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Test 2 Review
Chp 4 – 9

Chapter 4: Business Ethics

1) What are the 5 ethical systems?

 Universalism: all people should uphold certain values that society needs to function.
 Egoism: individual self-interest is the actual motive of all conscious action
 Utilitarianism: greatest good for the greatest number should be the overriding concern of
decision makers.
 Relativism: bases ethical behavior on the opinions and behaviors of relevant other people
 Virtue ethics: what is moral comes from what a mature person with “good” moral
character would deem right

2) What’s the ethical “thinking” associated with decision-making at each of three stages of
Kohlberg’s Model of Cog. Dvlpmt?
 Pre-conventional: make decisions based on immediate self interest
o Taking a work USB home bc you don’t want to buy a new one
 Conventional: make decisions that conform to expectations of groups and institutions
(family, peers, society)
o You think about taking the USB home, but decide it’s not right.
 Principled: make decisions based on self-chosen ethical principles
o You don’t think of taking it home bc you believe that would be wrong

3) What are some danger signs that indicate that an organization is participating in unethical
behavior?
 Excessive emphasis on short-term gain over longer-term considerations.
 Failure to establish a written code of ethics.
 A desire for simple, “quick fix” solutions to ethical problems.
 An unwillingness to take an ethical stand that may impose financial costs.
 Consideration of ethics solely as a legal issue or a public relations tool
 Lack of clear procedures for handling ethical problems.
 Responsiveness to the demands of shareholders at the expense of other constituencies

4) What role does the ethical behavior of leaders play in influencing the behavior of employees
in an organization?
 Starts at the top – leader behavior is the most influential factor
 More influential on behavior than employees signing an agreement, punishments, etc.
 If leaders are (or are perceived to be) in the pre-conventional/conventional stage, the
organization could be in trouble.
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Key Terms

Compliance-based ethics programs

- prevent/detect/punish legal violations

Integrity-based ethics programs

- instill in people a personal responsibility for ethical behavior

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Chapter 5: Planning & Decision Making

1) How does an organizational mission statement differ from a vision statement? What do they
have in common?
Vision – future “picture”
Mission – purpose and how things work
Both long-term

2) Why is it important to write SMART goals/objectives?

To reach the goals as successfully/efficiently as possible to achieve common
purpose/direction

3) Explain the process of conducting a situational (external and internal) analysis (hint: in the
macro-environment). What external factors does an organization research in this process?
 Gather/interpret/summarize info relevant to planning issue in question
 Study past events, examine current conditions, forecast future trends
 Examine influences from external environment
 Outcome: identify/diagnose planning assumptions, issues, problems

4) What is a SWOT analysis? How do organizations use it to develop organizational strategies?

 Strengths, Weaknesses, Opportunities, Threats.
 Mngrs formulate strategy to take advantage of opportunities by capitalizing on
strengths, ridding weaknesses, and countering potential threats

5) Describe the 4 Corporate Strategies.

 Concentration – focus on single business competing in single industry
 Vertical integration – expand org’s domain into distributors to eliminate uncertainties
 Related diversification – move into new businesses related to company’s original core
business
 Unrelated diversification – expand into unrelated businesses to minimize risks due to
mkt fluctuation in one industry

6) Business Strategies relate to how an organization competes. Describe the two business
strategies discussed in class.
 Low-cost – offer standard/no frills product
 Differentiation – unique in its industry along one or more dimensions

7) What are the 3 levels of organizational plans? Name characteristics and examples of each.
Strategic: identifying/executing org’s mission by matching capabilities with demands of
environment
Involves managers/staff from all parts of org in the formulation/implementation of
strategic goals and strategies
Tactical: translating broad strategic goals and plans into specific goals and plans that are
relevant to a distinct portion of the organization, like marketing.
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Budget – annual or more

Marketing – Annual
Land use plan
Large Project plan – meetings, building projects, starting new programs
Staffing/HR – recruiting, hiring, compensation administration
Disaster plam
Crisis Communication
Operational: identifying specific procedures/processes required at org’s lower levels
Short term or “standing” (policies, procedures)
Take in cash? How to do the daily deposit, daily reports, etc.
Serve customers? How to deal with customer concerns, complaints
Run a facility? How to keep it clean and well maintained

8) When is a decision considered “programmed”?

Certainty conditions (little risk); Problem is frequent, repetitive, and routine, with much
certainty regarding cause-and-effect relationships

9) What are advantages and disadvantages of group decision-making?

