Econ Final Exam Study Guide
Econ Final Exam Study Guide ECON102
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This 16 page Study Guide was uploaded by Stephanie Donovan on Friday January 30, 2015. The Study Guide belongs to ECON102 at Pennsylvania State University taught by Dr. McLeod in Fall. Since its upload, it has received 153 views. For similar materials see Micro economics in Economcs at Pennsylvania State University.
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Date Created: 01/30/15
Management 301 Exam 2 Study Guide Chapter 4 DecisionMaking A Decision Making Problem Solving i look at decisions through current and future state ii young people want to move fast but they need to fully de ne current state 1 where are we now Where would we like to be B Context for Managerial Problem Solving Decisional Role i Technical Competency speci c skills ii Analytic Competency assess current state iii Information Competency data collection 1 3 roles a Decisional Roles b Interpersonal Roles c Informational Roles C Chilean Minors i August 5 2010 ii mine collapses 33 minors trapped down 2000 ft for 17 days iii No one knew if they were still alive or not iv Sebastian Pinera president gave them a lesson of unity partnership faith trust never stopped searching v president knew they were alive mining company said they were dead vi Luis Urzua in the hole supervisor of minors vii Sebastian Chilean President takes on leadership role viii Centre Rock lnc Berlin PA were the people who got the minors out ix Chilean Minors and world Cup 2014 1 Minors took dirt from the mine where they quotnever gave upquot and gave it to their team to do the same D Problem Avoider Solver Seeker i Problem Avoider leaves scene avoids the problem ii Problem Solver solves the problem once its an issue iii Problem Seeker goes after the problem before it blows up iv Costa Concordia and PSU Ice Hockey 1 Concordia Famous Cruise ship launched in 2007 3 football elds long a Going to Italy January 13 2012 and sinks b Captain is supposed to organize the safety boats and rescue c the captain jumped off ship and was on shore while everyone else was trying to save themselves i Problem Avoider 1 captain of Costa Concordia was avoiding the problem a he only looked out for himself b I don t want to make a decision if it will fall on mequot ii Problem Solver 1 ship is turned over and people came in to solve this problem to get it upright amp to salvage port July 2014 Management 301 Exam 2 Study Guide 2 2 PSU Ice Hockey Pegula Family donates 88 Million to build ice hockey arena a Help PA and US hockey b recruiting for Penn State business of hockey c Sandusky Scandal Comes out Joe Paterno gets red PSU doesn t want to lose the donation d Pegula s love Joe Pa but he gets red so the CEO of hockey goes to talk to Pegulas to address the problem before it explodes i Problem Seeker CEO of hockey 1 go after the problems before it blows up be ahead of the 2 quottrying to map out our current statequot E Cognitive DecisionMaking Styles Flight 1549 video systematic amp intuitive i sensing amp intuition and thinking amp feeling ii personality types in decision making 1 feeling amp thinking 2 sensing amp intuition a sensing uses 5 senses looks at details actually happening b intuition conceptual theoretical 3 conceptual theoretical decision making 4 AT approach is always problem 1St peope 2ml 5 F approach people 1 problems 2nOI iii See Chart Page 95 iv US Airways ight 1549 Captain Suy Suenberger 1 took off in air plane and hit birds birds struck and both engines were lost a pilot makes decision to land in the Hudson River b all crew and passengers were saved c he was a safety trainer i Landing in the Hudson was the intuitive answer ii Example of Test Question 1 you are asked to make a decision for the company on facts and goals which thinking is this sensation and thinking 2 Talk about your future and beliefs what element of personal decision making process is this intuitive F Types of Problems Programmed amp NonProgrammed DecisionMaking also classic vs behavioral 1 Programmed budgeting how many of ce supplies you need continuing policy already in place resources money a continuing policy b risk of failure low 2 NonProgrammed launching new policy stuff we don t have a new policy b risk of failure high G Risks amp DecisionMaking Management 301 Exam 2 Study Guide 3 i Certain optimizing success know all variables and know your decision is good ii Risk know probabilities you know what COULD happen iii Uncertain you cannot gure out the probability iPad was uncertain no one had iPads before 1 risk aversion against iv never sold ice tea and coke decide to sell new brand Risk and Programmed 1 Coke ls good at launching products L0NampFrogarmw Pisko Failue m 39lypeo dejs39m H Performance Threat amp Performance Opportunity i Performance Threat anything that can harm your business ii Performance Opportunity Anything that can help your business I Coke amp Honest Tea i CEO of Coke Muhtar Kent