Fundamentals of Management

5th Edition Fundamentals of Management Ricky W. Griffin Texas A & M University *% SOUTH-WESTERN c? CENGAGE Learning- Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States

Contents Preface xv 1 An Introduction to Management 1 Understanding the Manager's Job An Introduction to Management 3 Kinds of Managers 3 Basic Management Functions 5 Fundamental Management Skills 6 The Science and the Art of Management 8 The Evolution of Management 9 The Importance of History and Theory 9 The Historical Context of Management 10 The Classical Management Perspective 10 The Behavioral Management Perspective 13 The Quantitative Management Perspective 16 Contemporary Management Perspectives 17 The Systems Perspective 17 The Contingency Perspective 19 Contemporary Management Challenges and Opportunities 19 Summary of Key Points 22 Discussion Questions 23 Building Effective Time-Management Skills 23 Building Effective Conceptual Skills 25 Building Effective Decision-Making Skills 25 Skills Self-Assessment Instrument 26 Experiential Exercise 27 CHAPTER CLOSING CASE: Home Depot's Failed Manager 28 YOU MAKE THE CALL: Marissa Mayer: Google's Top Designer 29 Test Prepper 30 Eye on Management: Managing for "Absolutely, Positively, Outrageous Customer Service" at Southwest Airlines 7 2 The Environments of Organizations and Managers 31 The Organization's Environments 33 The General Environment 33 The Task Environment 34 The Internal Environment 36 The Ethical and Social Environment of Management 38 The Individual Ethics in Organizations 38 Social Responsibility in Organizations 41 Managing Social Responsibility 43 The International Environment of Management 45 Trends in International Business 45 Levels of International Business Activity 46 The Context of International Business 47 The Organization's Culture 51 The Importance of Organization Culture 51 Determinants of Organization Culture 52 Managing Organization Culture 52 Summary of Key Points 53 Discussion Questions 54 Building Effective Diagnostic and Decision-Making Skills 54 Building Effective Interpersonal Skills 55 Building Effective Communication Skills 56 Skills Self-Assessment 57 Experiential Exercise 57 VII

VIII CONTENTS CHAPTER CLOSING CASE: Coffee, Cafe, Kaffee, or Copi Starbucks Spans the Globe 58 YOU MAKE THE CALL: Leading Lenovo: China's Foremost Global Capitalist 59 Test Prepper 60 Eye on Management: Global Competition at Subway 49 Planning 3 Planning and Strategic Management Planning and Organizational Goals 63 Organizational Goals 63 Kinds of Organizational Plans 65 The Nature of Strategic Management 66 The Components of Strategy 66 Types of Strategic Alternatives 66 Using SWOT Analysis to Formulate Strategy 67 Evaluating an Organization's Strengths 67 Evaluating an Organization's Weaknesses 68 Evaluating an Organization's Opportunities and Threats 68 Formulating Business-Level Strategies 68 Porter's Generic Strategies 69 Strategies Based on the Product Life Cycle 70 Formulating Corporate-Level Strategies 71 Single-Product Strategy 72 Related Diversification 72 Unrrelated Diversification 73 Operational Planning 77 Single-Use Plans 78 Standing Plans 78 Contingency Planning and Crisis Management 80 Summary of Key Points 83 Discussion Questions 84 Building Effective Decision-Making Skills 84 Building Effective Conceptual Skills 85 Building Effective Diagnostic Skills 87 Skills Self-Assessment Instrument 88 Experiential Exercise 88 CHAPTER CLOSING CASE: FEMA's Disastrous Response to Hurricane Katrina 91 61 YOU MAKE THE CALL: The Video Game Wars 92 Test Prepper 93 Managing in Times of Change: PlayStation 2 Plays On 70 Tactical Planning 76 Developing Tactical Plans 76 Executing Tactical Plans 77 Managing Decision Making 94 The Nature of Decision Making 96 Decision Making Defined 96 Types of Decisions 97 Decision-Making Conditions 98 Rational Perspectives on Decision Making 99 The Classical Model of Decision Making 100 Steps in Rational Decision Making 100 Behavioral Aspects of Decision Making 105 The Administrative Model 106 Political Forces In Decision Making 107 Intuition and Escalation of Commitment 107 Risk Propensity and Decision Making Ethics and Decision Making 108 108 Group and Team Decision Making in Organizations 109 Forms of Group and Team Decision Making Advantages of Group and Team Decision Making 110 Disadvantages of Group and Team Decision Making 111 Managing Group.and Team Decision-Making Processes 112 109

