Globolization and E-Commerce

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MANAGEMENT HISTORY

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GLOBALIZATION

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LEARNING OBJECTIVES

-Learn about the history of principles of management

-Know the context for temporary principles of management

-Understand key global trends

-See how globalization is effecting the management principles and practices

context |kntekst|nounthe circumstances that form the setting for an event, statement, or idea, and in terms of which it can be fully understood and assessed: the decision was taken within the context of planned cuts in spending.3

HISTORY

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Pre-twentieth century1.Adam Smith-Economic advantages of division of labor, breakdown of jobs into narrower repeated tasks-1700 The Wealth of Nations

2.The Industrial Revolution?-the advent of machine power and division of labor-1800-World GDP folded by 10 in two centuries.

Adam Smith (baptised 16 June 1723 17 July 1790 [OS: 5 June 1723 17 July 1790]) was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. It earned him an enormous reputation and would become one of the most influential works on economics ever published. Smith is widely cited as the father of modern economics and capitalism.Smith studied social philosophy at the University of Glasgow and the University of Oxford. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations, publishing it in 1776. He died in 1790.The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the socioeconomic and cultural conditions of the times. It began in the United Kingdom, then subsequently spread throughout Europe, North America, and eventually the world.The Industrial Revolution marks a major turning point in human history; almost every aspect of daily life was influenced in some way. Most notably, average income and population began to exhibit unprecedented sustained growth. In the two centuries following 1800, the world's average per capita income increased over 10-fold, while the world's population increased over 6-fold.[2] In the words of Nobel Prize winner Robert E. Lucas, Jr., "For the first time in history, the living standards of the masses of ordinary people have begun to undergo sustained growth... Nothing remotely like this economic behavior has happened before".[3]Starting in the later part of the 18th century, there began a transition in parts of Great Britain's previously manual labour and draft-animalbased economy towards machine-based manufacturing. It started with the mechanisation of the textile industries, the development of iron-making techniques and the increased use of refined coal.[4] Trade expansion was enabled by the introduction of canals, improved roads and railways.[5]The introduction of steam power fuelled primarily by coal, wider utilisation of water wheels and powered machinery (mainly in textile manufacturing) underpinned the dramatic increases in production capacity.[5] The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries. The effects spread throughout Western Europe and North America during the 19th century, eventually affecting most of the world, a process that continues as industrialisation. The impact of this change on society was enormous.[6]The First Industrial Revolution, which began in the 18th century, merged into the Second Industrial Revolution around 1850, when technological and economic progress gained momentum with the development of steam-powered ships, railways, and later in the 19th century with the internal combustion engine and electrical power generation. The period of time covered by the Industrial Revolution varies with different historians. Eric Hobsbawm held that it 'broke out' in Britain in the 1780s and was not fully felt until the 1830s or 1840s,[7] while T. S. Ashton held that it occurred roughly between 1760 and 1830.[8]Some 20th century historians such as John Clapham and Nicholas Crafts have argued that the process of economic and social change took place gradually and the term revolution is a misnomer. This is still a subject of debate among historians.[9][10] GDP per capita was broadly stable before the Industrial Revolution and the emergence of the modern capitalist economy.[11] The Industrial Revolution began an era of per-capita economic growth in capitalist economies.[12] Economic historians are in agreement that the onset of the Industrial Revolution is the most important event in the history of humanity since the domestication of animals and plants.[13]5

ANCIENT HISTORY: MANAGEMENT THROUGH THE 1900S

Scientific Management

Frederick Winslow Taylor-1911

(bottom-top) best way of doing a job

Frank & Lilian Moller Gilberth-1906

Scientific management, also called Taylorism,[1] was a theory of management that analyzed and synthesized workflows. Its main objective was improving economic efficiency, especially labor productivity. It was one of the earliest attempts to apply science to the engineering of processes and to management. Its development began with Frederick Winslow Taylor in the 1880s and 1890s within the manufacturing industries. Its peak of influence came in the 1910s; by the 1920s, it was still influential but had begun an era of competition and syncretism with opposing or complementary ideas. Although scientific management as a distinct theory or school of thought was obsolete by the 1930s, most of its themes are still important parts of industrial engineering and management today. These include analysis; synthesis; logic; rationality; empiricism; work ethic; efficiency and elimination of waste; standardization of best practices; disdain for tradition preserved merely for its own sake or merely to protect the social status of particular workers with particular skill sets; the transformation of craft production into mass production; and knowledge transfer between workers and from workers into tools, processes, and documentation.6

