208 terms

Management Final

Span of Management
The number of employees reporting to a supervisor aka. span of control
Unity of Command
Each employee is held accountable under one supervisor
Division of Labor
Work specialization. the degree to which organizational tasks are separated into separate jobs
Work Specialization
same as division of labor
Chain of Command
Unbroken line of authority that links all employees in an organization and shows who reports to whom.
Scalar Principle
A clearly defined line of authority in the organization that includes all employees
Unity of Direction
similar activities in an organization should be grouped together under one manager
Economic Environment Factors
represents the general economic health of the country or region in which the organization operates.
the concept that the whole is greater than the sum of its parts. The organization must be managed as a coordinated whole.
Characteristics of Effective Goal Setting
a. Goals need to be specific and measurable. Should be expressed in quantitative terms. Ex: increasing profits by 2 percent. Not all goals can be expressed in numerical terms, but vague goals have little motivation power for the employees. Important point is that the goals be precisely defined and allow for measurable progress.
b. Effective goals also have a defined time period that specifies the date on which goal attainment will be measured.
c. Goals should cover key result areas. Goals cannot be set for every aspect of employee behavior or organizational performance; if they were, their sheer number would render them meaningless. Instead, managers establish goals based on the idea of choice and clarity (a few carefully chosen, clear, and direct goals can more powerfully focus on organizational attention, energy, and resources).
d. Mangers should set goals that are challenging but realistic. When goals are unrealistic, they set employees for failure and lead to a decrease in employee morale. However, if goals are too easy, employees may not feel motivated.
e. Goals should also be linked to rewards.
f. The ultimate impact of goals depends on the extent to which salary increases, promotions, and awards are based on goal achievement.
i. Employees pay attention to what gets noticed and rewarded in the organization.
Mission Statement
a. a broadly stated definition of purpose that distinguishes the organization from others of a similar type
Strategic Goals
a. Broad statements describing where the organization wants to be in the future. These goals pertain to the organization as a whole rather than to specific division or departments
The blueprint that defines activities
b. AKA Official goals
Tactical Goals
a. Tactical goals and plans are the responsibility of middles managers.
i. Ex: Heads of major divisions or functional units
b. Division managers will formulate tactical plans that focus on the major actions the division must take to fulfill its part of the strategic plan set by top management.
c. results that major divisions and departments within the organizations intend to achive.
d. Tactical goals apply to middle management and describe what major subunits must do for the organization to achieve its overall goals
- help execute major strategic plans
Specific part of the company's strategy
Plans of the divisions and departments
Big Five Personality Traits
-emotional stablity
-openess to experience
Self-Serving Bias
tendency to overestimate the contribution of internal factors to ones successes and the contribution of external factors to ones failures
Fundamental Attribution Error
tendency to underestimate the influence of external factors on anothers behavior and to overestimate the influence of internal factors
Roles of Management
Role- set of expectations for a managers behavior
Informational roles, Interpersonal roles, and Decisional roles
Informational Roles
describe the activities used to maintain and develop an information network. Monitor -seek and receive information, scan periodicals and reports, maintain personal contacts. Disseminator- forward information to other organization members, send memos and reports, make phone calls. Spokesperson- transmit information to outsiders through speeches, reports, and memos.
Interpersonal Roles
pertain to relationships with others and are related to the human skills described earlier. Figurehead- perform ceremonial and symbolic duties such as greeting visitors, signing legal documents. Leader- direct and motivate subordinates train, counsel, and communicate with subordinates. Liaison- maintain information links both inside and outside organization; use email, phone calls, and meetings.
Decisional Roles
pertain to those events about which the manager must make a choice and take action. They require conceptual as well as human skills. Entrepreneur- initiate improvement projects, identify new ideas, delegate idea responsibility to others. Disturbance handler- take corrective action during disputes or crises; resolve conflicts among subordinates adapt to environmental crises. Resource allocator- decides who gets resources; schedule, budget, set priorities. Negotiator- represent department during negotiation of union contracts, sales, purchases, budgets, represent departmental interests.
Perceptual Defense
tendency of perceivers to protect themselves by disregarding ideas, objects, or people that are threatening to them
Utilitarian Approach
under this approach a decision maker is expected to consider the effect of each decision alternative on all parties and select the one that optimizes the benefits for the greatest number of people. The utilitarian ethic is cited as the basis for the recent trend among companies to monitor employee use of the internet and police personal habits such as alcohol and tobacco consumption because such behavior affects the entire work place.
Individualism Approach
- contends that acts are moral when they promote the individuals best long term interests. Individualism is believed to lead to honesty and integrity because that works best in the long run.
Justice Approach
holds that moral decisions must be based on standards of equity, fairness, and impartiality. Three types of justice are of concern to managers. Distributive justice requires that different treatment of people not based on arbitrary characteristics. For example men and woman should not receive different salaries if they are performing the same job. Compensatory justice- argues that individuals should be compensated for the cost of their injuries by the party responsible.
Moral Justice Approach
asserts that human beings have fundamental rights and liberties that cannot be taken away by individuals decision. Thus an ethically correct decision is one that best maintains the rights of those affected by it.
Ethical Domain
no specific laws yet has standard set of conduct based or shared principles and value of moral conduct for company
MBO/ Management by Objectives
is a system where managers and employees define goals for every department, project, and person, and use them to monitor subsequent performacnce
Four major activities make MBO successful
i. Set goals. Setting goals involves eployees at all level and looks beyond day to day activities to answer the question, "What are we trying to accomplish?" mangers head the criteria of effective goals described in the previous section and make sure to assign the responsibility of goal accomplishment. However, goals should be jointly derived. Mutual agreement between employee and supervisor creates the strongest commitment to achieving goals. In the case fo teams, all team members may participate in setting goals.
ii. Developing action plans. An action plan defines the course of action needed to achieve the stated goals. Action plans are made for both individuals and departments.
iii. Review progress. A periodic progress review is important to ensure action plans are working. These reviews can occur informally between mangers and subordiantes, where the organization may wish to conduct three, six, or nine month reviews during the year. The periodic checkup allows managers and employees to see whether they are on target or whether corrective action is needed. Managers and employees should not be locked into predefined behavior and must be willing to take whatever steps are necessary to produce meaningful results. The point of MBO is to achieve goals. The action plan can be changed whenever goals are not being ment.
iv. Appraise overall performance. The final step in MBO is to carefully evaluate whether annual goals have been achieved for both individuals and departments. Success or failure to achieve goals can become part of the performance appraisal system and the designation of salary increases and other rewards. The appraisal of departmental and overall corporate performance shapes goals for the next year. THE MBO CYCLE REPEATS ITSELF NATURALLY.
