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Thomas S. Bateman McIntire School of Commerce

University of Virginia

Scott A. Snell Darden Graduate School of Business

University of Virginia

Robert Konopaske McCoy College of Business

Texas State University

13e

MANAGEMENT Leading & Collaborating in a Competitive World

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MANAGEMENT: LEADING & COLLABORATING IN A COMPETITIVE WORLD, THIRTEENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2019 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2017, 2015, and 2013. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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ISBN 978-1-259-92764-5 MHID 1-259-92764-4

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All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Names: Bateman, Thomas S., author.|Snell, Scott, 1958- author.|Konopaske, Robert, author. Title: Management: leading & collaborating in a competitive world/Thomas S. Bateman, McIntire School of Commerce, University of Virginia, Scott A. Snell, Darden Graduate School of Business, University of Virginia, Robert Konopaske, McCoy College of Business, Texas State University. Description: Thirteenth edition.|New York, NY: McGraw-Hill Education, [2019] Identifiers: LCCN 2017048278|ISBN 9781259927645 (alk. paper) Subjects: LCSH: Management. Classification: LCC HD31.2 .B36 2019|DDC 658–dc23 LC record available at https://lccn.loc.gov/2017048278

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

mheducation.com/highered

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For my parents, Tom and Jeanine Bateman, and Mary Jo, Lauren, T.J., and James

and

My parents, John and Clara Snell, and Marybeth, Sara, Jack, and Emily

and

My parents, Art and Rose Konopaske, and Vania, Nick, and Isabella

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THOMAS S. BATEMAN Thomas S. Bateman is Bank of America pro- fessor in the McIntire School of Commerce at the University of Virginia, teaching leadership and organizational behavior at undergraduate and graduate levels. For many years prior to joining the University of Virginia, he taught organizational behavior at the Kenan- Flagler Business School of the University of North Carolina to undergraduates, MBA students, PhD students, and practicing managers. He taught for two years in Europe as a visiting professor at the Institute for Management Development (IMD), one of the world’s leaders in the design and delivery of executive education. Professor Bateman earned his doctorate in business administration at Indiana University, and his BA from Miami University.

Professor Bateman is an active management researcher, writer, and consultant. He serves on the editorial boards of the Academy of Management Review, the Academy of Management Journal, and the Asia Pacific Journal of Business and Management. His articles appear in professional jour- nals such as the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Journal of Organizational Behavior, Human Relations, Journal of Macromarketing, and Proceedings of the National Academy of Sciences. His recent work on leadership and psychology in the domain of climate change appears in Nature Climate Change, Global Environmental Change, and The Conversation.

Tom’s long-time research interests center on proactive behavior (including leadership) by employees at all levels, with a recent turn toward scientists and public leadership. His consulting work has included a variety of organizations includ- ing Singapore Airlines, the Brookings Institution, the U.S. Chamber of Commerce, the Nature Conservancy, LexisNexis, Weber Shandwick, the Association of Climate Change Officers, and Chicago’s Field Museum of Natural History.

SCOTT A. SNELL Scott Snell is professor of business administration at the University of Virginia’s Darden Graduate School of Business. He teaches courses in leadership, organizational capability development, and human capital consulting. His research focuses on human resources and the mecha- nisms by which organiza- tions generate, transfer, and integrate new knowledge for competitive advantage.

He is co-author of four books: Managing People and Knowledge in Professional Service Firms, Management: Leading & Collaborating in a Competitive World, M: Management, and Managing Human Resources. His work has been published in a number of journals such as the Academy of Management Journal, Academy of Management Review, Strategic Management Journal, Journal of Management, Journal of Management Studies, and Human Resource Management, and he was recently listed among the top 100 most-cited authors in scholarly journals of management. He has served on the boards of the Strategic Management Society’s human capi- tal group, the Society for Human Resource Management Foundation, the Academy of Management’s human resource division, the Human Resource Management Journal, the Academy of Management Journal, and the Academy of Management Review. Professor Snell has worked with com- panies such as AstraZeneca, Deutsche Telekom, Shell, and United Technologies to align strategy, capability, and invest- ments in talent. Prior to joining the Darden faculty in 2007, he was professor and director of executive education at Cornell University’s Center for Advanced Human Resource Studies and a professor of management in the Smeal College of Business at Pennsylvania State University. He received a BA in psychology from Miami University, as well as MBA and PhD degrees in business administration from Michigan State University.

About the Authors

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ROBERT KONOPASKE Rob Konopaske is an associate professor of management and prin- ciples of management course coordinator in the McCoy College of Business at Texas State University. At the College, he also serves as the Director of the Institute for Global Business. A passionate educator who cares deeply about providing students with an excep- tional learning experience, Rob has taught numerous under- graduate, graduate, and executive management courses, including Introduction to Management, Organizational Behavior, Human Resource Management, International Human Resources Management, and International Business. He has received numerous teaching honors while at Texas State University, most recently the 2016 Presidential Distinction Award, 2014 Gregg Master Teacher Award, and 2012–2013 Namesake for the PAWS Preview new student socialization program (an honor bestowed annually upon eight out of approximately 2,000 faculty and staff). Rob earned his doctoral degree in business adminis- tration (management) at the University of Houston, a mas- ter in international business studies (MIBS) degree from the University of South Carolina, and a bachelor of arts

degree (Phi Beta Kappa) from Rutgers University. He has taught at the University of Houston, the University of North Carolina at Wilmington, and Florida Atlantic University.

Rob is co-author of several recent editions of six books: Management: Leading & Collaborating in a Competitive World, M: Management, Organizational Behavior and Management, Human Resource Management, Global Management and Organizational Behavior, and Organizations: Behavior, Structure, Processes. The eleventh edition of Organizations won a McGuffey Award (for longevity of textbooks and learning materials whose excellence has been demonstrated over time) from the national Text and Academic Authors’ Association.

Rob’s research has been published in such outlets as the Journal of Applied Psychology, Academy of Management Executive, Management International Review, Business Horizons, Human Resource Management, Journal of Business Research, Journal of Management Education, Nonprofit Management and Leadership, Journal of Managerial Psychology, and Human Resource Management Review. Dr. Konopaske currently serves on the editorial board of the International Journal of Human Resource Management.

Rob has lived and worked internationally, speaks three languages, and has held management positions with a large nonprofit organization and a Fortune 500 multinational firm. He consults, trains, and conducts research projects for a wide range of companies and industries. Current or for- mer clients include Credit Suisse, PricewaterhouseCoopers, Buffalo Wings & Rings, KPMG, New Braunfels Utilities, and Johnson & Johnson.

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Our goal is to keep you focused on delivering important “bottom line” results—to make sure you think continually about delivering the goods that make both you and your organization successful. Good management practices and processes are the keys to delivering the results that you want and your employer wants. This results-oriented focus of Management, 13th edition, is a unique highlight you will take away from this book.

Leading & Collaborating Yes, business is competitive. But it’s not that simple. In fact, to think strictly in terms of competition is overly cynical, and such cynicism can sabotage your performance. Along with a realistic perspective on competitive realities, important action elements in managerial success are collaboration and leadership. To succeed, teams and organizations need people to work with rather than against one another, Put another way, you can’t perform alone—the world is too complex, and business is too challenging.

You need to work with your teammates. Leaders and fol- lowers need to work as collaborators more than as adver- saries. Work groups throughout your organization need to cooperate with one another. Business and government, often viewed as antagonists, can work productively together. And today more than ever, companies that traditionally were competitors engage in joint ventures and find other ways to collaborate on some things even as they compete in others. Leadership is needed to make these collaborations work.

How does an organization create competitive advan- tage through collaboration? It’s all about the people, and it derives from good leadership.

Three stereotypes of leadership are that it comes from the top of the company, that it comes from one’s immedi- ate boss, and that it means being decisive and issuing com- mands. These stereotypes contain some truth, but realities are much more complex and challenging.

First, the person at the top may or may not provide effec- tive leadership—in fact, truly good leadership is far too rare. Second, organizations need leaders at all levels, in every team and work unit. This includes you, beginning early in your career, and this is why leadership is a vital theme in this book. Third, leaders should be capable of decisiveness and of giving commands, but relying too much on this tra- ditional approach isn’t enough. Great leadership is far more inspirational than that, and helps people both to think

Welcome to our 13th edition! Thank you to everyone who has used and learned from previous editions. We are proud to present to you our best-ever edition.

Our Goals Our mission with this text is to inform, instruct, and inspire. We hope to inform by providing descriptions of the impor- tant concepts and practices of modern management. We hope to instruct by describing how you can identify options, make decisions, and take effective action. We hope to inspire not only by writing in an interesting way but also by provid- ing a real sense of the challenges and fascinating opportuni- ties ahead of you. Whether your goal is starting your own company, leading a team to greatness, building a strong orga- nization, delighting your customers, or generally forging a positive and sustainable future, we want to inspire you to take meaningful action.

We hope to inspire you to be both a thinker and a doer. We want you to know the important issues, consider the con- sequences of your actions, and think before you act. But good thinking is not enough; management is a world of action. It is a world for those who commit to high performance.

Competitive Advantage The world of management is competitive, while also rich with important collaborative opportunities. Never before has it been so imperative to your career that you learn the skills of management. Never before have people had so many opportu- nities and challenges with so many potential risks and rewards.

You will compete with other people for jobs, resources, and promotions. Your employer will compete with others for contracts, clients, and customers. To survive the compe- tition, and to thrive, you must perform in ways that give you an edge that makes others want to hire you, buy from you, and do repeat business with you. Now and over time, you will want them to choose you, not the competition.

By this standard, managers and organizations must perform. Six essential performance dimensions are cost, quality, speed, innovation, service, and sustainability. When managed well, these performance dimensions deliver value to your customer and competitive advantage to you and your organization. Lacking performance on one or more of them puts you at a disadvantage. We elaborate on them all, throughout the book.

Preface

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differently and to work differently—including working col- laboratively toward outstanding results.

True leadership—from your boss as well as from you— inspires collaboration, which in turn generates results that are good for you, your employer, your customer, and all the people involved.

As Always, Currency and Variety in the 13th Edition It goes without saying that this textbook, in its 13th edition, remains on the cutting edge of topical coverage, updated throughout with both current business examples and recent management research. We continue to emphasize real results, sustainability, and diversity, themes on which we were early and remain current leaders.

While still organizing the chapters around the clas- sic management functions, we modernize those functions with a far more dynamic orientation. Looking constantly at change and the future, we describe the management func- tions as Delivering Strategic Value (for Planning), Building a Dynamic Organization (for Organizing), Mobilizing People (for Leading), and last but hardly least, Learning and Changing (for Controlling).

Special Features Every chapter offers a fascinating and useful portfolio of spe- cial boxed features that bring the subject matter to life in real time:

1. Management in Action, a hallmark feature, presents unfolding contemporary three-part cases about today’s business leaders and companies. The first part, “Manager’s Brief,” encourages students at the start of each chapter to begin thinking about one or more of that chapter’s major themes in the context of the current business scene. For example, Chapter 1 introduces Facebook’s Mark Zuckerberg and some of the challenges his company faces. The second Management in Action element, “Progress Report,” appears about halfway through each chapter and incorporates addi- tional chapter themes into the narrative. At each stage of this unfolding feature, we offer suggestions or questions for classroom discussion, in-class group work, or simply reflec- tion. Closing out the Management in Action three-part series is “Onward,” at the end of each chapter, which distills key aspects of the chapter and challenges students with questions for further consideration. Chapter 1’s closing “Onward” seg- ment reflects on what it might be like to work at Facebook.

