Introduction to Business 109 (Business Essentials: Custom Edition, 2016)

Organizational culture appears as three layers: observable artifacts, token values, and foundational beliefs

FALSE

Detailed Schedule

Schedule showing daily work assignments with start and stop times assigned.

Master Operations Schedule

Schedule showing which products will be produced, and when, in upcoming time periods.

In general, organizations become more bureaucratic over their lifetimes

TRUE

Principals of effective organization

responsibility, authority, and accountability

operations managers

responsible for operation activities fulfill customer wants and needs

Quota

restriction on the number of products of a certain type that can be imported into a country

Trade Surplus

situation in which a country's exports exceed its imports, creating a positive balance of trade

Extractor

"A business that takes resources from nature for direct consumption or for use in developing other products is a

Corporation

"A separate legal entity, formed by documents filed with the state, which is owned by one or more shareholders and managed by a board of directors."

Mission Statement

"A short, specific written statement of the reason a business exists and what it wants to accomplish."

Goal

"A specific statement of results the business expects to achieve."

Partnership Agreement

"A written agreement among all owners that specifies the rules and procedures that guide ownership and operations."

Franchise

"A written contract granting permission to operate a business to sell products and services in a prescribed way."

Articles of incorporation

"A written legal document that identifies ownership and operating procedures and conditions for the business."

Intermediaries

"Businesses involved in selling the goods and services of producers to consumers and other businesses."

Procedures

"Descriptions of the way work is to be done."

Policies

"Guidelines used in making consistent decisions."

1. The Environment: Mechanistic Versus Organic Organizations—the Burns & Stalker Model

"Here every job is broken down into the smallest of steps, and the whole process is automated," wrote BusinessWeek Actually, Deveny found that she fell behind in, say, bagging french fries, but it was certainly the intention of McDonald's guiding genius Ray Kroc that, in fact, nearly anyone should be able to do this—and that a Big Mac should taste the same anywhere. Thus, for example, procedure dictates that a hamburger is always dressed the same way: first the mustard, then the ketchup, then two pickles. McDonald's is a hugely successful example of what British behavioral scientists Tom Burns and G. M. Stalker call a mechanistic organization, as opposed to an organic organization.correspondent Kathleen Deveny, reporting about a day she spent working in a McDonald's restaurant. "Anyone could do this, I think."

The Virtual Structure: An Internet-Connected Partner for a Temporary Project

"Strip away the highfalutin' talk," says one industry observer, "and at bottom the Internet is a tool that dramatically lowers the cost of communication. That means it can radically alter any industry or activity that depends heavily on the flow of information." One consequence of this is the virtual organization, an organization whose members are geographically apart, usually working with e-mail, collaborative computing, and other computer connections, while often appearing to customers and others to be a single, unified organization with a real physical location. The virtual organization allows the form of boundaryless structure known as the virtual structure, a company outside a company that is created "specifically to respond to an exceptional market opportunity that is often temporary," according to one definition. The structure, in which members meet and communicate with each other by e-mail and videoconferencing instead of face to face, is valuable for organizations that want to grow through partnerships with other companies. For instance, Finnish phone-maker Nokia, which had trouble gaining market share in the United States, changed its strategy to develop phones in partnership with U.S. carriers, as by assigning product developers to AT&T and Verizon.

Span of control

"is the number of employees who are assigned to a particular work task and manager. "

Unity of command

"means there is a clear reporting relationship for all staff of a business."

Limited Liability Company

"provides liability protection for owners"

Corporate Bylaws

"that are the operating procedures for the corporation."

Board of Directors

"the people who will make the major policy and financial decisions for the business."

Functional organizational structure

"work is arranged within main business functions such as production, operations, marketing, and human resources."

Matrix organizational structure

"work is structured around specific projects, products, or customer groups."

Market Orientation

- a firm that has market orientation focuses its efforts on 1) continuously collecting information about consumers' needs 2) sharing this information across departments 3) using it to create customer value

Need

- a need occurs when a person feels deprived of basic necessities such as food, water, and shelter

Marketing Program

- a plan that integrates the marketing mix to provide a good, service or idea to prospective buyers

Want

- a want is a need that is shaped by a person's knowledge, culture, and personality

Direct Contact

- customer's contact with the seller through buying, using, and obtaining service

Customer Experience

- foundation of customer relationship management -the internal response that customers have to all aspects of an organization and its offerings -internal response includes both the direct and indirect contacts of the customer with the company

Managing Change - Three Stages

-At the highest level, analysis of the company's environment highlights extensive change as the most effective response to its problems. -Top management begins to formulate a vision of a new company. -The firm sets up new systems for appraising and compensating employees who enforce the firm's new values.

Just-in-Time (JIT) Production

-Bringing together all needed materials only when they are required, creating fast and efficient responses to customer orders

Quality Improvement

-Building quality into products and services rather than trying to control quality by inspection

Types of Corporations (List)

-Closely Held (or Private) Corporation a corporation whose stock is held by only a few people and is not available for sale to the general public -Publicly Held (or Public) Corporation A corporation whose stock is widely held and available for sale to the general public -S Corporation a hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes -Limited Liability Corporation (LLC) hybrid of a publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability -Professional Corporation form of ownership allowing professionals to take advantage of corporate benefits while granting them limited business liability and unlimited professional liability. Mostly composed of doctors/lawyers/professionals -Multinational (or Transnational) Corporation form of corporation spanning national boundaries

Types of Strategy

-Corporate Strategy strategy for determining the firm's overall attitude toward growth and the way it will manage its businesses or product lines -Business (or Competitive) Strategy strategy, at the business-unit or product-line level, focusing on improving a firm's competitive position -Functional Strategy strategy by which managers in specific areas decide how best to achieve corporate goals through productivity

Trends in Small-Business Start-Ups

-Emergence of E-Commerce The Internet provides fundamentally new ways of doing business -Crossovers from Big Business More businesses are being started by people who have opted to leave big corporations and put their experience to work for themselves -Opportunities for Minorities and Women More small businesses are also being started by minorities and women. -Global Opportunities Many entrepreneurs are also finding new opportunities in foreign markets -Better Survival Rates Today, 44 percent of new start-ups can expect to survive for at least four years.

Basic Forms of Organizational Structure

-Functional Structure organization structure in which authority is determined by the relationships between group functions and activities -Divisional Structure organizational structure in which corporate divisions operate as autonomous businesses under the larger corporate umbrella -Matrix Structure +organizational structure created by superimposing one form of structure onto another +In some companies, the matrix organization is a temporary measure installed to complete a specific project and affecting only one part of the firm -International Organizational Structures approaches to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets

Distinctions Based on Wealth

-High-income countries. Those with annual per-capita income greater than $11,115. -Upper-middle-income countries. Those with annual per-capita income of $11,115 or less but more than $3,595. -Lower-middle-income countries. Those with annual per-capita income of $3,595 or lower but more than $905. -Low-income countries (often called developing countries). Those with annual per-capita income of $905 or less.

Forms of Authority

-Line Authority organizational structure in which authority flows in a direct chain of command from the top of the company to the bottom -Staff Authority authority based on expertise that usually involves counseling and advising line managers -Staff Members advisers and counselors who help line departments in making decisions but who do not have the authority to make final decisions -Committee and Team Authority authority granted to committees or teams involved in a firm's daily operations -Work Team groups of operating employees who are empowered to plan and organize their own work and to perform that work with a minimum of supervision

Communicating the Culture and Managing Change

-Managers themselves must have a clear understanding of the culture -Must transmit the culture to others in the organization -Should maintain the culture by rewarding and promoting those who understand it and work toward maintaining it

Kinds of Planning Schedules (4+definition)

-Master schedule: Shows which products will be produced, and when -Detailed schedule: Shows day-to-day activities -Staff schedules: Show who and how many employees will be working, and when -Project schedules: Coordinate completion of large-scale projects

Kinds of Goals

-Mission Statement organization's statement of how it will achieve its purpose in the environment in which it conducts its business -Long-Term Goal goal set for an extended time, typically five years or more into the future -Intermediate Goal goal set for a period of one to five years into the future -Short-Term Goal goal set for the very near future

Goals of the WTO

-Promote trade by encouraging members to adopt fair trade practices -Reduce trade barriers by promoting multilateral negotiations -Establish fair procedures for resolving disputes among members

Strategic Management: Setting Goals and Formulating Strategy

-Strategic Management process of helping an organization maintain an effective alignment with its environment -Strategy broad set of organizational plans for implementing the decisions made for achieving organizational goals

Materials Management Activities

-Supplier selection -Purchasing -Transportation -Warehousing -Inventory control

Basic Management Skills

-Technical Skills skills needed to perform specialized tasks -Human Relations Skills skills in understanding and getting along with people -Conceptual Skills abilities to think in the abstract, diagnose and analyze different situations, and see beyond the present situation -Decision-Making Skills skills in defining problems and selecting the best courses of action -Time Management Skills skills associated with the productive use of time

Marketing Mix

-The Four Ps -Product -Price -Promotion -Place - the marketing manager's controllable factors that can be used to solve a marketing problem

Relationship marketing

-The hallmark of developing and maintaining effective customer relationships is called relationship marketing- linking the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits -more effective when there is ongoing communication

What is the difference between a mission statement and a goal?

-a mission statement states the purpose of existence for a business and what it hopes to achieve -a goal is a more specific statement of what a business expects to achieve and may be used to measure a business records.

What are the differences between the 3 main forms of business ownership?

-business forms differ in the ways in which decision-making and investments are made and to whom liabilities are distributed.

What problems can result from the use of a functional organizational structure?

-employees in a functional organizational structure may tend to lose sight of overall corporate goals -workers tend to be limited to specific duties and may not see their relationship to the organization as a whole -this can result in lack of interest and motivation over time.

Environmental Forces

-forces that are mostly beyond the control of the marketer -social, economic, technological, competitive, and regulatory forces -may serve as accelerators or brakes on marketing (can expand or restrict an organization's marketing opportunities)

Grapevine

-informal communication network that runs through an organization -By maintaining open channels of communication and responding vigorously to inaccurate information, managers can minimize the damage the grapevine can cause.

Marketing

-marketing is the activity for creating, communicating, delivering, and exchanging offerings that benefit the organization, its stakeholders, and society at large

Span of Control

-number of people supervised by one manager -The distribution of authority in an organization also affects the number of people who work for any individual manager.

Target Market

-one or more specific groups of potential consumers toward which an organization directs its marketing program

Intrapreneuring

-process of creating and maintaining the innovation and flexibility of a small-business environment within the confines of a large organization

Delegation

-process through which a manager allocates work to subordinates 1. Assigning responsibility - the duty to perform an assigned task 2. Granting authority - the power to make the decisions necessary to complete the task 3. Creating accountability - the obligation employees have for the successful completion of the task

utility

-the benefits or consumer value received by users of the product

Which form of business ownership is the most complex and difficult to form?

-the corporation is more complex to begin than other business forms. -forming a corporation requires much more bureaucracy, s is more subject to government regulations, requires the organization of a board, and must have clearly defined bylaws.

Balance of trade

-the economic value of all the products that a country exports minus the economic value of its imported products -Positive or negative balance -A positive balance of trade results when a country exports (sells to other countries) more than it imports (buys from other countries). -A negative balance of trade results when a country imports more than it exports.

Goals

-the means by which organizations and their managers measure success or failure at every level -objective that a business hopes and plans to achieve

Corporate culture

-the shared experiences, stories, beliefs, and norms that characterize an organization -helps define the work and business climate that exists in an organization

Exchange

-the trade of things of value between buyer and seller so each is better off after the trade - exchange is key to achieving to goals of marketing 1) discover the needs and wants of customers and 2) satisfying those needs and wants

Customer Value

-the unique combination of benefits received by targeted buyers that includes quality, convenience, on-time delivery, and both before-sale and after-sale service at a specific price

Societal Marketing Concept

-the view that organizations should satisfy the needs of consumers in a way that provides for society's well-being

Reasons for Success

1 Hard work, drive, and dedication. Small-business owners must be committed to succeeding and willing to spend the time and effort to make it happen. 2 Market demand for the products or services being provided. Careful analysis of market conditions can help small-business owners assess the probable reception of their products. 3 Managerial competence. Successful owners may acquire competence through training or experience or by drawing on the expertise of others. 4 Luck.

Reasons for Failure

1 Managerial incompetence or inexperience. Some entrepreneurs put too much faith in common sense, overestimate their own managerial skills, or believe that hard work alone ensures success. 2 Neglect. Some entrepreneurs try to launch ventures in their spare time, and others devote only limited time to new businesses. But starting a small business demands an overwhelming time commitment. 3 Weak control systems. Effective control systems keep a business on track and alert managers to potential trouble. If your control systems don't signal impending problems, you may be in serious trouble before you spot more obvious difficulties. 4 Insufficient capital. Some entrepreneurs are overly optimistic about how soon they'll start earning profits. In most cases, it takes months or even years.

Leading Causes of Wasted Time

1 Paperwork. Some managers spend too much time deciding what to do with letters and reports. Most documents of this sort are routine and can be handled quickly. Managers must learn to recognize those documents that require more attention. 2 Telephone calls. Experts estimate that managers get interrupted by the telephone every five minutes. To manage this time more effectively, they suggest having an assistant screen all calls and setting aside a certain block of time each day to return the important ones. Unfortunately, the constant use of cell phones seems to be making this problem even worse for many managers. 3 Meetings. Many managers spend as much as four hours a day in meetings. To help keep this time productive, the person handling the meeting should specify a clear agenda, start on time, keep everyone focused on the agenda, and end on time. 4 E-mail. Increasingly, managers are relying heavily on e-mail and other forms of electronic communication. Time is wasted when managers have to sort through spam and a variety of electronic folders, in-boxes, and archives.

Two conditions warranting "dumping"

1) Products are being priced at "less than fair value." 2) The result unfairly harms domestic industry.

Protections:

1) The Fourth Amendment protection from unreasonable searches and seizures. 2) The Fourth Amendment requirement that no warrant for a search or an arrest be issued without probable cause. 3) The Fifth Amendment requirement that no one be deprived of "life, liberty, or property without due process of law." 4) The Fifth Amendment prohibition against double jeopardy (trying someone twice for the same criminal offense). 5) The Fifth Amendment requirement that no person be required to be a witness against (incriminate) himself or herself. 6) The Sixth Amendment guarantees of a speedy trial, a trial by jury, a public trial, the right to confront witnesses, and the right to a lawyer at various stages in some proceedings. 7) The Eighth Amendment prohibitions against excessive bail and fines and against cruel and unusual punishment.

Service operations

1. Involve interacting with consumers 2. Are sometimes intangible and unstorable 3. Involve a customer's presence in the process 4. Involve certain service quality considerations

Benefits of Just-in-Time Production

1. Reduces the number of goods in process (goods not yet finished) 2. Minimizes inventory costs 3. Reduces inventory storage space requirements 4. Replaces stop-and-go production 5. Disruptions are visible and get resolved quickly 6. Continuous improvement of the process

Management Plan

A businesses plan that divides a company into different departments run by different managers.

Organizational Chart

A chart that shows how a business is structured and who is in charge of whom

1. Clan Culture: An Employee-Focused Culture Valuing Flexibility, Not Stability

A clan culture has an internal focus and values flexibility rather than stability and control. Like a family-type organization, it encourages collaboration among employees, striving to encourage cohesion through consensus and job satisfaction and to increase commitment through employee involvement. Clan organizations devote considerable resources to hiring and developing their employees, and they view customers as partners. Southwest Airlines is a good example of a company with a clan culture. So is online shoe seller Zappos, which encourages managers to spend 10%-20% of their off-work hours with employees.

Virtual Structure

A company outside a company that is created "specifically to respond to an exceptional market opportunity that is often temporary

Corporate Criminal Liability

A corporation is a legal entity created under the laws of a state. At one time, it was thought that a corporation could not incur criminal liability because, although a corporation is a legal person, it can act only through its agents (corporate directors, officers, and employees). Therefore, the corporate entity itself could not "intend" to commit a crime. Over time, this view has changed. Obviously, corporations cannot be imprisoned, but they can be fined or denied certain legal privileges (such as necessary licenses).

Publicly Held (or Public) Corporation

A corporation whose stock is widely held and available for sale to the general public

Recklessness

A court can also find that the required mental state is present when a defendant's acts are reckless or criminally negligent. A defendant is criminally reckless if he or she consciously disregards a substantial and unjustifiable risk.

Organization Chart

A diagram that shows the structure of an organization, classifications of jobs, and the relationships among those classifications."

Phishing

A distinct form of identity theft known as phishing has added a different wrinkle to the practice. In a phishing attack, the perpetrator "fishes" for financial data and passwords from consumers by posing as a legitimate business, such as a bank or credit-card company. The "phisher" sends an e-mail asking the recipient to update or confirm vital information, often with the threat that an account or some other service will be discontinued if the information is not provided. Once the unsuspecting individual enters the information, the phisher can use it to masquerade as that person or to drain his or her bank or credit account.

The Vertical Hierarchy of Authority: Who Reports to Whom

A glance up and down an organization chart shows the vertical hierarchy, the chain of command. A formal vertical hierarchy also shows the official communication network—who talks to whom. In a simple two-person organization, the owner might communicate with just a secretary or an assistant. In a complex organization, the president talks principally to the vice presidents, who in turn talk to the assistant vice presidents, and so on.

Hacking

A hacker is someone who uses one computer to break into another. The danger posed by hackers has increased significantly because of botnets, or networks of computers that have been appropriated by hackers without the knowledge of their owners. A hacker may secretly install a program on thousands, if not millions, of personal computer "robots," or "bots," that allows him or her to forward transmissions to an even larger number of systems.

3. Heroes

A hero is a person whose accomplishments embody the values of the organization. IKEA employees are expected to work hard, inspired by an anecdote from their Swedish founder, Invar Kamprad, in his 1976 "A Furniture Dealer's Testament," in which he recounts how he was berated by his father for failing repeatedly to get out of bed to milk the cows on his family's farm. Then one day he got an alarm clock. "'Now by jiminy, I'm going to start a new life,' he determined, setting the alarm for twenty to six and removing the 'off button.'"

4. Hierarchy Culture: A Structured Culture Valuing Stability & Effectiveness

A hierarchy culture has an internal focus and values stability and control over flexibility. Companies with this kind of culture are apt to have a formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency, timeliness, and reliability in the creation and delivery of products. General Motors has been an example of a company with a hierarchical structure. So also is UPS, the delivery company.

3. Market Culture: A Competitive Culture Valuing Profits Over Employee Satisfaction

A market culture has a strong external focus and values stability and control. Because market cultures are focused on the external environment and driven by competition and a strong desire to deliver results, customers, productivity, and profits take precedence over employee development and satisfaction. Employees are expected to work hard, react fast, and deliver quality work on time; those who deliver results are rewarded. Kia Motors, which fires executives who don't meet their sales goals, is an example of a company with a very aggressive and competitive market culture.

Insanity

A person who suffers from a mental illness may be incapable of the state of mind required to commit a crime. Thus, insanity may be a defense to a criminal charge. Note that an insanity defense does not enable a person to avoid imprisonment. It simply means that if the defendant successfully proves insanity, she or he will be placed in a mental institution.

Assembly Line Layout

A same-steps layout in which a product moves step by step through a plant on conveyor belts or other equipment until it is completed.

2. Stories

A story is a narrative based on true events, which is repeated—and sometimes embellished upon—to emphasize a particular value. Stories are oral histories that are told and retold by members about incidents in the organization's history. Example: Marc Benioff is founder of cloud computing business Salesforce.com, a San Francisco company known for its great sense of social responsibility and generosity. Its spirit of philanthropy is embodied in a story called the 1-1-1 rule. "When we started the company," Benioff says, "we took 1% of our equity [stock value] and 1% of our profit and 1% of all our employees' time, and we put it into a... public charity. At the time, it was very easy because we had no profit, we had no time, we had no equity. But then, it turned out that our company is worth, you know, tens of billions of dollars." Salesforce.com also runs 10,000 nonprofits for free, doesn't charge universities for its services, and, says Benioff, delivers "hundreds of thousands of hours of community service."

1. Symbols

A symbol is an object, act, quality, or event that conveys meaning to others. In an organization, symbols convey its most important values. Example: One of the most iconic products of IKEA, maker of inexpensive home furnishings, whose vision is "to create a better life for the many," is the LACK table, a 22-inch by 22-inch side table that sells for only $9.99

Jurisdiction and Identification Challenges

A threshold issue is, of course, jurisdiction. Jurisdiction is normally based on physical geography, as discussed in Chapter 2. Each state and nation has jurisdiction, or authority, over crimes committed within its boundaries. But geographic boundaries simply do not apply in cyberspace. A person who commits an act against a business in California, where the act is a cyber crime, might never have set foot in California but might instead reside in New York, or even in Canada, where the act may not be a crime. Identifying the wrongdoer can also be difficult. Cyber criminals do not leave physical traces, such as fingerprints or DNA samples, as evidence of their crimes. Even electronic "footprints" can be hard to find and follow. For instance, e-mail may be sent through a remailer, an online service that guarantees that a message cannot be traced to its source. For these reasons, laws written to protect physical property are often difficult to apply in cyberspace. Nonetheless, governments at both the state and the federal level have taken significant steps toward controlling cyber crime. California, for instance, which has the highest identity theft rate in the nation, has established a new eCrime unit to investigate and prosecute cyber crimes. Other states, including Florida, Louisiana, and Texas, also have special law enforcement units that focus solely on Internet crimes.

Departmentalization

A way of organization that subdivides responsibilities by specific units.

Criminal Law

A wrong against society set forth in a statue and punishable by a fine and or imprisonment -- or in some cases, death. -- because crimes are offenses against society as a whole, they are prosecuted by a public official, such as a district attorney (D.A.) or an attorney general (A.G.), not by the victims. Once a crime has been reported, the D.A.'s office decides whether to file criminal charges and to what extent to pursue the prosecution or carry out additional investigation.

State of Mind

A wrongful mental state, or mens rea, also is typically required to establish criminal liability. The required mental state, or intent, is indicated in the applicable statute or law. Murder, for example, involves the guilty act of killing another human being, and the guilty mental state is the desire, or intent, to take another's life. For theft, the guilty act is the taking of another person's property. The mental state involves both the awareness that the property belongs to another and the desire to deprive the owner of it.

Which of the following cultural perspectives leads to the highest long-term financial performance? A. Adaptive perspective B. Fit perspective C. Market perspective D. Conditional perspective E. Strength perspective

A. Adaptive perspective

Which of the following is a stage in the life of an organization? A. Birth B. Decline C. Elderly D. Introduction E. Growth

A. Birth

Katsuro started a tax consulting business with his friend Carey. They have a small space in a strip mall and one administrative assistant. At which stage of the organizational life cycle is their business? A. Birth stage B. Introduction stage C. Adolescent stage D. Youth stage E. Midlife stage

A. Birth stage

______ values are the explicitly stated values and norms preferred by an organization. A. Espoused B. Inherent C. Enacted D. Expressed E. Internalized

A. Espoused

Which of the following is an example of a nonprofit organization? A. The Humane Society B. American Medical Association C. The Democratic party D. State Farm Insurance E. Teamsters Union

A. The Humane Society

Which of the following can be classified as a mutual-benefit organization? A. Trade association B. Hospital C. Financial company D. Retail company E. College

A. Trade association

Turnbull Software is a medium-sized but growing company that works diligently to create a supportive and familylike atmosphere for its employees. It provides superior benefits and involves employees in decisions large and small. Turnbull has a(n) ______ culture. A. clan B. adhocracy C. market D. hierarchy E. espoused

A. clan

Organizational ________ is concerned with devising the optimal structures of accountability and responsibility that an organization uses to execute its strategies. A. design B. structure C. life cycle D. charting E. culture

A. design

Among the jobs titles at Greensboro Regional Hospital are Chief of Medical Services, Director of Administrative Services, and Director of Outpatient Services. Greensboro has a ______ structure. A. functional B. network C. simple D. divisional E. matrix

A. functional

With a ______ structure, the organization has a central core of key functions and outsources others to vendors who can do them cheaper or faster. A. hollow B. matrix C. spine D. hybrid E. mechanistic

A. hollow

An organization that contains two command structures, and in which some people actually report to two bosses, is a ______ structure. A. matrix B. bifunctional C. team-based D. hybrid E. network

A. matrix

The obligation you have to perform the tasks assigned to you is called A. responsibility. B. accountability. C. delegation. D. authority.

