Busn chapter 2,3,4,5,6,7,8

Advantages of Departmentalization by Function

- Employees can develop skills in depth and progress within a department as they master more skills. - The company can achieve economies of scale by centralizing all the resources it needs and locate various experts in that area. - Employees can coordinate work within the function, and top management can easily direct and control various departments' activities.

Advantages of Matrix Organization

- Gives managers flexibility in assigning people to projects. - Encourages interorganization cooperation and teamwork - Produce creative solutions to product development problems - Makes efficient use of organizational resources

disadvantages to a narrow span of control

-Less empowerment -Higher costs -Delayed decision making -Less responsiveness to customers

advantages of a narrow span of control

-More control by top management -More chances for advancement -Greater specialization -Closer supervision

advantages of a broad span of control

-Reduced costs -More responsiveness to customers -Faster decision making -More empowerment

Ways to departmentalize

By product By function By customer group By geographic location By process

decision making

Choosing among two or more alternatives.

benchmarking

Comparing an organization's practices, processes, and products against the world's best.

outsourcing

Contracting with other companies (often in other countries) to do some or all of the functions of a firm, like its production or accounting tasks.

Fayol's Principles of Organization

1. Unity of command 2. Hierarchy of authority 3. Division of labor 4. Subordination of individual interests to the general interest 5. Authority 6. Degree of Centralization 7. Clear communication channels 8. Order 9. Equity

companies that are the most successful in adapting to change have these common traits:

1. they listen to customers, 2. they have inspirational managers who drive new ideas throughout the organizations, 3.they often have had a close call with going out of business

venture capitalists

Individuals or companies that invest in new businesses in exchange for partial ownership of those businesses.

PMI

Listing all the pluses for a solution in one column, all the minuses in another, and the implications in a third column.

acquisition

One company's purchase of the property and obligations of another company.

enterprise zones

Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support

objectives

Specific, short-term statements detailing how to achieve the organization's goals.

absolute advantage

The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.

degree of centralization

The amount of decision-making power vested in top management should vary by circumstances.

goals

The broad, long-term accomplishments an organization wishes to attain.

balance of payments

The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.

vertical merger

The joining of two companies involved in different stages of related businesses

span of control

The optimum number of subordinates a manager supervises or should supervise.

unemployment rate

The percentage of civilians at least 16-years-old who are unemployed and tried to find a job within the prior four weeks.

management

The process of accomplishing the goals of an organization through the effective use of people and other resources.

networking

The process of establishing and maintaining contacts with key managers in and outside the organization and using those contacts to weave strong relationships that serve as informal development systems.

problem solving

The process of solving the everyday problems that occur. Problem solving is less formal than decision making and usually calls for quicker action.

economies of scale

The situation in which companies can reduce their production costs if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase.

General Agreement on Tariffs and Trade (GATT)

a 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions

cooperative (co-op)

a business owned and controlled by the people who use it- producers, consumers, or workers with similar needs who pool their resources for mutual gain

Corporate Social Responsibility (CSR)

a business's concern for society's welfare

state capitalism

a combination of freer markets and some government control

foreign subsidiary

a company owned in a foreign country by another company, called the parent company

embargo

a complete ban on the import or export of a certain product, or the stopping of all trade with a particular country

countertrading

a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services

oligopoly

a degree of competition in which only one seller controls the total supply of a product or service and sets the price

business plan

a detailed written statement that describes the nature of the business, the target market, the advantages the business will have in relation to competition, and the resources and qualifications of the owners.

inflation

a general rise in the prices of goods and services over time

entrepreneurial team

a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product

corporation

a legal entity with authority to act and have liability apart from its owners

partnership

a legal form of business with two or more owners

import quota

a limit on the number of products in certain categories that a nation can import

organizing

a management function that includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives

controlling

a management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not

equity

a manager should treat employees and peers with respect and justice

gross output GO

a measure of total sales volume at all stages of production

franchisee

a person who buys a franchise

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats

depression

a severe recession, usually accompanied by deflation

disinflation

a situation in which price increases are slowing (the inflation rate is declining)

deflation

a situation in which prices are declining

stagflation

a situation when the economy is slowing but prices are going up anyhow

espirit de corps

a spirit of pride and loyalty should be created among people in the firm

conventional (C) corporation

a state-chartered legal entity with authority to act and have liability separate from its owners

hierarchy

a system or organization in which people or groups are ranked one above the other according to status or authority.

social audit

a systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs

virtual corporation

a temporary networked organization made up of replaceable firms that join and leave as needed

clear communication channels

all workers should be able to reach others in the organization quickly and easily

hierarchy of authority

all workers should know to whom they report

Service Corps of Retired Executives (SCORE)

an SBA office with volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for expenses)

franchise agreement

an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory

Leveraged Buyout (LBO)

an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing

communism

an economic and political system in which the government makes almost all economic decisions and owns all the major factors of production

socialism

an economic system based on the premise that some if not most basic businesses should be owned by the government so that profits can be more evenly distributed among the people

capitalism

an economic system in which all or most of the factors of production and distribution are are privately owned and operated for profit

vision

an encompassing explanation of why the organization exists and where it's trying to head

producer price index PPI

an index that measures the change in prices at the wholesale level

matrix organization

an organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line- and - staff structure

centralized authority

an organization structure in which decision-making authority is maintained at the top level of management

inverted organization

an organization that has contact people at the top and the chief executive officer at the bottom of the organization chart

