What is a Manager

THINGS NEEDED FOR EXAM: Pens, pencils, student ID Book rec: last lecture MGM NOTES * Business is essential to livelihood * Only the managers make the business successful * Not the industry, but the management * The most successful have leadership skills, communication skills, analytical skills What is a manager “Managers are responsible for making decisions under conditions of uncertainty about the allocation of scarce resources towards achieving the organization's strategic objectives” * management is about how to come up with better answers * Uncertainty of outcomes makes ppl nervous and managers need to be skilled at making decisions with uncertainty * Info is no longer a strategic asset * Taking part in teams and caring about other peoples jobs is essential For any business, long term business success is contingent on managers’ ability to achieve 6 critical success factors: * Achieving financial performance * Meet customer needs * Deliver quality - Quality is related to price * Promote innovation * Gain employee commitment * Build distinctive competitive advantage Functions of management: * Planning and strategizing * Organizing * Leading and developing * Controlling Efficiency and effectiveness is management Chapter 1 ● ● ● What can a great boss do? Inspire professionally/personally Coaching, feedback Managers play an important role in identifying critical issues and crafting responses ● ● ● ● They create and coordinate the workplace environment and work systems so that others can perform those tasks They run large corporations Some are top level managers or first line managers A manager is someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals ○ ○ ○ ○ ● Managers were the organizational members who told others what to do and how to do it Managers may have other work duties not related to coordinating and integrating the work of others insurance claims supervisor may process claims in addition to coordinating the work activities of other claims clerks An insurance claims supervisor may process claims in addition to coordinating the work activities of other claims clerks First line managers manage the work of nonmanagerial employees who typically are involved with producing their products. They can be called “supervisors or even shift, district, department, or office managers ● Middle managers manage the work of first-line managers and can be found between the lowest and top levels. Can be called project leader, regional, store, or division managers ● Top managers are responsible for making organization-wide decisions and establishing the goals that affect the entire organization. These individuals typically have titles such as executive vice president, president, managing director, chief operating officer, or chief executive officer ● Managers work in organizations; an organization is a deliberate arrangement of ppl to accomplish some specific purpose ○ An organization has a distinct purpose ○ Each organization is composed of ppl ○ All organizations develop a deliberate structure within which members do their work ● Managers: ○ Plan - Define goals; establish strategy; developing subplans ○ Lead - Determining what needs to be done and how ○ Organize - Directing and motivating, determining how to group activities ○ Control - Monitoring activities ● Management is coordinating work activities with and through other ppl so that activities are completed efficiently and effectively f ● As a manager, Dani Reiss needs to plan, lead, organize, and control, and he needs to be efficient and effective. ● Management researchers have developed three specific categori-zation schemes to describe what managers do: functions, roles, and skills ○ Functions - Managers perform certain activities as the efficiently and effectively coordinate the work of others ● Fayol proposed that all managers perform five functions ○ Planning ○ Organizing ○ Commanding ○ Coordinating ○ Controlling How is being a manager going to be different? Being a manager means that you have a greater responsibility to consider, and you’ll keep in mind big-picture organizational goals and how your work and that of your staff contributes to those goals. As a manager you also have a responsibility to think about development opportunities for any team members who may now report to you. How will you help to put them on a path toward growth and success? ● Managerial roles refers to specific actions or behaviours expected of and exhibited by a manager ● Roles ○ ○ ○ The interpersonal roles involve working with people Informational roles involve receiving, collecting and disseminating info Decisional roles involve significant choices that affect the organization ● Roles of disseminator, figurehead, negotiator, liaison and spokesperson are more important at the higher levels of organization ● Interpersonal roles (Working with people): ○ Figurehead ○ Leader ○ Liaison ● Informational roles (Receiving, collecting, disseminating info): ○ Monitor ○ Disseminator ○ Spokesperson ● Decisional roles (Significant choices that affect): ○ Entrepreneur ○ Disturbance handler ○ Resource allocator ○ Negotiator ● ● ● Technical skills - Expertise in a particular field Human skills - The ability to work well with other people, both individually and in a group Conceptual skills - The mental ability to analyze and generate ideas about abstract and complex situations ● 40% of managers either leave or stop performing within 18 months of starting an organization because of failure to develop relationships with bosses, colleagues, subordinates etc. ● Changes that are impacting managers jobs ○ Increasing importance of customers ○ Social media ○ Innovation ○ Sustainability - a company’s ability to achieve its business goals and increase long term shareholder value by integrating economic, environmental and social opportunities ● Universality of management - The reality that management is needed in all types and sizes of organizations, at all organizational levels, in all organizational areas, and in organizations no matter where they’re located ● Because managers deal with scarce inputs—including resources such as people, money, and equipment—they are concerned with the efficient use of those resources by getting things done at the least cost ● Rewards of being manager ○ Create a work environment in which employees work to best of their ability’ ○ Think creatively ○ Help people find fulfillment at work ○ Work with many people ○ Receive status ○ Receive appropriate compensation in the form of salaries, bonuses, and stock options ● Challenges ○ Hard work ○ May have duties more clerical than managerial ○ Limited resources ○ Motivate in chaotic situations ○ Success depends on others https://www.proprofs.com/quiz-school/quizshow.php?title=dvuo-mgmt303-principles-manageme nt-chapter-1-quiz&q=25 Key vocab from chapter 1: Manager - someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals Planning - Define goals; establish