and key learning concepts, and to help extend your learning.

Discussion questions enable you to apply the theory you have learned, think beyond the conceptual level and identify any areas that require further study.

The Ethical challenge offers a hypothetical scenario involving ethics or social responsibility in management, and then asks you to choose how you would act.

ConCept Revision experiential

exercise

ConCept extension

Case project 1.1

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The Group challenge is an activity or exercise that is suitable for tutorials. It encourages discussion, the development of teamwork and analytical skills.

The Case for critical analysis describes a real-world management situation. Each case concludes with a set of questions that encourage you to sharpen your diagnostic skills for management problem solving.

On the job video cases ask questions about videos available on the Management CourseMate that show the direct application of management theories by real-world business leaders.

The Continuing case at the end of each Part offers a running description of the ongoing management issues faced by one organisation. Each of the case’s six sections relates to the management topics described in the preceding Part.

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ONLINe ReSOuRCeS FOR STuDeNTS Visit http://login.cengagebrain.com and login using the code card in the front of this text for 12 months’ access to the Management CourseMate website. You’ll find an e-book, audio summaries, case projects, interactive self-tests, internet research activities, revision quizzes, videos, a glossary, flashcards, games, crosswords and more tools to help you excel in your studies.

From http://login.cengagebrain.com you can also access a 12-month subscription to Search me! Management.

Fast and convenient, this resource is updated daily and provides you with 24-hour access to full-text articles from hundreds of scholarly and popular journals, e-books, and The New York Times.

Use the Search me! Management keywords provided in the margins of each chapter to further explore topics and find current references. Get started with these search terms, and then try some of your own to expand your knowledge. Search tip: Search me! Management contains information from both local and international sources. To get the greatest number of search

results, try using both Australian and American spellings in your

searches, e.g. ‘globalisation’ and ‘globalization’; ‘organisation’ and

‘organization’.

FOR THe INSTRuCTOR Cengage Learning is pleased to provide you with a selection of resources that will help you prepare your lectures. These teaching tools are available on the companion website, accessible via http://login.cengage.com.

i N S T r u C T o r ’ S M A N u A l The Instructor’s manual provides you with a wealth of content to help set up and administer a management subject. It includes learning objectives, chapter outlines, key points, figures from the text, further teaching tips and materials, tutorial warm-up activities, as well as solutions to problems in the text.

P o w E r P o i N T T M P r E S E N TAT i o N S Chapter-by-chapter PowerPoint presentations cover the main concepts addressed within the text and can be edited to suit your own requirements. Use these slides to enhance your lecture presentations and to reinforce the key principles of your subject, or for student handouts.

E x A M v i E w T E S T b A N k

ExamView helps you to create, customise and deliver tests in minutes, for both print and online applications. The Quick Test Wizard and Online test Wizard guide you step by step through the test-creation process. With ExamView’s complete word-processing abilities, you can add an unlimited number of new questions to the

bank, edit existing questions and build tests of up to 250 questions using up to 12 question types. You can also export the files into Blackboard or WebCT.

T E A C h i N G N o T E S Teaching notes for student case projects, internet research activities and interactive self-tests will assist you in preparing tutorial discussion, setting activities and providing feedback.

A r T w o r k These digital files of graphs, pictures and flowcharts from the text can be used in a variety of media. Add them into your course management system, use them within student handouts or copy them into lecture presentations.

M a n a g e M e n t l o C A l v i d E o PA C k A G E This video package, featuring large and small local companies, provides a relevant and engaging visual teaching tool for the classroom. Scenarios will link the application of management concepts to key graduate outcomes.

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f e a t u r e s m a t r i x Part 1 Part 2 Part 3 Part 4

ChaPters 1 2 3 4 5 6 7 8 9 10

IN-ChaPter Features

New manager self-test

Are you ready to be a manager, p. 3

Are you a new-style or an old-style manager?, p. 49 What’s your mach?, p. 65

Are you fit for managerial uncertainty?, p. 89 Culture preference, p. 121 Working in an adaptive culture, p. 126

Are you ready to work internationally?, p. 135 What are your social values?, p. 162

Will you be a courageous manager?, p. 179 Servant leadership, p. 191 Ethical work climates, p. 213

Do you think like an entrepreneur?, p. 225

Does goal setting fit your management style?, p. 271

What is your strategy strength?, p. 309

How do you make decisions?, p. 351 Intolerance of ambiguity, p. 360 Making important decisions, p. 365

What are your leadership beliefs?, p. 389 Delegation, p. 396 Authority role models, p. 421

Case study India: A hotbed of competition for mobile phones, p. 12 Extraodinary crisis management, p. 37

Switching to green power, p. 51 Brumby's Bakeries cooking along, p. 68 Atlassian : supporting collaboration and innovation, p. 75 Enjo: a friend of its customers, p. 77

Growing a business from scratch: lavender!, p. 102

Shifting international services and jobs!, p. 139 The axis of India, p. 142 LG Electronics, p. 170

Philanthropy goes up a gear, p. 186 A leadership dilemma at Timberland, p. 201 A crisis to milk, p. 209

Cleanevent, p. 223 Competitive innovation in the mining industry, p. 238 Wesfarmers, p. 239 Health Mastery: Entrepreneurship in the NZ health services industry, p. 245 Entrepreneurship in solar energy, p. 250 The high and lows of franchising entrepreneurship, p. 252 Franchises in Australia and New Zealand, p. 253 Entrepreneurship: from 'sparky' to CEO, p. 257

Siemens, p. 289 Austal Ltd, p. 315 MYOB, p. 316 Chip competition in overdrive, p. 323 Ferragamo: family business or not?, p. 334

Len Jury Limited, stamp dealer, p. 355 Pepsi-Cola, p. 359

Fonterra's global management structure, p. 392 Strida Bicycles: A globally networked company, p. 416

Australian manager profile

Noreen Kam, National Procurement Manager, Silliker Australia, p. 64

Dr Justin Pierce, Cotton On Group, p. 111

Glenn Barnes, Chairman, Ansell Ltd and Australian Unity Ltd, p. 146

Susan Mizrahi, human rights advocate, p. 198

Laura Mae Davey: Founder and director of Maer Snowboarding, p. 261

Maureen and Tony Wheeler, co-founders, Lonely Planet Publications, p. 276

James Campbell, Biotech Executive, p. 329

Grant Anderson, chief executive officer, ANCA Group, p. 369

Rachael Robertson: leadership lessons from the world’s toughest workplace, p. 405