2. Social Enterprise boxes offer examples illustrating chapter themes from outside the private sector. Many students are deeply interested in social entrepreneurs and enterprises, inherently and for future employment possi- bilities. Examples include: “Ashoka’s Bill Drayton, Pioneer of Social Entrepreneurship” (Chapter 1), “Are Business School Graduates Willing to Work for Social Enterprises?”

(Chapter 10), and “Piramal Sarvajal Provides Clean Water via ‘Water ATMs,’” (Chapter 17).

3. Multiple Generations at Work boxes discuss chapter themes from multigenerational perspectives, based on data rather than stereotypes, with a goal of strengthening what too often are difficult workplace relationships. Examples include: “Are ‘Portfolio Careers’ the New Normal?” (Chapter 2), “Crowdsourcing: An Inexpensive Source of Creative Ideas” (Chapter 3), and “Tech-Savvy Gen Z Is Entering the Workforce” (Chapter 17).

4. The Digital World feature offers unique examples of how companies and other users employ digital/social media in ways that capitalize on various ideas in each chapter. Students of course will relate to the social media but also learn of interesting examples and practice that most did not know before. Instructors will learn a lot as well!

That’s the big picture. We believe the management sto- ries in the boxed features light up the discussion and con- nect the major themes of the new edition with the many real worlds students will enter soon.

Up next is just a sampling of specific changes, updates, and new highlights in the 13th edition—enough to convey the wide variety of people, organizations, issues, and man- agement challenges represented throughout the text.

Chapter 1 • New Management in Action about Mark Zuckerberg of

Facebook.

• New Social Enterprise about Bill Drayton of Ashoka.

• New example of Yum! Brands having 43,000 restaurants in 135 countries.

• New Exhibit 1.1: “Staying Ahead of the Competition.”

• New example of entrepreneurial college students pitch- ing sustainable business ideas.

• New passage about artificial intelligence simplifying human-technology interfaces.

• New example of Quicken Loans Rocket Mortgage appli- cations taking minutes to complete.

• New passage about Facebook entering the job posting space to compete against LinkedIn.

Chapter 2 • New Management in Action about Jeff Bezos creating

Amazon’s organizational environment.

• New Multiple Generations at Work about “portfolio careers” becoming the new normal.

• New Social Enterprise about the Paris Agreement and combating climate change.

• New example of Microsoft’s HoloLens teaching medical students about human anatomy.

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• New passage about Wells Fargo’s incentive system lead- ing to a major corporate scandal.

• New example about Amazon suing companies that sell false positive reviews on its site.

• Revised Exhibit 5.2: “Examples of Decisions Made under Different Ethical Systems.”

• New example about Nabisco’s utilitarian decision to lay off 1,200 workers at a Chicago plant.

• Updated Exhibit 5.3: “Current Ethical Issues in Business.”

• New Exhibit 5.6: “A Process for Ethical Decision Making.”

• New example about Starbucks building Leadership Energy and Environmental Design (LEED) stores in 20 countries.

Chapter 6 • New Management in Action about Alibaba’s evolution

to a global brand.

• New example of Harley-Davidson’s marketing of motor- cycles to riders in international markets.

• New example of Chinese companies purchasing U.S. firms and divisions like Starwood Hotels, Smithfield Foods, and GE’s appliance business.

• Updated Exhibit 6.1: “Top 10 Global Firms.”

• New example of a small business, AppIt, expanding internationally by acquiring a software development company in India.

• New example about the Philippines becoming a popular location for outsourcing.

• New passage about McDonald’s collaborating with an Indian entrepreneur to adapt its menu (e.g., “Chicken Maharajah Mac”) to the vegetarian country.

Chapter 7 • New Management in Action about Starbucks’ entrepre-

neurial beginnings.

• New example about 28 million small businesses generat- ing over half of all jobs in the U.S.

• Updated Exhibit 7.2: “Successful Entrepreneurs Who Started in Their 20s.”

• New examples of franchises including Jimmy John’s and Jazzercise.

• Updated Multiple Generations at Work: “Millennial Entre- preneurs Can Learn from Others with More Experience.”

• New passage about Barbara Nascimento, founder of The Traveller Tours in Portugal, describing how to start a business.

• New example of Gordon Logan, CEO of Sports Clips, leveraging the skills of a top management team.

• Revised Exhibit 2.5: “Potential Substitutes and Complements.”

• New example of AstraZeneca losing patent protection of its $5 billion product, Crestor.

• New passage on organizational challenges associated with acquisitions.

• New example of Target investing in “green chemistry innovation.”

Chapter 3 • New Management in Action about Uber’s questionable

decision making.

• New example of General Electric using data analytics to improve efficiencies of digital wind farms.

• Updated Exhibit 3.2: “Comparison of Types of Decisions.”

• New passage about National Geographic’s “Wanderlust” social media photo competition.

• New Exhibit 3.3: “The Phases of Decision Making.”

• New example about IDEO suggesting ways to encourage employee creativity.

• New Exhibit 3.8: “Managing Group Decision Making.”

• New example about Havenly crowdsourcing feedback on its pricing and new product ideas.

Chapter 4 • Updated Management in Action about Walt Disney

scripting its own success.

• Revised Exhibit 4.1: “Decision-Making Stages and Formal Planning Steps.”

• New passage about General Motors and Lyft forming an alliance to create a fleet of on-demand autonomous vehicles.

• Revised Exhibit 4.3: “Hierarchy of Goals and Plans.”

• New passage about Chipotle’s challenges with recent food-safety events.

• New Exhibit 4.5: “The Strategic Management Process.”

• New passage about Elon Musk committing to enable human travel to Mars.

• New example of the U.S. Environmental Protection Agency’s methane-to-energy projects.

Chapter 5 • New Multiple Generations at Work about Millennials

being bullish on business.

• New Social Enterprise about India’s Barefoot College, a college for the poor by the poor.

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• New example of the U.S. government considering major changes to the H-1B temporary visa program.

• New passage on companies settling discrimination law- suits brought by employees.

Chapter 11 • New Management in Action about diversity and inclu-

sion at Apple.

• Updated Social Enterprise about managing diversity at Change.org.

• Updated example about changing workforce demographics.

• Updated Exhibit 11.3: “Top Ten Most Powerful Women Executives.”

• New example of Kaiser Permanente, AT&T, and MasterCard continuing their strong commitment to diversity.

• Updated example of the number of women in leadership positions in S&P 500 companies.

• New example of percentage of individuals with disabili- ties who are employed.

• Updated Exhibit 11.6: “Some Top Executives of Color.”

Chapter 12 • Updated Management in Action about Indra Nooyi’s

leading PepsiCo to perform with purpose.

• New Social Enterprise about Elizabeth Hausler’s engi- neering of disaster-proof homes.

• New example of Richard Branson, CEO of Virgin Group, envisioning a world powered by renewable energy by 2050.

• New Exhibit 12.4: “Sources of Leader Power.”

• Updated example of famous leaders including Margaret Thatcher, Nelson Mandela, Julius Caesar, and George Washington.

• New example of servant leadership philosophies at Zappos, Whole Foods Market, and the Container Store.

• New example of how Cheryl Bachelder, CEO of Popeye’s Louisiana Kitchen, used active listening to increase store sales by 25 percent.

• New passages about lateral, intergroup, and shared leadership.

Chapter 13 • Updated Management in Action about what makes soft-

ware company, SAS, such a great place to work.

• Updated Multiple Generations at Work about Millennials wanting to fulfill higher-order needs.

• Updated Social Enterprise about giving veterans a renewed sense of purpose.

Chapter 8 • Updated Management in Action about leadership and

structural changes at General Motors.

• Updated Social Enterprise about Kiva’s approach to organizing.

• Updated Multiple Generations at Work about online networks replacing traditional hierarchies.

• New examples of Shake Shack, Microsoft, and Sanofi using top management teams.

• New Exhibit 8.2: “Examples of Differentiation.”

• New Exhibit 8.13: “A Network Organization.”

• New examples of how Southwest Airlines, MasterCard, SAP, and Target are integrating marketing and commu- nications functions.

• New example of how the Internal Revenue Service is organized around customer groups.

Chapter 9 • New passages about organizing around ordinary and

dynamic capabilities.

• New example of Canon’s core capability in innovative image technology.

• New example about Dr Pepper Snapple Group, Coca- Cola, and PepsiCo forming an alliance to cut by 25 percent the amount of sugar in their soft drinks by 2025.

• Revised Exhibit 9.2: “How I’s Can Become We’s.”

• New example of Walmart’s CEO trying to reduce bureaucracy while encouraging employees to take more initiative.

• New example of Capital One using predictive analytics to make credit card offers to customers.

• New examples of small and large batch technologies.

Chapter 10 • Updated Management in Action about Google’s ability

to hire top talent.

• Updated Social Enterprise about business school gradu- ates working for social enterprises.

• Updated Multiple Generations at Work about college students needing soft skills.

• New example about Kayak, Etsy, and W. L. Gore creat- ing unique organization cultures.

• New Exhibit 10.1: “An Overview of the HR Planning Process.”

• New examples about John Deere and Siemens Energy finding creative ways to train young employees through a combination of academic and hands-on training.

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• Updated Multiple Generations at Work about companies shifting to more frequent performance reviews.

• New passage about Chipotle Mexican Grill trying to cor- rect its food-safety challenges.

• New example of Home Depot using six sigma to improve customer checkout processes.

• New passage about the role of board members in rela- tion to governance of companies.

• New passage about feedback control and its relationship to employee performance.

• New example of Toyota asking “Why?” to identify root causes of problems.

Chapter 17 • New Management in Action about Elon Musk being an

innovator extraordinaire.

• New Social Enterprise about India-based Piramal Sarvajal providing clean water via “Water ATMs.”

• New Multiple Generations at Work about tech-savvy Gen Z entering the workforce

• New Exhibit 17.1: “Innovation Types with Examples.”

• New passage about retailers like Macy’s in New York attracting young shoppers to stores.

• New example of virtual health care for annual patient visits reducing costs.

• New example of biosensor patches being applied to patients’ skin to monitor vital signs.

• New passage about Google’s FaceNet research team winning a facial recognition competition.

Chapter 18 • Updated Management in Action about Shell Oil’s lead-

ers facing off with investors over climate change.

• Updated Multiple Generations at Work about Millennials being ready for the future of work.

• New example of Sears losing its dominance in retail.

• New example of world-class centers in San Francisco, London, Munich, Warsaw, and Shenzen.

• New Exhibit 18.3: “Reasons for Resistance to Change.”

• New example of a manager at John Deere implementing change in a gradual manner.

• New Exhibit 18.8: “Opportunity Is Finding Ways to Meet Customers’ Needs.”

• New passage about big data, Internet of Things, and arti- ficial intelligence combining to make cities smarter.

