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CONCORDIA / OTHER / Admi 201 / What products are most profitable to sell?

What products are most profitable to sell?

What products are most profitable to sell?

Description

School: Concordia University - Loyola Campus
Department: OTHER
Course: Intro to administration
Term: Spring 2018
Tags:
Cost: 50
Name: ADMI 201 Midterm Exam Study Guide
Description: This study guides includes tips, additional information, and all of the notes that will be useful for exam preparation. All of the info is in the document.
Uploaded: 02/11/2018
20 Pages 51 Views 2 Unlocks
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Introduction to Administration — ADMI 201  


What products are most profitable to sell?



Professor Robert Soroka  

Concordia University  

Midterm Study Guide  

This document contains my class notes from every lecture of the semester up to date, weeks 1, 2,  3, 4, and 5. The chapters being covered in the exam are chapters 1-6 inclusive. In class 5, we  covered both chapters 6 and 7, and as mentioned during the lecture, chapter 7 WILL NOT be on  the exam. This study guide also contains a few tips and tricks for exam prep and for during the  exam.  

**Tips**:  

- Read material in the textbook, as it contains good examples for possible essay questions  - As mentioned by the professor, material from the textbook may be up for grabs as well  - When studying, re-writing notes and and finding your own solutions for examples will help to  prepare you for the essay question(s)  


Why are resources also called factors of production?



- Study as if you have to teach it to somebody  

- During the exam, read the long answer/short answer/essay questions before you do the  multiple choice questions, as you will be able to pay more attention for possible answers to  those questions if you know what you’re looking for  

- For essay questions, demonstrate as much knowledge/understanding as possible  

Exam Format/Layout:  We also discuss several other topics like What is summarizing accounting process?

- Chapters 1-6 inclusive  

- Lectures 1-5  

- Multiple Choice 50%; Short Answer/Essay Question(s) 50%  

- Application of terms— know the terminology, but not specific definitions  - Assume 1 minute/multiple choice  


Why is the external environment important?



- Out of /90, 50 marks for multiple choice, 40 marks for short answer  

- Lined paper: for essay questions, unlined: scrap and unmarked  

- **Bring: 2 HB #2 pencils, a few pens, paper-based translation dictionary (if needed)**  

Notes:  

Class 1: Introduction/Chapter 1  

The Idea of Business and Profit:  We also discuss several other topics like How does the clustering of firms and workers benefit the firms?

- Businesses produce or sell products in order to make a profit  

- Profit= Revenues - Expenses  

- Non-Profit Organizations provide goods and services but do not seek profit, ex.: The  Lakeshore Players  

Economic Systems Around the World:  

The Factors of Production—> Resources used by firms to create goods and services

- Natural Resources  

- Capital  

- Human Resources (Labour)—> the most expensive factor  

- Entrepreneurs—> the risk-taker  

- Information Resources  

———————————————————————————————————————  Class 2: Chapter 2: The Economic Environment  

Organizational Boundaries and Environments  

- External Environments—> Factors beyond an organization’s boundaries that cannot be  controlled, ex.: competition  

- Organizational Boundaries—> That which separates the organization from the environment  

The Economic Environment:  We also discuss several other topics like What is the definition of social media?

- The conditions of the economic system in which an organization operates  

Economic Growth—————Economic Stability—————Full Employment   =  

 Key Economic Goals  We also discuss several other topics like What is the pericardium?
Don't forget about the age old question of What is the formula for the income statement?

Dimensions of the External Environment: Multiple Organizational Environments:  - Economic Environment  

- Technological Environment  

- Political-Legal Environment  

- Socio-Cultural Environment  

- Business Environment  If you want to learn more check out Why do we not love government?

- Global Environment  

- Emerging Challenges and Opportunities  

Economic Growth Overview:  

- The Business Cycle  

- Aggregate Output and the Standard of Living  

- Gross Domestic Product (GDP) and Gross National Product (GNP)  

- Productivity  

- Balance of Trade  

- National Debt  

The Business Cycle:  

- The typical pattern of short-term ups and downs in an economy (peak, recession, trough and  recovery)  

Aggregate Output:  

- Measure of economic growth

- Total quantity of goods and services produced by an economic system during a given period  

Standard of Living:  

- Total quantity and quality of goods and services that a country’s citizens can purchase with  their currency  

Productivity:  

