MGMT 445 Exam 1 Study Guide
MGMT 445 Exam 1 Study Guide MGMT 445
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This 20 page Study Guide was uploaded by Patricia Soto on Monday February 8, 2016. The Study Guide belongs to MGMT 445 at University of Illinois at Chicago taught by Eric J. Michel in Winter 2016. Since its upload, it has received 36 views. For similar materials see Organizational Theory in Business, management at University of Illinois at Chicago.
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Date Created: 02/08/16
1 MGMT 445 – Mr. Michel First Exam Study Guide Daft Ch. 1-4 Spring 2016 Lectures and Discussions Chapter 1: Introduction to Organizations and Organization Theory 1. Identify current challenges that organizations and managers face. a. Globalization b. Intense Competition c. Ethics and Social Responsibility d. Speed of Responsiveness e. The Digital Workplace f. Diversity 2. What is organization theory? How is organization theory different from organizational behavior? Organization theory: is concerned with the big picture of the organization and its major departments & helps us explain what happened in the past, as well as what may happen in the future, so that we can manage organizations more effectively 3. Define an organization and the importance of organizations in society. Definition: Social entities that are goal-directed, designed as deliberately, structured and coordinated activity systems, Linked to the external environment, Includes large multinational corporations, and family owned businesses, as well as nonprofits Importance: Organizations are a means to an end, Role of the the corporation over the past 100 years, Produce goods and services efficiently, Facilitate innovation, Adapt to and influence a changing environment, Create value for owners, customers, and employees, Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees 4. Define and contrast the five structural dimensions of organizations. 2 i. Formalization- amount of written documentation ii. Specialization – degree to which organizational tasks are separated into separate jobs…”division of labor” 1. Adam Smith’s efficiency expectations iii. Hierarchy of Authority – span of control for each manager and designates who reports to whom…can be narrow (taller hierarchy) or wide (shorter hierarchy) 1. Titles determine who you report to & who provides your formal performance evaluation iv. Complexity – number of different departments within an organization…vertical-(less departments), (a lot of departments) horizontal-, and spatial-complexity (geographic) 1. How many departments in the organization v. Centralization- what hierarchical level has the authority to make decisions?...centralized vs. decentralized 1. Amount of responsibility individual employees have 5. What is an organizational chart? How does the organizational chart relate to the structural dimensions? Organizational Charts i. Visual representation ii. Establishes formal tasks iii. Framework for vertical control iv. Establishes formal reporting relationships * Know how to interpret how many different levels of an organization there are on a chart 6. Define and contrast the five contingencies that influence structure. Contingency Factors – 5 factors that describe the organizational setting and shape of the structural dimensions i. Size – number of employees ii. Organizational technology – what tools or technologies are used to transform inputs into outputs? iii. Environment – everything outside of the organization that impacts it iv. Goals and strategy – define the scope of operations, how resources are allocated, provide purpose and set the organization apart from competitors v. Culture – values, beliefs, and norms shared by employees 7. Understand efficiency and effectiveness, and the stakeholder approach to measuring effectiveness. a. Efficiency – amount of resources used to achieve the organization’s goals b. Effectiveness – the degree to which and organization achieves its goals c. Stakeholder Approach – balancing the needs of groups in and outside of the organization that has a stake in the organization’s performance 3 8. Explain concept of stakeholder—defined: group within or outside the org. that has an interest in the org.’s performance Stakeholders- any group within or outside the organization that has a stake (interest) in the organization’s performance a. NOT the same as a shareholder or stockowner. All owners are organizational stakeholders, but not all organizational stakeholders are owners. b. Each stakeholder: i. Has a different level of need from the organization ii. Has a different interest in the company 9. Identify important stakeholders in organizations. a. Employees – loss of satisfaction, pay, supervision b. Owners, Stockholders –financial return c. Customers – value, high quality service and goods d. Suppliers –satisfactory transactions, revenue e. Community - f. Creditors – financial responsibility g. Union h. Management i. Government 10. Understand historical perspectives on organization design. a. How Efficient Can We Make Things? i. Scientific Management: Pioneered by Fredrick Winslow Taylor b. How to Get Organized? i. Administrative Principles 1. Contributed to Bureaucratic Organizations c. What about People? i. Hawthorne Studies d. Can Bureaucracies Be Flexible? i. Flexible and lean; focused on service, quality, and engaged employees (1980’s) e. Is there “One Best Way?” i. Contingency: It all depends 