Advantages – more info improves decision, diff perspectives enhance problem solving,
group discussion spurs thinking, enhanced understanding of decisions, increases commitment to
decisions
Disadvantages – one person can dominate/undermine group, OK result (not maximizing),
pressure to avoid disagreement, original goals replaced w new/less important goals

10) Describe the three models of decision-making

Maximizing – best possible outcome
Satisficing – choosing option that’s acceptable, not the best/perfect
Optimizing – best possible balance among several goals

11) What are the common steps in strategic planning, decision making, and in addressing an
ethical issue/problem? (Ch. 4 and 5)

12) Why would a start-up organization develop a “business plan”? How does it differ from a
Strategic Plan?
 Helps determine viability of enterprise
 Guides as you plan/organize
 Helps obtain financing

Senior execs responsible for dvlpt/execution of the strategic plan

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13) What is the purpose of a Master Plan? How is it different than an organization’s Strategic
Plan? What sector is this type of plan most closely associated?
 Most commonly used in public agencies
 Framework for land and physical resource (capital) development
 Includes specific data supporting land-use decisions
 A “design” plan; illustrated with photos, maps, charts, etc.
 Formal and book
 Ideally guided by, and updated according to, a strategic plan

14) Why involve all organizational levels in strategic planning?

All mngrs encouraged to think strategically and focus on long-term, externally oriented
issues as well as short-term tactical/operational issues

Key Terms

Goal
- Target/end mgmt. desire to reach

Strategy
- Pattern of actions and resource allocations designed to achieve org’s goals

Specific
Measurable
Attainable
Relevant
Time-bound
To complete the Lieumann Project by December 31st, 2016 at a cost not to exceed
$30,000 and 350 work-hours.

Groupthink
- Group members avoid disagreement as they strive for consensus
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Chapter 7: Organizational Structure

1) What type of info does the traditional organizational chart convey?

 Represents administrative units and chain of command for that organization but NOT the
actual relationships and processes that exist within the organization
 Offers framework (basic structure is there but it doesn’t demonstrate everything that goes
on inside)

2) What are the differences between a centralized and decentralized organization?

Centralized organization: high-level execs make most decisions and pass them down to
lower levels for implementation – TALL
Decentralized organization: lower-level managers make important decisions – FLAT

3) Describe characteristics of a mechanized and organic organizations.

Mechanized: internal efficiency, rigid, bureaucratic
Organic: emphasizes flexibility, informal, teamwork

4) What are the steps in effective delegation?

 Define goal (work backwards)
 Select person for task
 Solicit her views about suggested approaches
 Give her authority/time/resources to perform assignment
 Schedule checkpoints
 Follow through – discuss progress

5) Explain responsibility, authority, and accountability.

Different types of delegation
 Responsibility: person assigned to task they are supposed to carry out
 Authority: person has power/right to make decisions, give orders, do whatever
necessary to fill responsibility
 Accountability: person’s mngr has right to take corrective action if person fails to
do so

6) Explain the 3 horizontal structures (and network). Describe conditions that would indicate
when a company might consider changing their structure to better reach their goals.
 Functional: specialists; separate departments
o Change: if new products introduced, or customer demands change
 Divisional: multiple divisions with same functions, just different places
o Change: when coordination is becoming difficult
 Matrix: dual reporting relationships in which some managers report to two superiors
o Change: when people don’t know which supervisor they should go to
 Network: Collection of independent/mostly single-function firms that collaborate
o Change: if their specialty isn’t right for them
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7) In a divisional structure, parts of the organization are separated into separate, somewhat
independent divisions based on products, customers, or geographic regions.

Key Terms
Span of control
- # of subordinates who report directly to an executive or supervisor; tall or flat organization

Unity of command
- employee responsible to only one supervisor, who in turn is responsible to only one
supervisor, and so on up the organizational hierarchy

Line job
- deal directly with the org’s primary goods/services

Staff job
- support line departments

“Tall” organization
- centralized

“Flat” organization
- Decentralized
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Chapter 8: Human Resources

1) How can “people” be a source of competitive advantage?

 People create value
 Talent is rare
 A group of well-chosen, motivated people is difficult to imitate
 People can be organized for success

2) List and explain typical HR manager responsibilities.

