39 terms

MGMT EXAM #2

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What are the 3 steps in planning?
1) Determining the organization's mission and goals
define the business and establish major goals
2) Formulating strategy
Analyze current sitation and develop strategies
3) Implementing Strategy
Allocate resources and responsibilities to achieve strategies

Where are we, where do we want to go, and how do we get get there?
What is the relationship between planning and strategy?
Planning is the first step in developing a strategy. Planning is indentifying and selecting appropriate goals and courses of action for an organization. It is both goal-making and and a strategy making process.

Strategy: a cluster of descision about what goals to pursue, what actions to take, and how to use resources to achieve goals.
Define formualting strategy:
Strategy formulation: The development of a set of corporate-, business-, and functional strategies that allow an organization to accomplish its mission and achieve its goals.
What are the two tools associated with formulating strategy?
1) SWOT analysis
2) the Five Forces Model
What is a SWOT Analysis?
A planning exercise to identify strenghts and weaknesses inside an organization and opportunities and threats in the environment.
What is a corporate-level strategy?
A plan of action to manage the growth and development of an organization so as to maximize its long-run ability to create value.
What is a business-level strategy and 3 examples?
A plan of action to take advantage of favorable opportunities and find ways to counter threats so as to complete effectively in an industry.

1) low-cost strategy: driving the organization's total costs down below the total costs of rivals-Wal-Mart
2) differentiation: distinguishing an organization's products from the competition's products, e.g., product design, quality, or after-sales service.
*Marketing plays a key role in helping an organzation to distinguish its product(s) from other(s) out there-Brand Identity and positioning.
3) Stuck in the (freaking) Middle
Attempting to simultaneously pursue both a low-cost strategy and differentition.
Organizations stuck in the middle tend to have lower levels of performance than those using other strategies.
EXCEPTIONS: TARGET, Toyota, Dell...
What are the five forces in the Five Forces Model?
1) Level of Rivalry-increased competition leads to lower profits.
2) Potential for Entry-easy entry leads to lower prices and profits.
3) Power of Suppliers-If there are only a few suppliers of important items, supply costs rise.
4) Power of Customers-If there are only a few large buyers, they can bargin down prices.
5) Substitutes: More available substitutes tend to drive down prices and profits.
Differentiate between the main types of business-level strategies and explain how they give an organization a competitive advantage that may lead to superior performance?
Michael Porter, the researcher who developed the five forces model, argued that business-level strategy creates a competitive advantage because it allows an organization (or a division of a company) to counter and reduce the threat of the five industry forces. Porter suggests that managers must choose between two basic ways in order to increase profits: (1) differentiating the product to increase its value to customers or; (2) lowering the costs of making the product.

Managers must choose one of the four business-level strategies:
1) low cots 2) focused low cost 3) differentiation 4) focused differentiation

Focused low-cost-serving only one market segment and being the lowest-cost organization serving that segment.

Focused differentiation-serving only ONE market segment like the rich or a particular region-Midwest
examples: Rolex, Bentley
What are the 4 corporate-level strategies?
Corporate-level strategy: plan of action that involves choosing in which industries and countries a company should invest its resources to achieve its mission and goals.
1) concentration on a Single Industry:
-reinvesting company profits to strengthen its competitive position in its current industry
-develop new products or services in that industry
-expand the number of locations
2) Vertical integration: expanding a company's operations either into an industry that produces inputs for its products or into an industry that uses, distributes, or sells its products.
Backward vertical integration-a firm seeks to reduce its input costs by producing its own inputs.
Forward vertical integration-a firm distributes its outputs or products to lower distribution costs and ensure quality service to customers.
3) Diversification: expanding a company's business operation into a new industry in order to produce new kinds of valuable goods or services
TWO WAYS TO DIVERSIFY: (1) related diversification-entering a new business to create a competitive advantage in one or more of an organization's existing divisions or businesses-the goal is synergy between businesses; (2) UNrelated diversification-entering a new industry or buying a company in a new industry that is not related in any way to an organization's current businesses or industries
*too much can cause managers to lose control of their organization's core business
4) International expansion: Global strategy:selling the same standardized product and using basic marketing approach in each national market.
What are the 4 ways to expand internationally?
1) importing and exporting
2) licensing (manufacturing)-Coke and franchising (product and service side) McDonalds
3) Strategic alliances-joint ventures
4) Wholly owned foreign subsidairy
Discuss the layers of organizational culture?
Organizational culture: Set of shared, taken-for-granted implicit assumptions taht a group holds and that determines how it perceives, thinks about and reacts to it various environmnets. The three important chracteristics: (1) it is passed on to new employees through the process of socialization; (2) it influences our behavior at work; (3) it operates at different levels.