A. responsibility.

Montpellier Mediterranean Designs has decided that, as part of the fashion industry, it should move to a more organic structure. Montpellier should A. simplify and eliminate rules and procedures. B. centralize authority. C. clearly define job responsibilities. D. disband teams and task forces. E. focus on improving uniformity.

A. simplify and eliminate rules and procedures.

Public relations firm Crowley Communications has a single full-time employee, Jolene Crowley, who is in charge of contracting teams to work on projects as needed. Teams are spread throughout the United States and are made up of specialists linked by computers and telecommunications equipment. This is an example of a(n) ________ organization. A. virtual B. network C. outsourced D. modular E. hollow

A. virtual

Organizational Culture: The System of Shared Beliefs & Values

According to scholar Edgar Schein, organizational culture, sometimes called corporate culture, is a system of shared beliefs and values that develops within an organization and guides the behavior of its members. This is the "social glue" that binds members of the organization together. Just as a human being has a personality—fun-loving, warm, uptight, competitive, or whatever—so an organization has a "personality," too, and that is its culture. Culture can vary considerably, with different organizations having differing emphases on risk taking, treatment of employees, teamwork, rules and regulations, conflict and criticism, and rewards. And the sources of these characteristics also vary. They may represent the strong views of the founders, of the reward systems that have been instituted, of the effects of competitors, and so on.

Define the four types of organization in the competing values framework, and describe the characteristics of each.

According to the competing values framework, organizational cultures can be classified into four types: (1) clan, (2) adhocracy, (3) market, and (4) hierarchy (see Figure 8.2). A clan culture has an internal focus and values flexibility rather than stability and control. Like a family-type organization, it encourages collaboration among employees, striving to encourage cohesion through consensus and job satisfaction through employee involvement. An adhocracy culture has an external focus and values flexibility. This type of culture attempts to create innovative products by being adaptable, creative, and quick to respond to changes in the marketplace. Employees are encouraged to take risks and experiment with new ways of getting things done. A market culture has a strong external focus and values stability and control. Because market cultures are focused on the external environment and driven by competition and a strong desire to deliver results, customers, productivity, and profits take precedence over employee development and satisfaction. A hierarchy culture has an internal focus and values stability and control over flexibility. Companies with this kind of culture are apt to have a formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency, timeliness, and reliability in the creation and delivery of products.

Purchasing

Acquisition of the materials and services that a firm needs to produce its products.

Quality Control

Action of ensuring that operations produce products that meet specific quality standards.

Make-To-Order Operations

Activities for one-of-a-kind or custom-made production.

Make-To-Stock Operations

Activities for producing standardized products for mass consumption.

Transportation

Activities in transporting resources to the producer and finished goods to customers.

Operations (Production)

Activities involved in making products, goods, and services for customers.

Service Operations (Service Production)

Activities producing intangible and tangible products, such as entertainment, transportation, and education.

Goods Operations (Goods Production)

Activities producing tangible products, such as radios, newspapers, buses, and textbooks.

Two of the most common approaches to formalizing top management commitment to ethical business practices:

Adopting written codes Instituting ethics programs

Advantages & Disadvantages of Sole Proprietorship

Advantages +Freedom +Simple to form +Low start-up costs +Tax benefits Disadvantages -Unlimited liability -Limited resources -Limited fundraising capability -Lack of continuity

Advantages & Disadvantages of Corporations

Advantages +Limited liability +Continuity +Stronger fundraising capability Disadvantages -Can be taken over against the will of its management -Double taxation of profits -Complicated and expensive to form

Advantages & Disadvantages of Partnership

Advantages +More talent and money +More fundraising capability +Relatively easy to form +Limited liability for limited partners +Tax benefits Disadvantages -Unlimited liability for general partners -Disagreements among partners -Lack of continuity

Advantages & Disadvantages of Franchising

Advantages +Proven business opportunity +Access to management expertise Disadvantages -Start-up costs -Ongoing payments -Management rules and restrictions

Total Quality Management (TQM)

All activities involved in getting high-quality goods and services into the marketplace.

When Should You Delegate & When Not? How Managers Get More Done

All managers must learn how to delegate—to assign management authority and responsibilities to people lower in the company hierarchy. But failure to delegate can happen even with high-powered executives, including those you might least suspect—such as the president of Harvard University. Dr. Neil L. Rudenstine, who became president of Harvard in 1991, initially became so exhausted from overwork that he had to stay home for 2 weeks to recover. The incident sent a message that his future survival would depend on his ability to set priorities and delegate responsibility.1 "To do more in a day, you must do less—not do everything faster," says Oakland, California, productivity expert Odette Pollar. If as a manager you find yourself often behind, always taking work home, doing your subordinates' work for them, and constantly having employees seeking your approval before they can act, you're clearly not delegating well. How do you decide when to delegate and when not to? Here are some guidelines: -Delegate Routine & Technical Matters Always try to delegate routine tasks and routine paperwork. When there are technical matters, let the experts handle them. -Delegate Tasks That Help Your Subordinates Grow Let your employees solve their own problems whenever possible. Let them try new things so they will grow in their jobs. -Don't Delegate Confidential & Personnel Matters Any tasks that are confidential or that involve the evaluation, discipline, or counseling of subordinates should never be handed off to someone else. -Don't Delegate Emergencies By definition, an emergency is a crisis for which there is little time for solution, and you should handle this yourself. -Don't Delegate Special Tasks That Your Boss Asked You to Do—Unless You Have His or Her Permission If your supervisor entrusts you with a special assignment, such as attending a particular meeting, don't delegate it unless you have permission to do so. -Match the Tasks Delegated to Your Subordinates' Skills & Abilities While recognizing that delegation involves some risk, make your assignments appropriate to the training, talent, skills, and motivation of your employees.

Total Quality Management (TQM)

All of the activities necessary for getting high-quality goods and services into the marketplace 1. Always Delivering High Quality -Planning for quality -Organizing for quality -Directing for quality -Controlling for quality

Getting the Right Fit: What Form of Organizational Structure Works Best?

All the organizational structures described in this chapter are used today because each structure has advantages that make it appropriate for some cases and disadvantages that make it not useful for others. For example, the clear roles and strict hierarchy of an extremely mechanistic organization are clearly suitable in a system valuing careful routines and checks and balances, such as a nuclear power plant. A fast-moving startup drawing on sources of expertise throughout the world may benefit from a more organic structure that lowers boundaries between functions and organizations. As for the types of organizational structures described in Section 8.5, all have their uses. Functional structures save money by grouping together people who need similar materials and equipment. Divisional structures increase employees' focus on customers and products. A matrix structure tries to combine the advances of functional and divisional structures, but it can also slow decision making. Teams can arrive at creative solutions and develop new products faster than workers in more traditional structures. Finally, network and modular structures can tap people in particular specialties.

Limited Partnership

Allows for limited partners who invest money but are liable for debts only to the extent of their investments General (or active) partners run the business

Exceptions to Miranda Rule

Although the Supreme Court's decision in the Miranda case was controversial, it has survived several attempts by Congress to overrule it. Over time, however, the Supreme Court has made a number of exceptions to the Miranda ruling. For instance, the Court has recognized a "public safety" exception that allows certain statements to be admitted even if the defendant was not given Miranda warnings. A defendant's statements that reveal the location of a weapon would be admissible under this exception. Additionally, a suspect must unequivocally and assertively ask to exercise her or his right to counsel in order to stop police questioning. Saying, "Maybe I should talk to a lawyer" during an interrogation after being taken into custody is not enough.

Mail and Wire Fraud

Among the most potent weapons against white-collar criminals are the federal laws that prohibit mail fraud and wire fraud. These laws make it a federal crime to devise any scheme that uses U.S. mail, commercial carriers (FedEx, UPS), or wire (telegraph, telephone, television, the Internet, e-mail) with the intent to defraud the public. These laws are often applied when persons send out advertisements or e-mails with the intent to fraudulently obtain cash or property by false pretenses. The maximum penalty under these statutes is substantial. Persons convicted of mail, wire, and Internet fraud may be imprisoned for up to twenty years and/ or fined. If the violation affects a financial institution or involves fraud in connection with emergency disaster-relief funds, the violator may be fined up to $1 million, imprisoned for up to thirty years, or both.

2. Adhocracy Culture: A Risk-Taking Culture Valuing Flexibility

An adhocracy culture has an external focus and values flexibility. This type of culture attempts to create innovative products by being adaptable, creative, and quick to respond to changes in the marketplace. Employees are encouraged to take risks and experiment with new ways of getting things done. Adhocracy cultures are well suited for startup companies, those in industries undergoing constant change, and those in mature industries that are in need of innovation to enhance growth. W. L. Gore is an example of a company with an adhocracy culture. So is Google, which urges engineers to spend 20% of their time on personal projects.

How does a manufacturer differ from an extractor?

An extractor takes natural resources, such as oil or timber, for direct consumption or for use in developing other products. -A manufacture takes resources supplied by others and converts them into useable products.

The Miranda Rule

An important question many courts faced in the 1950s and 1960s was not whether suspects had constitutional rights—that was not in doubt—but how and when those rights could be exercised. Could the right to be silent (under the Fifth Amendment's protection against self-incrimination) be exercised during pretrial interrogation proceedings or only during the trial? Were confessions obtained from suspects admissible in court if the suspects had not been advised of their right to remain silent and other constitutional rights? To clarity these issues, the United States Supreme Court issued a landmark decision in 1966 in Miranda v. Arizona, which we present here. Today, the procedural rights required by the Court in this case are familiar to almost every American.

Strict Liability and Overcriminalization

An increasing number of laws and regulations impose criminal sanctions for strict liability crimes. Strict liability crimes are offenses that do not require a wrongful mental state to establish criminal liability. Strict liability crimes are particularly common in environmental laws, laws aimed at combatting illegal drugs, and other laws affecting public health, safety, and welfare. Under federal law, for example, tenants can be evicted from public housing if a member of the household or a guest used illegal drugs. The eviction can occur regardless of whether the tenant knew or should have known about the drug activity.

Inside Trading

An individual who obtains "inside information" about the plans of a publicly listed corporation can often make stock-trading profits by purchasing or selling corporate securities based on this information. Insider trading is a violation of securities law. Basically, securities law prohibits a person who possesses inside information and has a duty not to disclose it to outsiders from trading on that information. A person may not profit from the purchase or sale of securities based on inside information until the information is made available to the public.

Describe the typical organization chart. What is a horizontal relationship compared to a vertical one? A solid line versus a dotted one?

An organization chart is a box-and-lines illustration showing the formal lines of authority and the organization's official positions or work specializations (see Figure 8.4). Two kinds of information that organization charts reveal about organizational structure are (1) the vertical hierarchy of authority—who reports to whom, and (2) the horizontal specialization—who specializes in what work. Line positions (authority to make decisions) are indicated on the organization chart by a solid line (usually a vertical line). Staff positions (authority functions that provide advice, recommendations, and research) are indicated on the organization chart by a dotted line (usually a horizontal line).

functional organizational structure

An organizational structure based on organizational functions, such as marketing, finance, or operations.

Line Authority

An organizational structure in which managers at the top of the line are in charge of those beneath them.

divisional organizational structure

An organizational structure that groups activities in terms of distinct product or service groups.

matrix organizational structure

An organizational structure that is a combination of two structures and imposes one type of structure on top of one another.

international organizational structure

An organizational structure that looks to address the need to manufacture, purchase, and sell in the global market; acquire resources and produce and sell products in local markets without consideration for national boundary.

Foreign Direct Investment (FDI)

Arrangement in which a firm buys or establishes tangible assets in another country

Criminal Process

As mentioned earlier in this chapter, a criminal prosecution differs significantly from a civil case in several respects. These differences reflect the desire to safe-guard the rights of the individual against the state. Exhibit 7-3 below summarizes the major steps in processing a criminal case. We now discuss three phases of the criminal process—arrest, indictment or information, and trial—in more detail.

Steps in Criminal Case: Trial

At a criminal trial, the accused person does not have to prove anything. The entire burden of proof is on the prosecutor (the state). As mentioned earlier, the prosecution must show that, based on all the evidence, the defendant's guilt is established beyond a reasonable doubt. If there is reasonable doubt as to whether a criminal defendant committed the crime with which she or he has been charged, then the verdict must be "not guilty." A verdict of "not guilty" is not the same as stating that the defendant is innocent. It merely means that not enough evidence was properly presented to the court to prove guilt beyond a reasonable doubt. Courts have complex rules about what types of evidence may be presented and how the evidence may be brought out in criminal cases, especially in jury trials. These rules are designed to ensure that evidence presented at trials is relevant, reliable, and not prejudicial toward the defendant.

Decentralized Organization

Authority lies with several managers.

Accountability

Authority means accountability—managers must report and justify work results to the managers above them. Being accountable means you have the responsibility for performing assigned tasks.

Authority

Authority refers to the rights inherent in a managerial position to make decisions, give orders, and utilize resources. (Authority is distinguished from power, which, as we discuss in Chapter 14, is the extent to which a person is able to influence others so they respond to orders.) In the military, of course, orders are given with the expectation that they will be obeyed, disobedience making one liable to a dishonorable discharge or imprisonment. In civilian organizations, disobeying orders may lead to less dire consequences (demotion or firing), but subordinates are still expected to accept that a higher level manager has a legitimate right to issue orders.

__________ means that managers must report and justify work results to managers above them. A. Liability B. Accountability C. Delegation D. Hierarchical control E. Position power

B. Accountability

Which of the following is not one of the mechanisms used to embed culture into an organization? A. Slogans or sayings. B. Accounting practices. C. Leader reactions to crisis. D. Titles or bonuses. E. Organizational structure.

B. Accounting practices.

Which of the following is an example of an observable artifact of organizational culture? A. Mission statements B. Awards ceremonies C. Basic assumptions D. Codes of ethics E. Core beliefs

B. Awards ceremonies

Which of the following is a characteristic of a simple structure? A. Comprehensive set of rules. B. Centralized authority. C. High work specialization. D. Extensive division of labor. E. Tall hierarchy.

B. Centralized authority.

The "HP Way" at Hewlett-Packard fostered a culture of integrity, teamwork, and innovation that complemented the high-technology industry of the time. This is an example of which perspective? A. Strength perspective B. Fit perspective C. Match perspective D. Conditional perspective E. Adaptive perspective

B. Fit perspective

Xerox Corporation is currently in what stage of its organizational life cycle? A. Decline stage B. Maturity stage C. Adolescent stage D. Youth stage E. Adult stage

B. Maturity stage

According to productivity expert Odette Pollar, which of the following should a manager delegate? A. Emergencies. B. Tasks that challenge subordinates. C. Special tasks your boss has asked you to do. D. Personnel matters. E. Confidential matters.

B. Tasks that challenge subordinates.

Which of the following is an example of a mutual-benefit organization? A. Federal Bureau of Investigation B. United Steelworkers of America union C. University of California at Berkeley D. U.S. Postal Service E. Public Broadcasting System

B. United Steelworkers of America union

Rashid has examined the environment in which his organization operates and has determined that currently the market demands an organic and integrated structure. Rashid did this as part of his A. environmental analysis. B. contingency design. C. life-cycle analysis. D. diversification plan. E. integration plan.

B. contingency design.

Technical specialization and division of labor in an organization lead to ________ in an organization. A. bureaucracy B. differentiation C. integration D. conglomeration E. decentralization

B. differentiation

The arrangement of having discrete parts of a task done by different people is called an organization's A. coordinated effort. B. division of labor. C. span of control. D. chain of command. E. matrix structure.

B. division of labor.

Southwest Airlines employees all know about when CEO Herb Kelleher visited one of the airline's hangars in the middle of the night in a dress with a purple boa—just to liven things up. In fact, this is part of Southwest's history. This is an example of using a ________ to impart organizational culture. A. myth B. story C. ritual D. rite E. value

B. story

Level 3: Basic Assumptions—Core Values of the Organization

Basic assumptions, which are not observable, represent the core beliefs that employees have about their organization—those that are taken for granted and, as a result, are difficult to change. Example: At insurance giant AIG, people worked so hard that the joke around the offices was "Thank heavens it's Friday, because that means there are only two more working days until Monday." Another example: When Peter Swinburn took over in 2008 as CEO of Molson Coors, headquartered jointly in Denver and Montreal, the company had grown into one of the world's largest breweries through a process of 10 acquisitions and joint ventures during the preceding decade. "The challenge was getting a staff of 15,000 workers on three continents to think as one," says one account. "There were different languages and work practices." Swinburn came up with an unofficial motto—"Challenge the expected"—that he hoped would motivate employees to think outside their roles. One survey found that 87% of employees said the company had a "clear vision for the future" in 2009, up from 73% in 2008.

Steps in Criminal Case: Arrest

Before a warrant for arrest can be issued, there must be probable cause to believe that the individual in question has committed a crime. As discussed earlier in this chapter, probable cause can be defined as a substantial likelihood that the person has committed or is about to commit a crime. Note that probable cause involves a likelihood, not just a possibility. Arrests can be made without a warrant if there is no time to get one, but the action of the arresting officer is still judged by the standard of probable cause.

Malware

Botnets are one of the latest forms of malware, a term that refers to any program that is harmful to a computer or, by extension, a computer user. A worm, for example, is a software program that is capable of reproducing itself as it spreads from one computer to the next. --> Virus: A virus, another form of malware, is also able to reproduce itself, but must be attached to an "infested" host file to travel from one computer network to another. For instance, hackers are now capable of corrupting banner ads that use Adobe's Flash Player. When an Internet user clicks on the banner ad, a virus is installed. Worms and viruses can be programmed to perform a number of functions, such as prompting host computers to continually "crash" and reboot, or otherwise infect the system. (For a discussion of how malware is now affecting smartphones, see this chapter's Insight into the Global Environment feature.)

Service Business

Businesses that complete activities that are consumed by customers rather than offering products for sale."

The Law of Demand

Buyers will purchase (demand) more of a product as its price drops and less of a product as its price increases

The law of demand

Buyers will purchase (demand) more of a product as its price drops and less of a product as its price increases

Starting a Small Business

Buying an Existing Business Franchising Starting from Scratch

Which of the following is not a description of organizational culture? A. A system of shared beliefs and values. B. "Social glue" binding members together. C. A system of reporting relationships. D. An organization's personality. E. A system that guides the behavior of organizational members.

C. A system of reporting relationships.

Which of the following is a consequence of decentralized authority? A. Greater uniformity B. Decreased efficiency C. Greater flexibility D. Slower decisions E. Decreased duplication of work

C. Greater flexibility

Elizabeth works with the gaming production team at her job, so the leader of that group often assigns her work, but she also has a boss in the marketing department. Which of the following is most likely true? A. There is likely to be a lack of common purpose among her managers. B. Her workplace has too much division of labor. C. Her work arrangement violates the unity of command principle. D. Because of her cross-functional team, her work can be done without coordinated effort. E. Her production team leader has too wide a span of control.

C. Her work arrangement violates the unity of command principle.

Which of the following statements is good advice for those transitioning upward in an organization? A. Don't try to manage upward or sideways. B. Invent your own kind of management style. C. Maintain good relationships with other departments. D. Enjoy the solitude of upper management positions. E. Focus on the rights and privileges of your new job.

C. Maintain good relationships with other departments.

At which stage of the organizational life cycles does lack of flexibility and innovation become the danger to the business? A. Adult stage B. Birth stage C. Maturity stage D. Adolescent stage E. Youth stage

C. Maturity stage

Which of the following is not a device through which culture is typically transmitted to employees? A. Symbols B. Stories C. Strategic plan D. Heroes E. Rites and rituals

C. Strategic plan

Which of the following is the way culture becomes embedded in an organization? A. Writing a strategic plan. B. Performing competitive analysis. C. Using a teaching process. D. Conducting formal market research. E. Following legal requirements.

C. Using a teaching process.

In what stage of the organizational life cycle does a firm increase its hiring, create some division of labor, and begin setting rules? A. Midlife B. Maturity C. Youth D. Growth E. Birth

C. Youth

Digital Globe is a technology company that provides advanced, high-resolution satellite pictures of the earth, digitalized for electronic use. As the military, governments, and others demand clear pictures, Digital Globe provides them immediately with its innovative and responsive products. Digital Globe is most likely an example of a(n) ______ culture. A. inventive B. clan C. adhocracy D. market E. hierarchy

C. adhocracy

At Caldwell Organic Grocers, all purchasing, hiring, and production decisions are made by top management. Caldwell has ______ authority. A. classical B. wide C. centralized D. for-profit E. matrix

C. centralized

The process of assigning meaningful authority and responsibility to managers and employees lower in the hierarchy is called A. designation. B. accountability. C. delegation. D. execution. E. allocation.

C. delegation.

Among the organizational cultures thought to enhance business performance, the ______ perspective assumes that the strength of a corporate culture is related to a firm's long-term financial performance. A. market B. strength C. fit D. objective E. adaptive

C. fit

An organization's ______ is a control mechanism for making sure the right people do the right things at the right time. A. central command B. division of labor C. hierarchy of authority D. span of control E. strategic plan

C. hierarchy of authority

At Harvestar Farm Equipment, specialists from marketing, manufacturing, and engineering departments work closely together in cross-functional teams on new professional planting and harvesting equipment designs. Harvestar is an example of a ______ organization. A. highly differentiated B. centralized C. highly integrated D. mechanistic E. bureaucratic

C. highly integrated

Galen is temporarily working with a group with membership from different departments in his company on a special project, yet he still has all of responsibilities of his regular job and still reports to the same manager. This is an example of A. matrix structure. B. work dispersion. C. horizontal design. D. hybrid workgroups. E. network clustering.

C. horizontal design.

A formal chain of command, standardization of rules and procedures, and use of cross-functional teams enhance an organization's A. assimilation. B. differentiation. C. integration. D. decentralization. E. centralization.

C. integration.

Rorschach Composites has precise requirements and very detailed procedures for creating small machine parts through an injection molding process. Because of the sensitive processes, employees are tightly monitored. Rorschach is a(n) ______ organization. A. hybrid B. integrated C. mechanistic D. flat E. organic

C. mechanistic

A system of consciously coordinated activities or forces of two or more people is known as a(n) A. operation. B. culture. C. organization. D. structure. E. adhocracy.

C. organization.

In a functional structure, people with ______ are grouped together. A. similar levels of authority B. temporary jobs on the same project C. similar occupational specialties D. jobs related to similar products E. jobs in the same geographic region

C. similar occupational specialties

On an organizational chart, a dotted line typically indicates a(n) A. outside company. B. line position. C. staff position. D. temporary employee. E. nonmanagerial employee.

C. staff position.

In an organic organization, A. authority is centralized. B. bureaucracy is essential. C. the need to respond to unexpected tasks is common. D. many rules and procedures exist. E. success is possible only when the environment is stable. In an organic organization, authority is decentralized, there are fewer rules and procedure

C. the need to respond to unexpected tasks is common.

Follow-up

Checking to ensure that production decisions are being implemented; critical, ongoing facet of operations

Cooperatives

Combine the freedom of sole proprietorships with the financial power of corporations Groups of sole proprietorships or partnerships agree to work together for their common benefit Mostly agricultural

Credit Card Numbers

Companies take risks by storing their online customers' credit-card numbers. Although the consumer can make a purchase more quickly without entering a lengthy card number, the electronic warehouses that store the numbers are targets for cyber thieves. Stolen credit-card numbers are much more likely to hurt merchants and credit-card issuers (such as banks) than consumers. In most situations, the legitimate holders of credit cards are not held responsible for the costs of purchases made with a stolen number.

Liabilities of the Corporate Officers and Directors

Corporate directors and officers are personally liable for the crimes they commit, regardless of whether the crimes were committed for their private benefit or on the corporation's behalf. Additionally, corporate directors and officers may be held liable for the actions of employees under their supervision. Under the responsible corporate officer doctrine, a court may impose criminal liability on a corporate officer who participated in, directed, or merely knew about a given criminal violation.

intrapreneuring

Creating and maintaining the innovation and flexibility of a small business within the confines of a large, bureaucratic structure.

White Collar Crime

Crimes occurring in the business context are popularly referred to as white-collar crimes, although this is not an official legal term. Ordinarily, white-collar crime involves an illegal act or series of acts committed by an individual or business entity using some nonviolent means to obtain a personal or business advantage. Usually, this kind of crime takes place in the course of a legitimate business occupation. Corporate crimes fall into this category. Certain property crimes, such as larceny and forgery, may also be white-collar crimes if they occur within the business context. The crimes discussed next normally occur only in the business context.

