Management Exam #1
Learn from Feedback
-Effective managers always conduct a retrospective analysis to see what they can learn from past successes or failures -Managers who do not evaluate the results of their decisions do not learn from experience and they are likely to make the same mistakes again -Managers must establish a formal procedure with these steps: 1. Compare what actually happened to what was expected to happen as a result of the decision 2. Explore why any expectations for the decision were not met 3. Derive guidelines that will help in future decision making
What is an entrepreneur?
-Entrepreneurs are individuals who notice opportunities and decide how to mobilize the resources necessary to produce new and improved goods and services -In charge of all of the planning, organizing, leading, and controlling decision necessary to start new business ventures
Controlling
-Establish accurate measuring and monitoring systems to evaluate how well the organization has achieved its goals -Managers monitor the performance of individuals, departments, and the organization as whole to see whether they are meeting desired performance standards -The outcome of the control process is the ability to measure performance accurately and regulate organizational efficiency and effectiveness -Managers must decide which goals to measure and then they must design control systems that will provide the information necessary to assess performance -The controlling task also helps managers evaluate how well they themselves are performing the other three tasks of management
Organizing
-Establish task and authority relationships that allow people to work together to achieve organization goals -Organizing people into departments according to the kind of job-specific tasks they perform lays out the line of authority and responsibility between different individuals and groups -Organizational structure → a formal system of task and reporting relationships that coordinates and motivates members so they work together to achieve organizational goals
What is diversification?
-Expanding into new industry -Pros: more revenue -Cons: can't be a master at any of it because doing so many different things -EX: Ball makes everything from mason jars to aerospace engineering -EX: 3M -Risk takers -Relentless focus on customers -Stretch goals - new products at a rapid rate -Autonomy (Theory Y) -Technologies belong to every unit -Researchers share results -Expanding into a new industry - provide new goods and services -Think of it as diversity but for goods/services instead of for people -Example: Ball corporation makes mason jars but also does aerospace engineering Pros: Can save costs, share resources, expand customer base Cons: Not enough time to know everything about each business unit/industry Think of the saying, "Jack of all trades, master of none" 3M dabbles in all of these: transportation, healthcare, electronics, communications, specialty materials, etc.
Empowerment
-Giving authority to make decisions -How does it contribute to effective leadership? -Enhances the sense of trust within an organization -Get employees more motivated and committed -Where did we see this before? -Trader Joe's empowered employees to give good customer service
Characteristics of Entrepreneurs
-High on the personality trait of openness to experiment -Internal locus of control → believe they are responsible for what happens to them and that their own actions determine important outcomes such as the success or failure of a new business -High level of self-esteem
How does Cott compete with Coke & Pepsi?
-High quality, low-price soda to stores under their brand -Cott has a low-cost strategy - make the grocery stores pay for ads so they can lower their price (don't have to pay for advertising) -Retailers are willing to do this because they make more profit from Cott's sodas and the products build their store brand image
Trader Joe's Strategies
-Low cost, high quality -Does not have a lot of variety - not overwhelmed by choices -Great customer service -Led employees to feel they "owned" their supermarkets and he worked to develop a store culture based on values and norms about providing excellent customer service and developing personalized relationships with customers -Falls under leading -Fun atmosphere -Employees wear Hawaiian shirts -Store managers are called captains -The store decor uses lots of wood and contains tiki huts where employees give customers food and drink samples and interact with them -Employees are paid really well and can be promoted easily
Coke & Pepsi - What are their differentiation strategies?
