Showing posts with label essay example. Show all posts
Showing posts with label essay example. Show all posts

Wednesday, May 1, 2013

management

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Questions on Organizational Behavior

Prepared by Dr. Stephen Hartman, School of Management, New York Institute of Technology.

. What are some of the new challenges confronting managers in todays business environment?

The global, one-world economy is changing the nature of competition. The second generation of the Information Age, marked by advances in decision support and telecommunications technology, is changing the nature of work in all organizations.

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The quality Service Revolution is changing the focus of competition among world competitors as product and service quality become increasingly important to consumers, both internally and externally.

. What are the three dimensions of management and how are they important.

The three dimension of management are technical, conceptual, and human. It is absolutely essential for managers to develop meaningful solutions to todays complex management problems by using innovative technological solutions that provide answers to problems people and organizations are having. Furthermore, it is critical to managements success that they be able to meaningfully understand human resource needs and be able to successfully deploy these

5. Discuss Henri Fayols contributions to organizational theory.

Henri Fayol has been called the father of management. Henri Fayol was a successful French industrialist. He also created the first school of management. He was responsible for developing the major classical management concepts of planning, organizing, developing, staffing, coordinating, and budgeting (PODSCORB). He also was the first to develop the importance of lateral communications with his gang plank theory of communications in organization.

Henri Fayol belongs to the administrative management branch of the classical school. His entire working career was spent with a mining company, Commentary-Fourchambault Company, where he rose from an apprentice to General Manager in 1888 remaining there until his retirement in 118. He is credited with turning the company around from a threatened bankruptcy into a strong financial position by the time of his retirement at age 77.

As a result of his management experience, Fayol strongly believed management theories could be developed and taught to others. His first writing on administration, Administration Industrielle et Generale, was published in 116 in the Bulletin of the Society of Mineral Industries and later appeared as a book. The book became prominent in the United States after a second English translation appeared in 14 under the title General and Industrial Management.

Henri Fayols Fourteen Management Principles

a. Division of Work. Division of work, specialization, produces more and better work with the same effort. It focuses effort while maximizing employee efforts. It is applicable to all work including technical applications. There are limitations to specialization which are determined by its application.

b. Authority and responsibility. Authority is the right to give orders and the power to exact obedience. Distinction must be made between a managers official authority deriving from office and personal authority created through individual personality, intelligence and experience. Authority creates responsibility.

c. Discipline. Obedience and respect between a firm and its employees based on clear and fair agreements is absolutely essential to the functioning of any organization. Good discipline requires managers to apply sanctions whenever violations become apparent.

d. Unity of command. An employee should receive orders from only one superior. Employees cannot adapt to dual command.

e. Unity of direction. Organizational activities must have one central authority and one plan of action.

f. Subordination of Individual Interest to General Interest. The interests of one employee or group of employees are subordinate to the interests and goals of the organization and cannot prevail over it.

g. Remuneration of Personnel. Salaries are the price of services rendered by employees. It should be fair and provide satisfaction both to the employee and employer. The rate of remuneration is dependent on the value of the services rendered as determined by the employment market.

h. Centralization. The optimum degree of centralization varies according to the dynamics of each organization. The objective of centralization is the best utilization of personnel.

i. Scalar chain. A chain of authority exists from the highest organizational authority to the lowest ranks. While needless departure from the chain of command should be discouraged, using the gang plank principle of direct communication between employees can be extremely expeditious and increase the effectiveness of organizational communication.

j. Order. Organizational order for materials and personnel is essential. The right materials and the right employees are necessary for each organizational function and activity.

l. Equity. In organizations equity is a combination of kindliness and justice. The desire for equity and equality of treatment are aspirations to be taken into account in dealing with employees.

m. Stability of Tenure of Personnel. In order to attain the maximum productivity of personnel, it is essential to maintain a stable work force. Management insecurity produces undesirable consequences. Generally the managerial personnel of prosperous concerns is stable, that of unsuccessful ones is unstable.

n. Initiative. Thinking out a plan and ensuring its success is an extremely strong motivator. At all levels of the organizational ladder zeal and energy on t he part of employees are augmented by initiative.

o Esprit de Corps. Teamwork is fundamentally important to an organization. This is encouraged by creating work teams and using extensive face-to-face verbal communication.

While subsequent organizational research has created controversy over many of Fayols principles, they are still widely used in management theory.

6. Discuss Max Webers contributions to organizational theory.

Max Weber can be classified in the bureaucratic management branch of the classical school. Weber, the son of a prominent Bismarckian era German politician, was raised in Berlin and studied law at the University of Berlin. After assuming an appointment teaching law at the University of Berlin, Weber assumed teaching appointments in economics at the Universities of Freiburg, Heidelberg, Vienna, ending with his death after a bout with pneumonia.

Webers interest in organizations evolves from his view of the institutionalization of power and authority in the modern Western world. He constructed a rational-legal authority model of an ideal type bureaucracy. This ideal type rested on a belief in the legality of patterns of normative rules and the right of those elevated to authority to issue commands (legal authority). Weber postulated the rules and regulations of a bureaucracy serve to insulate its members against the possibility of personal favoritism.

Weber Believes All Bureaucracies Have Certain Characteristics

a. A well defined hierarchy. All positions within a bureaucracy are structured in a way permitting the higher positions to supervise and control the lower positions. This provides a clear chain of command facilitating control and order throughout the organization.

b. Division of labor and specialization. All responsibilities in an organization are rationalized to the point where each employee will have the necessary expertise to master a particular task. This necessitates granting each employee the requisite authority to complete all such tasks.

c. Rules and regulations. All organizational activities should be rationalized to the point where standard operating procedures are developed to provide certainty and facilitate coordination.

d. Impersonal relationships between managers and employees. Weber believes it is necessary for managers to maintain an impersonal relationship with the employees because of the need to have a rational decision making process rather than one influenced by favoritism and personal prejudice. This organizational atmosphere would also facilitate rational evaluation of employee outcomes where personal prejudice would not be a dominant consideration.

e. Competence. Competence should be the basis for all decisions made in hiring, job assignments, and promotions. This would eliminate personal bias and the significance of knowing someone in central personnel decisions. This fosters ability and merit as the primary characteristics of a bureaucratic organization.

f. Records. Weber feels it is absolutely essential for a bureaucracy to maintain complete files regarding all its activities. This advances an accurate organizational memory where accurate and complete documents will be available concerning all bureaucratic actions and determinations.

Webers bureaucratic principles have been widely adopted throughout the world. Yet, there are many critics.

7. Discuss Frederick W. Taylors contributions to organizational theory.

Taylor has been termed the father of scientific management. As the name implies, it was a scientific approach to managerial decision making. The name was intended to contrast his approach with the unscientific approaches that characterized traditional management practices at the time. Taylors major techniques included time and motion studies whereby the work task was divided into its constituent elements or motions and eliminating wasted motions so that the work would be done in the one best way as well as timing the remaining motions in order to arrive at an expected rate of production.

Taylor also pushed strongly for standardization in the design and use of tools. Tools and procedures were standardized in accordance with what designs were most effective in a given context. Taylor also advocated a worker be assigned a given quantity of work each day based on the results of time study. This was forerunner of modern day goal-setting.

Taylor claimed the primary motivation of an employee was to earn money. Therefore, the way to get an employee to work harder was to pay by the piece. This system, known as the piece rate system, was intended to provide individual employee productivity incentives.

8. What was the Hawthorne study and why was it important?

The Hawthorne Experiments consist of two studies conducted at the Hawthorne Works of the Western Electric Company in Chicago from 14 to 1. The studys particular focus is on lighting and attempts to operationalize many of the principles of scientific management.

The initial study in 14 was conducted by a group of engineers seeking to determine the relationship of lighting levels to worker productivity. The study was done in connection with the National Research Council of the National Academy of Sciences.

The results of the studys findings are extremely interesting since worker productivity increases as the lighting levels decrease until the employees are unable to see what they are doing after which performance naturally declines.

