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ABC classification system

Method of managing inventories based on their total value.


Personal characteristics used in performing a job.

absolute advantage

The ability to produce more of a good than another producer.

acceptance sampling

Statistical method of predicting the quality of a batch or a large group of products by inspecting a sample or group of samples.

active listening

Absorbing what another person is saying and responding to the person's concerns.

activity scheduling

Develops the precise timetable to be followed in producing a product or service.

affirmative action plan

Written document outlining specific goals and timetables for remedying past discriminatory actions.

Age Discrimination in Employment Act of 1968

Passed in 1968, initially designed to protect individuals ages 40 to 65 from discrimination in hiring, retention, and other conditions of employment. Amended in 1978 to include individuals up to age 70. Specifically, forbids mandatory retirement at 65 except in certain circumstances.

aggregate operations planning

Concerned with overall operations and balancing major sections of the operating system; matches the organization's resources with demands for its goods and services.

Americans with Disabilities Act of 1990 (ADA)

Gives individuals with disabilities sharply increased access to services and jobs.

apprenticeship training

System in which an employee is given instruction and experience, both on and off the job, in all of the practical and theoretical aspects of the work required in a skilled occupation, craft, or trade.

aptitude tests

Measure a person's capacity or potential ability to learn.

assembly chart

Depicts the sequence and manner in which the various components of a product or service are assembled.

assessment center

Utilizes a formal procedure to simulate the problems a person might face in a real managerial situation to evaluate the person's potential as a manager and determine the person's development needs.


Method of control normally involved with financial matters; also can include other areas of the organization.


Legitimate exercise of power; the right to issue directives and expend resources; related to power but narrower in scope.

autocratic leader

Makes most decisions for the group.


Giving a person the opportunity to avoid a negative consequence by exhibiting a desirable behavior. Also called negative reinforcement.

balance of trade

Difference between the value of the goods a country exports and the value of the goods it imports.

behavior (personal) control

Based on direct, personal surveillance.

behaviorally anchored rating scale (BARS)

Assesses behaviors required to successfully perform a job.

bet-your-company culture

Requires big-stakes decisions; considerable time passes before the results are known.

board of directors

Carefully selected committee that reviews major policy and strategy decisions proposed by top management.

bottom-up management

Philosophy popularized by William B. Given that encouraged widespread delegation of authority to solicit the participation of all employees from the bottom to the top of the organization.


Presenting a problem to a group and allowing group members to produce a large quantity of ideas for its solution; no criticisms are allowed initially.


Technique in which a group is presented with a problem situation and members anonymously write down ideas, then exchange papers with others who build on ideas and pass them on until all members have participated.

break-even chart

Depicts graphically the relationship of volume of operations to profits.


Statement of expected results or requirements expressed in financial or numerical terms.


Condition that occurs when work is no longer meaningful to a person.

business game

Generally provides a setting of a company and its environment and requires a team of players to make decisions involving company operations.

business strategies

Focus on how to compete in a given business.

case study

Training technique that presents real and hypothetical situations for the trainee to analyze.

central tendency

Tendency of raters to rate most employees as doing average or above-average work.


Little authority is delegated to lower levels of management.


Requires the manager to answer yes or no to a series of questions concerning the employee's behavior.

Civil Rights Act of 1991

Permits women, persons with disabilities, and persons who are in religious minorities to have a jury trial and sue for punitive damages if they can prove intentional hiring and workplace discrimination. Also requires companies to provide evidence that the business practice that led to the discrimination was not discriminatory but was related to the performance of the job in question and consistent with business necessity.


Carried out by experienced managers, emphasizes the responsibility of all managers for developing employees.

code of ethics

A document that outlines the principles of conduct to be used in making decisions within an organization.

combination strategy

Used when an organization simultaneously employs different strategies for different parts of the company.


Organization structure in which a group of people are formally appointed, organized, and superimposed on the line or line and staff structure to consider or decide certain matters.


The act of exchanging information.

comparative advantage

Exists when a country can produce goods more efficiently or cheaply than other countries because of its specific circumstance.


