MAN3025 Exam#2 Review

Threats of substitute products

A firm faces more competition when there are more available substitutes for its products and services. If a product is a commodity, buyers' power increases because there are no switching costs.

Human Resource Management (HRM)

HRM consists of the activities managers perform to plan for, attract, develop, and retain an effective workforce. It is a key component of the strategic planning process. All organizations must engage in staffing, so the importance of human resource management is universal. An organization's people are its most important resource, so effective human resource management is key to organizational success.

Cascading objectives

Goals structured in a unified hierarchy, becoming narrower and more specific at lower levels of the organization. As an additional example of how strategic goals lead to operating activities, Dr. Archambeau applied the means-ends chain, which uses cascading objectives.

Strategic goals

Set by and for top management (i.e., the C-Suite) and focus on objectives for the organization as a whole. Strategic goals are generally considered long-term goals because they span 1 to 5 years, while tactical and operational goals are generally considered short-term goals because they span less than a year.

Innovation strategy

Plan for being more innovative. An innovation strategy should integrate innovation activities into normal business strategies.

Personality tests

Personality tests measure personality traits like self-efficacy, self-esteem, locus of control, emotional stability, extroversion, agreeableness, conscientiousness, and openness to experience.

Employee Referrals

Filling open positions with outside applicants from existing employees' social networks.

Boundaryless organization

Fluid, highly adaptive organization that uses information technology to collaborate with competitors, suppliers, and/or customers. 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 competitors, suppliers, and customers. Boundaryless organizations have emerged as computer connections and virtual organizations have proliferated. Three Organizational designs that fall under this category are as follows: 1. Hollow structure 2. Modular structure 3. Virtual structure

Exit Interview

Formal conversation between a representative from the organization and a departing employee to find out why the employee is leaving and to learn about potential problems in the organization. When an employee leaves the organization, it is useful to have an exit interview during which the human resources manager and the departing employee can discuss his or her reasons for leaving and any problems in the organization. It can also help so that the employee doesn't leave on a sour note. Companies may offer the departing emp

Boomerangs

Former employees who return to the organization.

VRIO

Framework for analyzing the competitive potential of a resource/capability based on its value, rarity, imitability, and organization. Thus, if the idea is valuable, it puts the firm in a competitive position. (Of course, if the idea is not even valuable, it's at a competitive disadvantage.) If the idea is both valuable and rare, the firm has at least a temporary competitive advantage. If it is also costly to imitate, the firm has an opportunity to exploit its value, rarity, and imitability for a competitive advantage. If the firm has the necessary structure, culture, control systems, human resources. and financing, the idea can provide a sustained competitive advantage.

Porter's 4 competitive strategies

Also called 4 generic strategies: 1) cost-leadership 2) differentiation 3) cost-focus 4) focused-differentiation

Work rules and employee benefits

If there are formal rules, employees should be provided with a list of them in an employee handbook. They should also know how they will be compensated.

Interviewing

Interviews are the most commonly used selection technique. The types of interviews are as follows: 1. Unstructured interview 2. Structured interview, including situational interviews and behavioral-description interview

The following matrix shows examples of innovations classified on both of these dimensions:

1. Improvement-Process: Manufacturing companies have started using 3D printing in production. 2. Improvement-Product: The latest iPhone models are the 14th generation since the product was introduced in 2007. 3. New Direction-Process: Panelized homes make it quicker to construct houses. 4. New direction-Product: Major automobile manufacturers are developing driverless cars.

2 broad types of approaches to SHRM

1. Talent management 2. High-performance work system (HPWS)

The following is a list of the most important federal laws relating to discrimination and equal opportunity:

1. The Equal Pay Act of 1963 requires organizations to pay men and women equally for performing equal work. 2. The Title VII of the Civil Rights Act of 1964 (amended 1972) prohibits discrimination based on race, color, religion, national origin, sex, or sexual orientation. 3. The Civil Rights Act of 1991 strengthens the Civil Rights Act of 1964 by increasing damages and shifting the burden of proof to the employer. 4. The Americans with Disabilities Act (ADA) of 1990 prohibits discrimination based on disability and requires employers to make "reasonable accommodations" for an individual's disability. 5. The Age Discrimination in Employment Act (ADEA of 1967 (amended 1978 and 1986) Restricts mandatory retirement and prohibits age discrimination.

The causes and effects of culture

1. The antecedents of culture are the founder's values, the industry and business environment, the national culture, and the senior management's vision and behavior. 2. Organizational culture is a combination of observable artifacts, espoused and enacted values, and basic assumptions of employees. 3. Influenced by the culture, organizational structure and practices consist of the organizational design and the reward systems in place. 4. The type of organizational structure affects the group and social processes of the firm, such as socialization, mentoring, decision making, group dynamics, communication, empowerment, and leadership. 5. Social processes of a firm's culture lead to collective attitudes and behaviors, including the work attitudes, motivation, and job satisfaction of its employees. 6. All aspects of organizational culture ultimately drive organizational outcomes regarding levels of effectiveness, innovation, and stress.

The following are some suggestions for giving performance feedback:

1. Use a problem-solving approach rather than criticism. 2. Describe the employee's current and desired performance in specific and direct terms. 3. Solicit the employee's input and show employees respect. 4. Follow up on the employee's corrective action.

3 kinds of selection tools

1. background information 2. interviewing 3. employment tests

Common Elements of Organizations

1. common purpose 2. coordinated effort 3. division of labor (work specialization) 4. hierarchy of authority (chain of command) 5. span of control (or span of management) 6. authority 7. centralization of authority

Social and political pressures

A change in leadership or war can prompt social and political pressures. A change in values can also prompt these pressures. For example, changes in eating habits have led to such an extreme surge in weight gain that more than a third of U.S. adults and a sixth of children are obese, prompting several big U.S. cities to pass soda taxes.

Common purpose

A common purpose unifies employees or members and gives everyone an understanding of the organization's mission.

Hierarchy of authority (chain of command)

A hierarchy of authority is a control mechanism for making sure the right people do the right things at the right times. To achieve a coordinated effort, managers must have the authority to direct subordinates. A flat organization has few or no levels of middle management (between top managers and those reporting to them). A multiple-tiered hierarchy is best because it reduces each manager's span of control to a manageable level. The principle of unity of command states that an employee should report to no more than one manager so that conflicting priorities and demands can be avoided. Although early management theories stressed the unity of command principles, innovations in information technology make it possible and potentially useful for a person to communicate with more than one manager.

Performance Appraisal (AKA., performance review)

A management process that consists of (1) assessing an employee's performance and (2) providing him or her with feedback. It is part of a manager's job to honestly appraise the work done by employees. A performance appraisal involves assessing an employee's performance and providing the employee with feedback. Performance appraisals require the manager to judge how the employee is doing in relation to organizational standards, and they also require the manager to counsel the employee in how to improve performance when necessary, However, many performance appraisals are ineffective because they are based on a schedule rather than need. Research indicates that feedback is more accurate when given frequently, and good feedback should be future-oriented (and result in improved future performance). Performance appraisal is an important component of effective performance management the continuous cycle of improving job performance through goal setting, feedback and coaching, and rewards and positive enforcement. 2 kinds of performance appraisals: 1. Objective appraisals 2. Subjective appraisals Although managers perform the majority of performance appraisals, information can be gathered from the following groups as well: 1. Subordinates and peers 2. Clients and customers 3. The employee being appraised

Quid pro quo

A situation in which a person's employment, benefits, or opportunities will be jeopardized if he or she does not acquiesce to the sexual demands of others. In this type of sexual harassment, there is tangible economic injury (i.e., a person's hiring or opportunities for benefits or advancement will be jeopardized if he or she does not acquiesce to the sexual demands of others).

Organization

A system of consciously coordinated. activities or forces of 2 or more people.

Organizational culture (AKA, corporate culture)

A system of shared beliefs and values that develops within an organization and guides the behavior of its members. It can be described as the "social glue" that guides employee behavior or the "personality" of the organization. Like national culture, organizational culture is based on cultural values including collective beliefs, assumptions, and general feelings about what is good, valuable, rational, and normal. Organizational culture goes beyond the formal written statements in the company's policy manual and acts as an informal control mechanism. The following are the 4 functions of an organization's culture: 1. Providing direction - As an informal control system, organizational culture gives employees a sense-making device indicating where the organization is going. 2. Providing organizational identity - Organizational culture provides organizational members with a sense of who they are and what they're doing. 3. Facilitating collective commitment - Culture promotes loyalty toward and respect for the organization. When employees work for a company with a strong corporate culture that they identify with, they will work harder and remain with the organization longer. 4. Promoting social-system stability - A positive, reinforcing work environment tends to be a more stable one, and stability promotes efficiency and productivity.

Organizational structure

A system of task and reporting relationships that coordinate and motivate an organization's members to work together to achieve the organization's goals. It determines what people specialize in and who they report to. Managers must make decisions about the division of labor, the chain of command, and how workers will coordinate with one another.

Ability tests

Ability tests assess the general physical, mental, mechanical, or clerical abilities of job candidates. For example, NFL hopefuls lift weights during the scouting combine. Although the athletes would never have to lift weights in a game, the weightlifting test provides a general idea of the strength and fitness level of the athlete. Intelligence and cognitive ability tests are popular for predicting executives' performance.

The Environment: Mechanistic or Organic?

According to Tom Burns and G.M. Stalker, organizations can either be mechanistic or organic. 1. Mechanistic organizations are those in which authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. These organizations are most suitable for a stable environment. 2. Organic organizations are those in which authority is decentralized, rules and procedures are fewer, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks. These organizations implement improvements as they go along, depending on the pressures of the environment. Organic organizations are best when the environment is unstable because the focus is on creativity rather than efficiency.

tools for turning strategy into action

According to a quote from Vince Lombardi that Dr. Archambeau presented in class, "The best game plan in the world never blocked or tackled anybody." Managers must eliminate potential roadblocks to successful implementation, such as organizational structure, organizational culture, and employees' resistance to change. Therefore, strategic implementation and execution are central parts of any company's overall strategy. The following are some tools that managers can use to improve strategic execution: • Visible leadership - Effective leaders are able to get their followers to adopt behaviors that lead to successful strategy execution. Managers can display visible leadership by motivating people, by modeling desired behaviors, and by shaping culture, norms, and values. This is the key element of successful strategy execution. • Clear roles and accountability - It is important that top managers clearly define roles, delegate authority, and hold individuals accountable for strategy execution. • Candid communication - Managers should create a culture of honesty and openness, they must listen to and encourage debate among subordinates. • Appropriate human resource practices - Managers should ensure that the organization's recruiting, selection, training, compensation, promotion, transfers, and layoffs fit in well with the strategy.

Lewin's Change Model

According to social psychologist Kurt Lewin, change occurs in 3 stages: 1. Unfreezing 2. Changing 3. Refreezing

Loss of job security or status

Administrative changes may threaten to alter power bases, and technological changes may threaten to replace workers.

defensive strategy

Also called retrenchment strategy; common type of grand strategy that involves a reduction in the organization's efforts. A firm might adopt a defensive strategy by eliminating unprofitable parts of itself in order to attempt to rebuild more efficiently and restore profitability. In order for a firm to follow a defensive strategy, it can implement the following: • Reducing costs by halting hiring • Liquidating (selling off) assets • Gradually ending production • Divesting part of its business by selling off entire departments or subsidiaries • Declaring bankruptcy

Strategic Management in Small Firms

Although we typically think of strategic management as something done in large firms, small firms can successfully carry it out as well. However, strategic planning requires a long-term orientation. Many small businesses do not engage in strategic planning because they have a short-term focus.

Employee characteristics

An employee's characteristics consist of his or her perceptions of change, individual differences, and likely actions and inactions. Some employees are more willing to change than others.

Coordinated effort

An organization achieves its common purpose through coordinated effort. the coordination of individual efforts into a group effort (organization-wide).

Step 2: current reality assessment

Analyzes where the organization stands, what is working, and what could be improved to maximize efficiency and effectiveness in achieving the organization's mission. After developing the mission and vision of an organization, management must conduct a current reality assessment, also known as an organizational assessment, to evaluate the firm as in its present state, and identify how it could be improved in order to achieve the organization's mission. The organization should internally and externally examine where it stands with its stakeholders, what is working well in achieving its vision, and what can be changed to increase efficiency and effectiveness. Managers use tools for examining the current reality, including competitive intelligence, SWOT analysis, VRIO analysis, forecasting, benchmarking, and Porter's model for industry analysis, to convert the organization's vision into strategy.

Technology

Any machine or process that enables an organization in changing materials used to produce a finished product. A catch-all term that refers to more than just computers; it refers to any machine or process that enables organizations to gain a competitive advantage in the conversion of inputs to a finished product.

Behaviorally Anchored Rating Scale (BARS)

Appraisal using scales to rate an employee's performance on specific job-related behaviors.

Base Pay

Basic wages or salaries paid to employees in exchange for doing their jobs.

Behavioral appraisals

Behavioral appraisals rate employees based on specific, observable, job-related aspects of performance (such as being on time for work). One type of subjective appraisal is a behaviorally anchored rating scale (BARS), which rates employee performance according to scales of specific behaviors (such as a five-point scale from "always early" to "habitually late"). In class Dr. Archambeau presented a BARS (behaviorally anchored rating scale) for a production line supervisor's demonstrated ability to schedule work appropriately. The scale provides five different descriptions of behaviors related to this task, ranging from the employee having (1) no plan or schedule of work, to (5) a comprehensive schedule with target dates and plans updated relative to operations. The appraiser (i.e., the production line supervisor's manager) is tasked with identifying which description applies best to the employee.

Organization chart

Box-and-lines illustration of the formal relationships of positions of authority and the organization's official positions or work specializations. An organization chart is a box-and-lines illustration that shows the formal lines of authority and Saved 218 terms the organization's official positions or work specializations. Two kinds of information shown on organization charts are as follows: 1. The vertical hierarchy of authority - The chain of command and the official communication network can be identified by looking up and down the chart. 2. The horizontal specialization - The different jobs or work specializations at each level can be identified by looking left and right on the chart. For example, each functional area of the firm may have multiple vice presidents.

Structure

Change and turbulence in the market may warrant reconfiguration of the firm's activities and tasks by managers. GE reorganized it's structure into few divisions, partially by selling off divisions that did not fit into its long-term strategy, and it now has a division that focuses on supporting the others. By focusing on fewer divisions, GE has been able to eliminate redundancies as well as become more successful in those areas.

Shareholder and customer demands

Changes in customer preferences may force an organization to change, or shareholders may demand that the organization adopt desired changes. For example, customers increasingly expect firms to be transparent about corporate social responsibility, sustainability, and consumer privacy. Customers and shareholders are becoming more demanding, and they may force the organization to adopt desired changes. One trend is the benefit corporation (B corporation).

Targeted products with shorter time to market

Companies are trying to beat their competitors by being first to market. This means that firms must develop new products and services, as well as ways to market them and bring them to market, faster than ever.

Areas that Need Change

Change is often needed in four main areas of an organization: 1. people, 2. technology, 3. structure, and 4.strategy. To illustrate this, Dr. Archambeau went through the history of GE, beginning when GE was dealing with various forces, primarily market changes, that compelled change in the organization. In the past, GE's typical mode of growth was through acquisitions, taking one of the best in a given industry, purchasing it, and using GE's operational expertise to turn it into the number one in its industry. GE recognized that the changing nature of competition was making it more difficult for it to maintain profitability and return on equity. One of the problems industrial companies were facing was the slowing growth of the developed world. As the environment became highly competitive, GE realized that developing high-end products domestically and adapting them to other markets would no longer work as a successful business model. Because of the changing dynamics of global competition, GE altered its business model to be based on reverse innovation. GE's new strategy would use innovation to jumpstart growth organically: restarting R&D, developing products in emerging countries, and distributing them globally. At GE, changes in these four areas were facilitated by the change in leadership. When Jeff Immelt replaced Jack Welch as CEO, he shifted the company to become more marketing-oriented. To make this possible, he emphasized commercial excellence, global expansion, technological leadership, and long-term research. GE also shifted from an acquisition strategy to a strategy that emphasized innovation and development from within. This differs from Welch's process-oriented and efficiency-motivated strategy. While Welch utilized management by exception, Immelt introduced management by objectives. This demonstrates how all of the processes we have covered so far are deeply connected. Changes in GE's culture, human resource practices, and strategic focus were integrated with changes in GE's leadership. In 2017, Immelt stepped down as CEO and was replaced by John Flannery, who at the time was the head of GE's high-performing healthcare division. Flannery attempted to raise capital from the healthcare unit and by selling off parts of the business, but investors were unhappy with the slow pace of his progress. GE was removed from the Dow Jones Industrial Average as a result of its plunging valuation and poorly performing stock, and GE's power division continued to struggle. In 2018, Flannery stepped down and was replaced by Larry Culp, who is attempting to improve GE's debt-to-equity ratio and turn things around more effectively.