• New Exhibit 18.9: “Learning Cycle: Explore, Discover, Act.”

• New example of the U.S. Department of Homeland Security setting cyber security goals.

• New example of Colorado-based New Belgium Brewery engaging in environmental and sustainability initiatives.

• New passage about how Ryan LLC rewards its employ- ees with 12 weeks of paid pregnancy leave and paid 4-week sabbaticals.

• New passage about Menlo Innovations offering employ- ees creative nonmonetary rewards.

• Updated passages about extrinsic rewards, empower- ment, and quality of work life.

Chapter 14 • Updated Management in Action about self-managed

teams working at Whole Foods Market.

• New Social Enterprise about co-working becoming more popular.

• Updated Multiple Generations at Work about preparing for global virtual teamwork.

• New passage about Cisco Systems relying on employee teams to remain competitive.

• New Exhibit 14.6: “A Four-Stage Model of Dispute Resolution.”

• New example of parallel teams and team-based rewards being used by organizations.

Chapter 15 • New Management in Action about music-sharing plat-

form SoundCloud encouraging the free flow of informa- tion among employees.

• Updated Social Enterprise about when the message is the story.

• New example of company review sites like Glassdoor. com and Salary.com attracting negative posts from employees.

• Updated passage about digital communication and social media.

• Updated passage about communication flowing through all parts of organizations.

• New example of Hilcorp, an oil and gas exploration company, using open book management.

• Updated passage about upward communication and open-door policies.

Chapter 16 • New Management in Action about electronic monitor-

ing of employees' health to control costs.

• Updated Social Enterprise about using multiple ways to measure social impact.

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Many individuals contributed directly to our develop- ment as textbook authors. Dennis Organ provided one of the authors with an initial opportunity and guidance in textbook writing. Jack Ivancevich did the same for one of the other authors. John Weimeister has been a friend and adviser from the very beginning. Thanks also to Christine Scheid for so much good work on previous editions and for continued friendship.

Enthusiastic gratitude to the entire McGraw-Hill Education team, starting with director Mike Ablassmeir, who—and this is more than an aside—spontaneously and impressively knew Rolling Stone’s top three drummers of all time. Mike has long provided deep expertise and an informed perspective, not to mention friendship and managerial cool in everything we do. Not technically an author, Mike is most certainly an educator for us and for the instructors and students who learn from the products he leads.

Special thanks to teammates without whom the book would not exist, let alone be such a prideworthy product:

Jamie Koch: so helpful, resourceful, enthusiastic, fast, and on top of everything;

Christine Vaughan: knowledgeable, tech-savvy, patient, always available to help us navigate the online authoring platform;

Debbie Clare: so creative, energetic, always thinking of unique ideas, and encouraging us to engage in new ways of sharing how much the 13th edition means to us;

Claire Hunter: positive, patient, easily amused (thank- fully), amazingly effective at keeping us on track and focused;

Kerrie Carfagno: great depth and breadth, in both expe- rience and knowledge, thanks for teaching even more stu- dents about our digital world;

Elisa Adams: eloquent, passionate, expressive, and remarkably good at meeting (or beating) deadlines.

Thanks to you all for getting some of our jokes, for being polite about the others, and for being fun as well as talented and dedicated throughout the project.

Finally, we thank our families. Our parents, Jeanine and Tom Bateman, Clara and John Snell, and Rose and Art Konopaske, provided us with the foundation on which we have built our careers. They continue to be a source of great support. Our wives, Mary Jo, Marybeth, and Vania, were encouraging, insightful, and understanding throughout the process. Our children, Lauren, T.J., and James Bateman; Sara, Jack, and Emily Snell; and Nick and Isabella Konopaske, provided an unending source of inspiration for our work and our nonwork. Thank you.

Thomas S. Bateman Charlottesville, VA

Scott A. Snell Charlottesville, VA

Robert Konopaske San Marcos, TX

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

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

What you do with the things you learn from this course, and with the opportunities the future holds, counts. As a man- ager, you can make a dramatic difference for yourself and for other people. What managers do matters tremendously.

Acknowledgments This book could not have been written and published with- out the valuable contributions of many individuals.

Special thanks to Lily Bowles, Taylor Gray, and Meg Nexsen for contributing their knowledge, insights, and research. Thanks to Michael Dutch for his contributions to the Instructor’s Manual and PowerPoint Presentations, as well as providing insights whenever we call upon him.

Our reviewers over the last 12 editions contributed time, expertise, and terrific ideas that significantly enhanced the quality of the text. The reviewers of the 13th edition are

Germaine Albuquerque Essex County College

Derek B. Bardell Delgado Community College

Andrew A. Bennett Old Dominion University

Harry Bernstein Essex County College

Jennifer Blahnik Lorain County Community College

Karen Bridgett Essex County College

Angela Bruns Baton Rouge Community College

John Ephraim Butt University of North Carolina–Charlotte

Holly A. Caldwell Bridgewater College

Frank Carothers Somerset Community College

Robert Cote Lindenwood University

Darrell Cousert University of Indianapolis

Tony Daniel Shorter University

John T. Finley Columbus State University

Roy Lynn Godkin Lamar University

Dan Hallock University of North Alabama

Anne Kelly Hoel University of Wisconsin–Stout

Carrie S. Hurst Tennessee State University

Sridharan Krishnaswami Old Dominion University

Debra D. Kuhl Pensacola State College

Thomas Norman California State University

Shane Spiller Western Kentucky University

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In this ever more competitive environment, there are six essential types of performance on which the organization beats, equals,

or loses to the competition: cost, quality, speed, innovation, service, and sustainability. These six performance dimensions,

when done well, deliver value to the customer and competitive advantage to you and your organization.

Throughout the text, Bateman, Snell, and Konopaske remind students of these six dimensions and their impact on the bottom

line with marginal icons. This results-oriented approach is a unique hallmark of this textbook.

New questions in this edition further emphasize the bottom line. The Instructor’s Manual has answers to these questions.

Bottom Line

First Pages

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representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

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representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

bat27644_ch02_038-071.indd 51 10/19/17 02:39 PM

representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

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representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

The External and Internal Environments  Chapter 2 51

bat27644_ch02_038-071.indd 51 10/19/17 02:39 PM

representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

First Pages

The External and Internal Environments  Chapter 2 51

bat27644_ch02_038-071.indd 51 10/19/17 02:39 PM

representatives before selling them to their customers, and industrial buyers, who buy raw materials (such as chemicals) before converting them into final products. Selling to inter- mediate customers is often called business-to-business (B2B) selling. Notice in these B2B examples that the intermediate customer eventually goes on to become a seller.

Like suppliers, customers are important to organizations for reasons other than the money they provide for goods and services. Customers can demand lower prices, higher qual- ity, unique product specifications, or better service. They also can play competitors against one another, as occurs when a car buyer (or a purchasing agent) collects different offers and negotiates for the best price. Customers want to be actively involved with their products, as when the buyer of an iPhone customizes it with ring tones, wallpaper, and a variety of apps.

Dell Inc. took customer input a step further by asking customers what they want the company to develop next. At Dell’s IdeaStorm website (www.ideastorm.com), visitors can post ideas and comments about products. One of IdeaStorm’s most enthusiastic customer- users became so involved with the community that he was hired as the project’s manager and helped expand the site’s customer interactions.34

The Internet empowers customers. It provides easy information about product features and pricing. In addition, Internet users informally create and share messages about a prod- uct, providing flattering free “advertising” at best or embarrassing and even erroneous bad publicity at worst. Companies try to use this to their advantage by creating opportunities for consumers and the brand to interact.

Another way companies connect with customers is through social media sites like LinkedIn Company Pages, which allows companies to invite individuals to join company- related groups. Online retailer Zappos uses LinkedIn to answer questions about its prod- ucts and the company’s culture. Similarly, Google+ Communities offers companies a way to interact with individuals who might be interested in their products or services while increas- ing its visibility and brand awareness.35

As we discussed in Chapter 1, customer service means giving customers what they want or need, the way they want it, the first time. This usually depends on the speed and depend- ability with which an organization can deliver its products. Exhibit 2.6 shows several actions and attitudes that contribute to excellent customer service.

Bottom Line In all businesses—services as well as manufacturing— strategies that emphasize

good customer service provide a critical

competitive advantage. Identify some excellent and poor customer service that

you have received.

FedEx partners with many health care companies to provide logistics of all types from factory floor to a patient’s front door. ©Bloomberg/Bloomberg/Getty Images

EXHIBIT 2.6 Actions and Attitudes = Excellent Customer ServiceSpeed of filling and

delivering normal orders.

Willingness to meet emergency needs.

Merchandise delivered in good

condition.

Readiness to take back defective

goods and resupply quickly.

Availability of installation and

repair services and parts.

Service charges, whether free or

priced separately.

g

SOURCE: Adapted from Kotler, P., Marketing Management: Analysis, Planning, Implementation and Control, 9th ed. Englewood Cliffs, NJ: Prentice Hall, 1990.

Q

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In CASE You Haven’t Noticed . . . Bateman, Snell, and Konopaske have put together an outstanding selection of case studies of various lengths that highlight companies’ ups and downs, stimulate learning and understanding, and challenge students to respond.

Instructors will find a wealth of relevant and updated cases in every chapter, using companies—big and small—that students will enjoy learning about.

CHAPTER UNFOLDING CASES

Each chapter begins with a “Management in Action: Manager’s Brief” section that describes an actual organizational situation, leader, or company. The “Manager’s Brief” is referred to again within the chapter in the “Progress Report” section, showing the student how the chapter material relates back to the company, situation, or leader highlighted in the chapter opener. At the end of the chapter, the “Onward” section ties up loose ends and brings the material full circle for the student. Answers to Management in Action section questions can be found in the Instructor’s Manual.

SOCIAL ENTERPRISE

Social Enterprise boxes have been updated in each chapter to familiarize students with this fast-growing sector. Answers to Social Enterprise questions are included in the Instructor’s Manual.

MULTIPLE GENERATIONS AT WORK

In each chapter, a Multiple Generations at Work box has been updated added to highlight some of the intergenerational challenges faced by managers and employees today.

THE DIGITAL WORLD

The Digital World feature offers unique examples of how companies and other users employ digital/social media in ways that capitalize on various ideas in each chapter.

CONCLUDING CASES

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

SUPPLEMENTARY CASES

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

Outstanding Pedagogy Management: Leading & Collaborating in a Competitive World is pedagogically stimulating and is intended to maximize student learning. With this in mind, we used a wide array of pedagogical features—some tried and true, others new and novel:

END-OF-CHAPTER ELEMENTS

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

• Retaining What You Learned provides clear, concise responses to the learning objectives, giving students a quick reference for reviewing the important concepts in the chapter.

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

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

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Assurance of Learning This 13th edition contains revised learning objectives and learning objectives are called out within the chapter where the content begins. The Retaining What You Learned for each chapter ties the learning objectives back together as well. And, finally, our test bank provides tagging for the learning objective that the question covers, so instructors will be able to test material covering all learning objectives, thus ensuring that students have mastered the important topics.

