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Perspective Management Notes

Lecture 1:
1. To define management
2. To discuss the history of management
3. To describe the four functions of management
4. To identify the skills required by managers

‘Management is the attainment of organisational goals in an effective and

efficient manner through planning, organising, leading and controlling
organisational resources’ (Text: p.10)
‘Managers give direction to their organisations, provide leadership and
decide how to use organisational resources to accomplish goals’ (Text p.10)
An organisation is a social entity that is goal directed and
deliberately structured (Text: p.16)

Organizational Performance: The organisation’s ability to attain its goals by

using resources in an efficient and effective manner
• Effectiveness is a measure of task output
• Efficiency is a measure of the resource cost

1. Classical Perspectives
• Scientific Management
• Administrative Principles
• Bureaucratic Principles
2. Humanistic Perspective
• Hawthorne Studies
3. Management Science Perspective
4. Recent Historical Trends
• Systems Theory
• Contingency View
• Sustainable Development
5. To understand how management thought has evolved historically
6. To evaluate the ongoing relevance of management theory today

How a Field of Theory Evolves

1. Observation of a new phenomenon and the reporting of exploratory
case studies
2. Definitions which capture operational characteristics and the context
3. Conceptualization of useful constructs and their dimensions to provide
a deeper, more nuanced understanding of the possible relationships
that underpin the phenomenon
4. Testing of theoretical relationships
5. Consistent body of knowledge within a field of theory

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Classical Management Perspective

➢ Scientific Management (Frederick Taylor)
➢ Developed standard method for performing each job
➢ Each worker had specific skills (trained) for each job
➢ Minimized interruptions by planning
➢ Provided wage incentives to workers for increased output/goals
➢ Bureaucratic Management (Max Webber)
➢ Clear definitions of authority/responsibility
➢ Clear hierarchy
➢ Selection based on technical qualifications
➢ Admin decisions are recorded in writing
➢ Management and ownership are separate
➢ Rules and procedures are applied to all employees
➢ Negatives; Excessive paperwork, slowness in handling
problems, resistance to change
➢ Administrative Management (Henry Fayol)
➢ Planning Organising Commanding Coordinating Controlling
➢ Employees are grouped to combine individual talents for a
greater good
➢ Organizations as cooperating ‘communities’ of managers
and workers
➢ Employee ownership
➢ Private profits relative to public good

Humanistic Perspectives
➢ Hawthorne Studies
➢ Series of experiments about productivity and work conditions
➢ A variety of different work conditions trialed and the greatest
increases in productivity were due to: the group atmosphere
and participative supervisions
➢ Conclusion: Work is a group activity and need for recognition,
security and sense of belonging are more important in determining
productivity than physical conditions of work
➢ Human Relations Movement: Emphasizes satisfaction of employees’
basic needs as key to increased worker productivity
➢ Human Resources Perspective: Suggests jobs should be designed to
meet higher level needs by allowing workers to use their full potential

Management Science Perspective

➢
Use the application of mathematics, statistics and other quantitative
techniques to managerial problems
➢
Techniques included: Mathematical forecasting, Inventory modeling, Linear
programming, Queuing theory, Simulation

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Recent Historical Trends

➢
Systems theory
➢
System: Set of interrelated parts that function as a whole
➢
Subsystem: A smaller component of a larger system
➢
Open System: Interacts with the external environment
➢
Contingency View
➢ Claims that there is no best way to organize a corporation, to lead a
company, or to make decisions. Instead, the optimal course of action
is contingent (dependent) upon the internal and external
situation Management Themes of the 21st Century
➢
Quality and Performance Excellence
➢
Global Awareness
➢
Learning Organizations
➢
Sustainable Development

Four Functions of Management

➢ Planning: Defining goals for future organizational performance and
deciding on the tasks and use of resources needed to attain them
➢ Organising: Assigning tasks, grouping of tasks into departments
and allocating resources to departments
➢ Leading: Involves the use of influence to motivate employees to
achieve the organisation’s goal
➢ Controlling: Monitoring employees activities, keeping the organization on
track towards its goals, and making corrections as needed

Manager Skills
➢ Conceptual Skills: Cognitive ability to see the organization as a whole and
the relationship among its parts
➢ Human Skills: Ability to work with and through other people and to
work effectively as a group member
➢ Technical Skills: The ability to apply expertise and perform a special
task with proficiency

Lecture 3
1. To describe the planning process and understand its importance
to management
2. To distinguish between different levels in the planning process and
analyse their alignment
3. To distinguish the difference between different planning types
and models
4. To explain the challenges of planning in turbulent environments and how
they can be resolved
5. To describe the shift towards new planning approaches and explain
why the shift occurred
6. To describe the control process and understand its connection
to planning

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7. To distinguish between different types of focus for control and

evaluate their usefulness
8. To explain the steps in the feedback control model and evaluate their
usefulness
9. To explain the changing philosophy of control and why this change
has occurred

The Planning Process

1. Goal: A desired future state that the organization attempts to realize
2. Plan: A blueprint specifying the resource allocations, schedules and
other actions necessary for attaining goals

Why are these important?

