MGMT 1001 THEORY NOTES

Chapter 1: Organisations and Management

Learning Outcome
1. Why are managers so
important?

2. What is an organization?

Organisations need their managerial skills and abilities

Role in identifying critical issues and crafting responses
Crucial in getting things done
Allow the business to achieve its goals: coordinating plans, systems
and conditions

A deliberate arrangement of people of people to accomplish some specific

purpose.
Has a distinct purpose
Composed of people
Develop some deliberate structure so that the members can do their
work
However the nature of an organisation is consistently changing (societal,
environmental, economic): team orientated, flexible, casualization, employee
involvement, diverse workforce, work anywhere

3. Who are managers?

Manager: Someone who coordinates and oversees the work of other people
so that organisational goals can be accomplished

4. What do managers do?

Top managers: Managers (near the top) are responsible for making
organisation-wide decisions and establishing the goals and plans that
affect the entire organisation
Middle managers: Manage the work of first-line managers
First line managers: Manage the work of non-managerial employees
who are directly involved with he production or creation of the
organizations products.

Management: The process of coordinating and overseeing the work activities

of others so that their activities are completed efficiently and effectively

Efficiently: Getting the most output, from the least amount of inputs (low
resource waste)
Effectively: Doing things right, completing activities so that
organisational goals are attained (high goal attainment)

Management functions:
1. Planning: Setting goals, establishing strategies, developing plans to
integrate and coordinate activities
2. Organising: Arranging and structuring work that employees do to
accomplish the organisations goals
3. Leading: Working with and through people to accomplish organisational
goals
4. Controlling: Monitoring, comparing and correcting work performance
Management roles:
1. Interpersonal: Involve people and other duties:figurehead, leader,
liaison (maintain self-developed network of outside contacts)
2. Informational: Receiving, collecting and disseminating information:

spokesperson (holds meetings), reading reports

3. Decisional: Making decision, entrepreneur, initiate and oversee new
projects that will improve organisational performance, disturbance
handler, resource allocator, negotiator
Management skills:
1. Technical skills: Knowledge of and proficiency in a certain specialised
field (job-specific knowledge to perform tasks) - tend to be more
important for lower-level managers who are managing employees who
are using tools and techniques to produce the organisations products
or service
2. Human skills: The ability to work well with other people individually and
in a group, cooperate effort within a team, to motivate and to manage
conflict. (Important for managers at all levels)
3. Conceptual skills: Ability to think and to conceptualise about abstract
and complex situations (see organisation as whole, effective decision
making, needed by all managers but become more important in top
management position)

5. Is the managers job

universal?

Organisational level
All managers, regardless of level, make decisions
The amount of time they give to each function is not necessarily the
same, (content of managerial functions changes with managers level
e.g. top managers: designing overall organisation, lower-level: focus on
job design for individuals)
As managers move up = more planning, less direct supervising
Organisational area
Relative degree and mixture of roles performed by a particular manager
will depend on the functional area of the organisation
Also some roles are universally required for managers independently of
their function areas, and that all have to perform the managerial
component & functions

6. How is the managers

job changing.

Organisational size
Small business manager: most important role is spokesperson,
outwardly directed activities as meeting with customers, arranging
finance, searching for new opportunities
Large organisation: directed internally, deciding which organisational
units get what resources and how much of them = resource allocator

Changing workplaces, global economic and political uncertainties,

environmental concerns, corporate ethics scandals, technological
advancements, change is constant.
1. Changing technology (digitalisation) = virtual workplaces, more mobile
workforce, flexible work arrangements.
2. Increased threats to security = restructured workplace, employee
assistance, risk management
3. Increased competitiveness= customer service, innovation, globalisation,
efficiency/productivity
4. Increased environmental concerns = management for sustainability,
recycling, carbon-neutral operations

Customers: Delivering consistent, high-quality service is essential for

success and survival, customer-responsive organisation, friendly and
courteous service, accessible, prompt in responding to customer

7. Why study management

needs.
Social media; forms of communication are becoming important and
valuable tools in managing.
Innovation: Important for organisations to be competitive, and
managers to improve entrepreneurial skills.
Sustainability: Business goals are developed to manage in efficient and
effective way, responding strategically, increase long-term shareholder
value
Universality of management: managers are needed in all types and
sizes of organisations, at all levels and work areas and in global
locations
The reality of work: you will either manage, or be managed.
Managing yourself: Greater need to take greater control of our own
actions in the new types of organisations that are developing
Awareness: That there are significant rewards (such as creating work
environments to help employees work the best of their ability; support
and encouragement; helping others find meaning and fulfillment in
work; challenges in being a manager

CHAPTER 2: EVOLUTION OF MANAGEMENT THEORY

Learning Outcome
Studying history is important because it helps us see the origins of
todays management practices and identify what has and has not
worked
Early examples: construction of the Egyptian pyramids, arsenal of
Venice
Publication of Adam Smiths The Wealth of Nations: argued the
benefits of division of labour (job specialisation)
Industrial revolution: became more economical to manufacture in
factories than at home
Managers were needed to manage these factories, and these
managers needed formal management theories to guide them.

1. Provide some examples

of early management
practice

Development of the main management theories:

1. Classical Approach (Scientific Management - General administrative)
2. Quantitative approach
3. Behavioural Approach (Early advocates - Hawthorne studies Human relations movement - Behavioural science theorists)

4. Contemporary Approach (Systems theory - Contingency)

2. Discuss the important
contributions of scientific
management within the
classical approach

Classical Approach: First studies, emphasised rationality and making

organisations and workers as efficient as possible

Scientific management: Involves using scientific methods to define

the one best way for a job to be done

Frederick W. Taylor: Father of scientific management, studied

manual work using scientific principles- guidelines for improving
production efficiency- find the one best way to do those jobs.
o Use scientific methods to find the best way to do the job

3. Explain the influences of

general administrative
theorists within the
classical approach

4. Describe the quantitative

approach

The Gilbreths: Finding efficient hand-and-body motions and designing

proper tools and equipment for optimising work performance
Today, managers use these contributions when analyse basic work
tasks to be performed, use time-and-motions studies to eliminate
wasted motions, hire the best-qualified workers for a job, design
incentive systems based on output (All aimed to + efficiency)

General administrative approach: Focuses on describing what

managers do and what constituted good management practice

Fayol: Functions of management were common to all business

endeavours but also were distinct from other business functions.
o Developed 14 principles: attention was direct at the activities of
all managers (e.g. division of work, authority, discipline,
centralisation)

Weber: Described an ideal type of organisation as a bureaucracy

(organisation characterised having characteristics that many of todays
large organisations still have.

Today, managers use the concepts of general administrative theory

when performing the functions of management and structure their
organisations: efficient and effectively.