Management in practice

Do you really want to be a manager? p. 28 Time management tips for new managers, p. 29

Management tools and trends, p. 73

Creating guanxi in China, p. 95 Green power, p. 114 St Luke's, p. 115 Unlocking innovative solutions through people p. 125

Challenging the boss on ethical issues, p. 190 Guidelines for ethical decision making, p. 192 Cultivating a service mindset, p. 205

Why start-ups fail, p. 248 Who sets the goals? Manager versus coalition, p. 282

Will strategy ever be the same?, p. 321

Why do managers make bad decisions? Biases to avoid, p. 372 Evidence-based management, p. 377

How to delegate, p. 398 Would you like to work in your pyjamas?, p. 417

Innovative way Twitter and Square, p. 5 Budget blockbusters, p. 17 Clickcorp: Taking Ugg to the world, p. 35

Sony: Experiencing the thrills and uncertainties of innovation, p. 55 UPS : leading the world in parcel delivery, p. 59 Semco: Giving power to the employee, p. 65

Shopping online, even cars, p. 98 Costco’s winning formula, p. 103 Zappos Family, p. 113

Godrej & Boyce, p. 146 Hollywood studios, p. 149 Lenovo in China, p. 165 Global operating, p. 169 India’s tech talent, p. 170

Gap Inc., p. 196 Harvard Business School, Columbia Business School, Yale School of Management, p. 204 Google, p. 206 Lifebuoy to glowing health, p. 208

Fast growing companies: What are they like?, p. 231 The reluctant social entrepreneur, p. 243 Instagram, p. 256

Planning for not just a little toll, p. 287 JetBlue, p. 298 The birth of the Kindle, p. 301

Amazon Prime, p. 316 Facebook, p. 325 Focused innovation in marketing, p. 336 The Dodo is not extinct!, p. 340 Dell Computer, p. 321

Bremen Castings, p. 356 The New York Times, p. 371

The ‘no structure’ structure, p. 390 Caterpillar, p. 395 Teams work at Imagination Ltd, p. 412 Flight coordianation, p. 422

eND-OF-ChaPter Features

Sustainable development

Sustrainable development: Now a core issue for managers, p. 41

Sustainable development and management thinking, p. 78

Sustainable development and the business environment, p. 127

Sustainable development: a global issue and opportunity, p. 171

Taking managerial action on sustainable development, p. 215

Sustainability and the small or start-up organisation, p. 263

Sustainable development and goal setting, p. 303

Developing a sustainability strategy as part of business strategy, p. 344

Sustainable development decisions, p. 379

Organising for sustainable development, p. 425

Ethical challenge Can management afford to look the other way? p. 43

The supervisor, p. 80

Competitive intelligence predicament, p. 129

Quality or closing, p. 173

What is right?, p. 217

To grow or not to grow?, p. 264

Repair or replace?, p. 304

A great deal for whom?, p. 346

The unhealthy hospital, p. 381

Caught in the middle, p. 427

Group challenge Your best and worst managers, p. 44

Turning points on the road to management, p. 81

Should you go global?, p. 129

Considerations for overseas expansion, p. 173

Ethics and business costs, p. 218

What counts?, p. 265 Course goal setting, p. 305

Developing strategy for small business, p. 346

A new approach to making decisions, p. 381

Family business, p. 428

Case for critical analysis

Sharpstyle Salons, p. 44

More hassle from HR?, p. 81

Richmond Supply Co., p. 130

Shui Fabrics, p. 174

Too much intelligence, p. 218

Emma's Parlour, p. 265 HID, p. 305 Starbucks Coffee, p. 346

Decisions at Paradox, p. 382

Abraham's Grocery, p. 428

On the job video case

Camp Bow Wow: Innovative management for a changing world, p. 45

Barcelona Restaurant Group: The evolution of management thinking, p. 82

Camp Bow Wow: The environment and corporate culture, p. 130

Holden outerware: Managing in a global environment, p. 175

Theo Chocolate: Managing ethics and social responsibility, p. 219

Urban escapes: Managing small business start-ups, p. 266

Modern Shed: Managerial planning and goal setting, p. 306

Theo Chocolate: Strategy formulation and execution, p. 347

Plant fantasies: Managerial decision making, p. 383

Modern Shed: Designing adaptive organisations, p. 429

Continuing Case General Motors Part One: Introduction to Management, p. 85

General Motors Part Two: The environment of management, p. 268

General Motors Part Three: Planning, p. 385

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Part 4 Part 5 Part 6

11 12 13 14 15 16 17 18 19 20 CaPstONe ChaPter

ChaPter BODy Features

Are you innovative?, p. 433 Assess your creativity, p. 439 Taking charge of change, p. 452

Getting the right people on the bus, p. 477 Do you want to be an HR manager?, p. 508

Do you know your biases?, p. 517 Are you attuned to gender differences?, p. 545

Are you self- confident?, p. 557 Expressed emotions, p. 582 Personality assessment: Jung’s typology, p. 591

What ’s your personal style?, p. 603 Interpersonal patterns, p. 632 What is the impact of leadership? p. 637

Are you engaged or disengaged?, p. 645 Need for achievement, affiliation and power, p. 656 What motivates you?, p. 675

Are you building a personal network?, p. 683 What is your social disposition?, p. 690 Candour, p. 697 Personal assessment of communication apprehension, p. 715

How do you like to work?, p. 725 Are you a contributing team member?, p. 741 Managing conflict, p. 750

What is your attitude towards organisational regulation and control?, p. 761

Which side of your brain do you use?, p. 799

Building a better mouse…, p. 437 General electric, p. 453 Making change stick, p. 459 3m, p. 462 A mini crisis of culture and performance, p. 467

Container Store, p. 491 Vivo Café, All in the family…the business is people, p. 503

Lenovo Corp., p. 537 Diversity still a big issue, problem and opportunity, p. 546

The Carlson Companies, p. 575

News Corporation, p. 615 In the hands of a matador, p. 626 Asea Brown Boveri, p. 626

