MGMT FINAL STUDY GUIDE

How do/can firms respond to the environment?

-

Identify the basic characteristics of managerial decision making:

-

Internal environments

- "Culture" of the organization. May influence the organization's response to its environment. Ex. culture, values, climate

SWOT analysis

- A comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategy.

Diversification (General, related, and unrelated)

- A firm's investment in a different product, business, or geographic area. - Related: entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses. - Unrelated: entering a new industry or buying a company in a new industry that is not related in any way to an organization's current businesses or industries. - Purchasing businesses in different industries lets managers engage in portfolio strategy (apportioning financial resources among divisions to increase financial returns or spread risks among different businesses). - Too much unrelated diversification can reduce value rather than create it - lose control of their organization's core business.

Mechanistic organizations

- A form of organization that seeks to maximize internal efficiency - Based on Weber's bureaucratic organization - Relatively inflexible

Strategy map

- A method for aligning the organization's strategic and operational goals. It provides a tool managers can use to communicate their strategic goals and enable members of the organization at every level to understand the parts they will play in helping to achieve them.

What is a rolling plan?

- A plan that is updated and amended every year to take account of changing conditions in the external environment.

What is a single-use plan?

- A set of activities aimed at achieving a specific goal within a particular budget and time period that is unlikely to be repeated in future.

Human resource management

- Activities that managers engage in to attract and retain employees and to ensure that they perform at a high level and contribute to the accomplishment of organizational goals

External environments

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

Why is the macro environment important to firms?

- Although a top executive team may have unique internal strengths and ideas about its goals, it must consider external factors before taking action.

Organic organizations

- An organizational form that emphasizes flexibility - Jobholders have broader responsibilities that change as the need arises - Communication occurs through advice and information rather than through orders and instructions - Decision making and influence are more decentralized and informal - Expertise is highly valued - Jobholders rely more heavily on judgement than on rules - Obedience to authority is less important than commitment to the organization's goals - Employees depend more on one another and relate more informally and personally

Title VII of Civil Rights Act (1964)

- Prohibits discrimination based on race, sex, color, religion, or national origin in employment decisions: hiring, pay, working conditions, promotion, discipline, or discharge.

Age Discrimination in Employment Act (1967)

- Prohibits employment discrimination based on age for persons over 40 years; restricts mandatory retirement.

Equal Pay Act (1963)

- Prohibits gender-based pay discrimination between two jobs substantially similar in skill, effort, responsibility, and working conditions.

Identify barriers to decision making

- Psychological biases - Time pressures - Social realities

Organizational agility

- Refers to the firms ability to adapt to changing demands. It includes: - Flexibility - Adaptability - Quickness (speed) - Responsiveness

Family and Medical Leave Act (1991)

- Requires 12 weeks' unpaid leave for medical or family needs: paternity, family member illness.

Vocational Rehabilitation Act (1973)

- Requires affirmative action by all federal contractors for persons with disabilities; defines disabilities as physical or mental impairments that substantially limit life activities.

Executive Orders 11246 and 11375 (1965)

- Requires equal opportunity clauses in federal contracts; prohibits employment discrimination by federal contractors based on race, color, religion, sex, or national origin.

First-Line managers

- Responsible for the daily supervision of non-managerial employees.

Programmed decisions

- Routine, virtually automatic decision making that follows established rules or guidelines.

Satisficing

- Searching for and choosing an acceptable, or satisfactory, response to problems and opportunities rather than trying to make the best decision. - Decision making that takes the short-cut of defining a set of aspirations (goals) and then setting on some (usually the first) alternative that meets the minimum requirements. It is a pragmatic and often necessary approach: In situations in which there are many choices or when choices are presented one by one, optimizing can be a hopeless quest. Given our tendency to satisfice, we're unlikely to end up with anything much better than what we're willing to accept.

Environment scanning

- Searching for and sorting through information about the environment.

Core competency

- Specific set of departmental skills, knowledge, and experience: specialty, assurance, quality.

