REVISON

PRINCIPLES OF BUSINESS Prepared by: Khoi Nguyen

1. Plans and planning techniques

2. Controls and control systems
3. Organizational culture, innovation & change
4. Leadership
5. Diversity and global cultures
PRINCIPLES OF BUSINESS

1. Plans and
Planning Techniques
1.1. What to plan?

The 04 functions of management

1.1. What to plan?
• Definition:
 Planning is the primary managerial activity
that specifies the objectives to be achieve
in the future and selects the alternative
course of action to reach these objectives.
• Planning involves:
 Defining the organizational goals;
 Establishing an overall strategy for
achieving these goals;
 Developing plans for organizational work
activities.
1.2. Why plan?
 Good planning makes us:
• Action oriented—keeping a results-driven sense of
direction, avoiding complacency trap;
• Priority oriented—making sure the most important
things get first attention;
• Advantage oriented—ensuring that all re-sources are
used to best advantage;
• Change oriented—anticipating problems and
opportunities so they can be best dealt with.
1.2. Why plan?

 Planning improves time management

 Improved coordination and control
• Planning links with control so success can be
measured;
• Hierarchy of objectives – lower level
objectives help accomplish higher ones.
1.2. Why plan?
1.3. Who plan?

What about non-managerial employees?

1.3. Who plan?
1.4. How to plan?

Define objectives
Stretch goals – performance targets that require hard work

Determine current status compared to objectives

Develop premises regarding future conditions and

generate alternative scenarios for what may happen

Analyze alternatives and make a plan

Implement and evaluate the plan

1.4. How to plan?
• Forecasting tries to predict the future.
• Contingency planning creates back-up
plans for when things go wrong.
• Scenario planning crafts plans for
alternative future conditions.
• Benchmarking identifies best practices.
• Staff planners provide special expertise.
• Participatory planning improves
implementation.
• Goal setting helps align plans and activities.
1.4. How to plan?
1.4. How to plan?

VS.
1.5. Types of plans
• Time frame: Short-term vs. long-term plans;
• Breath: Strategic vs. Operational vs. Functional
plans;
• Specificity: Specific vs. Directional plans;
• Frequency of use: Standing vs. single-use plans;
• Policies vs. Procedures;
• Budgets:
– Financial budgets project cash flows and expenses
– Operating budgets anticipate sales and revenue
– Nonmonetary budgets allocate resources
1.6. Strategy – Business level
1.6. Strategy – Corporate level
1.6. Strategy – International
business level
1.7. Discussion
PRINCIPLES OF BUSINESS

2. Controls and
Control Systems
2.1. What is controlling?

• Controlling is one of the four management

functions.
• Control begins with objectives and
standards.
• Control measures actual performance
• Control compares results with objectives
and standards.
• Control takes corrective action as needed.
2.2. The control process
2.3. Types of Controls
2.4. Four performance control tools
• Many tools used to monitor and measure
organizational performance.
– In terms of finance:
• Analyze and control budgets;
• Analyze and control financial ratios;
• Break-even analysis.
– In terms of information:
• Comprehensive and secure controls;
• Management information system (MIS).
– Benchmarking
2.4. Four performance control tools
- Balanced Scorecards start with the organizational
mission and vision to build goals and performance
measures for:
• Financial performance
• Customer satisfaction
• Internal process improvement
• Innovation and learning
2.5. Inventory Control
• Inventory controls reduce inventory costs
– Economic order quantity
• Pre-determined amount of inventory is ordered
when current inventory reaches a certain level
– Just-in-time scheduling
• Inventory arrives exactly
when needed for production or sale
2.6. Quality Control
• Quality Control is increasingly important
for global competition
– Total Quality Management
• Commitment to quality
• Striving for zero defects
– Continuous Improvement
• Always searching for new ways to improve work
quality and performance
2.7. Management by objectives
Management By Objectives (MBO)
• Superior and subordinate jointly plan
objectives
2.8. Discussion
PRINCIPLES OF BUSINESS