Criminal Procedures

Criminal law brings the force of the state, with all of its resources, to bear against the individual. Criminal procedures are designed to protect the constitutional rights of individuals and to prevent the arbitrary use of power on the part of the government. The U.S. Constitution provides specific safeguards for those accused of crimes. The United States Supreme Court has ruled that most of these safeguards apply not only in federal court but also in state courts by virtue of the due process clause of the Fourteenth Amendment. These protections include the following:

Criminal Negligence

Criminal negligence involves the mental state in which the defendant takes an unjustified, substantial, and foreseeable risk that results in harm. A defendant can negligent even if she or he was not actually aware of the risk but should have been aware of it. A homicide is classified as involuntary manslaughter when it results from an act of criminal negligence and there is no intent to kill.

The Importance of Culture

Culture can powerfully shape an organization's long-term success. For example, a recent study summarized 25 years of research on the relationship between organizational culture and various measures of organizational effectiveness. Results revealed that companies with clan, adhocracy, and market cultures had significantly higher levels of employee job satisfaction, innovation, and quality of products and services. Organizations with market cultures also reported higher profits and financial growth.

Customer Divisions: Grouping by Common Customers or Clients

Customer divisions tend to group activities around common customers or clients. Examples: Ford Motor Co. has separate divisions for passenger car dealers, for large trucking customers, and for farm products customers. A savings and loan might be structured with divisions for making consumer loans, mortgage loans, business loans, and agricultural loans.

Major Corporate Stakeholders

Customers Employees Investors Suppliers Local communities where they do business

Stakeholder Model of Responsibility

Customers- Treat customers fairly and honestly Employees- Treat employees fairly and respect their dignity and basic human needs Investors- Follow proper accounting procedures; provide information to shareholders about financial performance Suppliers- Create mutually beneficial partnership arrangements with suppliers Local and International Communities- Involvement in programs and charities

Prosecuting Cyber Crime

Cyber crime has raised new issues in the investigation of crimes and the prosecution of offenders. Determining the "location" of a cyber crime and identifying a criminal in cyberspace present significant challenges for law enforcement.

Employment Fraud

Cyber criminals also look for victims at online job-posting sites. Claiming to be an employment officer in a well-known company the criminal sends bogus e-mail messages to job seekers. The messages ask the unsuspecting job seekers to reveal enough information to allow for identity theft. As the unemployment rate has remained high, cyber criminals have found many opportunities for employment fraud.

Cyberterrorism

Cyberterrorists, as well as hackers, may target businesses. The goals of a hacking operation might include a wholesale theft of data, such as a merchant's customer files, or the monitoring of a computer to discover a business firm's plans and transactions. A cyberterrorist might also want to insert false codes or data. For instance, the processing control system of a food manufacturer could be changed to alter the levels of ingredients so that consumers of the food would become ill. A cyberterrorist attack on a major financial institution, such as the New York Stock Exchange or a large bank, could leave securities or money markets in flux and seriously affect the daily lives of millions of citizens. Similarly, any prolonged disruption of computer, cable, satellite, or telecommunications systems due to the actions of expert hackers would have serious repercussions on business operations—and national security—on a global level.

Which of the following is a good reason to avoid delegating tasks? A. A wish to keep subordinates from taking risks. B. To avoid making subordinates deal with a difficult client. C. A desire to keep an enjoyable part of the job. D. A fear that sensitive personnel matters will not be kept private. E. A concern that subordinates could do a better job.

D. A fear that sensitive personnel matters will not be kept private.

The competing values framework classifies organizational cultures into which of the following? A. Stable, flexible, and laddered cultures. B. Observable, flexible, competitive, and driven cultures. C. Symbolic, heroic, and basic cultures. D. Clan, adhocracy, market, and hierarchy cultures. E. Observable, espoused, and core cultures.

D. Clan, adhocracy, market, and hierarchy cultures.

Goodwill Industries, a charity that provides training and employment services to the disabled, is which type of organization? A. Clan B. For-profit C. Mutual-benefit D. Nonprofit E. Market

D. Nonprofit

Good job design requires matching the level of responsibility to the level of A. liability. B. dependability. C. delegation. D. authority. E. position power.

D. authority.

Hollow, modular, and virtual structures lead to a ________ organization. A. functional B. network C. simplistic D. boundaryless E. matrix

D. boundaryless

Management at the De la Garza Recreational Products has recognized that the firm is much slower than the competition at getting new designs to market. The problem seems to stem from coordination problems between the various functional departments involved in the recreational vehicle design process. De la Garza should A. improve technical training for employees. B. formalize the division of labor. C. relax its rules and procedures. D. create cross-functional teams for development. E. cancel all social events for employees.

D. create cross-functional teams for development.

Hiromi started a new job with a growing consulting firm and was surprised to find that most employees had no job titles. A coworker explained that the founders wanted to create a level playing field, allowing motivated employees to seek leadership roles on a project-by-project basis. No job titles, here, is an example of A. stabilizing structure. B. measuring activities. C. increasing accountability. D. embedding culture. E. reinforcing hierarchy.

D. embedding culture.

The Federal Reserve Bank has 12 separate districts around the United States, which means it is using ______ in its organizational structure. A. functional constituencies B. locality divisions C. site networks D. geographic divisions E. matrix regions

D. geographic divisions

A Ritz-Carlton beach attendant who surprised a couple with flowers, candles, and champagne for the man's proposal was able to transmit the culture of the luxury hotel to other employees, so he would be considered a A. champion. B. key employee. C. potential manager. D. hero. E. superior.

D. hero.

Kia Motors takes a very aggressive stance to fire executives who don't meet sales goals, which makes the company an example of a(n) ______ culture. A. clan B. target-driven C. adhocracy D. market E. hierarchy

D. market

Arnos Engineering has a functional structure throughout the company but also has a second chain of command based on the part of the United States where one works. This organization has a ______ structure. A. bifunctional B. hybrid C. network D. matrix E. team-based

D. matrix

In a ______ structure, a firm assembles portions of product provided by outside contractors. A. compilation B. network C. outsourced D. modular E. hollow

D. modular

Information-technology companies such as Motorola favor a(n) ______ structure because they constantly have to adjust to technological change. A. mechanistic B. bureaucratic C. formalized D. organic E. tall

D. organic

The activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's life are known as A. myths. B. stories. C. conventions. D. rites and rituals. E. values.

D. rites and rituals.

According to Lawrence and Lorsch, the ______ determine(s) the degree of differentiation or integration that is appropriate. A. resources available to an organization B. governmental pressures on an organization C. organization's culture D. stability of an organization's environment E. size of the organization

D. stability of an organization's environment

In a mechanistic organization, A. most communication is informal. B. many teams and task forces are operating simultaneously. C. authority is decentralized. D. tasks and rules are clearly specified. E. employees are joined through technology.

D. tasks and rules are clearly specified.

Another term for the chain of command within an organization, as represented on an organizational chart, is A. reporting linkage. B. span of control. C. horizontal specialization. D. vertical hierarchy. E. network structure.

D. vertical hierarchy.

Information Resources

Data and other information used by businesses, play a major role. Rely on including market forecasts, the specialized knowledge of people, and economic data

Delegation

Delegation is the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy. To be more efficient, most managers are expected to delegate as much of their work as possible. However, a business entrepreneur may fall into the common trap of perfection, believing, as one writer puts it, that "you are the only person who can handle a given situation, work with a special client, design a program." But a surprising number of managers fail to realize that delegation is an important part of their job.

customer departmentalization

Departmentalization based on customer types or customer groups.

geographic departmentalization

Departmentalization based on geographic areas.

process departmentalization

Departmentalization based on production processes used to create goods and services.

functional departmentalization

Departmentalization based on the functions or activities of the specialized job.

product departmentalization

Departmentalization based on the functions or activities of the specialized job.

Differentiation: When Forces Push the Organization Apart

Differentiation is the tendency of the parts of an organization to disperse and fragment. The more subunits into which an organization breaks down, the more highly differentiated it is. This impulse toward dispersal arises because of technical specialization and division of labor. As a result, specialists behave in specific, delimited ways, without coordinating with other parts of the organization. For example, a company producing dental floss, deodorants, and other personal care products might have different product divisions, each with its own production facility and sales staff—a quite differentiated organization.

3. Division of Labor: Work Specialization for Greater Efficiency

Division of labor, also known as work specialization, is the arrangement of having discrete parts of a task done by different people. Even a two-person crew operating a fishing boat probably has some work specialization—one steers the boat, the other works the nets. With division of labor, an organization can parcel out the entire complex work effort to be performed by specialists, resulting in greater efficiency.

Business plan

Document in which the entrepreneur describes her or his business strategy for the new venture and demonstrates how it will be implemented

Duress

Duress exists when the wrongful threat of one person induces another person to perform an act that he or she would not otherwise have performed. In such a situation, duress is said to negate the mental state necessary to commit a crime because the defendant was forced or compelled to commit the act. Duress can be used as a defense to most crimes except murder. Both the definition of duress and the types of crimes that it can excuse vary among the states, however. Generally, to successfully assert duress as a defense, the defendant must reasonably have believed that he or she was in immediate danger, and the jury (or judge) must conclude that the defendant's belief was reasonable.

What cultural perspective assumes that the most effective cultures help organizations anticipate and adapt to environmental changes? A. Strength perspective B. Fit perspective C. Adjustment perspective D. Conditional perspective E. Adaptive perspective

E. Adaptive perspective

Hard-working people at insurance giant AIG joked that "thank heavens it's Friday because that means there are only two more working days until Monday." This is characteristic of which layer of organizational culture? A. Enacted norms B. Invisible artifacts C. Symbolic culture D. Heroic mores E. Basic assumptions

E. Basic assumptions

Which type of culture has an internal focus and values stability and control over flexibility? A. Clan B. Adhocracy C. Market D. Classical E. Hierarchy

E. Hierarchy

Among the functions of organizational ________ are that it gives members an organizational identity and it promotes social-system stability. A. design B. structure C. life cycle D. charting E. culture

E. culture

Durant Security operates across Florida and Georgia with a variety of products and services. It has a unit located in Tampa that provides home security to its clients, and another unit in Atlanta that provides security for businesses, in particular banks and high-technology firms. This is a ______ structure. A. functional B. simple C. geographic divisional D. matrix E. customer divisional

E. customer divisional

Jennifer's staff enjoys working for her but thinks she is a perfectionist. She often thinks that she is the only one who can handle her division's difficult clients or handle some of the most sensitive issues, so she frequently has problems with A. responsibility. B. allocation. C. accountability. D. authority. E. delegation.

E. delegation

Although managers may wish to affect employees with explicitly stated values, they are frequently more influenced by ______ ones. A. subversive B. expressed C. espoused D. adopted E. enacted

E. enacted

Fonseca Construction Supply has product divisions for lumber, hardware, electrical supplies, and plumbing supplies. Each has its own production facility and sales staff. Fonseca is A. tightly integrated. B. bureaucratic. C. functionally organized. D. a matrix organization. E. highly differentiated.

E. highly differentiated.

A supervisor of an assembly line has 45 employees that report to her; this would be considered a(n) ______ span of control. A. unsustainable B. tall C. deep D. complex E. wide

E. wide

Entrapment

Entrapment is a defense designed to prevent police officers or other government agents from enticing persons to commit crimes in order to later prosecute them for those crimes. In the typical entrapment case, an undercover agent suggests that a crime be committed and somehow pressures or induces an individual to commit it. The agent then arrests the individual for the crime. For entrapment to be considered a defense, both the suggestion and the inducement must take place. The defense is not intended to prevent law enforcement agents from setting a trap for an unwary criminal. Rather, its purpose is to prevent them from pushing the individual into a criminal act. The crucial issue is whether the person who committed a crime was predisposed to commit the illegal act or did so only because the agent induced it.

Level 2: Espoused Values—Explicitly Stated Values & Norms

Espoused values are the explicitly stated values and norms preferred by an organization, as may be put forth by the firm's founder or top managers. For example, the founders of technology company Hewlett-Packard stressed the "HP Way," a collegial, egalitarian culture that gave as much authority and job security to employees as possible. Although managers may hope the values they espouse will directly influence employee behavior, employees don't always "walk the talk," frequently being more influenced by enacted values, which represent the values and norms actually exhibited in the organization. Thus, for example, an international corporation hung signs throughout the hallways of its headquarters proclaiming that "trust" was one of its driving principles (espoused value), yet had a policy of searching employees' belongings each time they entered or exited the building (enacted value)

The Criminal Act

Every criminal statute prohibits certain behavior. Most crimes require an act of commission—that is, a person must do something in order to be accused of a crime. In criminal law, a prohibited act is referred to as the actus reus, or guilty act. In some instances, an act of omission can be a crime, but only when a person has a legal duty to perform the omitted act, such as filing a tax return. The guilty act requirement is based on one of the premises of criminal law—that a person should be punished for harm done to society. For a crime to exist, the guilty act must cause some harm to a person or to property. Thinking about killing someone or about stealing a car may be morally wrong, but the thoughts do no harm until they are translated into action. Of course, a person can be punished for attempting murder or robbery, but normally only if he or she has taken substantial steps toward the criminal objective. Additionally, the person must have specifically intended to commit the crime to be convicted of an attempt.

informal organization

Everyday social interactions among employees that transcend formal jobs and job interrelationships, may alter formal structure.

Mistake

Everyone has heard the saying "Ignorance of the law is no excuse." Ordinarily, ignorance of the law or a mistaken idea about what the law requires is not a valid defense. A mistake of fact, however, as opposed to a mistake of law, can excuse criminal responsibility if it negates the mental state necessary to commit a crime.

A ritual is a narrative based on true events, which is repeated and sometimes embellished upon to emphasize a particular value of an organization

FALSE

Allowing business-casual dress in the workplace is an example of the espoused values portion of organizational culture

FALSE

An organization is said to be flat when there are only a few levels with wide spans of control.

FALSE

An organization with different groupings of people based on its products, customers, or geographic regions has a functional structure

FALSE

Business founders and subsequent managers primarily use power and coercion to embed the culture into the organization

FALSE

Companies that must respond to fast-changing customer tastes often favor a mechanistic structure to an organic one

FALSE

Corporate culture is as also known as organizational structure

FALSE

Director of accounting is an example of a staff position

FALSE

Espoused values represent the values and norms actually exhibited in the organization

FALSE

Horizontally on an organizational chart are the various companies outside of the firm, such as suppliers and distributors

FALSE

If a marketing person reports to both the vice president of marketing and also to the project manager for the Ford Mustang, she works in a network organization.

FALSE

If your boss asked you to take care of a task, productivity expert Odette Pollar says it is still OK to delegate it

FALSE

Lawrence and Lorsch's term for the tendency of an organization's parts to disperse and fragment is dissolution

FALSE

One advantage of decentralized organizations is that procedures are uniform and thus easier to control

FALSE

Only for-profit organizations can be meaningfully represented by an organization chart

FALSE

Sharing stories, legends, or myths are good ways to develop an organizational structure

FALSE

Sometimes an organizational structure can be strong enough to take the place of organizational culture

FALSE

The division of labor means that an employee should report to no more than one manager

FALSE

The first stage of in an organization's life cycle is known as the creation stage

FALSE

The fit perspective assumes that the most effective cultures help organizations anticipate and adapt to environmental changes

FALSE

The four stages of organization life cycle include birth, growth, stability, and maturity

FALSE

The functional structure is the most typical type for small firms

FALSE

The hierarchy of authority, or who reports to whom, is shown with horizontal lines on an organization chart.

FALSE

The pink Cadillac that Mary Kay presents to the best salespeople of its cosmetic line is an example of an emblem

FALSE

The process of fitting the organization to its environment is called incidental design

FALSE

The customs, values, and demographic characteristics of the society in which an organization functions are the principal elements of the political-legal environment. True or false

False

The technological environment includes only electronics and telecommunications used to perform business activities. True or false

False

Bankruptcy Fraud

Federal bankruptcy law allows individuals and businesses to be relieved of oppressive debt through bankruptcy proceedings. Numerous white-collar crimes may be committed during the many phases of a bankruptcy action. A creditor may file a false claim against the debtor, which is a crime. Also, a debtor may fraudulently transfer assets to favored parties before or after the petition for bankruptcy is filed. For instance, a company-owned automobile may be "sold" at a bargain price to a trusted friend or relative. Closely related to the crime of fraudulent transfer of property is the crime of fraudulent concealment of property, such as the hiding of gold coins.

Unity of Command

Finally, a principle stressed by early management scholars was that of unity of command, in which an employee should report to no more than one manager in order to avoid conflicting priorities and demands. Today, however, with advances in computer technology and networks, there are circumstances in which it makes sense for a person to communicate with more than one manager (as is true, for instance, with the organizational structure known as the matrix structure, as we'll describe).

GDP Per Capita

GDP per capita means GDP per individual person. We get this figure by dividing total GDP ($16.77 trillion) by total population, which happens to be a bit over about 322 million.

Geographic Divisions: Grouping by Regional Location

Geographic divisions group activities around defined regional locations. Example: This arrangement is frequently used by government agencies. The Federal Reserve Bank, for instance, has 12 separate districts around the United States. The Internal Revenue Service also has several districts.

The Contemporary Global Economy

Governments and businesses are more aware of the benefits of globalization to businesses and shareholders New technologies have made international travel, communication, and commerce faster and cheaper than ever Sometimes a firm must expand into foreign markets simply to keep up with competitors

Public Order Crime

Historically, societies have always outlawed activities that are considered contrary to public values and morals. Today, the most common public order crimes include public drunkenness, prostitution, gambling, and illegal drug use. These crimes are sometimes referred to as victimless crimes because they normally harm only the offender. From a broader perspective, however, they are deemed detrimental to society as a whole because they may create an environment that gives rise to property and violent crimes.

Burden of Proof

In a civil case, the plaintiff usually must prove his or her case by a preponderance of the evidence. Under this standard, the plaintiff must convince the court that based on the evidence presented by both parties, it is more likely than not that the plaintiff's allegation is true. In a criminal case, in contrast, the state must prove its case beyond a reasonable doubt. If the jury views the evidence in the case as reasonably permitting either a guilty or a not guilty verdict, then the jury's verdict must be not guilty. In other words, the government (prosecutor) must prove beyond a reasonable doubt that the defendant has committed every essential element of the offense with which she or he is charged. If the jurors are not convinced of the defendant's guilt beyond a reasonable doubt, they must find the defendant not guilty. Note also that in a criminal case, the jury's verdict normally must be unanimous—agreed to by all members of the jury—to convict the defendant.Footnote (In a civil trial by jury, in contrast, typically only three-fourths of the jurors need to agree.)

Organic Organizations: When Looseness & Flexibility Work Best

In an organic organization, authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks. Tom Peters and Robert Waterman called this kind of organization a "loose" structure. Organic organizations are sometimes termed adhocracies because they operate on an ad hoc basis, improvising as they go along. As you might expect, information-technology companies such as Motorola favor the organic arrangement because they constantly have to adjust to technological change—yet so do companies that need to respond to fast-changing consumer tastes, such as clothing retailer The Worth Collection, which operates as a virtual company offering high-end women's clothing through direct selling in people's homes.

Cyber Theft

In cyberspace, thieves are not subject to the physical limitations of the "real" world. A thief can steal data stored in a networked computer with Internet access from anywhere on the globe. Only the speed of the connection and the thief's computer equipment limit the quantity of data that can be stolen.

Civil Liability

In the event of a RICO violation, the government can seek civil penalties. The government can seek the divestiture of a defendant's interest in a business or the dissolution of the business. (Divestiture refers to the taking of possession—or forfeiture—of the defendant's interest and its subsequent sale.) Moreover, in some cases, the statute allows private individuals to sue violators and potentially recover three times their actual losses (treble damages), plus attorneys' fees, for business injuries caused by a RICO violation. This is perhaps the most controversial aspect of RICO and one that continues to cause debate in the nation's federal courts. The prospect of receiving treble damages in civil RICO lawsuits has given plaintiffs a financial incentive to pursue businesses and employers for violations.

The Hollow Structure: Operating with a Central Core to Outside Firms & Outsourcing Functions to Outside Vendors

In the hollow structure, often called the network structure, the organization has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster. A company with a hollow structure might retain such important core processes as design or marketing and outsource most other processes, such as human resources, warehousing, or distribution, thereby seeming to "hollow out" the organization. Example: A firm with a hollow structure might operate with extensive, even worldwide operations, yet its basic core could remain small, thus keeping payrolls and overhead down. The glue that holds everything together is information technology, along with strategic alliances and contractual arrangements with supplier companies.

Stage 4. The Maturity Stage—Very Bureaucratic

In the maturity stage, the organization becomes very bureaucratic, large, and mechanistic. The danger at this point is lack of flexibility and innovation. After Jobs was fired in a boardroom struggle in 1985, Apple entered a period in which it seemed to lose its way, having trouble developing successful products and getting them to market. Scully, who emphasized the wrong technology (a "personal data assistant" called Newton, which failed to establish a following), was followed by two more CEOs who were unable to arrest the company's declining market share. In 1997, Jobs was brought back as a "temporary" chairman, and Apple began an unprecedented era of innovation and profitability. Employees who were present during birth and youth stages may long for the good old days of informality and fewer rules as the organization moves toward more formalized and bureaucratic structures. Whereas clearly some organizations jump the gun and institute such structures before they are appropriate, some expanding companies in effect never grow up, holding onto the prebureaucratic way of life for too long, hindering their ability to deliver goods or services efficiently in relation to their size.

Stage 3. The Midlife Stage—Bureaucratic

In the midlife stage, the organization becomes bureaucratic, a period of growth evolving into stability. Now the organization has a formalized bureaucratic structure, staffs of specialists, decentralization of functional divisions, and many rules. In the 1980s, Apple Computer became a large company with many of these attributes. In 1983, Pepsi-Cola marketer John Scully was hired as a professional top manager. Jobs became chairman. Wozniak left the company.

Stage 2. The Youth Stage—Prebureaucratic

In the youth stage, the organization is in a prebureaucratic stage, a stage of growth and expansion. Now the company has a product that is making headway in the marketplace, people are being added to the payroll (more clerical than professional), and some division of labor and setting of rules are being instituted. For Apple Computer, this stage occurred during the years 1978 to 1981, with the establishment of the Apple II product line.

Hofstede's Five Dimensions of National Culture

Individualism-Collectivism Power Respect-Power Tolerance Uncertainty Acceptance-Uncertainty Avoidance Aggressive Goal Behavior-Passive Goal Behavior Long-term outlook-Short-term outlook

Steps in Criminal Case: Indictment or Information

Individuals must be formally charged with having committed specific crimes before they can be brought to trial. If issued by a grand jury such a charge is called an indictment. A grand jury does not determine the guilt or innocence of an accused party. Rather, its function is to hear the state's evidence and to determine whether a reasonable basis (probable cause) exists for believing that a crime has been committed and that a trial ought to be held. Usually, grand juries are called in cases involving serious crimes, such as murder. For lesser crimes, an individual may be formally charged with a crime by an information, or criminal complaint. An information will be issued by a government prosecutor if the prosecutor determines that there is sufficient evidence to justify bringing the individual to trial.

Integration: When Forces Pull the Organization Together

Integration is the tendency of the parts of an organization to draw together to achieve a common purpose. In a highly integrated organization, the specialists work together to achieve a common goal. The means for achieving this are a formal chain of command, standardization of rules and procedures, and use of cross-functional teams and computer networks so that there is frequent communication and coordination of the parts.

The Importance of Small Business in the U.S. Economy

Job Creation, Innovation, Contributions to Big Business Small businesses have accounted for about 40 percent of all new jobs in high-technology sectors of the economy Small businesses are generally the first to hire in times of economic recovery

Factors of production (list)

Labor includes the physical and intellectual contributions people make while engaged in economic production and is also called human resources. Capital is the term used to describe the financial resources needed to operate a business. An Entrepreneur is a person who accepts the risks and opportunities entailed in creating and operating a new business venture. Physical resources are tangible things that organizations use to conduct their business and include natural resources and raw materials, offices, storage and production facilities, parts and supplies, computers, and peripherals. Information resources are data and other information used by businesses and include market forecasts, the specialized knowledge of people, and economic data.

Fixed-Position Layout

Labor, equipment, materials, and other resources are brought to the geographic location where all production work is done.

Midemeanors

Less serious crimes punishable by a fine or confinement for up to a year.

