FUNDAMENTALS OF _ A , = = M | % r | \l | - 1 eos \ T rena BSae ~ CourseMate The more you study, the better the results. Cengage Learnina’s Management Course Mate helps you make the most of your study time by accessing everything you need to succeed in one place. CourseMate features include: + Au Interactive eBook wich highligheing, note taking, and an interactive glossary * Interactive Learning Tools. read your textbook, rake nores, review flashcards, watch videos, and ake practice quizzes—online with CourseMate. + Ics Affordable—abour hilfthe cose ofa traditional printed textbook. To access additional course materials including Course Mate, please visit www. cengagebrain.com. Ar the CeagageBrain.com honte page, enter the ISBN of {your title (from the back cover of your book) using the search boxat the top of the page. This will take you to the product page where these resources can be found“This ian electonie version ofthe prin textbook. Due to electromi rights sesrctoes, some thie party costed may be suppressed ioral seview has deemed that any suppressed contest does uot materially affect she overall cacti experience tion if subvesuea rights restrictions requie For valusble information om pricing, previous edidons changes to cures edition, und allemate formats. lease visi ww .coapase.comighered i search by ISIN, autho, Ue or keyword for metals i your aneas of intrest.¢» SOUTH-WESTERN ‘ue CENGAGE Learning Fundamentals of Management, Sixth Edition Ricky W.Grifin Vice Pretidentof Editodsl, Business: Jacki. Calhoun, Publisher: Mi (editor: Scott Person, s3 Acuna Exec Senior Develapmental Editor julia Chase Senlor Edtorial Assistant: Ruth Belanger Senior Marketing Consnnunications ranagers|in Overly Marketing Coordinator: Julia Tucker Marketing Director Clint Kernen Content Project Management: PreftediaGbat edi Editor: Rob EBington ufacturing Coordinator: anda Klapper Print Buyer: Arethea Thomas Production Sewvice/Compositor PretteciaGlobat Senior Art Director: Tippy Nelntosh Internal Design: PretesixGlobal Cover Designer:Red Hangar Design LLC Cover mage: © Wilias Manning/Corbie Photography Manager:|olun Hill, Photo Researcher: PreMedlaGlabal Printed in Canada 123456713 121110 © 2012, 2008 South-Western, Cengage Leatning ALL RIGHTS RESERVED, No part af this wark covered by the copyright herein may be reproduced, transmitted, stored or used in any form orby any means graphic, electron, or mectanical, including but not limited to photocopying, recording, scanning, digitizing taping, Wed distribution, information networks, or information storage and retrieval systems, except a permitted under Section 107 or 108 of the 1978 United States Copyright Act without the prior written permission of the publisher For preduct infatmation and technology assistance, ontaet at at Cengage Learning Customer & Ses Support, 1-800-354-9706 fer permisionto ute mate from this tex product, tal eequests-oline a cengage.com/petm sions Further pemitstons questlons can becmaled permissionrequest@cengaze.com Cengage Leavning WebTutor™ Isa trademark of Cengage Learning. LUbrary ef Congress Control Number: 2010936508 ISBNS: 978-0:538-47895-5 ISBN-10: 053847875 6 South-Western Cengage Learning. 5991 Natorp Boulevard Mason, O11 45040 USA CCongage Leaming praducts are represented in Carach by Nelson Education, Li For your course and leatning solutions, visit academie.cengage.com Purchase any of cur praducts at your local college store or at our preferred online store wwwscengagebrain.comPART 1 An Introduction to Management 1 Understanding the Manager's Job: 2 The Envirouments of Organizations and Mauagers PART 2 Planning 3° Planning and Strategic Management 4 Managing Decision Making 5 Entrepreneurship and New Venture Management PART 3 Organizing 6 Omanization Structure and Design 7 Organization Change and Innovation 8 Managing Human Resources in Organizat PART 4 Leading 2 Basic Elements of Individual Behavior in Organizations 10 Managing Employee Motivation and Performance IL Leadership and Influence Processes 12. Communication in Organizations 13 Managing Work Groups and Teams PART 5 — Controlling 1 Basic Elements of Gontrol 15 Managing Operations, Quality, and Produetivity Sayonara ts na cn na Dak iui es mt ‘saat etoreoae ey spose él 8 121 153 187 22 237 291 327 361 301 423 457Preface xiii PART 1 AN INTRODUCTION TO MANAGEMENT ‘An Intraduction to Management 3 Kinds of Managers 4 Basie Management Functions 6 Fundamental Managesnent Skills 7 ‘The Scienice and the Art of Management 9 The Evolution of Management 10 ‘The Emportance of They ave Histary 10 The Historical Gontext af Menagement 1 ‘The Classical Management Perspective 12 ‘The Behavioral Management Perspective 14 ‘The Quantitative Management Perspective 17 2 The