MAN3205 Smokin Notes Exam 2

involves setting goals and deciding how to achieve them
why plan?
helps you check your progress, helps you coordinate activities, helps you be forward-thinking, helps you deal with uncertainty
2 drawbacks to planing
1. time consuming 2. plans go obsolete quickly
developed the 4 organizational responses to uncertainty
Raymond E. Miles and Charles C. Snow
4 approaches to responding to environmental uncertainty
defenders, prospectors, analyzers, and reactors
experts at producing and selling narrowly defined products and services; strive to defend dominance in their market segments, penetrating deeper into current markets; cautious and incremental growth; ignore developments outside of their narrow market segment
when does defender strategy work
organization operates in relatively steady environment and a mature industry
focus on developing new products/services and seeking out new markets; frequently experiment with new products/approaches; initiate change; first to introduce new products; spurt like growth
when does prospector strategy work
organization is operating in an environment that is unstable and rapidly changing; changing technology and customer needs
let other organizations take the risks of product development and marketing and then imitate what seems to work best; typically operates in both a cash cow domain and an ever-changing domain they hope will propel growth; monitor environment for opportunities and new ideas that might lead to growth; growth is normally through market penetration
when analyzer strategy works
organization operates in a mature but growing market in which technology and customer preferences are ever-changing
adjustments only made when forced to do so by environmental pressures; inability to respond usually drives down sales and forces them out of business
when reactor strategy works
organization operates in a market that is either highly regulated or has no competition
3 types of business problems of the adaptive cycle
entrepreneurial (what markets should we be in?), engineering (how are we going to produce/deliver our product? how will we reach the markets we want to be in?), administrative (what are the rules and procedures we must follow to be successful?)
steps in planning process
1. mission statement 2. vision statement 3. strategic planning 4. tactical planning 5. operational planning
mission statement
expresses the organization’s purpose or reason for being; says something about the organization’s purpose, business, and values
vision statement
expresses where the organization wants to go, what it wants to become, what it wants to accomplish, and why the vision is important
specific commitments to achieve a measurable result within a stated period of time
means-end chain
hierarchy of organizational goals and constitutes the means that lead to the accomplishment of the ends
strategic goals
set by and for top management and focus on objectives for the organization as a whole
tactical goals
set by and for middle managers and focus on the actions needed to achieve strategic goals
operational goals
set by and for first line managers and are concerned with short term associated with realizing tactical goals
strategic planning
1-5 years; top managers decide on long-term goals with the resources they expect to have available
tactical planning
middle managers determine what contributions their departments can make with their given resources over the next 6 to 24 months
operational planning
first line managers determine how to accomplish specific tasks with available resources over the next 1-52 weeks
action plan
defines the course of action needed to achieve the stated goal
operating plan
defines how the business will be conducted over a one year period and identifies clear targets such as revenues, cash flow, and market share
standing plans
developed for activities that occur repeatedly over a period of time (policy, procedure, rule)
standing plan that outlines the general response to a designated problem or situation
standing plan that outlines the response to a particular problem or circumstance
standing plan that designates strategic required action
single use plans
developed for activities that are not likely to be repeated in the future (projects and programs)
single use plan encompassing a range of projects or activities
single use plan encompassing a smaller range of tasks or activities
management by objectives (MBO)
4 step process with the purpose of motivating subordinates to achieve organizational goals
4 steps of MBO
1. set objectives jointly 2. develop an action plan 3. review performance periodically 4. appraise performance and give rewards
3 things that need to be in place for MBO to be a success
commitment of top management, organizational wide commitment, cascading objectives
cascading objectives
structuring objectives in a unified hierarchy, becoming more specific at the lowest levels
advantages of MBO
joint participation, employees more committed, focuses on steps need to be taken to achieve organizational goals
disadvantages of MBO
time consuming, managers have more negotiating power
SMART goals
specific, measurable, appropriate, realistic, time bound
planning and control cycle
1. make the plan 2. carry it out 3. control direction by comparing results with the plan 4. control the direction by taking corrective action
benefits of planning
employees motivated by clear goals, planning helps managers allocate scarce resources, provide a standard of performance
limitations of planning
false sense of risklessness, can reduce an organization’s flexibility, inhibit intuition and creativity
strategic management