Behavior of managers

Conflict between managers and employees, poor leadership, or ineffective reward systems may indicate a need for change. Structural reorganization may also be a force for change, particularly as an organization becomes larger and more complex, which disrupts normal operations, procedures, and hierarchies.

Force-Field Analysis

Determining which forces could facilitate a proposed change and which forms could act against it. Force-field analysis is a technique that can be used to determine the forces that will promote change and the forces that will prevent it. Managers first identify the forces for a change (thrusters) and against it (counterthrusters), and then take steps to remove the negative forces and enhance the positive ones.

reverse innovation

Developing products in emerging countries and distributing them globally

Discipline

Discipline refers to temporarily removing an employee from his or her job or threatening to do so.

Dismissal

Dismissal can take the form of layoffs, downsizings, or firings. This can be thought of as moving out of the organization. 1. When an employee is laid off, he or she is dismissed but may be recalled later if the organization is financially able to bring him or her back. 2. When an employee is downsized, he or she is permanently dismissed because of reasons separate from his or her performance. 3. When an employee is fired, he or she is permanently dismissed because of his or her performance. The legal pressures put on companies today are making it increasingly difficult for managers to fire employees at will.

diversification strategy

Diversification presents opportunities and risks to a company. Before deciding to diversify, a manager should consider the following questions during planning: • How will we attain a competitive advantage? • What strategic resources will be necessary to succeed? • What will our market share be? • How will we benefit from diversification? • Are we sufficiently organized for diversification? Keep in mind that diversification is only beneficial when 2 companies can achieve synergy, which is when the total value they achieve combined is more than the total value they could achieve if each were on its own.

Division of labor (work specialization)

Division of labor refers to the arrangement of having discrete parts of a task done by different people. Division of labor increases efficiency by dividing a complex work effort into tasks handled by specialists.

Human Capital

Economic or productive potential of employee knowledge, experience, and actions. Human capital refers to the economic or productive potential of employee knowledge, experience, and actions (i.e., all employee competencies that are or could be valuable to the organization). Employees with the right human capital provide the organization with a competitive advantage and an important intangible asset. Highly educated, knowledgeable, experienced, and skilled workers (i.e. workers with more human capital) are more productive and make better decisions, so they have more economic value than workers with less human capital.

Grievance

Employee complaint about management's violation of the terms of the labor-management agreement.

organizational threats

Environmental factors that hinder an organization's achievement of a competitive advantage.

Organizational opportunities

Environmental factors that the organization may exploit for competitive advantage.

National Labor Relations Board

Established by the Wagner Act of 1935, which enforces procedures where employees may vote to have a union and for collective bargaining.

Peer Pressure

Even if an individual is not directly affected by a change, he or she may oppose it to protect the interests of friends.

Step 4: strategy implementation

Execution consists of using questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and achieve promised results. Strategy implementation refers to putting strategic plans into effeet. Without successful implementation, strategic planning is ineffective.

Person-job fit

Extent to which a worker's competencies and needs match with a specific job position.

Radical innovation is hurting traditional companies

Harvard Business School Professor Clayton Christensen argues that traditional organizations cannot take full advantage of disruptive technologies such as digitalization. According to Christensen, established companies cannot take advantage of disruptive innovation, which is when a product or service begins at the bottom of the market, in only simple applications, but then rapidly escalates up the market and replaces established competitors. Even when they see disruptive trends in their external environment, many organizations cannot adapt fast enough to survive radically innovative change.

The Environment: Differentiation or Integration?

Harvard researchers Paul R. Lawrence and Jay W. Lorsch expanded upon Burns and Stalker's ideas by proposing a dimension of differentiation vs. integration forces that depend on the stability of the environment and either pull the parts of an organization apart or push them together. 1. Differentiation is the tendency of the parts of an organization to disperse and fragment. Division of labor and technical specialization cause employees to isolate their activities from those of the rest of the organization. The more organizational subunits there are, the more differentiated the organization is. 2. Integration is the tendency of the parts of an organization to draw together to achieve a common purpose. This is achieved through the formal chain of command, the use of cross-functional teams, the standardization of rules and procedures, and the use of computer networks. According to Lawrence and Lorsch, successful organizations balance differentiation and integration for different subunits based on the part of the environment that affects them most. Organizational subunits have to be somewhat differentiated and specialized, but they cannot lose sight of the overall organizational goal. For example, consider a large firm with a few differentiated businesses. Because each division operates in a different environment, these divisions also have slightly different structures, cultures, and hiring practices. Having dissimilar values and norms among employees in the different businesses is not necessarily a bad thing, as it allows each to be more effective in its respective environment.

Hybrid approaches

Hybrid approaches include employee referrals (filling open positions with outside applicants from existing employees' social networks) and boomerangs (former employees who return to the organization). Empicyee referrals account for about half of new hires because current employees will not risk their reputation within the company by recommending a poor worker, and employees know what is required to fit in with the organization's culture and to perform well. Hiring boomerangs is cheaper and less time-consuming because they already understand the organization's culture and thus need little to no onboarding.

Inputs

In the change process, the inputs are the organization's mission statement. vision statement, strategic plan, and evaluation of the organization's readiness for change.

Incentives

Incentives include bonuses, commissions, profit-sharing plans, employee stock ownership plans (ESOPs), and other inducements that are used to attract and retain top employees.

Human Resource (HR) practices

Include the following: • Recruitment and selection • Compensation • Onboarding and learning and development • Performance management • Emplovee relations

Firms must operate within the various constraints of the HRM environment

Include those imposed by: 1. legislation 2. societal trends 3. changing technology

Types of Innovation

Innovations can be classified based on their type (product vs. process) and their focus (improvement vs. new direction).

Technological advancements

Innovations in manufacturing, automation, and information technology can inspire or compel change within an organization.

Integrity tests

Integrity tests assess attitudes and experiences related to an applicant's honesty, reliability, dependability, and trustworthiness.

Organizational weaknesses

Internal drawbacks that hinder an organization in executing strategies in pursuit of its mission.

Organizational strengths

Internal skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission.

Case Study: Dell

In Michael Dell founded Dell Computer Corporation in 1984. The company experienced high profits and rapid growth due to its low-cost, direct-marketing method and just-in-time business model. It primarily built custom computers for customers, and it maintained strong, sustainable growth. It eventually branched out and began selling peripherals, servers, and network equipment. The PC industry as a whole began to suffer in the early 2000s, and Dell suffered as well. Michael Dell relinquished his position as CEO of the company in 2004, and the company continued its downward spiral. Three reasons are as follows: People began to shop for low-cost, value PCs rather than customized PCs. There was a re-emergence of effective retail channels for value PCs. • The real growth in PCs was in emerging markets, and Dell had not focused on those markets. Michael Dell re-assumed his position as CEO in 2007, which was the year when HP surpassed Dell as the industry leader in personal computer sales. This was partially because HP merged with Compaq, making the company much larger than Del This resulted in economies of scale that made competing more cost effective for P. Based on this. Del came to o realize that, based on the competitive landscape, the company could not compete on price points due to its cost structure and declining profit margins. In 2008, Dell adopted a new long-term strategy in which it would focus more on enterprise solutions and services rather than end-user computing. The justification for this strategy was that enterprise solutions have higher margins than end-user computing. In 2009, Dell acquired Perot Systems to gain assets and competencies relating to enterprise solutions and services. At the same time, it invested billions of dollars into acquiring other companies that could give it competencies in the fields of enterprise software, cloud computing, and storage. These acquisitions fundamentally reconfigured Dell's business model. Dell had a strong brand, positive cash flow, and global operations in its core business, but demand was declining significantly. This is why Dell wanted to transition to enterprise solutions and services, which featured faster growth, expanding margins, and higher recurring revenue. Unfortunately, Dell's stock price did not respond well to the new strategy. Michael Dell essentially turned the public corporation into a private enterprise. His justification was that he did not want to be subject to the scrutiny of investors who demand consistent returns and profitability. According to Dell, it would take some time for his strategic vision to be realized and become profitable. In the proxy statement provided to investors, Michael Dell described the tactical steps involved in the transition from *Core Dell' to "New Dell." This document described how Dell's core business selling desktops and laptops--would be used as the foundation for its transition to enterprise services, Dell's strategic goal was to increase operational efficiency in its core business and use the gains from this improvement to drive the evolution of a 'New Dell' that would focus on enterprise solutions and services. Overall, the main takeaways from the proxy statement were as follows • Core Dell is critical to New Dell. • New Dell faces risks with sales force integration and competition. • The speed of the transformation is critical. One of the problems was that this idea of transitioning to the software industry was not a new idea; many companies had already transitioned, so Dell was playing from behind. As a late-mover, it didn't have time to catch up to other firms in the industry by itself, which is why it had been acquiring so many firms. The proxy statement also showed how planning helps with benchmarking. When talking about the speed of transformation, the proxy statement gives brackets for projected operating income decline for Core Dell and projected operating income growth for New Dell. These expectations provide a blueprint for where the company is going.

Most firms are unable to implement a cost-leadership strategy and a differentiation strategy simultaneously because they each require different resources and different skill sets. For example, Walmart's cost-leadership strategy results in decisions and tradeoffs unlike those made by Nordstrom, which uses a differentiation strategy.

In class, De. Archambeau presented a map to compare business-level strategies for firms in the personal computer industry. Acer, an Asian company, uses the cost-leadership strategy. HP is trying to compete not only on cost but also by attempting to show what makes the company different. Sony is currently struggling, as several of its businesses are being crushed, notably consumer electronics. Sony is now retrenching its entire line of PCs, and going from cost-leadership strategy to a cost-focus strategy. Dell has used a mixture of cost-leadership and differentiation strategies. Originally, Dell was able to offer the latest, highest-performing technology at the best price, while still offering customer customization and surpassing customer service expectations. However, increased competition has led to Dell being beaten in both the cost and differentiation categories. Now, Dell is trying to focus primarily on cost-leadership. (An exception is Dell's Alienware, a narrow product line of gaming computers, which uses the focused-differentiation strategy successfully.) Unlike Dell, Apple's generic strategy is a differentiation strategy. Apple used to use a focused-differentiation strategy and have little market share in the PC industry, but with its growth in the past decades, its portion of the PC business is also increasing. It uses innovation and responsiveness to customers to differentiate its product offerings from its competition. Specifically, Apple's key differentiators are as follows: • All of Apple's products use its proprietary operating system, which creates a "closed ecosystem" and imposes switching costs. This decreases the threat of substitute products; once you have an Apple product, you are forced to buy other Apple products because there are no substitutes that are as compatible with the product you already own. This discourages users from abandoning their Apple products and develops brand loyalty. • Apple focuses intensely on design quality and strives to provide compelling features in all of its products. • Apple has been very successful at marketing its products. Specifically, its retail stores (Apple stores) have provided an excellent customer interface. Although Apple relies on innovation, it is rarely the first to introduce a new type of product or the first entrant into a new industry. Rather, Apple is an "analyzer; it seizes opportunities by latching on to burgeoning markets and striving to be the top competitor in those markets.

Structured Interview

Interviews that involve asking each applicant the same set of questions, in order to compare responses to a standardized set of answers. Structured interviews involve asking each applicant the same questions and comparing their responses to a standardized set of answers. Two kinds of structured interviews are as follows: 1. Situational interviews 2. Behavioral-description interviews

Radically innovative change

Introduction of a practice that is new to the industry. Radically innovative change is the introduction of a practice new to the industry. For example, a clothing store might start offering same-day home delivery.

Innovative change

Introduction of a practice that is new to the organization. Innovative change is the introduction of a practice that is new to the organization but is employed elsewhere within the industry For example, a clothing store may ask employees to work flexible schedules so that the store can stay open 24 hours a day.

creativity

Involves advancing new and imaginative ideas into reality.

Invention

Involves creating something new

Reactive Change

Made in response to problems or opportunities as they arise (as opposed to proactive change). Reactive change refers to making changes in response to problems or opportunities as they arise.

people

Managers can take steps to change the knowledge, abilities, attitudes, and behavior of their employees.

Tactical planning

Middle managers determine what contributions their departments or similar work units can make over the next 6 months to 2 years with their given resources. Occurs when middle managers determine what contributions their departments or similar work units can make with their given resources over the next 6 to 24 months. Middle managers (including functional managers, department managers, and product-line managers) have to make plans that implement strategic plans handed down from above. They must also supervise lower-level managers and ensure that tactical plans are being properly implemented.

Transfer

Moving an employee to a different job with similar responsibility. Transfer refers to the movement of an employee to a job with a similar level of responsibility within the organization. This can be thought of as moving sideways in the organization. Managers must be sure to motivate those employees whose skills and abilities don't merit promotion but still add value to the organization at their current level. Transfer (i.e., laterally moving them) can keep these employees engaged by giving them different assignments or offering them new opportunities. Transfer can also help maximize productivity and minimize turnover by allowing the employee to get better understanding of more parts of the organization before a promotion.

Stories

Narrative based on true events that is repeated - and sometimes embellished upon - to emphasize a particular value. A story is a narrative based on true events, which is repeated and sometimes embellished to emphasize a particular view. Stories are oral histories about incidents in the organization's history.

Adverse Impact

Negative effect on a protected class of individuals resulting from an employment practice or job specification. Occurs when an employment practice or procedure negatively affects a protected class of individuals. For example, basing a person's starting salary on what they earned at a previous job can discriminate against female applicants (who tend to make less money than males for performing the same job). Employers must be able to justify any job specifications and requirements.

Collective Bargaining

Negotiations between management and employees about disputes over compensation, benefits working conditions, and job security. An example of a union is the NFL Players Association. In the U.S. overall, labor unions have been on the decline for years.

Cultural change

Note that the same process to establish a culture can be used to change the culture, if managers decide this is necessary. Managers have the following three options regarding culture: 1. Maintain the existing organizational culture if they believe it is appropriate for the current environment. 2. Alter the current culture, including modifications involving a new set of values, basic assumptions, and ideologies. 3. Create a completely new culture, typically in a separate work unit or new organization

span of control (span of management)

Number of subordinates who are directly accountable to a given manager. The span of control (or span of management) is the number of people reporting directly to a given manager. A manager with a narrow span of control has a small number of subordinates, whereas a manager with a wide span of control has many subordinates. When an organization has many levels and narrow spans of control. it is described as being tall. When an organization has just a few levels and wide spans of control, it is described as being wide. There is no consensus on exactly what number of subordinates is best (but historically they said 7-10). In general, narrow spans of control are best when tasks are complex or specialized, and wide spans of control are best when tasks are simple or standardized. The recent trends toward lean management staffs and employee empowerment mean that spans of control have gotten wider.

Material symbols

Object, act, quality, or event that conveys meaning to others. A symbol is an object, act, quality, or event that signifies an ideas or quality (I.e., conveys meaning to others). For example, the office design or the attire of employees might signal the level of formality expected.

Crowdsourcing

Obtaining services, ideas, or content by soliciting contributions form a large group of people, especially online. Crowdsourcing, which involves obtaining services, ideas, or content by soliciting contributions from a large group of people (typically online), is increasingly being used to help companies innovate.

Hostile environment

Occurs when an intimidating or offensive work environment is created. Note that a hostile environment need not have to involve a tangible economic injury, as in quid pro quo sexual harassment.

Onboarding (AKA, employee socialization)

Programs designed to integrate and transition employees into new jobs and organizations through familiarization with policies, procedures, cultures, politics, and clarification of work-role expectations and responsibilities. Orientation and learning and development are used to help new employees perform their jobs and "fit in" with the organization.

Levels of Organizational Culture

Organizational culture is present at the following 3 levels: 1. observable artifacts 2. espoused values 3. basic assumptions Level 1 is the most visible and least resistant to change (i.e., easiest to influence), whereas level 3 is the least visible and most resistant to change.

Organizational design

Organizational design involves the establishment of optimal organizational structures that will establish accountability and responsibility while ultimately helping the firm achieve its strategy. The three types of organizational design include traditional designs, horizontal design, and designs that open organizational boundaries.

Simple structure

Organizational structure with centralized authority, a flat hierarchy, few rules, and low work specialization. A structure with centralized authority, a flat hierarchy, few rules, and low work specialization. Firms in their earliest stages tend to use simple structures. Some of these eventually grow out of a simple structure and into a complex one.

Forced Ranking Performance Review System

Performance review system that ranks all employees within a business unit against one another, creating a distribution of scores along some sort of bell curve. Another kind of performance appraisal technique a forced ranking performance review system involves a ranking of all employees in a business unit against one another and the distribution of scores along some sort of bell curve. Those at the bottom of the curve are told to improve or they will be fired; those at the top of the curve are rewarded with promotions and bonuses. Major Fortune 500 companies have successfully used this system to encourage high performance and dispose of poor performers. However, implementing this kind of system that pits employees against each other can compromise employees' morale and productivity. The use of forced ranking performance reviews is decreasing. The type of performance appraisal managers use should reflect the organization's culture and strategic focus. For example, forced rankings would be least effective in a firm that wants to promote collaboration.