strategy; developing subplans Leading - Determining what needs to be done and how Organizing - Directing and motivating, determining how to group activities Controlling - Monitoring activities Management - coordinating work activities with and through other ppl so that activities are completed efficiently and effectively Chapter 2 ● Adam smith argued the advantages of the division of labour ● Fredrick Winslow Taylor developed 4 scientific mgm principles ○ Develop a science for each element of an individual's work ○ Scientifically select and then train, teach, develop workers ○ Heartily cooperate with workers to make sure work is done according to scientific principles ○ Divide work equally ● Max weber developed bureaucracy ○ A form of organization characterized by division of labour a clearly defined hierarchy, detailed rules and regulations, and impersonal relationship ● The Gilbreths devised a classifications scheme to label 17 basic hand motions CLASSICAL APPROACH ● The classical approach is composed of 2 main theories ○ ○ ● ● Scientific management General administrative theory Scientific management In 1911, Frederick Winslow Taylor developed his principles of scientific management ○ Taylor’s book describes the theory of scientific management, “the use of scientific methods to define the one best way for a job to be done” ○ He believed that worker output was only 1/3 of what was possible ○ Taylor succeeded in getting that level of productivity - by putting the right person on the job with the correct tools and motivating the worker with an economic incentive of significantly higher daily wages The Gilbreths invented a device allied a microchronometer that recorded a worker’s hand and body motions and the amount of time spent doing each motion ○ They also devised a classification scheme to label 17 basic hand motions called therbligs General Administrative theory ● This theory focused on what managers do and what good mgm was ● Henri Fayol first identified 5 functions of management ○ Planning ○ Organizing ○ Commanding ○ Coordinating ○ Controlling ● His belief that management was an activity common to all business endeavours, government, and even the home led him to develop 14 principles of management: ○ Division of work ○ Authority ○ Discipline ○ Unity of command ○ Unity of direction ○ Subordination of individual interests to the general interest ○ Remuneration ○ Centralization ○ Scalar chain ○ Order ○ Equity ○ Stability of tenure of personnel ○ Initiative ○ Team spirit ● Max weber developed bureaucracy ○ A form of organization characterized by division of labour a clearly defined hierarchy, detailed rules and regulations, and impersonal relationship ● Many managers feel that bureaucracy hinders employees’ creativity BEHAVIOURAL APPROACH ● The field of study that researched actions at work is called organizational behaviour ● OB research: Robert Owen, Hugo munsterberg, mary parker Follett, and Chester Barnard ● The most important contribution to the OB field came out of the Hawthorne studies ● social norms or group standards were the key determinants of individual work behaviour ● Mayo concluded that people’s behaviours and attitudes are closely related, that group factors significantly affect individual behaviour, that group standards establish individual worker output, and that money is less a factor in determining output than group standards, group attitudes, and security Quantitative approach: ● ● ● The quantitative approach evolved from mathematical and statistical solutions developed for military problems during world war 2 The quantitative approach involves applying statistics, optimization models, information models, computer simulations, and other quantitative techniques to management activities ○ Linear programming, for instance, is a technique that managers use to improve resource allocation decisions ○ Work scheduling can be more efficient as a result of critical-path scheduling analysis ○ The economic order quantity model helps managers determine optimum inventory levels ○ Another area where quantitative techniques are used frequently is in total quality management The quantitative approach contributes directly to management decisions making in the area of planning and control Contemporary approaches ● The 2 contemporary approaches are systems and contingency ● A system is a set of interrelated and interrelated and interdependent parts arranged in a manner that produces a unified whole ● Closed systems are not influenced by and do not interact with their environment ● Most systems today are open systems ● The contingency approach (sometimes called the situational approach) says that organizations are different, face different situations (contingencies), and require different ways of managing Adam smith argued the economic advantages that organizations would gain from division of labour ○ ○ ○ ○ Fredrick winslow Taylor’s 4 scientific management principles Develop a science for each element of an individual's work to replace the old rule of thumb method Scientifically select and then train, teach, and develop the worker Heartily cooperate w workers to ensure that all work is done in according to the scientific principles Divide work and responsibility almost equally between management and workers; Management does all work for which it is better suited than the workers ● Therbligs - a classification scheme for labelling basic hand motions ● Bureaucracy - a form of organization characterized by division of labour, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships developed by Max weber ● The quantitative approach contributes directly to management decision making in the areas of planning and control. For instance, when managers make budgeting, queuing, scheduling, quality control, and similar decisions, they typically rely on quantitative techniques. ● Classical approach - First studies of management, which emphasized rationality and making organizations and workers as efficient as possible Scientific management - An approach that involves using the scientific method to find the “one best way” for a job to be done The Gilbreths also devised a classification scheme to label 17 basic hand motions (such as search, grasp, hold), which they called therbligs (Gilbreth spelled backward with the th trans-posed). This scheme gave the Gilbreths a more precise way of analyzing a worker’s exact hand movements ● ● ● ● general administrative theory - An approach to management that focuses on describing what managers do and what constitutes good management practice His belief that management was an activity common to all business endeavours, government, and even the home led him to develop 14 principles of management—fundamental rules of management that could be applied to all organizational situations and taught in schools. These principles are shown in Exhibit 3 ● Fayol’s 14 principles of management ○ Division of work ○ Authority ○ Discipline ○ Unity of command ○ Unity