Exam 1 Study Guide
Yellow= definition Pink=Example Blue=Need to know Chapter 1- Management and Managers
Organization-A deliberate arrangement of people brought together to accomplish a specific purpose
Common Characteristics of organizations
∙ Goals - express the distinct purpose of a particular organization ∙ People - make decisions and engage in work activities to reach the organization’s goals, and
∙ Structure - which systematically defines and limits its members’ behavior. o Example: Starbucks’ goal is to create a culture of inclusion
Difference between nonmanagerial and managers:
• Nonmanagerial Employees
If you want to learn more check out Does positive definite imply symmetric?
• Work directly on tasks
• Not responsible for overseeing others’ work If you want to learn more check out Why does marginal product eventually diminish?
• Direct and oversee the activities of others
• May have work duties not related to overseeing others
• Nonmanagerial Employees: sales associates, stock
• Managers: Store Managers, District Managers, Keyholders
o Make decisions about the direction of an organization
o Manage other managers
o Direct nonmanagerial employees
Team Leaders Don't forget about the age old question of What are spreadsheets used for?
o Manage activities of a work team
o Top Managers: CEO, CFO, COO
o Middle Managers: Agency Head, Division Manager, Project Leader o First-Line Managers: Unit Coordinator, Shift Managers
o Team Leaders: Team Leader for a specific project probably do not have the same responsibilities as First Line
What is Management?
• Effectiveness: Doing the right things
• Efficiency: Doing things right If you want to learn more check out How do you find the 6 trigonometric functions?
o Effectiveness—ordering a chicken sandwich and fries; if the customer receives the correct order
o Efficiency- How quickly the customer got the order If you want to learn more check out What are the current issues in clinical psychology?
Is the job universal?
1 Level in the Organization
2 Size of the Organization
3 Profit vs. Not-for-profit
a For Profit: turning a profit and have investors (generally). There is a board of directors normally as well
b Non-Profit: Still has a cash flow but not turning a profit
4 National Borders
a Knowing what your target market is based on your global
3 Ways to Look at what Managers Do We also discuss several other topics like What is it called when we think we know the outcome of new events because of past experiences?
1 Four Functions Approach
a Know all 4 but specifically know “whether or not you should automate the protection facility is part of the organization
2 Management Roles Approach
a Interpersonal (figurehead, leader, liaison)
b Informational (monitor, spokesperson, disseminator)
c Decisional (entrepreneur, negotiator)
3 Skills and Competencies
a Conceptual Skills
b Interpersonal Skills
c Technical Skills
d Political Skills
Why Study Management?
o If an organization is thriving than the community is also thriving. o Knowing how a manager thinks helps the employee
o Most people will either manage or be managed
Two Things that are constantly changing
a Changes in technology is changing the workplace (self-checkouts at groceries)
o Consistent, high-quality customer service is essential to survival in management
o Without customers there is no profit or following
o Being aware of the ever-growing technology is necessary for a business o Being careful about the sensitivity of others with what you post on social media is important
Innovation & Sustainability
o Integrating economic, environmental, and social opportunities into business strategies
Chapter 2- The Management Environment External Environment
∙ Factors, forces, situations, and events outside the organization that affect its performance.
o Example: Natural disasters
Components of the External Environment
• Economic - factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages.
o Example: buying a car, the price might be set at a certain number, but the buyer pays more due to interest
• Demographic - trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition.
o Example: Average age is different in different countries
• Technological - scientific and industrial innovations.
• Sociocultural - societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior.
• Political/legal component - federal, state, and local laws, as well as other countries’ laws and global laws. It also includes a country’s political conditions and stability.
o Political factors change with the administration
• Global - encompasses issues associated with globalization and a world economy.
o Global component of the external environment could affect the supply chain. Such as volcanic activities in Iceland then it influences the supply of materials in Japan or the US.
• Global productivity still slow
• Global trade is sluggish
• U.S. employment is up
• Is the American dream still a possibility?
o Only 10 percent of adults think economic inequality is “not a problem at all.”
o Economic inequality is a problem because it influences the available disposable income. If consumers don’t have disposable income, businesses go out.
