MGMT FINAL EXAM STUDY NOTES

Lectures:Week 1: Managing Contemporary Enterprise: The Importance of Knowledge

Meeting the Challenge of a Knowledge Economy• Humans have lived in a knowledge economy since the beginning of time (fire,

development of tools, wheel etc)• Knowledge is growing at an exponential rate. Each discovery leads to another

development• More now than ever, we live in a economy where key factors of production reside

in the capacities and ingenuity of the human mind. Increasing emphasis must be placed on continuous innovation, collaborative learning, competitive advantage.

• Continuous innovation: In an economy where the only certainty is uncertainty, innovation is key. Markets shift, technologies become outdated, competitors multiply. We must be able to change and adapt to these changing conditions

• Collaborative learning: People share and expand knowledge, and thus productivity

• Competitive advantage: Competitive advantage no longer goes to those with most resources; it belongs to those with the most knowledge. Nations that excel in creating knowledge excel Ex. Sweden

• Learn To Learn• Nike, Nokia or Netscape= small companies in terms of employees, generating

hundreds of millions of dollars in sales by levering their knowledge advantage• What’s the “Knowledge Economy” mean to you?

1. A new way of thinking about business2. An underground network that exchanges knowledge for a price3. A trillion-dollar market space4. The engine driving innovation and change5. A shift from “bricks” to “clicks”6. The reason continuous learning and skill-development is so important today

The Rational for Developing Learning Organizations• “the ability to learn faster than your competition may be the only sustainable

advantage” – Arie de Geus• “learning disabilities are tragic in children, but they are fatal in organizations

because few corporations live even half as long as a person” – Peter Senge• In order to deal with new problems, we cannot suppress creativity in

organizations. We must promote it to deal with overcome organizational challenges.

• Strive to be a “learning organization” so you can: create a sustainable advantage, grow and develop, create new niches, change with the economy, create knowledge, generate renewable resources “teach a man to fish”

The New Knowledge Landscape• The future lies in knowledge exchange and sharing.• Economy is fired by brainpowerEmerging Trends of Global Leaders

1. Thinking Globally: - Leaders will need to understand the economic, cultural, legal and

social ramifications- Must be able to understand and lead across global regions due to

globalization- Learn how to manage global marketing, production and sales

teams

2. Appreciating Cultural Diversity:- They will have to understand the social and motivational

differences or cultures- Understand behaviors (religion, greetings, manners etc.)- Ability to motivate different cultural properly. Pride in one culture

could be source of embarrassment in another. Motivational strategies in one may be offensive in another.

3. Technological Savvy:- Leaders must be aware of the technological component and use it

strategically to gain a competitive advantage4. Building Partnerships and Alliances:

- The ability to form important relationships and handle complicated networks will be important as inter-dependence will increase

5. Sharing Leadership: - Successful leaders of the future will integrate not control- One person cannot do everything, so it is important to share it- Create an environment where other leaders subscribe to a common

vision and goal and work as an integral unit- Develop a social architecture that encourages bright, confident

people to work together successfully

Week 2: Managing Contemporary Enterprise: The Importance of Stakeholders• A stakeholder is anyone who has a vested interest in the status of an organization • Takes a “win-win” approach to conflict resolution where everyone gains• A key stakeholder is an individual or group that can materially affect or be

affected by a company’s actions, decision, goals, policies, or practices. (P.45) Contd details.

Stakeholder: What are their stakes?

Level of Importance

How does the stakeholder influence the enterprise?

What action should the enterprise take to deal with the stakeholder?

Who can be a stakeholder? REFER TO PAGE 36• Owners / Shareholders• Employees• Customers• Suppliers• Creditors – lend money or capital to finance operation• Competitors• Government- affect operation of business through regulations,• Society at large• The environment

Advantages • Allows organizations to determine who to partner with

• Powerful mgmt technique to see who to partner with in international relations

• Considers both competitors and complementers

• Allows business to look at social, ethical and economic aspects in one

• HELPS FIRMS TO COMPETE AND CO-OPERATE

Disadvantages • Can be difficult to forecast and predict

• High degree of subjectivity in analysis

• Attitudes are always changing so it must often be monitored

Week 3: Managing Contemporary Enterprise: The Importance of SustainabilitySustainability and Social Entrepreneurship• Sustainability: A means of running an organization efficiently, while paying strict

attention to the TBL in order to ensure the company’s existence at a certain level.• Social Entrepreneurship: The act of doing business for the betterment of society

or with a socially-inclined mindset. It can be defined as a professional, innovative, and sustainable approach to systemic change that resolves social market failures and grasps opportunities.

• Meets the needs of the present without compromising the needs of future generations

• Improving the quality of human life whilst living within the carrying capacity of the ecosystems.

• SOCIAL RETURN ON INVESTMENTDeveloping a Triple Bottom Line MindsetTriple Bottom Line Accounting: company’s performance based on financial profit, environmental and social success• The Triple Bottom Line (TBL) broadens the definition of a company’s

performance from a financial profit figure to include social and environmental measures of success. It ensures that a business will be sustainable by meeting the needs of its socio-corporate environment. John Elkington– Financial performance indicators include:

– Profits– Shareholder value

– Social performance indicators include:– Safety– Human rights

– Environmental performance indicators include:– Pollutant releases– Energy consumption

Intangible assets: Company values, reputation, and goodwill.

• Intangible assets can increase when a business focuses on achieving triple bottom line results.

• Some examples of intangible assets:– Brand value … Think Pepsi or Coca Cola!– Reputation value

Corporate Social Responsibility: When a business interacts with its community in a positive way (i.e. through charity or helping create a friendly and safe environment). It also applies to the decisions and impact thereof that businesses make on a daily basis.Creating Sustainable Value• Striving towards financial, social and environmental performance excellence will

mean shifting traditional mindsets.• Value is not always defined in quantitative terms (i.e. How much money one

tonne of gold is worth?).• Value can be qualitative judgments as well. (i.e. What principles, standards, or

qualities are considered worthwhile?)Understanding Tangible vs. Intangible Assets

• Intangible assets can increase when a business focuses on achieving triple bottom line results.

