Foundational Concepts in Management and Business
Definition of Management
A process of assembling and using sets of resources, in a goal-directed manner, to accomplish tasks in an organizational setting.
- F.W. Taylor: “The art of knowing what is to be done and seeing that it is done in the best possible manner.”
- Mary Parker Follett: “The art of getting things done through people.”
The concept can be traced back to Sir Thomas More (1474-1535), who described the division of work in “Utopia”.
Key Challenges in the 2000s
Managing Change, Managing Resources, Managing Strategically, Managing Entrepreneurially.
Technological Principle
Moore’s Law
The power of microprocessors doubles and their cost halves approximately every 18 months.
Entrepreneurship and Change
Joseph Schumpeter (1883-1950)
Austrian economist: The entrepreneur is the agent of change in the modern economy. Associated with “creative destruction” (e.g., Kodak vs. Polaroid).
Entrepreneurial Mindset
Focuses on new opportunities (e.g., GM & Latinos).
Justice in Management
Procedural Justice
Ensuring that those affected by managerial decisions consent to the decision-making process and that the process is impartial.
Compensatory Justice
If distributive and procedural justice fail, those hurt by inequitable distribution of rewards are compensated.
Foundational Management Theories
F.W. Taylor and Scientific Management
The father of Scientific Management, focused on reducing time and boosting productivity.
The Four Functions of Managers
Managers perform four key functions:
- Planning
- Organizing
- Directing
- Controlling
Peter Drucker’s Five Functions
- Setting objectives.
- Organizing.
- Motivating and communicating.
- Measuring performance.
- Developing people.
Mintzberg’s Managerial Roles
Interpersonal Roles
Figurehead, Leader, Liaison.
Informational Roles
Monitor, Disseminator, Spokesperson.
Decisional Roles
Entrepreneur, Disturbance-handler, Resource-allocator, Negotiator.
Approaches to Ethical Decision-Making
Ethical Decision Models
- Utilitarian Approach: What brings the greatest good?
- Moral Rights Approach: Focuses on what is simply “right” or “wrong.”
- Universalism Approach: (Text truncated: NHLQNTGQTH)
- Justice Approach: (Text truncated: libra)
Moral Intensity Factors (Six Components)
The degree of ethical dimension:
- Magnitude of Consequences
- Social Consensus
- Probability of Effect
- Temporal Immediacy
- Proximity
- Concentration of Effect
Corporate Social Responsibility Perspectives
Efficiency Perspective (Milton Friedman)
The only responsibility of business is to increase profit, as long as it operates legally.
Social Responsibility Perspective
Go beyond profit-making; protect the environment and promote justice.
Stakeholders
- Primary stakeholders: Employees
- Secondary stakeholders: Local communities
Responses to Social Pressures
- Defenders: Maximize profit; only change when legally required.
- Accommodators: Focus on profit while fighting new restrictions.
- Reactors: Respond to social pressure, even without popular opinion.
- Anticipators: (Text truncated: los buenitos – the good ones).
Promoting Ethical Conduct
Companies use Codes of Ethical Conduct and support Whistleblowers.
Corruption and Global Business
Corruption
Involves using power for bribery, blackmail, or influence-peddling. The (FCPA) of 1977 is a US law prohibiting bribing public officials in other countries.
Globalization Views
- Globophobes (versus) Globophiles (with).
- Externality: An unintended or indirect consequence imposed on society that may not be understood or anticipated.
- Friedman’s ‘Flat World’: Globalization has leveled the economic playing field.
Country Institutional Environment
Factors include Economic development, Political-legal system, and Physical infrastructure.
Cultural Differences
Folkways and Mores
- Folkways: Dress code, manners.
- Mores: Prohibitions against murder or theft.
Hofstede’s Cultural Dimensions
- Power Distance: How much people accept unequal power.
- Individualism vs. Collectivism: Focus on “me” or “we.”
- Masculinity vs. Femininity: Value competition (masc) or quality of life (fem).
- Uncertainty Avoidance: Tolerance for uncertainty.
International Market Entry Strategies
- Exporting: Low risk, smaller returns.
- Licensing: Distribute product for a royalty fee.
- Strategic Alliances: Share costs but also profits.
- Cross-Border Acquisition: Fast entry, High cost.
- Greenfield Venture: 100% ownership; maximum control and profit, but riskiest.
Managing International Subsidiaries
- Global Focus: Headquarter rules.
- Region-Country Focus: Local management rules.
- Transnational Focus: A mix of both.
Strategic Corporate Social Responsibility
A three-criteria model that helps managers focus on social areas where there are high chances of shared value for business and society.