ii CEO of Honest Tea Seth Goldman iii CSO of Coke Beatriz Perez iv Partnership with these two companies 1 coke bought 40 Honest Tea 2 Honest Tea went up from 35 million to 120 million J Coca Cola Vs Honest Tea i Threats to Honest Tea 1 Coke could launch another line of teas amp crush the little company ii Opportunities for Honest Tea 1 marketing advantage 2 they have capital that s money to expand distribution and network iii Threats to Coca Cola 1 our generation is moving away from soda iv Opportunities for Coca Cola 1 partner with Honest Tea K Traditional DecisionMaking Process Model i Identify Problem amp Opportunity Develop Alternative iii Decide on Action iv Implement Decision v Evaluate Results L Issues GroupInd Heuristics i Judgmental heuristics and other biases and traps may cause decision making errors 1 people make bad decisions sometimes because there is limited information tine and energy heuristics 2 availability heuristic uses readily available information to assess a current situation Management 301 Exam 2 Study Guide 3 representativeness heuristic assesses the likelihood of an occurrence using a stereotype of similar events 4 anchoring and adjustment heuristic adjusts a previously existing value or starting point to make a decision 5 framing error is solving a problem in the context perceived a is it positive or negative b glass if half empty or half fullquot 6 another tendency is trying to justify a decision after we make it a quotNo one will nd outquot b con rmation error when we attend only to information that con rms a decision already made c escalating commitment the continuation of a course of action even though it is not working i an inability or willingness that calls it quits even when facts suggest this is the best decision M Amazon Case iv v vi vii Jeff Bezos CEO of Amazon started out selling books online logo amazon az 1 online retailer problem you can t have it today Walmart Big Box retail store vs Brick and Mortar Store prime air distribution distribution and retailing innovations Drone Technology 1 Battle is over N Super Soaker Stories I ii iii iv v vi vii viii Lonnie Johnson Developer of Super Soaker from Alabama 19805 product came up with the idea because of a uke bathroom spill developer of the stealth bomb works at NASA bathroom sink sprayed at his face and he decided to make the super soaker 8 years of rejection before it was successful 1 no advertising and it still blew off the shelves Partners and licenses his product gets royalty he gets money for each gun sold 1 now owned by Hasbro 1 Billion and counting identify problem or opportunity great project super soaker develop how do make this into a business decide gures out his methods to do this implement starts his company evaluate can it be enhanced a cycle starts again U39lbUUNl l 0 Advanced Decision Making Model DMAIC Six Sigma Decision Making Process DMAlC 1 De ne What is it 2 Measure Assess current state 3 Analyze What do we have 4 Improve What can we make better 5 Control Look to future state and how to achieve goal Management 301 Exam 2 Study Guide 5 P ClSCO Video DMAIC i ClSCO does a lot of training in around decision making miscommunication connections are lost increase productivity start with what customers want develop value in care context is critical for information very competitive market needs improvement ll Chapter 5 Planning A Planning de nition i Planning process of setting performance objectives and determining how to get them done B Management Process Levels i planningorganizingeadingcontrolling C Personal planning Work Style and Life Style i What kind of person are you ii Judging organizing lay it all out formal structured planning approach iii Perceiving informal unstructured exibility make up as you go 1 greatest con ict in the work place time management a judging looks at day at time line i make to do list b perceiving looks at constant moving world prioritizes incoming issues i prioritize D Process of planning 5 steps i De ne Objectives ii Compare Current to Objectives iii Compare Future Alternatives iv Analyze AlternativesMake Plans v Implement amp Evaluate 1 Note Traditional DecisionMaking E Planning amp Personal Priorities i big rock planning if you don t put the big things rst they will never t ii What am I doing about that 1 priorities are key 2 must start with most important 3 effective time management 4 complacency avoidance F 4 components of good planning i Action Oriented should always be actions for every piece ii Priority Oriented What should we get done 1 iii Advantage Oriented Do things that average our strengths iv Change Oriented effective changed attend G Amusement Park Planning discussion Shanghai i Shende corporate partner with Shanghai Disney ii Can t have a park in China without partnership iii best way to approach a day at an Amusement Park Newewwe Management 301 Exam 2 Study Guide 1 look at costs weather 2 assess lowest lines 3 use a map H What would each major have to do to plan Shanghai