5th

Edition

Fundamentals
of Management
Ricky W. Griffin
Texas A & M University

*% SOUTH-WESTERN
c? CENGAGE LearningAustralia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States

Contents
Preface

xv

PART

An Introduction to Management
1

Understanding the Manager's Job

An Introduction to Management
3
Kinds of Managers 3
Basic Management Functions 5
Fundamental Management Skills 6
The Science and the Art of Management 8

Summary of Key Points 22

Discussion Questions 23
Building Effective Time-Management Skills 23
Building Effective Conceptual Skills 25
Building Effective Decision-Making Skills 25
Skills Self-Assessment Instrument 26
Experiential Exercise 27

The Evolution of Management

9
The Importance of History and Theory 9
The Historical Context of Management 10
The Classical Management Perspective 10
The Behavioral Management Perspective 13
The Quantitative Management Perspective 16
Contemporary Management Perspectives
The Systems Perspective 17
The Contingency Perspective 19
Contemporary Management Challenges and
Opportunities 19

CHAPTER CLOSING CASE: Home Depot's Failed

Manager 28
YOU MAKE THE CALL: Marissa Mayer: Google's
Top Designer 29
17

Test Prepper

30

Eye on Management: Managing for "Absolutely,

Positively, Outrageous Customer Service" at
Southwest Airlines 7

The Environments of Organizations and Managers

The Organization's Environments
The General Environment 33
The Task Environment 34
The Internal Environment 36

33

The Ethical and Social Environment of

Management
38
The Individual Ethics in Organizations 38
Social Responsibility in Organizations 41
Managing Social Responsibility 43
The International Environment of
Management
45
Trends in International Business 45
Levels of International Business Activity 46
The Context of International Business 47

31

The Organization's Culture

51
The Importance of Organization Culture 51
Determinants of Organization Culture 52
Managing Organization Culture 52
Summary of Key Points 53
Discussion Questions 54
Building Effective Diagnostic and Decision-Making
Skills 54
Building Effective Interpersonal Skills 55
Building Effective Communication Skills 56
Skills Self-Assessment 57
Experiential Exercise 57

VII

VIII

CONTENTS
CHAPTER CLOSING CASE: Coffee, Cafe, Kaffee,
or CopiStarbucks Spans the Globe 58
YOU MAKE THE CALL: Leading Lenovo: China's
Foremost Global Capitalist 59

Test Prepper

60

Eye on Management: Global Competition

at Subway 49

PART

Planning
3

Planning and Strategic Management

Planning and Organizational Goals
Organizational Goals 63
Kinds of Organizational Plans 65

63

The Nature of Strategic Management

The Components of Strategy 66
Types of Strategic Alternatives 66

Operational Planning
77
Single-Use Plans 78
Standing Plans 78
Contingency Planning and Crisis Management

66

Using SWOT Analysis to Formulate Strategy

Evaluating an Organization's Strengths 67
Evaluating an Organization's Weaknesses 68
Evaluating an Organization's Opportunities and
Threats 68
Formulating Business-Level Strategies
Porter's Generic Strategies 69
Strategies Based on the Product Life Cycle

67

Summary of Key Points 83

Discussion Questions 84
Building Effective Decision-Making Skills
Building Effective Conceptual Skills 85
Building Effective Diagnostic Skills 87
Skills Self-Assessment Instrument 88
Experiential Exercise 88

80

84

CHAPTER CLOSING CASE: FEMA's Disastrous

Response to Hurricane Katrina 91

68
70

Formulating Corporate-Level Strategies

Single-Product Strategy 72
Related Diversification 72
Unrrelated Diversification 73

61

YOU MAKE THE CALL: The Video Game Wars

71

Test Prepper

92

93

Managing in Times of Change: PlayStation 2

Plays On 70

Tactical Planning
76
Developing Tactical Plans 76
Executing Tactical Plans 77

Managing Decision Making

The Nature of Decision Making
Decision Making Defined 96
Types of Decisions 97
Decision-Making Conditions 98

94

96

Rational Perspectives on Decision Making

The Classical Model of Decision Making 100
Steps in Rational Decision Making 100

Risk Propensity and Decision Making

Ethics and Decision Making 108

99

Behavioral Aspects of Decision Making

105
The Administrative Model 106
Political Forces In Decision Making 107
Intuition and Escalation of Commitment 107

108

Group and Team Decision Making in

Organizations
109
Forms of Group and Team Decision Making 109
Advantages of Group and Team Decision
Making 110
Disadvantages of Group and Team Decision
Making 111
Managing Group.and Team Decision-Making
Processes 112

ix

CONTENTS

Summary of Key Points 112

Discussion Questions 113
Building Effective Conceptual Skills 113
Building Effective Decision-Making Skills 114
Building Effective Technical Skills 115
Skills Self-Assessment Instrument 115
Experiential Exercise 116