CONTENTS ix Summary of Key Points 112 Discussion Questions 113 Building Effective Conceptual Skills 113 Building Effective Decision-Making Skills Building Effective Technical Skills 115 Skills Self-Assessment Instrument 115 Experiential Exercise 116 CHAPTER CLOSING CASE: The Decision-Making Mind of Microsoft 118 YOU MAKE THE CALL: Making Tough Choices at 114 Wal-Mart 119 Test Prepper 120 Eye on Management: Team Decision Making at the Riverwood Clinic 110 5 Entrepreneurship and New Venture Management 121 The Nature of Entrepreneurship 123 The Role of Entrepreneurship in Society 123 Job Creation 125 Innovation 126 Importance to Big Business 127 Strategy for Entrepreneurial Organizations 127 Choosing an Industry 127 Emphasizing Distinctive Competencies 132 Writing a Business Plan 133 Entrepreneurship and International Management 134 Structure of Entrepreneurial Organizations 135 Starting the New Business 136 Financing the New Business 137 Sources of Management Advice 139 Franchising 140 The Performance of Entrepreneurial Organizations 142 Trends in Small-Business Start-Ups 142 Reasons for Failure 145 Reasons for Success 146 Summary of Key Points 146 Discussion Questions 147 Building Effective Diagnostic Skills 148 Building Effective Interpersonal Skills 148 Building Effective Conceptual Skills 150 Skills Self-Assessment Instrument 150 Experiential Exercise 151 CHAPTER CLOSING CASE: Entrepreneurial Spirit Flies High at JetBlue 152 YOU MAKE THE CALL: Founding Facebook 153 Test Prepper 154 Meeting of the Minds: Parts One and Two: Managing in the Soft-Drink Industry 155 Eye on Management: Sandwich Chef: A Start Up 134 Organizing 6 Organization Structure and Design The Basic Elements of Organizing 159 Job Specialization 159 Alternatives to Specialization 160 Grouping Jobs: Departmentalization 162 Establishing Reporting Relationships 164 Distributing Authority 165 Coordinating Activities 166 The Bureaucratic Model of Organization Design 169 Situational Influences on Organization Design 170 Core Technology 170 Environment 171 Organizational Size and Life Cycle 172 Basic Forms of Organization Design Functional (U-Form) Design 173 Conglomerate (H-Form) Design 174 Divisional (M-Form) Design 174 Matrix Design 175 Hybrid Designs 177 Emerging Issues in Organization Design The Team Organization 178 173 177 157

CONTENTS The Virtual Organization 178 The Learning Organization 179 Summary of Key Points 180 Discussion Questions 180 Building.Effective Conceptual Skills 181 Building Effective Technical Skills 181 Building Effective Decision-Making Skills Skills Self-Assessment Instrument 183 182 CHAPTER CLOSING CASE: Manufacturing Jobs, Japanese-Style 185 YOU MAKE THE CALL: Did You Hear the One About... Delegation? 186 Test Prepper 187 Eye on Management: Managing Reporting Relationships in Teams 167 7 Organization Change and Innovation The Nature of Organization Change 190 Forces for Change 190 Planned Versus Reactive Change 192 Managing Change in Organizations 193 Steps in the Change Process 193 Understanding Resistance to Change 195 Overcoming Resistance to Change 196 Areas of Organization Change 197 Changing Organization Structure and Design 197 Changing Technology and Operations 197 Changing People, Attitudes, and Behaviors 199 Changing Business Processes 199 Organization Development 201 Organizational Innovation The Innovation Process 203 Forms of Innovation 205 203 The Failure to Innovate 206 Promoting Innovation in Organizations 207 188 Summary of Key Points 209 Discussion Questions 209 Building Effective Time-Management Skills 210 Building Effective Diagnostic Skills 211 Building Effective Technical Skills 212 Skills Self-Assessment Instrument 215 Experiential Exercise 216 CHAPTER CLOSING CASE: Whole Foods Changes the Grocery Industry 217 YOU MAKE THE CALL: Innovative Ikea 218 Test Prepper 219 Managing in Times of Change: Out With the Old, In With the New 205 8 Managing Human Resources in Organizations 220 The Environmental Context of Human Resource Management 222 The Strategic Importance of HRM 222 The Legal Environment of HRM 223 Attracting Human Resources 226 Human Resource Planning 226 Recruiting Human Resources 228 Selecting Human Resources 229 Developing Human Resources 231 Training and Development 231 Performance Appraisal 232 Performance Feedback 234 Maintaining Human Resources 235 Determining Compensation 235 Determining Benefits 237 Managing Workforce Diversity 237 The Meaning of Diversity 237 The Impact of Diversity 238 Managing Diversity in Organizations 238 Managing Labor Relations 240 How Employees Form Unions 240 Collective Bargaining 241 New Challenges in the Changing Workplace 242 Managing Knowledge Workers 243 Contingent and Temporary Workers 243 Summary of Key Points 245 Discussion Questions 246 Building Effective Decision-Making Skills 246 Building Effective Communication Skills 247 Building Effective Technical Skills 248

