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Encyclopedia of Management
6TH EDITION
Encyclopedia of Management
6TH EDITION
Encyclopedia of Management
6TH EDITION
 Encyclopedia of Management, 6th edition ª 2009 Gale, Cengage Learning

ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be
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Library of Congress Cataloging-in-Publication Data

Encyclopedia of management. -- 6th ed.

p. cm.
Includes bibliographical references and index.
ISBN 978-1-4144-0691-6 (hardcover)
1. Industrial management--Encyclopedias. I. Gale (Firm)

HD30.15.E49 2009
658.003--dc22 2008047144

Gale
27500 Drake Rd.
Farmington Hills, MI 48331-3535

ISBN-13: 978-1-4144-0691-6
ISBN-10: 1-4144-0691-6

This title is also available as an e-book.

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ISBN-10: 1-4144-3803-6
Contact your Gale sales representative for ordering information.

Printed in the United States of America

1 2 3 4 5 6 7 13 12 11 10 09
 Highlights

The 6th edition of the Encyclopedia of  Lean Manufacturing and Just- as graphics and statistics, the topics
Management (EoM) presents a com- in-Time Production covered in this volume are of both
pletely refreshed look at the vast and  Mission and Vision Statements current and enduring interest.
continually evolving field of manage-  Mobile Commerce
ment. Through 316 essays, readers  New Product Development
 Organization Theory ADDITIONAL FEATURES
will encounter thousands of terms,  New to the 6th edition, a man-
issues, and concepts such as:  Outsourcing and Offshoring
agement glossary consisting of over
 Pioneers of Management
 Angel Investors and Venture 200 management terms
 Privacy, Privacy Laws, and  Contents are arranged alphabeti-
Capitalists Workplace Privacy
 Apprenticeship Programs cally from A to Z in one volume
 Project Management  One comprehensive tiered index
 Benchmarking  Quality of Work Life simplifies accessibility
 Best Practices  Social Networking  Cross-references abound to help
 Coalition Building  Time-Based Competition readers locate information
 Consumer Behavior  Trends in Organizational Change  ‘‘Further Reading’’ sections pro-
 Corporate Social Responsibility  Virtual Corporations vide source suggestions for further
 Electronic Commerce  Web 2.0 study
 Environmentalism and  Women and Minorities in  Graphs, charts, and tables
Sustainability Management  Math formulas illustrate concepts
 Fuzzy Logic and models
The Encyclopedia of Management’s
 Globalization essays offer a unique starting point Composed by business writers,
 Hypothesis Testing for individuals seeking comprehensive EoM represents a substantial contribu-
 Innovation information that can’t be adequately tion to business and management refer-
 Intellectual Property Rights conveyed through brief dictionary-like ence. Students, scholars, and business
 International Management definitions. Placed into context, and practitioners alike will find a wealth of
 The Internet enhanced by background data as well information in this fully revised source.

V
 Contents

Preface and User’s Guide XIII Business Process Reengineering . . . . . . . . . . . . . . . . . . .55

Guide to Functional-Area Readings XVII Business Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Cafeteria Plan—Flexible Benefits . . . . . . . . . . . . . . . . .61
Glossary XXV Capacity Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Essay Titles, A-Z Case Method of Analysis. . . . . . . . . . . . . . . . . . . . . . . .64
Cash Flow Analysis and Statement . . . . . . . . . . . . . . . .66
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Cellular Manufacturing. . . . . . . . . . . . . . . . . . . . . . . . .69
Activity-Based Costing . . . . . . . . . . . . . . . . . . . . . . . . . .1 Change—Managing . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Affirmative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Change—Trends in Organizations . . . . . . . . . . . . . . . .75
Aggregate Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Chaos Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Angel Investors and Venture Closed Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Capitalists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Coalition Building . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
The Art and Science of Management . . . . . . . . . . . . . .10 Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Artificial Intelligence. . . . . . . . . . . . . . . . . . . . . . . . . . .15 Communities of Interest, Communities
Assessment Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 of Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
Autonomy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Competitive Advantage. . . . . . . . . . . . . . . . . . . . . . . . .90
B2B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Competitive Intelligence . . . . . . . . . . . . . . . . . . . . . . . .94
B2E Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Complexity Theory. . . . . . . . . . . . . . . . . . . . . . . . . . . .97
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Computer-Aided Design and Manufacturing . . . . . . .102
Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Computer-Aided Manufacturing. . . . . . . . . . . . . . . . .105
Bandwidth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Computer-Integrated Manufacturing . . . . . . . . . . . . .105
Bar Coding and Radio Computer Networks . . . . . . . . . . . . . . . . . . . . . . . . . .107
Frequency Identification . . . . . . . . . . . . . . . . . . . . . .34 Computer Security . . . . . . . . . . . . . . . . . . . . . . . . . . .113
Barriers to Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Concurrent Engineering and Design . . . . . . . . . . . . . .118
Bases of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 Conflict Management and Negotiation . . . . . . . . . . . .120
Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 Consulting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125
Best Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Consumer Behavior . . . . . . . . . . . . . . . . . . . . . . . . . .128
Black Friday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Content Management System . . . . . . . . . . . . . . . . . . .131
Brainstorming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Contingency Approach to Management . . . . . . . . . . .132
Break-Even Point . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Continuing Education and Lifelong Learning
Budgeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134
Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 Continuous Improvement. . . . . . . . . . . . . . . . . . . . . .138

VII
CONTENTS

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . .141 Expatriates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286

Corporate Social Responsibility. . . . . . . . . . . . . . . . . .144 Experience and Learning Curves . . . . . . . . . . . . . . . . .288
Cost Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .150 Expert Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .291
Culture—Organizational . . . . . . . . . . . . . . . . . . . . . .155 Exporting and Importing . . . . . . . . . . . . . . . . . . . . . .293
Customer Relationship Management . . . . . . . . . . . . .155 Facilitator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .299
Cycle Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 Feedback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .300
Data Processing and Data Management . . . . . . . . . . .161 Financial Issues for Managers . . . . . . . . . . . . . . . . . . .302
Debt vs. Equity Financing . . . . . . . . . . . . . . . . . . . . .165 Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . .305
Decision Rules and Decision Analysis . . . . . . . . . . . . .166 First-Mover Advantage . . . . . . . . . . . . . . . . . . . . . . . .310
Decision Support Systems. . . . . . . . . . . . . . . . . . . . . .172 Five S Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . .311
Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .177 Flexible Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312
Deregulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .180 Flexible Manufacturing. . . . . . . . . . . . . . . . . . . . . . . .313
Dictionary of Occupational Titles . . . . . . . . . . . . . . . .182 Flexible Spending Accounts . . . . . . . . . . . . . . . . . . . .316
Disaster Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . .182 Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .317
Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185 Franchising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322
Distribution and Distribution Requirements Free Trade Agreements and Trading Blocs . . . . . . . . .324
Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .326
Diversification Strategy . . . . . . . . . . . . . . . . . . . . . . . .194 Futuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .328
Diversity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 Fuzzy Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .330
Divestment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200 Gap Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .335
Domestic Management Societies Generic Competitive Strategies . . . . . . . . . . . . . . . . . .337
and Associations . . . . . . . . . . . . . . . . . . . . . . . . . . .201 Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .341
Downsizing and Rightsizing . . . . . . . . . . . . . . . . . . . .204 Goals and Goal Setting . . . . . . . . . . . . . . . . . . . . . . . .348
Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .208 Group Decision Making . . . . . . . . . . . . . . . . . . . . . . .352
EAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211 Group Dynamics . . . . . . . . . . . . . . . . . . . . . . . . . . . .354
E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211 Handheld Computers . . . . . . . . . . . . . . . . . . . . . . . . .359
Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211 Health Savings Accounts. . . . . . . . . . . . . . . . . . . . . . .361
Economies of Scale and Economies of Scope. . . . . . . .215 Human Resource Information Systems . . . . . . . . . . . .362
Effectiveness and Efficiency. . . . . . . . . . . . . . . . . . . . .217 Human Resource Management . . . . . . . . . . . . . . . . . .369
Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .220 Importing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .377
Electronic Commerce . . . . . . . . . . . . . . . . . . . . . . . . .220 Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .377
Electronic Data Interchange and Electronic Funds Industrial Relations. . . . . . . . . . . . . . . . . . . . . . . . . . .381
Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 Industry Life Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . .383
Electronic Funds Transfer . . . . . . . . . . . . . . . . . . . . . .227 Information Assurance . . . . . . . . . . . . . . . . . . . . . . . .383
Employee Assistance Programs . . . . . . . . . . . . . . . . . .227 Initial Public Offering. . . . . . . . . . . . . . . . . . . . . . . . .385
Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . .229 Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386
Employee Compensation . . . . . . . . . . . . . . . . . . . . . .233 Insider Trading. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .389
Employee Evaluation and Performance Instant Messaging . . . . . . . . . . . . . . . . . . . . . . . . . . . .391
Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240 Intellectual Property Rights. . . . . . . . . . . . . . . . . . . . .392
Employee Handbook and Orientation . . . . . . . . . . . .246 Internal Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . .394
Employee Recruitment Planning. . . . . . . . . . . . . . . . .250 International Business . . . . . . . . . . . . . . . . . . . . . . . . .396
Employee Screening and Selection . . . . . . . . . . . . . . .253 International Management . . . . . . . . . . . . . . . . . . . . .400
Employment Law and Compliance . . . . . . . . . . . . . . .258 International Management Societies
Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263 and Associations . . . . . . . . . . . . . . . . . . . . . . . . . . 406
Enterprise Resource Planning . . . . . . . . . . . . . . . . . . .266 International Monetary Fund . . . . . . . . . . . . . . . . . . .409
Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . .268 International Organization for
Environmentalism and Sustainability . . . . . . . . . . . . .271 Standardization . . . . . . . . . . . . . . . . . . . . . . . . . . . .412
Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273 The Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .415
European Union. . . . . . . . . . . . . . . . . . . . . . . . . . . . .278 Intrapreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419
Executive Compensation. . . . . . . . . . . . . . . . . . . . . . .282 Inventory Management. . . . . . . . . . . . . . . . . . . . . . . .421
Executive Development . . . . . . . . . . . . . . . . . . . . . . .285 Inventory Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . .425
Exit Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .285 IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .428

VIII ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 CONTENTS

Japanese Management. . . . . . . . . . . . . . . . . . . . . . . . .429 Microeconomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . .575

Job Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .435 Miles and Snow Typology . . . . . . . . . . . . . . . . . . . . .575
Joint Ventures and Strategic Alliances . . . . . . . . . . . . .439 MIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .574
Just-in-Time Production. . . . . . . . . . . . . . . . . . . . . . .441 Mission and Vision Statements . . . . . . . . . . . . . . . . . .577
Knowledge-Based View of the Firm . . . . . . . . . . . . . .443 Mobile Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . .582
Knowledge Centers. . . . . . . . . . . . . . . . . . . . . . . . . . .446 Models and Modeling. . . . . . . . . . . . . . . . . . . . . . . . .585
Knowledge Management . . . . . . . . . . . . . . . . . . . . . .447 Morale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .589
Knowledge Workers . . . . . . . . . . . . . . . . . . . . . . . . . .449 Motivation and Motivation Theory . . . . . . . . . . . . . .591
Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .455 Multimedia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .594
Leadership in Energy and Environmental Multinational Corporations . . . . . . . . . . . . . . . . . . . .596
Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .458 Multiple-Criteria Decision Making. . . . . . . . . . . . . . .600
Leadership Styles and Bases of Power . . . . . . . . . . . . .459 NAICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .605
Leadership Theories and Studies . . . . . . . . . . . . . . . . .462 Nanotechnology . . . . . . . . . . . . . . . . . . . . . . . . . . . . .605
Lean Manufacturing and Just-in-Time Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .610
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .467 Nepotism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .610
Leveraged Buyouts . . . . . . . . . . . . . . . . . . . . . . . . . . .472 New Product Development. . . . . . . . . . . . . . . . . . . . .612
Licensing and Licensing Agreements . . . . . . . . . . . . . .474 Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . .617
Lifelong Learning Trends . . . . . . . . . . . . . . . . . . . . . .476 Nonprofit Organizations. . . . . . . . . . . . . . . . . . . . . . .619
Line-and-Staff Organizations . . . . . . . . . . . . . . . . . . .476 Nonverbal Communication . . . . . . . . . . . . . . . . . . . .623
Location Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . .478 North American Industry Classification
Logistics and Transportation. . . . . . . . . . . . . . . . . . . .481 System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .627
Long Tail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .484 O*NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .629
Macroeconomics. . . . . . . . . . . . . . . . . . . . . . . . . . . . .489 Occupational Information Network . . . . . . . . . . . . . .629
Macroenvironmental Forces . . . . . . . . . . . . . . . . . . . .489 Offshoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .630
Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .494 Open and Closed Systems. . . . . . . . . . . . . . . . . . . . . .630
Make-or-Buy Decisions . . . . . . . . . . . . . . . . . . . . . . .499 Operant Conditioning . . . . . . . . . . . . . . . . . . . . . . . .632
Management: Art vs. Science . . . . . . . . . . . . . . . . . . .501 Operating Systems . . . . . . . . . . . . . . . . . . . . . . . . . . .634
Management Audit. . . . . . . . . . . . . . . . . . . . . . . . . . .501 Operations Management. . . . . . . . . . . . . . . . . . . . . . .636
Management Awards . . . . . . . . . . . . . . . . . . . . . . . . .504 Operations Scheduling . . . . . . . . . . . . . . . . . . . . . . . .638
Management Control . . . . . . . . . . . . . . . . . . . . . . . . .510 Operations Strategy . . . . . . . . . . . . . . . . . . . . . . . . . .641
Management and Executive Development. . . . . . . . . .513 Opportunity Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .645
Management Functions . . . . . . . . . . . . . . . . . . . . . . .517 Order-Qualifying Criteria. . . . . . . . . . . . . . . . . . . . . .646
Management Information Systems . . . . . . . . . . . . . . .520 Order-Winning and Order-Qualifying
Management Levels . . . . . . . . . . . . . . . . . . . . . . . . . .523 Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .646
Management Science . . . . . . . . . . . . . . . . . . . . . . . . .528 Organic Organizations . . . . . . . . . . . . . . . . . . . . . . . .648
Management Societies and Associations: Organization Theory . . . . . . . . . . . . . . . . . . . . . . . . .650
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .533 Organizational Analysis and Planning . . . . . . . . . . . . .652
Management Societies and Associations: Organizational Behavior . . . . . . . . . . . . . . . . . . . . . . .655
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533 Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . .657
Management Styles . . . . . . . . . . . . . . . . . . . . . . . . . . .533 Organizational Culture . . . . . . . . . . . . . . . . . . . . . . . .660
Management Thought . . . . . . . . . . . . . . . . . . . . . . . .536 Organizational Development . . . . . . . . . . . . . . . . . . .663
Managing Change . . . . . . . . . . . . . . . . . . . . . . . . . . .540 Organizational Learning . . . . . . . . . . . . . . . . . . . . . . .664
Manufacturing Control via the Internet . . . . . . . . . . .545 Organizational Structure. . . . . . . . . . . . . . . . . . . . . . .665
Manufacturing Resources Planning . . . . . . . . . . . . . . .548 Organizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .672
Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .551 Outsourcing and Offshoring . . . . . . . . . . . . . . . . . . . .674
Marketing Communication . . . . . . . . . . . . . . . . . . . .552 Paradigm Shift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .679
Marketing Concept and Philosophy . . . . . . . . . . . . . .558 Participative Management. . . . . . . . . . . . . . . . . . . . . .680
Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . .561 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . .682
Mechanistic Organizations . . . . . . . . . . . . . . . . . . . . .565 Paternalism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .685
Mentoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .566 Performance Appraisals. . . . . . . . . . . . . . . . . . . . . . . .686
Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . .570 Performance Measurement . . . . . . . . . . . . . . . . . . . . .686
Metadata or Meta-Analysis . . . . . . . . . . . . . . . . . . . . .574 Personality and Personality Tests. . . . . . . . . . . . . . . . .688

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION IX

CONTENTS

Pioneers of Management. . . . . . . . . . . . . . . . . . . . . . .693 Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .858

Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .699 Strategic Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . . .862
Poison Pill Strategies. . . . . . . . . . . . . . . . . . . . . . . . . .703 Strategic Integration . . . . . . . . . . . . . . . . . . . . . . . . . .862
Poka-Yoke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .705 Strategic Planning Failure . . . . . . . . . . . . . . . . . . . . . .863
Popular Press Management Books. . . . . . . . . . . . . . . .710 Strategic Planning Tools . . . . . . . . . . . . . . . . . . . . . . .869
Porter’s Five-Forces Model . . . . . . . . . . . . . . . . . . . . .714 Strategy Formulation . . . . . . . . . . . . . . . . . . . . . . . . .875
Pricing Policy and Strategy . . . . . . . . . . . . . . . . . . . . .717 Strategy in the Global Environment . . . . . . . . . . . . . .882
Privacy, Privacy Laws, and Workplace Privacy. . . . . . .720 Strategy Implementation. . . . . . . . . . . . . . . . . . . . . . .887
Problem Solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . .723 Strategy Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .892
Process Management . . . . . . . . . . . . . . . . . . . . . . . . .727 Stress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .898
Procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .733 Subject Matter Experts . . . . . . . . . . . . . . . . . . . . . . . .903
Product Design. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .733 Succession Planning . . . . . . . . . . . . . . . . . . . . . . . . . .905
Product Life Cycle and Industry Life Cycle . . . . . . . . .737 Sunshine Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .908
Product-Process Matrix. . . . . . . . . . . . . . . . . . . . . . . .743 Supply Chain Management . . . . . . . . . . . . . . . . . . . .909
Production Planning and Scheduling . . . . . . . . . . . . .747 Sweatshops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .912
Productivity Concepts and Measures. . . . . . . . . . . . . .749 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .915
Profit Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .753 Synergy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .918
Project Management. . . . . . . . . . . . . . . . . . . . . . . . . .754 Systems Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .919
Purchasing and Procurement . . . . . . . . . . . . . . . . . . .759 Systems Design. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .922
Quality Gurus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .765 Task Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .927
Quality and Total Quality Management . . . . . . . . . . .771 Teams and Teamwork . . . . . . . . . . . . . . . . . . . . . . . .929
Quality of Work Life . . . . . . . . . . . . . . . . . . . . . . . . .775 Technology Management . . . . . . . . . . . . . . . . . . . . . .934
Radio Frequency Identification . . . . . . . . . . . . . . . . . .779 Technology Transfer. . . . . . . . . . . . . . . . . . . . . . . . . .940
Reinforcement Theory . . . . . . . . . . . . . . . . . . . . . . . .779 Telecommunications. . . . . . . . . . . . . . . . . . . . . . . . . .946
Request for Proposal (RFP). . . . . . . . . . . . . . . . . . . . .781 Theory of Constraints. . . . . . . . . . . . . . . . . . . . . . . . .949
Research Methods and Processes . . . . . . . . . . . . . . . . .783 Theory X and Theory Y . . . . . . . . . . . . . . . . . . . . . . .954
Results-Only Work Environment . . . . . . . . . . . . . . . .789 Theory Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .957
Reverse Auction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .791 Time-Based Competition . . . . . . . . . . . . . . . . . . . . . .959
Reverse Supply Chain Logistics . . . . . . . . . . . . . . . . . .792 Time Management . . . . . . . . . . . . . . . . . . . . . . . . . . .962
Rightsizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .796 Total Quality Management. . . . . . . . . . . . . . . . . . . . .966
Risk Management. . . . . . . . . . . . . . . . . . . . . . . . . . . .796 Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .966
Robotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .799 Trading Blocs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .966
Safety in the Workplace . . . . . . . . . . . . . . . . . . . . . . .803 Training Delivery Methods. . . . . . . . . . . . . . . . . . . . .966
Sales Management . . . . . . . . . . . . . . . . . . . . . . . . . . .808 Transnational Organization . . . . . . . . . . . . . . . . . . . .973
Scalable Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . .811 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .975
Scenario Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . .812 Trends in Organizational Change . . . . . . . . . . . . . . . .975
Securities and Exchange Commission . . . . . . . . . . . . .814 Uniform Commercial Code . . . . . . . . . . . . . . . . . . . .981
Sensitivity Training. . . . . . . . . . . . . . . . . . . . . . . . . . .817 Upselling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .982
Service Factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .820 Utility Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .983
Service Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . .821 Value-Added Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .987
Service Operations . . . . . . . . . . . . . . . . . . . . . . . . . . .826 Value Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .991
Service-Oriented Architecture . . . . . . . . . . . . . . . . . . .830 Value-Chain Management . . . . . . . . . . . . . . . . . . . . .993
Service Process Matrix. . . . . . . . . . . . . . . . . . . . . . . . .833 Value Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .995
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .836 Vendor Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .996
Simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .841 Venture Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .999
Six Sigma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .844 Virtual Corporations. . . . . . . . . . . . . . . . . . . . . . . . .1001
Social Networking . . . . . . . . . . . . . . . . . . . . . . . . . . .844 Virtual Organizations . . . . . . . . . . . . . . . . . . . . . . . .1003
Span of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . .846 Vision Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .1007
Spirituality in Leadership . . . . . . . . . . . . . . . . . . . . . .847 Warehousing and Warehouse Management. . . . . . . .1009
Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .850 Web 2.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1011
Statistical Process Control and Six Sigma . . . . . . . . . .852 Whistleblower . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1012

X ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 CONTENTS

WiMax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1013
Women and Minorities in Management . . . . . . . . . .1014
World-Class Manufacturer . . . . . . . . . . . . . . . . . . . .1019
Zero-Based Budgeting . . . . . . . . . . . . . . . . . . . . . . .1023
Zero Sum Game . . . . . . . . . . . . . . . . . . . . . . . . . . . .1026

Index 1029

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION XI

 Preface and User’s Guide

PREFACE
The Encyclopedia of Management, 6th Edition is an alphabetical reference book covering a
comprehensive slate of management concepts. Last published in 2005, this fully revised work
represents the latest management theories and practices. Each essay has been revised and new
essays have been added to reflect the current state of management. The Encyclopedia’s essays
represent an authoritative treatment of the entire field of management, encompassing all the
current theories and functional areas of this vast and growing discipline. For the manage-
ment student, manager, business practitioner, reference librarian, or anyone interested in a
better understanding of a business management term or concept, the Encyclopedia should be
a first-stop for general information as well as a link to other management concepts, related
terms, references, and electronic databases and information sources. It is designed to be a
desk reference for everyday business management needs.
Still another use of the Encyclopedia is in a deeper understanding of one or more key
functional areas of management. By using the book as a systematic or a programmed reading
of entries in selected categories or cluster areas, the reader can obtain a more thorough, in-
depth understanding of key functional areas of management. By reading all the essays for the
terms under each heading in the ‘‘Guide to Functional Area Readings’’ (which is the entire
list of essays in the volume), individuals with a limited business background, a specialty in
another management functional area, or a liberal arts education background can have a
broad, general familiarity with the entire scope of the management discipline today in one
easy-to-use reference source.
The field of management is an extremely broad discipline that draws upon concepts and
ideas from the physical and social sciences, particularly mathematics, philosophy, sociology,
and psychology. Within business, the field of management includes terms and ideas also
common to marketing, economics, finance, insurance, transportation, accounting, compu-
ter technologies, information systems, engineering, and business law.
Management has applications in a wide variety of settings and is not limited to business
domains. Management tools, as well as the art and science of management, find applications
wherever any effort must be planned, organized, or controlled on a significant scale. This
includes applications in government, the cultural arts, sports, the military, medicine,
education, scientific research, religion, not-for-profit agencies, and in the wide variety of

XIII
PREFACE AND USER ’ S GUIDE

for-profit pursuits of service and manufacturing. Management takes appropriate advantage

of technical developments in all the fields it serves.
The growth of the discipline of management has also led to specialization or compart-
mentalization of the field. These specialties of management make learning and study easier,
but at the same time make broad understanding of management more difficult. It is
particularly challenging to the entrepreneur and the small business owner to master the
subject areas, yet this group is compelled to excel at all management functions to further their
business’s success. Management specialties have grown to such an extent it is difficult for any
single manager to fully know what management is all about. So rapid have been the strides in
recent years in such subjects as decision making, technology, the behavioral sciences,
management information systems, and the like, to say nothing of proliferating legislative
and governmental regulations affecting business, that constant study and education is
required of all managers just to keep current on the latest trends and techniques. Thus,
managers and executives need a comprehensive management desktop reference source to
keep up-to-date. Having the management essays in one comprehensive encyclopedia saves
valuable research time in locating the information.
In the growing age of specialists, there is a growing lack of generalists. Typically, a
business manager spends a large percentage of their career developing a great familiarity and
proficiency in a specialized field, such as sales, production, procurement, or accounting. The
manager develops a very specialized knowledge in this area but may develop only a peripheral
knowledge of advances in other areas of management. Yet as these individuals are promoted
from a specialist-type position up the organizational chart to a more administrative or
generalist supervisory or leadership position, the person with newly enlarged responsibilities
suddenly finds that their horizon must extend beyond the given specialty. It must now
include more than just a once-superficial understanding of all aspects of managing, including
purchasing, manufacturing, advertising and selling, international management, quantitative
techniques, human resources management, public relations, research and development,
strategic planning, and management information systems. The need for broader manage-
ment understanding and comprehension continues to increase as individuals are promoted.
The Encyclopedia of Management has had, as its goal, to bridge this gap in understanding
and to offer every executive, executive-aspirant, management consultant, and educator and
student of management, both comprehensive and authoritative information on all the
theories, concepts, and techniques that directly impact the job of management. Building
on the solid reputation established in prior editions, this thoroughly updated reference
source strives to make specialists aware of the other functional areas of the management
discipline and to give the top manager or administrator who occupies the general manager
position new insights into the work of the specialists whom he or she must manage or draw
upon in the successful management of others. In addition, the Encyclopedia proposes to make
all practitioners aware of the advances in management science and in the behavioral sciences.
These disciplines touch upon all areas of specialization because they concern the pervasive
problems of decision-making and interpersonal relations.