ANCIENT HISTORY: MANAGEMENT THROUGH THE 1900S

General Administrative TheoristsHenri Fayol_Fayolism-14 principles of management (top bottom) Division of work,authority,dicipline, unity of command..

Max Weber-the form of ideal organization bureaucracy

Fayol has been described as the father of modern operational management theory (George, p.146). Although his ideas have become a universal part of the modern management concepts, some writers continue to associate him with Frederick Winslow Taylor. Taylor's Scientific Management deals with the efficient organisation of production in the context of a competitive enterprise that has to control its production costs. That was only one of the many areas that Fayol addressed. Perhaps the connection with Taylor is more one of time, than of perspective. According to Claude George (1968), a primary difference between Fayol and Taylor was that Taylor viewed management processes from the bottom up, while Fayol viewed it from the top down. George's comment may have originated from Fayol himself. In the classic General and Industrial Management Fayol wrote that "Taylor's approach differs from the one we have outlined in that he examines the firm from the "bottom up." He starts with the most elemental units of activitythe workers' actionsthen studies the effects of their actions on productivity, devises new methods for making them more efficient, and applies what he learns at lower levels to the hierarchy...(Fayol, 1987, p.43)." He suggests that Taylor has staff analysts and advisors working with individuals at lower levels of the organization to identify the ways to improve efficiency. According to Fayol, the approach results in a "negation of the principle of unity of command" (p.44). Fayol criticized Taylors functional management in this way. the most marked outward characteristics of functional management lies in the fact that each workman, instead of coming in direct contact with the management at one point only, receives his daily orders and help from eight different bosses (Fayol, 1949, p.68.) Those eight, Taylor said, were (1) route clerks, (2) instruction card men, (3) cost and time clerks, (4) gang bosses, (5) speed bosses, (6) inspectors, (7) repair bosses, and the (8) shop disciplinarian (p.68). - [1] - This, Fayol said, was an unworkable situation, and that Taylor must have somehow reconciled the dichotomy in some way not described in Taylor's works.Fayol's desire for teaching a generalized theory of management stemmed from the belief that each individual of an organization at one point or another takes on duties that involve managerial decisions. Unlike Taylor, however, who believed management activity was the exclusive duty of an organizations dominant class. Fayol's approach was more in sync with his idea of Authority which stated that the right to give orders should not be considered without the acceptance and understanding of responsibility.Noted as one of the early fathers of the Human Relations movements, Fayol expressed ideas and theories with practices which differed from Taylor in that they showed flexibility and adaptation as well as stressed the importance of Interpersonal Interaction among employees.[citation needed]Fayol believed that animosity and unease within the workplace occurred among employees in different departments often due to communication in writing; i.e. letters, (or in current times) e-mails. Among scholars of organizational communication and psychology, e-mails and letters as a form of communication in work are said to induce or solidify the idea of importance of an individual within the workplace and furthermore give way to selfish thinking which leads to arguments and conflict among employees.[citation needed]Fayol expressed this idea in his book by stating," in some firms... employees in neighboring departments with numerous points of contact, or even employees within a department, who could quite easily meet, communicate with each other in writing... there is to be observed a certain amount of animosity prevailing between different departments or different employees within a department. The system of written communication usually brings this result. There is a way of putting an end to this deplorable system and that is to forbid all communication in writing which could easily and advantageously be replaced by verbal ones."While Fayol's theories are typically referred to as rigid and inflexible, it is practices and theories such as these which show flexibility in his theories of management. He developed and used theses ideas in order to diagnose a problem and eventually find solutions which provided methods to work around and fix these situations. This all led to his general idea of controlling employees in order to achieve increased productivity.Fayol also expressed ideas which would later on lead to influence Systems and Contingency theories. The two are said to have emerged as a result of management theorists' desire to integrate ideas of the human relation theories within management which is what Fayol's General theory of Management relied upon.7

World War II-Mathematical solutions to military problems

Quantative Approach

StatisticsOptimization-Operations research

1945-1960

Organizational Behaviour

Robert OwenHugo MunsterbergMary Parker FolletChester Barnard

Human resource man.