Comprehensive Supplements INSTRUCTOR’S MANUAL

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

TEST BANK

The Test Bank includes more than 100 questions per chapter in a variety of formats. It has been revised for accuracy and expanded to include a greater variety of comprehension and application (scenario-based) questions as well as tagged with Bloom’s Taxonomy levels and AACSB requirements.

POWERPOINT PRESENTATION SLIDES

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

McGraw-Hill Customer Experience At McGraw-Hill, we understand that getting the most from new technology can be challenging. That’s why our services don’t stop after you purchase our products. You can e-mail our product specialists 24 hours a day to get product training online. Or you can search our knowledge bank of frequently asked questions on our support website. For customer support, call 800-331-5094, submit a support request using our contact us form, http://mpss.mhhe.com/contact.php, or visit www.mhhe.com/support. One of our technical support analysts will be able to assist you in a timely fashion.

MANAGER’S HOT SEAT

This interactive, video-based application puts students in the manager’s hot seat, building critical thinking and decision-making skills and allowing students to apply concepts to real managerial challenges. Students watch as 21 real managers apply their years of experience when confronting unscripted issues such as bullying in the workplace, cyber loafing, globalization, intergenerational work conflicts, workplace violence, and leadership versus management. In addition, Manager’s Hot Seat interactive applications, featuring video cases and accompanying quizzes, can be found in Connect.

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CREATE

Instructors can now tailor their teaching resources to match the way they

teach! With McGraw-Hill Create, www.mcgrawhillcreate. com, instructors can easily rearrange chapters, combine material from other content sources, and quickly upload and integrate their own content, such as course syllabi or teaching notes. Find the right content in Create by searching through thousands of leading McGraw-Hill textbooks. Arrange the material to fit your teaching style. Order a Create book and receive a complimentary print review copy in three to five business days or a complimentary electronic review copy via e-mail within one hour. Go to www.mcgrawhillcreate.com today and register.

TEGRITY CAMPUS

Tegrity makes class time available 24/7 by automatically capturing

every lecture in a searchable format for students to review when they study and complete assignments. With a simple one-click start-and-stop process, you capture all computer screens and corresponding audio. Students can replay any part of any class with easy-to-use browser-based viewing on a PC or Mac. Educators know that the more students can see, hear, and experience class resources, the better they learn. In fact, studies prove it. With patented Tegrity “search anything” technology, students instantly recall key class moments for replay online or on iPods and mobile devices. Instructors can help turn all their students’ study time into learning moments immediately supported by their lecture. To learn more about Tegrity, watch a twominute Flash demo at http://tegritycampus.mhhe.com.

BLACKBOARD® PARTNERSHIP

McGraw-Hill Education and Blackboard have teamed up to simplify your life. Now you and your students can access Connect and Create right from within your Blackboard course—all with one single sign-on. The grade books are

seamless, so when a student completes an integrated Connect assignment, the grade for that assignment automatically (and instantly) feeds your Blackboard grade center. Learn more at www.domorenow.com.

McGRAW-HILL CAMPUSTM

McGraw-Hill Campus is a new one-stop teaching and learning experience available to users of any

learning management system. This institutional service allows faculty and students to enjoy single sign-on (SSO) access to all McGraw-Hill Higher Education materials, including the award-winning McGraw-Hill Connect platform, from directly within the institution’s website. With McGraw-Hill Campus, faculty receive instant access to teaching materials (e.g., eTextbooks, test banks, PowerPoint slides, animations, learning objectives, etc.), allowing them to browse, search, and use any instructor ancillary content in our vast library at no additional cost to instructor or students. In addition, students enjoy SSO access to a variety of free content (e.g., quizzes, flash cards, narrated presentations, etc.) and subscription-based products (e.g., McGraw-Hill Connect). With McGraw-Hill Campus enabled, faculty and students will never need to create another account to access McGraw-Hill products and services. Learn more at www.mhcampus.com.

ASSURANCE OF LEARNING READY

Many educational institutions today focus on the notion of assurance of learning, an important element of some accreditation standards. Management: Leading & Collaborating in a Competitive World is designed specifically to support instructors’ assurance of learning initiatives with a simple yet powerful solution. Each test bank question for Management: Leading & Collaborating in a Competitive World maps to a specific chapter learning objective listed in the text. Instructors can use our test bank software, EZ Test, to easily query for learning objectives that directly relate to the learning outcomes for their course. Instructors can then use the reporting features of EZ Test to aggregate student results in similar fashion, making the collection and presentation of assurance of learning data simple and easy.

AACSB TAGGING

McGraw-Hill Education is a proud corporate member of AACSB International.

Understanding the importance and value of AACSB accreditation, Management: Leading & Collaborating in a Competitive World recognizes the curricula guidelines detailed in the AACSB standards for business

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McGRAW-HILL CUSTOMER EXPERIENCE GROUP CONTACT INFORMATION

At McGraw-Hill Education, we understand that getting the most from new technology can be challenging. That’s why our services don’t stop after you purchase our products. You can e-mail our Product Specialists 24 hours a day to get product training online. Or you can search our knowledge bank of Frequently Asked Questions on our support website. For Customer Support, call 800-331-5094 or visit www.mhhe.com/support. One of our Technical Support Analysts will be able to assist you in a timely fashion.

accreditation by connecting selected questions in the text and the test bank to the eight general knowledge and skill guidelines in the AACSB standards. The statements contained in Management: Leading & Collaborating in a Competitive World are provided only as a guide for the users of this product. The AACSB leaves content coverage and assessment within the purview of individual schools, the mission of the school, and the faculty. While the Management: Leading & Collaborating in a Competitive World teaching package makes no claim of any specific AACSB qualification or evaluation, we have within Management: Leading & Collaborating in a Competitive World labeled selected questions according to the eight general knowledge and skills areas.

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©McGraw-Hill Education

McGraw-Hill Connect® is a highly reliable, easy-to- use homework and learning management solution that utilizes learning science and award-winning adaptive tools to improve student results.

73% of instructors who use Connect

require it; instructor satisfaction increases by 28% when Connect

is required.

Over 7 billion questions have been answered, making McGraw-Hill

Education products more intelligent, reliable, and precise.

Using Connect improves retention rates by 19.8%, passing rates by 12.7%, and exam scores by 9.1%.

▪ Connect content is authored by the world’s best subject matter experts, and is available to your class through a simple and intuitive interface.

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Quality Content and Learning Resources

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▪ SmartBook helps students study more efficiently by delivering an interactive reading experience through adaptive highlighting and review.

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©Hero Images/Getty Images

▪ Connect Insight® generates easy-to-read reports on individual students, the class as a whole, and on specific assignments.

▪ The Connect Insight dashboard delivers data on performance, study behavior, and effort. Instructors can quickly identify students who struggle and focus on material that the class has yet to master.

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Robust Analytics and Reporting

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www.mheducation.com/connect

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Brief Contents

PREFACE VII

PART ONE FOUNDATIONS OF MANAGEMENT 2

1. Managing and Performing 2

2. The External and Internal Environments 38

3. Managerial Decision Making 72

PART TWO PLANNING: DELIVERING STRATEGIC VALUE 102

4. Planning and Strategic Management 102

5. Ethics, Corporate Responsibility, and Sustainability 130

6. International Management 158

7. Entrepreneurship 188

PART THREE ORGANIZING: BUILDING A DYNAMIC ORGANIZATION 222

8. Organization Structure 222

9. Organizational Agility 250

10. Human Resources Management 276

11. Managing the Diverse Workforce 310

PART FOUR LEADING: MOBILIZING PEOPLE 340

12. Leadership 340

13. Motivating for Performance 370

14. Teamwork 402

15. Communicating 428

PART FIVE CONTROLLING: LEARNING AND CHANGING 458

16. Managerial Control 458

17. Managing Technology and Innovation 488

18. Creating and Leading Change 516

Notes 547

Glossary/Subject Index 594

Name Index 620

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Actively Manage Your Relationship with Your Organization 20 Survive and Thrive 21

MANAGEMENT IN ACTION ONWARD 22 Key Terms 23

Retaining What You Learned 23

Discussion Questions 24

Experiential Exercises 25

CONCLUDING CASE 27

APPENDIX A 28

KEY TERMS 34

DISCUSSION QUESTIONS 35

CHAPTER 2

The External and Internal Environments 38 MANAGEMENT IN ACTION MANAGER’S BRIEF 39 The Macroenvironment 41

The Economy 41 Technology 42 Laws and Regulations 43

MULTIPLE GENERATIONS AT WORK 44 Demographics 44 Social Issues 45 Sustainability and the Natural Environment 45

SOCIAL ENTERPRISE 46 The Competitive Environment 46

Competitors 47 New Entrants 48 Substitutes and Complements 49 Suppliers 50 Customers 50

MANAGEMENT IN ACTION PROGRESS REPORT 52 Environmental Analysis 52

CHAPTER 1

Managing and Performing 2 MANAGEMENT IN ACTION MANAGER’S BRIEF 3 Managing in a Competitive World 4

Globalization 4 Technological Change 5 Knowledge Management 6 Collaboration across Boundaries 6

MULTIPLE GENERATIONS AT WORK 7

THE DIGITAL WORLD 7 Managing for Competitive Advantage 8

Innovation 8 Quality 8 Service 9 Speed 9 Cost Competitiveness 10 Sustainability 11 Delivering All Types of Performance 11

The Functions of Management 12 Planning: Delivering Strategic Value 12 Organizing: Building a Dynamic Organization 12

SOCIAL ENTERPRISE 13 Leading: Mobilizing People 13 Controlling: Learning and Changing 14 Performing All Four Management Functions 14

MANAGEMENT IN ACTION PROGRESS REPORT 15 Management Levels and Skills 15

Top-Level Managers 15 Middle-Level Managers 16 Frontline Managers 16 Working Leaders with Broad Responsibilities 16 Must-Have Management Skills 17

You and Your Career 18 Be Both a Specialist and a Generalist 19 Be Self-Reliant 19 Connect with People 20

Contents

PART ONE FOUNDATIONS OF MANAGEMENT

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Identifying and Diagnosing the Problem 77 Generating Alternative Solutions 77 Evaluating Alternatives 78 Making the Choice 80 Implementing the Decision 80

MANAGEMENT IN ACTION PROGRESS REPORT 81 Evaluating the Decision 82

The Best Decision 82 Barriers to Effective Decision Making 83

Psychological Biases 83 Time Pressures 84

THE DIGITAL WORLD 85 Social Realities 85

Decision Making in Groups 85 Potential Advantages of Using a Group 85 Potential Problems of Using a Group 86

Managing Group Decision Making 87 Leadership Style 87 Constructive Conflict 87 Encouraging Creativity 89 Brainstorming 90

MULTIPLE GENERATIONS AT WORK 91 Organizational Decision Making 91

Constraints on Decision Makers 91 Organizational Decision Processes 92 Decision Making in a Crisis 92

MANAGEMENT IN ACTION ONWARD 94 Key Terms 95

Retaining What You Learned 95

Discussion Questions 96

Experiential Exercises 96

CONCLUDING CASE 98

PART ONE SUPPORTING CASE 99

Environmental Scanning 53 Scenario Development 53 Forecasting 54 Benchmarking 54

Actively Managing the External Environment 55 Changing the Environment You Are In 55 Influencing Your Environment 55 Adapting to the Environment: Changing the Organization 56 Choosing an Approach 58