Composed of the extrinsic rewards offered by the organization and consists of the base wage or salary, any incentives or bonuses, and any benefits employees receive in exchange for their work.

competitive advantage

Sometimes called businessspecific advantage; refers to some proprietary characteristic of the business, such as a brand name, that competitors cannot imitate without substantial cost and risk.

computer-aided design (CAD)

Generates various views of different components and assemblies.

computer-aided engineering (CAE)

Uses a product's characteristics to analyze its performance under different parameters.

computer-aided manufacturing

(CAM) Uses stored data regarding various products to provide instructions for automated production equipment.

computer-based training

Training that allows the trainee to absorb knowledge from a preset computer program and advance his or her knowledge in a self-paced format.

computer-integrated manufacturing (CIM)

Uses computer technology to incorporate all of the organization's production-related functions into an integrated computer system to assist, augment, or automate most functions.

conceptual skills

Involve understanding the relationship of the parts of a business to one another and to the business as a whole. Decision making, planning, and organizing are specific managerial activities that require conceptual skills.

concurrent (screening) control

Focuses on process as it occurs; designed to detect a problem when it occurs.


Overt behavior that results when an individual or a group of individuals thinks a perceived need or needs of the individual or group have been blocked or are about to be blocked.


Leader behavior of showing concern for individual group members and satisfying their needs.

contingency approach to leadership

Focuses on the style of leadership that is most effective in particular situations.

contingency approach to management

Theorizes that different situations and conditions require different management approaches.

contingency (situational) approach to organization structure

States that the most appropriate structure depends on the technology used, the rate of environmental change, and other dynamic forces.

contingency plans

Address the what-ifs of the manager's job; get the manager in the habit of being prepared and knowing what to do if something does go wrong.

continuous flow system

Operating system used by companies that produce large amounts of similar products/services flowing through similar stages of the operating system.

continuous improvement

Refers to an ongoing effort to make improvements in every part of the organization relative to all of its products and services.


An agreement between two parties to carry out a transaction.


Process of ensuring that organizational activities are going according to plan; accomplished by comparing actual performance to predetermined standards or objectives, then taking action to correct any deviations.

control tolerances

Variation from the standard that is acceptable to the manager.


Measuring performance against objectives, determining the causes of deviations, and taking corrective action where necessary.


The protection provided to a creative work.

corporate culture

Communicates how people in an organization should behave by establishing a value system conveyed through rites, rituals, myths, legends, and actions.

corporate strategies

See grand strategies.


A business formed under state or federal statutes that is authorized to act as a legal person.


Coming up with an idea that is new, original, useful, or satisfying to its creator or to someone else.

critical-incident appraisal

Requires the manager to keep a written record of incidents, as they occur, involving job behaviors that illustrate both satisfactory and unsatisfactory performance of the employee being rated.

critical path method (CPM)

Planning and control technique that graphically depicts the relationships among the various activities of a project; used when time durations of project activities are accurately known and have little variance.


Set of important understandings (often unstated) that members of a community share.

customer departmentalization

Defining organizational units in terms of customers served.

data processing

Capture, processing, and storage of data.


A great deal of authority is delegated to lower levels of management.

decision making

In its narrowest sense, the process of choosing from among various alternatives.

decision process

Process that involves three stages: intelligence, design, and choice. Intelligence is searching the environment for conditions requiring a decision. Design is inventing, developing, and analyzing possible courses of action. Choice is the actual selection of a course of action.

defensive (retrenchment) strategy

Used when a company wants or needs to reduce its operations.

democratic leader

Guides and encourages the group to make decisions.


Grouping jobs into related work units.

dependent demand item

Subassembly or component parts used to make a finished product; their demand is based on the number of finished products being produced.

direct feedback

Process in which the change agent communicates the information gathered through diagnosis directly to the affected people.


Feeling of conflict felt by individual trying to make a decision.


Including people of different genders, races, religions, nationalities, ethnic groups, age groups, and physical abilities.

economic order quantity (EOQ)

Optimal number of units to order at one time.


Results from being motivated; refers to the amount of energy an employee uses in performing a job.


Involves stopping the flow of exports to or imports from a foreign country.

employee assistance program (EAP)

Program sponsored by the organization that attempts to help employees with stress, burnout, and other personal problems that include alcohol and drug abuse, depression, anxiety, domestic trauma, financial problems, and other psychiatric/medical problems.

employee leasing companies

Provide permanent staffs at customer companies.


Form of decentralization in which subordinates have authority to make decisions.


An individual who conceives the idea of what product or service to produce, starts the organization, and builds it to the point where additional people are needed.

entry socialization

Adaptation process by which new employees are introduced and indoctrinated into the organization.

environmental changes

All nontechnological changes that occur outside the organization.

equal employment opportunity

The right of all people to work and to advance on the bases of merit, ability, and potential.

Equal Pay Act of 1963

Prohibits wage discrimination on the basis of sex.

equity theory

Motivation theory based on the idea that people want to be treated fairly in relationship to others.


Study of the interface between humans and machines

essay appraisal method

Requires the manager to describe an employee's performance in written narrative form.


