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Midterm #1 Study Guide

by: Chandler Darden

Midterm #1 Study Guide MGMT 3000

Chandler Darden
GPA 3.79
Principles of Management
Charles W. Lyons, J.D.

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About this Document

All the book notes/vocabulary from the first 6 chapters.
Principles of Management
Charles W. Lyons, J.D.
Study Guide
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This 11 page Study Guide was uploaded by Chandler Darden on Tuesday September 29, 2015. The Study Guide belongs to MGMT 3000 at University of Georgia taught by Charles W. Lyons, J.D. in Fall 2015. Since its upload, it has received 48 views. For similar materials see Principles of Management in Business, management at University of Georgia.

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Date Created: 09/29/15
Midterm 1 Studv Guide MGMT 3000 Lyons Ch1 Introduction to Management Three pillars of management 0 1 Strategy 0 2 Organization 0 3 Individual Leadership Management the act of working with and through a group of people to accomplish a desired goal or objective in an efficient and effective manner 0 Managers I Plan and budget I Organize and staff I Control and problem solve Leadership the ability to drive change and innovation through inspiration and motivation O Leaders I Set direction I Align people I Motivate and inspire Bureaucratic organization structure a clear differentiation of tasks and responsibilities among individuals coordination through a strict hierarchy of authority and decision rights standardized rules and procedures and the vertical separation of planning and execution so that plans are made in the upper ranks of an organization and executed in the lower ranks 0 Max Weber 0 1900 s Scientific Management a focus on how jobs work and incentive schemes could be designed to improve productivity using industrial engineering methods 0 Frederick Taylor 0 1910 s Human relations movement the belief that organizations must be understood as systems of interdependent human beings who share a common interest in the survival and effective functioning of the firm 0 1930 s Contingent View a view of the firm where effective organizational structure is based on fit or alignment between the organization and various aspects in its environment 0 1960 s Business environment the combination of all contextual forces and elements in the external and internal environment of a firm 0 Changing perspectives of the business environment I Managerial view 0 Up to 1960 s 0 Key focus production I Shareholder view 0 1960 s1980 s 0 Key focus financial performance highest stock valuation 39 Stakeholder view 0 Since 1990 s 0 Key focus serving multiple contingencies O Attempts to organize and analyze multiple groups that interact with the firm Stakeholder mapping process 0 1 Map stakeholder relationships with the firm 0 2 Identify specific subsets within stakeholders O 3 Determine stakes for each stakeholder 0 4 Define connections between stakeholders Strategic review process the process by which senior leaders of a corporation meet with business unit managers to review progress toward specific goals Environmental scanning a tool that managers use to scan the business horizon for key events and trends that will affect the business in the future Scenario building forecasting the likely result that might occur when several events and stakeholders are linked together Contingency planning the systematic assessment of the external environment to prepare for a possible range of alternative futures for the organization Trend analysis a tool where key variables are monitored and modeled to help predict a change that might occur in the environment Contextual intelligence the ability to understand the impact of environmental factors on a firm and the ability to understand how to in uence those same factors Ch2 The Global Business Environment Globalization the integration and interdependence of economic technological sociocultural and political systems across diverse geographic regions Comparative Advantage an economic theory that proclaims countries should specialize in producing goods for which they have the lowest opportunity cost of production External environment represents all of the external forces that affect the firm s business 0 General environment includes the technological economic politicallegal and sociocultural dimensions that affect a firm s external environment 0 Task environment includes entities that directly affect a firm on a constant basis and include competitors suppliers and customers Internal environment task environment general environment 0 O O 0 Task and general environment are both part of the external environment Internal owners board of directors employees and culture Task customers competitors suppliers General technological economic sociocultural politicallegal General environment 0 Technological dimension the processes technologies or systems that a firm can use to produce outputs Economic dimension the general economic environment in the markets where the firm performs activities I EX GDP in ation unemployment Political dimension refers to the political events and activities in a market that affect a firm Legal dimension the regulations and laws that a firm encounters in its markets Sociocultural dimension demographic characteristics as well as the values and customs of a society 39 Social values the deeply rooted system of principles that guide