USER’S GUIDE AND COMPILATION

Reference, Plus a Planned Reading Program. The information in the Encyclopedia is
accessible in two forms. First, through the traditional A-to-Z compilation the reader readily
has the quick answer to an immediate question or concise background information on any
aspect of the field of management. As a handy desktop reference, the information is readily
accessible. Second, and of more lasting importance, as a planned reading program for pursuit
in depth of any of the functional areas of management—the reader’s own M.B.A., if you will.
This program is set forth in the Guide to Functional-Area Readings located at the end of the
frontmatter.
Cross-referencing and Special Features. The arrangement of the essays on a strictly alpha-
betical basis, rather than by subject categories, makes for extremely rapid and convenient

XIV ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 PREFACE AND USER ’ S GUIDE

information retrieval. At the same time, the extensive cross-referencing makes it easy to
pursue a major area of interest in any depth of study desired. ‘‘See-title’’ cross-references serve
to guide the reader directly toward the location of essays that may be recognized by more
than one commonly used term. (For example, upon turning to ‘‘E-commerce’’ the see-title
cross-reference would direct the reader to turn to ‘‘Electronic Commerce’’.)
Special features found within the essays include the following:
 ‘‘See Also’’ references, included at the end of many essays, refer the reader to further topics
of closely related interest.
 Charts, graphs, tables, and formulae are included as illustrative examples whenever
appropriate.
 Further Reading sections are included at the end of most entries. The bibliographic and
URL citations point the reader toward a variety of suggested online and published sources
for further study and research.
Glossary of Management Terms. This glossary defines over 200 management terms, includ-
ing financial, governmental and general business terms. Cross-references and acronyms are
also provided.
Index. Supporting the easy-to-use, extensive system of cross-references, is a comprehensive
index at the back of the Encyclopedia. The Index contains alphabetical references to the
following as mentioned in the essays: important or unusual terms; names of companies,
institutions, organizations, and associations; key governmental agencies; specific legislation;
relevant court cases; names of prominent or historical individuals; titles of groundbreaking
literature; and significant studies.
Comprehensive Coverage and Compilation Method. Every effort has been made to achieve
comprehensiveness in choice and coverage of subject matter. The 316 essays frequently go far
beyond mere definitions and referrals to other sources. They are in-depth treatments,
discussing background, subject areas, current applications, and schools of thought. In
addition, information may be provided about the kinds of specialists who use the term in
a given organization, the degree of current acceptance, and the possibilities for the future as
the subject undergoes further development and refinement. Longer essays frequently provide
charts, graphs, or examples to aid in understanding the topic.
The authors of all essays followed the editorial process specified for providing the reader
an initial overview of the topic followed by information on the variety of management
problems the information can be used to solve. Thus, if the reader has little knowledge of a
term, after referring to the Encyclopedia of Management, 6th Edition, he or she will be in
possession of the basics of the subject—objective, scope, implementation, current usage in
practice, and expected future usage. With this information, the reader will then be in a
position to ask the right kind of questions of specialists and technicians to make sure that the
firm (or department, or unit, or agency, etc.) is taking full advantage of the opportunity the
term presents.

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION XV

 Guide to Functional-Area Readings

Eighteen functional-area reading curricula Macroenvironmental Forces B2B

are outlined below. Items listed beneath each Make-or-Buy Decisions B2E Management
heading represent titles of specific essays in Manufacturing Resources Planning Balanced Scorecard
the EoM. Market Share Bar Coding and Radio Frequency
Mergers and Acquisitions Identification
1. CORPORATE PLANNING AND Miles and Snow Typology Business Process Reengineering
STRATEGIC MANAGEMENT
Multiple-Criteria Decision Making Cafeteria Plan—Flexible Benefits
Aggregate Planning New Product Development Cellular Manufacturing
B2B Open and Closed Systems Chaos Theory
B2E Management Operations Strategy Coalition Building
Barriers to Entry Opportunity Cost Communities of Interest/Communities
Best Practices Order-Winning and Order-Qualifying of Practice
Brainstorming Criteria Complexity Theory
Business Plan Porter’s Five Forces Model Concurrent Engineering and Design
Capacity Planning Product Life Cycle and Industry Life Consulting
Content Management System Cycle Contingency Approach to
Decision Rules and Decision Analysis Production Planning and Scheduling Management
Decision Support Systems Results-Only Work Environment Continuing Education and Lifelong
Diversification Strategy Strategic Integration Learning Trends
Divestment Strategic Planning Failure Corporate Governance
Downsizing and Rightsizing Strategic Planning Tools Corporate Social Responsibility
Economies of Scale and Economies of Strategy Formulation Customer Relationship
Scope Strategy Implementation Management
Environmentalism and Sustainability Strategy in the Global Environment Decision Support Systems
Exit Strategy Strategy Levels Diversity
Exporting and Importing SWOT Analysis Electronic Commerce
Franchising Synergy Electronic Data Interchange and
Free Trade Agreements and Trading Upselling Electronic Funds Transfer
Blocs Zero-Based Budgeting Empowerment
Futuring Enterprise Resource Planning
Gap Analysis 2. EMERGING TOPICS IN
Entrepreneurship
Generic Competitive Strategies MANAGEMENT Environmentalism and Sustainability
Globalization Ethics
Goals and Goal Setting Activity-Based Costing Expatriates
Group Decision Making Affirmative Action Expert Systems
Knowledge-Based View of the Firm Angel Investors and Venture Capitalists Five S Framework
Location Strategy Artificial Intelligence Flexible Spending Accounts
Long Tail Assessment Centers Futuring

XVII
GUIDE TO FUNCTIONAL - AREA READINGS

Handheld Computers Intellectual Property Rights Cost-Volume-Profit Analysis

Health Savings Accounts International Business Debt vs. Equity Financing
Human Resource Information Systems International Management Societies Domestic Management Societies and
Innovation and Associations Associations
Instant Messaging Intrapreneurship Due Diligence
Intellectual Property Rights Inventory Management Economics
Intrapreneurship Joint Ventures and Strategic Alliances Electronic Data Interchange and
Knowledge-Based View of the Firm Knowledge Management Electronic Funds Transfer
Leadership in Energy and Knowledge Workers Employee Benefits
Environmental Design Leveraged Buyouts Employee Compensation
Metadata or Meta-Analysis Licensing and Licensing Agreements Executive Compensation
Mobile Commerce Location Strategy Exit Strategy
Multiple-Criteria Decision Making Macroenvironmental Forces Financial Issues for Managers
Non-Compete Agreements Make-or-Buy Decisions Financial Ratios
Outsourcing and Offshoring Market Share Flexible Spending Accounts
Paradigm Shift Marketing Concept and Philosophy Health Savings Accounts
Popular Press Management Books Marketing Research Income Statements
Quality of Work Life Miles and Snow Typology Initial Public Offering
Results-Only Work Environment Mission and Vision Statements Insider Trading
Robotics New Product Development Internal Auditing
Social Networking Non-Compete Agreements International Management Societies
Spirituality in Leadership Organizational Development and Associations
Succession Planning Outsourcing and Offshoring International Monetary Fund
Telecommunications Patents and Trademarks Inventory Types
Vendor Rating Planning Leveraged Buyouts
Virtual Corporations Poison Pill Strategies Licensing and Licensing Agreements
Women and Minorities in Popular Press Management Books Long Tail
Management Porter’s Five Forces Model Make-or-Buy Decisions
Pricing Policy and Strategy Management Control
3. ENTREPRENEURSHIP Problem Solving Nonprofit Organizations
Process Management Opportunity Cost
Angel Investors and Venture Capitalists Product Design Patents and Trademarks
Balance Sheets Product Life Cycle and Industry Life Profit Sharing
Brainstorming Cycle Purchasing and Procurement
Break-Even Point Profit Sharing Risk Management
Budgeting Research Methods and Processes Securities and Exchange Commission
Business Plan Scenario Planning Stakeholders
Business Structure Securities and Exchange Commission Succession Planning
Cafeteria Plan—Flexible Benefits Shareholders Venture Capital
Case Method of Analysis Stakeholders Zero-Based Budgeting
Cash Flow Analysis and Statements Strategic Planning Tools
Competitive Advantage Strategy Levels 5. GENERAL MANAGEMENT
Consumer Behavior Succession Planning
Cost Accounting SWOT Analysis Aggregate Planning
Customer Relationship Management Synergy The Art and Science of
Diversification Strategy Technology Transfer Management
Domestic Management Societies and Value Creation Autonomy
Associations Venture Capital B2B
Due Diligence Virtual Organizations B2E Management
Economics Balanced Scorecard
Economies of Scale and Economies of 4. FINANCIAL MANAGEMENT Barriers to Entry
Scope AND ACCOUNTING ISSUES Best Practices
Effectiveness and Efficiency Activity-Based Costing Black Friday
Financial Issues for Managers Angel Investors and Venture Capitalists Brainstorming
Financial Ratios Balance Sheets Budgeting
First-Mover Advantage Balanced Scorecard Business Plan
Futuring Break-Even Point Business Structure
Gap Analysis Budgeting Communication
Generic Competitive Strategies Capacity Planning Competitive Advantage
Income Statements Cash Flow Analysis and Statements Competitive Intelligence
Initial Public Offering Corporate Social Responsibility Contingency Approach to
Innovation Cost Accounting Management

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 GUIDE TO FUNCTIONAL - AREA READINGS

Continuous Improvement Subject Matter Expert Social Networking

Corporate Governance Succession Planning Stress
Corporate Social Responsibility Training Delivery Methods Succession Planning
Delegation Trends in Organizational Change Sweatshops
Disaster Recovery Task Analysis
Diversity 6. HUMAN RESOURCES Teams and Teamwork
Divestment MANAGEMENT Theory X and Theory Y
Downsizing and Rightsizing Theory Z
Economics Affirmative Action Time Management
Effectiveness and Efficiency Artificial Intelligence Training Delivery Methods
Electronic Commerce Assessment Centers Virtual Organizations
Empowerment Autonomy Women and Minorities in
Financial Issues for Managers Nonverbal Communication Management
Financial Ratios Brainstorming
Forecasting Cafeteria Plan—Flexible Benefits 7. INNOVATION AND TECHNOLOGY
Generic Competitive Strategies Coalition Building
Globalization Communication Artificial Intelligence
Goals and Goal Setting Continuing Education and Lifelong Bandwidth
Human Resource Management Learning Trends Bar Coding and Radio Frequency
Innovation Discrimination Identification
International Management Diversity Communication
Knowledge-Based View of the Firm Downsizing and Rightsizing Competitive Intelligence
Knowledge Management Electronic Data Interchange and Complexity Theory
Leadership Styles and Bases of Power Electronic Funds Transfer Computer Networks
Leadership Theories and Studies Employee Assistance Programs Computer Security
Line-and-Staff Organizations Employee Benefits Computer-Aided Design and
Logistics and Transportation Employee Compensation Manufacturing
Management Control Employee Evaluation and Performance Computer-Integrated Manufacturing
Management Functions Appraisals Content Management System
Management Information Systems Employee Handbook and Orientation Data Processing and Data Management
Management Science Employee Recruitment Decision Rules and Decision Analysis
Management Styles Employee Screening and Selection Decision Support Systems
Management Thought Employment Law and Compliance Delegation
Managing Change Empowerment Electronic Commerce
Mission and Vision Statements Executive Compensation Electronic Data Interchange and
Motivation and Motivation Theory Flexible Spending Accounts Electronic Funds Transfer
Operations Management Group Dynamics Environmentalism and Sustainability
Organization Theory Health Savings Accounts Experience and Learning Curves
Organizational Analysis and Planning Human Resource Information Systems Expert Systems
Organizational Behavior Human Resource Management Forecasting
Organizational Chart Japanese Management Fuzzy Logic
Organizational Culture Job Analysis Handheld Computers
Organizational Learning Knowledge-Based View of the Firm Information Assurance
Organizational Structure Knowledge Workers Innovation
Organizational Development Mentoring The Internet
Organizing Morale Knowledge Centers
Paradigm Shift Motivation and Motivation Theory Knowledge Management
Participative Management Nepotism Knowledge Workers
Patents and Trademarks Non-Compete Agreements Leadership in Energy and
Paternalism Organizational Behavior Environmental Design
Pioneers of Management Organizational Chart Management Information Systems
Planning Organizational Culture Manufacturing Control via the Internet
Process Management Performance Measurement Metadata or Meta-Analysis
Quality and Total Quality Personality and Personality Tests Mobile Commerce
Management Privacy, Privacy Laws, and Workplace Nanotechnology
Request for Proposal/Quotation Privacy Product Design
Social Networking Quality of Work Life Project Management
Strategic Integration Reinforcement Theory Robotics
Strategy Formulation Results-Only Work Environment Service-Oriented Architecture
Strategy Implementation Safety in the Workplace Technology Management
Strategy in the Global Environment Scalable or JIT Workforce Technology Transfer
Strategy Levels Sensitivity Training Telecommunications

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GUIDE TO FUNCTIONAL - AREA READINGS

Virtual Corporations Joint Ventures and Strategic Alliances Human Resource Management
Virtual Organizations Knowledge Management Insider Trading
Web 2.0 Knowledge Workers Intellectual Property Rights
WiMax Leadership Styles and Bases of Power Job Analysis
Leadership Theories and Studies Leveraged Buyouts
8. INTERNATIONAL/GLOBAL Line-and-Staff Organizations Management Audit
MANAGEMENT Management and Executive Management Control
Development Mergers and Acquisitions
B2B Nepotism
Management Functions
Competitive Advantage Non-Compete Agreements
Management Levels
Diversity
Management Styles Patents and Trademarks
European Union
Management Thought Personality and Personality Tests
Expatriates
Managing Change Privacy, Privacy Laws, and Workplace
Exporting and Importing
Mechanistic Organizations Privacy
First-Mover Advantage
Mentoring Quality of Work Life
Franchising
Mission and Vision Statements Risk Management
Free Trade Agreements and Trading Blocs
Morale Safety in the Workplace
Futuring
Motivation and Motivation Theory Stress
Globalization
Open and Closed Systems Succession Planning
International Business
Operant Conditioning Sunshine Laws
International Management
Organizational Culture Sweatshops
International Management Societies
Paradigm Shift Technology Transfer
and Associations
Participative Management Whistle Blower
International Monetary Fund
Personality and Personality Tests Women and Minorities in Management
International Organization for Standards
Pioneers of Management
Japanese Management
Problem Solving 11. MANAGEMENT INFORMATION
Licensing and Licensing Agreements
Reinforcement Theory SYSTEMS
Location Strategy
Sensitivity Training
Macroenvironmental Forces Balanced Scorecard
Span of Control
Outsourcing and Offshoring Bandwidth
Spirituality in Leadership
Patents and Trademarks Bar Coding and Radio Frequency
Strategy Formulation
Popular Press Management Books Identification
Profit Sharing Succession Planning
Teams and Teamwork Barriers to Entry
Strategy in the Global Environment Complexity Theory
Sweatshops Theory X and Theory Y
Theory Z Computer Networks
Transnational Organization Computer Security
Value-Added Tax Women and Minorities in
Management Computer-Aided Design and
Vendor Rating Manufacturing
Virtual Organizations Computer-Integrated Manufacturing
World-Class Manufacturer 10. LEGAL ISSUES
Content Management System
Affirmative Action Data Processing and Data Management
9. LEADERSHIP
Cafeteria Plan—Flexible Benefits Decision Rules and Decision Analysis
The Art and Science of Management Computer Networks Decision Support Systems
Assessment Centers Computer Security Distribution and Distribution
Best Practices Corporate Governance Requirements Planning
Communication Corporate Social Responsibility Electronic Commerce
Contingency Approach to Discrimination Electronic Data Interchange and
Management Diversity Electronic Funds Transfer
Corporate Governance Downsizing and Rightsizing Handheld Computers
Corporate Social Responsibility Due Diligence Human Resource Information Systems
Delegation Electronic Data Interchange and Information Assurance
Domestic Management Societies and Electronic Funds Transfer The Internet
Associations Employee Assistance Programs Management Information Systems
Entrepreneurship Employee Benefits Management Science
Executive Compensation Employee Compensation Manufacturing Resources Planning
Expert Systems Employee Evaluation and Performance Metadata or Meta-Analysis
Goals and Goal Setting Appraisals Models and Modeling
Human Resource Management Employee Recruitment Multiple-Criteria Decision Making
International Management Societies Employee Screening and Selection Operating System
and Associations Employment Law and Compliance Operations Management
Japanese Management Ethics Operations Scheduling
Job Analysis Executive Compensation Scenario Planning

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 GUIDE TO FUNCTIONAL - AREA READINGS

Service-Oriented Architecture Balanced Scorecard Intrapreneurship

Statistical Process Control and Six Sigma Benchmarking Knowledge Workers
Systems Design, Development, and Best Practices Leadership Styles and Bases of Power
Implementation Break-Even Point Managing Change
Technology Management Budgeting Mentoring
Technology Transfer Cash Flow Analysis and Statements Morale
Continuous Improvement Motivation and Motivation Theory
12. MANAGEMENT SCIENCE AND
Cost Accounting Multimedia
OPERATIONS RESEARCH
Cost-Volume-Profit Analysis Organizing
Bar Coding and Radio Frequency Cycle Time Participative Management
Identification Debt vs. Equity Financing Personality and Personality Tests
Business Process Reengineering Due Diligence Planning
Computer-Aided Design and Effectiveness and Efficiency Popular Press Management Books
Manufacturing Executive Compensation Problem Solving
Concurrent Engineering and Design Financial Issues for Managers Profit Sharing
Decision Rules and Decision Analysis Financial Ratios Safety in the Workplace
Decision Support Systems Forecasting Sensitivity Training
Distribution and Distribution Gap Analysis Spirituality in Leadership
Requirements Planning Goals and Goal Setting Strategic Planning Tools
Expert Systems Management Audit Stress
Location Strategy Management Control Succession Planning
Logistics and Transportation Management Information Systems SWOT Analysis
Maintenance Market Share Teams and Teamwork
Make-or-Buy Decisions Multiple-Criteria Decision Making Time Management
Manufacturing Resources Planning Nepotism Trends in Organizational Change
Models and Modeling Order-Winning and Order-Qualifying Value Creation
Multiple-Criteria Decision Making Criteria
New Product Development Performance Measurement 15. PRODUCTION AND OPERATIONS
Operating System Pricing Policy and Strategy MANAGEMENT
Operations Management Profit Sharing
Operations Scheduling Simulation Activity-Based Costing
Operations Strategy Stakeholders Aggregate Planning
Product Design Value Analysis Bar Coding and Radio Frequency
Production Planning and Scheduling Value Chain Management Identification
Productivity Concepts and Measures Value Creation Benchmarking
Product-Process Matrix Vendor Rating Break-Even Point
Project Management Zero-Based Budgeting Business Process Reengineering
Purchasing and Procurement Zero Sum Game Cellular Manufacturing
Quality and Total Quality Computer-Aided Design and
Management Manufacturing
14. PERSONAL GROWTH AND
Research Methods and Processes Computer-Integrated Manufacturing
DEVELOPMENT FOR MANAGERS
Reverse Supply Chain Logistics Concurrent Engineering and Design
Scenario Planning The Art and Science of Management Continuous Improvement
Service Operations Brainstorming Cost-Volume-Profit Analysis
Service Process Matrix Coalition Building Decision Rules and Decision Analysis
Simulation Communication Decision Support Systems
Statistical Process Control and Consulting Distribution and Distribution
Six Sigma Contingency Approach to Requirements Planning
Statistics Management Domestic Management Societies and
Subject Matter Expert Continuing Education and Lifelong Associations
Systems Analysis Learning Trends Five S Framework
Systems Design, Development, and Continuous Improvement Flexible Manufacturing
Implementation Customer Relationship Management Forecasting
Technology Transfer Delegation Industrial Relations
Warehousing and Warehouse Diversity International Management Societies
Management Employee Assistance Programs and Associations
World-Class Manufacturer Empowerment Inventory Management
Entrepreneurship Inventory Types
13. PERFORMANCE MEASURES Facilitator Japanese Management
AND ASSESSMENT
Feedback Layout
Activity-Based Costing Goals and Goal Setting Lean Manufacturing and Just-in-Time
Balance Sheets Group Dynamics Production

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION XXI

GUIDE TO FUNCTIONAL - AREA READINGS

Location Strategy International Management Societies Logistics and Transportation

Logistics and Transportation and Associations Long Tail
Long Tail Japanese Management Make-or-Buy Decisions
Maintenance Management Awards Manufacturing Resources Planning
Make-or-Buy Decisions Manufacturing Resources Planning Market Share
Management Awards Marketing Research Multiple-Criteria Decision Making
Manufacturing Control via the Internet Operations Strategy New Product Development
Manufacturing Resources Planning Opportunity Cost Operations Management
Market Share Order-Winning and Order-Qualifying Operations Scheduling
New Product Development Criteria Operations Strategy
Operations Management Outsourcing and Offshoring Organic Organizations
Operations Scheduling Participative Management Organizing
Operations Strategy Popular Press Management Books Poka-Yoke
Order-Winning and Order-Qualifying Productivity Concepts and Measures Problem Solving
Criteria Quality Gurus Process Management
Outsourcing and Offshoring Quality and Total Quality Product Design
Participative Management Management Product Life Cycle and Industry Life
Poka-Yoke Quality of Work Life Cycle
Popular Press Management Books Statistical Process Control and Six Production Planning and Scheduling
Porter’s Five Forces Model Sigma Productivity Concepts and Measures
Production Planning and Scheduling Strategic Planning Tools Product-Process Matrix
Productivity Concepts and Measures Teams and Teamwork Purchasing and Procurement
Product-Process Matrix Value Analysis Quality and Total Quality
Project Management Value Creation Management
Purchasing and Procurement Vendor Rating Reverse Auction
Quality Gurus World-Class Manufacturer Reverse Supply Chain Logistics
Quality and Total Quality Risk Management
Management 17. SUPPLY CHAIN MANAGEMENT Span of Control
Reverse Supply Chain Logistics Stakeholders
Robotics Activity-Based Costing Teams and Teamwork
Safety in the Workplace Business Process Reengineering Vendor Rating
Scalable or JIT Workforce Capacity Planning Warehousing and Warehouse
Service Factory Cellular Manufacturing Management
Service Industry Coalition Building
Service Operations Communication 18. TRAINING AND DEVELOPMENT
Service Process Matrix Competitive Advantage
Simulation Competitive Intelligence Artificial Intelligence
Statistical Process Control and Six Sigma Computer Networks Assessment Centers
Statistics Computer-Integrated Manufacturing Autonomy
Strategic Integration Conflict Management and Negotiation Concurrent Engineering and Design
Supply Chain Management Customer Relationship Management Conflict Management and Negotiation
Synergy Cycle Time Consulting
Teams and Teamwork Decision Support Systems Contingency Approach to
Technology Management Distribution and Distribution Management
Technology Transfer Requirements Planning Continuing Education and Lifelong
Theory of Constraints Economies of Scale and Economies of Learning Trends
Time-Based Competition Scope Continuous Improvement
Upselling Effectiveness and Efficiency Corporate Social Responsibility
Warehousing and Warehouse Electronic Commerce Delegation
Management Electronic Data Interchange and Domestic Management Societies and
World-Class Manufacturer Electronic Funds Transfer Associations
Enterprise Resource Planning Downsizing and Rightsizing
16. QUALITY MANAGEMENT AND Expert Systems Employee Evaluation and Performance
TOTAL QUALITY MANAGEMENT Fulfillment Appraisals
Communication Group Dynamics Employee Handbook and Orientation
Customer Relationship Management Industrial Relations Goals and Goal Setting
Domestic Management Societies and Inventory Management Group Decision Making
Associations Inventory Types Human Resource Management
Five S Framework Joint Ventures and Strategic Alliances Innovation
Gap Analysis Lean Manufacturing and Just-in-Time Instant Messaging
Goals and Goal Setting Production International Management Societies
Innovation Location Strategy and Associations

XXII ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 GUIDE TO FUNCTIONAL - AREA READINGS

Job Analysis Multimedia Safety in the Workplace

Knowledge Management Multiple-Criteria Decision Sensitivity Training
Knowledge Workers Making Simulation
Management and Executive Organizational Culture Stress
Development Organizational Learning Succession Planning
Management Audit Organizing SWOT Analysis
Marketing Communication Participative Management Teams and Teamwork
Mission and Vision Statements Personality and Personality Tests Training Delivery Methods
Morale Popular Press Management Books Virtual Organizations
Motivation and Motivation Problem Solving Women and Minorities in
Theory Project Management Management

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION XXIII

 Glossary

Account statement: A record of transactions, including B2G: Business-to-government e-commerce.

payments, new debt, and deposits, incurred during a Balance Sheet: A financial statement listing the total assets
defined period of time. and liabilities of a company at a given time.
Accounting system: System capturing the costs of all employ- Bankruptcy: (See also Chapter 7 of the 1978 Bankruptcy Act;
ees and/or machinery included in business expenses. Chapter 11 of the 1978 Bankruptcy Act) The condition in
Accounts payable: See Trade credit which a business cannot meet its debt obligations and peti-
Accounts receivable: Unpaid accounts which arise from tions a federal district court either for reorganization of its
unsettled claims and transactions from the sale of a debts (Chapter 11) or for liquidation of its assets (Chapter 7).
company’s products or services to its customers. Barriers to Entry: Obstacles that make it difficult for a new
Advertising: A marketing tool used to capture public atten- company to compete against companies already estab-
tion and influence purchasing decisions for a product or lished in the industry. Examples of such obstatcles include
service. Utilizes various forms of media to generate con- patents, trademarks, copyrighted technology, and a domi-
sumer response, such as flyers, magazines, newspapers, nant brand.
radio, and television. Basic research: Theoretical scientific exploration not tar-
Age discrimination: The denial of the rights and privileges geted to application.
of employment based solely on the age of an individual. Benefit: Various services, such health care, flextime, day
Annual report: (See also Securities and Exchange Commis- care, insurance, and vacation, offered to employees as part
sion) Yearly financial report prepared by a business that of a hiring package. Typically subsidized in whole or in
adheres to the requirements set forth by the Securities part by the business.
and Exchange Commission (SEC). Billing cycle: A system designed to evenly distribute cus-
Applied research: Scientific study targeted for use in a tomer billing throughout the month, preventing clerical
product or process. backlogs.

