Principles of Management

Substitute

A potential threat, customers use it as an alternative (ex: apple watch and galaxy watch)

vigilance

A process in which a decision maker carefully executes all stages of decision making

Concentric diversification strategy

A strategy used to add new businesses that produce related products or are involved in related markets and activities

system 2 information processing

A type of decision-making process that is reflective and done slowly with deliberative thought.

system 1 information processing

A type of decision-making process that is reflexive and done quickly without careful thought.

high-involvement organization

A type of organization in which top management ensures that there is consensus about the direction in which the business is heading

U.S. Patient Protection and Affordable Care Act

This act requires businesses with 50 or more FT employees to offer health insurance.

Attractive environment

This type of environment provides competitive advantage and high potential

unattractive environment

This type of environment puts a firm at a competitive disadvantage and offers low potential

contingency plans

alternative courses of action that can be implemented based on how the future unfolds

strategic maneuvering

an organization's conscious efforts to change the boundaries of its task environment

organic structure

an organizational form that emphasizes flexibility

ordinary capabilities

capabilities pertaining to basic administrative and operational functions

prospectors

companies that continuously change the boundaries for their task environments by seeking new products and markets, diversifying and merging, or acquiring new enterprises

defenders

companies that stay within a stable product domain as a strategic maneuver

This type of environment includes... -rivals -suppliers -buyers -new entrants -substitutes and complements

competitive environment

Barriers to entry

conditions that prevent new companies from entering an industry

buffering

creating supplies of excess resources in case of unpredictable needs

Political action

efforts to influence elected representatives to create a more favorable business environment or limit competition (ex: issue advertising; lobbying at state and national levels)

legal action

engaging company in private legal battle (ex: apple and qualcomm engaging in multibillion-dollar legal dispute)

Public relations

establishing and maintaining favorable images in the minds of those making up the environment (ex: adidas sponsoring the olympics)

Competitive aggression

exploiting a distinctive competence or improving internal efficiency for competitive advantage (ex: aggressive pricing, comparative advertising)

-raw materials -human resources -energy -financial resources -information -equipment

external environmental factors

Macroenvironment

general environment; includes legal, political, economic, technological, demographic, and social & natural factors that generally affect organizations

Inputs

goods and services organizations take in and use to create products or services

Regulators

government agencies that have the power to investigate company practices and take legal action to ensure complaince with law

ready-made solutions

ideas that have been seen or tried before

This type of environment includes... -economy -technology -legal/regulations -demographics -social issues -natural environment

macroenvironment

Communication occurring through orders and instructions occurs in a(n) _________ structure

mechanistic

Jobholders relay more heavily on rules occurs in a(n) _________ structure

mechanistic

Communication occuring through advice and information occurs in a(n) _________ structure

organic

Expertiste being highly valued occurs in a(n) _________ structure

organic

Jobholders relying more heavily on judgement occurs in a(n) _________ structure

organic

Open Systems

organizations that are affected by, and that affect, their environment

illusion of control

people's belief that they can influence events, even when they have no control over what will happen

Complement

potential opportunity because customers buy more of a given product if they also demand more of the complementary product (ex: Gym membership and workout clothes)

environmental scanning

searching for and sorting through information about the environment

independent strategies

strategies that an organization acting on its own uses to change some aspect of its current environment

outputs

the goods, services, and ideas that result from the conversion of inputs

benchmarking

the process of comparing an organization's practices and technologies with those of other companies

empowerment

the process of sharing power with employees, thereby enhancing their confidence in their ability to perform their jobs and their belief that they are influential contributors to the organization

certainty

the state that exists when decision makers have accurate and comprehensive information

uncertainty

the state that exists when decision makers have insufficient information

risk

the state that exists when the probability of success is less than 100 percent and losses may occur

Coalition

two or more group coalescing and acting jointly with respect to some set of issues for some period of time (ex: the business roundtable and the U.S. chamber of commerce lobby congress on behalf of business)

Voluntary action

voluntary commitment to various interest groups, causes, and social problems (ex: walmart donating supplies to wildfire victims)

environmental uncertainty

when managers do not have enough information about the environment to understand or predict the future

strategic alliance

A formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals.

b

A(n) ________ illustrates the four key drivers of a firm's long-term success and shows how goals in each area are linked to others. a. objective script b. strategy map c. GANTT chart d. PERT chart e. decision tree

External Environment

All relevant forces outside a firm's boundaries, such as competitors, customers, the government, and the economy.

Corporate Diplomacy

An umbrella term for attempting to influence external stakeholders through a variety of strategic activities

corporate diplomacy

An umbrella term for attempting to influence external stakeholders through a variety of strategic activities

Ordinary

Capable people, facilities and equipment, procedures and routines, and administrative coordination are all examples of __________ capabilities

satisficing

Choosing an option that is acceptable, although not necessarily the best or perfect.

programmed decisions

Decisions encountered and made before, having objectively correct answers, and solvable by using simple rules, policies, or numerical computations.