Managing motivation at Degussa Peroxide Ltd, p. 647 Acer Group Computers: coping with fierce competition in the world's PC market, p. 652 Outback Steakhouse, p. 658 Hilcorp Energy, p. 672

General Electric, p . 696 Susan Williams, p. 705 Rhonda White achieved her vision, p. 707

The team’s the thing, p. 727 The Aconex team in Melbourne, p. 739 Transport Corporation of India (TCI) p. 741

A lesson in quality from China, p. 782 Semco's open book policy, p. 782 The honeybee style, p. 784

Managing the professional services firm, p. 803 IKEA, p. 813 Profiting in a depressed smoke stack industry, p. 815 NTT DoCoMo: the leading edge of the mobile phone business, p. 818 Harvest FreshCuts, p. 827

Google: A great place to search - and work, p. 848 Values can come from Mars, p. 857

Richard Gunn, Director of Property, PGA Group, p. 441

Dr Greg Smith, Co-Founder of SciV entures Investments, p. 586

Patricia Neden, p. 623

From engineer to manager, p. 663

Jane Evans, p. 710 Invention is singular; innovation is plural: Peter Richardson, p. 732

Roger Perry, chief executive officer, Bevington Group, p. 769

Richard Goyder: Managing director of Wesfarmers, p. 845

Use six thinking hats for better ideas, p. 443

The right way to interview a job applicant, p. 494

Change your frame, p. 525 A guide for expatriate managers, p. 537

Getting the right fit, p. 559 The rise of the introverted manager, p. 572

How to delegate, p. 620 Are you a charismatic leader? p. 623

How to utterly destroy motivation, p. 649 Th e carrot-and-stick controversy, p. 667

Leaping over language barriers, p. 714

How to be a great team leader, p. 735 Team leader qualities, p. 746

Quantify yourself, p. 765 Cyberslackers beware: the boss is watching, p. 789

A German factory shows how to be fast and flexible, p. 808

Two useful theoretical frames: resources and capabilities, p. 839

PWC, p. 442 Corning, p. 446 Procter & Gamble, p. 448 General Electric’s work-out, p. 457 ENSR, p. 458 Staying in the picture: Ted's cameras, p. 460 Advertisers change their ways, p. 465

Red 5 Studios Inc. p. 490 The GE Way, p. 497

Google, p. 530 IBM, p. 540 Women in IT, p. 544

Innovation in a logistics business, p. 565 eHarmony, p. 570 Understanding your leadership style, p. 578 Dow Chemical, p. 580

Level 5 leaders hip at work, p. 607 Charismatic leadership, p. 624

Flexible work policies, p. 654 Fun goal setting, p. 660 Employee engagement, p. 674 Respect: from peers to Australian corporate leaders, p. 676

Valuedance, p. 694 Cisco systems, p. 699 SuperValu, p. 712 NECX, p. 714

Nokia, p. 737 Spring Company, p. 744 McDevitt Street Bovis, p. 749

7-Eleven, p. 774 Campbell Soup, p. 779 The global success of eBay, p. 787 Toyota, p. 788

Dell’s electronic communication systems, p. 813 AGL, p. 825

GE people/ talent management, p. 846

eND OF ChaPter Features

Implementing sustainable development in the organisation, p. 467

Sustainability and people, p. 509

Driving sustainability through effectively managing diversity, p. 546

Sustainability and organisational behaviour, p. 594

Leadership of sustainable development, p. 638

Motivation for sustainability, p. 677

Communications and sustainability, p. 717

Implementing sustainable development through teamwork, p. 752

Sustainable development and management control, p. 792

Operations management, information and sustainable development, p. 826

Crowdsourcing, p. 469 Research for sale, p. 510

Sunset prayers, p. 548

Should I fudge the numbers?, p. 596

Does wage reform start at the top?, p. 640

Compensation showdown, p. 679

The voice of authority, p. 719

Consumer safety or team commitment? p. 753

The wages of sin?, p. 794

Manipulative or not?, p. 829

Are you ready to implement personal change?, p. 470

Management competencies, p. 511

Personal Diversity, p. 548

Personality role play, p. 596

Which leadership styles are more effective?, p. 640

Should, need, like, love, p. 679

Listen like a professional, p. 719

Feedback exercise, p. 754

Create a group control system, p. 794

Developing an online strategy, p. 829

Understanding how an organisation works, p. 859

Malard Manufacturing Company, p. 471

The right ways with employess, p. 511

Waterway Industries, p. 550

Volkswagen's Ferdinand Piëch, p. 597

DGL International, p. 640

Lauren's balancing act, p. 680

WA Manufacturing, p. 720

Are we a team?, p. 754

Lincoln Electric, p. 795

Sunbright Outdoor Furniture, Inc. p. 830

Holden outerwear: Managing change and innovation, p. 471

Barcelona Restaurant group: managing human resources, p. 512

Mitchell Gold + Bob Williams, p. 550

Mitchell Gold + Bob Williams: Understanding individual behaviour, p. 599

Camp Bow Wow: Leadership, p. 641

Urban Escapes: Motivating employees, p. 681

Plant Fantasies: Managing communication, p. 720

Holden outerware: Leading teams, p. 755

Barcelona Restaurant group: Managing quality control and performance, p. 796

General Motors Part Four: Organising, p. 553

General Motors Part Five: Leading, p. 758

General Motors Part Six: Controlling, p. 834

xxviii

A gratifying experience for us was working with the teams of publishing professionals who were committed to the vision of

producing the best management text ever. In particular, we thank the Cengage Learning Australia team of Dorothy Chiu, Kylie McInnes,

Nathan Katz, Michelle Aarons and Duncan Campbell-Avenell, as well as the University of Melbourne’s Sally Lawson and many others who worked on

this edition. Another group of people who made a major contribution to this textbook are

the management experts who provided advice, reviews, answers to questions, and suggestions for changes, insertions and clarifications. We want to thank all of these

colleagues for their valuable feedback and suggestions. Finally we thank those professional managers from whom we have learned so much about ‘what works’ in building, running and

sustaining effective organisations.

a c k n o w l e d g e m e n t s

xxix

Danny A. Samson, BE, PhD, is Professor of Management and was Head of the Department of Management at the University of Melbourne, where he has also been Associate Dean (Development) of the Faculty of Economics and Commerce and Director of the Foundation for Sustainable Economic Development and the Centre for Manufacturing Management.