-Make and sell syrup concentrate -Bottlers produce and distribute -Charge premium price in order to get advertising dollars -Coke & Pepsi spend a ton on advertising so they build brand awareness and brand loyalty
Generate Alternatives
-Manager must generate a set of feasible alternative courses of action to take in response to the opportunity or threat -EX: In the Sun Microsystems decision, the alternatives were either to go ahead with the September 10 launch or to delay the launch until the Carrera was 100% ready for market introduction -Usually, alternatives are not so obvious or so clearly specified -One major problem is the managers may find it difficult to come up with creative alternative solutions to specific problems -They have a managerial mindset and it is hard to view the world from a fresh perspective -Need to abandon usual mindset to find a creative alternative
Leading
-Motivate, coordinate and energize individuals and groups to work together to achieve organizational goals -Leadership involves managers using their power, personality, influence, persuasion and communication skills -Leadership revolves around encouraging all employees to perform at a high level to help the organization achieve its vision and goals
Assess Alternatives
-Next, evaluate the advantages and disadvantages of each alternative -The key to good assessment of the alternatives is to define the opportunity or threat exactly and then specify the criteria that should influence the selection of alternatives for responding to the problem or opportunity -Managers often fail to specify the criteria that are important in reaching a decision -Successful managers use four criteria to evaluate the pros and cons of alternative courses of action 1. LEGALITY -Managers must ensure that a possible course of action will not violate any domestic or international laws or government regulations 2. Ethicalness -Managers must ensure that a possible course of action is ethical and will not necessarily harm any stakeholder group 3. Economic Feasibility -Managers must decide whether the alternatives are economically feasible → whether they can be accomplished given the organization's performance goals -Typically, managers perform a cost-benefit analysis of the various alternatives to determine which one will have the best net financial payoff 4. Practicality -Managers must decide whether they have the capabilities and resources required to implement the alternative, and they must be sure the alternative will not threaten the attainment of other organizational goals -EX: The key question at Sun Microsystems was whether to go ahead with the September 10 launch date -Two main criteria were influencing McNealy's choice: the need to ship a machine that was as "complete" as possible (the practicality criterion) and the need to beat Apollo to market with a new workstation (the economic feasibility criterion). -The first criteria suggested that the launch should be delayed; the second that the launch should go ahead -Sun Microsystems went ahead with the September 10 launch -EX: Some of the worst managerial decision can be traced to poor assessment of the alternatives → such as the decision to launch the Challenger space shuttle -Managers chose the desire to demonstrate to the public the success of the US space program in order to ensure future funding (economic feasibility) over the need to ensure the safety of the astronauts (ethicalness) -Therefore, led to death of astronauts
Implement the Chosen Alternative
-Next, the decision and alternative must be implement, and many subsequent and related decisions must be made -EX: course of action decided to develop a new line of women's clothing → next have to decide on dress designers, fabrics, manufacturers, and contracts with clothing stores to sell the new line -To ensure that decision is implemented, top managers must assign to middle managers the responsibility for making the follow-up decision necessary to achieve the goal
Why study management?
-Resources are valuable and scarce -The more efficient and effective that organizations can make of those resources, the greater the relative well being and prosperity of people in that society -Managers directly impact the well-being of a society and the people in it. Understanding what managers do and how they do it is of central importance to understanding how a society creates wealth and affluence for its citizens. -Understand others -We are constantly asked to work in groups and interact with people/bosses everyday -Job that pays well and is interesting
Recent Changes on Restructuring
-Restructuring → involves simplifying, shrinking, or downsizing an organization's operations to lower operating costs -Modern IT's ability to improve efficiency has increased the amount of downsizing in recent years because IT makes it possible for fewer employees to perform a particular work task -IT increased each person's ability to process information and make decisions more quickly and accurately
What is Differentiation?
-Result of efforts to make a product or brand stand out as a provider of unique value to customers in comparison with its competitors EX: Lush -All natural and organic -The smells and sights EX: Apple -Deliveries its customers new and exciting products every 6 months or every year
Recognize the Need for a Decision
-Stimuli spark the realization that a decision must be made because of changes in the organizational environment result in new kinds of opportunities and threats -EX: This happened at Sun Microsystems when the September 10 launch date had been set when it seemed that Motorola chips would be readily available. -Later, with the supply of chips in doubt and bugs reaminning in the software system, Sun was in danger of failing to meet its launch date -Managers must recognize the need for a decision to be made and respond to it in a timely and appropriate way
Choose Among Alternatives
-The next task is to rank the various alternatives (using the criteria from the previous section) and make a decision -When rakning alternatives, managers must be sure all the information available is brought to bear on the problem or issue at hand -EX: As the Sun Microsystems case indicates, however, identifying all relevant information for a decision does not mean the managers has complete information; in most instances, information is incomplete -Managers often ignore critical information as well, even when it is available -Avoid Groupthink. -Groupthink → a pattern of faulty and biased decision making that occurs in groups whose members strive for agreement among themselves at the expense of accurately assessing information relevant to a decision -Typically a group rallies around one central manager and the course of action that manager supports -Group members become blindly committed to that course of action without evaluating it -EX: deciding to launch the Challenger
What is a vision and what are some examples?