Performance tests (AKA, skills tests)

Performance tests (also called skills tests) assess the job candidate's performance on actual job tasks. For example, when NFL receivers have to demonstrate their pass-throwing or kicking ability at the combine, it is a performance test because it is testing a specific, job-related skill. Applicants for a computer programming job might take a test on a particular programming language.

Personality conflicts

Personality differences between employees and change agents can generate resistance. Personality conflicts can prevent an employee from accepting another person's vision for change.

Promotion

Promotion refers to moving an employee to a position higher up in the organization. This can be thought of as moving upward in the organization. The decision to promote an employee must be fair and not based on gender, age, race, ethnicity, or physical ability. As a manager, you must also be aware that coworkers will resent others being promoted over them; this may require counseling.

Change agent-employee relationships

Resistance is reduced when change agents and employees have a trusting relationship. Mistrust can doom an otherwise well-conceived change.

Microlearning

Short burst of content that employees can engage with for a few minutes at a time at their convenience.

right-to-work laws

Statute that prohibit employees from being required to join a union as a condition of. employment.

Virtual structure

Structure in which a firm creates "a company outside a company" specifically for the purpose of responding to an exceptionally attractive -- and often, temporary -- market opportunity. A structure in which the firm creates "company outside of a company" specifically to respond to an attractive (and often temporary) market opportunity. This type of structure involves the creation of a virtual organization - an organization whose members are geographically separated, usually working through email, collaborative computing, and other computer connections. The internet facilitates communication and enables organizations to become virtual without customers or suppliers realizing it. Virtual structures often make use of independent contractors to meet short-term organizational needs. Advantages of a virtual structure include the following: 1. It allows a firm to tap into different knowledge pools and talent pools without being bounded by geographic barriers. 2. Firm gets lower fixed costs because it doesn't need to pay rent for an office building. 3. Less time and money are needed for travel because there are people located where the opportunities are. Some downsides include the fact that it is difficult to have behavioral norms or a strong culture in a virtual organization.

Hollow structure (AKA, network structure)

Structure in which the organization's central core uses computer and information technology to outsource some functions to a network of separate, independent firms. A structure in which the central core of the organization is complemented by outside, independent firms that provide outsourced goods and services and are linked to the central core via computers. This structure (which is also called a network structure makes extensive use of information technology. Nike, Reebok, and Vizio use a hollow structure. Nike, for example, is best at designing new shoes and marketing its products. By outsourcing other aspects of its business, such as production, it can focus on improving what it does best. Drawbacks of a hollow structure include the possibility that the independent firms that a company outsources to might later become its competitors.

The Taft-Hartley Act of 1947

The Taft-Hartley Act of 1947 gave the U.S. president the ability to end a strike if it threatens national security. The following are some important laws relating to labor relations: 1. The Privacy Act gives employees the right to review letters of reference about themselves. 2. The Immigration Reform and Control Act requires employers to verify employment eligibility (even for U.S. citizens) upon hiring them. 3. The Sarbanes-Oxley Act prohibits demoting or firing employees who inform a federal agency about the employer's alleged fraud (i.e., whistleblowers).

Human resource practices

The activities used to manage the organization's capital, including staffing, appraising, training and development, and compensation. They ensure employees have the necessary skills, motivation, and opportunities to contribute to the organization's strategic goals.

Change agent characteristics

The change agent is the individual who is a catalvst for helping organizations change, usually the manager or leader. Change-agent characteristics consist of individual differences, perceptions of change, and actions and inactions. Leadership style, personality, and ability to empathize are examples of characteristics that might contribute to resistance.

Improvement Innovation (AKA, Incremental or core innovation)

The creation of a product, service, or process that modifies an existing one. One example of an improvement innovation is upgrading an existing razor by including an additional blade for precision or a lotion strip for moisture.

Types of Organizational Cultures

The competing values framework classifies cultures into 4 types, based on 2 dimensions: 1. Internal focus and integration means the organization focuses attention and efforts on internal dynamics and employees. External focus and differentiation means the organization focuses attention and efforts outward, on its external environment (customers and shareholders). 2. Flexibility and discretion means the organization prefers decentralized decision making. Stability and control means the organization prefers centralized authority. The four types of organizational cultures in the competing values framework are as follows: 1. Hierarchy culture 2. Adhocracy culture 3. Clan culture 4. Market culture Type of culture shapes the long-term success of an organization and impacts important variables. A recent study involving over 38,000 organizational units concluded that the type of organizational culture can provide a competitive advantage. Organizational culture is positively associated with various outcomes that are important to managers: • The cultures associated with flexibility and discretion clan and adhocracy are strongly correlated to overall leadership (whereas market and hierarchy cultures have moderate relationships). • Market cultures have a strong relationship to high-performance work practices (whereas clan, adhocracy, and hierarchy cultures have moderate relationships). • All four types have a moderate relationship with employee outcomes. • Clan, adhocracy, and market cultures are moderately correlated to innovation outcomes (whereas hierarchy culture has a weak relationship). • Adhocracy, market, and hierarchy cultures are moderately correlated to operational outcomes (whereas clan culture has a weak correlation). • Clan and market cultures have a moderate relationship to customer outcomes (whereas adhocracy and hierarchy cultures have a weak correlation). • All four types of culture have a weak relationship with financial outcomes. Overall, market cultures have the highest correlations with these organizational outcomes.

Centralization of Authority

The level of centralization refers to who makes important organizational decisions. 1. In organizations with centralized authority, higher-level managers make decisions. Centralized authority prevents duplication of efforts because a central group of specialists performs most tasks. Additionally, procedures are uniform and easy to control, resulting in efficiencies. 2. In organizations with decentralized authority, decisions are made by middle and supervisory-level managers to whom higher managers have delegated power. Decentralization of authority encourages managers to solve their own problems, and it increases organizational efficiency and flexibility by allowing managers to make decisions quickly.

Organizing

The managerial function that involves the deployment of resources in a way that will achieve strategic goals. Managers have to make the best use of the organization's assets, including tangible (physical) assets and intangible assets, such as the human capital its workers.

Necessary human capital

The most innovative teams consist of employees with a diverse range of knowledge and experience. Moreover, team members should demonstrate a history of creativity, intrinsic motivation, and international work experience.

Background Information

The organization can get basic information about a candidate from his or her application and résumé. However, résumés can contain exaggerations, inaccuracies, and even lies. Other sources of background information include consultations with previous employers and references.

Innovative culture and climate

The organization must permit risk taking, tolerate failure, and encourage experimentation.

Selection

The process of screening job applicants and choosing the best candidate for a position. Selection is the process of screening of job applicants and choosing the best candidate for a position. This requires the organization to predict each candidate's performance, fit, and satisfaction (i.e., how long they will stay). Selection techniques should be legally defensible, measuring factors that are directly related to job performance in a way that is free from bias. Legal defensibility involves ensuring selection techniques are reliable and valid: 1. Reliability - The degree to which a test measures the same thing consistently. If an individual's characteristics remain the same over time, that individual's score on the test should remain the same over time. 2. Validity - The degree to which the test measures what it purports to measure (nothing more and nothing less). For example, a person who scores high on a test designed to measure performance should be able to perform well.

functional-level strategy

The third/lowest level of strategic management; functional managers focus on tactical issues of their functional department (HR, marketing, operations, etc.) to support the business-level strategies. Examples of functional-level strategic decisions include marketing plans and production plans for particular products.

SMART Goals - Measurable

There should be a way to measure whether the goal has been achieved. Goals relating to quality are difficult to quantify; however, managers must attempt to find ways to do so (e.g., through customer surveys).

As previously noted, the time frames for strategic, tactical, and operational planning overlap

Thus, to identify which type of planning is happening in an exam question, you should focus on who is planning what, rather than focusing solely on the time frame being planned for.

Strategic planning

Top managers determine what the organization's long-term goals should be for the next 1 to 5 years with the resources they expect to have available. Occurs when top managers determine what the organization's long-term goals should be for the next 1 to 5 years with the resources they expect to have available. Top managers (including CEOs, presidents, Vice Presidents, general managers, and division heads) formulate long-term plans with knowledge of the ever-changing and increasingly competitive environment.

Systems Approach to Change

We can use a systems approach to examine the change process. Recall that a system is a set of interrelated parts operating together for a common purpose. Like all systems, the change system consists of inputs, the transformation process, and outputs. Finally, this leads to the feedback part, where managers gather information about whether the organizational change was successful (regarding the implementation, the direct and indirect effects, deficiencies, benefits, etc.), and use it as a basis for improvement. Not all change works, so it is important to use feedback systems, which compare the actual outputs of a change with the desired outputs. The systems model of change can be applied to the strategic planning process or as a diagnostic framework to uncover the causes (and possible solutions) of an organizational problem.

Givebacks

When a union agrees to give up previous wage or benefit gains in return for something else.

The advantages of MBO are as follows:

• Joint participation of management and employees in goal setting allows for both "bottom-up' and "top-down" goal setting. • Employees are typically more committed to achieving goals that they had a part in developing. By being part of the process, they "buy in" to the company's strategy. • The entire process focuses on the steps that need to be taken to achieve broad organizational goals.

The planning process loop is divided into the following eight tasks, or steps:

• Task 1: Develop a vision, mission, and goals. • Task 2: Determine opportunities and threats. • Task 3: Determine strengths and weaknesses. • Task 4: Develop strategies. • Task 5: Develop a strategic plan. • Task 6: Develop tactical and operational plans • Task 7: Analyze and control results. • Task 8: Continue planning. (Repeat this process.)

The disadvantages of MBO are as follows:

• It can be time-consuming for both employees and managers. • Even though employees and managers are supposed to collaborate in goal setting, the reality is that managers inherently have a stronger negotiating position because of their authority.

The strategic planning process is the initial stage of the strategic formulation process and can be broken down into 5 steps:

1. Define and clarify a mission and objectives. 2. Assess environment for threats and opportunities. 3. Assess internal strengths and weaknesses. 4. Consider alternative strategies using competitive analysis 5. Choose a strategy.

The implementation process is the second stage and can be broken down into 3 steps:

1. Implement strategy through a structure, system, and operational processes that work together. 2. Set up control and evaluation systems to ensure success. 3. Feedback to planning.

plan

A blueprint for action that details how an organization is going to realize its goals through its strategic plans and its operating plans. It is a written document that defines the firm's objectives, strategy, and measures of success.

Business plan

A document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success.

2. Strategy involves competitive trade-offs.

By choosing to pursue some strategies, an organization implicitly decides not to pursue other strategies that are incompatible. If a company tries to do everything, rather than focus on one particular position, it will lose its competitive identity.

Cash Cows (BCG Matrix)

Cash cows have low market growth but high market share. With high earnings and stable cash flows, cash cows finance stars and question marks. Managers should "milk" cash cows, not investing very heavily in R&D; eventually this market will mature, and the revenue stream will dry up - similar to an old cow.

Operational goals

Set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals.

Action plan

The course of action needed to achieve the stated goal, and the action plan forms the basis for an operating plan.

Planning

The managerial function that involves setting goals and deciding how to achieve them. Combine with a fundamental understanding of decision making, a basic discussion of planning will feed into the following segment on strategic management.

Wages and salaries

Base pay consists of the basic wage or salary paid to employees in exchange for doing their jobs. This is based on what competitors pay their employees, whether jobs are unionized or hazardous, the individual's level in the organization, the individual's experience, and the prevailing pay levels in the organization's geographic area or industry.

Product innovation

Change in the appearance or functionality/performance of a product or service, or the creation of a new one. For example, new models of grooming razors exhibit product innovations (disposable, multiple blades, electric shavers) that change and improve on the first razors.

Values Statement

Expresses the organization's values - what core priorities it stands for, its culture, what beliefs it wants to emphasize, what standards are embodied by its employees, and what contributions it offers the world.

Vision Statement

Expresses what the organization should become and where it wants to go strategically. Expresses the organization's vision - where it wants to go, what actions it needs to get there, what it wants to become, and a clear sense of the future it wants to accomplish.

Legal defensibility

Extent to which a selection device measures job-related criteria and is free from bias. Measuring factors that are directly related to job performance in a way that is free from bias. Legal defensibility involves ensuring selection techniques are reliable and valid.

Person-organization fit

Extent to which individual personality and values match the climate and culture of an organization. If you can identify an organization's culture, you can determine your person-organization fit, which is the extent that your personality and values match the climate and culture of an organization. Good fit is associated with positive work attitudes, higher performance, less stress, and less intention to quit. Additionally, most interviewers prioritize culture fit when making hiring decisions. According to one survey, the four most commonly asked interview questions are, "What's your favorite movie?"; "What's your favorite website?";"What makes you uncomfortable?"; and, "What's the last book you read for fun?" Questions like these are trying to assess an applicant's person-organization fit. Avoiding mismatches in person-organization fit helps reduce turnover.

3 core processes of execution

Three Core Processes of Execution he The three core processes of execution are the three core processes of business: people, strategy, and operations. 1. People - Execution in terms of the first and most important core process, people, involves hiring, training, and motivating the right people with the right skills to get the job done. The focus should not be on who is currently in the position; it should be on who will benefit the firm in the future. 2. Strategy - The second core process of execution, strategy, must explain how success will be accomplished in the future. A good strategic plan gives an assessment of the external environment, the degree to which managers understand existing markets, and how to cultivate the business. It identifies competition and makes assurances that the strategy can be executed and that the short term and long term are balanced. It establishes milestones for execution and identifies critical issues facing the business. 3. Operations - The third core process of execution, operations, provides people with a path to follow. The operating plan should describe the company's activities and the short-term objectives of each activity. Effective management of these three core processes drives successful strategy execution.

Legal Constraints on Human Resource Management

U.S. organizations must operate within American laws, so human resource managers have to know what the law is, as well as the organization's obligations under the law. There are dozens of federal laws that impact the human resource environment, many of which are in place to stop discrimination and ensure equal opportunities for all groups. We will briefly review some of the most important pieces of federal legislation relating to human resources. On page 396, the textbook presents a table of 15 of the most important federal laws and regulations that protect employees in the areas of labor relations, compensation and benefits, health and safety, and equal employment opportunities.

Human resource concerns

Unmet needs, absenteeism and turnover, reduced productivity, and job dissatisfaction are all problems with employees that indicate a need for change.

Sexual Harassment

Unwanted sexual attention that creates an adverse work environment. Sexual harassment consists of unwanted sexual attention that creates an adverse work environment. If a manager or agent of the organization engages in inappropriate behavior, the organization can be sued even if it had no knowledge of the activity. Two types of sexual harassment are as follows: 1. Quid pro quo 2. Hostile environment

Characteristics of an Effective Strategy

1. Strategy involves creating a unique and valuable position. 2. Strategy involves competitive trade-offs. 3. Strategy requires the creation of a "fit" among activities.

related diversification

A company's purchase of a new business that is related to its current business portfolio. Occurs when an organization operates, under one ownership, several separate businesses that are related to one another. A related diversification decision should therefore be influenced by how much strategic similarity the businesses have with regard to three major corporate management tasks: resource allocation, strategy formulation, and performance management. • Resource allocation - Making products that involve the same type of management, capital investment, production, or similar sources of risk. • Strategy formulation - Making products that have similar key success factors, are in similar stages of the industry life cycle, or occupy similar competitive positions similar • Performance management - Making products that have targets that are defined by similar performance variables. For example, Pepsi, which primarily sells beverages, diversified into the (related) snack business, which uses the same distribution channels. By purchasing Frito-Lay, Pepsi created synergy because it increased its bargaining power as a supplier; Pepsi has more leverage in negotiating deals with grocery stores because Pepsi accounts for a larger share of the store's products (compared with if it just had its beverage business).

planning/control cycle

A continuous feedback loop for each level of planning. It includes 2 planning steps and 2 control steps. The 2 planning steps are as follows: 1. Make the plan 2. Carry the plan out The 2 control steps involve controlling the direction as follows: 3. Control the direction by comparing results with the plan 4. Control the direction by taking corrective action in two ways: (1) by correcting deviations in the plan being carried out, or (2) by improving future plans and restarting the cycle.

Management by Objectives (MBO)

A process with the purpose of motivating subordinates to achieve organizational goals. This approach is a departure from the top-down approach traditionally used to establish goals for subordinates (i.e., administrative management). MBO is a proactive, results-oriented approach that allows individuals at all levels of the organization to collaborate and participate in the goal-setting process. The key idea is that lower-level employees will be more committed to a goal if they are involved in setting it. Most successful organizations practice MBO, as opposed to management by exception - a more passive form of leadership in which managers don't intervene with employee problems until they are severe enough to require immediate action.

Forecasting

A vision or projection of the future. Forecasts can have a significant impact on strategy, and thus, organizational success. Two kinds of forecasting include trend analysis and contingency planning: 1. Trend analysis 2. Contingency planning

Goals

AKA objectives, are specific commitments to achieve a measurable result within a stated period of time. An organization's goals are shaped by its mission, vision, and values, so it is important for a company to have these statements in place before formulating goals.