3. Organizational
Cultures, Innovation,
and Change
 3.1. What is organizational culture?

• Culture is the personality of the

organization
– Shared beliefs and values that guide behavior
of organization members
3.2. What is a strong culture?
• Organizational culture shapes behavior
and influences performance
– Strong cultures are clear, well defined and
widely shared among members
– Socialization helps new
members learn the
culture
3.3. Observable vs. Core culture
3.4. The ice-berg model of culture
3.5. The Schein’s model of culture
3.6. High-context vs. Low-context
3.8. What is innovation?
• Innovation is to take a new idea and put it into
practice:
– Process innovation results in better ways to
do things
– Product innovation results in new or
improved goods or services
– Business model innovations are new ways
to make money
3.8. Types of Innovation
• Green innovations
– Earth friendly business models
• Social innovations
– Business models that help solve the world’s
social problems
• Social Entrepreneurship
– Ways to solve social
problems
3.8. Commercializing Innovation
• Commercializing innovation
– Turns ideas into products, services or
processes
3.9. What is an innovative organization?

Characteristics of highly innovative

organizations

Strategy Culture Structures Management Staffing for

includes values support supports creativity and
innovation innovation innovation innovation innovation
3.10. The resistance to change
• Why people resist change
 Fear of the unknown
 Disrupted habits
 Fear of loss
 Skepticism about the benefits of change
3.11. Organizational Change
• Change leaders identify and deal
positively with resistance to change
– Positive tactics
• Education and communication
• Participation and involvement
• Facilitation and support
• Negotiation and agreement
– Negative resistance tactics
• Manipulation and cooptation
• Explicit and implicit coercion
3.12. The Lewin’s change process
3.13. The Kotter’s change process
3.14. Discussion
PRINCIPLES OF BUSINESS

4. Leadership
4.1. What is leadership?
• Leadership is one of the four functions of management
• Leaders use position power to achieve influence
• Leaders use personal power to achieve influence
• Leaders bring vision to leadership situations
• Leaders display different traits in the quest for leadership
effectiveness
• Leaders display different styles in the quest for
leadership effectiveness
 4.2. Five sources of power
• Power is the ability to get others to do
what needs to be done

Position
Personal Management
Power Power Power

– Reward power – Expert power

“you can have this if you do this” Special skill or knowledge that influences behavior
– Coercive power – Referent power
“do this or I’ll take this away” Admirable and likeable qualities that influence behavior
– Legitimate power
“do it because I’m your boss”
4.3. Traits theories of leadership
• Traits theories:
– Theories that consider personality, social, physical, or intellectual traits
to differentiate leaders from non-leaders.
– Leaders are assumed to be born with certain traits.
– The more leadership traits a leader has, the more effective the leader is
likely to be.
• People want leaders who are:
– Honest
– Conscientious
– Competent
– Forward-looking
– Open to new experience
– Inspiring
– Credible
– Extraverted
– Emotionally intelligent
4.3. Traits theories of leadership
• Limitations of Traits theories:
– Unclear evidence about the relationship between
traits and leadership.
– Specific traits are not effective in all situations
– Better at predicting leader emergence than leader
effectiveness.
4.4. Behavioral theories
• Behavioral theories of leadership:
– Theories proposing that specific behaviors
differentiate leaders from non-leaders.
– Leadership behaviors can be taught.
• Research about behavioral leadership:
– Ohio State studies
– University of Michigan studies
4.4. Behavioral theories
• Ohio State Studies:
– Initiating Structure-oriented
• The degree to which leaders are likely to define
and structure their own roles and the roles of
subordinates for the attainment of goals.
– Consideration-oriented
• The degree to which a leader is likely to have job
relationships.
• Relationship means mutual trust, respect for
subordinate’s ideas, and regard for subordinate’s
feelings.
4.4. Behavioral theories
• University of Michigan studies:
– Employee-oriented
• Emphasizing interpersonal relations; taking a
personal interest in the needs of employees and
accepting individual differences among members.
– Production-oriented
• One who emphasizes technical or task aspects of
the job.
4.5. Leadership styles
4.6. Contingency Leadership
• Fiedler’s contingency model
– Leadership style depends on the situation
– Least Preferred Co-worker Scale (LPC)
4.6. Contingency Leadership
• Fiedler’s contingency model
– Assumption:
• Leader’s style is fixed and can be measured by the least
preferred co-worker (LPC) questionnaire.
– Least Preferred Co-Worker (LPC) Questionnaire:
• The way in which a leader will evaluate a co-worker who is
not liked will indicate whether the leader is task- or
relationship-oriented.
• Fiedler attempted to measures the degree to which a person
is task or relationship oriented by the Least-Preferred
Coworker (LPC) questionnaire.
• Respondents were asked to describe their least preferred
coworkers, using the 18 sets of contrasting adjectives.
4.6. Contingency Leadership
• Fiedler’s contingency model
– Define the situation:
• Leader-Member Relations:
– The degree of confidence, trust, and respect subordinates
have in their leader.
• Task Structure:
– The degree to which the job assignments are procedurized.
• Position Power:
– Influence derived from one’s formal structural position in the
organization; includes power to hire, fire, discipline, promote,
and give salary increases.
4.6. Contingency Leadership
• Fiedler’s model:
4.6. Contingency Leadership
• Fiedler's conclusions:
– Task oriented leaders tend to perform better in
situations that are very favorable or very unfavorable to
them.
– Relationship oriented leaders perform better in
moderately favorable situations.
– An individual’s leadership style was fixed, and leader
effectiveness could be improved in only two ways:
• Bring in a new leader whose style fits better to the situation.
• Change the situation to fit the leader.
• Research has generally supported the validity of
Fiedler’s model.
• Some drawbacks are associated with the model.
4.6. Contingency Leadership
• Hersey-Blanchard situational model
4.6. Contingency Leadership
• House’s Path-Goal theory
– Help followers move along paths to achieve
work and personal goals
– Four leadership styles
Directive leader