• Legitimacy, source of motivation and commitment, direct resource
allocation, guide to targeted action, provides rational for decisions,
set performance standards

Planning: The management function of defining goals for future organizational

performance and deciding on the tasks and resource use needed to attain them

Levels in the Planning Process

1. Mission Statement
2. Strategic Goals: Broad statements of where the organization wants to be
in the future pertaining to the organization as a whole
3. Tactical Goals: Define the outcomes that major divisions and departments
must achieve
4. Operational Goals: Specific measureable results expected
from departments, work groups and individuals

Different Planning Periods

1. Long-term: five years and beyond (Strategical goals)
2. Intermediate-term planning: between 1-2 year (Tactical goals)
3. Short-term planning: One year of less (Operational goals)
Note: goals at all these levels must be; aligned, specific, measureable, cover key
result areas, challenging but realistic, defined time period, linked to rewards

Types of Plans:
• Management by objectives: Managers and employees define goals
for every department, project and person
• Single use plans
• Standing plans

Planning in Turbulent Environments

• Contingency Plans: Define organistaion responses to specific
situations, such as emergencies, setbacks or unexpected conditions
• Scenario Planning: Plans that anticipate various situations that
could impact the organization
• Crisis Planning: Plans for unexpected disasters

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Traditional Approach to Planning

• Centralized planning department
• Formal topdown

Modern Approach to Planning

• Decentralized planning staff
• High performance planning paradigm

Organizational Control
• Planning Sets the Direction: Decide where you want to go and decide
the best way to go about it
• Control ensures results: The systematic process through which managers
regulate organizational activities to make the consistent with
expectations established in plan, targets and standards of performance

Feedback Control Model

1. Establish standards of performance
2. Measure actual performance
3. Compare performance with standards
4. Take corrective action
5. Or do nothing or provide reinforcement (if adequate)

Characteristics of Effective Control Systems; Linked to strategy, understandable

measures, acceptable to organizational members, objective and subjective data,
accurate, timely, flexible to contingency, cost effective

Changing Philosophy of Control

❖ Hierarchical control
❖ Stable environments
❖ Top-down, formal authority, measureable standards,
extrinsic rewards, close supervision, rigid culture
❖ Decentralised Control
❖ Unstable environments
❖ Limited rules, flexible authority, emphasis on goals rather than rules
and procedures, teams, employee participation, adaptive culture

Lecture 5
1. To define managerial ethics and distinguish the ethical domain for
human behavior
2. To explain different approaches for evaluating ethical decision making
– utilitarian, individualism, moral rights, justice
3. To describe the factors that influence ethical decision making – individual,
national culture, organization
4. To explain the concept of Corporate Social Responsibility and how it
has emerged
5. To distinguish an organization’s different social reposibilities
6. To evaluate different responses an organization can take to
social demands

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7. To explain how organization can manage ethics and social responsibility

Managerial Ethics
Ethics
• The code of moral principles and values that governs the behavior of a
person or a group with respect to what is right or wrong
• Sets standards of good or bad, or right or wrong, in a person’s
conduct and thereby guides the behavior of that person or group

Three types of human behavior

• Domain of codified law (legal standard)
• Domain of ethics (social standard)
• Domain of free choice (personal standard)

Ethical Dilemma: A situation in which all alternative choices or behaviors have

potentially negative ethical consequences, making it difficult to distinguish
right from wrong

Alternative Approaches for Ethical Decision Making

1. Utilitarian Approach- moral behavior produces greatest good to
the greatest number of people
2. Individualism Approach- acts are moral when they promote
the individuals best long-term interests
3. Justice approach – moral decisions are on stadards of equity, fairness and
impartiality
4. Moral-rights- Moral decisions respect the fundamental rights and liberties
of all people. Eg right to free speech, privacy and life safety

Factors Affecting Ethical Choice

• The individual manager (Kohlberg’s levels of moral development)
• Pre-conventional: Follows rules to avoid punishment, acts in
own interests and obedience for its own sake
• Conventional: Lives up to expectations of others, fulfills duties
and obligations of social system and upholds laws
• Post-conventional: Follows self-chosen principles of justice and
right, aware of differences and balances concern for individual
with concern for common good
• National culture
• Cultural Relativism: Ethical behavior is always determined by
cultural context
• Ethical Imperialism: Behavior that is unacceptable in one’s home
environment should not be acceptable anywhere else
• The organization
• Values of an organistation or department
• The socialization employees into values of the organization
• Organisations rules and policies
• Reward System
• Staff selection

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Corporate Social Responsibility

Corporate social responsibility (CSR): The obligation of the management of an
organization to make decisions and take actions that will enhance the welfare
and interests of social as well as the organization
• Represents a shift from classical economic perspectives on organisations
to a stakeholder perspective
• An organizations performance should be measured by \
• Traditional financial/economic outcomes
• Environmental outcomes
• Social outcomes