SMART Goals

All operational goals that managers set should be SMART goals, which is specific, measurable, attainable, results-oriented, and has target dates.

Porter's model for industry analysis

Business-level strategies originate in 5 primary competitive forces in the firm's environment: 1) threats of new entrants 2) bargaining power of suppliers 3) bargaining power of buyers 4) threats of substitute products or services 5) rivalry among competitors Porter's model for industry analysis suggests that average industry profits vary as a result of pressure from five primary competitive forces that each influence productivity. Managers should evaluate the level of the following five competitive forces and consider the factors that are causing each force to get stronger or weaker. Based on an analysis of each of these forces, managers can determine the overall level of competition in the industry (e.g., weak, moderate/normal, strong, fierce, or brutal). According to Porter, industries with less overall competition have higher average profits.

Forces of Change

Change can be driven by forces internal to the organization and/or forces external to the organization. Outside factors that can force an organization to change include the following: 1. Demographic changes 2. Technological advancements 3. Shareholder and customer demands 4. Changes in the market 5. Social and political pressures Inside factors- forces coming from inside of the organization- that may drive change include the following: 1. Human resource concerns 2. Behavior of managers

Process innovation

Change in the way a product or service is conceived, manufactured, or disseminated. Process innovation is just as important as product innovation in today's business world. For example, the internet has introduced major process changes that have completely reshaped the way companies deliver media to consumers.

Appropriate HR practices

Company policies, practices, and procedures should reinforce all of these points.

Clients and customers

Customer comment cards and questionnaires can be used to gather assessments from customers that can be used in employee evaluations.

Fear of the unknown

Employees will fear the consequences of change, especially if it occurs abruptly.

SMART Goals - Specific

Goals should clearly address only one issue or metric, and both the manager and his or her subordinates should know exactly what the goal is.

Operational planning

First-line managers determine how to accomplish specific tasks with available resources for one week to one year into the future. Occurs when first-line managers determine how to accomplish specific tasks with available resources within the next 1 to 52 weeks. First-line managers (e.g., team leaders, unit managers, first-line supervisors) must direct the tasks of non-managerial employees and ensure that operational plans are properly implemented. First-line managers use to guide performance through the direction of employees and resources toward goal attainment. In other words, operational plans break tactical plans into actionable, short-term goals. Operational plans specify how the work will get done and what resources will be needed to ensure that the organization's objectives for the next 1 to 52 weeks will be achieved efficiently and effectively. Case Study: Dell ---> - Continuing with the discussion of Dell, an example of operational planning is how the company decided to achieve the goals of becoming more efficient in the personal computing market, and transitioning to a solutions management company. - For instance, Dell began as a company that offered extensive customization, which customers no longer place a high value on. Thus, in order to become more efficient and lower costs, Dell significantly reduced the variety of customizations available and moved from a configure-to-order (CTO) system to a build-to-order (BTO) system that prebuilds the most popular configurations. - With its new model and lower price point, Dell's recent operational plan for driving revenue has been to take advantage of the PC growth in emerging markets, including those in lower-tier cities in China, India, Indonesia, and Brazil. Additionally, in order to ease the transition into the solutions management market, which is more customer-service oriented, Dell hired more salespeople to grow its salesforce to a more appropriate size. This has paid off; Wyse, one of Dell's cloud-computing companies, had a $1 billion run rate.

Climate of mistrust

If organizations have a climate of mistrust, a sense of secrecy will make the change even more uncertain, and employees won't believe that the change will be to their benefit. Managers should create a climate of openness, honesty, and participation.

Reactive vs. Proactive Change

Managers should make proactive change when possible to avoid having to make reactive change. Human resource managers should participate in developing proactive change to ensure that new employees will fit the vision of the future and assist the transition. Managers can survey the external environment and gather competitive intelligence to help them anticipate trends,

Compensation

Managers use compensation to attract and retain good employees. Includes: (1) wages or salaries, (2) incentives, and (3) benefits.

Fear of failure

Many times, workers doubt heir ablty to deal wilh on thiefob changes.

Flat organization

Organizational structure with few or no levels of middle management between top managers and those reporting to them.

Demographic changes

Organizations must manage changes in the demographic characteristics (i.e., age, education, skill level, gender, immigration) of the population Organizations must manage the increasing diversity of the U.S. workforce.

benchmarking

Process of evaluating a company's own performance based on how it compares with the performance of high-performing organizations in its industry. Benchmarking allows a company to incorporate the best practices in the industry into its own operations. For example, airlines use benchmarking to compare the number of on-time arrivals, fuel cost, number of lost bags, etc. to high-performing competitors. Even nonprofit organizations like cities benchmark measures such as quality of life.

Question Marks (BCG Matrix)

Question marks are new ventures with a high market growth rate but low market share. (This results in low but growing earnings and a negative cash flow.) Managers should carefully analyze question marks to determine if they will grow into stars or diminish into dogs.

Adaptive Change

Reintroduction of a familiar practice. Adaptive change is the reintroduction of a familiar practice (one the organization has previously employed). For example, once a year, a clothing store might ask employees to work 12 hours a day instead of eight during inventory week.

Bullying

Repeated mistreatment by one or more perpetrators, including abusive physical, psychological, verbal, or nonverbal behavior that is threatening, or humiliating. Common types of bullying include aggressive e-mails, co-worker gossip, and yelling. The majority of bullies are male bosses, and the majority of victims are women. When women are the bullies, other women are the targets most of the time. An environment that allows bullying to thrive leads to decreased productivity and lower employee satisfaction overall. HR managers must be familiar with laws such as these because they relate to contemporary challenges that managers face. Managers are responsible for eliminating sexual harassment, accommodating employees with disabilities, and dealing with employees with substance abuse problems or health problems.

SMART Goals - Results-oriented

The best goals are ambitious but achicvable, given the resources available to the organization. Based on experience and data, managers should ensure that output goals for subordinates can be completed with subordinates given resources, and that goals are aligned with the results that managers are looking for.

Authority

Rights inherent in a managerial position to make decisions, give orders, and utilize resources. Authority refers to the rights inherent in a managerial position to make decisions, give orders, and utilize resources. Subordinates are expected to recognize a manager's authority to issue orders, and they are expected to follow those orders (as disobeying may lead to negative consequences). Accountability, responsibility, and delegation come with authority. 1. Accountability refers to the obligation to report and justify work results to people higher in the organizational hierarchy. Subordinates are accountable for performing tasks assigned to them. 2. Responsibility is the obligation you have to perform the tasks assigned to you. Managers typically have more responsibility than subordinates. 3. Delegation is the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy. Delegating affects efficiency, attitudes, and organizational performance. There are two kinds of authority positions: line positions and staff positions. 1. Line managers have the authority to make decisions, have profit-and-loss responsibility, and usually have people reporting to them. In an organizational chart, line positions are indicated by a solid vertical line. Examples of line managers are presidents, CEOs, and executive administrative directors. 2. Staff personnel have authority functions; they provide advice, recommendations, and research to line managers. In an organizational chart, staff positions are indicated by dotted horizontal lines. Examples of staff personnel (sometimes called support personnel) are legal counsel, human resources departments, and special advisors. For instance, the human resources department doesn't have the final decision about new hires, but the staff personnel in HR provide the information and support necessary for line managers to do so.

Tactical goals

Set by and for middle managers and focus on the actions needed to achieve strategic goals.

Innovation system

Set of mutually reinforcing structure, processes, and practices that drive an organization's choices around innovation. An innovation system is defined as "a coherent set of interdependent processes and structures that dictates how the company searches for novel problems and solutions, synthesizes ideas into a business concept and product designs, and selects which projects get funded." The following are the components of an effective innovation system: 1. Innovation strategy 2. Committed leadership 3. Innovative culture and climate 4. Required structures and processes 5. Necessary human capital 6. Appropriate HR practices 7. Appropriate resources

Predisposition towards change

Some people are raised by parents who were patient, flexible, and understanding. These people tend to associate change with love and approval. Compare this type of individual to a person who was raised by unyielding, forceful parents. This individual tends to associate change with demands for compliance.

Readiness for change

Staff's beliefs, attitudes, and intentions about the extent of the changes needed and their willingness and ability to implement the changes. Readiness for change refers to employees beliefs, attitudes, and intentions about the extent of the changes needed and their willingness and ability to implement the changes. Thus, in the inputs part of the system, managers ask, "Why should we change, and how willing and able are we to change?"

Step 5: monitor the process to maintain strategic control

Strategic control consists of monitoring the execution of strategy and making adjustments if necessary. Managers use a feedback loop in which they continuously track the internal and external environment for deviations, and use feedback to reformulate plans, rethink policies, and take corrective action. Managers need to do the following to keep the strategic plan on track: • Engage employees in achieving the plan. This is key in the control process. • Keep planning simple. • Stay focused on what's important. • Keep progressing toward your vision, adjusting plans when needed.

Organizational development

Techniques for implementing planned change to make people and organizations more effective.

Strategic management

The formulation and implementation of strategies and strategic goals. This process involves managers from all parts of the organization. A five-step process for formulating and implementing strategies and strategic goals. The strategic management process involves managers from all parts of the organization in carrying out the following steps: 1. Mission, vision, and values statements 2. Current reality assessment 3. Corporate, business, and functional strategy formulation 4. Strategy implementation 5. Strategic control

Traditional Design

Traditional designs tend to rely on vertical management hierarchies and clear reporting relationships. The four traditional designs are as follows: 1. Simple Structure 2. Functional Structure 3. Divisional Structure 4. Matrix Structure

Trait appraisals

Trait appraisals rate employees based on certain general characteristics, such as "attitude" and "leadership" and therefore are prone to personal bias.

product change

the development of new products

process change

the development of new ways of doing business or creating products

Committed leadership

Strategic goals can only be achieved if top managers show their commitment to them.

Unstructured interview

Interviews that involve gathering information about candidates without a fixed set of questions or systematic scoring procedure. Unstructured interviews involve gathering information about candidates without a fixed set of questions or systematic scoring pricedure. Because unstructured interviews are similar to conversations, they can create a more relaxed atmosphere and provide freedom to discuss certain topics in more detail. However, decades of research consistently show that they have low reliability, low validity, and are very susceptible to legal challenges because they are highly subjective. As an example, Dr. Archambeau played a clip of the origins of job interviews. - A caveman interviewer asks, "So, you want to join tribe? What you do?" - The caveman applicant replies, "Me hunter." - Another caveman interviewer notes, "We have many hunters," to which the caveman applicant says, "Me also gather." - An interviewer then replies, "You hunter gatherer?" and so on.

Focus (or scope) of innovation

Involves: 1. Improvement Innovation (AKA, Incremental or core innovation) 2. New-direction Innovation (AKA, transformational, radical, or disruptive innovation)

Organization (VRIO)

Is the firm organized to capitalize on the resource or capability? When it has all necessary things (structure, culture, capital, etc.) to harness the value, rarity, and imitability of the business idea, the firm can exploit the competitive advantage if it is organized to do so

Rarity (VRIO)

Is the resource or capability controlled by few or no other firms? If several competing firms that are duplicating the business idea currently exist, then it is not rare and has only equal competitive potential.

Imitability (VRIO)

Is the resource or capability costly to imitate? If other firms can get into the market without having to confront substantial barriers to entry (e.g., substantial expenses), then the firm may have a competitive advantage in pursuing its business idea, but this competitive advantage will likely only be temporary.

Value (VRIO)

Is the resource or capability valuable? If a resource or business idea enables the firm to exploit an opportunity or neutralize a threat, then it is valuable. A firm's unique value might come from its human resources system, brand name, customer service, etc.

Knowledge workers

Knowledge workers are people whose work's main function or concern involves generating or interpreting information rather than manual labor. Employees become more valuable to an organization over time because they learn firm-specific skills and knowledge. This is why firms are willing to invest in training and developing employees.

Organizational arrangements

Turbulence in the market may prompt reorganization of the firm's structure, policies, procedures, rewards, roles, etc.

Market Culture

Type of organizational culture that has a strong external focus and values stability and control. A market culture is competitive and values profits over employee satisfaction and employee development. Market cultures focus on customers, productivity, and competition to achieve results such as market share and profitability. Employees who work hard and produce results are rewarded appropriately. Dr. Archambeau mentioned that Amazon is considered an example of a firm with a market culture because it emphasizes control and customer satisfaction and focuses on profitability and market share by being very specific about goal achievement for employees. Dr. Archambeau also discussed the market culture at Brown & Brown Insurance. During the annual sales meeting, managers of poorly performing sectors are led to a fake guillotine by medieval executioners. Obviously, the managers are not physically harmed; however, their failure is showcased to the whole company, and the guillotine is symbolic of just how quickly they could lose their jobs.

Adhocracy Culture

Type of organizational culture that has an external focus and values flexibility. An adhocracy culture is risk-taking and values flexibility. Adhocracy cultures use adaptability, creativity, and agility to create innovation, growth, and cutting-edge outputs. This type of culture is suitable for start-ups, organizations that undergo constant change. and companies in mature industries that need innovation for growth For example, Dr. Archambeau played a clip about Netflix, where employees have freedom and responsibility and are encouraged to take risks. The company aims to create an environment that inspires creativity and facilitates new ideas.

Clan Culture

Type of organizational culture that has an internal focus and values flexibility. A clan culture is collaborative, employee-focused and values flexibility over stability. Clan cultures use cohesion, collaboration, participation, communication, and employee empowerment to raise organizational commitment, employee morale, and employee development. This kind of culture might exist in a family-run business, where there is significant concern about the well-being of employees. For example, The Container Store attributes its success to its "employee-first culture."

Hierarchy Culture

Type of organizational culture that has an internal focus and values stability and control. A hierarchy culture is structured and values stability and effectiveness. Hierarchy cultures use process control, standardization, and measurement to ensure efficiency, promptness, and smooth functioning. The work environment tends to be formalized and have many rules. This type of culture is successful in a stable market environment. Companies that are bureaucracies tend to have a hierarchy culture. McDonald's is an example of this; it focuses on logistics, standardization, and the control end of the process. Franchisees are taught exactly how to run their stores, and they are expected to maintain very specific standards. McDonald's even has a training school Hamburger U to train new franchisees and new employees. Many government agencies, such as the Department of Motor Vehicles (DMV), also have hierarchical structures.

Situational interview

Type of structured interview in which applicants are asked how they would behave in a hypothetical job situation. Situational interviews are a type of structured interview in which applicants are asked how they would behave in a hypothetical job situation. A question might be: "What would you do if your supervisor asked you to keep a secret from top management?" In class, Dr. Archambeau played a clip from the movie The Internship in which interviewees were asked this situational question: "Suppose that you were shrunk to the size of a nickel and that you were stuck in a blender. What would you do?" This was a hypothetical question that was presumably asked to each applicant.

Behavioral-description interview

Type of structured interview in which applicants are asked to recount past actions and experiences. Behavioral-description interviews involve an exploration into what applicants have actually done in the past. A question might be: "Recount a time when you had to learn more about competitor organizations.

Subordinates and peers

Valuable information can be gathered from coworkers and colleagues. This information should be used for development, not for appraisals.

Enacted Values

Values and norms exhibited in an organization.

To show SMART goals in action, Dr. Archambeau evaluated Honda's goal from several years ago, when the company announced its plan: Within 3 years, Honda would be the fuel-efficiency world leader in every vehicle class.

We can apply the SMART framework as follows: • Specific - This is a specific goal because it clearly specifies an objective (manufacturing vehicles that are fuel-efficiency leaders). • Measurable - This is a measurable goal because there are organizations that rank vehicles based on fuel efficiency, and fuel efficiency is a quantifiable variable. • Attainable - This may be an attainable goal, depending on the resources it would take for Honda to develop innovative engines that are more efficient than its competitors' engines, as compared with the value to Honda of being the leader in every vehicle class. • Results-oriented - This is a results-oriented goal because it will be clear at the end of three years if Honda has been successful or not. • Target dates- This is a time-bound goal because it specifies that the goal must be achieved within three years. Dr. Archambeau mentioned that though Honda improved, it wasn't able to fully accomplish what it set out to do. Honda achieved presence in multiple categories, including both electric and non-electric vehicles, yet it does not lead any of these categories.

business-level strategy

Middle level of strategic management; senior managers below the C-Suite focus on individual business units or product lines (e.g., How will we compete in this industry?) Examples of business-level strategic decisions include budgeting for marketing, new product development, and facilities expansion.

For example, consider the mission statement for NestFresh, a company that produces eggs from 100% cage-free chickens:

NestFresh strives to provide you and your family with a more sustainable, humane alternative to conventional eggs, which are produced in caged facilities. We insist on producing cage-free and organic eggs to create awareness about the need for humane treatment of egg-laying hens and the importance of environmental responsibility. Note that NestFresh's mission statement clearly states its purpose, and it also mentions the company's values when it discusses the ethical treatment of hens. These values guide the strategic plans of the company, which drive its tactical and operational plans. For instance, NestFresh's use of cage-free eggs impacts how much acreage it needs for its farms. In class, Dr. Archambeau played a clip that showed what it's like to operate a cage-free chicken farm, which is very different from most egg farms, which look more like factories.