The Internal Environment of Organizations: Culture and Climate 58

Organization Culture 58

THE DIGITAL WORLD 60

MANAGEMENT IN ACTION ONWARD 61 Organizational Climate 61

Key Terms 62

Retaining What You Learned 62

Discussion Questions 64

Experiential Exercises 64

CONCLUDING CASE 67

APPENDIX B 68

KEY TERMS 70

CHAPTER 3

Managerial Decision Making 72 MANAGEMENT IN ACTION MANAGER’S BRIEF 73 Characteristics of Managerial Decisions 74

Lack of Structure 74 Uncertainty and Risk 75

SOCIAL ENTERPRISE 76 Conflict 76

The Phases of Decision Making 77

PART TWO PLANNING: DELIVERING STRATEGIC VALUE

CHAPTER 4

Planning and Strategic Management 102 MANAGEMENT IN ACTION MANAGER’S BRIEF 103 An Overview of Planning Fundamentals 104

The Basic Planning Process 104

SOCIAL ENTERPRISE 107

Levels of Planning 108 Strategic Planning 108 Tactical and Operational Planning 109 Aligning Tactical, Operational, and Strategic Planning 110

Strategic Planning 111

MANAGEMENT IN ACTION PROGRESS REPORT 112 Step 1: Establishing Mission, Vision, and Goals 113 Step 2: Analyzing External Opportunities and Threats 114

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THE DIGITAL WORLD 116 Step 3: Analyzing Internal Strengths and Weaknesses 116 Step 4: SWOT Analysis and Strategy Formulation 118

MULTIPLE GENERATIONS AT WORK 120 Step 5: Strategy Implementation 123 Step 6: Strategic Control 124

MANAGEMENT IN ACTION ONWARD 125 Key Terms 126

Retaining What You Learned 126

Discussion Questions 127

Experiential Exercises 128

CONCLUDING CASE 129

CHAPTER 5

Ethics, Corporate Responsibility, and Sustainability 130 MANAGEMENT IN ACTION MANAGER’S BRIEF 131

It’s a Big Issue 132 It’s a Personal Issue 133

MULTIPLE GENERATIONS AT WORK 134 Ethics 135

Ethical Systems 135 Business Ethics 137 The Ethics Environment 137

THE DIGITAL WORLD 140 Ethical Decision Making 141 Courage 142

MANAGEMENT IN ACTION PROGRESS REPORT 143 Corporate Social Responsibility 144

Contrasting Views 146 Reconciliation 146

The Natural Environment and Sustainability 147 A Risk Society 147

SOCIAL ENTERPRISE 148 Ecocentric Management 149 Environmental Agendas for the Future 150

MANAGEMENT IN ACTION ONWARD 151 Key Terms 151

Retaining What You Learned 152

Discussion Questions 153

Experiential Exercises 154

CONCLUDING CASE 155

CHAPTER 6

International Management 158 MANAGEMENT IN ACTION MANAGER’S BRIEF 159 Managing in Today’s (Global) Economy 160

International Challenges and Opportunities 160 Outsourcing and Jobs 162

The Geography of Business 163 Western Europe 164 Asia: China and India 165 The Americas 166

SOCIAL ENTERPRISE 167 Africa and the Middle East 167

Global Strategy 168 Pressures for Global Integration 168 Pressures for Local Responsiveness 169 Choosing a Global Strategy 170

MANAGEMENT IN ACTION PROGRESS REPORT 172 Entry Mode 173

Exporting 173 Licensing 174 Franchising 174 Joint Ventures 175 Wholly Owned Subsidiaries 175

Working Overseas 176 Skills of the Global Manager 177 Understanding Cultural Issues 177

MULTIPLE GENERATIONS AT WORK 180 Ethical Issues in International Management 181

THE DIGITAL WORLD 182

MANAGEMENT IN ACTION ONWARD 182 Key Terms 183

Retaining What You Learned 183

Discussion Questions 184

Experiential Exercises 185

CONCLUDING CASE 186

CHAPTER 7

Entrepreneurship 188 MANAGEMENT IN ACTION MANAGER’S BRIEF 189 Entrepreneurship 192

Why Become an Entrepreneur? 192 What Does It Take to Succeed? 193 What Business Should You Start? 194

SOCIAL ENTERPRISE 197 What Does It Take, Personally? 199 Success and Failure 200

MANAGEMENT IN ACTION PROGRESS REPORT 201

THE DIGITAL WORLD 202 Common Management Challenges 202 Increasing Your Chances of Success 204

MULTIPLE GENERATIONS AT WORK 209 Corporate Entrepreneurship 209

Building Support for Your Idea 210 Building Intrapreneurship 210 Management Challenges 210 Entrepreneurial Orientation 211

MANAGEMENT IN ACTION ONWARD 212

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CHAPTER 8

Organization Structure 222 MANAGEMENT IN ACTION MANAGER’S BRIEF 223 Fundamentals of Organizing 224

Differentiation 224 Integration 225

The Vertical Structure 226 Authority in Organizations 226 Hierarchical Levels 227 Span of Control 228 Delegation 229 Decentralization 230

The Horizontal Structure 232 The Functional Organization 232

SOCIAL ENTERPRISE 234 The Divisional Organization 234 The Matrix Organization 236

MANAGEMENT IN ACTION PROGRESS REPORT 237 The Network Organization 239

MULTIPLE GENERATIONS AT WORK 241 Organizational Integration 241

THE DIGITAL WORLD 242 Coordination by Standardization 242 Coordination by Plan 242 Coordination by Mutual Adjustment 243 Coordination and Communication 243

Looking Ahead 245

MANAGEMENT IN ACTION ONWARD 245 Key Terms 246

Retaining What You Learned 246

Discussion Questions 247

Experiential Exercises 247

CONCLUDING CASE 249

CHAPTER 9

Organizational Agility 250 MANAGEMENT IN ACTION MANAGER’S BRIEF 251 The Responsive Organization 252 Strategy and Organizational Agility 253

MULTIPLE GENERATIONS AT WORK 254 Organizing around Core Capabilities 254 Strategic Alliances 255 The Learning Organization 256 The High-Involvement Organization 256

Organizational Size and Agility 257 The Case for Big 257 The Case for Small 257 Being Big and Small 258

SOCIAL ENTERPRISE 259

MANAGEMENT IN ACTION PROGRESS REPORT 260 Customers and the Responsive Organization 260

Customer Relationship Management 260

THE DIGITAL WORLD 262 Quality Initiatives 262 Reengineering 264

Technology and Organizational Agility 265 Types of Technology Configurations 265 Organizing for Flexible Manufacturing 266 Organizing for Speed: Time-Based Competition 268

Final Thoughts on Organizational Agility 270

MANAGEMENT IN ACTION ONWARD 271 Key Terms 271

Retaining What You Learned 272

Discussion Questions 272

Experiential Exercises 273

CONCLUDING CASE 274

PART THREE ORGANIZING: BUILDING A DYNAMIC ORGANIZATION

Key Terms 212

Retaining What You Learned 212

Discussion Questions 214

Experiential Exercises 214

CONCLUDING CASE 217

PART TWO SUPPORTING CASE 217

APPENDIX C 219

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CHAPTER 10

Human Resources Management 276 MANAGEMENT IN ACTION MANAGER’S BRIEF 277 Strategic Human Resources Management 278

The HR Planning Process 279

SOCIAL ENTERPRISE 280 Staffing 282

Recruitment 282 Selection 283

THE DIGITAL WORLD 284 Workforce Reductions 286

Developing the Workforce 290 Training and Development 290

MULTIPLE GENERATIONS AT WORK 291

MANAGEMENT IN ACTION PROGRESS REPORT 292 Performance Appraisal 292

What Do You Appraise? 293 Who Should Do the Appraisal? 294 How Do You Give Employees Feedback? 295

Designing Reward Systems 296 Pay Decisions 296 Incentive Systems and Variable Pay 297 Executive Pay and Stock Options 298 Employee Benefits 299 Legal Issues in Compensation and Benefits 299 Health and Safety 300

Labor Relations 300 Labor Laws 301 Unionization 301 Collective Bargaining 302 What Does the Future Hold? 303

MANAGEMENT IN ACTION ONWARD 304 Key Terms 304

Retaining What You Learned 305

Discussion Questions 306

Experiential Exercises 306

CONCLUDING CASE 308

CHAPTER 11

Managing the Diverse Workforce 310 MANAGEMENT IN ACTION MANAGER’S BRIEF 311 Diversity: A Brief History 312 Diversity Today 313

The Changing Workforce 314

MULTIPLE GENERATIONS AT WORK 316 The Age of the Workforce 320

Managing Diversity and Affirmative Action 321 Advantage through Diversity and Inclusion 321 Challenges of Diversity and Inclusion 322

MANAGEMENT IN ACTION PROGRESS REPORT 325 Multicultural Organizations 325 How to Cultivate a Diverse Workforce 326

Top Management’s Leadership and Commitment 326

SOCIAL ENTERPRISE 327 Organizational Assessment 327 Attracting Employees 328 Training Employees 329 Retaining Employees 329

THE DIGITAL WORLD 330

MANAGEMENT IN ACTION ONWARD 332 Key Terms 332

Retaining What You Learned 332

Discussion Questions 334

Experiential Exercises 334

CONCLUDING CASE 336

PART THREE SUPPORTING CASE 337

PART FOUR LEADING: MOBILIZING PEOPLE

CHAPTER 12

Leadership 340 MANAGEMENT IN ACTION MANAGER’S BRIEF 341

What Do We Want from Our Leaders? 342

MULTIPLE GENERATIONS AT WORK 343 Vision 343 Leading and Managing 345

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Leading and Following 346

Power and Leadership 346 Sources of Power 346

Traditional Approaches to Understanding Leadership 348 Leader Traits 348 Leader Behaviors 349 The Effects of Leader Behavior 351 Situational Approaches to Leadership 353

MANAGEMENT IN ACTION PROGRESS REPORT 357 Contemporary Perspectives on Leadership 358

Charismatic Leadership 358 Transformational Leadership 359 Authenticity 360 Opportunities for Leaders 361

SOCIAL ENTERPRISE 362 A Note on Courage 362

Developing Your Leadership Skills 363 How Do I Start? 363

THE DIGITAL WORLD 364 What Are the Keys? 364

MANAGEMENT IN ACTION ONWARD 364 Key Terms 365

Retaining What You Learned 365

Discussion Questions 367

Experiential Exercises 367

CONCLUDING CASE 368

CHAPTER 13

Motivating for Performance 370 MANAGEMENT IN ACTION MANAGER’S BRIEF 371 Motivating for Performance 372 Setting Goals 373

Goals That Motivate 373 Stretch Goals 374 Limitations of Goal Setting 374 Set Your Own Goals 375

Reinforcing Performance 375 (Mis)Managing Rewards and Punishments 376 Managing Mistakes 378 Providing Feedback 378

Performance-Related Beliefs 378 The Effort-to-Performance Link 379 The Performance-to-Outcome Link 379 Impact on Motivation 380 Managerial Implications of Expectancy Theory 380