layers:
Observable artifacts-consist of the physical manifestation of an organization's culture. Acronyms, manner of dress, awards, myths and stories, published list of values.
Values: concepts or beliefs that pertain to desirable end states that guide selection of behavior.
Espoused-represent the explicitly stated values and norms that are preferred by an organization.
Enacted-represent the values and norms that actually are exhibited or converted into employee behavior.
Basic assumptions: are unobervable and highly resistant to change.
What are the four functions of organizational culture?
1) organizational idenity-a sense of who or what the company is.
2) Collective commotment-get the employees on board with the identity or company vision
3) Social System stability-the extent to which the work environment is perceived as posititve and reinforcing; the extent to which conflict and change are effectively managed.
4) Sense-making device-help employees understand why the organization does what it does and how it intends to accomplish its goals
Describe the general types of organizational culture and their associated characteristics and their outcomes:
Competing values framework
-two dimensions: (1) focus inward or outward; (2) preference for flexibility and discretion or control and stability.

Clan-internal focus and values flexiblity
-family-type organization
effectiveness is achieved by encouraging collaboration
"employee-focued"

Adhocracy-external focus and values flexiblity
fosters innovation
creative
think outside the box

Hierarchy-internal focus and values stability and control
formalized and very structured
TQM programs
effectiveness is effciency, timeliness and reliability
market-strong external focus and calues stability and control
driven by competition
desire to deliver results
paid for performance

culture is significantly correlated with employee behavior and attitudes-satisfaction, commitment, intentions to stay, quality of communication, postive managerial relationships.
(KEY POINT) Congruence between an individual's values and the organizational's values was associated with organziational commitment, job satisfaction, intention to quit, and turnover.
THERE IS NOT A CLEAR PATTERN OF RELATIONSHIPS BETWEEN ORGANIZATIONAL CULTURE AND OUTCOMES SUCH AS SERVICE QUALITY, CUSTOMER SATISFACTION, AND AN ORGANIZATION'S FINANCIAL PERFORMANCE
Mergers frequently fail due to incomptible cultures
Compare and contrast the three decision making models:
The three models are: (1) rational model; (2) Simon's normative model; (3) garbage can model.

Rational-4 step model. (1) identifying the problem; (2) generate alternative solutions; (3) selecting a solution; (4) implementing and evaluating the solution
*assumption that managers have full-information.

Simon's normative model states there are constraints that restrict rational decision making. Human mind is limited and there are time demands. Satisficing: choosing a solution that meets a minimum stard of acceptance-good enough.

Garbage can model-decision making is sloppy and haphazard like a garbage can. Decision result from complex interaction of four streams of events: problems, solutions, participants and choice opportunites. Made overnight and quickly and political motives frequently influence decision makers. The decision-making process is sensitive to load-number of problems, and thus important ones are likey to be solved.
Overconfidence bias occurs when?
Relates to our tendency to be overconfident about estimates or forecasts.
Hindsight bias occurs when?
Occurs when knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlier.
What is a Framing bias?
Tendency to consider risks about gains differently than risks pertaining to losses
What is Escalation of commitment bias?
Refers to the tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed
What is Availability heuristic?
Tendency to base decisions on info readily available in memory.
What is Representativeness heuristic?
Tendency to assess the likelihood of an event occurring based on impressions about similar occurrences
What is a Confirmation bias?
Subconsciously make a decision and then seek only info that supports it
What is Representativeness heuristic?
Tendency to assess the likelihood of an event occurring based on impressions about similar occurrences
Describe the model of decision-making styles and the role of intuition in decision making:
Very few people have only one dominant decision-making style.
Analytical-high tolerance for ambiguity and are orientated toward task and technical. Tend to overanalyze situation. respond well to new or uncertain situations.

Conceptual-high tolerance for ambiguity and tend to focus on people and social concerns. Take a broad perspective to problem solving. long-term perspective. RELY ON INTUITION and discussion with others. RISK TAKER. Good at finding creative solution-IDEALISTIC AND INDECSIVE.

Directive-low tolerance for ambiguity and are oriented toward task and technical concerns. Efficient, logical, practical, systematic, action-oriented, descisive, focused on facts. SHORT RUN. Accountant

Behavioral-low tolerance for ambiguity and tend to focus on people and social concerns. Supportive. show warmth and perfer verbal to written information and tend to avoid conflict. OVERLY CONCERNED WITH PEOPLE AND CANNOT SAY NO and can be wishy-washy.