11. Explain the differences in organic and mechan istic organization designs and the five contingency factors typically associated with each. a. Mechanistic – characterized by machine-like standard rules and procedures with clear authority b. Organic – design of organization is looser, free-slowing, and adaptive c. Depends upon 5 contingency factors i. Structure – M (centralized) vs. O (decentralized) ii. Tasks/Roles – M (specialized tasks) vs. O (empowered roles) iii. System Formality – M (many rules) vs. O (few rules) iv. Communication – M (vertical) vs. O (horizontal) 4 v. Hierarchy/Collaboration – M (strict hierarchy) vs. O (collaboration) 12. Identify two current trends in organization design (open systems and chaos theory) open systems are adaptive and interact with the environment chaos theory states that relationships in complex systems are nonlinear (managers are unable to control what happens) i. Chaos operates with some predictability which is the challenge of today’s managers Chapter 2: Strategy and Effectiveness 1. Define and differentiate between strategy (def. ), strategic management (def. ), organizational goals (def. ) and strategic intent (def. ) Strategy a. The _pattern_____ of decisions a firm makes (cumulative decision & how the effect each other) Strategic management b. Seeking a competitively superior organizational-_environmental________ fit Organizational __goals__________ c. A desired state of affairs that an organization attempts to reach Strategic __intent________ d. (How to accomplish our mission & execute strategies) e. How an organization’s energies and resources are directed toward a focused, unifying, and compelling goal 2. Understand the role top managers play in determining strategic intent, designing organizational structure, and achieving organizational outcomes. How do top managers use information from the external environment and the internal situation to craft strategy and organizational structure? 5 3. Compare and contrast four definitions of competence. Core Competence q A strength, anything that an organization does well n Ex. Walmart – Low Cost Strategy n Ex. Macy’s or Nordstorm – Higher quality, customer service Distinctive Competence q A unique core competence; something that the organization does better than anyone else q Ex. Walmart – the supply chain (as you buy something, the supplier knows to replace it) Competitive Advantage q A distinctive competence that customers value and that the organization has resources to exploit Sustainable Competitive Advantage q A competitive advantage that the organization can continue to exploit over time This is what every organization aims for! 6 Ex. Four Seasons Four Definitions of Competence • Core Competence o Superior customer service • Distinctive Competence o A culture built on highly positive customer experiences • Competitive Advantage o Creating value by being seen as prestige ex. Being able to see celebrities • Sustainable completive advantage o $400-500 per night 4. Describe the strategy formulation process and perform situation (SWOT) analysis Strengths a. Positive internal characteristics that can be exploited Weaknesses b. Internal characteristics that might inhibit or restrict performance Opportunities c. External characteristics that have the potential to help achieve of strategic goals Threats d. External characteristics that may prevent the achievement of strategic goals e. Process begins when mgrs. evaluate current position with respect to mission, goals, and strategies. Mgrs. Next scan the int./ext. environment– called situation analysis. Mission or goals may be redefined to formulate new strategy. Last step is implementation. 1. Internal to org: Strengths—(def/ex. ) Weaknesses-- (def/ex. ) 2. External to org: Opportunities-- (def/ex. ) Threats-- (def/ex. ) 5. Contrast missions and visions. Mission: The organization’s core broad purpose and reason for existence What we do or why we exist today, Communicates purpose, values, and legitimacy Vision: An attractive, ideal future that is credible yet not readily available, The view of what the organization can and should become if the mission is followed and succeeds 6. What are operational goals, why are they important, and provide an example of one. a. Operational goals designate the ends sought through the actual operating procedures of the organization i. Provide employee direction and motivation ii. Offer decision guidelines 7 iii. Define standards of performance b. Examples include: i. Overall Performance ii. Employee Development iii. Innovation and Change iv. Productivity 7. Understand three types of Grand Strategy (ex. Growth, Stability or Retrenchment) Definition: General plan of major action to achieve long-term goals n Growth (Internal or External) q Diversification (External) n Mergers & Acquisitions q Ex. AT&T & Direct TV n Stability q Often referred to as a Pause Strategy n Ex. Small Businesses n Retrenchment (Associated with Organizational Decline) q Also known as Downsizing n Liquidation & Divestiture 8. Understand the three levels of strategy – what question does each level seek to answer? 9. Define corporate-level strategies and explain the portfolio approach BCG Matrix – Portfolio Strategy 8 10. Corp level “what business are we in?” Strategy – pattern of decisions that are made At the corporate level – managers are trying to determine what business we are in? Business level strategy- how do we compete against other companies? Functional level strategy- how do we support the business level strategy? 