Management Study Guide

Management Study Guide

Management LevelsTop

Managers

• At the top of the organization• CEO, President, Vice President

Middle Managers

• Translate goals from top managers• Department head, Project leader, Division manager

First-Line Managers

• Supervise day-to-day activities of employees• Supervisor, team leader

Non-managers

• Work directly on job/task• Does not oversee anyone

Goals of ManagementGetting things done efficiently & effectively

HighAttainmen

tOf Goal

Low ResourceUsage/

Use resource efficientl

y

Effective

Efficient

Management Functions

Planning

define goals & establish

strategy

OrganizingDetermine

WHAT needs to be done,

HOW it will be done & WHO

will do it

Leading

Directing & coordinating

work activities

Controlling

Monitoring activities to ensure they

go as planned

Components of External Environment

Factors OUTSIDE organization that affect performance

Global

Political/Legal

Sociocultural

Technological

Demographics

Economic

StakeholdersFactors in the environment that are affected by

the organization (i.e. stock holders)

Organization

Employees

Customers

MediaGovernment

Competitors

Organizational CultureShared values, principles, and traditions

“Way of doing things around here”Shows how members & employees act

Attention to Detail

Outcome Oriented

People Orientation Stability

Innovation/Creativity

Examples:Ritz Carlton is 5-star hotelknown for exceptional service

Employees are very nice &Accommodating

Apple is for tech savvy, youngerPeople

Employees design sleek products With features that young peopleWant in their products

Types of Global Organizations

Multinational Corporation (MNC) is an international company with operations in multiple countries

Multi-domestic Corporation Management is specific to local culture with many

different “home bases”

Global CorporationManagement & decisions are made in home country

Transnational/Borderless OrganizationNo geographical barriers, no “home base”

Important “Global” Terms Franchising: agreement in which organization gives another

organization the right to use its name Global Strategic Alliance: partnership between an organization and

a foreign company to share resources and develop products TOGETHER Joint Venture: strategic alliance between two organizations to form a

separate company for some purpose Foreign Subsidiary: direct investment in foreign country that

involves setting up a separate office Global Sourcing: purchasing materials from around the world,

wherever it is cheapest Parochialism: narrow focus in which manager sees things only

through their own eyes & own perspective

Hofstede’s Study Study of the differences in cultural environments

Power distance: degree to which culture accepts power is distributed unequally (low = low power distance, extremely unequal = high power distance)

Individualism vs. Collectivism: degree to which people choose to act as individuals rather than members of group (collectivism = more group oriented)

Quantity of life vs. Quality of life (Quantity = importance of money, assertiveness, & material goods

Quality = importance of relationships and concern for others) Uncertainty avoidance: degree to which people prefer structured

situations as opposed to being unstructured and taking risks Long term vs. Short term

Long-term: people look to future and persistence Short-term: people value past and present & emphasize upon respecting

tradition and fulfilling social obligations

Social Actions

Social Responsibility

• Firm goes above & beyond

• Inherently does the right thing for society

Social Obligation

• Does bare minimum

• Meets required economic & legal responsibilities

Social Responsiveness

• Actions solely based on significance to society

• Engages in actions based on response to some popular social need

Ethical BehaviorEthics: set of rules & principles that defines right

and wrong conduct

Utilitarian View provide greatest

good for the greatest number.

Rights Viewdecisions made to protect liberties &

privileges

Theory of Justicedecisions made to enforce rules fairly

& impartially

Sustainabilitycompany’s ability to

achieve goals increase

shareholder value by integrating

economic & social opportunities into

strategies

Code of ethics: formal document that states an organization’s primary values and ethical rules it expects managers and employees to follow

DiversityWorkforce diversity: ways in which people are

similar and different than each other in terms of:AgeGenderRace & EthnicityReligion

Contingent workers: part-time, temporary workers who are available on as-needed basisMay not be as committed to organization

Decision Making ProcessIdentify Problem

• Problem: discrepancy between an existing and desired state of affairs

Identify Decision Criteria

• Decision criteria: factors relevant to criteria

Allocate Weights of Criteria

• Weigh each criteria based on priority in the decision

Develop Alternative

• Make a list of different solutions that could solve problem

Analysis of Alternatives

• Evaluate each alternative and its strengths & weaknesses

Select an Alternative

• Based on the weights of different criteria, pick one that solves the solution most effectively

Implement an Alternative

• Decision implementation: putting a decision into action

Evaluate Effectiveness of Decision

• Evaluate the result of the decision to whether the problem was resolved

Decision Making Errors Heuristics: shortcuts or “rules of thumb”

Anchoring Effect: decision makers fixate on initial event as starting point and compare all other events to it.

