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Principles of Management Exam 2 (Ch. 5-8)
Terms in this set (146)
Economic feasibility of alternatives states that an alternative might seem economically superior to other alternatives; but if managers realize it is likely to threaten other important projects, they might decide it is not practical after all.
The pattern of faulty and biased decision making that occurs in groups whose members strive for agreement at the expense of good decision making is called
The explosion of the space shuttle Challenger is an example of poor managerial decision making by the managers at NASA and Morton Thiokol, who considered and then downplayed the criterion of:
a group problem-solving technique in which managers meet face-to-face to generate and debate a wide variety of alternatives from which to make a decision
a decision-making technique in which group members write down ideas and solutions, read their solutions to the whole group, and discuss, and then rank the alternatives.
nominal group technique
a decision-making technique in which group members don't meet face-to-face, but respond in writing to questions posed by the group leader.
Dynamic Explosives is trying to decide whether or not to launch a new product nationally. This represents a(n) ________________ decision.
Dominic, a plant manager, wants to initiate a diversity training program in his plant. He is considering whether his department has enough extra people to cover for the time his employees will be engaged in the classes. Which criteria of decision making is Dominic implementing?
The first step in decision making that a manager needs to take is generate a set of feasible alternative courses of action in response to the opportunity or threat.
With reference to the steps of decision-making process, which is the last step in the managerial decision-making process?
learn from feedback
Based on the administrative model of decision making, the first step in the managerial decision-making process is to:
recognize the need for a decision
Programmed decisions are made in response to unusual or novel opportunities and threats
the process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action.
Programmed Decision Making
Routine, virtually automatic decision making that follows established rules or guidelines.
nonprogrammed decision making
Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats
feelings, beliefs, and hunches that come readily to mind, require little effort and information gathering and result in on-the-spot decisions
A decision that requires time and effort and results from careful information gathering, generation of alternatives, and evaluation of alternatives.
prescriptive -> identify and evaluate all possible alternatives and consequences -> rationally choose the most appropriate course of action.
the most appropriate decision in light of what managers believe to be the most desirable consequences for the organization
decision making is inherently uncertain and risky -> explains why managers usually make satisfactory rather than optimum decisions.
Cognitive limitations that constrain one's ability to interpret, process, and act on information.
the degree of probability that the possible outcomes of a particular course of action will occur
Causes of Incomplete Information
ambiguous information (can be interpreted in multiple and often conflicted ways) and time constraints & information costs (no time or money)
Searching for and choosing an acceptable, or satisfactory, response to problems and opportunities, rather than trying to make the best decision.
Group Decision Making
less likely to fall victim to bias; draws on combined skills of group members; generates more alternatives; processes more information; more cooperation
Managers must ensure that a possible course of action will not violate any domestic or international laws or government regulations
managers must ensure that a possible course of action is ethical and will not unnecessarily harm any stakeholder group
managers must decide whether the alternatives are economically feasible - that is, whether they can be accomplished given the organization's performance goals.
Managers must decide whether they have the capabilities and resources required to implement the alternative, and they must be sure the alternative will not threaten the attainment of other organizational goals.
Six Steps in Decision Making
1. Recognize the need for a decision
2. Generate alternatives
3. Assess alternatives
4. Choose among alternatives
5. Implement the chosen alternative
6. Learn from feedback
The process through which managers seek to improve employees' desire and ability to understand and manage the organization and its task environment.
An organization in which managers try to maximize the ability of individuals and groups to think and behave creatively and thus maximize the potential for organizational learning to take place.
a loss of productivity in brainstorming sessions due to the unstructured nature of brainstorming
an individual who notices opportunities and decides how to mobilize the resources necessary to produce new and improved goods and services
An individual who pursues initiatives and opportunities and mobilizes resources to address social problems and needs in order to improve society and well-being through creative solutions.
A manager, scientist, or researcher who works inside an organization and notices opportunities to develop new or improved products and better ways to make them.
A manager who takes "ownership" of a project and provides the leadership and vision that take a product from the idea stage to the final customer.
a group of intrapreneurs who are deliberately separated from the normal operation of an organization to encourage them to devote all their attention to developing new products
the cluster of decisions that managers make to assist an organization to achieve its goals
single-use plans are useful in situations that involve programmed decisions in an organization
Coca-Cola spends an enormous amount of money on advertising to distinguish, and create a unique image for, their products. Coca-Cola is pursuing which strategy?
The corporate-level strategy that becomes appropriate when managers see the need to reduce the size of their organizations to increase performance is
concentration on a single industry
Strategy formulation begins with managers systematically analyzing the factors inside an organization and outside in the global environment that affect the organization's ability to meet its goals now and in the future.