of direction ○ Subordination of individual interests to the general interest ○ Remuneration ○ Centralization ○ Scalar chain ○ Order ○ Equity ○ Stability of tenure of personnel ○ Initiative ○ Team spirit ● field of study that researches (behaviour) of people at work is called organizational behaviour Hawthorne Studies - A series of studies during the 1920s and 1930s that provided new insights into individual and group behaviour system - A set of interrelated and interdependent parts arranged in a manner that produces a unified whole closed systems - Systems that are not influenced by and do not interact with their environment Open systems - Systems that interact with their environment The contingency approach (sometimes called the situational approach) says that organizations are different, face different situations (contingencies), and require different ways of managing ● ● ● ● ● ● Elton Mayo is the father of human relations Sep 21 class notes ● You are not rewarded for soft skills but for results ● Criticism is diff for diff ppl ● If managers wanna be effective, they have to Sep 28 class notes: ● When a new product is introduced, it is sold at a high price because of its scarcity ● Organizations must properly identify solutions to market place needs/desires and deliver these solutions to the right customer, at the right place, time and price creating a profit ● If the price of something goes up, the supply increases Chapter 3 Business and Profit ● ● ● ● ● ● Netflix, walmart and shoppers are all businesses —an organization that produces or sells goods or services to make a profit Businesses produce most of the goods and services that we consume, and they employ most of the workforce in Canada Taxes paid by businesses help support the government at all levels Profit is what remains after a business’s expenses have been subtracted from its revenue Profits reward business owners for risky investments not-for-profit organizations use the funds they generate from government grants or from the sale of goods or services to provide services to the public Economic systems around the world ● A major determinant of how organizations operate is the kind of economic system that characterizes the country in which they do business ● An economic system allocates a nation’s resources among its citizens ● Economic system differ in terms of who owns and controls these resources, known as the “factors of production” ○ Land ○ Labour - Human resources/labour ○ Natural resources ○ Capital - the funds required to start and maintain a business ○ Entrepreneurship - people who accept the opportunities and risks involved in creating and operating businesses ○ Information - The information included the specialized knowledge and expertise of people who work in businesses, as well as information contained in market forecasts and various other forms of economic data Types of economic systems ● command economy, for example, relies on a centralized government to control all or most factors of production and to make all or most production and allocation decision ● a market economy, individual - producers and consumers - make production and allocation decisions through the mechanism of supply and demand ● Command economy: an economic system in which the government controls all or most factors of production and makes all or most production decisions ● Market economy: an economic system in which individuals control all or most factors of production and make all or mist production decisions Command economy ● Communism is a system in which the government owns and operates all sources of production ● ● In a less extensive command economic system called socialism, the government owns and operates only selected major industries Both socialism and communism are considered command economies Market economies ● In a market economy, business-to-consumer (B2C) and business-to-business (B2B) exchanges take place without much government involvement. Both buyers and sellers enjoy the freedom of choice Input/Output markets ● In an input market, firms buy resources from households that supply the resources ● In an output market, firms supply goods and services in response to demand on the part of the households. The activity of these two markets create a circular flow ● Capitalism: an economic system in which the market decide what, when, and for whom to produce Chapter 4 STRATEGY ● Strategy is the concrete expression of how an organization intends to compete and win in its marketplace ● To visualize strategy, think about: ○ Goals ○ Product ○ Market focus ○ Value proposition ○ Core activities ● Types of strategy: ○ Strategic marketing ○ Strategic finance ○ Strategic human resource management ○ Strategic operations ○ ETC. ● ● ● ● ● ● ● ● Questions to understand the strategy of a business: ○ GOALS - What does the business hope to achieve in terms of growth, profitability and risk? ○ PRODUCT MARKET FOCUS - What are the products and services that the business plans to sell, and to what specific markets? ○ VALUE PROPOSITION - How does the business intend to attract customers? ○ CORE ACTIVITIES - What are the primarily value-adding activities that the business intends to perform and how does it intend to perform them? Businesses can be a stand-alone business or a strategic business unit (SBU) An SBU sells a set of products or services to an identifiable group of customers and it is accountable for distinct revenues, costs and investments, directly or by reasonable allocation Goals can be divided into soft goals and hard goals The soft goals affect the social conduct of the business Measurability is essential to use goals to manage and conduct the business A goal structure is an order of priority, it is caught in the terms of ○ Growth - strategy implies a priority on the market, plant, and personnel investments to grow the business, if necessary at the expense of current profitability. ○ Harvest - implies a stingy approach to investment and spending as priority is given to milking cash and profits from a business. ○ ● ● ● ● ● ● ● ● ● Divest - to give priority to those actions that prepare and initiate the sale of the business A growth strategy implies a priority on market, plant, and personnel investments to grow the business Many decisions that firms face revolve around products and markets Firms can choose to focus on existing products and markets through a penetration strategy; A penetration strategy suggests that there is market share to be gained by focus-ing on the current products and markets A value proposition is a statement of the fundamental benefit or benefits that it has chosen to offer Henry Mintzberg presents 5 different types of strategy ○ Plan ○ Position ○ Ploy ○ Perspective ○ Pattern As we ascend from a specific strategy to a corporate strategy, we pass from specific economic objectives to broader organization goals. More weight is given to such char-acteristics as unity, coherence, consistency, purpose, and