Assets: Anything of value owned by a company. Brainstorming: A group session where employees contribute
their ideas for solving a problem or meeting a company
Audit: The verification of accounting records and business objective without fear of retribution or ridicule.
procedures conducted by an outside accounting service.
Brand name: The part of a brand, trademark, or service
Average cost: Total production costs divided by the quan- mark that can be spoken. It can be a word, letter, or group
tity produced. of words or letters.
B2B: Business-to-business e-commerce. Budget: An estimate of the spending necessary to complete
B2C: Business-to-consumer e-commerce. a project or offer a service in comparison to cash–on–

XXV
GLOSSARY

hand and expected earnings for the coming year, with an than goes out. A negative cash flow is when more goes
emphasis on cost control. out than comes in.
Business conditions: Outside factors that can affect the Champion: An advocate for the development of an
financial performance of a business. innovation.
Business cycle: A period of economic recession and recov- Channel of distribution: The means used to transport
ery. These cycles vary in duration. merchandise from the manufacturer to the consumer.
Business ethics: Moral values and principles espoused by Chapter 7 of the 1978 Bankruptcy Act: Provides for a
members of the business community as a guide to fair court–appointed trustee who is responsible for liquidating
and honest business practices. a company’s assets in order to settle outstanding debts.
Business license: A legal authorization issued by municipal Chapter 11 of the 1978 Bankruptcy Act: Allows the
and state governments and required for business operations. business owners to retain control of the company while
Business name: (See also Business license; Trademark) Enter- working with their creditors to reorganize their finances
prises must register their business names with local gov- and establish better business practices to prevent liqui-
ernments usually on a ‘‘doing business as’’ (DBA) form. dation of assets.
(This name is sometimes referred to as a ‘‘fictional Collateral: Securities, evidence of deposit, or other prop-
name.’’) The procedure is part of the business licensing erty pledged by a borrower to secure repayment of a loan.
process and prevents any other business from using that
same name for a similar business in the same locality. Commercialization: The final stage of the innovation
process, including production and distribution.
Business plan: A document that spells out a company’s
expected course of action for a specified period, usually Common stock: The most frequently used instrument for
including a detailed listing and analysis of risks and uncer- purchasing ownership in private or public companies.
tainties. For the small business, it should examine the Common stock generally carries the right to vote on
proposed products, the market, the industry, the manage- certain corporate actions and may pay dividends, although
ment policies, the marketing policies, production needs, it rarely does in venture investments. In liquidation, com-
and financial needs. Frequently, it is used as a prospectus mon stockholders are the last to share in the proceeds from
for potential investors and lenders. the sale of a corporation’s assets; bondholders and pre-
ferred shareholders have priority. Common stock is often
Capacity: Level of a firm’s, industry’s, or nation’s output used in first–round start–up financing.
corresponding to full practical utilization of available
resources. Competitor: A business whose product or service is mar-
keted for the same purpose/use and to the same con-
Capital: Assets less liabilities, representing the ownership sumer group as the product or service of another.
interest in a business. A stock of accumulated goods,
especially at a specified time and in contrast to income Continous Improvement Plan (CIP): A set of activities
received during a specified time period. Accumulated designed to bring gradual, but continual improvement
goods devoted to production. Accumulated possessions to a process through constant review. One of the best
calculated to bring income. known is The Shewhart Cycle.

Capital expenditure: Expenses incurred by a business for Copyright: A legal form of protection available to creators
improvements that will depreciate over time. and authors to safeguard their works from unlawful use or
claim of ownership by others. Copyrights may be acquired
Capital gain: The monetary difference between the pur- for works of art, sculpture, music, and published or
chase price and the selling price of capital. unpublished manuscripts. All copyrights should be regis-
Capital intensity: (See also Debt capital; Equity midrisk tered at the Copyright Office of the Library of Congress.
venture capital; Informal capital; Internal capital; Owner’s Corporate financial ratios: (See also Industry financial ratios).
capital; Secondhand capital; Seed capital; Venture capital) The relationship between key figures found in a company’s
The relative importance of capital in the production pro- financial statement expressed as a numeric value. Used to
cess, usually expressed as the ratio of capital to labor but evaluate risk and company performance. Also known as
also sometimes as the ratio of capital to output. Financial averages, Operating ratios, and Business ratios.
Capital resource: The equipment, facilities and labor used
Cost containment: Actions taken by employers and
to create products and services.
insurers to curtail rising health care costs; for example,
Cash flow: The movement of money into and out of a increasing employee cost sharing, requiring second opi-
company. A positive cash flow is when more comes in nions, or preadmission screening.

XXVI ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 GLOSSARY

Cross training: Training an employee in another activity depreciated the full value of all assets at their acquisition.
that is related to their current work. It is basically equivalent to the operating income line in
Customer service: Various techniques used to ensure the the income statements.
satisfaction of a customer. Economic efficiency: The use of productive resources to
Cyclical peak: The upper turning point in a business cycle. the fullest practical extent in the provision of the set of
goods and services that is most preferred by purchasers
Cyclical trough: The lower turning point in a business in the economy.
cycle.
Economic indicators: Statistics used to express the state of
Debt: (See also Long–term debt; Mid–term debt; Securitized the economy. These include the length of the average
debt; Short–term debt) Something owed by one person to work week, the rate of unemployment, and stock prices.
another. Financing in which a company receives capital
Employer identification number: The business equivalent
that must be repaid; no ownership is transferred.
of a social security number. Assigned by the U.S. Inter-
Debt capital: Business financing that normally requires nal Revenue Service.
periodic interest payments and repayment of the princi-
Equal Employment Opportunity Commission (EEOC):
pal within a specified time.
A federal agency that ensures nondiscrimination in the
Deming Cycle: A set of activities (Plan, Do, Check, Act) hiring and firing practices of a business.
designed to drive continuous improvement. Initially
Equal opportunity employer: An employer who adheres
implemented in manufacturing, it also applies to busi-
to the standards set by the Equal Employment Oppor-
ness. It was first developed by Walter Shewhart, however
tunity Commission.
is more commonly called the Deming Cycle in Japan
where it was popularized by Edwards Deming. Equity: (See also Common Stock; Equity midrisk venture capi-
tal) The ownership interest. Financing in which partial or
Demographics: Statistics on various markets, including
total ownership of a company is surrendered in exchange for
age, income, and education, used to target specific pro-
capital. An investor’s financial return comes from dividend
ducts or services to appropriate consumer groups.
payments and from growth in the net worth of the business.
Demonstration: Showing that a product or process has
Equity midrisk venture capital: An unsecured investment
been modified sufficiently to meet the needs of users.
in a company. Usually a purchase of ownership interest
Deregulation: The lifting of government restrictions; for in a company that occurs in the later stages of a com-
example, the lifting of government restrictions on the pany’s development.
entry of new businesses, the expansion of services, and
FASB: Financial Accounting Standards Board. The FASB
the setting of prices in particular industries.
was created in 1973, replacing the Accounting Principles
Discrimination: The denial of the rights and privileges of Board and the Committee on Accounting Procedure of
employment based on factors such as age, race, religion, the American Institute of Certified Public Accountants.
or gender.
Feasibility study: A study to determine the likelihood that
Diseconomies of scale: The condition in which the costs of a proposed product or development will fulfill the objec-
production increase faster than the volume of production. tives of a particular investor.
Distribution: Delivering a product or process to the user. Federal Trade Commission (FTC): Federal agency that
Distributor: One who delivers merchandise to the user. promotes free enterprise and competition within the U.S.

Diversified company: A company whose products and Federal Trade Mark Act of 1946: See Lanham Act.
services are used by several different markets. Financial analysis: The techniques used to determine
Dow Jones Industrial Average: An indicator of stock money needs in a business. Techniques include ratio ana-
market performance. lysis, calculation of return on investment, guides for mea-
suring profitability, and break–even analysis to determine
Earnings Statement: A standard financial document that is ultimate success.
a summary of a company’s revenue and expenses for a
specific period, usually one quarter of a fiscal year and Financial statement: A written record of business finances,
the entire fiscal year. including balance sheets and profit and loss statements.

EBITDA: Earnings before Interest, Tax, Depreciation and Fiscal year: Any twelve–month period used by businesses
Amortization. It reports what the company would have for accounting purposes.
earned during the period if it did not have to pay Flexible benefit plan: A plan that offers a choice among
interest on its debt, didn’t have to pay taxes, and had cash and/or qualified benefits such as group term life

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION XXVII

GLOSSARY

insurance, accident and health insurance, group legal is a hospital, skilled nursing facility, home health
services, dependent care assistance, and vacations. agency, or provider of certain physical therapy services.
Four Ps: Marketing terms: Product, Price, Place, and Human Resources Management: A business program
Promotion. designed to oversee recruiting, pay, benefits, and other
issues related to the company’s work force, including plan-
Free on board (FOB): A pricing term indicating that the
ning to determine the optimal use of labor to increase
quoted price includes the cost of loading goods into
production, thereby increasing profit.
transport vessels at a specified place.
Idea: An original concept for a new product or process.
FTC: See Federal Trade Commission.
Import: Products produced outside the country in which
Fulfillment: The systems necessary for accurate delivery of they are consumed.
an ordered item, including subscriptions and direct
marketing. Income: Money or its equivalent, earned or accrued,
resulting from the sale of goods and services.
Full–time workers: Generally, those who work a regular
schedule of more than 35 hours per week. Income statement: A financial statement that lists the
profits and losses of a company at a given time.
GAAP: Generally Accepted Accounting Principles. A set
of widely accepted accounting standards, set by the Industry financial ratios: (See also Corporate financial ratios)
FASB, and used to standardize financial accounting of Corporate financial ratios averaged for a specified indus-
public companies. try. These are used for comparison purposes and reveal
industry trends and identify differences between the
Garment registration number: A number that must performance of a specific company and the perfor-
appear on every garment sold in the U.S. to indicate mance of its industry. Also known as Industrial
the manufacturer of the garment, which may or may not averages, Industry ratios, Financial averages, and Busi-
be the same as the label under which the garment is sold. ness or Industrial norms.
The U.S. Federal Trade Commission assigns and regu-
Inflation: Increases in volume of currency and credit,
lates garment registration numbers.
generally resulting in a sharp and continuing rise in
GNP: See Gross national product. price levels.
Good Housekeeping Seal: Seal appearing on products that Informal capital: Financing from informal, unorganized
signifies the fulfillment of the standards set by the Good sources; includes informal debt capital such as trade
Housekeeping Institute to protect consumer interests. credit or loans from friends and relatives and equity
Goods sector: All businesses producing tangible goods, capital from informal investors.
including agriculture, mining, construction, and manu- Initial public offering (IPO): A corporation’s first offering
facturing businesses. of stock to the public.
GPO: See Gross product originating. Innovation: The introduction of a new idea into the
marketplace in the form of a new product or service or
Gross domestic product (GDP): The part of the nation’s
an improvement in organization or process.
gross national product generated by private business
using resources from within the country. Intellectual property: Any idea/work that can be consid-
ered proprietary in nature and thus protected from
Gross national product (GNP): The most comprehensive
infringement by others.
single measure of aggregate economic output. Repre-
sents the market value of the total output of goods and Internal capital: Debt or equity financing obtained from
services produced by a nation’s economy. the owner or through retained business earnings.
Gross product originating (GPO): A measure of business Invention: The tangible form of a technological idea,
output estimated from the income or production side which could include a laboratory prototype, drawings,
using employee compensation, profit income, net inter- formulas, etc.
est, capital consumption, and indirect business taxes. Job description: The duties and responsibilities required in
Health maintenance organization (HMO): Organization a particular position.
of physicians and other health care professionals that Job tenure: A period of time during which an individual is
provides health services to subscribers and their depen- continuously employed in the same job.
dents on a prepaid basis. Joint venture: Venture in which two or more people com-
Health provider: An individual or institution that gives bine efforts in a particular business enterprise, usually a
medical care. Under Medicare, an institutional provider single transaction or a limited activity, and agree to share

XXVIII ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 GLOSSARY

the profits and losses jointly or in proportion to their Market failure: The situation in which the workings of a
contributions. competitive market do not produce the best results from
the point of view of the entire society.
Keogh plan: Designed for self–employed persons and unin-
corporated businesses as a tax–deferred pension account. Market information: Data of any type that can be used for
market evaluation, which could include demographic
Labor force: Civilians considered eligible for employment
data, technology forecasting, regulatory changes, etc.
who are also willing and able to work.
Market research: A systematic collection, analysis, and report-
Labor force participation rate: The civilian labor force as a ing of data about the market and its preferences, opinions,
percentage of the civilian population. trends, and plans; used for corporate decision–making.
Labor intensity: (See also Capital intensity) The relative Market share: In a particular market, the percentage of
importance of labor in the production process, usually sales of a specific product.
measured as the capital–labor ratio; i.e., the ratio of units
Marketing: Promotion of goods or services through var-
of capital (typically, dollars of tangible assets) to the num-
ious media.
ber of employees. The higher the capital–labor ratio exhib-
ited by a firm or industry, the lower the capital intensity of Matrix Management: A style of management where an
that firm or industry is said to be. employee has two reporting bosses – one functional and
one operational.
Labor surplus area: An area in which there exists a high
unemployment rate. In procurement, extra points are Micro–efficiency: (See also Economic efficiency) Efficiency
given to firms in counties that are designated a labor as it pertains to the operation of individual firms.
surplus area; this information is requested on procure- Mid–term debt: An obligation that matures within one to
ment bid sheets. five years.
Labor union: An organization of similarly–skilled workers Minimum wage: The lowest hourly wage allowed by the
who collectively bargain with management over the federal government.
conditions of employment.
Multi–level marketing: A system of selling in which you
Lanham Act: Refers to the Federal Trade Mark Act of sign up other people to assist you, and they, in turn, recruit
1946. Protects registered trademarks, trade names, and others to help them. Some entrepreneurs have built suc-
other service marks used in commerce. cessful companies on this concept because the main focus
of their activities is their product and product sales.
Large business–dominated industry: Industry in which a
minimum of 60 percent of employment or sales is in NAFTA: See North American Free Trade Agreement.
firms with more than 500 workers. NASDAQ: See National Association of Securities Dealers
Leader pricing: A reduction in the price of a good or service Automated Quotations.
in order to generate more sales of that good or service. National Association of Securities Dealers Automated
Leveraged buy–out (LBO): The purchase of a business or Quotations: Provides price quotes on over–the–counter
a division of a corporation through a highly leveraged securities as well as securities listed on the New York
financing package. Stock Exchange.
National income: Aggregate earnings of labor and prop-
License: A legal agreement granting to another the right
erty arising from the production of goods and services in
to use a technological innovation.
a nation’s economy.
Liability: An obligation or duty to perform a service or an
Net assets: See Net worth.
act. Also defined as money owed.
Net income: The amount remaining from earnings and
Long–haul rates: Rates charged by a transporter in which profits after all expenses and costs have been met or
the distance traveled is more than 800 miles. deducted. Also known as Net earnings.
Long–term debt: An obligation that matures in a period Net profit: Money earned after production and overhead
that exceeds five years. expenses have been deducted.
Macro–efficiency: (See also Economic efficiency) Efficiency Net worth: (See also Capital) The difference between a
as it pertains to the operation of markets and market company’s total assets and its total liabilities.
systems.
New York Stock Exchange (NYSE): The oldest stock
Market evaluation: The use of market information to deter- exchange in the U.S. Allows for trading in stocks, bonds,
mine the sales potential of a specific product or process. warrants, options, and rights that meet listing requirements.

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION XXIX

GLOSSARY

Non-disclosure agreement: A legal contract that allows a Private placement: A method of raising capital by offering
company to share its intellectual property with others, whose for sale an investment or business to a small group of
input it needs, without jeopardizing that information. investors (generally avoiding registration with the Secu-
rities and Exchange Commission or state securities regis-
North American Free Trade Agreement (NAFTA):
tration agencies). Also known as Private financing or
Passed in 1993, NAFTA eliminates trade barriers among
Private offering.
businesses in the U.S., Canada, and Mexico.
Pro forma: The use of hypothetical figures in financial
NYSE: See New York Stock Exchange statements to represent future expenditures, debts, and
Occupational Safety & Health Administration (OSHA): other potential financial expenses.
Federal agency that regulates health and safety standards Proactive: Taking the initiative to solve problems and
within the workplace. anticipate future events before they happen, instead of
Organizational chart: A hierarchical chart tracking the reacting to an already existing problem or waiting for a
chain of command within an organization. difficult situation to occur.
Product development: The stage of the innovation process
Overhead: Expenses, such as employee benefits and build-
where research is translated into a product or process
ing utilities, incurred by a business that are unrelated to
through evaluation, adaptation, and demonstration.
the actual product or service sold.
Production: The manufacture of a product.
Owner’s capital: Debt or equity funds provided by the
owner(s) of a business; sources of owner’s capital are Profit and loss statement (P & L): The summary of the
personal savings, sales of assets, or loans from financial incomes and costs of a company’s operation during a
institutions. specific period of time. Also known as Income and
expense statement.
Part–time workers: Normally, those who work less than
35 hours per week. The Tax Reform Act indicated that Prototype: A model that demonstrates the validity of the
part–time workers who work less than 17.5 hours per concept of an invention (laboratory prototype); a model
week may be excluded from health plans for purposes of that meets the needs of the manufacturing process and
complying with federal nondiscrimination rules. the user (production prototype).
Prudent investor rule or standard: A legal doctrine that
Part–year workers: Those who work less than 50 weeks
requires fiduciaries to make investments using the pru-
per year.
dence, diligence, and intelligence that would be used by a
Partnership: Two or more parties who enter into a legal prudent person in making similar investments. Because
relationship to conduct business for profit. Defined by the fiduciaries make investments on behalf of third–party ben-
U.S. Internal Revenue Code as joint ventures, syndicates, eficiaries, the standard results in very conservative invest-
groups, pools, and other associations of two or more ments. Until recently, most state regulations required the
persons organized for profit that are not specifically classi- fiduciary to apply this standard to each investment. Newer,
fied in the IRS code as corporations or proprietorships. more progressive regulations permit fiduciaries to apply
this standard to the portfolio taken as a whole, thereby
Patent: A grant by the government assuring an inventor
allowing a fiduciary to balance a portfolio with higher–
the sole right to make, use, and sell an invention for a
yield, higher–risk investments. In states with more progres-
period of 17 years.
sive regulations, practically every type of security is eligible
Pension: A series of payments made monthly, semiannu- for inclusion in the portfolio of investments made by a
ally, annually, or at other specified intervals during the fiduciary, provided that the portfolio investments, in their
lifetime of the pensioner for distribution upon retire- totality, are those of a prudent person.
ment. The term is sometimes used to denote the portion Public equity markets: Organized markets for trading in
of the retirement allowance financed by the employer’s equity shares such as common stocks, preferred stocks,
contributions. and warrants. Includes markets for both regularly traded
Pension fund: A fund established to provide for the pay- and nonregularly traded securities.
ment of pension benefits; the collective contributions Public offering: General solicitation for participation in an
made by all of the parties to the pension plan. investment opportunity. Interstate public offerings are
Performance appraisal: An established set of objective supervised by the U.S. Securities and Exchange
criteria, based on job description and requirements, that Commission.
is used to evaluate the performance of an employee in a Quality control: The process by which a product is checked
specific job. and tested to ensure consistent standards of high quality.