GATT-General Agreement on Tariffs and Trade
signed by 23 nations in 1947 started as a set of rules to ensure nondiscrimination, clear procedures, the negotiation of disputes, and the participation of lesser- developed countries in international trade. GATT sponsored eight rounds of international trade negotiations aimed at reducing trade restrictions. The WTO represents the maturation of GATT into a permanent global institution that can monitor international trade and has legal authority to arbitrate disputes on some 400 trade issues.
Most favored nation clause- calls for member countries to grant other member countries the most favorable treatment they accord any country concerning import and exports
the set of key values, beliefs, understandings, and norms that members of an organization share. Culture is a pattern of shared values and assumptions about how things are done within the organization. Culture can be analyzed at two levels. Visible- artifacts are all the things one can see, hear, and observe by watching members of the organization. Artifacts such as dress, office layout, symbols, slogans, and ceremonies. The second one is called invisible. At a deeper, less obvious level are values and beliefs, which are not observable but can be discerned from how people explain and justify what they do. Such as stories and language.
Theory X
- the average human being has an inherent dislike of work and will avoid it if possible. Because of the human characteristic of dislike for work, most people must be coerced, controlled, directed, or threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives. The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, and wants security above all
Theory Y
- the expenditure of physical and mental effort in work is as natural as play or rest. The average human being does not inherently dislike work. External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. A person will exercise self-direction and self control in the service of objectives to which he or she is committed. The average human being learns, under proper conditions, not only to accept but to seek responsibility. The capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population. Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized
- a cultural attitude marked by the tendency to regard ones own culture as a superior to others. Refers to a natural tendency of ppl to regard their own culture as a superior and to downgrade or dismiss other cultural values, can be found in all countries
Strong ethnocentrism attitudes within a country make it difficult for foreign firms to operate there. American managers are regularly accused of an ethnocentric attitude that assumes American way is the best way
- the degree to which the organization achieves a stated goal or succeeds in accomplishing what it tries to do
- the use of minimal resources- raw materials, money and people-to produce a desired volume of output.
Chester Barnard (1886-1961)
- studied economics at Harvard but failed to receive a degree because he lacked a course in laboratory science. He went to work in the statistical department of at&t and in 1927 became president of new jersey bell. One of barnards significant contributions was the concept of the informal organization. The informal organization occurs in all formal organizations and include cliques and naturally occurring social groupings. Barnard argued that organizations are not machines and stressed that informal relationships are powerful forces that can help the organization if properly managed. Another significant contribution was the acceptance of theory, which states that people have free will and can choose whether to follow management orders.
-led the humanistic perspective
Leverage Ratio
refers to funding activities with borrowed money
Debt ratio- total debt/ total assets
Liquidity Ratio
indicates that the organizations ability to meet its current debt obligations
Current ratio-assets/liabilities
Profitability Ratio
profits relative to a source of profits such as sales or assets
-profit marginal on sales (net income/sales)
-gross margin (gross incomet/total sales)
-return on assets (net income/total assets)
Job Enrichment
incorporating high motivators into the work including responsibility, recognition, and opportunities for growth, learning and achievement
Job Enlargement
combining a series of tasks into one new, broader job, to give employees variety and challenge
Job Rotation
moving employees from one job to another to provide them with variety and stimulation
Job Simplification
improve task efficiency by reducing the number of tasks
Need For Achievement
desire to accomplish something difficult, master complex tasks, and surpass others
Need for Belonging
desire to form close personal relationships, avoid conflict, and establish warm friendships
Need for Power
desire to influence or control others
Balanced Scorecard
A comprehensive management control system that balances traditional financial measures with measures of customer service, internal business process, and the organization capacity for learning and growth
Open Book Management
Allows employees to see for themselves through charts, computer printouts, meetings, and so forth the financial condition of the company
Information sharing
Encourage active participation
Commitment to goals
Total quality Management
-Management of the total organization to deliver quality
-a concept that focuses on managing the total organization to deliver quality to customers.
-total quality management (TQM) is a decentralized control philosophy
-infuse quality into every activity in a company through continuous improvement
-toyota is a good example of the results of TQM
-TQM became attractive in the 1980s because of its success in japan
-W. Edward Deming, known as the father of the quality movement
expense budget
A budget that outlines the anticipated and actual expenses for a responsibility center
revenue budget
Identifies forecasted and actual revenues of the organization
cash budget
Estimates and reports cash flows on a daily or weekly basis to ensure that the company has sufficent cash to meet it's obligations
capital budget
Plans and reports investments in major assets to be depreciated over several years
top down budgeting
Middle and lower level managers set departmental budget targets
Done in accordance with overall company revenues and expediters specified by top management
A budgeting process in which middle and lower level managers set departmental budget targets in accordance with overall company revenues and expediters specified by top management
bottom up budgeting
A budgeting process in which lower level managers budget their departments resource needs and pass them up to top management for approval
Lower level managers budget their departments resource needs
Pass up to top management for approval
force field analysis
the process of determining which forces drive and which resist a proposed change
- meaning that it describes how managers actually make decisions in complex situations rather than dictating how they should make decisions according to a theoretical ideal.
job satisfaction
-when the work matches the employees needs and interests, when working conditions and rewards are acceptable and when the employees like their coworkers and when they have positive relationships with supervisors
-a positive attitude toward ones job
organizational citizenship
work behavior that goes beyond job requirements to contribute to organizational success
-refers to the tendency of people to help one another and put in extra effort that goes beyond job requirements to contribute to the organizations success
organizational commitment
loyalty to,heavy, engagement involvement in ones organization
-especially important in a tight labor market, which forces employers to compete harder to attract and keep good workers
means it defines how a decision maker SHOULD make decisions. It does not describe how managers actually make decisions so much as it provides guidelines on how to reach an ideal outcome for the organization.