Use of quantitative techniques, such as data collection and

mathematical manipulation of that data, to improve decision-making.
Total quality management: devoted to continual improvement and
responding to customer needs and expectations
Today: use quantitative especially when making decisions as they plan
and control work activities e.g. budgeting, allocating resources,
improving quality, scheduling work, determining optimum inventory
levels

5. Discuss the
development and uses of
the organisational behavior
approach

Scientifically select, train and develop the workers (choosing

right person on the job with correct tools and equipment, follow
the instructions exactly)
Ensure cooperation from the workers by offering incentives
(motivation, economic incentive that is significantly higher than
daily wage)
Allocate work and responsibilities to workers and managers

The early OB advocates: all believed that people were the most
important asset of the organisation and should be managed.
Hawthorne Studies: scientific management experiment: emphasis on
the human behaviour factor in managing - group factors: group
standards establish individual worker output, group attitudes.
The study stimulated an interest in human behaviour in organisations
Largely shaped how todays organisations are managed: foundation for
current theories of motivation, leadership, group behaviour.

6. Explain the systems and System theory: Organisation takes in inputs from the environment and
contingency theories in the transforms these resources into outputs that are distributed into the
environment.
contemporary approach
Helps us understand management, since managers must ensure that
all interdependent units are working together in order to achieve the
organisations goals

Realise that decisions and actions taken in one organisational area will
affect others.
Recognise that organisations are not self-contained, rely on their
environment for essential inputs and as outlets to absorb outputs

Contingency theory: Organisations are different, different situations that

require different ways of managing.
Helps us understand management: stresses that there are no simplistic
or universal rules for management.
Managers must look at their situation and determine the best way.

7. Provide examples of
current trends and issues
that are influencing
management today

Globalisation, ethics, workforce diversity, entrepreneurship, learning

organisations and knowledge management, and sustainability.

CHAPTER 3: DECISION MAKING

Learning Outcome

1. Identify the eight steps

in the decision-making
process

2. Discuss the three ways

managers make decisions

1. Identify problem
2. Identify decision criteria
3. Weight the criteria
4. Develop alternatives
5. Analyse alternatives
6. Select alternatives
7. Implement alternative
8. Evaluate decision effectiveness
1. The assumptions of rationality: problem is clear and unambiguous,
single, well-defined goal to be achieved: all alternatives and
consequences are known.
Rational decision making: choices that are consistent and value
maximising the organisations interests
Assumes that decisions are made in the best economic interests
2. Bounded rationality: Behaviour that is rational within the parameters of a
simplified decision-making process that is limited by an individuals ability
to process the information
Because managers cannot possible analyse ALL information on all
alternatives, managers satisfice: accept the solutions are good enough
Escalation of commitment: managers increase commitment to a decision
even when they have evidence it may have been wrong.

3. Intuitive decision making: Making decisions on the basis of experience,

feelings and accumulated judgment

3. Explain the two types of

problems and decisions

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

approach and are used when the problem being resolved is straightforward,
familiar and easily defined (structured)

Non-programmed decision: unique decisions that require a custom-made

solution, used when problems are unusual (unstructured), information is
ambiguous or incomplete.
Certainty: Ideal situation in which a manager can make accurate
decisions because all outcomes are none.
Uncertainty: Situation where a manager is not certain about the
outcomes and cannot even make reasonable probability estimates.
o Psychological orientation: follow a maximax (maximising the
maximum possible playoff); a maximin choice (maximising the
minimum possible playoff), or a minimax choice (minimising the
maximum regret: amount of money that could have been made
if a diff decision was made)
Risk: Can estimate the likelihood of certain outcomes

4. Contrast the three

decision-making
conditions

5. Describe two different

decision-making styles

Reflects two things: source of information (external or internal) and how they
process that information (linear or non-linear)
1. Linear thinking style: Characterised by a persons preference for using
external data and processing this information through rational, logical
thinking
2. Non-linear thinking: Characterised by a preference for internal sources of
information and processing this information with internal insights, feelings
and hunches.

6. Identify some common

decision-making errors
and biases

7. Describe some effective

decision-making
techniques for todays
world.

Overconfidence
Immediate gratification
Selective perception
Framing
Availability
Randomness
Representation
Hindsight
Self-serving bias
Understanding cultural differences in decision making, knowing when it
is time to call it quits, using effective decision-making process, building
an organisation that can spot the unexpected, quickly adapt to the
changed environment.

6 characteristics of an effective decision-making process:

1. Focuses now hat is important
2. Logical and consistent
3. Acknowledges both subjective and objective thinking, blends both
analytical and intuitive approaches
4. Requires only enough information as is necessary to resolve a problem
5. Encourages and guides gathering of relevant information and informed
opinions
6. Straightforward, reliable, easy to use and flexible.
Five habits of highly reliable organisations
1. Not being tricked by their successes
2. Deferring to experts on the front line
3. Letting unexpected circumstance provide the solution
4. Embracing complexity
5. Anticipating, but also recognising limits.

CHAPTER 4: SOCIAL RESPONSIBILITY AND ETHICS

Learning Outcome

1. Contrast the classical

and socioeconomic views,
and evaluate to whom
managers could be
responsible

2. Discuss what it means to

be socially responsible,
and describe factors which
influence that decision

Classical view: Managements only responsibility is to maximise profits.

Managers are only responsible to the owners (shareholders) of a
business
Socioeconomic view: Responsibility goes beyond making profits, to include
protecting and improving societys welfare
Managers are responsible to society as a whole, and in between to
employees, customers, and suppliers (range of stakeholders)

Social obligation: reflects the classical view of social responsibility, is

when a firm engages in social actions because of its obligations to
meet certain economic and legal responsibilities
Social responsiveness: Firm engages in social actions in response to
popular social need
Social responsibility: Business intention beyond its economic and legal
obligations to pursue long-term goals that are good for society

To determine whether and organisation should be socially involved:

1. Looking for arguments for and against (For: public image, shareholder
interest, long-run profits / Against: violation of profit maximisation, costs, lack
of skills)
2. Assess the impact of social involvement on economic performance
3. Evaluate the performance of socially responsible investment funds versus
non-SRI funds

3. Explain ecologically
sustainable management,
and discuss how
organisations can go
green

Ecological sustainable management: When managers consider the impact of

their organisation on the natural environment (recognition of this close link)
1. Legal (light green) approach: Simply doing what is required legally, obey
rules and regulations willingly and without challenge e.g. complying with
relevant environmental laws, not going further
2. Marketing approach: Respond to environmental preferences of its
customers, whatever customers demand in terms of environmentally friendly
products will be what the business provides (social responsiveness)
3. Stakeholder approach: Works to meet the environmental demands of
multiple stakeholders such as employees, suppliers or the community (social
responsiveness)
4. Activist/Dark Green Approach: Looking for ways to respect and
preserve the earth and its natural resources (social responsibility) - highest
degree of environmental sensitivity
Green action: Evaluated by examining reports (sustainability report:
framework for reporting performance encompassing the triple bottom link of
economic, environmental and social issues) about their environmental
performance, looking for compliance with global standards for environmental
management (ISO 14000) using the Global 100 list of the most sustainable
corporations.

