MBA MCO101 Unit 10 Lecture 11 200806 Xx
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Transcript of MBA MCO101 Unit 10 Lecture 11 200806 Xx
MCO 101 • MANAGEMENTUnit 10: Operations Management.
Entrepreneurship. Innovation. Ethics
MANAGEMENT 2MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Managing Expectations
LEARNING OUTCOMES:
At the end of the course, students will be able to:
• Explain fundamental concepts and principles of management including the basic roles, skills, and functions of management
• Discuss the knowledgeable of historical development, theoretical aspects and practice application of managerial process
• Examine the environment, technology, human resources, and organisations in order to achieve high performance
• Discuss the ethical dilemmas faced by managers and the social responsibilities of businesses.
MANAGEMENT 3MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Managing Expectations
SUBJECTS DISCUSSED:
1. Management, Managers and evolution of Management theory
2. Personality traits and diversity3. Organisation, Globalisation and the resulting
environments4. Decision-making and Planning5. Structure and Strategy6. Executing and Controlling7. Human Resources Management as a function8. Motivation, Leadership, Groups and Teams9. Communication10. Operations Management. Entrepreneurship. Innovation
MANAGEMENT 4MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Managing Expectations
TOPIC DETAILS:
After going through UNIT 10, you should be able to:
1. explain the functions that exists within a business environment
2. describe how various units interact to achieve the organizational goals.
3. explain why innovation matters to companies. 4. discuss the different methods that managers can use to
effectively manage innovation in their organizations. 5. explain the ethical dilemma faced by today’s managers in
performing their duties.
MANAGEMENT 5MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Managing Service & Operations Management
Operations Management : Managing the daily production of goods and services.
Key issue faced by Managers - Productivity
HigherProductivity
LowerCosts
LowerPrices
HigherMarketShare
HigherProfits
HigherStandard
of Living
Increased wages and new jobs
More donations to charities
More affordable and better products
MANAGEMENT 6MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Kinds of Productivity
Partial productivity = OutputsSingle Kind of Input
Multifactor productivity =Outputs
Labor + Capital + Materials + Energy
MANAGEMENT 7MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Quality
BaldrigeNational
Quality Award
TotalQuality
Management
ISO 9000 & 14000
Quality-RelatedProduct
Characteristics
Quality-RelatedService
Characteristics
MANAGEMENT 8MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Meaning of Quality
…A product or service free of deficiencies
…The characteristics of a product orservice that satisfy customer needs
Quality
MANAGEMENT 9MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Quality- Product & ServicesR
elia
bili
ty
ServiceabilityDurability
Product
MANAGEMENT 10MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Total Quality Management
Principles of TQM
Continuous improvement
Teamwork
Customer focus and satisfaction
MANAGEMENT 11MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Service Operations
Services…
• are performed• are intangible• are unstorable
Goods…
• are made• are tangible• are storable
MANAGEMENT 12MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
ServiceRecovery
andEmpowerment
Service Operations
Service-ProfitChain
MANAGEMENT 13MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
The Service-Profit Chain
MANAGEMENT 14MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Components of Internal Service Quality
Both vertical and horizontal communication?
Do service employees have tools needed?
Are good performers rewarded/recognized?
Does management aid or hinder employees?
Is there teamwork among individuals and departments?
Do they facilitate serving customers?
Is job-specific training available?
Are goals of senior management and frontline service employees aligned?
Policies and Procedures
Tools
Effective Training
Rewards and Recognition
Communication
Management Support
Goal Alignment
Teamwork
MANAGEMENT 15MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Service Recovery and Empowerment
• Service recovery is restoring customer satisfaction to strongly dissatisfied customers– Fixing the mistakes that were made– Performing “heroic” service that delights customers
• Empowering workers can help solve customerdissatisfaction – The goal is zero customer defections
MANAGEMENT 16MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Doing the Right Thing
Protect Your Front-Line Staff:The Customer Isn’t Always Right
Fire customers who use foul language, make threatsagainst employees or other customers, lie, demandunethical or illegal service, bully, or are belligerent
Otherwise, you are saying you care more aboutmoney than the safety of people in the business
MANAGEMENT 17MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Empowering Service Employees
1. Finding service workers capable of solving problems
2. Training service workers
3. Higher wages
4. Less emphasis on service reliability
5. Eagerness to provide “giveaways”
6. Unintentional unfair customer treatment
1. Quicker response to customer complaints
2. Employees feel better
3. Enthusiastic employee interaction with customers
4. Employees offer ideas for improvement and prevention
5. Great word-of-mouth advertising and customer retention
6. Satisfied employees more likely to stay with company
COST BENEFITS
MANAGEMENT 18MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Manufacturing Operations
• Make-to-order operations– manufacturing doesn’t begin
until an order is placed
• Assemble-to-order operations– used to create semi-
customized products
• Make-to-stock operations– manufacture standardized
products
Amount ofProcessing
Flexibilityof Manufacturing
Continuous-flow production
Produces products continuously, like oil drilling
Line-flow production
Uses predetermined, linear steps, like beverage bottling
Batch production
Produces specific quantities of different items, like a bakery or commissary
Job shops Handle small, specialty batches
Project manufacturing
Is for large, expensive, specialized products like aircraft carriers
MANAGEMENT 19MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Why Innovation Matters
1900-1910• airplane, plastic, air
conditioner1911-1920• mammogram, zipper, sonar1921-1930• talking movies, penicillin, jet
engine1931-1940• radar, helicopter, computer1941-1950• atomic bomb, bikini,
transistor1951-1960• DNA, oral contraceptive,
Tylenol
1961-1970• video recorder, handheld
calculator, computer mouse1971-1980• compact disc, gene splicing,
laser printer1981-1990• MS-DOS, space shuttle,
CD-ROM1991-2000• taxol, Pentium processor,
Java2001-Today• mapping of human genome,
first cloning of human embryo
MANAGEMENT 20MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Technology Cycles
Technology Cycle
A cycle that begins with the “birth” of a new technology and ends when that technology reaches its limits and is replaced by a newer, better technology.