11. Portfolio Strategy= mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage: BCG Matrix is one example Hi Market Share Low Biz Stars Question Marks Growth Rate Cash Cows Dogs Low a. What to do with: Stars—Invest and build ?—Build or harvest Cash cows—Hold and use profits for other SBUs Dogs—Divest or Turnaround 12. Describe business-level strategies: Porter’s competitive forces, Porter’s strategies, Miles and Snow Typology a. Business level “how do we compete?” b. Porter Five Forces Affecting Industry Competition 9 i. Threat of new entrants / Bargaining power of buyers / Bargaining power of suppliers / Threat of substitute products /Competitor rivalry POTENTIAL ENTRANTS Threat of new entrants Barof suppliersr INDUSTRY COMPETITORS SUPPLIERS BUYERS Rivalry Among Existing Firms Bargaining power of buyers Threat of substitute products or services SUBSTITUTES Source: Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter c. Porter Competitive Strategies -- i. Differentiation--- aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls in an attempt to be more efficient than competitors. ii. Low Cost Leadership--- involves an attempt to distinguish a firm’s products or services. iii. Focus---- concentrates on a specific regional market or buyer. d. Miles and Snow Typology - Managers should seek to formulate strategy that matches the demands of the external environment i. Prospector – Learning orientation; flexible, fluid, decentralized structure & Values creativity, risk-taking, and innovation 1. Ex. 3M ii. Defender – Efficiency orientation; centralized authority and tight cost control & Emphasis on production efficiency, low overhead 1. Ex. BIC Corp. iii. Analyzer – Balances efficiency and learning; tight cost control with flexibility and adaptability & Emphasis on creativity, research, risk-taking for innovation 10 1. Ex. IBM iv. Reactor – No clear organizational approach; design characteristics may shift abruptly depending on current needs 1. International Harvester 13. What are functional-level strategies and how do they relate to business-level and corporate-level strategies? Business Level Strategy Broad Cost Differentiation Focus Focus Cost Differentiation Focus Cost Differentiation Functional Level Strategy Efficiency Innovation Competitive Advantage Quality Responsiveness to Customers 14. How do business-level strategies affect organization design? 11 15. Contrast efficiency and effectiveness. n Efficiency – amount of resources used to achieve the organization’s goals n Effectiveness – the degree to which an organization achieves its goals n Four ways to measure effectiveness: q The Goal Approach q The Resource-Based Approach q The Internal Process Approach q The Strategic Constituents Approach 16. Discuss the goal, resource, internal process, and strategic constituents approaches to measuring effectiveness. 12 17. Understand the competing values model and how it relates to the integrated effectiveness model. What are the two dimensions of the integrated effectiveness model and what are the characteristics of each of the four quadrants? Competing values model tries to balance concern with various parts of the organization. The human relations emphasis incorporates the values of an internal focus and flexible structure 2x2 Matrix consisting of two dimensions: a. Structure (flexibility vs. control) b. Focus (internal vs. external) 13 Chapter 3: Fundamentals of Organizational Structure 1. Define the three key components of organization structure. a) Formal reporting Relationships § Number of levels § Span of control b) Grouping of Individuals § Creation of departments c) Design of systems § Communication, coordination, and integration of efforts d) Horizontal information and coordination reflected in organization chart 2. Contrast vertical organization and horizontal organization. What are the features of each? 3. Explain the vertical and horizontal information-sharing concepts of structure. What is hierarchical referral? How are vertical links established? Why are budgets and reports important? a) Vertical linkages coordinate activities between the top and the bottom of the organization b) Hierarchical referral are the vertical lines which identify the chain of command c) Rules and Plans create vertical links § budget is the most widely used plan d) Reports, computer systems, and written information are vertical information systems 4. Contrast the six types of horizontal linkages that help to coordinate work activities across departments. a) Horizontal linkage coordinates activities across organizational departments - not traditionally drawn on the organizational chart 14 § Information Systems § Liaison Roles (ex. R&D and mfg) § Task Forces (link 2 departments) § Full-Time Integrator (ex. Project/Brand Manager) § Teams (challenge of virtual teams) 5. Understand three questions that inform the overall design of an organization’s structure. Why are these questions important? a) What are the required work activities? § Determines the tasks that are strategically important to the company b) How should the work activities fit together? § Determines the chain of command and departments c) What departmental grouping is the most effective? § Determines how resources are allocated, responsibility for performance, extent to which collaboration occurs 6. Compare and contrast the seven departmental grouping options and understand