4. Discuss the factors that

lead to ethical and
unethical behavior

Ethics: Refers to the principles, values, and beliefs that define right and
wrong decisions and behaviour
1. Stage of moral development
Pre conventional- Person choice between right and wrong is based on
the personal consequences involved such as physical punishment,
reward.
Conventional: moral values reside in maintaining expected standards,
living up to others.
Principled: clear effort to define moral principles regardless of the
authority of groups
2. Individual characteristics
Value: Basic convictions about what is right and wrong
Personality: ego strength: personality measure / locus of control:
reflects the degree to which people believe they control their own fate)
3. Structural variables
Structural design, use of goals, performance appraisal system, reward
allocation procedures
4. Organisational culture (Shared values and cultural strength)
5. Intensity: Greatness of harm, consensus of wrong, probability of harm,
immediacy of consequences, proximity to victims.
Since ethical standards are NOT universal, managers should know what is
allowed or not legally, important to recognise any cultural differences, and
clarify ethical guidelines for employees working in different global locations
know the principles of the Global Compact

5. Describe managements
role in encouraging ethical
behavior

Behaviour of managers: single most important influence on an individuals

decision to act ethically or unethically.

6. Discuss current social

responsibility and ethics
issues

1. Managing ethical lapses & social irresponsibility

Ethical leadership: Be a good role model by being ethical and honest
(ethical leaders are honest, share their values, stress important shared
values, and use the reward system appropriately)
Can protect whistleblowers by encouraging them to come forward:
setting up ethics hotlines, establishing a culture where employees can
complain and be heard without fear of reprisal

Ways to encourage ethical behaviour:

Paying attention to employee selection
Having and using a code of ethics
Recognising the important ethical leadership role they play and how
what they do is more important
Make sure that goals (suitable and achievable) and the performance
appraisal process do not reward goal achievement without taking into
account how those WERE achieved: ethics training, independent social
audits & establishing protective mechanisms

2. Social entrepreneurship
Seeking out opportunities to improve society by using practical, innovative
and sustainable approaches.
3. Promoting positive social change

Promote positive social change: corporate philanthropy and employee

volunteering efforts.
Enhance employees work efforts and motivation

CHAPTER 5: INDIVIDUAL BEHAVIOUR (ATTITUDE, PERCEPTION, PERSONALITY)

Learning Outcome

1. Identify the focus and

goals of organisational
behavior

Organisational behaviour (OB): concerned with the actions of people at

work.
Challenges in understanding OB: Hidden organisational elements
(attitudes, perceptions, norms etc) are not obvious (individualistic)

Focus (3)
Individual behaviour (Attitudes, perception, personality, learning,
motivation)
Group behaviour (Norms, roles, team building, conflict, leader)
Organisational aspects (Structure, culture, HR policies)
Goals: Explain, predict and influence behaviour, to manage employees
behaviour.

2. Define the six important

employee behaviors that
mangers want to explain,
predict and influence

3. Explain the role that

attitudes play in job
performance

1.
2.
3.
4.

Employee productivity: measure of efficiency & effectiveness

Absenteeism: Failure to report to work
Turnover: Voluntary/Involuntary
Organisational citizenship behaviour (OCB): discretionary behaviour
not part of an employees formal job requirements: promotes the
effective functioning of an organisation (e.g. volunteering for extend job
activities, helping other employees)
5. Job satisfaction: general attitude
6. Workplace misbehaviour: intentional harmful behavior
3 Components of Attitudes:
1. Cognitive component: beliefs, opinions, knowledge or information help
by a person.
2. Affective component: Emotional or feeling part of an attitude
3. Behavioural component: Intention to behave a certain way towards
someone or something
Job-Related Attitudes:
Job involvement: Degree to which an employee identifies with their job,
actively participates, considers performance to be important to be
important to self worth.

Organisational commitment: Degree to which an employee identifies

with a particular organisation and its goals, wishes to maintain
membership

Employee Engagement: connected to, satisfied and enthusiastic with

their jobs.

Job Satisfaction: Trend with employees are experiencing high levels of

work intensification, and women in particular are experiencing
worsening work-life balance.
o High job satisfaction = positively influences productivity, lowers
absenteeism, lowers turnover rates, promotes positive
customer satisfaction (frontline employees in service),
moderately promotes OCB, helps minimise workplace
misbehaviour.
_____________________________________________________________

LINK TO MANAGERS
o Managers should be interested in attitude: give warnings of potential
problem and influence behavior.
o Given that mangers want to keep absences down- especially among
productive employees- want to do things that will generate positive job
attitudes e.g. flexible work options, monetary incentives, management
support programs.
o Managers should focus on factors that are conducive to high levels of
employee job satisfaction etc.
o Recognise that employees will try to reduce dissonance- pressure to
reduce is minimized if it is perceived as externally imposed, however
can offset if rewards are significant.

4. Describe the various

personality theories

Myers-Briggs Type Indicator (MBTI): Personality using four dimensions

o Social interaction (extrovert or introvert)
o Preference for gathering data (sensing or iNtuitive: established
routines or solving new problems)
o Preference for decision making (feeling or thinking:
emotions/personal values or use reason and logic to deal)
o Style of making decisions (Perceptive or judgmental: curious,
spontaneous, flexible or control and prefer their world to be
structured)

The Big Five Model: Five basic personality dimensions underlie all
others and encompass most of the significant variations in human
personality.
o Extraversion (Degree of sociable, talkative)
o Agreeableness (Cooperative, trusting)
o Conscientiousness (Responsible, dependable)
o Emotional stability (Calm, secure: positive/negative)
o Openness to experience (imaginative, intellectual)

Additional personality insights

o Locus of control (Degree to which people believe they control
their own fate)
o Machiavellianism (Degree of people who maintain emotional
distance, pragmatic)
o Self-esteem
o Self-monitoring (adjust behavior to external, situational factors)
and risk taking.
o Other personality traits: resilience (overcome challenges),
proactive (take action until meaningful change)

LINK TO MANAGERS:
o Main value in understanding personality differences lie in employee
selection: use personality traits when recruiting

o Likely to have high-performing, more-satisfied employees when

matching personalities with jobs.

o Satisfaction is highest, turnover lowest when personality and

occupation are compatible e.g. social individuals should be in
people-type/service jobs.
To work effectively, must understand each other = fine-turn your
emotional reactions/relationships to suit a situation.

