Management exam T1:

Chapter 1, page 7 - 13

Management is the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading and controlling organizational resources. Functions of management: Planning: is the management function concerned with defining goals for future organizational performance and deciding on the tasks and resources needed o attain them. Organizing: is the management function concerned with assigning tasks, grouping tasks into departments and allocating resources to departments. Leading: is the management function that involves the use of influence to motivate employees to achieve the organizations goals. Controlling is the management function concerned with monitoring employees activities, keeping the organization on track towards its goals and making corrections as needed.

Performance: Resources: Attain goals Human Products Financial Services Raw Efficiency materials Effectiveness Technologic al Information

Organizational performance: Organization: A social entity that is goal directed and deliberately structured. Effectiveness: the degree to which the organization achieves a stated goal Efficiency: the use of minimal resources (raw materials money and people) to produce a desired volume of output. Performance: the organizations ability to attain its goals by using resources in an efficient and effective manner.

Management skills: Conceptual skill: The cognitive ability to see the organization as a whole and the relationships among its parts. Think strategically: long-term view. Human Skill: the ability to work with and through other people and to work effectively as a group member. Technical skill: The understanding of and proficiency in the performance of specific tasks.
Chapter 2, page 37 - 62

External Forces: Social forces: The aspects of a culture that guide and influence relationships among people (their values, needs and standard of behaviour). Political forces: the influence of political and legal institutions on people and organizations. Economic Forces: Forces that affect the availability, production and distribution of a societys resources among competing users.

The management perspective:

1. Classical perspective: A management perspective that emerged during the nineteenth and early twentieth centurys that emphasized a rational, scientific approach to the study of management and sought to make organizations efficient operating machines.

Scientific management: A subfield of the classical management perspective that emphasized scientifically determined changes in management practices as the solution to improving labor productivity. Standard methods for performing each job. Selected workers with appropriate abilities for each job. Trained workers in standard method. Supported workers by planning work and eliminating interruptions. Provided wage incentives to workers for increased output. Bureaucratic organizations: A subfield of the classical management perspective that emphasized management on an impersonal, rational basis. Through such elements as clearly defined authority and responsibility, formal recordkeeping and separation of management and ownership. Focus on organization and no longer on individuals Systematic and rational approach looked at organization as a whole The ideal bureaucracy: - Divisions of labor, with clear definitions of authority and responsibility. - Positions organized in a hierarchy of authority. - Managers subject to rules and procedures that will ensure reliable, predictable behaviour. - Management separate from the ownership of the organization. - Administrative acts and decisions recorded in writing. - Personnel selected and promoted based on technical qualifications. Administrative principles: A subfield of the classical management perspective that focuses on the total organization rather than the individual worker, delineating the management functions of: - planning - commanding - controlling - Organizing - coordinating 2. Humanistic perspective A management perspective that emerged near the late nineteenth century and emphasized understanding human behaviour, needs, and attitudes in the workplace. Human relations movement: A movement in management thinking and practice that emphasizes satisfaction of employees- basic needs as the key to increased worker productivity. Human resources perspective: A management perspective that suggests jobs should be designed to meet higher-level needs by allowing workers to use their full potential. McGregor: X theory: - Dislike work will avoid it - Must be coerced, controlled, directed, or threatened with punishment - Prefer direction, avoid responsibility, little ambition, want security Y theory Do like work

- Self direction and self control - Seek responsibility - Imagination, creativity widely distributed - Intellectual potential only partially utilized Behavioural sciences approach: A subfield of the humanistic management perspective that applies social science in an organizational context, drawing from economics, psychology, sociology and other disciplines. Understand employee behaviour and interaction in an organizational setting. 3. Management science perspective A management perspective that emerged after World War 2 and applied mathematics, statistics and other quantitative techniques to managerial problems. 4. Systems theory An extension of the humanistic perspective that describes organizations as open systems characterized by entropy, synergy and subsystem interdependence.

Open system: A system that interacts with the external environment Closed system: A system that does not interact with the external environment Entropy: The tendency for a system to run down and die. Synergy: the concept that the whole is greater than the sum of its parts. Subsystems: parts of a system that depends on one another for their functioning. 5. Contingency view An extension of the humanistic perspective in which the successful resolution of organizational problems is thought to depend on managers identification of key variations in the situation at hand.

To help managers identify and understand situations. 6. Total quality management (TQM) A concept that focuses on managing the total organization to deliver quality to customers. Four significant elements of TQM are: employee involvement, focus on the customer, benchmarking, and continuous improvement. 7. The learning organization An organization in which everyone is engaged in identifying and solving problems, enabling the organization to continuously experiment, improve, and increase its capability.

Learning Organizati on

8. The technology-driven workplace E-commerce: Business exchanges or transactions that occur electronically. Types of E-commerce are: B2C: Business to consumer: selling products and services online B2B: Business to Business: transactions between organizations C2C: Consumer to consumer: electronic markets created by web-based intermediaries. (EBay) Supply chain management: managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to final customers. Enterprise resource planning (ERP): systems that unite a companys major business functions, order processing, product design, purchasing, inventory and so on. Knowledge management: The efforts to systematically find, organize, and make available a companys intellectual capital and to foster a culture of continuous learning and knowledge sharing.