XXX ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 GLOSSARY

Rate of return: The yield obtained on a security or other Seed capital: Venture financing provided in the early
investment based on its purchase price or its current stages of the innovation process, usually during product
market price. development.
Recession: Contraction of economic activity occurring Service sector: Broadly defined, all U.S. industries that
between the peak and trough of a business cycle. produce intangibles, including the five major industry
divisions of transportation, communications, and utili-
Regulated market: A market in which the government ties; wholesale trade; retail trade; finance, insurance, and
controls the forces of supply and demand, such as who real estate; and services.
may enter and what price may be charged.
Short–term debt: An obligation that matures in one year.
Research: The initial stage of the innovation process,
which includes idea generation and invention. Standard Industrial Classification (SIC) codes: Four–digit
codes established by the U.S. Federal Government to
Research and development financing: A tax–advantaged categorize businesses by type of economic activity; the first
partnership set up to finance product development for two digits correspond to major groups such as construc-
start–ups as well as more mature companies. tion and manufacturing, while the last two digits corre-
Resource realignment: The adjustment of productive spond to subgroups such as home construction or highway
resources to interindustry changes in demand. construction.
SWOT: Strengths, Weaknesses, Opportunities, and Threats.
Resources: The sources of support or help in the innova-
These factors provide a reference which an organization can
tion process, including sources of financing, technical
use to conduct an analysis of its operations.
evaluation, market evaluation, management and busi-
ness assistance, etc. Target market: The clients or customers sought for a
business’ product or service.
Retained business earnings: Business profits that are
retained by the business rather than being distributed Tax number: (See also Employer identification number) A
to the shareholders as dividends. number assigned to a business by a state revenue depart-
ment that enables the business to buy goods without
Revolving credit: An agreement with a lending institution paying sales tax.
for an amount of money, which cannot exceed a set
maximum, over a specified period of time. Each time Trade credit: Credit extended by suppliers of raw materials
the borrower repays a portion of the loan, the amount of or finished products. In an accounting statement, trade
the repayment may be borrowed yet again. credit is referred to as "accounts payable."
Trade secret: Competitive advantage gained by a business
Risk management: The act of identifying potential sources
through the use of a unique manufacturing process or
of financial loss and taking action to minimize their
formula.
negative impact.
Trademark: A graphic symbol, device, or slogan that iden-
Routing: The sequence of steps necessary to complete a
tifies a business. A business has property rights to its
product during production.
trademark from the inception of its use, but it is still
Scale economies: The decline of the production cost per prudent to register all trade marks with the Trademark
unit of output (average cost) as the volume of output Office of the U.S. Department of Commerce.
increases. Trend: A statistical measurement used to track changes
Scale efficiency: The reduction in unit cost available to a that occur over time.
firm when producing at a higher output volume. Unfair competition: Refers to business practices, usually
Secondary market: A market established for the purchase unethical, such as using unlicensed products, pirating
and sale of outstanding securities following their initial merchandise, or misleading the public through false adver-
distribution. tising, which give the offending business an unequitable
advantage over others.
Secondhand capital: Previously used and subsequently
resold capital equipment (e.g., buildings and machinery). Uniform Commercial Code (UCC): A code of laws gov-
erning commercial transactions across the U.S., except
Securities and Exchange Commission (SEC): Federal Louisiana. Their purpose is to bring uniformity to finan-
agency charged with regulating the trade of securities to cial transactions.
prevent unethical practices in the investor market.
Uniform product code (UPC symbol): A computer–read-
Securitized debt: A marketing technique that converts able label comprised of ten digits and stripes that encodes
long–term loans to marketable securities. what a product is and how much it costs. The first five

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION XXXI

GLOSSARY

digits are assigned by the Uniform Produce Code Council, Workers’ compensation: A state–mandated form of insur-
and the last five digits by the individual manufacturer. ance covering workers injured in job–related accidents.
Venture capital: (See also Equity; Equity midrisk venture In some states, the state is the insurer; in other states,
capital) Money used to support new or unusual business insurance must be acquired from commercial insurance
ventures that exhibit above–average growth rates, signif- firms. Insurance rates are based on a number of factors,
icant potential for market expansion, and are in need of including salaries, firm history, and risk of occupation.
additional financing to sustain growth or further Working capital: Refers to a firm’s short–term investment
research and development; equity or equity–type finan- of current assets, including cash, short–term securities,
cing traditionally provided at the commercialization accounts receivable, and inventories.
stage, increasingly available prior to commercialization. Yield: (See also Rate of return) The rate of income returned
Withholding: Federal, state, social security, and unemploy- on an investment, expressed as a percentage. Income
ment taxes withheld by the employer from employees’ yield is obtained by dividing the current dollar income
wages; employers are liable for these taxes and the corpo- by the current market price of the security. Net yield or
rate umbrella and bankruptcy will not exonerate an yield to maturity is the current income yield minus any
employer from paying back payroll withholding. Employ- premium above par or plus any discount from par in
ers should escrow these funds in a separate account and purchase price, with the adjustment spread over the
disperse them quarterly to withholding authorities. period from the date of purchase to the date of maturity.

XXXII ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

A
A

ACQUISITIONS WHAT IS ACTIVITY-BASED

COSTING?
SEE Mergers and Acquisitions
In contrast to traditional cost-accounting systems, ABC
systems first accumulate overhead costs for each organiza-
tional activity, and then assign the costs of the activities to
the products, services, or customers (cost objects) causing
ACTIVITY-BASED that activity. As one might expect, the most critical aspect
of ABC is activity analysis. Activity analysis is the proc-
COSTING esses of identifying appropriate output measures of activ-
To support compliance with financial reporting require- ities and resources (cost drivers) and their effects on the
ments, a company’s traditional cost-accounting system is costs of making a product or providing a service. Signifi-
often articulated with its general ledger system. In essence, cantly, as discussed in the next section, activity analysis
this linkage is grounded in cost allocation. Typically, costs provides the foundation for remedying the distortions
are allocated for either valuation purposes (i.e., financial inherent in traditional cost-accounting systems.
statements for external uses) or decision-making purposes
(i.e., internal uses) or both. However, in certain instances, TRADITIONAL COST-ACCOUNTING
costs are also allocated for cost-reimbursement purposes SYSTEMS VERSUS ABC
(e.g., hospitals and defense contractors). Geared toward compliance with financial reporting require-
The traditional approach to cost-allocation consists ments, traditional cost-accounting systems often allocate
of three basic steps: accumulate costs within a production costs based on single volume measures such as direct-labor
or nonproduction department; allocate nonproduction hours, direct-labor costs, or machine hours. While using a
department costs to production departments; and allocate single volume measure as an overall cost driver seldom meets
the resulting (revised) production department costs the cause-and-effect criterion desired in cost allocation, it
to various products, services, or customers. Costs derived provides a relatively cheap and convenient means of com-
from this traditional allocation approach suffer from plying with financial reporting requirements.
several defects that can result in distorted costs for In contrast to traditional cost-accounting systems,
decision-making purposes. For example, the traditional ABC systems are not inherently constrained by the tenets
approach allocates the cost of idle capacity to products. of financial reporting requirements. Rather, ABC systems
Accordingly, such products are charged for resources that have the inherent flexibility to provide special reports to
they did not use. Seeking to remedy such distortions, facilitate management decisions regarding the costs of
many companies have adopted a different cost-allocation activities undertaken to design, produce, sell, and deliver
approach called activity-based costing (ABC). a company’s products or services. At the heart of this

1
Activity-Based Costing

flexibility is the fact that ABC systems focus on accumulat- 3. Companies with inaccurate cost measurements tend
ing costs via several key activities, whereas traditional cost to lose bids because of over-costed products, incur
allocation focuses on accumulating costs via organizational hidden losses because of under-costed products, and
units. By focusing on specific activities, ABC systems fail to detect activities that are not cost-effective.
provide superior cost allocation information—especially 4. Because computer technology costs are decreasing,
when costs are caused by non-volume-based cost drivers. the price of developing and operating ABC systems
Even so, traditional cost-accounting systems will continue
also has decreased.
to be used to satisfy conventional financial reporting
requirements. ABC systems will continue to supplement, In 2004 John Karolefski cited the following benefits
rather than replace, traditional cost-accounting systems. realized by foodservice distributors and restaurants that
have converted to activity-based costing practices:
IMPLEMENTATION 1. Understanding the true costs and productivity of
In most cases, a company’s traditional cost-accounting capital equipment
system adequately measures the direct costs of products
2. Understanding which products are most profitable
and services, such as material and labor. As a result, ABC
and where to focus sales efforts
implementation typically focuses on indirect costs, such as
manufacturing overhead and selling, general, and admin- 3. More accurate pricing and determination of mini-
istrative costs. Given this focus, the primary goal of ABC mum order size
implementation is to reclassify most, if not all, indirect 4. Less time, money, and effort spent on the wrong
costs (as specified by the traditional cost-accounting sys- products
tem) as direct costs. As a result of these reclassifications,
the accuracy of the costs is greatly increased. Implementation costs are an obstacle to some, who
According to Ray H. Garrison and Eric W. Noreen, feel that ABC is just a fad or will show little benefit.
there are six basic steps required to implement an ABC According to Karolefski, ‘‘ABC works better if it’s kept
system: simple’’ (2004, p. 18). Nevertheless, when implemented
properly ABC yields benefits to the company, its business
1. Identify and define activities and activity pools partners, and to consumers. Conversely, in 2007, a mar-
2. Trace costs directly to activities (to the extent feasible) ket review of ABC and other management systems found
that it is poor implementation of the programs that often
3. Assign costs to activity cost pools leads to failure. The report cites short cuts and mistakes as
4. Calculate activity rates the reasons that ABC and related systems do not succeed.
5. Assign costs to cost objects using the activity rates
and activity measures previously determined ACTIVITY-BASED MANAGEMENT
6. Prepare and distribute management reports To manage costs, a manager should focus on the activities
that give rise to such costs. Accordingly, given the activity
focus of ABC, managers should implement ABC systems
COSTS AND BENEFITS to facilitate cost management. Using ABC systems to
While ABC systems are rather complex and costly to improve financial management is called activity-based
implement, Charles T. Horngren, Gary L. Sundem, and management (ABM). The goal of ABM is to improve
William O. Stratton suggest that many companies, in the value received by customers and, in doing so, to
both manufacturing and nonmanufacturing industries, improve profits.
are adopting ABC systems for a variety of reasons: The key to ABM success is distinguishing between
value-added costs and non-value-added costs. A value-
1. Margin accuracy for individual products and services,
added cost is the cost of an activity that cannot be
as well as customer classifications, is becoming increas-
eliminated without affecting a product’s value to the
ingly difficult to achieve given that direct labor is
customer. In contrast, a non-value-added cost is the cost
rapidly being replaced with automated equipment.
of an activity that can be eliminated without diminishing
Accordingly, a company’s shared costs (i.e., indirect
value. Some value-added costs are always necessary, as
costs) are becoming the most significant portion of long as the activity that drives such costs is performed
total cost. efficiently. However, non-value-added costs should always
2. Because the rapid pace of technological change con- be minimized because they are assumed to be unneces-
tinues to reduce product life cycles, companies do not sary. Examples of non-valued-added activities include
have time to make price or cost adjustments once storing and handling inventories; transporting raw mate-
costing errors are detected. rials or partly finished products, such as work-in-process

2 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 Affirmative Action

inventory items, from one part of the plant to another; ORIGINS AND DEVELOPMENT OF
and redundancies in production-line configurations or AFFIRMATIVE ACTION
other activities. Oftentimes, such non-value activities Although the roots of affirmative action in the United
can be reduced or eliminated by careful redesign of the States go back to the nineteenth century, modern affir-
plant layout and the production process. mative action plans originated with executive orders
SEE ALSO Cost Accounting; Inventory Management; issued by Presidents John F. Kennedy, Lyndon B. John-
Inventory Types; Process Management; Quality and son, and Richard M. Nixon in the 1960s. Executive
Total Quality Management; Time-Based Competition Order 11246, signed by President Johnson in 1965,
required government agencies, contractors, and subcon-
BIBLIOGRAPHY tractors to undertake affirmative action to remedy past
Actuate Corporation. ‘‘Scorecard Design and Implementation discrimination in education, training, and employment.
Best Practices’’ [Whitepaper] (June 2007). In 1969 President Nixon further strengthened affirmative
Brimson, James A. Activity Accounting: An Activity-Based Costing action through Executive Order 11478, which required
Approach. New York: Wiley, 1997. government contractors to develop goals for increasing the
Cokins, Gary. ‘‘ABC Can Spell a Simpler, Coherent View of representation of historically disadvantaged groups and
Costs.’’ Computing Canada 24, no. 32 (1998): 34–35. timetables for achieving them.
Cokins, Gary. ‘‘Why Is Traditional Accounting Failing
Managers?’’ Hospital Material Management Quarterly 20, no. 2 As amended in subsequent years, these executive
(1998): 72–80. orders eventually required all government agencies and
Daly, John L. Pricing for Profitability: Activity-Based Pricing for contractors with annual contracts of $10,000 or more to
Competitive Advantage. New York: Wiley, 2001. undertake affirmative action. They also required agencies
Dolan, Pat, and Karen I. Schreiber. ‘‘Getting Started With ABC.’’ and contractors with 50 employees and government busi-
Supply House Times 40, no. 4 (1997): 41–52. ness of $50,000 or more to have written affirmative action
Garrison, Ray H., and Eric W. Noreen. Managerial Accounting. plans. These written plans must include a utilization
9th ed. Boston: Irwin McGraw-Hill, 1999.
analysis, which compares the composition of the entity’s
Hicks, Douglas T. Activity-Based Costing: Making It Work for Small
workforce to the proportion of women and minorities in
and Mid-Sized Companies. 2nd ed. New York: Wiley, 2002.
Horngren, Charles T., Gary L. Sundem, and William O. Stratton.
the available labor market. If underutilization is found, the
Introduction to Management Accounting. 11th ed. Upper Saddle agency or contractor must set specific goals and timetables
River, NJ: Prentice Hall, 1999. for remedying the ‘‘imbalance’’ and develop specific plans
Karolefski, John. ‘‘Time Is Money: How Much Are Your for how this will be done. The use of affirmative action plans
Customers Costing You?’’ Food Logistics 18 (15 June 2004). expanded greatly in the twenty years after the executive
Lindahl, Frederick W. ‘‘Activity-Based Costing Implementation orders. Because most educational institutions and large
and Adaptation.’’ Human Resource Planning 20, no. 2 (1997): organizations receive money and/or do business with the
62–66. government, affirmative action plans are very common.

TYPES OF AFFIRMATIVE ACTION

AFFIRMATIVE ACTION In the employment context, affirmative action plans
Affirmative action is a descriptive phrase for policies and should be distinguished from equal employment oppor-
programs designed to correct the effects of past discrim- tunity (EEO) programs. EEO efforts focus on the process
ination and increase the representation of historically dis- involved in hiring and promoting employees and attempt
advantaged groups, including women and African to ensure that there is a level playing field for all involved.
Americans. Affirmative action plans exist in the private Conversely, affirmative action programs focus on the out-
and public sectors and involve the hiring of job appli- comes of recruiting, hiring, and promotion processes, and
cants, the selection of contractors for government proj- involve additional efforts to increase the proportion of
ects, and the admission of students to undergraduate and women and minorities that are hired and promoted.
graduate educational institutions. Some employers, educa- There are various types of affirmative action plans.
tional institutions, and government agencies are legally Some plans simply try to increase the number of applicants
required by executive order to have affirmative action from underrepresented groups. Such plans, which are
plans. Others may be ordered to develop affirmative sometimes called ‘‘pure’’ plans or ‘‘opportunity enhance-
action plans as part of a court finding that they have ment’’ plans, involve proactive efforts to locate and recruit
discriminated against individuals or groups. Still others a larger number of individuals from the affected groups.
voluntarily develop such plans because they believe it is Other affirmative action plans can be termed ‘‘limited
good public policy, or that it provides them with a com- preference’’ or ‘‘tiebreak’’ plans. They go a step further
petitive advantage. than pure affirmative action plans by considering race or

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION 3

Aggregate Planning

gender as a ‘‘plus’’ factor when evaluating the qualifications Initiative 200 (WA, 1998)
of applicants who essentially are equally qualified. Finally, Kovach, Kenneth A., David A. Kravitz, and Allen A. Hughes.
the most aggressive affirmative action plans are ‘‘strong ‘‘Affirmative Action: How Can We Be So Lost When We
Don’t Even Know Where We Are Going?’’ Labor Law Journal
preferential treatment’’ or ‘‘quota’’ plans. In these plans,
55, no. 1 (2004): 53–62.
qualified members of a disadvantaged group may be pre- Meredith v. Jefferson County Board of Education 2006.
ferred to more highly qualified individuals who are not in Naff, Katherine C. ‘‘From Bakke to Grutter and Gratz: The
the affected group. Generally speaking, the more aggressive Supreme Court as a Policymaking Institution.’’ The Review of
the affirmative action strategy employed, the more likely it Policy Research 21, no. 3 (2004): 405–427.
is to generate challenges and the more difficult it is to Office of Federal Contract Compliance Programs. U.S. Department
defend legally. of Labor, Employment Standards Administration, Office of
Federal Contract Compliance Programs. Available from:
Affirmative action plans are quite controversial and
http://www.dol.gov/esa/ofccp.
have been the subject of hundreds of lawsuits, several of Parents Involved in Community Schools v. Seattle School District No.
which have gone to the U.S. Supreme Court. Lawsuits 1 2007.
filed by those who believe they have been unfairly treated Proposal 2 (MI, 2006)
by affirmative action plans usually are called ‘‘reverse Proposition 209 (CA, 1996)
discrimination’’ lawsuits. Although the courts generally
have agreed that affirmative action is legal if it meets
certain criteria, court decisions in the 1990s and early
2000s seemed to reflect a trend toward restricting the AGGREGATE PLANNING
more aggressive types of affirmative action programs, Aggregate planning is the process of developing, analyz-
which may include preferences based on race or gender. ing, and maintaining a preliminary, approximate schedule
of the overall operations of an organization. The aggregate
MOVEMENT AWAY FROM plan generally contains targeted sales forecasts, production
AFFIRMATIVE ACTION levels, inventory levels, and customer backlogs. This
In 1996, Proposition 209 was passed into California state schedule is intended to satisfy the demand forecast at a
law. The ballot proposition amended the state Constitu- minimum cost. Properly done, aggregate planning should
tion to prohibit public institutions from taking into minimize the effects of shortsighted, day-to-day schedul-
consideration race, sex, or ethnicity. The ballot was spear- ing, in which an organization orders only small amounts
headed by the California Civil Rights Campaign and led of materials and must lay off workers one week, and the
by University of California Regent Ward Connerly. Two next week orders larger amounts and must rehire workers.
years later a Washington State Initiative was passed to bar This longer-term perspective on resource use can result in
any public institution from giving preferential treatment cost savings.
on the premise of race, sex, color, ethnicity, or national In simple terms, aggregate planning is an attempt to
origin in the operation of employment, education, or balance capacity and demand in such a way that costs are
contracting. The Michigan Civil Rights Initiative or Pro- minimized. The term ‘‘aggregate’’ is used because plan-
posal 2 was a similar ballot initiative passed into Michigan ning at this level includes all resources ‘‘in the aggregate,’’
Constitutional law in 2006. for example, as a product line or family. Aggregate resour-
In a landmark decision of the U.S. Supreme Court in ces could be total number of workers, hours of machine
2007, Parents Involved in Community Schools v. Seattle time, or tons of raw materials. Aggregate units of output
School District No. 1—together with Meredith v. Jefferson could include gallons, feet, pounds of output, as well as
County Board of Education—prohibited placing students aggregate units appearing in service industries such as
in public schools for the purpose of racial integration. hours of service delivered, number of patients seen, etc.
Furthermore, the court refused to recognize racial balanc- Some contend that an aggregate process is superior in
ing as a compelling state interest. today’s lean manufacturing and sales and operation
SEE A LS O Discrimination; Diversity (S&OP) environment, and that detailed long-term fore-
casts are no longer necessary. In 2007 Wallace and Stahl
BIBLIOGRAPHY (of the firm Supply Chain Consultant) noted that detailed
Gomez-Mejia, Luis R., David B. Balkin, and Robert L. Cardy. forecasts and plans are normally needed only within a
Managing Human Resources. 4th ed. Upper Saddle River, NJ: specific time-frame, and beyond that, forecasting is a poor
Pearson/Prentice Hall, 2004. use of a company’s resources.
Heilman, M.E., W.F. McCullough, and D. Gilbert. ‘‘The Other
Side of Affirmative Action: Reactions of Nonbeneficiaries to Aggregate planning does not distinguish among sizes,
Sex-Based Preferential Selection.’’ Journal of Applied Psychology colors, features, and so forth. For example, with automo-
81, no. 4 (1996): 346–357. bile manufacturing, aggregate planning would consider

4 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 Aggregate Planning

the total number of cars planned for, not the individual 1. Hire/lay off. By hiring additional workers as needed
models, colors, or options. When units of aggregation are or by laying off workers not currently required to
difficult to determine (for example, when the variation in meet demand, firms can maintain a balance between
output is extreme) equivalent units are usually deter- capacity and demand.
mined. These equivalent units could be based on value, 2. Overtime. By asking or requiring workers to work
cost, worker hours, or some similar measure. extra hours a day or an extra day per week, firms can
Aggregate planning is considered to be intermediate- create a temporary increase in capacity without the
term (as opposed to long- or short-term) in nature. Hence, added expense of hiring additional workers.
most aggregate plans cover a period of three to eighteen
3. Part-time or casual labor. By utilizing temporary
months. Aggregate plans serve as a foundation for future
workers or casual labor (workers who are considered
short-range type planning, such as production scheduling,
permanent but only work when needed, on an on-
sequencing, and loading. The master production schedule
call basis, and typically without the benefits given to
(MPS) used in material requirements planning (MRP) has
full-time workers) firms can alter capacity to match
been described as the aggregate plan ‘‘disaggregated.’’
fluctuations in demand.
Steps taken to produce an aggregate plan begin with the
determination of demand and the determination of current 4. Inventory. Finished-goods inventory can be built up
capacity. Capacity is expressed as total number of units per in periods of slack demand and then used to fill
time period that can be produced (this requires that an demand during periods of high demand. In this way
average number of units be computed since the total may no new workers have to be hired, no temporary or
include a product mix utilizing distinctly different produc- casual labor is needed, and no overtime is incurred.
tion times). Demand is expressed as total number of units 5. Subcontracting. Frequently firms choose to allow
needed. If the two are not in balance (equal), the firm must another manufacturer or service provider to provide
decide whether to increase or decrease capacity to meet the product or service to the subcontracting firm’s
demand, or increase or decrease demand to meet capacity. customers. By subcontracting work to an alternative
To accomplish this, a number of options are available. source, additional capacity is temporarily obtained.
Options for situations in which a firm needs to 6. Cross-training. Cross-trained employees may be able
increase or decrease demand to match capacity include: to perform tasks in several operations, creating some
1. Pricing. To increase demand in periods when flexibility when scheduling capacity.
demand is less than peak, a firm can vary pricing, for 7. Other methods. While varying workforce size and
example, by offering matinee prices for movie thea- utilization, inventory buildup/backlogging, and sub-
ters, off-season rates for hotels, weekend rates for contracting are well-known alternatives, there are
telephone service, and pricing for items that experi- other, more novel ways that find use in industry.
ence seasonal demand. Among these options are sharing employees with
2. Promotion. Through advertising, direct marketing, counter-cyclical companies and attempting to find
and other forms of promotion, a firm can shift interesting and meaningful projects for employees to
demand. do during slack times.