Bureaucracy

an organization with many layers of mangers who set rules and regulations and oversee all decisions

tall organizational structure

an organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management

mission statement

an outline of the fundamental purposes of an organization

limited partner

an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment

insider trading

an unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends

Organizing, or structuring

begins with determining what work needs to be done and then dividing up the tasks among the participants

advantages of decentralized management

better adaption to customer wants; more empowerment of workers; faster decision making; higher morale

importing

buying products from another country

incubators

centers that offer new businesses low-cost offices with basic business services

brainstorming

coming up with as many solutions as possible in a short period of time with no censoring of ideas

leading

creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization's goals and objectives

intrapreneurs

creative people who work as entrepreneurs within corporations

external customers

dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use

disadvantages of departmentalization by function

departments may not communicate well - employees may identify with their department's goals rather than the organization- company's response to external changes may be slow - people may not be trained to take different managerial responsibilities rather than become narrowed specialists - department members may engage in group think

job specialization

dividing tasks into smaller jobs

division of labor

dividing up the work among the participants

free-market economies

economic system in which the market largely determines what goods and services get produced, who gets them, and how the economy grows

mixed economies

economic systems in which some allocation of resources is made by the market and some by the government

command economies

economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow

staff personnel

employees who advise and assist line personnel in meeting their goals

line personnel

employees who are part of the chain of command that is responsible for achieving organizational goals

corporate social initiatives

enhanced forms of corporate philanthropy directly related to the company's competencies

micropreneurs

entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle

integrity-based ethics codes

ethical standards that define the organization's guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees

compliance-based ethics codes

ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers

knowledge management

finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm

division of labor

functions are to be divided into areas of specialization

empowerment

giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests

enabling

giving workers the education and tools they need to make decisions

advantages of centralized management

greater top management control; more efficiency; simpler distribution system; stronger brand/ corporate image

cross-functional self-managed teams

groups of employees from different departments who work together on a long-term basis

top management

highest level of management, consisting of the president and other key company executives who develop strategic plans

internal customers

individuals and units within the firm that receive services from other individuals or units

whistleblowers

insiders who report illegal or unethical behavior

sovereign wealth funds SWFs

investment funds controlled by governments holding large stakes in foreign companies

participative (democratic) leadership

leadership style that consists of managers and employees working together to make decisions

autocratic leadership

leadership style that involves making managerial decisions without consulting others

free-rein leadership

leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives

disadvantages of decentralized management

less efficiency; complex distribution system; less top-management control; weakened corporate image

disadvantages to centralized management

less responsiveness to customers; less empowerment; interorganizational conflict; lower morale away from headquarters

devaluation

lowering the value of a nation's currency relative to other currencies

exchange rate

lowering the value of a nation's currency relative to other currencies

authority

managers have the right to give orders and the power to enforce obedience

Supervisory Management

managers who are directly responsible for supervising workers and evaluating their daily performance

order

materials and people should be placed and maintained in the proper location

mass production

methods for efficiently producing large quantities of goods

consumer price index CPI

monthly statistics that measure the pace of inflation or deflation

4d tech

moving 3d with time as the 4th dimension

market

people with unsatisfied wants and needs who have both the resources and the willingness to buy

max werber's organizational theory

puts heavy emphasis on the authority of the manager and believes employees should just shut up and do what they are told; also emphasized was job descriptions, written rules, decision guidelines, and detailed records, consistent procedures, regulations, and policies, staffing and promotion based on qualifications

restructuring

redesigning an organization so that it can more effectively serve its customers

dumping

selling products in a foreign country at lower prices than those charged in the producing country

exporting

selling products to another country

departmentalization

setting up individual departments to do specialized tasks

organizational chart

shows relationships among people: who is accountable for the completion of specific work, and who reports to whom

human relations skills

skills that involve communication and motivation; they enable managers to work through and with people

technical skills

skills that involve the ability to perform tasks in a specific discipline or department

conceptual skills

skills that involve the ability to picture the organization as a whole and the relationship among its various parts

ethics

standards of moral behavior, that is, behavior accepted by society as right versus wrong

foreign direct investment FDI

the buying of permanent property and businesses in foreign nations

monopolistic competition

the degree of competition in which a large number produce very similar products that buyers nevertheless perceive as different

perfect competition

the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product

corporate philanthropy

the dimension of social responsibility that includes charitable donations

corporate responsibility

the dimension of social responsibility that includes everything from hiring minority workers to making safe products

