Busn chapter 2,3,4,5,6,7,8
Advantages of Departmentalization by Function
- Employees can develop skills in depth and progress within a department as they master more skills. - The company can achieve economies of scale by centralizing all the resources it needs and locate various experts in that area. - Employees can coordinate work within the function, and top management can easily direct and control various departments' activities.
Advantages of Matrix Organization
- Gives managers flexibility in assigning people to projects. - Encourages interorganization cooperation and teamwork - Produce creative solutions to product development problems - Makes efficient use of organizational resources
disadvantages to a narrow span of control
-Less empowerment -Higher costs -Delayed decision making -Less responsiveness to customers
advantages of a narrow span of control
-More control by top management -More chances for advancement -Greater specialization -Closer supervision
advantages of a broad span of control
-Reduced costs -More responsiveness to customers -Faster decision making -More empowerment
Ways to departmentalize
By product By function By customer group By geographic location By process
decision making
Choosing among two or more alternatives.
benchmarking
Comparing an organization's practices, processes, and products against the world's best.
outsourcing
Contracting with other companies (often in other countries) to do some or all of the functions of a firm, like its production or accounting tasks.
Fayol's Principles of Organization
1. Unity of command 2. Hierarchy of authority 3. Division of labor 4. Subordination of individual interests to the general interest 5. Authority 6. Degree of Centralization 7. Clear communication channels 8. Order 9. Equity
companies that are the most successful in adapting to change have these common traits:
1. they listen to customers, 2. they have inspirational managers who drive new ideas throughout the organizations, 3.they often have had a close call with going out of business
venture capitalists
Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.
PMI
Listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third column.
acquisition
One company's purchase of the property and obligations of another company.
enterprise zones
Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support
objectives
Specific, short-term statements detailing how to achieve the organization's goals.
absolute advantage
The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.
degree of centralization
The amount of decision-making power vested in top management should vary by circumstances.
goals
The broad, long-term accomplishments an organization wishes to attain.
balance of payments
The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
vertical merger
The joining of two companies involved in different stages of related businesses
span of control
The optimum number of subordinates a manager supervises or should supervise.
unemployment rate
The percentage of civilians at least 16-years-old who are unemployed and tried to find a job within the prior four weeks.
management
The process of accomplishing the goals of an organization through the effective use of people and other resources.
networking
The process of establishing and maintaining contacts with key managers in and outside the organization and using those contacts to weave strong relationships that serve as informal development systems.
problem solving
The process of solving the everyday problems that occur. Problem solving is less formal than decision making and usually calls for quicker action.
economies of scale
The situation in which companies can reduce their production costs if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase.
General Agreement on Tariffs and Trade (GATT)
a 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions
cooperative (co-op)
a business owned and controlled by the people who use it- producers, consumers, or workers with similar needs who pool their resources for mutual gain
Corporate Social Responsibility (CSR)
a business's concern for society's welfare
state capitalism
a combination of freer markets and some government control
foreign subsidiary
a company owned in a foreign country by another company, called the parent company
embargo
a complete ban on the import or export of a certain product, or the stopping of all trade with a particular country
countertrading
a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services
oligopoly
a degree of competition in which only one seller controls the total supply of a product or service and sets the price
business plan
a detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owners.
inflation
a general rise in the prices of goods and services over time
entrepreneurial team
a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product
corporation
a legal entity with authority to act and have liability apart from its owners
partnership
a legal form of business with two or more owners
import quota
a limit on the number of products in certain categories that a nation can import
organizing
a management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives
controlling
a management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not
equity
a manager should treat employees and peers with respect and justice
gross output GO
a measure of total sales volume at all stages of production
franchisee
a person who buys a franchise
SWOT analysis
a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats
depression
a severe recession, usually accompanied by deflation
disinflation
a situation in which price increases are slowing (the inflation rate is declining)
deflation
a situation in which prices are declining
stagflation
a situation when the economy is slowing but prices are going up anyhow
espirit de corps
a spirit of pride and loyalty should be created among people in the firm
conventional (C) corporation
a state-chartered legal entity with authority to act and have liability separate from its owners
hierarchy
a system or organization in which people or groups are ranked one above the other according to status or authority.