- Measure of growth that compares the output of an economic system with the resources that are  needed to produce the output  

- Standard of living improves through increases in productivity  

Gross National Product (GNP):  

- Value of all goods and services produced by a national economy within a given period  regardless of production location  

Gross Domestic Product:  

- Value of all goods and services produced by a national economy within a given period with  domestic factors of production  

REAL GROWTH RATES GDP PER CAPITA REAL GDP  

Economic Stability:  

- Condition when the amount of money available and the quantity of goods and services  produced are growing at about the same rate  

Inflation Deflation Unemployment  

 =  

 Threats to Economic Stability  

Balance of Trade:  

- Value of all exported products minus imported products  

National Debt:  

- Amount of money that a government owes its creditors  

- Increases/decreases based on the budget deficit/surplus  

Inflation: Occurs when there is a widespread price increase in an economic system  Consumer Price Index (CPI): Tool used to measure inflation  

Deflation: A period of generally falling prices

Unemployment: Level of joblessness among people actively seeking work in an economic  system:  

- Frictional  

- Seasonal  

- Cyclical  

- Structural  

Managing the Canadian Economy:  

Fiscal Policies———————-Monetary Policies 

 Stabilization Policies  

The Technological Environment:  

- Technology: All the ways a company creates value for its customers  - Knowledge, work methods, physical equipment, etc…  

- Research and Development (R&D)  

- Provides new ideas for products, services and processes  

- Basic; Applied  

The Political-Legal Environment:  

- Reflects the relationship between business and government (ex.: regulations)  - Pro- or anti-business sentiment  

- Political Stability  

- International Relations  

- Laws Under the Competition Act: Protects consumers from company/business tricks, false/ misleading advertising, product distraction, ex.: Bait and Switch, Predatory Pricing  

The Socio-Cultural Environment:  

- Customs, values, attitudes and demographic characteristics of the society in which an  organization functions  

- Customer preferences and tastes  

- Vary across and within national boundaries  

- Ethical compliance and responsible business behaviour  

The Business Environment:  

- The Industry Environment: Porter’s five forces model is used to analyze the competitive  situation in an industry; Who has the power?  

Threats of New Entrants—> {  

Bargaining Power of Suppliers—> { Industry  

Threat of Substitutes—> { Rivalry  

Bargaining Power of Consumers—>{  

Emerging Challenges and Opportunities in the Business Environment:

- The most successful firms are getting leaner by focusing on their core competencies  - The skills and resources with which an organization competes best and creates the most  value for owners  

- SWOT—> Strengths, Opportunities, Weaknesses and Threats  

Outsourcing:  

- Paying suppliers and distributors to perform certain business processes  

The Growing Role of Social Media:  

- Social media is now an integral part of daily communication, especially among Millennials 

Business Process Management:  

- Moving away from department-oriented organizations toward process-oriented teams  

Redrawing Corporate Boundaries:  

- Acquisitions and Mergers:  

- Horizontal, vertical and conglomerate mergers  

- Friendly, hostile takeovers  

- Divestitures and Spinoffs:  

- Selling part of an existing business or setting it up as a new corporation  - Friendly Takeover:  

- The acquired company welcomes acquisition (needs cash or other benefits  - Hostile Takeover:  

- The acquiring company buys enough of the other company’s stock to take control  - A poison pill is a defence tactic that management can adopt to make a firm less attractive  - Employee-Owned Corporations:  

- Employee stock ownership programs (ESOP)  

- Strategic Alliances:  

- Two or more companies temporarily join forces  

- Often called a joint venture 

- Subsidiary and Parent Corporations:  

- Subsidiary corporations owned by another corporation  

- Parent corporations own subsidiary corporations  

Chapter 3: Ethics in the Workplace  

What is Ethical Behaviour?:  

- Standards or moral values that dictate what is right and wrong  

- Culturally based  

- Formed upon society’s expectations  

- Vary by person, and by situation  

- Everyone develops his/her own “code of ethics”

Influences on Ethical Behaviour/Personal Code of Ethics:  

- Family  

- Peer Group  

- Experiences  

Managerial Ethics:  

- The standards of behaviour that guide managers in their work  

- Ex.: Behaviour toward employees  

- Ex.: Behaviour toward the organization  

- Ex.: Behaviour toward other economic entities  

Assessing Ethical Behaviour:  

1. Gather the relevant factual information—>  

2. Analyze the facts to determine the most appropriate moral values—>  3. Make an ethical judgement based on the rightness or wrongness of the proposed activity or  policy  

- Utility: Does the act epitomize what is best for those who are affected by it?  - Rights: Does it respect the rights of the individuals involved?  

