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CHAPTER 1: Understanding the Manager’s Job

The Management Process:


 Planning and Decision making – setting the organization’s goals and deciding how best to
achieve them.
 Organizing – determining how best to group activities and resources; during
 Controlling – monitoring and correcting ongoing activities to facilitate goal attainment; after
 Leading – motivating members of the organization to work in the best interests of the
organization

Fundamental Management Skills:

 Technical - the skills required for work done in an organization.


 Interpersonal - the ability to communicate with, understand, and motivate both individuals and
groups.
 Conceptual - the ability to think in the abstract.
 Diagnostic - the ability to visualize the appropriate response to a situation.
 Communication - the ability both to convey and to receive ideas and information effectively from
others.
 Decision-Making - the ability to recognize and define problems and opportunities and then to
select a course of action to solve problems and capitalize on opportunities.
 Time-Management - the ability to prioritize work, to work efficiently, and to delegate
appropriately.

The Classical Management Perspective


 Scientific Management - concerned with improving the performance of individual workers (i.e.,
Systems Approach
efficiency). Contingency Perspective
•Recognition
Administrativeof internal - focuses on managing the total• organization
Management Recognition ofthan
rather the situational
interdependencies
individuals. nature of management
• Recognition of • Response to particular
environmental
Behavioral Management influences
Perspective - Emphasized the importance ofcharacteristics of situation
individual attitudes and
behaviors, and group processes.

Classical Behavioral Quantitative


Quantitative Management Perspective - focuses on decision making, economic effectiveness,
Management
mathematical models, and use of computers Management
to solve quantitative problems. Management
Perspectives - Useful in planning andPerspectives
controlling processes. Perspectives
Methods
Management forScience - focuses on the
Insights for moti-
development Techniques
of representative mathematical forto
models
enhancing
assist with decisions. vating performance improving decision
efficiency and
Operations Management - practicaland understanding
application of management science making,
to efficientlyresource
manage
the production and
facilitating planning,distribution of products and services.
individual behavior, allocation, and
organizing, and groups and teams, operations
controlling and leadership

Effective and efficient management


CHAPTER 2: The Environments of Organizations and Managers

Levels of International Business Activity


 Exporting - making a product in the firm’s domestic market and selling it in another country.
 Importing - bringing a good, service, or capital into a home country from abroad.
 Licensing - allowing a foreign company to manufacture or market the products and use a firm’s
brand name, trademark, technology, patent, copyright, or other assets in exchange for a royalty
based on sales.
 Strategic Alliance and Joint Ventures - firms jointly cooperate for mutual gain, by sharing costs
and/or sharing ownership of a new enterprise.
 Direct Investment - Occurs when a firm headquartered in one country builds or purchases
operating facilities or subsidiaries in a foreign country.

Controls on International Trade


 Tariffs - taxes collected on goods shipped across national boundaries.
 Quotas - limits placed on the number or value of goods that can be traded as exports or imports.
 Export restraint agreements - voluntary limits on the volume or value of goods exported to, or
imported from, another country.

CHAPTER 3: Planning and Strategic Management


Purposes of Goals:
- Provide guidance and a unified direction for people in the organization.
- Have a strong effect on the quality of other aspects of planning.
- Serve as a source of motivation for employees of the organization.
- Provide an effective mechanism for evaluation and control of the organization.

What Goals Do:


By Level
 Mission statement - a statement of the organization’s fundamental purpose.
 Strategic goals - set by top management, address broad competitive issues.
 Tactical goals - set by middle managers, that focus on how to operationalize actions to strategic
goals.
 Operational goals - set by lower-level managers, focus on actions in support of tactical goals.

Kinds of Organizational Plans:


• Strategic Plans
– Are general plans outlining resource allocation, priorities, and action steps to achieve
strategic goals.
– Are set by and for top management.
• Tactical Plans
– Are aimed at achieving the tactical goals set by and for middle management.
• Operational Plans
– Have a short-term focus.
– Are set by and for lower-level managers.

I. Strategic Management
Strategy - A comprehensive plan for accomplishing an organization’s goals.

Types of Strategic Alternatives:


 Business-level Strategy - conducts business in an industry or a particular market.
 Corporate-level Strategy - manages its operations simultaneously across several
industries and several markets.
The Relationships of Strategies by Organizational Level

SWOT ANALYSIS

SWOT Analysis: Evaluating Strengths


 Organizational Strengths - skills and abilities enabling an organization
to conceive of and implement strategies.
 Distinctive Competencies - strengths possessed by only a small number of competitors that are
useful for competitive advantage and superior performance.
 Competitive Advantage - results from a firm exploiting its unique competencies to attain
superior performance.