3. Back-ordering. By postponing delivery on current

AGGREGATE PLANNING
orders, demand is shifted to a period when capacity is
STRATEGIES
not fully utilized. This is really just a form of
smoothing demand. Service industries are able to There are two pure planning strategies available to the
smooth demand by taking reservations or by making aggregate planner: a level strategy and a chase strategy. Firms
appointments in an attempt to avoid walk-in cus- may choose to utilize one of the pure strategies in isolation,
tomers. Some refer to this as ‘‘partitioning’’ demand. or they may opt for a strategy that combines the two.
4. New demand creation. A new, but complementary
Level Strategy. A level strategy seeks to produce an aggre-
demand is created for a product or service. When
gate plan that maintains a steady production rate and/or a
restaurant customers have to wait, they are frequently
steady employment level. To satisfy changes in customer
diverted into a complementary (but not complimen-
demand, the firm must raise or lower inventory levels in
tary) service, the bar. Other examples include the
anticipation of increased or decreased levels of forecast
addition of video arcades within movie theaters, and
the expansion of services at convenience stores. demand. The firm maintains a level workforce and a
steady rate of output when demand is somewhat low.
Options which can be used to increase or decrease This allows the firm to establish higher inventory levels
capacity to match current demand include: than it currently needs. As demand increases, the firm is

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION 5

Aggregate Planning

able to continue a steady production rate/steady employ- 3. Identify company, departmental, or union policies
ment level, while allowing the inventory surplus to absorb that are pertinent, such as maintaining a certain safety
the increased demand. stock level or maintaining a reasonably stable work-
A second alternative would be to use a backlog or force. Other pertinent topics might include: backor-
backorder. A backorder is simply a promise to deliver the der policies, overtime policies, inventory level policies,
product at a later date when it is more readily available, and other less explicit rules such as the nature of
usually when capacity begins to catch up with diminish- employment with the individual industry, the possi-
ing demand. In essence, the backorder is a device for bility of a bad image, and the loss of goodwill.
moving demand from one period to another, preferably 4. Determine unit costs for units produced. These costs
one in which demand is lower, thereby smoothing typically include the basic production costs (fixed and
demand requirements over time. variable costs as well as direct and indirect labor
A level strategy allows a firm to maintain a constant costs). Also included are the costs associated with
level of output and still meet demand. This is desirable making changes in capacity. Inventory holding costs
from an employee-relations standpoint. Negative results must also be considered, as should storage, insurance,
taxes, spoilage, and obsolescence costs. Finally,
of the level strategy would include the cost of excess
backorder costs must be computed. While difficult to
inventory, subcontracting or overtime costs, and back-
measure, this generally includes expediting costs, loss
order costs, which typically are the cost of expediting
of customer goodwill, and revenue loss from can-
orders and the loss of customer goodwill.
celled orders.
5. Develop alternative plans and compute the cost for
Chase Strategy. A chase strategy implies matching demand
each.
and capacity period by period. This could result in a consid-
erable amount of hiring, firing, or laying off of employees; 6. If satisfactory plans emerge, select the one that best
insecure and unhappy employees; increased inventory carry- satisfies objectives. Frequently, this is the plan with
ing costs; problems with labor unions; and erratic utilization the least cost. Otherwise, return to step 5.
of plants and equipment. It also implies a great deal of
An example of a completed informal aggregate plan
flexibility on the firm’s part. The major advantage of a chase
strategy is that it allows inventory to be held to the lowest can be seen in Figure 1. It is an example of a plan
level possible, and for some firms this is a considerable sav- determined by utilizing a level strategy. Notice that
ings. Most firms embracing the just-in-time production con- employment levels and output levels remain constant
cept utilize a chase strategy approach to aggregate planning. while inventory is allowed to build up in earlier periods
only to be drawn back down in later periods as demand
Most firms find it advantageous to utilize a combi-
increases. Also, note that backorders are utilized in order
nation of the level and chase strategies. A combination
to avoid overtime or subcontracting. The computed costs
strategy (sometimes called a hybrid or mixed strategy) can
for the individual variables of the plan are as follows:
be found to better meet organizational goals and policies
and achieve lower costs than either of the pure strategies
used independently.
Output costs:
Regular time = $5 per unit
TECHNIQUES FOR AGGREGATE Overtime = $8 per unit
PLANNING Subcontracted = $12 per unit
Techniques for aggregate planning range from informal Other costs:
trial-and-error approaches, which usually utilize simple Inventory carrying cost = $3 per unit per
tables or graphs, to more formalized and advanced math- period applied to average inventory
ematical techniques. William Stevenson’s textbook Pro- Backorders = $10 per unit per period
duction/Operations Management contains an informal but Cost of aggregate plan utilizing a level strategy:
useful trial-and-error process for aggregate planning pre- Output costs:
sented in outline form. This general procedure consists of Regular time = $5 × 1,500 = $7,500
the following steps: Overtime = $8 × 0 = 0
Subcontracted = $10 × 0 = 0
1. Determine demand for each period. Other costs:
2. Determine capacity for each period. This capacity Inventory carrying cost = $3 × 850 = $2,400
should match demand, which means it may require Backorders = $10 × 100 = $1,000
the inclusion of overtime or subcontracting. Total Costs = $10,900

6 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 Aggregate Planning

Figure 1

Period 1 2 3 4 5 6
Forecast 100 150 300 300 500 150
Output
Regular 250 250 250 250 250 250
Overtime
Subcontract
Output- 150 100 -50 -50 -250 100
forecast
Inventory
Beginning 0 150 250 200 150 0
Ending 150 250 200 150 0 100
Average 75 200 225 175 75 50
Backlog 0 0 0 0 0 100 0

Cost of aggregate plan utilizing a level strategy:

Output:
Regular time = $5 X 1500 = $7,500
Overtime = $8 X 0 = 0
Subcontracted = $10 X 0 = 0
Inventory carrying cost = $3 X 850 = 2,550
Backorders = $10 X 100 = 1000
Total Cost $11,050

A second example, shown in Figure 2, presents the Linear Programming. Linear programming is an optimi-
same scenario as in Figure 1 but demonstrates the use of a zation technique that allows the user to find a maximum
combination strategy (i.e., a combination of level and profit or revenue or a minimum cost based on the avail-
chase strategies) to meet demand and seek to minimize ability of limited resources and certain limitations known
costs. For this example, let’s assume that company policy as constraints. A special type of linear programming known
prevents us from utilizing backorders and limits our plan as the Transportation Model can be used to obtain aggregate
to no more than 50 units of overtime per period. Notice plans that would allow balanced capacity and demand and
that the regular output level is constant, implying a level the minimization of costs. However, few real-world aggre-
workforce, while overtime and subcontracting are used to gate planning decisions are compatible with the linear
meet demand on a period-by-period basis (chase strategy). assumptions of linear programming. Supply Chain Manage-
One will notice that the cost of the combination plan is ment: Strategy, Planning and Operation, by Sunil Chopra
slightly lower than the cost of the level plan. and Peter Meindl, provides an excellent example of the use
of linear programming in aggregate planning.
Output costs:
Regular time = $5 × 1,200 = $6,000 Mixed-Integer Programming. For aggregate plans that
Overtime = $8 × 100 = 800 are prepared on a product family basis, where the plan is
Subcontracted = $12 × 250 = 3,000 essentially the summation of the plans for individual
Other costs: product lines, mixed-integer programming may prove to
Inventory carrying cost = $3 × 325 = 975 be useful. Mixed-integer programming can provide a
Backorders = $10 × 0 = 0 method for determining the number of units to be pro-
Total cost = $10,775 duced in each product family.

Linear Decision Rule. Linear decision rule is another

MATHEMATICAL APPROACHES optimizing technique. It seeks to minimize total produc-
TO AGGREGATE PLANNING tion costs (labor, overtime, hiring/lay off, inventory carry-
The following are some of the better known mathematical ing cost) using a set of cost-approximating functions
techniques that can be used in more complex aggregate (three of which are quadratic) to obtain a single quadratic
planning applications. equation. Then, by using calculus, two linear equations

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION 7

Aggregate Planning

Figure 2

Period 1 2 3 4 5 6
Forecast 100 150 300 300 500 150
Output
Regular 200 200 200 200 200 200
Overtime 50 50
Subcontract 250
Output- 100 50 -100 -50 0 50
forecast
Inventory
Beginning 0 100 150 50 0 0
Ending 100 150 50 0 0 50
Average 50 125 100 25 0 25
Backlog 0 0 0 0 0 0 0

Output:
Regular time = $5 X 1200 = $6,000
Overtime = $8 X 100 = 800
Subcontracted = $12 X 250 = 3,000
Inventory carrying cost = $3 X 325 = 975
Backorders = $10 X 0 = 0
Total Cost $10,775

can be derived from the quadratic equation, one to be general terms. It requires that a computer program be
used to plan the output for each period and the other for constructed that will unambiguously evaluate any produc-
planning the workforce for each period. tion plan’s cost. It then searches among alternative plans
for the one with the minimum cost. However, unlike
Management Coefficients Model. The management linear programming, there is no assurance of optimality.
coefficients model, formulated by E.H. Bowman, is based
on the suggestion that the production rate for any period Simulation. A number of simulation models can be used
would be set by this general decision rule: for aggregate planning. By developing an aggregate plan
within the environment of a simulation model, it can be
Pt = aWt-1 – bIt-1 + cFt+1 + K, where tested under a variety of conditions to find acceptable
Pt = the production rate set for period t plans for consideration. These models can also be incor-
Wt-1 = the workforce in the previous period porated into a decision support system, which can aid in
It-1 = the ending inventory for the previous period planning and evaluating alternative control policies. These
Ft+1 = the forecast of demand for the next period models can integrate the multiple conflicting objectives
a, b, c, and K are constants inherent in manufacturing strategy by using different
It then uses regression analysis to estimate the values quantitative measures of productivity, customer service,
of a, b, c, and K. The end result is a decision rule based on and flexibility.
past managerial behavior without any explicit cost func-
tions, the assumption being that managers know what is Functional Objective Search Approach. The functional
important, even if they cannot readily state explicit costs. objective search (FOS) system is a computerized aggregate
Essentially, this method supplements the application of planning system that incorporates a broad range of actual
experienced judgment. planning conditions. It is capable of realistic, low-cost
operating schedules that provide options for attaining
Search Decision Rule. The search decision rule method- different planning goals. The system works by comparing
ology overcomes some of the limitations of the linear the planning load with available capacity. After manage-
cost assumptions of linear programming. The search deci- ment has chosen its desired actions and associated plan-
sion rule allows the user to state cost data inputs in very ning objectives for specific load conditions, the system

8 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 Aggregate Planning

weights each planning goal to reflect the functional per hour would remain the same or even rise. Effective
emphasis behind its achievement at a certain load con- earnings could rise even more if the employer is unable to
dition. The computer then uses a computer search to consume all contracted hours. Employees have greater
output a plan that minimizes costs and meets delivery income security with no worries about layoffs. There is
deadlines. also increased morale because blue-collar workers are now
salaried. In a 2007 publication, authors Lusa, Corominas
Aggregate Planning in Services. For manufacturing firms and Pastor offer a practical approach to balancing AH
the luxury of building up inventories during periods of workers’ time, given their varied skill levels. Their pub-
slack demand allows coverage of an anticipated time when lication, ‘‘An exact procedure for planning holidays and
demand will exceed capacity. Services cannot be stock- working time under annualized hours considering cross-
piled or inventoried so they do not have this option. Also, trained workers with different efficiencies’’ attempts to
since services are considered ‘‘perishable,’’ any capacity bridge the gap between academic and realistic conversa-
that goes unused is essentially wasted. An empty hotel tions about AH.
room or an empty seat on a flight cannot be held and sold Another development affecting aggregate planning is
later, as can a manufactured item held in inventory. postponement. This refers to delaying the ‘‘finish’’ of a
Service capacity can also be very difficult to measure. product until the moment of sale. Firms that rely on the
When capacity is dictated somewhat by machine capabil- postponement strategy, such as PC-maker Dell, Inc., or
ity, reasonably accurate measures of capacity are not clothing franchise Benetton Group Sp.A., depend upon
extremely difficult to develop. However, services generally the availability of aggregate inventories of components
have variable processing requirements that make it diffi- that can be assembled to order shortly after, or even
cult to establish a suitable measure of capacity. immediately, as an order is taken. Dell’s process also
Historically, services are much more labor intensive illustrates a subcategory of postponement known as tail-
than manufacturing, where labor averages 10 percent (or ored business streams, in which similar items are segre-
less) of total cost. This labor intensity can actually be an gated into parallel tracks. In a tailored business stream, the
advantage because of the variety of service requirements manufacturer identifies common elements that unite a
an individual can handle. This can provide quite a degree bulk of its output. The easier, more predictable processes
of flexibility that can make aggregate planning easier for can be managed with the least expensive management
services than manufacturing. approach, while unpredictable elements are managed with a
more structured—and thus more expensive—infrastructure.
By keeping the processes separate, the company ensures that
Other Ideas in Aggregate Planning. Rudy Hung, in his resources are used efficiently. This process also includes
Production and Inventory Management Journal article titled an element of monitoring so that as pricing or market con-
‘‘Annualized Hours and Aggregate Planning,’’ presents a ditions change, the company can ensure that the processes
useful concept called Annualized Hours (AH). Under remain efficient.
AH, employees are contracted to work for a certain num-
ber of hours (say 1,800 hours) per year, for a certain sum SEE ALSO Capacity Planning; Planning; Simulation
of money. Employees can be asked to put in more hours
during busy periods and fewer hours in slow periods. BIBLIOGRAPHY
Typically, employees receive equal monthly or weekly Bliss, Christoph, Ronald Haddock, and Kaj Grichnik. ‘‘China’s
payments so that hourly workers in effect have gained Shifting Competitive Equation.’’ Strategy+Business 18 March
salaried status. Overtime is paid only when employees 2008. Available from: http://www.strategy-business.com/li/
have worked beyond their annual hours. leadingideas/li00067?pg=0.
AH is also known as flexiyear, as it can be seen as an Chopra, Sunil and Peter Meindl. Supply Chain Management:
Strategy, Planning, and Operation. Upper Saddle River, NJ:
extension of flextime, in which employees can vary their
Pearson Prentice Hall, 2004.
work hours within limits. This concept is used almost
Dejonckheere, J., S.M. Disney, M. Lambrecht, and D.R. Towill.
exclusively in Europe, particularly in the United King-
‘‘The Dynamics of Aggregate Planning.’’ Production Planning
dom. The Scandinavian pulp and paper industries pio- & Control 14, no. 6 (2003): 497–516.
neered AH in the mid-1970s. Around that time, some
Finch, Byron J. Operations Now. Boston: McGraw-Hill Irwin, 2004.
West German firms, particularly those in the retail indus-
Hung, Rudy. ‘‘Annualized Hours and Aggregate Planning.’’
try, also used AH.
Production and Inventory Management Journal 38, no. 4
AH gives employers much flexibility. AH serves to (1997).
cut labor costs by offering employees an annual sum less Iyer, Ananth V., Vinayak Deshpande, and Zhengping Wu. ‘‘A
than their previous annual earnings with overtime. Even Postponement Model for Demand Management.’’
though their total earnings may fall, their average earnings Management Science 49, no. 8 (2003): 983–1002.

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION 9

Angel Investors and Venture Capitalists

Lusa, Amaia, Albert Corominas, and Rafael Pastor. ‘‘An exact According to the Center for Venture Research, market
procedure for planning holidays and working time under conditions and the capital gap between the upper range of
annualized hours considering cross-trained workers with angel investment and the lower end of VC financing have
different efficiencies.’’ International Journal of Production required angels to invest in later-stage businesses. In
Research 46, no. 8 (2008): 2123–2142.
2007, 35 percent of angel funding was given to businesses
Moeller, Leslie, Matthew Egol, and Karla Martin. ‘‘Smart
Customization: Profitable Growth Through Tailored Business in the expansion stage.
Streams’’. Strategy+Business. November 2003. Available from:
http://www.strategy-business.com/resiliencereport/resilience/ ANGEL GROUPS
rr00001?pg=0. Angel Groups are formed when a number of private
Stahl, Bob, and Tom Wallace. ‘‘Forecast Less and Get Better
investors wish to pool their resources to invest collectively
Results’’. September, 2007. Available from: http://www.
supplychain.com/downloads/Forecast_Less_and_Get_Better_ in companies. These groups meet to review proposals
Results.pdf. from businesses seeking funding and conduct ‘‘due dili-
Stevenson, William J. Production Operations Management. Boston: gence’’ to decide whether to invest in a firm. Angel groups
McGraw-Hill Irwin, 2004. are usually made up of 10 to 150 accredited investors. As
of 2008, there are over 300 of these groups.

VENTURE CAPITALISTS
ANGEL INVESTORS AND Venture capital is a form of private equity invested in
VENTURE CAPITALISTS companies in exchange for convertible debt of ownership
Angel investors and venture capitalists (VCs) are two equity with the intention of taking the business public.
sources of funding for businesses. Both angels and VCs Venture capitalists are fund managers who invest capital
invest in entrepreneurial firms in exchange for an equity pooled from third-party investors in high-risk companies
share in the business. An angel is a high-net-worth indi- with the potential for high returns. The third-party
investors are made up of wealthy investors and financial
vidual who invests his or her own capital in a company,
institutions. VCs tend to fund enterprises that are too
where a venture capitalist manages a fund of pooled money
risky for bank loans or the standard capital markets. For
from other sources (such as pension funds and insurance
this reason, many new companies with a limited operating
companies). Angel investors tend to inject start-up capital
history seek venture capital, because they cannot obtain
into a company’s seed round of investment, where
funding through a debt issue. One disadvantage for entre-
VCs generally invest in later-stage companies. Typically, preneurs who are funded by venture capital is the VCs
VCs invest $2,000,000 or more in a financing round and usually get a say in company decisions.
angels invest amounts in the $5,000 to $100,000 range.
The Angel Capital Report by the Center for Venture BIBLIOGRAPHY
Research found that venture capitalists invested $29.4 ‘‘For Entrepreneurs.’’ Angel Capital Education Foundation March,
billion in 3,814 companies in 2007. By comparison, 2007. Available from: http://www.angelcapitaleducation.org/
angels invested $26 billion in 57,120 companies. dir_resources/for_entrepreneurs.aspx.
Sohl, Jeffrey. ‘‘2007 Angel Market Analysis.’’ Center for Venture
Research. Available from: http://www.wsbe.unh.edu/files/
ANGEL INVESTORS 2007%20Media%20Release%20-%20Lori%20Wright.pdf.
Typically, angel investors are former entrepreneurs who U.S. Small Business Administration. ‘‘Finance Start-up.’’ Small
Business Planner April, 2008. Available from: http://
have retired on profit they earned from starting up suc- www.sba.gov/smallbusinessplanner/start/financestartup/
cessful businesses. Angels tend to seek active involvement SBA_INVPROG.html.
in the companies they fund. Angel investments are usually ‘‘Venture Capital Performance Outpaced the Public Markets
very high risk because many are lost when start-up com- Across Most Time Horizons in Fourth Quarter 2007.’’
panies fail—in 2007, 27 percent of angel investment exits National Venture Capital Association and Thomson Reuters
were accounted for by bankruptcies. Thus, businesses April, 2008. Available from: http://www.nvca.org/pdf/
funded by angels must have the potential to return ten Q407PerformanceReleaseFINAL.pdf.
or more times the original investment within five years
through an exit strategy such as a sale or an initial public
offering (IPO). In 2007, mergers and acquisitions
accounted for 65 percent of angel exits and IPOs repre- THE ART AND SCIENCE
sented 4 percent. OF MANAGEMENT
Angel investment is the largest source of seed capital One of the enduring questions in the field of manage-
available in the United States. In 2007, 39 percent of ment is whether management is an art or a science.
investments made by angels were in the start-up stage. Webster’s College Dictionary defines an art as ‘‘skill in

10 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 The Art and Science of Management

conducting any human activity’’ and science as ‘‘any skill

or technique that reflects a precise application of facts or a Exhibit 1
principle.’’ Reflected in the differences in these definitions Frederick W. Taylor’s Principles of
is the use of precision in science, in that there is a partic- Scientific Management
ular, prescribed way in which a manager should act. Thus,
1. Managers must study the way that workers perform their tasks and
management as a science would indicate that in practice, understand the job knowledge (formal and informal) that workers have,
managers use a specific body of information and facts to then find ways to improve how tasks are performed.
guide their behaviors, but that management as an art 2. Managers must codify new methods of performing tasks into written
requires no specific body of knowledge, only skill. work rules and standard operating procedures.
3. Managers should hire workers who have skills and abilities needed for
Conversely, those who believe management is an art the tasks to be completed, and should train them to perform the tasks
are likely to believe that there is no specific way to teach according to the established procedures.
or understand management, and that it is a skill borne of 4. Managers must establish a level of performance for the task that is
acceptable and fair and should link it to a pay system that rewards
personality and ability. Those who believe in management workers who perform above the acceptable level.
as an art are likely to believe that certain people are more
predisposed to be effective managers than are others, and
that some people cannot be taught to be effective manag-
ers. That is, even with an understanding of management FOUNDATIONS OF MANAGEMENT
research and an education in management, some people AS AN ART PERSPECTIVE
will not be capable of being effective practicing managers. Practicing managers who believe in management as an art
are unlikely to believe that scientific principles and theo-
FOUNDATIONS OF THE ries will be able to be implemented in actual managerial
MANAGEMENT AS A SCIENCE situations. Instead, these managers are likely to rely on the
PERSPECTIVE social and political environment surrounding the mana-
Practicing managers who believe in management as a gerial issue, using their own knowledge of a situation
science are likely to believe that there are ideal managerial rather than generic rules to determine a course of action.
practices for certain situations. That is, when faced with a For example, as a contrast to the example given pre-
managerial dilemma, the manager who believes in the viously, a manager who has a problem with an employee’s
scientific foundation of his or her craft will expect that poor work performance is likely to rely on his or her own
there is a rational and objective way to determine the experiences and judgment when addressing this issue.
correct course of action. Rather than having a standard response to such a problem,
This manager is likely to follow general principles this manager is likely to consider a broad range of social
and theories and also by creating and testing hypotheses. and political factors and is likely to take different actions
For instance, if a manager has a problem with an employ- depending on the context of the problem.
ee’s poor work performance, the manager will look to Henry Mintzberg is probably the most well-known
specific means of performance improvement, expecting and prominent advocate of the school of thought
that certain principles will work in most situations. He that management is an art. Mintzberg is an academic
or she may rely on concepts learned in business school or researcher whose work capturing the actual daily tasks of
through a company training program when determining a real managers was groundbreaking research for its time.
course of action, perhaps paying less attention to political Mintzberg, through his observation of actual managers
and social factors involved in the situation. in their daily work, determined that managers did not
Many early management researchers subscribed to sit at their desks, thinking, evaluating, and deciding all
the vision of managers as scientists. The scientific manage- day long, working for long, uninterrupted time periods.
ment movement was the primary driver of this perspective. Rather, Mintzberg determined that managers engaged in
Scientific management, pioneered by Frederick W. Taylor, very fragmented work, with constant interruptions and rare
Frank and Lillian Gilbreth, and others, attempted to opportunities to quietly consider managerial issues. Thus,
discover ‘‘the one best way’’ to perform jobs. They used Mintzberg revolutionized thinking about managers at the
scientific processes to evaluate and organize work so that it time that his work was published, challenging the prior
became more efficient and effective. Scientific manage- notion that managers behaved rationally and methodically.
ment’s emphasis on both reducing inefficiencies and on This was in line with the perspective of management as an
understanding the psychology of workers changed man- art, because it indicated that managers did not necessarily
ager and employee attitudes towards the practice of man- have routine behaviors throughout their days, but instead
agement. See Exhibit 1 for a summary of the principles of used their own social and political skills to solve problems
scientific management. that arose throughout the course of work.