• In some companies, intangible assets can make up to 80% or 90% of a company’s market value!

• Some examples of intangible assets: – Brand value … Think Pepsi or Coca Cola! – Reputational value … how does society react to human rights violations or oil spills, or harmful product recalls? Think Johnson & Johnson and the recall of contaminated Tylenol).

Characteristics of sustainable enterprises:• Stay connected to stakeholders & changes in the external environment (i.e. What

is happening politically, socially, technologically, environmentally, and economically that could impact the business?)

• Build these internal capabilities: leadership, stakeholder inclusion, communication & dialogue

• Design their mission and strategy to maximize competitive advantage in a changing environment

Using SWOT Analysis• Essential for venturing into a new market, because it allows us to evaluate all the

variables beforehand.• Strengths: attributes of the organization that are helpful to achieving the objective. • Weaknesses: attributes of the organization that are harmful to achieving the

objective. • Opportunities: external conditions that are helpful to achieving the objective.

• Threats: external conditions that are harmful to achieving the objective. Strengths and weaknesses

• Resources: financial, intellectual, location • Cost advantages from proprietary know-how and/or location • Creativity (ability to develop new products) • Valuable intangible assets: intellectual capital • Competitive capabilities • Effective recruitment of talented individuals

Opportunities and threats• Expansion or down-sizing of competitors......LPK • Market trends • Economic conditions • Expectations of stakeholders • Technology • All other activities or inactivities by competitors • Criticisms by outsiders • Changes in markets • All other environmental condition

Week 4: Engaging Customers: Product Development & Life Cycle• Firm need to develop a steady stream of new products and services give the rapid

changes in consumer tastes, technology, and competition.Firms can obtain new products by:- Acquisition: buying a whole company, patent, or license to produce someone

else’s product- New product development: develop new original products and new brands, by

investing into research and development.Reasons why some products fail in the market: (P.63)- wrongly targeted market- product not designed well or below expectations- Price too high because of the high quality- Lack of product advertising and support- High cost of R&D than expected profit return- Strong Competitors fight back even aggressively. Eg PS3 and Nintendo WII and

XB0X 360 major example of competition in the gaming entertainment market, can be used as a strong backup example

The Product Development Process• Series of activities by which a product idea is transformed into a final product

Steps:1. Evaluate opportunities and select the best product idea

2. Get feedback to refine the product concept3. Make sure the product performs and appeals to consumers4. Design with manufacturing5. Build and test prototypes6. Ramp up production and run market tests7. Launch the product

Protect Your Idea: get a patentProduct Life-cycle: Product development: company finds and develops a new idea.1. Introduction: A period of slow growth in sales. No profits.2. Growth: Rapid market acceptance and increasing profits.3. Maturity: A period of sales slowdown. Product has achieved acceptance with

most potential buyers.4. Decline: Sales drop off and profits decline.

• Product class (automobiles)• Product form (SUV)• Brand (Volkswagen Jetta)

Different products have different lifetimes. Product classes have the longest life cycles. Kraft Dinner is age-defying because it has 75% market share (page 79)

The Marketing Environment• The External Marketing Environment: Factors external to the firm that present

threats and opportunities and require shifts in marketing plans (regulatory, economic, competitive, technological, social and cultural)

Week 5: Engaging Customers: The Importance of QualityPromote Quality and Continuous Learning as Core Values• A commitment to quality and continuous improvement can reduce costs, increase

profits, and help to create corporate cultures where continuous learning is a way of life. To earn these benefits, the commitment to quality and improvement has to become part of the mindset shaping how people approach their work, not just a collection of programs and techniques.

• Theorists like Edwards Deming and Joseph Juran, suggests that when you focus on increasing the quality of a good or service, you can actually reduce the costs of production because poor quality is expensive.

• Quality is shaped by corporate policies, the nature of labor management relations, corporate culture, access to resources, appropriate knowledge and technology and a host of other forces influencing the workplace and business environment.

• Many organizations disregard this web of interconnection, fragmenting work processes, and creating methods of control that actually undermine the ability to produce quality work.

• It's a vicious loop. Poor quality production systems lead to low productivity, defects and waste materials. Faulty under-performing products annoy customers. Dissatisfied customers spread "the word" which in turn deters new customers.

It is important to recognize two key principles:• The pursuit of quality and continuous improvement has to be a core value and

mindset, not just a program or technique.• The pursuit of quality has to break bureaucratic, professional and technical

boundaries. It cannot be pursued in isolated pockets.Small Changes Create Large EffectsEnsuring Customer Satisfaction• Customers are the fluid of an organization• Happy employees= improved customer satisfaction= business profit• WAYS TO ENSURE SATISFACTION:

- Raising the bar- Changing with the customer- Customer input- Keeping commitments (just like politicians and electors)- Understanding the competition

Deming’s Theory of Management• A managerial theory about productivity and quality control. Dr. Deming said if

JAPAN CAN, WHY CANT WE?????• Deming’s Key Ideas:

1. Diseases and Obstacles2. The Concept of Variability3. 14 Steps MGMT Must Take

• Diseases and Obstacles:-Overemphasis on short-term profits-Human resource practices that encourage both managers and employees to be mobile and not organizationally loyal-Merit ratings and review systems that are based on fear of one’s supervisor-Absence of single driving purpose-Management that is based on visible figures alone

• The Concept of Variability-Variation is a part of any process-Management can change the system to increase productivity

• 14 Steps MGMT Must Take To Transform An Organization• Total Quality Management: Comprehensive, strategic management approach that

builds quickly into every organizational process as a way of improving customer satisfaction.

• Quality assurance: System of policies, practices, and procedures implemented throughout a company to produce quality goods and services.