- Justice: Is it consistent with what we regard as fair?  

- Caring: Is it consistent with people’s responsibilities to others?  

Written Codes of Ethics:  

- Increase public confidence in a firm  

- Help stem the tide of government regulation  

- Improve internal operations by providing consistent standards of both ethical ad legal conduct  - Help managers respond to problems as a result of unethical or illegal behaviour  

Areas of Social Responsibility:  

- Responsibility Towards Environment 

- Air pollution  

- Water pollution  

- Land pollution, ex.: toxic waste disposal, recycling  

- Responsibility Towards Customers 

- Rights of consumers (consumerism)  

- Unfair pricing (collusion)  

- Ethics in advertising, ex.: truth in advertising, advertising of counterfeit brands, morally  objectionable advertising  

- Responsibility Towards Employees 

- Legal and social commitments  

- Human resource management issues  

- Social responsibility issues  

- Privacy issues, ex.: drug test and computer monitoring  

- Encouraging ethical behaviour, ex.: whistle-blowers

- Responsibility Towards Investors 

1. Improper Financial Management  

- Doing a poor job of managing the financial resources of a company  

- May be legally unprintable because no law has been broken  

- It may be difficult to replace management because unrest in the firm may devalue its  stock  

2. Cheque Kitting  

- Illegal practice of writing cheques against money that has not arrived in the bank  account  

- A creative “cheque kiter” can write cheques from account to account with very little  money to back it up  

- The assumption is that the money will arrive before the cheque needs to clear  3. Insider Trading  

- Using confidential (non-public) information to gain from the sale of stock  - Involves gaining knowledge of inside information about the company prior to  making the purchase  

- Can involve the collusion of investors buying and selling stock at the appropriate  time to make huge profits  

4. Misrepresentation of Finances  

- Companies must conform to accounting guidelines and principles  

- Failure to follow GAAP in order to inflate expected profit figures can mislead  investors  

Implementing Social Responsibility Program: Approaches to Corporate Social Responsibility  

Obstructionist Stance Defensive Stance Accommodative Stance Proactive Stance  <—————————————————————————————————————->  Lowest Level Highest Level  of Social Responsibility of Social Responsibility  

Corporate Charitable Donations:  

- Companies may contribute to a program, ex.: Ronald McDonald House  - Corporations often donate goods when disaster strikes  

- Many encourage employees to volunteer  

Managing Social Responsibility Programs:  

1. Top Management Support 

- Develop a policy statement outlining their commitment to ethical behaviour  2. Strategic Planning 

- Top managers develop a plan of the level of support  

- Percentage of sales revenues to go to social causes  

- Promise to train chronically unemployed people  

3. Appoint a Director 

- Executive-level administrator is appointed to oversee the program

- This may be a partial time work commitment on the part of existing top managers  4. The Social Audit 

- A systematic analysis of how the firm is using funds  

- Addresses the effectiveness of the money spent  

- Triple bottom line reporting= Financial Reports—Social Audits—Sustainability Reports  - Sustainable development: Activities that meet current needs that do not put future  generations at a disadvantage  

Social Responsibility and Small Businesses:  

- Face the same issues as large businesses  

- May be tested by ethical dilemmas because of limited financial resources and concerns for  economic survival  

- Ex.: Temptation to take cash deals (may convince themselves internally to justify an illegal  choice)  

- Ex.: Might avoid sustainable products because of higher costs  

———————————————————————————————————————  Class 3: Chapter 4: Entrepreneurship, Small Business, and New Venture Creation

Small Business: 

- Owner-managed business with fewer than 100 employees 

- Definitions vary; some statistics do not include unincorporated businesses with one owner and  no employees 

New Venture: Recently formed organization, opened within the last 12 months, that sells goods  or services 

Entrepreneurship: Process of identifying and capitalizing on a marketplace opportunity Entrepreneur: Person who recognizes and seizes opportunities 

Intrapreneurs: Create something new within an existing large organization, ex.: the creation of  post-it notes at 3M, where a musician/scientist wanted to tab his sheet music, but had to create an  adhesive that would stick, but that wasn’t too strong so that it would rip the sheet, he sent the  product to secretaries, eventually cut them off, creating demand amongst company bosses 