Threat of new entry

New competitors take customers away from existing organizations. The higher the industry's barriers to entry are, the costlier it will be for new firms to enter the market and the less competitive the market will be. Barriers to entry include absolute cost advantages, switching costs, proprietary products (learning curve) access to inputs and distribution, brand identity, capital requirements, government policy, economies of scale, technology, and expected retaliation. For example, imagine that you wanted to get into the pharmaceutical industry. You would need to make and sell a large enough quantity to recoup the cost of R&D for drug development. Moreover, before the company can see any revenues, it must go through the FDA approval process, which takes years Contrast this industry with the restaurant industry, which has very low barriers to entry. You can start a restaurant with few resources and very little regulatory approval. It is no wonder, therefore, that there are many restaurants of many different kinds, creating a very competitive industry.

Benefits (AKA, fringe benefits)

Non-monetary forms of compensation designed to enrich the lives of all employees that are paid for (all or in part) by the organization. Health insurance, life insurance, accidental death and dismemberment (AD&D insurance, education, holidays off, retirement plans, and vacation days are some of the many examples of benefits.

Vertical integration

Occurs when a firm expands into the industries that provide supplies used in producing its products, or into the industries that distribute and sell its products. Vertical integration should leverage a firm's competitive advantage and create synergies whenever possible. For example, Disney+ is an instance of Disney vertically integrating - from being the content producer to also being the distributor.

The strategic human resource management process involves the following steps

1. Determine the mission and vision. 2. Determine the grand strategy. 3. Develop strategic plans. 4. Determine what human resources are needed. 5. Recruit and select individuals. 6. Engage in orientation, training, and development. 7. Appraise employee performance. **The purpose of this process is getting optimal work performance in efforts to fulfill the company's mission and vision. In class, Dr. Archambeau played a clip of Jack Welch, former-CEO of General Electric, discussing the importance of human resources, which he considers more important than finances to achieving business success. Human resources should be involved in every aspect of business meetings and development because the success of the company is ultimately in their hands, as they are cultivating tomorrow's leaders. Welch believes it's wrong to diminish the duties of HR to forms and morale-boosting events. Firms can use a number of processes to develop human capital, including career development, rewards and recognition, performance appraisals, recruiting, and workforce planning. These human capital processes drive key performance metrics - productivity, quality, innovation, and customer service. Meeting these metrics leads to top-level business results such as revenue growth, return on investment, and return to shareholders.

There are 12 mechanisms that managers push and pull to create cultural change or embed the preferred culture:

1. Formal statements - Mission, vision, and values statements can be used along with employee training materials to establish a culture. 2. Slogans and sayings - Corporate culture can be expressed in company language, slogans, sayings, and acronyms. 3. Rites and rituals - Recall that rites and rituals are the activities, planned or unplanned, used to commemorate important events and accomplishments. 4. Stories, legends, and myths — For example, a story can help change a culture of silence into one in which people feel comfortable voicing concerns. 5. Leader reactions to crisis - Top managers' responses to critical events and incidences 6. Role modeling, training, and coaching - Structured training and coaching/ mentoring send a cultural message. programs can introduce organizational values and provide support and role models. 7. Physical design - The physical design of the workspace, such as the office layout, sends a visible message about the culture. 8. Rewards, titles, promotions, and bonuses - Incentives are powerful in embedding culture because people have a desire to be rewarded. 9. Organizational goals and performance criteria - These criteria, which are used for selection, development, promotion, and dismissal of employees, communicate the desired culture. 10. Measurable and controllable activities - Employees ascertain which aspects of their performance are most important to the organization based on which activities, processes, or outcomes the leaders pay attention to, measure, and control. 11. Organizational structure - A decentralized structure creates a culture of flexibility and discretion, whereas a centralized structure creates a culture of stability and control. 12. Organizational systems and procedures - Companies are increasingly modifying work systems and procedures to encourage collaboration, innovation, quality, and efficiency. Changing an organization's culture requires pushing and pulling multiple levers and is not easy or quick. Managers should attempt to align all of these cultural drivers to avoid sending conflicting messages to employees.

Benefits of Strategic Planning

1. It provides direction and momentum. Planning involves developing the firm's strategy, which is its theorized idea of how to be successful. 2. It inspires new ideas. Successful planning allows an organization to focus on the future as well as the present, encouraging innovation. This enables firms to recognize trends and lucrative opportunities for expansion, development, or growth. Strategy innovation can lead to a firm potentially reinventing the basis of competition. 3. It cultivates a sustainable competitive advantage. Planning also allows organizations to be more dynamic; strategic plans can be modified as firms continually develop their capabilities.

Reliability

Degree to which a test produces consistent scores. If an individual's characteristics remain the same over time, that individual's score on the test should remain the same over time.

Step 1: mission, vision, and values statements

1. Mission statement - The organization's reason for operating - Expresses the organization's purpose or reason for being. Top management and the board of directors determine the purpose of the organization, including the needs it exists to address. 2. . Vision statement - What the organization envisions itself becoming - Expresses what the organization should become and where it wants to go strategically. 3. Values statement - Values the organization wants to emphasize (i.e., what it stands for) - Expresses the organization's values - what core priorities it stands for, its culture, what beliefs it wants to emphasize, what standards are embodied by its employees, and what contributions it offers the world.

Disadvantages of Planning

1. Planning is time-consuming. It takes time and resources to gather information, forecast, and budget. When a manager devotes his/her time to planning, he/she takes time away from other value-adding activities. 2. Plans go obsolete quickly. In a fast-paced environment, plans can become outdated quickly, so they must be constantly evolving to reflect the changing nature of the market.

The 4 steps in the MBO processes

1. Set objectives jointly - Managers and subordinates should come together to determine the subordinates' goals for the future. Employees have greater productivity and are more likely to be "on the same page" when they have participated in establishing a goal. A back-and-forth negotiation will ensure that goals are achievable yet challenging. The goals, which should be written down, should be SMART goals. The three types of objectives in MBO are as follows: • Improvement objectives (or performance objectives) define the performance level that is to be accomplished for a specific area in a specific way (e.g., "Increase food sales by 5%") • Maintenance objectives (or behavioral objectives) show intent to keep performance at previously established levels (e.g., "Continue to meet sales goals specified last month"). • Personal development objectives (or learning objectives) define the individual's personal goals that are to be fulfilled. MBO is intended to keep employees engaged in their work, so these objectives are important. It's not just about what the employee can do for the firm; it's also about what the firm can do for the employee (e.g., "Take a particular software course to gain some of the qualifications required for a promotion"") 2. Develop an action plan - Managers should prepare action plans for both work groups and individuals to detail how objectives will be attained. Goal attainment is most likely when managers place an emphasis on results on a time scale. Additionally, breaking objectives into smaller and more specific sub-goals reduces procrastination. 3. Review performance periodically - The manager and the subordinate should periodically come together to review progress and see how well the objectives are being met. Managers should give subordinates feedback, and objectives should be revised or updated as necessary. Employees are more motivated in their work when they are held accountable for their results. 4. Appraise performance and give rewards - Every 6 months or year, managers and subordinates should come together to compare objectives to actual performance. High performance should be rewarded with money, praise, promotion, or some combination of these, and corrective action should be used for non-attainment of objectives. (Additionally, objectives for the next period can be set at this time, recommencing the MBO process.) Deadlines are particularly important for making MBO work effectively? Deadlines help employees focus by helping them prioritize tasks, and they provide a system for feedback. Productivity gains are highest when top management is committed to MBO. Goals from higher levels guide goal setting at lower levels. Top-level objectives (strategic goals) are the broadest and are set by top managers. These objectives are translated into middle-level objectives (tactical goals), and finally into lower-level objectives (operational goals). Therefore, MBO cannot be applied to only some specific divisions; it must be applied to the entire organization.

Formulating the firm's strategic plan is a critical step in the planning process because it provides the organization with the overall blueprint for how the organization will achieve its goals. Strategy and strategic management are important for at least three reasons:

1. They provide direction and momentum. Strategic planning is a foundation for specifying goals and preparing for the future; it helps managers and employees focus on the most critical problems, choices, and opportunities facing the organization. Having a strategy helps managers determine the firm's value proposition how the organization will exploit its core competencies, deliver value to customers, and build synergy in its operations. 2. They encourage new ideas. Strategic planning emphasizes the long-run importance of innovation. Strategy provides a basic blueprint for growth, reinvention, and renewal by concentrating on innovating, which makes an organization's customer value more difficult for other companies to imitate. 3. They help an organization develop a sustainable competitive advantage. As we've discussed. strategic planning helps an organization identify ways to stay ahead of competitors in four areas, referred to as the four building blocks of a competitive advantage: (1) responsiveness to customers, (2) innovation, (3) quality, and (4) efficiency. The results of a firm's strategy will determine whether the firm will have a sustainable competitive advantage. Thus, strategic management impacts the market as well as competitors' strategies. Successful companies must regularly reconfigure their assets and capabilities to ensure resources are being used to best take advantage of new opportunities or to minimize threats. Without strategy as a tool to differentiate a firm and drive particular outcomes, the firm will experience a weaning competitive advantage.

The following is an example analysis of the five competitive forces for the PC market:

1. Threat of new entry - There is a relatively low threat of new entry, as a result of the industry's high barriers to entry; incoming firms would require a significant capital investment. The market is dominated by a handful of major competitors, and each one benefits from brand recognition and customer loyalty. 2. Buyers' bargaining power - This is considered a medium threat because buyers have many alternatives to a PC, such as tablets or mobile phones, and computers are generally considered a commodity item. 3. Suppliers' bargaining power - The overall threat of suppliers bargaining power ranges from low to medium, depending on the component being supplied. Hardware suppliers and services suppliers have little bargaining power because these components are generally commodities, with many suppliers in the market. Software suppliers have medium bargaining power. On one hand, operating system software providers are rare. However, these suppliers are still not considered a high threat because the relationship is bilateral - software suppliers receive the vast majority of their business from the handful of major players that dominate the PC market. 4. Threats of substitute products - The threat of substitutes is high and growing higher. Multiple products (e.g., smartphones and tablets) offer the same benefits as a PC; as technology advances, industry lines will continue to blur. 5. Competitive rivalry - The PC market is considered to have "fierce" rivalry, which is a high threat. This is because the industry is mature and declining in the developed world, and it is a price-sensitive, commodity product. Managers should repeat this process periodically to assess whether the industry is becoming more or less attractive over time. (For example, the PC market was once extremely attractive because it was a high-growth market with a relatively small number of competitors, but it has become less attractive over time. Competitive rivalry in particular has become fierce as industry growth has slowed.) After doing an industry analysis, managers must come up with a strategy for mitigating threats from the five forces and buffering their impact.

Strategic Formulation Process

A good strategy provides momentum and direction, encourages innovation, and maintains a competitive advantage. The strategic formulation process can be broken down into two main stages: 1. the strategic planning process 2. the implementation process.

Trend analysis

A hypothetical extension of a past series of events into the future. For example, time-series analysis takes historical sales data and projects it into the future to predict long-term trends, cyclic patterns, and seasonal variations. If the historical data are flawed, the forecast will also be flawed.

Strategy

A large-scale action plan that sets the direction for an organization. The purpose of strategy is to determine where to invest time and effort in order to effectively utilize resources.

3. Strategy requires the creation of a "fit" among activities.

A strategy should align an organization's activities to reinforce one another in a strategic fit. A company acquires a competitive advantage if it can achieve a fit among its core activities. It is much more difficult to duplicate an entire system than its separate parts, so developing a complex, integrated activity system will create barriers to entry that result in long-lasting sustainability of the competitive advantage. For instance, Southwest Airlines has several activities that reinforce one another in what is known as a virtuous circle. Southwest Airlines focuses on point-to-point, regional travel. At Southwest, efficient operations lead to low fares, which lead to customer loyalty, which leads to high utilization of aircrafts, which makes operations even more efficient. The fit" among the various activities at Southwest Airlines is what makes its strategy particularly effective. Additionally, this activity system makes Southwest's strategy difficult for competitors to copy (though they have tried).

SWOT analysis

AKA a situational analysis; strategic planning tool involving the search for the strengths, weaknesses, opportunities, and threats affecting the organization. SWOT analysis is useful because it helps managers set realistic goals, improve their capabilities in problem areas, establish plans to overcome weaknesses, exploit strengths, and turn threats into opportunities.

Contingency planning

AKA scenario planning and scenario analysis; forecasting based on alternative but equally likely potential future conditions. (Future conditions can include things like economic conditions, competitors' strategies, or budget levels.) Contingency planning helps firms react quickly and decisively when things do not go as planned.

Learning and development

According to Dr. Archambeau, training refers to educating employees how to do better in their current jobs, whereas development refers to educating employees in the skills and knowledge they will need to do their jobs in the future. Learning and development (L&D) programs facilitate employee involvement by bridging the gap between what employees already know and what they need to know to perform their jobs well. This can be accomplished through a five-step process: 1. Assess the skill gaps that need to be improved. 2. Identify learning objectives that will reduce skill gaps. 3. Select methods for delivering L&D. 4. Implement the L&D programs. 5. Evaluate the programs to determine whether the L&D programs have met the objectives or if something needs to be adjusted. When L&D is intended to teach workers skills (e.g., networking or decision making), interactive methods such as role-playing, case analysis, virtual reality, and artificial intelligence are most effective. To teach workers facts (e.g., work rules or laws), methods such as online courses, shared documents, and e-books are effective. Another approach to L&D is microlearning, in which employees engage with a small amount of content for a few minutes at a time at their convenience. In microlearning, employees must master a small "bite-size" lesson before advancing to anything else. L&D can occur both on and off the job. Examples of on-the-job L&D include coaching, job rotation, training positions, and planned work activities. Examples of off-the-job L&D include classroom programs, professional conferences, and e-learning platforms (including videoconferencing, games, and simulations) that occur outside of normal job duties.

Porter made the following key points about creating a strategy that is effective (i.e., creates a sustainable competitive advantage):

According to Porter, companies often fail to recognize the difference between operational efficiency and strategy. While strategy is a plan for effectively competing in the market, operational efficiency is performing tasks better than competitors. Operational efficiency is important, but it is not sufficient to be the sole driver of a company's decision making. Operations strategy (operational planning) is in place to ensure that all tasks performed across a company are the right tasks (i.e., to ensure operational effectiveness). Operational effectiveness is a necessity; strategic success is impossible without it. A firm must also constantly innovate, which helps maintain barriers to entry.

1. Strategy involves creating a unique and valuable position.

According to Porter, strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. He described strategic positioning as "performing different activities from rivals, or performing similar activities in different ways." There are three basic ways to create a unique and valuable position in the minds of customers: 1. Variety-based positioning - A firm is engaged in variety-based positioning when it produces a subset of an industry's products or services. (This kind of position gets its name from the fact that the firm has chosen a product or service variety rather than targeting certain customer segments.) For example, Jiffy Lube focuses almost exclusively on oil changes. This allows the company to achieve economies of scale by having facilities and equipment all based on one function. Jiffy Lube's positioning of meeting a few specific needs of many customers also allows for work specialization, as its mechanics don't need to know how to do other types of car maintenance or repairs. 2. Needs-based positioning - A firm is engaged in needs-based positioning when it attempts to serve the various needs of a particular customer segment. This positioning strategy works well when there are groups of customers with differing needs. Needs-based positioning involves serving a broad range of needs for a few customers (i.e., serving multiple different needs of the target customer segment). For example. Bessemer Trust (Britney Spears's former co-conservator) is a wealth management firm that caters to only a handful of super wealthy customers. It specializes in serving the complicated financial issues associated with being crazy rich (e.g., trust funds, investments, offshore holdings, property taxes). Another example: IKEA offers do-it-yourself solutions (targeting the budget-conscious young adults in the middle class) for all kinds of home and office furnishings. 3. Access-based positioning - A firm is engaged in access-based positioning when it segments customers based on their accessibility rather than their needs. Differences in accessibility may be due to geography, age, or anything requiring a different set of activities to reach customers. A firm would use this kind of positioning to serve the broad needs of many customers. For example, Carmike Cinema serves customers in small markets in towns of fewer than 200,000 people. Because there are often not many entertainment options in cities with a small population size, Carmike's movie theaters can compete fairly well. The movies shown are not always the latest releases, but tickets are more moderately priced than tickets at cinemas in larger markets. A simplified summary of the positioning systems is as follows: 1. Variety-based --> Few needs, many customers 2. Needs-based --> Broad needs, few customers 3. Access-based --> Broad needs, many customers

Rites and rituals

Activities and ceremonies that celebrate important occasions and accomplishments in an organization's life. Rituals are the activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's life.