MANAGEMENT IN ACTION PROGRESS REPORT 381 Maslow’s Need Hierarchy 381

Understanding People’s Needs 381

MULTIPLE GENERATIONS AT WORK 383

Alderfer’s ERG Theory 383 McClelland’s Needs 384 Need Theories: International Perspectives 384

Designing Motivating Jobs 385 Job Rotation, Enlargement, and Enrichment 385

SOCIAL ENTERPRISE 386 Herzberg’s Two-Factor Theory 387 The Hackman and Oldham Model of Job Design 387 Empowerment 388

Achieving Fairness 390 Assessing Equity 390 Restoring Equity 391 Procedural Justice 391

Employee Satisfaction and Well-Being 392

THE DIGITAL WORLD 393 Quality of Work Life 393

MANAGEMENT IN ACTION ONWARD 394 Psychological Contracts 394

Key Terms 395

Retaining What You Learned 395

Discussion Questions 396

Experiential Exercises 397

CONCLUDING CASE 399

CHAPTER 14

Teamwork 402 MANAGEMENT IN ACTION MANAGER’S BRIEF 403 The Contributions of Teams 404 Types of Teams 404

MULTIPLE GENERATIONS AT WORK 406 Self-Managed Teams 406

MANAGEMENT IN ACTION PROGRESS REPORT 407 How Groups Become Real Teams 408

Group Processes 408 Critical Periods 409

THE DIGITAL WORLD 410 Teaming Challenges 410 Why Groups Sometimes Fail 410

Building Effective Teams 411 Performance Focus 411 Motivating Teamwork 412 Member Contributions 412

SOCIAL ENTERPRISE 413 Norms 413 Roles 414 Cohesiveness 414 Building Cohesiveness and High-Performance Norms 416

Managing Lateral Relationships 417 Managing Outward 417

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PART FIVE CONTROLLING: LEARNING AND CHANGING

CHAPTER 16

Managerial Control 458 MANAGEMENT IN ACTION MANAGER’S BRIEF 459 Bureaucratic Control Systems 461

The Control Cycle 461

SOCIAL ENTERPRISE 463 Approaches to Bureaucratic Control 465

MULTIPLE GENERATIONS AT WORK 467 Management Audits 468 Budgetary Controls 469 Financial Controls 471 Problems with Bureaucratic Control 474

MANAGEMENT IN ACTION PROGRESS REPORT 475 Designing Effective Control Systems 476

The Other Controls: Markets and Clans 480 Market Control 480

Clan Control: The Role of Empowerment and Culture 482

MANAGEMENT IN ACTION ONWARD 483 Key Terms 483

Retaining What You Learned 483

Discussion Questions 485

Experiential Exercises 485

CONCLUDING CASE 487

CHAPTER 17

Managing Technology and Innovation 488 MANAGEMENT IN ACTION MANAGER’S BRIEF 489 Technology and Innovation 490

Technology Life Cycle 491 Diffusion of Technological Innovations 492

Lateral Role Relationships 418 Managing Conflict 418 Conflict Styles 419 Being a Mediator 420 Electronic and Virtual Conflict 421

MANAGEMENT IN ACTION ONWARD 422 Key Terms 422

Retaining What You Learned 423

Discussion Questions 424

Experiential Exercises 424

CONCLUDING CASE 425

CHAPTER 15

Communicating 428 MANAGEMENT IN ACTION MANAGER’S BRIEF 429 Interpersonal Communication 430

One-Way versus Two-Way Communication 430 Communication Pitfalls 431 Mixed Signals and Misperception 432 Oral and Written Channels 433 Digital Communication and Social Media 433

MULTIPLE GENERATIONS AT WORK 436

THE DIGITAL WORLD 437 Media Richness 437

MANAGEMENT IN ACTION PROGRESS REPORT 438 Improving Communication Skills 438

Improving Sender Skills 438

SOCIAL ENTERPRISE 442 Improving Receiver Skills 442

Organizational Communication 444 Downward Communication 445 Upward Communication 447 Horizontal Communication 448 Informal Communication 448 Boundarylessness 449

MANAGEMENT IN ACTION ONWARD 450 Key Terms 450

Retaining What You Learned 450

Discussion Questions 451

Experiential Exercises 452

CONCLUDING CASE 454

PART FOUR SUPPORTING CASE 455

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MULTIPLE GENERATIONS AT WORK 493

SOCIAL ENTERPRISE 494 Technology Leadership and Followership 495

Technology Leadership 495 Technology Followership 497

Assessing Technology Needs 498 Measuring Current Technologies 498 Assessing External Technological Trends 499

Making Technology Decisions 499 Anticipated Market Receptiveness 499 Technological Feasibility 500 Economic Viability 501 Anticipated Capability Development 501 Organizational Suitability 502

MANAGEMENT IN ACTION PROGRESS REPORT 503 Sourcing and Acquiring New Technologies 504

Internal Development 504 Purchase 504 Contracted Development 504 Licensing 504

THE DIGITAL WORLD 505 Technology Trading 505 Research Partnerships and Joint Ventures 505 Acquiring a Technology Owner 505

Technology and Managerial Roles 506 Organizing for Innovation 507

Unleashing Creativity 508 Bureaucracy Busting 509 Design Thinking 509 Implementing Development Projects 510 Technology, Job Design, and Human Resources 511

MANAGEMENT IN ACTION ONWARD 511 Key Terms 512

Retaining What You Learned 512

Discussion Questions 513

Experiential Exercises 514

CONCLUDING CASE 514

CHAPTER 18

Creating and Leading Change 516 MANAGEMENT IN ACTION 517 Becoming World Class 518

Sustainable, Great Futures 518 The Tyranny of the Or 519 The Genius of the And 520 Achieving Sustained Greatness 520 Organization Development 521

Managing Change 522 Motivating People to Change 522

MULTIPLE GENERATIONS AT WORK 524 A General Model for Managing Resistance 524 Enlisting Cooperation 526 Harmonizing Multiple Changes 528

MANAGEMENT IN ACTION PROGRESS REPORT 529 Leading Change 529

Shaping the Future 532 Thinking about the Future 532 Creating the Future 532

THE DIGITAL WORLD 533

SOCIAL ENTERPRISE 534 Shaping Your Own Future 535 Learning and Leading 536

MANAGEMENT IN ACTION ONWARD 538 A Collaborative, Sustainable Future? 539

Key Terms 539

Retaining What You Learned 539

Discussion Questions 540

Experiential Exercises 540

CONCLUDING CASE 542

PART FIVE SUPPORTING CASE 543

CASE INCIDENTS

Notes 547

Glossary/Subject Index 594

Name Index 620

Photo on pages xxiii, xxiv, xxvi, xxvii, and xxix: ©zlikovec/Shutterstock.com RF.

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Foundations of Management

• Managing and Performing • The External and Internal

Environments • Managerial Decision

Making

Planning: Delivering Strategic Value

• Planning and Strategic Management

• Ethics and Corporate Responsibility

• International Management • Entrepreneurship

Strategy Implementation

Organizing: Building a Dynamic Organization

• Organization Structure • Organizational Agility • Human Resources

Management • Managing the Diverse

Workforce

Leading: Mobilizing People

• Leadership • Motivating for Performance • Teamwork • Communicating

Controlling: Learning and Changing

• Managerial Control • Managing Technology and

Innovation • Creating and Leading

Change

The Management Process

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22

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Managing in a Competitive World Globalization Technological Change Knowledge Management Collaboration across Boundaries

Managing for Competitive Advantage Innovation Quality Service Speed Cost Competitiveness Sustainability

Delivering All Types of Performance

The Functions of Management Planning: Delivering Strategic Value Organizing: Building a Dynamic Organization Leading: Mobilizing People Controlling: Learning and Changing Performing All Four Management Functions

Management Levels and Skills Top-Level Managers Middle-Level Managers Frontline Managers Working Leaders with Broad Responsibilities Must-Have Management Skills

You and Your Career Be Both a Specialist and a Generalist Be Self-Reliant Connect with People Actively Manage Your Relationship with Your Organization Survive and Thrive

After studying Chapter 1, you will be able to:

Summarize the major challenges of managing in the new competitive landscape.

Describe the sources of competitive advantage for a company.

Explain how the functions of management are evolving in today’s business environment.

Compare how the nature of management varies at different organizational levels.

Define the skills you need to be an effective manager.

Understand the principles that will help you manage your career.

LO 1

LO 2

LO 3

LO 4

LO 5

LO 6

CHAPTER 1

Managing and Performing

Management means, in the last analysis, the substitution of thought for brawn and muscle, of knowledge for folklore and tradition, and of

cooperation for force.

—PETER DRUCKER

CHAPTER OUTLINELEARNING OBJECTIVES

PART ONE FOUNDATIONS OF MANAGEMENT

©Jirsak/Shutterstock.com RF

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3

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What does a manager do? Dream up a bold new mis- sion for the company? Build a corporate structure that ensures success? Lead and inspire others? Keep the company on track toward its goals?

Most managers perform all these basic functions to some degree, perhaps none more publicly or suc- cessfully than Mark Zuckerberg, founder and CEO of Facebook Inc. Zuckerberg has seen his company grow into a unique worldwide phenomenon with almost 2 billion active users, more than 600 times as many people as the average daily viewership of CNN, Fox, and MSNBC combined. Given that the company reported $8.8 billion in revenue in 2016, it seems Zuckerberg’s passion for connecting people with one another has more than paid off. Facebook’s unparal- leled success does not mean Zuckerberg has no man- agement challenges left, however.

Past hurdles that Zuckerberg had to deal with included the need for cash to fund Facebook’s rapid growth. In 2012 he announced an initial public offering of stock to attract that cash, and then saw the company go through a damaging initial drop in its stock price. Next came the soaring popularity of smartphones, encouraging Facebook users to go mobile in droves. Facebook was forced to quickly develop its capability to carry advertising on its mobile app. Those mobile ads now bring in 80 percent of the company’s reve- nue, up from zero in 2012.

More recent hurdles include charges that Facebook aided the spread of fake news during the 2016 U.S. presidential election campaign. Zuckerberg responded by developing partnerships with outside fact-checking groups to flag stories of questionable reliability. He

directed upgrades of Facebook’s user data tracking to counter problems of misreporting results to adver- tisers, and he wants to focus on artificial intelligence to prevent the sharing of inappropriate content. That story continues to unfold. Meanwhile Facebook teams are working to keep up with newer competitors like Snapchat by adding to the video capabilities of its Instagram platform.

While he is organizing and leading the company and refining its operations, Zuckerberg, ranked #1 in 2017 among the top 50 business people by Fortune magazine, is also still shaping plans for what he hopes Facebook can be. He recently released a bold state- ment of his views on its next big goal: to bring all of humanity together in a safe and informed “global community.”1

Management in Action ONE WELL-KNOWN MANAGER: FACEBOOK’S MARK ZUCKERBERG

Management challenges are ever-changing. What is going on now for Facebook

and Mark Zuckerberg? As you read this chapter, notice the wide variety of skills

that Zuckerberg needs to help Facebook meet its goals. Also, think about how

managing people, money, and other resources enables Facebook and other

organizations to accomplish far more than individuals acting independently could

ever achieve.