strengths and weaknesses of each option. a) Functional Grouping § Group employees by similar functions, knowledge, skills, or work processes 15 b) Divisional Grouping § Group employees by product lines or services c) Geographic Grouping § Group employees by geographic location § Activities grouped by needs of users/customers by geography § Many multinational corporations are organized by country § Focuses managers and employees on specific geographic regions § Strengths and weaknesses similar to divisional organization d) Matrix Grouping § Group employees by two or more grouping alternatives simultaneously § Multifocused with strong horizontal linkage § Three conditions for Matrix Structure: § Need for shared resources across the organization 16 § Two or more critical outputs required: products and technical knowledge § Environment is complex and uncertain § Allows organization to meet dual demands of technical expertise and innovation/change e) Horizontal Grouping § Group employees around core work processes § Organization around core processes • Processes refers to tasks and activities § Shift towards horizontal structure during reengineering § Eliminates vertical hierarchy and departmental boundaries § Structure is created around cross-functional processes § Self-directed teams, not individuals, are dominant players How it works n Process owners are responsible for entire process n People on the team are given authority for decisions n Can increase organization’s flexibility n Customers drive the organization, measured by customer satisfaction, employee satisfaction, and financial contribution n Culture is one of openness, trust, and collaboration; focus on continuous improvement 17 f) Virtual Network Grouping § Group employees virtually to share information and complete tasks § Extend horizontal coordination beyond the boundaries of the organization § Most common strategy is outsourcing • Contract out certain tasks/functions • Key- Centralized decisions & subcontract work § Virtual or modular structures subcontract most of its major functions to separate companies § The virtual network organization serves as a central hub with contracted experts 18 g) Hybrid Grouping § Customized combination of several types § Combination of various structure approaches § Tailored to specific needs § Often used in rapidly changing environments § Greater flexibility 7. Contrast structural alignment and structural deficiency. Describe the symptoms of structural deficiency within an organization. a) Each structure meets different needs and is a tool that can help managers be more effective b) Structural alignment aligns structure with organizational goals c) Symptoms of Structural Deficiency: § Decision making is delayed or lacking quality § Organization cannot meet changing needs § Employee performance declines, needs are not meet § Too much conflict 8. Consider department grouping options and the dominant structural approach. What types of grouping options are more appropriate for vertical organization? What types of grouping options are more appropriate for horizontal organization? 19 9. Describe how structure can be used to achieve an organization’s strategic goals • Differentiation/prospector strategy—develop innovative products; horizontal communication/flexibility critical Ø Divisional-- Team-- Matrix--- • Low-cost Leadership /Defender strategy—internal efficiency; Structures that are use resources efficiently are critical Ø Vertical Functional--- Matrix--- • Focus strategy – serving specific geographic markets are critical Ø Geographic -- Chapter 4: The External Environment 1. Contrast domain and sectors. § Domain is the chosen environmental field of action…Products? Markets? Niche? § Sectors or subdivisions that contain similar elements…grouped into task environment and general environment sectors 2. Define the task environment and its key sectors. § __Task____: Inner layer, closer to the organization § Day-to-Day transactions § __Directly_______ influences basic operations and performance • Market o Ex. Customers • Industry o Ex. Competitors • Raw Materials o Ex. Suppliers • Human Resources 20 o Ex. Labor Markets 3. Define the general environment and its key sectors. § __General____: Outer layer that is widely dispersed • Affects all organizations _equally_____ o Sociocultural o Technology o Economic o Government o Financial 4. Identify the three factors that cause uncertainty for organizations. § Organizations must cope with and manage _uncertainty____ to be effective. § The dimensions of the environment range: • _Stable_____ vs. ___Unstable___ • Homogeneous vs. Heterogeneous • __Simple_____ vs. _Complex__________ § The dimensions boil down to: • The need for information about the environment • The need for resources from the environment 5. Explain environmental complexity and environmental dynamism. 6. Describe the environmental uncertainty model. 7. Explain how organizations adapt to complexity and dynamism in a changing environment. 8. Understand how the environment affects organizational differentiation and integration. 9. Describe how the environment affects organic versus mechanistic management processes. 10. What is the resource dependence perspective and how do organizations depend on financial resources? 11. Recognize how organizations influence key environment sectors. 12. Understand the organization-environment integrative framework.
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