Professor Samson has been a member of a number of boards of directors, committees and industry bodies, including appointments as a member of the TAC Board, Australian Manufacturing Council and the Commonwealth Government Industry Task Force on Leadership and Management (Karpin committee). He has written eight books in the fields of decision analysis, manufacturing and production strategy, strategy, e-business and technology management. He has won research and best paper awards from leading journals, as well as teaching excellence awards, and has been Associate Editor of various management journals, such as the Journal of Operations Management.

His principal research interests are in the strategic competitiveness of organisations and in the effective use of operations systems towards achieving that competitiveness.

He has won numerous competitive research grants and published in a variety of journals that reflect the breadth of his research interests, including the Academy of Management Executive, Journal of the Operational Research Society, European Journal of Operational Research, Journal of Risk and Insurance, Journal of Business Research, International Journal of Management Science, ASTIN Bulletin, Journal of Operations Management, Interfaces, Decision Sciences Journal, International Journal of Technology Management, Australian Accounting Review, Decision Support Systems and the International Journal of Production and Operations Management.

In addition to teaching many thousands of business and commerce students over the past 25 years, Professor Samson has conducted over 100 public education short courses in engineering management, manufacturing management, strategy, general management and professional practice management, as well as numerous executive seminars in decision analysis, business strategy, total quality and related fields, logistics and statistical analysis.

His work history includes three years as an engineer at ICI Australia, appointment as a lecturer at AGSM, five years as an Assistant Professor of Business Administration at the University of Illinois, and 10 years as a professor at the Melbourne Business School, University of Melbourne.

During his career he has been a consultant to senior executives in most manufacturing industries and in numerous service sector organisations in Australia, New Zealand, the US, the UK and Europe. These include major companies in food, building products, pharmaceuticals, aerospace, paper and printing, chemicals, processing, banking, government and other industries. He is currently a board member of the Australian Institute of Management.

Richard L. Daft, PhD, is Associate Dean for Academic Programs and the Brownlee O. Currey, Jr Professor in Management in the Owen Graduate School of Management at Vanderbilt University. Professor Daft specialises in the study of organisation theory and leadership, and enjoys applying these ideas in his roles as Associate Dean. Professor Daft is a Fellow of the Academy of Management and has served on the editorial boards of Academy of Management Journal, Administrative Science Quarterly and Journal of Management Education. He was the Associate Editor-in-Chief of Organization Science and served for three years as associate editor of Administrative Science Quarterly.

Professor Daft has authored or co-authored 13 books and has also authored dozens of scholarly articles, papers and chapters. His work has been published in Administrative Science Quarterly, Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Accounting Organizations and Society, Management Science, MIS Quarterly, California Management Review and Organizational Behavior Teaching Review. Professor Daft has been awarded several government research grants to pursue studies of organisation design, organisational innovation and change, strategy implementation and organisational information processing.

Professor Daft also is an active teacher and consultant. He has taught management, leadership, organisational change, organisational theory and organisational behaviour. He has been involved in management development and consulting for many companies and government organisations.

a B o u t t h e a u t h o r s

1

P a r t o n e

I n n o v a t I v e M a n a g e M e n t f o r

a C h a n g I n g W o r l d

Chapter 1 The changing world of managemenT

Chapter 2 The evoluTion of managemenT Thinking

AustrAliA is often described as a country that plays above its weight when it comes to sporting achievement – an accurate description, as we see in the Australian team’s achievements at Olympic and Commonwealth Games. The same can be said for New Zealand in respect of its tremendous rugby union accomplishments.

Whether in rugby or hockey or business management, innovation is perhaps the ultimate competitive battleground. Innovative tactics in sport can take the opposition by surprise and create a winning advantage, just as the iPod, iPhone and iPad have been winners for Apple.

Most people can relate to sporting excellence and the levels achieved by elite athletes because they have played sports themselves. But what do sporting efforts and achievements have to do with management?

According to Rod McQueen,1 the former coach and manager of the Wallabies, the team that took Australian rugby union to its unprecedented domination of the sport from 1990 to 2000, the answer is that sporting success and business management success come from the same roots. McQueen says his success with the Wallabies resulted from his use of the same strategies and tactics that have driven his own success in his business display and services organisation. He had the Wallabies plan by conducting Strengths– Weaknesses–Opportunities–Threats (SWOT) analyses of

competitors. McQueen also motivated his staff, and the Wallabies, by using innovative management techniques that developed from the bottom up, increasing motivation and ownership of these ideas.

What is the ultimate goal of a sportsperson, a team or a manager? Doing everything they can to achieve success by planning and implementing strategies and tactics that lead to that success. In management, as in sport, there are strong connections between actions – what you do – and outcomes – how well you do.

This explains why so many high achievers in sport go on to achieve success in business or government. Examples abound, and there are too many leaders who were once great athletes for this to be a coincidence. Perhaps the common factor is sheer drive and ambition – or, as Rod McQueen puts it, the same human and organisational factors and techniques that work when innovation and high levels of performance are needed, whatever the activity.

In Part One of this textbook, we look at the skills and roles of managers, and the history and new models of management.

2

1 Understand the personal challenges involved in becoming a new manager in an organisation in today’s world.

2 Describe the four management functions and the type of management activity associated with each.

3 Explain the difference between efficiency and effectiveness and their importance for organisational performance, including in terms of innovation outcomes.

4 Describe conceptual, human and technical skills, and their relevance for managers and employees.

5 Describe management types and the horizontal and vertical differences between them.

6 Discuss the innovative management competencies needed to deal with today’s turbulent environment, including issues such as diversity, globalisation and rapid change.