process that involves managers from all parts of the organization in the formulation and implementation of strategies and strategic goals
why strategy matters
provides direction and momentum, encourages new ideas, help an organization develop a sustainable competitive advantage
Porter’s 3 underlying principles of strategic planning
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
variety based positioning
produces a subset of an industry’s products or services (ex: Jiffy Lube)
needs based positioning
attempts to serve most or all of the needs of a particular group of customers (ex: IKEA)
2 approaches to needs based positioning
serving the broad needs of a few customers, serving the differing needs of similar customers
access based positioning
segments customers who are accessible in different ways rather than on actual differences between them (ex: Carmike Cinemas)
5 steps of strategic management process
1. determine a mission and vision 2. determine the grand strategy 3. generate strategic plans 4. execute the strategic plans 5. maintain control over the strategy
3 common grand strategies
growth, stability, defensive
grand strategy
explains how the organization will accomplish its mission
growth strategy
involves expansion as in sales revenue, market shares, number of employees, or number of customers served
stability strategy
involves little or no significant change; firm still faces stiff competition or a changing environment
defensive strategy
involves reduction of the organization’s efforts
competitive intelligence
gaining information about competitors’ activities so that one can anticipate their moves and act appropriately
SWOT analysis
strategic planning tool that involves the search for the strengths, weaknesses, opportunities, and threats
organizational strengths
skills and capabilities that give the organization special competencies and competitive advantages
organizational weaknesses
drawbacks that hinder an organization in executing strategies
organizational opportunities
environmental factors that the organization can exploit for competitive advantage
organizational threats
environmental factors that hinder an organization’s achievement of a competitive advantage
why is SWOT analysis useful
helps managers set realistic goals, improve their capabilities, and establish plans to overcome weaknesses, exploit strengths, and turn threats into opportunities
2 kinds of forecasting
trend analysis, contingency planning
trend analysis
hypothetical extension of a past series of events into the future
contingency planning
creation of alternative hypothetical but equally likely future conditions
Porter’s 5 forces of competition
1. threat of new entry 2. suppliers’ bargaining power 3. buyers’ bargaining power 4. threat of substitute products 5. competitive rivalry
threat of new entry
new competitors take customers away from existing organizations; higher the barriers, the more costly entry, less competition
suppliers’ bargaining power
more concentrated the industry, the more bargaining power of suppliers
buyers’ bargaining power
buyers have more bargaining power when there is a relatively small number of buyers
threats of substitute products
a firm faces more competition when there are more available substitutes for its products and services
competitive rivalry
more competition, less profitable; can be mitigated by differentiation
Porter’s 4 competitive strategies
cost-leadership, differentiation, cost-focus, focused-differentiation
cost-leadership strategy
used to keep costs/prices low to target a wide market, focus on efficiency of their processes in order to achieve this strategy; ex: WalMart
differentiation strategy
used to offer products or services that are of unique and superior value to target a wide market; ex: Apple and Target
cost-focus strategy
keep costs/prices low to target a narrow market; ex: Dollar Store
focused-differentiation strategy
used to offer products or services that are of unique and superior value to target a narrow market ex: IKEA
single product strategy
company makes and sells only one product within its market; allows organization to focus its efforts on one product
diversification strategy
company operates several businesses to spread out the risk, 2 types
unrelated diversification
when an organization operates several unrelated businesses under one ownership; ex: Berkshire Hathaway
related diversification
when an organization operates several separate but related businesses ex: Disney
factors that may influence a decision to use related diversification
resource allocation, strategy formulation, performance control and management
BCG matrix
evaluates business units based on growth rate and market share
high growth industry and have high market share; can become cash cows
cash cows
slow growth but high market share; finance stars and question marks
question marks
new ventures with a high market growth but low market share
low growth and low market share; should be sold or gotten rid of
strategy implementation
putting strategic plans into effect
consists of using questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and achieve promised results
3 core processes of business
people, strategy, operations
8 components for implementation
1. exercising strategic leadership to drive implementation 2. shaping the work environment/culture to fit the strategy 3. using rewards and incentives appropriately 4. allocating enough resources to key activities 5. establishing policies that support strategies 6. pushing for continuous improvement 7. building an org that can successfully execute a strategy 8. installing information and operating systems to enable personnel to be more efficient
