MGMT 207Midterm Review

Chapter 1-9

Chapter 1 Intellectual capital …

People are the ultimate foundations of organizational performance. Intellectual capital is the collective brainpower or shared knowledge of a

workforce that can be used to create value. A knowledge worker adds to the intellectual capital of an organization.

Globalization … National boundaries of world business have largely disappeared.

Globalization is the worldwide interdependence of resource flows, product

markets, and business competition that characterize the new economy.

Technology … Continuing transformation of the modern workplace through:

The Internet World Wide Web Computers Information technology

Increasing demand for knowledge workers with the skills to fully utilize technology.

Chapter 1

Diversity … Workforce diversity reflects differences with respect to

gender, age, race, ethnicity, religion, sexual orientation, and able-bodiedness.

A diverse and multicultural workforce both challenges and offers opportunities to employers.

How diversity bias can occur in the workplace: Prejudice Discrimination Glass ceiling effect

Ethics Code of moral principles that set standards of conduct.

Ethical expectations for modern businesses: Integrity and ethical leadership Natural environment Consumer protection Human rights

Types of managers

Line managers are responsible for work activities that directly affect organization’s outputs.

Staff managers use technical expertise to advise and support the efforts of line workers.

Functional managers are responsible for a single area of activity.

General managers are responsible for more complex units that include many functional areas.

Administrators work in public and nonprofit organizations.

Functions of Management Planning

The process of setting objectives and determining what actions should be taken to accomplish them.

Organizing The process of assigning tasks, allocating resources,

and arranging the coordinated activities of individuals and groups to implement plans.

Leading The process of arousing people’s enthusiasm to work

hard and direct their efforts to fulfill plans and accomplish objectives.

Controlling The process of measuring work performance, comparing

results to objectives, and taking corrective action as needed.

Chapter 2

Theory X & Theory Y

McGregor’s Theory X assumes that workers: Dislike work Lack ambition Are irresponsible Resist change Prefer to be led

McGregor’s Theory Y assumes that workers are: Willing to work Capable of self

control Willing to accept

responsibility Imaginative and

creative Capable of self-

direction

Chapter 2

Implications of Theory X and Theory Y: Managers create self-fulfilling prophecies. Theory X managers create situations where

workers become dependent and reluctant. Theory Y managers create situations where

workers respond with initiative and high performance. Central to notions of empowerment and self-

management.

Ethics – Chapter 3 Ethics

Code of moral principles. Set standards of “good” and “bad” or “right” and “wrong.”

Ethical behavior What is accepted as good and right in the context of the governing moral

code. Can you identify examples of ethical and unethical business practices that

you have read about, heard about, or personally witnessed or experienced?

Utilitarian view of ethics — greatest good to the greatest number of people. Individualism view of ethics — primary commitment is to one’s long-term

self-interests. Moral-rights view of ethics — respects and protects the fundamental rights

of all people. Justice view of ethics — fair and impartial treatment of people according to

legal rules and standards.

Chapter 3 An ethical dilemma occurs when choices, although having potential for

personal and/or organizational benefit, may be considered unethical.

Ethical dilemmas include: Discrimination Sexual harassment Conflicts of interest

Rationalizations for Unethical Conduct Convincing yourself that the behavior is not really illegal. Convincing yourself that the behavior is in everyone’s best interest. Convincing yourself that nobody will ever find out what you’ve done. Convincing yourself that the organization will “protect” you.

What influences our ethical choices: The person - Family influences, religious values, personal standards, and

personal needs. The organization - Supervisory behavior, peer group norms and behavior, and

policy statements and written rules. The environment - Government laws and regulations, societal norms and

values, and competitive climate in an industry.

Social Responsibility Looks at ethical issues on the organization level.

Obligates organizations to act in ways that serve both its own

interests and the interests of society at large. Organizational stakeholders

Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.

Typical organizational stakeholders Employees Customers Suppliers Owners Competitors Regulators Interest groups

Competitive Advantage Chapter 4 Competitive advantage is a core competency that clearly sets an

organization apart from competitors and gives it an advantage over

them in the marketplace.

