Management 3303 Exam 2 Dennis Rose

Myths v. Realities About Entrepreneurship

1. anyone can start a business (T) 2. entrepreneurs are gamblers (F) 3. entrepreneurs want the whole show to themselves (T) 4. entrepreneurs are their own bosses & completely independent (F) 5. entrepreneurs work harder than managers in big companies (T) 6. entrepreneurs experience a great deal of stress (T) 7. entrepreneurs are motivated solely by the quest for money (F) 8. entrepreneurs seek power & control over others (F) 9. if an entrepreneur is talented, success will happen quickly (F) 10. any entrepreneur w/ a good idea can raise venture capital (F)

Four Levels of Corporate Social Responsibility

1. economic: produce goods/services that society wants at a price that benefits the business and satisfies its obligations to investors 2. legal: obey the law 3. ethical: be ethical, meet societal expectations not written as law 4. philanthropic: be a good global corporate citizen by performing additional activities that society finds desirable and that the organizations values support

Danger Signs of Unethical Behavior

1. excessive emphasis on short-term revenues over longer-term considerations 2. failure to establish a written code of ethics 3. desire for simple, "quick fix:" solutions to ethical problems 4. unwillingness to take an ethical stand that may impose financial costs 5. consideration of ethics solely as a legal issue or a PR tool 6. lack of clear procedures for handling ethical problems 7. responsiveness to the demands of shareholders at the expense of other constituencies

6 Stages of Formal Decision Making

1. identify & diagnose the problem 2. generate alternative solutions 3. evaluate alternatives 4. make the choice 5. implement the decision 6. evaluate decision

Principles That Make An Effective Ethics Code

1. involve those who have to live with the code in writing it 2. focus on real-life situations that employees can relate to 3. keep it short & simple, so it's easy to understand & remember 4. write about values & shared beliefs that are important and that people can really believe in 5. set the tone at the top; have executives talk about and live up to the codes

Kohlberg's Stages of Moral Development

1. preconventional stage: makes decisions based on immediate self-interest with no care how it will affect others 2. conventional stage: makes decisions that conform to ones expectations 3. principled stage: makes decisions based on self-chosen ethical principles

Three Common Plans Used by Organizations

1. single-use plan: focuses on achieving non-repeating goals 2. standing plan: designed to accomplish an enduring set of goals 3. contingency plan: specifies actions when initial plans fail or events in the external environment create sudden change

Egoism

Ethical principle that believes individual self-interest should be the actual motive of all conscious actions; that the morally right thing to do is whatever promotes the greatest good for oneself

True or False: most people good decision makers, ethical & unbiased.

False; most people have unconscious biases that favor themselves and their own group

The Ethical Decision-Making Process

Step 1: understand all of the moral standards as well as the moral impacts; who will the decision benefit & harm, which are able to exercise their rights, and whose rights are denied Step 2: define the complete moral problem. Step 3: determine the economic outcomes, consider legal requirements, & evaluate the ethical duties Step 4: propose a convincing moral solution

Discounting the Future

a decision bias in which one weighs short-term costs/benefits more heavily than longer-term costs/benefits

Framing Effects

a decision bias influenced by the way in which a decision alternative is phrased/presented

Kyosei

a global ethical principle of business that states businesses should live & work together for the common good, allowing cooperation & mutual prosperity to coexist

Human Dignity

a global ethical principle of business that states businesses should value each person as an end, rather than a means

Sarbanes-Oxley Act

a law passed in response to a series of corporate scandals (particularly Enron & WorldCom) that requires companies (1) to have more independent board directors, not just company insiders (2) to adhere strictly to accounting rules & (3) to have senior managers personally sign off on financial results

Ethical Issue

a situation, problem, or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong

Low-Cost Strategy

a strategy an organization uses to build competitive advantage by being efficient & offering a standard, no-frills product

Differentiation

a strategy an organization uses to build competitive advantage by being unique/different than competitors in its industry or market segment

Related Diversification

a strategy in which an organization adds new businesses to produce related products to their current products or products that are in related markets. ex: video game console company creates a video game line

Unrelated Diversification

a strategy in which an organization adds new businesses to produce unrelated products or products that are in unrelated markets

Control System

a system designed to support managers in evaluating the organizations progress regarding its strategy and, when discrepancies exist, take corrective action

Shareholder Model

a theory of corporate social responsibility that holds that managers are agents of shareholders whose primary objective is to maximize profits

Stakeholder Model

a theory of corporate social responsibility that suggests that managers are obliged to look beyond profitability to help their organizations succeed by interacting with groups that have a stake in the organization

Optimizing

achieving the best possible balance among several goals

Transaction Fee Model

an e-commerce model that charges fees for goods/services

Subscription Model

an e-commerce model that charges fees for site visits

Advertising Support Model

an e-commerce model that charges fees to advertise on a site

Intermediary Model

an e-commerce model that charges fees to bring buyers & sellers together ex: ebay

Affiliate Model

an e-commerce model that charges fees to direct site visitors to other companies sites

Transcendent Education

an education with five goals that balance self-interest with responsibility to others: empathy, generosity, mutuality, civil aspiration & intolerance of ineffective humanity

Entrepreneur

an individual who takes on greater than normal financial risks to establish a new organization without the benefit of corporate sponsorship

SWOT Analysis

analysis of companies strengths, weaknesses, opportunities & threats

Goal & Plan Evaluation (step 3 of planning process)

carefully evaluate the advantages & disadvantages as well as the potential effects of each goal/plan and then must prioritize and eliminate some of them.