-When goals are lofty and long term they may be called "Vision" Examples: "There's something going on here...something that is changing the world...and this is the epicentre." Steve Job of Apple Computers during its initial start-up "Quality, hard work, and commitment - The stuff America is made of. Our goal is to be the best. What else is there? If you can find a better car, buy it." - Lee Iacocca when he was chairman of Chrysler Corporation "2000 stores by the year 2000." - Howard Schultz, of Starbucks Coffee Company "To strengthen the social fabric by continually democratizing home ownership." - Federal National Mortgage Association, Fannie Mae Exploring the past, illuminating the present and imagining the future" - National Museum of Australia "Empower people through great software, anyplace, any time and on any device." - Microsoft's vision "To provide the best service and lowest fares to the short haul, frequent-flying, point-to-point, non-interlining traveler." - Southwest Airlines' vision "Whirlpool, in its chosen lines of business, will grow with new opportunities and be the leader in an ever-changing global market. We will be driven by our commitment to continuous quality improvement and to exceeding all of our customers' expectations. We will gain competitive advantage through this, and by building on our existing strengths and developing new competencies. We will be market driven, efficient and profitable. Our success will make Whirlpool a company that worldwide customers, employees and other stakeholders can depend on." - Wirlpool's vision
Global Environment Challenges
1. Competitive advantage -The ability of one organization to outperform other organizations because it produces desired goods or services more efficiently and effectively than they do -Efficiency -Innovation -Responsiveness to customers -Quality 2. Ethics and social responsibility -Pressure to increase performance and to make the best use of resources to increase the level at which their organizations perform -EX: Today companies like Nike and Walmart are trying to stop sweatshop practices and prevent managers abroad from adopting work practices that harm their workers → they employ inspectors who police the factories overseas 3. Managing diverse workforce -Procedures and practices must be legal and fair and do not discriminate against any organizational members -Celebrate diversity 4. Utilizing IT -Why would a manager say no to implementation? (think UPS example) -At UPS drivers used to rely on maps, note cards, and their own experience to plan the fastest way to deliver hundreds of packages a day -UPS invested over $600 M to developed a computerized route optimization system that each evening plans each of is drivers routes for the next day in the most efficient way -Managers should continually utilize efficient and effective new IT that can link and enable managers and employees to better perform their jobs
Three Steps in Planning
1. Determining the Organization's Mission and Goals 2. Formulating Strategy 3. Implementing Strategy
Ways to Differentiate
1. Location -Dunkin Donuts and Trader Joe's in Boulder -In and Out in Colorado 2. Quality -Nordstrom -Lexus -Better camera on the iphone 3. Features -Touchscreen keyboard -No headphone jack -Waterproof 4. Style -Sleek iphone 5. Or it simply doesn't exist yet 6. Price and Service -EX: Virgin Airlines and Southwest Airlines
Four Essential Tasks of Management
1. Planning 2. Organizing 3. Leading 4. Controlling
Steps in the Decision-Making Process
1. Recognize the Need for a Decision 2. Generate Alternatives 3. Assess Alternatives 4. Choose Among Alternatives 5. Implement the Chosen Alternative 5. Learn from Feedback
Porter's Five Forces Model
1. Rivalry among existing competitors -Helps makes things high quality -EX: all the restaurants on Pearl have to be super good -Degree of competition for customers tends to drive down profits - good example are the overabundance of restaurants in Boulder. -Competition leads to lowering of prices and more advertising. Just look in a supermarket for this. Level of rivalry is high in the t shirt business, in the car business, in the supermarket business. 2. Threat of new entrants -EX: so easy to add a new coffee shop or restaurant on Pearl -When a company can easily enter a market. For example, Starbucks has threat of entry coffee shops that want to enter this market. They need to continuously innovate to remain competitive. 3. Threat of substitute products or services -EX: verizon vs. t-mobile or whole foods vs. trader joe's -Whatever product you have, for example, videoconferencing, can be done by another company by a different means: -Videoconferencing is a substitute for travel, plastic is a substitute for aluminum. There are plenty of substitute MP3 players for Apple's ipod. 4. Bargaining power of buyers -EX: costco can buy in bulk so they have power and can lower the price -Big, powerful buyers can bargain prices down particularly when they buy in volume. The Federal government buys weapons. They can bargain the prices down. Big box stores, like Walmart, buy a lot and have significant buying power. 5. Bargaining power of suppliers -EX: Cuban cigars -If there are only a few large suppliers, they can drive up the prices. For example, when Microsoft had a near monopoly on operating systems, they would cut profitability out of PC sellers. -If there are only a few people who supply marijuana then they can charge high prices to the medical marijuana shops. -If there are only certain farmers that grow a certain coffee bean - that bean can be expensive and anything made with that bean has to be more expensive
Implementation Strategy
???