SWOT Analysis: Evaluating Weaknesses


 Organizational Weaknesses - insufficiencies of skills and capabilities that limit an organization’s
choice of strategic actions in support of its mission.
 Weaknesses can be overcome by:
o Making investments to obtain the strengths needed.
o Modifying the organization’s mission so it can be accomplished with the current
workforce.

Evaluating an Organization’s Opportunities and Threats


 Organizational Opportunities - Areas in the organization’s environment that may generate high
performance.
 Organizational Threats - Areas in the organization’s environment that make it difficult for the
organization to achieve high performance.

Business-Level Strategies
Porter’s Generic Strategies
 Differentiation Strategy - seeking to distinguish an organization from its competitors through
the quality of its products or services.
 Overall Cost Leadership Strategy - attempting to gain competitive advantage by reducing
overall costs below the costs of competing firms.
 Focus Strategy - concentrating on a specific regional market, product line, or group of buyers.

Strategies Based on the Product Life Cycle


Product Life Cycle - A model that shows sales volume changes over the life of products.
• Introduction stage: demand may be very high and sometimes outpaces the
firm’s ability to supply the product.
• Growth stage: more firms begin producing the product, and sales continue to
grow.
• Mature stage: overall demand growth begins to slow down.
• Decline stage: demand for product decreases.
 Related Diversification - a strategy in which an organization operates in several different
businesses, industries, or markets that are somehow linked.
Bases of Relatedness in Implementing Related Diversification:
– Similar technology
– Common marketing and distribution skills
– Common brand name and reputation
– Common customers
 Unrelated Diversification- operates multiple businesses that are not logically associated with
one another.
Advantages:
– Stable corporate-level performance over time due to business cycle differences
among the multiple businesses.
– Resources can be allocated to areas with the highest return potentials to maximize
corporate performance.
Disadvantages:
– The strategy does not usually lead to high performance due to the complexity of
managing a diversity of businesses.
– Firms with unrelated strategies fail to exploit important synergies, putting them at a
competitive disadvantage to firms with related diversification strategies.

Managing Diversification
• Portfolio Management Techniques
– Are used to make decisions about what businesses to engage in and how to manage
these multiple businesses to maximize corporate performance.
• BCG (Boston Consulting Group) Matrix - Evaluates businesses relative to the
growth rate of their markets and their individual market shares.
- Classifies the types of businesses of a diversified organization’s portfolio as:
o Dogs having small market shares and no growth prospects.
o Cash cows having large shares of mature markets.
o Question marks having small market shares in quickly growing markets.
o Stars having large shares of rapidly growing markets.
• GE (General Electric) Business Screen - Evaluates firms in a diversified portfolio
along two multi-factor dimensions:
o Industry attractiveness.
o Competitive position (strength) of portfolio firms.
- Shows where a firm should invest more of its resources in competitive
businesses in attractive industries.

Types of Operational Plans:


Single-use Plans - developed to carry out a course of action not likely to be repeated in the future
 Program - single-use plan for a large set of activities
 Project – single-use plan of less scope and complexity than a program
Standing Plans - developed for activities that recur regularly over a period of time
 Policy - standing plan specifying the organization’s general response to a designated problem or
situation
 Standard operating procedure – standing plan outlining steps to be followed in particular
circumstances
 Rules and regulations - standing plans describing exactly how specific activities are to be carried
out
Contingency Planning and Crisis Management
• Contingency Planning - the determination of alternative courses of action to be taken if an
intended plan is unexpectedly disrupted or rendered inappropriate.
• Crisis Management - the set of procedures the organization uses in the event of a disaster or
other unexpected calamity.

CHAPTER 4: Managing Decision Making

Decision-Making Conditions
 Under Certainty - The decision maker knows with reasonable certainty what the alternatives are
and what conditions are associated with each alternative.
 Under Risk - The availability of each alternative and its potential payoffs and costs are all
associated with risks.
 Under Uncertainty - The decision maker does not know all the alternatives, the risks associated
with each, or the consequences of each alternative.