 Personnel planning
 Compensation Administration
 Recruiting and Hiring
 Assignments
 Performance Management
 Employee Development and Training

3) Explain the HR planning process.

Planning: know where the business is headed, what it plans to be
Programming: recruitment, training, pay systems
Evaluating: produce results for business plans

4) Describe Fair Labor Standards Act, and Civil Rights Act. Which is associated with EEO? 
CRA
FLSA: creates salary/hourly employee categories, governing overtime and other rules.
Sets minimum wage, child labor laws.

CRA: Disparate treatment impact suits, business necessity, job relatedness; shifts burden
of proof to employer, permits punitive damages and jury trials

5) What is “job analysis” and how is it utilized in HRM and planning?

Determines what’s done on a given job and what should be done on that job
o Job description tells about job itself
o Job specification describes KSAOs needed to perform job

6) What does KSAO stand for? Where do you find KSA’s?

Knowledge/skills/ability/other characteristics (matching needs with capabilities)
o Found in the job specification (ex: communication skills)

7) Discuss the advantages and disadvantages of internal vs. external recruitment.

Internal
Advantages – employers know employee, employee knows org
Disadvantages – lack of KSAOs yields a limited applicant pool, leads to poor selection
External
Advantages – “new blood”, innovation
Disadvantages – unfamiliar w org = may not like working there, demoralizing to
employees
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8) Why is it important to “hire right”?

Reliability (consistency) and validity (accuracy)

9) What are advantages to a structured interview?

Help establish rapport
Provide sense of applicant’s personality
More reliable predictors of job performance
Free of bias and stereotypes
Allows for manager to compare responses across different candidates

10) Explain the distinction between behavioral interviewing vs. situational interviewing.
Behavioral: How you behaved in the past will predict how you will behave in the future.
Situational: What would you do?

11) What are the two purposes of performance appraisals?

 Address performance deficiencies
o Be specific about behaviors/expectations/standards
 Employee development
o Identify/capitalize on strengths
o Work on weaknesses
o Identify opportunities for change/advancement (and allow employee to prepare)

12) Why would a job be paid on an hourly basis vs. a salaried basis?
 Internal factors (compensation policy, worth of each job, individual worth, employer’s
ability to pay)

 External factors (labor mkt conditions, area wage rates, cost of living, legal requirements

13) Why would companies offer outplacement services to employees that they no longer need?
To help people who have been dismissed from company regain employment elsewhere

14) List the steps of progressive discipline.

 Coaching
 Informal, oral and written counseling
 Suspension
 Discharge/Termination

15) Name elements (including fringe benefits) that could be considered part of an employee’s
total compensation package.
Worker’s compensation Pension
Social security Medical/health
Unemployment insurance
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Key Terms
“Employment at will”
- Employee may be terminated for any reason

Performance test
- Formal assessment of employee’s job performance

Management by objective (MBO)

- Objs set by a subordinate and a supervisor must be reached within a given time
period

Orientation training
- Introduces new employees to company and familiarizing them with policies,
procedures, culture, and the like

Team training
- Provides skills and perspectives they need to collaborate with others

Diversity training
- Programs focused on identifying/reducing hidden biases against people with
differences and developing the skills needed to manage a diversified workforce
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Chapter 9: Diversity

1) Explain the legal concept of sexual harassment and who it applies to in the workplace. Give
examples of “quid pro quo” and “hostile environment” harrassment.
Conduct of a sexual nature that has negative consequences for employment – applies to
everyone in the workplace.
- Quid pro quo: sleeping with your boss to get a promotion
- Hostile environment: demeaning jokes, inappropriate/suggestive remarks

2) How can cultivating a diverse workforce provide value and competitive advantage to an
organization?
 Attract/retain motivated employees
 Better perspective on differentiated market
 More creativity and innovation in problem solving
 Enhancement of organizational flexibility

Key Terms

Diverse workforce
- Gender, race, ethnicity, nationality, religion, age, disability status, military
experience, sexual orientation, economic class, educational level, lifestyle.

Mentors
- Higher-level managers who help ensure that high-potential people are introduced to
top management and socialized into the norms/values of the organization

Monolithic organizations
 Low degree of structural integration – employing few women, minorities, or other
groups that differ from the majority – and has a highly similar employee
population

Pluralistic organizations
 relatively diverse employee population
 Makes effort to involve employees from different genders/races/cultures

Multicultural organizations
 values cultural diversity and seeks to utilize and encourage it