CHAPTER CLOSING CASE: The Decision-Making

Mind of Microsoft 118
YOU MAKE THE CALL: Making Tough Choices at
Wal-Mart 119
Test Prepper

120

Eye on Management: Team Decision Making at the

Riverwood Clinic 110

Entrepreneurship and New Venture Management

The Nature of Entrepreneurship
123
The Role of Entrepreneurship in Society
Job Creation 125
Innovation 126
Importance to Big Business 127

121

Reasons for Success

123

Strategy for Entrepreneurial Organizations

Choosing an Industry 127
Emphasizing Distinctive Competencies 132
Writing a Business Plan 133
Entrepreneurship and International Management
Structure of Entrepreneurial Organizations
Starting the New Business 136
Financing the New Business 137
Sources of Management Advice 139
Franchising 140
The Performance of Entrepreneurial
Organizations
142
Trends in Small-Business Start-Ups 142
Reasons for Failure 145

127

134
135

146

Summary of Key Points 146

Discussion Questions 147
Building Effective Diagnostic Skills 148
Building Effective Interpersonal Skills 148
Building Effective Conceptual Skills 150
Skills Self-Assessment Instrument 150
Experiential Exercise 151
CHAPTER CLOSING CASE: Entrepreneurial Spirit
Flies High at JetBlue 152
YOU MAKE THE CALL: Founding Facebook
Test Prepper

153

154

Meeting of the Minds: Parts One and Two:

Managing in the Soft-Drink Industry 155
Eye on Management: Sandwich Chef:
A Start Up 134

PART

Organizing
6

Organization Structure and Design

The Basic Elements of Organizing
159
Job Specialization 159
Alternatives to Specialization 160
Grouping Jobs: Departmentalization 162
Establishing Reporting Relationships 164
Distributing Authority 165
Coordinating Activities 166
The Bureaucratic Model of Organization
Design
169
Situational Influences on Organization
Design
170

157
Core Technology 170
Environment 171
Organizational Size and Life Cycle

172

Basic Forms of Organization Design

Functional (U-Form) Design 173
Conglomerate (H-Form) Design 174
Divisional (M-Form) Design 174
Matrix Design 175
Hybrid Designs 177
Emerging Issues in Organization Design
The Team Organization 178

173

177

CONTENTS

The Virtual Organization 178

The Learning Organization 179

CHAPTER CLOSING CASE: Manufacturing Jobs,

Japanese-Style 185

Summary of Key Points 180

Discussion Questions 180
Building .Effective Conceptual Skills 181
Building Effective Technical Skills 181
Building Effective Decision-Making Skills 182
Skills Self-Assessment Instrument 183

YOU MAKE THE CALL: Did You Hear the One

A b o u t . . . Delegation? 186
Test Prepper

Eye on Management: Managing Reporting

Relationships in Teams 167

Organization Change and Innovation

The Nature of Organization Change
Forces for Change 190
Planned Versus Reactive Change 192

190

Managing Change in Organizations

193
Steps in the Change Process 193
Understanding Resistance to Change 195
Overcoming Resistance to Change 196
Areas of Organization Change
197
Changing Organization Structure and Design 197
Changing Technology and Operations 197
Changing People, Attitudes, and Behaviors 199
Changing Business Processes 199
Organization Development 201

188
The Failure to Innovate 206
Promoting Innovation in Organizations

Organizational Innovation
The Innovation Process 203
Forms of Innovation 205

203

207

Summary of Key Points 209

Discussion Questions 209
Building Effective Time-Management Skills
Building Effective Diagnostic Skills 211
Building Effective Technical Skills 212
Skills Self-Assessment Instrument 215
Experiential Exercise 216

210

CHAPTER CLOSING CASE: Whole Foods Changes

the Grocery Industry 217
YOU MAKE THE CALL: Innovative Ikea
Test Prepper

187

218

219

Managing in Times of Change: Out With the Old, In

With the New 205

Managing Human Resources in Organizations

220

The Environmental Context of Human Resource

Management
222

The Strategic Importance of HRM 222

The Legal Environment of HRM 223

Managing Workforce Diversity

The Meaning of Diversity 237
The Impact of Diversity 238
Managing Diversity in Organizations

Attracting Human Resources

226
Human Resource Planning 226
Recruiting Human Resources 228
Selecting Human Resources 229

Managing Labor Relations

How Employees Form Unions
Collective Bargaining 241

Developing Human Resources

Training and Development 231
Performance Appraisal 232
Performance Feedback 234
Maintaining Human Resources
Determining Compensation 235
Determining Benefits 237

231

235

237

238

240
240

New Challenges in the Changing Workplace

Managing Knowledge Workers 243
Contingent and Temporary Workers 243
Summary of Key Points 245
Discussion Questions 246
Building Effective Decision-Making Skills 246
Building Effective Communication Skills 247
Building Effective Technical Skills 248