Small and New Businesses in the Canadian Economy 

- Role of Small Business: 

- 98% of all employer businesses in Canada are small (fewer than 100 employees) - Main source of job creation 

- Leaders in innovation and new technology 

- Agriculture: 90.7%; Accommodation and Food Services: 89.6%; Construction: 81.8%;  Other Services: 90.6% 

- Increasing Role of Female Entrepreneurs:

- Women now account for approximately half of all new businesses

- Rise of “mompreneurs” 

- Reasons that women start their own business: Gain Control Over my Schedule: 46%; Saw  a Market Opportunity and Decided to Pursue it: 24%; Frustrated with “Glass Ceiling” at  Big Companies: 23%; Other Reasons: 7% 

The Entrepreneurial Process: 

1. Identifying Opportunities: 

- Generating Ideas 

- Screening Ideas 

- Idea adds or creates value 

- Idea provides a competitive advantage 

- Idea is marketable and financially viable 

- Idea has a low exit costs 

- Developing the Opportunity 

- Business Plan 

2. Business Plan: 

- Cover Page 

- Executive Summary 

- Table of Contents 

- Company Description 

- Product of Service Description 

- Marketing 

- Operating Plan 

- Management 

- Financial Plan 

- Supporting Details/Appendix 

3. Accessing Resources: 

- Bootstrapping—> free methods to promote the business 

- Doing more with less 

- Preferably external resources 

- Financial Resources 

- Debt—> Financial institutions; suppliers 

- Equity—> Personal savings; Private investors (Angels); Love money (money from  family, friends, inheritance); Venture capitalists; Selling shares within the business - Other Resources 

- Business Development Bank of Canada (BDC) 

- Incubators 

- The internet 

4. Assessing the “Fit” 

- Entrepreneur—Opportunity Fit—> Is it possible? 

- Opportunity—Resources Fit—> Can required resources be acquired? 

- Entrepreneur—Resources Fit—> Capacity to meet requirements?

Alternative Approaches: Starting up a small business Buying an Existing Business: 

- CONS: 

- Uncertainty about financial health 

- Location may be poor 

- The pricing strategy may need to be revisited - May have a poor reputation 

- PROS: 

- Established clientele 

- Ease of financing 

- Experienced employees 

- Established lines of credit and supply 

- Less risky than starting from scratch 

Family-Owned Business Challenges: 

- Ongoing Management: 

- Which family members have control? - Price to be paid? 

- Family members rights to a job? 

- Succession: 

- Successor Selection? 

- Succession Timing? 

- Successor Training? 

After the Start-Up: 

Franchising Benefits—> Franchiser: 

- Attain rapid growth 

- Share advertising cost 

- Increased investment money 

- Development of a motivated sales team - Increased revenue 

- No need to deal with local business issues Franchising Benefits—> Franchisee: 

- Access to management expertise 

- No need to build a business from scratch - Low failure rates 

- Well-developed brand 

- Training provided 

- Expert Advice 

- Economies of scale in buying supplies - Help with external financing 

- Be your own boss 

- Keep most of the profits

Success and Failure in Small Business: 

Success: 

- Hard work, drive and dedication 

- Market demand for product or service 

- Managerial competence 

- Luck 

Failure: 

- Managerial incompetence 

- Neglect, arrogance 

- Weak control systems 

- Insufficient capital—> not enough money to meet short-term obligations Forms of Business Organizations: 

1. Sole Proprietorship: You are the business, the business is you 

Advantages: 

- Freedom 

- Simplicity 

- Low start-up costs 

- Tax benefits 

Disadvantages: 

- Unlimited liability 

- Lack of continuity 

- Difficult to raise money 

- Reliance on one individual 

2. Partnership: Two or more people agree to combine their financial, managerial and technical  abilities to run a business; Frequently used by professionals; Two types: 1) General Partners  (unlimited liability), 2) Limited Partners (limited liability); A partnership MUST involve AT  LEAST 1 General Partner 

“If it waddles like a duck, and it quacks like a duck, it’s a duck”—> If a limited partner acts  like a general partner, and participates in day-to-day activities, then in court, the distinction  between a general partner and a limited partner “is not evident” 

Advantages: 