Classical Economic Perspective: Managements only responsibility is to maximize

profits for shareholders

Stakeholder Perspective: Management must be concerned for the broader

social welfare for all stakeholders, not just profits

Organizations Social Responsibilities:

• Economic Responsibilities
• Legal Responsibilities
• Ethical Responsibilities
• Discretionary Responsibilities

Organisational Responses to Social Demands

• Obstructive response:denies responsibility and obstructs investigation;

concerned with meeting economic responsibilities only

• Defensive response:admits some errors, defends self but does not

obstruc t; concerned with meeting economic and legal responsibilities

• Accommodative response:accepts social responsibility to (often under ex

ternal pressure) to comply with public interest; concerned with meeting
economic, legal and ethical responsibilities

• Proactive response:seeks to learn what is in public interest and to respon

d without external pressure; concerned with meeting economic, legal,
ethical and discretionary responsibilities

Managing Organisational Ethics and Social Responsibility

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 • Leadership by example
• Leaders make a commitment to ethical values and help others
throughout the organization to embody and reflect those values
• Codes of ethics
• A formal statement of the organisations values regarding ethics
and social issues
• Principle-based statements to define fundamental organizational
values
• Policy-based statements to outline procedures to use in
specific ethical situations
• Ethical Structures
• Ethics committees
• Chief Ethics Officer heading an ethics department
• Ethics training programs
• Supporting Whistle Blowers
• Whistle Blowing: disclosure by an employee of illegal, immoral
or illegitimate practices by the organization
• Law vs organizational barriers

Lecture 6

1. To explain the environment of an organisation

and its importance within an open systems view
2. To distinguish between the external and internal environment of an organ
isation
3. To distinguish between the general and task environment as the two layer
s of the external environment
4. To identify the dimensions that make up the general environment of an o
rganisation and analyse their impact on the organisation
5. To identify the sectors that make up the task environment of an organisati
on and analyse their impact on the organisation
6. To explain the strategies an organization
has for dealing with environmental uncertainty
7. To identify corporate culture as a major factor in the internal environmen
t of an organisation
and explain the difference between visible and invisible culture
8. To explain the relationship between corporate culture and external envir
onment and describe different types of cultures that fit with different env
ironments and strategies
9. To explain the relationship between corporate culture and business perfo
rmance and describe ways leaders of an organization can use culture to
improve performance

The Environment of Organisations

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1. External Environment: All elements existing outside the boundaries of

the organization that have the potential to affect it
2. Internal Environment: Elements within an organisations boundaries
– corporate culture

The External Environment

• General Environment:
• The outer layer of the external environment that affects
the organization indirectly
• Provides the general context for management decision making
• Task Environment:
• The inner layer of the external environment that directly
influences the organisation’s operations and performance
• Includes sectors that conduct day-to-day transactions with
the organizations

The General Environment

• International dimension: events originating in foreign countries, as
well as opportunities for local organisations in other countries
• Technological dimension: scientific and technological advancements in
a specific industry and society at large, including advances in methods
available for converting resources into products and services
• Sociocultural dimension: the demographic characteristics, norms,
customs and values of the population within which the organization
operates
• Economic dimension: the overall economic health of the country
or region in which the organization operates
• Legal-political dimension: government regulations at the local, state
and federal levels, and political activities designed to control
organization behavior
• Natural dimension: all elements that occur naturally on earth,
including plants, animals, rocks and natural resources such as air,
water and climate

The Task Environment

• Customers
• People and organisations in the environment who acquire goods
or services from the organization
• Competitors
• Other organisations in the same industry or type of business
that provide goods and services to the same set of customers
• Suppliers
• Provide the human, information and financial resources and raw
materials that the organization uses to produce its output
• Labour Market
• The people available for hire by the organization

The Organisation-Environment Relationship

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• Environmental Uncertainty: Managers know what goal they wish to achieve,

but information about alternatives and future events is complete
• Managers have two choices when managing the relationship between
their organization and the external environment
1. Adapt to the external environment; make changes within
your organization to cope with uncertainty
2. Influence the external environment; try to change the
external environment

Choice 1: Adapting
Boundary spanning roles
• Roles assumed by people and/or departments that link and coordinate
the organization with key elements in the external environment
• Detect and process information about changes in the environment

Forecasting and scenario planning

Flexible structures
• Interorganisational partnerships – partnership orientation based on
trust and long-term contracts

Mergers and joint ventures

• Scale advantages, spread risk across organisations

Choice 2: Influencing
Advertising and public relations
• Managing customer perceptions about your products and organsation

Political activity
• Building relationships with key members of government

Trade Associations
• An association made up of organisations with similar interests

The Internal Environment – Corporate Culture

• The internal environment comprises factors inside the boundaries or
the organization
• Internal environments are important because they affect what
people think and do at work
• A key component of the internal environment is corporate culture,
which is the system of shared beliefs and values that develops within
an organization and guides the behavior of it members (corporate
culture: the set of key values, beliefs, understandings and norms shared
by members of an organization)

Visible manifestations of corporate culture: all the things one can see, hear
and observe by watching members of the organization:

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• Symbols
• Stories
• Heroes
• Slogans
• Ceremonies

Invisible Culture:
• Expressed values and beliefs can be interpreted from visible culture –
can be discerned from how people explain and justify what they do
• Underlying assumptions and beliefs are the essence of culture and may be
so deeply embedded members may not be consciously aware of them
• Determines why things are the way they are
• Unwritten but shared understandings of the way things are done in the
organization (eg customer is always right)

Culture and the External Environment

• Strong organizational cultures are those where the core values
are uniformly held by organizational members
• Strong culture organisations operate with a small but enduring set
of organizational values
• Highly successful organisations typically emphasise values of
quality, performance excellence, innovation, social responsibility,
integrity, worker involvement, customer service and teamwork
• BUT strong corporate culture alone does not ensure business success
as corporate culture needs to fit with the external environment and the
organsation’s strategy

Four types of corporate cultures based on;

1. The extent to which the external environment requires flexibility or
stability
2. The extent to which a company’s strategic focus is internal or external

Connecting Culture and Business Performance

• Leaders in the organization should establish and maintain core values
that are; relevant, pervasive and strong
• Leaders can influence culture by Symbolic Leadership
• Leaders can use the observable culture to establish and maintain
a desired culture
• Leaders can influence culture by:
1. What they pay attention to and notice
2. Their reactions to problems and crises
3. Role modeling, coaching and mentoring
4. Criteria for reward, promotion, punishment

Lecture 8
• To define strategy and explain why it is important

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• To describe the process of strategic management

• To explain the steps in the strategic management process
• To conduct a SWOT analysis to help formulate strategy
• To distinguish between corporate and business levels of strategy
• To describe different types of corporate-level strategies and use
portfolio analysis to explain when each is appropriate
• To conduct a Porter’s Five Forces analysis to help formulate business-
level strategy
• To describe the generic types of competitive strategies at the business
level and explain when each is appropriate
• To explain the challenges in strategic implementation

Basic Concepts of Strategy

• Strategy: is the plan of action that prescribes resource allocation and
other activities for dealing with the environment, achieving
competition advantage and helping the organisation achieve its goals
• Competitive Advantage:
• What sets the organisation apart from the others and provides it with
a distinctive edge in the marketplace
• Operating in a successful way that is difficult for competitors
to imitate

Strategy should focus on:

• Exploiting a Core Competence – a business activity that an
organisation does particularly well in comparison to competitors
• Building Synergy – the organisation’s parts interact to produce a
joint effect that is greater than the sum of the parts acting alone
• Delivering Value to Customers – combination of benefits customers
receive and costs paid

Strategic Management: The process of formulating and implementing

strategies to accomplish long-term goals and sustain competitive advantage
Strategy Formulation: The stage of strategic management that involves the
planning and decision making that lead to the establishment of the
organisations goals and a specific strategic plan
Strategy Implementation: The stage of strategic management that involves the
use of managerial and organisational tools to direct resources towards achieving
strategic outcomes

Step 1: Evaluate Current Position

• Mission – organisations reason for being
• Goals (eg profitability, market share)
• Existing Strategy

Step 2: Analysis of Environment

SWOT Analysis:

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• Assessing the STRENGTHS and WEAKNESSES in the internal

environment of the organisation along with OPPOURTUNITIES and
THREATS in the external environment
• Objectives of the SWOT is to identify core competencies (core
competencies: special strengths that give an organisation a
competitive advantage because that are rare and difficult to imitate)

Step 3: Levels of Strategy

Corporate Strategy:
• Concerned with the question ‘what business are we in?’
• Relates to the organisation as a whole and the combination of
business units and product lines that make it up
Business Strategy:
• Concerned with the question ‘how do we compete?’
• Relates to each business unit or product line within the organisation
Functional Strategy:
• Concerned with ‘how do we support the business level strategy?’
• Relates to all of the organisation’s major departments

Types of Strategy’s
1. Growth Strategies: Expanding the scale of current operations (eg
diversification, concentration – growth in the same business area)
2. Retrenchment Strategies: Decreasing scale of current operations (eg
liquidation, restructuring)
3. Co-operative Strategies: Strategic alliances to partner with
other organisations for mutual benefit
4. Portfolio Approach: The organisations mix of strategic business units and
product lines that fit together in such a way as to provide the organisation
with synergy and competitive advantage
5. Strategic Business Units: A division of the organisation that has a unique
business mission, product line, competitors and markets relative to other
SBU’s in the same organisation
6. BCG Matrix: A concept developed by the Boston Consulting Group
that evaluates strategic business units with respect to the dimensions
of business growth rate and market share

To find a competitive advantage within these five forces, Porter suggested an

organisation can adopt one of three generic business-level strategies:

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• Cost leadership strategy – organisation aggressively seeks efficient

facilities, cuts costs and employs tight cost controls to be more efficient
than competitors ie seeks to operate with lower costs than competitors
• Differentiation strategy – organisation seeks to distinguish its products or
services from those of its competitors ie offers products that are unique
from competitors and for which consumers will pay a premium
• Focus strategies – organisation concentrates on a specific regional
market or buyer group
• Focused cost leadership – low cost operations in special
market segment
• Focused differentiation – unique product to special market segment