A set of moral principles or values that govern behavior.

evaluation phase

Third phase in strategic management, in which the implemented strategic plan is monitored, evaluated, and updated.

exception principle

States that managers should concentrate on matters that deviate significantly from normal and let subordinates handle routine matters; also called management by exception.


Employee's belief that his or her effort will lead to the desired level of performance.

expectancy approach

Based on the idea that employees' beliefs about the relationship among effort, performance, and outcomes as a result of performance and the value employees place on the outcomes determine their level of motivation.


Goods and services that are sold abroad.

external environment

Consists of everything outside the organization.


Providing no positive consequences or removing previously provided positive consequences as a result of undesirable behavior.

extrinsic rewards

Rewards that are directly controlled and distributed by the organization.

facilities layout

Process of planning the optimal physical arrangement of facilities, including personnel, operating equipment, storage space, office space, materials-handling equipment, and room for customer or product movement.

Family and Medical Leave Act (FMLA)

Enables qualified employees to take prolonged unpaid leave for family- and health-related reasons without fear of losing their jobs.


The flow of information from the receiver to the sender.

feedback system

System in which outputs from the system affect future inputs or future activities of the system.

fixed overhead expenses

Expenses that do not change appreciably with fluctuations in the level of production or service.

fixed-position layout

A type of facilities layout where the product is too large to move and remains in one place.

flat structure

Organization with few levels and relatively large spans of management at each level.

flow process chart

Outlines what happens to a product or service as it progresses through the facility.

forced-choice rating

Requires the manager to rank a set of statements describing how an employee carries out the duties and responsibilities of the job.

formal plan

Written, documented plan developed through an identifiable process.

formal work group

Work group established and formally recognized by the organizing function of management.

formulation phase

First phase in strategic management, in which the initial strategic plan is developed.

free trade area

A region within which trade restrictions are reduced or eliminated.

functional departmentalization

Defining organizational units in terms of the nature of the work.

functional plans

Originate from the functional areas of an organization such as production, marketing, finance, and personnel.

functional strategies

Concerned with the activities of the different functional areas of the business.

Gantt chart

Planning and controlling device that graphically depicts work planned and work accomplished in their relation to each other and to time.

geographic departmentalization

Defining organizational units by territories.

glass ceiling

Refers to a level within the managerial hierarchy beyond which very few women and minorities advance.

global economy

Economy in which companies compete actively with businesses from around the world.

Gordon technique

Differs from brainstorming in that no one but the group leader knows the exact nature of the real problem under consideration. A key word is used to describe a problem area.

grand or corporate strategies

Address which businesses an organization will be in and how resources will be allocated among those businesses.


Informal channels of communication within an organization.

graphic rating scale

Requires the manager to assess an employee on factors such as quantity of work, dependability, job knowledge, attendance, accuracy of work, and cooperativeness.

group cohesiveness

Degree of attraction each member has for the group, or the "stick-togetherness" of the group.

group conformity

Degree to which the members of the group accept and abide by the norms of the group.

group norms

Informal rules a group adopts to regulate and regularize group members' behavior.


Dysfunctional syndrome that cohesive groups experience that causes the group to lose its critical evaluative capabilities.

growth strategy

Used when the organization tries to expand, as measured by sales, product line, number of employees, or similar measures.

halo effect

Occurs when the interviewer allows a single prominent characteristic to dominate judgment of all other traits.

Hawthorne effect

States that giving special attention to a group of employees (such as involving them in an experiment) changes their behavior.

Hawthorne studies

Series of experiments conducted in 1924 at the Hawthorne plant of Western Electric in Cicero, Illinois; production increased in relationship to psychological and social conditions rather than to the environment.

horizontal or lateral communication

Communication across the lines of the formal chain of command.

horizontal structure

Consists of two groups. One group is composed of members of senior management who are responsible for strategic decisions and policies. The second group is composed of empowered employees working together in different process teams.

human asset accounting

Determining and recording the value of an organization's human resources in its statement of financial condition.

human relations skills

Involve understanding people and being able to work well with them.

human resource forecasting

Process that attempts to determine the future human resource needs of the organization in light of the organization's objectives.

human resource planning (HRP)

Process of "getting the right number of qualified people into the right job at the right time." Also called personnel planning.

hybrid departmentalization

Occurs when an organization simultaneously uses more than one type of departmentalization.

idiosyncrasy credit

Phenomenon that occurs when certain members who have made or are making significant contributions to the group's goals are allowed to take some liberties within the group.

implementation phase

Second phase in strategic management, in which the strategic plan is put into effect.


The purchasing of goods from a foreign company.


Goods and services purchased abroad.

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