Environments The Organization's Environments 33 Environment 34 “Task Environment 36 Internal Environment 38, Tho Ethical and Social Environment of ‘Management 40 il Ethics in Organizations 40 Indiv Emerging Ethi Social Responsibility in Organizations 43 Managing Social Responsibility 43 Josues 42 Contemporary Management Perspectives 18 ‘The Systems Perspective 18 The Cor Contemporary Management fsues and Challenges 20) ‘Summary of learning Objectives and Key Peints 23 Discussion Questions 24 Building Effective Time Management Skills 25 Building Effective Decision Making Skills 25 Skills Self Aszessment Instrument 26 ingency Penpective 19 Experiential Exercise 27 CHAPTER CLOSING CASE: Jumpin’ Jack Flash 28 YOU MAKE THE CALL: In Search of Google 2? 31 nment of Management 46 Business 46 Levels of iterntional Business Aetisiy 47 ‘The Context of International Business $8 The Organization's Culture 52 ‘The Importance of Organization Culture 52 Determinants of Organization Culture 52 Managing Organization Cultare 53 Summary of learning Objectives and Key Points 53 Discussion Questions $4 min Cigna Ai ora My nl i alii ep tem i ay scm gt in ci aiBuilding EFective Interpersonal Skills $5 CHAPTER CLOSING CASE: Is Fair Trade Building Effective Communication Skills 58 Really Fair? 58 Skills SelfAssessment Instrument 56 YOU MAKE THE CALL: Competition Can Hurt. . er Help! 59 Experiential Exercise 57 PART 2 PLANNING Planning and Organizational Goals 65 Tactical Planning 79 Organizational Goals 65 Developing Tactical Plans 79 Kinds of Organizational Plans 67 Executing Tactical Plans 80 The Nature of Strategic Management 67 ‘Operational Planning 80 The Components of Strategy 67 Single-Use Plans 80 ‘Types of Strategic Altematives 68 Using SWOT Analysis lo Formulate Strategy 68 Evaluating an Oxganization’s Strengths 68. Summary of leatning Objectives and Key Points 84 Evaluating an Organization's Weaknesses 69 Evaluating an Organization's Opportunities el Threats 70 Plans $1 mnningaanel Crisis Management 82 sussion Questions 86 ling Effective Decision Making Skills 86 Building EHective Communication and Inter personal Skills 87 Formulating Burines+-Lovel Strategies 72 Porters Generie Strategies 72 Strategies Based on the Product Life Gyele 73 Skills Self-Assessment Instrument 88 Formulating Corporate-level Strategies 74 Experiential Exercise 88 ‘Single-Product Strategy 74 ‘CHAPTER CLOSING CASE: Thinking Outside Related Diversification 75 the Big Box 89 Unrelated Diversification YOU MAKE THE CALL: Recent Developments in Games Theory 92 The Nature of Decision Making 96 Risk Propensity ane Decision Making. 100 Decision Making Defined 97 Ethies andl Decision Making 10 Types of Decisions 97 ‘Group and Team Decision Making in Decision-Making Conditions 9% Organizations 110 Ratonal Perspectives on Decision Making 101 Forms of Group and Team Decision Making 110 The Classical Made of Decision Making 10 Advantages of Group and Team Decision Making 111 Steps in Rational Decision Making 102 Disadvantages of Group and Team Decision Behavioral Aspects of Decision Making 106 Making L12 *hovioral Aspects of Decision Makin Managing Croup and ‘Team Decision-Making ‘The Administrative Model 106 Prncewes 11 * Political Forces in Decision Making 107 eee Summary of learning Objectives and Key Points 113 Intuition and EsealatDiscussion Questions 114 Building Effective Conceptual Skills 11.4 Building Effective Technical Skills 115 Skills Self-Assessment Instrument 116 5 ekernetp nde Vn Manone The Nature of Entrepreneurship 124 The Role of Entiepteneurship in Society 125 Job Creation 125: Innovation 127 Inpontance to Big Business 129 Strotegy for Entrepreneurial Organizations 129 Chovsingse Industry 129 Emphasizing: Distinctive Competencies 133 Writing Business Plan 134 Entrepreneurship and Intemational Management 133 Structure of Entrepreneurial Organizations 135 Starting the New Business 136 Financing the New Business 137 Sources of Management Advice 139 Franchising 1H PART 3 ORGANIZING Contents $ Experiential Exercise 116 CHAPTER CLOSING CASE: The Art ond Science of Decision Making 117 YOU MAKE THE CALL: Citi ODs on CDOs 119 121 The Performance of Entrepreneurial Organizations 142 Tien it Sinal-Business Sartatps 142 Reasons for Failure 144 Reasons for Success 145 ‘Summary of learning Objectives and Key Points 146 Discussion Questions 146 Building Effective Diagnastic Skills 147 Building Efective Conceptual Skills 148 Skills SelF Assessment Instrument 148 Experiential Exercise 149 CHAPTER CLOSING CASE: JetBlue Copitalizes on the Entrepreneurial Spirit 150 YOU MAKE THE CALL: Facebook Faces the Prablem of Booking Revenues 152 The Basic Elements of Organizing 157 Job Specialization 157 Grouping Jobs: Departmentalization 162 