- Larger talent pool 

- Larger money pool 

- Ease of formation 

- Tax benefits 

Disadvantages: 

- Unlimited liability 

- Lack of continuity 

- Ownership transfer difficulty 

- Potential conflict

3. Corporation: They have the following rights and characteristics:

- Separate legal entity from its owners: can sue; could be sued 

- Property rights and obligations 

- Indefinite lifespan 

- Taxed independently 

Public Corporation:  

- Shares are widely held and available to the general 

- Initial Public Offering (IPO): the sale of shares for the first time to the general investing  public 

Private Corporations:  

- Shares held by a few shareholders (not widely available) 

Board of Directors: 

- Governing body; responsible for shareholder interests 

- Appoint management, set policy, amen major decisions 

- Hires officers, ex.: CEO, President, Vice-President, etc… 

Shareholders: 

- Investors who buy shares of ownership in a company 

- May share in profits through dividends 

Chief Executive Officer (CEO): 

- Person responsible for the firms overall performance 

Advantages: 

- Limited liability 

- Continuity 

- Professional management 

- Easier to raise money 

Disadvantages: 

- Start-up costs 

- Double taxation 

- Regulations 

- Stockholder revolts 

4. Cooperative: Organizations formed to benefit its owners through reduced prices and  distribution of surpluses 

Advantages: 

- Limited liability 

- Owner continuity 

- One vote per member; equal voice regardless of size 

- Income taxed only at the individual member level 

Disadvantages: 

- No incentive to invest 

- Members simply benefit from usage 

Interest Rates: The cost of borrowing money; Interest rates decided by the Bank of Canada

———————————————————————————————————————  Class 4: Chapter 5: The Global Context of Business  

The Contemporary Global Economy:  

- Total volume of world trade= $19 Trillion/Year  

- Globalization:  

- The integration of markets globally  

- The world is becoming a single interdependent system  

- Imports: Products purchased in Canada that are manufactured in other countries  - Exports: Products made in Canada that are purchased by consumers in other countries  

Major World Marketplaces:  

- North America:  

- Canada’s largest trading partner is the United States  

- Trade with Mexico is increasing  

- Europe:  

- Traditional view (West VS East)  

- Emerging view (North VS South)  

- Pacific/Asia:  

- Japan, China, and India  

Emerging Markets: Others include: South Korea, Thailand, Indonesia, Ukraine  Brazil, Russia, India, China, South Africa 

Forms of Competitive Advantage:  

- Absolute Advantage: A country can produce something more efficiently than any other  country  

- Comparative Advantages: A country can produce certain items more efficiently (cheaper) than  it can other items  

Theory of National Competitive Advantage:  

1. Factor Conditions  

2. Demand Conditions  

3. Related and Supporting Industries  

4. Strategies, Structure, and Rivalries  

Balance of Trade: The difference in value between total exports and total imports  - Trade Surplus: The nation exports more than it imports  

- Trade Deficit: The nation imports more than it exports  

Balance of Payments: The flow of money into or out of a country

Cash Flow In

Cash Flow Out

Exports

Imports

Foreign tourist spending in Canada

Canadian tourist spending overseas

Foreign investments in Canada

Foreign aid grants

Earnings from investments outside of Canada

Military spending abroad

Canadian investment abroad

Earnings from foreign investment in Canada

Foreign Exchange Rate:  

- “Strong” Canadian ($)——> When high demand for Canadian $ and products  - When the value of the Canadian $ depreciates—> exports increase and imports cost more  - When the value of the Canadian $ appreciates—> exports decrease and imports cost less  

International Business Management:  

- Exporter: Makes products in one country and sells to others  

- Importer: Buys products in foreign markets for resale at home  

- International Firm:  

- Conducts much of its business abroad  

- Basically, a domestic firm with international operations  

- Multinational Firm:  

- Controls assets, factories, mines, sales offices, & affiliates in two+ foreign countries  - Planning and decision making are geared to international markets  

International Organizational Structures:  

- Importing or Exporting via Independent Agent: Why have an Independent Agent?  - Local individual or organization who represents exporter’s interests  

- Often sells products, collects payments, and ensures customer satisfaction  - Understands the language, culture, and market  

- Easiest method: you don’t need a physical location; all you need is a market  - Licensing Arrangement: Why Create a Licensing Arrangement?  