Intuition: a capacity for attaining direct knowledge or understanding withour the apparent intrusion of rational thought or logical interrference
automatic and involuntary
can be useful BUT NOT ALWAYS!
Pros and cons of of involving groups in desicion making process:
Advantages:
1) greater pool of knowledge
2) different perspectives
3) greater comprehension
4) increased acceptance
5) training ground

Disadvantages:
1) social pressure
2) domination
3) logrolling-political wheeling
4) goal displacment-winning an argument, making a point to other members can displace main objective.
5) "groupthink"desire of unanimity override sound judgement.
Compare and contrast the three decision-making techniques that can be used in groups:
Consensus
Presenting opinions and gaining agreement to support a decision

All members say they agree or, at least, will go along and support the decision

Brainstorming
Process to generate a quantity of ideas
Helps groups generate multiple ideas and alternatives for solving problems

Nominal Group Technique
Process to generate ideas and evaluate solutions
Similar to how brainstorming should work, with an added evaluation component at the end (e.g. rank your top 3 choices)
Delphi technique
Process to generate ideas from physically dispersed experts
Electronic format (i.e. internet survey)
Describe perception in terms of the social information processing model and discuss stereotypes and perceptual errors come into play during this process:
Attention
Process of becoming consciously aware of something or someone
Can come from the environment or from memory

People tend to pay attention to salient stimuli (i.e. when it stands out from the context)

In encoding, raw information is interpreted or translated into mental representations
Perceivers assign pieces of information to cognitive categories (i.e. mental depositories for storing information)
A schema represents a person's mental picture or summary of a particular event or type of stimulus
Stereotype
Beliefs about the characteristics of a group
Not always negative
May or may not be accurate
Explain, according to Kelley's model, how external and internal causal attributions are formulated:
Internal factors
Personal characteristics that cause behavior

External behavior
Environmental characteristics that cause behavior
Consensus
Involves a comparison of an individual's behavior with that of his or her peers
Distinctiveness
Involves comparing a person's behavior on one task with the behavior from other tasks
Consistency
Determined by judging if the individual's performance on a given task is consistent over time
Compare and contrast the self-serving bias and the fundamental bias and discuss their managerial implications:
Fundamental attribution bias
Reflects one's tendency to attribute another person's behavior to his or her personal characteristics, as opposed to situational factors

Self-serving bias
Reflects one's tendency to take more personal responsibility for success than for failure
Describe what leadership is and discuss how leaders are different from managers
Leadership
The process by which a person exerts influence over other people and inspires, motivates and directs their activities to help achieve group or organizational goals
Leader
An individual who is able to exert influence over other people to help achieve group or organizational goals
When leaders are effective, the influence they exert over others helps a group or organization achieve its goals.
Manager
Establish and implement procedures and processes to ensure smooth functioning and who are accountable for goal accomplishment
Leader
Look to the future, chart the course for the organization, and attract, retain, motivate, inspire, and develop relationships with employees based on trust and mutual respect
Identify the traits that show the strongest relationship to leadership, the behaviors leaders engage in, and the limitations of the trait and behavior models:
Research shows that certain personal characteristics do appear to be connected to effective leadership.
These include intelligence, knowledge and expertise, dominance, self-confidence, high energy, tolerance for stress, integrity and honesty, and maturity
Stereotypes in terms of consideration and initiating structure are not supported in the literature
There is support though that leadership style may vary between men and women
However, male and female managers do not differ significantly in terms of their effectiveness (both are equally effective)
Therefore, emotional intelligence may play a particularly important role in leadership effectiveness
Explain how contingency models of leadership enhance our understanding of effective leadership and management in organizations:
Relationship-oriented style
Leaders concerned with developing good relations with their subordinates and being liked by them.
Task-oriented style

Leaders whose primary concern is to ensure that subordinates perform at a high level and focus on task accomplishment.
Situational Characteristics
How favorable a situation is for leading

There are three in Fiedler's model:
Leader-member relations, or the extent to which followers like, trust, and are loyal to their leader
Task structure
Position power
Task structure
The extent to which workers' tasks are clear-cut, so that subordinates know what needs to be accomplished and how to go about doing it
Position power
The amount of legitimate, reward, and coercive power leaders have by virtue of their position
Desctibe what transformational leadership is and explain how mangers can engage in it:
Leadership that changes (or transforms) their subordinates in three important ways:
Makes subordinates aware of the importance of their jobs and how necessary it is for them to perform those jobs as best they can so that the organization can attain its goals
Makes subordinates aware of their own needs for personal growth and development
Motivates workers to work for the good of the organization, not just themselves