Disney Marketing Finance Accounting Managemen Supply Chain Risk Mgmt t advertising nd Chinese crowd logistics insurance investors reporting control rides System peope liabiities opening nding evaluating resource stuff to the park environment publicity types Assets control al health and safety communicat budgeting manage sources of understandi e to budget materialequipm ng codes consumers ent incentives nancial hiring ring sourcing food legal statements and water design Project transportation input MGMT market auditing media merchandise research each is an SKU segmentatio performance movement of n types of MGMT people customers public training relations i each unit of merchandise is SKU l Planning Hierarchy 5 components i Mission and Purpose 1 Top Management Objective 2 Senior Management 3 Middle Management 4 Supervisory Management 5 Workers ii Objective Hierarchy Alignment and follow through j Planning Impact on Control and Coordination i makes controlling easier ii links people with systems iii uses fundamental objective hierarchy K long and short range i long range 3 years ii short range 312 months L Strategic and operational and functional i Strategic Plan the big umbrella I am going to try and participate and do this business 1 Operational or Tactical Plan How do I go about doing this ways to implement strategic plan a Financial Management 301 Exam 2 Study Guide 7 b Marketing c Production d Facilities e Human Resources i These are all Functions daily tasks Functional Planning 1 each have their own strategical plan with tactics to accomplish M Policies and procedures i company policy broad guidelines ii company procedures speci c actions 1 how you make the policy go iii Example Jim and Pam from the Of ce 1 Jim tells Pam he s in love w her 2 She says I cantquot 3 dating is against company policy iv companies have No datingquot policies v Procedure it they start dating one will have to leave or change departments N Big six planning tools de nitions amp example i Forecasting using statistical tools and intuition based on experience to predict a future state 1 need to use math and brain to gure out what to do 2 intuition is part of planning 3 Business Week Fortune and The Economist report forecasts of industry conditions interest rates employee rates national economies and other issues ii Contingency planning identifying actions to take when a strategic or tactical plan must change based on circumstances good and bad 1 identi es alternative courses of action to take when things go wrong 2 actual everyday business 3 most likely case 200 planes what is in the best We underestimate 4 What is the worst we overestimate a how many planes will we sell b they got 400 orders of planes and that is good and bad iii Scenario planning considering future scenarios and developing plans to address those issues 1 identi es alternative future scenarios and makes plans to deal with each 2 something big Whatifs 3 big things that would disrupt our business a natural disasters b political change c economic downturn 4 this approach was developed by Roy DutchShell 5 involves descriptions of worst casesquot and best casesquot iv Benchmarking comparing your company to outside organizations both in your industry and in other businesses Management 301 Exam 2 Study Guide 8 1 uses external comparisons to gain insights for planning 2 tendency of mangers confidence tricks them into thinking the future will be successful a ex football coaches go watch other teams to see how they do what they do b used to discover what other people and organizations are doing c a way of learning success rom others 3 best practices are methods that lead to superior performance v Participatory planning including those impacted andor who will implement your plan in the process 1 includes the person who will be affected by plans andor who will be asked to implement them 2 Stakeholders if they follow the rules all month boss will buy coffee and doughnuts 3 includes the person who will be affected by plans andor who will be asked to implement them a has advantages of group decision making b can increase creativity and available resources c increases understanding and acceptance of plans vi Goal Setting developing clear quanti ed measures that guides an organizations and the individuals work 1 Goal setting helps align plans and activities throughout an organization 2 planning system where employees work with speci c goals 3 if you want to be successful the goals and objectives should be good ones 4 stretch goals are performance targets that we have to work extra hard and stretch to reach 5 good goals are a speci c clearly target key results and outcomes to be accomplished b timely linked to due date and timetables c measurable no doubt when accomplished or missed described so results can be measured without ambiguity d challenging include stretch that moves toward real gains e attainable although challenging realistic possible to accomplish 6 managers must make sure goals and