individuals in their everyday choices and interactions Task environment 0 0 Competitor any organization that creates goods or services targeted at a similar group of customers Supplier a company that provides resources or services for a firm to help in its creation of products and services Customers the people or other organizations that buy a firm s products and services Internal environment 0 Owners the people or institutions that maintain legal control of an organization Board of directors a group of individuals elected by the shareholders and charged with overseeing the general direction of the firm Employees the people who make the products and provide the services that allow a firm to exist Ch3 Ethics and Corporate Social Responsibility Ethics the study of moral standards and their effect on behavior and conduct Morality the standards that people use to judge what is right or wrong good or evil Ethical Frameworks O Utilitarianism the ethical philosophy claiming that behaviors are considered moral if they produce the greatest good or utility for the greatest number of people 0 Kantianism an ethical philosophy claiming that motives and universal rules are important aspects in judging what is right or wrong I Fiduciary a person who is entrusted with property information or power to act on behalf of a beneficiary O Fiduciary responsibilities 0 Virtue ethics an ethical philosophy claiming that morality s primary function is to develop virtuous character 0 Descends from Aristotle and Plato 0 Justice an ethical philosophy that provides the framework for society to judge what is morally right or wrong fair or unfair and establishes ways to evaluate or punish those who behave in morally wrong ways 0 Distributive Justice a subset of justice that deals with the distribution of wealth among members of a society 0 Procedural Justice a subset of justice claiming that rules should be clearly stated consistently obeyed and impartially enforced 0 Privacy a person s right to determine the type and extent of information that is disclosed about him or her 0 Con icts of interest con icts that occur when employees or managers engage in activities on behalf of the company and have a personal interest in the outcome of those activities 0 Trade secret any type of information used in conducting business that is not commonly known by others 0 It often provides a strategic advantage for a company over its competitors 0 Whistleblowing the release of information by a member of an organization that is evidence of illegal or immoral conduct to executives in a company or regulating agencies outside of a company 0 Corporate social responsibility a business s obligation to pursue policies decisions and actions that align with the objectives and values of society 0 Core responsibilities of business in society 0 Economic responsibilities a business s duty to make a profit and increase shareholder value 0 Legal responsibilities a business s duty to pursue its economic responsibilities within the boundaries of the law 0 Ethical responsibilities a business s duty to meet the expectations of society beyond its economic and legal responsibilities 0 Economic I Legal I Ethical 0 Corporate social responsiveness the practice of businesses responding to pressure from society to engage in socially responsible ways Strategic CSR corporate social responsibility activities that are directly related to business activities so that they can combine social welfare with financial welfare Ch4 Introduction to Strategy Strategy pursuing a set of unique activities that provide value to customers making tradeoffs about which businesses to pursue what products to produce and which customers to serve and aligning resources to achieve organizational objectives 0 A manager s game plan for the organization Competitive advantage a firm achieves a competitive advantage when it creates more economic value than competitors by engaging in a strategy that is difficult or impossible for others to duplicate Conglomeration the act of growing through unrelated diversification essentially by acquiring companies in different industries Goal an organizationally desired result product or end state Strategic framework 0 External and internal environment goes into creating a vision or mission and then that creates objectives which then allows a strategy to be formulated and ends with an implementation of the strategy Core competencies a network of unique activities that strategically fit together and are difficult to replicate Vision a concept or picture of what a firm wants to achieve and how it plans to accomplish that Mission the activities a firm performs for its customers 0 EX Facebook I To give people the power to share and make the world more open and connected Mission statement a statement that defines a firm s reason for existence Objectives series of quantifiable milestones or benchmarks by which a firm can assess its progress Strategy formulation the process of identifying how a firm can best align its resources to carve out a defensible position in the marketplace Optional effectiveness performing certain activities that enable a firm to operate more effectively than its competitors do 3 components of strategy 0 Managing tradeoffs 0 Choosing a set of activities 0 Creating fit Strategic position a place in an industry that a firm occupies by way of the products or services it offers and the methods it chooses to deliver them 0 Southwest airlines cost leadership position