High-Contact System

Level of customer contact in which the customer is part of the system during service delivery.

3. Life Cycle: Four Stages in the Life of an Organization

Like living things, organizations go through a life cycle. The four-stage organizational life cycle has a natural sequence of stages: birth, youth, midlife, and maturity. In general, as an organization moves through these stages, it becomes not only larger but also more mechanistic, specialized, decentralized, and bureaucratic. Each stage offers different managerial challenges and different organizational design issues.

Line Position

Line managers have authority to make decisions and usually have people reporting to them. Examples: the president, the vice presidents, the director of personnel, and the head of accounting. Line positions are indicated on the organization chart by a solid line (usually a vertical line).

Master Limited Partnership

Master partner has majority ownership and runs the business; minority partners have no management voice

formal organization

Measurable data that can be represented in chart form.

MECHANISTIC VERSUS ORGANIC ORGANIZATIONS

Mechanistic Organizations: Centralized hierarchy of authority Many rules and procedures Specialized tasks Formalized communication Few teams or task forces Narrow span of control, taller structures Organic Organizations: Decentralized hierarchy of authority Few rules and procedures Shared tasks Informal communication Many teams or task forces Wider span of control, flatter structures

Explain the concepts of mechanistic and organic organizations. What kind of organization should be in place when an organization's environment is changing quickly and unpredictably?

Mechanistic organizations are characterized by: centralized authority, many rules and procedures, specialized tasks, formalized communication, few teams or task forces, narrow spans of control, and taller structures. Organic organizations are characterized by: decentralization of authority, few rules and procedures, shared tasks, informal communication, many teams and task forces, wider span of control, and flatter structures. For a changing environment, organizations are best served by an organic structure, which is more flexible and can react more quickly as needed

What is the difference between managers and operational managers?

Middle managers carry out the decisions of top management. Operational managers are responsible for the daily operations of the business.

Offenses

Minor Violations-- Jaywalking, violating a building code, etc. Usually punished with a fine-- however, a guilty party can be put in jail for a few days, fined, or both, depending on state or local law. Whether a crime is a felony or a misdemeanor can determine in which court the case is tried and, in some states, whether the defendant has a right to a jury trial.

Determinants of Organizational Structure

Mission Strategy Size Internal Environment External Environment

The Stakeholder Model of Responsibility

Most companies that strive to be responsible to their stakeholders concentrate first and foremost on five main groups: Customers Employees Investors Suppliers Local communities where they do business

tall organizational structure

Multiple layers of management. Used in centralized organizations.

Google

Now 15 years old, Google started out as a freewheeling company in which engineers were given time to experiment on their own projects, producing the famed Google's culture of innovation. The problem, however, was that the company grew so quickly (to 31,000 people) that decision making had become molasses-like. For instance, the two cofounders, who had been trained as engineers, had hired a professional manager, Eric Schmidt, to be CEO, but the three of them "had to agree before anything could be done," says one report. "The unwieldy management and glacial pace of decision making were particularly noticeable in [Silicon Valley], where startups overtake behemoths in months." Since then, Schmidt was promoted to chairman and Page took over as CEO, streamlining the company's structure and decision-making processes.

Obtaining Goods by False Pretenses

Obtaining goods by means of false pretenses is a form of theft that involves trickery or fraud, such as using someone else's credit-card number without permission to purchase an iPad. Statutes dealing with such illegal activities vary widely from state to state. They often apply not only to property, but also to services and cash. Sometimes, a statute consolidates the crime of obtaining goods by false pretenses with other property offenses, such as larceny and embezzlement, into a single crime called simply "theft." Under such a statute, it is not necessary for a defendant to be charged specifically with larceny, embezzlement, or obtaining goods by false pretenses. Petty theft is the theft of a small quantity of cash or low-value goods. Grand theft is the theft of a larger amount of cash or higher-value property. In the following case, the sales manager of a sports vehicle dealership was charged under a state statute with grand theft.

Plea-Bargaining

Often, a grant of immunity from prosecution for a serious crime is part of the plea bargaining between the defending and prosecuting attorneys. The defendant may be convicted of a lesser offense, while the state uses the defendant's testimony to prosecute accomplices for serious crimes carrying heavy penalties.

CULTURE PLUS STRUCTURE

Once a strategy has been created that reflects an organization's vision, managers must design the kind of culture and structure that will motivate and coordinate employees in achieving the organization's goals.

The Three Levels of Organizational Culture

Organizational culture appears as three layers: (1) observable artifacts, (2) espoused values, and (3) basic assumptions. Each level varies in terms of outward visibility and resistance to change, and each level influences another level.

Organizational Design

Organizational design is concerned with designing the optimal structures of accountability and responsibility that an organization uses to execute its strategies. We may categorize organizational designs as three types: (1) traditional designs, (2) horizontal designs, and (3) designs that open boundaries between organizations.

Explain the four common elements of organizations proposed by Edgar Schein

Organizational psychologist Edgar Schein proposed the four common elements of (1) common purpose, (2) coordinated effort, (3) division of labor, and (4) hierarchy of authority. The common purpose unifies employees or members and gives everyone an understanding of the organization's reason for being. The common purpose is realized through coordinated effort, the coordination of individual efforts into a group or organizationwide effort. Division of labor, also known as work specialization, is the arrangement of having discrete parts of a task done by different people. The hierarchy of authority, or chain of command, is a control mechanism for making sure the right people do the right things at the right time.

Organizational Structure: Who Reports to Whom & Who Does What

Organizational structure is a formal system of task and reporting relationships that coordinates and motivate an organization's members so that they can work together to achieve the organization's goals. , Organizational structure is concerned with who reports to whom and who specializes in what work. Whether an organization is for-profit or nonprofit, the challenge for top managers is to create a culture and structure that will motivate its members to work together and coordinate their actions to achieve the organization's goals. A major point is that there must be consistency among all these elements.

learning organizations

Organizations which work to integrate continuous improvement with ongoing employee learning and development.

Justifiable use of Force

Other situations, however, also justify the use of force: the defense of one's dwelling, the defense of other property, and the prevention of a crime. In all of these situations, it is important to distinguish between deadly and nondeadly force. Deadly force is likely to result in death or serious bodily harm. Nondeadly force is force that reasonably appears necessary to prevent the imminent use of criminal force. Generally speaking, people can use the amount of nondeadly force that seems necessary to protect themselves, their dwellings, or other property, or to prevent the commission of a crime. Deadly force can be used in self-defense only when the defender reasonably believes that imminent death or grievous bodily harm will otherwise result. In addition, normally the attacker must be using unlawful force, and the defender must not have initiated or provoked the attack. Many states are expanding the situations in which the use of deadly force can be justified. Florida, for instance, allows the use of deadly force to prevent the commission of a "forcible felony," including robbery, carjacking, and sexual battery.

Private property rights

Ownership of the resources used to create wealth is in the hands of individuals.

Degrees of Competition

Perfect Competition Monopolistic Competition Oligopoly Monopoly

The Computer Fraud and Abuse Act

Perhaps the most significant federal statute specifically addressing cyber crime is the Counterfeit Access Device and Computer Fraud and Abuse Act. This act is commonly known as the Computer Fraud and Abuse Act (CFAA). Among other things, the CFAA provides that a person who accesses a computer online, without authority, to obtain classified, restricted, or protected data (or attempts to do so) is subject to criminal prosecution. Such data could include financial and credit records, medical records, legal files, military and national security files, and other confidential information. The data can be located in government or private computers. The crime has two elements: accessing a computer without authority and taking the data. This theft is a felony if it is committed for a commercial purpose or for private financial gain, or if the value of the stolen data (or computer time) exceeds $5,000. Penalties include fines and imprisonment for up to twenty years. A victim of computer theft can also bring a civil suit against the violator to obtain damages, an injunction, and other relief.

Financing a Small Business

Personal resources Loans from family and friends Bank loans Venture capital companies Small-Business Investment Companies (SBICs) Minority Enterprise Small-Business Investment Companies (MESBICs) SBA financial programs

Process Layout (Custom-Product Layout)

Physical arrangement of production activities that groups equipment and people according to its production requirements.

Product Layout (Same-Steps Layout)

Physical arrangement of production steps designed to make one type of product in a fixed sequence of activities according to its production requirements.

Name the four managerial functions.

Planning, Organizing, Leading, and Controlling

Middle Managers Examples

Plant Managers, Regional Managers, and Department Heads.

How Organizations Influence Government

Political Action Committees (PACs)- special organizations created to solicit money and then distribute it to political candidates Lobbying- the use of persons or groups to formally represent an organization or group of organizations before political bodies

Supply Chain Management (SCM)

Principle of looking at the supply chain as a whole to improve the overall flow through the system.

Quality Ownership

Principle of total quality management that holds that quality belongs to each person who creates it while performing a job.

Elements required for private enterprise system

Private property rights- ownership of the resources used to create wealth is in the hands of individuals Freedom of choice- you can sell your labor to any employer you choose Profits- the lure of profits leads some people to abandon the security of working for someone else and assume the risks of entrepreneurship Competition- occurs when two or more businesses vie for the same resources or customers

Value-Added Analysis

Process of evaluating all work activities, materials, flows, and paperwork to determine the value that they add for customers.

Supplier Selection

Process of finding and choosing suppliers from whom to buy.

Operations Control

Process of monitoring production performance by comparing results with plans and taking corrective action when needed.

Management

Process of planning, organizing, leading, and controlling an organization's resources to achieve its goals

Inventory Control

Process of receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods.

The Law of Supply

Producers will offer (supply) more of a product for sale as its price rises and less of a product as its price drops

The law of supply

Producers will offer (supply) more of a product for sale as its price rises and less of a product as its price drops

Type of Businesses

Producers, Intermediaries, Service Businesses

Product Divisions: Grouping by Similar Products or Services

Product divisions group activities around similar products or services. Examples: The media giant Time Warner has different divisions for magazines, movies, recordings, cable television, and so on. The Warner Bros. part of the empire alone has divisions spanning movies and television, a broadcast network, retail stores, theaters, amusement parks, and music.

Utility

Product's ability to satisfy a human need or want.

Elements of Green Marketing

Production Processes Product Modification Carbon Offsets Packaging Reduction Sustainability

PERT Chart

Production schedule specifying the sequence of activities, time requirements, and critical paths for performing the steps in a project.

Gantt Chart

Production schedule that breaks down large projects into steps to be performed and specifies the time required to perform each step.

Lean Production System

Production system designed for smooth production flows that avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes.

ISO 9000

Program certifying that a factory, laboratory, or office has met the quality management standards set by the International Organization of Standardization.

Overcriminalization

Proponents of strict liability criminal laws argue that they are necessary to protect the public and the environment. Critics say laws that criminalize conduct without any required intent have led to overcriminalization, or the use of criminal law as the main tool to solve social problems, such as illegal drug use. They argue that when the requirement of intent is removed, people are more likely to commit crimes unknowingly—and perhaps even innocently. When an honest mistake can lead to a criminal conviction, the idea that crimes are a wrong against society is undermined.

Responsibility toward Employees

Provide opportunities to balance work and life pressures and preferences Help employees maintain job skills Treat terminated or laid-off employees with respect and compassion A company that provides its employees with equal opportunities without regard to race, sex, or other irrelevant factors is meeting both its legal and its social responsibilities

Consumerism

Social activism dedicated to protecting the rights of consumers in their dealings with businesses

Barriers to International Trade

Social and Cultural Differences Economic Differences Legal and Political Differences

Proportions of U.S. Firms in Terms ofOrganization Type and Sales Revenue

Sole proprietorships account for 74% of the Business in the US, but only make 4% of the revenue. Corporations account for 17% of business, but 81% of revenue. Partnerships account for 9% and 15%, respectively.

Civil Liability for Criminal

Some torts, such as assault and battery, provide a basis for a criminal prosecution as well as a civil action in tort.

Online Retail Fraud

Somewhat similar to online auction fraud is online retail fraud, in which consumers pay directly (without bidding) for items that are never delivered. As with other forms of online fraud, it is difficult to determine the actual extent of online sales fraud, but anecdotal evidence suggests that it is a substantial problem.

Staff Position

Staff personnel have authority functions; they provide advice, recommendations, and research to line managers. Examples: specialists such as legal counsels and special advisers for mergers and acquisitions or strategic planning. Staff positions are indicated on the organization chart by a dotted line (usually a horizontal line).

Formulating Strategy

Step 1: Setting Strategic Goals Step 2: Analyzing the Organization and the Environment: SWOT Analysis Step 3: Matching the Organization and Its Environment

How an Organization's Culture & Structure Are Used to Implement Strategy

Strategy—the large-scale action plans that reflect the organization's vision and are used to set the direction for the organization. To implement a particular strategy, managers must determine the right kind of (1) organizational culture and (2) organizational structure.

Explain the three perspectives of organizational culture that may enhance economic performance. Which perspective was found to provide the highest level of long-term financial performance?

Strength, fit, and adaptive culture may enhance economic performance. The strength perspective assumes that the strength of a corporate culture is related to a firm's long-term financial performance. The fit perspective assumes that an organization's culture must align, or fit, with its business or strategic context. A correct fit is expected to foster higher financial performance. The adaptive perspective assumes that the most effective cultures help organizations anticipate and adapt to environmental changes. An investigation of 207 companies from 22 industries during the years 1977-1988 partly supported the strength and fit perspectives. However, findings were completely consistent with the adaptive perspective. Long-term financial performance was highest for organizations with an adaptive culture.

An advantage in using centralized authority is that there is less duplication of work, because fewer employees perform the same task

TRUE

An investigation of companies with different organizational cultures showed that long-term financial performance was highest for those with an adaptive culture

TRUE

An organization chart typically takes on a family-treelike pattern, with many boxes and lines showing official positions and reporting relationships

TRUE

An organization is said to be flat when there are only a few levels with wide spans of control.

TRUE

An organization's basic assumptions are difficult to change

TRUE

As you are promoted to higher levels in an organization, you may have to actively resist isolation.

TRUE

Bombardier builds eight-passenger business jets from 12 separately sourced portions which can be put together in four days. This firm has a modular organizational structure

TRUE

By definition, an organization can be composed of as few as two people

TRUE

Confidential matters and issues involving discipline cannot be effectively delegated

TRUE

Danilo opened a new restaurant in Phoenix called El Barrancón. He wanted to be sure a culture of service and excellence was embedded in his new organization so he posted the values of the organization in the kitchen and in the dining room. Danilo is teaching his organization the culture through this action

TRUE

For IKEA, whose vision is "to create a better life for the many," the inexpensive LACK side table would be considered a symbol

TRUE

Ford Motor Co. has what is known as a divisional structure because it has different divisions for passenger car dealers, large trucking customers, and farm products customers

TRUE

Hierarchy of authority is also referred to as the chain of command

TRUE

In an organization, culture exists on both visible and unobservable levels

TRUE

Integration is the tendency of the parts of an organization to draw together to achieve a common purpose

TRUE

Organizational culture can vary widely across organizations on dimensions of treatment of employees, teamwork, and risk taking

TRUE

Research shows that organizations with market cultures report higher profits and financial growth

TRUE

Staff personnel have authority functions in that they provide advice, recommendations, and research to line managers

TRUE

The founder of McDonald's, Ray Kroc, intended that a Big Mac should taste the same anywhere, and accordingly, the company has many specific procedures, making it a mechanistic organization

TRUE

The type of training provided to new hires and the frequency of performance evaluations contribute to their understanding of the organization's culture

TRUE

When Pfizer Pharmaceuticals manages failure and disappointment and helps drug researchers live for the small victories in discovering new drugs for various diseases, it is focusing on the adhocracy aspects of its culture

TRUE

When the National Football League annually presents the winners of the Super Bowl with rings in a ceremony, it is an example of a ritual

TRUE

Organizational Design for the Twenty-first Century

Team organization -relies almost exclusively on project-type teams, with little or no underlying functional hierarchy Learning organization -works to facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs Virtual organization -has little or no formal structure -has only a handful of permanent employees, a very small staff, and a modest administrative facility.

Dimensions of the External Environment

The Domestic Business Environment is the environment in which a firm conducts its operations and derives its revenues. The Global Business Environment encompasses the international forces that affect a business and includes international trade agreements, international economic conditions, and political unrest. The Technological Environment encompasses all the ways by which firms create value for their constituents and includes human knowledge, work methods, physical equipment, electronics and telecommunications. The Political-Legal Environment is the relationship between business and government. The Sociocultural Environment includes the customs, mores, values, and demographic characteristics of the society in which an organization functions and determines the goods and services, as well as the standards of business conduct, that a society is likely to value and accept. The Economic Environment includes relevant conditions that exist in the economic system in which a company operates.

Scope of Warrant

The Fourth Amendment prohibits general warrants. It requires a particular description of what is to be searched or seized. General searches through a person's belongings are impermissible. The search cannot extend beyond what is described in the warrant. Although search warrants require specificity, if a warrant is issued for a person's residence, items in that residence may be searched even if they do not belong to that individual. In the following case, police officers obtained a search warrant and conducted a search for weapons in the home of a suspect's foster mother. A judge later ruled that the warrant was not supported by probable cause, and the homeowners sued individual police officers for executing an illegal search warrant.

Fourth Amendment Protections

The Fourth Amendment protects the "right of the people to be secure in their persons, houses, papers, and effects." Before searching or seizing private property, normally law enforcement officers must obtain a search warrant—an order from a judge or other public official authorizing the search or seizure. Advances in technology allow the authorities to track phone calls and vehicle movements with greater ease and precision. Nevertheless, the use of such technology can still constitute a search within the meaning of the Fourth Amendment.

Federal Sentencing Guidelines

The Sentencing Reform Act created the U.S. Sentencing Commission, which performs the task of standardizing sentences for federal crimes. The commission's guidelines establish a range of possible penalties for each federal crime. Originally, the guidelines were mandatory, in that the judge was required to select a sentence from within the set range and was not allowed to deviate from it.

Cyber Crime

The U.S. Department of Justice broadly defines computer crime as any violation of criminal law that involves knowledge of computer technology for its perpetration, investigation, or prosecution. Many computer crimes fall under the broad label of cyber crime, which describes any criminal activity occurring via a computer in the virtual community of the Internet. Most cyber crimes are simply existing crimes, such as fraud and theft of intellectual property, in which the Internet is the instrument of wrongdoing.

3. The Adaptive Perspective: Success Results When Culture Helps the Firm Adapt

The adaptive perspective assumes that the most effective cultures help organizations anticipate and adapt to environmental changes. Which Perspective Is Accurate? An investigation of 207 companies from 22 industries during the years 1977-1988 partly supported the strength and fit perspectives. However, findings were completely consistent with the adaptive perspective. Long-term financial performance was highest for organizations with an adaptive culture.

Productivity

The amount of output produced compared with the amount of resources used to produce that output.

Stage 1. The Birth Stage—Nonbureaucratic

The birth stage is the nonbureaucratic stage, the stage in which the organization is created. Here there are no written rules and little if any supporting staff beyond perhaps a secretary. The founder may be a lone entrepreneur, such as Michael Dell, who began Dell Computers by selling microcomputers out of his University of Texas college dorm room. Or the founders may be pals who got together, as did Apple Computer founders Steve Jobs and Stephen Wozniak, who built the first computer in Wozniak's parents' Palo Alto, California, garage, using the proceeds from the sale of an old Volkswagen.

Broad Application of Rico

The broad language of RICO has allowed it to be applied in cases that have little or nothing to do with organized crime. RICO incorporates by reference twenty-six separate types of federal crimes and nine types of state felonies. If a person commits two of these offenses, he or she is guilty of "racketeering activity." Under the criminal provisions of RICO, any individual found guilty is subject to a fine of up to $25,000 per violation, imprisonment for up to twenty years, or both. Additionally, any assets (property or cash) that were acquired as a result of the illegal activity or that were "involved in" or an "instrumentality of" the activity are subject to government forfeiture.

2. Coordinated Effort: Working Together for Common Purpose

The common purpose is realized through coordinated effort, the coordination of individual efforts into a group or organizationwide effort. Although it's true that individuals can make a difference, they cannot do everything by themselves.

Model Penal Code

The courts have had difficulty deciding what the test for legal insanity should be. Federal courts and some states use the substantial-capacity test set forth in the Model Penal Code: A person is not responsible for criminal conduct if at the time of such conduct as a result of mental disease or defect he or she lacks substantial capacity either to appreciate the wrongfulness of his [or her] conduct or to conform his [or her] conduct to the requirements of the law.

Bribery

The crime of bribery involves offering to give something of value to a person in an attempt to influence that person, who is usually, but not always, a public official, to act in a way that serves a private interest. Three types of bribery are considered crimes: bribery of public officials, commercial bribery, and bribery of foreign officials. As an element of the crime of bribery, intent must be present and proved. The bribe itself can be anything the recipient considers to be valuable. Realize that the crime of bribery occurs when the bribe is offered—it is not required that the bribe be accepted. Accepting a bribe is a separate crime. Commercial bribery involves corrupt dealings between private persons or businesses. Typically, people make commercial bribes to obtain proprietary information, cover up an inferior product, or secure new business. Industrial espionage sometimes involves commercial bribes.

The Concept of Accountability

The expectation of an expanded role for business in protecting and enhancing the general welfare of society

Federal Crimes

The federal criminal code now lists more than four thousand criminal offenses, many of which do not require a specific mental state. There are also at least ten thousand federal rules that can be enforced through criminal sanctions, and many of these rules do not require intent.

The Simple Structure: For the Small Firm

The first organizational form is the simple structure. This is the form often found in a firm's very early, entrepreneurial stages, when the organization is apt to reflect the desires and personality of the owner or founder. An organization with a simple structure has authority centralized in a single person, a flat hierarchy, few rules, and low work specialization. There is only one hierarchical level of management beneath the owner. Hundreds of thousands of organizations are arranged according to a simple structure—for instance, small mom-and-pop firms running landscaping, construction, insurance sales, and similar businesses. Examples: Both Hewlett-Packard and Apple Computer began as two-man garage startups that later became large.

2. The Fit Perspective: Success Results When Culture Fits with the Firm's Business Context

The fit perspective assumes that an organization's culture must align, or fit, with its business or strategic context. A "correct" fit is expected to foster higher financial performance. Example: Prior to the arrival of Carleton Fiorina as CEO, Hewlett-Packard's "HP Way" culture from 1957 to the early 1990s pushed authority as far down as possible in the organization and created an environment that emphasized integrity, respect for individuals, teamwork, innovation, and an emphasis on customers and community improvement. This fit perspective was a key contributor to HP's success—until the high-technology industry began to change in the late 1990s.

Supply Chain (or Value Chain)

The flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the network of firms until the product reaches the end customer

Criminal Liability

The following two elements normally must exist simultaneously for a person to be convicted of a crime: The performance of a prohibited act (actus reus). A specified state of mind, or intent, on the part of the actor (mens rea).

The Matrix Structure: A Grid of Functional & Divisional for Two Chains of Command

The fourth organizational form is the matrix structure. In a matrix structure, an organization combines functional and divisional chains of command in a grid so that there are two command structures—vertical and horizontal. The functional structure usually doesn't change—it is the organization's normal departments or divisions, such as Finance, Marketing, Production, and Research & Development. The divisional structure may vary—as by product, brand, customer, or geographic region. A hypothetical example, using Ford Motor Co.: The functional structure might be the departments of Engineering, Finance, Production, and Marketing, each headed by a vice president. Thus, the reporting arrangement is vertical. The divisional structure might be by product (the new models of Taurus, Mustang, Explorer, and Expedition, for example), each headed by a project manager. This reporting arrangement is horizontal. Thus, a marketing person, say, would report to both the Vice President of Marketing and to the Project Manager for the Ford Mustang. Indeed, Ford Motor Co. used the matrix approach to create the Taurus and a newer version of the Mustang.

Forgery

The fraudulent making or altering of any writing (including electronic records) in a way that changes the legal rights and liabilities of another is forgery. Without authorization, Severson signs Bennett's name to the back of a check made out to Bennett and attempts to cash it. Severson is committing forgery. Forgery also includes changing trademarks, falsifying public records, counterfeiting, and altering a legal document.

4. Hierarchy of Authority: The Chain of Command

The hierarchy of authority, or chain of command, is a control mechanism for making sure the right people do the right things at the right time. If coordinated effort is to be achieved, some people—namely, managers—need to have more authority, or the right to direct the work of others. Even in member-owned organizations, some people have more authority than others, although their peers may have granted it to them. In addition, authority is most effective when arranged in a hierarchy. Without tiers or ranks of authority, a lone manager would have to confer with everyone in his or her domain, making it difficult to get things done. Even in newer organizations that flatten the hierarchy, there still exists more than one level of management.