Establishing Reporting Relationships 163 Distrbting Authority 16¢ etme The Bureaucratic Model of Organization Design 16: Sitvationel Influences on Organization Design 168 Gore Technology 168 E Organizational Coordin, irorrment 169) ize and Life Cyele 170 153 Basic Forms of Organization Design 171 tional (U Form) Design 171 Conglomerate (H Form) Design 172 Divisional (M Matrix Design Hybrid Designs 176 Emerging Issues in Organization Design 176 ‘The Team Organieation 176 ‘The Virtual Organization 176 ‘The Learning Organization 177 Summary of learning Objectives and Key Points 178Peon Discussion Questions 178 Building Effective Conceptual Skills 179 Building Effec Is 180 Skills SelFAssessment Instrument 180 ¢ Technical SI Exporiontiol Exercise 182 CHAPTER CLOSING CASE: eBay Bids for Structured Change 183 YOU MAKE THE CALL: Promoting Brand Loyalty ot A&F 186 The Nature of Organization Change 191 Forces far Change 191 Planned versus Reactive Change 192 Managing Change in Organizations 193 Steps in the Change Process 193 Understanding Resistance to Change 194 Overeoming Resistance to Change 196 ‘Areas of Organization Change 197 Changing Orga Changing Technology anid Operations 197 Changing People, Attitudes, and Behaviors 200 ‘Changing Business Processes 200 Organization Development 202 ation Stracture and Design 197 Oigenizotional Innovation 204 ‘The Innovation Process 205 Forms of Innovation 207 Promoting Innovation in Organizations 209 Summary of learning Objectives and Key Points 211 ussion Questions 212 Building Elective Decision Making Skills 213 Building Effective Diagnostic Skills 213, Skills SelfAssessment Insieument 214 Experiential Exercise 215 CHAPTER CLOSING CASE: Culivoting Innovation at IKEA 216 ‘YOU MAKE THE CALL: The Science of the Deal 219 ‘The Environmental Context of HRM 224 The Strategie Importance of HRM 224 ‘The Legal Environment of HRM 235 Labor Relations Attracting Human Resources 228 Human Rewource Planning 225 Recruiting Human Resources 232 Sclect ig Human Resources 233, Developing Human Resources 234 Training anid Development 24 Performance Appraisal 235 Performance Feedback 235 ing Human Resources 238 ing Compensation 239 ing Benefits 10 Managing Workforce Diversity 241 the Meaning of Diversity 241 the haypact of Diversity 241 Managing Diversity in Organizations 242 Managing Labor Relations 243 ow Employees Form Unions 243 Collective Barsvning 245 New Challenges in the Changing Workplace 246 Managing Knowledge Workers 248 Contingent and Tenporary Workers 247 Summary of learning Objectives ond Key Points 248 wussion Questions 249 Building Effective Decision Making Skills 250Building EFfective Technical Skills 250 Skills SelEAssessment Instrument 251 Experiential Exercise 252 PART 4 LEADING CHAPTER CLOSING CASE: “Sill Better Of Thon Most” 253 YOU MAKE THE CALL: The Temptations of Temping 256 9 ose Hemant of Indvidel Behavior in Orgoizeons 287 Understanding Individuals in Organizations 261 The Payellogical Contract 261 The Person-fob Fit 262 ‘The Nature of Individial Differences 262 Porsonality and Individual Behavior 264 ‘The “Big Five” Personality Tats 264 The Myer-Briggs Framework 266 Other Personality Traits at Work 266 Emotional Intelligence 268 Attitudes and Individual Behavior 269 Work-Related Attitudes 269 Alfect ancl Mood in Organizations 270 Perception and Individual Behavior 271 1 Pereeption anid Atsibation 272 Stress and Individul Behavior 273 Casas and Consequences of Stress 274 Managing Suess 276 Creativity in Organizations 277 ‘The Creative Individual 277 ine Process 275 Basie Perceptual Processes Enhancing Creativ 10 Managing Employes The Needs Hierarchy Approach 296 ‘The Tive-Factor Theory 298 ral Human Needs 209 Process Perspectives on Motivation 299 Expectancy Theory 300 Equity Theory 303 Goal-Setting Theory 303 in Oxgunieations 279 Types of Workplace Behavior 260 Performance Behaviors 250 Withelawal Behaviors 280° Organizational Citizenship 281 Dysfunctional Behaviow 281 ‘Summary of learning Objectives and Key Points 282 Discussion Questions 283 Building Effective Interpersonal Skills 284 Building Effective Time Management Skills 284 Skills SelPAssessment Instrument 265 Experiential Exercise 285 CHAPTER CLOSING CASE: Being St. YOU MAKE THE CALL: Is Your Boss Superficially Charming, Insincere, and lacking in Empathy? 