Classical model of decision making
Most useful when applied to programmed decisions and to decisions characterized by certainty or risk because relevant information is available and probabilities can be calculated.
Based on rational economic assumptions and manager beliefs about what ideal decision making should be. Four assumptions underlying this model:
1. The decision maker operates to accomplish goals that are known and agreed on. Problems are precisely formulated and defined.
2. The decision maker strives for conditions of certainty, gathering complete information. All alternatives and the potential results of each are calculated.
3. Criteria for evaluating alternatives are known. The decision maker selects the alternative that will maximize economic return to the organization.
4. The decision maker is rational and uses logic to assign values, order preferences, evalue alternatives, and make the decision that will maximize the attainment of organizational goals.
Classical model of decision making is considered to be normative.
The ideal, rational approach of the classical model is often unattainable by real people in real organizations, but the model has value because it helps decision makers be more rational and not rely entirely on personal preference in making decisions.
Administrative model
Focus on organizational factors that influence decisions
Seek to find alternatives for complex problems instead of rational approach
Decision goals are vague and lack consensus.
Rational procedures are not always used.
Search for alternatives is limited because of human, information and resource constraints.
Managers will settle for satisficing rather than maximizing.
Descriptive: Describes how managers make decisions
-considered to be descriptive
Bounded rationality- means people have limits, or boundaries on how rational they can be.
Satisficing- means that decision makers choose the first solution alternative that satisfies minimal decision criteria. Rather than pursuing all alternatives to id the single solution that will maximize economic returns, managers will opt for the first solution that appears to solve the problem, even if better solutions are presumed to exist. The decision maker cannot justify the time and expense of obtaining complete information.
Administrative model relies on assumptions different from those of the classical model and focuses on organizational factors that influence individual decisions. According the admistrative model:
1. Decision goals are often vague, conflicting, and lack consensus among managers. Managers often are unaware of problems or opportunities that exist in the organization.
2. Rational procedures are not always used, and, when they are, they are confined to a simplistic view of the problem that does not capture the complexity of real organizational events.
3. Managers' searches for alternatives are limited because of human, information, and resource constraints.
4. Most managers settle for a satisficing rather than a maximizing solution, partly because they have limited information and partly because they have only vague criteria for what constitutes a maximizing solution.
Intuition- represents a quick apprehension of a decision situation based on past experience of a decision situation based on past experience but without conscious thought. Another aspect of administrative decision making.
Third model of decision making.
Resembles the real environment in which managers operate
Four basic assumptions:
Organizations are made up of diverse interests
Information is ambiguous and incomplete
Managers do not have the resources to identify all dimensions of the problem
Managers engage in the push and pull of debate to decide goals and alternatives
Normative and descriptive: Useful for nonprogrammed decisions
Useful for making nonprogrammed decisions when conditions and uncertain, information is limitied, and there are manager conflicts about what goals to pursue or what course of action to take.
Coalition-informal alliance among managers who support a specific goal.
Political model closely resembles the real environment in which most managers and decision makers operate.
Begins with 4 basic assumptions-
1. Organizations are made up of groups with diverse interests, goals, and values. Managers disagree about problem priorities and may not understand or share the goals and interests of other managers.
2. Information is ambiguous and incomplete. The attempt to be rational is limited by the complexity of many problems as well as personal and organizational constraints.
3. Managers do not have the time, resources, or mental capacity to identify all dimensions of the problem and process all relevant information. Managers talk to each other and exchange viewpoints to gather information and reduce ambiguity.
4. Managers engage in the push and pull of debate to decide goals and discuss alternatives. Decisions are the result of bargaining and discussion among coalition members.
expectancy theory
motivation depends on individuals expectations about their ability to perform tasks and receive desired rewards
-focuses on the thinking process that individuals use to achieve rewards
-based on the effort, performance, and desirability of outcomes
E>P- expectancy probability that effort will lead to desired performance
P>O-expectancy probability that performance will produce desired outcome
valence- value of outcomes (rewards), or attraction to outcomes, for the individual
cognitive dissonance
-condition in which two attitudes or a behavior and an attitude conflict
-people want to behave in accordance with their attitudes
- usually will take corrective action
- a psychological discomfort that occurs when individuals recognize inconsistencies in their own attitudes and behaviors
- economic development that generates wealth and meets the needs of the current population while preserving the environment for the needs of future generations
-refers to economic development that generates wealth and meets the needs of the current population while preserving the environment so future generations can meet their needs as well
Characteristics of Weberian bureaucracy
division of labor with clear definitions of authority and responsibility. Positions organized in a hierarchy of authority. Managers subject to rules and procedures that will ensure reliable, predictable behavior. Management separate from the ownership of the organization. Administrative acts and decision recorded in writing. Personnel selected and promoted based on technical qualifications. Max weber- a german theorist introduced bureaucratic theories.
a. The strategy of moving into new lines of business.
b. Purpose of diversification is to expand the firm's business operations to produce new kinds of valuable products and services.
a. Broad in scope—general guide to action; based on organization's overall goals/strategic plan; define boundaries to which to make decisions. Ex: Sexual harassment polices/ internet and e-mail usage policies
a. Sometimes called a standard operation procedure; defines a precise series of steps to attain certain goals. Ex: Procedures for issuing refunds; procedures for handling employee grievances.