concern for the future. The time horizon grows more distant and market-share percentages give way to a more comprehensive vision of the company’s future development as an institution. Describing corporate strategy: ○ The first step in the descriptive process is to identify the businesses that the corpo-ration encompasses, which is not difficult, and the essential similarities and differences among these businesses, which is more of a challenge ○ The second step in describing corporate strategy is to identify the resources (finan-cial, technical, personnel, etc.) that are treated as “corporate property” to be shared by, and transferred between, the businesses ○ The third step of description is to identify the ways and the degree to which corporate management is engaged in the business-level decisions about strategy, operations, and performance. ○ PG 87 The purpose of corporate level management (and thus, ultimately its justification) is to add competitive advantage in order to add value to its constituent business units The central challenge to corporate general management is to create a coherent corpo-rate strategy that adds value to its individual business units Chapter 5 The Diamond E model ● It is a high level road map for strategic analysis ● ● ● The principal logic underlying the Diamond-E framework is that of consistency, coher-ence, and alignment ● ● ● ● ● ● ● ● ● ● Business strategy can be described in terms of four related components—goals, product market focus, value proposition, and core activities. A decision on the desirability of such proposals must therefore consider (1) their implications for the ongoing strategy of the business, (2) consistency with the other variables in the Diamond-E framework, and, ultimately, (3) their promise of profitability The objectives of the analysis, depending on circumstances, are to help (1) assess the appropriateness of the firm’s cur-rent strategy, (2) generate new ideas and strategic proposals, and (3) evaluate specific strategic proposals. Poerter’s 5 forces: ○ Number and power of a company’s rivals ○ Potential new market entrants ○ Suppliers ○ Customers ○ substitute products that influence a company's profitability PEST analysis (political, economic, social, and technological analysis) Industry value chain analysis involves examining the various stages of a product's production, from raw material procurement all the way through the final purchase by end-users The objective of this step of analysis is to establish what will happen if you simply con-tinue to employ the current strategy, or modest variations of it, and from this determine the urgency for strategic action To move forward from the performance assessment you need a clear understanding of your current business strategy Using your organization’s current strategy as a point of depar-ture, assess the consistency of the relationships in the Diamond-E framework As you move to create new strategic proposals, you can rely heavily on your earlier work to dictate the issues that take priority, the time frame that you have to work in, and the rough scale of action that makes sense ● October 19 ARTICLE NOTES ● ● ● Businesses expect their price increase to moderate because of downward pressure on prices for commodities and other input goods Businesses’ short term inflation expectations remain above the Bank of Canada’s inflation target Businesses linked to housing expect weaker sales because of high interest rates Business confidence has softened ● ● Business sentiment has trended down since April 2022 This is because of higher interest rates Short-term inflation expectations have edged down but remain elevated ● ● Businesses link inflationary pressures to: ○ Global factors ■ Elevated commodity prices tied to ukraine war ■ Persistent supply chain issues ○ Domestic influences ■ Strong demand ■ High labour costs Businesses mentioned various conditions necessary for inflation to return to target: ● ○ Higher interest rates ○ Lower commodity prices and end of ukraine war ○ Improved supply chains Businesses expect growth in their input and output prices to slow down Box 1: Firms’ price-setting behaviour returns to pre-pandemic approaches ● Businesses’ expectations did not play a majour role in their pricing decisions CBC ARTICLE: ● Canada has the "highest or second highest Purchasing Power Parity-adjusted prices in all five level baskets" when compared to Australia, France, Germany, Italy, Japan, the U.K. and the U.S ● Canada is 15 out of 100 in internet affordability ● In July, Rogers experienced a major countrywide network outage, halting millions’ of Canadians’ ability to access their landline, cellphones, internet and television ● Financial institutions, including TD Canada Trust, BMO and the Royal Bank of Canada, said the outage had disrupted their operations October 19 articles ● ● Demand for housing is high but supply is lacking Interchange fees have been restricted to less than one per cent in various regions of the world, including the European Union, Israel, the United Kingdom, China, and Australia. The average interchange fee in Canada, on the other hand, is 40 per cent higher at 1.4 per cent, making it one of the most expensive countries in the world to use a credit card OCTOBER 19 NOTES ● Managers care about inflation because it increases prices of factors of production ● High inflation means that producers have to charge more for their products, meaning that demand will decrease ● Interest rates help banks manage inflation ● In the recession, Chapter 6 Organizational boundaries and environments ● ● ● The external environment consists of everything outside an organization that may affect it An organizational boundary separates the organization from its environment Organizations have multiple environments ● ● ● The economic environment refers to the conditions of the economic system in which an organization operates In recent years, the economic environment has been characterized by low growth, low unemployment rates and low inflation During periods of unemployment, people are less likely to make unnecessary purchases and delay purchasing cars, houses etc Economic growth ● ● ● ● ● ● ● Economic growth is mainly measured by aggregate output Aggregate output is the total quantity of goods and services produced by an economic system during a given period When output grows faster than the population, output per capita goes up and the system provides relatively more of the goods that people want The business cycle has 4 phases: ○ Peak ○ Recession ○ Trough ○ Recovery A recession is when 2 consecutive quarters Gross domestic product (GDP) is the total value of all goods and services produced within a given period by a national economy through domestic factors of production Gross national product is the total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located ● ● ● ● GDP per capita means GDP per person, it is calculated by dividing total GDP by the total population