Beginning in 17 a second group of experiments commenced with a group of five women in the bank wiring room. During the course of the experiment, the women are supervised by the experimenters conducting the study. Additionally the workers in the experimental group are given special privileges including the right to leave their workstation without permission, rest periods, free lunches and variations in pay levels and workdays. As with the first set of experiments, the second group of experiments result in significantly increased rates of productivity.

In the second experimental study in 18 the Harvard researchers, F. J. Roethlisberger, Professor of Human Relations, and Elton Mayo, a Professor of the Industrial Research Department, became associated with it. After extensive research, the results were not published until 1, they conclude the primary determinant of the increase in productivity is the change in the supervisory arrangement rather than the changes in lighting or other associated worker benefits. Since the experimenters became the primary supervisors of the employees, the intense interest they displayed for the workers was the basis for the increased motivation and resulting productivity.

Essentially the experimenters became a part of the study and influenced its outcome. This is the origin of the term Hawthorne Effect describing the special attention researchers give to a studys subjects and the impact it has on its findings. While the result of the Hawthorne studies failed to answer the specific question of the relation between illumination and worker productivity, the study did create a strong theoretical foundation for the human relations view of management.

. Discuss Chester Barnards contributions to organizational theory.

Barnard led a highly successful management career rising to the position of the President of New Jersey Bell Telephone Company. He was also very active professionally including acting as the head of the Rockefeller Foundation. After giving a series of lectures on management, Barnard published his only book, The Functions of the Executive, in 18.

Basically, Barnard feels organizations are communication systems. He feels it is particularly important for managers to develop a sense of common purpose where a willingness to cooperate is strongly encouraged. He is credited with developing the acceptance theory of management emphasizing the willingness of people to accept those having authority to act. He feels the managers ability to exercise authority is strongly determined by the employees zone of indifference where orders are accepted without undue question.

Contrary to Weber beliefs that communication flows from the top of the organization to the bottom, Barnard feels organizational communication flows from the bottom to the top. He states there are four factors affecting the willingness of employees to accept authority

1. The employees must understand the communication.

. The employees accept the communication as being consistent with the organizations purposes.

. The employees feel their actions will be consistent with the needs and desires of the other employees.

4. The employees feel they are mentally and physically carry out the order from the higher authority.

Barnard also feels informal organizations within formal organizations perform necessary and vital communication functions for the overall organization. This is consistent with his belief that the executives main organizational function is acting as a channel of communication and maintaining the organization in operation.

Barnards sympathy for and understanding of employee needs in the dynamics of the organizational communication process positions him as a bridge to the behavioral school of management many of whose early members were his contemporaries.

10. Who was Mary Parker Follet and why was she important to organizational theory?

One of the earliest pioneers in the behavioral movement was Mary Parker Follet. Follet received an education in political science and pursued a professional career as a social worker where she became absorbed in work place related issues. She strongly believes in the inherent problem solving ability of people working in groups. Rather than assuming classical managements strongly hierarchical position of power in organizations, Follet asserts power should be cooperatively shared for the purpose of resolving conflict.

She is best known for her integration method of conflict resolution as opposed to the three choices she sites of domination, compromise or voluntary submission by one side over another. If, for example, an individual is sitting in a library on a warm spring day near an open window and a second person decides to share the table but wishes to close the window to avoid the draft, we have the basis of a conflict. Now one person could try and dominate the other and force the window to either be open or closed leaving the other person unhappy. A second alternative is for one person to simply submit to the wishes of the other, but be very unhappy. The third alternative is to compromise and close the window half way which will not satisfy either person.

Follet states the best way to handle this situation is to resolve the issue jointly through creative conflict resolution where, in our example, the newcomer may voluntarily agree to sit in another part of the library adjusting the window according to his/her preference. In this case, both parties to the conflict are happy as the issue has been resolved according to their own desires. Creative conflict resolution involves cooperatively working with others to devise inventive new ideas often providing strong interpersonal benefits.

11. Discuss Herbert Simons contributions to organizational theory.

The death knell of classical management theory was pronounced by Herbert Simon in his book Administrative Behavior A Study of Decision-Making Processes in Administration Organization published n 147. Simon is particularly critical of the principles of administration including span of control and unity of command while saying all of the principles collectively were no more than proverbs. Simon found the principles of classical administration to be contradictory and vague.

Simons greatest management contribution is in decision making theory for which he received a Nobel prize. Simon states decision makers perform in an arena of bounded rationality and that the approach to decision making must be one of satisficing where satisfactory rather than optimum decisions are often reached. Satisficing successfully adapts to and is a realistic solution for the limited time and resources a manager has when considering alternatives in the decision making process.

1. Disccuss Abraham Maslows contributions to organizational theory.

Receiving his doctorate in psychology, Abraham Maslow was the first psychologist to develop a theory of motivation based upon a consideration of human needs. Maslows theory of human needs has three assumptions. First, human needs are never completely satisfied. Second, human behavior is purposeful and is motivated by need satisfaction. Third, needs can be classified according to a hierarchical structure of importance from the lowest to highest.

Maslow believes the needs hierarchy can be classified into five specific groups. To reach successive levels of the hierarchy required the satisfaction of the lower level needs

1. Physiological needs. Maslow groups all physical needs necessary for maintaining basic human well being into this category. These needs become acute and predominant if any or all of these needs are unsatisfied. However, consistent with Maslows theory of motivation, once a need is satisfied, such as thirst, it no longer is a motivator.

. Safety needs. These needs include the need for basic security, stability, protection, and freedom from fear. A normal state exists for an individual to have all of these needs generally satisfied. Otherwise, they become primary motivators.

. The belongingness and love needs. Once the physical and safety are satisfied and no longer are motivators, than the belongingness and love needs emerge as primary motivators. The individual will strive to establish meaningful relationships with significant others. Deprivation of the belongingness and love need will result in significant personality maladjustment.

4. The esteem needs. An individual must develop self confidence. In order to do this it is essential to the individual to have adequacy from achieving mastery and competence leading to the achievement of status, reputation, fame and glory. This achieves satisfaction of the self-esteem needs.

5. The need for self-actualization. Assuming all of the previous needs in the hierarchy are satisfied, a new discontent and restlessness will soon develop... A musician must make music, an artist must paint, a poet must write ... What a man can be, he must be.

Maslows hierarchy of needs theory helps the manager to visualize employee motivation. It helps in understanding the motivations and needs employees have and the requirement to satisfy basic needs in order to achieve higher level motivation.

1. Discuss Douglas McGregors contributions to organizational theory.

McGregor is the other major theorist associated with the Human Relations school of management. McGregor believes there are two basic kinds of managers.

One type of manager, Theory X, has a negative view of employees assuming they are lazy, untrustworthy and incapable of assuming responsibility while the other type of Manager, Theory Y, assumes employees are trustworthy and capable of assuming responsibility having high levels of motivation.

Theory X

1. Employees normally do not like to work and will try to avoid it.

. Since employees do not like working, they have to coerced, controlled, directed and threatened with punishment to motivate them to work.

. The average employee is lazy, shuns responsibility, is not ambitious, needs direction and principally desires security.

Theory Y

1. Work is as natural as play and therefore people desire to work.

. Employees are responsible for accomplishing their own work objectives.

. Comparable personal rewards are important for employee commitment to achieving work goals.

4. Under favorable conditions, the average employee will seek and accept responsibility.

5. Employees can be innovative in solving organizational problems.

6. Most organizations utilize only a small proportion of their employees abilities.

Mcgregors Theory X and Y is appealing to managers and dramatically demonstrate the divergence in management viewpoints toward employees. As such, Theory X and Y has been extremely helpful in promoting management understanding of supervisory styles and employee motivational assumptions.

14. Discuss Renesis Likerts contributions to organizational theory.

While being the director of the Institute of Human Relations at Ann Arbor, Michigan, Likert conducted a series of empirical studies on the differences between good and bad supervisors defined on the basis of high and low productivity. His research is based on employee interviews in separate departments in many different organizations where a scale of feelings is developed, the Likert scale, regarding employee attitudes toward their supervisors. This was correlated with their productivity.