tools for turning strategy into action
visible leadership, clear roles and accountability, candid communication, appropriate human resources practices
strategic control
monitoring the execution of strategy and making adjustments if necessary
2 ways of making decisions
rational and emotional
rational (classical) model
assumes that managers are logical decision makers who strive to make the optimal decision and always act in the organization’s best interest
non rational model
assumes that risky or uncertain environment; managers find it difficult to make optimal decisions
4 steps of rational decision making model
1. identify the problem or opportunity 2. generate alternatives 3. evaluate alternatives and pick one 4. implement the solution and evaluate it
3 faulty assumptions of rational model
1. managers have complete information 2. managers can separate emotions from their analysis 3. managers can make the best decision for the organization
3 major nonrational decision making models
incremental, satisficing, intuition
incremental model
managers take small, short term steps to alleviate a problem instead of taking one gigantic step towards a long term solution
satisficing model
managers seek alternatives until they find one that is satisfactory; proposed by Herbert Simon
bounded rationality
ability of decision makers to be rational is limited by numerous constraints
judgmental heuristics
shortcuts or rules of thumb
intuition model
making a choice without the use of conscious thought or logical inference; complement to rational decision making
evidence based management
requires managers to establish organizational practices based on hard data and best evidence
Pfeffer and Sutton’s 7 principles to help companies implement evidence based management
1. act as if org is an unfinished prototype 2. don’t brag or embellish 3. look at org as if you were an outsider 4. make everyone participate in evidence based management 5. sell evidence based management 6. avoid or ignore orders that are wrong 7. allow failure but try to learn from it
4 decision making styles
directive, conceptual, analytical, behavioral
directive style
efficient, practical, systematic, logical, action-oriented, decisive; prefers clear cut solutions, concerned about the short run, exercises power and control
analytical style
carefully considers a lot of information and alternatives, takes longer to make a decision, responds well to new situations
conceptual style
broad perspective, considers many options, focuses on long term, takes risks, comes up with creative solutions, enjoys new ideas, relies on intuition and discussions with others, tends to be indecisive
behavioral style
people-oriented and works well with others, avoids conflicts, shows concern for others, receptive to suggestions, tends to be wishy washy
4 ineffective reactions to decision maling
relaxed avoidance, relaxed change, defensive avoidance, panic
relaxed avoidance
manager decides to take no action in the belief that there will be no great negative consequences
relaxed change
manager realizes that complete inaction will have negative consequences and opts for the first available alternative that involves low risk
defensive avoidance
manger can’t find good solution and procrastinates or denies the risk of negative consequences
manger frantically tries to get rid of a problem and can’t deal with the situation realistically
3 types of organizations
for profit, nonprofit, mutual benefit
2 challenges in organizing role
designing organizational structure, designing organizational culture
3 elements of organizational architecture
structure, culture, and human resource management systems
4 types of organizational culture
clan, adhocracy, market, hierarchy
clan culture
internal focus and values flexibility rather than stability and control, values cohesion, consensus, job satisfaction, collaboration
adhocracy culture
external focus and values flexibility, values adaptivity, creativity, and flexibility; innovative companies and start ups
market culture
external focus, driven by competition, values stability and control; profits, productivity, and results are more important
hierarchy culture
internal focus, values stability and control, control mechanisms in place to ensure promptness, efficiency, and effectiveness
3 layers of organizational culture
observable artifacts, espoused values, basic assumptions
how culture is learned
stories, rituals, material symbols, language
importance of organizational culture
provide organizational identity, facilitate collective commitment, promote social system stability, shape behavior
3 perspectives for enhancing economic performance
strength, fit, adaptive
strength perspective
strength of a corporate culture is related to a firm’s long term financial performance
fit perspective
assumes that an organization’s culture must align with its business or strategic context
adaptive perspective
assumes that the most effective cultures help organizations anticipate and adapt to environment changes
process of culture change
formal statements, slogans and sayings, stories, legends, and myths, leader reactions to crisis, role modeling, training, and coaching, physical design, rewards, titles, promotions, and bonuses, organizational goals and performance criteria, measurable and controllable activities, organizational structure, procedures for self development
7 common elements of all organizations
1. common purpose 2. coordinated effort 3. division of labor 4. hierarchy of authority 5. span of control 6. authority 7. centralization of authority
4 traditional designs
simple, functional, divisional, matrix structures
simple structure