The Modular Structure: Outsourcing Pieces of a Product to Outside Firms

The modular structure differs from the hollow structure in that it is oriented around outsourcing certain pieces of a product rather than outsourcing certain processes (such as human resources or warehousing) of an organization. In a modular structure, a firm assembles product chunks, or modules, provided by outside contractors. One article compares this form of organization to "a collection of Lego bricks that can snap together." For example, Bombardier (pronounced "bom-bar-dee-ay"), of Wichita, Kansas, makes an eight-passenger business jet, the Continental, that is designed in a dozen large modules that are built in various places around the world. The cockpit and forward fuselage are built by Bombardier Montreal. The center section is built in Belfast, the wing by Mitsubishi in Japan, the stabilizers and rear fuselage by Aerospace Industrial Development in Taiwan, the landing gear by Messier-Dowty in Canada, and the tailcone by Hawker de Havilland in Australia. The engines are provided by General Electric and the avionics gear by Rockwell Collins, both companies in the United States. The 12 modules are shipped to Wichita, where the parts are snapped together in just four days.

Property Crime

The most common type of criminal activity is property crime, in which the goal of the offender is some form of economic gain or the damaging of property. Robbery is a form of property crime, as well as a violent crime, because the offender seeks to gain the property of another. We look here at a number of other crimes that fall within the general category of property crime. (Note also that many types of cyber crime, discussed later in this chapter, are forms of property crime as well.)

3. Designs That Open Boundaries Between Organizations: Hollow, Modular, & Virtual Structures

The opposite of a bureaucracy, with its numerous barriers and divisions, a boundaryless organization is a fluid, highly adaptive organization whose members, linked by information technology, come together to collaborate on common tasks. The collaborators may include not only coworkers but also suppliers, customers, and even competitors. This means that the form of the business is ever-changing, and business relationships are informal. Three types of structures in this class of organizational design are hollow, modular, and virtual structures.

Describe the boundaryless organization and three organizational structures that are common forms of it.

The opposite of a bureaucracy, with its numerous barriers and divisions, a boundaryless organization is a fluid, highly adaptive organization whose members, linked by information technology, come together to collaborate on common tasks. The collaborators may include not only coworkers but also suppliers, customers, and even competitors. This means that the form of the business is ever-changing, and business relationships are informal. Three types of structures in this class of organizational design are hollow, modular, and virtual structures. In the hollow structure, often called the network structure, the organization has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster. The modular structure differs from the hollow structure in that it is oriented around outsourcing certain pieces of a product rather than outsourcing certain processes (such as human resources or warehousing) of an organization. In a modular structure, a firm assembles product chunks, or modules, provided by outside contractors. One consequence of the Internet is the virtual organization, an organization whose members are geographically apart, usually working with e-mail, collaborative computing, and other computer connections, while often appearing to customers and others to be a single, unified organization with a real physical location

Outsourcing

The practice of paying suppliers and distributors to perform certain business processes or to provide needed materials or services.

departmentalization

The process of grouping jobs into logical units post specialization.

job specialization

The process of identifying specific jobs and designating people to perform them leads to job specialization.

delegation

The process through which a manager allocates work to subordinates. Involves three steps, the assignment of responsibility, granting of authority, and the creation of accountability.

Perfect Competition

The products of each firm are so similar that buyers view them as identical to those of other firms. Both buyers and sellers know the prices that others are paying and receiving in the marketplace. Because each firm is small, it is easy for firms to enter or leave the market. Going prices are set exclusively by supply and demand and accepted by both sellers and buyers.

Money Laundering

The profits from organized crime and illegal activities amount to billions of dollars a year. These profits come from illegal drug transactions and, to a lesser extent, from racketeering, prostitution, and gambling. Under federal law, banks, savings and loan associations, and other financial institutions are required to report currency transactions involving more than $10,000. Consequently, those who engage in illegal activities face difficulties in depositing their cash profits from illegal transactions. As an alternative to storing cash from illegal transactions in a safe-deposit box, wrongdoers and racketeers launder "dirty" money through legitimate business to make it "clean." Money laundering is engaging in financial transactions to conceal the identity, source, or destination of illegally gained funds.

Criminal Sanctions

The sanctions imposed on criminal wrongdoers are also harsher than those applied in civil cases. As we will see in Chapter 12, the purpose of tort law is to enable a person harmed by a wrongful act to obtain compensation from the wrongdoer, rather than to punish the wrongdoer. In contrast, criminal sanctions are designed to punish those who commit crimes and to deter others from committing similar acts in the future. Criminal sanctions include fines as well as the much harsher penalty of the loss of one's liberty by incarceration in a jail or prison. Most criminal sanctions also involve probation and sometimes require performance of community service, completion of an educational or treatment program, or payment of restitution. The harshest criminal sanction is, of course, the death penalty.

2. The Horizontal Design: Eliminating Functional Barriers to Solve Problems

The second organizational design is the horizontal design. In a horizontal design, teams or workgroups, either temporary or permanent, are used to improve collaboration and work on shared tasks by breaking down internal boundaries. For instance, when managers from different functional divisions are brought together in teams—known as cross-functional teams—to solve particular problems, the barriers between the divisions break down. The focus on narrow divisional interests yields to a common interest in solving the problems that brought them together. Yet team members still have their full-time functional work responsibilities and often still formally report to their own managers above them in the functional-division hierarchy.

The Functional Structure: Grouping by Similar Work Specialties

The second organizational form is the functional structure. In a functional structure, people with similar occupational specialties are put together in formal groups. This is a quite commonplace structure, seen in all kinds of organizations, for-profit and nonprofit. Examples: A manufacturing firm will often group people with similar work skills in a marketing department, others in a production department, others in finance, and so on. A nonprofit educational institution might group employees according to work specialty under faculty, admissions, maintenance, and so forth.

5. Span of Control: Narrow (or Tall) Versus Wide (or Flat)

The span of control, or span of management, refers to the number of people reporting directly to a given manager. There are two kinds of spans of control, narrow (or tall) and wide (or flat). -Narrow Span of Control This means a manager has a limited number of people reporting—three vice presidents reporting to a president, for example, instead of nine vice presidents. An organization is said to be tall when there are many levels with narrow spans of control. -Wide Span of Control This means a manager has several people reporting—a first-line supervisor may have 40 or more subordinates, if little hands-on supervision is required, as is the case in some assembly-line workplaces. An organization is said to be flat when there are only a few levels with wide spans of control. Historically, spans of about 7 to 10 subordinates were considered best, but there is no consensus as to what is ideal. In general, when managers must be closely involved with their subordinates, as when the management duties are complex, they are advised to have a narrow span of control. This is why presidents tend to have only a handful of vice presidents reporting to them. By contrast, first-line supervisors directing subordinates with similar work tasks may have a wide span of control. Today's emphasis on lean management staffs and more efficiency means that spans of control need to be as wide as possible while still providing adequate supervision. Wider spans also fit in with the trend toward allowing workers greater autonomy in decision making. Research suggests that, when aided by technology to communicate and monitor, a manager can oversee 30 employees or more.

1. The Strength Perspective: Success Results When a Firm Has a Strong Culture

The strength perspective assumes that the strength of a corporate culture is related to a firm's long-term financial performance. A culture is said to be "strong" when employees adhere to the organization's values because they believe in its purpose. A culture is said to be "weak" when employees are forced to adhere to the organization's values through extensive procedures and bureaucracies. The strength perspective embraces the point of view that strong cultures create goal alignment, employee motivation, and the appropriate structure and controls needed to improve organizational performance. The downside of a strong culture, critics believe, is that such financial success can so reinforce cultural norms that managers and employees become arrogant, inwardly focused, and resistant to change, with top managers becoming blinded to the need for new strategic plans. Example: A case could be made that the strong cultures of American automakers for many years made them resistant to the need to make radical adjustments.

Explain what centralization and decentralization of authority mean. Would you rather be a manager in a centralized or a decentralized organization? Why?

The student should define both terms and then give a logical explanation of their preference. With centralized authority, important decisions are made by higher-level managers; while with decentralized authority, important decisions are made by middle-and supervisory-level managers. An advantage in using centralized authority is that there is less duplication of work, because fewer employees perform the same task; rather, the task is often performed by a department of specialists. Another advantage of centralization is that procedures are uniform and thus easier to control; all purchasing, for example, may have to be put out to competitive bids. An advantage in having decentralized authority is that managers are encouraged to solve their own problems rather than to buck the decision to a higher level. In addition, decisions are made more quickly, which increases the organization's flexibility and efficiency.

Explain what a matrix structure is, and draw an organization chart that depicts a matrix (including appropriate job titles). Explain what you think it would be like to be a manager in a matrix organization

The student should explain the matrix structure, draw a chart similar to the one shown in the text, and give his or her opinion of working in a matrix. In a matrix structure, an organization combines functional and divisional chains of command in a grid so that there are two command structures, vertical and horizontal. The functional structure usually doesn't change It is the organization's normal departments or divisions, such as finance, marketing, production, and R&D. The divisional structure may vary, as by product, brand, customer, or geographic region. One of the difficulties of the matrix is reporting to two managers who may have different priorities, or as a manager, to compete with another manager for an employee's services. This is a violation of the unity of command principle. For an example of a drawing of a matrix organization, see Figure 8.9 (students may vary labels, but should still show a similar matrix reporting structure).

Define organizational culture, and explain three layers in which it appears. Choose an organization with which you have some experience (for example, an employer, one of your schools, your church, a club) and use it to illustrate the layers of culture

The student should first define organizational culture and then provide examples for the visible and invisible levels of culture of the organization he or she chooses. Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behavior of its members. Organizational culture appears as three layers: (1) observable artifacts, (2) espoused values, and (3) basic assumptions. Each level varies in terms of outward visibility and resistance to change, and each level influences another level. At the most visible level, organizational culture is expressed in observable artifacts—physical manifestations such as manner of dress, awards, myths, and stories about the company, rituals and ceremonies, and decorations, as well as visible behavior exhibited by managers and employees. Espoused values are the explicitly stated values and norms preferred by an organization, as may be put forth by the firm's founder or top managers. Basic assumptions, which are not observable, represent the core values of an organization's culture—those that are taken for granted and, as a result, are difficult to change.

Arson

The willful and malicious burning of a building (and, in some states, vehicles and other items of personal property) is the crime of arson. At common law, arson applied only to burning down another person's house. The law was designed to protect human life. Today, arson statutes have been extended to cover the destruction of any building, regardless of ownership, by fire or explosion. Every state has a special statute that covers the act of burning a building for the purpose of collecting insurance. (Of course, the insurer need not pay the claim when insurance fraud is proved.)

Describe the three different ways in which departments are organized.

They can be organized by function, product, or location.

Give five examples of mechanisms used by organizations to embed its culture

Those who found a business, and the managers who follow them, essentially use a teaching process to embed the values, beliefs, expectations, behaviors, and business philosophy that constitute the organization's culture. Among the mechanisms used are the following: Formal Statements: The first way to embed preferred culture is through the use of formal statements of organizational philosophy, mission, vision, and values, as well as materials used for recruiting, selecting, and socializing employees. Slogans & Sayings: The desirable corporate culture can be expressed in language, slogans, sayings, and acronyms. Stories, Legends, & Myths: These can illustrate values. Leader Reactions to Crises: How top managers respond to critical incidents and organizational crises sends a clear cultural message. Role Modeling, Training, & Coaching: They illustrate goals and values. Physical Design of workplaces is often complementary to the culture. Rewards, Titles, Promotions, & Bonuses: These demonstrate what is valued. Organizational Goals & Performance Criteria: Many organizations establish organizational goals and criteria for recruiting, selecting, developing, promoting, dismissing, and retiring people, all of which reinforce the desired organizational culture. Measurable & Controllable Activities: An organization's leaders can pay attention to, measure, and control a number of activities, processes, or outcomes that can foster a certain culture. Organizational Structure: The hierarchical structure found in most traditional organizations is more likely to reinforce a culture oriented toward control and authority compared with the flatter organization that eliminates management layers in favor of giving employees more power. Organizational Systems & Procedures: Companies are increasingly using electronic networks to increase collaboration among employees, to increase innovation, quality, and efficiency.

The Organization: Three Types

Three types of organizations are classified according to the three different purposes for which they are formed: -For-profit organizations. These are formed to make money, or profits, by offering products or services. -Nonprofit organizations. These are formed to offer services to some clients, not to make a profit (examples: hospitals, colleges). -Mutual-benefit organizations. These are voluntary collectives whose purpose is to advance members' interests (examples: unions, trade associations). Clearly, you might have an occupation (such as auditor or police officer) that is equally employable in any one of these three sectors. As a manager, however, you would be principally required to focus on different goals—making profits, delivering public services, or satisfying member needs—depending on the type of organization.

Operations Scheduling

Times when specific production activities will occur

Common Elements of Organizations: Three More That Most Authorities Agree On

To Schein's four common elements we may add three others that most authorities agree on: (5) span of control, (6) authority, responsibility, and delegation, and (7) centralization versus decentralization of authority.

Rackateering

To curb the entry of organized crime into the legitimate business world, Congress enacted the Racketeer Influenced and Corrupt Organizations Act (RICO). The statute makes it a federal crime to: Use income obtained from racketeering activity to purchase any interest in an enterprise. Acquire or maintain an interest in an enterprise through racketeering activity. Conduct or participate in the affairs of an enterprise through racketeering activity. Conspire to do any of the preceding activities.

Probable Cause

To obtain a search warrant, law enforcement officers must convince a judge that they have reasonable grounds, or probable cause, to believe a search will reveal a specific iIllegality. Probable cause requires the officers to have trustworthy evidence that would convince a reasonable person that the proposed search or seizure is more likely justified than not.

Liability of Legal Entities

Today, corporations normally are liable for the crimes committed by their agents and employees within the course and scope of their employment. For liability to be imposed, the prosecutor generally must show that the corporation could have prevented the act or that a supervisor authorized or had knowledge of the act. In addition, corporations can be criminally liable for failing to perform specific duties imposed by law (such as duties under environmental laws or securities laws).

Service-Based Hacking

Today, many companies offer "software as a service." Instead of buying software to install on a computer, the user connects to Web-based software. The user can write e-mails, edit spreadsheets, or perform other tasks using his or her Web browser. Cyber criminals have adapted this distribution method to provide "crimeware as a service." A would-be thief no longer has to be a computer hacker to create a botnet or steal banking information and credit-card numbers. He or she can rent the online services of cyber criminals to do the work for a small price. Fake security software (also known as scareware) is a common example. The thief can even target individual groups, such as U.S. physicians or British attorneys.

1. Traditional Designs: Simple, Functional, Divisional, & Matrix Structures

Traditional organizational designs tend to favor structures that rely on a vertical management hierarchy, with clear departmental boundaries and reporting arrangements, as follows.

Burglary

Traditionally, burglary was defined as breaking and entering the dwelling of another at night with the intent to commit a felony. This definition was aimed at protecting an individual's home and its occupants. Most state statutes have eliminated some of the requirements found in the common law definition. The time of day at which the breaking and entering occurs, for example, is usually immaterial. State statutes frequently omit the element of breaking, and some states do not require that the building be a dwelling. When a deadly weapon is used in a burglary, the perpetrator can be charged with aggravated burglary and punished more severely.

In a natural monopoly, prices tend to be government-regulated. True or false

True

The point at which the supply curve and the demand curve intersect is the market price. True or false

True

The pursuit of profits is how a business differs from organizations such as most universities, hospitals, and government agencies. True or false

True

Larceny

Under the common law, the crime of larceny involved the unlawful taking and carrying away of someone else's personal property with the intent to permanently deprive the owner of possession. Put simply, larceny is stealing, or theft. Whereas robbery involves force or fear, larceny does not. Therefore, picking pockets is larceny, not robbery. Similarly, taking company products and supplies home for personal use without permission is larceny. (Note that a person who commits larceny generally can also be sued under tort law because the act of taking possession of another's property involves the tort of trespass to personal property—see Chapter 12.) Most states have expanded the definition of property that is subject to larceny statutes. Stealing computer programs may constitute larceny even though the "property" is not physical (see the discussion of computer crime later in this chapter). So, too, can the theft of natural gas or Internet and television cable service.

The Exclusionary Rule

Under what is known as the exclusionary rule, any evidence obtained in violation of the constitutional rights spelled out in the Fourth, Fifth, and Sixth Amendments generally is not admissible at trial. All evidence derived from the illegally obtained evidence is known as the "fruit of the poisonous tree," and such evidence normally must also be excluded from the trial proceedings. For instance, if a confession is obtained after an illegal arrest, the arrest is the "poisonous tree," and the confession, if "tainted" by the arrest, is the "fruit." The purpose of the exclusionary rule is to deter police from conducting warrantless searches and engaging in other misconduct. The rule can sometimes lead to injustice, however. If the evidence of a defendant's guilt was obtained improperly (without a valid search warrant, for instance), it normally cannot be used against the defendant in court.

Types of Crimes

Violent Crime: --Definition—Crime that causes others to suffer harm or death. --Examples—Murder, assault and battery, sexual assault (rape), and robbery. Property Crime: --Definition—Crime in which the goal of the offender is some form of economic gain or the damaging of property; the most common form of crime. --Examples—Burglary, larceny, arson, receiving stolen goods, forgery, and obtaining goods by false pretenses. Public Order Crime: --Definition—Crime that is contrary to public values and morals. --Examples—Public drunkenness, prostitution, gambling, and illegal drug use. White-Collar Crime: --Definition—An illegal act or series of acts committed by an individual or business entity using some nonviolent means to obtain a personal or business advantage; usually committed in the course of a legitimate occupation. --Examples—Embezzlement, mail and wire fraud, bribery, bankruptcy fraud, insider trading, and the theft of intellectual property. Organized Crime: --Definition—A form of crime conducted by groups operating illegitimately to satisfy the public's demand for illegal goods and services (such as gambling and illegal narcotics). Money laundering—Passing "dirty" money (obtained through criminal activities, such as illegal drug trafficking) through legitimate enterprises so as to "launder" it (make it appear to be legitimate income). RICO—The Racketeer Influenced and Corrupt Organizations Act (RICO) makes it a federal crime to use income obtained from racketeering activity to purchase any interest in an enterprise, acquire or maintain an interest in an enterprise through racketeering activity, conduct or participate in the affairs of an enterprise through racketeering activity, or conspire to do any of the preceding activities. RICO provides for both civil and criminal liability.

Embezzlement

When a person who is entrusted with another person's property fraudulently appropriates it, embezzlement occurs. Typically, embezzlement is carried out by an employee who steals funds. Banks are particularly prone to this problem, but embezzlement can occur in any firm. Embezzlement is not larceny because the wrongdoer does not physically take the property from the possession of another, and it is not robbery because no force or fear is used. The intent to return the embezzled property—or its actual return—is not a defense to the crime of embezzlement. Embezzlement occurs whether the embezzler takes the funds directly from the victim or from a third person. If the financial officer of a large corporation pockets checks from third parties that were given to her to deposit into the corporate account, she is embezzling. Frequently, an embezzler takes a relatively small amount at one time but does so repeatedly over a long period. This might be done by underreporting income or deposits and embezzling the remaining amount or by creating fictitious persons or accounts and writing checks to them from the corporate account. Even an employer's failure to remit state withholding taxes that were collected from employee wages can constitute embezzlement.

Four Factors to Be Considered in Designing an Organization's Structure

When managers are considering what organizational arrangements to choose from, stage of development is among the factors, or contingencies, they must consider. Recall from Chapter 2 that the contingency approach to management emphasizes that a manager's approach should vary according to—that is, be contingent on—the individual and environmental situation. Thus, the manager following the contingency approach simply asks, "What method is the best to use under these particular circumstances?" The process of fitting the organization to its environment is called contingency design. Managers taking a contingency approach must consider the following factors (among others) in designing the best kind of structure for their particular organization at that particular time: Environment—mechanistic versus organic Environment—differentiation versus integration Life cycle Link between strategy and structure

Immunity

When the state wishes to obtain information from a person accused of a crime, the state can grant immunity from prosecution. Alternatively, the state can agree to prosecute the accused for a less serious offense in exchange for the information. Once immunity is given, the person has an absolute privilege against self-incrimination and therefore can no longer refuse to testify on Fifth Amendment grounds.

Organized Crime

White-collar crime takes place within the confines of the legitimate business world. Organized crime, in contrast, operates illegitimately by, among other things, providing illegal goods and services. Traditionally, the preferred markets for organized crime have been gambling, prostitution, illegal narcotics, and loan sharking (lending funds at higher-than-legal interest rates), along with more recent ventures into counterfeiting and credit-card scams.

Questions to Ask When Starting from Scratch

Who and where are my customers? How much will those customers pay for my product? How much of my product can I expect to sell? Who are my competitors? Why will customers buy my product rather than the product of my competitors?

7. Centralization Versus Decentralization of Authority

Who makes the important decisions in an organization? That is what the question of centralization versus decentralization of authority is concerned with.

Decentralized Authority

With decentralized authority, important decisions are made by middle-level and supervisory-level managers. Here, obviously, power has been delegated throughout the organization. Among the companies using decentralized authority are General Motors and Harley-Davidson. With decentralized authority managers are encouraged to solve their own problems rather than buck decisions to a higher level. Decisions are also made more quickly, increasing the organization's flexibility and efficiency.

Responsibility

With more authority comes more responsibility. Responsibility is the obligation you have to perform the tasks assigned to you. A car assembly-line worker has little authority but also little responsibility: just install those windshields over and over. A manager, however, has greater responsibilities. It is a sign of faulty job design when managers are given too much authority and not enough responsibility, in which case they may become abusive to subordinates and capricious in exerting authority. Conversely, managers may not be given enough authority, so the job becomes difficult.

Statue of Limitations

With some exceptions, such as the crime of murder, statutes of limitations apply to crimes just as they do to civil wrongs. In other words, the state must initiate criminal prosecution within a certain number of years. If a criminal action is brought after the statutory time period has expired, the accused person can raise the statute of limitations as a defense. The running of the time period in a statute of limitations may be tolled—that is, suspended or stopped temporarily—if the defendant is a minor or is not in the jurisdiction. When the defendant reaches the age of majority or returns to the jurisdiction, the statutory time period begins to run again.

Promotion

a means of communication between the buyer and the seller

Place

a means of getting the product to the consumer

Productivity

a measure of economic growth that compares how much a system produces with the resources needed to produce it

Productivity

a measure of economic performance that compares how much a system produces with the resources needed to produce it -If more products are being produced with fewer factors of production, the prices of these products will likely go down -If your entire economic system increases its productivity, then your overall standard of living improves

Consumer Price Index

a measure of the prices of typical products purchased by consumers living in urban areas

Consumer Price Index (CPI)

a measure of the prices of typical products purchased by consumers living in urban areas

Economic System

a nation's system for allocating its resources among its citizens

Make to order operations

activities for one of a kind or custom made production

operations/production

activities involved in making products (goods/services) for customers

service operations/production

activities producing intangible and tangible products ex. entertainment, transportation and education

Service Operations

activities producing intangible and tangible products, such as entertainment, transportation and education

goods operations/production

activities producing only tangible products ex. radios, newspapers, buses, and textbooks

Goods operations

activities producing tangible products such as radios, newspapers, buses

European Union (EU)

agreement among major European nations to eliminate or make uniform most trade barriers affecting group members. Monetary, not fiscal union.These nations have eliminated most quotas and set uniform tariff levels on products imported and exported within their group. In 1992, virtually all internal trade barriers went down, making the EU the largest free marketplace in the world. The adoption of a common currency, the euro, by most member nations further solidified the EU's position in the world economy.

North American Free Trade Agreement (NAFTA)

agreement to gradually eliminate tariffs and other trade barriers among the United States, Canada, and Mexico and includes agreements on environmental issues and labor abuses.

Conditions Necessary for Perfect Competition

all firms in an industry must be small, and the number of firms in the industry must be large

Technological Environment

all the ways by which firms create value for their constituents

Capacity

amount of a product that a company can produce under normal conditions

capacity planning

amount of production that companies can product under normal conditions 1.# of people employed 2. size of facilities

Demand and Supply Schedule

an assessment of the relationships among different levels of demand and supply at different price levels

Proactive Stance

approach to social responsibility by which a company actively seeks opportunities to contribute to the well-being of groups and individuals in its social environment

International organizational Structures

approaches to organizational structures developed in response to the need to manufacture, produce and sell in global markets

Physical Resources

are the tangible things that organizations use to conduct their business. They include natural resources and raw materials, offices, storage and production facilities, parts and supplies, computers and peripherals, and a variety of other equipment.