7 Explain the leadership skills needed for effective crisis management.

8 Discuss the future challenges for Australian managers.

9 Discuss the meaning of sustainable development.

C h A p t e r 1

t h e c h a n g i n g w o r l d o f

m a n a g e m e n t

L e a r n i n g o b j e c t i v e s After studying this chApter, you should be Able to:

c h a P t e r o u t L i n e ➜ Why innovative management matters ➜ Current challenges for managers

Challenges for government Challenges for business Challenges for the individual

employee ➜ Managers who make a difference ➜ The definition of management ➜ The four management functions

Planning Organising Leading Controlling

➜ Organisational performance ➜ Management skills

Conceptual skills Human skills Technical skills When skills fail

➜ Management types Vertical differences Horizontal differences

➜ What is it like to be a manager? Making the leap: becoming a new

manager ➜ Manager activities

Adventures in multitasking Life on a speed dial Where does a manager find the

time? Manager roles

➜ Managing in small businesses and not- for-profit organisations

➜ State-of-the-art management competencies

➜ Turbulent times: managing crises and unexpected events

Stay calm Be visible Put people before business Tell the truth Know when to get back to business

➜ Australia’s managers: improving from a low base

Manager strengths Manager weaknesses

➜ Sustainable development: now a core issue for managers

33

new Manager seLf-test

a r e y o u r e a d y t o b e a m a n a g e r ?

Welcome to the world of management. Are you ready for it? This questionnaire will help you see whether your priorities align with the demands placed on today’s managers. Rate each of the following items based on what you think is the appropriate emphasis for that task to your success as a new manager of a department. Your task is to rate the four top-priority items as ‘High priority’ and the other four as ‘Low priority’ (that is, four of the items should be rated high and four rated low.)

Priorities HigH Priority Low Priority

1 Spend 50 per cent or more of your time in the care and feeding of people.

2 make sure people understand that you are in control of the department.

3 use lunches to meet and network with peers in other departments.

4 implement the changes you believe will improve department performance.

5 Spend as much time as possible talking with and listening to subordinates.

6 make sure jobs get done on time.

7 reach out to your boss to discuss his expectations for you and your department.

8 make sure you set clear expectations and policies for your department.

scoring and interpretation: All eight items in the list may be important, but the odd-numbered items are considered more important than the even-numbered items for long-term success as a manager. If you checked three or four of the odd-numbered items, consider yourself ready for a management position. A successful new manager discovers that a lot of time has to be spent in the care and feeding of people, including direct reports and colleagues. People who fail in new management jobs often do so because they have poor working relationships or they misjudge management philosophy or cultural values. Developing good relationships in all directions is typically more important than holding on to old work skills or emphasising control and task outcomes. Successful outcomes typically will occur when relationships are solid. After a year or so in a managerial role, successful people learn that more than half their time is spent networking and building relationships.

Note: This questionnaire is adapted from research findings reported in Linda A. Hill, Becoming a Manager: How New Managers Master the Challenges of Leadership, 2nd ed. (Boston, MA: Harvard Business School Press,

2003); and John J. Gabarro, The Dynamics of Taking Charge (Boston, MA: Harvard Business School Press, 1987).

part one : Innovat I v e ManageMent for a Chang Ing Wor ld4

The business environment, in which managers try to steer their companies towards achieving

their goals, seems to be changing faster and more unpredictably than ever before. Consider executives in the oil industry, who are responsible for exploring, finding, evaluating, developing and then producing oil

and gas which they then convert (refine) into valuable petroleum products. These products

keep the world moving, and without them we could not power cars, buses, planes, ships and trucks. These

core products are also the raw materials for most forms of plastics, petrochemicals, fertilisers and other categories of goods that we all take for granted as consumers. For the better part of 200 years, companies such as Shell, Exxon Mobil and BP had a quite stable world in which to operate. They were relatively unfettered by government controls on pollution and able to count on stable prices and predictable costs, and hence on profits and returns on invested funds.

Those factors have changed dramatically in the past decade, necessitating a complete rethink of how these businesses are run. Consider the very successful national oil company of Malaysia, called PETRONAS. From its beginning in 1974, this company has operated in Malaysia, and more recently it has branched out successfully into over 30 other countries, operating exploration, oilfield development and even petrol retailing outlets in countries as diverse as South Africa, Thailand and Sudan, as well as many other Asian, European and African countries. Recent major PETRONAS investments are in gas field development and export in Queensland and Western Australia. The world that these international oil companies operate in has changed a lot recently, for example, as prices have spiked and fallen fast and unpredictably. Consider such factors as:

PETRONAS executives have had to do their planning, investment decision making and run their operations as the global price of oil rose from around $23 per barrel to over $140 per barrel within a period of five years. They were then forced to plan for the possibility that the price would go up to a massive $200 per barrel, which was being forecast by some industry experts. Such high prices made oilfields that were previously unfeasible into highly profitable enterprises. Large expansions became viable. But then the global oil price quickly and unpredictably fell to below $40 per barrel, bottoming briefly at $34. Plans went out the window: a new world emerged almost overnight. Then, just when PETRONAS was getting used to a world of low oil prices, low profit margins and tightening operations and costs, prices shot back up to over $90 in 2011 and have hovered within this range since. What is next? This is the environment in which managers must plan and execute their strategies: one of high uncertainty and unpredictable volatility.

The unfortunate disaster experienced by BP in the Gulf of Mexico in April 2010, in which one of its oil wells leaked large amounts of crude oil (5 million barrels) into the sea led to governments and communities globally taking a negative attitude

towards BP and the industry in general; this brought about tougher regulation, and, at least for a while, a ban on further exploration and oilfield development. Despite ‘best efforts’, this whole industry suffers from unpredictable safety and environmental events and outcomes.

The global financial crisis (GFC) of 2008–10 was also in full swing during this period, such that consumer demand went into meltdown in the USA and then elsewhere. In countries such as Iceland, Spain, Ireland, Greece, Portugal and many others, unprecedented recessions took place. Not since the Great Depression of 1930 had such events occurred.

More recently, major markets in which PETRONAS and other leading oil companies have investments and operations have experienced significant political instability, such as the ’Arab Spring’ revolutions in Egypt and Libya, and the splitting of Sudan into two countries. In 2013 the major ongoing problems in Syria and Egypt made it even more challenging than usual to do business. What’s next?

The natural environment appears to be increasingly volatile. PETRONAS managers signed up for a major investment in Central Queensland, Australia, where major storms in 2010 and 2011 led to extreme flooding and one of the biggest cyclones in recorded history, delaying and disrupting operations, destroying assets and interfering with markets.

PETRONAS is losing its staff on a significant and regular basis. They are being poached by competitors from developing Middle Eastern companies, which operate in countries that are oil-rich and able to offer large cash salary packages to the best engineers and others in these companies.