social audit
a systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs
virtual corporation
a temporary networked organization made up of replaceable firms that join and leave as needed
clear communication channels
all workers should be able to reach others in the organization quickly and easily
hierarchy of authority
all workers should know to whom they report
Service Corps of Retired Executives (SCORE)
an SBA office with volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for expenses)
franchise agreement
an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory
Leveraged Buyout (LBO)
an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing
communism
an economic and political system in which the government makes almost all economic decisions and owns all the major factors of production
socialism
an economic system based on the premise that some if not most basic businesses should be owned by the government so that profits can be more evenly distributed among the people
capitalism
an economic system in which all or most of the factors of production and distribution are are privately owned and operated for profit
vision
an encompassing explanation of why the organization exists and where it's trying to head
producer price index PPI
an index that measures the change in prices at the wholesale level
matrix organization
an organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line- and - staff structure
centralized authority
an organization structure in which decision-making authority is maintained at the top level of management
inverted organization
an organization that has contact people at the top and the chief executive officer at the bottom of the organization chart
Bureaucracy
an organization with many layers of mangers who set rules and regulations and oversee all decisions
tall organizational structure
an organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management
mission statement
an outline of the fundamental purposes of an organization
limited partner
an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment
insider trading
an unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends
Organizing, or structuring
begins with determining what work needs to be done and then dividing up the tasks among the participants
advantages of decentralized management
better adaption to customer wants; more empowerment of workers; faster decision making; higher morale
importing
buying products from another country
incubators
centers that offer new businesses low-cost offices with basic business services
brainstorming
coming up with as many solutions as possible in a short period of time with no censoring of ideas
leading
creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization's goals and objectives
intrapreneurs
creative people who work as entrepreneurs within corporations
external customers
dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use
disadvantages of departmentalization by function
departments may not communicate well - employees may identify with their department's goals rather than the organization- company's response to external changes may be slow - people may not be trained to take different managerial responsibilities rather than become narrowed specialists - department members may engage in group think
job specialization
dividing tasks into smaller jobs
division of labor
dividing up the work among the participants
free-market economies
economic system in which the market largely determines what goods and services get produced, who gets them, and how the economy grows
mixed economies
economic systems in which some allocation of resources is made by the market and some by the government
command economies
economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow
staff personnel
employees who advise and assist line personnel in meeting their goals
line personnel
employees who are part of the chain of command that is responsible for achieving organizational goals
corporate social initiatives
enhanced forms of corporate philanthropy directly related to the company's competencies
micropreneurs
entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle
integrity-based ethics codes
ethical standards that define the organization's guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees
compliance-based ethics codes
ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers
knowledge management
finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm
division of labor
functions are to be divided into areas of specialization
empowerment
giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests
enabling
giving workers the education and tools they need to make decisions
advantages of centralized management
greater top management control; more efficiency; simpler distribution system; stronger brand/ corporate image
cross-functional self-managed teams
groups of employees from different departments who work together on a long-term basis
top management
highest level of management, consisting of the president and other key company executives who develop strategic plans
internal customers
individuals and units within the firm that receive services from other individuals or units
whistleblowers
insiders who report illegal or unethical behavior
sovereign wealth funds SWFs
investment funds controlled by governments holding large stakes in foreign companies
participative (democratic) leadership
leadership style that consists of managers and employees working together to make decisions
autocratic leadership
leadership style that involves making managerial decisions without consulting others
free-rein leadership
leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives
disadvantages of decentralized management
less efficiency; complex distribution system; less top-management control; weakened corporate image
disadvantages to centralized management
less responsiveness to customers; less empowerment; interorganizational conflict; lower morale away from headquarters
devaluation
lowering the value of a nation's currency relative to other currencies
exchange rate
lowering the value of a nation's currency relative to other currencies
authority
managers have the right to give orders and the power to enforce obedience
Supervisory Management
managers who are directly responsible for supervising workers and evaluating their daily performance
order
materials and people should be placed and maintained in the proper location
mass production
methods for efficiently producing large quantities of goods
consumer price index CPI
monthly statistics that measure the pace of inflation or deflation
4d tech
moving 3d with time as the 4th dimension
market
people with unsatisfied wants and needs who have both the resources and the willingness to buy
max werber's organizational theory
puts heavy emphasis on the authority of the manager and believes employees should just shut up and do what they are told; also emphasized was job descriptions, written rules, decision guidelines, and detailed records, consistent procedures, regulations, and policies, staffing and promotion based on qualifications
restructuring
redesigning an organization so that it can more effectively serve its customers
dumping
selling products in a foreign country at lower prices than those charged in the producing country
exporting
selling products to another country
departmentalization
setting up individual departments to do specialized tasks
organizational chart
shows relationships among people: who is accountable for the completion of specific work, and who reports to whom
human relations skills
skills that involve communication and motivation; they enable managers to work through and with people
technical skills
skills that involve the ability to perform tasks in a specific discipline or department
conceptual skills
skills that involve the ability to picture the organization as a whole and the relationship among its various parts
ethics
standards of moral behavior, that is, behavior accepted by society as right versus wrong
foreign direct investment FDI
the buying of permanent property and businesses in foreign nations
monopolistic competition