MANAGEMENT 21MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
S-Curves and Technological Innovation
Effort
Perf
orm
an
ce
Discontinuity
NewTechnology
A
B
C
Innovation Streams
Patterns of innovation over time that can create sustainable competitive advantage.
Technological Discontinuity
A scientific advance or unique combination of existing technologies that creates a significant breakthrough in performance or function.
MANAGEMENT 22MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Technological Innovation
Discontinuous Change
Dominant Design
Technological Discontinuities
TechnologicalSubstitution
DesignCompetition
MANAGEMENT 23MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Managing Innovation
CreativeWork
Environments
ChallengingWork
Work GroupEncouragement
Lack of Organiz.Impediments
SupervisoryEncouragement
OrganizationalEncouragement
FreedomFlow
MANAGEMENT 24MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Managing Innovation
Steps
Environment
Goals
Approach
Experimental Approach
CompressionApproach
Uncertain discontinuouschange: technological substitution and design competition
Certain incremental changeestablished technology(i.e., dominant design)
Compress time/steps neededto bring about small improvements
PlanningSupplier involvementShorten time of stepsOverlapping stepsMultifunctional teams
Build something new,different, and better
Design iterationsTestingMilestonesMultifunctional teamsPowerful leaders
SpeedLower costsIncremental improvements in performance of dominantdesign
SpeedPerformance ImprovementsNew dominant design
MANAGEMENT 25MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Managing Expectations
TOPIC DETAILS:
After going through this part, you should be able to:
1. Discuss how the nature of management jobs creates the possibility for ethical abuses.
2. Identity common kinds of workplace deviance.3. Describe the U.S. Sentencing Commission Guidelines for
Organisations and explain how they both encourage ethical behaviour and punish unethical behaviour by businesses.
4. Describe what influences ethical decision making.5. Explain what practical steps managers can take to improve ethical
decision making. 6. Explain to whom organisations are socially responsible.7. Explain for what organisations are socially responsible. 8. Explain how organisations can choose to respond to societal demands
for social responsibility.9. Explain whether social responsibility hurts or helps an organisation’s
economic performance.
MANAGEMENT 26MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Ethical and Unethical Workplace Behavior
Ethics
The set of moral principles or values that defines right and wrong for a person or group.
MANAGEMENT 27MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Ethics and the Nature of Management Jobs
Unethical Managerial Behaviour
Authority and Power
Handling Information
Influencing the Behavior of Others
Setting Goals
MANAGEMENT 28MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Ethics and the Nature of Management Jobs
Managers can encourage ethical behaviours by…
• using resources for company business only
• handling information confidentially
• not influencing others to engage in unethical behaviour
• not creating policies that reward employees for unethical behaviour
• setting reasonable goals
MANAGEMENT 29MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Workplace Deviance
Workplace Deviance
Unethical behaviour that violates organisational norms about right and wrong
Two dimensions:• Degree of deviance• Target of deviant behaviour
MANAGEMENT 30MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Types of Workplace Deviance
Production Deviance
Property Deviance
Political Deviance
Personal Aggression
Minor Serious
Organisational
Interpersonal
MANAGEMENT 31MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Production Deviance
• Leaving early
• Taking excessive breaks
• Intentionally working slow
• Wasting resources
MANAGEMENT 32MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Property Deviance
• Sabotaging equipment
• Accepting kickbacks
• Lying about hours worked
• Stealing from company
MANAGEMENT 33MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Political Deviance
• Showing favouritism
• Gossiping about co-workers
• Blaming co-workers
• Competing non-beneficially
MANAGEMENT 34MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Personal Aggression
Sexual harassment Verbal abuse Stealing from co-workers Endangering co-workers
MANAGEMENT 35MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
U.S. Sentencing Commission GuidelinesCompanies can be prosecuted and punished even if management didn’t know about the unethical behaviour.