Step 4: Implementation
Challenges and Problems in Implementing Strategy
• Failures of Substance: Inadequate attention to major strategic
planning elements
• Failures of Process: Poor handling of strategy implementation
• Emergent Strategy: Not all strategies are systematically and
deliberately formulated prior to implementation – strategies emerge
over time as managers learn from experience
• Issues of Corporate Governance – System of control and performance
monitoring of top management
• Leadership – How to get people to engage in the continuous
change, refinement and implementation of strategy

Lecture 9:
• To identify basic concepts involved in organising as a management
function (work specialisation; chain of command; authority,
responsibility and delegation; span of control; centralisation and
decentralisation; formalisation)
• To describe the five major types of organisational structures and to
evaluate their usefulness (functional, divisional, matrix, team, network)
• To describe organisational design and compare the two major choices in
organisational design (mechanistic vs organic designs)
• To explain the contingency factors that influence the choice
of organisational design

Organising – Basic Concepts

Organaisational Structure: The framework in which the organization defines how
tasks are divided, resources are deployed and departments are coordinated
1. Set of formal tasks assigned to individuals and departments
2. Formal reporting relationships
3. Design of systems to ensure effective coordination of employees
across department

Organisational Chart

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Work Specialisation: The degree to which organisational tasks are subdivided

into individual jobs, also called division of labour

Chain of command: An unbroken line of authority that links all individuals in

the organisation and specifies who reports to whom

Authority, responsibility and delegation:

• Authority – the formal and legitimate right of a manager to
make decisions, issue orders and allocate resources
• Responsibility – the duty to perform an assigned task or activity
• Delegation – process managers use to transfer authority
and responsibility to positions below them in the hierarchy

Span of Control: The number of employees who report to a supervisor

Centralisation and decentralisation:

• Centralisation – The location of decision authority near top organisational
levels
• Decentralisation – The location of decision authority near
lower organisational levels

Formalisation: the written documentation used to direct and control employees

Types of Organisation Structures:

Departmentalisation – the process of grouping together people and jobs
into work units
Traditional Organisation Structures which achieve departmentalisation are;
1. Functional Structures
2. Divisional Structures
3. Matrix Structures
Newer organisation structures are:
1. Team Structures
2. Network Structures

Functional Structure:
❖ An organisation structure in which positions are grouped into
departments based on similar skills, expertise and resource use
❖ Works well for small organisations producing few products or services

Disadvantages
Advantages
◼
◼ Poor communication and coordination
Economies of scale and efficient resource use across functional departments –
◼ ‘functional chimneys problem’
Task assignment consistent with expertise and ◼
training Slow response to external changes,
lagging innovation
◼ ◼
In-depth training and skill development Decisions concentrated at top of
within functions hierarchy, leading to delay
◼ ◼
Clear career paths within functional Responsibility for problems is difficult to
departments pinpoint
◼
Top manager direction and control ◼
◼ Limited view of organisational goals by
Excellent coordination within functions employees
◼
High quality technical problem solving ◼
Limited general management training for
employees
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Divisional Structures
❖ An organization structure in which departments are grouped based
on similar organizational outputs
❖ Group together people who work on the same product or process, serve
similar customers and/or located in the same area or geographical region
❖ Common in complex organisations
❖ Avoid problems associated with functional structures

Advantages Disadvantages
• Fast response, flexibility in unstable • Duplication of resources across divisions
environments • Less technical depth and specialisation in
divisions
• Fosters concern for customer needs
• Poor coordination across divisions
• Improved coordination across functional
• Less top management control
departments
• Competition between divisions for corporate
• Easy to pinpoint responsibility for product resources
problems
• Emphasis on overall product and division
goals
• Develops general management skills

Matrix Structures:
❖ An organizational structure which uses functional and divisional chains
of command and simultaneously in the same part of the organization
❖ Dual lines of authority – running vertically and horizontally

Team Structures:
❖ Cross-functional teams – a group of employees assigned to a functional
department that meets as a team to resolve mutual problems
❖ Permanent teams – a group of participants from several functions who are
permanently assigned to solve ongoing problems of common interest

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 Network Structures:
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❖ An organization structure that subcontracts major functions to separate

organisations and coordinates their activities from a small headquarters
organization
❖ The network structure can be viewed as a central hub surrounded by
a network of outside specialists to who major functions are outscored

Organisational Design
❖ Choosing and implementing structures that best arrange resources
to serve the organisation’s mission and objectives
The right structure must fit contingency factors:
• Strategy
• Environment
• Technology

Fitting structure to the environment

Mechanic Design:
• Bureaucratic
• Rigid, vertical, centralized structure
• Lots of rules, procedures and clear lines of
authority Organic Design:
• Adaptive
• Wider span of control so more horizontal, decentralized structure
• Lots of delegation of authority to lower levels