the degree of competition in which a large number produce very similar products that buyers nevertheless perceive as different
perfect competition
the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product
corporate philanthropy
the dimension of social responsibility that includes charitable donations
corporate responsibility
the dimension of social responsibility that includes everything from hiring minority workers to making safe products
corporate policy
the dimension of social responsibility that refers to the position a firm takes on social and political issues
departmentalization
the dividing of organizational functions into separate units
fiscal policy
the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending
World Trade Organization (WTO)
the international organization that replaced the General Agreement on Tariffs and Trade and was assigned the duty to mediate trade disputes among nations
conglomerate merger
the joining of firms in completely unrelated industries
horizontal merger
the joining of two firms in the same industry
middle management
the level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling
chain of command
the line of authority that moves from the top of a hierarchy to the lowest level
brain drain
the loss of the best and brightest people to other countries
monetary policy
the management of the money supply and interest rates by the Federal Reserve
free trade
the movement of goods and services among nations without political or economic barriers
microeconomics
the part of economics study that looks at the behavior of people and organizations in particular markets
macroeconomics
the part of economics study that looks at the operation of a nation's economy as a whole
business cycles
the periodic rises and falls that occur in economies over time
real time
the present moment or the actual time in which something takes place
Transparency
the presentation of a company's facts and figures in a way that is clear and apparent to all stakeholders
market price
the price determined by supply and demand
Strategic Planning
the process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals
tactical planning
the process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done
contingency planning
the process of preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives
operational planning
the process of setting work standards and schedules necessary to implement the company's tactical objectives
supply
the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
demand
the quantity of products that people are willing to buy at different prices at a specific time
limited liability
the responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have limited liability
unlimited liability
the responsibility of business owners for all of the debts of the business
merger
the result of two firms forming one company
under free market capitalism people have four basic rights:
the right to own private property, the right to own a business and keep all that business's profits, the right to freedom of competition, the right to freedom of choice
franchise
the right to use a specific business's name and sell its products or services in a given territory
formal organization
the structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts
economics
the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals
resource development
the study of how to increase resources and to create the conditions that will make better use of those resources
informal organization
the system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization
Keynesian economic theory
the theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession
balance of trade
the total value of a nation's exports compared to its imports measured over a particular period
Gross Domestic Product (GDP)
the total value of final goods and services produced in a country in a given year
trade protectionism
the use of government regulations to limit the import of goods and services
comparative advantage theory
theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently
self-managed
they are empowered to make decisions without management approval
Small Business Administration (SBA)
A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans.
Sole Proprietorship
A business owned by one person
small business
A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts.
Limited Liability Company (LLC)
A company similar to an S corporation but without the special eligibility requirements.
frachisor
A company that develops a product concept and sells others the rights to make and sell the products.
trade surplus
A favorable balance of trade; occurs when the value of a country's exports exceeds that of its imports.
contract manufacturing
A foreign country's production of private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing.
licensing
A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).
strategic alliance
A long-term partnership between two or more companies established to help each company build competitive market advantages.
planning
A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives.
staffing
A management function that includes hiring, motivating, and retaining the best people available to accomplish the company's objectives
general partnership
A partnership in which all owners share in operating the business and in assuming liability for the business's debts.
joint venture
A partnership in which two or more companies (often from different countries) join to undertake a major project.
limited liability partnership (LLP)
A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.
Master Limited Partnership (MLP)
A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.
limited partnership
A partnership with one or more general partners and one or more limited partners.
invisible hand
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
Small Business Investment Company SBIC Program
A program through which private investment companies licensed by the Small Business Administration lend money to small businesses.
common market
A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. An example is the European Union.
tariff
A tax on imported goods
S corporation
A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships
North American Free Trade Agreement NAFTA
Agreement that created a free-trade area among the United States, Canada, and Mexico.
decentralized authority
An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be.
multinational corporation
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management
flat organizational structure
An organizational structure that has few layers of management and a broad span of control.
general partner
An owner (partner) who has unlimited liability and is active in managing the firm.
trade deficit
An unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports.
core competencies
those functions that the organization can do as well as or better than any other organization in the world
recession
two or more consecutive quarters of decline in the GDP
organizational (or corporate) culture
widely shared values within an organization that provide unity and cooperation to achieve common goals
Subordination of individual interests to the common interest
workers are to think of themselves as a coordinated team
digital natives
young people who have grown up using the internet and social networking
disadvantages of matrix organization
•It's costly and complex. •Employees may be confused where their loyalty belongs. •Good interpersonal skills and cooperative employees are a must. •It may only be a temporary solution to a long-term problem.
disadvantages of a broad span of control
Fewer chances for advancement, overworked managers, loss of control, less management expertise
United States-Mexico-Canada Agreement USMCA
Free-trade agreement among the United States, Mexico, and Canada that replaced NAFTA in an effort to create more balanced and reciprocal trade.
line organization
Has direct two-way lines of responsibility, authority and communication running from the top to the bottom. Everyone reports to one supervisor.
core inflation
CPI Consumer price index minus food and energy
unity of command
Each worker is to report to one, and only one, boss.