288 e Jobs 286 Reinforcement Perspectives on Molivation 305 Kinds of Reinforcement in Organizations 305 Providing Reinforcement in Organizations 396 Popular Motivational Strategies 307 Empowerment ancl Participation 307 Alternative Forms of Work Artangements 307 Using Reward Systems to Motivate Performance 309 Mesit Rewaudl Systems 30 Incentive Reward Systems 30°*ee Experiential Exercise 452 CHAPTER CLOSING CASE: Dell Does Damage Control 453 YOU MAKE THE CALL: Facets of Jamie Dimon’s Control Strategy at J.P. Morgan Chase 456 15 Managing Operations, Qua 457 The Nature of Operations Management 480 “Total Quality Management 473 ‘The Importance of Operations 460 TQM Tools and ‘Techiiggaes 475 Manuctasing and Prediction Operations 461 Monaging Productivity 478 Service Operations 402 “The Meaning of Proiuctivity 479 The Role of Operations in Organizational Stategy 462 The linportanee of Produetisity 480 Designing Operations Systems 462 Productivity Trends 4150 Determining the Product-Service Mix 462 Prod tivity 480, Summaty of leaining Objectives and Key Points 482 Organizational Technologies 465 Discussion Questions 483 Baefcining Technology 65 Building Effective Communication Skil 483 \ a Kel ee “es Symame thoush Building Effective Diagnostic Skills 484 Implementing Operations Systems Throvg] ‘Supply Chain Management 469 Skills Self-Assessment Instrument 485 ‘Operations Managetnent as Control 469 Exporiential Exercise 486 Purchasing Management 470 ‘CHAPTER CLOSING CASE: Amazon. Inventory Management 470 Rekindles Is Flaie for Technology 486 Managing Total Quality 471 ‘A New IDEO in Holal Quality 488 The Meaning of Quality 472 ‘The Importance of Quakiy 472 APPENDIX Interpretations of Skills Self-Assessment Instruments 489 Notes 499 Name Index 515 Organization and Product Index 517 Subject Index 521Over the last Five decades, hundreds of books have been written for intiod uel management courses. As the body of material comprising the theory, research, and practice of management has grown and expanded, textbook authors have coi or this expansion of material in their books. Writers have understood the importance of adding new material pestinent to traditional topics, such as planning and organizing, wh simultancously adding coverage of emerging new topics, such as diversity and information technology. As. by-product ofthis trend, our general survey textbooks have grown longer and longet, mnaking it increasingly difficult to cover all the material in one course. Another emerging trend in management education is a new facus on teac a broader context. That is, introductory management courses are increasingly being taught with less emphasis on theory alone ancl more emphasis on application of concepts. ‘Teaching students haw: to apply management concepts sucessfully: often involves focusing more on skills development and the human side of the owgenization. This trend requizes that textbooks cover theoretical concepts within a flexible framework that enables instructors to make use of interactive tools such as case studies, exercises, andl projects. It also dictates thal a tex! be as relevant to stuslents as possible. Hence, while this book draws examples and cases from older large firms like Ferd, IBMI.and Nestle, italso makes extensive ase of newer firm such as Google, Abercrambic & Fitch, Faccbook, Starbucks, Urban Outfitters, and others ‘This textbook represents a synthesis of these trends toward a more manageable and practical approach, By combining concise text discussion, stanslard pedagogical tools, lively and euttent eantent, an emphasis on organizational behavior, and exciting skills- development materials, Fundamentals of Management answers the need for a new approach to management education, This book provides almost limitless flexibility, a solid foundation of knowledge-based material, and an action-oriented learning niension sinique in the fieKl. Indeed, almost a half million students were introduced to the field of management using the first five editions of this book. This sixth edition builds solidly on the successes of the earlier editions. ORGANIZATION OF THE BOOK Most n ‘management finetions of planning, organizing, leading, and controlling, Famdamentals of Management uses these functions as is organizing framework. The book consists of five parts, wit fifteen chapters, Part One introduces management through two chapters. Chapter | provides a basic overview of the management process in organications, and Chapter 2 introduces stustents to the environment of management. Part Tivo covers the first basic management function, planning, Chapter 3 introduces the fundamental concepts of planning and discusses layeinent instructors today organize their course around the traditional yin tiga Ai ora My nl nd align i ap csc my gt ind cia xiiistrategie nis the topic of Chapter 4. Finally, Chapter 5 covers entteprencurship and the management of new ventures ‘The sceond basic management favetion, organizing, is the subject of Part Three. In Chapter 6 the findamentat concepts of organ vation structure and design are introduced anid discussed, Chapter 7 explores organization change anid orga nizatio wal iunovation Chapter 8 is