Based on his research, Likert developed a four level managerial classification system. System 1 utilizes a supervisory system based primarily on fear and punishment. This results in an authoritarian supervisory system where employees are usually not consulted concerning major decisions.

In System organizations rewards are used to motivate employees with some freedom being allowed to comment on organizational decisions. However, managers have the primary decision making responsibility and employees in a System organization must act cautiously.

System organizations are more open to employee consultation regarding the managerial decision making process and overt managerial threats are avoided.

Likert states the System 4 organization is the most open and participative and is the ideal state managers should strive to achieve. This is termed the democratic model. Likert states the more an organizations management approximates the System 4 model, the more productive it will be.

15. Discuss Frederick Herzbergs contributions to the study of organizational behavior?

Additional empirical research was performed by Herzberg on 00 engineers and accountants. The research objective was to determine work situations where the subjects feel highly satisfied and motivated as opposed to those where the reverse is true. The research reveals that the work itself and achievement as well as recognition for the achievement are the primary motivators. Herzberg terms these factors satisfiers or motivators.

Factors having a negative motivation impact on the research subjects are the working conditions, salary, job security, supervisory methods and the general company management climate. Herzberg terms these factors hygiene factors or dissatisfiers.

From this research Herzberg developed the motivation-hygiene model of management. The model states that employee motivation is achieved with challenging enjoyable work where achievement, growth, responsibility and advancement are encouraged and recognized. The environmental or hygiene factors, such as poor lighting, ventilation, poor working conditions, low salaries, and poor supervisory relations, serve as dissatisfiers.

The difference between motivators and hygiene factors is that motivators cause an employee to develop his/her own internal motivations, whereas hygiene factors can make an employee unhappy and dissatisfied, but cannot motivate him/her. The job itself is the motivator.

16. Discuss David C. McLelland contributions to organization theory.

He performed research on motivation patterns. In the Thematic Apperception Test (TAT) where an individual writes a descriptive analysis of their individual reactions from unstructured pictures. McClelland determines the motivational state of the subjects from these descriptions.

Based upon this research, McClelland developed an achievement motivation theory consisting of four sets of needs achievement, affiliation, competence and power. Achievement motivation is a need people have to succeed through overcoming challenges. The affiliation motivation is similar to Maslows belongingness and love need where people relate to others on a social basis. The competence need is the desire to accomplish a job well done, and the power motivation is the need to control others and make a difference in the outcome of a given situation.

McClelland believes people have strong needs. His achievement motivation theory is important for managers seeking understanding of employee motivational patterns.

17. Discuss W. Edwards Demings contributions to organizational theory.

Deming received his doctorate in physics from Yale and was invited by the Union of Japanese Scientists and Engineers to visit Japan in 150. In addition to urging the Japanese to use sampling methods to test for quality control, he also taught them the best way to lowered production costs was improved quality. Dr. Deming is concerned with increased organizational productivity by applying statistical quality controls as well as improving organizational communication

Although well known in Japan, Deming was ignored for years in the U.S.; however, this began to change after he was featured on an American TV show dealing with the reasons why the Japanese competition was threatening American business. He soon became sought after by American corporations coping with the mounting international competitive threat.

Demings Fourteen Management Points

1 Create constancy of purpose toward improvement of product and service, with the aim to become competitive, to stay in business, and to provide jobs.

Adopt a new philosophy. We are in a new economic age, created by Japan. We can no longer live with commonly accepted styles of American management, nor with commonly accepted levels of delays, mistakes, or defective products.

Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

4 End the practice of awarding business on the basis of price tag. Instead, minimize total cost.

5 Improve constantly and forever the system of production and service to improve quality and productivity, and thus constantly decrease costs.

6 Institute training on the job.

7 Institute supervision the aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

8 Drive out fear, so that everyone may work effectively for the company.

Break down the barriers between departments. People in research, design, sales, and production must work as a team to foresee problems of production and use that may be encountered with the product or service.

10 Eliminate slogans, exhortations, and targets for the work force which ask for zero defects and new levels of productivity. Such exhortations only create adversarial relationships. The bulk of the causes of low productivity belong to the system, and thus lie beyond the power of the work force.

11 Eliminate work standards that prescribe numerical quotas for the day. Substitute aids and helpful supervision.

1 Remove the barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. Remove the barriers that rob people in management and engineering of their right to pride of workmanship. This means abolishment of the annual rating, or merit rating, and management by objective.

1 Institute a vigorous program of education and retraining.

14 Put everybody in the company to work to accomplish the transformation.

18. Discuss the evolution of management theory.

The evolution of management thought has followed societal trends of the nineteenth and twentieth centuries. The nineteenth century works of Charles Babbage and Robert Owen were concerned with the early factory system as well making social progress. The classical school and bureaucratic school of the early twentieth century were the first efforts to generate a comprehensive theory of management. This school included Max Weber and Henri Fayol. Fayol was the father of the administrative management school. He had a profound affect on much of administrative theory during the early part of the twentieth century.

Frederick Taylor, the engineer, established the scientific method of management.

The behavioral school made a profound influence on management theory. It is a revolutionary period of management theory. It includes the Nobel prize winning critic of the early proverbs of administration, Herbert Simon, as well as the landmark Hawthorne Experiment ushering in the human relations branch of the bureaucratic method. The behavioral school also includes the first female organizational theorist, Mary Parker Follet. A major result of the behavioral school is the demise and repudiation of the classical school of management.

The human relations school of management is extremely important in dealing with the concept of employee motivation. Herbert Maslow developed the hierarchy of needs theory while Douglas McGregor developed Theory X and Y. The behavioral research school applies much of the needs theory developed by Maslow in actual organizational settings.

The contemporary management school brings a more interdisciplinary approach to the field of management. The very important writings of W. Edwards Deming in the area of productivity improvement and those of Peter Drucker on MBO and management innovation have a major impact on the way todays organizations are managed. The integrative methodologies of the systems approach and contingency theory give managers the latitude they need to integrate the research of the many management schools.

Finally, the quality school of management is extremely important in presenting a comparative management model. W. Edwards Deming is the pre-eminent theorist in this school. It has also become known as Total Quality Management (TQM).

0. Organizational theory is extremely interdisciplinary. What are the foundations for the discipline?

There are three basic building blocks for organizational theory. They are anthropology, sociology, and psychology.

1. Discuss the significance of reliability and validity in organizational theory research.

Reliability is the accuracy of measurement and consistency of results. Validity is whether the study really demonstrates what it is supposed to demonstrate. Internal validity assures that there are no plausible alternative explanations other than those reported (threats of internal validity).

Additionally, there are types of validity researchers must be concerned with in understanding research in organizational behavior

Content - how well the measure captures the behavior of interest.

Predictive - an objective statistical relationship between what is being predicted (criterion) and what is being used to predict it (predictor).

Construct - the degree to which observable characteristics converge with similar concepts or discriminate between dissimilar concepts.



. Because people are confronted by constant stimuli, they are unable to attend to them all. Therefore, they select only a small number at any given time. This is accomplished through the principles of perceptual selectivity. What are the various external attention factors that affect perceptual selectivity.

a. Intensity - the more intense the stimulus, the more likely it is to be perceived.

b. Size - the larger, the object, the more likely it is to be perceived.

c. Contrast - external stimuli which stand out or which are not what people are expecting will receive more attention.

d. Repetition - repeated external stimuli are more attention-getting than a single stimulus.

e. Motion - more attention will be paid to moving objects than to stationery ones.

f. Novelty and Familiarity - new objects in a familiar setting or familiar objects in a new setting are attention getting.

4. Discuss the role of heredity in determining personality.

The exact role that heredity plays in personality is inconclusive. However, research on identical twins (the Jim twins) raised apart has shown some support for this perspective. Despite a continuing debate on heredity versus environment, genetics experts and educational psychologists generally argue that intelligence is to some degree inherited.