o
5. Describe perception and
factors that influence it

Perception: how we give meaning to our environment by organising and

interpreting sensory impressions.
Attribution theory depends on three factors: explains how we judge
people differently depending on the meaning we attribute to a given
behavior
Whether these 3 factors are low or high in frequency, help managers
determine whether employee behavior is attributed to external or
internal causes.
o

Distinctiveness (individual displays different behaviours in different

situations, whether it is unusual or not: if it is unusual: attribute the
behavior to external forces, beyond the control of the person- high
distinctiveness)

Consensus (others facing a similar situation respond the same:

consensus is high = likely to give an external attribution that is an
outside factor)

Consistency (Engages in behaviour regularly and consistently,

respond the same way over time? High consistency = attribute to
internal causes)

Fundamental attribution error: tendency to underestimate influence

of external factors and overestimate internal factors when making
judgment (e.g. sales manager prone to attribute poor performance of
her sales representatives to laziness rather than to the innovative
product line of a competitor)

Self-serving bias: tendency to attribute our own successes to internal

factors, and put blame for personal failure on external factors such as
luck.
Three shortcuts in judging others: assumed similarity, stereotyping, and
the halo effect (general impression based on a single characteristic)

_____________________________________________________________
LINK TO MANAGERS:
o Managers need to recognise that their employees react to
perceptions, not reality.
o If individuals perceive appraisals to be biased, they will behave as if
those conditions actually exist. Always potential for perceptual
distortion.
o Managers need to recognise how shortcuts can influence their
perception when recruiting/performance appraisals.
o Can reduce perceptual errors/distortions such as comparing to an
objective measure, or asking if others agree with that perception.

Learning: Any relatively permanent change in behavior that occurs as a

result of experience.

6. Discuss learning
theories and their
relevance in shaping
behaviors

Operant conditioning: argues that behaviour is a function of its

consequences; managers can use it to explain, predict and influence
behavior (desired voluntary behavior leads to a reward or prevents a
punishment)

Social learning theory: individuals learn by observing what happens to

other people, and directly experiencing something.

Shaping behavior: Managers can shape behaviour by using: positive

reinforcement, negative reinforcement, punishment, or extinction.

_____________________________________________________________
LINK TO MANAGERS:
o Issues if whether managers are going to manager their learning
through the rewards they allocate and the examples they set, or
allow it to occur.
o Managers should expect that employees will look to them as models,
read the message they are sending and model their behavior
accordingly e.g. act a s appositive role model= picked up by their
employees.

7. Discuss contemporary
issues in organizational
behavior

Challenge of generation Y workers: new attitudes to the workplace e.g.

aim to work faster and better, want fair and direct managers, seek out
creative challengers.
Main challenges: Appearance, technology, management style.
Workplace misbehaviour can be dealt with by recognising that it exists,
screening potential employees for possible negative tendencies, paying
attention to employee attitudes through surveys about job satisfaction
and dissatisfaction.
Recognition of workplace bullying

CHAPTER 6: COMMUNICATION
Learning Outcome

1. Define the nature and

function of communication.

2. Identify the seven

components of the
communications process

Communication is the transfer and understanding of meaning

Interpersonal communication: communication between two or more
people
Organisational communication: all patterns, networks and systems of
communication
Functions of communication: controlling employee behavior, motivating
employees, release of emotional expression of feelings and fulfillment of
social needs, providing information

Seven elements
Should be noticed that the entire communication process is susceptible
to noise- disturbances that interfere with the transmission, receipt or
feedback of a message
1. Sender: who has the message

2. Message
3. Encoding: Converting a message into symbols
4. Medium: channel a message travels along
5. Decoding: When the receiver translates a senders message
6. Receiver
7. Feedback

3. Compare and contrast

methods of interpersonal
communication

Which method a manger used reflect the needs of the sender: the
attriutes of the message, needs of receiver. .
Methods of interpersonal communication:
Face-to-face, telephone, group meetings, formal presentations, memos,
fax, employee publications, bulletin boards, audio, voice male.
Non-verbal communication: without words, or using body language:
gestures, facial expressions.
Verbal intonation: emphasis to given words or phrases that conveys
meaning.
Can evaluate the various communication methods according to their
feedback, confidentiality encoding and decoding ease, interpersonal
warmth, formality and time of consumption
1. Filtering: deliberate manipulation of information to make it appear more
favorable to the receiver
2. Emotions: how they feel = how they interpret
3. Information overload: exceeds their processing capacity, do not
understand certain things
4. Defensiveness: feel threatened = react in ways that reduce their ability
to achieve mutual understanding
5. Language: words mean different things that are influenced by age,
education, cultural background e.g. jargon
6. National culture.

4. Identify barriers to
effective interpersonal
communication, and
describe how to overcome
them.

- Managers can overcome these barriers by using feedback, simplifying

language, listen activity (listen for full meaning without making premature
judgments, constraining emotions.

5. Explain how
communication can flow
most effectively in
organisations.

6. Describe how
information technology
affects managerial

Formal communication: takes place within prescribed organisational work

arrangements.
Informal communication: not defined by organisations structural
hierarchy.
Three way communication networks:
o The chain, in which communication flows according to the formal
chain of command
o The wheel: communication flow between a clearly identifiable
and strong leader and others in a work team
o All channel: communication flows freely among all.
Managers should manage the grapevine as an important information
network.
They can minimise the negative consequences of rumours by
communicating openly, fully and honestly with employees.
Workplace design: should support four types of employee work: focused,
collaboration, learning and socialisation.
Technology has radically changed, improves a managers ability to
monitor performance
Gives employees more complete information with which to make faster

communication

7. Discuss contemporary
issues in communication.

decisions
Provided employees more opportunities to collaborate and share
information
Made it possible for people to be fully accessible, anytime, anywhere
Affects organisations by affecting the way that organisational members
communicate, share information and do their work.
Two main challenges: legal and security issues, and lack of personal
interaction.
Potential for cyberbullying, as a new and disturbing trend.
Communicating with customers: what and how communicate takes place
can significantly impact ta customers satisfaction with the service and
the likelihood of being a repeat customer.
Important for organisations to get input from employees
Organisations can manage knowledge by making it easy for employees
to communicate and share their knowledge so they can learn from each
other: improve effectiveness and efficiency
o Online information databases
o Creating communities of practice.
Important that communication is ethical: encouraged through clear
guidelines and through answering questions that force a communicator
to think through the communication choices made and the consequences
of those choices.

CHAPTER 7: TEAMS (TASHS NOTES)

Learning Outcome

1. Define the term group,

and describe the stages of
group development
2. Discuss the main
components that
determine group
performance and
satisfaction
3. Differentiate between
work groups and work
teams, and describes four
common types of work
teams.
4. Identify the
characteristics of an
effective work team.