The functional organization

- jobs (and departments) are specialized and grouped according to business functions and the skills they require: production, marketing, human resources, research and development, finance, accounting, and so forth.

Factors influencing the wage mix

1. Internal factors: - Compensation police of organization - Worth of job - Employee's relative worth - Employer's ability to pay 2. External factors: - Conditions of the labor market - Area wage rates - Cost of living - Collective bargaining - Legal requirements

The components of HR planning

1. Planning - Organizational strategic planning - HRM environmental scanning - Human resource planning 2. Programming - Human resource activities 3. Evaluating - Results

What are some of the criticisms of formal planning?

1. Planning may create rigidity 2. Formal plans can't replace intuition and creativity 3. Planning focuses managers' attention on today's competition, not on tomorrow's survival 4. Formal planning reinforces success, which may lead to failure.

The 4 components of management

1. Planning: identifying and selecting appropriate goals. a) Includes 3 steps, called strategy: i. decide which goals to pursue ii. decide what course of action to adopt to attain those goals iii. decide how to allocate organizational resources 2. Organizing: Structure working relationships so organizational members work together organizational goals. 3. Leading: Articulating a clear vision and energizing and enabling organizational members so they understand the part they play play in achieving organizational goals. 4. Controlling: Evaluating how well an organization is achieving its goals and taking action to maintain or improve performance. a) Ability to measure performances accurately and regulate efficiency and effectiveness b) Ability to implement controls to help managers evaluate how well they are performing the other three tasks of management (planning, organizing, leading)

What types of performance frame our perspective on this course?

1. Service 2. Speed 3. Quality 4. Innovation 5. Cost

How does a mission help define a business?

It describes: - Who are our customers? - What customer needs are being satisfied - How are we satisfying customer needs?

What are the pros and cons of group decision making?

Pros: - Larger pool of information - More perspectives and approaches - Intellectual stimulation - People understand the decision - People are committed to the decision Cons: - One person dominates - Satisficing - Groupthink - Goal displacement

Pay structure

The arrangement of jobs into categories based on their relative importance to the organization and its goals, level of skills, and other characteristics.

Pay level

The relative position of an organization's incentives in comparison with those of other firms in the same industry employing similar kinds of workers.

Risky decision environments (Risk)

- Exist when decision makers lack complete certainty regarding the outcomes of various courses of action, but they are aware of the probabilities associated with their occurrence.

Certain decision environments (Certainty)

- Exist when information is sufficient to predict the results of each alternative in advance of implementation.

The divisional organization

- departmentalization that groups units around products, customers, or geographic regions.

Factors that maintain and transmit organizational culture

- Attraction-selection-attrition framework: model that explains how personality may influence organizational culture > Values of the founder - founders hire employees whose personalities are similar to their own (molds organizational culture) - Socialization - process by which newcomers learn an organization's values and norms and acquire the work behaviors necessary to perform jobs effectively - Ceremonies and rites - formal events that recognize incidents of importance to the organization as a whole and to specific employees > Rites of passage - determine how individuals enter, advance within, or leave the organization > Rites of integration - build and reinforce common bonds among organizational members > Rites of enhancement - let organizations publicly recognize and reward employees' contributions and thus strengthen their commitment to organizational values - Stories and language - communicate organizational culture, reveal behaviors that are valued by the organization and practices that are frowned on (organizational code of ethics) > Language (verbalized and non-verbalized) encompasses how people dress, the offices they occupy, the cars they drive, and the degree of formality they use when addressing one another. (ex.) Office space allocation - top/windowed offices are usually assigned to top managers, parking space, etc.

Benefits

- Based on membership in an organization - Include sick days, vacation days, and medical and life insurance - Considered part of compensation - Legally required - Social security, workers' compensation, unemployment insurance - Voluntary - Health insurance, retirement, day care, and everything else a company may provide or make available

Why is information incomplete?

- Because the full range of decision-making alternatives is unknowable in most situations, and the consequences associated with known alternatives are uncertain.