• Mental models: Allow us to make sense of the world rapidly and efficiently. They relate to every individual’s set state of mind, thoughts, concerns, etc…In essence, they are a set of preconceived beliefs that shape how we view the world.

Leadership Component of Quality:• Leaders will do what it takes to help employees serve customers better• They will try to make employees as happy as possible so that they will ensure the

well serving of customers, and if customers are happy than the entire organization benefits as a whole.

• Global leader will try to find out the consumers preference not only on global scale the leader of the rapidly changing society will also have to adapt to changes and preference of individual customers from different cultures and even regions.

• Quality of both product and services will provide the company with a huge opportunity to distinguish it self from the competition.

• Customer satisfaction can be ensured by obtaining feedback from the customer and having their input incorporated so that the company is able to keep the customer happy and will retain the customer.

• As companies for all know that it’s more costly to gain new customers than to retain them.

• Most important factor behind quality mindset of the corporations would be Commitment to its customers as this is most single sound factor of success for any company.

Week 6: Engaging Customers: The Importance of MarketingLearning To Challenge Mental Models• Mental models are frames that we carry "in our heads." They embody deeply held

images and assumptions that can shape our perceptions and actions. At times they also prevent us from taking action. By being aware of their influence, individuals and organizations can learn to challenge and change them when necessary.

• They can limit options, because they hamper you from developing creative ways to expand conventional approaches to marketing to increase value.

• Times change, models do not, this is a source of problemThe Marketing Mix

Four P’s of Marketing– Price– Product– Place / Placement (location, distribution)– Promotion

• Combination of product, price, place and promotiono Developing a product

Product ideas come from people within the company who understand customers needs

Internal engineers are challenged to design the product Conducting marketing research

• Who are potential customers?• How much are they willing to pay?• Process of collecting and analyzing the data that’s relevant to a

specific marketing situation• Secondary data: information already collected by the company

or other means (stats Canada)• Primary data: newly located information that address specific

questions (survey, personal interviews, focus groups) Branding

• Some word, letter sound or symbol that would differentiate their product from similar products on the market

• Trademark: registering the name with the patent and trademark office

• Strategies:o Private branding – company makes a product and sells

it to a retailer who in turn resells it under its own nameo Generic branding – the maker attaches no branding

information to a product expect a description of its contents. Customers are often given a choice between a brand name prescription drug or a cheaper generic drug with a similar chemical makeup.

o Manufacturer branding – a company sells one or more products under its own brand name. Using multi-branding approach, the company will assign different brand names to different products

• Brand equity o Any added value generated by favourable consumer

experienceso Brand loyalty: you may prefer or insist upon buying a

certain brand only Packaging and labelling

• Packaging: the container that holds your product

• Labelling: what you say about the product on your packaging• Purpose: attract consumer attention, make it easier for people

(eg: keeping track of calories etc.)o Setting a price for the product

Involves trial and error because there are so many factors to consider Strategies

• Skimming pricing – start off with the highest price that keenly interested customers would pay, and then from here you can lower it once competitors appear

• Penetration pricing – charge a low price, both to discourage competition and to grab a sizeable share of the market, as soon as competition falls, you can push up prices

• Cost-based pricing – figure out how much it costs to make a product and then set a price by adding a profit to the cost (30% mark up)

• Demand based pricing- bases the price of a product on how much people are willing to pay for it

• Target costing – practice strategy that determines how much to invest in a product by figuring out how much customers will pay and subtracting an amount for profit

• Prestige pricing – setting a price artificially high to foster the impression that the product is of high quality

• Odd-even pricing- pricing products a few cents under an even number (9.99$)

o Placing a product Distribution – entails all activities involved in getting the right quantity

of your product to your customers at the right time and at a reasonable cost

Distribution channels:• Selling directly to customers • Selling through retailers• Selling through wholesalers

Physical distribution• Warehousing/distribution center • Materials handling (physically carrying goods during

production, warehousing and distribution)• Automation (automating the process inventory etc.)• Just in time production (reducing inventory costs by delivering

materials just in time to go into the production prices• Transportation (trucks, trains, planes, ships, pipelines etc.)

The Supply Chain• Flow that begins with the purchase of raw materials and ends

in the sale of finished product to an end user

• Supply chain management – process of integrating all the activities in the supply chain

The value chaino Supply chain management helps companies to produce better

products at lower costs and to distribute them more effectively Customer value triad

o Most customers buy products that gives them the highest value, and they usually determine value by considering the value triad: quality, service and price

o Promoting the product Various ways to communicate with customers, including advertising,

sales promotion and publicity Need to imprint a clear image of it in the minds of your target audience Tools:

o Advertising: paid, non personal communication designed to create an awareness of a product or company

o Personal selling: one on one communication with customers or potential costumers

o Sales promotions: approach in which a company provides an incentive for potential customers to buy something

o Publicity: focus on getting a company or product mentioned in the newspaper, television or other forms of media

o Public relations: communication activities undertaken by companies to garner favourable publicity for themselves and their products. Eg: sponsoring a fundraising event, a press release to promote the event.

Important keynotes:• Projected Image –is the impression your firm is giving by everything you do:

what your employees wear, where you are located, how you decorate, how you advertise and ETC.

• Expected Image – this is the perception of your firm that people carry around in their heads before they even encounter you company or firm.

• Companies need to offer the options for both off the shelf solutions and customization

• Positioning cannot be based only on features and benefits alone but also needs an emotional link.

Week 7: Meeting Financial Stakeholder Expectations & Corporate Social Responsibilities

Corporate Social Responsibility

• CSR movement argues that organizations of all kinds can become good citizens by combining their economic interests with broader philanthropic activities

• CSR takes many forms• CSR results in social and economic gains, SROIFour ways in which firms respond to CSR pressures:

1.A defensive approach – to alleviate pain. Firms will do what they have to do to avoid pressure that makes them incur costs.