The Sharing Economy
• Asset owners share with other individuals through peer-to-peer service, for a set fee, their underutilized physical assets or their knowledge, expertise, skills, or time.
o Know uber is an example of the sharing economy because individuals take their underutilized physical asset and use them for profit
o People are staying in the work force longer, which is good for companies to have the experience. However, if people are staying in the workforce longer, it decreases the availability of entry level jobs.
How Does External Environment Affect Managers?
• Jobs and employment
• Assessing environmental uncertainty
• Managing stakeholder relationships
Assessing Environmental Uncertainty
∙ In a stable environment there is minimal change.
∙ Dynamic environments experience frequent change.
o In a dynamic environment competitor move into and out of the industry frequently.
Managing Stakeholder Relationships
o Any constituencies in an organization’s environment that are affected by that organization’s decisions and actions.
Examples: employees, customers, competitors, suppliers
o Climate change is something that impacts everyone, which makes the world a stakeholder of global climate change
∙ Good stakeholder relationships
o Can lead to desirable organizational outcomes
o Can affect organizational performance
o Demonstrate doing the “right” thing
• Shared values, principles, traditions, and ways of doing things that influence the way an organization’s members act.
• Organizational “personality”
How Does Organizational Culture Affect Managers?
• Effect on what employees do and how they behave
• Effect on what managers do
How Does Culture Affect What Employees Do?
∙ Strong cultures:
o Cultures in which the key values are deeply held and widely shared.
o Normally no formal meetings to tell employees about culture, it is observed and learned.
Strong Cultures Can:
• Substitute for formal rules and regulations
• Create predictability, orderliness, and consistency
Company Values Affect Managers’ Behavior
o Ready, Aim, Fire—thinking about it, analyzing, and taking action o Ready, Fire, Aim—find the solution, take action, correct later
Chapter 3-Integrative Managerial Issues Globalization and its Impact
∙ Global village
o A boundaryless world where goods and services are produced and marketed worldwide.
What Does it Mean to Be “Global”?
• Exchanging goods and services with consumers in other countries. • Using managerial and employee talent from other countries. • Using financial sources and resources outside home country. Types of Global Organizations
∙ MNC (multinational corporation)
∙ Remember the definition for a multinational corporation: any type of international company that maintains operations in multiple countries o Multidomestic corporation
Management decisions are decentralized for the
company, so the management can tailor their
strategies based on the country
o Transnational organization
artificial or geographic boundaries are irrelevant; all
the products are offered everywhere
o Global corporation
wherever the headquarters are (the home country)
make the decisions for the corporation
The focus is control and efficiency.
Managing in a Global Organization
• A person with a parochial (narrow minded) attitude cannot succeed in today’s world.
o Power Distance- the degree to which people in a country accept that institutional power distributed unequally
o Individualism/Collectivism- individual/for the group
o Quality/Quantity-materialism/how materialistic the culture within a country is o Uncertainty avoidance-willingness to take risks
o Orientation-long term is for retirement/short term is what benefits now GLOBE: 9 Dimensions of Cultural Difference
1. Assertiveness--the degree in which a culture encourages the people to be tough, confrontational, and assertive
2. Future orientation
3. Gender differentiation
4. Uncertainty avoidance
5. Power distance
6. Individualism/ Collectivism
7. In-group collectivism
8. Performance orientation
9. Humane orientation
∙ Corporate social responsibility (CSR)
o going above and beyond legal and economic responsibilities ∙ Social obligations
o producing safe products that meet certain legal and economic responsibilities
o The traditional view about being socially involved takes more from shareholders.
∙ Social responsiveness
o when a company investigates trends and social norms and changes their products with it
• A company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental, and social opportunities into its business strategies.
Sustainability means Different Things to Different People
∙ Meeting the needs of people today without compromising the ability of future generations to meet their own needs.
∙ A company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental, and social opportunities into its business strategies.
∙ Ethics: A set of rules or principles that defines right and wrong conduct. ∙ Utilitarian view of ethics: The outcomes or consequences – greatest good
∙ Rights view of ethics: Respect & protect individual liberties & privileges such as the right of free consent, the right to privacy, and the right of free speech.