SWOT Analysis
a. Formulation strategy often begins with an audit of the internal and external factors that will affect the organization's competitive situation.
b. S-strengths W-weaknesses O-opportunities T-threats
c. SWOT analysis includes a careful assessment of strengths, weaknesses, opportunites, and threats that affect organizational performance.
i. Managers obtain external information about opportunities and threats from a variety of sources, including customers, govt reports, professional journals, suppliers, bankers, friends in other organizations, consultants and association meetings.
ii. Internal strengths and weaknesses- Strengths are positive internal characteristics that the organization can exploit to achieve its strategic performance goals. Weaknesses are internal characteristics that might inhibit or restrict the organization's performance. Managers perform an internal audit of specific functions such as marketing, finance, production, and research and development. Internal analysis also assesses overall organization structure, management competence and quality, and human resource chacteristics. Based on their understanding of these areas, managers can determine their strengths or weaknesses compared with other companies.
iii. External opportunities and threats- threats are charachteristics of the external environment that may prevent the organization from achieving its strategic goals. Ex: Microsoft/illegal software.
iv. Opportunities are characteristics of the external environment that have the potential to help the organization to achieve or exceed its strategic goals. Ex: Us autos can take Toyotas customer's because of safety issues.
Title VII of the Civil Rights Act
a. prohibits discrimination in employment on the basis of race, religion, color, sex, or national origin
a. means that an organization accommodates several subcultures.
a. Narrow in scope; describes how a specific action is to be performed; may apply in specific setting
the degree to which a person is outgoing, sociable, assertive, and comfortable with interpersonal relationships
the degree to which a person is able to get along with others by being good-natured, likable, cooperative, forgiving, understanding, and trusting
the degree to which a person is focused on a few goals, thus behaving in ways that are responsible, dependable, persistent, and achievement-oriented
emotional stability
the degree to which a person is calm, enthusiastic, and self confident, rather than tense, depressed, moody, or insecure
openness to experience
the degree to which a person has a broad range of interests is imaginative, creative, artistically sensitive, and willing to consider new ideas
Operational goals
Are specific, measurable results that are expected from departments, work groups, and individuals
Direct employees and resources toward outcomes
Lower levels of the organization
Specific action steps
Market value added system (MVA)
A control system that measures the stock markets estimate of the value of a company's past and expected capital investment projects
Activity based costing system (ABC)
A control system that identifies the various activities needed to provide a product and allocates costs accordingly
Economic value added system (EVA)
A control system that measures performance in terms of after tax profits minus the cost of capital invested in tangible assets
The four management functions
Identifying goals and resources or future organizational performance
determining the organization's goals and the means for achieving them
the most fundamental and controversial management function
Assigning tasks, delegating authority and allocating resources across the organization
The use of influence to motivate employees to achieve goals
Monitoring activities and taking action when needed determining whether the organization is on target toward its goals , and making correction as necessary
is the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources
Facts about managers
-Managers are the executive function of the organization
-Building and coordinating and entire system
-Create systems and conditions that enable others to perform those tasks
-Create the right systems and environment, managers ensure that the department or organization will survive and thrive
-Recognize the key role of people
-Managers must focus on innovation to stay competitive
-Managers must motivate and coordinate others
-Managers are dependent upon subordinates
-They are evaluated on the work of others
is a social entity that is goal directed and deliberately structured
-Long term survival
innovations may include
-New products, services, technologies
-Controlling costs
-Investing in the future
-Corporate values
management types
-vertical differences
-horizontal differences
vertical differences
-Top Managers
-Middle Managers
-First-Line Managers
horizontal differences
-Functional departments like advertising, manufacturing, sales
-include both line and staff functions
top managers
a manager who is at the top of the organizational hierarchy and is responsible for the entire organization
-they have titles such as president, chairperson, executive director, chief executive officer (CEO), and executive vice president, corporate or group head
-responsible for setting organizational goals, defining strategies for achieving them, monitoring and interpreting the external environment and making decisions that affect the entire organization. They look to the long term future and concern themselves with general environmental trends and the organizations overall success. Top managers are also responsible for communicating a shared vision fro the organization, shaping corporate culture, and nurturing an entrepreneurial spirit that can help the company innovate and keep pace with rapid change.
middle managers
a manager who works at the middle levels of the organization and is responsible for major departments
. Examples of middle managers are department head, division head, manager of quality control, general manager, administrator, product line or service manager, information service manager and director of the research lab. Middle managers typically have two or more management levels beneath them. They are responsible for the implanting the overall strategies and policies defined by top managers. Middle managers are generally concerned with the near future rather than with long range planning.
first line managers
a manager who is at the first or second management level and is directly responsible for overseeing the production of goods and services
They are the first or second level of management and have such titles as supervisor, production, sales, R&D supervisor, IT, HRM, Accounting supervisor,line jobs, staff jobs, line manager, section chief, and office manager. They are responsible for teams and nonmanagement employees. Their primary concern is the application of rules and procedures to achieve efficient production provide technical assistance and motivate subordinates. All these managers are vertical differences
Staff managers
are in charge of departments such as a finance and human resources that support line departments.
general managers
are responsible for several departments that perform different functions. A general manager is responsible for a self-contained division, such as a Nordstrom department store or a Honda assembly plant and for all the functional departments within it.
conceptual skills
- is the cognitive ability to see the organization as a whole system and the relationships among its parts. Conceptual skill involves knowing where ones team fits into the total organization and how the organization fits into the industry, the community, and the broader business and social environment. It means the ability to think strategically- to take the broad, long-term view and to identify, evaluate, and solve complex problems
human skills
is the managers ability to work with and through other people and to work effectively as a group member. Human skill is demonstrated in the way a manger relates to other people, including the ability to motivate, facilitate, coordinate, lead, communicate and resolve conflicts. Human skills are increasingly important for managers at all levels
technical skills
is the understanding of and proficiency in the performance of specific tasks. Technical skill includes mastery of the methods, techniques, and equipment involved in specific functions such as engineering, manufacturing, or finance. It also includes specialized knowledge, analytical ability, and the competent use of tools and techniques to solve problems in that specific discipline. They are particularly important at lower organizational levels.
Managerial skills
- a managers job is complex and multidimensional. The necessary skills for managing a department or an organization can summarized in three categories, conceptual, human, and technical. All managers must possess skills in each of these important areas to perform effectively.
classical perspective
-The early study of management.
-19th - late 20th Century
-Scientific Management
-Bureaucratic Organizations
-Administrative Principles
-Very powerful, gave companies fundamental skill for high productivity
-Helped US surge in management techniques
Contingency view "perspective"
"- tells managers that what works in the organizational situation might not work in others. Managers can identify important contingencies that help guide their decisions regarding the organization.