5. Discuss contemporary
issues in managing work
teams.
CHAPTER 8: HUMAN RESOURCES

Learning Outcome

1. Explain why HRM is

important

Important for three reasons:

Significant source of competitive advantage
Important part of organisational strategies: achieving competitive
success through people means managers must change how they
think about their employees and how they view their work
relationship.
The way organisations treat their people = significantly impact
organisational performance = work practices that lead to both high
individual and organisational performance e.g. flexile job
assignments, open communication, training programs, extensive
employee involvement.
Human resource planning (1), recruitment/decruitment (2) and
selection (3): aim to identify and select competent employees
Orientation (4) and training (5) aim to provide employees with up to
date skills and knowledge
Performance managment (6), compensation and benefits (7) and
career development (8) aim to retain competent and high performing
employees

2. Identify the eight HRM

activities, and the three
outcomes they aim to
achieve

3. Describe the important

external influences on the
HRM process

Economy: Global conditions affect the demand of businesses that in

turn affects the human resource management in either recruitment,
decruitment or to help maintain motivation in times of downturns.

Unions: organisations that represent workers and seek to protect their

interests through collective bargaining: which dictate HRM decisions.
However number of employees in unions are declining (private
sector)= individual bargaining.
Legal environment: enacting new laws and regulations= affect HRM
decisions e.g. Fair Work Act 2009 (minimum conditions for
employees, rights and responsibilities), Work Health and Safety Act
2011, Paid Parent Leave Act 2010, Age Discrimination Act, Sex
Discrimination Act.
Demographic trends: e.g. aging workforce could lead to declining
productivity = HRM need to redesign to suit their workers.

4. Discuss the tasks

associated with identifying
and selecting competent
employees

Human resource planning: process by which managers ensure that they

have the right number and kinds of people in the right places, right times, and
capable of performing assigned tasks effectively and efficiently (current
assessment):
Job analysis: assessment that defines a job and the behavior
necessary to perform it
Job description: written statement describing a job; typically job

content, environment and conditions of employments

Job specification: written statement that specifies the minimum
qualification that a person must possess to successfully perform a
given job.

Recruitment/Decruitment
Recruitment: Main sources of potential job candidates- internet, employee
referrals, company website, professional recruiting organisations.
Decruitment: Resignation (voluntary), dismissal (involuntary),
redundancy/retrenchment, job sharing
Selection: Ensure the most suitable employees are selected
Different selection devices: application forms, written tests, work
sampling, assessment centers, interviews, background
investigations, physical exams.
Realistic job preview: gives an applicant more realistic expectations
about the job = should increase job satisfaction and reduce turnover.

5. Explain the different

types of orientation and
training

Orientation: introducing a new employee to their job

Important: results in an outsider-insider transition, make the new
employee feel comfortable and fairly well adjusted = lowers likelihood of
poor work performance, reduces the probability of an early surprise
resignation.
Work unit orientation: familiarizes new employees with goals of work,
and to new co-workers.
Organization orientation: informs about mission, history, procedures,
rules
Training
Two types of training: general (communication, computer skills,
customer service etc) and specific (basic life-work skills, managing
change, diversity/cultural awareness).
Using traditional training methods or by technology based methods.
Important to make sure employees are provided with up-to-date skills
and knowledge

6. Describe strategies for

retaining competent, highperforming employees.

Performance management system: Process of establishing performance

standards that are used to evaluate employee performance.

Performance appraisal methods

o Written essays (description of strengths and weaknesses)
o Critical incidents (focus on critical behavior)
o Graphic rating scales (set of performance factors, rates employee
on each factor: quantitative data)
o Multi-person comparisons (employees are rated in comparison to
others in work group) and 360- degree appraisals.
Developing an appropriate compensation and benefits program:
consideration the employees tenure and performance, the kind of job
performed, industry, unionization, management philosophy, size of
company
Skill based pay: job skills they demonstrate / variable pay: individuals
compensation is on performance.
Increased emphasis today on employees taking more responsibility for
their own career development can provide some career development
assistance of mentoring = retain competent, high-performing
employees.

7. Discuss contemporary
issues in managing human
resources.

Can manage downsizing by communicating openly and honestly,

following appropriate laws regarding severance pay or benefits,
providing support/counseling for surviving employees, reassigning roles
according to employee talents and backgrounds, focusing on boosting
morale.
Sexual harassment: affects an individuals employment, performance or
work environment.
Need to be aware of what constitutes an offensive or hostile work
environment, and educate employees on sexual harassment.
Deal with work-family life balance, issues by offering family-friendly
benefits such as onsite childcare, flextime, telecommuting etc.
Should focus more attention on OH&S= accident records in Australia
are still too high because of complacency.

CHAPTER 9: STRATEGIC MANAGEMENT

Learning Outcome
1. Define strategic
management and explain
why it is important

Strategic management: what managers do to develop the organisations

strategies. Strategies are the plans for how the organisation will do whatever
it is in business to do, how it will compete successfully, and how it will attract
and satisfy its customers in order to achieve its goals.
Important for three reasons:
1. Makes a difference in how well an organisation performs= higher
levels of performance
2. Helping managers cope with continually changing situations
3. Helps coordinate and focus employee efforts on what is important

2. Explain what managers

do during the six steps of
the strategic management
process

Encompass: strategy planning, implementation and evaluation

1. Identify the current mission, goals and strategies: mission (statement
of its purpose), defining the mission forces to identify what it is in
business to do.
2. Do an external analysis
3. Do an internal analysis (STEPS 2 & 3 = SWOT ANALYSIS)
4. Formulate strategies
5. Implement strategies
6. Evaluate strategies: how effective, have they helped succeed the
goals, what adjustments?
Strengths: any activities the organisation does well/unique resources
Weaknesses: activities the organisation does not do well, or resources it
needs but does not have.
Opportunities: positive trends in the external environment
Threats: negative trends

3. Describe the three main

types of corporate
strategies

Corporate strategy: organisational strategy that determines what businesses

a company is in, or wants to be in, and what it wants to do with those
businesses (based on the missions and goals, and the roles of each
business unit)

Growth strategy: when an organisation expands the number of

markets served or products offered, either through current or new

businesses.
o Concentration: focuses on its primary line of business, and
increasing the number of products offered or markets served in
this primary business
o Vertical integration: BACKWARD =attempt to gain control of its
inputs by becoming its own supplier (e.g. eBay bought PayPal).
FORWARD = becomes its own distribution and able to control
its output (e.g. Apple retail stores)
o Horizontal integration: Company grows by combining with other
organisations in the same industry- combining with competitors
(acquisitions)
o Diversification: RELATED= company grows by merging with or
acquiring firms in different but related industries.
UNRELATED= company grows by merging with or acquiring
firms in different and unrelated industries.