1960

The Systems Approach

Closed Open system(interacts with environment) and related concepts for systems

Organizations are formed by many interdependent parts, envision them by systems approach

Organizations are not self-contained but affected by external environment

Systems TheroySystems theory, first introduced in 1958 by Ludwig von Bertalanffy and later on published in 1968 attempts to understand organizations by comparing them to living organisms. Systems Theory is broken down into four distinct characteristics which reflect the biological resemblance between living organisms and organizations. First, Wholeness expresses the idea that an organization is a set of individual elements which are interdependent in the sense that the actions of one individual or group will affect the rest of the system or organization. The second is described as Hierarchy or the division of individuals into subsystems. This can be illustrated by groups within an organization. With regards to organisms, this could be called the organs of the body. Third, the organization may be regarded as, "Open or closed," in that systems can be characterized by their level of active exchange with the outside environment; successful organizations must be actively open . Lastly, open systems are characterized by two processes; maintenance and adaptation. Both of these processes act on Feedback to actions taken by the groups in order to maintain stability and adapt to environmental changes.Fayol illustrated all of these ideas in his theories on general management. First, he believed in the division of labor among organizations(subsystems) by relating them to living organisms. He states that, "...it is observable in the animal world where the more highly developed the creature the more highly differentiated it's organs." He continues to describe the same scenario replicating that of an individual within a group and of a group within an organization. This is described in his 14 principles as the principle of Order (see the 14 principles) System Theory relies heavily on interdependence which Fayol also suggests is a vital part of management as he states, ""Man... plays a role like that of a cell in the animal... As the development of the organism is effected the grouping together of elemental units the organs appear, they are differentiated and perfected in proportion as the number of combined elements increase. In the social organism, as in the animal, a small number of functional elements accounts for an infinite variety of activities.''Contingency Leadership Theory which was produced around the same time as Systems Theory, roughly states that no one leadership or management style is ideal and that the best leadership is that which reflects the internal and external environment of the organization. This is perhaps the most important concept that Fayol based his ideas around as well as the area where he and Taylor differ the most."Seldom do we have to apply the same principle twice in identical conditions;allowance must be made for different changing circumstances... Therefore principles...[must be]... flexible and capable of adaptation to every need; it is a matter of knowing how to make use of them which is a difficult art requiring intelligence, experience, decision, and proportion.

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1970

The Contingency Approach

Different organizations require differentWays of management

Organizations recognize and respond to situational variables as they arise

Contingency theory is a class of behavioral theory that 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. Several contingency approaches were developed concurrently in the late 1960s.They suggested that previous theories such as Weber's bureaucracy and Taylor's scientific management had failed because they neglected that management style and organizational structure were influenced by various aspects of the environment: the contingency factors. There could not be "one best way" for leadership or organization.Historically, contingency theory has sought to formulate broad generalizations about the formal structures that are typically associated with or best fit the use of different technologies. The perspective originated with the work of Joan Woodward (1958), who argued that technologies directly determine differences in such organizational attributes as span of control, centralization of authority, and the formalization of rules and procedures.Gareth Morgan in his book Images of Organization describes the main ideas underlying contingency in a nutshell:Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstancesThere is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with.Management must be concerned, above all else, with achieving alignments and good fitsDifferent types or species of organizations are needed in different types of environmentsFred Fiedler's contingency model focused on a contingency model of leadership effectiveness. This model contains the relationship between leadership style and the favorableness of the situation. Situational favorableness was described by Fiedler in terms of three empirically derived dimensions1. The leader-member relationship, which in the most important variable in determining the situation's favorableness2. The degree of task structure, which is the second most important input into the favorableness of the situation3. The leader's position power obtained through formal authority, which is the third most important dimension of the situationSituations are favorable to the leader if all three of these dimensions are high. That is, if the leader is generally accepted and respected by followers(first dimension), if the task is very structured (second dimension), and if a great deal of authority and power are formally attributed to the leader's position (third dimension), then the situation is favorable.William Richard Scott describes contingency theory in the following manner: "The best way to organize depends on the nature of the environment to which the organization must relate". The work of other researchers including Paul Lawrence, Jay Lorsch, and James D. Thompson complements this statement. They are more interested in the impact of contingency factors on organizational structure. Their structural contingency theory was the dominant paradigm of organizational structural theories for most of the 1970s. A major empirical test was furnished by Johannes M Pennings who examined the interaction between environmental uncertainty, organization structure and various aspects of performance.[edit]

