2. Welcome to Seminar Two! MT-140 Class 2 Kym Chavez, MBA Kaplan University Th is is me !

3. Welcome to MT140 Introduction to Management Unit 2 Seminar – Foundations of Management

4. Agenda General Questions and Announcements Introduction Business Organizations as Open Systems Management Environmental Considerations / Q & A Major Management Theories / Q & A Conclusion of Seminar

5. UNIT 1: Any questions?

6. # 6 Nag Grams and Late work… If you have late work, please send it in. Better some points then no points, right? You may receive a funny little reminder called a nag- gram- that is a free service I offer to make sure you turn in your assignments.

7. Unit 2 Objectives During this unit we will: 1.Identify significant past and current management theories 2. Describe the business organization as an open system 3. Identify the role of internal and external environmental factors in business

8. Key Concepts Organizations are open systems that are influenced by their environment and in turn, influence their environment. All organizations must operate in a macro environment. All organizations must operate within a competitive environment.

9. Businesses are Open Systems Organizations that are affected by, and that affect, their environment. The take in Inputs: In the form of goods and services to create products or services. They produce Outputs: In the form of goods or services. These are in constant interaction with the firm’s environment. These impact and are impacted by both the External Environment and the Macroenvironment.

10. In your workplace…. What is the input and output in your workplace (be specific please)? What are the major competitors in your industry?

11. Inputs Into The Open System Raw Materials Services Equipment Capital (Human Labor, Money, Intellectual, Managerial, etc.) Information (Knowledge)

12. Outputs Into The Open System Products (Example: Cars, Computers, Furniture, Groceries, etc.) Services (Example: accountants, medical services providers, etc.).

13. External Environment All relevant forces outside the firm’s boundaries. These include competitors, customers, the government, and the economy. Examples: Copyrights, patents, trademarks, government licenses Industry-specific requirements for entry Specific taxes Interest rates for both customers and business Technological changes that impact the firm (Example: iPods versus tape players; regular cameras versus digital cameras, etc.)

14. In your workplace?

15. Any questions ?

16. READING FOR UNIT 2: 1) READING: This week's required reading is from Chapter 2 in the Bateman and Snell text pp. 26-35. Click the Chapter 2 icon above for an electronic version of Chapter 2. This reading introduces the concept of a business organization as an open system and investigates the internal and external environmental forces that interact with this system. These forces act to shape the organization and in turn, are shaped by the organization.

17. DISCUSSION DISCUSSION: Discussion scenario: Marc has opened a 24-Hour fitness center in a fast-growing city. Before purchasing the franchise and starting his new business, Marc looked at the one other fitness center currently operating in that area. In the same general area are video game rooms, fast food restaurants, a sports bar, a golf driving range, a sporting goods store, and a bowling alley. Marc believes that the one fitness center forms his competition. Based on your reading of “Substitutes and Complements” in pp. 33-34 of the text, do you agree with Marc or disagree? Why?

18. EXAMPLE: I do not agree with Marc. The one other fitness center is not his only competition, especially in a fast-growing city, where monthly and yearly changes are going to be an ongoing challenge. I think it is good that Marc has visited his most direct competition and has gained some knowledge of how his gym could perform better, but I hope he is not gong to overlook some of the substitutions his customers could make and the complementary relationships he could have with his less direct competition. Assuming that Marc has done a serious amount of research in this location concerning the demographics (number of residents, average income, etc.), state of the economy, kept up with technological advances of gyms and aware of the influx of people wanting to become and eat healthier, he can use this knowledge to build his business successfully. There are several opportunities for a cooperative strategy amongst some of the local businesses. Using other businesses to compliment your services is a great way to grow your clientele. For example, most sports bars and bowling alleys have leagues that allow companies to participate in sponsorship, wear your logo shirts and allows you to network. You can also make brochures for local business to keep at their entrances offering discounts or trial memberships to attract new customers, however, usually the reciprocated gesture is required. Most people who are active will do more than just go to a gym, so the opportunities are endless with other sport activities. In today’s economy, people are cutting costs where they can by buying equipment and apparel at sports goods store. This is a good substitute for many individuals. Knowing this, Marc could either set up a “mini-store” in his gym or try to work with the store by recommending them to his clientele and vice versa. With all of the current competition, Marc needs to be at the top of his game and take the blinders off assuming that another gym is his only concern. In a growing town there will always be new competition coming in and the likely hood of a corporate gym (Planet Fitness, Gold’s Gym, etc.) coming in to the area is inevitable. He needs to focus on scenario development and keep his eye on the ever changing market.

19. ASSIGNMENT ASSIGNMENT: For this assignment, you must watch the video presentation on the Evolution of Management. You will find the video on page 2 of the Assignments page in your course. Based on the various theories presented in the video, write a paper using a minimum of 100 words stating which management theory you think is more important and why. Submit your Assignment to the correct unit Dropbox for grading before the close of the unit as an attachment.