2.A traditional cost-benefit approach – thus firms will undertake activities they can identify as beneficial

3.A strategic approach- firms will recognize the changing environment and engage with CSR as part of deliberate emergent strategy

4.An innovations and learning approach- an active engagement with CSR will provide new opportunities to understand the market place and will enhance organizational learning and those provide a competitive advantage.

• In this environment, firms need to think of themselves as being part of a network in which value is created and where co-operation is more important.

Financial Literacy: Understanding the Numbers• Assets: Any things of value owned or leased by a business.• Liabilities: Claims against a firm’s assets by creditors.• Fixed Assets: Assets retained for long-term use with constant prices (i.e. land,

buildings, and machinery)• Liquidity: The level of ease with which an asset can be converted into cash.• Income statement: A financial statement of a company’s revenues, expenses, and

profits over a given period of time.• Balance sheet: Statement of a firm’s financial position on a particular date.• Cash-flow statement: A statement showing when cash flows in and out of a

business.• Competitive advantage: The ability to perform, in one or more ways, things that

competitors cannot match.• Bankruptcy: When a business does not have sufficient assets or earning power to

repay its debts and legal action is taken to dissolve the company and compensate its creditors as much as possible.

The Changing Role of Business• CSR hot topic for multinational corporations• Ex: Shell’s attempt to dump the Brent Spar oil rig in the North Sea, Nike’s

reported use of child labor, Nestle’s marketing of infant milk formula in developing countries, Premier Oil’s decision to operate in Myanmar and the to sell its interests

• Why is CSR such an issue?1. Consumers/Stakeholders: Becoming more demanding2. Visibility: greater visibility of businesses via the Internet or NGO and lobby

groups such as Amnesty International or Greenpeace. Internet has lead to greater scrutiny and globalization are brining pressures on supply chain

3. Investors: They are taking a growing interest. • Businesses must pay more attention to its relationships with society/s-holders

(Volkswagen and Johnson and Johnson) • Triple Bottom Line (Environment, Social, Economic/Financial) by John

Elkington• Four ways that firms respond to CSR pressure: 1. Defensive Approach (Do what

they have to do to avoid pressure/costs) 2. Traditional Cost: Actions that directly benefit. 3. Strategic Approach: Use CSR strategy as a deliberate emergent strategy

• New Economy: Innovation, learning, CSR provides opportunities to understand the marketplace and will enhance organizational learning and thus provide competitive advantage

• Get away from competitive mindset and move towards “case for business for CSR”----------business and society impact each other, so CSR is important

Week 8: The Employee as a Stakeholder

Cultivating Trust•You can't buy trust. It is something that has to be earned over time as people gain confidence in you as a person, and in your leadership abilities. Take this opportunity to learn about six things that you can do to create a high trust environment.

1. Honor Commitments: honest and take responsibility if you stumble: "It was my mistake. I should have honored that commitment. I'll make this right." Maybe more important to be committed. Don’t Hedge if the going gets rough. Honor small commitments (renovating lunch room vs increasing sales)

2. Demonstrate Empathy and Caring: Adjust weekend meeting to compensate for employee’s family crisis

3. Be honest and open; share information: Don’t be manipulating or with holding.

4. Be generous with credit: Don’t take credit for others work. Credit = work5. Be Fair: Don’t have favorites, treat everyone equally6. Walk the Talk: Do what you say you are gonna do!

Understanding Ripple Effects of Words and Actions• If you are a leader of any stature, chances are that people are "reading" the

significance of your words and actions all the time.• They may be doing this to get advance warning of what’s to come; for indications

on which way the political wind is blowing; to assess their personal worth or standing in your eyes; or just to get some fresh gossip for the corporate grapevine.

• It is important to recognize this and be acutely aware of potential consequences, especially unintended side effects.

1. Everything that you say and do as a leader may be scrutinized and is likely to get amplified

2. Omissions and Silences can be powerful: Prepare public statements carefully, to make sure you're not missing something or someone. Accidentally omitting a team member's name from a list of acknowledgements could be interpreted as deliberate. Try to provide complete explanations on important issues.

3. Think about likely impacts and try to anticipate negative consequences4. Find reliable sounding boards: Identify people you can trust and be fairly

objective. For difficult communications test your planned statements on them

5. Buy Time in Difficult or sensitive situations: The full dimensions of a situation may not be immediately obvious. Deferring reaction often allows a clearer picture to emerge. But it depends on the circumstances. In crisis situations you often have to be decisive and be seen as being in control of the situation even though you would like more information

Treat People Right• Virtuous Spirals: Organizations that reward their employees for work perform

better and organizations achieve more. Virtuous Spirals are win-win relationships

that are hard to duplicate sources of positive momentum Begins with strategy organizational design, staffing rewards. To obtain this “Develop a wide array of human capital mgmt practices that motivate people to excel and then follow through by rewarding them.

Components of an effective organization1. Strategy: Master plans for accomplishing goals, purpose, products/services2. Organizational Capabilities: Allow organizations to coordinate and focus

on its behavior to carry through with strategy (ability to manage and develop new knowledge

3. Core Competencies: Combination of technology and production skills that help define and create organizations products/services (miniaturize products)

4. Environment: Context in which the organization operates (state of the economy, political and physical environment.

Seven Key Principles for Treating People Right1. Attraction and Retention: Organizations must create propositions (plans)

to attract and retain the right people2. Hiring Practices: Hire people who fit with their values, core competencies

and strategic goals”3. Training and Development: Train employees to do their jobs and offer

room for professional development”4. Work Design: Design work that is meaningful for people and provides

them with feedback, responsibility, and autonomy 5. Mission, Strategies, and Goals: create an organizational mission w/

strategies, goals, and values that employees can understand, support and believe in

6. Reward Systems: Implement reward systems that reinforce their design, core values and strategy

7. “Leadership’: Hire and develop leaders who can create commitment, trust, success, and a motivating work environment

• Avoid False Spirals: wrong belief that you are in a virtuous spiral (dot-com enterprises in the 1990s thought they were doing well but their value was inflated so high they collapsed hard)

• Avoid Fraudulent Spirals: Enron, WorldCom, Adelphia (deceitful activities) To avoid this implement above.