4. Discuss how corporate

strategies can be managed
using the BCG matrix

Stability strategy: organisation makes no significant changes in what

it is doing (e.g. economic crises whereby business focus on continue
the business operations)

Renewal strategies: address organisational weaknesses that are

leading to performance declines (cut costs and restructure
organisational operations)
o Retrenchment: Short-run strategy for minor performance
problems, help stabilize operations, revitalize organisational
resources and capability and prepare to compete again.
o Turnaround: Measures more extensive.

BCG Matrix: way to analyze a companys

portfolio of businesses by looking at its
market share and its industrys anticipated
growth rate.
Strategic management tool that
helps managers make resource
allocation decisions in diverse
businesses.

Four categories:
Cash cows (low growth, high market share), although they generate
large amounts of cash, prospects for future growth are limited
Stars: (High growth & market share), fast-growing market, hold a
dominant share, contribution to cash flow depends on their need for
resources
Question marks: (High growth, low market share), attractive industry
but holds a small market share.
Dogs: (Low growth & market share

5. Describe the role of

competitive advantage in
developing a competitive
strategy

An organisations CA = what set its apart, distinctive edge, core

competencies
Becomes the basis for choosing an appropriate competitive strategy
To a degree that an organisation can satisfy a customers need for
quality= can differentiate itself from competitors and attract a loyal
customer base.
Constant improvement in quality & reliability = CA

Porters Five Forces model: accesses the five competitive forces that dictate
the rules of competition in an industry
1. Threat of new entrants: how likely is that new competitors will come
to the industry? Factors such as EOS, brand loyalty and capital
requirements determine how easy/hard for new competitors.
2. Threat of substitutes: How likely is that other industries product can
be substituted? Factors: switching costs, and buyer loyalty
3. Bargaining power of buyers: Factors: numbers of customers in the
market, customer information and availability of substitutes.
4. Bargaining power of supplies: Factors: degree of supplier
concentration and availability of substitute inputs.
5. Current rivalry: how intense, factors: industry growth rate,
increasing/falling demand, and product differences.

6. Identify Porters three

competitive strategies

Porters three competitive strategies:

1. Cost leadership: competing on the basis of having the lowest costs in
the industry
2. Differentiation: competing on the basis of having unique products
that are widely valued by customers (e.g. exceptionally high quality,
extraordinary service, innovative design, technological capability)
3. Focus: competing in a narrow segment, either a cost advantage or
differentiation advantage.

7. Discuss current
strategic management
issues.

Managers face three current strategic management issues:

1. Strategic leadership: the ability to anticipate, envision, maintain
flexibility, think strategically, and work with others in the organisation
to initiate changes that will create a viable and valuable future for the
organisation and includes 8 key dimensions.
2. Strategic flexibility: ability to recognise major external environmental
changes, to quickly commit resources, and to recognise when a
strategic decision is not work- important because managers
oftentimes face highly uncertain environments.
3. Important types of strategies for todays environment
E-business strategies: to reduce costs, differentiate their
firms product/services, to target specific customer groups or
to lower costs by standardizing certain office functions
Clicks-and-bricks: combines online and traditional
standalone locations
Becoming more customers orientated: giving customers
what they want, communicating effectively with them, and
having a culture that emphasizes customer service.
Innovative: deciding their organisations innovation
emphasis (basic scientific research, product development or
process development), and its innovation timing (first mover
or follower)
Environmentally sustainability: differentiate themselves and
achieve an advantage over competitors

CHAPTER 10: LEADERSHIP

Learning Outcome

1. Define leadership and

leadership

2. Compare and contrast

early theories of leadership

Leader: Someone who can influence others and who has managerial
authority.

Leadership: process of leading a group and influencing that group to

achieve its goals, managers should be leaders because leading is one
of the FOUR MANAGEMENT FUNCTIONS (POLC)

Early theories focused on the leader (trait theories) and how the leader
interacted with the group (behavioural theories)
Early attempts to define leader traits = unsuccessful, although later
attempts found 7 traits associated.
o Drive, desire to lead, honesty and integrity, self-confidence,
intelligence, job-relevant knowledge and extraversion.
o Intent to isolate traits that leaders possessed and non-leaders
did not.

Behavioural Theories:
University of IOWA studies | 3 Leadership styles:
1. Autocratic: tended to centralize authority, dictate work methods,
make unilateral decisions and limit employee participation.
2. Democratic: tended to involve employees in decision making,
delegate authority, encourage participation in deciding work methods
and goals, and use feedback as an opportunity for coaching
employees
3. Laissez-faire-style: generally gave the group complete freedom to
make decisions and complete the work in whatever way it saw fit.
Conclusion: more satisfied under a democratic leader than autocratic
Dilemma of improving satisfaction or performance? (Performance
sometimes on par with autocratic)
The Ohio State | Dimensions of leader behaviour
Initiating structure: extent to which a leader was likely to define and
structure his or her role and the roles of group members in the
search for goal attainment
Consideration: extent to which a leader has job relationships
characterized by mutual trust and respect for group members ideas
and feelings.
High-high leader:
o Leader high in both dimensions = achieve high group task
performance and high group member satisfaction, but not
always
University of Michigan | Dimensions of leader behaviour #2
Employee-oriented: emphasizing interpersonal relations, they took a
personal interest in the needs of their followers and accept individual
differences among
Production-orientated leaders: Emphasis the technical or task aspects,
mainly concerned with accomplishing group tasks and regarded group
members as means tot hat end.
Leaders who were employee oriented could get high group productivity
and high group member satisfaction.

The Managerial Grid: looked at leaders concern for production and concern
for people, and identified five leader styles

3. Describe the three main

contingency theories of
leadership

Although it suggested that a leader who has high in concern for

production and high in concern for people was the best, there
was no substantive evidence for that conclusion.
Behavioral studies showed: leaders behaviour has a dual
nature, focus on task AND people

1. Fiedler Contingency Model: Leadership model that proposes that

effective group performance depends upon the proper match between a
leaders style of interacting with their follows and the degree to which the
situation allows the leader to control and influence.
Based on the premise that a certain leadership style would be most
effective in different types of situations.
o Define those leadership styles & different types of situations
o Identify the appropriate combinations (style + situation)
Key in leadership success: individuals basic leadership style: taskorientated or relationship orientated- using the least-preferred coworker questionnaire.
Questionnaire determine the positive relations with co-workers, of the
leader is considered to have a good, personal relation = considered
as relationship orientated. If focused on productivity and output =
task-orientated.
Assumed that a leaders style was fixed
Measured three contingency dimensions (defined the key situational
factors for determining leader effectiveness)
o Leader-member relations: degree of confidence, trust and
respect employees had for their leader
o Task structure: degree to which jobs assignments were
formalized and procedurised
o Position power: influence a leader has over power-based

e.g. hiring, firing, promotions etc.