Development

- Building the knowledge and skills of organizational members to enable them to take on new responsibilities and challenges

If Performance appraisal is done poorly it can:

- Cause resentment - Reduce motivation - Diminish performance - Possibly expose the organization to legal action

Civil Rights Act (1991)

- Clarifies Title VII requirements: disparate treatment impact suits, business necessity, job relatedness; shifts burden of proof to employer; permits punitive damages and jury trials.

The basic decision making process

- Classic model of decision making: prescriptive model that assumes the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action. 1. Identifying and diagnosing the problem 2. Generating alternative solutions 3. Evaluating alternative solutions 4. Making the choice 5. Implementing the decision 6. Evaluating the decisions

Bounded rationality

- Cognitive limitations that constrain one's ability to interpret, process, and act on information.

Organization

- Collections of people who work together and coordinate their actions to achieve a wide variety of goals or desired future outcomes.

What are the basic components of the competitive environment?

- Competitors: organizations that produce goods and services that are similar to a particular organization's goods and services - strong competitive rivalry results in price and competition, and falling prices reduce customer revenues and profits. - Distributors: organizations that help other organizations sell their goods or services to customers - changing nature of distributors and distribution methods can bring opportunities and threats to managers. - Customers: individual and groups that buy the goods and services that an organization produces - responsiveness towards satisfying customers' needs (ex. WalMart in European locations had to change customer experience to suit European culture vs. American culture). - Suppliers: individual and organizations that provide an organization with the input resources that it needs to produce goods and services (raw materials, parts, labor, etc.) - Global outsourcing: purchase or production of inputs or final products from overseas suppliers to lower costs and improve product quality or design.

Issues related to the horizontal structure

- Conflicts between line departments and staff departments.

Fair Labor Standards Act (1938)

- Creates exempt (salaried) and nonexempt (hourly) employee categories, governing overtime and other rules; sets minimum wage, child labor laws.

The National Labor Relations Act (Wagner Act) 1935

- Declares labor organizations legal - Establishes five unfair employer labor practices - Created the National Labor Relations Board (NLRB)

What are the basic components of the Macro environment?

- Demographic: outcomes of change in, or changing attitudes toward, the characteristics of a population, such as age, gender, ethnic origin, race, sexual orientation, and social class. - Political and social: outcomes of changes in laws and regulations, such as the deregulation of industries, the privatization of organizations, and increased emphasis on environmental protection. - Economic: interest rates, inflation, unemployment, economic growth, and other factors that affect the general health and well-being of a nation or the regional economy of an organization. - Technological: Outcomes of changes in the technology that managers use to design, produce, or distribute goods and services. - Sociocultural: pressures emanating from the social structure of a country or society from the national culture.

In what ways do organizations respond to/attempt to shape their environments?

- Departmentalization: subdividing an organization into smaller subunits > Functional organization > Divisional organization > Matrix organization

Effectiveness and efficiency

- Efficiency: a measure of how productively resources are used to achieve a goal - Effectiveness: a measure of the appropriateness of the goals that managers have selected for the organization to pursue and the degree to which the organization achieves those goals.

Human Skills / Relations

- Empathy: ability to understand and appreciate others perspective interpersonal human skills (play well with others).

Top Managers

- Establishes organizational goals, decides how departments should interact and monitors (audits) the performance of middle managers; support CEO to "set the tone for the organization", roll out vision/mission and fiscal, long and short term goals.

Uncertain decision environments (Uncertainty)

- Exist when managers have so little information on hand that they cannot even assign probabilities to various alternatives and their possible outcomes. - Described as a rapidly changing setting in terms of: > External conditions > The information technology requirements needed for analyzing and making decisions > The people who influence problem and choice definitions - Can be described in terms of types of risks encountered by the organization: > Strategic risks are threats to overall business success > Operational risks are threats inherent in the technologies used to reach business success > Reputation risks are threats to a brand or to the firm's reputation

Americans with Disabilities Act (1990)

- Extends affirmative action provisions of Vocational Rehabilitation Act to private employers; requires workplace modifications to facilitate disabled employees; prohibits discrimination against disabled.