The strategy that explains the methods that a division or organization will use to compete against its rivals in the industry is a __________-level strategy
Medien Corporation decides to enter a new type of business in order to create a competitive advantage in one of its existing businesses. Which strategy is Medien pursuing?
Ace Real Estate conducted a SWOT analysis, and their managers believe that this year's local market growth will be slower than in the past. The predicted slow market growth is a(n):
An organization purchases one of its suppliers in order to obtain access to the raw materials it needs for its production. The organization is using a ________________________ corporate-level strategy.
Planning takes place at the corporate level and the business level of an organization, but not at the functional level of the organization.
identifying and selecting appropriate goals and courses of action; one of the four principal tasks of management
A broad declaration of an organization's purpose that identifies the organization's products and customers and distinguishes the organization from its competitors.
Three Steps in organizational planning
1. Determining the organization's mission and goals (define the business, establish major goals)
2. Formulating strategy (analyze current situation and develop strategies)
3. Implementing strategy (allocate resources and responsibilities to achieve strategies)
Top management's decisions pertaining to the organization's mission, overall strategy, and structure.
A plan that indicates in which industries and national markets an organization intends to compete.
Divisional managers' decisions pertaining to divisions' long-term goals, overall strategy, and structure.
Functional managers' decisions pertaining to the goals that they propose to pursue to help the division attain its business-level goals
A plan of action to improve the ability of each of an organization's functions to perform its task-specific activities in ways that add value to an organization's goods and services.
the intended duration of a plan
used in situations in which programmed decision making is appropriate
developed to handle nonprogrammed decision making in unusual or one-of-a-kind situations
the ability of the CEO and top managers to convey a compelling vision of what they want the organization to achieve to their subordinates
The development of a set of corporate, business, and functional strategies that allow an organization to accomplish its mission and achieve its goals
allocate responsibility, detailed action plan, establish timetable (include measurable goals), and allocate resources
A planning exercise in which managers identify organizational strengths (S) and weaknesses (W) and environmental opportunities (O) and threats (T).
permanent, ongoing, intense competition brought about in an industry by advancing technology or changing customer tastes
the level of rivalry among organizations in an industry
the more that companies compete against one another for customers
the potential for entry into an industry
The easier it is for companies to enter an industry, the more likely it is for industry prices and therefore industry profits to be low.
the power of large suppliers
If there are only a few large suppliers of an important input, then suppliers can drive up the price of that input, and expensive inputs result in lower profits for companies in an industry.
the power of large customers
If only a few large customers are available to buy an industry's output, they can bargain to drive down the price of that output. As a result, industry producers make lower profits.
the threat of substitute products
Often the output of one industry is a substitute for the output of another industry. When a substitute for their product exists, companies cannot demand high prices for it or customers will switch to the substitute, and this constraint keeps their profits low.
Driving the organization's costs down below the costs of its rivals.
Distinguishing an organization's products from the products of competitors on dimensions such as product design, quality, or after-sales service.
focused differentiation strategy
serving only one segment of the overall market and trying to be the most differentiated organization serving that segment
focused low-cost strategy
Serving only one segment of the overall market and trying to be the lowest-cost organization serving that segment.
expanding a company's business operations into a new industry in order to produce new kinds of valuable goods or services
performance gains that result when individuals and departments coordinate their actions
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
selling the same standardized product and using the same basic marketing approach in each national market
customizing products and marketing strategies to specific national conditions
allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee
selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits
An agreement in which managers pool or share their organization's resources and know-how with a foreign company, and the two organizations share the rewards and risks of starting a new venture.
a strategic alliance among two or more companies that agree to jointly establish and share the ownership of a new business
wholly owned foreign subsidiary
production operations established in a foreign country independent of any local direct involvement
The degree to which a manager feels that his/her job is meaningful because of the way that it affects other people is known as the autonomy of the job.
The "chain of command" of an organization is the hierarchy of authority for that organization.
The units of Zach Ltd., are grouped together such that the functions that work together to produce a product are grouped together. This is an example of a(n) ________________ structure.
Rusty is a project manager who has 15 executives reporting directly to him. The number 15 is Rusty's:
span of control
Fern Motor Co. brings together senior managers from its marketing, R&D, manufacturing, accounting, and finance departments to work on a project as a team, to design a new type of sport utility vehicle. In this scenario, Fern Motor Co. creates a:
The organizational design in which employees are correctly referred to as two-boss employees is a _________________ structure.
Xpress Delivery Corporation organizes its managers according to the different regions of the world in which the managers work. This is an example of a ________________ structure.