-Successful resolution of organizational problems depends on situations.
-case view- every situation is unique
-universalist- there is one best way
Humanistic perspective view
on management emphasizes the importance of understanding human behaviors, needs and attitudes in the workplace as well as social interactions and group processes. There are three primary subfields based on humanistic perspective: the human relations movement, the human resources perspective, and the behavioral sciences approach.
Systems Theory
A holistic view of management as a interrelated parts to achieve a common purpose.
Boundary- spanning roles
- link and coordinate the organization with key elements in the external environment
Achievement culture
- is suited to organizations concerned with serving specific customers in the external environment but without the intense need for flexibility and rapid change. This results- oriented culture values competitiveness, aggressiveness, personal inactive, and willingness to work long and hard to achieve results. People who are focused, competitive and driven to win.
Adaptability culture
- emerges in an environment that requires fast response and high risk decision making. Managers encourage values that support the companys ability to rapidly, detect, interpret, and translate signals from the environment into new behavior responses. Employees have autonomy to make decisions and act freely to meet new needs, and responsiveness to customers is highly valued. Managers also actively create change by encouraging and rewarding creativity, experimentation, and risk taking. They move quickly and respond to rapid changes in the environment. Its characterized by values that support the companys ability to interpret and translate signals from the environment into new behavior responses.
Consistency culture
- uses an internal focus and a consistency orientation for a stable environment. Following the rules and being thrifty are valued and the culture supports and rewards a methodical, rational, orderly way of doing things.
Involvement culture
- emphasizes an internal focus on the involvement and participation of employees to adapt rapidly to changing needs from the environment. This culture places high value on meeting the needs of employees, and the organization may be characterized by a caring, family like atmosphere. Managers emphasize values such as corporation, consideration of both employees and customers, and avoiding status differences. Example: Valero. This culture places high value on meeting the needs of employees and values cooperation and equality.
Four key elements of quality management
Employee involvement
Focus on customer
Continuous improvement
General environment
- affects organizations indirectly. It includes social, economic, legal/political, international, natural, technological factors that influence all organizations about equally.
Task environment
- is closer to the organization and includes the sectors that conduct day to day transactions with the organization and directly influence its basic operations and performance. It is considered to include competitors, suppliers, customers, and the labor market.
Internal environment
- includes the elements within the organizations boundaries. The internal environment is composed of current employees, management, and especially corporate culture, which defines employee behavior in the internal environment and how well the organization will adapt to the external environment.
General environment dimensions
- influence the organization over time but often are not involved in day to day transactions with it. It includes international, technological, sociocultural, economic, legal-political, and natural.
International dimension
- of the external environment represents events originating in foreign countries as well as opportunities for U.S. companies in other countries
Events originating in foreign countries
Impacts all aspects of the external environment
New competitors
New customers
New suppliers
Today, all companies globally
Technological dimension
of the general environment includes scientific and technological advances in society.
-Desktop computers
-nternet Access
-Handheld devices
-Cell phones
-Medical advances
Sociocultural dimension
- includes demographic characteristics, norms, customs, and values of a population within which the organization operates.
-Today's demographics are the foundation of the future workforce
-Demographic trends affect organizations globally
Values of population
Geographical Distribution
Population Density
Education Levels
Economic dimension
- represents the general economic health of the country or region in which the organization operates.
General economic health:
Consumer purchasing power
Unemployment rate
Interest rates
Recent Trends:
Frequency of mergers and acquisitions
Small business sector vitality
Legal political dimension
- includes government regulations at the local, state, and federal levels, as well as political activities designed to influence company behavior.
Natural dimension
- includes all elements that occur naturally on earth including plants, animals, rocks, and natural resources such as air, water, and climate.
The natural dimension has no voice
Pressure comes from advocacy and managers
Eliminate nonbiodegradable plastic bags from the environment
Improving efficiency of plants and factories
Investing in cleaner technologies
- the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong
Interorganizational Partnerships
collaborating with other organizations
combination of two organizations
joint ventures
an alliance of organizations for a specific project
a variation of direct investment, in which an organization shares costs and risks with another firm to build a manufacturing facility, develop new products or set up a sales and distribution network. It involves a strategic alliance or program by two or more organizations. A joint venture typically occurs when a project is too complex, expensive, or uncertain for one firm to handle alone.
stages of globalization
-global or (stateless)
Domestic stage
Market potential is limited to the home country
All production and marketing facilities located at home
Initial foreign involvement, little importance, "one best way"
International stage
Exports increase, company usually adopts a multi-domestic approach
exports, increase, and the company usually adopts a multidomestic approach, meaning that competition is handled for each country independently. Product, design, marketing, and advertising are adapted to the specific needs of each country, requiring a high level of sensitivity to local values and interests. Typically these companies use an international division to deal with the marketing of products in several countries individually. Competitive positioning, very important, "many good ways"
multinational stage
Marketing and production facilities located in many countries
More than 1/3 of its sales outside the home country
Top management is expected to take a global perspective
Single management authority
Managed as an integrated worldwide business system
These companies adopt a globalization approach meaning they focus on delivering a similar product to multiple countries. Explosion of international operations. Somewhat important. "the least-cost way" product, design, marketing, and advertising strategies are standardized throughout the world.
global or stateless stage
Making sales and acquiring resources in whatever country offers the best opportunities and lowest cost
Ownership, control, and top management tend to be dispersed
corporate international development transcends any single home country. These corporations operate in true global fashion, making sales and acquiring resources in whatever country offers the best opportunities and lowest cost. At this stage, ownership, control, and top management tend to be dispersed among several nationalities. Example: Nestle SA gets most of its sales from outside the "home" country of Switzerland and its 280,000 employees are spread all over the world. Critically important. Many good ways.