The basic steps in the planning process

- Goal setting - Strategy formulation - Strategy implementation

If Performance appraisal is done well it can:

- Help employees improve their performance, pay, and chances for promotion - Foster communication between managers and employees - Increase employee and organizational effectiveness

The "Five Forces Model"

- Helps managers focus on the five most important competitive forces, or potential threats, in the external environment. 1. Level of rivalry among organizations in an industry 2. Potential for entry into an industry 3. Power of large supplies 4. Power of large customers 5. Threat of substitute products

Issues related to the vertical structure

- How Authority distributed in organizations - Hierarchical levels - Span of control - Delegation - Decentralization

Pay

- Includes employees' base salaries, pay raises, and bonuses - Determined by characteristics of the organization and the job and levels of performance

What is the Macro (General) environment?

- Includes governments, economic conditions, and other fundamental factors that generally affect all organizations. - Defined by the most general elements in the external environment that potentially can influence strategic decisions.

How have changes in technology contributed to declining barriers of distance and culture?

- Increased communication (video tele-conferencing, satellites) - Advanced transportation (commercial jet travels) - Internet (part of communication) and global computer networks - Huge effects on labor markets - eCommerce - Expand the market for their goods and services through exports and investments in countries overseas > International treaties: General Agreement on Tariffs (GAT) and Trade > Regional trade agreements: North American Free Trade Agreement (NAFTA - North America and Canada regions) and the Central American Free Trade Agreement (CAFTA- North America and Central America regions)

Ambiguous information

- Information that can be interpreted in multiple and often conflicting ways. (Unclear)

Responsive organization

- Is built to learn and respond rapidly by optimizing for the open flow of information; encouraging experimentation and learning on rapid cycles; and organizing as a network of employees, customers, and partners motivated by shared purpose.

Why is planning called the primary management statement?

- It establishes the basis for all the other things managers do. It's concerned with ends (what is to be done) as well as with means (how it's to be done).

Issues of organizational size and agility

- Large organizations are typically less organic and more bureaucratic - Jobs tend to become more specialized in large organizations - With size comes greater complexity and a need for increased control - Still, organizations can find ways to remain agile despite these challenges

Understand and differentiate between levels and types of planning

- Long-term plans are usually 5 years or more - Intermediate-term plans are 1 to 5 years - Short-term plans are less than 1 year - Corporate-level plan: Top management decision pertaining to the organization's mission, overall strategy, and structure. - Business-level plan: Divisional managers decisions pertaining to divisions long-term goals, overall strategy, and structure. - Functional-level plan: Functional manager decisions pertaining to the goals that they propose to pursue to help the division attain its business level goals.

Reasons managers sometimes avoid making decisions

- Managers can't be sure how much time, energy, or trouble lies ahead - Getting involved is risky; tackling a problem but failing to solve it can hurt a manager's track record - It is easier to procrastinate or get busy with less demanding activities - May not have all accurate information (changes fast - volatile) necessary to assess best decision.

Conceptual skills

- Most important to CEO, top and middle level managers (not the result of the day-to-day interactions) -- analyzing data, patterns, data, patterns, data collection within context. Less important to front line managers.

CEO

- Most senior and important manager: raise funds/financial positioning, shareholders, public relations

Non-programmed decisions

- Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats.

Why is planning important?

- Planning is necessary to give the organization a sense of direction and purpose - Planning is a useful way of getting managers to participate in decision making about the appropriate goals and strategies for an organization - A plan helps coordinate managers of the different functions and divisions of an organization to ensure that they all pull in the same direction and work to achieve its desired future state - A plan can be used as a device for controlling managers within an organization

Define planning, strategy, and mission statement

- Planning: a conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future. - Strategy: A pattern of actions and resource allocations designed to achieve the organization's goals. - Mission statement: a definition of purpose of an organization.