Environmental Uncertainty causes:

• Increased differences among departments
• Need for increased horizontal coordination to keep departments
working together
• Need to be flexible and responsive toward environment
Lecture 10
• To describe the process of international strategic management
• To explain the reasons why organisations expand internationally
• To distinguish between the four strategies that organisations can adopt
for their international operations and to understand when each strategy
is appropriate
• To identify the modes of entry into foreign markets and to evaluate when
each mode is appropriate

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• To explain how the sociocultural environment, economic environment,

and legal-political environment impacts on the management of
international operations

International Management and Strategy

• International management involves managing operations in more
than one country
• This arises because organisations develop and implement strategies
in more than one country
• Emerging borderless world

Step 1: Reasons for Expanding Internationality

Increase market size
• Build on competitive advantage in the domestic market by transferring
competencies to international markets where local competitors lack such
skills
Improve return on investment
• Particularly in R & D intensive industries eg.
Biotechnology, Pharmaceuticals
• Protect innovation as patent protection requires a global
perspective Economies of scale and learning
• Increase in efficiency of production as the number of goods
being produced increases. .
• Economies of scale result from expanding the size and/or scope
of markets
• Develop learning and experience curve
Realise location advantage
• Economies that arise from performing a value creation activity in
the optimal location for that activity (Beefeater BBQs in China)
• Lower cost effects: raw materials and labour
• Differentiation effects: access to key suppliers

Step 2: Choose a Strategy for International

Operations Four Strategies (Textbook 255-258)
1. Export Strategy
2. Multidomestic Strategy
3. Globalisation Strategy
4. Transnational Strategy

Export Strategy
• Centralisation of management and product development at home
• Strong home country, head office control over foreign operations
• Very limited local customisation of product, if any

Multidomestic Strategy

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• Strategy and operating decisions are decentralised to strategic business

units (SBU) in each country
• Business units in each country are independent of each other (hence low
on coordination & global integration)
• Products and services are tailored to local markets (high on national
responsiveness)
• Focus on competition in each market (need for advertising modification)
• Assumes markets differ by country or regions
• Prominent strategy among European firms due to broad variety of
cultures and markets in Europe

Globalisation Strategy
• Decisions regarding product design & advertising are centralized in the
home office (hence high on global integration)
• Requires resource sharing and coordination across borders
• Product design and advertising strategies are standardised across
national markets (low on national responsiveness)
• Assumption is that a single world market exists for the product and
therefore focus on the need for global efficiency
• Standardising products leads to global efficiency through economies of
scale

Transnational Strategy
• Seeks to achieve both global integration and national responsiveness
• World-oriented view focusing on using the best approaches and people
from around the world
• Attain efficiency with flexibility to meet specific needs in
various countries
• Difficult to achieve because of simultaneous requirement for strong
central control and coordination to achieve efficiency and local flexibility
and decentralization to achieve local market responsiveness

Step 3: Choosing an Entry Mode

Exporting:
• Organisation maintains its production facilities within its home
country and transfers its products for sale in foreign markets
• Common way to enter new international markets
• No need to establish operations in other countries

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• Establish distribution channels through contractual relationships

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 • May have high transportation costs and encounter high import tariffs and
other trade barriers
• Less control over marketing and distribution
• Difficult to customise products
• Countertrade may be used in less developed countries

Licensing
• Company (licensor) in one country makes certain resources available to
companies in another country (licensee) eg technology, managerial
skills, patent
• Licensing firm is paid a royalty on each unit produced and sold
• Relatively low cost way to enter a foreign market
• Relatively low profit potential
• Licensing firm loses control over product quality and distribution
• A significant risk if the licensee learns technology and competes when
license expires
• Franchising: A form of licensing in which an organisation provides its
foreign franchisees with a complete assortment of materials and services
eg equipment, standardised operating system, managerial advice

Joint Venture
• Most joint ventures (JVs) involve a foreign company with a new
product or technology and a host company with access to distribution
or knowledge of local customs, norms or politics
• Enable firms to share costs, risks and resources to expand into
international ventures
• May be the fastest, cheapest and least risky way to go global if choose
right partner
• May not understand the strategic intent of partners or may experience
divergent goals

Acquisitions
• Purchase of one corporation by another, through either the purchase
of its shares, or the purchase of its assets
• Enable firms to make most rapid international expansion
• Can gain quick increase in market share or access to promising new
technologies
• Can be very costly
• Legal and regulatory requirements may present barriers to foreign
ownership
• Potential to gain synergies in production but may also have to combine
potentially disparate corporate cultures

Greenfield Venture
• The most risky type of direct investment in which a company builds a
subsidiary from scratch in a foreign country
• Most costly and complex of entry alternatives

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• Potentially most profitable, if successful

• Maintain greatest degree of control over production, technology,
marketing and distribution
• May need to acquire expertise and knowledge that is relevant to host
country e.g. local managers have heightened awareness of economic,
political & cultural conditions
• Could require hiring host country nationals or consultants at high cost

