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Test 1 covers: Chapter 1: Innovative Management Chapter 2: The Environment & Corporate Culture Chapter 6: Decision Making
Dr. Cecilia Champion
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This 14 page Class Notes was uploaded by aiy0001 on Sunday August 21, 2016. The Class Notes belongs to 3100 at Auburn University taught by Dr. Cecilia Champion in Fall 2016. Since its upload, it has received 3 views. For similar materials see Management in Economics at Auburn University.

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Date Created: 08/21/16
Management Chapter 1: Innovative Management Management for a Changing World  The nature of management is to motivate and coordinate others  Management is undergoing a revolution o From tight controlCollaboration o Doing more with less o Change is natural o Engage the whole employee o Innovation is imperative Management (2 important points)  The process of how organizational goals are achieved o Managerial Functions: Planning, organizing, leading, controlling  Planning: Identifying and selecting organizational goals  Deciding on actions to achieve their goals  Decide on how to allocate or obtain organizational resources  OutcomeStrategy  Organizing: Assigning tasks to be done  Who does the tasks?  How are the tasks grouped?  Where are decisions made?  OutcomeOrganizational Structure  Leading: Motivating others, directing activities, selecting effective communication channels, and resolving conflicts  Controlling: Compare actual performance with goals and correct problems to get back company back on track  The results of management (the organizational performance) o Efficientness and Effectiveness  Efficient: Doing the task correctly while minimizing costs (i.e. money, people, equipment)  Effective: Doing the right task and achieving the stated goal; providing value for the customer What do Managers Do?  Categorizing activities by their functions  Categorizing activities by the roles managers use in carrying out work Good Managers:  Have clear communication skills and vision  No micromanaging  Focusing on career development  Productive and results oriented-Not going to explain how to get to the end but clearly explains what the ideal outcome is *Data driven, evidence based Organization  Goal directed  Deliberately structured  A social entity  May be profit or non-profit Roles of Managers  Informational (How you move information around) o Monitor  Seeking and receiving information o Disseminator  What needs to be communicated to the organization  Forwarding information to others  Ex. Manager at BP o Spokesperson  Communicates information to people outside the organization  Interpersonal (Working through people) o Figurehead  Face of an organization; symbolic head  Signing documents for mergers  Ex. Mayor of New York during 9/11 o Leader  Directs and motivates employees and basically deals with all activities of employees o Liaison  Maintains information outside the formal chain of command  Decisional (Taking action, making a decision) o Entrepreneur  Initiates new ideas o Disturbance handler  Taking action during disputes and resolving conflicts o Resource allocator  Decides who gets resources and what they are o Negotiator  Represents the organization at negotiations Relationship of Conceptual, Human, and Technical Skills to Management Top Managers  High conceptual skills  Medium human skills  Low technical skills Middle Managers  High human skills  Medium conceptual skills  Low technical skills First Line Managers  High human skills  Medium technical skills  Low conceptual skills Non-managers (individual contributors)  High technical skills  Medium human skills  Low conceptual skills From Individual Performer to Manager Individual Identity  Specialist-performs specific tasks  Gets things done through own efforts  An individual actor  Works relatively independent Manager Identity  Generalist-coordinates diverse tasks  Gets things done through others  A network builder  Works in highly interdependent manner Influences on Management Practice  Social Forces: Values, needs, and standards of behavior o Family v. work  Political Forces: Influence of political and legal institutions on people and organizations o Government systems; capitalism  Economic Forces: Forces that affect the availability, production, and distribution of a society’s resources o Machines replacing labor; technology History of Management Thought  Scientific Management (Late 1800’s) o Emphasis on efficiency and a scientific approach to management o Classical Perspective  Pioneered by Frederick Taylor  At the beginning of this period, standard of living was low and production of labor was intensive  Focused on efficiency-“one best way to do the job”  Used wage incentive plans  Workers earn higher pay and management has higher profits  Emphasized selecting workers based on abilities and training workers  Frank and Lillian Gilbreth  Time and motion studies  Administrative Principles (Early 1900’s-1940’s) o Focused on authority structures and division of work o Classical Perspective  Max Weber developed 5 principles of Bureaucracy  All designed to ensure efficiency and effectiveness in organizations 1. Manager’s authority derives from their position in their organization 2. People should be given a position because of their performance 3. Each position’s responsibility and authority should be clearly defined 4. Clearly specified hierarchy of authority 5. System of rules and standard operating procedures which specify how employees should behave  Bureaucratic Organizations o Looking at the organization as a whole and finding the best way to do something  Ex. UPS drivers (15.5 seconds)  Specific steps for the whole process (no left turns) o Google, Facebook, and Microsoft are organizations that DO NOT follow this  Henry Fayol’s Principles of Management  Still the foundation for much of management theory today  Manager’s informal authority from expertise, moral worth, and ability to lead  Unity of command  Important to limit the length of the chain of command  Managers should allow employees to be innovative and creative  Equity to all organizational members  Esprit de Corps  Humanistic Perspective (1920’s-1930’s) o Focused on relationships among people o Emphasized understanding of human behavior o Dealt with need and attitudes in the workplace o Truly effective control