Steps in the decision making process

- Step 1: Recognize need for a decision - identify and diagnose the problem - Step 2: List all alternative courses of action - Step 3: Assess alternatives - specify the criteria that should influence the selection of alternative > Practical, economical, ethical, legal - Step 4: Rank each alternative AND make a decision > Select the alternative that leads to desired future consequences i. Maximize the best possible decision ii. Satisfice - acceptable, although not necessarily the best/perfect iii. Optimize - achieve the best possible balance among several goals - Step 5: Implement chosen alternative/decision - Step 6: Learn from feedback.

Middle Managers

- Supervises first-line managers and is responsible for finding the best way to use resources to achieve organizational goals.

Common characteristics of organizations

- Systematic Structure - People working together - Common Goal/Distinct Purpose

Training

- Teaching organizational members how to perform current jobs and helping them to acquire the knowledge and skills they need to be effective performers

Emotional intelligence

- The ability to understand and manage ones own moods and emotions and the moods and emotions of others. Help managers understand and relate well to others. > Self-awareness: accurate self-assessment, self-confidence > Self-management: Trustworthiness, conscientiousness, adaptability, achievement orientation, initiative > Social awareness: Empathy, organizational awareness, service orientation > Relationship Management: development of others, inspirational leaders, influence, communication, change catalyst, conflict management, teamwork and collaboration.

Performance Appraisal

- The evaluation of employees' job performance and contributions to their organization. - Traits appraisals - Behavior appraisals - Results appraisals

Organizational structure

- The formal system of task and reporting relationships that controls, coordinates, and motivates employees so that they work together to achieve organizational goals.

Business-level strategies

- The major actions by which a business competes in a particular industry or market. - Low-cost strategy - Differentiation strategy - "Stuck in the middle" - Focused low-cost - Focused differentiation

Organizational design

- The management process by which managers select and manage various dimensions of the organization's structure and culture so that the organization can achieve its goals.

Optimum decision

- The most appropriate decision in light of what managers believe to be the most desirable consequences for the organization.

Span of Control

- The number of subordinates who report directly to an executive or supervisor.

Managerial roles

- The people responsible for supervising the use of an organization's resources to meet its goals. - Resources include: > People, skills, know-how, experience, machinery, raw materials, computers and IT, patents, and financial capital, and loyal customers and employees. - Effectiveness > Achieving organizational goals - Efficiency > Achieving goals with minimal waste of money, time, materials, and people.

Management

- The planning, organizing, leading, and controlling of human and other resources to achieve organizational goals efficiently and effectively.

Strategic HR management

- The process by which managers design the components of a HRM system to be consistent with each other, with other elements of organizational architecture, and with the organization's strategy and goals.

Decision making

- The process by which managers respond to opportunities and threats by analyzing the options and making determinations, or decisions, about specific organizational goals and courses of action.

Self-leadership

- The process of influencing oneself. - Basic premises: > WE are in control of our own destiny > The world does not always cooperate with us > We largely create the personal world with which we must cope > We influence our actions in countless ways that we may be unaware of - Concept derived from two areas of psychology 1. Social Cognitive Theory 2. Intrinsic Motivation - Goal is to help you develop a framework for motivating (influencing) yourself.

Staffing

- The selection and training of individuals for specific job functions, and charging them with the associated responsibilities. 1. Recruitment - The development of a pool of applicants for jobs in an organization - Internal, external 2. Selection - Choosing from among qualified applicants to hire into an organization.

Corporate-level strategies

- The set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities. - Concentration on a single industry - Vertical integration

What is the Competitive (Task) environment?

- The set of forces and conditions that originate with global suppliers, distributors, customers, and competitors; these forces and conditions affect an organization's ability to obtain inputs and dispose of outputs. - Affect a manager's ability to obtain resources and dispose of outputs.

Organizational culture

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

Technical skills

- Understand all dimensions of skill sets to perform task / job. First line/lower level managers critical role (nuts and bolts).

What is a standing plan?

- Used over a long period of time, sometimes indefinitely, and can be altered to adapt to changing circumstances.

The matrix organization

- an organization composed of dual reporting relationships in which some employees report to two superiors -- a functional manager and a divisional manager.