Franchise

arrangement in which a buyer (franchisee) purchases the right to sell the good or service of the seller (franchiser)

Strategic Alliance

arrangement in which a company finds a foreign partner to contribute approximately half of the resources needed to establish and operate a new business in the partner's country - also called joint venture

Employee Stock Ownership Plan (ESOP)

arrangement in which a corporation holds its own stock in trust for its employees, who gradually receive ownership of the stock and control its voting rights

Employee Stock Ownership Plan (ESOP)

arrangement in which a corporation holds its own stock in trust for its employees, who gradually receive ownership of the stock and control its voting rights.

Foreign Direct Investment (FDI)

arrangement in which a firm buys or establishes tangible assets in another country

Licensing Arrangement

arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country

Demand and Supply Schedule

assessment of the relationships among different levels of demand and supply at different price levels

Staff schedule

assigned working times in upcoming days for each employee on each work shift

Cartel

association of producers whose purpose is to control supply and prices

Staff authority

authority based on expertise that usually involves counseling and advising line managers

Line authority

authority flows in a direct chain of command from the top to the bottom

Committee and Team authority

authority granted to committees or teams involved in a firms daily operation

Ethical Behavior

behavior conforming to generally accepted social norms concerning beneficial and harmful actions

Unethical behavior

behavior that conforms to individual beliefs and social norms about what is defined as wrong and bad

Ethical behavior

behavior that conforms to individual beliefs and social norms about what's right and good

Unethical Behavior

behavior that does not conform to generally accepted social norms concerning beneficial and harmful actions

planning categories

capacity, location, layout, quality, methods of planning

Quality

combination of characteristics of a product or service that bear on its ability to satisfy stated or implied needs

Competitive Product Analysis

company analysis a competitors product to ID desirable improvements

Stability

condition in which the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate

Establishment of a Decision-Making Hierarchy

deciding who will be empowered to make which decisions and who will have authority over others

Division

department that resembles a separate business in that it produces and markets its own products

Departmentalization

determining how people performing certain tasks can best be grouped together

Specialization

determining who will do what

Organization Chart

diagram depicting a company's structure and showing employees where they fit into its operations

Profits

difference between a business's revenues and its expenses

Performance

dimension of quality that refers to how well a product does what it is supposed to do

Consistency

dimension of quality that refers to sameness of product quality from unit to unit

Functional Departmentalization

dividing an organization according to groups' functions or activities

Process Departmentalization

dividing an organization according to production processes used to create a good or service

Product Departmentalization

dividing an organization according to specific products or services being created

Geographic Departmentalization

dividing an organization according to the areas of the country or the world served by a business

Geographic Departmentalization

dividing an organization according to the areas of the country or the world served by business

Customer Departmentalization

dividing an organization to offer products and meet needs for identifiable customer groups

Business Plan

document in which the entrepreneur summarizes his or her business strategy for the proposed new venture and how that strategy will be implemented

Responsibility

duty to perform an assigned task

Private Enterprises

economic system that allows individuals to pursue their own interests without undue governmental restriction

Balance of Trade

economic value of all products a country exports minus the economic value of all products it imports

Balance of Trade

economic value of all products a country exports minus the economic value of all products it imports A positive balance of trade results when a country exports (sells to other countries) more than it imports (buys from other countries). A negative balance of trade results when a country imports more than it exports.

Market Economy

economy in which individuals control production and allocation decisions through supply and demand

Planned Economy

economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions

Planned Economy

economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions (communism, socialism)

Whistle-Blower

employee who detects and tries to put an end to a company's unethical, illegal, or socially irresponsible actions by publicizing them

Business Ethics

ethical or unethical behaviors by employees in the context of their jobs

External Environment

everything outside an organization's boundaries that might affect it

If productivity increases, prices charged to consumers will tend to increase as well. True or false

false

The primary measure of growth in the business cycle is inflation. True or false

false

supplier selection

finding and choosing suppliers from whom to buy from

Importer

firm that buys products in foreign markets and then imports them for resale in its home country

International Firm

firm that conducts a significant portion of its business in foreign countries

Multinational Firm

firm that designs, produces, and markets products in many nations

Exporter

firm that distributes and sells products to one or more foreign countries

Balance of Payments

flow of all money into or out of a country. The money that a country pays for imports and receives for exports, its balance of trade, accounts for much of its balance of payments.

supply chain

flow of information, materials and services that start with raw materials suppliers and continues adding value through other stages

Independent Agent

foreign individual or organization that agrees to represent an exporter's interests

Branch Office

foreign office set up by an international or multinational firm

Multinational (or Transnational) Corporation

form of corporation spanning national boundaries

Professional Corporation

form of ownership allowing professionals to take advantage of corporate benefits while granting them limited business liability and unlimited professional liability

Professional Corporation

form of ownership allowing professionals to take advantage of corporate benefits while granting them limited business liability and unlimited professional liability. Mostly composed of doctors/lawyers/professionals

Cooperatives

form of ownership in which a group of sole proprietorships or partnerships agree to work together for common benefits

Master Limited Partnership

form of ownership that sells shares to investors who receive profits and that pays taxes on income from profits

Consumerism

form of social activism dedicated to protecting the rights of consumers in their dealings with businesses

Cyber Fraud

fraud is any misrepresentation knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to her or his detriment. Cyber fraud is fraud committed over the Internet.

Capital

funds needed to create and operate a business enterprise

Tactical Plan

generally short-term plan concerned with implementing specific aspects of a company's strategic plans

Manufactors

get supplies from other producers and convert them into products."

Board of Directors

governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets

Small Business Administration (SBA)

government agency charged with assisting small businesses

Stabilization Policy

government economic policy intended to smooth out fluctuations in output and unemployment and to stabilize prices

SWOT Analysis

identification and analysis of organizational strengths and weaknesses and environmental opportunities and threats as part of strategy formulation

Contingency Planning

identifying aspects of a business or its environment that might entail changes in strategy

Insider Trading

illegal practice of using special knowledge about a firm for profit or gain

Natural Monopoly

industry in which one company can most efficiently supply all needed goods or services

Natural Monopoly

industry in which one company can most efficiently supply all needed goods or services (ex: local/rural electric companies)

Grapevine

informal communication network that runs through an organization

National Competitive Advantage

international - stems from a combination of factor conditions, demand conditions, related and supporting industries, and firm strategies, structures, and rivalries

Self-Incrimination

is guaranteed by a clause in the Fifth Amendment to the U.S. Constitution. The clause reads "nor shall [any person] be compelled in any criminal case to be a witness against himself."

Accountability

is taking responsibility for the results achieved."

Fixed position layout

labor, equipment, materials and other resources are brought to the geographic location where all production work is done

Institutional Investor

large investor such as a mutual fund or a pension fund that purchases large blocks of corporate stock.

Institutional investor

large investor, such as a mutual fund or a pension fund, that purchases large blocks of corporate stock

Business Practice Law

law or regulation governing business practices in given countries

Local Content Law

law requiring that products sold in a particular country be at least partly made there

What are the other specialized forms of business ownership

limited liability partnership, joint venture, s corporation, limited liability company, nonprofit

Planning

management process of determining what an organization needs to do and how best to get it done

Operations Managers

managers responsible for ensuring that operations activities create value and provide benefits to customers

Organizational buyers

manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale

Monopolistic Competition

market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors

Monopolistic Competition

market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors - may be large or small, but they can still enter or leave the market easily.

Monopolistic Competition

market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors (ex: Coke/Pepsi/Dr. Pepper)

Perfect Competition

market or industry characterized by numerous small firms producing an identical product

Monopoly

market or industry in which there is only one producer that can therefore set the prices of its products

Productivity

measure of economic growth that compares how much a system produces with the resources needed to produce it

Market

mechanism for exchange between buyers and sellers of a particular good or service

Span of control

number of people supervised by one manager

Accountability

obligation employees have to their manager for the successful completion of an assigned task

Private enterprise system

one that allows individuals to pursue their own interests with minimal government restriction private property rights, freedom of choice, profits, and competition

Centralized Organization

organization in which most decision-making authority is held by upper-level management

Functional structure

organization structure in which authority is determined by the relationships between group functions and activities

World Trade Organization (WTO)

organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices

Crisis Management

organization's methods for dealing with emergencies

Limited Partner

partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment

Ultimate Consumers

people who use the goods and services purchased for a household

Labor (Human Resources)

physical and mental capabilities of people as they contribute to economic production

Process layout

physical arrangement of production activities that groups equipment and people according to function

customer product layout

physical arrangement of production activities that groups equipment and people according to function

Product layout

physical arrangement of production steps designed to make one type of product in a fixed sequence of activities according to its production requirements

same step layout

physical arrangement of production steps designed to make one type of product in a fixed sequence of activities according to its production requirements

layout planning

physical location or floor plan for machinery, equipment, customers, service stations and supplies - Determines whether a company can respond to demand for more and different products or it finds itself unable to match competitors' speed and convenience •Process layouts •Product layouts

Goods

physical objects that satisfy consumer needs

Strategic Plan

plan reflecting decisions about resource allocations, company priorities, and steps needed to meet strategic goals

Operational Plan

plan setting short- term targets for daily, weekly, or monthly performance

Socialism

planned economic system in which the government owns and operates only selected major sources of production

Fiscal Policies

policies used by a government regarding how it collects and spends revenue

Law of Demand

principle that buyers will purchase (demand) more of a product as its price drops and less as its price increases

Law of Supply

principle that producers will offer (supply) more of a product for sale as its price rises and less as its price drops

Globalization

process by which the world economy is becoming a single interdependent system

Departmentalization

process of grouping jobs into logical units product, process, functional, customer, geographic

operations control

process of monitoring production performance by comparing results with the plans and taking corrective action when needed

Materials management

process of planning, organizing and controlling the flow of materials from sources of supply through distribution of finished goods

materials management

process of planning, organizing, and controlling the flow of materials from sources to supply through distribution of finished goods

Environmental Analysis

process of scanning the business environment for threats and opportunities

Export

product made or grown domestically but shipped and sold abroad

PERT chart

production schedule specifying the sequence of activities time requirements and critical path for performing steps in a project

PERT chart

production schedule specifying the sequence of activities, time requirements, and critical path for performing the steps in a project

Gantt Chart

production schedule that breaks down large projects into steps to be performed and specifies the time required to perform each step

Gantt chart

production schedule that breaks down large projects into steps to be performed and specifies the time required to perform each step

Operations managers create utility for customers through

production, inventory, and quality control

Utility

products ability to satisfy a human want or need

utility

products ability to satisfy a human want or need

place utility

products available so that they are convenient

time utility

products available when consumers want them

Market Price (Equilibrium Price)

profit-maximizing price at which the quantity of goods demanded and the quantity of good supplied are equal

Gross national product (GNP)

refers to the total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located

Gross domestic product (GDP)

refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production measure of aggregate output

Team organization

relies on project type teams with little or no underlying functional hierarchy

Factors of Production

resources used in the production of goods and services labor, capital, entrepreneurs, physical resources, and information resources

Price Gouging

responding to increased demand with overly steep (and often unwarranted) price increases.

Corporate Governance

roles of shareholders, directors, and other managers in corporate decision making and accountability Corporate governance is established by the firm's bylaws and usually involves three distinct bodies. Stockholders (or shareholders) are the owners of a corporation, investors who buy ownership shares in the form of stock. The board of directors is a group elected by stockholders to oversee corporate management. Corporate officers are top managers hired by the board to run the corporation on a day-to-day basis. Although board members oversee operations, most do not participate in day-to-day management. Rather, they hire a team of managers to run the firm. This team, called officers, is usually headed by the firm's chief executive officer (CEO), who is responsible for overall performance. Other officers typically include a president, who is responsible for internal management, and vice-presidents, who oversee various functional areas such as marketing and operations.

Felonies

serious crimes punishable by death or by imprisonment for more than one year. Many states also define different degrees of felony offenses and vary the punishment according to the degree. For instance, most jurisdictions punish a burglary that involves forced entry into a home at night more harshly than a burglary that involves breaking into a nonresidential building during the day.

operations process

set of methods and technologies used to produce a good/service

Business Cycle

short-term pattern of economic expansions and contractions

Surplus

situation in which quantity supplied exceeds quantity demanded

Double Taxation

situation in which taxes may be payable both by a corporation on its profits and by shareholders on dividend incomes

Political Action Committees (PACs)

special organizations created to solicit money and then distribute it to political candidates

Organizational Structure

specification of the jobs to be done within an organization and the ways in which they relate to one another

Managerial Ethics

standards of behavior that guide individual managers in their work

Managerial Ethics

standards of behavior that guide individual managers in their work Behavior toward Employees - This category covers such matters as hiring and firing, wages and working conditions, and privacy and respect. Behavior toward the Organization - Ethical issues also arise from employee behavior toward employers, especially in such areas as conflict of interest, confidentiality, and honesty. Behavior toward Other Economic Agents - Ethics also comes into play in the relationship of a business and its employees with so-called primary agents of interest — mainly customers, competitors, stockholders, suppliers, dealers, and unions.

Economic indicators

statistics that show whether an economic system is strengthening, weakening, or remaining stable help assess the performance of an economy

Economic Indicators

statistics that show whether an economic system is strengthening, weakening, or remaining stable—to help assess the performance of an economy.

Joint Venture

strategic alliance in which the collaboration involves joint ownership of the new venture

Joint Venture

strategic alliance in which the collaboration involves joint ownership of the new venture.

Corporate Social Audit

systematic analysis of a firm's success in using funds earmarked for meeting its social responsibility goals

Social Audit

systematic analysis of a firm's success in using funds earmarked for meetings its social responsibility goals

operations management

systematic direction/control that transforms resources into products that create value and provide benefits

Operations (production) Management

systemic direction and control of the activities that transform resources into finished products that create value for and provide benefits to customers

Why is it important for a manager to understand organizational culture? What functions does organizational culture serve?

t is important for a manager to understand organizational culture for two reasons: culture can powerfully shape an organization's long-term success, and culture can serve as a control mechanism, substituting for organizational structure. An organization's culture has four functions: It gives members organizational identity. It facilitates collective commitment. It promotes social-system stability. It shapes behavior by helping employees make sense of their surroundings.

Absolute Advantage

the ability to produce something more efficiently than any other country can

Absolute Advantage

the ability to produce something more efficiently than any other country can (Saudi oil, Canadian timber)

Legal Compliance

the extent to which the organization conforms to local, state, federal, and international laws

Uncertainty Orientation

the feeling individuals have regarding uncertain and ambiguous situations

Uncertainty Orientation (Hofstede)

the feeling individuals have regarding uncertain and ambiguous situations

Capital

the financial resources needed to operate a business/ need this to start a new business and then to keep it running and growing

Goal Orientation (Hofstede)

the manner in which people are motivated to work toward different kinds of goals

Business cycle

the pattern of short-term ups and downs (or expansions and contractions) in an economy

Offshoring

the practice of outsourcing to foreign countries

Outsourcing

the practice of paying suppliers and distributors to perform certain business processes or to provide needed materials or services

Protectionism

the practice of protecting domestic business at the expense of free market competition Critics charge that protectionism drives up prices by reducing competition

Market price (equilibrium price)

the price at which the quantity of goods demanded and the quantity of goods supplied are equal

Standard of Living

the total quantity and quality of goods and services people can purchase with the currency used in their economic system

Standard of Living

the total quantity and quality of goods and services people can purchase with the currency used in their economic system you need to know how much your nation's economic system is growing

Standard of living

the total quantity and quality of goods and services that they can purchase with the currency used in their economic system

Aggregate Output

the total quantity of goods and services produced by an economic system during a given period

Aggregate Output

the total quantity of goods and services produced by an economic system during a given period - an increase is growth (or economic growth). When this grows more quickly than the population, two things usually follow: Output per capita—the quantity of goods and services per person—goes up. The system provides more of the goods and services that people want.

Aggregate output

the total quantity of goods and services produced by an economic system during a given period primary measure of growth in the business cycle

Gross National Product

the total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located

Gross Domestic Product

the total value of all goods and services produced within a given period by a national economy through domestic factors of production This is a measure of aggregate output

Merger

the union of two corporations to form a new corporation

Merger

the union of two corporations to form a new corporation.

Lobbying

the use of persons or groups to formally represent an organization or group of organizations before political bodies

possession utility

the value of making an item easy to purchase through the provision of credit cards or financial arrangements

Demand

the willingness and ability of buyers to purchase a good or service

Demand

the willingness and ability of buyers to purchase a product (a good or a service)

Demand

the willingness and ability of buyers to purchase a product (a good or a service)

Supply

the willingness and ability of producers to offer a good or service for sale

Organizational Stakeholders

those groups, individuals, and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance

Organizational Stakeholders

those groups, individuals, and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance.

ideas

thoughts about concepts, actions, or causes

Gross Domestic Product (GDP)

total value of all goods and services produced within a given period by a national economy through domestic factors of production

Theft of Trade Secrets and Other Intellectual Property

trade secrets constitute a form of intellectual property that for many businesses can be extremely valuable. The Economic Espionage ActFootnote makes the theft of trade secrets a federal crime. The act also makes it a federal crime to buy or possess another person's trade secrets, knowing that the trade secrets were stolen or otherwise acquired without the owner's authorization. Violations of the Economic Espionage Act can result in steep penalties: imprisonment for up to ten years and a fine of up to $500,000. A corporation or other organization can be fined up to $5 million. Additionally, the law provides that any property acquired as a result of the violation, such as airplanes and automobiles, is subject to criminal forfeiture, or seizure by the government. Similarly, any property used in the commission of the violation, such as servers and other electronic devices, is subject to forfeiture. A theft of trade secrets conducted via the Internet, for instance, could result in the forfeiture of every computer or other device used to commit or facilitate the violation as well as any assets gained.

transportation

transporting resources to the producer and finished goods to the customer

Economic indicators help to assess the performance of an economy. True or false

true

Economic systems differ in how factors of production are used. True or false

true

In typical modern oligopolies, the large capital investment necessary to enter the market discourages new competitors. True or false

true

Natural monopolies exist partly because duplication of effort and resources would be wasteful in some cases. True or false

true

Stabilization policy is made up of both monetary and fiscal policy. True or false

true

Capatilism

which allows the private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive

Establishment of a Decision making hierarchy

who will make decisions and have authority over others

Methods Planning

• Managers identify each production step and methods for performing it. • They reduce waste and inefficiency through methods improvement and improving process flows. -A detailed description, often a process flowchart, helps managers organize and record information. • They attempt to improve customer service.

A Project Manager uses the Gantt chart to:

•List all activities to be performed •Estimate the time required for each step •Record the progress on the chart •Check the progress against the time scale on the report

sole proprietorship

A business owned by one person.

Who has the decision-making authority in a decentralized organization?

A number of different managers.

Cooperative

An organization that is owned and operated by its members.

ISO 14000

Certification Program attesting to the fact that a factory, laboratory, or office has improved it environmental performance.

The Process of Culture Change

Changing organizational culture is a teaching process in which organizational members teach each other about the organization's preferred values, beliefs, expectations, and behaviors. This process is accomplished by using one or more of the following mechanisms: 1. Formal Statements The first way to embed preferred culture is through the use of formal statements of organizational philosophy, mission, vision, and values, as well as materials used for recruiting, selecting, and socializing employees. Example: Walmart founder Sam Walton stated that three basic values represented the core of the retailer's culture: (1) respect for the individual, (2) service to customers, and (3) striving for excellence. 2. Slogans & Sayings The desirable corporate culture can be expressed in language, slogans, sayings, and acronyms. Example: Robert Mittelstaedt, Dean of the W. P. Carey School of Business at Arizona State University, promotes his goal of having a world-class university through the slogan "top-of-mind business school." This slogan encourages instructors to engage in activities that promote quality education and research. 3. Stories, Legends, & Myths Until a decade ago, major drug companies treated third world countries as not worth the trouble of marketing to. But Andrew Witty, who in 2008 at age 43 became the youngest CEO of GlaxcoSmithKline, the world's second-largest pharmaceutical company, is making a name for himself by doing more for the poor people of the world than any other big drug company leader. While working in poor countries Witty found "just unbelievable energy to self-improve, to lift themselves up." He has promised to keep prices of drugs sold in poor countries to no more than 25% of what is charged in rich ones and to donate one-fifth of all profits made in such countries toward building their health systems. Now Glaxco is ranked No. 1 on the Access to Medicine index, which rates pharmaceutical companies on their stances toward the poor. 4. Leader Reactions to Crises How top managers respond to critical incidents and organizational crises sends a clear cultural message. Example: In 2001, Xerox Corporation was on the verge of bankruptcy, $19 billion in debt, and with only $100 million in cash. Anne Mulcahy, who had worked for the company for 25 years, assumed the post of CEO. Inspired by a history about adventurer Ernest Shackleton, who rescued his men after their ship was crushed by Antarctic ice in 1916, Mulcahy worked furiously for two years, not taking a single day off. She declined to file the company for bankruptcy and refused to cut research and development, believing that Xerox's long-term health depended on investment in new products. Five years later, the company reported a profit of more than $1 billion. And in 2008, she was named "CEO of the Year" by Chief Executive magazine. 5. Role Modeling, Training, & Coaching Triage Consulting Group, a health care financial consulting firm in California, places a high value on superior performance at achieving measurable goals. New employees are immediately prepared for this culture with a four-day orientation in Triage's culture and methods, followed by 15 training modules scheduled in six-week intervals. After less than a year, the best performers are ready to begin managing their own projects, furthering their career development. Performance evaluations take place four times a year, further reinforcing the drive for results. 6. Physical Design Intel originally had all its people work in uniform cubicles, consistent with the value it placed on equality. (Top managers don't have reserved parking spaces either.) However, the cubicle arrangement conflicted with the value Intel places on innovation, so the company is experimenting with open-seating arrangements combined with small conference rooms. Not only are open-seating arrangements thought to encourage collaboration, they also can reduce noise because employees can see when their activities are annoying to people nearby. Intel hopes that this environment will better support creative thinking. 7. Rewards, Titles, Promotions, & Bonuses At Triage Consulting Group, employees at the same level of their career earn the same pay, but employees are eligible for merit bonuses, again reinforcing the culture of achievement. The awarding of merit bonuses is partly based on coworkers' votes for who contributed most to the company's success, and the employees who received the most votes are recognized each year at the company's "State of Triage" meeting. 8. Organizational Goals & Performance Criteria Many organizations establish organizational goals and criteria for recruiting, selecting, developing, promoting, dismissing, and retiring people, all of which reinforce the desired organizational culture. Example: PepsiCo sets challenging goals that reinforce a culture aimed at high performance. 9. Measurable & Controllable Activities An organization's leaders can pay attention to, measure, and control a number of activities, processes, or outcomes that can foster a certain culture. Example: ExxonMobil's credo is "efficiency in everything we do," so that managers make a concerted effort to measure, control, and reward cost efficiency. As a result, the company is famous for delivering consistent returns, regardless of whether the price of oil is up or down. 10. Organizational Structure The hierarchical structure found in most traditional organizations is more likely to reinforce a culture oriented toward control and authority compared with the flatter organization that eliminates management layers in favor of giving employees more power. Example: The hierarchical structure of a railroad provides a much different culture from that of the "spaghetti organization" formerly employed by Danish hearing-aid maker Oticon, in which employees worked at mobile desks on wheels and were always subject to reorganization. 11. Organizational Systems & Procedures Companies are increasingly using electronic networks to increase collaboration among employees and to increase innovation, quality, and efficiency. For example, Molson Coors CEO Peter Swinburn, mentioned previously, in knitting together employees of several former companies made sure they had better tools to interact with each other. One technology he introduced was Yammer, a website for short messages similar to Twitter, on which some 2,000 employees now provide updates and collaborate on projects.

Quality

Combination of "characteristics of a product or service that bear on its ability to satisfy stated or implied needs".

How Employees Learn Culture: Symbols, Stories, Heroes, & Rites & Rituals

Culture is transmitted to employees in several ways, most often through such devices as (1) symbols, (2) stories, (3) heroes, and (4) rites and rituals.