M A

N A

G E

R ’S

B R

IE F

P R

O G

R E

S S

R E

P O

R T

O N

W A

R D

©Frederic Legrand - COMEO/Shutterstock.com RF

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Facebook’s CEO, Mark Zuckerberg, is one of the most interesting leaders in business today. He is an innovator who combines technological know-how with a vision for the future and an obsessive drive to please customers. Together, those qualities have helped him build a business idea into a major corporation that continues to transform how people connect with one another.2

Zuckerberg is a standout among other top business leaders. Named 2016 Businessperson of the Year by Fortune magazine, he has successfully navigated the $350 billion media com- pany through challenging times, as when Facebook was slow to respond to the shift to mobile, and the clumsy handling of its initial public offering.3

Consider the department store Macy’s as a contrasting example. Following weaker than expected 2016 holiday sales, Macy’s announced that it would close 63 stores and cut 10,000 jobs.4 Terry Lungren, who stepped down as CEO in February 2017, was replaced by Jeff Gennette, who has the daunting task of turning around seven straight quarters of sales declines.5 Time will tell whether Macy’s can compete effectively against changing shopping habits driven by online retail giants like Amazon.

In business, there is no alternative to managing well. Companies may fly high for a while, but they cannot do well for very long without good management. It’s the same for individu- als: the best performers succeed by focusing on fundamentals, knowing what’s important, and managing well. The aim of this book is to help you succeed in those pursuits.

Management is a challenge requiring

knowledge and skills to adapt to new

circumstances.

When the economy is soaring, business seems easy. Starting an Internet company looked easy in the 1990s, and ventures related to the real estate boom looked like a sure thing just a few years ago. But investors grew wary of dot-com start-ups, and the demand for new homes dropped off the table when the economy crashed in late 2008. At such times, it becomes evident that management is a challenge requiring knowledge and skills to adapt to new circumstances.

What defines the competitive landscape of today’s business? You will be reading about many relevant issues in the coming chapters, but we begin here by highlighting four ongoing challenges that character- ize the business landscape: globalization, technologi- cal change, the importance of knowledge and ideas, and collaboration across organizational boundaries.

Globalization Far more than in the past, today’s enterprises are global, with offices and production facili- ties in countries all over the world. Corporations operate worldwide, transcending national borders. Companies that want to grow often need to tap international markets. The change from a local to a global marketplace is irreversible.6

Fortune magazine annually publishes a list of the world’s most admired companies. Whereas U.S. companies used to dominate, Switzerland-based Nestlé was the most admired maker of consumer food products in 2016, Germany’s BMW was the most admired pro- ducer of motor vehicles, and Singapore Airlines was the most admired airlines company.7 According to Fortune’s 2016 Global 500 list, the five largest firms are Walmart (U.S.), State Grid (China), China National Petroleum (China), Sinopec Group (China), and Royal Dutch Shell (British-Dutch).8

Globalization also means that a company’s talent and competition can come from any- where. As with its sales, more than half (60 percent) of GE’s 333,000 employees live out- side the United States.9 Kentucky-based Yum! Brands (KFC, Pizza Hut, and Taco Bell) has over 43,000 restaurants in more than 135 countries. In 2016, about half of its profits came from outside the United States. On average, Yum! Brands opens six stores per day in inter- national locations.10

LO 1

Managing in a Competitive World

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PepsiCo’s chief executive, Indra Nooyi, brought a much- needed global viewpoint to a company whose international business was growing three times faster than sales in the United States. Nooyi, who was raised in India and educated there and in the United States, steered the company toward more “better for you” and “good for you” snacks such as a Quaker beverage in China, Natural Balance snack bar in Mexico, and KeVita probiotic drinks in the United States.11

Globalization affects small companies as well as large. Many small companies export their goods. Many domestic firms assemble their products in other countries. And com- panies are under pressure to improve their products in the face of intense competition from foreign manufacturers. Firms today must ask themselves, “How can we be the best in the world?”

For students, it’s not too early to think globally. Participating in the Global Business Institute program at Indiana University, one hundred students from North Africa, South Asia, and the Middle East came to the United States to pitch entrepreneurial business ideas to a panel of experts. The panel consisted of officials from Coca-Cola and the U.S. Department of State. The most recent winner was Team Pakistan, who proposed a business model that reduces waste by reselling used clothing.12

Technological Change The Internet of Things, artificial intelligence, mobile applications, Big Data analytics, and cloud computing are only some of the ways that technology is vitally important in the busi- ness world. Technology both complicates things and creates new opportunities. The chal- lenges come from the rapid rate at which communication, transportation, information, and other technologies change.13 For example, after just a couple of decades of widespread desk- top use, customers switched to laptop models, which require different accessories. Then, users turned to mini-laptops, tablets, smartphones, and smartwatches to meet their mobility technology needs.14 Any company that served desktop users had to rethink its customers’ wants and needs.

Later chapters discuss technology further, but here we highlight the rise of the Internet and its effects. How is the Internet so critical to business?15 It is a digital marketplace, a means for manufacturing goods and services, a distribution channel, an information service, an arena for social activism,16 and more. It drives down costs and speeds up globalization. It improves efficiency of decision making. Managers can watch and learn what companies around the world are doing in real time.

Although these advantages create business opportunities, they also create threats, not just from hackers but from competitors as they capitalize sooner on new developments than you do.

Things continue to change at breakneck speed. About 15 years ago, tech guru Tim O’Reilly coined the term “Web 2.0” to describe the exciting new wave of social networking start-ups that allow users to publish and share information. But most failed or stalled; very few, other than Facebook, made a profit.17 Web 2.0 redefined the ways in which customers and sellers, employees and employers shared knowledge.

Next came Web 3.0, described as a “read-write-execute” web where applications, search findings, and online services are more tailored, integrated, and relevant to users.18 Think about the last time you searched for a product on Amazon and a list of related products appeared on the screen as alternatives. Web 3.0 is giving way to the Internet of Things, where smartphones, home thermostats, weight scales, wearable fitness trackers, and so forth sense human activities and communicate this information wirelessly through networks to be used in myriad ways (regulate home temperature, check body weight, and tally miles walked).19

Globalization has changed the face of the workforce. Managers in this competitive environment needs to attract and effectively manage a talent pool from all over the globe.

©geopaul/E+/Getty Images RF

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What’s next for the digital frontier? It’s hard to predict with precision, but as billions of people and businesses worldwide demand more personalized and connected experiences, artificial intelligence will simplify the interfaces between humans and technology. Instead of people adapting to new technologies as in the past, technology will adapt to people’s preferences.20

Knowledge Management Companies and managers need good new ideas. Because companies in advanced economies have become so efficient at producing physical goods, most workers have been freed up to provide services or “abstract goods” such as software, entertainment, data, and advertising. These workers, whose primary contributions are ideas and problem-solving expertise, are often referred to as knowledge workers. Managing these workers poses some particular chal- lenges,21 which we examine throughout this book.

Because the success of modern businesses so often depends on the knowledge used for innovation and the delivery of services, organizations need to manage that knowledge.22 Knowledge management is the set of practices aimed at discovering and harnessing an organization’s intellectual resources—fully using the intellects of the organization’s people. Knowledge management is about finding, unlocking, sharing, and capitalizing on the most precious resources of an organization: people’s expertise, skills, wisdom, and relationships. The nearby “Multiple Generations at Work” box explores how important knowledge trans- fer is to organizational survival.

Knowledge managers find these human assets, help people collaborate and learn, gener- ate new ideas, and harness those ideas into successful innovations.

Collaboration across Boundaries One of the most important processes of knowledge management is to ensure that people in different parts of the organization collaborate effectively with one another. This requires productive communications among different departments, divisions, or other subunits of the organization. For example, “T-shaped” managers break out of the traditional corporate hierarchy to share knowledge freely across the organization (the horizontal part of the T) while remaining committed to the bottom-line performance of their individual business units (the vertical part).23 Consulting firm McKinsey originally developed this T-shaped concept as a way for its employees to view clients’ problems from both broad and deep perspectives.24

Toyota keeps its product development process efficient by bringing together design engineers and manufacturing employees from the very beginning. Often, manufacturing employees can see ways to simplify a design so that it is easier to make without defects or unnecessary costs. Toyota expects its employees to listen to input from all areas of the organization, so this type of collaboration is a natural part of the organization’s culture. Employees use software to share their knowledge—best practices they have developed for design and manufacturing.25 Thus, at Toyota, knowledge management supports collabora- tion and vice versa.

Collaboration across boundaries occurs even beyond the boundaries of the organization itself. Companies today must motivate and capitalize on the ideas of people outside the organization. Customers, for instance, can be collaborators. Companies must realize that the need to serve the customer drives everything else.

In this digitally connected era, customers expect to offer their ideas and be heard. Companies collaborate with their customers by actively and continuously listening and responding. L.L.Bean tracks customer comments and reviews on its website; if any product averages fewer than three stars out of five, the company removes it and directs the product manager to resolve the problem.26 Businesses pay attention to customer comments on Amazon, Zappos, Yelp, TripAdvisor, Facebook, Twitter, and many more sites. Customer feedback management software can search these and other sites and generate statistics and reports. Companies can respond to negative online reviews with the goal of winning over their critics.27

knowledge management

Practices aimed at discovering and harnessing an organization’s intellectual resources.

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Multiple Generations at Work Move over Boomers, Here Comes the Next Generation of Leaders

The workforce is changing rapidly. A large number of Baby Boomers (born 1946–1964) will be exiting the workforce over the next 15 years. According to the Pew Research Center, approximately 10,000 Boomers turn 65 each day in the United States. Though some Boomers work into their later years, others step out of the workforce to enjoy hobbies, travel opportunities, and family time.

The talent exodus of top-level executives, managers, and leaders will translate into career opportunities for younger generations. Gen Xers (born 1965–1979) occupy many middle-level jobs, but there are not enough of them to fill all of the soon-to-be-vacant senior positions. Enter the Millennial generation (born 1980–2000), who make up the largest demographic cohort on record.28 These early 30- and 20-somethings are flooding into the job market and will be needed to move quickly from team leader and frontline managerial positions to even higher responsibility.

Before Gen Xers and Millennials can assume higher- level positions in businesses, schools, government agen- cies, and nonprofits, organizational knowledge must be transferred from senior management to the less experi- enced Gen Xers and Millennial employees. Senior man- agers and leaders possess “know-how” and “know-who”

that are critical to the long-term success of their organiza- tions. Prior to retirement, senior talent will look to trans- fer their knowledge to younger employees.

Complicating this need is the fact that generations, like individuals, sometimes differ in their attitudes, per- sonalities, and behaviors. This can affect everything from communication, customer service, teamwork, job satis- faction, morale, and retention to overall organizational performance.

©Bike_Maverick/Getty Images RF

The Digital World Collaboration across boundaries now includes instant communication with stakeholders around the world. Humanitarian organizations are at the forefront of this col- laboration. You can sign up online as a Red Cross digital advocate (redcross.org/volunteer/volunteer- opportunities /be-a-digital-advocate). Volunteers go online and monitor social media for tweets, Facebook posts, and other social media communication that can provide useful informa- tion to Red Cross workers. Volunteers also provide direct support by responding on social media with information about basic first aid and shelter locations, and for emo- tional support. One example was reminding a young teen who had tweeted she was home alone as a tornado was touching down that she needed to get in the bathtub if she didn’t have a basement.

