Management

CASE: 1 DEVELOPING VERIFIABLE GOALS (MANAGEMENT BY OBJECTIVE)

The division manager had recently heard a lecture on management by objectives. His enthusiasm, kindled at that time, tended to grow the more he thought about it. He finally decided to introduce the concept and see what headway he could make at his next staff meeting.

He recounted the theoretical developments in this technique, cited the advantages to the division of its application, and asked his subordinates to think about adopting it.

It was not as easy as everyone had thought. At the next meeting, several questions were raised. "Do you have division goals assigned by the president to you for next year?" the finance manager wanted to know.

"No, I do not", the division manager replied. "I have been waiting for the president's office to tell me what is expected, but they act as if they will do nothing about the matter."

"What is the division to do, then?" the manager of production asked, rather hoping that no action would be indicated.

"I intend to list my expectations for the division", the division manager said. "There is not much mystery about them. I expect $30 million in sales; a profit on sales before taxes of 8 percent; a return on investment of 15 percent; an ongoing program in effect by June 30, with specific characteristics I will list later, to develop our own future managers; the completion of development work on our XZ model by the end of the year; and stabilization of employee turnover at 5 percent."

The staff was somewhat stunned that their superior had thought through to these verifiable objectives and stated them with such clarity and assurance. They were also surprised about his sincerity in wanting to achieve them.

"During the next month I want each of you to translate these objectives into verifiable goals for your own functions. Naturally they will be different for finance, marketing, production, engineering and administration. However you state them, I will expect them to add up to the realization of the division goals."

Questions

1.Can a division manager develop verifiable goals, or objectives, when they have not been assigned to him or her by the president? How? What kind of information or help do you believe is important of the division manager to have from headquarters.

2.Was the division manager setting goals in the best way? What would you have done?

CASE: 2 RESTRUCTURING AT KOREA'S DAEWOO (ORGANIZING)

Daewoo was founded in 1967 by its hardworking, sentlessly driven chairman, Kim (surname) Woo-Chong. After its initial success in exporting textiles, be company expanded into trade, autos, machinery, consumer electronics, construction, heavy shipping, computers, telephones, and financial services, becoming Korea's fourth largest business group. The company became, for example, a textile supplier for Sears, Cristian Dior, Calvin Klein, and London Fog. Daewoo also engaged in a joint venture with General Motors to build the Le Mans car. However, labor and their problems limited the car shipments.

Chairman Kim's philosophy of hard work and to value placed in people were important factors in firm's success. However, in the late 1980s and early 1990s, the company faced several problems. for the, Kim was concerned that with the increasing prosperity of Koreans, the work force might lose the spirit of hard work. Moreover, there was a growing discontent among the younger workers and a lessening of convention.

Through Kim's hands-off approach to manage some of the companies in the Daewoo business went out of control. For example, in the unfitable heavy shipping industry, he noticed many necessary expenses. The elimination of company sponsored barbershops saved the company $8 million year.

In general, Daewoo's work force is young and educated. In contrast to similar positions in many Korean companies, top positions at Daewoo are supplied by managers with no family ties.

Although Daewoo is a manor company with its 91,000 employees, it is not dominant in any one industry. The strategy of being a supplier for major foreign companies, such as Caterpillar, General Motors, and Boeing, may have led to bypassing opportunities for becoming a major marketer of its own brands. Now, in the 1990s, Kim is also looking at opportunities in Europe; for example, he formed a joint venture with a distribution company in France.

The massive restructuring has already had some positive effects. Kim sold some steel, financial, and real estate units. The hands-off managerial style has been replaced by a hands-on style, resulting in recentralization. Managers were "retired" or otherwise let go. Thousands of positions were also eliminated.

Things were looking better in 1991. The company lost money in 1988 and 1989 but made some profit in 1990 partly because of the sale of some major assets. The joint venture with GM registered a healthy growth. The company was also optimistic about the future of the new compact car Espero. Still, in the early 1990s, Daewoo has had to cope with the strong Korean currency, its labor costs, Japanese competition, and recessions in various countries in which it operates.

Questions

1.What are the advantages and disadvantages of a hands-off, decentralized management approach?

2.How can Daewoo stay competitive with the Japanese?

3.What are some of the controllable and uncontrollable factors in this case? How should Mr. Kim respond to those factors?

CASE: 3 MANAGING THE HEWLETT-PACKARD WAY (MOTIVATION)

William R. Hewlett and David Packard, two organizational leaders who demonstrated a unique managerial style, began their operation with $538 in 1939, in a one-car garage. Eventually they built a very successful company that now produces more than 10,000 products, such as computers, peripheral equipment, test and measuring instruments, and handheld calculators. Perhaps even better known than its products is the distinct managerial style preached and practiced at Hewlett-Packard (HP). It is known as the HP way.

The values of the founders - who withdrew from active management in 1978 - still permeate the organization. The HP way emphasizes honesty, a strong belief in the value of people, and customer satisfaction. The managerial style also emphasizes an open-door policy, which promotes team effort. Informality in personal relationships is illustrated by the use of first names. Management by objectives is supplemented by what is known as managing by wandering around. By strolling through the organization, top managers keep in touch with what is really going on in the company.

This informal organizational climate does not mean that the organization structure has not changed. Indeed, the organizational changes in the 1980s in response to environmental changes were quite painful. However, these changes resulted in extraordinary company growth during the 1980s.

Questions

1.Is the Hewlett-Packard way of managing creating a climate in which employees are motivated to contribute to the aims of the organization? What is unique about the HP way?

2.Would the HP managerial style work in any organization? Why, or why not? What are the conditions for such a style to work?

CASE: 4 WHO ARE THE EFFECTIVE LEADERS? (LEADERSHIP)

In a search for effective leaders, 206 CEO respondents from Fortune 500 and Service 500 companies identified as the three top leaders Don Petersen (No. 1) at Ford, Lee Iacocca at Chrysler, and Jack Welch at General Electric. The overwhelming majority of those questioned felt that there is no leadership crisis in the United States. On the other hand, those holding another view pointed to the ineffectiveness of managers in competing in the global market; the excessive focus on short-term results, often at the expense of long-term company health; and the lack of investment in plants.

About two-thirds of the respondents thought that leadership can be taught, especially through job rotation, in-company training, and delegation of authority. But there was also the realization that latent leadership qualities have to be the foundation of leadership.

Although not on the basis of the survey, Fortune identified the following factors for successful business leadership:

vTrust in subordinates is the foundation for delegating authority. A manager gets things done through people.

vLeaders must provide a vision for the enterprise and inspire others to commit themselves to this vision.

vLeaders must take command in times of crisis. Even those who subscribe to participative management realize that at critical times they have to take charge.

vTaking risks is a part of business - not careless risk, but calculated ones. Probably those who have never failed (who played it safe) may not have managed well.

vLeaders need to be very competent in their fields and command the respect of employees.

vA top executive surrounded by "yes-sayers" will get an incorrect view of what is really going on within and outside the organization. Thus, executives should invite dissenting views.

vEffective leaders see and understand the big picture. They simplify complex situations and problems so that they can be understood.

Questions

1.Who were the leaders identified in the survey? Why do you think they have been effective?

2.What were the leadership characteristics identified by Fortune? Do you agree with the seven statements about the characteristics? Should other factors be taken into account?

3.Do you think that leadership can be taught? Explain.

4.How do the leadership characteristics relate to the managerial functions?