ISO 9000 and ISO 14000

Ensuring certification of quality management in processes

Espoused Values

Espoused values are the explicitly stated values and norms preferred by an organization

Supply Chain (Value Chain)

Flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the network of firms until the product reaches the end customer.

Management Skills for the Twenty-First Century

Global Management Skills -Managers will need to understand foreign markets, cultural differences, and the motives and practices of foreign rivals. -Managers will also need to understand how to collaborate with others around the world on a real-time basis. Management and Technology Skills -New forms of technology have added to a manager's ability to process information while simultaneously making it even more important to organize and interpret an ever-increasing wealth of input.

Getting Closer to the Customer

Identifying internal and external customers

Low-Contact System

Level of Customer contact in which the customer need not be part of the system to receive the service.

Informal groups

Informal groups are simply groups of people who decide to interact among themselves. They may be people who work together in a formal sense or who just get together for lunch, during breaks, or after work. They may talk about business, the boss, or non-work related topics such as families, movies, or sports. Their impact on the organization may be positive (if they work together to support the organization), negative (if they work together in ways that run counter to the organization's interests), or irrelevant (if what they do is unrelated to the organization) relationships, effectively alters a company's formal structure.

What does good planning require?

It requires setting realistic goals that can actually be reached.

What is line Authority, and how does it look on an organizational chart?

Line authority can be traced in a line from the top of an organization to the bottom.

LINE AND STAFF

Line responsibilities are indicated by solid lines, staff responsibilities by dotted lines.

Entrepreneurial Characteristics

Resourcefulness Concern for good, personal customer relations Strong desire to be their own bosses Deal with uncertainty and risk

Operations Process

Set of methods and technologies used to produce a good or service.

Operational Managers

Supervisors, Office Managers, and Crew Leaders are examples of this type of manager.

A formal vertical hierarchy shows a company's most typical channels of communication

TRUE

organizational structure

The specification of the jobs to be done and the ways in which those jobs relate to one another.

organization charts

Used to clarify structure and to show employees where they fit into a firm's operations. Utilizes chain of command to explain the perspective of each job in the context of the firm.

Price

What is exchanged for the product

Surplus

a situation in which the quantity supplied exceeds the quantity demanded

Economic Indicators

a statistic that helps assess the performance of an economy

Percentage of US Businesses with less than 20 employees

about 90%

purchasing

acquisition of the materials and the services that a firm needs to produce its product

quality control

action of ensuring that operations produce products that meet specific quality standards - Requires establishment of specific standards and measurements

Sole Proprietorship

business owned and usually operated by one person who is responsible for all of its debts

Companies design their operations based on

business strategy

Corporation

business that is legally considered an entity separate from its owners and is liable for its own debts; owners' liability extends to the limits of their investments

General Partnership

business with two or more owners who share in both the operation of the firm and the financial responsibility for its debts

Entrepreneur

businessperson who accepts both the risks and the opportunities involved in creating and operating a new business venture

Closely Held (or Private) Corporation

corporation whose stock is held by only a few people and is not available for sale to the general public

Publicly Held (or Public) Corporation

corporation whose stock is widely held and available for sale to the general public

Producers

create the products and services used by individuals and other businesses."

low-contact system (with customers)

customer does not need to be a part of the system to receive service ex, post office, repair shops, and gas/electric companies

high-contact system (with customers)

customer is part of the system during service delivery ex. transportation involving passengers

key difference in goods and service operations

customers involvement in service operations

Information Resources

data and other information used by businesses

Balance of Payments

flow of all money into or out of a country

S Corporation

hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes

Collusion

illegal agreement between two or more companies to commit a wrongful act

Small Business

independently owned business that has relatively little influence in its market an important source of new jobs

Market Economy

individual producers and consumers control production and allocation by creating combinations of supply and demand

Market economy

individual producers and consumers control production and allocation by creating combinations of supply and demand

Entrepreneur

individual who accepts the risks and opportunities involved in creating and operating a new business venture

services

intangible items

Four aspects of service operations

interacting with customers, intangible and unstorable nature of some services, the customers presence in the process and service quality consideration

General Agreement on Tariffs and Trade (GATT)

international trade agreement to encourage the multilateral reduction or elimination of trade barriers

Market

is a mechanism for exchange between the buyers and sellers of a particular good or service

Entrepreneur

is a person who accepts the risks and opportunities entailed in creating and operating a new business

Joint Venture

is a unique business organized by two or more other businesses to operate for a limited time and for a specific project"

First-mover advantage

is any advantage that comes to a firm because it exploits an opportunity before any other firm does

Contingent Worker

is one who has no explicit or implicit contract for long-term employment.

Responsiblity

is the obligation to complete specific work."

Authority

is the right to make decisions about how responsibilities should be accomplished."

Economists have focused on four factors of production:

labor, capital, entrepreneurs, and physical resources also information resources

Limited Liability

legal principle holding investors liable for a firm's debts only to the limits of their personal investments in it

Organizing

management process of determining how best to arrange an organization's resources and activities into a coherent structure

Oligopoly

market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products

Oligopoly

market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products (ex: Boeing, Airbus)

Recession

more precisely defined as a period during which aggregate output, as measured by real GDP, declines.

Informal organization

network unrelated to the firms formal authority structure of everyday social interactions among company employees

Informal Organization

network, unrelated to the firm's formal authority structure, of everyday social interactions among company employees

Strategic Alliance

no

Inflation

occurs when an economic system experiences widespread price increases

Association of Southeast Asian Nations (ASEAN)

organization for economic, political, social, and cultural cooperation among Southeast Asian nations

Decentralized organization

organization in which a great deal of decision making authority is delegated to levels of management below the top

Decentralized Organization

organization in which a great deal of decision-making authority is delegated to levels of management at points below the top

Centralized Organization

organization in which most decision making authority is held by upper level management

Matrix Structure

organizational structure created by superimposing one form of structure onto another

Divisional structure

organizational structure in which corporate divisions operate autonomous businesses under the larger corporate umbrella

Stockholder (or Shareholder)

owner of shares of stock in a corporation

General (or active) Partner

partner who actively manages a firm and who has unlimited liability for its debts

Authority

power to make the decisions necessary to complete a task

Protectionism

practice of protecting domestic business against foreign competition

Dumping

practice of selling a product abroad for less than the cost of production

Import

product made or grown abroad but sold domestically

Form utility

production of the good or service

Business ethics

refers to ethical or unethical behaviors by employees in the context of their jobs

Social responsibility

refers to the overall way in which a business attempts to balance its commitments to relevant groups and individuals in its social environment

Economic Environment

relevant conditions that exist in the economic system in which a company operates

Business process reengineering

rethinking and radical redesign of business processes to improve performance, quality and productivity

Corporate Governance

roles of shareholders, directors, and other managers in corporate decision making and accountability

assembly line

same step layout, product moves step by step through a plant on a conveyor belt or other equipment until completion

Detailed schedule

schedule showing daily work assignments with start and stop times for assigned jobs

Profit center

separate company unit responsible for its own cost and profits

Profit Center

separate company unit responsible for its own costs and profits

Operations process

set of methods and technologies used to produce a good and service

operations capability

special ability that production does especially well to outperform competition

Operations capability

special ability that production does especially well to outperform the competition

Demand and Supply Schedule

stained from marketing research, historical data, and other studies of the market they reveal the relationships among different levels of demand and supply at different price levels.

Strategic Alliance

strategy in which two or more organizations collaborate on a project for mutual gain - a company finds a foreign partner to contribute approximately half of the resources needed to establish and operate a new business in the partner's country

Spin-off

strategy of setting up one or more corporate units as new, independent corporations

Spin-Off

strategy of setting up one or more corporate units as new, independent corporations.

Divestiture

strategy whereby a firm sells one or more of its business units

Divestiture

strategy whereby a firm sells one or more of its business units.

Capitalism

system that sanctions the private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive

Physical Resources

tangible items that organizations use in the conduct of their businesses

Tariff

tax levied on imported products

Power Orientation

the beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations

Power Orientation (Hofstede)

the beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations

Sociocultural Environment

the customs, mores, values, and demographic characteristics of the society in which an organization functions

Officers

top management team of a corporation

Gross National Product (GNP)

total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located

Specialization

who will do what

Four Types of Organizational Culture: Clan, Adhocracy, Market, & Hierarchy

According to one common methodology known as the competing values framework, organizational cultures can be classified into four types: (1) clan, (2) adhocracy, (3) market, and (4) hierarchy

Perfect Competition

(1) all firms in an industry must be small, and (2) the number of firms in the industry must be large -Prices are, therefore, determined by such market forces as supply and demand.

Marketing Concept

- The idea that an organization should 1) strive to satisfy the needs of consumers 2) while also trying to achieve the organizations goals

Assessing Ethical Behavior

1- Gather the relevant factual information 2- Analyze the facts to determine the most appropriate moral values 3- Make an ethical judgment based on how right or wrong the proposed activity or policy is.

Purposes of Goal Setting

1- Provides direction and guidance for managers at all levels 2- Helps firms allocate resources 3- Helps to define corporate culture 4- Helps managers assess performance

Ethical Norms (list)

1- Utility- Does a particular act optimize the benefits to those who are affected by it? (That is, do all relevant parties receive "fair" benefits?) 2- Rights- Does it respect the rights of all individuals involved? 3- Justice- Is it consistent with what's fair? 4- Caring- Is it consistent with people's responsibilities to each other?

Operations Planning

1. Capacity planning 2. Location planning 3. Layout planning 4. Process layouts 5. Product layouts 6.Fixed position layouts

2. The Environment: Differentiation Versus Integration—the Lawrence & Lorsch Model

Burns and Stalker's ideas were extended in the United States by Harvard University researchers Paul R. Lawrence and Jay W. Lorsch. Instead of a mechanistic-organic dimension, however, they proposed a differentiation-integration dimension—forces that impelled the parts of an organization to move apart or to come together. The stability of the environment confronting the parts of the organization, according to Lawrence and Lorsch, determines the degree of differentiation or integration that is appropriate.

partnership

Business owned by two or more people who share its risks and rewards.

_______ group activities around similar products or services. A. Output structures B. Matrix organizations C. Offering divisions D. Functional structures E. Product divisions

E. Product divisions

In which type of culture do employees adhere to the organization's values because they believe in its purpose? A. Fit B. Strategic C. Conditional D. Adaptive E. Strong

E. Strong

As an organization goes through the stages of the life cycle, it becomes more A. informal. B. centralized. C. unstable. D. organic. E. bureaucratic.

E. bureaucratic.

Departmentalization

how people perform certain tasks can best be grouped together

Labor/Human Resources

human capital, includes the physical and intellectual contributions people make while engaged in economic production

Limited Liability Corporation (LLC)

hybrid of a publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability

A clan culture has an external focus and values flexibility rather than stability and control

FALSE

A company with a formalized, structured work environment aimed at achieving efficiency, timeliness, and reliability in the creation and delivery of products has a clan culture

FALSE

A formal system of task and reporting relationships that coordinate and motivate an organization's members is known as an organizational configuration.

FALSE

The "social glue" that binds customers to a particular firm is called organizational culture

FALSE

The Red Cross is an example of a mutual-benefit organization

FALSE

Materials Management

Process of planning, organizing, controlling the flow of materials from sources of supply through distribution of finished goods.

Necesity

Sometimes, criminal defendants can be relieved of liability by showing necessity—that a criminal act was necessary to prevent an even greater harm.

Operations Capability (Production Capability)

Special ability that production does especially well to outperform the competition.

Business Process Reengineering

Starting over from scratch to improve processes

Warehousing

Storage of incoming material for production and finished goods for distribution to customers.

Core Principles and Organizational Values

Strategies and practices can change frequently and objectives can change occasionally, but an organization's core principles and values should remain steadfast.

Operations (Production) Management

Systematic direction and control of the activities that transform resources into finished products that create value for and provide benefits to customers.

A functionally organized company can also use cross-functional teams to work on particular problems

TRUE

A good organizational culture can facilitate a low turnover rate

TRUE

A hero is a person whose accomplishments embody the values of the organization.

TRUE

A hollow structure is often called a network structure

TRUE

A market culture has a strong external focus and values stability and control

TRUE

An adhocracy culture attempts to create innovative products by being adaptive, creative, and quick to respond to the environment

TRUE

When employees are forced to adhere to an organization's values through extensive procedures and bureaucracies, its culture is said to be weak

TRUE

Staff Members

advisers and counselors who help line departments in making decisions but who do not have the authority to make final decisions

Unlimited Liability

legal principle holding owners responsible for paying off all debts of a business

Defensive Stance

approach to social responsibility by which a company meets only minimum legal requirements in its commitments to groups and individuals in its social environment

Accommodative Stance

approach to social responsibility by which a company, if specifically asked to do so, exceeds legal minimums in its commitments to groups and individuals in its social environment

Accomodative Stance

approach to social responsibility by which a company, if specifically asked to do so, exceeds legal minimums in its commitments to groups and individuals in its social environment

Obstructionist Stance

approach to social responsibility that involves doing as little as possible and may involve attempts to deny or cover up violations

Mixed market economy

features characteristics of both planned and market economies

Embargo

government order banning exportation and/or importation of a particular product or all products from a particular country

Embargo

government order banning exportation or importation of a particular product or all products from a particular country

Subsidy

government payment to help a domestic business compete with foreign firms

Small Business Investment Company (SBIC)

government-regulated investment company that borrows money from the SBA to invest in or lend to a small business

Small-Business Investment Company (SBIC)

government-regulated investment company that borrows money from the SBA to invest in or lend to a small business

Demand Curve

graph showing how many units of a product will be demanded (bought) at different prices

Supply Curve

graph showing how many units of a product will be supplied (offered for sale) at different prices

Nominal GDP

gross domestic product (GDP) measured in current dollars or with all components valued at current prices

GDP Per Capita

gross domestic product divided by total population

Informal groups

group of people decide to interact

Venture Capital Company

group of small investors who invest money in companies with rapid growth potential

Work team

groups of operating employees who are empowered to plan and organize their own work and to perform that work with minimal supervision

Virtual organization

has little or no formal structure, a handful of permanent employees, small staff and a modest administrative facility

Time utility

having the offering available when consumers need it

Place utility

having the offering available where consumers need it

Limited liability

holds a firm's owners responsible for no more than the capital that they have invested in it.

High contact system

level of customer contact in which the customer is part of the system during service delivery

Low contact system

level of customer contact in which the customer need not be a part of the system to receive the service

Three forms of authority

line, staff, committee and team

Leading

management process of guiding and motivating employees to meet an organization's objectives

Shortage

meaning the quantity demanded will be greater than the quantity supplied

Follow-up

operations control activity for ensuring that production decisions are being implemented

Business

organization that provides good or services to earn profits

Business

organization that provides goods or services to earn profits

World Trade Organization (WTO)

organization through which member nations negotiate trade agreements and resolve disputes about trade policies and practices

Planned Economy

relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions

Outsourcing

replacing internal processes by paying suppliers and distributors to perform business processes or needed materials

Chain of Command

reporting relationships with a company

Chain of Command

reporting relationships within a company

Trade Deficit

situation in which a country's imports exceed its exports, creating a negative balance of trade

Shortage

situation in which quantity demanded exceeds quantity supplied

warehousing

storage of incoming materials for production and finished goods for distribution to customers

Comparative Advantage

the ability to produce some products more efficiently than others

Balance of Trade

the economic value of all the products that a country exports minus the economic value of the products it imports

Balance of Trade

the economic value of all the products that it exports minus the economic value of its imported products -There are positive results when a country exports (sells to other countries) more than it imports (buys from other countries). -There are negative results when a country imports more than it exports

Domestic Business Environment

the environment in which a firm conducts its operations and derives its revenues

Regulation

the establishment of laws and rules that dictate what organizations can and cannot do

Time Orientation

the extent to which members of a culture adopt a long-term versus a short-term outlook on work, life, and other elements of society

Time Orientation (Hofstede)

the extent to which members of a culture adopt a longterm versus a short-term outlook on work, life, and other elements of society

Ethical Compliance

the extent to which the members of the organization follow basic ethical (and legal) standards of behavior

Socialism

the government owns and operates selected major industries

Global Business Environment

the international forces that affect a business

Purchasing Power Parity

the principle that exchange rates are set so that the prices of similar products in different countries are about the same

Privatization

the process of converting government enterprises into privately owned companies

Job Specialization

the process of identifying the specific jobs that need to be done and designating the people who will perform them

Job specification

the process of identifying the specific jobs that need to be done and designating the people who will perform them

Entrepreneurship

the process of seeking business opportunities under conditions of risk

Acquisition

the purchase of one company by another

Acquisition

the purchase of one company by another.

Political-Legal Environment

the relationship between business and government

Factors of production (definition)

the resources that a country's businesses use to produce goods and services

factors of production

the resources that a country's businesses use to produce goods and services.

The government can influence the availability of capital by working through the Federal Reserve System. True or false

true

The main measure of growth in the business cycle is aggregate output. True or false

true

Collusion

two or more firms collaborate on such wrongful acts as price fixing

nonprofit organization

type of organization that focuses on providing a service but not to make a profit.

Limited Partnership

type of partnership consisting of limited partners and a general (or managing) partner

Insider trading

using confidential information to gain from the purchase or sale of stocks.

Learning organization

works to facilitate the lifelong leaning and personal development of all of its employee's while continually transforming itself to respond to changing demands and needs

Operations

activities involved in making products - goods and services for customers

S Corporation

"A corporate form that is favored by many small businesses is

Franchisee

"The company purchasing the rights to run the business is the

Franchiser

"The company that owns the product or service and grants the rights to another business is known as

Limited Liability Partnership

"identifies some investors who cannot lose more than the amount of their investment, but they are not allowed to participate in the day-to-day management of the business."

Partnership

"is a business owned and controlled by two or more people who have entered into an written agreement."

Nonprofit Corporation

"is a group of people who join to do some activity that benefits the public."

Indirect Contact

- involve unplanned "touches" with the company through word- of mouth comments from other customers, reviewers, and news reports

Communism

- is a system in which the government owns and operates all factors of production - the government would assign people to jobs; it would also own all business and control business decisions—what to make, how much to charge, and so forth. - Marx proposed that individuals would contribute according to their abilities and receive benefits according to their needs. - He also expected government ownership of production factors to be temporary

Market

- potential consumers make up a market, which is people with both the desire and ability to buy a specific offering

Customer Relationship Management (CRM)

- process of identifying prospective buyers, understanding them intimately, and developing favorable long-term perceptions of the organization and its offerings so that buyers will choose them in the market place

Competitive Product Analysis

-Analyzing competitors' products to identify improvements

Areas of Management

-Human Resource Managers hire and train employees, evaluate performance, and determine compensation -Operations Managers responsible for production, inventory, and quality control -Marketing Managers responsible for getting products from producers to consumers. -Information Managers design and implement systems to gather, organize, and distribute information -Financial Managers plan and oversee accounting functions and financial resources

Management Roles and Skills

-Interpersonal Roles a category of managerial roles including figurehead, leader, and liaison -Informational Roles a category of managerial roles including monitor, disseminator, and spokesperson -Decisional Roles a category of managerial roles including entrepreneur, disturbance handler, resource allocator, and negotiator

Lean Production Systems Goals

-Smooth production flows avoid inefficiencies -Elimination of unnecessary inventories -Continuous improvement in production processes

Perfect Competition (2)

-The products of each firm are so similar that buyers view them as identical to those of other firms. -Both buyers and sellers know the prices that others are paying and receiving in the marketplace. -Because each firm is small, it is easy for firms to enter or leave the market. -Going prices are set exclusively by supply and demand and accepted by both sellers and buyers.

Types of Managers

-Top Manager manager responsible for a firm's overall performance and effectiveness -Middle Manager manager responsible for implementing the strategies and working toward the goals set by top managers -First-Line Manager manager responsible for supervising the work of employees

What is required for marketing to occur

-Two or more parties with unsatisfied needs -desire and ability to satisfy those needs -a way for the parties to communicate -something to exchange

FOUR FUNCTIONS OF ORGANIZATIONAL CULTURE

1.It Gives Members an Organizational Identity At Southwest Airlines, for instance, top executives constantly reinforce the company's message that workers should be treated like customers, and they continually celebrate employees whose contributions go beyond the call of duty. 2. It Facilitates Collective Commitment Consider 3M, one of whose corporate values is to be "a company that employees are proud to be part of." This collective commitment results in a turnover rate of less than 3% among salaried personnel. "I'm a 27-year 3Mer because, quite frankly, there's no reason to leave," says one manager. "I've had great opportunities to do different jobs and to grow a career. It's just a great company." 3. It Promotes Social-System Stability The more effectively conflict and change are managed within an organization and the more that employees perceive the work environment to be positive and reinforcing, the more stable the social system within the organization. At 3M, social stability is encouraged by promoting from within, by hiring capable college graduates in a timely manner, and by providing displaced workers 6 months to find new jobs. 4. It Shapes Behavior by Helping Employees Make Sense of Their Surroundings The culture helps employees understand why the organization does what it does and how it intends to accomplish its long-term goals. 3M sets expectations for innovation, for example, by having an internship and co-op program, which provides 30% of the company's new college hires. Sometimes culture can be strong enough to take the place of structure; that is, the expectations of the culture replace formal rules and regulations. In these cases, the sense of orderliness and predictability that employees look to for guidance are provided by the culture rather than by a rule book.

The Horizontal Specialization: Who Specializes in What Work

A glance to the left and right on the line of an organization chart shows the horizontal specialization, the different jobs or work specialization. The husband-and-wife partners in a two-person graphic arts firm might agree that one is the "outside person," handling sales, client relations, and finances, and the other is the "inside person," handling production and research. A large firm might have vice presidents for each task—marketing, finance, and so on.

Quality Improvement Teams

Adopting quality circles

Virtual Organization

An organization whose members are geographically apart, usually working with e-mail, collaborative computing, and other computer connections

1. Common Purpose: The Means for Unifying Members

An organization without purpose soon begins to drift and become disorganized. The common purpose unifies employees or members and gives everyone an understanding of the organization's reason for being.

Staff Schedule

Assigned working times in upcoming days for each employee on each work shift.

Level 1: Observable Artifacts—Physical Manifestations of Culture

At the most visible level, organizational culture is expressed in observable artifacts—physical manifestations such as manner of dress, awards, myths and stories about the company, rituals and ceremonies, and decorations, as well as visible behavior exhibited by managers and employees. Department store retailer J. C. Penney Co. has tried to revamp itself from a traditional, hierarchical culture into one that is more informal and flexible by, for example, allowing such observable artifacts as business-casual dress on weekdays and jeans on Fridays.

Centralized Organization

Authority lies in one place.

One of the typical devices for transmitting culture, a(n) ______ is an object, act, quality, or event that conveys meaning to others. A. icon B. symbol C. sign D. representation E. ritual

B. symbol

Economic system

a nation's system for allocating its resources among its citizens, both individuals, and organizations

Violent Crime

Certain crimes are called violent crimes, or crimes against persons, because they cause others to suffer harm or death. Murder is a violent crime. So is sexual assault, or rape. Robbery—defined as the taking of money, personal property, or any other article of value from a person by means of force or fear—is also a violent crime. Typically, states have more severe penalties for aggravated robbery—robbery with the use of a deadly weapon. Assault and battery, which will be discussed in Chapter 12 in the context of tort law, are also classified as violent crimes. --Each violent crime is further classified by degree, depending on the circumstances surrounding the criminal act. These circumstances include the intent of the person committing the crime and whether a weapon was used. For crimes other than murder, the level of pain and suffering experienced by the victim is also a factor.

Coporation

Company that is registered by a state and operates apart from its owners.

Consumer Bill of Rights

Consumers have a right to safe products Consumers have a right to be informed about all relevant aspects of a product Consumers have a right to be heard Consumers have a right to choose what they buy Consumers have a right to be educated about purchases Consumers have a right to courteous service

Describe the function of leading and how it affects a managers job.

Creating a vision to inspire employees. Setting goals for your manager, communicating, resolving conflicts, and encouraging each employee to reach his or her own potential.

When managers must be closely involved with their subordinates, they should have a ______ span of control. A. flexible B. wide C. flat D. narrow E. lean

D. narrow

centralized organization

Decision-making authority is retained at the top levels of the organization.

location planning

Determining where production will happen based on costs and flexibility

Performance

Dimension of quality that refers to how well a product does what it is supposed to do.

Consistency

Dimension of quality that refers to sameness of product quality from unit to unit.