Real GDP means that GDP has been adjusted Purchasing power parity is the principle that exchange rates are set so that the prices of similar products in different countries are about the same ● ● ● Productivity is the measure of growth that compares how much a system produces and how much is needed to produce it Balance of trade is the economic value of all the products that a country exports minus the economic value of its imported products National debt is the amount of money the government owes its creditors Economic stability ● ● ● ● ● ● ● ● ● ● ● ● Economic stability is the goal of an economic system Economic stability is when the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate Inflation, deflation and unemployment threaten stability Inflation is evident when the amount of money injected unto an economic system outsrips the increase in actual output Consumer price index is the measure of the prices of typical products purchased by consumers living in urban areas Deflation (falling prices) is evident when the amount of money injected into an economic system lags behind increases in actual output There are 4 types of unemployment: ○ Frictional unemployment - people temporarily out of work while looking for a new job ○ Seasonal unemployment - people are out of work because of the seasonal nature of their jobs ○ Cyclical unemployment - people are out of work because of a downturn in the business cycle ○ Structural unemployment - people are unemployed because they lack the skills needed to perform available jobs Higher interest rates make money more expensive to borrow Lower interest rates make money less expensive to borrow If someone is saving money, high interest/inflation will benefit them Higher inflation reduces economic activity If someone is looking to buy a home or business, high inflation will not benefit them Managing the canadian economy ● ● ● Fiscal policies involve the collection and spending of gov revenues Monetary policies focus on controlling the size of the nation’s money supply Research and development - those activities that are necessary to provide new products, services and processes Political legal environment ● Political legal environment reflects the relationship between business and government Disruptions in business ● ● The physical environment Freight companies may have difficulty moving products from manufacturers to consumers because rivers are frozen or because highways are snow covered The socio cultural environment ● ● ● Consumer tastes and preferences shape the economy Ethics are important to businesses and their success Socio cultural environment - Conditions including the customs, values, attitudes, and demographic characteristics of the society in which an organization functions The industry environment ● ● ● ● ● Rivalry among existing competitors can be seen in price competition, advertising campaigns and increased emphasis on customer service Threat of potential entrants can cause competitiveness When there are less suppliers, they have great bargaining power When there are few buyers and many suppliers, buyers have great bargaining power If there are many substitute products, the industry will be more competitive Emerging challenges and opportunities in the business environment ● ● ● ● Outsourcing is the strategy of paying suppliers to perform certain business processes or to provide needed materials or services Museums outsource cafeteria operations to food service management companies The growing use of social media is being used for marketing Business process management means moving away from organizing around departments and moving toward organizing around process oriented team structures that cut across old departmental boundaries Redrawing corporate boundaries ● ● ● ● ● ● ● ● In an acquisition, one firm simply buys another firm Hudson’s Bay purchased Saks fifth avenue for US$2.4B A merger is a consolidation of 2 firms A poison pill is a defence tactic that management adopts to make a firm less attractive to a potential hostile suitor The objective is to make the “pill” so distasteful that a potential acquirer will not want to swallow it A divestiture occurs when a company sells part of its existing business operations to another company A spinoff is the strategy of setting up one or more corporate units as new, independent corporations. STRATEGIC ALLIANCE - An enterprise in which two or more persons or companies temporarily join forces to undertake a project Study questions 1. It is important for managers to understand the environment in which their business operates because it gives them insight as to what circumstances their business is in. It would help them realize and prepare for things such as low employment, high or low inflation and low economic growth. By understanding the work environment, managers can prepare for these events and plan accordingly. It helps them identify opportunities for growth early so that they can save time and maximize profits. 2. Rising inflation can be beneficial for suppliers because the more prices increase, the more they will want to sell. D Chapter 7 Ethics in the workplace ● ● ● Ethics are beliefs about what is right and wrong or good and bad Values, morals and social context determine whether something is ethical or not Business ethics refers to ethical or unethical behaviours by a business’s manager or employee Individual ethics ● ● ● Something can be unethical and legal Somethings are legal in some countries and illegal in others Jeitinho - a method of finding a way to accomplish something by circumventing or bending the rules or transgressing social conventions Managerial ethics ● Managerial ethics are the standards of behaviour that guide individual managers in their work Behaviour towards employees ● ● ● ● Issues such as hiring, firing, wages and working conditions are important ethical topics in the workplace Canadian ethical/legal guidelines state that hiring and firing decisions should only be based on work performance Hiring a less competent family member is unethical but legal Paying an employee less because they cant afford to quit is unethical but legal Behaviour towards the organization ● Employees stealing supplies and padding expense accounts ● Conflict of interest is a problem which occurs when an activity benefits an employee at the expense of the employer Behaviour toward other economic agents ● Ethical disputes may arise in the relationships between a company and its customers, competitors, stockholders, suppliers, dealers, and unions Assessing ethical behaviour ● ● We can determine whether a particular action or decision is ethical or unethical by using a three-step model ○ Gather the relevant factual information ○ Determine the most appropriate moral values ○ Make an ethical judgement based on the rightness/wrongness of the proposed activity or policy 4 ethical norms to make decisions ○ Utility. Does a particular act optimize what is best for those