Supportive leader

Achievement oriented leader

Participative leader
4.6. Contingency Leadership
• House’s Path-Goal theory
4.6. Contingency Leadership
• House’s Path-Goal theory
4.6. Contingency Leadership

• Leader-member exchange (LMX)

– In-groups
– Out-groups
4.7. Decision making styles

• Four styles of decision making

4.8. Transformational Leadership
4.9. Discussion
PRINCIPLES OF BUSINESS

5. Diversity and
Global Cultures
5.1. What is diversity?
• Organizational subcultures
– Groups that share interests or characteristics
• Occupations
• Ethnicity
• Religion
• Gender
• Generations
5.2. Diversity in the Workplace
• There is a business case for diversity
• Inclusive organizational cultures value and
support diversity
• Organizational subcultures can create
diversity challenges
• Minorities and women suffer diversity bias
in many situations
• Managing diversity should be a top
leadership priority
5.3. How to manage diversity?
5.4. Global cultures
• Culture shock comes from discomfort in
cross-cultural situations
• Cultural intelligence is the capacity to
adapt to foreign cultures
• The “silent” languages of cultures include
context, time and space
• Hofstede identifies five value differences
among national cultures
• Country clusters show cultural differences
5.5. Culture Shock
• Culture shock comes from discomfort in
cross-cultural situations
• Stages include:
Confusion

Small victories

Honeymoon

Irritation and anger

Reality
5.6. Cultural Intelligence
• Cultural intelligence includes
– Self awareness
– Flexibility
– Sensitivity
– Willingness to learn
– Willingness to
modify behavior
5.7. High-context vs. Low-context
• Low-context
– Emphasize communication via spoken or
written words
• High-context
– Rely on unspoken or situational
cues as well as spoken or
written words in communication
5.8. The Hofstede’s model
• Hofstede’s five value differences among
national cultures:
Power Distance
• The degree to which a society accepts unequal distribution of power

Uncertainty Avoidance
• The degree to which a society tolerates risk and uncertainty

Individualism-collectivism
• The degree to which a society emphasizes individuals and their self-interests

Masculinity-femininity
• The degree to which a society values assertiveness and materialism versus
relationships, feelings and quality of life

Time Orientation
• The degree to which a society values short term or long term goals
5.8. The Hofstede’s model
5.9. Ecological fallacy
• Ecological fallacy
– Mistaken belief that a generalization about a
culture applies equally to everyone in that
culture
5.10. The GLOBE dimensions
• Power distance
• Uncertainty avoidance
• Gender egalitarianism
• Future orientation
• Institutional collectivism
• In-group collectivism
• Assertiveness
• Performance orientation
• Humane orientation
5.11. Discussion