Value-Added Analysis

Eliminating wasteful and unnecessary activities

Deflation, an indication that the economy is contracting, is characterized by price stabilization of goods. True or false

False

One of the four elements that are necessary for private enterprise to be carried out is reasonable prices. True or false

False

The United States government manages the collection and spending of its revenues through monetary policy. True or false

False

flat organizational structure

Few layers of management. Used in decentralized organizations.

Real GDP

GDP adjusted to account for changes in currency values and price changes

Real Growth Rate

GDP and GNP usually differ by less than 1 percent, but economists argue that GDP is a more accurate indicator of domestic economic performance because it focuses only on domestic factors of production The U.S. population is growing at a rate of 0.77 percent per year.

Real GDP

GDP has been adjusted to account for changes in currency values and price changes

Nominal GDP

GDP measured in current dollars or with all components valued at current prices

Problems with Constitutionality

In 2005, the United States Supreme Court held that certain provisions of the federal sentencing guidelines were unconstitutional. Essentially, the Court's ruling changed the federal sentencing guidelines from mandatory to advisory. Depending on the circumstances of the case, a federal trial judge may now depart from the guidelines if she or he believes that it is reasonable to do so.

Mechanistic Organizations: When Rigidity & Uniformity Work Best

In a mechanistic organization, authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. Mechanistic organizations, then, are bureaucratic, with rigid rules and top-down communication. This kind of structure is effective at McDonald's because the market demands uniform product quality, cleanliness, and fast service. In general, mechanistic design works best when an organization is operating in a stable environment. Yet new companies that have gone through a rough-and-tumble startup period may decide to change their structures so that they are more mechanistic, with clear lines of authority.

National Competitive Advantage

International competitive advantage stemming from a combination of factor conditions, demand conditions, related and supporting industries, and firm strategies, structures, and rivalries 1 Factor conditions are the factors of production we discussed in Chapter 1 — labor, capital, entrepreneurs, physical resources, and information resources. 2 Demand conditions reflect a large domestic consumer base that promotes strong demand for innovative products. 3 Related and supporting industries include strong local or regional suppliers and/or industrial customers. 4 Strategies, structures, and rivalries refer to firms and industries that stress cost reduction, product quality, higher productivity, and innovative products.

Receiving Stolen Goods

It is a crime to receive goods that a person knows or should have known were stolen or illegally obtained. To be convicted, the recipient of such goods need not know the true identity of the owner or the thief, and need not have paid for the goods. All that is necessary is that the recipient knows or should know that the goods are stolen, which implies an intent to deprive the true owner of those goods.

4. The Link Between Strategy & Structure

It makes sense that a company's structure should help it achieve its goals, which represent an important part of its strategy. Thus, if the managers of an organization change its strategy, as gloStream did when it decided to add lots more people and put them under one roof instead of in a virtual network, they need to change the organization's structure to support that strategy. Indeed, companies often begin by offering a single product or product line that requires only a simple structure, but as they grow and their strategies become more ambitious and elaborate, so the structure changes to support those strategies. Most current strategy structures tend to reflect strategies of (1) cost minimization, (2) innovation, or (3) imitation. For instance, cost minimizers, who tend to tightly control costs, opt for the stability and efficiency of the mechanistic structure. Innovative companies prefer the flexibility and free flow of information of the organic structure. Imitators, who minimize their risks by copying market leaders, might use a mechanistic structure to maintain cost controls and an organic structure to mimic the industry's innovative directions.

Special Issues in Corporate Ownership

Joint Venture - strategic alliance in which the collaboration involves joint ownership of the new venture. Employee Stock Ownership Plan (ESOP) - arrangement in which a corporation holds its own stock in trust for its employees, who gradually receive ownership of the stock and control its voting rights. Institutional Investor - large investor such as a mutual fund or a pension fund that purchases large blocks of corporate stock. Merger - the union of two corporations to form a new corporation. Acquisition - the purchase of one company by another. Divestiture - strategy whereby a firm sells one or more of its business units. Spin-Off - strategy of setting up one or more corporate units as new, independent corporations.

6. Authority, Responsibility, & Delegation: Line Versus Staff Positions

Male sea lions have to battle other males to attain authority over the herd. In human organizations, however, authority is related to the management authority in the organization; it has nothing to do with the manager's fighting ability or personal characteristics. With authority goes accountability, responsibility, and the ability to delegate one's authority.

Operations (Production) Managers

Managers responsible for ensuring that operations activities create value and provide benefits to customers.

Middle Managers

Managers who carry out the decisions of top management.

State Crimes

Many states have also enacted laws that punish behavior as criminal without the need to show criminal intent.

Global/Geographic Clusters

North America- As the world's largest marketplace and most stable economy, the United States dominates the North American market. Canada also plays a major role in the international economy, and the United States and Canada are each other's largest trading partners. Europe- Europe is often regarded as two regions—Western and Eastern. Western Europe, dominated by Germany, the United Kingdom, and France, has long been a mature but fragmented marketplace. The transformation of this region via the European Union (discussed later in this chapter) into an integrated economic system has further increased its importance. Pacific Asia- Pacific Asia is generally agreed to consist of Japan, China, Thailand, Malaysia, Singapore, Indonesia, South Korea, Taiwan, the Philippines, and Australia. Fueled by strong entries in the automobile, electronics, and banking industries, the economies of these countries grew rapidly in the 1970s and 1980s. After a currency crisis in the late 1990s that slowed growth in virtually every country of the region, Pacific Asia showed clear signs of revitalization until the global recession in 2009.

Identity Theft

Not surprisingly, there has been a marked increase in identity theft in recent years. Identity theft occurs when the wrongdoer steals a form of identification—such as a name, date of birth, or Social Security number—and uses the information to access the victim's financial resources. The Internet has provided even easier access to private data, as we will discuss further in Chapter 15. Frequent Web surfers surrender a wealth of information about themselves without knowing it. Most Web sites use "cookies" to collect data on those who visit their sites. Web browsers often store information such as the consumer's name and e-mail address. Finally, every time a purchase is made online, the item is linked to the purchaser's name.

Approaches to Social Responsibility

Obstructionist- involves doing as little as possible and may involve attempts to deny or cover up violations Defensive- company meets only minimum legal requirements in its commitments to groups and individuals its social environment Accommodative- a company, if specifically asked to do so, exceeds legal minimums in its commitments to groups Proactive- a company actively seeks opportunities to contribute to the well-being of groups and individuals in its social environment

Organization

Once an organization's vision and strategy have been determined, as we stated at the beginning of this chapter, the challenge for top managers is to create, first, a culture that will motivate its members to work together and, second, a structure that will coordinate their actions to achieve the organization's strategic goals. Here let us begin to consider the second part—an organization's structure. According to Chester I. Barnard's classic definition, an organization is a system of consciously coordinated activities or forces of two or more people. By this definition, a crew of two coordinating their activities to operate a commercial tuna fishing boat is just as much an organization as the entire StarKist Tuna Co.

Verizon Is Creating a Culture That Focuses on Shareholder Value

One may be the loneliest number, but Verizon isn't complaining. After appearing five times in the Top 10 over the last six years, the telecommunications company captured the No. 1 spot on the Training Top 125 for the first time in 2012. Despite a relatively flat training budget and a work stoppage that resulted from the expiration of union collective bargaining agreements, Verizon remained steadfast in its commitment to effective training tied to corporate strategic goals—and had the results to show for it. "We focused on the major training initiatives that would advance our strategic business goals and business unit/functional-specific initiatives," says Al Torres, VP, Human Resources, Verizon Telecom and Business. "We remained relatively flat on full-time staff across Verizon, but we increased the number of internal subject matter experts (SMEs) significantly to help drive key initiatives deeply through the organization." Verizon's three main business goals for 2011 were: To build a business and workforce as good as its networks. To lead in shareholder value creation. To be recognized as an iconic technology company. Verizon's strategic business units (BUs) align BU-specific priorities with the company's business goals and core values. "Our federated L&D organizations, supporting each BU, establish training priorities/initiatives that align with each BU's priorities and Verizon's business goals and values—top to bottom and across," says Magda Yrizarry, VP, Corporate Human Resources.... Creating a leadership culture that leads for shareholder value was one of Verizon's significant goals in 2011, and the company's implementation of Leading for Shareholder Value (LSV) was a key lever for cultural change.... Sponsored by a new president and CEO Lowell McAdam, LSV is a 1.5-day mandatory executive education program designed to help senior leaders understand how to drive long-term value creation.... Each LSV session is led by CEO McAdam and CFO Fran Shammo.... As part of the program design, Yrizarry says, senior leaders are placed in cross-business units and cross-functional teams and given an assignment to identify obstacles preventing Verizon from creating more shareholder value. Each team recommends actions that will remove those obstacles. At the end of each session, each team reports to a panel of top executives.... In addition, during the program, each senior leader submits an Individual Accountability Plan (IAP). These IAPs are aligned with "value drivers" or metrics by which shareholders, analysts, and potential investors assess company performance.... Each senior leader selects one to two action he or she will commit to as part of driving SHV. The IAPs then are digitized and provided to Lowell McAdam and business unit presidents for review and follow-up. More than 300 senior leaders now have SHV IAPs that will be incorporated into 2011 performance reviews and, where appropriate, into 2012 performance agreements, Yrizarry says.... At the other end of Verizon's leadership development spectrum, "we are focused on attracting and retaining the best talent from colleges and universities as we see this as critical to building our leadership funnel for the future," Yrizarry says. In 2011, Verizon rolled out a new "Verizon Leadership Development Program" (VLDP) across the enterprise.... "VLDP recruits the highest-performing college graduates at strategic partnership schools with 10- to 12-week Verizon internships and semester-long co-ops as a primary feeder pool for the full-time college hire VLDP," Yrizarry says. VLDP currently sponsors Finance, Network Operations, Engineering, IT, Human Resources, and Marketing. After graduation and upon hire, participants complete a minimum of two job rotations. The number and length of job rotations varies between functions over the course of two or three years in the program. All VLDP hires experience a 24-month customized leadership curriculum road map focused on cultural immersion and self-awareness, operational effectiveness, high performance, and leadership preparation. In addition, each function has a functional-specific curriculum road map and experiential development activities. Innovation is at the core of who Verizon is, according to Verizon Wireless Human Resources VP Lou Tedrick, and "it's essential to be a leading innovator in order to achieve our goal of becoming an iconic technology company. Our 4G LTE network is key to our future ability to deliver innovative technology to our customers." Prior to rolling out its 4G LTE network in December 2010, Verizon delivered 60,000-plus hours of 4G LTE technology and device training to its front-line Sales and Services reps between January and August. "We've maintained a one-stop online performance support 4G LTE Resource Center for employees to use at the moment of apply," Tedrick notes.... With the volume of training taking place—particularly on new products and technology—just how does Verizon measure its effectiveness? At the onset of a training initiative, "we work with key stakeholders and business partners to define what success will look like in terms of employee knowledge, behaviors, and targeted business results," Tedrick says. "Then, we ideally get a pre-training 'snapshot' of knowledge, behaviors, and/or business results to compare with a post-training snapshot." Verizon Wireless (VZW), for example, uses a CS New Hire Training (NHT) Scorecard to monitor new hire performance at 30, 60, 90, and 120 days post-training. "Working with our CS Operations Leaders, we measure new hire performance on a set of CS key performance indicators such as 'Entire Rep Performance,' 'Quality,' 'First Call Resolution,' and 'Average Handle Time.'" Tedrick says new hires consistently meet the expected key performance indicators (KPIs) by 120 days post-training and that VZW has used this scorecard to determine curriculum changes needed for a CS NHT redesign and for targeted reinforcement training.... Tedrick says video/audio podcasts are fast becoming one of Verizon employees' favorite means for learning quickly. "We've built videos to demonstrate system processes for our B2B sales team-accessed from within their primary sales force automation tool. Videos demonstrating new devices provide a quick, effective, on-demand learning approach." Viewership is viral, Tedrick says, with employees recommending to peers a video lesson they just watched in a matter of minutes. Indeed, Verizon's DROID Charge by Samsung video reached 1,240 views shortly after it launched. "We distribute videos via VZTube, our internal YouTube site," Tedrick explains. Year-to-date total videos watched: 1,478,412; audio files played: 13,084; total VZTube members: 83,398. Viewership statistics on existing videos are used to make recommendations for future videos. Tedrick notes that low views on a particular video type are taken into consideration when planning future videos that are similar in style and message. Verizon also expanded its My NetWork Social Networking platform for peer-to-peer collaboration to include My NetWork On-The-Go in 2011. Employees now can access my NetWork features using their mobile devices.... "We've found that the keys to success for social media is to 'pilot' or 'trial' first, so you can work out any issues before expanding to a wider audience, and if you track the impact on KPIs, it can be a good case study to share with leaders who may be concerned about the net impact of social media," Tedrick says. "Additionally, we've found that taking a 'low-key' approach to social media for learning has let learners try things out for size, then recommend it to their peers. The result is organic versus forced utilization." Verizon currently is exploring the use of tablets for delivering Online Performance Support System (InfoManager) content at "moment of apply," particularly for its Retail representatives, Tedrick says. "This way, our Retail representatives will have access to the information while interacting with our customers and not have to step out of their sales process flow." Verizon hopes to have it available by mid-year 2012.

Online Auction Fraud

Online auction fraud, in its most basic form, is a simple process. A person puts up an expensive item for auction, on either a legitimate or a fake auction site, and then refuses to send the product after receiving payment. Or, as a variation, the wrongdoer may send the purchaser an item that is worth less than the one offered in the auction. The larger online auction sites, such as eBay, try to protect consumers against such schemes by providing warnings about deceptive sellers or offering various forms of insurance. It is nearly impossible to completely block fraudulent auction activity on the Internet, however. Because users can assume multiple identities, it is very difficult to pinpoint fraudulent sellers—they will simply change their screen names with each auction.

Follow-Up

Operations control activity for ensuring that production decisions are being implemented.

Common Elements of Organizations: Four Proposed by Edgar Schein

Organizational psychologist Edgar Schein proposed the four common elements of (1) common purpose, (2) coordinated effort, (3) division of labor, and (4) hierarchy of authority.

virtual organizations

Organizations that have little or no formal structure and just a handful or employees.

team organizations

Organizations that rely almost exclusively on project-type teams with little or no underlying functional hierarchy.

Civil Law

Pertains to the duties that exist between persons and their government.

Quality Ownership

Quality belongs to each person who creates it while performing a job and it requires a focus on quality by all parts of an organization

Enacted Values

Represent the values and norms actually exhibited in the organization

Business Process Re-engineering

Rethinking and radical redesign of business processes to improve performance, quality, and productivity.

4. Rites & Rituals

Rites and rituals are the activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's life. Military units and sports teams have long known the value of ceremonies handing out decorations and awards, but many companies have rites and rituals as well. Example: Employees of New Belgium Brewery in Fort Collins, Colorado, which makes Fat Tire Ale, are given a cruiser bicycle during their first year. After five years, they get a free brewery-hopping trip to Belgium. Ten years of employment is acknowledged with a tree planted in their name in the campus orchard. (The company boasts a 97% employment retention rate.)

Small Business Development Center (SBDC)

SBA program designed to consolidate information from various disciplines and make it available to small businesses

M'naghten and Other State Rules

Some states use the M'Naghten test. Under this test, a person is not responsible if, at the time of the offense, he or she did not know the nature and quality of the act or did not know that the act was wrong. Other states use the irresistible-impulse test. A person operating under an irresistible impulse may know an act is wrong but cannot refrain from doing it. Under any of these tests, proving insanity is extremely difficult. For this reason, the insanity defense is rarely used and usually is not successful. Four states have abolished the insanity defense.

Factors that increase criminal penalties

Sentencing guidelines still exist and provide for enhanced punishment for certain types of crimes. Penalties can be enhanced for white-collar crimes, violations of the Sarbanes-Oxley Act (, and violations of securities laws. The sentencing judge must take into account the various sentencing factors that apply to an individual defendant before concluding that a particular sentence is reasonable. When the defendant is a business firm, these factors include the company's history of past violations, management's cooperation with federal investigators, and the extent to which the firm has undertaken specific programs and procedures to prevent criminal activities by its employees.

Crafting a Business Plan

Setting Goals and Objectives Sales Forecasting Financial Planning

quality

The combination of "characteristics of a product or service that bear on its ability to satisfy stated or implied needs" -Begins when products are designed: goals are set for performance and consistency -Includes deciding what constitutes a high-quality product and determining how to measure these quality characteristics

span of control

The number of people who report to a manager.

Unlimited Liability

The owner is responsible for the company's debts.

Contingency Design

The process of fitting the organization to its environment is called contingency design.

The Divisional Structure: Grouping by Similarity of Purpose

The third organizational form is the divisional structure—people with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions.

What are the primary responsibilities of top-level managers?

They set goals as well as plan for the future.

Quality Improvement Team

Total quality management tool in which collaborative groups of employees from various work areas work together to improve quality by solving common shared production problems.

ORGANIZATION CHART

Two kinds of information that organization charts reveal about organizational structure are (1) the vertical hierarchy of authority—who reports to whom, and (2) the horizontal specialization—who specializes in what work.

Just-In-Time (JIT) Production

Type of lean production system that brings together all materials at the precise time they are required at each production stage.

WHAT KIND OF ORGANIZATIONAL CULTURE WILL YOU BE OPERATING IN?

Want to get ahead in the workplace but hate the idea of "office politics"? Probably you can't achieve the first without mastering the second. Although hard work and talent can take you a long way, "there is a point in everyone's career where politics becomes more important," says management professor Kathleen Kelley Reardon. You have to know the political climate of the company you work for, says Reardon, who is author of The Secret Handshake and It's All Politics. "Don't be the last person to understand how people get promoted, how they get noticed, how certain projects come to attention. Don't be quick to trust. If you don't understand the political machinations, you're going to fail much more often." A great part of learning to negotiate the politics—that is, the different behavioral and psychological characteristics—of a particular office means learning to understand the organization's culture. The culture consists not only of the slightly quirky personalities you encounter but also all of an organization's normal way of doing business, as we'll explain.

What factors affect the design of an organization's structure?

What is the optimal size for an organization? How big is too big? Medical records company gloStream, which sells software to doctors' offices, was founded in 2005 as a virtual organization, and for four years the approach worked well, with costs kept low and salespeople having no choice but to be out in the field. But in 2009, CEO Mike Sappington decided it was time to "take the company physical"—and move more people under the same roof. "We've gotten too big to be a virtual company," he told Inc. magazine. By the following year, gloStream planned to have 100 employees in the United States and another 100 in India. "Setting up a conference call or arranging everyone's schedules for a meeting," he said, "started to take an enormous amount of time."

Cultures for Enhancing Economic Performance: Three Perspectives

What types of organizational culture can increase an organization's economic performance in terms of increasing competitiveness and profitability? Three perspectives have been proposed: (1) strength, (2) fit, and (3) adaptive.

The Organization Chart

Whatever the size or type of organization, it can be represented in an organization chart. An organization chart is a box-and-lines illustration showing the formal lines of authority and the organization's official positions or work specializations. This is the family tree-like pattern of boxes and lines posted in staff break rooms and given to new hires.

Centralized Authority

With centralized authority, important decisions are made by higher-level managers. Very small companies tend to be the most centralized, although nearly all organizations have at least some authority concentrated at the top of the hierarchy. Sears and McDonald's are examples of companies using this kind of authority. An advantage in using centralized authority is that there is less duplication of work, because fewer employees perform the same task; rather, the task is often performed by a department of specialists. Another advantage of centralization is that procedures are uniform and thus easier to control; all purchasing, for example, may have to be put out to competitive bids.

Groups that will increase as a percentage of the total U.S workforce in the next decade

Younger Workers (16-24 years of age) Asian, Hispanic, African American Groups Women

Propiertorship

a business owned and run by just one person.

Euro

a common currency shared among most of the members of the EU (excluding Denmark, Sweden, and the United Kingdom)

Euro

a common currency shared among most of the members of the European Union (excluding Denmark, Sweden, and the United Kingdom

Stability

a condition in which the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate

franchise

a contractual agreement to use the mane and sell the products or services of a company in a designated geographic area.

Closely Held (or Private) Corporation

a corporation whose stock is held by only a few people and is not available for sale to the general public

Product

a good, service, or idea to satisfy the consumer's needs

Small Business Administration (SBA)

a government agency that assists small businesses, has different standards based on industry

Limited Liability Corporation (LLC)

a hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes

S Corporation

a hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes

Recession

a period during which aggregate output, as measured by GDP, declines

Social Orientation

a person's beliefs about the relative importance of the individual versus groups to which that person belongs

Social Orientation (Hofstede)

a person's beliefs about the relative importance of the individual versus groups to which that person belongs

Depression

a prolonged and deep recession

Assembly line layout

a same steps layout in which a product moves step by step through plant on conveyor belts

Niche

a segment of a market that is not currently being exploited

First-Mover Advantage

any advantage that comes to a firm because it exploits an opportunity before any other firm does

Ethics

beliefs about what is right and wrong or good and bad in actions that affect others

ISO 14000

certification program attesting to the fact that a factory, laboratory, or office has improved its environmental performance

ISO 9000

certification program attesting to the fact that a factory, laboratory, or office has met the quality management standards set by the International Organization for Standardization

Tall Organizational Structure

characteristic of centralized companies with multiple layers of management

Flat Organizational Structure

characteristic of decentralized companies with relatively few layers of management

Tall Organizational structure

characteristics of centralized companies with multiple layers of management

Flat Organizational structure

characteristics of decentralized companies with relatively few layers of management

Inflation results in increased purchasing power for the consumer. True or false

false

Physical resources include the data and other information used by businesses. True or false

false

Organization Chart

diagram depicting a companies structure and showing employees where they fit into its operation

Functional Departmentalization

dividing an organization according to groups functions or activities

production provides businesses with..

economic results like profit, wages, and goods purchased from other companies

Mixed Market Economy

economic system featuring characteristics of both planned and market economies

Private Enterprise

economic system that allows individuals to pursue their own interests without undue governmental restriction

Monopoly

exists when an industry or market has only one producer (or else is so dominated by one producer that other firms cannot compete with it). A sole producer enjoys complete control over the prices of its products

classify service according to...

extent of customer contact

Aggregate output refers to a company's annual production of goods or services. True or false

false

Gross domestic product (GDP) refers to the total value of goods and services produced by a national economy within a given period regardless of where the factors of production are located. True or false

false

Inflation

occurs when widespread price increases occur throughout an economic system

Tender Offer

offer to buy shares made by a prospective buyer directly to a target corporation's shareholders, who then make individual decisions about whether to sell

Established Market

one in which many firms compete according to relatively well-defined criteria

make to order operations

one of a kind or custom made production ex.getting a dress made/tailored

Small business

one that is independent (not part of a larger business) and that has relatively little influence in its market

Monetary Policies

policies used by a government to control the size of its money supply

Communism

political system in which the government owns and operates all factors of production

Operations control

process for monitoring production performance by comparing results with plans and taking corrective action when needed

Delegation

process in which a manager allocates work to subordinates

Organizational Analysis

process of analyzing a firm's strengths and weaknesses

Privatization

process of converting government enterprises into privately owned companies

Intrapreneuring

process of creating and maintaining the innovation and flexibility of a small business environment within the confines of a large organization

Quality ownership

quality management that holds that quality for each person who creates it

Exchange Rate

rate at which the currency of one nation can be exchanged for the currency of another nation

form utility

raw materials and human skills into goods and services

inventory control

receiving, storing, handling, and counting of all raw materials, partly finished goods and finished goods

Master operations schedule

schedule showing which products will be produced, and when, in upcoming time periods

make to stock operations

standardized products made for mass consumption ex. buying a sweater at target

National Debt

the amount of money that the government owes its creditors.

National Debt

the amount of money the government owes its creditors

Social Responsibility

the attempt of a business to balance its commitments to groups and individuals in its environment, including customers, other businesses, employees, investors, and local communities

Philanthropic Giving

the awarding of funds or gifts to charities or other worthy causes

Philanthropic giving

the awarding of funds or gifts to charities or other worthy causes

Unemployment

the level of joblessness among people actively seeking work in an economic system

Goal Orientation

the manner in which people are motivated to work toward different kinds of goals

Product differentiation is common in a market characterized by monopolistic competition. True or false

true

Tax increases and decreases are a form of fiscal policy. True or false

true

The consumer price index is expressed as a percentage of prices as compared to a base period. True or false

true

Competition

vying among businesses for the same resources or customers