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION 11

The Art and Science of Management

Another scholar that promoted the notion of man- young when compared to other fields of research (e.g., in
agement as an art was David E. Lilienthal, who in 1967 the physical sciences). In fact, many scholars have argued
had his series of lectures titled Management: A Humanist that the social sciences (e.g., management research) suffer
Art published. In this set of published lectures, Lilienthal from envy of the physical sciences, in which ‘‘truths’’ are
argues that management requires more than a mastery of able to be determined through research. As such, social
techniques and skills; instead, it also requires that man- sciences researchers may strive to create a more ‘‘scien-
agers understand individuals and their motivations and tific’’ approach to their fields in order to grant them more
help them achieve their goals. Lilienthal believed that legitimacy.
combining management and leadership into practice not Despite its relative immaturity, some consistent
only by getting work done but by understanding the answers have been developed in the field of management.
meaning behind the work, as effective managerial behav- In many ways this is due to the increased sophistication of
ior. Thus, he promoted the idea of the manager as a management research. However, there are still a number
motivator and facilitator of others. This manager as an of research gaps in management; despite our increased
artist was likely to respond differently to each employee knowledge in some areas, there is still a great deal of
and situation, rather than use a prescribed set of responses disagreement and confusion in other areas. In these cir-
dictated by a set of known guidelines. cumstances, the practice of management is likely to be
Another proponent of the management as art school dictated by the perspective of management as an art.
of thought is Peter Drucker, famed management scholar Because there are no hard and fast rules in certain circum-
who is best known for developing ideas related to total stances, individual managers’ experiences and skills must
quality management. Drucker terms management ‘‘a lib- guide them.
eral art,’’ claiming that it is such because it deals with the In the twenty-first century, much of the management
fundamentals of knowledge, wisdom, and leadership, but research conducted in academic institutions blends the
because it is also concerned with practice and application. notion of management as an art and as a science. Some
Drucker argues that the discipline (i.e., the science) of of these trends in management research that have pushed
management attempts to create a paradigm for managers the field in either direction—namely increased statistical
in which facts are established and exceptions to these facts sophistication and the emphasis on contextual influences—
are ignored as anomalies. He is critical of the assumptions are described below.
that make up the management paradigm, because these
assumptions change over time as society and the business
environment change. Thus, management is more of an art, Increased Statistical Sophistication. As computer tech-
because scientific ‘‘facts’’ do not remain stable over time. nology continues to improve, the ability of management
researchers to conduct sophisticated statistical analyses has
also been enhanced. Powerful statistical computing pack-
ART AND SCIENCE IN ages are now readily available for desktop computers,
MANAGEMENT RESEARCH allowing for high-speed analysis of complex statistical
Noted researcher Thomas Kuhn, in his book The Struc- models. Additionally, new statistical modeling techniques,
ture of Scientific Revolutions, addresses issues associated such as structural equations modeling, have gained foot-
with the state of current scientific research and the oppor- ing in management research. Thus, management
tunities for scientific discovery. Kuhn, in previous edi- researchers are now better able to empirically test more
tions of this text, drew distinctions between mature and complex research hypotheses, and management as a sci-
immature fields of study. ence is perpetuated.
In mature fields of study, many of the central ques- The improvement in researchers’ ability to analyze
tions of that field have been answered, and strong con- statistics more quickly has resulted in an increase in infor-
sensus exists among researchers regarding the fundamental mation about theories of management. Practicing manag-
assumptions of that field. Conversely, in immature fields ers may now know of certain relationships that have
of study, there is still a great deal of debate on major received strong support through decades of empirical
questions in the field, and gains in knowledge come research. Such ‘‘truths’’ may become guiding principles
sporadically. that practicing managers see as ideal solutions to a variety
In many ways, management is an immature science. of situations.
While its foundations in psychology, sociology, and other For instance, numerous empirical studies over several
related areas give it a long and rich history, the nature of recent decades have supported the relationship between
the areas of study renders it immature. That is, due to the appropriate goal setting and higher work performance.
difficulties of studying human behavior in a number of This relationship has been tested in a variety of situations,
disparate settings, the study of management is still very with a number of contextual influences present, yet

12 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 The Art and Science of Management

the statistical relationship holds in nearly all of them. valid predictor of future job performance than are
Thus, a practicing manager may see this body of empirical unstructured interviews (in which applicants are asked
research and, in a work situation, see the benefits of goal different questions and responses are evaluated using dif-
setting on performance as a scientific ideal. He or she may ferent criteria). Meta-analysis has been used to establish
then implement goal setting in a number of practical this finding, and thus a practicing manager may use this
situations, bolstered by the confidence afforded by deca- information as a scientific ‘‘fact’’ when conducting selec-
des of research supporting such actions. tion interviews.
Meta-analysis, in particular, is a methodological pro-
cedure that has contributed significantly to the study of Contextual Influences. While improvements in manage-
management. Meta-analysis is a statistical technique that ment researchers’ ability to conduct statistical analysis in
allows a researcher to combine findings from multiple their studies has promoted the notion of management as a
studies, correct for errors in study design, and determine science, in some ways it has also promoted management
an ‘‘average’’ statistical relationship among variables. as an art. Because of the capability to statistically analyze
Meta-analysis first gained a foothold in management and interpret larger, more complex models of behavior,
research in studies of the validity of selection techniques researchers are now testing models with this increased
for different jobs in different organizations. Before the complexity.
application of meta-analysis to research the validity of In particular, there is an increased emphasis on con-
different selection techniques, there was a belief in the textual influences. That is, rather than focusing solely on
situational specificity of these selection methods. That is, how behaviors are linked to outcomes, many researchers
studies of the accuracy of selection techniques in predict- now include individual, social, and political variables in
ing subsequent job performance had such disparate research models to have a richer understanding of behav-
results that academics concluded that validity of a stand- ior. Thus, there are more complex recommendations that
ardized test, for example, would differ dramatically in can be made from recent research, rather than basic truths.
each selection situation (e.g., with different job applicants, For example, one of the most prominent areas of con-
in different organizations, in different geographic regions). textual research in recent years is in person-organization fit
This myth was dispelled, however, with the application (p-o fit). The p-o fit model is a part of the attraction-
of meta-analysis to the results of the collected body of selection-attrition model that suggests that certain types of
research on the validity of selection methods. The use of individuals are attracted to particular organizations, selected
meta-analysis established that the differences in findings by those organizations, and either adapt to become an
were due primarily to limitations of research design, such effective part of the organization, or leave if they do not fit
as small sample size, unreliability of measures, and other with the organization. The p-o fit model is the notion that
correctable problems. When meta-analysis was applied to the particular skills, attitudes, values, and preferences of an
this group of studies, they were combined to determine individual employee should fit with those of the organiza-
that validates of selection techniques were general across tion in order for that employee to have high job satisfaction
jobs and organizations. Thus, the use of meta-analysis and performance. The model also indicates that this fit is
helped to establish that cognitive ability tests and struc- likely to be as important as an assessment of applicants’
tured interviews were highly valid selection methods in abilities when hiring.
nearly every job.
Previous models of selection emphasized a strict
Meta-analysis has now been applied to many differ- interpretation of applicant skills, with the use of valid
ent areas of management research, including training, selection tests as most important. However, the p-o fit
recruitment, fairness, and other topics. Additionally, there model indicates that, even if skills and abilities have been
have been a number of refinements to the statistical appropriately measured, that hiring the applicant with the
corrections used in meta-analysis. best skills is not always the best course of action, but that
The increased acceptance and use of meta-analysis hiring an individual who fits into the culture of the
in management research supports the notion of manage- organization could be more advantageous.
ment as a science. Meta-analysis provides for ‘‘truths’’ in This move towards including contextual influences
management—relationships between variables that hold in management research models promotes the notion of
strong regardless of the people or situation involved. management as an art. Rather than indicating that there
For instance, one consistent finding is that structured are specific principles and guidelines that can guide man-
selection interviews (ones in which applicants are asked agement practice, it suggests that managerial behavior
the same set of predetermined questions, and in which should change based on the social and political context
responses are evaluated using the same criteria) are a more of the situation.

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION 13

The Art and Science of Management

ART AND SCIENCE IN influenced by scholars such as Henry Mintzberg and Peter
MANAGEMENT EDUCATION Drucker, and is often evident in complex theories of
AND DEVELOPMENT management. Many scholars and practitioners blend art
Management education and development, which attempts and science to more effectively cultivate managerial talent.
to prepare today’s managers for organizational challenges, This is evident in recent theories of management, research
are guided by both the notion of management as an art in workplaces, and education and development of
and as a science. The approach to management education managers.
and development is likely to differ dramatically depending
on the belief one has as to the nature of the practice of Future Issues in Management Education. The Associa-
management. The perspective of management as an art tion to Advance Collegiate Schools of Business (AACSB)
assumes to some extent that a manager has a disposition or task force on management and education and other man-
experiences that guide him or her in managerial decisions agement theorists have identified challenges facing the
and activities. Thus, with this perspective, many managers future of the field of management. Among these chal-
may be successful without any formal education or train- lenges are making both the art and science of manage-
ing in management. The perspective of management as a ment accessible to students in the field. At the same time,
science, however, would indicate that management skills managers must prepare to face the challenges of global-
can be taught through an understanding of theory and ization. In meeting this challenge, management educators
principles of management. Many of today’s educational can bring a new focus to the managers who will lead in
institutions and workplaces blend the notion of manage- the next generation of businesses.
ment as a science and an art in their approach to preparing SEE A LS O Management Science; Management Thought;
employees for management. Organizational Behavior; Research Methods and
Management education in today’s universities pri- Processes; Statistics
marily emphasizes management as a science. Textbooks
used in management courses emphasize many of the BIBLIOGRAPHY
consistent findings of many decades of management Appley, Lawrence A. Management in Action: The Art of Getting
research. And, as these degrees increase in popularity, it Things Done through People. American Management
is likely that more practicing managers will have a set of Association, 1956.
established management ideals with which they operate. The Association to Advance Collegiate Schools of Business.
‘‘Business and Business Schools: A Partnership for the
While formal management education may promote Future.’’ Report of the AACSB International Alliance for
management as a science, many development efforts sup- Management Education Task Force. 2006. Available from:
port the notion of management as an art. To cultivate http://www.aacsb.edu/publications/default.asp.
management talent, organizations offer mentoring, over- Bennis, W. G. & O’Toole, J. (2005). How business schools lost
seas experiences, and job rotation. These activities allow their way. Harvard Business Review, 83(5), 96–104.
managers to gain greater social and political insight and DuBrin, Andrew J. Essentials of Management. 6th ed.
thus rely on their own judgment and abilities to improve Peterborough, Ontario: Thomson South-Western, 2003.
their management style. Much of mentoring involves Drucker, Peter F. The Essential Drucker. New York, NY: Harper
Collins Publishers, 2001.
behavior modeling, in which a protégé may learn nuances
Gatignon, Hubert. Statistical Analysis of Management Data. New
of managerial behavior rather than a set of specific guide-
York: Springer-Verlag, 2003.
lines for managing. Overseas experiences are likely to
Jones, Gareth R., and Jennifer M. George. Contemporary
involve a great deal of manager adaptation, and the gen- Management. 4th ed. New York, NY: McGraw-Hill Irwin,
eral rules by which a manager might operate in one 2006.
culture are likely to change when managing workers in Kuhn, Thomas S. The Structure of Scientific Revolutions. 3rd ed.
other countries. Finally, job rotation is a technique that Chicago, IL: The University of Chicago Press, 1996.
requires a manager to work in a variety of settings. Again, Lilienthal, David E. Management: A Humanist Art. New York,
this encourages a manager to be flexible and adaptive, and NY: Colombia University Press, 1967.
likely rely more on his or her personal skill in managing. Mintzberg, Henry. ‘‘The Manager’s Job: Folklore and Fact.’’
Harvard Business Review, July-August 1975, 56—62.
The foundations of management as an art and man-
———. The Nature of Managerial Work. New York: Harper &
agement as a science are evident in today’s educational Row, 1973.
institutions and work organizations. Management as a Rue, Leslie W., and Lloyd L. Byars. Management: Skills and
science was primarily influenced by researchers in the area Applications. 10th ed. New York, NY: McGraw-Hill Irwin,
of scientific management, such as Frederick Taylor, and 2003.
continues today in much of the empirical research on Williams, Chuck. Management. Cincinnati, OH: South-Western
management issues. Management as an art has been College Publishing, 2000.

14 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

 Artificial Intelligence

ARTIFICIAL inputs exceeds some previously set threshold value; this is

INTELLIGENCE called transfer.
Artificial intelligence (AI) refers to computer software Inputs with high weights tend to give greater activa-
that exhibits intelligent behavior. The term ‘‘intelligence’’ tion to a neuron than inputs with low weights. The weight
is difficult to define and has been the subject of heated of an input is analogous to the strength of a synapse in a
debate by philosophers, educators, and psychologists for biological system. In biological systems, learning occurs
ages. Nevertheless, it is possible to enumerate many impor- by strengthening or weakening the synaptic connections
tant characteristics of intelligent behavior. Intelligence between nerve cells. An artificial neural network simulates
includes the capacity to learn, maintain a large storehouse synaptic connection strength by increasing or decreasing
of knowledge, utilize commonsense reasoning, apply ana- the weight of input lines into neurons.
lytical abilities, discern relationships between facts, commu- Neural networks are trained with a series of data
nicate ideas to others and understand communications from points. The networks guess which response should be
others, and perceive and make sense of the world around us. given, and the guess is compared against the correct
Thus, artificial intelligence systems are computer programs answer for each data point. If errors occur, the weights
that exhibit one or more of these behaviors. into the neurons are adjusted and the process repeats
AI systems can be divided into two broad categories: itself. This learning approach is called backpropagation
knowledge representation systems and machine learning and is similar to statistical regression.
systems. Knowledge representation systems, also known Neural networks are used in a wide variety of busi-
as expert systems, provide a structure for capturing and
ness problems, including optical character recognition,
encoding the knowledge of a human expert in a particular
financial forecasting, market demographics trend assess-
domain. For example, the knowledge of medical doctors
ment, and various robotics applications.
might be captured in a computerized model that can be
used to help diagnose patient illnesses.
Induction Algorithms. Induction algorithms form another
approach to machine learning. In contrast to neural net-
MACHINE LEARNING SYSTEMS
works (which are highly mathematical in nature), induction
The second category of AI, machine learning systems, approaches tend to involve symbolic data. As the name
creates new knowledge by finding previously unknown
implies, these algorithms work by implementing inductive
patterns in data. In contrast to knowledge representation
reasoning approaches. Induction is a reasoning method that
approaches, which model the problem-solving structure of
can be characterized as ‘‘learning by example.’’ Unlike rule-
human experts, machine learning systems derive solutions
based deduction, induction begins with a set of observations
by ‘‘learning’’ patterns in data, with little or no interven-
tion by an expert. There are three main machine learning and constructs rules to account for these observations.
techniques: neural networks, induction algorithms, and Inductive reasoning attempts to find general patterns that
genetic algorithms. can fully explain the observations. The system is presented
with a large set of data consisting of several input variables
Neural Networks. Neural networks simulate the human and one decision variable. The system constructs a decision
nervous system. The concepts that guide neural network tree by recursively partitioning data sets based on the vari-
research and practice stem from studies of biological ables that best distinguish between the data elements. That
systems. These systems model the interaction between is, it attempts to partition the data so that each partition
nerve cells. Components of a neural network include contains data with the same value for a decision variable.
neurons (sometimes called ‘‘processing elements’’), input It does this by selecting the input variables that do the best
lines to the neurons (called dendrites), and output lines job of dividing the data set into homogeneous partitions.
from the neurons (called axons). For example, consider Figure 2, which contains the data set
Neural networks are composed of richly connected pertaining to decisions that were made on credit loan
sets of neurons forming layers. The neural network archi- applications.
tecture consists of an input layer, which inputs data to the An induction algorithm would infer the rules in
network; an output layer, which produces the resulting Figure 3 to explain this data.
guess of the network; and a series of one or more hidden As this example illustrates, an induction algorithm is
layers, which assist in propagating. This is illustrated in able to induce rules that identify the general patterns in
Figure 1. data. In doing so, these algorithms can prune out irrele-
During processing, each neuron performs a weighted vant or unnecessary attributes. In the example above,
sum of inputs from the neurons connecting to it; this is salary was irrelevant in terms of explaining the loan deci-
called activation. The neuron chooses to fire if the sum of sion of the data set.

ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION 15

Artificial Intelligence

Figure 1

I1 Output 1
Wt 11

Wt 12

I2

Output 2

I3

Wt 41

I4 Wt 42 Output 3

Input Hidden Output

Layer Layer Layer

Induction algorithms are often used for data mining

applications, such as marketing problems that help com- Figure 2
panies decide on the best market strategies for new prod- Artificial Intelligence & Expert Systems
uct lines. Data mining is a common service included in Credit Current Loan
data warehouses, which are frequently used as decision Salary History Assets Decision
support tools. a) High Poor High Accept
b) High Poor Low Reject
c) Low Poor Low Reject
Genetic Algorithms. Genetic algorithms use an evolution- d) Low Good Low Accept
ary approach to solve optimization problems. These are e) Low Good High Accept
f) High Good Low Accept
based on Darwin’s theory of evolution, and in particular
the notion of survival of the fittest. Concepts such
as reproduction, natural selection, mutation, chromosome,
and gene are all included in the genetic algorithm approach. and return to the origin. For such a problem there are
Genetic algorithms are useful in optimization prob- (n 1)! possible solutions, or (n 1) factorial. For six
lems that must select from a very large number of possible cities, this would mean 5  4  3  2  1 = 120
solutions to a problem. A classic example of this is the possible solutions. Suppose that the salesman must travel
traveling salesperson problem. Consider a salesman who to 100 cities. This would involve 99! possible solutions,
must visit n cities. The salesperson’s problem is to find the an astronomically high number.
shortest route by which to visit each of these n cities Obviously, for this type of problem, a brute strength
exactly once, so that the salesman will tour all the cities method of exhaustively comparing all possible solutions

16 ENCYCLOPEDIA OF MANAGEMENT, SIXTH EDITION

Exploring the Variety of Random
Documents with Different Content
water, and a boat to draw the seine, but we caught only four trout
and a few other small fish.
Soon after we anchored, a native of the island brought on board
such another note as had been given to Captain Clerke. He
presented it to me, but it was written in the Russian language,
which, as already observed, none of us could read. As it could be of
no use to me, and might be of consequence to others, I returned it
to the bearer, and dismissed him with a few presents, for which he
expressed his thanks, by making several low bows as he retired.
In walking next day along the shore, I met with a group of natives
of both sexes, seated on the grass at a repast consisting of raw fish,
which they seemed to eat with as much relish as we should a turbot,
served up with the richest sauce. By the evening we had completed
our water, and made such observations as the time and weather
would permit. I have taken notice of the rapidity of the tide without
the harbour, but it was inconsiderable within. It was low water at
noon; and high water at half past six in the evening; and the water
rose, upon a perpendicular, three feet four inches; but there were
marks of its sometimes rising a foot higher.
Thick fogs and a contrary wind detained us till the 2d of July,
which afforded an opportunity of acquiring some knowledge of the
country and of its inhabitants. The result of our observations will be
mentioned in another place. At present, I shall only describe the
harbour.
It is called by the natives Samganoodha, and is situated on the
north side of Oonalashka, in the latitude of 53° 55ʹ, in the longitude
of 193° 30ʹ; and in the strait or passage that separates this island
from those that lie to the north of it, and whose position before the
harbour shelters it from the winds that blow from that quarter. It
runs in S. by W., about four miles, and is about a mile broad at the
entrance, narrowing toward the head, where its breadth is not above
a quarter of a mile, and where ships can lie land-locked, in seven,
six, and four fathoms water. Great plenty of good water may be
easily got, but not a single stick of wood of any size.
 CHAP. VIII.

PROGRESS NORTHWARD, AFTER LEAVING OONALASHKA.—THE ISLANDS

OONELLA AND ACOOTAN.—OONEEMAK.—SHALLOWNESS OF THE
WATER ALONG THE COAST.—BRISTOL BAY.—ROUND ISLAND.—CALM
POINT.—CAPE NEWENHAM.—LIEUTENANT WILLIAMSON LANDS, AND
HIS REPORT.—BRISTOL BAY, AND ITS EXTENT.—THE SHIPS OBLIGED
TO RETURN, ON ACCOUNT OF SHOALS.—NATIVES COME OFF TO THE
SHIPS.—DEATH OF MR. ANDERSON; HIS CHARACTER; AND ISLAND
NAMED AFTER HIM.—POINT RODNEY.—SLEDGE ISLAND, AND
REMARKS ON LANDING THERE.—KING’S ISLAND.—CAPE PRINCE OF
WALES, THE WESTERN EXTREME OF AMERICA.—COURSE WESTWARD.
—ANCHOR IN A BAY ON THE COAST OF ASIA.