plan work for one person or helps to accomplish the goals of a group 7 goals link together across in a consistent meanends manner 0 Goal Setting Components P Nordstrom strategic amp operational plans i information technology to drive their main service customer service people were intimidated so they renovated and welcomed customers iii they think about what the customers want iv Nordstrom top gun for customer service 1 they changed their operations tactics to help customers Management 301 Exam 2 Study Guide a ex woman lost her ring they went through the sweeper bags to nd it b ex man with suit shipped to Europe Q Gulfstream Example from Class i Gulfstream Aerospace G650 government celebrities military executives us this jet ii 65 million to get one w a 10 million down payment ill make a super fancy jet goes faster and higher than any other jet R THON uses planning i forecasting what are the needs in every area food water safety ii contingency what if something goes wrong iii Scenarios measles iv benchmark how do we get better v participatory ask people who did it last year vi goal raise enough money lll Chapter 6 Controlling A Controlling ensuring results by measuring performance and taking corrective actions B 3 Part de nition Right Things Happen Right Way Right Time i control measurement ii out of control not goo forest res iii Blazing Saddles guy hit the hose and the horse and man fell C Metrics MUST be measureable D Key performance metric for retail store sales by SKU color of display uniform design type of ACheating i NOT metrics metrics have to have numbers E 4 step control process i Set performance objectives Control begins with objectives and Stand 1 control process has 4 steps 2 starts with setting performance objectives and standards for measuring them 3 output standard measures performance results in terms of quantity quality cost or time a measure actual outcomes 4 input standard measures work efforts that go into a performance task a helpful when outputs are hard to measure b example of input standards following rules and procedures in the workplace ii measure actual performance current state Control Measures actual performance 1 needs to be accurate and timely 2 have to measure otherwise control is not easily possible iii compare actual to objectives Control compares results with objectives and standards 1 control equation Need for Action Desired Performance Actual Performance a de nes actual performance Management 301 Exam 2 Study Guide 10 b when actual is less than desired there is a performance de ciency c when actual is more than desired there is a performance opportunity 2 different types of comparisons a engineering comparisons b historical comparisons c relative comparisons iv take actions to control progress 1 Addresses the difference between desired and actual performance 2 management by exception focuses attention on differences between actual and desired performance F Disney Examples i See book for details go over examples and make sure you can do them yourself G Managerial Feedback i lnputs to Throughputs to Outputs ii Controls 1 feed forward inputs 2 concurrent throughputs 3 feedbackoutputs H Star Wars Movie example on feedback control i Sale of Star Wars to Disney4 billion deal ii CEO of Disney caretakers of these iconic characters iii George Lucas amp Disney iv two companies were a perfect match Star Wars 7 will be lstof a whole new series v Bob lger president of Disney vi Kathleen Kennedy president of Lucas Movies 1 Input controls feed forward casting secur y water and food quantities of lm materials location for shoots project costs 2 Throughputs Concurrent a payroll for cast and crew b assess contingency needs c track budget categories d morale 3 Outputs Feedback Total cost to produce cost to promote cost to promote by region or channel impact of promotion tickets sold nal pay outs Dance Marathon Example TthQQCTQ TthQQCTQ Management 301 Exam 2 Study Guide 11 J Management by Objectives 3 steps i managerial process of boss l employees ii Peter Drucker major current mgmt thinker 1 manage people from metrics iii What are the metrics needed to do tasks 1 joint plan plan together 2 act alone boss doesn t hold your hand u get help from boss only when you need it 3 joint control end of the year boss will ask how it went work together a see p 132 chart for help K External Controls occurs through direct supervision or administrative systems i alternatives are bureaucratic or administrative control market control ii Corporate 1 Budgetary 2 Market control is essentially the in uence of market competition on the behavior of organizations and their members 3 Bureaucratic control In uences behavior through authority policies procedures job descriptions budgets and daytoday supervisions a policies and procedures i designed to make sure people treat each other in the right way b emphasizes hierarchy and authority iii Personal 1 Social Norm clan control in uences behavior though social norms and peer