∙ Theory of justice view of ethics: Equitable, fair, & impartial Encouraging Ethical Behavior
∙ Code of ethics: Needs to be specific enough to follow guidelines but lenient enough for judgement calls
∙ Ethical leadership
∙ Ethics training
∙ Critics: value systems learned in youth.
∙ Proponents: ethical problem solving increases ethical behavior, moral development, awareness.
∙ Diversity is visible in age, gender, race, physical attributes, styles of dress, and personality type.
∙ Workforce diversity: The ways in which people in an organization are both different from and similar to one another
∙ In the workplace, on average, it is 50/50 for males and females. Females are not likely to be outnumbered, however, women are more likely to experience skepticism and wage gap.
∙ GLBT is not federal protected, YET
∙ Never okay to force someone to retire.
∙ Ethnicity is cultural
∙ Race is biological
Chapter 4-Foundations of Decision Making Identifying a Decision Problem
∙ Problem: A discrepancy between an existing and a desired state of affairs. ∙ Remember decision making process starts with the identification of a problem
Identifying Decision Criteria
∙ Relevant Factors: (this is for the example of buying a car)
o Repair record
1. Most important criterion assigned a weight of 10.
2. Other weights assigned against this standard.
Implementing the Decision
∙ Putting a decision into action
Evaluating the Decision
∙ Appraising the outcome of the decision: Was the problem resolved? Common Errors
∙ Heuristics are rules of thumb or judgmental shortcuts that allow for faster decision making. They save time, help eliminate ambiguity and complexity. However, these lead to common errors.
∙ Immediate gratification: short term payoff with the expense of the future ∙ Availability Bias: focusing on recent events
∙ Rational Model
o Choices that are consistent and value-maximizing within specified constraints
o Indicates that the individuals are rational, logical, and make decisions that are best for the company
o Being a rational decision maker means being full objective and logical ∙ Bounded Rationality
o Satisfice: accepting a solution that is less than perfect
o Escalation of commitment
∙ Intuitive Decision Making
o Takes in to account bound rationality and how people are influenced with their emotions and feeling, skills and knowledge
o Most used approach
Types of Problems
1. Structured problem: straightforward, familiar, easily defined. 2. Unstructured problem: new or unusual for which information is ambiguous or incomplete
Types of Decisions
∙ Programmed: Repetitive decisions that can be handled using a routine approach.
o Procedures and policies
∙ Nonprogrammed: repetitive decisions that cannot be handled using a routine approach
o Case by case basis
∙ Certainty: Known outcome
∙ Risk: Able to estimate outcomes
∙ Uncertainty: Unable to estimate outcomes
How Do Groups Make Decision?
∙ Decisions are often made by groups representing the people who will be most affected by those decisions.
o Task Forces
o Review Panels
o Work Teams
∙ More complete information
∙ Diversity of experiences/perspectives
∙ More alternatives generated
∙ Increased acceptance of solution
∙ Increased legitimacy
∙ Minority domination
∙ Ambiguous responsibility
∙ Pressures to conform
∙ When a group exerts extensive pressure on an individual to withhold his or her different views in order to appear to be in agreement.
o What it does
o How it occurs
o How to minimize it
the leaders should solicit ideas from all group members without passing judgement on those ideas
When are Groups Most Effective?
o Faster decision making
o More efficient use of work hours
o More accurate decisions
o More creative
o More heterogenous representation
o Greater acceptance of final solution
Improving Group Decision Making
2. The nominal group technique
3. Electronic meetings
∙ National culture influences the way decisions are made and the degree of risk involved.
∙ Creativity lets the decision maker:
o Understand a problem more fully
o See problems others can’t
o Identify all viable alternatives
∙ Creativity requires expertise, creative thinking skills, and intrinsic motivation.
∙ Design thinking:
o Approaching management problems as designers approach design problems
∙ Big Data
o The vast amounts of quantifiable information that can be analyzed by highly sophisticated data processing.
Chapter 5-Foundations of Planning
What is planning?
