Ch5. Ethics 3/22/2015 7:45:00 PM

130 Milton Friedman's social perspective: managers' primarily

responsibility is to operate business in the best interests of the stockholders

whose primarily concerns are financial. When managers decide to spend

the organization's resources for "social good" they add to the cost of doing

business, which have to be passes on to the consumers through higher

prices or absorbed by stockholders. His interpretation of social

responsibility is to maximize profits for the stockholders.

(Not his) Classical view- the view that management's only social

responsibility is to maximize profits. Organization does what it's

obligated to do and nothing more

The other two concepts- social responsiveness and social responsibility-

reflect the socioeconomic view, which says that managers' social

responsibilities go beyond making profits to include protecting and

improving society's welfare. Corporations are not interdependent entities

responsible to stockholders but have obligation to the larger society.

130 Social obligation- when a firm engages in social actions

because of its obligations to meet certain economic and legal

responsibilities

131 social responsiveness- what a company engages in social

actions in response to some popular need. Managers are guided

by social norms and values and make practical, market oriented

decisions about their actions

131 social responsibility- a business's intention, behind its legal

and economic obligations, to go the right thing and act in ways that

are good for society. It goes beyond what it's obligated to do or

chooses to do because if some popular social need. Does what is

right because it feels it has an ethical responsibility to do so.

Carole's four responsibilities

1. Economic-must do

2. Legal- have to do

3. Ethical- should do

4. Discretionary- might do

Approaches to social responsibility

Obstructionist approach- managers decide not to act in a social

responsible way and try to hide their behaviors from others

Defensive approach- managers act within the law but only do what

law requires

Accommodative approach- managers try to balance the needs of

different stakeholder groups against one another

Proactive approach-companies go out of their ways to learn the

Ned's of the different stakeholder groups.

How organizations go green

Legal or light green approach- firms do what is legally required by

obeying laws, rules, and regulations, willingly, and without legal

change

Market approach- firms respond to the performance of their

customers for environmentally friendly products

Stakeholder approach- firms work to meet the environmental

demands of multiple stakeholders

Activist approach- firms look for ways to respect and preserve

environment and be actively socially responsible.

147 Social entrepreneur- individual or organization who seeks out

opportunities to improve society by using practical, innovative, sustainable

approaches.

148 Corporate philanthropy- effective way for companies to address

societal problems.

148 Volunteering- another way for businesses to be involved in promoting

social change

137 Ethics- principles, values, beliefs that define what is right and wrong

behavior.

137 stages of moral development: a measure of interdependence from

outside influences

1. Preconventional level: a persons choice between right or wrong is

based on personal consequences from outside sources, such as

physical punishment, reward, or exchange of favors. Concerned

for self

2. Conventional level: ethical decisions rely on maintaining expected

standards and living up to the expectations of others consideration

of society's values

3. Principled level: individuals define moral values apart from the

authority of groups to which they belong or in society in general.

Universal values.

Moral relativism- morality is relative to some personal, social, or cultural

standard, and there is not method for deciding whether one decision is

better than another. It is the individuals right to think if an act is right or

wrong. Individual's claim, who are you to judge? Tolerance, can never

made right decisions about an individuals or groups actions

Pluralism-tolerance at its best, everyone should have their freedom to live

their lives as they seem fit, just as long as they don't cross the boundary to

cause harm to other people. Respects all beliefs and values.

Issue intensity

Consensus of wrong- how much agreement is there that this

action is wrong

Probability of harm- how likely will this action cause harm

Immediacy of consequences- will harm be felt immediately

Prolixity to victims- how close are the potential victims

Concentration of effect- how concentrated is the effect on the

victims

Greatness of harm- how many people will be harmed

How can managers improve ethical behavior?

Hire individuals with high ethical standards

Establish codes of ethics and decision rules Lead by example

Set realistic job goals and include ethics in performance appraisals

Ethics training

Conduct interdependent social audits

Provide support for individuals facing ethical dilemmas

Ethical leaders- act inspiration to others, communicate ethical for

organizations. Actions of leaders. Unethical actions are copied more than

ethical

Ch6. Decision Making 3/22/2015 7:45:00 PM

Decision- a choice among two or more alternatives

Top- organizational goals

Middle and lower- production schedules, product quality problems,

pay raises, and employee discipline.

163 Decision making process

1. Identifying the problem: a discrepancy between and existing and

desired state of affairs

2. Characteristics of problems- problem becomes a problem when

the manager becomes aware of it. There is pressure to solve the

problem. The manager must have authority, information, or

resources to solve the problem

3. Identifying decision criteria: factors that are important to resolving

the problem such as, costs, risks, outcomes.