Step 4: Assess Management Issues and Risks

• National culture includes the shared knowledge, beliefs and values, as
well as the common modes of behaviour and ways of thinking, among
members of societ
• When choosing a country in which to operate consider the culture’s social
values and similarity/difference to home culture

Dimensions of Hofstede’s Values

Power distance
• Acceptance of inequality in power among institutions, organisations and
people.
Uncertainty avoidance
• Intolerance for uncertainty and ambiguity.
Individualism and collectivism
• Individualism : refers to a loosely knit social framework that values
independence
• Collectivism : refers to a tightly knit social framework where individuals
look after one another
Masculinity and femininity
• Masculinity : focus on achievement, heroism, assertiveness,
work centrality and material success
• Femininity cooperation, group decision making and quality
of life
Time orientation
• Long-term : concern for future, thrift & perseverance
• Short term (concern with past & present, tradition & social obligations)

Sociocultural Environment:
• Management theories are not universal – most theories in this course
are framed from a North American and Western European perspective
• Cross-cultural differences mean management practices cannot always
be transferred successfully from one national culture to another

Economic Environment

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 • Economic conditions in the country where the organisation
operates internationally

Legal-Political Environment
• Political systems and government supervision and regulations in the
country where the organisation operates internationally
• When choosing a country in which to operate evaluate:
• Political risk – risk of loss of assets, earning power or
managerial control due to politically based actions or events by
host governments
• Political instability – riots, revolutions, civil disorders,
frequent changes of government
• Laws and regulations eg consumer protection, information and
labeling, intellectual property rights, employment and safety

Lecture 11
• To explain the Human Resources Management and how it fits
with strategy
• To distinguish between attracting, developing and maintaining a
quality workforce
• To describe what is involved in attracting a quality workforce and
explain why this is important to management
• To describe what is involved in developing an effective workforce
and explain why this is important to management
• To describe what is involved in maintaining an effective workforce
and explain why this is important to management
• To identify contemporary issues in human resource management

Human Resource Management

• HRM is activities undertaken to attract, develop and maintain an
effective workforce within an organisation
• Organisations should take a strategic approach to HRM:
1. All managers are HR managers.
2. Employees are assets.
3. HRM is a matching process.

HRM Process Involves:

1. Attracting an effective workforce
2. Developing an effective workforce
3. Maintaining an effective workforce

Attracting an Effective Workforce

• Attracting individuals who show signs of becoming valued, productive,
and satisfied employees
• Attracting is underpinned by a matching model:
the organisation and the applicant attempt to match each other’s needs,
interests and values
Attracting involves:

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1. HR Planning
2. Recruiting
3. Selecting

HR Planning
• Human resource planning
– The forecasting of HR needs and the projected matching of
individuals with expected job vacancies.
• Consider key questions eg emerging new technologies; volume
of business, staff turnover

Recruiting
• Recruiting is …
• Activities or practices that define the desired characteristics
of applicants for specific jobs.
• Recruiting requires assessing organisational needs
• Job analysis
– The systematic process of gathering and interpreting
information about the essential duties, tasks and
responsibilities of a job.
• Job description
– A concise summary of the specific tasks and
responsibilities of a particular job.
• Job specification
– An outline of the knowledge skills, education and
physical abilities needed to adequately perform a
job.

Selecting
• The process of determining the skills, abilities and other attributes
a person needs to perform a particular job.
• Choosing from the pool of recruited applicants

Developing an Effective Workforce

I. Employee Orientation
II. Training
III. Performance Appraisal

Orientation
• Set of activities designed to familiarise new employees with their jobs,
coworkers and key aspects of the organisation. Eg mission, policies
and procedures
Training
• Training and development is…
– Planned effort by an organisation to facilitate employees’ learning
of job-related skills and behaviours
• Types of training activities:
– On-the-job training (most common)
– Mentoring and coaching

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– Classroom training
– Self-directed learning
– Computer-based training

Performance Appraisal
• The process of observing and evaluating an employee’s
performance, recording the assessment and providing feedback.
Assessing performance
– Multidimensional ratings
– 360-degree feedback
– Performance review ranking systems
– Behaviourally anchored scale

Making an Effective Workforce

Maintaining a quality workforce, especially in dynamic environments, requires
consideration of:
i. Career development
ii. Work-life balance
iii. Compensation and benefits
iv. Retention and turnover

Career Development
A sequence of jobs that constitute what a person does for a living
• Career path
• Career planning
• Career plateau

Work-life Balance
• How people balance career demands with personal and family needs
• Contemporary work-life balance issues:
– Single parents
– Dual-career couples
– Family-friendliness as screening criterion used by candidates.