• Threats to a Virtuous Spiral: Avoid by adding “Strategy change” in order to adapt to new gov’t or environmental regulations, economic downturn, industry failure, mistakes, Fads or fashions

• Virtuous spirals can flourish in organizations that perform well and treat people right. Despite the numerous threats to an organization, virtuous spirals can be rekindled.

• Virtuous Spirals: When individual and organizations archive more and more of their goals. They are the win-win relationships that are hard to duplicate sources of positive momentum

• Death Spirals: When organizations mishandle their human capital is susceptible to inverting this process. During this time an organization will see both individual and organizational performance decline

• False Spiral: Occur when an organization thinks a virtuous spiral has been initiated, when in the fact the thought is simply an illusion.

• Fraudulent Spiral: Is which cause destruction, and are easily mistake as virtuous although they are created by deceitful activities.

Threats to virtuous Spirals:• Environmental Changes• Economic downturn with a country• Industry specific economic downturn• Mistakes or self-inflicted threats• Fads or Fashions

Week 9: Managing Employees: The Importance of LeadershipEmpowering People to Make a Difference• Organizations have to create contexts where people are encouraged to step

forward and use their skills, insights and intelligence to make full and effective contributions

To create contexts where people feel able to contribute and want to make a difference, be guided by these principles:

• Think about empowerment as giving space to grow and develop, rather than in terms of "empowering people"

• Create space by removing barriers and providing support• Remember the importance of boundaries: without a sense of shared vision,

empowerment in an organizational context means anarchy• Remember the importance of accountability: give space; expect results!• Empowerment grows: when people feel that they are able to accomplish things

that are worthwhile, they often end up accomplishing more and more• Empowerment doesn't grow in situations where people don't want to be

empowered• Empowerment always starts with oneself!

The Basics: Leadership in Action• Build on your natural leadership inclinations (review core values, be flexbile,

determine good motivators)• Recognize and build on the contributions of others (learn from others success,

positive attitude towards them, Build on growth of confidenc or success of others and move onto other things)

• Excel the Leadership Triangle: People, Vision, and Execution (treating people, having a vision, executing)

• Align style with needs of organization (needs, strengths, weaknesses of org.)• Remember the importance of focusGood to Great Darwin Smith (pg. 136 example), was a Level 5 Leader Level 5 means highest level in a hierarchy of executive capabilities that we

identified during our research.

Leaders in the other levels cannot produce as great of success, because Level 5 Leaders blends extreme personal humility and intense professional will.

This makes good companies, great! PG. 139 OUTLINES LEVELS Darwin Smith said “I never stopped trying to become qualified for the job” at

Kimberly Clark, despite the fact he lost a thumb, had throat and nose cancer. Even when he lost his thumb, he went to work next day.

Humility + Will = Level 5. PG.142-143!! USE MOCKLER EXAMPLE Display professional Will (PG. 144-145) Born: Provides that you are a Level 5 Leader by nature and you are because of the

fact you are not egotistical. These leaders are about building, creating, and contributing. Instead of fame, fortune, power and adulation

Bred: These are people that evolve into leaders. Eg: Colman Mockler, while getting an MBA at Harvard, converted to Christianity and according to “Cutting Edge” became a prime mover in a group of Boston business executives that met frequently over breakfast to discuss the carry over of religious values to corporate life. Darwin Smith blossomed into a Level 5 Leader after his near death experience with Cancer

There are many ways to be bred into a Level 5 Leader!The Different Types of Leaders? Leadership style: Whether you are task emphasis or relationship emphasis Leadership Style Adaptability: Ability to adapt to organizations needs, strengths,

weaknesses. Task Oriented Behavior: Careful supervision of group members to obtain

consistent work methods and explain what activities are needed to accomplish this.

Relationship Behaviors: Aim at satisfying the social and emotional needs of group members. Showing consideration for friendship, mutual trust, respect, and warmth in the relationship between leader and follower. Maintaining relationships.

• -THE four styles of leadership (1. High task and low responsibility: Lots of input little relationship behavior, 2. High task and high responsibility: Input in a persuasive, supportive and guiding manner, 3. High relationship and low task: Less direction from leader, more collaboration between leader and group members, 4. Low relationship and low task: Delegates leadership/responsibility but is informed on progress)

PG. 153 SITUATIONAL LEADERSHIP MODEL Situational variables. Trust, Objectives Appropriate Leaderships style, Task

Characterisitcs: degree of clarity and structure in task. Rewards: Increase follower motivation by clarifying how followers can receive rewards for task accomplishment.

Time: Sometimes leaders don’t have time to seek opinions and suggestions and vice versa.

Week 10: Understanding the Issues & Importance of External StakeholdersDialogue and Collective LearningGreening the Corporation Greening the Corporation: Consider environmental and social issues in their

business practices Ecological Modernization: Society (including corporations) can modernize itself

out of ecological crises, through economics, natural sciences, corporate mgmt, politics, regulators, and other factors to provide both economic and environmental growth. Three parts: 1. Intuitional Learning 2. Corporate view on env issues 3. Cultural Politics (environmental challenges viewed as opportunities for growth)

Corporate Culture: The set of norms found in organizations. 1. Role Culture: Role of job description is more important the person who fills it. 2. Power Culture: few rules, bureaucracy, and control mechanisms exercised by the founder.

Ex: The Body Shop has a power culture because it actively addresses environmental issues such as energy conservation, waste mgmt, and product life cycle assessment by fighting the use of animals for product testing world-wide.

Corporate Environment Mgmt Styles: 1. Environmental Compliace Mgmt: least progressive. Acts to comply with legislation or litigation. 2. Preventatiev Environmental Mgmt: Goes beyond complying with legislation and litigation, but is involved with pollution prevention and reduced waste of resources

• Strategic Environmental Mgmt: Incorporates environmental goals into the overall economic strategy often anticipating and pursuing green markets. Heaving env research and responsive to env resources.4. Sustainable Development Mgmt: Strive to take a leadership role in their industries in response to env issues.