Suggests that task-orientated leaders performed best in very favorable
and unfavorable situations, and relationship-orientated leaders
performed best in moderately favorable.
Hersey Situational leadership Model
Focused on followers readiness (extent to which people have the
ability and willingness to accomplish a specific task)
Successful leadership is achieved by selecting the right leadership
style, which is contingent on the level of followers readiness.
Four leadership styles
1. Telling (high task-low relationship): leader defines roles and tells
people what to do
2. Selling (High task-high relationship): provides both direction and
supportive behaviour
3. Participating (Low task-high relationship): share in decision making;
main role is facilitating and communicating
4. Delegating (Low task-low relationship): little direction or support
Four stages of readiness:
1. Unable and unwilling (use telling style)
2. Unable but willing (use selling style)
3. Able but unwilling (use participative style)
4. Able and willing (delegating style)

Path-goal model / Robert House

Theory that says it is the leaders job to assist their followers in
attaining their goals and to provide the direction or support needed to
ensure that their goals are compatible with the overall objectives of
the organisation.
Four leadership behaviours:
1. Directive: know what is expected, schedules work to be done, specific
guidelines.
2. Supportive: Friendly, shows concern
3. Participative: consults with group, uses their suggestions
4. Achievement-orientated: sets challenging goals, expects employees to
perform at their highest level
Assumes that a leader can and should be able to use any of these
styles
Two situational contingency variable were found in the environment
and in the follower
Essentially says that a leader should provide direction and support as
needed; that is, structure the path so that the followers can achieve
goals.

4. Describe contemporary
views of leadership

1. Leader-member exchange theory (LMX): leaders create in-groups and

out-groups, and that those in the in-group will have higher performance
ratings, less turnover and greater job satisfaction.
2. Transformational-transactional leadership:
Transactional leader: guide or motivate their followers to work
towards establishing goals by exchanging rewards for productivity
Transformational leader: stimulates and inspires followers to achieve
extraordinary goals

3. Charismatic-visionary leadership:
Charismatic leader: enthusiastic and self-confident leader whose
personality and actions influence people to behave in certain ways,
people can learn to be charismatic
Visionary leader: create and articulate a realistic, credible and
attractive version of the future.
4. Team leadership
Team leader: 2 priorities
1. Manage the teams external boundary
2. Facilitate the team process.
4 leader roles:
1. Liaison with external constituencies: gathers information from the
outside and shares that information with team members.
2. Trouble-shooter: tries to resolve problems
3. Conflict manager: Identify such matters and minimize disruption of
intra-team conflicts.
4. Coach: clarify expectations and roles, teach, offer support

5. Explain the five sources

of a leaders power

1. Legitimate (authority): power a leader has as a result of their position

in the company, followers will always comply
2. Coercive: power of their ability to punish or control (followers react to
this power out of fear of the negative results that might occur if they
do not comply)
3. Reward: power to give rewards, e.g. money, appraisals, promotions
4. Expert (special expertise, skills or knowledge)
5. Referent (desirable resources or traits): develops out of admiration of
another and desire to be like that person.

6. Discuss issues affecting

leadership in the 21st
century

Developing trust: todays uncertain environment, followers want

leaders who are credible (honest, competent) and whom they can
trust (integrity)
o Important to develop trust positive job outcomes
(satisfaction, performance, commitment)
o Leadership effectiveness relies a lot on ability to gain the
trust of employees.
o Financial challenges, increased use of temporary employees
have undermined employees, so are faced with the
challenge of rebuilding and restoring trust.

Providing ethical leadership: fostering moral virtue when they try

to change the attitudes and behaviours of followers.
o Employees, society, media scrutinize the actions of leaders,
CEOs

Empowering employees: increasing the decision-making discretion

of workers
o If companies are to compete successfully in a dynamic
global economy, they have to be able to make decisions and
implement changes quickly
o Need to cope with increased work demand
o Empower when employees have the skills, knowledge, seek
autonomy and possess an internal locus of control

Sustainability initiatives and ethical transformational leadership

o Increased awareness of stakeholders interest
o Able to align business goals with sustainability targets that
do not just provide economic value, but to the wider
community.

Becoming an effective leader

o Leadership training: high self-monitoring

Leading across cultures: do not just use only any single style, they
adjust it to the situations (uncertain working environments)
o Also constrained by the cultural conditions of where they
work
o Suggest that there are universal traits due to pressure to
adopt common technologies and management practices

CHAPTER 11: INTERNATIONAL BUSINESS/MANAGING IN A GLOBAL ENVIRONMENT

Learning Outcome

1. Explain how the global

economy creates both
opportunities and threats
for managers

Increasingly, managers must think globally if their organisations are to

succeed over the long term. No organisation is immune to the influence of
global competition.
Opportunities:
Improved infrastructures being built
Greater influx of migrants= people with new skills and knowledge
Trade barriers reduced such as tariffs
Enormous consumer markets opened for organisations to expand their
operations outside, access to new resources and materials (cheaper
or better quality)
Threats:
Intensified competitive marketplace = increasing consumer purchasing
online which can cause business closures.

2. Contrast ethnocentric,
polycentric and geocentric
attitudes towards global
business

3. Discuss the important of

regional trading alliances
and global trade

Ethnocentric: a parochialistic belief (viewing the world solely through

your own perspective, leading to an inability to recognise differences
between people) that the best approaches and practices are those of
the home country (country in which the companys headquarters are
located = do not trust foreign employees)

Polycentric: The view that managers in the host country (the foreign
country in which the organisation is doing business) know the best
work approaches and practices for running their business.

Geocentric: A world-orientated view that focuses on using the best

approaches and people from around the globe.

When trade is allowed to flow freely, countries benefit from economic

growth & productivity gains because they specialize in producing the
goods they have a comparative advantage in.
o Being shaped by two forces: regional trading alliances and

mechanisms.

4. Describes ASEAN,
European Union, NAFTA
and other regional trade
alliances.

the agreements negotiated through the WTO

Bilateral (between two countries) e.g. Australia-New
Zealand Closer Economic Relations Agreement (CER):
coordinate business regulation and competition policy and to
eventually remove all trade barriers, thus facilitating freer
trade. Gaining free access to a larger market has to be
beneficial
o Multilateral trading (between multiple countries)
agreements e.g. ASEAN, European Union.
Systems and mechanisms are needed so that efficient and effective
trading relationships can develop.
One of the realities of globalisation is that countries are independent
e.g. global financial crisis. The global economy did not collapse due
to governmental interventions and trade and financial mechanisms
(e.g. the four important global trade mechanism: WTO, IMF, World
Bank, OECD)
o World Trade Organisation (WTO): Global organisation of 159
countries that deals with the rules of trade among nations
o International Monetary Fund (IMF): An organisation of 188
countries that promotes international monetary cooperation
and provides advice, loans, and technical assistance.
o World Bank: Provides financial and technical assistance to
developing countries
o Organisation for Economic Co-operation and Development
(OECD): Helps its 34 member countries achieve sustainable
economic growth and employment.
o

The Association of Southeast Asian Nations (ASEAN): trading

alliance of ten Southeast Asian nations (e.g. Indonesia, Vietnam,
Thailand, Cambodia) that focus on establishing an economic free
trade area that covers a market of more than 600 million people.