Climate change and the danger of the world choking itself on carbon released from oil and coal into the environment are threats to the core business of companies in this industry, and come simultaneously with predictions that global oil reserves are dwindling anyway. The potential for carbon taxes and emission trading schemes (ETS) can add costs and complexity to energy businesses.

Sources: http://en.wikipedia.org/wiki/2000s_energy_crisis (accessed 6 march 2014); http://tfc-charts.com/chart/Qm/w (accessed 6 march 2014).

Question

How can the managers in PETRONAS and other oil companies, large and small, have any confidence in their decisions and plans in an environment that is changing so rapidly that, almost every day, a surprising event somewhere in the world impacts significantly on their business?

ManageMent Challenge

1 : The chang ing wor ld of managemenT 5

When steve Jobs died in October 2011, Apple, the company he cofounded in 1976, was the most valuable company in the world in terms of market capitalisation. Millions of people are devoted to Apple’s innovative products, including the iPhone and the iPad. After Jobs’s death, magazines, newspapers, scholarly journals and websites rushed to publish articles about the legendary CEO’s legacy and his management style. In his 600-plus-page biography of Jobs, Walter Isaacson calls him ‘the greatest business executive of our era’, and managers around the world began reading the book to tap into the power of Jobs’s management ideas.2 It seems hard to believe that 26 years earlier, after founding Apple, Jobs had been fired from his own company at the age of 30. During his first 10 years with Apple, Jobs was clearly visionary and innovative – characteristics that he continued to display throughout his lifetime. But he didn’t know or care much for the ‘management’ side of the business, and that led to a humiliating and humbling fall which provided Jobs with the chance to learn some management lessons that eventually took him back to Apple and produced one of the greatest corporate success stories of all time.

For most people, being a manager doesn’t come naturally. Steve Jobs had both positive and negative qualities as a manager, but over the course of his career he learned how to coordinate and lead people effectively to accomplish amazing results. One surprise for many people when they first step into a management role is that they are far less in control of things than they expected to be. The nature of management is to motivate and coordinate others to cope with diverse and far-reaching challenges. Many new managers expect to have power, to be in control and to be personally responsible for departmental outcomes. However, managers depend on subordinates more than the reverse, and they are evaluated on the work of other people rather than their own achievements. Managers set up the systems and conditions that help other people perform well.

In the past, many managers did exercise tight control over employees. But the field of management is undergoing a revolution that asks managers to do more with less, to engage employees’ hearts and minds as well as their physical energy, to see change rather than stability as natural, and to inspire vision and cultural values that allow people to create a truly collaborative and productive workplace. This textbook introduces and explains the process of management and the changing ways of thinking about the world that are critical for today’s managers. By reviewing the actions of some successful and not-so-successful managers, you will learn the fundamentals of management. By the end of this chapter, you will already recognise some of the skills that managers use to keep organisations on track, and you will begin to understand how managers can achieve astonishing results through people. By the end of this book, you will understand the fundamental management skills for planning, organising, leading and controlling a department or an entire organisation.

twitter and Square InnovatIve

Way

‘By inventing Twitter, Jack may have well brought down dictators in North Africa and the Middle East,’ said Virgin Group CEO Richard Branson. He was talking about Jack Dorsey, one of the cofounders of the microblogging service Twitter, which has more than 500 million users and processes over 340 million ‘tweets’ a day. As Branson’s comment reflects, tweeting isn’t just about gossiping or showing off. It’s used for all sorts of activities, from organising protests and spreading

the word about political turbulence or natural disasters to marketing products and gathering customer feedback. Ultimately, though, Dorsey’s other company, Square, founded in 2010, may eventually have even greater impact and influence. Square started with one product – a simple credit card reader that can be plugged into an iPhone and allow anyone to accept credit card payments. Today, more than a million small businesses and individuals in the United States use Square to

part one : Innovat I v e ManageMent for a Chang Ing Wor ld6

Why innovative management matters A major theme of this text is innovation, and related to that, sustainable development. To gain or keep a competitive edge, today’s managers have renewed their emphasis on innovation, shifting away from a relentless focus on controlling costs towards investing in the future. In a survey of nearly 1000 executives in North America, Europe, South America and Asia, 86 per cent agreed that ‘innovation is more important than cost reduction for long-term success’.3

Why does innovative management matter? Innovations in products, services, management systems, production processes, corporate values, and other aspects of the organisation are what keep companies growing, changing and thriving. Without innovation, no company can survive over the long run. Industries, technologies, economies, governments and societies are in constant flux, and managers are responsible for helping their organisations navigate through the unpredictable with flexibility and innovation.4 The growing clout and expertise of companies in developing countries, particularly China and India, have many Western managers worried. In a hypercompetitive global environment, companies must innovate more – and more quickly – than ever. Throughout this text, we will spotlight various companies that reflect this new innovation imperative. In addition, Chapter 11 discusses innovation and change in detail. First, let’s begin our adventure into the world of management by learning about some of the current challenges for managers, and what it means to be a manager.

Current Challenges for managers Managers have both challenges and opportunities, whatever the size and industry or sector that they work in. We can consider the new challenges of the workplace at three levels: government, business and individual.

ChAllenges for government Imagine the vast range of challenging issues managers face in the three levels of government in Australia: federal, state and municipal (that is, local shire or council). Consider the challenges of providing competitive services and sound policy frameworks on such difficult issues as healthcare, education, transport, economic management, local services, defence and protection and environmental management,

process credit cards, and Dorsey’s team is looking for how to expand into Australia, Latin America, Asia and Europe. Square is also creating a variety of other products and services and is growing rapidly.

Much of the success of Twitter and Square can be attributed to managers’ effectiveness at innovation. Dorsey

refers to new initiatives at Square as ‘resets’ because they aim to be so groundbreaking that they reset the nature of the financial world. ‘Everything we do is about getting people to be more open, more creative, more courageous,’ says Dorsey. Square quickly zoomed to No. 5 on Fast Company’s list of the world’s most innovative companies.

Sources: Quoted in ellen mcgirt. (march 2012). 05: Square, for making magic out of the mercantile. Fast Company, 82–5, 146–7 (part of the section, The world’s 50 most innovative companies); will Self. (26 march 2012). Twitter is Just a new home for old Bores. New Statesman, 53; (13 January 2011).

could Tunisia Be the next Twitter revolution? The Atlantic, http://www.theatlantic.com/daily-dish/archive/2011/01/could-tunisia-be-the-next-twitter-revolution /177302/ (accessed 11 June 2012); alexander mills et al. (2009). web 2.0 emergency applications: how useful can Twitter Be for emergency response?