Customer relationship management (CRM): Systems that help companies track customers interaction with the firm and allow employees to call up information on past transaction. Outsourcing: Contracting out selected functions or activities of an organization to other organizations that can do the work more cost efficiently.

Chapter 3, page: 69-85

General and tasks environment

Organisational Environment All elements existing outside the organisations boundaries that have the potential to affect the organization. General environment: the layer of the external environment that affects the organization indirectly. Tasks environment: the layer of the external environment that directly influences the organizations operations and performance. Internal environment: the environment that includes the elements within the organizations boundaries.

General environment: International dimension: represents events originating in foreign countries as well as opportunities for U.S. companies in other countries. (globalization) Technological dimension: includes scientific and technological advancements in the industry and society at large. Examples Technological advance (innovation) ICT Network advances- ERP-MIS Medical advances (HIV, diabetes) Nanotechnology advances (Chemical/Biochemical Marketing advances (customer behavior)

Sociocultural dimension: representing the demographic characteristics, norms, customs, and values of the population within which the organization operates. - Demographic characteristics o Average age going up o People stay healthier - Customs, norms and values o Emancipation o Multiculturalism - Level of education - Free move of employees (EU) Economic dimension: representing the overall economic health of the country or region in which the organization operates. - General economic health (EU and global scale) o Consumer purchasing power (inflation) o Unemployment rate o National economic growth (GDP) o Interest rates/ money value - Recent Trends o Frequency of mergers and acquisitions o Recession and credit crisis Legal-Political dimension: includes federal, state and local government regulations and political activities designed to influence company behavior. Free trade and free flow of workers within EU (open market) Tax on pollution activities subsidies on green activities An pressure group works within the legal-political framework to influence companies to behave in socially responsible ways. Task environment: Customers: people and organizations in the environment who acquire goods or services from the organization. Competitors: Other organizations in the same industry or type of business that provide goods or services to the same set of customers. Suppliers: People and organizations who provide the raw materials which the organization uses to produce its output. Labor market: The people available for hire by the organization.

The organization environment relationship.

External environment and uncertainty

Boundary spanning roles: Roles assumed by people and/or departments that link and coordinate the organization with key elements in the external environment. Business Intelligence (BI) Competitive intelligence (CI) Inter-organizational partnerships: An increasingly popular strategy for adapting to the environment is to reduce boundaries and increase collaboration with other organizations. From adversarial to partnership orientation. Strategic partnerships Mergers and Joint ventures Merger: The combining of two or more organizations into one. Joint venture: A strategic alliance or program by two or more organizations.
Chapter 7, page: 209 219 + 226 230

Managerial planning and goal setting

Goal: A desired future state that the organization attempts to realize Plan: A blueprint specifying the resource allocations, schedules, and other actions necessary for attaining goals. Planning: The act of determining the organizations goals and the means for achieving them.

Levels of goals and plans:

Mission statement = External Message: Legitimacy for investors, customers, suppliers, community Rest = Internal Message: Legitimacy, motivation, guides, rationale, standards Goals in Organizations: Mission: The organizations reason for existence. Unique proposition to the market shared values Mission statement: A broadly stated definition of the organizations basic business scope and operations that distinguishes it from similar types of organizations. Slogan with mission essentials. A way to distinguish from similar types of organizations, such as, company values, product quality, attitudes to reward employees - To Refresh the World in body, mind, and spirit.- Coca Cola - Sense and simplicity - Philips Purposes of goals and plans: Legitimacy What the organization stands for - reason for being External + employees identify with overall purpose Source of Motivation and Commitment Employees identification with the organization Motivate by reducing uncertainty Resource allocation Allocate employees, money, and equipment Guides to Action Provides direction; focus on targets

Direct efforts toward important outcomes

Rationale for Decisions Learn what organization is trying to accomplish internal policies and decisions will be made in accordance with desired outcomes Standard of Performance Serve as performance criteria Provide a standard of assessment

goals and plans

Strategic goals: Broad statements of where the organization wants to be in the future. Pertain to the organization as a whole rather than to specific or departments. Strategic Plans: The action steps by which an organization intends to attain strategic goals. (long term 1-3 years) Tactical goals: goals that define the outcomes that major divisions and departments must achieve in order for the organization to reach its overall goals. Tactical Plans: Plans designed to help execute major strategic plans and to accomplish a specific part of the companys strategy. (3 6 months) Operational goals: Specific, measurable results expected from departments, work groups, and individuals within the organization. Operational plans: Plans developed at the organizations lower levels that specify action steps toward achieving operational goals and that support tactical planning activities. (daily or weekly) Means-end Chain: Achievement of goals at lower levels permits the attainment of high-level goals Traditional organizational responsibility: Strategic = top management Tactical middle management Operational = 1st line management & workers Criteria for Effective goals: Specific and measurable Cover key result areas Challenging but realistic defined time period Linked to rewards

Planning
High performance planning in a fast changing environment: Have a strong mission statement and vision Set stretch goals for excellence (ambitious, clear, energizing) Establish a culture that encourages learning Embrace event-driven planning Utilize temporary task forces Planning still starts and stops at the top