The process by which managers establish the structure of working relationships among workers of the organization is known as:
A differentiation strategy aimed at increasing the customer's perception of an organization services usually succeeds even with an inflexible structure.
A flat organization has fewer levels of authority relative to the size of that organization.
a formal system of task and reporting relationships that coordinates and motivates organizational members so they work together to achieve organizational goals
The process by which managers make specific organizing choices that result in a particular kind of organizational structure.
factors that determine the design of organizational structure
the organizational environment, strategy, technology, and human resources
The process by which managers decide how to divide tasks into specific jobs
The process of reducing the number of tasks that each worker performs
increasing the number of different tasks in a given job by changing the division of labor
increasing the degree of responsibility a worker has over his or her job
the extent to which a job requires that an employee use a wide range of different skills, abilities, or knowledge
the extent to which a job requires that a worker perform all the tasks necessary to complete the job, from the beginning to the end of the production process
The degree to which a worker feels his or her job is meaningful because of its effect on people inside the organization, such as coworkers, or on people outside the organization, such as customers.
the degree to which a job gives an employee the freedom and discretion needed to schedule different tasks and decide how to carry them out
the extent to which actually doing a job provides a worker with clear and direct information about how well he or she has performed the job.
functional structure (most common)
An organizational structure composed of all the departments that an organization requires to produce its goods or services.
An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer
An organizational structure in which each product line or business is handled by a self-contained division.
An organizational structure in which each region of a country or area of the world is served by a self-contained division.
An organizational structure in which each kind of customer is served by a self-contained division; also called customer structure.
An organizational structure that simultaneously groups people and resources by function and by product.
A group of managers brought together from different departments to perform organizational tasks.
product team structure
An organizational structure in which employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his or her direct subordinates.
hierarchy of authority
An organization's chain of command, specifying the relative authority of each manager
minimum chain of command
have as few levels as possible, flat organization
span of control
the number of subordinates who report directly to a manager
someone in the direct line or chain of command who has formal authority over people and resources at lower levels
Someone responsible for managing a specialist function, such as finance or marketing.
giving lower-level managers and nonmanagerial employees the right to make important decisions about how to use organizational resources
organizing tools that managers can use to increase communication and coordination among functions and divisions
A committee of managers from various functions or divisions who meet to solve a specific, mutual problem; also called ad hoc committee.
B2B network structure
A series of global strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product.
to use outside suppliers and manufacturers to produce goods and services
an organization whose members are linked by computers, mobile and virtual technology, computer-aided design systems, videoconferencing, and cloud computing, and who rarely, if ever, see one another face-to-face.
knowledge management system
a company-specific virtual information system that systematizes the knowledge of its employees and facilitates the sharing and integrating of their expertise
Formal target-setting, monitoring, evaluation, and feedback systems that provide managers with information about how well the organization's strategy and structure are working.
feedforward control (input stage)
control that allows managers to anticipate problems before they arise
concurrent control (conversion stage)
control that gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise
feedback control (output stage)
Control that gives managers information about customers' reactions to goods and services so corrective action can be taken if necessary.
The Steps of the organizational control process
1. Establish standards of performance, goals, or targets against which performance is to be evaluated
2. Measure actual performance
3. Compare actual performance against chosen standards of performance
4. Evaluate the result and initiate corrective action if the standard is not being achieved
measure how efficiently managers are using the organization's resources to generate profits
Return on Investment (ROI)
net profit before taxes/total assets (most common)
measure how well managers have protected organizational resources to be able to meet short-term obligations
measure the degree to which managers use debt or equity to finance ongoing operations
Show how well managers are creating value from organizational assets
A budget that states how managers intend to use organizational resources to achieve organizational goals.
Management by Objectives (MBO)
A goal-setting process in which a manager and each of his or her subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluate the extent to which the subordinate is achieving those goals.
Managing by exception
the process of looking only for employees who were falling behind in meeting their goals
Control of behavior by means of a comprehensive system of rules and standard operating procedures.
the set of values, norms, and standards of behavior that control the way individuals and groups interact and work together to achieve organizational goals
The control exerted on individuals and groups in an organization by shared values, norms, and standards of behavior.
the movement of an organization away from its present state and toward some desired future state to increase its efficiency and effectiveness
Four Steps in the Organizational Change Process
1. Assess the need for change
2. Decide on the change to make
3. Implement the change
4. Evaluate the change
A fast, revolutionary approach to change in which top managers identify what needs to be changed and then move quickly to implement the changes throughout the organization.
a gradual or evolutionary approach to change in which managers at all levels work together to develop a detailed plan for change
the process of comparing one company's performance on specific dimensions with the performance of other, high-performing organizations.
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