5. What did the Milgram study demonstrate about the role that the situation plays in the human personality?

Subjects from a variety of occupations administered increasing levels of shock to a fellow learner. The subjects were exposed to the accomplices vocal responses (moans, screams, pleas, etc.) and were encouraged by the experimenter to continue the experiment. Contrary to expert opinion, almost two-thirds of the subjects went ahead and administered what they thought was a very dangerous or even fatal amount of voltage. The results of the experiment suggested that people tend to obey those in authority positions, even though their behavior goes against their personality or better judgment.

6. What are successful organizational socialization strategies?

Provide a challenging first job.

Provide relevant training.

Provide timely and consistent feedback

Select a good supervisor to be in charge of socialization.

Design a relaxed orientation program.

Place new recruits in work groups with high morale.

7. Discuss attitudes as a complex cognitive process.

They tend to persist unless something is done to change them. They can fall anywhere along a continuum from very favorable to very unfavorable. They are directed toward some object about which a person has feelings and beliefs.

8. Discuss the role attitudes play in organizational behavior in terms of help people adapt to their work environment.

They help employees adjust tot heir environments and are a basis for future behaviors. They help employees defend their self images and justify actions.

They provide a basis for expressing central values.

They help supply standards that allow people to organize and explain the world around them.

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. Discuss how it is possible to change employee attitudes.

Provide new information.

Use fear

Resolve discrepancies between attitudes and behavior

Use influence from friends or peers.

Employ co-optation whereby disgruntled employees are made a part of the process and given credit for it.

0. Discuss the importance of job satisfaction in achieving productivity.

Most research evidence indicates that there is no large positive relationship between satisfaction and productivity; however, if people are rewarded equitably, they will be more satisfied and they may strive for a greater performance effort.

1. Discuss the relationship between job satisfaction and absenteeism.

There is an inverse relationship between job satisfaction and absenteeism. People who believe that their work is important tend to have lower absenteeism then those who dont. It is important to remember, however, that high job satisfaction will not necessarily result in low absenteeism, but low job satisfaction is likely to bring about high absenteeism.

. Discuss how Victor Vrooms Expectancy Theory depicts a process of cognitive variables which reflect individual differences in motivation. What are the variables in his the Expectancy Theory.

Valence - the strength of an individuals preference for a particular outcome.

Instrumentality - the degree to which a first level outcome will lead to a desired second level outcome.

Expectancy - the probability that a particular effort will lead to a particular first level outcome.

The model helps management understand workers motivation, but does not provide specific solutions to motivational problems.

. Discuss how equity theory argues that a major input into job performance and satisfaction is the degree of equity or inequity that people perceive in their work situation.

Inequity occurs when a person perceives that the ratio of his/her outcomes to inputs are unequal. Inputs and outcomes are based on perception. Motivation under this perspective can be defined by the drive to restore equity. This may be done in several ways

Alter the inputs or outcomes

Cognitively distorts the inputs or outcomes.

Leave the field

Act on the other

Change the other

Feelings of inequity can occur not only when a person feels cheated, but also in the case of overreward. There has been research support for the theory.

4. Compare and contrast job enlargement and job enrichment.

Job enlargement is termed horizontal job loading. It makes the job less specialized by adding more functions to it, but without increased responsibility for the worker. Job enrichment is a direct outgrowth of Frederick Herzbergs Two-Factor Theory of motivation. In particular, job enrichment is concerned with designing jobs that include greater variety of work content, require higher levels of skill, give workers more autonomy and provide feedback.

Job enrichment vertically loads the job, which means that there are not necessarily more tasks to perform, but more responsibility for the overall job.

5. Explain the quality of work life (QWL) approach to job design.

QWL is a more general approach to job design. It is primarily concerned with the impact of work and organizational climate on people, and how this in turn influences organizational effectiveness. Design efforts are focused on the human-technology-organization interface. Employee participation in problem solving and decision making is central to this approach.

6. Explain the sociotechnical approach to job design.

This approach is grounded in systems theory. It is concerned with the harmony between personal, social and technological functioning. This approach generally involves the redesign of technological work processes and the formation of autonomous, self-regulating work groups.

7. Discuss the interrelationship of goal setting with human resource management.

Effective goal setting includes the following elements

specific goals are more effective than vague, general or do your best goals.

difficult, challenging goals tend to be more effective than relatively easy, mundane goals. Owned and accepted goals arrived at through participation are preferred to assigned goals. Objective, timely feedback about progress toward goals is preferable to no feedback.

8. What are the four major techniques of administering reinforcement?

Fixed-ratio schedules - reinforcement is given after a fixed number of responses. This schedule tends to produce a high response rate that is vigorous and steady.

Fixed-interval schedules - reinforcement is given after a specified time or period, measured from the last reinforced response. Under a fixed-interval schedule there is an uneven pattern that varies from a slow response immediately following reinforcement to a vigorous response immediately preceding reinforcement.

Variable-ratio schedules - reinforcement is given after a randomly varied number of responses. Each response has an equal chance of being reinforced regardless of the number of responses that have preceded it.

Variable-interval schedules - reinforcement is given after a randomly distributed length of time.

44. Discuss the trait theory of leadership.

The Great Man theory says that a person is born either with or without the necessary traits for leadership. A more recent and realistic approach accepts the fact that leadership traits are not completely inborn, but can be acquired through learning. The results of a search for universal traits are disappointing, and the only consistent result was that leaders are generally brighter than their followers, but not too much so.

45. Discuss Fiedlers Contingency Theory of Leadership.

His contingency model contained the relationship between leadership style (human relations or task-direct) as measured by the Least Preferred Coworker (LPC) scale, and the favorableness of the situation (leader-member relations, degree of task structure, and position power).

Situations are favorable for the leader when all three situational dimensions are high. When the dimensions are low, the situation is unfavorable.

Under highly favorable or unfavorable situations, task directed leaders are more effective. In situations of moderate favorableness, by far the most common situation, human relations leaders are more effective.

6. What are the major categories of organizational communication.

Management Information Systems - generally computerized systems which integrate networks of information that support management decision making, strategic planning, customer service activities, and actual communication.

Telecommunication Technology - involves the transmission of information within and between organizations using computer, telephone, and television technologies, wireless systems of portable phone, and wired systems of fiber optic linkages. Existing telecommunications applications include telephone caller ID, electronic mail, electronic data interchange (EDI), voice messaging, and electronic bulletin boards.

Nonverbal - nonword human responses, such as body language, time, space, paralanguage, environmental context, etc., that convey meaning.

What are some methods of promoting effective upward communication and improving managers listening habits?

Grievance procedure - allow employees to make upward appeals and protect individuals from arbitrary action by their direct supervisor.

Open Door policy - allows subordinates to interact with their supervisor when needed or wanted.

Counseling, attitude questionnaires, and exit interviews - these contribute valuable upward information for management to correct or prevent problems.

Participative techniques - either informal or formal participation programs generally result in more satisfied employees and, occasionally, better performers.

Ombudsperson - encourages subordinate-initiated communication, especially in large, depersonalized organizations.

67. What are some examples of formal programs of employee participation in organizations?

The Scanlon Plan is a pioneering form of labor-management cooperation.

Suggestion plans or boxes represent another traditional participation program.

Quality circles, a technique widely used in Japan, are small groups of volunteers from the same work area who collectively solve work-related problems.

Self-managed work groups have become very popular in the most innovative firms. These groups run themselves and have proved to be very productive in firms such as General Mills.

68. What are some criticisms of the Webers bureaucratic model?

Specialization - creates conflict between specialized units.Hierarchy - individual initiative and participation are often blocked. Upward communication and horizontal communication are impeded.

Rules - rules often become ends in themselves. Rules are used for punitive control from above.

Impersonal characteristics - are concerned with human problems (both employees an customers) associated wit bureaucratic structures.



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Analysis of Wal-Mart̢۪s strategy

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1. Why did Mexico make suck a good proving ground for Wal-Mart̢۪s foreign expansion strategy?