Transformation leadership can result in subordinates that trust the managers, are highly motivated, and help the organization achieve its goals
There are at least three ways in which transformational leaders can influence their followers: being a charismatic leader, intellectually stimulating subordinates, and engaging in developmental consideration
Charismatic Leader
An enthusiastic, self-confident leader who is able to clearly communicate his or her vision of how good things could be (creates excitement)
Intellectual Stimulation
Behavior a leader engages in to make followers aware of problems and view these problems in new ways (i.e. opportunities), consistent with the leader's vision
Developmental Consideration
Behavior a leader engages in to support and encourage followers and help them develop and grow on the job

Transformational leadership is very beneficial when organizations are in trouble
Name five "soft" and four "hard" influence tactics"
"SOFT"
Rational persuasion - Trying to convince someone with reason, logic, or facts
Inspirational appeals - Trying to build enthusiasm by appealing to others' emotions, ideals, or values
Consultation - Getting others to participate in planning, making decisions, and changes
Ingratiation - Getting someone in a good mood prior to making a request; being friendly and helpful; using praise or flattery
Personal appeals - Referring to friendship and loyalty when making a request

"Hard"
Exchange - Making express or implied promises and trading favors
Coalition tactics - Getting others to support your effort to persuade someone
Pressure - Demanding compliance or using intimidation or threats
Legitimating tactics - Basing a request on one's authority or right, organizational rules or policies, or express or implied support from superiors
Summarize Caialdini's principles of influence and persuasion:
Liking
People tend to like those who like them
Reciprocity
Belief that both good and bad deeds should be repaid in kind is virtually universal
Social proof
People tend to follow the lead of those most like themselves
Consistency
People tend to do what they are personally committed to
Authority
People tend to defer to and respect credible experts
Scarcity
People want items, information, and opportunities that have limited availability
Identify and briefly describe French and Raven's five bases of power:
Reward power
Obtaining compliance with promised or actual rewards

Coercive power
Obtaining compliance through threatened or actual punishment

Legitimate power
Obtaining compliance through formal authority
Expert power
Obtaining compliance through one's knowledge or information

Referent power
Obtaining compliance through charisma or personal attraction
Dicuss what the research says regarding the effectiveness of the various types of influence and power:
Commitment
Substantial agreement followed by initiative and persistence in pursuit of common goals
Compliance
Reluctant or insincere agreement requiring subsequent prodding to satisfy minimum requirements
Resistance
Stalling, unproductive arguing, or outright rejection
Commitment is more likely when people rely on consultation, strong rational persuasion, and inspirational appeals and do not rely on pressure and coalition tactics

Commitment is more likely when the influence attempt involves something important and enjoyable and is based on a friendly relationship
Managers rely most heavily on inspiration, ingratiation, and pressure in dealing with subordinates

Employees are more apt to accept change when managers rely on a consultative strategy and are more likely to resist change when managers use a legitimating tactic

Research on power:
Expert and referent power had a generally positive effect

Reward and legitimate power had a slightly positive effect

Coercive power had a slightly negative effect
Define empowerment and explain how to make it succeed:
Sharing varying degrees of power with lower-level employees to tap their full potential
Participative management (PM)
Process whereby employees play a direct role in:
1) Setting goals,
2) Making decisions,
3) Solving problems, and
4) Making changes in the organization
Advocates claim that PM increases employee satisfaction, commitment, and performance

Participative management helps employees fulfill three basic needs:
Autonomy
Meaningfulness of work
Interpersonal contact
Compare and contrast organizational politics and impression management and what triggers politics, describe some of the political taticcs people may use, and explain how to manage poltics:
Intentional acts of influence to enhance or protect the self-interests of individuals or groups
Building a network of useful contacts
Using 'key players' to support initiatives
Making friends with power brokers
Bending the rules to fit the situation
Self-promotion
Creating a favorable image (i.e. impression management)
Praising others (ingratiation)
Attacking or blaming others
Using information as a political tool
Impression management (IM)
Process by which people attempt to control or manipulate the reactions of others to images of themselves or their ideas
Getting others to see us in a certain manner
Anyone can be the target of IM
Job-focused
Manipulating information about one's job performance
Supervisor-focused
Praising and doing favors for one's supervisor
Self-focused
Presenting oneself as a polite and nice person
Screen out overly political individuals at hiring time.
Create an open-book management system.
Make sure every employee knows how the business works and has a personal line of sight to key results
Have non-financial people interpret periodic financial and accounting statements for all employees.
Establish formal conflict resolution and grievance processes.
As an ethics filter, do only what you feel comfortable doing on national television.
Publicly recognize and reward people who get real results without political games.