Satisficing

choosing an option that is acceptable/satisfactory, although not necessarily the best or perfect

Maximizing

choosing an option that realizes the best possible outcome

Integrity-Based Ethics Programs

concerned with the law but also with instilling in people a personal responsibility for ethical behavior. the people within the organization govern themselves through a set of guiding principles that they embrace

Goal Displacement

condition that occurs when a decision-making group loses sight of its original goal & a new, less important goal emerges

Monitor & Control Performance (step 6 of planning process)

continually monitor the performance of the work units against the goals and plans, as well as develop control systems to measure the performance to allow them to take corrective action if the plan was implemented improperly or the situation changes

Strategy Implenetation

define strategic tasks, assess organizations capabilities, develop implementation agenda, create implementation plan

Opportunity Analysis

description of the good or service, an assessment of the opportunity, an assessment of the entrepreneur, specification of activities & resources needed to translate your idea into a viable business & your sources of capital

Compliance-Based Ethics Programs

designed to prevent, detect & punish legal violations. they increase surveillance & controls on people and impose punishments on wrongdoers

Sustainable Growth

economic growth & development that meet present needs w/o harming the needs of future generations

Business Costs of Ethical Failures

ethical failures can result in a wide range of costs that start with government fines or penalties and can grow to legal investigation, corrective actions, government oversight, and can grow even more to loss of reputation, loss of customers, employee cynicism, loss of employee morale, and government regulation

Caux Principles

ethical principles established by business leaders from across the globe that believe in two ethical ideals: Kyosei & Human Dignity

Universalism

ethical system stating that all people, regardless of culture, race, sex, religion, nationality, or sexuality should uphold certain values that society needs to function. (opposite of relativism)

Relativism

ethical system that bases ethical behavior on the opinions & views of other relevant people

Virtue Ethics

ethical system that believes what is moral comes from what a mature person with "good" moral character would deem right

Utilitarianism

ethical system that seeks the greatest amount of happiness for the greatest amount of people

Business Plan

formal planning step that focuses on the entire venture & describes all the elements involved in starting it

Situational Analysis (step 1 of planning process)

gather, interpret & summarize all information relevant to the planning issue under consideration

Essential Ingredients for a Recipe for Success

great product, viable market, good timing

Characteristics of an Entrepreneur

high creativity, innovation, general management skills, business know-hows, and networks

Implementation (step 5 of planning process)

implement the plan so long as both managers & employees understand the plan, have the resources available, and are motivated to do so.

Stakeholder

individuals who affect and are affected by the actions of the organizations missions, goals & strategies

Shareholder

individuals who own shares of a corporation

Moral Judgment

knowing what actions are morally defensible

Nonfinancial Resources

legitimacy, networks, top-management teams, advisory boards, partners & social capital

Strategic Vision

long-term direction & strategic intent of a company that provides a perspective on where the organization is headed & what it can become

Strategic Goals

major targets or end results relating to the organizations long-term survival, value & growth

Generate Alternative Goals & Plans (step 2 of planning process)

managers & employees think broadly & creatively to set goals as well as come up with alternatives

Common Management Challenges

may not like it, survival, growth, delegation, misuse of funds, poor controls, mortality, going public

Ethics

moral principles & standards that guide the behavior of an individual or group.

Advantages of Using Groups

more information improves decisions, different perspectives enhance problem solving, group discussions spur thinking, increased understanding, increased commitment

Intrapreneur

new-venture creators working inside big companies; someone that works for an organization but brings in new business ideas to the company

Disadvantages of Using Groups

one person may dominate the discussion & undermine the process, may lead to satisficing, may lead to groupthink, original goals may be displaced by less important ones

Mission

organizations basic purpose & scope of operations

Groupthink

phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus which discourages creativity/individualism

Moral Philosophy

principles, rules & values people use in deciding what is right or wrong

Life-Cycle Analysis (LCA)

process of analyzing all inputs & outputs, through the entire "cradle-to-grave" life of a product, to determine total environmental impact

Benchmarking

process of assessing how well one company's basic functions & skills compare with those of another company / set of companies. the goal of benchmarking is to understand other firms "best practices" and to undertake actions to achieve better performances & lower costs

Operational Planning

process of identifying the specific procedures & processes required at lower levels of the organization

Skunkworks

project team designated to produce a new, innovative project

Moral Awareness

realizing the issue has ethical implications

Goal & Plan Selection (step 4 of planning process)

select the most appropriate & feasible plan

Strategic Planning

set of procedures for making decisions about the organizations long-term goals & strategies

Tactical Planning

set of procedures for translating broad strategic goals/plans into specific goals/plans that are relevant to a distinct portion of the organization

Ethical Leader

someone who has good moral values & ethics both personally and as a manager in the organization

The Planning Process

step 1: situational analysis step 2: alternative goals & plans step 3: goal & plan evaluation step 4: goal & plan selection step 5: implementation step 6: monitor & control

Concentration

strategy employed for an organization that operates a single business & competes in a single industry

Illusion of Control

the belief that one can influence events, even when they have no control over what will happen

Ecocentric Management

the creation of sustainable economic development & improvement of quality of life worldwide for all organizational stakeholders

Corporate Strategy

the distribution of resources among the entities in which an organization competes with

Business Ethics

the moral principles & standards that guide behavior in the world of business

Corporate Social Responsibility

the obligation an organization has towards society

Entrepreneurship

the process of initiating a business and assuming and managing risks and rewards

Ethical Climate

the processes in which an organization evaluates and makes decisions on what is right & wrong

Moral Character

the strength & persistence to act in accordance with your ethics despite the challenge

Bootlegging

when an employee works on a project that's not officially assigned using the companies assets

Vertical Integration

when an organization acquires or develops new businesses that produce parts for the organizations products

Competitive Aggressiveness

when an organization challenges a competitor directly

Strategic Management Process

(1) establish mission, vision & goals (2) SWOT analysis (3) strategy implementation (4) strategic control