Answerï¼Å¡

Considering the environment of politic and economic of Mexican in 10s, it provided Wal-Mart good opportunity to expand its business. There are main three factors as follows

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l Firstly, when Wal-Mart considering expanding global market, U.S.A. at the same time was entering negotiations with Mexico and Canada about the North American Free Trade Agreement. This spurred the interests of Wal-Mart to develop its business in neighbor̢۪s market.

l Secondly, the leader of Mexico, Carlos Salinas, who was a Harvard-trained economist, advocated free market reforms and privatized those State-owned enterprises in Mexican. This created nicer investment environment to Wal-Mart.

l The tight monetary policy lowered inflation rate into the single digits in Mexican.

All of these would be bring good opportunities to Wal-Mart for its strategy to enter Mexican̢۪s market.

l Firstly, the barriers to trade and investment between U.S.A and Mexican, which had already lowered by Salinas, would fall much further under the NAFTA proposal.

l Second, tariffs on goods imported from the United States had come down from 100 percent in the mid-180s to a maximum of 0 percent by the early 10s, and under NAFTA many of these would fall to zero.

l The tight monetary policy drove Mexican̢۪s economy growth rate at 4 to 5 percent per year by the early 10s; disposable income of Mexican people had increased by 70 percent since Salinas took office. And more than two third of people would be classified as middle class, which means people have enough purchasing power.

With an eye to big potential opportunities in Mexico market, Wal-Mart carried its points by taking many right steps. Such as

l Concentrated in three main urban areas Mexico City, Guadalajara, and Monterrey. The people there are richer and with much stronger purchasing power for consuming, easily accepted the consuming way in the supermarket.

l Deeply investigated in Mexican market, and quickly knew that the company̢۪s competitive advantage is the combination of culture and supporting information and logistics systems, and the weakness is knew nothing about the culture and business system in this new market. Comparing all investing possibilities, then Wal-Mart decided the best way to do is taking the form of joint venture by 50 to 50.

l Chosen the good partner for the joint venture in Mexico. Cifra, the largest one in Mexico, has rich experience in retail market and has well done in dealing with supermarket business for several years. Concerning the business dimension and benefits, Cifra operated 10 discount and grocery stores and generated sales about $. billion. The good condition of Cifra can minimum the investment risk of Wal-Mart.

l The two founders of Wal-Mart and Cifra have a good relation and reached a common agreement with regard to the NAFTA which opened up opportunities for both sides in business cooperation in Mexico.

Good relation of two founders

ï¼Å½What is the source of Wal-Mart’s competitive advantage? What barriers did Wal-Mart have to overcome in transferring its competencies to Mexico?

Answer

l Advantage

1) First-class management team, that pursued a number of innovative operating strategies that backed up the company̢۪s commitment to deliver a large selection of high-value merchandise at a low cost to consumers.

) Located in small Southern towns when it̢۪s early period that had no other major retail presence. Wal-Mart did not have to face competition from other discounters.

) Advanced distribution system. Pioneered the development of a hub-and-spoke-based distribution system, where central distribution warehouses were strategically located to serve clusters of stores.

4) IT system. Wal-Mart has one of the first to utilize computer based information systems to track in-store sales and transmit this information to suppliers.

5) Dynamic and egalitarian culture. Wal-Mart grants major decision-making authority or store managers, department managers and individual employees(associates). Treating employees well, demanding commitment and excellent performance from them. profit-sharing plan and stock ownership plan

6) Has garnered significant leverage with its suppliers, and use this leverage to demand lower prices from its suppliers.(every day low prices)

l Barriers

1) Culture and system are difficult to transfer to franchisees

) Distribution and transportation cost too much

) Mexican retail market is very fragmented and dispersed

4) Government bureaucrats

5) NAFTA is not been implemented, high tariffs

6) Select a non-perfect merchandise

. How did Wal-Mart intend to create value in the Mexican market?

Answer

Wal-Mart believes that its unique culture, format, and operating systems are its advantage for international expansion. At that time, the United States, Mexico and Canada were talking about the foundation of North American Free Trade Agreement (NAFTA). This spurred Wal-Mart̢۪s interests in Mexico. Historically, there are a lot of cross border trade and investment between U.S.A and Mexico. On the other hand, there are potential customers in Mexico, about 0 million middle class. The following is the steps of Wal-Mart entered into Mexico market

l Enter a 50/50 joint venture with Cifra. After a rapid grow in U.S.A., Wal-Mart has recognized that its U.S. growth prospects are ultimately limited by market saturation, its growth rate in U.S. would inevitably slow. This would slow stock price appreciation for Wal-Mart. Wal-Mart realized that it knew little about the culture and business systems of Mexico, so the company decided to form a joint venture with Cifra.

l 11 it opened the first Sam̢۪s Club store in Mexico City.

l 1 Wal-Mart established six more Sam̢۪s Clubs in Mexico

l 1 Wal-Mart began to open stores under the Wal-Mart name.

4. Despite some early setbacks, Wal-Mart has apparently been successful in Mexico. In contrast, some other U.S. retailers pulled out of the country in the aftermath of the December 14 peso crisis. What do you think distinguishes Wal-Mart from these companies?

Answer

l Wal-Mart has the integrated and effective foreign growth strategy

1) Entering a joint venture with a Mexincan company, Cooperate with Cifra in Mexico.

After debating a number of option for expansion, it chose to enter a 50/50 joint venture with Cifra, because it know little about the culture and business systems of Mexico.

During the December 14 peso crisis

) Making strong improvements in its operating efficiency.

Because of the low local labor costs, it can reduce its inventory and logistic costs

) Start to source far more goods from Mexico

Because many of its suppliers had located in Mexico to take advantage of lower production costs and NAFTA.

4) Improve the mix of product offerings at its Mexican stores.

Offer more products sold well in place of those sold bad

5) Use its purchase volume to gain leverage with suppliers, bargaining down prices in return for large purchase volumes

6) Decide to take advantage of the economic slump to build its market share.

l Wal-Mart uses its competitive advantage to develop successful.

1) Hub-and-spoke-based distribution system

This system allowed Wal-Mart to rapidly replenish stock in its stores, while keeping the amount of stores space needed for inventory to a minimum, can cut down inventory and logistics costs.

) Computer-based information systems

It can be used to determine pricing and stocking strategy and to better manage inventories.

) Dynamic and egalitarian culture and control system

By such means, Wal-Mart creates incentives for associates and managers to give their best for the company.

Wal-Mart always keep the point �every day low prices” and pass more prices on to consumers, enabling the company to gain market share and remain profitable. So compared with other companies, Wal-Mart use the long-time, flexible and successive foreign growth strategy to develop the market successfully.

5ï¼Å½If Wal-Mart can succeed in Mexico, it can probably succeed in most countries. Discuss this statement. Is it correct?

If Wal-Mart can succeed in Mexico, it can probably succeed in most countries. Discuss this statement. Is it correct?

Firstly before answering this question, we should consider what the main things are for one international company leading for success.

There are number reasons why the corporation succeeded in the expansion. The cores are the two main elements coming from the external and internal sides

l External side

The environment represents the set of uncontrollable forces to which the firm must adapt its marketing mix.

1) Economic environment

International expansion is affected by the economic environment in two respects by the global economy and secondly by the individual economies of the targeted countries

A. Government policy and regulation; the change of government

a. The balance of payments of one country measures the flow of the transaction between residents of that country and the residents of the rest of the world over a period of time

b. the tariff and quotas and protectionism are the restrictions to protect local market

c. Stable economic environment and continuous economic growth is the basic reason for some company looking for where is right place for the international expansion.

d. The government economy policy of trade and investment, monetary policy

e. living and consumption standard

B. International institutions and agreement

The trend to free market will help the company to fulfill the international strategy, otherwise it will become the big barrier. The segment market defined is very important for one company strategy expansion

) Political environment

Political conflict may be lead to instability, but it may or may not affect business operations.