CONTENTS XI Skills Self-Assessment Instrument Experiential Exercise 250 249 CHAPTER CLOSING CASE: REI: A Place for Serious Fun 251 YOU MAKE THE CALL: Results-Only Work Environment at Best Buy 252 Test Prepper 253 Meeting of the Minds: Part Three: Managing in the Soft-Drink Industry 254 Eye on Management: Equality 239 4 Leading 9 Basic Elements of Individual Behavior in Organizations 258 Understanding Individuals in Organizations The Psychological Contract 260 The Person-Job Fit 261 The Nature of Individual Differences 262 Personality and Individual Behavior 263 The "Big Five" Personality Traits 263 The Myers-Briggs Framework 264 Other Personality Traits at Work 265 Emotional Intelligence 267 Attitudes and Individual Behavior 268 Work-Related Attitudes 268 Affect and Mood in Organizations 269 Perception and Individual Behavior 270 Basic Perceptual Processes 270 Perception and Attribution 271 Stress and Individual Behavior 272 Causes and Consequences of Stress 273 Managing Stress 275 Creativity in Organizations 276 The Creative Individual 276 The Creative Process 277 Enhancing Creativity in Organizations 279 260 Types of Workplace Behavior Performance Behaviors 280 Withdrawal Behaviors 280 Organizational Citizenship 281 Dysfunctional Behaviors 281 280 Summary of Key Points 282 Discussion Questions 283 Building Effective Diagnostic Skills 283 Building Effective Conceptual Skills 284 Building Effective Time-Management Skills Skills Self-Assessment Instrument 285 Experiential Exercise 286 CHAPTER CLOSING CASE: Steve Jobs: "The Leading-Edge Guy in the World" 287 YOU MAKE THE CALL: W. L. Gore Nurtures Talent and Creativity 288 Test Prepper 289 284 Managing in Times of Change: Managing the Flood of Ideas 278 10 Managing Employee Motivation and Performance 290 The Nature of Motivation 292 Content Perspectives on Motivation 293 The Needs Hierarchy Approach 293 The Two-Factor Theory 295 Individual Human Needs 296 Process Perspectives on Motivation 296 Expectancy Theory 297 Equity Theory 300 Goal-Setting Theory 300 Reinforcement Perspectives on Motivation Kinds of Reinforcement in Organizations 302 Providing Reinforcement in Organizations 303 Popular Motivational Strategies 303 Empowerment and Participation 304 Alternative Forms of Work Arrangements 304 302

XII CONTENTS Using Reward Systems to Motivate Performance 306 Merit Reward Systems 306 Incentive Reward Systems 306 Team and Group Incentive Reward Systems 308 Executive Compensation 310 New Approaches to Performance-Based Rewards Summary of Key Points 312 Discussion Questions 313 Building Effective Interpersonal and Communication Skills 314 312 Building Effective Decision-Making Skills 314 Building Effective Conceptual and Diagnostic Skills 315 Skills Self-Assessment Instrument 316 Experiential Exercise 316 CHAPTER CLOSING CASE: You've Got to Love This Job 319 YOU MAKE THE CALL: Motivation Without Borders 320 Test Prepper 321 11 Leadership and Influence Processes The Nature of Leadership 324 The Meaning of Leadership 324 Leadership and Management 324 Leadership and Power 325 Generic Approaches to Leadership Leadership Traits 328 Leadership Behaviors 329 328 Situational Approaches to Leadership 331 LPC Theory 331 Path-Goal Theory 334 Vroom's Decision Tree Approach 335 The Leader-Member Exchange Approach 338 Related Approaches to Leadership 339 Substitutes for Leadership 339 Charismatic Leadership 339 Transformational Leadership 340 Emerging Approaches to Leadership 341 Strategic Leadership 341 Cross-Cultural Leadership 341 Ethical Leadership 342 Political Behavior in Organizations 342 Common Political Behaviors 343 Impression Management 343 Managing Political Behavior 344 Summary of Key Points 345 Discussion Questions 346 Building Effective Diagnostic Skills 346 Building Effective Decision-Making Skills 347 Building Effective Conceptual Skills 348 Skills Self-Assessment Instrument 348 Experiential Exercise 349 CHAPTER CLOSING CASE: Stan O'Neal Leads Merrill Lynch 351 YOU MAKE THE CALL: Watch Out Bud, Miller Is Catching Up 352 Test Prepper 353 322 Managing in Times of Change: Measuring Excellent Leadership 326 12 Communication in Organizations 354 Communication and the Manager's Job 356 A Definition of Communication 356 Characteristics of Useful Information 357 The Communication Process 358 Forms of Communication in Organizations 359 Interpersonal Communication 359 Communication in Networks and Work Teams 361 Organizational Communication 362 Electronic Communication 363 Information Systems 363 Personal Electronic Technology 366 Informal Communication in Organizations The Grapevine 368 Management by Wandering Around 369 Nonverbal Communication 369 367