The Classical Model of Decision Making

The Administrative Model of Decision Making

Behavioral Aspects of Decision Making:


• Bounded Rationality - the concept that decision makers are limited by their values and
unconscious reflexes, skills, and habits.
• Satisficing - the tendency to search for alternatives only until one is found that meets some
minimum standard of sufficiency to resolve the problem.
• Coalition – a positive or negative political force in decision making which consists of an informal
alliance of individuals or groups formed to achieve a goal.
• Intuition - an innate belief about something without conscious consideration.
• Escalation of Commitment - a decision maker’s staying with a decision even when it appears
to be wrong.
• Risk Propensity - the extent to which a decision maker is willing to gamble when making a
decision.
• Ethics
Forms of Group Decision Making:
 Interacting group or team - consists of an existing group or newly formed team interacting and
then making a decision.
 Delphi groups - developing a consensus of expert opinion from a panel of experts who
individually contribute through a moderator.
 Nominal groups - generating ideas through the individual contributions of alternatives that are
winnowed down to reach a decision.

CHAPTER 5 & 6: Entrepreneurship and New Venture Management

Entrepreneurship - The process of planning, organizing, operating, and assuming the risk of a business
venture.

Strategy for Entrepreneurial Organizations

Emphasizing Distinctive Competencies:


• Identifying niches in an established market - finding part of a market not currently being
exploited can offer a competitive advantage.
• Identifying new markets - transferring an existing product/service to a new market can create
new industries/products/services.
• Taking first-mover advantage - exploiting a market opportunity before any other firm does can
result in a competitive advantage.

Business Plan - is a document that summarizes business strategy and structure.


– Should include:
• Business goals and objectives.
• Strategies used to achieve these goals and objectives.
• A plan of how the entrepreneur will implement these strategies.

Starting a new business


• Buying an Existing Business
• Starting from Scratch

Financing the New Business


 Personal Resources - using own money and money borrowed from friends and relatives to
finance the business.
 Strategic Alliances - partnering with established firms such as suppliers in a mutually beneficial
relationship.
 Lenders - obtaining funding from traditional lenders
(e.g., banks, independent investors, and government loans).
 Venture Capital Companies - groups of small investors who provide capital funds to small high-
growth potential start-up firms in exchange for an equity position (stock) in the firms.
 Small-Business Investment Companies (SBICs) - are investor-owned companies that borrow
money from the SBA to loan to small business with high growth potential.
 SBA Financial Programs - provide assistance (e.g., SBA-guaranteed loans) for small businesses
unable to get private financing at reasonable terms.

Franchising
• Franchising Agreement
– Operation of the franchised business by the entrepreneur (the franchisee) under a license
by a parent firm (the franchiser).
– The entrepreneur pays the parent firm for use of trademarks, products, formulas, and
business plans.

CHAPTER 7: Organization Change and Innovation

Steps in the Change Process (Kurt Lewin’s Model):


 Unfreezing - individuals must be shown why the change is necessary.
 Implementing change - the change itself is implemented
 Refreezing - involves reinforcing and supporting the change so that it becomes a integral part of
the system.

People resist change because of:


- Uncertainty about the extent and effects of change.
- Threats to self-interests, power, and influence.
- Different perceptions of change effects and outcomes.
- Feelings of loss in disrupted social networks, power, security, and familiarity with existing
procedures.

Overcoming Resistance to Change


- Encourage active participation in the change process.
- Provide education and communication about the change process.
- Facilitate the change process by making only necessary changes, announcing changes in
advance, and allowing time to adapt to change.
- Use force-field analysis to focus efforts on removing barriers to change.
Force-Field Analysis for Plant Closing at General Motors

Business Process Change (Reengineering) - the radical redesign of all aspects of a business to achieve
major improvements in cost, service, or time.
The Need for Business Process Change:
– Entropy is a normal process leading to system decline.

Approaches to Business Process Change:


• Recognizing the need for change and acting on it with a sense of urgency.
• Starting with a clean slate opens up the process.
• Using a blend of top-down and bottom-up involvement.

Organization Development - A planned, organization-wide effort managed from the top, intended to
increase organizational effectiveness and health through interventions in the organization’s processes,
using behavioral science knowledge.
Organizational Innovation
Innovation - the managed effort of an organization to develop new products or services or new uses for
existing products or services.
• Radical Innovation - a new product, service, or technology developed by an organization that
replaces the existing one.
- fundamentally changes the nature of competition in an industry.
• Incremental Innovation - a new product, service, or technology that modifies an existing one.
- does not significantly affect competition in an industry.

• Technical Innovation - a change in the physical appearance or performance of a product or


service, or the physical processes through which a product or service is manufactured.
• Managerial Innovation - a change in the management process by which products and services
are conceived, built, and delivered to customers.

• Product Innovation - a change in the physical characteristics or performance of existing products


or service or the creation of brand-new products or services.
• Process Innovation - a change in the way a product or service is manufactured, created, or
distributed.

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