Online collaboration allows managers to manage many demands in a brief amount of time during crises. The United Nations (OCHA) uses trained volunteers called the Stand By Task Force (SBTF). They collaborate online from all over the world. When one group sleeps, another group in another part of the world is waking up and ready to help. This provides 24-hour support to lead- ership in the crucial hours of a crisis.

Businesses are learning from humanitarian organi- zations and are using online collaboration or crowd- sourcing. GlaxoSmithKline (GSK) is crowdsourcing its malaria research by sharing its data online and allowing the public to collaborate. You will learn details of how GSK and others are using technology to support and accelerate management goals later in the text.

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The early Internet years turned careers (and lives) upside down. Students dropped out of school to join Internet start-ups or start their own. Managers in big corporations quit their jobs to do the same. Investors salivated, and invested heavily. The risks were often ignored or downplayed—sometimes tragically as the boom went bust in 2000.

And consider an earlier industry with similar transforming power: automobiles. There have been at least 2,000 carmakers—how many remain?

What is the lesson to be learned from the failures in these important transformational industries? A key to understanding the success of a company is the competitive advantage it holds and how well it can sustain that advantage.

To survive and win over time, you have to gain and sustain advantages over your competi- tors. You gain competitive advantage by being better than your competitors at doing valu- able things for your customers. But what does this mean, specifically? To succeed, managers must deliver performance. The fundamental success drivers of performance are innovation, quality, service, speed, cost competitiveness, and sustainability.

Innovation Companies must continually innovate. Innovation is the introduction of new goods and ser- vices. Your firm must adapt to changes in consumer demands and to new competitors.

Products don’t sell forever; in fact, they don’t sell for nearly as long as they used to because competitors are continuously introducing new products. Your firm must innovate, or it will die.

In 2000, Blockbuster was the market leader of the video rental industry. It didn’t see the need to offer customers an alternative to driving to their retail stores to rent a movie, nor did the company eliminate late charges because they were a major source of revenue. Reed Hastings, founder of Netflix, displaced Blockbuster by allowing customers to order videos that would be delivered by mail. Customers could watch a video for as long as they wanted, then mail it back to Netflix. In 2010, Blockbuster filed for bankruptcy. Netflix has become a successful $8.8 billion company.29

The need for innovation is driven in part by globalization. One important reason is that facilities in other countries can manufacture appliances or write software code at a lower cost than facilities in the United States; U.S. facilities thus operate at a disadvan- tage. Therefore, they must provide something their foreign competitors can’t—and often that requires delivering something new.

Nevertheless, as labor and other costs rise overseas, and as U.S. companies find ways to improve efficiency at home, the future for North American facilities may brighten. Nissan has expanded production in Smyrna, Tennessee, including assembly of its Infiniti JX luxury car and Leaf electric car. Other companies like BMW have announced plans to expand

manufacturing operations in the United States. In 2016, the German auto maker completed its $1 billion expansion to its Spartanburg, South Carolina, plant, bringing annual pro- duction capacity to 450,000 vehicles.30

Innovation is today’s holy grail (2017’s number-one most-admired company in Fortune’s innovativeness cat- egory was Starbucks).31 Like the other sources of competi- tive advantage, innovation comes from people, it must be a strategic goal, and it must be managed properly. Later chap- ters show you how great companies innovate.

Quality Most companies claim that they are committed to qual- ity. In general, quality is the excellence of your product. Customers expect high-quality goods and services, and often they will accept nothing less.

LO 2

innovation

The introduction of new goods and services; a change in method or technology; a positive, useful departure from previous ways of doing things.

quality

The excellence of your product (goods or services).

Managing for Competitive Advantage

Bottom Line Because it’s easy for managers to be so busy that they lose sight of what really drives performance, you will periodically see icons as bottom-line reminders of the need for innovation, quality, service, speed, cost competitiveness, and sustainability. Which two or more of these advantages do you think would be hardest to deliver at the same time?

Q

©Trevor Lush/Purestock/Superstock RF

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Historically, quality pertained primarily to the physical goods that customers bought; it referred to attractiveness, lack of defects, and dependability. The traditional approach to quality was to check work after it was completed and then eliminate defects, using inspec- tion and statistical data to determine whether products were up to standards. But then W. Edwards Deming, J. M. Juran, and other quality gurus convinced managers to take a more complete approach to achieving total quality. This includes preventing defects before they occur, achieving zero defects in manufacturing, and designing products for quality. The goal is to solve and eradicate from the beginning all quality-related problems and to live a philoso- phy of continuous improvement in the way the company operates.32

Quality is further provided when companies customize goods and services to the wishes of the individual consumer. Choices at Starbucks give consumers thousands of variations on the drinks they can order. NikeID allows customers to customize their athletic shoes, Coca-Cola’s Freestyle vending machines empower thirsty consumers to create over 100 soft- drink mixes, and Panera Breads permits visitors to its restaurants to enter custom orders via self-service kiosks.33

Providing world-class quality requires a thorough understanding of what quality really is.34 Quality can be measured in terms of product performance, customer service, reliability (avoidance of failure or breakdowns), conformance to standards, durability, and aesthetics. Only when you move beyond broad, generic concepts such as “quality” and identify specific quality requirements can you identify problems, target needs, set precise performance stan- dards, and deliver world-class value.

By the way, Fortune magazine’s 2017 number-one company for quality of products and services was also Starbucks.

Service Important quality measures often pertain to the ser- vice customers receive. This dimension of quality is particularly important because the ser- vice sector has come to dominate the U.S. economy. In recent years, the fastest-growing job categories have been almost entirely health care services, and the jobs with the greatest declines are primarily in mining, logging, and manufacturing (although some manufactur- ing returns to the United States).35 Services include intangible products such as insurance, hotel accommodations, medical care, and haircuts.

Service means giving customers what they want or need, when they want it. So, service is focused on continually meeting the needs of customers to establish mutually beneficial long-term relationships. Thus cloud computing companies, in addition to providing online access to software, applications, and other computer services, also help their customers store and analyze large amounts of customer and employee data.

An important dimension of service quality is making it easy and enjoyable for custom- ers to experience a service or to buy and use products. The Detroit Institute of Arts hired a manager formerly with the Ritz-Carlton hotel chain, noted for its exceptional level of ser- vice, to be vice president of museum operations. As the art museum prepared for a grand reopening following a major renovation, the manager analyzed the types of customer inter- actions that occur in a museum, identifying ways to make the experience more pleasant. He also worked with his staff to identify ways to customize services, such as offering tours tailored to the interests of particular groups.36

Speed Google constantly improves its search product at a rapid rate. In fact, its entire culture is based on rapid innovation. Sheryl Sandberg, chief operating officer of Facebook, made a mistake early in her previous position as vice president of Google because she was moving too fast to plan carefully. Although the mistake cost the company a few million dollars, Google cofounder Larry Page responded to her explanation and apology by saying he was actually glad she had made the mistake. It showed that she appreciated the company’s val- ues. Page told Sandberg, “I want to run a company where we are moving too quickly and

service

The speed and dependability with which an organization delivers what customers want.

The result of long-term relationships is better

and better quality, and lower and lower costs.

—W. Edwards Deming

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doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risks.”37

Although it’s unlikely that Google actually favors mistakes over moneymaking ideas, Page’s statement expressed an appreciation that in the modern business environment, speed—rapid execution, response, and delivery—often separates the winners from the losers. How fast can you develop and get a new product to market? How quickly can you respond to customer requests? You are far better off if you are faster than the competition—and if you can respond quickly to your competitors’ actions.

Speed isn’t everything—you can’t get sloppy in your quest to be first. But other things being equal, faster compa- nies are more likely to be the winners, slow ones the losers. Even pre-Internet, companies were getting products to mar- ket and in the hands of customers faster than ever. Now the speed requirement has increased exponentially. Everything, it seems, is on fast-forward.

Speed is no longer just a goal of some companies; it is a strategic imperative. Quicken Loans (owned by Intuit) is currently the second-largest provider of mortgage loans in the United States, with Wells Fargo being the top issuer.38 In an ad during the 2016 Superbowl, Quicken announced its new mortgage service, Rocket Mortgage.39 The online, self-service mortgage application is mar- keted as cutting the approval time from days to minutes.40

Cost Competitiveness Walmart keeps driving hard to find new ways to cut billions of dollars from its already very low distribution costs. It leads the industry in efficient distribution, but competitors are copying Walmart’s methods, so the efficiency no longer gives it as much of an advantage.41

Walmart’s efforts are aimed at cost competitiveness, which means keeping costs low enough so that the company can realize profits and price its products (goods or services) at levels that are attractive to consumers. Needless to say, if you can offer a desirable product at a lower price, it is more likely to sell.

Singapore Airlines, one of the world’s most admired companies, kept profiting during the economic recession while the global airline industry lost money. It did so by cutting costs more strategically than the competition. SA slashed flights, parked planes, and reduced salaries, including the CEO’s.42

In contrast to the high-quality, even luxurious flying experience offered by Singapore Airlines, Ryanair is a European low-cost airline. CEO Michael O’Leary launched the “no frills” airline with the sole goal of flying people to their destination cheaply and with their luggage intact.43 His vision is for profits to come from in-flight sales, high luggage fees, low-cost secondary airports, and commissions on travel products sold through the airline’s website.44 O’Leary’s no-frills business model appears to be working. In 2016, Ryanair reported a 43 percent increase in net profit to $1.4 billion by carrying over 106 million passengers.45

One reason every company must worry about cost is that consumers can use the Internet to easily compare prices from thousands of competitors. Consumers looking to buy popular items, such as cameras, printers, and plane fares, can go online to research the best models and the best deals. If you can’t cut costs and offer attractive prices, you can’t compete.

speed

Fast and timely execution, response, and delivery of products.

cost competitiveness

Keeping costs low to achieve profits and be able to offer prices that are attractive to consumers.

Quicken Loans became quicker than before and quicker than many others when it introduced Rocket Mortgage.

©dpa picture alliance/Alamy Stock Photo

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Sustainability Avoiding wasteful use of energy can bolster a company’s financial performance while being kind to the environment. Efforts to cut energy waste are just one way to achieve an important form of competitive advantage: sustainability, which at its most basic is the effort to mini- mize the use and loss of resources, especially those that are polluting and nonrenewable.

Although sustainability means different things to different people,46 in this text we emphasize a long-term perspective on sustaining the natural environment and building tomorrow’s business opportunities while effectively managing today’s business.47

In the United States, corporate efforts aimed at sustainability have fluctuated as environ- mental laws are strengthened or loosened; overall, the worldwide trend has been in the direc- tion of greater concern for sustainability. Many companies have discovered that addressing sustainability issues often produces bottom-line benefits. Companies with strong sustain- ability performance that have also become financial winners include athletic-shoe maker Adidas, Spanish fashion group Inditex, French luxury-goods maker Hermès International, and Eaton, a power management company.48