- transfers products for sale in foreign countries
the company maintains its production facilities within the home nation and transfers its products for sale in foreign countries. Exporting enables a company to market its products in other countries at modest resource cost and with limited risk
global outsourcing
transferring the labor of specific tasks to low cost countries
allowing an operation in another country to produce and sale company products
providing a foreign organization with package of materials and services
which occurs when a franchise buys a complete package of materials and services, including equipment, products, product ingredients, trademark and trade name rights, managerial advice, and a standardized operating system
direct investing
a production facility in another country
an authorization to sell a company's goods or services in a particular place, a business established or operated under an authorization to sell or distribute a company's goods or services in a particular area
stages of moral development
preconventional level
- individuals are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences. In an organizational context this level may be associated with managers who use an autocratic or coercive leadership style, with employees oriented toward dependable accomplishment of specific tasks. Follows rules to avoid punishment. Acts in own interest. Obedience for its own sake. Self interest. Leadership style- autocratic/ coercive. Employee behavior- task accomplishment.
people learn to conform to the expectations of good behavior as defined by colleagues, family, friends, and society. Meeting social and interpersonal obligations is important. Work group collaborations is the preferred manner for accomplishment of organizational goals and managers use a leadership style that encourages interpersonal relationships and cooperation. Lives up to expectations of others. Fufills duties and obligations of social system. Upholds laws. Leader style- guiding/ encouraging team oriented. Work group collaboration.
or principle level, individuals are guided by an internal set of values based on universal principles of justice and rights and will even disobey rules or laws that violate these principles. Follows self chosen principles of justice and right. Aware that people hold different values and seeks creative solutions to ethical dilemmas. Balances concern for individual with concern for common goods. Internal value. Leadership style- transforming or servant leadership. Employee behavior- empowered employees full participation.
Hofstedes value scales
- national value systems that influence organizational and employee working relations ships- power distance: degree to which people accept inequality in power among institutions, organizations and people, uncertainty avoidance: value characterized by peoples intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity , individualism and collectivism: preference for a loosely knit social framework in which individuals take care of themselves, masculinity/ feminity: preference for achievement/ assertiveness, work centrality, material success and preference for relationships, cooperation, group decision making, and quality of life
utilitarian approach (domain of ethical decision making)
- under this approach a decision maker is expected to consider the effect of each decision alternative on all parties and select the one that optimizes the benefits for the greatest number of people. The utilitarian ethic is cited as the basis for the recent trend among companies to monitor employee use of the internet and police personal habits such as alcohol and tobacco consumption because such behavior affects the entire work place.
moral behaviors should produce the greatest good for the greatest number
Critics fear a "Big Brother" approach and ask if the common good is squeezing the life out of the individual
Ethical approach companies cite to justify their policing of employee's personal habits on and off the job, such as alcohol and tobacco consumption
individualism approach (domain of ethical decision making)
- acts are moral when they promote the individual's best long-term interests
Individual self-direction paramount
Individualism is believed to lead to honesty & integrity since that works best in the long run
moral rights approach (domain of ethical decision making)
- moral decisions are those that best maintains the rights of those affected
An ethical decision is one that avoids interfering with the fundamental rights of others
Approach to ethical decision-making that is consistent with due process, free consent, privacy, freedom of conscience and free speech, life and safety
asserts that human beings have fundamental rights and liberties that cannot be taken away by individuals decision. Thus an ethically correct decision is one that best maintains the rights of those affected by it.
justice approach (domain of ethical decision making)
holds that moral decisions must be based on standards of equity, fairness, and impartiality. Three types of justice are of concern to managers. Distributive justice: requires that different treatment of people not based on arbitrary characteristics. For example men and woman should not receive different salaries if they are performing the same job.
procedural justice:Evaluation of the process used in decision making
Rules should be clearly stated
Rules should be consistently and impartially enforce Compensatory justice- argues that individuals should be compensated for the cost of their injuries by the party responsible.Evaluation of responsibility
Individuals should be compensated for the cost of their injuries by the party responsible
Individuals should not be held responsible for matters they have no control over, and vise versa
are any group within or outside the organization that has a stake in the organization's performance.
sustainable development
Economic development that generates wealth and meets the needs of the current generation while focusing on future generations
Economic, social, environmental, etc.
economic responsibility
be profitable. The first criterion of social responsibility is economic responsibility. Its responsibility is to produce the goods and services that society wants and to maximize profits for its owners and shareholders
Legal Responsibility
- defines what society deems as important with respect to appropriate corporate behavior. That is, business are expected to fulfill their economic goals within the framework of legal requirements imposed by local town councils, state legislators, and federal regulatory agencies. Obey the law.
ethical responsibility
- be ethical. Do what is right. Avoid harm. Includes behaviors that are not necessarily codified into law and may not serve the corporations direct economic interests. To be ethical, organization decision makers should act with equity, fairness, and impartiality, respect the rights of individuals, and provide different treatment of individuals only when relevant to the organizations goals and tasks.
Discretionary responsibility
- contribute to the community, be a good corporate citizen. Is purely voluntary and is guided by a companys desire to make social contributions not mandated by economics, law or ethics. Discretionary activities include generous philanthropic contributions that offer no pay back to the company and are not expected.
business plan
Document specifying the business details prepared by an entrepreneur prior to opening a new business
is a desired future state that the organization attempts to realize
is a blueprint for goal achievement
goal characteristics
-specific and measurable
-defined time period
-cover key result areas
-challenging but realistic
-linked to rewards
organizational planning process
1.) Develop the plan
-define mission, vision
-set goals
2.) Translate the plan
- define tactical plans and objectives
-develop strategy map
-define contingency plans and scenarios
-identify intelligence teams
3.) Plan operations
-define operational goals and plans
-select measures and targets
-set stretch goals
-crisis planning
4.) execute the plan
-management by objectives
- performance dashboards
-single use plans
-decentralized responsibility
5.) Monitor and learn
-hold planning reviews
-hold operational reviews
crisis planning
a. Some companies engage in crisis planning to enable them to cope with unexpected events that are so sudden and devastating that they have the potential to destroy the organization if managers aren't prepared with a quick and appropriate response.
i. Although crisis may vary, a carefully thought out and coordinated plan can be used to respond to any disaster. In addition, crisis planning reduces the incidence of trouble. Ex: Putting lock on door reduces burglaries.