Twitter for Emergency Management and Mitigation, http://denman-mills.net/web_ documents/jips_mills.etal._2009.07.22_finalsubmission.pdf (accessed 11 June 2012).

1 : The chang ing wor ld of managemenT 7

among a host of others. What regulations should govern the growing telecommunications industry and the competition between mobile phone suppliers?

In Australia, former Prime Minister Julia Gillard was in charge of introducing a multi-billion-dollar investment in telecommunications infrastructure called the National Broadband Network (NBN), a plan that Tony Abbott’s Liberal government is, with some amendments, currently proceeding with. Will the NBN be successful, or will it become redundant?

As another example: What safety standards should apply in the chemical industry, and what hygiene standards in the food industry? An issue may be specific, such as what to do about the acute shortage of capacity for aircraft movement in Sydney (the ‘second Sydney airport’ problem) or what to do about floods, droughts, cyclones and climate change, or it may be more general, such as how to fund healthcare as our population continues to age.

The list of challenges for government at all three levels is virtually endless. Most involve allocating limited resources between alternatives, where conflicting objectives and tradeoffs between interest groups need to be considered. Although most of the challenges of government are managerial challenges, many are also policy challenges. Some are purely policy issues without much direct monetary cost to the government. For example, should the government preserve or relax the existing ‘four pillars’ policy in our banking industry, which prevents mergers or acquisitions between the big banks (ANZ, Commonwealth, NAB and Westpac) and limits competition? Should they allow or disallow same-sex marriage?

Governments in Asia have also faced many challenges, including dealing with economic uncertainty and responding to the critical levels of air, water and land pollution that have occurred as they have industrialised. Asia’s 4.3 billion people are breathing toxins at unacceptable levels, with many of the world’s worst-polluted cities being in Asia. The past decades of growth and increased prosperity in Asia have led to these outcomes, which are not sustainable in the long term. The estimated total costs of pollution in China are as high as 10 per cent of gross domestic product (GDP). Hotels in Hong Kong have banded together to improve their energy consumption and reduce their pollutants. Pollution from forest burning in Indonesia is impacting on the air quality and reducing tourism in Indonesia and Malaysia.

Governments also face many challenges in regulating the way that business does business. In Australia, New Zealand and elsewhere, government regulators are constantly working to ensure that businesses do not unfairly take advantage of consumers, workers or competitors. Governments make and implement laws against unfair trading, paying below minimum wage levels, unsafe workplaces or practices, pollution, nondisclosure of information, monopolistic practices and cartel behaviours, misinforming consumers and a host of other issues. Managers within government have great responsibility on their shoulders in advising politicians and interpreting and implementing policies. Managers in industry must ensure that their firms continuously comply with literally hundreds of laws.

ChAllenges for business The challenge of pollution control and sustainable development is not just for governments, but clearly also for the business sector and for individuals as consumers. For example, the tourism industry of a region or country can be significantly affected by air pollution, undrinkable water and other environmental

part one : Innovat I v e ManageMent for a Chang Ing Wor ld8

problems. In Australia, the Murray–Darling River system has been compromised and continues to be threatened by pollutants, and salinity and water shortage are widespread problems in the farming sector. Vast resources are needed to address these problems and farming businesses will need to work cooperatively with governments for decades to come.5

Many Australian businesses sell their products and services overseas as well as domestically and many Australian managers have consequently been exposed to the sharp competitive forces of the Asian, American and European marketplaces in which they do business. They have learned a great deal as a result. Even more important has been the translation of that learning into improved and widespread knowledge, practices and behaviour in Australian-based organisations. Further, many Australian businesses are not just buying and selling their raw materials and products and services outside Australia, but are also establishing operations outside Australia. These include retailers, banks, mining companies, manufacturers, distributors, software houses, Internet-based businesses and a variety of other enterprises.

In the business sector, large enterprises such as Telstra, Coles and the big banks each employ tens of thousands of people and are constantly faced with the challenge of managing the enormous costs of these labour forces. The challenge is smaller in scale, but similar, in the local milk bar or petrol station. In essence, this challenge is to continually generate enough revenue to pay all the firm’s costs for labour, rent, materials, energy, advertising and other expenses, while also producing a profit for the business owner that will be a sufficient return on investment. And while doing all this, managers must ensure that they and their companies comply with myriad laws: tax laws, labour standards, reporting of information, environmental regulations, consumer protection and many others.

The strategies and decisions that governments, businesses and individuals make increasingly are being taken in the face of uncertainty. A study of senior executives conducted at London Business School found that decision making, negotiation skills and agility in dealing with people and customers were key to what makes for successful leaders and managers at all levels. And we must remember how easy it is to ‘fall off the log’ of success: just consider the National Australia Bank. It went from being a darling of the Australian market and the leader in its industry in the 1990s under the leadership of Don Argus to a scandal-ridden company with a falling share price after Mr Argus passed on the reins of leadership to a successor. This led to shareholders losing about a quarter of their wealth, and the embarrassing resignations of the board chairman, board members and the managing director. Many employees were sadly ‘shed’ in the related tightening associated with this major Australian corporate crisis in 2004. This shows how even the mightiest companies can fall from grace when leaders and managers get it wrong. Under Don Argus, the bank grew its share price 600 per cent, moved towards globalisation and increased annual profits from A$500 million to over A$3 billion. Its market leadership was unquestioned for a decade. Under the next CEO, overseas assets were sold, the bank had to pull back from the global model it had aspired to, and shareholders suffered badly with long-lasting negative impacts. In 2014, this company has still not been able to recover its industry leadership position; in fact, it is seen generally as underperforming, as exemplified by its lagging share price and profitability, relative to industry leaders, which it used to outperform. Management missteps can occur in businesses of any size and in any industry, and customers, shareholders and regulators are generally unforgiving in today’s frenetic business world.