4. Allocating weights to the criteria: decision criteria are not of equal

importance

5. Developing alternatives: viable alternatives

6. Analyzing alternatives:Selecting an alternative

7. Implementing the alternative evaluating the decision's

effectiveness

166 Decision making approach

Rationality- describes choices that are logical and consistent and

maximize value.

o Assumptions: are perfectly rational, fully objective, and

logical Will select the alternative that maximizes outcomes in

the organization's interests rather than in their personal

interests

Bounded rationality- decision making that's rational but limited by

an individual's ability to process information.

o Assumptions: will satisfice- choose the first alternative

encountered that satisfactory solves the problem

o Escalation of commitment: increased commitment to a

previous decision despite evidence that it may have been

wrong.

167 Intuitive decision making: making decisions on the basis of experience,

feelings, and accumulated judgment

Experience: managers make decisions based on past experience

Affect: managers make decisions based on feelings or emotions

Cognitive: managers make decisions based on skills, knowledge,

and training

Subconscious mental processing: managers use data from

subconscious mind to make decisions

Ethical values or culture: managers make decisions based on

ethical values or culture

168 Evidence based management: systematic use of the best available

evidence to improve management practice.

Four essential element so EBM:

1. The decision maker's expertise and judgment.

2. Eternal evidence that's been evaluated by the decision make

3. Opinions, preferences, and values of those who have a stake

in the decision.

4. Relevant organizational factors such as context,

circumstances, and organizational members.

170 Structured problems: straightforward, familiar, and easily defined

problems. Goals that are clear

Unstructured: problems that are new or unusual and for which information

is ambiguous or incomplete. Problems that will require custom made

solutions

Programmed decisions: a repetitive decision that can be handled by a

routine approach

Non-programmed: decision that are unique and nonrecurring, decisions

that generate unique responses.

170 Procedure: a series of sequential steps used to respond to a well-

structured problem. Only difficulty is identifying the problem, once it's clear

so is the procedure

Rule: an explicit statement that tells managers what can or cannot

be done.

171 decision- making conditions

171 certainty: a situation in which a manager can make accurate decisions

because all outcomes are known

172 Risk: a situation in which the manager is able to estimate the

likelihood of outcomes that result from the choice of particular alternatives.

Under risk managers have historical data from past experiences or

secondary information that lets them assign probabilities to

different alternatives.

172 Uncertainty: a situation in which a decision maker had neither certainty

nor available reasonable probability estimates available. Limited

information prevents estimation of outcome probabilities for alternatives

associated with the problem and may force managers to relay on hunches,

Maximax: optimistic manager's choice to maximize the maximum

payoff

Maximin: pessimistic manager's choice to maximize the minimum

payoff

Minimax: the manager's choice to minimize maximum regret.

Characteristics of an international effective decision making process:

Focuses on what is important

It is logical and consistent

It acknowledges both subjective and objective thinking and blends

analytical with intuitive thinking

It required only as much information and analysis as is necessary

to resolve a particular dilemma

It encourages and guides the gathering of relevant information and

informed opinion

It is straight forward, reliable, easy to use, and flexible.

Read page 174

Ch8. Planning 3/22/2015 7:45:00 PM

220 What is planning? What is formal planning?

Planning:

o Defining the organization's goals

o Establishing strategies for achieving those goals

o Developing plans to integrate and coordinate work activities

When we mean the term planning, we mean formal planning:

specific goals covering a specific time period are defined. These

goals are written and shared with organizational members to

reduce ambiguity and create common understandings about what

need to be done.

220 Why do managers plan?

a. Provides direction to managers and non-managers

b. Reduced uncertainty by forcing managers to look ahead,

anticipate change, consider the impact of change, and develop

appropriate responses.

c. Managers plan to respond effectively.

d. Minimizes waste and redundancy, work activities are coordinated

around plans, inefficiencies become obvious and can be corrected

or eliminated.

e. Establishes the goals or standards used in controlling.

f. When managers plan, they develop goals and plans. When they

control, they see whether the plans have carried out and the goals

met

221 Goals (objectives): desired outcomes or targets, provide direction and

performance criteria

Types of goals:

o Financial- goals related to the financial performance of the

organization.

o Strategic- related to all the other areas of an organization's

performance.

o Stated goals: official statements of what an organization

says, and what it wants it various stakeholders to believe, it's

goals are.

o Real goals: goals that an organization actually pursues, as

defined by the actions of its members

223 Plans: documents that outline how goals are to be accomplished.

a. Describe how resources are to be allocated and establish activity

schedules.

i. Strategic plans: plans that apply to the entire organization and

establish the organization's goals

ii. Operational plans: plans that encompass a particular

operational area in the organization

iii. Long-term plans: beyond three years

iv. Short-term plans: one year or less

v. Specific plans: plans that are clearly defined and leave no

room for interpretation

vi. Directional plans: plans that are flexible and set out general

guidelines

vii. Single use plans: specifically designed to meet the needs of a

unique situation

viii. Standing plans: ongoing plans that provide guidance for

activities repeatedly

221 planning and performance:

224 Traditional goal setting: goals set by the top managers flown down

through the organization and became sub goals for each organizational

area.