20. EXAMPLE: According to the video, The Evolution of Management, for centuries scientist have studied and monitored the behavior of workers and managers. These scientific studies created a new field of study called Management Thought. Management Thought is the study and analysis of behavior in the workplace. These studies can often be influenced by social, economic and political forces. During the late 1800’s America became the manufacturing capital of the world. The manufacturing boom brought about the need to mass produce. The need to mass produce became the springboard to many technological advances. Technology enabled more products to be produced and assembly line technology enhanced large scale production. With the technological advancements and mass production came problems with doing business in a cost effective way. The need to improve cost efficiency fueled the search for new management styles that would produce such results. Out of the many studies of Management Thought came four main theories to effective management, The Classical Approach, The Behavioral Approach, The Systems Approach, and the Contingency Approach. In my opinion, the most important theory is The Systems Approach. This approach developed by W. Edwards Demming in the 1930’s and 40’s, says a business is a set of inner-related parts to get them to work as a whole. The Systems Approach consists of four parts, inputs, transformation processes, outputs, and feedback. Demming stated that all dimensions of an organization and environment are part of one system (The Evolution of Management). Demming was an advocate for continuous improvement, in both production and quality. This approach is important because it relates to businesses today. Many businesses today have many levels of management and workers. This approach promotes high morale by stressing the importance of each part of the business to make the business successful as a whole. High morale will produce happier workers, a positive, productive environment, and increased productivity. Although this system was developed in the 1930’s and 40’s, it is still relevant today and can still produce positive results. REFERENCES: Fagan, P. The Evolution of Management. McGraw-Hill Irwin Companies, Inc.

21. Macroenvironment A part of the External Environment that forms the general environment for the firm. Includes: Governments (Government actions, rules, laws, regulations, etc.) Economic Conditions (Amount of money, interest rates, etc.) Other fundamental conditions that could affect the firm.

22. Macro environment What are some specific ways that the macro environment has effected your industry? (Be specific)

23. Competitive Environment A part of the External Environment that forms the immediate environment surrounding the firm. Includes: Customers: Current customers as well as potential customers. Rival Firms: Size, efficiency, and market position of current competitors. Potential rival firms: Size, efficiency, and market position of potential competitors. What could customers substitute for your product? Suppliers and others: that the firm needs to conduct business (Distribution channels).

24. Barriers to Market Entry New firms enter markets when barriers to entry are low and less enter when these increase. Barriers can originate from: Government Policy Capital Requirements Brand Identification Cost Disadvantages Distribution Channels

25. Ultimately the Customer Decides! Ultimately, it is the customer who determines the success or the failure of a business. Regardless of the type of customer involved, business organizations that create value for their customers will retain their customers and attract new ones. Those that fail to provide perceived value for the customer will eventually lose the customer and fail. Profit is only the measure of how well a business provides value to its customers! Management plays a key role in determining how well a business provides this value.

26. Review- 25 points -Ok let’s review… # 26

27. Organizations that are affected by and that affect their environment are called: ____________. Inputs Outputs Open systems External environment

28. The answer is…. Inputs Outputs Open systems External environment

29. Specific government organizations in a firm's immediate task environment are called ______________. Substitutes New entrants Regulators Economic indicators

30. The answer is… Substitutes New entrants Regulators Economic indicators

31. Interest rates, inflation, the federal deficit and unemployment levels are all elements in which aspect of the macroenvironment? The social environment The international environment The regulatory environment The economy

32. The answer is… The social environment The international environment The regulatory environment The economy

33. Statistics that describe the population in terms of age, gender, education, income and occupation is referred to as: Demographics Market placing Categorization Population consensus

34. The answer is… Demographics Market placing Categorization Population consensus

35. Organizations must acquire a variety of resources in order to produce a product or service of value. These resources may include materials, equipment, financing or even employees. The sources that provide these various resources are referred to as: Resource firms Placement centers Wholesalers Suppliers

36. The answer is… Resource firms Placement centers Wholesalers Suppliers

37. Any questions ?

38. Management Theories As you no doubt discovered as you watched the video “The Evolution of Management,” business management theories extend over many years and cover many different aspects of the management function. One way to describe these is to divide them into three broad categories: 1)Scientific Management Theories 2)Bureaucratic Management Theories 3)Human Relations Management Theories.

39. Management Theories (Continued) Scientific Management Theories: Concerned with specific work tasks. These theories were called “scientific” because they introduced task definition and specific measurement to the process of work (Taylor, Fayol, etc.) Around 1900 until about 1940. Our current POLC is derived from Henri Fayol’s Theory circa 1917! What kinds of measurement do we do at work?

40. Management Theories (Continued) Bureaucratic Management Theories: These added to the measurement and specifications of earlier theories to recognize the need for structure, lines of authority, and control within the management of businesses. It responded to the growth of large business organizations by adding hierarchy to the business structure (Weber, etc. 1930s to 1950s).

41. Management Theories (Continued) Human Relations Management Theories: This broad range of management theories responded to the impersonal approach of earlier theories by recognizing the uniqueness of humans and the need for managers to resolve the needs of workers. Many of these come from the Behavioral Sciences (McClelland, Maslow, Lewin, McGregor, etc. 1930s to today).

42. Any questions ?

43. # 43 Parting Thoughts When everything is coming your way, you're in the wrong lane. Ambition is a poor excuse for not having enough sense to be lazy. Hard work pays off in the future. Laziness pays off now. Everyone has a photographic memory. Some just don't have film. Shin: a device for finding furniture in the dark. Many people quit looking for work when they find a job. I intend to live forever - so far, so good. If Barbie is so popular, why do you have to buy her friends? Have a great week!