devoted fo the management of human resoxtces Many instructors and mana cc thal the third basic management function, leading, is especially important in contemporary organizations. Thus Part Four comssts of five chapters devoted to this management function, Basic concepts and processes associates! with individual behavior are inlradhuced and discusses in Chapter 9. Frnphayee motivation is the subject of Chapter 11), Chapter Il examines leadership and influence pracesses in organizations, Communication in organiations is the topic of Chapter 12 The management of groups and teams is covered inn Chapter 13 The fourth management funetion, controlling, i the subject of Past Five. Cl introduces the fundamental concepts process. Aspecial area of control toa, aria magernent, Managerial decision m od issucs associate with management ofthe control fox total qualily, is diseassee in Chapter 15. SKILLS-FOCUSED PEDAGOGICAL FEATURES ess new dimensions of With this text, it has beer posible to addr without creating a book so long that itis unwieldy. Specifically, cach chapter is follawed by am exciting set of skills-based! exercises. ‘These resontces have been created fo bring an re and a behavioral orientation to management education by requising students to soke problems, make secisions, respons to sitwations, and work in groups hu shot, these inaterials simulate many of the day-tolay challenges and opportunities that real managers face, 9 ate two different Building Effective Skills ot skills introduced in Chapter 1. The S ‘Among these skillvbascd exerci around the set of basie mn, Assessment lastranent evercise feelps readers learn something aban their own approach to management, Finally, an Expevientéal Exercise provides additional actiow-oricwted learning opportunities, usually iva group selling, New to the sixth edition, each chapter also contains a boxed feature entitled Tough Times, Tough nied to depart briefly from the flow of the chapter to highlight or extend especially interesting ar emerging points and issues tclated to the tough decisions managets must inake ist tosay’s business Glimnate oF to ethical questions that confront me In addition lo the end-ofte-chapter evercises, every chapter includes inuportant standard pedagogy: learning abjectives, a chapter outline, an opening incident, terms, a summary of key points, questions for review, questions for analysis, and an endo hapter case wilh questions, shoices or Ethies in Action, The: eatores ss toslay CHANGES TO THE SIXTH EDITION The sinth edition of Fundamentals of Management retains the samme basic structure aed format as the previous edition, However, within that framework the content of the book has beew thoroughly revised and updated. The following changes are iMlusteative of the new material that has been added (1) New topical coverage includes dotails and references to bath domestic and slabal cconninic coulitions, When the previous edition was published, thelobal economic climate was sll fwotable. Bul as everyone now knows, the begari to decline in 2008 and by 2009 was in full recession. By 2010 the economy hael begun to stabilize bust was still both shu implications and impact of these economic flu siroughout the book. (2) Since the last edition several new management techniques have been inte duced. One of these, for example, is the Ficred work force where existing workers are paid at hi ‘cussed i sev (5) The latest research findings ce nizing, motivation, leadersh and referenced at the excl of the book, (4) Al of the cases and boxed inserts are wew te this edition of Fundamentals of Management. hey reflect a wiele variety of organizations and illustzate both she. ‘ccssfal and Tess successful practices and ecsions (5) As noted eatlier, this book features a rich and diverse artay’ of end-obelapter satcrials to facilitate both leaming anid skill development. For this edition over replaced or substantially revise anil erratic, The tralegic management, onst- nd contral have been incorporated into the text tbvo- thirds of this material have by ACKNOWLEDGMENTS L would like fo acknowledge the many conteibutions that others have made to this book. My faculty colleagues at Texas ASM University have contributed enormously both to this, book and to my thinking abut management education. ‘The fine teatn of professionals at ngage Learning has also bec instrumental in the suicecss of this book. Michissa Acuna Scot! Petson, Julia Chase, Melissa Sacco (PreMecliaGlobal), Tippy Melntosh, Clint Kemen, Jin Overly, Mardell Glinski Schulz, and Roti: Belanger were instrusiental in the predustion of this edition, Special thanks to Ron L Many reviewers have plaed a criligal role in improvement of this project. ‘They examined my work in det: to tip