comes from within the individual worker rather than authoritarian control o Hawthorne studies  Western Electric Company’s Hawthorne Studies Classical Perspective (Late 1800’s-1940)  Emphasized on a rational, scientific approach to the study of management  Sought to make organizations efficient Theory X  People are lazy  People lack ambition  Dislikes responsibility  People are self-centered  People don’t like change Theory Y  People are energetic  People want to make contributions  People do have ambition  People will seek responsibility Recent Historical Trends  Systems Thinking: Seeing both the elements and the interaction in a system/situation o Looking at relationships within the organization o A decision or choice that affects the whole company (ripple effect)  The whole is greater than the sum of the parts  Everything is interdependent  Ex. Zara: Fast fashion  Turn around is 3 weeks  Design, sourcing and manufacturing, distribution, and retailing (capitalizing on hot trends)  Contingency View: Viewing each situation as unique and principles are not universal o No one answer that fits any corporation o The Contingency Approach  The Classical Perspective assumed that there was one best way to do something and whatever worked in one organization worked in every organization  For organizations to be effective, there must be a “goodness of fit” between their structure and the conditions in their external environment  Total Quality Management (TQM): Focusing the whole organization on delivering quality and service o Continuous improvement Elements of a Learning Organization  Primary focus is problem solving Chapter 2: The Environment and Corporate Culture The External Organizational Environment  Forces and living conditions existing outside the organization’s boundaries that can potentially affect the organization  2 Layers of an External Organizational Environment 1. Task Environment (Directly in competition); conduct daily transactions with the organization  Customers: People or organizations who obtain goods or services from the organization o Every organization has customers (either profit or non-profit) o Identifying the organization’s main customers is crucial!  Ex. Home Depot forgot who their main customers were (left their platform of DIY) o Customer focus should be reflected in mission, goals, and strategies  Competitors: Organizations that provide goods or services to the same set of customers o Each industry has its own specific competitive issues o Competition can be based on price or features  Chipolte!  Managers must identify potential substitutes for their product  What are alternative ways to satisfy customers?  Suppliers: The people or organizations who provide the raw materials to produce the product or service o The cost of inputs are affects by the bargaining position of the supplier o Is the product rare or scarce? o Many companies are looking to cooperation between suppliers and companies  Labor Market: The people available for hire by the organization o Growing need for computer literate workers o The necessity for continuous investment in human resources 2. General Environment (Indirect-still influences an organization to the same impact of a direct environment and typically will not change day to day operations immediately)  Technological-Includes scientific and technological advancements in specific industry and society at large o Changes the way organizations design, produce, and distribute goods and services o Can make your product or service OR open opportunities for new products  Becoming more innovative and creative  Ex. 3D printers  Natural o Organizations must be sensitive to Earth’s natural resources o Environmental groups can be considered to be pressure groups  Advocate action  Reduce pollution  Develop renewable energy  Reduction of greenhouse gases  Sociocultural-Affects all organizations about equally o Norms, customs, and values of a general population (i.e. water > soda)  More healthy lifestyles  Sustainability: Losing sales due to concern about the environment (plastic water bottles)  THREAT-This is why we scan for trends; could result in either threats or opportunities for a company  Solution: Use less plastic o Demographic Characteristics of the Population (age, race, gender)  Increased diversity of population  Greater increase of diverse populations=greater increase of new foods and even new supermarkets  Gen Y entering the workforce  Aging of the workforce o Both come with different expectations  Economics: Factors that affect the general well- being of a nation or regional economy of an organization o Consumer purchasing power o Unemployment rate o Interest rates and inflation  Legal/Political o Government regulations  Local (i.e. dealing with trees outside buildings)  State  Federal (environmental agencies) o Pressure groups-Public opinions can change others opinions on whether to buy your product o Government spending  International-Includes events originating in foreign countries and U.S. opportunities in foreign countries o Economic  Provides new customers, competitors, and suppliers  Deals with exchange rates  Moving across currencies impacts sales and costs o Political  Political instability and terrorism  Tariffs, quotas, and taxes o Social Values/Norms  Ex. McDonald’s not selling in India (not what Indians eat) The Internal Environment Culture: Key values, beliefs, understandings, and norms in which organizational members share (“the way we do things”) The internal culture of high performance organizations fit the needs of the external environment Guides people’s behavior without constant supervision *Important in organizations: Can give companies a competitive advantage Decision Framework: What decisions are appropriate to make based on their culture  People are looking at what you do not what you say Levels of Corporate Culture 1. Visible: Culture that can be seen at the surface level o I.e. artifacts, office layouts, symbols, slogans, ceremonies o Ex. Facebook-“never done”; always striving to do better; openness; concrete floors; unfinished ceilings (all symbols) o Symbols: An object, act, or event that conveys an organizations important values o Stories: Story based on true events that is repeated frequently; used to convey values o Heroes: Figure who exemplifies deeds, character, and attributes of culture; role models (people we look up to)  Steve Jobs o Slogans: A