centralized authority, flat hierarchy, few rules, low work specialization
functional structure
people with similar specialties are put together in formal groups
divisional structure
people with diverse specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions
matrix structure
combines functional and divisional chains of command so that employees have 2 bosses (functional and project managers)
horizontal design
use of temporary or permanent teams to break down internal boundaries and improve collaboration
3 types of boundaryless organization
hollow, modular, and virtual structures
hollow structures
central core of an organization is complemented by outside, independent firms that provide outsourced goods/services and are linked to the central core via computers
modular structure
firm assembles product chunks/modules provided by outside contractors
virtual structure
firm creates a company outside a company specifically to respond to an attractive market opportunity
contingency design
process of fitting the organization to its environment
mechanistic organization
authority is centralized, tasks and rules are clearly specified and employees are closely supervised; top down communication and rigid rules
organic organization
decentralized authority, less rules and procedures, networks are encouraged to cooperate and respond quickly
tendency of the parts of an organization to disperse and fragment
tendency of the parts of an organization to draw together to achieve a common purpose
7 steps of SHRM
1. determine the mission and vision 2. determine the grand strategy 3. come up with 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
constraints of HRM environment
legislation, societal trends, changing technology
tools of SHRM
human capital, knowledge workers, social capital
human capital
economic or productive potential of employee knowledge, experience and actions
knowledge workers
people whose work involves generating or interpreting information rather than manual labor
social capital
economic or productive potential of strong, trusting, and cooperative relationships
job analysis
determines the basic elements of a job
job description
what a holder of a job does and how/why they do it
job specification
minimum qualifications a person must have to perform a job successfully
3 areas EEOC laws cover
discrimination, sexual harassment, affirmative action
National Labor Relations Board
created by Wagner Act, enforces procedures whereby employees may vote to have a union and engage in collective bargaining
collective bargaining
negotiations between management and employees about disputes over compensation, benefits, working conditions, and job security
Fair Labor Standards Act of 1938
banned child labor and established minimum living standards for workers engaged in interstate commerce
Title 9 of CRA of 1964
prohibits discrimination based on race, color, sex, religion, or national origin
Civil Rights Act of 1991
strengthens CRA of 1964 by increasing damages and shifting the burden of proof to employer
ADA of 1990
prohibits discrimination based on disability and requires employers to make reasonable accommodations
vocational rehabilitation act of 1973
prohibits discrimination based on mental or physical disability
health insurance portability accountability act of 1996 (HIPPA)
prohibits group plans from dropping sick employees and allows workers to get new coverage when they change jobs
family and medical leave act of 1993
requires companies to provide up to 12 weeks of unpaid leave for adoption, family emergencies, or childbirth
equal pay act of 1963
prohibits employers from paying males and females differently for equal work
patient protection and affordable care act of 2010
requires firms with 50+ employees to provide health care
consolidated omnibus budget reconciliation act of 1985 (COBRA)
allows employees to retain their health insurance coverage for a period of time after being laid off
sets mandatory health and safety standards to which organizations must adhere
process of locating and attracting qualified applicants for positions in the organization
internal recruiting
cheaper, boots morale and productivity, restricts competition from outsiders, may lead to promotions based on seniority over merit, doesn’t fill vacancy
external recruiting
workers with fresh viewpoints, can be expensive and time consuming and risky
realistic job preview
gives a candidate a picture of both positive and negative features of the job and the organization before they are hired
3 kinds of selection tools
background information, interviewing, and employment tests
unstructured interviews
asking probing questions to find out what the applicant is like, highly subjective
structured interviews
involve asking each applicant the same questions and comparing their responses to a standardized set of answers
situational interviews
interviewer uses hypothetical situations to test the candidate’s ability to do the job
behavioral description interviews
involve an exploration into what applicants have actually done in the past
3 types of employment tests
ability, performance, personality tests
2 legal considerations for employment tests
reliability and validity
process of helping a newcomer fit smoothly into the job and organization, includes job routine, mission and operations, work rules and employee benefits
educating technical and operational employees in how to better do their current jobs
refers to educating professionals and managers in the skills they need to do their jobs in the future
objective appraisals
based on facts and often numerical, independent of personal biases
subjective appraisals
based on a manager’s perceptions of an employee’s traits or behaviors