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QUALITY MANAGEMENT

WORKFORCE DIVERSITY

ENTREPRENEURSHIP

E-COMMERCE

Current Trends and Issues-1990+

The first web page went live on August 6, 1991. It was dedicated to information on the World Wide Web project and was made by Tim Berners-Lee. It ran on a NeXT computer at the European Organization for Nuclear Research, CERN.The first web page address was http://info.cern.ch/hypertext/WWW/TheProject.html.

Read more: http://articles.businessinsider.com/2011-06-29/tech/30016834_1_hypertext-flashback-first-web-page#ixzz1b8c2FG0012

IS GLOBALIZATION+ OR -

Definition

A process in which geographic distance becomes a factor of diminishing importance in the establishment and maintenance of cross-border economic,political and socio-cultural relations..

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Definition

The growing integration of national economics and societies,so that no society is isolated or remote from changes and developments in other societies.

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Globalization is not new

, though. For thousands of years, peopleand, later, corporationshave been buying from and selling to each other in lands at great distances, such as through the famed Silk Road across Central Asia that connected China and Europe during the Middle Ages. 17

For centuries, people and corporations have invested in enterprises in other countries

. In fact, many of the features of the current wave of globalization are similar to those prevailing before the outbreak of the First World War in 191418

Technology changes

Changes in Investment Regulations 1991- 2001

Advent of capitalismWHAT ARE THE DRIVERS OF GLOBALIZATION

But policy and technological developments of the past few decades have spurred increases in cross-border trade, investment, and migration so large that many observers believe the world has entered a qualitatively new phase in its economic development.

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Since 1950, volume of world trade has increased by 20 times.

1997 to 1999, foreign investment nearly doubled, from $468 billion to $827 billion.

Thomas Friedman has said that today globalization is; farther, faster, cheaper, and deeper.

Since 1950, for example, the volume of world trade has increased by 20 times, and from just 1997 to 1999 flows of foreign investment nearly doubled, from $468 billion to $827 billion. Distinguishing this current wave of globalization from earlier ones, author Thomas Friedman has said that today globalization is farther, faster, cheaper, and deeper.

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With globalization, there is a global market for companies to trade their products and a wider range of options for people, to choose from among the products of different nations. Developing countries benefit a lot from globalization, as there is a sound flow of money and thus, a decrease in the currency difference.

To meet the increasing demands that follow globalization, there is an increase in the production sector. This gives loads of options to the manufacturers as well.

Competition keeps prices relatively low, and as a result, inflation is less likely to occur.

PROS OF GLOBALIZATION

PROS OF GLOBALIZATION

The focus is diverted and segregated among all the nations. No country remains the single power head; instead there are compartmentalized power sectors. The decisions at higher levels are meant for the people at large. Communication among the countries is on the rise, which allows for better understanding and broader vision. As communication increases amongst two countries, there is interchange of cultures as well. We get to know more about the other's cultural preferences.

As we feed to each other's financial needs, the ecological imbalance is also meted out. Governments of countries show concern about each other.

Globalization is causing Europeans to lose their jobs as work is being outsourced to the Asian countries. The cost of labor in the Asian countries is low as compared to other countries.