1 : The chang ing wor ld of managemenT 9

ChAllenges for the individuAl employee For the individual who wants to exchange work for money in the labour market, the challenge of getting and keeping a job is to demonstrate the skills, attitude and continuing performance of output that are valuable to the employer and justify the costs of employment. In a business environment that has spent the last decade shedding labour, individual competitiveness for jobs is a continuing challenge, and the notion of ‘job security’ is, for most people, a thing of the past. This poses a challenge to individuals: planning for their next job. A career becomes a series of employment relationships. Most university graduates will have many different roles and jobs over their working lives. How do we, as individuals wanting to achieve a good return on the human capital we invest in our work, maximise our competitiveness in achieving and retaining a series of suitable jobs? Individuals must value-add to the organisations that employ them. The challenge of being individually competitive in the workplace follows the challenge of being competitive in school, getting into a suitable course at university, then graduating and getting a job that meets expectations.

For governments, companies and individuals, the challenge of being competitive never stops!

managers Who make a differenCe The turbulence and change in today’s competitive business environment has led to a revolution in the field of management. A new kind of leader is needed who can guide organisations through this turbulence – a strong leader who recognises the complexity of today’s world and realises there are no perfect answers. Unanticipated crises must somehow be prepared for. As we discussed earlier, the revolution asks managers to see change rather than stability as the nature of things, and to create vision and cultural values that allow people to foster a truly collaborative workplace, even under the most difficult conditions.

This new management approach is very different from a traditional mindset that emphasises fixed, tight, top-down control, employee separation and specialisation, and management by impersonal measurement and analysis. Australian enterprises that want to be part of a successful and positive economic future are responding to this revolution towards a new management paradigm, or way of thinking.

Making a difference as a manager today and tomorrow requires a different approach from yesterday. Successful departments and organisations do not just happen – they are managed to be that way. Managers in every organisation face major challenges and have an opportunity to make a difference. Flexibility and agility are important new approaches and capabilities needed by managers and their organisations.

Chanut Piyaoui made a difference by changing the somewhat unsavoury reputation of Thai hotels as ‘places of entertainment’, as she delicately phrased it. With little initial capital, Chanut’s vision and management skills created Thailand’s leading hotel chain, one that Asiamoney magazine has ranked one of the 100 best-managed companies in Asia.6 An initial change in the market positioning of the chain was pivotal, and has now led to international expansion of the hotel group into China, Dubai and India – all growth markets – and the development and operation of other hospitality businesses, including a training college. With further international expansion into related businesses being planned, Chanut’s vision is coming to fruition.

Such managers are not unusual. Every day, managers solve difficult problems, turn organisations around and achieve astonishing performances. To be successful, every organisation needs skilled managers.

part one : Innovat I v e ManageMent for a Chang Ing Wor ld10

the definition of management So what do managers actually do? The late, famed management theorist Peter Drucker, who is often credited with creating the modern study of management, summed up the job of the manager by specifying five tasks, as outlined in Exhibit 1.1.7 In essence, managers set goals, organise activities, motivate and communicate, measure performance and develop people. These five manager activities apply not only to top executives such as Mark Zuckerberg at Facebook, Alan Mulally at Ford Motor Company and Ursula Burns at Xerox, but also to the manager of a restaurant in your home suburb, the leader of an airport security team, a supervisor at a web hosting service, or the director of sales and marketing for a local Coles or Woolworths supermarket.

The activities outlined in Exhibit 1.1 fall into four core management functions: planning (setting goals and deciding activities), organising (organising activities and people), leading (motivating, communicating with and developing people) and controlling (establishing targets and measuring performance). Depending on their job situation, managers perform numerous and varied tasks, but they all can be categorised under these four primary functions. Thus, our definition of management is as follows:

Management is the attainment of organisational goals in an effective and efficient manner through planning, organising, leading and controlling organisational resources. This definition includes two important ideas: (1) the four functions of planning, organising, leading and controlling, and (2) the attainment of organisational goals in an effective and efficient manner. Let’s first look at the four primary management functions. Later in this chapter, we’ll discuss organisational effectiveness and efficiency, as well as the multitude of skills that managers use to perform their jobs successfully.

management The attainment of organisational goals in an effective and efficient manner through planning, organising, leading and controlling organisational resources.

exhibit 1.1 What do managers do?

Source: Based on ‘what do managers do?’, The Wall Street Journal Online, http://guides.wsj. com/management/developinga- leadership-style/what-do- managers-do/ (accessed 11 august 2010), article adapted from alan murray, The Wall Street Journal Essential Guide to Management (new York: harper Business, 2010).

5. Develop People Recognise the value of employees and develop this critical organisational asset

1. Set Objectives Establish goals for the group and decide what must be done to achieve them

4. Measure Set targets and standards; appraise performance

2. Organise Divide work into manageable activities and select people to accomplish tasks

3. Motivate and Communicate Create teamwork via decisions on pay, promotions, etc., and through communication

1 : The chang ing wor ld of managemenT 11

the four management funCtions Exhibit 1.2 illustrates the process of how managers use resources to attain organisational goals through the functions of planning, organising, leading and controlling. Chapters of this book are devoted to the multiple activities and skills associated with each function, as well as to the environment, global competitiveness and ethics that influence how managers perform these functions.

➜ Managers get things done by coordinating and motivating other people.

➜ Management often is a different experience from what people expect.

➜ Innovative management is critical in today’s turbulent world.

➜ Management is defined as the attainment of organisational goals in an effective and efficient manner through planning, organising, leading and controlling organisational resources.

➜ Managers at all levels, from those running a country to those managing just themselves or a small team, must meet many challenges of creating and delivering value to their organisation and its stakeholders.

reMeMber this

exhibit 1.2 The process of management

plAnning planning means identifying goals for future organisational performance and deciding on the tasks and use of resources needed to attain them. In other words, managerial planning defines where the organisation wants to be in the future and how to get there. A good example of planning comes from General Electric (GE) – a company that will be repeatedly referred to throughout this book – where managers have sold off such divisions as Plastics, Insurance and Media to focus company resources on four key business areas: energy, aircraft engines, healthcare and financial services. GE used to relocate senior executives every few years to different divisions so that they developed broad, general expertise. In line with the strategic refocusing, the company now will keep people in their business units longer so they gain a deeper understanding of products and customers within each of the four core businesses.8

planning The management function concerned with defining goals for future organisational performance and deciding on the tasks and resource use needed to attain them.