Central planning department: A group of planning specialists who develop plans for the organization as a whole and its major divisions and departments and typically report directly to the president or CEO. Decentralized planning: managers work with planning experts to develop their own goals and plans. Event-driven planning: Evolutionary planning that responds to the current reality of what the environment and the marketplace demands. Planning task force: A group of managers and employees who develop a strategic plan. Chapter 8, page: 237-263 Strategic management: The set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals. Organizations make decisions and actions such as.... ... respond to competitors behavior ... cope with difficult environmental changes ... meet changing customer needs ... effectively and efficiently use of resources requires proper strategic thinking and planning of management Managers ask such questions as... What changes and trends are occurring? Who are our customers? What products or services should we offer? Who are our competitors? What makes them successful? Grand strategy: the general plan of major action by which an organization intends to achieve its long-term goals. Three general categories: 1. Growth 2. Stability 3. Retrenchment ( Retrenchment, liquidation and Divestiture) 1. Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions

Internal growth = investing in expansion, including new or changed products - External growth = typically involves diversification businesses related to current product lines or into new areas 2. Stability, sometimes called a pause strategy, means that the organization wants - to remain the same size or - to grow slowly and in a controlled fashion 3. Retrenchment - Retrenchment = the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses - Liquidation = selling off a business unit for the cash value of the assets, thus terminating its existence - Divestiture = involves selling off parts of businesses that no longer seem central to the corporation Global strategy:

Strategy: The plan of action that prescribes resource allocation and other activities for dealing with the environment, achieving a competitive advantage, and attaining organizational goals. Globalization: The standardization of product design and advertising strategies throughout the world. Multi domestic strategy: The modification of product design and advertising strategies to suit the specific needs of individual countries. Transnational strategy: A strategy that combines global coordination to attain efficiency with flexibility to meet specific needs in various countries.

Purpose strategy: Core Competencies: Competitive advantage: What sets the organization apart from others and provides it with a distinctive edge in the marketplace. a competitive advantage, expertise, branding, process efficiency or customer service. Building Synergy: Core competence: A business activity that an organization does particularly well in comparison to competitors. 1+1=3. Combination of organization properties that are congruent (aligned) on the cost side (efficiency) on the knowledge side (innovation) internal organization (alignment of processes) Synergy: The condition that exists when the organizations part interact to produce a joint effect that is greater than the sum of the parts acting alone. Creating customer value Combination of core competences and synergy. Levels of strategy:

Corporate level strategy: the level of strategy concerned with the question: what business are we in? Pertains to the organization as a whole and the combination of business units and product lines that make it up. Business level strategy: the level of strategy concerned with the question: how do we compete? Pertains to each business unit or product line within the organization. Functional level strategy: the level of strategy concerned with the question: how do we support the business level strategy? Pertains to all of the organizations major departments.

The strategic Management process

Strategy formulations: The stage of strategic management that involves the planning and decision making that lead to the establishment of the organizations goals and of a specific strategic plan. Strategy implementation: the stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes. Situation analysis: Analysis of the strengths, weaknesses, opportunities, and threats (SWOT) that affect the organizational performance.

Portfolio strategy:

Strategic business unit (SBU): A division of the organization that has a unique business Mission, product line, competitors, and Market relative to other SBUs in the same Corporations. Portfolio strategy: The organizations mix of strategic business units and product lines that fit together in such a way as to provide the corporation with synergy and competitive advantage. BCG matrix: a concept developed by the Boston Consulting Group that evaluates strategic business units with respect to the dimensions of business growth rate and market share.

Formulating business level strategy:

Competitive strategies: Differentiation: A type of competitive strategy with which the organization seeks to distinguish its products or services from that of competitors. Cost- leadership: A type of competitive strategy with which the organization aggressively seeks efficient facilities, cuts costs, and employs tight cost controls to be more efficient than competitors. Focus: A type of competitive strategy that emphasizes concentration on a specific regional market or buyer group.

Strategy
Differentiation

Organizational characteristics
Acts in a flexible, loosely knit way, with strong coordination among departments Strong capability in basic rewards Creative flair, thinks out of the box Strong marketing abilities Rewards employee innovation Corporate reputation for quality or technical leadership Strong central authority; tight cost controls Maintains standard operating procedures Easy to use manufacturing technologies Highly efficient procurement and distributions systems Close supervision, finite employee empowerment Frequent, detailed control reports May use combination of above policies directed at particular strategic target Values and rewards flexibility and customer intimacy

Cost - leadership

Focus

Measures and costs of providing services and maintaining customer loyalty Pushes empowerment to employees with customer contact Strategy implementation and control: Strategy -> organization -> perfomance Organization: Leadership: - Use persuasion - Motivate employees - Shape culture/values Human resources: - Recruit/select employees - Manage transfers/promotions/training - Direct layoffs/recalls Information and control systems: - Revise pay, reward system - Change budget allocations - Implement information systems - Apply rules/procedures Structural design: - Design organizational chart - Create teams - Determine centralization/decentralization - Arrange facilities, task design