Return on equity a measure of the rate of return on the ownership interest shareholders equity of the common stock owners Businesslevel strategy the determination of how a company will compete in a given business and position itself among its competitors 0 Competitive advantage 0 How do we compete Corporatelevel strategy the way a company seeks to create value through the configuration and coordination of multimarket activities 0 Industry attractiveness 0 What industries should we be in O Allocation of resources among businesses Multinational strategies strategies in which the parent company organizes local subsidiaries and gives them autonomy to develop products tailored to local tastes Global strategies strategies that focus on developing overall scale economies and global efficiency instead of catering to local tastes International strategies strategies that combine elements of multinational and global strategies by using foreign subsidiaries to product and distribute products 0 RampD is still done by parent company 0 Not particularly useful for adopting products to local preferences or achieving economies of scale Transnational strategy strategies that balance a firm s international activities among efficiency local responsiveness and organizational learning 0 Some production might occur at a few top bases and other production activities might be conducted at the local level to adapt to local preferences Exporting shipping a firm s products from its domestic home base to global markets Licensing a contractual agreement whereby the licensor selling firm allows its technology patents trademarks designs processes knowhow intellectual property or other proprietary advantages to be used for a fee by the licensee Franchising common arrangements in many retail businesses where a firm contracts with individual owners to operate its retail units 0 Typically involves a corporation sharing management and marketing techniques with the owner in exchange for a fee and some percentage of the unit s revenues Joint venture a structure where two firms come together to form a new company in a market Alliances a structure where partners come together by contract to engage jointly in activities in a market Wholly owned subsidiary a fully operational independent entity that a firm sets up in a foreign country to conduct business in that market Ch5 BusinessLevel Strategy 0 Three Components of Strategy 0 O 0 Who I Customers What I Products and services How I Proces s approach 0 Porter s 5Forces Model 0 0 Provides a framework to assess an industry s longrun profit potential Suggest that any industry can be assessed by exploring 5 basic competitive forces I 1 Threat of new entrants I 2 Bargaining power of suppliers I 3 Threat of substitutes I 4 Bargaining power of customers I 5 Rivalry among existing competitors 0 Barriers to entry obstacles a firm may face while trying to enter a market or an industry I Supplyside economies of scale I when a firm manufacturers products in high volumes 0 Demandside benefits of scale I arise in situations where the buyers willingness to pay for a product increases as the number of other buyers for the industry s product increases 0 Firstmover advantage a competitive advantage that occurs when a firm is first to offer desirable products or services that secure customer loyalty 0 Characteristics of a Powerful Supplier Group 0 O O O O The supplier industry is more concentrated than the industry it sells to Industry participants in the buyer industry face switching costs in changing suppliers No substitutes exist for what the supplier group provides The supplier group can threaten to integrate forward into the buyer industry The supplier group does not depend heavily on the industry 0 Bargaining power the pressure that a supplier or buyer can exert on a company 0 Characteristics of a Powerful Customer Group 0 O O O The group is concentrated or purchases in large volumes relative to the supplier The industry s products are undifferentiated Buyers face few switching costs in changing vendors Buyers could potentially integrate backward to produce the industry s product 0 Conditions that Promote Intense Rivalry and Price Competition The product or service lacks differentiation or switching costs Fixed costs are high marginal costs are low Capacity must be expanded in large increments The product is perishable Competitors are numerous or are roughly equal in size and power Industry growth is slow 0 Exit barriers are high OOOOOO Increase is industry profitability if there are 0 High barriers to entry 0 Limited competitors 0 Lack of substitutes 0 Low buyer and supplier power Decrease in industry profitability if there are 0 Low barriers to entry 0 Many competitors 0 Several substitutes 0 High buyer and supplier power Resourcebased View of the firm a theory that a firm can develop a competitive advantage through the collection and harvesting of resources SWOT Analysis a tool that allows managers to take a snapshot of their firm s internal strengths and weaknesses as well as the opportunities and threats that are evident in the external environment 0 Strengths weaknesses opportunities threats Strategic exibility the capability to identify and react to changes in the external environment and to mobilize internal resources to deal with those changes Value the amount consumers are willing to pay for a product or service 0 Offering a lower price or providing a unique product whose benefits outweigh a higher