phrase or sentence that expresses key corporate values  “Just Do It”-Nike o Ceremonies: A special event that is planned for the benefit of an audience  Ex. Eli Lilly (smoking company) goodbye party  Commemorating the excellent work that people put into something 2. Invisible: Underlying values; deeper values and shared understandings held by organization members o Caring for one another as family How Culture is Established  Founders values  Past practices  Behaviors of top management o Modeling and acting appropriately o However, many things can be magnified or taken out of context o Be conscious of others watching you How We Perpetuate Culture Selection: Who agrees with the same values of your organization Socialization: Can be good or bad Needs of an Environment Adaptability Culture: External + Flexibility  Fast changing, customer focused (i.e. Amazon, Facebook) Involvement Culture: Internal + Flexibility  Fast changing, focus is on working together and working to become a family (i.e. Valero during Hurricane Katrina) Achievement Culture: External + Stability  Results oriented (i.e. GE); performance based Consistency Culture: Internal + Stability  Building rules and policies (i.e. design firms-internal processes are always the same regardless of the customers changing) *Every company has pieces of these 4 cultures but tend to gravitate more to one Chapter 6: Decision Making Decision: A choice made from available alternatives Decision Making: The process of identifying opportunities Types of Decisions o Programmed: Situations that occur often enough to enable decision rules to be developed  Certainty and risk o Non-Programmed: Decisions made in response to situations that are unique, poorly defined, and largely unstructured  Uncertainty and ambiguity Decision Making Conditions Conditions surrounding a decision can be organized according to:  The availability of information  The possibility of failure These conditions can be arranged on a scale moving from certaintyriskuncertaintyambiguity Decision Making Models 1. Classical Model  Earliest  Describes logical and rational decision processes (takes time)  Decisions are based on the organization’s best economic interests  Defines how decisions should be made, not necessarily how they are made  Has good information on alternatives  Agree on criteria to evaluate alternatives and priorities  The problem is clearly defined 2. Administrative Model (Herbert Simon)  Descriptive approach based on how managers actually make decisions  Does not assume completely logical and rational processes  This is a more realistic model for non-programmed decisions (uncertainty and ambiguity)  3 Principles 1. Bounded Rationality: People have limits on how rational they can be 2. Heuristics: Judgmental shortcuts in searching for alternative solutions  Availability Heuristic o Our perception of the frequency of events is influenced by:  Ease of recall-Don’t assume easy to recall events are actual events!  Vividness  Recency o Evaluating the odds  Dan Gilbert  Expected goodness of decision alternative=odds of gain X value of the gain  Error: Comparing with the past o Ex. Ranking causes of death-didn’t think of heart disease! Uninteresting because it is SO common  Confirmation Trap o Tend to see and use information that confirms what we think is true o Ignoring conflicting information-paying too much attention to information that confirms our initial ideas  To approach the contradictory information, you would be playing a Devil’s Advocate  Bounded Awareness o To avoid information overload, we filter out information-this filtering process however can prevent us from focusing on useful, observable information o We create a boundary which frames the problem to help us find a solution but THIS can prevent the discovery of a solution  Ex. Connect the dots task  Escalating Commitment o Where there are indications that the project is failing, even more resources are committed to the project in a effort to salvage the situation o Have to know when to stop and as a manager, have to know when to avoid this o What’s the withdrawal cost of the consequences if we back out? 3. Satisficing: Decision makers choose the first solution alternative that satisfies minimal decision criteria  Happens a lot in businesses since there is always so much pressure 3. Political Model  Closely resembles the real environment in which most managers and decision makers operate  Decisions are complex, making this non-programmed  Lots of groups with lots of different viewpoints o Disagreements and conflicts are normal which requires negotiating and compromising  Bounded rationality approach Managing Effective Decisions 1. Recognition of decision requirements 2. Diagnosis and analysis of causes 3. Development of alternatives 4. Selection of desired alternatives 5. Implementation of chosen alternative 6. Evaluation and feedback Group Decision Making  Advantages o Diversity of experience and viewpoints o Generating more alternatives o Increased acceptance to decisions o Groups tend to have better performance than individual solutions  By pooling resources and correcting each others errors, bringing in new experiences  BUT a single individual’s best performance can be better than a group’s performance  Disadvantages  Takes time to reach a decision and to bring a group together  Groups can be dominated by a few members  Not wanting to jeopardize the group’s cohesion  Increased pressure to conform  Groupthink: This can occur in highly cohesive groups where the group’s desire to maintain agreement overrides realistic evaluation of alternatives o Ex. The Challenger launch o Overestimation By the Group  Illusion of invulnerability  Inherent morality of the group o Closed Mindedness  Rationalization  Negative stereotypes (less receptive to valid criticisms) o Pressure to Uniformity  Self censorship (undervaluing yourself)  Direct pressure on members who disagree  Mind guarding  *Illusion of unanimity o Strategies to prevent Groupthink  Open climate  Avoid insulation  Critical evaluator  Avoid being too directive  Brain storming-here there is no judgment!  “Yes…and”  Generating alternative solutions  The Delphi Technique o No room, completely anonymous  Using hard evidence and fully aware of assumptions  Then, engage in rigorous debate-this is hard for cohesive groups!  Know when to bail  Debrief


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