) Social Cultural environment the language and habits are the typical things, which the international expansion is facing. This will contribute to the formats of distribution system and purchase chain.



4) The legal environment

Legal system does vary from country to country in terms of their complexity, interpretation and application and the global marketer must be aware of how the individual legal systems could affect the company̢۪s business practice.

The international expansion has meant that firms need to plan on a global scale to remain competitive and successful

l Internal side

1) Mission for management

Firms internal environment and reflect the constraints which are imposed by the company on the marketing strategy decisions

) The structure of management

) Operation format

If the format can be connected well with the target market,

How to change your present format to complying with the requirement of potential markets

So we can not use yes or no to answer the question

External and internal environment will determine its potential opportunities and chances to be successful As for any strategy of one company should not be fixed to use for all different environments. If the international expansion strategy is established, how to take actions and how to establish the project, it should be precise even different, which should be flexibly used in real practice.

So when cannot say if you succeed in one country which will typical meant successful in other countries.



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Wednesday, January 23, 2013

Global Capital Market

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1) Explain the function of global capital market



Before we discuss the function of global capital market, we`d better consider about generic capital market first. Basically, the generic capital market is the fundamental and essential factor to support such a modern economy. To do business or manufacture products or manage a company, we have to depend on generic capital market to maintain business and make a profit of company. It`s impossible to manage company or business without support from generic capital market. Actually, commertial banks and investment banks play a role to connect both by different way. A capital market brings together those who want to invest money and those who want to borrow money. Those who want to invest money include corporations with surplus cash individuals, and non bank financial institutions. Those who borrow money include individuals, companies and government.

why do we need a global capital market? Because domestic capital markets are not sufficient. A global capital market benefits both borrowers and investors. It benefits borrowers by increasing the supply of funds avaliable for borrowing and by lowering the cost of capital. It benefits investors by providing a wider range of investment opportunities, thereby allowing them to build portfolio of international investments that diversify their risks. To be wide extend, global capital market gives borrowers and investors to more opportunities and less risk in business.

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)Describe the nature of the foreign exchange market

First of all, we go through the concept of the foreign capital market. The foreign exchange market is a market for converting the currency of one country into that of another country. And also, an exchange rate is simply the rate at which one currency is converted into another. Without the foreign exchange market, international trade and international investment on the scale that we see today would be impossible; companies would have to resort to barter. The foreign exchange market is the lubricant that enables companies based in countries that use different currencies to trade with each other.

Obviously, the international trade and investment have their risks because future exchange rates cannot be perfectly predicted. Some of these risks can be insured against by using instruments offerd by the foreign exchange market, such as the forward exchange contracts. Commonly refering to foreign exchange risk, it is provide some insurance against the risks that arise from changes in exchange rates even though it cannot provide complete insurance.

To be summary, the foreign exchange market is critical and works a positive role to facilitate for international trade and investment.

)Discuss the implications for international business

There are a number of clear implications for international business. First, International businesses understand the influence of exchange rates on the profitability of trade and investment deals. Adverse changes in exchange rates can make apparently profitable deals unprofitable. The risk introduced into international business transactions by changes in exchange rates is referred to as foreign exchange risk. Means of hedging against foreign exchange risk are avaliable. Forward exchange rates and currency swaps allow companies to insure against this risk.

Second, International business must also understand the forces that determine exchange rates. It a company wants to know how the value of a particular currency is likely to change over the long term on the foreign exchange market. It should look closely at those economic fundamentals that appear to predict long-term exchange rate movements(i.e.,the growth in a company`s money supply,it`s inflation rate,and it`s nominal interest rates). That kinds of fundamentals are sort of the forces that determine exchange rates.



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Monday, October 22, 2012

Father and Son Relationships

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The relationship between a father and his son is one of the most important things in life. In the novel The Chosen by Chaim Potok, the importance of father-son relationships can be seen through the interaction between Reb Saunders and his son Danny and the interaction between Mr. Malter and his son Reuven. Although Reb Saunders and Mr. Malter have very different types of relationships between their sons, both fathers care for their sons in their own way and try to teach their sons important life skills.

In The Chosen, Mr. Malter shows a great amount of care for his son Reuven in a soft type of loving way. When Reuven was in the hospital, Mr. Malter often would come to visit him to see if he was all right. Also, he was always kind and understanding towards Reuven, even if Reuven did something he didnt approve of. (Potok writes), [Mr. Malter] looked at me and I saw his eyes were suddenly sad. I did not intend to scold you, he said (Potok pg.64).

Danny’s father also uses verbal communication to teach his son a very important life lesson. When Reuven is not sure whether he should become friends with Danny because he is Hasidic, Mr. Malter helps him choose the right path. He says, The Talmud says that a person should do two things for himself. One is to acquire a teacher. Do you remember the other?…You know what a friend is, Reuven? A Greek philosopher said that two people who are true friend are like two bodies with one soul…Reuven, if you can, make Danny Saunders your friend (Potok 74).

Mr. Malter also tells Reuven an important skill to help him in his life with dealing with other people. In one instance he speaks to Reuven and says, What I tried to tell you, Reuven, is that when a person comes to talk to you, you should be patient and listen. Especially if he has hurt you in any way (Potok 64).

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Unlike Mr. Malter who shows his to love to his son by being gentile with Reuven, Reb Saunders shows his love to his son Danny by being tough on him. Danny’s father was very strict on making sure his son knew the Talmud inside and out. For example, every Shabbat his father preaches a sermon on the Talmud and purposely makes mistakes in his sermon to quiz his son Danny by asking him to point out what the mistakes are. One time when his son was studying with his friend Reuven, his son didn’t hear any mistakes and his father then turned to his son and said, “…Of course you didn’t hear. How could you hear when you were not listening?” (Potok pg.18).

Where as Mr. Malter uses verbal communication to teach his son, Reb Saunders raises his son Danny in silence except when he is teaching his son the Talmud. He feels that silence teaches Danny more than could be taught by speaking. Even when Reb Saunders and his son Danny go on a trip to Lakewood, they spend an excruciating amount of time together on a bus in complete silence. At one point in the novel, Danny tells his friends Reuven in regard of his father that, He told me once he wishes everyone could talk in silence. (Potok pg.76).

One similarity in the relationship between Mr. Malter and his son Reuven and Reb Saunders and his son Danny is that both fathers look out for their sons. When Reuven came home late one night after being at the Saunders, Mr. Malter was very concerned about him and said, Next time you are out so late you will call, yes? I was ready to telephone Reb Saunders to find out what happened (Potok pg.1).

Reb Saunders also looks out for his son by making sure that all of his son’s friends meet his father’s approval. When Danny told his father about his friendship with Reuven, Reb Saunders tells his son to bring him over for Shabbat. When Reuven asks why does Reb Saunders want to meet with him, Danny says, “…I told him we were friends. He always has to approve of all my friends. Especially if they are outside of the fold.” (Potok pg.115).

The relationships between Reuven’s father Mr. Malter and Danny’s father Reb Saunders is very unique. Each of them has different ways of bringing up their sons and therefore have different relationships with them. Both relationships are similar in that both fathers care for their sons but are different in the way they bring their sons up.

Potok, Chaim. The Chosen. Ballantine Books. New York City, New York. 167.

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Brian's Winter

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Brian’s Winter was written by Gary Paulsen. This book’s genre is adventure.

A boy gets in a plane crash and has to find shelter until help arrives. What he doesnt know is that help will not arrive until after winter is over. This story takes place in the wilderness by a pond. The main conflict is the boy trying to beat the odds and fight the harsh winter. The climax is when a gargantious bear attacks Brian’s shelter. Almost everything he had salvaged from the plane wreckage and from the wilderness was destroyed. At the end of the story a plane noticed Brian and came to rescue him. Come to find out, he didn’t want to leave.

The book is about a thirteen-year-old boy who is stuck in the wilderness because he was traveling to his father’s oilrig in Washington. He has to find his own food and supplies. He does find some things from the plane. For example A small rifle, blanket, cooking utensils, and other things. His first big kill when he went hunting was a moose. The second encounter with a big animal was the bear. The main character is Brian, the boy stuck in the wilderness.