Selective perception bias: selectively interpret and organize events based on biased perception

Confirmation bias: look for information that validates their past beliefs or choices and ignore information that contradicts beliefs

Availability bias: use events in memory to make judgment about certain event

Representation bias: assess the likelihood of an event based on how closely it represents other events.

Rational DecisionsBounded rationality: making decisions within the limits of their ability to process information Only doing what you are capable of doing, without asking anyone else for help

• Escalation of commitment: committing to a previous decision despite evidence that it may be a poor decision• Doing something you already know is bad just because you wanted to before

Satisfice: Accepting solutions that are “good enough” Settling for something because it’s better than nothing

• Intuitive decision making: Making decisions based on personal experience, feelings, and judgment

Decision MakingStructured problems: straightforward, familiar problem, and easily defined problem

Unstructured problems: problem that is new/unusual; incomplete information

Procedure: series of sequential steps to solve problemPolicy: guideline for making decisions; no strict parametersRule: explicit statement that tells employees what can or cannot be done.

Nonprogrammed decisions: unique and nonrecurring

decisions that require custom-made solution

Certainty: situation in which a decision maker makes

accurate decision because ALL outcomes are known

Risk: situation in which decision maker estimates the likelihood of certain

outcomes

Groupthink: members WITHOLD OPINIONS in order to be in agreementBrainstorming: idea-generating process with NO CRITICISM (evaluated later)

Pros & Cons of Formal PlanningPros Cons

1. Formal planning higher profits Establishes goals and standards

1. Planning may create rigidity

2. Quality of planning process and appropriate implementation higher performance

2. Can’t replace intuition and creativity

3. Planning establishes coordinated effort & gives direction

3. Focuses on today’s competition, not tomorrow’s survival

4. Reduces uncertainty & clarifies consequences (especially in uncertain environment)

4. Reinforce success which may lead to failure (in uncertain environment)

5. Coordination reduces redundancy and waste; no overlapping between teams

Strategic Management Process

Identify organization

mission• Mission:

statement of purpose

SWOT Analysis

• External Analysis: opportunities & threats

• Internal analysis: resources and capabilities

Formulate Strategies

• Consider realities of external environment

• Corporate• Business• Functional

Implement Strategy

• Implement strategy .

• Extremely important because puts plan into action

Evaluate Results

• Evaluate how effective strategy helped organization reach its goals

Strategic management: what managers do to develop an organization’s strategiesStrategic Management Process: encompasses strategy,

planning, implementation, and analysis

SWOT: Strengths, Weakness, Opportunities, ThreatsExternal Internal

Strategies

Corporate strategy: specifies what business

a company is in or wants to be in & what it wants

to do

Growth Strategy: expands number of markets or products offeredConcentration: increase number of products offered in primary businessVertical Integration: company is own supplier & distributorHorizontal Integration: company grows by combining with competitorDiversification: company combines with other companies in related/unrelated industries.

Stability Strategy: organization continues to do what it is currently doing. Renewal Strategy: address declining performance -Retrenchment: stabilize & revitalize -Turnaround: cut costs & restructure operations

Competitive Advantage: sets organization apart; distinct edge -Cost leadership: having lowest costs in the industry -Differentiation: offer unique products -Focus: competes in niche w/ cost focus or differentiation focus

Functional Strategy: used in various functional departments to support the competitive strategy

-Example: product research, development, & customer service

strategies.

Goals

Stated Goals

• Official statements of what an organization says, and wants stakeholders to believe, goals are

Real Goals

• Goals an organization actually pursues based on what organization’s members are doing

Traditional Goal Setting

• Goals set by TOP managers flow down through organization and become subgoals

Well-Written Goals

• Written in terms of outcomes rather than actions

• Measurable & quantifiable

• Clear w/time frame

• Challenging, yet attainable

• Written down• Communicated to

all necessary members

Goals: desired outcomes or targets; guide managers decisions & formcriteria against which work results are measured

Plans Plans: documents that outline how goals are going to be met; include

resource allocation, budgets, schedules, & other necessary actions

Breadth

• Strategic: plans that apply to entire organization

• Tactical: plans that specify details of how the overall goals are achieved

Time Frame

• Long-term: defined as plans w/time frame beyond 3 years

• Short-term: cover one year or less

Specificity

• Directional: plans that are flexible and set general guidelines

• Specific: plans that are clearly defined and leave no room for interpretation

Frequency of Use

• Single-Use: one time plan specifically designed to meet the needs of a unique situation

• Standing: plans that are ongoing and provide guidance for activities performed repeatedly

Contemporary Planning Issues

Dynamic Environments: developing plans that are specific but flexible

Environmental Scanning: analysis of external environment involving screening large amounts of information to detect emerging trends Scenarios allow firms to identify and account for multiple

possibilities, then plan for themCompetitive Intelligence: environmental scanning that

gives managers accurate information about competitors Who are they? What do they do? How will they affect us?