The high rate of profit for the companies, in Asia, has resulted in a pressure on the employed Europeans, who are always under the threat of the business being outsourced. Companies are as opening their counterparts in other countries. This results in transferring the quality of their product to other countries, thereby increasing the chances of depreciation in terms of quality.

CONS OF GLOBALIZATION

There are experts who believe that globalization is the cause for the invasion of communicable diseases and social degeneration in countries.

The threat that the corporates would rule the world is on high, as there is a lot of money invested by them.

It is often argued that poor countries are exploited by the richer countries where the work force is taken advantage of and low wages are implemented.

CONS OF GLOBALIZATION

soverignty) to reside in the people halkn elinde olmak 26

Trading Blocs: European Union North America Free Trade Agr. The liberalization of China and IndiaTrading regions: Europa North America South East Asia

Globolization or Regionalization

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Stages of Globalization for OrganizationsImporting

Exporting

Licence Agreement

Joint Ventures

Acquisition

Developing Own Foreign Operations

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Problems of GlobalizationLegal Systems

Infrastructure

Political Instability

Language

National Culture

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To overcome the Problems of GlobalizationCorrect Form of Presence,

Familarity to Local Beleifs Customs,

Knoweledge of Laws and Regulations,

Open to Changes on Management Style,

Language training and Acclimatisation

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Economies of Scale

Bigger Markets

Cheaper Sources

Reasons for Globalization

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E-COMMERCE(e-business)Any business transaction whose price or essential terms were negotiated over on line system such as internet,extranet electronic data interchange network or electronic mail system.

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E-commerce can be divided into;E-commerce can be divided into: E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes gathered into a "virtual mall" The gathering and use of demographic data through Web contacts Electronic Data Interchange (EDI), the business-to-business exchange of data e-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters) Business-to-business buying and selling (B2B)

TYPES OF E-COMMERCETransactional SitePeople who shop online are most familiar with this type of website. A transactional site may be an electronic storefront for a brick-and-mortar retailer or a catalog business, (e.g., Lands End ), or a manufacturer showroom for those wishing to sell directly to the public (e.g., Dell Computer ). Transactional sites conduct full end-to-end transactions via the website, allowing customers to search for, order, and pay for products online as well as allowing them to contact the company for after-sales service. The most sophisticated sites create efficiencies by integrating the transaction process with back-office systems such as accounting, inventory, sales and others (e.g., Amazon ).

135Copyright 2006 Thomson Business and Economics. All rights reserved. E-CommerceExhibit 18

TYPES OF E-COMMERCEInformation Delivery Site This site generates sales by promoting corporate awareness rather than facilitating online transactions. Its function is similar to a brochure, providing information about the product or service and contact information on how to proceed with a purchase. Because this site is often static and doesnt require the software systems necessary for online transactions, it is less expensive to design and maintain than the transactional site. An information delivery site is ideal for companies that market products and services that cannot be provided online or goods that cannot be sold online (e.g. Ford , Coudert , Caterpillar ).

TYPES OF E-COMMERCEE-marketplaces These sites are market-makers: they bring buyers and sellers together to facilitate transactions. Participation in a brokerage often provides an efficient way of finding a customer without the expense of building a proprietary transactional website. Types of brokerages include auctions (e.g. eBay ), virtual malls (http://www.virtualmall.com/ ) and matching services (http://www.buyusa.gov/matchmaking/us_companies_home.html ).

Use these steps as a guide to creating your website

1-select domain name4-web site content2-register search engine3-choose web host5-execute orders

Tim Berners-Lee created the first web browser and World Wide Web. (Wikipedia)