Competitive rivalry

All of the preceding forces impact the level of rivalry within the industry. Firms in industries with more competition tend to be less profitable. A firm can mitigate the negative impacts of competition by differentiating itself from the competition. Some factors that increase competitive rivalry are high exit barriers and slow industry growth.

high-performance work system (HPWS)

Approach to strategic HRM that deploys bundles of internally consistent HR practices in order to improve employee ability, motivation, and opportunities across the organization. A strategic HRM approach that deploys bundles of internally consistent HR practices in order to improve employee ability, solving and improving the key business processes that drive customer value. HPWSs tend to use empowerment, self-managed teams, and incentive-based compensation such as profit-sharing or skill-based pay. HPWSs systematically enhance individual performance for all employees.

Talent Management

Approach to strategic HRM that matches high-potential employees with an organization's most strategically valuable positions. It involves identifying star employees, providing them with opportunities, and enhancing and leveraging their skills. Research shows that workers who are singled out as stars have higher job satisfaction, engagement, organizational commitment, self-efficacy, and performance, as well as lower turnover.

Horizontal structure

Arrangement that breaks down internal boundaries and improves collaboration through the use of temporary or permanent teams. Horizontal structure, or team-based design, involves the use of temporary or permanent teams to break down internal boundaries and improve collaboration. Cross-functional teams, for example, bring together members of different functional divisions to work together and solve problems. Note that these teams do not replace the team members functional responsibilities; the members still report to their functional bosses. Ford used horizontal design and cross-functional teams when it developed the Hybrid Escape; multiple people from different divisions came together to develop the car. Most car companies use a geographic divisional structure; however, Ford wanted to eliminate the redundancy and costs that are created by having identical departments around the world. The advantages of horizontal structures are as follows: 1. They facilitate organizational learning. 2. They improve responsiveness to customers because they promote rapid communication and reduction of cycle times. 3. They enjoy the advantages of teamwork, including flexibility, empowerment, and broader perspectives. Although the matrix structure and the horizontal design structure are similar, note that the horizontal structure is more efficient and flatly organized with cross-functional teams. In the horizontal structure, each employee reports to their project team manager, who reports to each of the functional managers. (In contrast, in the matrix structure, each employee reports to a project manager and to a functional manager.)

Knowledge as a competitive advantage

As computers and information technology gradually replace skilled workers, knowledge workers (who use abstract reasoning and problem solving to deal with non-routine information) are becoming more important.

Changes in the market

As the economy becomes more global, companies may be prompted to change by activities of both domestic and international competition. Changes in the dynamics of the market, such as mergers and acquisitions of competitors, can prompt change.

Mission and operations

As they begin the socialization process, employees must know what the company is about and why what they do is important.

The employee being appraised

Asking the employee to appraise his or her own work makes the employee feel involved in the evaluation process. Self-appraisals also make employees more receptive to negative feedback.

Affirmative Action

Attempt to achieve equality of opportunity within an organization. Affirmative action, which was established in the 1970s, focuses on achieving equality of opportunity within an organization. Affirmative action focuses on implementing policies that guarantee equal opportunity for protected groups, such as minority hiring goals. Public support for affirmative action is intermittent, as some consider it a form of discrimination. Although EEOC laws do not allow organizations to use minority hiring quotas to find, hire, or develop the talents of people from groups traditionally discriminated against, organizations can use active recruitment, minority hiring goals, and elimination of prejudicial interview questions to do so.

External recruiting

Attracting job applicants from outside the organization. External recruiting refers to attracting top applicants fro outside of the organization. Organizations are increasingly posting job openings on the internet and using social media for external recruiting. Recruiters also often partner with schools (universities. trade schools, and high schools) to locate potential talent. External recruiting allows firms to bring in workers with fresh viewpoints, specialized knowledge, and experience. However, it can be expensive and time-consuming. It can also be risky because the firm doesn't have any first-hand experience with outside employees.

Buyers' bargaining power

Buyers have more leverage when there are not many buyers in the market, when the buyer purchases a high volume, and when the buyer is informed and price-sensitive. When this is the case, any individual buyer is more important to suppliers. Additionally, buyers have more bargaining power if there are many firms that could supply the product, giving each individual supplier relatively little bargaining power. The creation of the internet put more price pressure on suppliers by allowing buyers to compare prices and find substitutes much more quickly and easily. Other factors affecting buyer power include buyers' incentives, brand identity, and the threat of backward integration.

The effect of China and India

China, India, and other countries have a surplus of labor that will work for lower wages than U.S. labor. Offshoring organizational functions can increase productivity, efficiency, revenues, and even quality. Globalization impacts how work is being done, and there is a movement toward increasingly fragmented supply chains and modular organizations that rely heavily on outsourcing.

growth strategy

Common type of grand strategy that involves expansion, in terms of sales revenues, market share, number of employees, or number of customers served. A grand strategy that involves expansion as in sales revenues. market share, number of employees, or number of customers or clients served. One type of growth strategy is an innovation strategy - one that focuses on increasing market share or profits by innovating improvements in products or services. Variations of how companies might implement a growth strategy include the following: • Improve an existing product or service • Introduce a new product or service • Increase marketing efforts • Expand vertically, by acquiring a distributor or manufacturer • Expand horizontally, by acquiring another retailer • Merge with another company

Stability strategy

Common type of grand strategy that involves little or no significant change. A grand strategy that involves little or no significant change. Note that a stability strategy is not necessarily easy; if the firm faces stiff competition or a changing environment, managers may have to fight hard to maintain their competitive position in the market. Stability strategies are generally used when a firm finds that it cannot handle rapid growth at all (it leads to mistakes and complaints), or if it has been growing rapidly and now needs a period of stability in order to quality control its growth. A company adopting a stability strategy can use either of the following methods: • Implement a no-change strategy • Implement a little-change strategy

Benefit corporation (AKA, B corporation)

Company that is legally required to adhere to socially beneficial practices.

competitive intelligence (CI)

Competitive intelligence involves gathering information about competitors' activities, so that a firm can anticipate changes in the market and act appropriately. Competitive intelligence is a systematic process in which firms collect, analyze, and manage external information that can have an effect on the firm's plans, decisions, and operations. Note that competitive intelligence is not organizational espionage, and it is perfectly legal. Competitive intelligence can come from public content, advertising, investor information, informal sources, etc. Sources of competitive intelligence that are heavily used include trade journals, external online databases, external hard-copy documents, employees, industry experts, and trade organizations. With competitive intelligence, firms can be proactive rather than reactive, and they can prepare for environmental changes and changes in the marketplace. Information from competitive analysis can be fed into SWOT analysis.

Change agent

Consultant with a background in behavioral sciences who can be a catalyst in helping organizations deal with old problems in new ways.

Contingency design

Contingency design refers to the process of fitting the organization to its environment. The following are some of the contingencies that can affect the kind of structure that is best for an organization.

Performance Management

Continuous cycle of improving employees' job performance through 4 steps: 1. defining performance by setting goals and expectations 2. monitoring and evaluating performance 3. reviewing performance through coaching and feedback 4. providing consequences

Nondisparagement agreement

Contract between 2 parties that prohibits one party from criticizing the other. Companies may offer the departing employee a severance package in exchange for him or her signing a nondisparagement agreement a contract prohibiting the former employee from criticizing or talking negatively about the company.

Cost-of-living adjustment (COLA)

Contract clause that ties future wage increases to increases in the cost of living (as measured by the U.S. Bureau of Labor Statistics' consumer price index).

two-tier wage contracts

Contracts in which new employees are paid less or receive fewer benefits than veteran employees have.

New-direction Innovation (AKA, transformational, radical, or disruptive innovation)

Creates a totally new or different approach to a product, service, process, or industry. New-direction innovations focus on creating new markets and customers. New-direction innovations can be disruptive because they can restructure or revolutionize an industry. For example, the emergence of self-driving vehicles will likely change the nature of the taxi industry and other related industries.

Criminal and Financial Background Checks

Criminal and financial background checks view negative marks as indicators of low trustworthiness or poor character. There is debate about whether criminal and financial background checks are valid predictors of job performance. There are movements to ban criminal background checks in early stages of the hiring process and to ban checking applicants' credit histories and scores.

Operating plan

Defines how the business will be conducted, and identifies clear targets such as revenues, cash flow, and market share. It is also important to understand that strategy requires execution; plans are only useful if they can be implemented rapidly and efficiently. Describes the company's activities and their short-term objectives for the next 1 to 52 weeks, based on the action plan, and identifies clear targets such as revenues, cash flow, and market share.

Validity

Degree to which a test measures what it purports to measure (nothing more and nothing less). For example, a person who scores high on a test designed to measure performance should be able to perform well.

Demotion

Demotion refers to the permanent removal of responsibilities and pay as the employee is sent to a lower level of the organizational hierarchy. This can be thought of as moving downward in the organization.

means-end chain

Describes the hierarchy of organizational goals (operational, tactical, and strategic). The means-end chain connects short-term goals (the means) to the accomplishment of long-term or high-level goals (the ends). Suppose a firm starts with a strategic goal: "Achieve a 10% increase in sales from new customers within one year." The tactics involved with this strategic goal (such as budgeting, or allocating organizational resources among various divisions in the organization) lead to the operational goal: "Begin offering two new products within one year." This operational goal can then be broken down into an action plan, which details the course of action or tasks needed to achieve the stated goal. For this example, the action plan might outline the following: 1. The product development team proposes two new product ideas by the end of March. 2. The two new products are produced and tested in select markets by the end of April. 3. Product modifications and marketing plans are made by the end of May. 4. Sales force training begins by the end of June. 5. Meetings are held on an ongoing basis for sales managers to discuss progress and feedback on the marketing plan with the salesforce. The action plan shows how day-to-day activities of employees across the organization (i.e., the means) work in tandem in order to deliver overarching strategic goals (i.e., the ends). This action plan helps managers track progress toward the objective of generating 10% more revenue in the coming months.

Dogs (BCG Matrix)

Dogs have low growth and market share. (This gives dogs low, unstable earnings and a negative to neutral cash flow.) Firms should divest from these markets.

Drug and alcohol tests

Drug and alcohol tests on job applicants are legal, but not if they are used selectively (i.e., they must be used for every candidate in the pool). Changes in marijuana laws complicate things, which has contributed to the decline in drug and alcohol testing for employment.

Changing

During the changing stage, managers give employees the tools they need to change, including benchmarking, mentors, experts, and training. It may not just be goals that need to change, but also structure, culture, and processes.

Refreezing

During the refreezing stage, the changed attitudes and behaviors are integrated into employees' normal ways of doing things. This is accomplished by integrating the change into the organization's standing plans and by properly rewarding desired behaviors.

Unfreezing

During the unfreezing stage, managers stir up motivation to change by encouraging workers to give up the old ways of doing things. More radically innovative change requires more time in the unfreezing stage.

Social Capital

Economic or productive potential of strong, trusting, and cooperative social relationships among employees. Social capital refers to the economic or productive potential of strong, trusting, and cooperative relationships. This includes the reciprocity, knowledge, and capabilities in informal connections and close personal relationships. This is particularly important when organizational success depends on coordination. A good HR department will find ways for employees to build social relationships with each other, such as by considering where break rooms and restrooms are or by organizing social events that force employees to interact.

Assessment center

Elaborate type of performance test in which management candidates participate in a series of interactive exercises over several days while being assessed by multiple evaluators. According to research, assessment center test results are more accurate than ability tests for predicting future success on the job.

Resistance to change

Emotional/behavioral response to real or imagined threats to an established work routine. Resistance to change is an emotional and behavioral response to real or imagined threats to change in an established work routine. Some of the key reasons why employees resist change are as follows: 1. predisposition towards change 2. fear of the unknown 3. climate of mistrust 4. fear of failure 5. loss of job security or status 6. peer pressure 7. disruption of group relationships or cultural traditions 8. personality conflicts 9. poor timing or lack of tact 10. non-reinforcing reward systems Employees disposition towards change is impacted by the following three key causes, which also interact to impact one another: 1. Employee characteristics 2. Change agent characteristics 3. Change agent-employee relationships Within GE, managers faced challenges in the company's attempt to transition from a strategy that focused on efficiency to one that focuses on innovation. The company had to overcome resistance to change from employees who were trained that efficiency and performance are key. To lessen the resistance to change, Jeff Immelt showed employees the need for change, and he demonstrated the company's willingness to change the corporate culture to promote innovation. He displayed a personal willingness to change, which inspired employees, and he created a Commercial Council, a unit of highly respected employees within GE to further assure employees of the benefits of the change.

Labor Unions

Employee organizations formed to protect and advance members' interests by bargaining with management over job-related issues.

Non-reinforcing reward systems

Employees are more likely to resist change if they do not perceive any positive rewards from it. The reward system in place should encourage employees to adopt the change.

Disparate Treatment

Employees from protected groups are intentionally treated differently. Occurs when organizations intentionally treat individuals from protected groups differently. One example is intentionally passing up people with disabilities for assignments involving travel.

How Culture is Learned

Employees learn the organizational culture through symbols, stories, heroes, rites and rituals, and organizational socialization. For example, Whole Foods maintains cultural consistency as it expands using a "yogurt culture" strategy: When opening a new store, the grocery chain relocates experienced Whole Foods managers to the new branch in order to facilitate the learning process of socializing recently hired employees.

Fear and Resistance to Change

Employees naturally feel threatened by change, and the degree to which they feel threatened depends on the nature of the change. 1. Adaptive change 2. Innovative change 3. Radically innovative change Adaptive change is the least costly, complex, and uncertain level of change. It results in the least employee resistance. Radically innovative change, on the other hand, is the most costly, complex, and uncertain type of change. It generally receives the most resistance from employees. Innovative change falls somewhere in between.

Job routine

Employees need to know what to do, how their work will be evaluated, and who will be their coworkers and managers and, ideally, mentors.

Legal environment

Employees should be informed about important legal considerations (such as policies against sexual harassment) to protect the company.

Poor timing or lack of tact

Employees will resist change more when it is introduced in an insensitive manner or implemented at a bad time. Moreover, employees are most likely to accept change when they clearly understand its value.

Fair Labor Standards Act (FLSA)

Established minimum living standards for workers engaged in interstate commerce, including a federal minimum wage and maximum workweek before overtime must be paid, and banned child labor. The Fair Labor Standards Act of 1938 banned child labor and established minimum living standards for workers engaged in interstate commerce, including the provision of a federal minimum wage and a maximum workweek. The U.S. retirement system was established by the Social Security Act of 1935. The following are some other important laws relating to compensation and benefits: 1. The Employee Retirement Income Security Act (ERIS) sets pension plan management rules and provides insurance to cover bankruptcy. 2. The Family and Medical Leave Act requires employers to provide 12 weeks of unpaid leave for medical and family reasons (e.g., childbirth, adoption, emergency) 3. The Health Insurance Portability and Accountability Act (HIPPA) ensures employees with preexisting health conditions can switch insurance plans when changing jobs, and prohibits group plans from dropping sick employees. 4. The Fair Minimum Wage Act increased the federal minimum wage to $7.25/hour.

Espoused values

Explicitly stated values and norms preferred by an organization. Espoused values are the explicitly stated values and norms preferred by an organization. These are often proposed by the founders or top manager, and they can be found in the organization's mission, vision, and values statements. Sometimes, there is a disconnect between espoused values and enacted values - the values and norms actually exhibited by the organization. Espoused values can be described as "talking the talk," and enacted values can be described as "walking the talk." For example, Dr. Archambeau noted that Walmart publicly claims to prioritize providing customer service (an espoused value), but in her experience, Walmart employees are generally unhelpful.

Mission statement

Expresses the organization's purpose or reason for being. Top management and the board of directors determine the purpose of the organization, including the needs it exists to address.

SMART Goals - Target dates

Goals should specify deadlines for achievement that are realistic yet challenging. Target dates give workers a clear time frame for doing what is expected.

Employment at will

Governing principle of employment in most U.S. states; means that anyone can be dismissed at any time for any reason or even for no reason. Employment law in most states provides for employment at will, the notion that anyone can be dismissed for any reason at any time. There are some important exceptions, however. For example, an individual cannot be dismissed based on his or her skin color, gender, or disability. Whistleblowers and people with contracts are also given special protections.