Thinking Globally

Business today is characterized by alliances between governments, industries and companies

The European Union (Euro breaks barrier of currency exchange), the NAFTA, and he Association of SouthEast Asian Nations dismantle barriers.

Companies are forming cross industry alliances such as utilities and telecommunication firms, software and hardware, banks and insurances through merger and acquisition or alliances

The labels of competitors, partner supplier, and customer are becoming interchangeable in order to companies to create alliances and provide a special product to consumers,

This has created a global marketplace, where convergence assumes greater significance

Inter-industry: Alliance across industries. System: EU, Commerce Intra-Industry: Mergers and Acquisitions (Financial services, Travel,

Transportation). The Above three converge to form a Global Cross-Industry• Goal of Global Integration: to take advantage of the economies of scale around

the world while responding to local needs. Goal is becoming more realistic.Global Leaders will need to understand globalization means 1. Market products differently from region to region as culture changes2. Changing PriceA global leader must have:1. A financial understanding of the world economy (EU) 2. Understand different cultures 3. Understanding of global and regional markets to understand how markets play off each other.• Aware of laws around the world and even time zones• Be flexible and ability to refrain from right or wrong because business is done is

so many different ways across the world. • Ex: Westerners going to Middle East do not understand the Koran• Ex: A company is Brazil maybe profit drive and a company in China may be

employee drive thus changing the operations. • Think Globally, Act Locally : Have a worldwide perspective when making local

or national decisions• 95% of US companies that go to China fail because they do not understand their

views and biases• Before Accenture went public in 2001, prior to the IPO CEO Joe Forehand spent

over six months visiting each parnetship to understand its frame and of reference• A global village: You can’t be an independent global leader, you need an

organization behind you. Customers want “one-stop shopping.” They will no longer accept the complexity of having to deal with many different suppliers and billing systems providing the same product but in different locations

• Global leaders will help educate people and prepare them to do business with different cultures.

• Have a thorough understanding of cultures before getting on the plane

Globalization and its discontents• Benefits of Globalization: Has Given many developing countries access to

knowledge well beyond the reach of even the wealthiest in any country a century ago.

• Ex: Guerillas in the Philippines were provided jobs by a World Bank financed project as they laid down their arms; irrigation projects have more than doubled the incomes of farmers, education projects have brought literacy to the rural areas• Globalization hurt those to people who are not part of the decisions about

globalization• Ex: The Third World is in dire poverty and the number of people in poverty

increased by 100 million at a time when the total world income increased by 2.5% annually

• Western countries which encouraged poor countries to break down barriers while keeping up their own, and as a result developing countries were prevented from exporting their agricultural products and deprived them of needed export income!

• Ex: Western Banks benefited from the loosening of capital market controls in Latin America and Asia, but those regions suffered when inflows of speculative hot money that had poured into countries suddenly reversed.

• When projects initiated by the West but funded by private capital fail, the poor people in developing countries still must repay the loans.

• Institutions that Govern Globalization: International Monetary Fund, the World Bank, and the WTO.

• IMF based on idea markets did not work well, and was made to ensure economic stability by being a lender of last resort introducing liquidity in the form of loans to those facing an economic downturn and pressuring countries to do their faire share to maintain AD.

• Ex: SEE page 184!• Managerial Decisions pg. 185

Week 11: The Future: Emerging Opportunities & Challenges for ContemporaryEnterprise

Dealing With Corporate Earthquakes• Andy Grove, former CEO of Intel said “Sooner or later something fundamental in

your business will change”• Businesses that do not predict their “fracture lines” will be demolished or barely

get by• In a richly connected world, "corporate earthquakes" are inevitable. The challenge

is to spot the warning signs and find ways of positioning for what is to come.• The individuals or businesses that fail to detect the emerging "fracture lines" that

signal major change will find their world being disrupted or demolished, or, at best, passing them by.

1. Be wary of minor disturbances: sales drop, outsourcing and outside hiring.2. Watch for emerging "fracture lines"

Instead of waiting for reality to hit you, do your best to anticipate corporate earthquakes before they happen. Most good entrepreneurs do this, spotting how

they can link ideas, technologies, services or products to create and satisfy new needs.

• Keep your ear to the ground: Encourage people to Develop sensitive and broad-based "antennae" that encourage them to tune into interesting conversations at conferences, trade shows, and visits outside the business

• Be sensitive to interesting stories, unusual facts, events and occurrences• Share what they learn so that intelligence spreadsUse Problems as Opportunities:

• Problems can seed new learning and change

• Creative destruction can provide the basis for continued renewal

• A search for flaws and potential criticism can speed the ability to changeAnticipating Opportunities (global leaders must)• The global leader of the future will create a clear and compelling vision for his or

her organization and a great capacity for communicating the vision in such a way as to inspire and stretch people beyond expectations.

• Leaders are initiators• “The unique role of leaders is to take us to places we’ve never been before.” And

they do that by: (PAGE 196)1. Investigating future trends: Research and project future trends in

customer and client relations, products, and services and employee retention while balancing speed to value in order to stay competitive because consumers demand better value, better services, and better products; employees(esp knowledge workers) demand more responsibility, more freedom, and more flexibility. Ex: Sun Microsystems, expected to integrate several hundred million transistors

2. Anticipating future opportunities: must have vision, be able to anticipate new strategies and possibilities long and short term

3. Looking to the future: Inspiring people to focus on future opportunities (not just the present). It is up to the global leader to ensure that each individual in the company understands how they help the company move towards their goals. They must empower people.

4. Developing ideas to meet the needs of the new environment: the world changes, the global leader must adapt and succeed.