226 Management by objectives (MOB): a process of setting mutually

agreed upon goals and using those goals to evaluate employee

performance.

Progress toward goals is periodically reviewed.

Reward are allocated on the basis of progress towards the goals

Organization's overall objectives and strategies are formulated

Major objectives are allocated among divisional and departmental

units

Unit managers collaboratly set specific objectives for their units

with their managers

Action plans defining how objectives are to be achieved are

specified and agreed upon by managers and employeesThe action

plans are implemented

Progress towards objectives are periodically reviewed and

feedback is providedSuccessful achievement

226 Well-written SMART goals

Written in terms of outcomes not actions: focuses on ends not

means.

Measurable and quantifiable: how outcome is to be measured and

expected

Clear as to time frame

Challenging yet attainable

Written down

Communicated to all necessary organizational members: puts

everyone one same page.

SMART: specific, measurable, attainable, relevant, timely.

228 Planning department: group of planning specialists whose sole

responsibility is helping to write organizational plans.

Ch9 Strategy 3/22/2015 7:45:00 PM

249 Strategic management: what managers do to develop the

organization's strategies

Strategies: the plans for how the organization will do what it's in

the business to do, how to compete successively, and how it will

attract and satisfy its customers in order to achieve its goals.

240 Business model: how a company is going to make money, Whether

customers will value what the company is providing Whether the company

can make money doing that.

248 Competitive advantage: what sets an organization apart: its distinctive

edge, the distinctive edge can come from the organization's core

competencies by doing something that others cannot do or doing it better

than others can do it.

242 Strategic management process

1. Identifying the organization's current mission, goals and strategies.

Mission: statement of the purpose of an organization: customers

Markets concern for survival growth and profitability philosophy

concern for public image products or services technology self

concept concern for employees Goals: foundation for further

planning.

2. Doing an external analysis: environmental scanning of specific and

general environments. Focuses on identifying opportunities

(positive) and threats in external environment (negative)

3. Doing an internal analysis: assessing organizational resources,

capabilities and activities Strengths: does well or its unique

resourcesWeaknesses: activities the organization does not do well

or resources it needs but does not possessSWOT analysis:

analysis of the organization's strengths, weaknesses,

opportunities, and threats. 12pp

4. Implementing strategies: effectivly fitting organizational structure

and activities to the environment

5. Evaluating results: how effective have strategies been?

Five Forces Model

244 Corporate strategies: an organizational strategy that determines what

businesses a company is in or wants to be in, and what is wants to do with

those businesses

Growth strategy: a corporate strategy that's used when an

organization wants to expand the number of markets served or

products offered

o Concentration: increases products or markets served in

primary business

o Horizontal integration: combine with competitors or enter

new geographic regions

o Vertical integration:backward or forward on the value chain

o Diversification: related or unrelated industries

Stability strategy: organization continues to do what it is currently

doing. Maintain status quo, uncertainty

o Renewal strategy: address declining performance

Retrenchment: focusing on eliminating non-critical

weaknesses and restoring strengths to overcome

current performance problems

Turnaround: addressing critical long-term performance

problems through the use of string cost-eliminating

measures.

247 Competitive strategy: organizational strategy for how and organization

will compete in its business

Cost leadership- seeking to attain the lowest total overall cost

relative to other industry competitors

Differentiation strategy- attempting to create a unique and

distinctive product or service for which customers will pay a

premium

Focus strategy- using a cost or differentiation advantage in a

particular market segment rather than a larger market

250 Competitive strategies: used by organization's various functional

departments to support the competitive strategy

255 First mover: an organization that's first to bring a product innovation to

the market or use a new process innovation

Advantages:

o Reputation for being innovative and industry leader

o Cost and learning benefits

o Control over scarce resources and keeping competitors from

having access to them

o Opportunity to begin building customer relationships and

loyalty

Disadvantages:

o Uncertainty over exact direction technology and market will

go

o Risk of competitors imitating innovators

o Financial and strategic risks

o High developmental costs.