Self-Managed Teams
A group of employees who assume responsibility for organizing, controlling, and supervising their own activities and monitoring the quality of the goods and services they provide
Empowerment
A management technique that involves giving employees more authority and responsibility over how they perform their work activities
Big Hairy Audacious Goal (BHAG) Examples
Become a $125 billion company by year 2000. (Wal-Mart, 1990) Become the Nike of the cycling industry. (Giro Sport Design, 1986) Become the dominant player in commercial aircraft and bring the world into the jet age. (Boeing, 1950) Crush Adidas. (Nike, 1960s)
Strategy - How are we going to get there?
Being different EX: Coca Cola Having low costs EX: Southwest Being innovative EX: Apple Being global EX: Apple Being sustainable EX: Leggo
Coke & Pepsi - How do they create a barrier to entry?
Bottlers agree not to bottle or distribute other products
Path-Goal Theory
Clearly ID outcomes Reward for reaching outcomes Clarify path to reach goal Leadership behaviors to motivate: -Directive -Supportive -Helpful when employees are stressed -Participative (empowerment) -Achievement-oriented -Motivates employees to work at the highest level possible
Behavior
Consideration -People, relationships -"Leadership" Initiating structure -Task, controlling, organizing -"Management"
What is will?
Creates superb results Unwavering resolve Sets standard of building enduring great company
CHAPTER 5
DECISION MAKING, LEARNING, CREATIVITY, AND ENTREPRENEURSHIP
Determining the Organization's Mission and Goals
Defining the Business -Who are our customers? -What customer needs are being satisfied? -How are we satisfying customer needs? -EX: Southwest ...defining the business... 1.Travelers - business and pleasure. Those with income to travel or a job that requires travel 2.The need is an affordable way to travel 3.We are satisfying those needs by having affordable flights, not charging for extra bags, and by being fun they want to come back EX: Mercedes...defining the business... 1.High income customers 2.that want prestige, quality, luxury 3.Satisfying those needs by providing them with a quality, luxury car that they can use when going to their high income jobs Establishing Major Goals -Best goals stretch the organization and require that each of its members work to improve company performance -EX: Setting goals... -Mattel's major goal is to be the leader in every segment of toy market in which it competes -Southwest has a goal to be the low-cost leader in the airline industry (long term lofty goals can also be considered "Vision") -Vision is all about long term future -So also think about timeframe for your goals and vision
Differentiation Strategy
EX: McGuckin Hardware b/c homey, local, family and customer service
Low-Cost Strategy
EX: Walmart
Efficiency vs. Effectiveness
Efficiency -A measure of how well or how productively resources are used to achieve a goal -EX: making lines shorter at DMV Effectiveness -A measure of the appropriateness of the goals an organization is pursuing and the degree to which the organization achieve those goals -EX: McDonald's goal of serving breakfast to attract more customers
Situation
Fiedler's Contingency Model Path-Goal Theory
Fiedler's Contingency Model
Fiedler's Leadership styles: 1. Relationship-oriented style → leaders concerned with developing good relations with their subordinates and to be liked by them 2. Task-oriented style → leaders whose primary concern is to ensure that subordinates perform at a high level and focus on task accomplishment Dimensions: 1. Leader-member relations → the extent to which followers like, trust, and are loyal to their leader 2. Task structure → the extent to which workers tasks are clear-cut so that a leader's subordinates know what needs to be accomplished and how to do it
What societal trends have hurt Coke and Pepsi?
