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BUAD422 Exam 2
Terms in this set (68)
-The view that corporations only exist to make money for its shareholders
-Introduced by Adolph A. Berle,
-Enshrined by Milton Friedman There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
Share Holder Primacy assumes:
1) shareholders are the owners of corporations (this is wrong)
--Corporations are legal entities without "owners"
2) Shareholders are residual claimants
--Entitled to all remaining profits contractual obligations are met in the event of dissolution
3) Shareholders (principles) hire directors and officers (agents)
--Directors hire directors... board nominating committees some companies allow shareholders to vote directors
1) Firms are made up of multiple stakeholders groups-Shareholders, employees, suppliers, customers
2) Stakeholders hold different interest and values
3) Role of executives is to manage competing interest in pursuit of strategic objectives
-Grounded in idea of trust and going concern for the company
-Long term orientation
4) Shareholders are but one stakeholder group; there interests matter but so do the others
-Why does this organization exist?
-What is the unifying reason for various stakeholders to want to coalesce: to engage, assist, and support this organization?
-Vision, Mission, & Values
--The University of Delaware exists to cultivate learning, develop knowledge, and foster the free exchange of ideas.
Star Model of Organization
- Process & Lateral Capability
-Our central, externally-oriented concept of how we will achieve our objectives
-Where will we be active?
-How will we get there?
-How will we win in the marketplace?
-How will we earn our returns?
-What will be our speed and sequence of moves?
-The roles and relationships in the organization Organizing basis (functions, markets, products, regions, etc.)
-Span of control
-Distribution of power
-Division of labor
Process & Lateral Capability
The flows that occur in the organization
-Internal information flows: content, format, and conduits
-Planning and goal setting
-Enablers for success
The mix of human talent in the organization
The mechanisms for propelling human behavior
-Measuring job performance
-Reward systems and strategies
-Aligning rewards with objectives
-Alignment is your ideal.
-Great Companies have a comprehensively aligned star.
Strategy Dimond: Arenas
Where will we be active?
1) Product scope (Diversify)
--Think supply chain
--you have cars now you want to make jet skiis (diversify)
2) Vertical Scope(Integration)
--Where are we in vertical product line
3) Geographic Scope (Expansion)
--Do it somewhere else
Strategy Dimond: Vehicles
How will we get there?
1) Internally developed
-Apple makes own products
2) Market contracts
3) Merger/ Acquisitions
-Aldi is a German grocery store and started buying regional chains in America
4) Alliance Partners
-Partner up with another company to get into different areas that you may not be able to get into without help
Strategy Dimond: Differentiators
How will we win?
-Core competencies-corporate wide capabilities that empower individual business units to adapt quickly to changing the environment
1) Provide access to wide variety of markets
2) Make a significant contribution to perceived customer benefits of end product
3) Difficult for competitors to imitate
Strategy Dimond: Economic Logic
How will we make money?
1) Value Producer- attract customers by offering similar products worthy of premium pricing
2) Cost Leader- attract customers by offering similar products at lower price points
Strategy Dimond: Staging
What will be our speed sequence of moves?
-Organize yourself around your customer
An organizational structure in which each product line or business is handled by a self-contained division.
Different firms come together in order to deliver on something
-An organization combines functional and divisional chains of command in a grid so that there are two command structures
--vertical and horizontal
Organizational structure that divides an organization into "front" functions, which focus on customers or market groups, and "back" functions, which design and develop products and services.
Span of Control
--How much can a person (or group) handle?
Distribution of Power
--Who has authority and control?