who are affected by it? ○ Rights. Does it respect the rights of the individuals involved? ○ Justice. Is it consistent with what we regard to be fair? ○ Caring. Is it consistent with people’s responsibilities to each other? Encouraging ethical behaviour in organizations ● Why unethical behaviour occurs in the first place ○ pressure (the employee has some problem that cannot be solved through legitimate means) ○ opportunity (the employee uses his or her position in the organization to secretly solve the problem) ○ rationalization (the employee sees himself or herself as basically an ethical person caught up in an unfortunate situation) Show top mgm commitment to values/high ethical standards ● For example, monitoring factories that produce its products to make sure that those factories are providing good working conditions for their employees Adopt written code of ethics ● Codes of ethics increase public confidence in a company, improve internal operations, and help manag-ers respond on those occasions when there are problems with illegal or unethical employee behaviour Provide ethics training ● ethics seminars are taught by former executives who have spent time in prison for their own ethical misdeeds Corporate social responsibility ● ● Corporate social responsibility (CSR) refers to the way in which a business tries to balance its commitments to important individuals and groups in its external environment. Fair trade movement is a movement designed to help workers in developing countries receive fair payments for their work The stakeholder model of responsibility ● Organizational stakeholders are individuals and groups that are directly affected by the practices of an organization and therefore have a stake in its performance Responsibility towards customers Consumer rights ● ● ● ● ● ● The right to safe products The right to be informed about all relevant aspects of a product The right to be heard The right to choose what they buy The right to be educated about purchases The right to courteous service Unfair pricing ● Collusion among companies, including getting together to “fix” prices is against the law Ethics in advertising ● ● ● ● Truth in advertising Stealth advertising is when the consumer is unaware that they are being subjected to advertising Morally objectionable advertising involves portraying individuals that offend a customer’s sense of decency Advertising counterfeit brands Responsibility towards employees ● Recruiting, hiring, training, promoting and compensating Whistle blowers ● ● A whistleblower is an employee who discovers and tries to put an end to a company’s unethical behaviour Federal protection to protect whistleblowers was introduced in Canada in 2003 Responsibility towards investors ● ● Managers paying themselves outlandish salaries and bonuses is being irresponsible towards investors Financial mismanagement can take many forms ○ Improper financial management ○ Misrepresentation of finances ○ Cheque kiting ○ Insider trading Improper financial management ● ● Paying themselves outlandish salaries Using investor money for expensive personal items Misrepresentation of finances ● Producing false financial statements to make a company look more profitable than it actually is Cheque kiting ● Writing a cheque from one account, depositing it in a second account, and then immediately spending money from the second account while money from the first account is still in transit Insider trading ● ● Insider trading is using confidential information to gain from the purchase or sale of stock The trader uses infor-mation not available to the general investor by either buying stock just before its price goes up or selling stock just before its price goes down Responsibility toward suppliers ● ● Businesses that are socially responsible take care when managing their relationships with their suppliers because they recognize the importance of mutually beneficial partnership arrangement Some firms go so far as to allow suppliers access to the firm’s internal records so the supplier can better serve the firm Responsibility towards local and international communities Corporate charitable donations ● ● Tim hortons Children’s Foundation built a camp for underprivileged children at Sylvia Lake in Manitoba Canada Goose, the outerwear com-pany, pays for shipments to Arctic communities and supplies free fabrics, buttons, and zippers to Inuit sewers Responsibility toward the environment ● Controlling pollution - the injection of harmful substances into the environment is a significant Air pollution ● Air pollution results when a combination of factors lowers air quality Water pollution ● businesses and municipalities dumped their waste into rivers, streams, and lakes with little regard for the effects Land pollution ● ● Toxic wastes are dangerous chemical and radio-active by-products of various manufacturing processes that are harmful to humans and animals Recycling - the reconversion of waste materials into useful product Approach to social responsibility Obstructionist stance ● Businesses that do as little as possible to contribute to CSR Defensive stance ● Businesses that will do everything required of it legally, but nothing more Accommodative stance ● Meets legal and ethical requirements but also goes further Proactive stance ● take to heart the arguments in favour of CSR Managing social responsibility programs Formal activities ● ● ● At the formal level, top management states strong support for CSR and makes it a factor in strategic planning All of the organization’s formal activities are summarized in a social audit, which is a systematic analysis of how a firm is using funds ear-marked for its social responsibility goals An important related element in a social responsibility program is the idea of sustainable development, which means pursuing activities that meet current needs but will not put future generations at a disadvantage when they attempt to meet their needs. Informal activities ● ● At the informal level, the culture of the organization is very important in either inhibiting or facilitating social responsibility activities Whistleblowing is another facet of informal activities that can enhance csr Chapter 8 ● ● Tim Hortons is a business franchise but entrepreneurs own 1 or 2 of each Tim Hortons In 2017, tims filed an $850M class action lawsuit claimed that RBI was trying to intimidate the franchisees Small business ● ● ● ● ● ● Small businesses are not easy to identify ○ Employee number ○ Size of investments ○ Type of ownership All of these indicate whether a business is small or not To be included in the business register ○ At least one paid employee ○ Annual sales of at least $30,000 we define a small business as an owner-managed business with fewer than 100 employees small businesses contributed approximately 30 percent of Canada’s GDP over the past decade Three common ways determine when a new firm comes into existence ○ When was formed ○ Incorporated or