rates employee performance according to scales of specific behaviors
360 degree assessment
performance appraisal when employees are appraised by supervisors, peers, subordinates, and clients
forced ranking
ranking all employees in a business unit against one another
formal appraisal
conducted at specific times throughout the year and are based on performance measures that have been established in advance
informal appraisal
conducted on an unscheduled basis and less rigorous
forms of compensation
wages/salaries, incentives, benefits
what to use to manage an effective workforce
promotion, transfer, discipline, demotion, dismissal
Collins’ 5 stages of institutional decline
1. hubris born of success 2. undisciplined pursuit of more 3. denial of risk and peril 4. grasping for salvation 5. capitulation to irrelevance or death
trends in organizational change
segmentation and niche products, targeted products with shorter time to market, radical innovation is hurting traditional companies, the effect of china and india, knowledge as a competitive advantage
reactive change
making changes in response to problems or opportunities as they arise
proactive change
carefully thought out changes made in anticipation of possible or expected problems or opportunities
forces of change
demographic changes, changes in the market, technological advancements, shareholder and customer demands, supplier practices, social and political pressures, problems with employees, behavior of managers
common areas where change is needed
people, technology, structure, strategy
3 causes of resistance to change
employee characteristics, change agent characteristics, change agent employee relationship
adaptive change
reintroduction of a familiar practice
innovative change
introduction of a practice that is new to the organization
radically innovative change
introduction of a practice that is new to the industry
lewin’s change model
unfreezing, changing, refreezing
Kotter’s 8 steps for organizational change
1. create sense of urgency 2. create a guiding coalition 3. develop a vision and strategy 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
4 steps of organizational development
1. diagnosis 2. intervention 3. evaluation 4. feedback
organizational development most successful when
multiple interventions, supported by top managers, both short term and long term results, culture is conducive
process of coming up with new ideas and turning them into useful applications
product innovation
change in the appearance or performance of a product or service, or the creation of a new one
process innovation
change in the way a product/service is conceived, manufacture, or disseminated
incremental innovation
creation of a product, service, or technology that modifies an existing one
radical innovation
creation of a product, service, or technology that replaces existing ones
ways organizations encourage innovation
1. create a culture that celebrates failure 2. devote the right amount of money, time, energy and focus to innovation 3. reward top performing innovators
ways managers can foster innovation
1. recognize problems and opportunities 2. communicate your vision 3. overcome resistance from employees by empowering and rewarding them 4. execute well
environmental scanning
practice of carefully monitoring an organization’s internal and external environments to detect signs of opportunities and threats that may influence the firm’s plans
3 advantages of diversification strategy
1. reduces risk that entire organization will fail 2. spread administrative costs over a number of businesses 3. helps an organization achieve synergy
sophisticated forms of business data analysis that represent the purest form of evidence based management; portfolio analysis and time-series forecasting
predictive modeling
data mining technique used to predict future behavior and anticipate the consequences of change
data analytics
process of analyzing “big data” for practical purposes, such as managing electricity grids of traffic patterns
availability bias
when managers use information that is readily available from memory to make judgments
representative bias
tendency to generalize from a small sample or a single event
confirmation bias
when a person seeks information that supports his or her point of view and discounts data that do not
sunk cost bias
when managers add up all the money already spent on a project and conclude that it would be too costly to simply abandon it
anchoring adjustment bias
tendency to make decisions based on an initial figure
overconfidence bias
when people have more subjective confidence in their decision making than their objective accuracy
hindsight bias
when people tend to view past events as more predictable than they really were
framing bias
when decision makers are unduly influenced by the way a problem or situation is presented
escalation of commitment bias
when a decision maker increases their commitment to a project despite negative information about it
espoused values
the explicitly stated values and norms preferred by an organization
enacted values
values and norms actually exhibited by the organization
unity of command
an employee should report to no more than one manager so that conflicting priorities and demands can be avoided
adverse impact
when an employment practice or procedure negatively impacts a protected class of individuals
disparate treamtment
occurs when organizations intentionally treat individuals from protected groups differently
computer assisted instruction (CAI)
computers are used to provide additional help or to reduce instructional time

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