∙ The primary function of management
∙ Planning is to help an organization get from point A to point B. Reasons for Planning:
∙ Establishes a coordinated effort by fostering teamwork in an organization. ∙ Planning reduces uncertainty because in the event of something happening, planning gives direction.
∙ Reduces overlap and wasteful activities. Establishes goals and standards to facilitate control in the company
Criticism of Formal Planning
∙ May create rigidity
∙ Can’t replace intuition and creativity
∙ Focuses attention on today’s success, not tomorrow’s survival. ∙ Reinforces success, which may lead to failure.
Formal Planning and Organizational Performance
∙ Higher profits
∙ Higher return on assets
∙ Improved quality of planning
∙ Appropriate implementation
Strategic Management: what managers do to develop an organization’s strategies The Importance of Strategic Management
∙ It has a positive impact on organizational performance.
∙ It prepares managers to cope with changing situations.
∙ It guides managers to examine relevant factors in planning future action. Steps in the Strategic Management Process
∙ Identify the Organizations Mission, Goals, and Strategies: o Purpose for the organizations; help establish performance criteria o Good mission statement: customers, competitions, core beliefs, sustainability/ green, public image, technology
∙ External Analysis
o Components of environment
o Threats and opportunities
∙ Internal Analysis
o Core competencies
o Organizational strengths and weaknesses
∙ Formulate Strategies
∙ Implement Strategies
∙ Evaluate Results
o How effective have strategies been?
o What adjustments are necessary?
∙ An organization expands the number of markets served or products offered o Concentration
o Vertical integration: purchasing your supplier
o Horizontal integration: buying out the competition
o Diversification: related and unrelated
Stability and Renewal Strategies
∙ Stability: Organization continues to do what it’s doing
o Organization addresses declining organizational performance o Retrenchment: Not as drastic; if someone retires, don’t replace them o Turnaround: Drastic changes, such as layoffs
∙ A competitive strategy is a strategy for how an organization will compete in its business.
∙ What sets an organization apart; its distinctive edge that comes from its core competencies and resources.
∙ Those strategies used by an organization’s various functional departments to support the competitive strategy.
1. Customer service
2. Employee skills & loyalty
∙ People are more willing to pay for higher quality
5. Social media
∙ Help people connect
∙ Reduce costs and/or increase revenue.
6. Big data
∙ Translate business knowledge into improved decision making and performance.
Setting Goals and Developing Plans
∙ Types of Plans
o Financial versus strategic
o Stated versus real
∙ Planning= Goals + Plans
Traditional Goal Setting
∙ Top Management flows down through the rest of the organization; they need to have an idea of what their goals will become
∙ Goals need to be stated so they don’t get muddled
∙ Goals can be ambiguous.
∙ There needs to be a means ends chain. Where higher level goals are linked to lower level goals.
Management by Objectives
1. Goals to be specific
2. Participative Decision Making: Lower level employees need realistic knowledge
3. Explicit Time Period: Actual date for change
4. Performance Feedback: Making sure the goal got done
∙ Written in terms of outcomes rather than actions
∙ Measurable and justifiable
∙ Clear as to a time frame
∙ Challenging yet attainable
∙ Written down
∙ Communicated to all necessary organizational members
Steps in Goal-Setting
1. Review the organization’s mission and employees’ key job tasks. 2. Evaluate available resources.
3. Determine the goals individually or with input from others.
4. Make sure goals are well-written and communicate to all who need to know.
5. Build in feedback mechanisms to assess goal progress. 6. Link rewards to goal attainment.
Types of Plans
o Long Term
o Short Term
∙ Flexibility and Clarity are musts
∙ Planning reduces uncertainty
∙ Top Executives have mainly strategic planning
∙ Middle-Level Managers use both operational and strategic planning ∙ First-Level Managers use mainly operational planning
Approaches to Planning
∙ Top-down traditional approach
o More formal planning
∙ Development by organizational members
o Family is an example of the smallest organizational unit Contemporary Issues
∙ Planning in dynamic environments
∙ Environmental scanning: what competition is doing, NOT corporate espionage