not ○ Sold goods and services or not ● ● we define a new venture as a recently formed commercial organization that provides goods and/or services for sale M Entrepreneurship ● ● ● ● Entrepreneurship is the process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it Every year, the Heritage Foundation publishes an index of economic freedom, which assess the extent to which entrepreneurs have freedom to pursue new opportunities Howard Schultz created starbucks C Characteristics of entrepreneurs: ● ● ● Resourcefulness Concern for long term customer relations Desire to be their own bosses Intrapreneurs ● ● People who exhibit entrepreneurial characteristics and create something new within an existing firm or organization are intrapreneurs Intrapreneurs do not have to concern themselves with acquiring resources Small businesses ● The private sector is the part of the economy consisting of companies and organizations not owned or controlled by the government Entrepreneurial process ● ● ● Idea generation ○ Abandoning traditional assumptions Screening ○ Weeding out dead end venture ideas Developing the opportunity ○ A business plan is a document that describes the entrepreneur’s proposed business venture, explains why it is an opportunity, and outlines its marketing plan, its operational and financial details, and its managers’ skills and abilities Financial resources ○ Two main parts of financing, debt and equity ○ ● ● ● ● Collateral refers to items (assets) owned by the business (such as a building and equipment) or by the individual (such as a house or car) that the borrower uses to secure a loan or other credit Entrepreneurs acquire resources by bootstrapping, which means “doing more with less” Most common sources of equity financing ○ Personal savings ○ Relatives money ○ Private investors ○ Venture capitalists Most common sources of debt financing ○ Financial institutions ○ Suppliers Other resources ○ Low interest loans ○ Loan guarantees ○ Interest free loans ○ Wage subsidies ○ Assessing the fit between elements in the entrepreneurial process Incubators ● ● ● ● ● ● Incubators provide new businesses with support to help nurture them to a successful future Legal advice Accounting services Consulting services Business contacts Clerical services Internet ● RBC has a great site that provides checklists, business plan formats and samples, and advice on selecting business structures, and more Crowdfunding ● the practice of collecting financial contributions from various individuals through an online platform Building the right team ● Deciding whether to share ownership by forming a venture team involved consideration of 2 main issues: ○ The size and scope of the venture ○ Personal competencies Buying an existing business ● ● ● ● ● Opportunities to buy existing businesses are increasing due to the fact that business owners are nearing retirement 60% of Canada’s small business owners are 50+ 40% of them plan on leaving soon, representing $300B worth of business value Buying an existing business will increase chances of success because the following has already been established Challenges may be: ○ Financial shape of the business ○ Location ○ Poor reputation(s) ○ Difficulty determining appropriate prices Buying a franchise ● ● ● ● Tims, McDonalds, Re/Max are all franchises A franchising agreement outlines the duties and responsibilities of each party and determines the amount and type of payment the franchisee must make to the franchiser Franchising agreements can range from 60-100 pages long Franchisees pay franchiser 2-30% of annual revenues/profits Considerations before going into franchising ● ● ● ● ● ● The franchise sale price Expenses incurred before business opens Training expenses Operational expenses for the first 6 months Personal finance needs for first 6 months Emergency needs Success and failure in small businesses ● Of every 100 small businesses that open ○ 85 still open after 1 year ○ 70 after 3 years ○ 51 after 5 years Reasons for success in small businesses ● ● ● ● Hard work drive and dedication Market demand for product/service Managerial competence “Luck” Reasons for failure ● ● ● Managerial incompetence Neglect - not giving enough attention to the work Weak control systems ● Insufficient capital (money) Forms of business ownership Sole proprietorship ● ● The sole proprietorship is a business owned and operated by one person Needs to be an extension of yourself and not a separate legal entity Advantages ● Freedom ● Easy to form ● No need to register your business name to operate ● Simple legal setup procedures Disadvantages ● Unlimited liability ● Extra fees paid out of pocket ● Hard to borrow money or expand ● Lack of continuity The partnership ● ● A partnership is established when two or more individuals (partners) agree to combine their financial, managerial, and technical abilities to operate a business for profit Types of partners: ○ General partners who are involved in managing and have unlimited liability ○ Limited partners who don’t participate actively in business Advantages ● Ability to grow by adding talent and money ● Easier time borrowing funds ● Few legal requirements Disadvantages ● Unlimited liability ● Lack of continuity, when one dies the partnership is void The corporation ● ● A corporation is a business that is a separate legal entity, that is liable for its own debts, and whose owners’ liability is limited to their investment Shareholders are investors who buy shares of ownership in the form of stock—they are the real owners of a corporation. ● ● ● ● Dividends on common stock are paid on a per-share basis (if a dividend is declared) The board of directors is the governing body of a corporation. Its main responsibility is to ensure that the corporation is run in the best interests of the shareholders. Chief executive officer is responsible for the firm’s overall performance Types of corporations ○ Public corporation - shares are traded on one or more stock exchanges ○ Private corporation - 50 or less stockholders ○ Initial public offering ○ Private equity firms ○ Income trust ○ Non-profit - performs public service, has special Advantages ● Limited liability ● Continuity ● Advantages in raising money by selling stock Disadvantages ● Double taxation - paying taxes on its profits and dividends they receive Co-Operative ● A co-operative is an incorporated form of business organized, owned, and democratically controlled by the people who use its products and services and whose earnings are distributed based on the use of the co-operative rather than on level of investment Chapter 9 Organizational structure ● Organizational structure is the specification of the jobs to be done within a business and how those jobs relate to one another Determinants of organizational structure ● Many organizational structures develop without much planning due to time pressures The chain of command ● Most businesses prepare organization charts ● An organization