Compensation and Benefits

• Monetary payments and non-monetary goods and commodities
(benefits, vacations) used to reward employees
• Wage and salary systems:
– Job-based vs Skill-based (or Competency-based)
– Compensation equity
– Pay-for-performance

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• Benefits: non-monetary forms of compensation

– Some are required by law eg Superannuation, holiday leave
loading, worker’s compensation
– Some optional eg health insurance, company car, onsite fitness
centres, subsidised child care

Retention and Turnover

• Replacement is the management of promotions, transfers, terminations,
layoffs and retirements.
• Replacement decisions relate to:
– Transferring or promoting people between positions within the
organisation
– Retirement
– Voluntary Turnover
– Involuntary turnover (eg mergers, cutbacks, poor performance)

Contemporary Issues in HRM

• Focus on building human capital to drive performance (Human capital =
The economic value of the knowledge, experience, skills and capabilities of
employees)
• Globalisation adds complexity to HRM
• Information technology
– Human resource information system – integrated computer system
designed to provide data and information used in HR planning and
decision making
• Innovations in HRM:
– Becoming an employer of choice
– Teams and projects
– Temporary and part-time employees
– Technology
– Promoting work/life balance
– Rightsizing the organisation

Lecture 12
• To describe effective management and explain the importance of
innovation an change management
• To distinguish between invention and innovation and different types of
innovation
• To explain the forces driving innovation

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• To describe the innovation process, including the roles in the innovations

process
• To explain the importance of internal and external collaboration for
innovation management
• To distinguish change management involving people and culture
• To explain organisation development as a type of change management
• To describe how resistance to change impacts the implementation of
innovation and change management and identify tactics for overcoming
resistance

Human Resource Management

• Fundamental practices common to effective organisations
- Leadership practices
- People management practices
- Customer focus practices
- Quality and process management practices
- Innovation management practices
- Knowledge management practices

Innovation Management
• Invention is the act of discovery of a new idea
• Innovation occurs when that invention is developed and commercialised
for a market … it is the act of converting new ideas into usable
applications that ideally have positive economic or social consequences
Innovation = Invention + Commercial Exploitation

Types of Innovation
• Product Innovation – a change in the organisation’s product or service
outputs ie. Results in new products or services
• Technology Innovation – a change that pertains to the organisation’s
production process ie. Results in better ways of doing things
• Incremental Innovations – new products or process that modify existing
ones
• Radical Innovations – breakthrough products that are new-to-the-world
and offer significant performance solutions to a consumer problem

Forces Driving Innovation

• The need to stay competitive
• Potential to lower costs of production
• Possibility of first-mover advantages – customers may be willing to pay a
higher price because the product/service is the first-of-its-kind and offers
them unique benefits

Innovation Management: The Process

Four steps of innovation process
1. Idea creation
- Discovering potential product or way to modify an existing one
2. Initial experimentation
- Sharing the idea with others and testing it in prototype form

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3. Feasibility determination
- Testing the practicality and financial viability of the new product
4. Final application
- Commercialising the product or sale to customers or clients

Roles in the Innovation Process

1. Inventor
- Develops technical aspects of idea but does not know how to
win support or turn into business
2. Idea Champion
- Believes in idea, obtains financial and political support
3. Sponsor
- High-level manager who approves & protects idea &
removes organisational barriers
4. Critic
- provides reality test against rigorous business criteria

Cooperation
• Internal coordination
- Idea incubators - inside the organisation can provide
safe harbour for development of ideas
- Horizontal linkages – shared development of innovations among
several departments
• External coordination
- Open innovation – extending search for and commercialisation
of ideas beyond the boundaries of the organisation

Cooperation
Companies that successfully innovate have:
1. People in marketing with good understanding of customer needs
2. Technical specialists aware of recent developments
3. Members from key departments cooperating in the development of
new products
4. Formal strategic partnerships such as alliances and joint ventures
5. Mechanisms to promote open innovation

Change Management: People and Culture

• People change
- Changing the attitudes and behaviours of a few employees
• Culture change
- A major shifts in the norms, values, attitudes and mindset of
the organisation

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• Training and development

- Most frequently used approach to change
• Organisation development
- Planned, systematic process of change that uses
behavioural science techniques to improve an
organisation’s health and effectiveness through
• Ability to cope with environmental changes
• Improvement of internal relationships
• Increased problem-solving capabilities
- OD is useful for mergers and acquisitions, organisational
decline and revitalisation and conflict management

Steps in Organisation Development:

1. Unfreezing
- Diagnosis stage in which people in organisation become aware of
problems and become willing to change
- Problem = discrepancies between desired state and current state
- Problem may be diagnosed by a change agent
2. Changing
- Intervention stage in which individuals experiment with
new workplace behaviour/skills
3. Refreezing
- Reinforcement stage in which individuals acquire a desired new
skill or attitude and are rewarded for it by the organisation

Implementing Innovation and Change Management

• Resistance to change (due to)
- Self-interest
- Lack of understanding and trust
- Uncertainty
- Different assessments and goals
• Implementation tactics
- Communication and education
- Participation
- Negotiation
- Coercion
- Top management support

Putting it all together… Effective Management

• Principles common to world’s best organisations
- Agreed purpose and direction throughout the organisation
- Empowered staff with decisions made at the right level
- Execution excellence
- Diligence, focus and discipline

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- Learning as a key principle of the organisation
- Integrity, values and ethical high road
- Distinctive capabilities and position

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