b. Crisis Prevention-Crisis prevention stage involves activities managers undertake to try to prevent crisis from occurring and to detect warning signs of potential crisis.
c. A critical part of the prevention stage is building open, trusting relationships with key stockholders such as employees, customers, suppliers, govts, unions and the community.
i. By developing favorable relationships, managers can often prevent crises from happening and respond more effectively to those that cannot be avoided.
d. Crisis preparation- This stage includes all the detailed planning to handle a crisis when it occurs.
i. 3 steps in in the preparation stage:
1. Designating a crisis management team and spokesperson.
2. Creating a detailed crises management plan
3. Setting up an effective communications system.
e. Crisis management team is a cross-functional group of people who are designated to swing into action if a crisis occurs. An organization should also have a spokesperson to be the voice of the company during the crisis. The crisis management plan (CMP) is a detailed, written plan that specifies the steps to be taken, and by whom, if a crisis occurs. CMP should include the steps for dealing with various types of crisis, such as natural disasters like fires/earthquakes, normal accidents like economic crises/industrial accidents, and abnormal events like product tampering/acts of terrorism. KEY POINT- CMP should be a living, changing document that is regularly reviewed, practiced, and updated as needed.
- meaning that it describes how managers actually make decisions in complex situations rather than dictating how they should make decisions according to a theoretical ideal.
Business-level strategy
a. How do we compete?
b. Pertains to each business unit or product line. Strategic decisions at this level concern amount of advertising, direction, and extent of research and development, product changes, new- product development, equipment and facilities, and expansion of contraction of product and service lines. Ex: PnG gillete, Fusion. E-commerce/Nutrisystem.
corporate level strategy
a. Questions managers ask, What business are we in?
b. Pertains to the organization as a whole and the combo of business units and product lines that make up the corporate entity.
c. Strategic actions at his level usually relate to the acquisition of new businesses, plants, or product lines; and joint ventures with other corporations in new areas. Ex: Brunswick billiards. CEO of Brunswick sold off unprofitable business and bought companies to make him profit.
Multi-domestic strategy
a. Means that competition in each country is handled independently of industry competition in other countries. Thus, a multinational company is present in many countries, but it encourages marketing, advertising, and product design to be modified and adapted to the specific needs of each country.
i. Many companies reject idea of single global market.
Porter's five force
a. Porter- studied number of business organizations and proposed that business level strategies are the result of five competitive forces in the company's environment. Indicates some ways internet technology is affecting each area.
analyzing a company's position in the industry
b. These forces help determine a company's position vs competitors in the industry environment.
c. Potential new entrants. Capital requirements and economies of scale are examples of two potential barriers to entry that can keep out new competitors. Ex: it is more costly to enter automobile industry, for instance, than to start a specialized mail order business. In general, internet technology has made it much easier for new companies to enter an industry by curtailing the need for such organizational elements as an established sales force, physical assets such as building and machinery, or access to existing supplier and sales channels.
d. Bargaining power of buyers. Informed customers become empowered customers. The internet provides easy access to wide array of information about products, services, and competitors, thereby greatly increasing the bargaining power of end consumers. Ex: customer shopping for car
e. Bargaining power of suppliers. The concentration and the availability of substitute suppliers are significant factors in determining supplier power. Ex: The sole supplier of engines to a manufacturer of small planes will have great power. The impact of the internet in this area can be both positive and negative. Procurement over the web also gives suppliers access to a greater number of customers, as well as the ability to reach end users. Overall, the internet tends to raise the bargaining power of suppliers.
f. Threat of substitute products. The power of alternatives and substitutes for a company's product may be affected by changes in cost or in trends such as increased health consciousness that will deflect buyer loyalty. Ex: sugar/splenda. The internet created a greater threat of new substitutes by enabling new approaches to meeting customer needs. For example, offers of low-cost airline tickets over internet.
g. Rivalry among competitors. Rivalry amongst competitors is influenced by the preceding four forces, as well as by cost and product differentiation. With the leveling force of the internet and IT, it has become more difficult for many companies to find ways to distinguish themselves from their competitors, which intensifies rivalry. Porter referred to the "advertising slugfest" when describing the scrambling and jockeying for position that occurs among fierce rivals within an industry. Ex: Nintendo/sony. Pepsi/coke.
Grand Strategies
General plan of major action to achieve long-term goals
1.) Growth-can be promoted internally by investing in expansion or externally by acquiring additional business divisions
Internal growth = can include development of new or changed products
External growth = typically involves diversification - businesses related to current product lines or into new areas
Diversification - The acquisition of businesses that are related to current product lines or that takes the corporation into new areas
2.) Stability-sometimes called a pause strategy, means that the organization wants
to remain the same size or
to grow slowly and in a controlled fashion
3.) Retrenchment-the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses
Liquidation = selling off a business unit for the cash value of the assets, thus terminating its existence

Divestiture = involves selling off of businesses that no longer seem central to the corporation
Global Strategies
Finding strategies in the world marketplace
Synergy among world operations
Organizations differ in their global strategies
Competitive Strategies
Cost leadership
portfolio strategy
a. Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage
b. The star has a large market in a rapidly growing industry.
i. Star is important because it has additional growth potential, and profits should be plowed into this business as investment for future growth and profits. The star is visible and attractive and will generate profits and a positive cash flow even as industry matures and market growth slows.
c. The cash cow exists in a mature, slow-growth industry but is a dominant business in the industry, with a large market share. Because heavy investments in advertising and plant expansion are no longer required, the corporation earns a positive cash flow. It can milk the cash cow to invest in other, riskier businesses.
d. The question mark exists in a new, rapidly growing industry, but has only a small market share. The question mark business is risky: It could become a star or it could fail. The corporation can invest the cash earned from the cash cows in question marks with the goal of nurturing them into future stars.
e. The dog is poor performance. It has only a small share of a slow-growth market. The dog provides little profit for the corporation and may be targeted for divestment or liquidation if turnaround is not possible.