European Union (EU): A union of 28 European nations created as a

unified economic and trade entity, removing barriers in taxes, and
protected industries which has improved economic efficiencies, all
adopted the EURO.

North American Free Trade Agreement (NAFTA): Mexican,

Canadian and US governments in which barriers to free trade have
been eliminated = strengthening the economic power of all three
countries which remains the largest trade bloc in the world in terms
of combined GDP.

5. Discuss the role of the

WTO

Global organisation that deals with the rules of trade among nations
Monitors and promotes world trade, evolving from the GATT in 1995.
Helps businesses in these countries conduct efficient and effective
trading relationships.
WTO rules and principles have assisted governments in keeping
markets open and they now provide a platform which trade can grow
as the global economy improves.

6. Contrast MNCs, TNCs

and borderless
organisations

Multinational corporation (MNC): A broad term that refers to any and

all types of international companies that maintain operations in
multiple countries
Multidomestic corporation: An international company that decentralizes
management and other decisions to the local country (reflects a
polycentric)

 Global company: An international company that centralizes its

management and other decisions in the home country (ethnocentric
attitude)
Transnational or borderless organisation: A global type of organisation
in which artificial geographic barriers are eliminated (reflecting a
geocentric approach)

7. Describe the structures

and techniques (three
stages) organisations go
through as they go global

Stage I
Exporting to foreign countries or importing from foreign countries
Global sourcing: purchasing materials or labor from around the world.
Goal: to take advantage of lower costs in order to be more competitive.
Beyond global sourcing, however, each successive stage of becoming
more international requires more investment and thus entails more
risk for the organisation.
Stage II
Hiring foreign representation or contracting with foreign manufacturers
Licensing and franchising
Stage III
Strategic alliances, joint ventures
Foreign subsidiary

8. Describe foreign
subsidiaries, joint
ventures, strategic
alliances, licensing and
franchising

Foreign subsidiaries: Directly investing in a foreign country by setting up a

separate and independent production facility or office (involves the greatest
commitment of resources and poses the greatest amount of risk)
Joint ventures: A specific type of strategic alliance in which the partners
agree to form a separate, independent organisation for some business
purpose ( for reasons such as funding, geographical constraints)
Strategic alliance: Partnerships between an organisation and a foreign
company partner(s) in which both share resources and knowledge in
developing new products or building production facilities (e.g. OneworldQANTAS, AA, British Airways)
Licensing: An organisation gives another organisation the right to make or
sell its products using its technology or product specifications.
Franchising: An organisation gives another organisation the right to use its
name and operating methods (e.g. fast-food chains, brewing companies)

9. Explain the relevance of

the legal-political and
economic environments to
global business

Legal-political environment:
Differences in the laws of various nations effects business activities
and the delivery of products and services
The legal-political environment does not have to be unstable or
revolutionary to be of concern to managers, just the fact that a
countrys social and political systems differ from those of Australia or
NZ is important.
Must recognise these differences if they are to understand the
constraints under which they operate and the opportunities that exist.
Managers must also be aware that laws on issues such as restraint of
trade, working conditions, the right of workers differs between
nations.
Economic environment:
Understand the type of economic system under which the country

operates: either a free market (resources are primarily owned and

controlled by the private sector) or planned economy (all economic
decisions are planned by a central government)
It has the potential to constrain decisions and actions
Must also need to understand currency exchange rates, inflation rates
and diverse tax policies.
o Exchange rates: strengthening of the Aus dollar = affect
pricing, sales volumes and revenues and make predicting
sales estimates or budgets very difficult.
o Inflation: managers can anticipate any possible changes in a
countrys monetary policies and make good business
decisions regarding purchasing and pricing.
o Taxation policies: Need accurate info on tax rules to
minimize their overall tax obligation.

10. Describe the Hostede

and GLOBE dimensions for
assessing cultures

Managing todays global workforce can be a challenge as

organisations have different cultures.
National culture: The values and attitudes shared by individuals from a
specific country that shape their behaviour and beliefs about what is
important.
Research indicates that national culture has a greater effect on
employees than does their organisations culture.
Therefore, one of the most widely referenced approaches to helping
managers between understanding between national culture: HOFSTEDE
Five dimensions of national cultures:
Individualistic: people look after their own and family interests
Collectivistic: people expect group to look after and protect them
High power distance: accepts wide differences in power, great deal of
respect for those in authority.
Low power distance: plays down inequalities, employees are not afraid
to approach nor are in awe of the boss.
High uncertainty avoidance: threatened with ambiguity and experience
high levels of anxiety.
Low uncertainty avoidance: comfortable with risks; tolerant of different
behaviour and opinions
Achievement: Values such as assertiveness, acquiring money and
goods, and competition prevail
Nurturing: values such as relationships and concern for others prevail.
Long-term orientation: people look to the future and value thrift and
persistence.
Short-term orientation: people value tradition and the past.

GLOBE (Global Leadership and Organisational Behaviour

Effectiveness)
Research program that studies cross-cultural leadership behaviours.
Gives managers additional information to help them identify and
manage cultural differences
Identified nine dimensions such as: future orientation, gender
differentiation, power distance, and performance orientation.
Extended Hofstedes work.

11. Outline the adjustments

challenges faced by a
manager on global
assignments.

1. International adjustment, the challenge of openness

The openness associated with globalisation and the significant
cultural differences between countries
Increased threat of terrorism by a truly global terror network
Economic interdependence of trading countries = e.g. GFC
domino effect. However there are structures in place such as the
WTO and IMF to address potential problems.
Intense underlying and fundamental cultural differencesdifferences that encompass traditions, history, religious beliefs
etc.
2. Managing a global workforce, in-country adjustment
May also highlight tensions that expose differences in work
experiences, pay levels and communication
E.g. work-family practices and programs that are appropriate for
one country may not be the best solution in other locations.
Need to understand how to best manager that global workforce,
need cultural intelligence (cultural awareness and sensitivity
skills), and a global mind-set.
Adjust leadership styles and management approaches to
accommodate diverse views.
Also in the process of negotiating future binding targets for
greenhouse gas emissions that are going to impact on how
businesses will operate in the future in order to reduce the effect
of global warming and climate change.