Competitive advantage may be achieved through Products Pricing Customer service Cost efficiency Quality

Economic conditions –– health of the economy in terms of inflation, income levels, gross domestic product, unemployment, and job out-look.

Socio-cultural conditions ––norms, customs, and social values on such matters as human rights, trends in education and related social institutions, as well as demographic patterns in society.Legal-political conditions –– prevailing philosophy and objectives of the political party or parties running the government, as well as laws and government regulations.

Technological conditions –– development and availability of technology, including scientific advancements.

Natural environment conditions –– nature and conditions of the natural environment, including levels of political concern expressed through environmentalism.

Customer Service Chapter 4

Establishes and maintains high standards of customer service

in order to strategically build lasting relationships with and add

value to customers.

Supply chain management is the strategic management of all

operations relating to an organization’s resource suppliers.

Customers want: High quality. Low price. On-time delivery.

Key customer service lessons: Protect reputation for quality products. Treat customers right.

Organization culture Chapter 4

Organizational culture is the system of shared beliefs and

values that develops within an organization and guides the

behavior of its members. Performance excellence Innovation Social responsibility Integrity Worker involvement Customer service Teamwork

Diversity – Chapter 4

Describes differences among people at work.

How diversity is handled in the workplace reflects the organization’s

culture.

Respect and inclusion.

Disrespect and exclusion.

A potential source of competitive advantage.

Glass ceiling

Misunderstanding and lack of sensitivity

Sexual harassment

Pay discrimination

Job discrimination

Globalization- Chapter 5 This is an age of a global economy in which resource supplies,

product markets and business competition are worldwide rather than purely local or national in scope.

The global economy is influenced by the forces of globalization — the process of growing interdependence among the components of the global economy.

International management describes management in organizations with business interests in more than one country.

The global manager is informed about international developments, transnational in outlook, competent in working with people from other cultures, and always aware of regional developments in a changing world.

Globalization Initial Market entry strategies involve the sale of goods or services to foreign

markets but do not require expensive investments. Types of market entry strategies:

Global sourcing is the process of purchasing materials, manufacturing components, or business services from around the world. Manufacturing in China

Exporting involves selling locally made products in foreign markets. Ralph Lauren

Importing involves buying foreign-made products and selling them in domestic markets. Chanel

A licensing agreement occurs when a foreign firm pays a fee for the rights to make or sell another company’s products in a specified region. Such an agreement usually grants access to a unique manufacturing technology, special patent, or trademark rights held by the licensor. Coca Cola

Franchising is a form of licensing in which a foreign firm buys the rights to use another’s name and operating methods in its home country. McDonalds

(MNC) is a business with extensive international operations in more than one foreign country.

Entrepreneurship - Chapter 6

EntrepreneurshipStrategic thinking and risk-taking behavior that

results in the creation of new opportunities for individuals and/or organizations.

EntrepreneursRisk-taking individuals who take actions to

pursue opportunities and situations others may fail to recognize or may view as problems or threats.

Entrepreneurs

In- control –– entrepreneurs believe that they control their own destiny..

High energy level –– entrepreneurs are persistent, hard working, and willing to exert extraordinary efforts to succeed.

Achievers –– entrepreneurs are motivated to act individually to accomplish challenging goals.

Tolerance for ambiguity –– entrepreneurs are risk takers; they tolerate situations with high degrees of uncertainty.

Self-confidence –– entrepreneurs feel competent, believe in themselves, and are willing to make and act on decisions.

Passion and action-orientation –– entrepreneurs try to act ahead of problems; they want to get things done and not waste valuable time.

Independence –– entrepreneurs want independence; they are self-reliant; they want to be their own boss, not work for others.

Flexibility entrepreneurs are willing to admit problems and errors, and to change a course of action when plans are not working.

Small Business Ones with 500 or fewer employees. Independently owned and operated. Constitute 99 percent of American businesses.