Disruption of group relationships or cultural traditions

Group relationships and cultural traditions are disrupted when employees are transferred, reassigned, or promoted.

corporate-level strategy

Highest level of strategic management; C-Suite executives focus on the organization as a whole (e.g., What industry should we be in?) Examples of corporate. level strategic decisions include acquisitions, joint ventures, and large investments in plant and equipment. For corporate-level strategy, a company can choose to either pursue a single-product strategy or a diversification strategy. • Using a single-product strategy, a company makes and sells only one product within its market. The benefit of a single-product strategy is that it allows the organization to focus its efforts on one product. The risk is that any problem within the industry, such as increased competition, can put the entire business in jeopardy. • Using a diversification strategy, a company operates several businesses to spread out the risk among multiple markets or market segments. There are two kinds of diversification strategies: 1. unrelated diversification 2. related diversification. A corporate-level strategy of diversification can be implemented through merger, acquisitions, strategic alliances, joint ventures, or internal development. These methods have distinct strengths and weaknesses: • Acquisitions and mergers allow a company to quickly expand its reach and enter a new market, while still maintaining management control. However, this type of diversification tends to be expensive and requires integrating the two company cultures. • Joint ventures and strategic alliances allow companies to enter new markets more quickly and without a large investment, but they involve sharing rewards and thus require trust between companies. @ • Internal development makes sure the company gets all of the added value of a new product, but it is time-consuming and (depending on the barriers to entry of the industry) can be limited by a firm's lack of knowledge or capabilities

Example: Coca-Cola's Mission, Vision, and Values

In class, Dr. Archambeau also presented the mission, vision, and values statements for Coca-Cola as examples: Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. • To refresh the world.. • To inspire moments of optimism and happiness.. • To create value and make a difference. Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. • People - Be a great place to work where people are inspired to be the best they can. • Portfolio - Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. • Partners - Nurture a winning network of customers and suppliers; together we create mutual, enduring value. • Planet - Be a responsible citizen that makes a difference by helping build and support sustainable communities. • Profit - Maximize long-term return to shareowners while being mindful of our overall responsibilities. • Productivity - Be a highly effective, lean, and fast-moving organization. Our values serve as a compass for our actions and describe how we behave in the world. • Leadership - The courage to shape a better future • Collaboration - Leverage collective genius • Integrity - Be real • Accountability - If it is to be, it's up to me • Passion - Committed in heart and mind • Diversity - As inclusive as our brands • Quality - What we do, we do well

Examples of possible strengths (or weaknesses) are a company's production process, product quality, and customer service reputation. Examples of possible opportunities (or threats) are a company's market segment analysis, government regulations, and industry growth analysis.

In the Dell case study, competitive intelligence about the competitive landscape at the time might have led to the following SWOT analysis: 1. Strengths - Dell's strengths include the following: • Its brand is valued at $7.5 billion. • It has a large global footprint to work with. • It has a broad product and service portfolio. • It has expertise with mergers and acquisitions. • It provides product customization and has a direct selling model. 2. Weaknesses - Dell's weaknesses include the following: • It has lower profit margins; most income comes from its PC business. • It has weak differentiation compared to what it had before. • It has a weak R&D department. Michael Dell, the CEO, announced a plan to fund more R&D to become more of a prospector, rather than an analyzer. • Many of its products are becoming commodities. 3. Opportunities - Dell faces the following opportunities: • The global IT service industry, cloud computing services, and tablet markets are all growing tremendously. • Emerging economies are new, high-growth markets. 4. Threats - Dell faces the following threats: • There is a decline in Dell's profit margin for its hardware products. • The growth rate of its PC and laptop markets is decreasing. (This is where Dell earns most of its revenue.) • There is a lot of competition in the PC and service markets. • There is a weak economic outlook in the United States and Europe.

Kotter's Steps to Leading Organizational Change

Leadership expert John Kotter proposed that there are eight steps managers can take to provide a clear picture of where the company wants to go as it changes. According to Kotter, the following eight steps must be handled sequentially for the change process to be most effective: 1. Create a sense of urgency (i.e., establish a compelling reason for change). 2. Create a guiding coalition (a cross-functional group to lead the change). 3. Develop a vision and strategy to guide the process. 4. Communicate the change vision. 5. Empower broad-based action. 6. Generate short-term wins. 7. Consolidate gains and produce more change. 8. Anchor new approaches in the culture. Dr. Archambeau pointed out that Kotter's steps parallel the stages of Lewin's model.

Recruiting

Locating and attracting qualified applicants for job openings. The process of locating and attracting qualified applicants for positions in the organization. Organizations locate and attract individuals with the skills, abilities, and characteristics they are looking for in one of the following ways: 1. Internal recruiting 2. External recruiting 3. Hybrid approaches Recruiters should seek candidates who will have person-organization fit as well as person-job fit — the extent to which a worker's competencies and needs match with a specific job position. When attracting employees, there is always the temptation to portray the organization as something it is not, When a person comes into a job with unrealistic expectations, he or she is more likely to be dissatisfied and quit. This is problematic because it takes time and money to interview, hire, train, and orient employees. A realistic job preview gives a candidate a picture of both the positive and negative features of the job and the organization before he or she is hired, which can lower turnover.

Proactive Change

Making carefully thought-out plans made in anticipation of potential problems or opportunities (as opposed to reactive change). Proactive change (or planned change) refers to carefully thought-out changes made in anticipation of possible or expected threats or opportunities.

Internal recruiting

Making existing employees aware of job openings. Internal recruiting refers to making current employees aware of job openings. Techniques include internal job postings (circulating formal announcements about open positions within the organization), informal nominations (managers' recommendations based on working with particular employees), and employee profiles (databases of information on individual employee competencies and qualifications). Internal recruiting tends to be cheaper and less risky because the organization already has an idea of the individual's work habits. It may also boost morale and productivity among workers because it demonstrates the firm's willingness to promote from within. Internal recruiting does have some drawbacks, however. First, it restricts competition from outsiders who may be better qualified to do the job. Second, it may lead to promotions due to seniority rather than merit. Finally, recruiting from within doesn't fill the vacancy; it simply moves the vacancy to another level in the organization.

Building a Foundation of Execution

Managers can create an execution-oriented culture by displaying the following behaviors: • They are personally and intensely engaged with the people and businesses that make up the organization. • They have a few clear priorities and goals. • They emphasize accountability and follow-up. • They reward top performers more than ordinary performers. • They develop the talents of those who work for them, expanding their capabilities. • They are realistic, authentic, self-aware, humble, and display self-mastery. The key questions to implementation involve whether your products are positioned properly in the market, how you intend to achieve certain results, if you have the right people to do what you have planned, and if you have specific plans to reach a desired outcome.

Employee replacement

Managers can move employees along their career path to manage an effective workforce. Employee replacement is the broad term that refers to the promotion, transferal, disciplining, or firing of individuals within an organization.

Trends in Organizational Change

Managers can plan for future change by identifying current trends, such as workforce diversity, the importance of knowledge, increased globalization, and the customization of mass goods. In addition to overarching trends such as these, the textbook identifies a number of "supertrends," including the following: 1. segmentation and niche products 2. targeted products with shorter time to market 3. radical innovation is hurting traditional companies 4. The effect of China and India 5. Knowledge as a competitive advantage The key takeaway is that managers should not underestimate the potential impact of change on the organization; they should be ready to make any adjustments necessary to help their organizations compete in an ever-changing business world.

Social factors

Managers may make an effort to change the culture, interpersonal relations, communication, leadership, and other social factors within the organization.

Methods

Managers may need to modify their technology, job design, or processes in order to remain current and effective.

Appropriate resources

Managers must allocate resources — including money, time, energy, knowledge, people, and focus — to innovation.

Unrelated diversification

Occurs when an organization, under one ownership, Operates several unrelated businesses. For example, Warren Buffett's company, Berkshire Hathaway, is an example of unrelated diversification; it owns firms in many different markets, from insurance to candy to shoes.

Strengthening Organizational Culture

Once a culture is in place, managers can strengthen it in the following ways: 1. Its founders and leaders set a tone for the culture. Organizational members pay attention to what they say and how they act. Organizational culture is based on the philosophy of the organization's founders, managers, and other figureheads. 2. The organization can use rewards that reinforce the culture. For instance, if a company claims that collaboration is one of its cultural values, it should reward teamwork in its evaluations of employees. 3. The organization can strive to maintain a stable workforce so that it does not have to continuously socialize new workers. Major disruptions to the workforce, such as mergers and acquisitions, are sometimes troublesome for corporate culture. 4. Managers should be in touch with the organization's cultural network, recognizing which individuals are highly influential and that others in the organization look up to and respect. (Mentors are often useful tools Mat can help an organization spread its culture to new hires.) 5. The organization can use proper selection techniques to hire people whose values are consistent with the organization's culture, and then use socialization to familiarize new hires with the values, expected behaviors, and social knowledge needed to succeed in a specific organization.

Step 3: corporate, business, and functional strategy formulation

Once managers assess the current reality, they must formulate a grand strategy, which explains how the organization will accomplish its mission (and vision). The three common grand strategies are as follows: 1. growth strategy 2. stability strategy 3. defensive strategy A company can use one, two, or all three of these grand strategies. Most major corporations are growing in some areas, shrinking in other areas, and having no significant change in other areas. As we've discussed, Dell's change in strategic vision was to transition to become an end-to-end solutions provider. (Recall that this was based on threats noted in the SWOT analysis, including retrenchment of the PC business and increased competition, and on opportunities, such as growth in solutions like cloud computing.) Dell's vision involved four key strategic shifts: simplification of products and services, increased emphasis on cloud computing, building a solutions-based business, and attracting new customers. Managers can devise the grand strategy using tools for formulating the corporate-level strategy (including portfolio planning with the BC matrix) and tools for formulating the business-level strategy (including Porter's four competitive strategies). Corporate-level strategy designates what markets or industries a firm will compete in, while business-level strategy designates how a firm will be successful in each of its markets.

cost-leadership strategy

One of Porter's 4 competitive strategies that involves keeping the costs, and hence prices, of a product or service below competitors'. A cost-leadership strategy is used to keep the costs, and hence, the prices, of a product or service below those of competitors and to target a wide market. Cost leaders may focus on the efficiency of their processes in order to achieve this strategy. Cost-leadership requires a business to have access to capital, process engineering skills, tight cost controls, job specialization, frequent reports, and incentives for reaching quantitative goals, (When targeting a narrow market, this is called a cost-focus strategy.)

differentiation strategy

One of Porter's 4 competitive strategies that involves offering products or services of unique and superior value compared with competitors' offerings. A differentiation strategy is used to offer products or services that are of unique and superior value compared to those of competitors while targeting a wide market. Differentiation requires marketing to emphasize branding, product engineering, product research and development, strong coordination, and incentives for reaching qualitative goals. A differentiation strategy tends to lead to a higher price point than competitors, but customers are willing to pay more for more perceived value. (When targeting a narrow market, this is called a focused-differentiation strategy.)

How Organizational Cultures Form

Organizational cultures begin with the philosophy of the organization's founder(s). As the company's top leadership changes over time, its values may change, so its culture may change as well. The culture continues to develop through selection (i.e., the hiring process) and socialization among employees; top management selects employees who they believe will fit in with the desired organizational culture for available positions, and these employees influence how the culture progresses.

Organizational socialization

Organizational socialization is the process by which organizational members learn the values, norms, and behaviors that allow them to participate as members of the organization. Socialization can be broken down into two processes: 1) In the learning process, new employees try to establish an understanding of the workplace's physical, social, strategic, and cultural dynamics. 2) In the adjustment process, new employees adjust themselves to fit the organization's work environment, including the work roles, team norms, and corporate cultural values. For example, Whole Foods maintains cultural consistency as it expands using a "yogurt culture" strategy: When opening a new store, the grocery chain relocates experienced Whole Foods managers to the new branch in order to facilitate the learning process of socializing recently hired employees.

Required structures and processes

Organizational structure and internal processes should foster collaboration, communication, and agility. For this reason, organic structures are often better than mechanistic ones. Organizational processes management, internal process, and technology capabilities turn inputs into outcomes, giving them a critical role in innovation.

Modular structure

Organizational structure in which a firm assembles its product by joining module parts supplied by outside contractors. A structure in which a firm assembles product chunks, or modules, provided by outside contractors. The modular structure can be described as the hollowest of hollow" structures. The two structures are very similar, the difference being that in a modular structure everything is outsourced, rather than just a few departments. A modular structure is often seen in the medical field. When you go to your primary care physician, the doctor's office provides you with a diagnosis, but the doctor's office is actually linked to (or can "chunk" out) everything else. For instance, if you need lab work tested, you have to go to a lab, or if you need a specialist, you have to go to a separate doctor's office. MySQL is a software-development company that uses a modular structure to coordinate the efforts of hundreds of workers, most of whom work from home, across numerous countries. Because this kind of arrangement minimizes face-to-face employee contact, employees are measured only by their skill and productivity, not by their interpersonal skills. An example of a modular structure that failed was in the production of the Dreamliner. When Boeing initially envisioned this process, it attempted to use a modular structure and have different companies provide different components. What Boeing found when it tried to assemble the plane was that the pieces didn't fit together. The disadvantages of a modular structure are as follows: 1. Not all products and services can be "chunked," or made in modules. 2. The different modules may not fit together properly if the firm doesn't properly specify how they should interface. 3. The entire process is only as fast as the slowest supplier of a module. Therefore, a single laggard can slow down the entire process.

Divisional structure

Organizational structure in which people with diverse occupational specialties are put together in formal groups, often based on product, customer, or geographic divisions. A structure in which people with diverse occupational specialties are put together in formal groups with similar products or services, customers or clients, or geographic regions. Divisional structures can be set up as follows: 1. Product divisions group activities around similar products or services. 2. Customer divisions group activities around common customers or clients. 3. Geographic divisions group activities around defined regional locations. One example of a company with a divisional structure is Disney, which has various product divisions because it has businesses in industries that don't have much strategic relatedness with one another. Another example: Amazon's wide assortment of product and service offerings is organized by a multi-divisional structure that is very complex. The advantages of a divisional structure are as follows: 1. Divisional groupings make greater focus possible by being more specialized. 2. Coordination is built into the structure. 3. Managers can allocate resources to the appropriate divisions in the most attractive markets. The disadvantages of a divisional structure are as follows: 1. Each division has to perform its own functional tasks, so there will be unnecessary and costly functional duplication. For example, consider how it is less efficient to have four separate marketing departments (one in each division), as opposed to one marketing department. 2. It may be hard to maintain a unified sense of identity and organizational culture, as the organization may evolve into a heterogeneous group of different divisions. 3. There is the potential for loss of control as different divisions may have different approaches to work processes and output.

Functional structure

Organizational structure in which people with similar occupational specialties are put together in formal groups. A structure in which people with similar occupational specialties are put together in formal groups. This kind of structure is focused on efficiency and is best for small firms or firms with a single programmatic focus. A business firm with a functional structure might have separate marketing, finance, production, and human resources departments, each headed by a vice president. As another example, a hospital with a functional structure might have separate departments for medical services, administrative services, outpatient services, and nutrition and food services. Each of these is headed by a director, who all report to the chief administrator. The advantages of a functional structure are as follows: 1. People working together in the same functional area learn from one another. 2. Managers can easily monitor and evaluate workers.

Matrix structure

Organizational structure that combines functional and divisional chains of command in a grid with two command structures - vertical and horizontal. A structure that combines functional and divisional chains of command in a grid so that there are two command structures vertical and horizontal. In a matrix structure, employees report to two bosses: their functional manager and their project manager (or divisional manager). Whereas the functional structure usually does not change, the project/divisional structure may change by product, customer, brand, or geographic region. For example, if Ford introduces a new car model, a new division will emerge. Note that the matrix structure violates the traditional concept of unity of command, the principle that states that an employee should report to no more than one manager, to avoid inconsistent priorities or conflicting demands. An organization must therefore have a very strong culture for a matrix structure to be effective. The main advantages of a matrix structure are that it allows the organization to simultaneously manage multiple organizational dimensions and that communication is built into the system, which allows for flexibility. Specifically, it allows the organization to use its employees for projects in addition to traditional functional work. The disadvantages of a matrix structure are as follows: 1. Having two bosses may create problems. What is best for one boss may not be best for another boss, creating a potential power struggle and a conflict of interest for the employee. 2. Having two goals (a project goal and a functional goal) may similarly create problems or conflicts of interest. 3. This approach may increase overhead and reduce efficiency. 4. The use of teams may lead to a diffusion of accountability for results. When a multitude of people and departments are working on a project, it's hard to pinpoint the cause of failure (or success).

Strategy

Organizations may have to change their strategies in response to changes in the marketplace. GE used to develop high-end products at home and adapt them for other markets. Under Immelt, the company shifted its focus to using reverse innovation. The new strategy had five key initiatives: technical leadership, services, customer focus, growth platforms, and globalization. GE began to promote more related diversification, R&D synergies, organic growth, and investment in high-growth segments, such as energy, healthcare, and aviation. GE's Imagination Breakthroughs (IB) program is one of the tools created at the organizational level so employees could understand and evaluate market innovations and new product developments in the context of the company's new focus. This framework is intended to quantify the value of different opportunities and thus lessen the variability in decision making. The program measures potential industry breakthroughs by considering five sets of questions: Calibrate, Explore, Create, Organize, and Realize (CECOR). At GE, chan

Segmentation and niche products

Organizations no longer cater to mass markets; they now cater to narrow segments of customers. This means that they must offer a wide variety of products to and target more-specific groups of customers.

Orientation

Orientation is the process of helping a newcomer fit smoothly into the job and the organization. This is the stage at which the newly hired employee "learns the ropes" and gets all the information he or she needs to achieve success. The new employee should have access to the information he or she needs to be effective, including information about the following: 1. Job routine 2. Mission and operations 3. Work rules and employee benefits 4. Legal environment

Business model

Outline of needs the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses. In other words, the business model is an outline of the basic idea behind your business and how the organization will deliver its value proposition.