The part I liked most was when Brian rigged up his machine to go to the bottom of the pond to get things from the plane. My least favorite part was at the end when they brought up the Indians who had been there the whole time.

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I would recommend this book to anyone who likes adventure books. It has some very suspenseful times and it is sometimes funny because of the stupid things the characters do. The only bad part of the book is the very ending. The Indians don’t really make sense because if they had been there the whole time then they would have met Brian and helped him out. I would rate this story a on the story scale.



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Organisation, Competition and Environment.

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INTRODUCTION

The purpose of this report is to determine and consider the aims of Blue plc and in turn try to achieve a number of objectives. These objectives are to try and improve profitability, addressing stakeholder expectations, expanding the market for Blue plc, outline potential benefits that expansion would bring to stakeholders and also to try and investigate how production could be achieved. This will be done by detailing, step-by-step, the different aspects of the business and how each aspect is achieved at present and how it can be improved.

The Mission Statement is a crucial element in the strategic planning of a business organisation. Creating a Mission is one of the first actions that a business should take. This can be a building block for an overall strategy and development of more specific functional strategies. By defining a Mission an organisation is making a statement of organisational purpose. The specific definition of a Mission Statement is

“A mission statement is an enduring statement of purpose for an organisation that identifies the scope of its operations in product and market terms, and reflects its values and priorities.”

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A good mission statement captures an organisation’s unique reason for being and encourages stakeholders to pursue common goals. Every company, whether big or small, needs a mission statement. Blue plc’s Mission statement has to reflect the goals of the company accurately as well as summarising it into one or two sentences.

Blue plc’s Mission Statement would therefore be



“ The aim of clothing company Blue plc is to become the leading manufacturer of high quality sports wear to the major retailing companies within the UK and eventually the worldwide market.

The overall objective is to increase product sell-through at retail, strengthen our retailer relationships and enhance and strengthen our brand image and visibility. By doing this, Blue plc will gain a formidable reputation and ultimately increase financial returns for our stakeholders.”



The definition of a stakeholder is

“ An individual or group with an interest in the success of an organisation in delivering intended results and maintaining the viability of the organisation’s products and services.”



Stakeholders play a very important role within the organisations that they have an interest in. They influence programs, products and services. The stakeholder theory states that, for a firm to remain viable it needs to satisfy all stakeholder groups’ interests. The main stakeholders within Blue plc can be split into two different groups. These groups are internal and external stakeholders. Below is a table categorising the two groups and identifying which stakeholders belong to them.

INTERNAL STAKEHOLDERS EXTERNAL STAKEHOLDERS

Shareholders Customers

Company Directors Society

Managers Government

Employees Suppliers

As with all stakeholders, there will be conflict between the different stakeholder groups. For example, managers want the highest possible price to sell their goods in order to make a substantial profit, however consumers want value for money and therefore the lowest possible price.

The stakeholder theory suggests that when setting objectives, the needs of all stakeholders should be considered. Stakeholders vary in their own aims and in their relative importance and influence on the managers who set the objectives. This can lead to conflict of interest.

It is therefore important to realise what each of the different stakeholders expectations are. This will enable a coalition of all groups and provide a common goal amongst them.

The main interest for shareholders would be to get maximum and increasing profits year on year, therefore increasing the financial return that they would receive in dividends. As sales have stagnated in recent years for Blue plc, and the fact that profits have dropped £0.8 million from 001/00 to 00/00, the main expectation for shareholders is to see a rise in profits for the following year. It is up to management to regain the increase in profits and reassure shareholders that the fall is only temporary. If management fail to do this, then shareholders may opt to cash in their shares and remove their interest from the company. This would ultimately have drastic consequences for the company and it is their aim to prevent this.

Directors within the company will have a similar expectation to the shareholders. They will also be concerned with the fall in profits and it is their job to address why they are falling and how to deal with it. It is their duty to devise an action plan that will turnaround the fall in profits and regain an increase in the sales.

It is thought that expanding the company into the continental European market will be the best solution to increasing sales and profits for the company. However, it is believed that such an expansion would not be viable unless the company was able to double its sales and take advantage of economies of scale. It is therefore the Director’s duty to try and convince all stakeholders that expansion will secure the future of the company.

The managers within the company are basically there to ensure that the business ideas will work efficiently and to plan. For example, the plan to expand into the European market will have to be thought through very carefully and strategically, and it is the mangers’ jobs to ensure that this happens. Their expectations are generally the same as the Directors as the future of the company will also determine their own futures.

Employees within company should also fulfil their respective roles to their maximum potential in order to maintain an efficient running on the business. Their expectations of the company is synonymous to that of all internal stakeholders and how they perform their tasks will determine the successfulness of the business.

Business has always had a social dimension also. The concept is based on two key ideas- the moral and ethical responsibilities of businesses, and the benefits of enlightening self-interest. Society allows businesses to exist; therefore businesses have a moral obligation to give something back. Ethics is doing the right thing, but is doing the right thing for one however, the right thing for another? This is the main reason why Blue plc must develop a common interest and goal to both internal and external stakeholders. By keeping everyone happy, then the future of the business is promising. Expanding the business into the European market is in everyone’s best interests as it will bring the business to a new customer market and also increase the profits for the company.

In order to expand into the continental European market, there must be funds available to achieve this. It is generally a common thought that one must spend money in order to make money. Blue plc must raise the capital in order to expand into the foreign market which is estimated to be between £10 and £1 million. A very large and powerful company, for example Microsoft, would have no problem in finding the funds needed. However, for Blue plc, even though it is a profit making business, will need to find other sources of funding for the venture.

There are many sources of financial assistance available to the business. Below shows the main sources of funding that Blue plc could consider. They are split into public sector bodies that support local development and also private sector organisations.



Public Sector Bodies Private Organisations

Government Grants Banks

Increasing No. of Shareholders

Attract more Investors





Businesses looking to seek and obtain Government funding may encounter a number of difficulties. The reason being because the Government tend only to give funding to non-profit organisations for programs and services that benefit the community or the public at large. Companies also cannot apply for Government assistance whenever they please. They must wait until they are announced by a Government agency. However, there is Government agency in Northern Ireland that Blue plc could look to for financial assistance. This is Invest Northern Ireland, a public body that has replaced the Industrial Development Board for Northern Ireland (IDB). There are a number of services that it has to help a business achieve what it is set out to do. In relation to Blue plc, Invest NI would be a good source of financial assistance, however they may be unlikely to provide the capital that Blue plc is looking for, as they are already a considerable profit-making organisation.

Banks are probably the most popular sources of financial assistance for most companies. The reason being is because banks obviously have vast amounts of readily available funds. However, a bank will only provide funding to a business if it sees that it will be able to pay back the money in the future. This therefore means that companies who are looking to a bank for funding must be able to convince the bank that the capital will be used for a successful purpose and that they will be able to payback the interest rates that the bank charges. Interest repayments are one of the reasons why most companies would be put off in applying for a loan from a bank, especially when it is a large amount of money that Blue plc needs.

Another source of financial assistance is to increase the number of shareholders that the company has. One way of doing this is to inform all the current shareholders that the business is planning to extend the company into Europe, and if they invest in more shares, then they will receive a larger dividend in the future. Even though this is a very good way of raising Capital, it may not be enough and other financial assistance must be sought elsewhere.

In order to raise the necessary capital that Blue plc needs to expand into Europe, they must carefully investigate all the different sources available and work out which way is the most beneficial for them. Careful planning and efficient use of resources is the key to this, because if they get it wrong then the result could be detrimental to the business.

There are many factors that affect the location of industries worldwide. The main ones are listed below

Materials

Power Supplies

Transport

Markets

Labour Supply

In the 1th Century, industry tended to be located close to the raw materials that it needed. This was mainly due to the immobility of the raw materials, which were heavy to move due to expensive and inefficient transport. Nowadays, raw materials may be described as “footloose”, as an industry is rarely tied to the location of the raw materials. There is now greater efficiency in the use of raw materials as power is more mobile and transport networks have improved, as has technology. Industries that need to be located near to raw materials are those using materials which are heavy, bulky or perishable or which lose weight or bulk during the manufacturing process.