my hat to the following reviewers, whose ach he continuans evolution and | and with a critical print cant he found eve. would wzhout ts text Joe Adamo (Cazenovia Collexe), Sally Alkazin (Linfield College), Hliabeth Anne Christo-Baker (Tera Gominunity College), Robert Ash (Sex College), Sheryl Berg-Ridenour{DeV ry College—Pontona), Alain Broder TouroColl Murray Branton (Central Oltio Tech), Sam Chapman (Diablo Valley College), Corona (Florida Gonumninity College —Jacksonnille}, Dr. Anne Gowen University), Thomas DeLaughter (University of Florida), Anita Dickson (Nozth Community College), Joc Dobson (Western Minis Kuivensity), Michael Dutch (Univer sity of Houston), Norb Elbe (Eastern Kentucky Uni Houston), Jan Feldbauer (Schoolcraft College), Anne Fiedler (Barry University), Eugene Garaventa (College of Staten Island), Phillip Gonsher (Johnson Conmnnnity College, Paticia Green (Nassas Commaisity College), Joseph S. Hooker, Je (North Greens ille College), David Hudson (Spalding University). Genzge W. Jacobs (Middle Tennessee State University), Tim MeCabe (Tompkins Cortland Community College, Judy Nixon ersity}, Teri Elkins (University of Unive Liss Reed (University of Portland), Virg of Tonniessee—Chalanooga), Raujna Patol (Bethune-Cookman College), Dr. Joan Rivera aia Rich (Caldwell Golleg Prslece | xwJo State University), Roberta B. Slater (Pennsyhuania College of Technlogy), noot {Hazard Community College), Howard Stanger (Canisius College), Shery] 1y(Newntan University), Roy Strickland (Ozarks Techn College), Mike L. Stutzman (Mt Metey College and Kirkwood College}, Abe Tawil (Baruch Uni versity), Barty Van Hook (Aricona State Univesity), Raith Weatherly (Simpson Call Mary Williams (Community College of Nevaela} My wife, Glenda, and our children, Dustin, Ashley, and Matt, are, of caurse, due the greatest thanks, Their love, care, interest, and enthusiasm help sustain nve jn all that Ho. [also enthusiastically invite your feedback on this baok. If you have any questions, ios, oF ismies to discuss, please Feel free to contact mes Thee nnost effi I My address is rerffin@arwu.ecl al Conan Evy 10 reacit me is through ems RW,however, the dus seems 1 excel in several managerial creas. Fitst, Brin and Page remain in the Forefiont of, ‘Google’s search for technological innovations. They be- liove inthe power of mathemaies and have developed Unique algorithms for just about every form of actly in the fi. One of the mos! successtl is an algorithm for auctioning advertising placemenis that ensures the high eat possible prices. Brin and Page hove also been remarkably succesttul in othacting talented ond creative employees ond then providing them with a werk envitonment and culture that foster the kind of prodvetvily andl innovation for which they were hired. At least hall of all Google employees ie scientists and engineers, Many ate recruited fiom the county's top enginaering schools, while ohers “win” jobs by performing well in online programming conlasls. Googles work in smal, fexible,selfdiected loam, and the company's website reinfrces the caval anoxphere: “Work and play,” according to Google, “ore ret muty- ally exclusive, lis possible t code and prs ihe puck at the some time.” Employees ore free to devote 20 percent of the workday to pursuing personal projects, and many of Google's mos innovative ideas have sprung from his polcy of enlightaned selfinterat, Pay for performance Is standard, and compensation is relotvely high. (Bin ond Page reward thomsehes with $1 a year in salary, with no bonuses, stock, or options.) Finally, afhough the founders avoid formal strate- gic planning, they've managed to diversify extensively through acquisitions and key alliances, Typically, CHAPTER 1 hint tenongnss 3 Google absorbs an cequited firm and then improves on its technology, thereby adding variety fo its ovin online offerings. Recent acquisitions include YouTube, c leader in online video sharing [2004]; Postini, a leader in communications secutly products (20071; ond Double- Click, a leader in online advertising services (2008}. Strategic alliances include these with foreign online ser- vice providers thot offer Google searches on their sites. Fer the future, Google plans on deing more of the some, competing head to head with financial service providers for stock information and with ifunes for music and videos. Also commilied lo the inhouse development of new features and services, Google spen! $2.1 bil lion on research and development [R&D] in 20G7 up from $1.2 billon in 2006} ond anaher $1 billion to oc quire new information technology IT} axsels. Innovations inthe works include an automated universal languoge translator for tansloting documents from any language into ony cther language and personalized home pages for allowing useis lo design automatic searches end dis- play the results in personal “newspapers.” If here's anything ee on the drawing board, no- body hnows for sure. In fact, outsiders notably poten- tial investors —otten enticize Google far being a “block box" when hey wont a few more deiails about topics of investor interest such as longzange strategy. “We don't talk about our strategy.” explains Page, *. .. be- cause it's stiategic. | would rether have people think we're confused than let our competitors know what we're going to do."