Healthy, organic movement Reduce obesity
What are the downsides to being an entrepreneur?
High risk Upfront cost is huge
Collectivist vs. individualistic
Individualism -Free from pressure to conform -Look after own interest -Creativity and initiative -Personal freedom, recognition and promotion Collectivism -Society at large has priority -Creativity is disruption -Conformity rewarded
What words come to mind when thinking about entrepreneurship?
Innovative, constantly coming up with new ideas, visionary, forward thinking, seeing what people want before they know they want it
SWOT Analysis
Internal -Strengths and weaknesses -Financial resources -Physical resources -Human resources -Current processes -Current products and services External -Opportunities and threats -Market trends -Economic trends -Outside source of funding, regulations -Target audience demographics -Rivals Purpose of SWOT -Build on strengths -Correct weaknesses -Take advantage of opportunities -Counter threats
CHAPTER 10
LEADERS AND LEADERSHIP
5 Kinds of Power
Legitimate -Based on position -EX: CEO Reward -Based on position -Power to give and keep rewards from people Coercive -Based on position -Punishment Expert -Having the experience/education Referent -Personality -Likeable people -EX: Ellen -Trust, loyalty, people look up to them
Campbells SWOT Aftermath
Microwavable soups with a pull tab Healthier recipes New food outlets like dining halls Authority to managers to come up with new ideas More emphasis on 7/11 and Subway rather than grocery Low carb bread and cookies Shrank operations Low-salt and luxury soups Sold Godiva and invested in R&D for India and China
What is humility?
Modesty Quiet, clam determination Ambition to company not self Servant leadership Mirror vs. window -If something goes wrong, leader looks in the mirror rather than the window aka blaming it on someone else -Looking through the window when things go right - congratulating co workers
Outsourcing vs. Insourcing
Outsourcing -Contracting with another company, usually abroad, to have it perform an activity the organization previously performed itself -Cheaper but loss of control and cultural differences can make it hard to adjust Insourcing -Manufacturing and production within a company or within the US -More expensive but you have complete control
CHAPTER 6
PLANNING, STRATEGY, AND COMPETITIVE ADVANTAGE
Planning
Planning -Choose appropriate organizational goals and courses of action to best achieve those goals -3 steps involved in planning -Deciding which goals the organization will pursue -Deciding what strategies to adopt to attain those goals -Deciding how to allocate organizational resources to pursue the strategies that attain those goals Strategy -A cluster of decisions about what goals to pursue, what actions to take, and how to use resources to achieve goals -EX: Dell PC example -Saw opportunity to enter PC market by assembling PCs and selling them directly to customers and cheaper than Apple -Used low-cost strategy → a way of obtaining customers by making decisions that allow an organization to produce goods or services more cheaply than its competitors so it can charge lower prices than they do
What are the pros and cons of expanding internationally?
Pros: cheaper Cons: loss of control and cultural differences can make it hard to adjust Pros: More sales from untapped markets More customers International experience Keep up with the competition Cons: Tailoring products and/or services is costly but if you don't then you can lose customers (global strategy vs. multi-domestic strategy) Many decisions have to be made (import vs. export, franchising, licensing, and alliances) and all have their own risks
Campbells Example
SWOT Strengths -Huge ecnomies of scale -First-rate R&D team Weaknesses -High staffing levels -Old machinery creates high costs -Afraid to take risks Opportunities -Health drinks like its V8 juice -Growing market for quality bread and cookies (Pepperidege Farms) -Growth for choclate products (Godiva) Threats -Organic and healthy options -Variety of other convience foods -A major THREAT to Campbell's was the societal trend of being more healthy -So they had to re-assess and did a SWOT analysis -Customer is busy and health conscious so they address that with microwavable healthy soups
Formulating Strategy
SWOT Analysis Porter's Five Forces Model
What is Emotional Intelligence?