Outputs

Outputs are the desired goals of a change. These should match up with the organization's strategic plan. Regarding outputs, managers ask, "What do we want from the change?" to ascertain expectations.

Union Security Clause

Part of the labor-management agreement that states that employees who receive union benefits must pay dues to the union.

Subjective Appraisals

Performance appraisals based on a manager's perceptions of an employee's (1) traits or (2) behaviors. Unlike objective appraisals, subjective appraisals rely on the perception of the supervisor, which is subiect to biases — and, consequently, subject to be challenged by poorly rated employees claiming they were unfairly evaluated).

Objective appraisals (results appraisals)

Performance appraisals based on facts (or results) and are often numerical. Objective appraisals may be based on measurements of sales made, journal publications, product defects, etc. Objective appraisals measure results independently of personal biases, making them harder to challenge in court.

360-degree feedback appraisal (AKA, a 360-degree assessment)

Performance assessment based on employee evaluations not only by managers but also by peers, subordinates, or even clients. A performance appraisal method in which employees are rated not only by their managerial supervisors but also by peers, subordinates, sometimes clients, and even themselves. Organizations that incorporate a 360-degree assessment ask the employee to choose 6 to 12 other individuals to provide anonymous performance appraisals. Successful implementation of the 360-degree process requires anonymity and the free flow of opinions.

Heroes

Person whose accomplishments embody the values of the organization. A hero is a person whose accomplishments embody the values of the organization. Heroes are often individuals who have made great sacrifices for the benefit of the organization. Many companies are deeply tied to their founders' beliefs, seeing founders as role models to emulate or as the physical embodiment of the ideal company employee.

Single-use plans

Plans developed for activities that are not likely to be repeated in the future. Single-use plans include projects and programs. • A program encompasses a range of projects or activities. • A project is a single-use plan that encompasses a smaller range of tasks or activities than a program.

Standing plans

Plans developed for activities that occur repeatedly over a period of time. Standing plans, which include rules, procedures, and policies, allow for consistency and efficiency. Employees have policies, procedures, and rules about appropriate behavior, compensation, sick leave, and other human resources functions. • A policy is a standing plan that outlines the general response to a designated problem or situation. • A procedure (also called a standard operating procedure) is a standing plan that outlines the response to a particular problem or circumstance. • A rule is a standing plan designating specific required action. For example, a retailer's policy might be that a purchase includes warranty protection for product defects. A procedure might be how a customer goes about claiming the warranty, such as requiring a receipt. A rule might be that the retailer will honor a warranty within a specified time period by replacing the item.

Unity of command

Principle that stresses an employee should report to only one manager in order to avoid conflicting priorities and demands.

Arbitration

Process in which a neutral third party listens to both parties in a dispute and makes a decision that the parties have agreed will be binding on them.

Mediation

Process in which a neutral third party listens to both sides in a dispute, makes suggestions, and encourages them to agree on a solution.

Employment tests

Standardized devices used to measure specific skills, abilities, traits, and other tendencies (of applicants in the selection process) Employment tests are standardized devices used to measure specific skills, abilities, traits, and other tendencies. The three most prevalent employment tests include the following: 1. Ability tests 2. Performance tests (AKA, skills tests) 3. Personality tests 3 additional types of employment tests are as follows: 1. Integrity tests 2. Drug and alcohol tests 3. Criminal and financial background checks Federal laws dictate what interviewers can and cannot ask during an interview. These laws are intended to prevent discrimination in the workplace. Dr. Archambeau presented several acceptable and inappropriate questions. For example, an employer can ask if the applicant has disabilities that might directly inhibit job performance, but not if the applicant has any disabilities in general. Additionally, an employer cannot ask anything regarding an applicant's race, religion, family/marital status, or age (aside from whether the applicant is over 18).

Stars (BCG Matrix)

Stars are in a high growth industry and have high market share. (This gives stars high, stable, growing earnings and a neutral cash flow.) Managers should invest in stars to achieve more growth. When market growth inevitably slows down, a company's stars become cash cows.

Strategic Human Resource Planning

Strategic human resource planning consists of developing a systematic, comprehensive strategy for understanding current employee needs and predicting future employee needs. The organization should look at both current and future employee needs. 1. Understanding current employee needs - Managers perform a job analysis, write a job description, and write a job specification to determine current staffing needs. • A job analysis is used to determine, by observation and analysis, the basic elements of a job. • A job description summarizes what the holder of a job does and how and why he or she does it. • A job specification describes the minimum qualifications a person must have so perform a job. In class, Dr. Archambeau pulled up a job listing for a firefighter. The listing contained a job description including information about essential job functions and duties; the culture of the work environment, the department, and the surrounding community; and salary and benefits. The post also provided a job specification summarizing the qualifications required for the job including the knowledge, skills, abilities, and physical demands that must be met for applicants to be eligible. For instance, all firefighters must have a high school diploma or GED, an EMT or paramedic certification, and a driver's license. 2. Predicting future employee needs - As technology and markets evolve, job descriptions change, and new jobs are created. Managers must predict the staffing the organization might need, as well as the likely sources of that future staffing. Predicting future staffing needs requires an understanding of the organization's vision and strategic plan. Staffing sources can be internal or external: • Internal staffing sources - Internal staffing involves filling positions with current employees. A well-organized company will have a human resource inventory a report listing an organization's employees that tracks each individual's education, training, certifications, experience, and other important information regarding the skills of the company's talent. This is a useful tool for identifying employees for promotion from within. • External staffing sources - External staffing involves filling positions with individuals who are not current employees. Looking outside the organization, managers can use U.S. Census Bureau data to determine the characteristics of the labor pool in the organization's geographic area. The Bureau of Labor Statistics provides data regarding the projected growth of occupations in a given industry, and the projected graduation rate of qualified individuals. Information about skills entering the labor market is important for HR to know; if a field is going to grow rapidly but the number of college graduates isn't, firms will have to compete for a limited number of qualified applicants. Additionally, the firm should consider any technological advances that might affect human resource needs (e.g., automating jobs).

Technology

Technology refers to any machine or process that enables an organization to gain a competitive advantage in changing materials used to produce a finished product. Organizations often need to modify these to remain current and effective. GE created a global brain trust with infrastructure that supports a global R&D network in order to be closer to customers and access a variety of technologies. Additionally, it spent billions of dollars on innovative projects such as "cleaner," coal-fired power plants.

Relationship between performance and goal difficulty

The "A" in SMART goals is important because how attainable or appropriate a goal is (i.e., the goal difficulty) has an impact on individuals' productivity. Managers should avoid setting goals that are too easy, which can cause subordinates to lose focus. In fact, research has shown that, up to a point, as goal difficulty increases, performance also increases for committed individuals with adequate ability. A committed employee will reach maximum performance when working at capacity and striving for goals in the moderate-to-challenging range. However, note that as goal difficulty increases further, from challenging to impossible, performance decreases because individuals will lack commitment to excessively high goals. Managers should make certain that stretch goals are not unreachable goals, which can cause subordinates to give up before they begin.

BCG matrix

The BCG Matrix (developed by the Boston Consulting Group) is a means of evaluating business units based on growth rate and market share. Evaluates business units on the basis of: 1) market growth rate - deals with how fast an entire industry is growing 2) market share - is concerned with a unit's share of the market relative to competitors' shares For example, Dell's PC business is a cash cow, its business unit for ultrathin monitors is becoming a star, its cloud computing business is a question mark, and its smartphone business was a dog.

Equal Employment Opportunity Commission (EEOC)

The EEOC was established by Title VII of the Civil Rights Act of 1964, which enforces anti-discrimination and other employment-related laws. The EEOC enforced EEO laws, which cover 3 main areas: 1. Sexual harassment - Quid pro quo or Hostile environment 2. Workplace discrimination - Adverse impact or Disparate treatment 3. Affirmative action

The Strategic-Management Process

The Strategic-Management Process includes 5 steps for formulating and implementing strategies and strategic goals. The Strategic-Management Process involves managers from all parts of the organization in carrying out the following steps: 1. mission, vision, and values statements 2. current reality assessment 3. corporate, business, and functional strategy formulation 4. strategy implementation 5. strategic control

competitive advantage

The ability of an organization to produce goods or services more effectively and efficiently than competitors, thereby outperforming them.

Federal Laws Relating to Health and Safety

The following are some of the most important laws relating to health and safety: 1. The Occupational Safety and Health Act (OSHA) sets mandatory health and safety standards to which organizations must adhere. OSHA started a growing body of laws protecting workers from hazardous working conditions. 2. The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees to pay to retain their health insurance coverage for a period of time after being laid off. 3. The Patient Protection and Affordable Care Act requires firms with 50 or more employees to provide health care coverage.

Sustainable Competitive Advantage

The goal is to achieve and maintain a sustainable competitive advantage, which continuously gives the firm a leg up in the industry. This will ultimately allow the organization to retain customers and be profitable. An organization can seek to achieve a sustainable competitive advantage by staying ahead of competitors in 4 areas: 1. Customer responsiveness: Organizations must be responsive to customer needs and wants. 2. Innovation: Innovation refers to finding ways to deliver new or better goods and services. Without innovation, organizations will eventually die. 3. Quality: The quality of a good or service refers to its ability to satisfy customers' needs. An organization must constantly strive to improve the quality of the goods and services that it produces so that it can stay ahead of competitors. 4. Efficiency: Companies strive to produce as much as possible, using as few resources (labor, raw materials, etc.) as possible. For example, Mattel was able to use strategic planning to turn around declining sales of its famous Barbie doll. In order to respond to the current reality (increasing customer diversity in its external environment), Mattel decided to make the Barbie line more inclusive by bringing out dolls of all colors and sizes.

SMART Goals - Attainable

The goals the organization chooses to set should support the organizational vision and be within the power of the staff members to achieve. If employees don't have the time, resources, or training necessary to make the accomplishment of a given task possible, they will often lose motivation.

Suppliers' bargaining power

The more concentrated the industry, the greater the bargaining power of suppliers. If there are only a few firms that could supply the product, however, each individual supplier has a lot of bargaining power. Additionally, high switching costs for the buyer or needing to purchase a specialty product increase suppliers' bargaining power. A business can therefore decrease suppliers' bargaining power by diversifying its supply chain (i.e., getting components and services from multiple different suppliers). Consider the market for computer processors. There are only two major firms - AMD and Intel - giving them significant bargaining power. On the other hand, suppliers of commodity products have essentially no power because buyers have multiple options for purchasing from others. Other sources influencing supplier power include the differentiation of inputs, the threat of forward integration, and the importance of volume and cost relative to total industry purchases.

organizational architecture

The organizational architecture is determined by the organization's structure, culture, and human resource management systems. The combination of these three elements helps managers in their organizing role, as they attempt to use organizational resources effectively and efficiently. Specifically, an organization's structure, culture, and human resource management systems contribute the following: 1. They establish groups and relationships among employees. They determine who will do what in the organization and influence which employees will interact and collaborate. 2. They establish formal reporting relationships. They determine how workers will use resources, who reports to whom, and who is accountable for what. 3. They establish a standing plan. Together, these elements establish a standing plan for employees to turn to as they do the organization's work. Recall that a standing plan is a long-term plan that is not expected to change. *** Thus, the alignment of organizational culture, structure, and human resources practices (all guided by corporate strategy) leads employees' social processes, work attitudes and behaviors, and overall performance.

Fundamentals of Planning

The planning process can be broken down into the following steps, from the broadest statement of the organization's goals to the narrowest directive: 1. Mission statement - The organization's reason for operating 2. . Vision statement - What the organization envisions itself becoming 3. Values statement - Values the organization wants to emphasize (i.e., what it stands for) 4. Strategic planning - Top managers planning the overarching vision for the firm for periods of 1 to 5 years. 5. Tactical planning - Middle managers planning how the overarching goals will be accomplished for the next 6 to 24 months. 6. Operational planning - First-line managers planning what workers need to accomplish day-to-day for periods of 1 to 52 weeks. A company's mission, vision, and values statements guide strategic planning. Strategic planning guides tactical planning. Finally, tactical planning guides operational planning. All three types of planning involve the generation of goals and action plans.

Strategic Human Resource Management (SHRM)

The process by which managers design the components of a human resource management system to be consistent with each other, with other elements of organizational architecture, and with the organization's strategy and goals. In other words, strategic HRM is the process of designing and implementing policies and practices that align the organization's human capital and strategic objectives. HRM is about managing people, whereas strategic HRM is about generating a competitive advantage through people. Thus, strategic HRM should be integrated into the organization in ways that drive performance. HR systems drive strategic implementation when there are two types of "fit." • Internal fit exists when the organization's HR practices reinforce one another. • External fit exists when the organization's HR practices are aligned with its culture and structure in support of the strategy.

Innovation

The process of coming up with new ideas and converting them into useful applications (usually goods and services). Innovation occurs when a new solution is valuable enough that consumers are willing to pay for it. Innovation should be distinguished from invention. Innovations must be novel and useful. Thus, the key difference between invention and innovation is that innovation must be useful. Additionally, innovation is different from the related idea of creativity. Innovation has changed the way we do things, and it has even changed what we do. It is the basis for product change, process change, and market changes. Organizations must continually innovate to survive and maintain a competitive advantage. This is particularly true in light of the fact that the market changes of today include trends towards a market that is increasingly global, is increasingly customized, and has decreasing time spans, including product life cycles that are growing shorter.

Transformation process

The transformation process involves targeting elements of change, including people, organizational arrangements, methods, and social factors. Managers diagnose problems and generate solutions by considering these four target elements (or levers managers can pull), which are described as follows: 1. people 2. organizational arrangements 3. methods 4. social factors Thus, in the transformation process part of the system, managers ask, "Which levers can we pull that will produce the change we want?", Note that any change made to a target element will have ripple effects throughout the organization and will ultimately affect the people within the organization. Once the organization determines the target elements of change, change can be designed to occur at the organizational level, the group level, the individual level, or all three.

Change

The way in which an individual or organization moves from an unsatisfactory current state to a desired state. The basic motivation for change is to improve upon an existing state. Organizations have to be able to anticipate and adjust to environmental change in order to continue to be successful. It is human nature to feel uncomfortable about change, no matter how seemingly small or unimportant. Because change causes stress in employees, managers must be proactive in dealing with and implementing organizational change.

Reasons for planning

There are several reasons for planning, including the following: 1. Planning helps you check your progress. 2. Planning helps you coordinate activities. 3. Planning helps you be forward-thinking. 4. Planning helps you deal with uncertainty. Planning will work out what you want and determine whether you can achieve what you want. It helps you to figure out the time frame it will take for you to be successful. It also encourages you to think about how you will accomplish the goal or task at hand. Planning is especially important during transitions and big changes, which creates uncertainty. Organizations must think carefully about how they are going to get from Point A to Point B and achieve their goals. Not only must they determine their objective, they must also think about whether it is possible to achieve and how they are going to achieve it.

Link Between Strategy and Structure

There is a relationship between strategy and structure. Organizational structure should be based, in part, on the strategy the organization hopes to implement through its structure. Organizational structure should facilitate the achievement of strategic goals, so strategic goals should drive structure. For instance, a firm focused on cost-leadership would most likely have a functional, formal structure. In contrast, a firm with a differentiation strategy would need a more organic, flexible structure to be successful. Business performance depends on the "fit" between strategy and structure. Organizational structure should also be suitable for a company's organizational culture. Organizational structure should evolve as strategy evolves. Organizations often begin with a simple strategy (to sell a single product), so they require a simple structure. As an organization's strategy gets larger and more complex, its organizational structure should get more complex as well. Organizations with more diversification tend to require the use of a more flexible structure.

Basic assumptions

These are unobservable, invisible, or preconscious core values that are often taken for granted and have a profound effect on employees' behavior, making them hard to change.

Observable artifacts

These include the physical manifestations of cultures, such as how employees dress, how managers act, ceremonies, and decorations. They are visible but often indecipherable.

People

When an organization wants to implement a change, it has two choices: to retrain existing employees (changing perceptions, attitudes, performance, skills, etc.) or fire them and hire new ones. For example, when Jeff Immelt took over as CEO of GE in 2001, he had to retrain people to think of GE as an "innovation company." Previously, GE groomed generalists, promoted efficiency, and tended to promote from within. Under Immelt, GE hired and groomed specialists, valued innovation and responsiveness, and did more external hiring.

Workplace Discrimination

When employment decisions are made for reasons not relevant to the job. Occurs when people are hired or promoted or denied hiring or promotion for reasons not relevant to the job. Organizations may not discriminate based on skin color, gender, religion, eye shape, or national origin. Moreover, they may not extend preferential treatment to people based on these traits. Organizations that are biased in this way may be held liable for back pay and punitive damages. Two types of workplace discrimination are as follows: 1. Adverse impact 2. Disparate treatment The leading basis for claims with the EEOC is currently discrimination based on retaliation, followed by discrimination based on disability, discrimination based on race, discrimination based on sex (including sexual harassment and pregnancy bias), and then discrimination based on age.