chart is a physical depiction of the company’s structure showing employee titles and their relationship to one another The building blocks or organizational structure The first step in developing the structure of any business involves 3 activities ● Specialization ● Departmentalization ● Establishment of a decision making hierarchy Job specialization ● Job specialization is the process of identifying the specific jobs that need to be done and designating the people who will perform them Specialization and growth ● Big companies need specialization and division of labour ● In very small companies owners can specialize in many jobs Departmentalization ● Departmentalization is the process of grouping specialized jobs into logical units ● Product departmentalization is the process of dividing an organization according to specific products or services being created Functional departmentalization ● Functional departmentalization means organizing departments according to the function they perform—marketing, finance, production, human resources, and so on Product departmentalization ● Product departmentalization is dividing an organization according to the specific product or service being created Customer departmentalization ● Customer departmentalization involves setting up departments or divisions that focus on meeting the needs of specific customers Performing tasks ● Delegation means assigning a task to a subordinate ● Accountability is the obligation of subordinates to accomplish tasks and justify outcomes to managers ● Managers should keep the following points in mind when they are delegating authority ○ Decide on the nature of the work to be done ○ Match the job with the skills of the subordinates ○ Make sure the person chosen understands the objectives he or she is supposed to achieve ○ ● Make sure subordinates have the time and training necessary to do the task The social interactions that take place in a company between employees at various levels, on an everyday basis, is considered to be the company’s informal organization. This network, which is unrelated to the firm’s formal authority structure, is sometimes just as powerful—if not more powerful—than the formal structure Distributing authority ● In centralized organization, top management retains the right to make most decisions that need to be made ● In a decentralized organization, more decision-making authority is delegated to managers at lower levels in the hierarchy ● The purpose of decentralization is to make a company more responsive to its environment Tall and flat organizations ● Decentralized firms have a flat organizational structure with only a few lawyers ● Centralized firms tend to have multiple layers of management and a tall organizational structure Span of control ● Span of control refers to how many people are supervised by an individual manager, factors influencing this may be ○ Employee ability ○ Managerial skills ○ Nature of tasks being performed ● Downsizing is the planned reduction in the scope of an organization’s activity The forms of authority Line authority ● Line authority flows up and down the chain of command ● Each line department is essential in achieving the goals the company has set Staff authority ● Staff authority is authority based on expertise and that usually involves advising line managers Committee and team authority ● Committee and team authority is authority granted to committees or work teams involved in a firm's daily operations The functional structure ● In the functional structure, the various units in the organization are formed based on the key functions that must be carried out to reach organizational goals. The divisional structure ● The divisional structure divides the organization into several divisions, each of which operates as a semi-autonomous unit and profit centre. Project organization ● Project organization involves forming a team of specialists from different functional areas of the organization to work on a specific project Matrix structure ● A matrix structure (a variation of the project organization) is a combination of two separate structures that can work better than either approach alone Advantages of divisional structure ● It accommodates change and expansion ● It increases accountability ● It develops expertise in the various divisions ● It encourages training for top management Disadvantages of divisional structure ● Activities may be duplicated across divisions ● A lack of communication among divisions may occur ● Adding diverse divisions may blur the focus of the organization ● Company politics may affect the allocation of resources International structures ● International organizational structure - An organizational structure designed to help a company succeed in international markets. International departments, international divisions, and an integrated global organization are all variations of the international organizational structure Boundaryless organization ● The boundaryless organization is one in which traditional boundaries and structures are minimized or eliminated altogether Team organization ● Team organization relies on project type teams, with little or no underlying functional hierarchy Virtual organization ● A virtual organization has little or no formal structure ● Typically, it has only a handful of permanent employees, a very small staff and a modest administrative facility Learning organization ● A learning organization facilitates the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs The informal organization ● The informal organization is a network of personal interactions and relationships among employees unrelated to the firm's formal authority structure Informal groups ● Informal groups are groups of people who decide to interact among themselves The organizational grapevine ● The grapevine is the informal communication network that runs through the entire organization ● An informal communications network that carries gossip and other information throughout an organization Chapter 10 The strategic importance of HRM ● Human resource management is the set of organizational activities directed at attracnting developing Business disruption insurance bvv The critical incident method focuses attention on an example of especially good or poor performance on the part of the employee. A cost-of-living adjustment is a labour contract clause tying future raises to changes in consumer purchasing power. Job analysis is a systematic analysis of jobs within an organization. The critical incident method focuses attention on an example of especially good or poor performance on the part of the employee. Human capital is an indication of the value of those people who work for and produce goods and services for an organization. It demonstrates their ability to contribute to the profitability of the company. The critical incident method focuses attention on an example of especially good or poor performance on the part of the employee