H aving put to sea with a light breeze, at south south-east, we steered

to the north, meeting with nothing to obstruct us in this course; for, as I
observed before, the Island of Oonalashka, on the one side, tended
south-west, and on the other, no land was to be seen in a direction more
northerly than north-east; the whole of which land was a continuation of
the same group of islands which we had fallen in with on the 25th of
June. That which lies before Samganoodha, and forms the north-east side
of the passage through which we came, is called Oonella, and is about
seven leagues in circumference. Another island, to the north-east of it, is
called Acootan, which is considerably larger than Oonella, and hath in it
some very high mountains, which were covered with snow. It appeared,
that we might have gone very safely between these two islands and the
continent, the south-west point of which opened off the north-east point
of Acootan, in the direction of north, 60° east; and which proved to be
the same point of land we had seen when we quitted the coast of the
continent, on the 25th of June, to go without the islands. It is called by
the people of these parts Oonemak, and lies in the latitude of 54° 30ʹ,
and in the longitude of 192° 30ʹ. Over the cape, which, of itself, is high
land, is a round elevated mountain, at this time entirely covered with
snow.
At six in the evening, this mountain bore east 2° north, and at eight we
had no land in sight. Concluding, therefore, that the coast of the
continent had now taken a north-easterly direction, I ventured to steer
the same course, till one o’clock next morning, when the watch on deck
thought they saw land ahead. Upon this we wore, and stood to the south-
west for two hours, and then resumed our course to the east-north-east.
At six o’clock land was seen ahead, bearing south-east, about five
leagues distant. As we advanced, we raised more and more land, all
connected, and seemingly in the direction of our course. At noon, it
extended from south-south-west to east; the nearest part five or six
leagues distant. Our latitude at this time was 55° 21ʹ, and our longitude
195° 18ʹ. This coast is on the north-west side of the volcano mountain; so
that we must have seen it, if the weather had been tolerably clear.
At six in the evening, after having run eight leagues upon an east by
north course from noon, we sounded, and found forty-eight fathoms over
a bottom of black sand. Being at this time four leagues from the land, the
eastern part in sight bore east-south-east, and appeared as a high round
hummock, seemingly detached from the main.
Having continued to steer east-north-east all night, at eight in the
morning of the 4th the coast was seen from south-south-west, and east
by south, and at times we could see high land, covered with snow, behind
it. Soon after, it fell calm, and being in thirty fathoms water, we put over
hooks and lines, and caught a good number of fine cod-fish. At noon,
having now a breeze from the east, and the weather being clear, we
found ourselves six leagues from the land, which extended from south by
west to east by south. The hummock, seen the preceding evening, bore
south-west by south, ten leagues distant. Our latitude was now 55° 50ʹ,
and our longitude 197° 3ʹ. A great hollow swell from west-south-west
assured us that there was no main land near, in that direction. I stood to
the north till six in the afternoon, when the wind having veered to the
south-east enabled us to steer east-north-east. The coast lay in this
direction, and at noon the next day was about four leagues distant.
On the 6th and 7th, the wind being northerly, we made but little
progress. At eight in the evening of the latter, we were in nineteen
fathoms water, and about three or four leagues from the coast, which on
the 8th extended from south-south-west to east by north, and was all low
land, with a ridge of mountains behind it, covered with snow. It is
probable, that this low coast extends some distance to the south-west;
and that such places as we sometimes took for inlets or bays are only
vallies between the mountains.
On the morning of the 9th, with a breeze at north-west, we steered
east by north, to get nearer the coast. At noon, we were in the latitude of
57° 49ʹ, and in the longitude of 201° 33ʹ, and about two leagues from the
land, which extended from south by east to east-north-east; being all a
low coast, with points shooting out in some places, which, from the deck,
appeared like islands; but from the mast-head, low land was seen to
connect them. In this situation, the depth of water was fifteen fathoms,
the bottom a fine black sand.
As we had advanced to the north-east, we had found the depth of
water gradually decreasing, and the coast trending more and more
northerly. But the ridge of mountains behind it continued to lie in the
same direction as those more westerly; so that the extent of the low land
between the foot of the mountains and the sea-coast insensibly
increased. Both high and low-grounds were perfectly destitute of wood,
but seemed to be covered with green turf, except the mountains, which
were covered with snow. Continuing to steer along the coast with a gentle
breeze westerly, the water gradually shoaled from fifteen to ten fathoms,
though we were at the distance of eight or ten miles from the shore. At
eight in the evening, an elevated mountain, which had been in sight for
some time, bore south-east by east, twenty-one leagues distant. Some
other mountains, belonging to the same chain, and much farther distant,
bore east 3° north. The coast extended as far as north-east half north,
where it seemed to terminate in a point, beyond which we hoped and
expected that it would take a more easterly direction. But soon after, we
discovered low land extending from behind this point, as far as north-west
by west, where it was lost in the horizon; and behind it was high land,
that appeared in detached hills.
Thus the fine prospect we had of getting to the north, vanished in a
moment. I stood on till nine o’clock, for so long it was light, and then the
point above mentioned bore north-east half east, about three miles
distant. Behind this point is a river, the entrance of which seemed to be a
mile broad; but I can say nothing as to its depth. The water appeared
discoloured, as upon shoals, but a calm would have given it the same
aspect. It seemed to have a winding direction, through the great flat that
lies between the chain of mountains to the south-east and the hills to the
north-west. It must abound with salmon, as we saw many leaping in the
sea before the entrance; and some were found in the maws of cod which
we had caught. The entrance of this river, distinguished by the name of
Bristol River, lies in the latitude of 58° 27ʹ, and in the longitude of 201°
55ʹ.
Having spent the night in making short boards, at daybreak, on the
morning of the 10th, we made sail to the west-south-west, with a gentle
breeze at north-east. At eleven o’clock we thought the coast to the north-
west terminated in a point, bearing north-west by west; and as we had
now deepened the water from nine to fourteen fathoms, I steered for the
point, ordering the Discovery to keep ahead. But before she had run a
mile, she made a signal for shoal water. At that instant, we had the depth
of seven fathoms; and before we could get the ship’s head the other way
had less than five; but the Discovery had less than four.
We stood back to the north-east, three or four miles; but finding there
was a strong tide or current setting to the west-south-west, that is,
toward the shoal, we anchored in ten fathoms, over a bottom of fine
sand. Two hours after we had anchored, the water had fallen two feet
and upward, which proved that it was the tide of ebb that came from the
river above mentioned. We also examined some of the water which we
had taken up, and found that it was not half so salt as common sea water.
This furnished another proof that we were before a large river.
At four in the afternoon, the wind shifting to south-west, we weighed
and stood to the southward, with boats ahead sounding, and passed over
the south end of the shoal, in six fathoms water. We then got into thirteen
and fifteen; in which last depth we anchored at half past eight; some part
of the chain of mountains, on the south-east shore, in sight, bearing
south-east half south; and the westernmost land on the other shore
north-west. We had, in the course of the day, seen high land, bearing
north 60° west, by estimation twelve leagues distant.
Having weighed next morning, at two o’clock, with a light breeze at
south-west by west, we plied to windward till nine; when, judging the
flood-tide to be now made against us, we came to an anchor in twenty-
four fathoms. We lay here till one, when the fog, which had prevailed this
morning, dispersing, and the tide making in our favour, we weighed and
plied to the south-west. In the evening, the wind was very variable, and
we had some thunder. We had heard none before, since our arrival upon
the coast; and this was at a great distance.
The wind having settled again in the south-west quarter, in the morning
of the 12th, we stood to the north-west, and at ten saw the continent. At
noon, it extended from north-east by north, to north-north-west, a
quarter west; and an elevated hill bore north-north-west, ten leagues
distant. This proved to be an island, which from its figure obtained the
name of Round Island. It lies in the latitude of 58° 37ʹ, and in the
longitude of 200° 6ʹ, and seven miles from the continent. In the evening,
at nine, having stood to the northward to within three leagues of the
shore, we tacked in fourteen fathoms water, the extremities of the coast
bearing east-south-east half east, and west. The wind veering to the
north-west enabled us to make a good stretch along shore, till two o’clock
in the morning, when we got all at once into six fathoms water, being at
this time two leagues from the shore. After edging off a little, our depth
gradually increased, and at noon we had twenty fathoms, when the
latitude was 58° 13ʹ, and the longitude 199°. Round Island bore north, 5°
east; and the west extreme of the coast north, 16° west, seven leagues
distant. It is an elevated point, which obtained the name of Calm Point,
from our having calm weather when off it. To the north-west of Round
Island are two or three hillocks, that appeared like islands; and it is
possible they may be such; for we had but a distant view of the coast in
this place.
During the 14th and 15th, our progress was slow, having little wind,
and sometimes so thick a fog, that we could not see the length of the
ship. The soundings were from fourteen to twenty-six fathoms; and we
had tolerable success in fishing, catching cod, and now and then a few
flat fish. At five in the morning of the 16th, the fog having cleared up, we
found ourselves nearer the land than we expected. Calm Point bore north,
72° east, and a point eight leagues from it, in the direction of west, bore
north, 3° east, three miles distant. Between these two points, the coast
forms a bay, in some parts of which the land was hardly visible from the
mast-head. There is also a bay on the north-west side of this last point,
between it and an elevated promontory, which, at this time, bore north,
36° west, sixteen miles distant. At nine, I sent Lieutenant Williamson to
this promontory, with orders to land, and see what direction the coast
took beyond it, and what the country produced, for from the ships it had
but a barren appearance. We found here the flood-tide setting strongly to
the north-west along the coast. At noon it was high-water, and we
anchored in twenty-four fathoms, four leagues distant from the shore. At
five in the afternoon, the tide making in our favour, we weighed, and
drove with it; for there was no wind.
Soon after, Mr. Williamson returned, and reported that he had landed
on the point, and having climbed the highest hill, found that the farthest
part of the coast in sight bore nearly north. He took possession of the
country in his Majesty’s name, and left on the hill a bottle, in which were
inscribed, on a piece of paper, the names of the ships, and the date of the
discovery. The promontory, to which he gave the name of Cape
Newenham, is a rocky point, of tolerable height, situated in the latitude of
58° 42ʹ, and in the longitude of 197° 36ʹ. Over, or within it, are two
elevated hills, rising one behind the other. The innermost, or easternmost,
is the highest. The country, as far as Mr. Williamson could see, produces
neither tree nor shrub; the hills are naked; but on the lower grounds grew
grass and other plants, very few of which were in flower. He saw no other
animal but a doe and her fawn, and a dead sea-horse, or cow, upon the
beach. Of these animals we had lately seen a great many.
As the coast takes a northerly direction from Cape Newenham, that
cape fixes the northern limit of the great bay and gulf, lying before the
river Bristol, which, in honour of the admiral Earl of Bristol, was named
Bristol Bay. Cape Ooneemak is the south limit of this bay, and is distant
eighty-two leagues from Cape Newenham, in the direction of south-south-
west.
About eight in the evening, a light breeze springing up, which fixed at
S. S. E., we steered N. W., and N. N. W., round Cape Newenham, which at
noon next day bore S. by E., distant four leagues. At this time the most
advanced land to the northward bore N., 30° E.; our depth of water was
seventeen fathoms; and the nearest shore 31⁄2 leagues distant. We had
but little wind all the afternoon; so that, at ten at night, we had only
made three leagues upon a north course.
We steered N. by W. till eight the next morning, when, our depth of
water decreasing suddenly to five and seven fathoms, we brought to, till a
boat from each ship was sent ahead to sound, and then steered north-
east after them; and at noon we had deepened the water to seventeen
fathoms. At this time Cape Newenham bore S. 9° E., distant eleven or
twelve leagues, the north-east extreme of the land in sight N. 66° E., and
the nearest shore about four or five leagues distant. Our latitude, by
observation, was 59° 16ʹ.
Between this latitude and Cape Newenham the coast is composed of
hills and low land, and appeared to form several bays. A little before one
o’clock the boats ahead made the signal for meeting with shoal water. It
seems they had only two fathoms, and at the same time the ships were in
six fathoms. By hauling a little more to the northward, we continued in
much the same depth till between five and six o’clock, when the boats
meeting with less and less water, I made the signal to the Discovery, she
being then ahead, to anchor, which we did soon after. In bringing our ship
up, the cable parted at the clinch, which obliged us to come to with the
other anchor. We rode in six fathoms water, a sandy bottom, and about
four or five leagues from the main land; Cape Newenham bearing south,
seventeen leagues distant. The farthest hills we could see to the north,
bore N. E. by E.; but there was low land stretching out from the high
land, as far as north by east. Without this was a shoal of sand and stones,
that was dry at half ebb.
I had sent the two masters, each in a boat, to sound between this
shoal and the coast. On their return, they reported that there was a
channel in which they found six and seven fathoms water; but that it was
narrow and intricate. At low water we made an attempt to get a hawser
round the lost anchor, but did not succeed then. However, being
determined not to leave it behind me, as long as there was a probability
of recovering it, I persevered in my endeavours, and at last succeeded in
the evening of the 20th.
While we were thus employed, I ordered Captain Clerke to send his
master in a boat to look for a passage in the south-west quarter. He did
so; but no channel was to be found in that direction; nor did there appear
to be any way to get clear of these shoals, but to return by the track
which had brought us in. For, although by following the channel we were
in, we might probably have got farther down the coast, and though
possibly this channel might have led us at last to the north, clear of the
shoals, still the attempt would have been attended with vast risk; and if
we should not have succeeded, there would have been a considerable
loss of time that could ill be spared. These reasons induced me to return
by the way in which we came, and so get without the shoals.
 A number of lunar observations made by Mr.
King and myself, on this and the four
preceding days, and all reduced to the ship’s
present station, gave the longitude 197° 45ʹ 48ʺ
By the time-keeper it was 197 26 48
Our latitude was 59 37 30
Variation
by the A. M. 23° 34ʹ 3ʺ
mean 22° 56ʹ 51ʺ
mean of
east.
three P. M. 22 19 40
compasses,
The northernmost part of the coast that we could see from this station
I judged to lie in the latitude of 60°. It seemed to form a low point, which
obtained the name of Shoal Ness.
The tide of flood sets to the north, and the ebb to the south. It rises
and falls, upon a perpendicular, five or six feet; and I reckon it to be high
water, on the full and change days, at eight o’clock.
Having weighed at three in the morning on the 21st, with a light breeze
at N. N. W., we steered back to the southward, having three boats ahead
to direct us. But, notwithstanding this precaution, we found more
difficulty in returning than we had in advancing; and at last were obliged
to anchor, to avoid running upon a shoal, which had only a depth of five
feet. While we lay here, twenty-seven men of the country, each in a
canoe, came off to the ships, which they approached with great caution;
hollowing and opening their arms as they advanced. This we understood
was to express their pacific intentions. At length some approached near
enough to receive a few trifles that were thrown to them: this encouraged
the rest to venture along-side; and a traffic presently commenced
between them and our people, who got dresses of skins, bows, arrows,
darts, wooden vessels, &c.; our visitors taking in exchange for these
whatever was offered them. They seemed to be the same sort of people
that we had of late met with all along this coast; wore the same kind of
ornaments in their lips and noses; but were far more dirty, and not so
well clothed. They appeared to be wholly unacquainted with people like
us: they knew not the use of tobacco; nor was any foreign article seen in
their possession, unless a knife may be looked upon as such. This,
indeed, was only a piece of common iron fitted in a wooden handle, so as
to answer the purpose of a knife. They, however, knew the value and use
of this instrument so well, that it seemed to be the only article they
wished for. Most of them had their hair shaved, or cut short off, leaving
only a few locks behind, or on one side. For a covering for the head they
wore a hood of skins, and a bonnet which appeared to be of wood. One
part of their dress, which we got from them, was a kind of girdle, very
neatly made of skin, with trappings depending from it, and passing
between the legs, so as to conceal the adjoining parts. By the use of such
a girdle, it should seem that they sometimes go naked, even in this high
latitude; for they hardly wear it under their other clothing.
The canoes were made of skins, like all the others we had lately seen;
only with this difference, that these were broader, and the hole in which
the man sits was wider than in any I had before met with. Our boats
returning from sounding seemed to alarm them; so that they all left us
sooner than probably they would otherwise have done.
It was the 22d, in the evening, before we got clear of these shoals, and
then I durst not venture to steer to the westward in the night, but spent it
off Cape Newenham, and at day-break next morning steered to the north-
west, ordering the Discovery to lead. Before we had run two leagues, our
depth of water decreased to six fathoms. Fearing, if we continued this
course, that we should find less and less water, I hauled to the
southward, the wind being at east, a fresh breeze. This course brought us
gradually into eighteen fathoms; and having that depth I ventured to
steer a little westerly, and afterward west, when we at last found twenty-
six fathoms water.
On the 24th at noon we were, by observation, in the latitude of 58° 7ʹ,
and in the longitude of 194° 22ʹ. Three leagues to the westward of this
station we had twenty-eight fathoms water, and then steered west north-
west, the water gradually deepening to thirty-four fathoms. I would have
steered more northerly, but the wind having veered in that direction, I
could not.
The 25th in the evening, having a very thick fog, and but little wind, we
dropped anchor in thirty fathoms water. Our latitude was now 58° 29ʹ,
and our longitude 1911⁄2° 37ʹ. At six the next morning the weather
clearing up a little, we weighed, and, with a small breeze at east, steered
north; our soundings being from twenty-eight to twenty-five fathoms.
After running nine leagues upon this course, the wind returned back to
the north, which obliged us to steer more westerly.
The weather continued, for the most part, foggy, till toward noon on
the 28th, when we had a few hours clear sun-shine; during which we
made several lunar observations. The mean result of them, reduced to
noon, when the latitude was 59° 55ʹ, gave 190° 6ʹ longitude; and the
time-keeper gave 189° 59ʹ. The variation of the compass was 18° 40ʹ
east. Continuing our westerly course, the water having now deepened to
thirty-six fathoms, at four o’clock next morning we discovered land,
bearing north-west by west, six leagues distant. We stood toward it till
half past ten, when we tacked in twenty-four fathoms water; being at this
time a league from the land, which bore north north-west. It was the
south-east extremity, and formed a perpendicular cliff of considerable
height; on which account it was called Point Upright, and lies in the
latitude of 60° 17ʹ, and in the longitude of 187° 30ʹ. More land was seen
to the westward of the point; and, at a clear interval, we saw another
elevated portion of land in the direction of west by south; and this
seemed to be entirely separated from the other. Here we met with an
incredible number of birds, all as the hawk kind before described.
We had baffling light winds all the afternoon, so that we made but little
progress; and the weather was not clear enough to enable us to
determine the extent of the land before us. We supposed it to be one of
the many islands laid down by Mr. Stæhlin in his map of the New
Northern Archipelago; and we expected every moment to see more of
them.
At four in the afternoon of the 30th, Point Upright bore north-west by
north, six leagues distant. About this time a light breeze springing up at
north north-west, we stood to the north-east till four o’clock next
morning, when the wind veering to the eastward, we tacked and steered
to the north-west. Soon after the wind came to the south-east, and we
steered north-east by north; which course we continued, with soundings
from thirty-five to twenty fathoms, till next day at noon. At this time we
were in the latitude of 60° 58ʹ, and in the longitude of 191°. The wind
now veering to north-east, I first made a stretch of ten leagues to the
north-west; and then, seeing no land in that direction, I stood back to the
eastward about fifteen leagues, and met with nothing but pieces of drift-
wood. The soundings were from twenty-two to nineteen fathoms.
 Variable light winds, with showers of rain, prevailed all the 2d; but
fixing in the south-east quarter, in the morning of the 3d, we resumed our
course to the northward. At noon we were, by observation, in the latitude
of 62° 34ʹ, our longitude was 192°; and our depth of water sixteen
fathoms.
Mr. Anderson, my surgeon, who had been lingering under a
consumption for more than twelve months, expired between three and
four this afternoon. He was a sensible young man, an agreeable
companion, well skilled in his own profession; and had acquired
considerable knowledge of other branches of science. The reader of this
Journal will have observed how useful an assistant I had found him in the
course of the voyage; and had it pleased God to have spared his life, the
public, I make no doubt, might have received from him such
communications, on various parts of the natural history of the several
places we visited, as would have abundantly shown that he was not
unworthy of this commendation.[79] Soon after he had breathed his last,
land was seen to the westward, twelve leagues distant. It was supposed
to be an island; and, to perpetuate the memory of the deceased, for
whom I had a very great regard, I named it Anderson’s Island. The next
day, I removed Mr. Law, the surgeon of the Discovery, into the Resolution,
and appointed Mr. Samuel, the surgeon’s first mate of the Resolution, to
be surgeon of the Discovery.
On the 4th, at three in the afternoon, land was seen, extending from
north north-east to north-west. We stood on toward it till four o’clock,
when, being four or five miles from it, we tacked; and soon after, the
wind falling, we anchored in thirteen fathoms water, over a sandy bottom;
being about two leagues from the land, and, by our reckoning, in the
latitude of 64° 27ʹ, and in the longitude of 194° 18ʹ. At intervals, we
could see the coast extending from east to north-west, and a pretty high
island, bearing west by north, three leagues distant.
The land before us, which we supposed to be the continent of America,
appeared low next the sea; but, inland, it swelled into hills, which rise,
one behind another, to a considerable height. It had a greenish hue, but
seemed destitute of wood, and free from snow. While we lay at anchor,
we found that the flood-tide came from the east, and set to the west, till
between ten and eleven o’clock. From that time, till two the next
morning, the stream set to the eastward, and the water fell three feet.
The flood ran both stronger and longer than the ebb; from which I
concluded, that, besides the tide, there was a westerly current.
At ten in the morning of the 5th, with the wind at south-west, we ran
down and anchored, between the island and the continent, in seven
fathoms water. Soon after, I landed upon the island, and, accompanied by
Mr. King, and some others of the officers, I hoped to have had from it a
view of the coast and sea to the westward; but the fog was so thick in
that direction, that the prospect was not more extensive than from the
ship. The coast of the continent seemed to take a turn to the northward,
at a low point named Point Rodney, which bore from the island north-
west half west, three or four leagues distant; but the high land, which
took a more northerly direction, was seen a great way farther.
This island, which was named Sledge Island, and lies in the latitude of
64° 30ʹ, and in the longitude of 193° 57ʹ, is about four leagues in circuit.
The surface of the ground is composed chiefly of large loose stones, that
are, in many places, covered with moss and other vegetables, of which
there were above twenty or thirty different sorts, and most of them in
flower. But I saw neither shrub nor tree, either upon the island, or on the
continent. On a small low spot, near the beach where we landed, was a
good deal of wild purslain, pease, long-wort, &c.; some of which we took
on board for the pot. We saw one fox; a few plovers, and some other
small birds; and we met with some decayed huts that were partly built
below ground. People had lately been on the island; and it is pretty clear,
that they frequently visit it for some purpose or other. We found, a little
way from the shore where we landed, a sledge, which occasioned this
name being given to the island. It seemed to be such a one as the
Russians in Kamtschatka make use of to convey goods from place to
place, over the ice or snow. It was ten feet long, twenty inches broad;
and had a kind of rail-work on each side, and was shod with bone. The
construction of it was admirable, and all the parts neatly put together;
some with wooden-pins, but mostly with thongs or lashings of whale-
bone, which made me think it was entirely the workmanship of the
natives.
At three o’clock the next morning, we weighed, and proceeded to the
north-westward, with a light southerly breeze. We had an opportunity to
observe the sun’s meridian altitude for the latitude; and to get altitude,
both in the forenoon and afternoon, to obtain the longitude by the time-
keeper. As we had but little wind, and variable withal, we advanced but
slowly; and, at eight in the evening, finding the ships settle fast toward
the land into shoal water, I anchored in seven fathoms, about two leagues
from the coast. Sledge Island bore south, 51° east, ten leagues distant;
and was seen over the south point of the main land.
Soon after we had anchored, the weather, which had been misty,
clearing up, we saw high land extending from north, 40° east, to north,
30° west, apparently disjoined from the coast, under which we were at
anchor, and seemed to trend away north-east. At the same time, an
island was seen bearing north 81° west, eight or nine leagues distant. It
appeared to have no great extent, and was named King’s Island. We rode
here till eight o’clock next morning, when we weighed, and stood to the
north-west. The weather clearing up toward the evening, we got sight of
the north-west land, extending from north by west, to north-west by
north, distant about three leagues. We spent the night making short
boards, the weather being misty and rainy, with little wind; and between
four and five in the morning of the 8th, we had again a sight of the north-
west land; and, soon after, on account of a calm, and a current driving us
toward the shore, we found it necessary to anchor in twelve fathoms
water, about two miles from the coast. Over the western extreme is an
elevated peaked hill, situated in latitude 65° 36ʹ, and in longitude 192°
18ʹ. A breeze at north-east springing up at eight o’clock, we weighed, and
stood to the south-east, in hopes of finding a passage between the coast
on which we had anchored on the 6th in the evening, and this north-west
land; but we soon got into seven fathoms water, and discovered low land
connecting the two coasts, and the high land behind it.
Being now satisfied that the whole was a continued coast, I tacked, and
stood away for its north-west part, and came to an anchor under it in
seventeen fathoms water. The weather, at this time, was very thick with
rain; but, at four next morning, it cleared up, so that we could see the
land about us. A high steep rock or island bore west by south; another
island to the north of it, and much larger, bore west by north; the peaked
hill above mentioned, south east by east; and the point under it, south,
32° east. Under this hill lies some low land, stretching out toward the
north-west, the extreme point of which, bore north-east by east, about
three miles distant. Over, and beyond it, some high land was seen,
supposed to be a continuation of the continent.
This point of land, which I named Cape Prince of Wales, is the more
remarkable, by being the western extremity of all America hitherto
known. It is situated in the latitude of 65° 46ʹ, and in the longitude of
191° 45ʹ. The observations by which both were determined, though made
in sight of it, were liable to some small error, on account of the haziness
of the weather. We thought we saw some people upon the coast; and
probably we were not mistaken, as some elevations, like stages, and
others, like huts, were seen at the same place. We saw the same things
on the continent within Sledge Island, and on some other parts of the
coast.
It was calm till eight o’clock in the morning, when a faint breeze at
north springing up, we weighed; but we had scarcely got our sails set,
when it began to blow and rain very hard, with misty weather. The wind
and current, being in contrary directions, raised such a sea, that it
frequently broke into the ship. We had a few minutes’ sunshine at noon;
and from the observation then obtained, we fixed the above-mentioned
latitude.
Having plied to windward till two in the afternoon, with little effect, I
bore up for the island we had seen to the westward, proposing to come
to an anchor under it till the gale should cease. But on getting to this
land, we found it composed of two small islands, each not above three or
four leagues in circuit; and consequently they could afford us little shelter.
Instead of anchoring, therefore, we continued to stretch to the westward;
and at eight o’clock, land was seen in that direction, extending from north
north-west, to west by south, the nearest part six leagues distant. I stood
on till ten, and then made a board to the eastward, in order to spend the
night.
At day-break in the morning of the 10th, we resumed our course to the
west for the land we had seen the preceding evening. At eleven minutes
after seven, when the longitude, by the time-keeper, was 189° 24ʹ, it
extended from south, 72° west to north, 41° east. Between the south-
west extreme, and a point which bore west, two leagues distant, the
shore forms a large bay, in which we anchored at ten o’clock in the
forenoon, about two miles from the north shore, in ten fathoms water,
over a gravelly bottom. The south point of the bay bore south, 58° west;
the north point north, 43° east; the bottom of the bay north, 60° west,
two or three leagues distant; and the two islands we had passed the
preceding day, north, 72° east, distant fourteen leagues.
 CHAP. IX.

BEHAVIOUR OF THE NATIVES, THE TSCHUTSKI, ON SEEING THE

SHIPS.—INTERVIEW WITH SOME OF THEM.—THEIR WEAPONS.—
PERSONS.—ORNAMENTS.—CLOTHING.—WINTER AND SUMMER
HABITATIONS.—THE SHIPS CROSS THE STRAIT, TO THE COAST
OF AMERICA.—PROGRESS NORTHWARD.—CAPE MULGRAVE.—
APPEARANCE OF FIELDS OF ICE.—SITUATION OF ICY CAPE.—THE
SEA BLOCKED UP WITH ICE.—SEA-HORSES KILLED, AND USED AS
PROVISIONS.—THESE ANIMALS DESCRIBED.—DIMENSIONS OF
ONE OF THEM.—CAPE LISBURNE.—FRUITLESS ATTEMPTS TO GET
THROUGH THE ICE AT A DISTANCE FROM THE COAST.—
OBSERVATIONS ON THE FORMATION OF THIS ICE.—ARRIVAL ON
THE COAST OF ASIA.—CAPE NORTH.—THE PROSECUTION OF THE
VOYAGE DEFERRED TO THE ENSUING YEAR.