Lack of experience Lack of expertise Lack of strategy and strategic leadership Poor financial control Growing too fast Insufficient commitment Ethical failure

Elements of a business plan Executive summary –– overview of business purpose and highlights of

key elements of the plan. Industry analysis –– nature of the industry, including economic trends,

important legal or regulatory issues, and potential risks. Company description –– mission, owners, and legal form. Products and services description –– major goods or services, with

special focus on uniqueness vis-à-vis competition. Market description –– size of market, competitor strengths and

weaknesses, and five-year sales goals. Marketing strategy –– product characteristics, distribution, promotion,

pricing, and market research. Operations description –– manufacturing or service methods, supplies

and suppliers, and control procedures. Staffing description –– management and staffing skills needed and

available, compensation, and human resource management systems. Financial projection cash flow projections for one to five years,

break-even points, and phased investment capital. Capital needs –– amount of funds needed to run the business, amount

available, and amount requested from new sources. Milestones a timetable of dates showing when key stages of the new

venture will be completed.

Information Technology- Chapter 7

Facilitation of communication and information sharing. Operating with fewer middle managers. Flattening of organizational structures. Faster decision making. Increased coordination and control.

IT for relationships with external environment:

Helps with customer relationship management.

Helps organizations with supply chain management.

Helps in monitoring outsourcing and other business

contracts.

How IT is changing the office …

Useful Information Characteristics of useful information:

Timely the information is available when needed. High quality –– the information is accurate and

reliable. Complete –– the information is complete and sufficient

for the task at hand. Relevant the information is appropriate for the task

at hand. Understandable –– the information is clear and easily

understood by the user.

Problem solving decision making Problem solving is …

The process of identifying a discrepancy between actual and desired performance and taking action to resolve it.

A decision is … A choice among possible alternative course of action.

Programmed decisions. Apply solutions that are readily available from past experiences

to solve structured problems. Structured problems are ones that are familiar, straightforward,

routine and clear with respect to information needs. Nonprogrammed decisions.

Develop novel solutions to meet the demands of unique situation

that present unstructured problems.

Unstructured problems are ones that are full of ambiguities and

information deficiencies.

5 step decision making process

Step 1 — identify and define the problem. Step 2 — generate and evaluate possible

solutions. Step 3 — decide on a preferred course of

action.

Step 4 — implement the decision solution.

Step 5 — evaluate results.

Planning – Chapter 8 Planning

The process of setting objectives and determining how to best accomplish them.

Objectives Identify the specific results or desired outcomes that one intends

to achieve. A good objective should be:

Specific

Measurable

Linked to a timetable

Challenging but attainable Plan

A statement of action steps to be taken in order to accomplish the objectives.

5 step planning process Define your objectives –– Identify desired outcomes or results in very

specific ways. Know where you want to go; be specific enough that you will know you have arrived when you get there, or know how far off the mark you are along the way.

Determine where you currently stand –– Evaluate current accomplishments relative to the desired results. Know where you stand in reaching the objectives; know your strengths and weaknesses.

Develop scenarios regarding future conditions –– Try to anticipate future events. Generate alternative “scenarios” for what may happen; identify for each scenario things that may help or hinder progress toward your objectives.

Analyze and choose among action alternatives –– List and carefully evaluate the possible actions that may be taken. Choose the alternative(s) most likely to accomplish your objectives; decide step-by-step what must be done to follow the chosen course of action.

Implement the plan and evaluate results –– Take action and carefully measure your progress toward objectives. Do what the plan requires; evaluate results; take corrective actions and revise plans as needed.

Strategic & Operational Planning Strategic plans — set broad, comprehensive, and

longer-term action directions for the entire organization.

Operational plans — define what needs to be done in specific areas to implement strategic plans. Production plans –– dealing with the methods and

technology needed by people in their work. Financial plans –– dealing with the money required to

support various operations. Facilities plans –– dealing with facilities and layouts

required to support task activities. Marketing plans –– dealing with the requirements of

selling and distributing goods or services. Human resource plans –– dealing with personnel

recruiting, selection, and placement of people into various jobs.