- Exporter gives a foreign company the exclusive right to manufacture or sell its products  for a royalty or fee  

- Ex.: Disney does not manufacture their own products, a producer buys a license to  reproduce products featuring their stock characters such as Mickey Mouse, etc…  - Franchising is a special form of a licensing arrangement  

- Establishing a Branch Office: Why Build a Branch Office?  

- Established in foreign country  

- Increased sales due to local presence  

- More direct control  

- May be a foreign legal requirement

- Choosing a Strategic Alliance (Joint Venture): Why Form a Strategic Alliance?  - May be mandated in some nations  

- Get knowledge and expertise of the foreign partner  

- Greater control  

- There needs to be give-and-take  

- Ex.: McDonalds CAN and the Soviet Union—> farming practices in exchange for access  - Foreign Direct Investment: Why Choose Foreign Direct Investment?  

- Companies buy or establish tangible assets in a foreign country (location benefits)  - Brings foreign investment to local economy  

- Provides local employment  

- Most dangerous and costly investment  

Barriers to International Trade:  

- Social and Cultural Differences—>  

- Language  

- Population Demographics  

- Shoppings Habits  

- Religious Differences  

- Social Benefits  

- Economic Differences—> The role of the government in the economy  - Planned VS Market Economies:  

- Capitalist  

- Socialist  

- Communist  

- Legal and Political Differences—>  

- *Quotas*  

- Limitations on importation of a product class  

- Embargo-forbidding export/import from a nation  

- United States VS Cuba  

- *Tariffs*  

- A tax on imported goods  

- Raises government revenues as well  

- Subsidy: Government financial assistance for domestic firms  

- Protectionism: Protects local business at the expense of free market competition  - Local-Content Laws: Requires that at least part of the product be made in the foreign  country (possible joint venture)  

- Business Practices 

- Bribes: seen as “gratuities” to officials in some nations, illegal in Canada  - Dumping: selling goods abroad for less than a firm charges at home; mostly illegal  - Cartels: associations of producers created to control supply and demand (ex.: OPEC)  

Overcoming Barriers to Trade:  

- General Agreement of Tariffs and Trade (GATT)

- World Trade Organization (WTO):  

- Successor of GATT, but more power  

- 153 member nations  

- Negotiate trade agreements and resolve trade disputes  

- Agricultural subsidies controversial  

- Many people protest against trade liberalization  

- European Union (EU) 

- Largest free marketplace in the world  

- 28 countries, plus more waiting to join  

- Eliminated most quotas and set uniform tariffs within the union  

- The North American Free Trade Agreement (NAFTA) 

- Came into effect in 1994  

- Goal to remove tariffs and other trade barriers between Canada, the USA, and Mexico  - Other Free Trade Agreements (ex.: TPP, CETA, ASEAN, Mercosur) 

- The Trans-Pacific Partnership:  

- 12 member states: Canada, Australia, Brunei Darussalam, Chile, Japan, Malaysia,  Mexico, New Zealand, Peru, Singapore and Vietname  

- TPP has many domestic opponents  

- Canada-European Union Comprehensive Economic and Trade Agreement (CETA):  - The 28 member states account for 500 million people and annual economic activity of  almost $18 Trillion  

Opponents of Free Trade

Supporters of Free Trade

Job losses

Access to US market

Market flooded with goods made in Mexico

More exports= jobs

Loss of control over: environmental standards,  natural resources, Canadian cultural sovereignty

No threat to: environment, natural resources,  cultural sovereignty

———————————————————————————————————————  Class 5: Chapter 6: Managing the Business Enterprise  

The Management Process: Functions of Management:  

- Planning:  

- Determining what the business needs to do and the best way to achieve it  - Strategic Plans: Which direction you should be pursuing, ex.: target market, business  sectors  

- Tactical Plans: How will we go about doing it  

- Operational Plans: Specific plans of what we will do and when we will do it  - Organizing:  

- Determining how to use existing resources to implement the plan  

- Arranging jobs in a structure to create an efficient task system  

- Leading:

- Guiding and motivating subordinates to meet objectives  

- Trying to stimulate employees to work at their best 

- Managers have various responsibilities with regard to their employees  - Authority to give orders  

- Ability to guide employees  

- Power to motivate subordinates—> Although some managers have a “shelf-life”  - Controlling: Managers monitor the firm’s performance  

- Usually has to do with the finance sector: looks at budgets; check actual performance  against the budget  

- Establish standards—> Measure actual performance against standards—> Does  measured performance match standards?  