Who, What, and Why?
• Nearly all businesses are covered
• Punishes a number of offences
• Encourages businesses to be proactive
Partial List of Offences
•Invasion of privacy
•Price fixing
•Fraud
•Customs violations
•Antitrust violations
•Civil rights violations
•Theft
•Money laundering
•Conflicts of interest
•Embezzlement
•Dealing in stolen goods
•Copyright infringements
•Extortion ……and more!!!
Partial List of Offences
•Invasion of privacy
•Price fixing
•Fraud
•Customs violations
•Antitrust violations
•Civil rights violations
•Theft
•Money laundering
•Conflicts of interest
•Embezzlement
•Dealing in stolen goods
•Copyright infringements
•Extortion ……and more!!!
MANAGEMENT 36MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Compliance Program Steps
1. Establish standards and procedures.
7. Improve program after violations.
6. Enforce standards consistently and fairly.
5. Train employees on standards and procedures.
3. Delegate decision-making authority only to ethical employees.
4. Encourage employees to report violations.
2. Assign upper-level managers to be in charge. Revise
if req
uire
d
MANAGEMENT 37MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
How Do You Make Ethical Decisions?
Influences on Ethical Decision Making
EthicalEthicalAnswersAnswersDepend Depend
on…on…
Ethical Intensity of Decision
Moral Development of Manager
Ethical Principles Used
MANAGEMENT 38MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Ethical Intensity Depends on…
Concentration of effect
Magnitude of consequences
Social consensus
Probability of effect
Proximity of effect
Temporal immediacy
MANAGEMENT 39MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Moral Development
Societal ExpectationsSelfish
InternalisedPrinciples
Pre conventional Conventional Post conventional
Kohlberg’s Stages of Moral Development
1. Punishment andObedience
2. InstrumentalExchange
3. Good boy, nice girl
4. Law and order
5. Social contract
6. Universalprinciple
MANAGEMENT 40MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Principles of Ethical Decision Making
Long-term self-interest
Personal virtue
Religious injunctions
Government requirements
Utilitarian benefits
Individual rights
Distributive justice
Never take any action not in your organisation’s long-term self-interest.
Never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the newspapers or on TV.
Never take any action that is not kind and that does not build a sense of community.
Never take any action that violates the law, for the law represents the minimal moral standard.
Never take any action that does not result ingreater good for society.
Never take any action that infringes on others’ agreed-upon rights.
Never take any action that harms the least among us: the poor, the uneducated, the unemployed.
MANAGEMENT 41MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Practical Steps to Ethical Decision Making
Select and hire ethical employees
Establish a Code of Ethics
Train employees to make ethical decisions
Create an ethical climate
Studies show that Integrity Tests…• Help reduce workplace deviance• Help hire workers who are better
performers
• Communicate code of ethics to both inside and outside the company
• Develop ethical standards and proceduresspecific to business
• Develops employee awareness of ethics
• Achieves credibility with employees• Teaches a practical model of ethical
decision making
Managers must:• Act ethically• Are active in company ethics
programs• Report potential ethics violations• Punish those who violate the code
of ethics
MANAGEMENT 42MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
A Basic Model of Ethical Decision Making
1. Identify the problem
2. Identify the constituents
3. Diagnose the situation
4. Analyse your options
5. Make your choice
6. Act
MANAGEMENT 43MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
What Is Social Responsibility?
Social Responsibility: A business’s obligation to…
•pursue policies
•make decisions
•take actions that benefit society
MANAGEMENT 44MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
To Whom Are Organisations Socially Responsible?
StakeholderModel
Satisfy Interests of Multiple
Stakeholders
ShareholderModel
Maximize Profits
PRO• Firm maximises shareholder wealth and
satisfaction• The company stock increases in value
CON• Organisations cannot act effectively as
moral agents for shareholders• Time, money, and attention diverted to
social causes undermine market efficiency
Primary Stakeholders:
ShareholdersEmployeesCustomersSuppliers
GovernmentsLocal Communities
Secondary Stakeholders:
MediaSpecial Interest Groups
Trade Associations
MANAGEMENT 45MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Organisation’s Social Responsibilities
Abide by principlesAbide by principlesof right and wrongof right and wrong
Obey laws andObey laws andregulationsregulations
EthicalEthical
LegalLegal
EconomicEconomic
DiscretionaryDiscretionary
Be profitableBe profitable
Serve a social roleServe a social role
$
?
MANAGEMENT 46MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Responses to Demands for Social Responsibility
Reactive DefensiveAccommo-
dativeProactive
Fight all the way
DO NOTHING
DO MUCH
Withdrawal
Do only what is required
Legal Approach
BargainingProblemSolving
PublicRelationsApproach
Beprogressive
Lead theindustry
MANAGEMENT 47MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights
reserved
Social Responsibility and Economic Performance
Realities ofSocial
Responsibility
Can cost a company
Sometimes it does pay
Does not guarantee profitability