Benefits of Globalization:• Opening up of international trader has helped many countries grow far more

quickly than they would otherwise have done.• Has given access to knowledge for growing and developing nations• Has allowed for foreign aid to many needy countries

Harms of Globalization (P.215 – 216) allot of explanation is available in the bookManaging the Unexpected: Assuring High Performance in Age of Complexity

• High performance companies deal effectively with unexpected challenges.They do this through:

1. Preoccupation with Failure: HRO (Highly Reliable Organization) aware that small lapses could occur at the same time. Encourage reporting of errors and near misses and extract lessons.

2. Reluctance to Simplify Interpretations: HROs manage their complex worlds through developing a deep and detailed view of an operation that allows for a nuanced understanding.

3. Sensitivity to Operations: HROs have high situational awareness and relational understandings that allow for continuous adjustments. Common language and shared goals across the organization

4. Commitment to Resilience: HROs are not “zero defects” organizations. While they may strive to be perfect, they are not. HROs are not disabled by their errors. This requires a deep understanding of people, process, technology, and raw materials, experience, expertise and training.

5. Deference to Expertise: In HROs those with the most expertise make decisions at the front line. Decisions made based on expertise not rank.

• Ex: The Union Pacific Culture: Hubris and the disconnect the UP growth strategy and its operational capabilities prevented the company from recongnizing warning signs and taking early preventative measures. The Homogeneity of mangers allowed executives to misinterpret or be blind to early warning signs.

• Non HROs see close calls as evidence of skill and success where HROs see close calls as failures from which leanings can be extracted.

Week 12: Integration & ReviewLearning to Learn

• Organization theorists Chris Argyris and Donald Schon have found it useful to distinguish between two main categories of learning

• "Single-loop" learning is a process through which systems are able to regulate their behavior and maintain a steady state. It occurs when a system scans and monitors

information in it's environment, compares the information against a set of operating norms, and initiates corrective action whenever undesirable deviations are spotted.

• "Double-loop" learning rests in an ability to question the appropriateness of a system's rules and to change them when necessary.

• Learning to learn is a feedback system that single and double loop learns about the context in which learning occurs. This allows it to learn about learning, and to build learning into everything it does.

• High performing systems use "single-loop" learning to produce operational efficiencies and "double-loop" learning to make sure that the strategic direction of the system is sound. The challenge is to find a good balance between the two types of learning.

• An individual or organization that masters the art of creating contexts will promote deep learning and change

• The Key Message: Whenever circumstances are changing or unpredictable, individuals, teams and organizations always need systems that are capable of "double-looping." But they have to be careful that they don't end up creating an endless form of "double-looping" where everything is questioned and challenged all the time. If they do, nothing gets done. Effective systems find a good balance between single and double-loop learning.Evolve! Succeeding In the Digital Culture of Tomorrow

• In the age of internet business, it is important for managers to understand why they need to change, what to change and how best to effect this change in leading, organizing, working, and thinking about their organizations

• IN E-CULTURE: Leaders must inspire, motivate and guide the change while staying focused on vision

• The key idea of e-culture is community , which is a group of individuals with shared experiences, values and goals who voluntarily feel a sense of group identity and work together for the good of all.

Key Elements of e-culture:1. Treating strategy as improvational theater. 2. Opening up to a network of partners: “big everywhere fast” requires

maximizing every possible connection 3. Moving from cell-like entities to integrated communities: Significantly

more likely than unsuccessful businesses to have departments that collaborate with each other, have conflict seen as a creative instead of disruptive force, have the freedom to do anything in support of the business and decisions made by the most knowledgeable not by the highest rank.

4. Creating a culture to attract and hold world class talent• No quick ways to riches on the web. Need for change. Change needs to be a way of

life and must be seen as a creative force within the organizations.

Getting Change Rolling: An organization must operate in a way that allows for rapid and continuous change.

1. Common theme, shared vision 2. Symbols/Signals 3. Guidance structure and process 4. Education, traning action tools 5. Champions and Sponsors: people executing change.6. Quick wins and local innovations: innovations and demonstrations at the local level that change is possible. 7. Communications and best practice exchange: multidirectional flow of change.8. Policy, procedure, system alignment 9. Measures, milestones, feedback.

Skills for Change masters: 1. Continuous Env Monitoring 2. Breakthrough thinking 3. Inspiring a vision 4. Building a coalition5. Nurturing the Team 6. Having Persistence and perseverance 7. Providing appropriate recognition

Training and Development- New Approaches for Changing Needs• E-business model has altered the way business is and can be done and conducted in

this internet-enabled world.• The importance of Community (P.221)• Leading change: Skills for change masters (P.225):• Continuous Environmental monitoring - they are well up to date with and aware of

the environment around them and are able to identify needs in the marketplace and even the needs to change within the organization

• Breakthrough thinking –ability to use information to generate exciting new ideas. They are unknown to create they puzzle pieces not just put the pieces together; this is what makes them innovators and not imitators.

Tutorials:Pre and Week 1: Tech Savvy, Self-Awareness and Personal Effectiveness

Week 2: Creative Problem Solving, Stress/ Time Management

Week 3: Teamwork• Ground rules• Being an effective team member

There are hundreds of things one can do to develop teamwork.• Speak up whenever you see an opportunity for improving team

performance• Encourage active participation• Be friendly• Remember that if you’re not working for the team, you’re probably

working against it• Every action you take either strengthens a group or weakens it• Ensure clarity• Know when to step into situation and when not to• Know when you are needed• Always be ready to pitch-in• Motivate others• Leading by action can at times be more effective• When people see you working hard, they get motivated to do so as well• Understand you teammates• Help others whenever possible• Be aware of other’s personalities and feelings• Resist group-think

• Two models of team developmentWeek 4: Financial Literacy

Financial Literacy: Understanding the Numbers• Assets: Any things of value owned or leased by a business.• Liabilities: Claims against a firm’s assets by creditors.• Fixed Assets: Assets retained for long-term use with constant prices (i.e. land,

buildings, and machinery)• Liquidity: The level of ease with which an asset can be converted into cash.• Income statement: A financial statement of a company’s revenues, expenses, and

profits over a given period of time.• Balance sheet: Statement of a firm’s financial position on a particular date.• Cash-flow statement: A statement showing when cash flows in and out of a

business.