expectations L internal control or selfcontrol occurs as people exercise selfdiscipline in ful lling job expectations i this is increased when people e have a good clear sense of the mission and their lV Chapter 7 Strategy a Strategy comprehensive plan guiding resource allocation to achieve long term organizational goals i focuses leadership attention on the competitive environment i big guessquot about what to do to be successful in the case of rivalry B strategic intent focuses organizational energies on achieving a compelling goal C planning connection i Planning the process of setting performance objectives determining how to get them done ii everything falls under strategy iii once strategy is determined then we plan D Personal strategic management i job relationship physical educational eating sleeping hobby etc ii eating lunch with friends is NOT a personal strategy E Dunkin Case i Dunkin Brands built to 10 bil a year ii hold different companies Management 301 Exam 2 Study Guide 12 1 Dunkin Donuts 2 Baskin Robins iii 60 countries 18300 stores iv Dunkin International Commercial 1 DD strategy was largely northeast brand 2 DD bough 3 private equity rms v What is important abut doing this purchase 1 good market companies with strong sustainability 2 highly focused on relationships vi DD does not exist in Argentina vii take away friction of franchisee and franchise org viii is still expanding Baskin Robins is popular in Asia promote great cash ow opportunity ix corporate strategy initial public offering IPO 1 we have a core business with enormous growth potential 2 potential in growing ice cream store 3 growing across the world is their strategy F Big Strategy lssues i Core bene t Proposition 1 core reason to have your company live 2 core bene t proposition is What is unique about company a your competitive advantage b sustainability advantage ii Dunkin core strategy coffee iii Nigel Travis CEO of Dunkin Brands 1 strategic analysis how are you keeping people in stores a great beverages promotions world class holiday donuts national coffee day compete with loyalty programs b coffee is big battle and business iv competitive advantage an ability to outperform rivals 1 good strategies enable this v sustainable competitive advantage is achieved in ways that are dif cult to imitate 1 Apple with iPad a they came out with the product before other companies had even thought of the idea b eventually competitors caught up G Levels of Strategy i Level 1 Corporate 1 sets longterm direction for the total enterprise 2 the big stuff buying and selling companies ii Level 2 Business 1 identi es how a division or strategic business will compete in its product or service domain a strategic question at business strategy level How are we going to compete for customers within this industry and in this market i product and service iL facHRyloca ons Management 301 Exam 2 Study Guide 13 iii technology b for small businesses business strategy is their corporate strategy iii Level 3 Functional 1 guides activities within one speci c area of operations 2 marketing manufacturing nance human resources 3 strategic question for functional strategies is How can we best utilize resources within the function to support implementation of the business strategy a to answer this question improve things i product quality ii ef ciency 4innova veness 5 all majors H Strategy Getting Bigger i Foundational Growth Strategies 1 basic growth within current operations a growth strategies involves expansion of the organizations current operations 2 concentration expansion current business replicate a growth through concentration means expansion within an existing business area i one with experts and experience 3 diversi cation related or new business a growth through diversi cation means expansion by entering related or new business areas i involves risk rms are moving outside competent areas ii related diversi cation way that moderates the risk iii unrelated diversi cation seeks growth in entirely new business areas 1 performance may decline if you enter unrelated diversi cation 4 vertical integration buy partners in supply chain a growth through vertical integration occurs by acquiring suppliers backward vertical integration or distributors forward vertical integration i backward vertical integration historical pattern in automobile industry as rms purchased parts suppliers although recent trends are to reverse this I getting smaller strategies J Global strategies focus on international business initiatives i globalization strategies adopts standardized products and advertising for us worldwide 1 try and advertise and sell standard products anywhere 2 multidomestic strategy customize products and advertising to t local cultures 3 transnational strategy rms seek a balance between ef ciencies in global operations a try and operate without a strong national identity Management 301 Exam 2 Study Guide 14 ii transnational rm tries to operate globally without having a strong national