A s we were standing into this bay, we perceived on the north shore

a village, and some people, whom the sight of the ships seemed to
have thrown into confusion, or fear. We could plainly see persons
running up the country with burdens upon their backs. At these
habitations, I proposed to land; and accordingly went with three
armed boats, accompanied by some of the officers. About thirty or
forty men, each armed with a spontoon, a bow, and arrows, stood
drawn up on a rising ground close by the village. As we drew near,
three of them came down toward the shore, and were so polite as to
take off their caps, and to make us low bows. We returned the
civility; but this did not inspire them with sufficient confidence to
wait for our landing; for the moment we put the boats ashore, they
retired. I followed them alone, without any thing in my hand; and by
signs and gestures prevailed on them to stop, and receive some
trifling presents. In return for these, they gave me two fox skins,
and a couple of sea-horse teeth. I cannot say whether they or I
made the first present; for it appeared to me, that they had brought
down with them these things for this very purpose; and that they
would have given them to me, even though I had made no return.
They seemed very fearful and cautious; expressing their desire by
signs, that no more of our people should be permitted to come up.
On my laying my hand on the shoulder of one of them, he started
back several paces. In proportion as I advanced, they retreated
backward; always in the attitude of being ready to make use of their
spears; while those on the rising ground stood ready to support
them with their arrows. Insensibly, myself, and two or three of my
companions, got in amongst them. A few beads distributed to those
about us, soon created a kind of confidence; so that they were not
alarmed when a few more of our people joined us; and, by degrees,
a sort of traffic between us commenced. In exchange for knives,
beads, tobacco, and other articles, they gave us some of their
clothing, and a few arrows. But nothing that we had to offer could
induce them to part with a spear, or a bow. These they held in
constant readiness, never once quitting them, except at one time,
when four or five persons laid theirs down, while they gave us a
song and a dance. And even then, they placed them in such a
manner, that they could lay hold of them in an instant; and for their
security, they desired us to sit down.
The arrows were pointed either with bone or stone, but very few
of them had barbs; and some had a round blunt point. What use
these may be applied to I cannot say; unless it be to kill small
animals, without damaging the skin. The bows were such as we had
seen on the American coast, and like those used by the Esquimaux.
The spears, or spontoons, were of iron or steel, and of European or
Asiatic workmanship; in which no little pains had been taken to
ornament them with carving, and inlayings of brass and of a white
metal. Those who stood ready with bows and arrows in their hands,
had a spear slung over their shoulder by a leathern strap. A leathern
quiver, slung over their left shoulder, contained arrows; and some of
these quivers were extremely beautiful; being made of red leather,
on which was very neat embroidery, and other ornaments.
Several other things, and in particular their clothing, shewed that
they were possessed of a degree of ingenuity, far surpassing what
one could expect to find amongst so northern a people. All the
Americans we had seen since our arrival on that coast, were rather
low of stature, with round chubby faces, and high cheek-bones. The
people we now were amongst, far from resembling them, had long
visages, and were stout and well made. In short, they appeared to
be a quite different nation. We saw neither women nor children of
either sex; nor any aged, except one man, who was bald-headed;
and he was the only one who carried no arms. The others seemed to
be picked men, and rather under than above the middle age. The
old man had a black mark across his face, which I did not see in any
others. All of them had their ears bored; and some had glass beads
hanging to them. These were the only fixed ornaments we saw
about them; for they wear none to their lips. This is another thing in
which they differ from the Americans we had lately seen.
Their clothing consisted of a cap, a frock, a pair of breeches, a
pair of boots, and a pair of gloves, all made of leather, or of the
skins of deer, dogs, seals, &c., and extremely well dressed; some
with the hair or fur on; but others without it. The caps were made to
fit the head very close; and besides these caps, which most of them
wore, we got from them some hoods, made of the skins of dogs,
that were large enough to cover both head and shoulders. Their hair
seemed to be black; but their heads were either shaved, or the hair
cut close off; and none of them wore any beard. Of the few articles
which they got from us, knives and tobacco were what they valued
most.
We found the village composed both of their summer and their
winter habitations. The latter are exactly like a vault, the floor of
which is sunk a little below the surface of the earth. One of them
which I examined, was of an oval form, about twenty feet long, and
twelve or more high. The framing was composed of wood, and the
ribs of whales, disposed in a judicious manner, and bound together
with smaller materials of the same sort. Over this framing is laid a
covering of strong coarse grass; and that again is covered with
earth; so that, on the outside, the house looks like a little hillock,
supported by a wall of stone, three or four feet high, which is built
round the two sides, and one end. At the other end the earth is
raised sloping, to walk up to the entrance, which is by a hole in the
top of the roof over that end. The floor was boarded, and under it a
kind of cellar, in which I saw nothing but water. And at the end of
each house was a vaulted room, which I took to be a store-room.
These store-rooms communicated with the house by a dark passage;
and with the open air, by a hole in the roof, which was even with the
ground one walked upon; but they cannot be said to be wholly
underground; for one end reached to the edge of the hill, along
which they were made, and which was built up with stone. Over it
stood a kind of sentry-box, or tower, composed of the large bones of
large fish.
The summer huts were pretty large and circular, being brought to
a point at the top. The framing was of slight poles and bones,
covered with the skins of sea-animals. I examined the inside of one.
There was a fire-place just within the door, where lay a few wooden
vessels, all very dirty. Their bed-places were close to the side, and
took up about half the circuit. Some privacy seemed to be observed;
for there were several partitions made with skins. The bed and
bedding were of deer-skins; and most of them were dry and clean.
About the habitations were erected several stages, ten or twelve
feet high; such as we had observed on some parts of the American
coast. They were wholly composed of bones; and seemed intended
for drying their fish and skins, which were thus placed beyond the
reach of their dogs, of which they had a great many. These dogs are
of the fox kind, rather large, and of different colours, with long soft
hair like wool. They are, probably, used in drawing their sledges in
winter. For sledges they have, as I saw a good many laid up in one
of the winter huts. It is also not improbable that dogs may constitute
a part of their food. Several lay dead that had been killed that
morning.
The canoes of these people are of the same sort with those of the
northern Americans; some, both of the large and of the small ones,
being seen lying in a creek under the village.
By the large fish-bones, and of their sea-animals, it appeared that
the sea supplied them with the greatest part of their subsistence.
The country appeared to be exceedingly barren; yielding neither tree
nor shrub, that we could see. At some distance westward, we
observed a ridge of mountains covered with snow that had lately
fallen.
At first we supposed this land to be a part of the island of
Alaschka, laid down in Mr. Stæhlin’s map, before mentioned. But
from the figure of the coast, the situation of the opposite shore of
America, and from the longitude, we soon began to think that it
was, more probably, the country of the Tschutski, or the eastern
extremity of Asia, explored by Beering in 1728. But to have admitted
this, without farther examination, I must have pronounced Mr.
Stæhlin’s map, and his account of the new Northern Archipelago, to
be either exceeding erroneous, even in latitude, or else to be a mere
fiction; a judgment which I had no right to pass upon a publication
so respectably vouched, without producing the clearest proofs.
After a stay of between two and three hours with these people,
we returned to our ships; and soon after, the wind veering to the
south, we weighed anchor, stood out of the bay, and steered to the
north-east, between the coast and the two islands. The next day, at
noon, the former extended from S. 80° W., to N. 84° W.; the latter
bore 43° W.; and the peaked mountain, over Cape Prince of Wales,
bore S. 36° E.; with land extending from it as far as S. 75° E. The
latitude of the ship was 66° 51⁄4ʹ; the longitude 191° 19ʹ; our depth
of water twenty-eight fathoms; and our position nearly in the middle
of the channel between the two coasts, each being seven leagues
distant.
 From this station we steered east, in order to get nearer the
American coast. In this course the water shoaled gradually, and
there being little wind, and all our endeavours to increase our depth
failing, I was obliged at last to drop anchor in six fathoms; the only
remedy we had left to prevent the ships driving into less. The
nearest part of the western land bore W., twelve leagues distant; the
peaked hill over Cape Prince of Wales, S. 16° W.; and the
northernmost part of the American continent in sight E. S. E., the
nearest part about four leagues distant. After we had anchored, I
sent a boat to sound, and the water was found to shoal gradually
toward the land. While we lay at anchor, which was from six to nine
in the evening, we found little or no current; nor could we perceive
that the water either rose or fell.
A breeze of wind springing up north, we weighed and stood to the
westward, which course soon brought us into deep water; and,
during the 12th, we plied to the north, both coasts being in sight;
but we kept nearest to that of America.
At four in the afternoon of the 13th, a breeze springing up at
south, I steered N. E. by N., till four o’clock next morning, when,
seeing no land, we directed our course E. by N.; and between nine
and ten, land, supposed to be a continuation of the continent,
appeared. It extended from east by south to east by north; and,
soon after, we saw more land, bearing N. by E. Coming pretty
suddenly into thirteen fathoms water, at two in the afternoon we
made a trip off till four, when we stood in again for the land; which
was seen, soon after, extending from north to south-east; the
nearest part three or four leagues distant. The coast here forms a
point, named Point Mulgrave, which lies in the latitude of 67° 45ʹ;
and in the longitude of 194° 51ʹ. The land appeared very low next
the sea; but, a little back, it rises into hills of a moderate height. The
whole was free from snow; and to appearance destitute of wood. I
now tacked, and bore away N. W. by W.; but soon after, thick
weather with rain coming on, and the wind increasing, I hauled
more to the west.
 Next morning, at two o’clock, the wind veered to S. W. by S., and
blew a strong gale, which abated at noon; and the sun shining out,
we found ourselves, by observation, in the latitude of 68° 18ʹ. I now
steered N. E. till six o’clock the next morning, when I steered two
points more easterly. In this run we met with several sea-horses,
and flights of birds; some like land-larks, and others seen no bigger
than hedge-sparrows. Some shags were also seen; so that we
judged ourselves to be not far from the land. But as we had a thick
fog, we could not expect to see any; and as the wind blew strong, it
was not prudent to continue a course which was most likely to bring
us to it. From the noon of this day to six o’clock in the morning of
the following, I steered E. by N.; which course brought us into
sixteen fathoms water. I now steered N. E. by E., thinking by this
course to deepen our water. But, in the space of six leagues, it
shoaled to eleven fathoms; which made me think it proper to haul
close to the wind, that now blew at west. Toward noon, both sun
and moon were seen clearly at intervals, and we got some flying
observations for the longitude; which, reduced to noon, when the
latitude was 70° 33ʹ, gave 197° 41ʹ. The time-keeper, for the same
time, gave 198°; and the variation was 35° 1ʹ 22ʺ E. We had
afterward reason to believe that the observed longitude was within a
very few miles of the truth.
Some time before noon we perceived a brightness in the northern
horizon, like that reflected from ice, commonly called the blink. It
was little noticed, from a supposition that it was improbable we
should meet with ice so soon. And yet the sharpness of the air, and
gloominess of the weather, for two or three days past, seemed to
indicate some sudden change. About an hour after, the sight of a
large field of ice left us no longer in doubt about the cause of the
brightness of the horizon. At half past two, we tacked, close to the
edge of the ice, in twenty-two fathoms water, being then in the
latitude of 70° 41ʹ; not being able to stand on any farther. For the
ice was quite impenetrable, and extended from west by south to
east by north, as far as the eye could reach. Here were abundance
of sea-horses; some in the water, but far more upon the ice. I had
the thoughts of hoisting out the boats to kill some; but the wind
freshening, I gave up the design, and continued to ply to the
southward, or rather to the westward; for the wind came from that
quarter.
We gained nothing; for on the 18th at noon our latitude was 70°
44ʹ; and we were near five leagues farther to the eastward. We
were, at this time, close to the edge of the ice, which was as
compact as a wall, and seemed to be ten or twelve feet high at
least. But farther north, it appeared much higher. Its surface was
extremely rugged, and here and there we saw upon it pools of
water.
We now stood to the southward, and, after running six leagues,
shoaled the water to seven fathoms; but it soon deepened to nine
fathoms. At this time the weather, which had been hazy, clearing up
a little, we saw land extending from south to south-east by east,
about three or four miles distant. The eastern extreme forms a
point, which was much encumbered with ice; for which reason it
obtained the name of Icy Cape. Its latitude is 79° 29ʹ, and its
longitude 198° 20ʹ. The other extreme of the land was lost in the
horizon; so that there can be no doubt of its being a continuation of
the American continent. The Discovery being about a mile astern,
and to leeward, found less water than we did, and tacking on that
account, I was obliged to tack also, to prevent separation.
Our situation was now more and more critical. We were in shoal
water, upon a lee shore; and the main body of the ice to windward,
driving down upon us. It was evident that if we remained much
longer between it and the land, it would force us ashore, unless it
should happen to take the ground before us. It seemed nearly to
join the land to leeward; and the only direction that was open was to
the south-west. After making a short board to the northward, I
made the signal for the Discovery to tack, and tacked myself at the
same time. The wind proved rather favourable, so that we lay up
south-west, and south-west by west.
At eight in the morning of the 19th, the wind veering back to
west, I tacked to the northward; and at noon the latitude was 70°
6ʹ, and the longitude 196° 42ʹ. In this situation we had a good deal
of drift-ice about us; and the main ice was about two leagues to the
north. At half past one we got in with the edge of it. It was not so
compact as that which we had seen to the northward; but it was too
close, and in too large pieces, to attempt forcing the ships through
it. On the ice lay a prodigious number of sea-horses; and as we
were in want of fresh provisions, the boats from each ship were sent
to get some.
By seven o’clock in the evening, we had received on board the
Resolution nine of these animals, which, till now, we had supposed
to be sea-cows, so that we were not a little disappointed, especially
some of the seamen, who, for the novelty of the thing, had been
feasting their eyes for some days past. Nor would they have been
disappointed now, nor have known the difference, if we had not
happened to have one or two on board, who had been in Greenland,
and declared what animals these were, and that no one ever ate of
them. But notwithstanding this, we lived upon them as long as they
lasted; and there were few on board who did not prefer them to our
salt meat.
The fat at first is as sweet as marrow; but in a few days it grows
rancid, unless it be salted, in which state it will keep much longer.
The lean flesh is coarse, black, and has rather a strong taste, and
the heart is nearly as well tasted as that of a bullock. The fat when
melted yields a good deal of oil, which burns very well in lamps, and
their hides, which are very thick, were very useful about our rigging.
The teeth, or tusks, of most of them were at this time very small,
even some of the largest and oldest of these animals had them not
exceeding six inches in length. From this we concluded that they had
lately shed their old teeth.
They lie in herds of many hundreds upon the ice, huddling one
over the other like swine, and roar or bray very loud; so that in the
night, or in foggy weather, they gave us notice of the vicinity of the
ice, before we could see it. We never found the whole herd asleep,
some being always upon the watch. These, on the approach of the
boat, would wake those next to them, and the alarm being thus
gradually communicated, the whole herd would be awake presently.
But they were seldom in a hurry to get away, till after they had been
once fired at. Then they would tumble one over the other into the
sea, in the utmost confusion. And if we did not, at the first
discharge, kill those we fired at, we generally lost them, though
mortally wounded. They did not appear to us to be that dangerous
animal some authors have described, not even when attacked. They
are rather more so to appearance than in reality. Vast numbers of
them would follow, and come close up to the boats; but the flash of
a musket in the pan, or even the bare pointing of one at them,
would send them down in an instant. The female will defend the
young one to the very last, and at the expence of her own life,
whether in the water or upon the ice. Nor will the young one quit
the dam, though she be dead, so that, if you kill one, you are sure
of the other. The dam, when in the water, holds the young one
between her fore-fins.
Mr. Pennant, in his Synopsis Quadr., p. 335[80], has given a very
good description of this animal, under the name of Arctic Walrus;
but I have no where seen a good drawing of one. Why they should
be called sea-horses, is hard to say, unless the word be a corruption
of the Russian name, Morse; for they have not the least resemblance
of a horse. This is, without doubt, the same animal that is found in
the Gulph of St. Lawrence, and there called sea-cow. It is certainly
more like a cow than a horse, but this likeness consists in nothing
but the snout. In short, it is an animal like a seal, but incomparably
larger. The dimensions and weight of one which was none of the
largest, were as follow:
Feet. Inches.
Length from the snout to the tail 9 4
Length of the neck, from the snout to
2 6
the shoulder-bone
Height of the shoulder 5 0
Fore 2 4
Length of the fins
Hind 2 6
 Fore 1 21⁄2
Breadth of the fins
Hind 2 0

Breadth 0 51⁄2
Snout
Depth 1 3
Circumference of the neck close to the
2 7
ears
Circumference of the body at the
7 10
shoulder
Circumference near the hind fins 5 6
From the snout to the eyes 0 7
Weight of the carcase,
without the head, skin, or 854 lb.
entrails
Head 411⁄2
Skin 205
I could not find out what these animals feed upon. There was
nothing in the maws of those we killed.
It is worth observing, that, for some days before this date, we had
frequently seen flocks of ducks flying to the southward. They were
of two sorts, the one much larger than the other. The largest were of
a brown colour; and, of the small sort, either the duck or drake was
black and white, and the other brown. Some said they saw geese
also. Does not this indicate that there must be land to the north,
where these birds find shelter, in the proper season, to breed, and
from whence they were now returning to a warmer climate?
By the time we had got our sea-horses on board, we were, in a
manner, surrounded with the ice; and had no way left to clear it, but
by standing to the southward, which was done till three o’clock next
morning, with a gentle breeze westerly, and, for the most part, thick,
foggy, weather. The soundings were from twelve to fifteen fathoms.
We then tacked and stood to the N. till ten o’clock, when the wind
veering to the northward, we directed our course to the W. S. W.
and W. At two in the afternoon, we fell in with the main ice, along
the edge of which we kept, being partly directed by the roaring of
the sea-horses; for we had a very thick fog. Thus we continued
sailing till near midnight, when we got in amongst the loose ice, and
heard the surge of the sea upon the main ice.
The fog being very thick, and the wind easterly, I now hauled to
the southward; and at ten o’clock the next morning, the fog clearing
away, we saw the continent of America, extending from S. by E. to
E. by S.; and at noon, from S. W. 1⁄2 S. to E., the nearest part five
leagues distant. At this time we were in the latitude of 69° 32ʹ, and
in the longitude of 195° 48ʹ; and as the main ice was at no great
distance from us, it is evident, that it now covered a part of the sea,
which, but a few days before, had been clear; and that it extended
farther to the S. than where we first fell in with it. It must not be
understood that I supposed any part of this ice which we had seen
to be fixed; on the contrary, I am well assured that the whole was a
moveable mass.
Having but little wind, in the afternoon I sent the master in a boat
to try if there was any current; but he found none. I continued to
steer in for the American land, until eight o’clock, in order to get a
nearer view of it, and to look for a harbour, but seeing nothing like
one, I stood again to the N., with a light breeze westerly. At this time
the coast extended from S. W. to E., the nearest part four or five
leagues distant. The southern extreme seemed to form a point,
which was named Cape Lisburne. It lies in the latitude of 69° 5ʹ, and
in the longitude of 194° 42ʹ, and appeared to be pretty high land,
even down to the sea. But there may be low land under it, which we
might not see, being not less than ten leagues from it. Every where
else, as we advanced northward, we had found a low coast, from
which the land rises to a middle height. The coast now before us
was without snow, except in one or two places, and had a greenish
hue. But we could not perceive any wood upon it.
On the 22d, the wind was southerly, and the weather mostly
foggy, with some intervals of sunshine. At eight in the evening it fell
calm, which continued till midnight, when we heard the surge of the
sea against the ice, and had several loose pieces about us. A light
breeze now sprung up at N. E., and as the fog was very thick, I
steered to the southward, to clear the ice. At eight o’clock next
morning, the fog dispersed, and I hauled to the westward. For
finding that I could not get to the N. near the coast, on account of
the ice, I resolved to try what could be done at a distance from it;
and as the wind seemed to be settled at N., I thought it a good
opportunity.
As we advanced to the W., the water deepened gradually to
twenty-eight fathoms, which was the most we had. With the
northerly wind the air was raw, sharp, and cold; and we had fogs,
sunshine, showers of snow and sleet, by turns. At ten in the morning
of the 26th, we fell in with the ice. At noon it extended from N. W. to
E. by N., and appeared to be thick and compact. At this time, we
were, by observation, in the latitude of 69° 36ʹ, and in the longitude
of 184°, so that it now appeared we had no better prospect of
getting to the N. here, than nearer the shore.
I continued to stand to the westward, till five in the afternoon,
when we were in a manner embayed by the ice, which appeared
high and very close in the N. W. and N. E. quarters, with a great deal
of loose ice about the edge of the main field. At this time we had
baffling light winds, but it soon fixed at S., and increased to a fresh
gale, with showers of rain. We got the tack aboard, and stretched to
the eastward; this being the only direction in which the sea was
clear of ice.
At four in the morning of the 27th, we tacked and stood to the W.,
and at seven in the evening we were close in with the edge of the
ice, which lay E. N. E. and W. S. W., as far each way as the eye could
reach. Having but little wind, I went with the boats to examine the
state of the ice. I found it consisting of loose pieces of various
extent, and so close together, that I could hardly enter the outer
edge with a boat; and it was as impossible for the ships to enter it,
as if it had been so many rocks. I took particular notice that it was
all pure transparent ice, except the upper surface, which was a little
porous. It appeared to be entirely composed of frozen snow, and to
have been all formed at sea. For setting aside the improbability, or
rather impossibility, of such huge masses floating out of rivers, in
which there is hardly water for a boat, none of the productions of
the land were found incorporated or fixed in it; which must have
unavoidably been the case, had it been formed in rivers, either great
or small. The pieces of ice that formed the outer edge of the field,
were from forty to fifty yards in extent to four or five; and I judged
that the larger pieces reached thirty feet or more under the surface
of the water. It also appeared to me very improbable, that this ice
could have been the production of the preceding winter alone; I
should suppose it rather to have been the production of a great
many winters. Nor was it less improbable, according to my
judgment, that the little that remained of the summer could destroy
the tenth part of what now subsisted of this mass, for the sun had
already exerted upon it the full influence of his rays. Indeed, I am of
opinion that the sun contributes very little toward reducing these
great masses. For although that luminary is a considerable while
above the horizon, it seldom shines out for more than a few hours at
a time, and is not seen for several days in succession. It is the wind,
or rather the waves raised by the wind, that bring down the bulk of
these enormous masses, by grinding one piece against another, and
by undermining and washing away those parts that lie exposed to
the surge of the sea. This was evident, from our observing that the
upper surface of many pieces had been partly washed away, while
the base or under part remained firm for several fathoms round that
which appeared above water, exactly like a shoal round an elevated
rock. We measured the depth of water upon one, and found it to be
fifteen feet, so that the ships might have sailed over it. If I had not
measured this depth, I should not have believed that there was a
sufficient weight of ice above the surface, to have sunk the other so
much below it. Thus it may happen, that more ice is destroyed in
one stormy season than is formed in several winters, and an endless
accumulation is prevented. But that there is always a remaining
store, every one who has been upon the spot will conclude, and
none but closet-studying philosophers will dispute.
 A thick fog, which came on while I was thus employed with the
boats, hastened me aboard rather sooner than I could have wished,
with one sea-horse to each ship. We had killed more, but could not
wait to bring them with us. The number of these animals on all the
ice that we had seen is almost incredible. We spent the night
standing off and on, amongst the drift ice; and at nine o’clock the
next morning, the fog having partly dispersed, boats from each ship
were sent for sea-horses. For, by this time, our people began to
relish them, and those we had procured before were all consumed.
At noon, our latitude was 69° 17ʹ, our longitude 183°; the variation,
by the morning azimuths, 25° 56ʹ E.; and the depth of water twenty-
five fathoms. At two o’clock, having got on board as much marine
beef as was thought necessary, and the wind freshening at S. S. E.,
we took on board the boats, and stretched to the S. W.; but not
being able to weather the ice upon this tack, or to go through it, we
made a board to the E., till eight o’clock, then resumed our course to
the S. W., and before midnight were obliged to tack again, on
account of the ice. Soon after, the wind shifted to the N. W., blowing
a stiff gale, and we stretched to the S. W., close hauled.
In the morning of the 29th, we saw the main ice to the northward,
and not long after, land bearing south-west by west. Presently after
this, more land showed itself, bearing west. It showed itself in two
hills like islands, but afterward the whole appeared connected. As we
approached the land, the depth of water decreased very fast; so that
at noon, when we tacked, we had only eight fathoms; being three
miles from the coast, which extended from south, 30° east, to north,
60° west. This last extreme terminated in a bluff point, being one of
the hills above mentioned.
The weather at this time was very hazy, with drizzling rain; but
soon after, it cleared; especially to the southward, westward, and
northward. This enabled us to have a pretty good view of the coast;
which, in every respect, is like the opposite one of America; that is,
low land next the sea, with elevated land farther back. It was
perfectly destitute of wood, and even snow; but was, probably,
covered with a mossy substance, that gave it a brownish cast. In the
low ground lying between the high land and the sea, was a lake,
extending to the south-east, farther than we could see. As we stood
off, the westernmost of the two hills before mentioned came open
off the bluff point, in the direction of north-west. It had the
appearance of being an island; but it might be joined to the other by
low land, though we did not see it. And if so, there is a two-fold
point, with a bay between them. This point, which is steep and
rocky, was named Cape North. Its situation is nearly in the latitude
of 68° 56ʹ, and in the longitude of 180° 51ʹ. The coast beyond it
must take a very westerly direction; for we could see no land to the
northward of it, though the horizon was there pretty clear. Being
desirous of seeing more of the coast to the westward, we tacked
again, at two o’clock in the afternoon, thinking we could weather
Cape North. But finding we could not, the wind freshening, a thick
fog coming on, with much snow, and being fearful of the ice coming
down upon us, I gave up the design I had formed of plying to the
westward, and stood offshore again.
The season was now so far advanced, and the time when the frost
is expected to set in so near at hand, that I did not think it
consistent with prudence, to make any farther attempts to find a
passage into the Atlantic this year, in any direction; so little was the
prospect of succeeding. My attention was now directed toward
finding out some place where we might supply ourselves with wood
and water; and the object uppermost in my thoughts was, how I
should spend the winter, so as to make some improvements in
geography and navigation, and, at the same time, be in a condition
to return to the north, in farther search of a passage, the ensuing
summer.
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