Equal Employment Opportunity Commission (EEOC)

Enforces federal laws that prohibit discrimination in the workplace

Occupational Safety and Health Administration (OSHA)

Enforces workplace safety and health standards

domain selection

Entering a new market or industry with an existing expertise

d

Giselle wants to apply the differentiation strategy to build competitive advantage in her plumbing company. Of the strategies below, which one best exemplifies the differentiation strategy? a. hiring qualified professionals to offer the service b. sending out marketing fliers to new home owners c. offering prices that are competitive in the market d. offering a free hour of service to first-time customers e. assuring that the plumbers keep appointments on time

Michael Porter

Harvard Business School professor who states successful managers do more than simply react to the environment; they act in a way that shapes/changes the organization's environment

dynamic capabilities

Higher-level strategic capabilities (compared with ordinary capabilities) that aid rapid adaptation.

a

In a SWOT analysis, the lack of spare production capacity would be considered a(n) a. weakness. b. opportunity. c. strength. d. weakness and a threat. e. threat.

Office of Federal Contract Compliance Programs (OFCCP)

Monitors federal contractors to make sure they take affirmative action to ensure equal employment opportunity

Securities and Exchange Commission (SEC)

Protects investors and maintains fair, honest, efficient markets

National Labor Relations Board (NLRB)

Safeguards employees' rights to organize and to determine whether to have unions as their bargaining representative

Dynamic

Sensing change, seizing opportunities, and changing practices faster than competitors do are all examples of __________ capabilities

cooperative strategies

Strategies used by firms who want to reach their objectives in cooperation with other firms through alliances and partnerships rather than by competing with them.

competitive environment

The immediate environment surrounding a firm; includes suppliers, customers, rivals, and the like.

Supply Chain Management

The managing of the network of facilities and people that obtain materials from outside the organization, transform them into products, and distribute them to customers

Organizational climate

The patterns of attitudes and behavior that shape people's experience of an organization

b

The planning level with the longest time horizon is known as ________ planning. a. tactical b. strategic c. operational d. managerial e. vertical

c

The planning process is similar to the ________ process in that both have a series of steps that are typically repeated in a cycle. a. environmental analysis b. goal-setting c. decision-making d. strategy-mapping e. tactical alignment

Organization culture

The set of important assumptions about the organization and its goals and practices that members of the company share

d

Which of the following is one among the six major components of the strategic management process? a. technology assessment b. stockholder reporting c. stakeholder analysis d. SWOT analysis e. skill improvement plan

d

Which of the following is true of operational planning? a. It is performed by top-level managers. b. It is a long-term plan spanning over three years. c. It focuses only on processes required in the higher organizational levels. d. It identifies specific plans and procedures. e. It translates broad strategic goals into specific goals.

c

________ include sets of actions to be taken when a company's initial plans have not worked well or if events in the external environment require a sudden change. a. Strategic maps b. Business incubators c. Contingency plans d. Differentiation strategies e. Functional plans

e

________ provides individuals and work units with a clear map to follow in future activities. a. Charting b. Staffing c. A mission statement d. A BCG matrix e. Planning

discounting the future

a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits

final consumer

a customer who purchases products in their finished form

intermediate consumer

a customer who purchases raw materials or wholesale products before selling them to final customers

framing effects

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

maximizing

a decision realizing the best possible outcome

divestiture

a firm selling one or more businesses

diversification

a firm's investment in a different product, business, or geographic area

mechanistic organization

a form of organization that seeks to maximize internal efficiency

groupthink

a phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus

Cooptation

absorbing new elements into the organization's leadership structure to avert threats to its stability or existence (ex: consumer and labor representatives are added to a large retailer's board of directors)

optimizing

achieving the best possible balance among several goals

competitive pacification

independent action to improve relations with competitors (ex: a food truck parking farther away from an established truck)

competitive intelligence

information that helps managers determine how to compete better

This type of environment includes... -culture -values -climate

internal environment

smoothing

leveling normal fluctuations at the boundaries of the environment

Flexible processes

methods for adapting the technical core to changes in the environment

flexible processes

methods for adapting the technical core to changes in the environment

contraction

negotiating an agreement between the organization and another group to exchange goods, services, info, patents, etc. (ex: starbucks and keurig green mountain enter into a contract to offer more starbucks L-Cup pack offerings)

custom-made solutions

new, creative solutions designed specifically for the problem

nonprogrammed decisions

new, novel, complex decisions having no proven answers

acquisition

one firm buying another

merger

one or more companies combining with another

conflict

opposing pressures from different sources, occurring on the level of psychological conflict or conflict between individuals or groups