Sir Timothy John "Tim" Berners-Lee, OM, KBE, FRS, FREng, FRSA (born 8 June 1955[1]), also known as "TimBL", is a British computer scientist and MIT professor, credited as the inventor of the World Wide Web, making the first proposal for it in March 1989.[2] On 25 December 1990, with the help of Robert Cailliau and a young student at CERN, he implemented the first successful communication between a Hypertext Transfer Protocol (HTTP) client and server via the Internet.Berners-Lee is the director of the World Wide Web Consortium (W3C), which oversees the Web's continued development. He is also the founder of the World Wide Web Foundation, and is a senior researcher and holder of the 3Com Founders Chair at the MIT Computer Science and Artificial Intelligence Laboratory (CSAIL).[3] He is a director of The Web Science Research Initiative (WSRI),[4] and a member of the advisory board of the MIT Center for Collective Intelligence.[5][6]In 2004, Berners-Lee was knighted by Queen Elizabeth II for his pioneering work.[7] In April 2009, he was elected as a member of the United States National Academy of Sciences, based in Washington, D.C.[8][939

Use these steps as a guide to creating your website

1. Select A Domain NameSelecting a domain name for your company's international website(s) is the first important decision you'll make and can potentially have significant marketing implications.2. Register at Search Engines Help potential customers find your website by registering with the major search engines in the countries you wish to target. 3. Choose a Web HostFind a dependable web hosting service to house your localized website(s). Many hosting providers offer additional value-added services such as site maintenance, search registration, site development, etc. 4. Website Content Localize and InternationalizeTarget international customers by tailoring your website to local language and cultural tastes.5. Execute OrdersEnable your customers a variety of payment options that meet local business practices and be aware of other considerations when doing international business such as taxes, shipping, customs duties, and after sales service.

Market Development on the Web

As with brick and mortar enterprises, market development is an essential ingredient for all of the above models and must be an integral part of a firm's e-business presence on the Internet. Companies should consider and evaluate the advantages of advertising online as an extension and component of their corporate growth strategies and as part of their international marketing efforts. Advertising messages often appear on portals or other websites that draw viewers with content (news, information) and services (such as email, chat, forums, etc.). Companies may seek to advertise on search engines that attract high traffic volume (e.g., Yahoo!) or target a specialized demographic (e.g., ivillage ). Some portals sell favorable link positioning or advertising keyed to particular search terms in a user query (e.g., Overture). Companies may also consider using an advertising network that feeds ads to a network of sites, thereby enabling large marketing campaigns (e.g, Doubleclick). (Note that all the websites listed above have been internationalized or have local mirror sites.)

Market Development on the WebDirect E-mailDirect E-mail may be a good way to promote web presence, depending on the market, product, or service. Direct e-mail is an inexpensive way to reach thousands of potential customers. However, several countries have legislation prohibiting or restricting unsolicited commercial email (see the Direct Marketing Association homepage at http://www.the-dma.org/ for more information on international spam legislation), and certainly any email must not constitute fraud. The Direct Marketing Association suggests that any email marketing should have:an honest subject line; no forged headers or technological deceptions; the identity of the sender, which includes a "physical" address, and an opt-out that works and is easy to find and easy to use (although note that some countries may specify an opt-in approach. Research spam legislation for the country you are targeting.) Whether you're targeting domestic or international customers, companies should be aware before choosing direct e-mail as a way to promote web presence of the potential for backlash against unsolicited e-mails by consumers who feel overwhelmed by the number of such e-mails received.

Use of e-commerce 2000; 20% of internet users in Europe 2003; 40% of internet users in Europe

More and more people,

Wider range of products Business-to-consumer e-commerce sales in 2011 increased to 690 billion euros ($961 billion), an increase of close to 20% from a year earlier.

Global business-to-consumer e-commerce sales will pass the 1 trillion euro ($1.25 trillion) mark by 2013, and the total number of Internet users will increase to approximately 3.5 billion from around 2.2 billion at the end of 2011, according to a new report by the Interactive Media in Retail Group (IMRG), a U.K. online retail trade organization.43

Influence of E-Commerce on Consumer Behaviour Better informed More able to ask for keen price

Less loyal

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Problems of E-CommerceE-fraud Phishing;from 1000 sites in 2004 to 2,6billion in 2005. Avoid verification of info that has already being supplied,avoid clicking on links embedded in email messages,avoid clicking attractive offers from unknown organisations. Overpayment Scam;Refuse payments for more than the selling price. Chain emails;Do not reply to chain emails,or do not enter to unknown foreign lotteries

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