242

XI

CONTENTS
Skills Self-Assessment Instrument
Experiential Exercise 250

Test Prepper

249

253

Meeting of the Minds: Part Three: Managing in the

Soft-Drink Industry 254

CHAPTER CLOSING CASE: REI: A Place for

Serious Fun 251

Eye on Management: Equality

239

YOU MAKE THE CALL: Results-Only Work

Environment at Best Buy 252

PART

Leading
9

Basic Elements of Individual Behavior in Organizations

Understanding Individuals in Organizations
The Psychological Contract 260
The Person-Job Fit 261
The Nature of Individual Differences 262
Personality and Individual Behavior
The "Big Five" Personality Traits 263
The Myers-Briggs Framework 264
Other Personality Traits at Work 265
Emotional Intelligence 267

263

Attitudes and Individual Behavior

268
Work-Related Attitudes 268
Affect and Mood in Organizations 269
Perception and Individual Behavior
Basic Perceptual Processes 270
Perception and Attribution 271

270

260

258

Types of Workplace Behavior

Performance Behaviors 280
Withdrawal Behaviors 280
Organizational Citizenship 281
Dysfunctional Behaviors 281

280

Summary of Key Points 282

Discussion Questions 283
Building Effective Diagnostic Skills 283
Building Effective Conceptual Skills 284
Building Effective Time-Management Skills
Skills Self-Assessment Instrument 285
Experiential Exercise 286

284

CHAPTER CLOSING CASE: Steve Jobs: "The

Leading-Edge Guy in the World" 287
YOU MAKE THE CALL: W. L. Gore Nurtures Talent
and Creativity 288

Stress and Individual Behavior

272
Causes and Consequences of Stress 273
Managing Stress 275

Test Prepper

289

Managing in Times of Change: Managing the Flood

of Ideas 278

Creativity in Organizations
276
The Creative Individual 276
The Creative Process 277
Enhancing Creativity in Organizations 279

10 Managing Employee Motivation and Performance

The Nature of Motivation
292
Content Perspectives on Motivation
The Needs Hierarchy Approach 293
The Two-Factor Theory 295
Individual Human Needs 296
Process Perspectives on Motivation
Expectancy Theory 297
Equity Theory 300

Goal-Setting Theory
293

296

290
300

Reinforcement Perspectives on Motivation

Kinds of Reinforcement in Organizations 302
Providing Reinforcement in Organizations 303
Popular Motivational Strategies
303
Empowerment and Participation 304
Alternative Forms of Work Arrangements 304

302

XII

CONTENTS
Using Reward Systems to Motivate
Performance
306
Merit Reward Systems 306
Incentive Reward Systems 306
Team and Group Incentive Reward Systems 308
Executive Compensation 310
New Approaches to Performance-Based Rewards 312

Building Effective Decision-Making Skills 314

Building Effective Conceptual and Diagnostic
Skills 315
Skills Self-Assessment Instrument 316
Experiential Exercise 316

Summary of Key Points 312

Discussion Questions 313
Building Effective Interpersonal and
Communication Skills 314

YOU MAKE THE CALL: Motivation Without

Borders 320

CHAPTER CLOSING CASE: You've Got to Love

This Job 319

Test Prepper

321

322

1 1 Leadership and Influence Processes

Political Behavior in Organizations
Common Political Behaviors 343
Impression Management 343
Managing Political Behavior 344

The Nature of Leadership

324
The Meaning of Leadership 324
Leadership and Management 324
Leadership and Power 325
Generic Approaches to Leadership
Leadership Traits 328
Leadership Behaviors 329

328

Situational Approaches to Leadership

331
LPC Theory 331
Path-Goal Theory 334
Vroom's Decision Tree Approach 335
The Leader-Member Exchange Approach 338
Related Approaches to Leadership
Substitutes for Leadership 339
Charismatic Leadership 339
Transformational Leadership 340

339

Emerging Approaches to Leadership

Strategic Leadership 341
Cross-Cultural Leadership 341
Ethical Leadership 342

342

Summary of Key Points 345

Discussion Questions 346
Building Effective Diagnostic Skills 346
Building Effective Decision-Making Skills 347
Building Effective Conceptual Skills 348
Skills Self-Assessment Instrument 348
Experiential Exercise 349
CHAPTER CLOSING CASE: Stan O'Neal Leads
Merrill Lynch 351
YOU MAKE THE CALL: Watch Out Bud, Miller Is
Catching Up 352
Test Prepper

341

353

Managing in Times of Change: Measuring Excellent

Leadership 326

12 Communication in Organizations
Communication and the Manager's Job
A Definition of Communication 356
Characteristics of Useful Information 357
The Communication Process 358