corporate policy

the dimension of social responsibility that refers to the position a firm takes on social and political issues

departmentalization

the dividing of organizational functions into separate units

fiscal policy

the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending

World Trade Organization (WTO)

the international organization that replaced the General Agreement on Tariffs and Trade and was assigned the duty to mediate trade disputes among nations

conglomerate merger

the joining of firms in completely unrelated industries

horizontal merger

the joining of two firms in the same industry

middle management

the level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling

chain of command

the line of authority that moves from the top of a hierarchy to the lowest level

brain drain

the loss of the best and brightest people to other countries

monetary policy

the management of the money supply and interest rates by the Federal Reserve

free trade

the movement of goods and services among nations without political or economic barriers

microeconomics

the part of economics study that looks at the behavior of people and organizations in particular markets

macroeconomics

the part of economics study that looks at the operation of a nation's economy as a whole

business cycles

the periodic rises and falls that occur in economies over time

real time

the present moment or the actual time in which something takes place

Transparency

the presentation of a company's facts and figures in a way that is clear and apparent to all stakeholders

market price

the price determined by supply and demand

Strategic Planning

the process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals

tactical planning

the process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done

contingency planning

the process of preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives

operational planning

the process of setting work standards and schedules necessary to implement the company's tactical objectives

supply

the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

demand

the quantity of products that people are willing to buy at different prices at a specific time

limited liability

the responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have limited liability

unlimited liability

the responsibility of business owners for all of the debts of the business

merger

the result of two firms forming one company

under free market capitalism people have four basic rights:

the right to own private property, the right to own a business and keep all that business's profits, the right to freedom of competition, the right to freedom of choice

franchise

the right to use a specific business's name and sell its products or services in a given territory

formal organization

the structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts

economics

the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals

resource development

the study of how to increase resources and to create the conditions that will make better use of those resources

informal organization

the system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization

Keynesian economic theory

the theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession

balance of trade

the total value of a nation's exports compared to its imports measured over a particular period

Gross Domestic Product (GDP)

the total value of final goods and services produced in a country in a given year

trade protectionism

the use of government regulations to limit the import of goods and services

comparative advantage theory

theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently

self-managed

they are empowered to make decisions without management approval

Small Business Administration (SBA)

A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans.

Sole Proprietorship

A business owned by one person

small business

A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size (set by the Small Business Administration) in terms of employees or annual receipts.

Limited Liability Company (LLC)

A company similar to an S corporation but without the special eligibility requirements.

frachisor

A company that develops a product concept and sells others the rights to make and sell the products.

trade surplus

A favorable balance of trade; occurs when the value of a country's exports exceeds that of its imports.

contract manufacturing

A foreign country's production of private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing.

licensing

A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).

strategic alliance

A long-term partnership between two or more companies established to help each company build competitive market advantages.

planning

A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives.

staffing

A management function that includes hiring, motivating, and retaining the best people available to accomplish the company's objectives

general partnership

A partnership in which all owners share in operating the business and in assuming liability for the business's debts.

joint venture

A partnership in which two or more companies (often from different countries) join to undertake a major project.

limited liability partnership (LLP)

A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

Master Limited Partnership (MLP)

A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.

limited partnership

A partnership with one or more general partners and one or more limited partners.

invisible hand

A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all

Small Business Investment Company SBIC Program

A program through which private investment companies licensed by the Small Business Administration lend money to small businesses.

common market

A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. An example is the European Union.

tariff

A tax on imported goods

S corporation

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships

North American Free Trade Agreement NAFTA

Agreement that created a free-trade area among the United States, Canada, and Mexico.

decentralized authority

An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be.

multinational corporation

An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management

flat organizational structure

An organizational structure that has few layers of management and a broad span of control.

general partner

An owner (partner) who has unlimited liability and is active in managing the firm.

trade deficit

An unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports.

core competencies

those functions that the organization can do as well as or better than any other organization in the world

recession

two or more consecutive quarters of decline in the GDP

organizational (or corporate) culture

widely shared values within an organization that provide unity and cooperation to achieve common goals

Subordination of individual interests to the common interest

workers are to think of themselves as a coordinated team

digital natives

young people who have grown up using the internet and social networking

disadvantages of matrix organization

•It's costly and complex. •Employees may be confused where their loyalty belongs. •Good interpersonal skills and cooperative employees are a must. •It may only be a temporary solution to a long-term problem.

disadvantages of a broad span of control

Fewer chances for advancement, overworked managers, loss of control, less management expertise

United States-Mexico-Canada Agreement USMCA

Free-trade agreement among the United States, Mexico, and Canada that replaced NAFTA in an effort to create more balanced and reciprocal trade.

line organization

Has direct two-way lines of responsibility, authority and communication running from the top to the bottom. Everyone reports to one supervisor.

core inflation

CPI Consumer price index minus food and energy

unity of command

Each worker is to report to one, and only one, boss.