Forecasting & Benchmarking Forecasting is the process of making assumptions about

what will happen in the future. Qualitative forecasting uses expert opinions to predict the

future. Quantitative forecasting techniques use math and

statistical analyses of historical data and surveys to predict future events.

Benchmarking is a method of finding out what other people and organizations are doing well and then incorporating those ideas into one’s own operations.

Best practices refer to a benchmarking technique that involves identifying those things that help both competitors and non-competitors achieve superior performance.

Controlling

The process of measuring performance and taking

action to ensure desired results.

Step 1 — establish objectives and standards.

Step 2 — measure actual performance.

Step 3 — compare results with objectives and

standards.

Step 4 — take corrective action as needed..

Internal & External Controls

Internal control

Allows motivated individuals and groups to exercise

self-discipline in fulfilling job expectations.

External control

Occurs through personal supervision and the use of

formal administrative systems.

MBO

Management by objectives (MBO) is a

structured process of regular communication in

which a supervisor/team leader and

subordinates/team members jointly set

performance objectives and review results

accomplished.

Supervisor/team leader and workers jointly review

results.

Employee Discipline Systems Discipline is the act of influencing behavior through

reprimand. When discipline is handled in a fair, consistent, and

systematic way, it is a useful form of managerial control. To be effective, reprimands should …

Be immediate. Be directed toward actions, not personality. Be consistently applied. Be informative. Occur in a supportive setting. Support realistic rules.

Financial Aspects of Planning Financial analysis information is important in exercising

managerial control over resource utilization and organizational performance. Liquidity

The ability to generate cash to pay bills. Leverage

The ability to earn more in returns than the cost of debt.

Asset management The ability to use resources efficiently and

operate at minimum cost. Profitability

The ability to earn revenues greater than costs.

Strategic Management – Ch9 Competitive advantage — operating with an attribute or set of

attributes that allows an organization to outperform its rivals.

Sustainable competitive advantage — one that is difficult for

competitors to imitate. Strategy — a comprehensive action plan that identifies long-

term direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage.

Strategic intent — focusing all organizational energies on a unifying and compelling goal.

Strategic management — the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage.

Competitive Environments Monopoly.

Only one player and no competition. Creates absolute competitive advantage.

Oligopoly. Few players not directly competing against each

other. Long-term competitive advantage in defined

market segment. Hypercompetition.

Several players directly competing against each other.

Any competitive advantage is only temporary. Customers usually gain through lower prices and

more product/service innovation.

Strategy Implementation

The process of allocating resources and putting

strategies into action.

Tasks: Identify organizational mission and objectives. Assess current performance based on mission and

objectives. Create strategic plans to accomplish purpose and

objectives. Implement the strategic plans Evaluate results; change strategic plans and/or

implementation processes as necessary.

Mission, Values, Culture The reason for an organization’s existence. Values are broad beliefs about what is or is not appropriate. Organizational Culture:

Shapes the values of managers and other organization members.

Points people in common directions. Helps build institutional identity. Gives character to the organization in the eyes of

employees and external stakeholders. Backs up the mission statement. Guides the behavior of organizational members in

meaningful and consistent ways.

SWOT Assess: Strengths, Weaknesses, Opportunities &

Threats Outside forces that affect our business,

Assessment of macro environment Analysis of industry environment Industry competitors –– intensity of rivalry among firms in

the industry. New entrants –– threats of new competitors entering the

market. Suppliers –– the bargaining power of suppliers. Buyers –– the bargaining power of buyers. Substitutes –– threats of substitute products or services.

Levels of Strategic Mgmt

Corporate strategy In what industries and markets should we compete?

Business strategy How are we going to compete for customers in this

industry and market? – General Electric Functional strategy

How can we best utilize resources to implement our business strategy?

E-business – E-commerce

The strategic use of the Internet to gain

competitive advantage.

Know the difference between e-business and e-

commerce.

Popular e-business strategies

Business-to-business (B2B) strategies

Business-to-customer (B2C) strategies