356

Forms of Communication in Organizations

359
Interpersonal Communication 359
Communication in Networks and Work Teams 361
Organizational Communication 362

354
Electronic Communication
Information Systems 363
Personal Electronic Technology

363
366

Informal Communication in Organizations

The Grapevine 368
Management by Wandering Around 369
Nonverbal Communication 369

367

xiii

CONTENTS
Managing Organizational Communication
Barriers to Communication 371
Improving Communication Effectiveness 373

370

Summary of Key Points 375

Discussion Questions 376
Building Effective Technical Skills 377
Building Effective Communication Skills 377
Skills Self-Assessment Instrument 378
Experiential Exercise 379

CHAPTER CLOSING CASE: Communicating the

Truth About Smoking 380
YOU MAKE THE CALL: Talking With Sports
Fans 381
Test Prepper

382

Managing in Times of Change: Communicating via

Craigslist 367

13 Managing Work Groups and Teams

Groups and Teams in Organizations
385
Types of Groups and Teams 385
Why People Join Groups and Teams 388
Stages of Group and Team Development 389
Characteristics of Groups and Teams
Role Structures 391
Behavioral Norms 393
Cohesiveness 395
Formal and Informal Leadership 397
Interpersonal and Intergroup Conflict
The Nature of Conflict 398
Causes of Conflict 399
Managing Conflict in Organizations
Stimulating Conflict 401 J
Controlling Conflict 402
Resolving and Eliminating Conflict 403

391

383
Summary of Key Points 404
Discussion Questions 404
Building Effective Decision-Making Skills 405
Building Effective Conceptual Skills 407
Building Effective Communication Skills 408
Skills Self-Assessment Instrument 408
Experiential Exercise 409
CHAPTER CLOSING CASE: Who Can Head Team
Nike? 410

398

YOU MAKE THE CALL: Teamwork for the Tampa

Bay Devil Rays 411
Test Prepper 412

401

Meeting of the Minds: Part Four: Managing in the

Soft-Drink Industry 413
Managing in Times of Change: Don't Let a Dream
Team Become a Nightmare 393

PART

Controlling
14 Basic Elements of Control
The Nature of Control
417
The Purpose of Control 417
Types of Control 419
Steps in the Control Process 421

Structural Control
430
Bureaucratic Control 431
Decentralized Control 431
Strategic Control
432
Integrating Strategy and Control 432
International Strategic Control 433

Operations Control
423
Preliminary Control 424
Screening Control 424
Postaction Control 424
Financial Control
425
Budgetary Control 425
Other Tools for Financial Control

415

Managing Control in Organizations

Characteristics of Effective Control 434
Resistance to Control 435
Overcoming Resistance to Control 437
428

434

XIV

CONTENTS
Summary of Key Points 438
Discussion Questions 439
Building Effective Time-Management Skills 439
Building Effective Decision-Making and Diagnostic
Skills 440
Building Effective Technical Skills 441
Skills Self-Assessment Instrument 441
Experiential Exercise 442

CHAPTER CLOSING CASE: Is Too Much Control

Hurting Dell? 444
YOU MAKE THE CALL: Effective Controls at
McDonald's Boost Performance 445
Test Prepper

446

Managing in Times of Change: Bringing

Accountability to Toys "R" Us 432

447

15 Managing Operations, Quality, and Productivity

The Nature of Operations Management
449
The Importance of Operations 449
Manufacturing and Production Operations 450
Service Operations 450
The Role of Operations in Organizational Strategy 451

Managing Productivity
467
The Meaning of Productivity 467
The Importance of Productivity 468
Productivity Trends 468
Improving Productivity 469

Designing Operations Systems

451
Determining Product-Service Mix 452
Capacity Decisions 452
Facilities Decisions 452

Summary of Key Points 470

Discussion Questions 471
Building Effective Communication Skills 472
Building Effective Diagnostic Skills 472
Building Effective Conceptual Skills 473
Skills Self-Assessment Instrument 473
Experiential Exercise 474

Organizational Technologies
Manufacturing Technology 454
Service Technology 457

454

Implementing Operations Systems Through

Supply Chain Management
457
Operations Management as Control 458
Purchasing Management 458
Inventory Management 459
Managing Total Quality
460
The Meaning of Quality 460
The Importance of Quality 461
Total Quality Management 462
TQM Tools and Techniques 463

CHAPTER CLOSING CASE: E-Tailing at

Amazon.Com 475
YOU MAKE THE CALL: Competing Through
Operations 476
Test Prepper

477

Meeting of the Minds: Part Five: Managing in the

Soft-Drink Industry 478
Eye on Management: Outsourcing

465

Appendix
Interpretations of Skills Self-Assessment Instruments
Answers to Test Preppers 492
Chapter Notes 493
Name Index 511
Organization and Product Index 514
Subject Index 519
Photo Credits 529

481