• Competitive advantage: The ability to perform, in one or more ways, things that competitors cannot match.

• Bankruptcy: When a business does not have sufficient assets or earning power to repay its debts and legal action is taken to dissolve the company and compensate its creditors as much as possible

• Break Even Volume= fixed cost/ (price – variable cost)

Week 5: Financial Analysis (page 283, Green pages)• Current ratio• Acid-test ratio• Inventory turnover• Account receivable turnover• Days sales in receivables• Debt ratio• Times-interest earned ratio• Rate of return on net sales• Rate of return on total assets• Rate of return on common• Earnings per share of common stock• Price/ earnings ratio• Dividend yield• Book value per share of common stock• Gross margin percentage• Earnings per share• Times-interest-earned ratio• Rate of return on shareholder’s equity

Week 6: Mid-Term

Week 7: Evaluating Performance & Giving Feedback• Giving feedback well Apply the EOJC Model:

• What’s the situation where feedback is needed?• What were the performance expectations in this situation?• What are your observations on behaviors and performance?• What are your judgments or evaluations on performance?• What are the consequences?

• Receiving feedback well• Evaluating performanceThe One Minute Manager - Managing should not take a lot of time because of two main reasons 1. Quality of Mgmt 2. People should me managing themselves!

- One Minute Goals: Clarify responsibilities and nature of the performance standard. (Agreement between the manager and subordinate regarding what needs to be done, Recording of each goal on a single page in no more than 250 words, continuous review) - One Minute Praising: (Letting others know that you are going to let them know how they are doing, praising positive performance ASAP, allowing the message that you felt good about their performance, handshakes or touch when appropriate. - One Minute Reprimands: (Letting people know u will communicate how they are doing, reprimand more performance, reaffirm how valuable you feel the employees are, make sure than when the reprimand episode is over it is over!) Week 8: Valuing Diversity & Power Orientation

Think win-winAppreciate diversity (page 308)

Globalization results in people from different cultures, races, ages, and socioeconomic and religious backgrounds

Global leader must understand that there are many different styles methods and positions in which people can accomplish goals

Building a power baseDo not misuse or abuse power, can result I negative outcomes in the

workplaceThe use of power can be good or badPower is the capacity or potential to influence the behavior of othersIt is a means to facilitate goal attainment, solve problems, create

strategy, evaluate performance, motivate others, and manage teamsPAGE 322The effective power builder: 1) indentifies where the power is in the

organization 2) applies formal authority sparingly 3) Strives to develop personal power bases 4) Frames desires in terms of organizational benefits 5) Considers the cost-benefit equation before selecting an influence strategy or power (weighing potential costs vs. benefits of using power).

Week 9: Planning & Goal Setting• Use strategic planning to generate new thinking and develop capacities that will

position the enterprise for new challenges and unexpected events• Self-management: clarify goals, setting goals, and planning

Week 10: Presentation Skills• Two way listening is a process. Unless people are listening, communication is a

waste of time. To communicate effectively, it is vital to learn how to listen.

• Understand non-verbal communication: to be an effective communicator it is vital to understand the power of non-verbal communication. Read body language, and adapt your message according to what you see.

Week 11: BPTP

Week 12: BPTP

1.04 Balancing Influence and Control Important for empathy and motivation. It may seem that telling people exactly what to do is the best way to go accomplish goals, but every time you use raw authority, relationships are eroded. It is important to build relationships.

You are more likely to build relationship capital when you:CollaborateConsultDiscuss PersuadeEmpathizeUnderstand Acknowledge personal needs Are humble Give creditDevelop and coach subordinatesTrust Share informationAre honestFollow the lead of others when it can achieve the greater good

Deplete relationship capital when you: Make excessive use of command and control style managementRely on positional powerDictateAre impersonalTake credit for other's work Are arrogantManipulateUse information as powerShow little trust"Push" to get decisions and actions you want rather than persuade and influence

Leadership

To lead others effectively for a period of time, you to know yourself, others and what works to accomplish tasks. Lead not only by task delegation, but through example.

1) Build on natural leadership inclinationsEffective leadership is an extension of who you areWhat are your core values?Demonstrate flexibility, in what ways can you moderate your natural

leadership tendencies?2) Learn what will motivate followers

Connect with your followersThink of what motivates peopleWhat can you do to motivate othersKeep constant motivationUse this motivation to create a success cycle

3) Recognize and build on the contributions of othersLearn from the people around youWhat skills do colleagues have?How can you build on them?How can this create opportunity for success?

4) Excel on the Leadership triangle: people, vision, executionCreate a visionRelate well to peopleCreate a positive environmentEnsure that people are enjoying working together Do not treat people like idiotsExplain situationsEncourage active participationCreate ambitionCreate a “do it” attitude where goals are accomplishedIt helps to create goals and dates on which they are to be doneWork well in a teamShare responsibility

5) Align your style with organizational needsPlay with your strengthsIf you have visible weaknesses, encourage others to take on more

responsibility so your weaknesses are minimized on objectives6) Remember the importance of focus

Focus time and attention on issues and priorities that really countEnsure everyone understand and acts on strategic priorities

Main Topics on the Exam:

• Leadership• Financial understanding• Management what if scenario – real life situations and application• Application of Quality• Continuous Learning• Stake Holders

Leadership

Topics include

Stakeholder/SWOTQuality mindsetEngaging customers

Financial UnderstandingTopics included

Financial literacyFinancial analysisEmerging opportunitiesTriple bottom lineSustainabilityThe importance of

Management what if scenario

Topics include

The employee as a stakeholderGlobalizationCorporate earthquakesE-cultureMental model/double looping learningPlanning and goal setting