potential cost Cost leadership a strategy that aims to provide a product or service at as low a price as possible to a broad audience Economies of scale cost savings achieved when the volume of a product produced by a firm enables it to reduce per unit costs Differentiation a strategy in which a firm seeks to be unique in its industry along a dimension or a group of dimensions that are valued by consumers Focus a strategy in which a company focuses its sales efforts on a specific geographical region a specific group of purchasers or a specific product type Value chain analysis a systematic way of examining all of the activities a firm performs and determining how they interact to form a source of competitive advantage Primary activities the activities involved in the physical creation of the product and its sale and transfer to the buyer O Inbound logistics activities such as materials handling warehousing and inventory control that are used to receive store and disseminate inputs to a product 0 Operations activities necessary to convert the inputs provided by inbound logistics into final product form I Machining packaging assembly equipment maintenance 0 Outbound IOgistics activities involved with collecting storing and physically distributing the final product to customers I Warehousing material handling order processing 0 Marketing and sales activities completed to provide the means through which customers can purchase products 0 Service activities designed to enhance or maintain a product s value I Installation repair training adjustment Support activities activities that provide the support necessary for the primary activities to occur 0 Procurement activities completed to purchase the inputs needed to produce a firm s products I Purchasing raw materials or fixed assets 0 Technological development activities completed to improve a firm s product and the processes used to manufacture it 0 Human resource management activities involved with recruiting hiring training developing and compensating all personnel 0 Firm infrastructure activities such as general management planning finance accounting legal support and government relations that are required to support the work of the entire value chain Ch6 CorporateLevel Strategy Corporate advantage occurs when a firm maximizes its resources to build a competitive advantage across its business units Diversification a strategy in which a firm engages in several different businesses that may or may not be related in an attempt to create more value than if the businesses existed as standalone entities O Singleproduct strategy a strategy in which a firm focuses on one specific product typically in one market I Develops greater core competency but suffers from more cyclicality 0 Related diversification a firm that owns more business that uses a similar set of tangible and intangible resources I Takes advantages of resources to achieve economies of scope O Unrelated diversification a firm that manages several businesses with no reasonable connection I Creates value through financial economies distributing capital over many business units 0 Horizontal diversification another name for related diversification where a firm pursues businesses that share a similar set of tangible and intangible resources 0 Economies of scope exists when the costs of operating two or more businesses or producing two or more products with the same corporate structure is less than the costs of operating the businesses independently or producing each product separately Synergy created when a firm generates sustainable cost savings by combining duplicate activities or deploying underutilized assets across multiple businesses Market power achieved when a firm attempts to increase the price at which it sells products to levels above the normal price seen in the market Financial economies cost savings that a firm achieves through the distribution of capital among business units The Diversification Test 0 Attractiveness Test I Is the industry profitable or capable of being profitable 0 Cost of Entry Test I How costly is it to enter the new industry 0 BetterOff Test I Will the new industry provide the firm with a competitive advantage International Scope Test 0 BetterOff Test I Will a global presence improve the firm s competitive advantage over and above what it could achieve on its own 0 Ownership Test I Does owning a global business unit provide the best alternative to sustaining or achieving a competitive advantage Factor cost differences cost savings achieved by access to raw materials or other factors such as lowcost labor Vertical integration occurs when one corporation owns business units that make inputs for other business units in the same corporation Backward integration occurs when a firm owns or controls the inputs it uses Forward integration occurs when a firm owns or controls the customers or distribution channels for its main products Administrative costs the costs of coordinating activities between business units Transaction costs costs to obtain products or services from a contractor or supplier as well as the costs associated with writing and administering the contracts for these products and services Spot contracts contracts that allow a buyer to purchase a commodity at a specific price 0 Outsourcing contracting with a firm outside the corporation to perform certain tasks or functions that the corporation used to do on its own


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