! This book is about m this chapter, we exa challenges. We explain th rnuanagement process, a We conclude this chapter by introducing critical facing now and will continue to encounter in the fal basie concepts of manage ine the general nature of management, its dimensions, jarize the origins of eantempotat lenges and issues that m do.tn nd its vent and managers, discuss the pranagement thought pers are Page and the work th AN INTRODUCTION TO MANAGEMENT Anon toachieve a set of goals, which wna ization isa group of people working together in a structured and coordinated fashion ude profit (Starbucks Corporati knowledge (University of Missouri), national clefense (the U.S. Anny), the coordination of organizetion ‘Acjoup of people werking ‘ino stud ond: Aoshion o ochieve ase of the discosery of various local charities (United Way of Ameriea}, or social satisfaction (a sorority). >4 Pa 1 An Inreduction to Management Figure 11 Kinds of Managers by Level ond Area ‘Organizatons generally fave tree bevel of enagemon,reprosented bby 9 managers, mide moragers, and fet ine amenagers Regardless af kevel managers are ako ‘aspeciic oreo within sho oxganizaton, such as merleting, hnanes ‘operations, human resources, odminisraton, ‘or some other creo, Managers ate responsible for using the organization’ resources to help achieve its goals. More precisely, management can be defined as a set of activities (including planning and dee 4, organizing, leading, and rected at an. organization’s resources (human, finaneial, physical, and information), with the aim of achieving organizational goals in an efficient and effective manner, A manager, then, is Someane whose primary responsibility is to carry out the management process. By cfficient, we mean using resources wisely, in a costeffective way. By effective, we mean making the right decisions and successfully implementing them, In general, successful organizations are baths efficient ancl effective* ‘Tosay’s managers face various interesting aind challenging situations. The average exceutive works 60 hours a week; has enormous demands placed on his or her time; and faces inctcascd complexities posed by globalization, domestic campetition government regulation, shareholder pressure, and Internet-related uneestainties. Their job is complicated cven more by rapid changes, unexpected disruptions, amd both minor anid major crises. The manager's job is unpredictable and fraught with challenges, but itis algo filled with opportunities to make a difference. Good managers ean propel an organization into unprecedented realms of suecess, whereas poor managers can devastate even the strongest of organizations.” Kinds of Managers Many different kinds af managers work in organiations today, Figure 1.1 shows how various kinds of managers within an ongenization can be differentiated by level und by urea. Levels of Management Top managers Middle managers Flistline managers ‘Areas of ManagementoO CHAPTER 1 Understanding the Menoger’s Job Levels of Management Onc way to classify managers is in terms of thir level in the organization. Top managers wake up the relatively small group of executives wha manage the overall organization. Titles fornd in this group include president, vice presiclent, and chief executive officer (CEO). Top managers create the organization's goals, overall strategy, and operating policies, They also officially represent the organization tothe ternal environment by meeting with government olficials, executives of other orgauizations, and so forth, Howard Schultz, CEO of Starbucks, is a top manager, as is Delis Wager, the Firm's executive viee president, Likewise, Sergey Brin, Lamy Page, ard Alan Mulally are also top. managers. The job of a lop manager is Hikely to be complevand varied. Top managers make decisions about activ h as acquiring other companies, investing in R&D, entering or abandoning various satkels, and building wew plants aud office facilities. They often work long hosts and spend mich of their time in meetings oF on the telephone. Ln most gers are also very well paid. In fact, the elite top managers of very large firms sometimes make several million dollars a year in salary, bonuses, and slock,* In 2009 Ford paid ils CEO, Alan Mu 00 in salary. He also earned 51,046,390 in other compensation and $14,641,851 in stock and eption awards.