Self-awareness EX: Pursuit of happiness video Self-management EX: coach tripping hockey player Relationship management Social awareness EX: Seinfeld video
Influential Types of Leadership
Servant leadership → work for the benefit of others Transformational → ability to bring about change -Charismatic - ability to inspire and motivate -MLK Transactional → use of influence thru an exchange process -Reward for high performance, reprimand for low
Traits
Smart Experienced Self-confident High energy Stress-tolerant Honest Mature
Soft skills vs. hard skills
Soft skills -Human skills -The general ability to understand, alter, lead, and control the behavior of other individuals and groups -EX: Communications major Hard skills -Technical skills -The job-specific skills required to perform a particular type of work or occupation at a high level -EX: Accounting major
What people come to mind when thinking about entrepreneurship?
Steve Jobs Mark Zuckerberg
Tim Cook vs. Steve Jobs
Steve Jobs: -Manager who ultimately decided what kinds of new products apple would develop and the design of their hardware and software -Management styles was often arbitrary and overbearing -Played favorites among the many project teams he created -Approach led to fierce competition, conflict, misunderstandings, and growing distrust among members of the different teams -Jobs and CEO were competing for control of Apple → resources weren't being used efficiently → costs soared and performance and profits fell → Jobs asked to leave -Jobs started new ventures after he left Apple -In these companies, Jobs developed a clear vision for managers to follow and he built strong management teams to lead the project teams developing the new PCs and movies -Jobs saw his main task as planning the companies future product development strategies and left the actual tasks of leading and organizing to managers below him -Apple asked Jobs to come back and be CEO and he created a clear vision and goals to energize and motivate Apple employees -He delegated authority to teams of employees to develop all the many different hardware and software components necessary to build the new products -Created strict timetables and challenging stretch goals -He kept the different teams' activities separate → only he and his chief designers knew what the new products would actually look like and their capabilities → his demand for secrecy increased over time -Jobs was feared by employees -Isolated, forbidding, and secretive Tim Cook: -Acknowledged as the leader who controlled Apple's purchasing and manufacturing operations and had intimate knowledge of Apple's new product design and engineering -Cook has a new, more open, and participative approach to managing Apple -Cook makes himself available to employees and talks directly to shareholders and analysts -Cook has worked to break down the barriers between teams in the company and increase the flow of information between product units -Down to earth, approachable, and well respected -Tim Cook was more transparent than Steve Jobs → open to the public
Planning and Strategy
Strategy → a careful plan or method for achieving a particular goal usually over a long period of time Planning → identifying and selecting appropriate goals and courses of action; one of the four principal tasks of management
CHAPTER 1
THE MANAGEMENT PROCESS TODAY
What is Management?
The planning, organizing, leading and controlling of human and other resources to achieve organizational goals efficiently and effectively
What is decision making?
The process by which managers respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action
Hawthorne Effect
The tendency to perform or perceive differently when one knows they are being observed
Theory X vs. Theory Y
Theory X -The assumption that employees dislike work, are lazy, dislike responsibility, and must be coerced to perform Theory Y -The assumption that employees like work, are creative, seek responsibility, and can exercise self-direction -Works better in society today
MODELS Equation
Traits + behavior + situation = effective leadership
Corporate-level Strategies
Vertical Integration Diversification Expanding Internationally
Vertical Integration
What is vertical integration? (Backward and Forward) -A typical supply chain: Get raw materials → make → distribute → sell -Backward integration: the brewer decides to grow his own hops -Forward integration: the brewer decides to sell his beer at his brewery -EX: Apple and Apple stores -Gallo decided to make their own bottles because it was cheaper - that would be "backward vertical integration" because they are taking on responsibilities that are backward in the supply chain (they make their own raw materials rather than buy raw materials from someone else - they take on the responsibility) -Apple makes their products but also decided to sell them by creating Apple stores (people can try out the products they make) - they vertically integrated into the retail part of the chain (forward vertical integration)
The Planning Process
Where are we now? (mission) Where do we want to be? (goals and vision) How do we get there? (strategy)