CONTENTS xiii Managing Organizational Communication 370 Barriers to Communication 371 Improving Communication Effectiveness 373 Summary of Key Points 375 Discussion Questions 376 Building Effective Technical Skills 377 Building Effective Communication Skills 377 Skills Self-Assessment Instrument 378 Experiential Exercise 379 CHAPTER CLOSING CASE: Communicating the Truth About Smoking 380 YOU MAKE THE CALL: Talking With Sports Fans 381 Test Prepper 382 Managing in Times of Change: Communicating via Craigslist 367 13 Managing Work Groups and Teams Groups and Teams in Organizations 385 Types of Groups and Teams 385 Why People Join Groups and Teams 388 Stages of Group and Team Development 389 Characteristics of Groups and Teams 391 Role Structures 391 Behavioral Norms 393 Cohesiveness 395 Formal and Informal Leadership 397 Interpersonal and Intergroup Conflict 398 The Nature of Conflict 398 Causes of Conflict 399 Managing Conflict in Organizations 401 Stimulating Conflict 401 J Controlling Conflict 402 Resolving and Eliminating Conflict 403 Summary of Key Points 404 Discussion Questions 404 Building Effective Decision-Making Skills 405 Building Effective Conceptual Skills 407 Building Effective Communication Skills 408 Skills Self-Assessment Instrument 408 Experiential Exercise 409 383 CHAPTER CLOSING CASE: Who Can Head Team Nike? 410 YOU MAKE THE CALL: Teamwork for the Tampa Bay Devil Rays 411 Test Prepper 412 Meeting of the Minds: Part Four: Managing in the Soft-Drink Industry 413 Managing in Times of Change: Don't Let a Dream Team Become a Nightmare 393 Controlling 14 Basic Elements of Control 415 The Nature of Control 417 The Purpose of Control 417 Types of Control 419 Steps in the Control Process 421 Operations Control 423 Preliminary Control 424 Screening Control 424 Postaction Control 424 Financial Control 425 Budgetary Control 425 Other Tools for Financial Control 428 Structural Control 430 Bureaucratic Control 431 Decentralized Control 431 Strategic Control 432 Integrating Strategy and Control 432 International Strategic Control 433 Managing Control in Organizations Characteristics of Effective Control 434 Resistance to Control 435 Overcoming Resistance to Control 437 434

XIV CONTENTS Summary of Key Points 438 Discussion Questions 439 Building Effective Time-Management Skills 439 Building Effective Decision-Making and Diagnostic Skills 440 Building Effective Technical Skills 441 Skills Self-Assessment Instrument 441 Experiential Exercise 442 CHAPTER CLOSING CASE: Is Too Much Control Hurting Dell? 444 YOU MAKE THE CALL: Effective Controls at McDonald's Boost Performance 445 Test Prepper 446 Managing in Times of Change: Bringing Accountability to Toys "R" Us 432 15 Managing Operations, Quality, and Productivity 447 The Nature of Operations Management 449 The Importance of Operations 449 Manufacturing and Production Operations 450 Service Operations 450 The Role of Operations in Organizational Strategy 451 Designing Operations Systems 451 Determining Product-Service Mix 452 Capacity Decisions 452 Facilities Decisions 452 Organizational Technologies Manufacturing Technology 454 Service Technology 457 454 Implementing Operations Systems Through Supply Chain Management 457 Operations Management as Control 458 Purchasing Management 458 Inventory Management 459 Managing Total Quality 460 The Meaning of Quality 460 The Importance of Quality 461 Total Quality Management 462 TQM Tools and Techniques 463 Managing Productivity 467 The Meaning of Productivity 467 The Importance of Productivity 468 Productivity Trends 468 Improving Productivity 469 Summary of Key Points 470 Discussion Questions 471 Building Effective Communication Skills 472 Building Effective Diagnostic Skills 472 Building Effective Conceptual Skills 473 Skills Self-Assessment Instrument 473 Experiential Exercise 474 CHAPTER CLOSING CASE: E-Tailing at Amazon.Com 475 YOU MAKE THE CALL: Competing Through Operations 476 Test Prepper 477 Meeting of the Minds: Part Five: Managing in the Soft-Drink Industry 478 Eye on Management: Outsourcing 465 Appendix Interpretations of Skills Self-Assessment Instruments 481 Answers to Test Preppers 492 Chapter Notes 493 Name Index 511 Organization and Product Index 514 Subject Index 519 Photo Credits 529