identity K Cooperation strategies focus on alliances and partnerships i strategic alliance organizations join together in partnership to pursue an area of mutual interest 1 outsourcing alliances contracting to purchase specialized services ii supplier alliances guarantee smooth ow of quality supplies iii distribution alliance rms join together to accomplish product sales and distribution iv coopetition the strategy of working with rivals on projects of mutual bene t 1 revolution mindsetquot 2 business competitors can be cooperation partners L Strategy formulation and implementation i The Strategic management process formulates and implements strategies 1 strategic management the process of formulating and implementing strategies 2 strategy of formulation the process of creating strategies a current mission objectives strategies assessment of the organization and environment and develops new strategies 3 Strategy implementation the process of putting strategies into action ii Strategy formulation begins with the organizations missions and objectives 1 mission the organizations reason for existence in society a best orgs have clear missions 2 operating objectives are speci c results that organizations try to accomplish a pro tability cost ef ciency etc M Mission compare to vision N SWOT i SWOT analysis examines strengths weaknesses opportunities and threats 1 SWOT analysis examines organizational strengths and weaknesses as well as environmental opportunities and threats 2 core competency a special strength that gives an organization a competitive advantage a organizational weakness are the opposite of this b opportunities and threats count in examining the environment 3 O Porter s Five Forces i Porter s ve forces model identi es industry attractiveness 1 1St step in creating a good strategy understand the nature of competition a Force 1 competitors intensity of rivalry among rms in the industry Management 301 Exam 2 Study Guide 15 b Force 2 new entrants threats of new competitors entering the market c Force 3 suppliers bargaining power of suppliers d Force 4 Customers bargaining power of buyers e Force 5 substitutesquot threats of substitute products or services 2 this models attractiveness of an industry 3 unattractive industries have intense rivalries ii Porter s competitive strategies model identi es business or product strategies 1 competitive relationships can be built around differentiation and cost leadership 2 differentiation strategy offers products that are unique and different from those of the competition a develop goods and services that are different from the competitions b attract loyalty of customers 3 success of differentiation strategy depends on customer perceptions of product 4 cost leadership strategy seeks to operate with lower costs than competitors a allows orgs to make pro ts at low prices competitors cannot match 5 focused differentiation strategy offers a unique product to a special market segment 6 focused cost leadership strategy seeks the lowest costs of operations within a special market segment 7 Porter s Competitive Strategies a Differentiation make products that are unique and different b Cost leadership produce at lower cost and sell at lower price c Focused differentiation used differentiation and targets needs of a special market d Focused cost leadership use cost leadership and target needs of a special market P BCG Portfolio Planning amp Product Life Cycle i Portfolio Planning examines strategies across multiple businesses or products 1 BCG Matrix analyzes business opportunities according to market growth rate and market share a stars have highgrowth markets i produce large pro ts through big penetration of expanding markets ii offer potential to be even more successful b cash cows have high market shares in lowgrowth markets i produce large pro ts and cash ow ii little potential Management 301 Exam 2 Study Guide 16 c question marks low market shares in highgrowth markets i do not generate much pro t at present ii have potential because of growing market d dogs low market shares in lowgrowth markets i produce little if any pro t ii low potential for future Q Strategic Leadership ensures strategy implementation and control i to have successful strategies entire orgs need to support it 1 involves COMPLETE management process ii strategic leadership inspires people to implement organizational strategies 1 leader must have the ability to make strategic choices AND learn from any mistakes made iii strategic control makes sure strategies are well implemented and that poor strategies are scrapped or changed 1 CEOs and top managers should always be in touch with strategies iv Strategic Leadership Responsibilities 1 a strategic leader has to be the guardian of tradeoffs 2 a strategic leader needs to create a sense of urgency 3 a strategic leader must make sure that everyone understands the strategy 4 a strategic leader must be a teacher
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