Partnership Strategies
Preferred Supplier
Strategic Business Partnering
Joint Ventures
strategy execution
The organization must be congruent with the strategy
Execution involves several tools:
Structural Design
Human Resources
Information and Control Systems
Strategy Formulation
stage of strategic management that involves planning and decision making that lead to the establishment of the organization's goals and of a specific strategic plan
Strategy Implementation
stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes
Focus strategy
a. Organization concentrates on a specific regional market or buyer group. The company will use either a differentiation or cost leadership approach, but only for a narrow target market. Ex: Family Dollar. Offers prices on major brands that are 20-40% lower than supermarkets. Company locates its stores on inexpensive, unglamorous real estate and markets to people who is not rich.
Programmed Decisions
- situations that occur often to enable rules
nonprogrammed decisions
situations that are unique or poorly defined and unstructured
all the information the decision maker needs is fully available
decision has clear-cut goals
good information is available
future outcomes associated with each alternative are subject to chance
managers know which goals they wish to achieve
information about alternatives and future events is incomplete
managers may have to come up with creative approaches to alternatives
by far the most difficult decision situation
goals to be achieved or the problem to be solved is unclear
alternatives are difficult to define
information about outcomes is unavailable
Decision making model types
Administrative model
Focus on organizational factors that influence decisions
Seek to find alternatives for complex problems instead of rational approach
Decision goals are vague and lack consensus.
Rational procedures are not always used.
Search for alternatives is limited because of human, information and resource constraints.
Managers will settle for satisficing rather than maximizing.
Descriptive: Describes how managers make decisions
ideal rational model
Strive to make economically sensible decisions
Four assumptions of the model:
The decision maker operates to accomplish goals that are known and agreed on.
Decision maker strives for conditions of certainty. All alternatives are calculated.
Criteria for evaluating alternatives are known.
The decision maker is rational and uses logic to assign values. Attempt to maximize organizational goals.
Normative = describes how a manager should and provides guidelines for reaching an ideal decision
Directive style
used by people who prefer simple, clear cut solutions to problems. Managers who use this style often make decisions quickly because they do not like to deal with a lot of info and may consider only one or two alternatives. People who prefer this style are generally efficient and rational and prefer to rely on exisiting rules or procedures for making decisions.
People who prefer simple, clear-cut solutions to problems
Make decisions quickly
May consider only one or two alternatives
Efficient and rational
Prefer rules or procedures
Analytical style
used by people who like to consider complex solutions based on as much data as they can gather. These individuals carefully consider alternatives and often base their decisions on objective, rational data from management control systems and other sources. They search for the best possible decision based on the information available.
Complex solutions based on as much data as they can gather
Carefully consider alternatives
Base decision on objective, rational data from management control systems and other sources
Search for best possible decision based on information available
Conceptual style
- used by people who also like to consider a broad amount of information. However, they are more socially oriented than those with an analytical style and like to talk to others about the problem and possible alternatives for solving it. Managers using a conceptual style consider many broad alternatives, rely on information from both people and systems, and like to solve problems creatively.
Consider a broad amount of information
More socially oriented than analytical style
Like to talk to others about the problem and possible solutions
Consider many broad alternatives
Relay on information from people and systems
Solve problems creatively
Behavioral style
- often the style adopted by managers having a deep concern for others as individuals. Managers using this style like to talk to people one-on-one, understand their feelings about the problem, and consider the effect of a given decision on them. People with a behavioral style usually are concerned with the personal development of others and may make decisions that help other achieve their goals.
Have a deep concern for others as individuals
Like to talk to people one-on-one
Understand their feelings about the problem and the effect of a given decision upon them
Concerned with the personal development of others
May make decisions to help others achieve their goals
means that decision authority is located near the top of the organization
means decision authority is pushed downward to lower
organizational levels
Basis for grouping positions into departments
Choices regarding chain of command
Five traditional approaches:
Innovative approaches:
Virtual Networks
Vertical functional approach
People are grouped together in departments by common skills, expertise, and resource
Divisional approach
Grouped together based on a common product, program, or geographical region
Horizontal matrix approach
Functional and divisional chains of command. Some employees report to two bosses
Team-based approach
. Created to accomplish specific tasks
Virtual Networks
Linked by internet
task force
A temporary team or committee formed to solve a specific
short-term problem
incremental change
efforts to gradually improve basic operational and work processes in different parts of the company
transformational change
redesigning and renewing the entire organization
Decision making process
a. Six steps-
i. 1. Recognition of decision requirement
ii. 2. Diagnosis and analysis of causes
iii. 3.development of alternatives
iv. 4. Selection of desired alternative
v. 5. Implementation of chosen alternative
vi. 6. Evaluation and feedback.
change sequence
environmental forces-Monitor global competition, and other factors
internal forces- Consider plans, goals, company problems, and needs>>Need for change-Evaluate problems and opportunities, define needed changes in technology products, structure, and culture>>Initiate change-Facilitate search, creativity, idea champions, venture teams, skunk works and idea incubators>>Implement change-Use force field analysis, tactics for overcoming resistance
performance gap
disparity between existing and desired performance levels.
Current procedures are not up to standard
New idea or technology could improve current performance
Resistance to Change.
Getting others to understand the need for change is the first step.
Lack of Understanding and Trust
Different Assessment and Goals
Tactics for overcoming resistance to change
Communication &education-Change is technical; users need accurate information & analysis
Participation- Users need to feel involved; design requires information from others; have power to resist
Coercion-Crisis exists; initiators clearly have power; other techniques have failed
Top management support-Involves multiple departments or reallocation of resources; users doubt legitimacy of change
Negotiation-Group has power over implementation; will lose out in the change
human capital
refers to the economic value of the combined knowledge, experience, skills and capabilities of employees
not generally a valid predictor of job performance
performance management issues
Appraisal Format
Job Specific
BARS - Behavior Anchored Rating Scale
Severity, leniency, halo, bias
Budgetary constraints
Traditional view is evaluation and administration
compensation and benefits
All remuneration in exchange for knowledge, skills, ability, and time
Direct pay
Base pay - tied to job tasks
Bonus, commissions - tied to performance
Indirect pay
Benefits, time off, insurance