Early industry also tended to be located near power supplies. Then newer forms of power were introduced and the means of transporting it were made easier and cheaper. Therefore this locational factor has become less important.

Transport is obviously one of the main factors that an industry must consider when locating its business. There are a number things that influence an industry and its transport and the main one is cost. Cost is usually related to distance and the further an industry has to transport its’ goods, the more expensive it will be to do so. The infrastructure surrounding the industry must also be taken into consideration. If the transport networks are bad, then this will hinder and increase the cost of transporting goods.

One of the most important factors affecting the location of an industry is the pull factor of a market. Industries will locate near to a market if the product is bulky, as this will reduce cost of transporting it. Industries will consider a number of factors when locating near a market for example, are there many linkages involved in transporting the goods or does the product become more perishable after processing. Another factor is weather or not the market that it is locating near very large, or very wealthy.

The final factor affecting the location of an industry is the amount of labour supply in the area. Previously, labour was immobile and there were fewer semi-skilled workers. Nowadays there is an increase in the number of part-time workers and the availability of and skills of labour vary from place to place.

In relation to Blue plc, the advantages and disadvantages of different locations must be considered. It must be decided whether setting up industry in Northern Ireland, in the EU or in non-EU countries is beneficial to them.

Advantages for setting up industry in Northern Ireland

· Low rates of Inflation and taxation.

· Highly skilled workforce and more people opting to go onto higher education.

· There is a lot of Government support within Northern Ireland for businesses.

Disadvantages

· Cost of labour is relatively high than that of the EU.

· The location of Northern Ireland is relatively distant from the European markets. This therefore increases cost in transport.

· There is a limited source for raw materials and these often have to be transported from different countries, again increasing cost.

· There is still some political unrest within Northern Ireland and this can prevent businesses from setting up industry there. However it must be mentioned that the country has become a lot more stable over recent years and is becoming more attractive to certain industries.

Advantages of setting up industry in the EU

· The workforce in the EU is generally highly skilled.

· There is access to all the main markets for an industry in the EU. This will reduce the cost in transport and all countries within EU are interlinked.

· There is a lot of support from the EU towards industries within the community.

Disadvantages

· Labour is relatively high costing in most EU countries.

· There is a lot of competition within the EU for many businesses. This generally means it is very difficult to start up a new business within the EU, as the larger competition wipes them out.

Advantages of setting up industry in the EU

· The cost of labour is relatively cheaper than that of the EU

· Raw materials are usually more readily available than they are in the EU

Disadvantages

· There is political instability in many of the non-EU countries.

· Distant from the main European Markets.

· There is a lack of skilled labour and many do not continue into higher education.

· Many countries outside the EU are very poor and do not have the funds to provide decent infrastructure and services.

Blue plc must decide where to set up industry examination of the advantages and disadvantages of each location as has been done above is very important. The best location for the industry would be to set up in the European Union. The reason being is because if the company wants to expand into the EU then transporting costs would be reduced employing a local workforce would look good for the company. As there has been a little profit already generated from the EU, then this proves that setting up business there would be worthwhile.

The main objectives that a government has are to ensure that there is economic growth, low unemployment, balance of payments in equilibrium and low inflation. They achieve this by using two main tools, the Fiscal Policy and the Monetary Policy.

The Fiscal Policy

The Fiscal Policy is the Government spending and taxation for the specific purposes of stabilising the economy. If the Government increases spending then this represents an injection into the economy. Therefore National income will rise which could and most likely will lead to inflation. If the Government raise taxes, then this represents a withdrawal from the economy. National income will therefore fall and inflation will decrease. Governments may raise taxes as an anti-inflationary measure.

The Fiscal Policy can be used to reduce unemployment by creating jobs, but this also may prove inflationary. The policy should therefore be used with care, even when it is being used to create new jobs. It still remains a difficulty for the Government to maintain its aims simultaneously. In relation to Blue plc, the Fiscal policy can be a good or bad thing to the business. If the Government where to increase taxation, then people are going to have less money for luxury goods which is what Blue plc sells. This would cause a decrease in sales and therefore a decrease in profits.

The Monetary Policy

The Monetary policy is the regulation of the money supply and interest rates by the Government in order to control inflation and stabilize currency. If the economy is heating up, the Government can withdraw money from the banking system, raise the reserve requirement or raise the discount rate to make it cool down. If growth is slowing, the Government can reverse the process � increase the money supply, lower the reserve requirement and decrease the discount rate.

This will affect Blue plc just like the Fiscal Policy would. If interest rates are increased, public spending will decrease and so too will the companies profits.

Labour productivity is conventionally measured as the ratio of real output to labour input. Although this measure relates output to the number of employees, it does not measure the specific contribution of labour as a single factor of production. Rather, it reflects the joint effects of many influences, including new technology, capital investment, capacity utilisation, energy use, and managerial skills, as well as the efforts of the workforce.

Labour productivity index shows the rate of change in output per person engaged.

Labour Productivity Index = Production index x 100

Employment index

Blue plc management should plan and control production levels and labour productivity. Production levels may be raised by

· Getting employees to work overtime

· Hiring Extra Staff

· Sub-Contracting work to another firm

· Managing the workforce to achieve more output.

If Blue plc want the opposite effect and reduce production levels then they may do this by either cancelling all overtime or reducing the number of employees.

The economic arguments for the Euro are sub-divided into main groups transaction costs, trade competition and investment. Ultimately, abstaining from the Euro means higher costs (as far as transaction costs are concerned) than if we joined. The commissions involved in buying the Euro when trading with European countries will remain and the uncertainty arising from a floating exchange rate will also continue to be apparent. Whilst this is unlikely to make a significant difference for UK businesses buying continental European exports, it could well affect the number of UK exports being purchased by continental European companies. Basically, UK exports will be more expensive to Euro zone countries compared to exports of other Euro zone countries due to the changing cost of buying the pound. The UKs membership in the Euro zone would eliminate these costs. Trade competition refers to the fact that if exports from Euro zone countries are all priced in the same currency then it is easier for companies to see price differences between companies across borders, ultimately increasing competition between companies. In effect, with the lack of tariffs or quotas for import and export between Euro zone countries, it is almost like an integrated single European Economy as buying from a company in a fellow Euro zone country is exactly the same as buying from a company in your own country. This is called price transparency it will become far easier to compare prices across the markets of the Euro zone. The removal of transaction costs associated with exchanging currency has another effect. Intra-European investment flows would likely increase. This means that companies across the Euro zone would benefit from increased investment from other Euro zone countries.

For Blue plc, moving into the European market will therefore result in easier and more cost efficient trading with other EU markets. Exchange rates would also be wiped out as trading will be in the same currency. This would therefore attract more selling between each of the markets that it is interested in as raw material suppliers will not be put off trading with a business that uses the pound.

If Blue plc are wishing to expand their company into the European and possibly the worldwide markets, then they must consider all the economic factors that will face them. If they are operating within the UK alone then there is no problem, as they will be dealing with a single currency. However they will not see an increase in their profits if they do not expand. If they find after expansion that their main market is in Europe then it would be better off locating industry there and operating in a Euro zone. This would ease financial strain on them and other markets would look to them for trade as they deal with the same currency. For a company like Blue plc, expansion is only the naturally progression. The company is growing and expanding into Europe will only ensure that it remains that way. The company may also find that the next step after Europe will be the USA and that is where real power can be achieved. Dominating the worldwide market is the mission statement of Blue plc, as the only way forward is to broaden the companies horizons and expand into the International arena. Careful planning and management is essential for this to happen and tough decisions will have to be made in the near future. The existence of Blue plc is in the way expansion is dealt with and if it is done correctly, the future of the company is very bright.



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