* Middle management is probably the largest gronp of managers in mast organizations Connon middleananagement titles include plant manager, operations manager, and division head. Middle mareagers are primarily responsible for implementing the policies and plans developed by lop managers anel for supervising and coordinating the activities of lowerslevel snanagers® Jason Hernander, a regional manager at Starbucks responsible for the firm's operation: ern states, isa middle manager. Fisstline managers supervise and coordinate the activities of operating employees, Common litles for firsHine 1anagers are supervisor, cootslinator, ans! office manager Po: by employees who enter mana ranks af operating personnel, Wayne Maxwell and Jeuny Wagner, managers of Starbucks coffee shaps in ews, are first-line managers, They avervee the dayeto-day operations of theie respective stores, hite operating employees to staff thems, and handle ather routine ministralive laties required af them by the parent cemporation, In contrast te top and He managers, illy spend a large proportion of their time wvising the work oftheir subordiuates. ent from the ions like these are often the first held istline managers typi Managing in Different Areas of the Organization Regardless of their Jevel, managers. may work in various areas within an organization, la any given firms, for ple, these areas may inchsde raatketing, financial, operations, heman resources, adininistrative, and others Marketing managers work in areas related to: the marketing function — getting consumers and clients to buy the organization's products or seevices (be they Nokia cell phones, Ford automobiles, Newsncek maugieines, Assucialed Press news reports, flights on Southwest Airlines, or cups of laite at Starbucks). ‘These arcas inelude new-product development, promotion, and distribution. Given the iimpostanice of marketing for Virtually all oginizations, developing goad managers in this atea i eitiea Finaneial managers deal primarily with an organization's financial resources. ‘They are bible for activities such as accounting, cash anid investments, In some businesses, especially banking and insurance, nancial mana Operations managers ate concerned with creating ancl managing the systems that fe an organization's products andl services. ‘ypieal responsibilities of operations managers include production control, inventory control, quality eontiol, plant layout, and sie selection \gorsane Found in lange manab 5é Pen ‘An Inneduction to Management res managers ate responsible for hiring and developing employ volved in i, recruiting and sclect and development, ad bens formulating performance appraisal ssstemns,and discharging low-perforning and problem employers. inistrative, af general, nanagers are not associated with any particular nent specialty. Probably’ the best example of aw adaninistrative management position is that of a hospital or clinie administrator. Administrative managers tend to be generalists; they have some basic familiarity with all functignal areas of management rather than specialized training: in any one area Many organizations have specialized management positions in addition to thase already described, Public relations managers, for example, deal with the public ancl media for firms such as Philip Mortis and the Dow Chemical Company to protect ancl enhance the image of their organizations. R&D) managers coordinate the activities of scientists and en) sin organizations sucls as Monsanto Co NASA, and Merck & Company. Internal consultants ate used in otganizations such as Prudential Insurance to provide specialized expert advice to operating managers International operations are often coondinated by specialized managers in organizations, like Eli Lilly and Rockwell International. The number, nature, and importance of these specialized managers vary tremendously from one organization to another. As contemporary organizations continue to grow in complexity and size, the number and. importance of such managers are also likely to increase Basic Management Functions Regandless af level or area, manage and decision making, orga these basic functions, as shown in z, and conteolling. This book is organized around igure 1.2, ware 12 t inagement Process Batic octiites—plomniog ond decision making, orgonizing, ading, and contating, Atheugh there is 2 base logic for describing tose actvites In fis sequence far indicated by the solid enews), mest monagers engage in more thon one ectinly ai fimo and alien move back and Foch borween the activities unpredictable ways or shown by the doted cows.