Types of Managers:  

- Top Management: Responsible for overall performance of the firm: in a year from now  - Middle Management: Responsible for implementing decisions of top managers: in a month  from now  

- First-Line Management: Responsible for supervising employees: today  

Top Management Middle Management First-Line Management <—————————————————————————————————>   Conceptual Human Relations Technical  

Areas of Management:  

- Marketing Managers: promotions, products purchase order, pricing  

- Financial Managers: in flow and out flow of money, accounts payable function, accounts  receivable functions, necessary resources for renovations, analysis for opening a new branch  - Operations Managers: focused on the actual work being done in stores, warehouse optimally  - Human Resource Managers: Assess qualifications of potential employees; 4 important  functions: recruit, select, orient, train; work on benefits, pensions, health plans, etc…  - Information Managers: Functions of hardware, software, etc…  

Basic Management Skills:  

- Conceptual skills  

- Decision-making skills  

- Recognize and define the decision situation  

- Identify alternatives  

- Evaluate the alternatives  

- Select the best alternative  

- Implement the chosen alternative  

- Follow up and evaluate the results  

- Time management skills: productive use of time  

- Leading causes of wasted time:  

- Paperwork

- Telephone  

- Meetings  

- Email  

- Human relations skills  

- Technical skills  

Behavioural Aspects of Decision Making:  

- Organizational Politics  

- Intuition  

- Escalation of Commitment—> Ex.: Montreal’s Olympic Stadium: a bad investment that kept  receiving money; taxpayers paid for the building until 2003  

- Risk Propensity  

Setting Goals and Formulating Strategy:  

- Strategic Management: Process of aligning the organization with its external environment  - Strategic Goals: Performance objectives that a firm plans to achieve  

Purpose of Setting Goals:  

- Provides direction, guidance, and motivation  

- Assists in allocating resources  

- Helps to define corporate culture  

- Helps managers assess performance  

Kinds of Goals:  

- Long-Term: 5+ years  

- Intermediate: 1-5 years  

- Short-Term: Less than 1 year  

SMART Goals:  

Specific  

Measurable  

Achievable  

Relevant  

Time-Framed  

Setting Goals and Formulating Strategy: Formulating Strategy:  

Mission Statement:  

- How the organization will achieve its purpose (reason for being)  

- Clarifies who the organization serves, what it offers, and how it will be provided  - Includes core values and ethical commitment  

- Doesn’t necessarily have to apply to a specific product  

- Ex.: Johnson and Johnson has a strong mission statement

Formulating Strategy:  

1. Setting strategic goals  

- Long-term goals based on the mission statement  

2. Analyzing the organization and its environment (SWOT)  3. Matching the organization to its environment  

Analyzing the Organization and its Environment: SWOT  - Strengths—> Internal  

- Weaknesses—> Internal  

- Opportunities—> External  

- Threats—> External  

Final Step in Strategy Formulation:  

- Matching company strengths to environmental opportunities - Minimizing the impact of threats and company weaknesses 

Levels of Strategies:  

1. Corporate-Level Strategy:  

- What businesses will we pursue?  

- How do these businesses relate to each other?  

2. Business-Level (Competitive) Strategy:  

- How will we compete in our chosen area?  

3. Functional Strategy:  

- What actions can our department pursue to reach the overall goals?  

Corporate-Level Strategies:  

- Concentration  

- Growth  

- Integration  

- Diversification  

- Investment Reduction  

Business-Level (Competitive) Strategies:  

- Cost Leadership  

- Differentiation  

- Focus  

Contingency Planning and Crisis Management:  

Contingency Planning:  

- Identify in advance changes that might occur  

- identify ways the company can respond to change  

Crisis Management:  

- Methods for dealing with emergencies

Management and Corporate Culture:  

Corporate Culture 

- A firm’s personality  

- Shared experience of employees  

- Stories, beliefs, and norms that characterize the organization  - Culture can direct employee’s efforts  

Communicating the Culture 

- Ensure new and existing managers understand the culture  - Develop a clear mission statement  

- Communicate the culture to employees  

- Reward those who understand and maintain the culture  Managing Change 

- Cultural change process  

- Management formulates vision of new company  - New systems of appraisal and compensation

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