Distribution of power (Centralized)
Distribution of Power (Decentralized)
Highly empowered workers who make decisions on their own because they are backed by management
Forms of Lateral Capabilities
-Shared goals, processes & systems
Information and voluntary communication patterns that can facilitate information sharing across department boundaries by exposing members to each other
- Training programs Job rotation programs
- Communities of Practice
- Online Social Networks
-Encourages innovation & Knowledge sharing
Informal nature reduced certainty of desired outcomes
Shared goals, processes & systems
-Goals Shared goals that cannot be achieved by any single unit
-Processes Formal methods for coordinating cross-unit activates
-Systems Software-based solutions to require lateral processes, e.g., ERP, CRM, SFA systems (Oracle, SAP, Salesforce)
Cross-functional work groups brought together for specific purpose over specified time period
Enablers of success Clear mission; committed members; leadership & organizational support
-Formal role with responsibility to share information and coordinate across organizational structure
--Project, Product, Brand, Business Manager
--Communication; Negotiation, Advocacy
--Clear understanding of political environment
-Challenging positions that require leadership & organizational support to succeed
Which form to use
-More informed decisions
-More complex decisions
-Conflict & Stress
Enablers of success
-Strong leadership support
-Collaborative culture (shared values, empowerment)
-Appropriate resources (people, training, time, space)
Rewards: Employee motivations
Rewards: something given in recognition of one's service, effort, or achievement
That which energizes, channels, and sustain human behavior over time, aside from aptitude, skill, task knowledge, and environmental constraints
-When absent can de-motivate behavior
-Rewarding Hygiene does not increase motivation
-You don't get a date because you shower, but if you don't shower you are less likely to get any dates
--Salary (If you under pay someone de-motivated)
Behavior is the function of ability + motivation
For a reward system to work, it must address:
Positive or negative perceptions about the outcome of performance Instrumentality
Confidence that reward will be granted if outcome is achieved
Belief that the outcome is achievable based on effort applied
Goal Setting Theory
Level of the goal is positively related to level of performance
-Make harder goals people will want to work harder
-Impossible goals = less effort
Assumptions of goals setting
1) Self-efficacy - belief task can be achieved
2) Task skills/abilities are either known or knowable
3) Goal commitment - determination to extend effort over time
When the performing the work itself serves as motivation
When the outcome of the work (pay recognition) serves as motivation
--Overuse of extrinsic motivation can undermine intrinsic motivation
Sense of fairness regarding rewards
--Perceived injustice lowers motivation
Perception that the process for determining the reward was fair
Perception that the allocated reward is fair in comparison to other rewards given based on effort given
Measuring Job Performance
Transparent and understood metrics provide:
-Evaluation of prior performance
-Comparison between individual or groups
-Basis for compensation
-Motivation for future performance
Reward Systems and Strategies
Pay for individual performance
-Incentive vs. Merit pay
Designed to maintain desire skill set
Reward Systems and Strategies:
Pay for individual performance:
--Incentive vs. Merit pay
--Designed to maintain desire skill set:
Pay for team performance aligns contribution and efforts
--Pay for organizational performance encourages interdepartmental cooperation:
Salary & Benefits:
--Base compensation level
--On-time vs. Recurring; expected vs. spot
(MIS) Aligning Rewards with Objectives
--Over-reliance on incentive pay; Unattainable goals Counterproductive behavior
--Focusing on highly observable behaviors
Conflict & competition
--Preaching team efforts but rewarding individual acts
Resistance to change
--Change efforts are not met with new reward systems
any person we hire needs to be the best
Strategic focus on role to identify key positions; match the talent to the role
Type of hiring positions (A Positions)
Strategic (Corporate workers & Talent leaders)
-Where you focus your time and effort
Type of hiring positions (B Positions)
Support (Line managers & Contributors)
Type of hiring positions (C Positions)
Surplus (Do bare minimum & Laggards)
Knowledge, skills, abilities, possessed by individuals
General- going to college to learn about business
Industry- what are things you have learned specific to the industry
-Can they handle the positions
-Can they handle greater roles
-Can they be a leader
-Experience hire means they have industry experience
Developing Talent Potential
1) Breadth- Can you cover your strategic positions
2) Depth- Can you back fill internally
3) Not enough talent leads limits company growth & profits
4) Too much talent limits career opportunities for employees
What KSA's are expected upon entry?
-What is expected to be developed?
-How will it be developed (trained vs. Learned)
-What is the trajectory of the path?
-How formal is the path?
-What are the likely entry points?
One of the most undesirable exercises performed
--Most people view themselves as above average
--Most people want affirmation of the appraisal
--Most people avoid conflict
Effective Feedback Management
1. Frequency of appraisal should match the style
2. Feedback should not be a surprise
3. Less about rating and more about development
4. Should set expectations for next evaluation
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