University of Economics - Principles of Management - Mid-tern note

Chap 1

• Manager: Someone who coordinates and oversees the work of other people so
organizational goals can be accomplished
• Top managers: Managers at or near the upper levels of the organization structure who are
responsible for making organization-wide decisions and establishing the goals and plans that
affect the entire organization
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Middle managers: Managers between the lowest level and top levels of the organization
who manage the work of first-line managers
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First-line (frontline) managers: Managers at the lowest level of management who manage
the work of non-managerial employees
• Efficiency: Doing things right, or getting the most output from the least amount of inputs
Effectiveness: Doing the right things or doing those work activities that will result in
achieving goals
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 • Managerial roles Specific actions or behaviors expected of and exhibited by a manager
interpersonal roles Managerial roles that involve people and other duties that are
ceremonial and symbolic in nature
Informational roles Managerial roles that involve collecting, receiving, and disseminating
information
Decisional roles Managerial roles that revolve around making choices
• Interpersonal skills The ability to work well with other people individually and in a group
Conceptual skills The ability to think and to conceptualize about abstract and complex
situations

Chap 2

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• rational decision making Describes choices that are logical and consistent and maximize
value
Bounded rationality Decision making that’s rational, but limited (bounded) by an
individual’s ability to process information
Satisfice Accept solutions that are “good enough”
Intuitive decision making: Making decisions on the basis of experience, feelings, and
accumulated judgment

• Evidence-based management (ebmgt) The systematic use of the best available evidence to
improve management practice
 • Structured problems Straightforward, familiar, and easily defined problems
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Programmed decision A repetitive decision that can be handled by a routine approach
• Procedure A series of sequential steps used to respond to a well-structured problem
Rule An explicit statement that tells managers what can or cannot be done
Policy A guideline for making decisions
• Unstructured problems: Problems that are new or unusual and for which information is
ambiguous or incomplete
Non-programmed decisions Unique and nonrecurring decisions that require a custom-made
solution
• Decision-Making Conditions
→ Certainty A situation in which a manager can make accurate decisions because all
outcomes are known
→ Risk A situation in which the decision maker is able to estimate the likelihood of certain
outcomes
→ Uncertainty A situation in which a decision maker has neither certainty nor reasonable
probability estimates available
• Decision-Making Styles
→ Linear thinking style Decision style characterized by a person’s preference for using
external data and facts and processing this information through rational, logical thinking
→ Nonlinear thinking style Decision style characterized by a person’s preference for
internal sources of information and processing this information with internal insights,
feelings, and hunches
• Decision-Making Biases and Errors
→ heuristics Rules of thumb that managers use to simplify decision making
→ Overconfidence → Sunk Costs
→ Availability → Selective Perception
→ Representation → Self-serving
→ Framing → Anchoring Effect
→ Randomness → Hindsight
→ Confirmation → Immediate Gratification
Chap 3

• External environment Those factors and forces outside the organization that affect its
performance
 • Environmental uncertainty The degree of change and complexity in an organization’s
environment
Environmental complexity The number of components in an organization’s environment
and the extent of the organization’s knowledge about those components
Stakeholders Any constituencies in the organization’s environment that are affected by an
organization’s decisions and actions
• Organizational culture The shared values, principles, traditions, and ways of doing things
that influence the way organizational members act and that distinguish the organization
from other organizations

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• Socialization The process that helps employees adapt to the organization’s culture
• Workplace spirituality A culture where organizational values promote a sense of purpose
through meaningful work that takes place in the context of community

Chap 4

• Global Perspective
→ Parochialism Viewing the world solely through your own perspectives, leading to an
inability to recognize differences between people
 → Ethnocentric attitude The parochial belief that the best work approaches and
practices are those of the home country
→ Polycentric attitude The view that the managers in the host country know the best
work approaches and practices for running their business
→ Geocentric attitude A world-oriented view that focuses on using the best
approaches and people from around the globe
• Different Types of International Organizations
→ Multinational corporation (MNC) A broad term that refers to any and all types of
international companies that maintain operations in multiple countries
→ Multi-domestic corporation An MNC that decentralizes management and other
decisions to the local country
→ Global company An MNC that centralizes management and other decisions in the
home country
→ Transnational or borderless organization An MNC in which artificial geographical
barriers are eliminated
 Global sourcing Purchasing materials or labor from around the world
wherever it is cheapest
 Exporting Making products domestically and selling them abroad
 Importing Acquiring products made abroad and selling them domestically
 Licensing An organization gives another organization the right to make or
sell its products using its technology or product specifications
 Franchising An organization gives another organization the right to use its
name and operating methods
 Strategic alliance A partnership between an organization and foreign
company partner(s) in which both share resources and knowledge in
developing new products or building production facilities
 Joint venture A specific type of strategic alliance in which the partners agree
to form a separate, independent organization for some business purpose
 Foreign subsidiary Directly investing in a foreign country by setting up a
separate and independent production facility or office
• Free market economy An economic system in which resources are primarily owned and
controlled by the private sector
Planned economy An economic system in which economic decisions are planned by a
central government
Chap 5
• Workforce diversity The ways in which people in an organization are different from and
similar to one another
Surface-level diversity Easily perceived differences that may trigger certain stereotypes, but
that do not necessarily reflect the ways people think or feel
Deep-level diversity Differences in values, personality, and work preferences
• Personal Bias
 → Bias A tendency or preference toward a particular perspective or ideology
→ Prejudice A preconceived belief, opinion, or judgment toward a person or a group of
people
→ Stereotyping Judging a person based on a perception of a group to which that
person belongs
→ Discrimination When someone acts out their prejudicial attitudes toward people
who are the targets of their prejudice
• Glass ceiling The invisible barrier that separates women and minorities from top
management positions
• Mentoring A process whereby an experienced organizational member (a mentor) provides
advice and guidance to a less experienced member (a protégé)

Chap 6

• Social obligation When a firm engages in social actions because of its obligation to meet
certain economic and legal responsibilities
• Classical view The view that management’s only social responsibility is to maximize profits
• Socioeconomic view The view that management’s social responsibility goes beyond making
profits to include protecting and improving society’s welfare
• Social responsiveness When a firm engages in social actions in response to some popular
social need
• Social screening Applying social criteria (screens) to investment decisions
• Ego strength A personality measure of the strength of a person’s convictions
• Locus of control A personality attribute that measures the degree to which people believe
they control their own fate
• Values-based management The organization’s values guide employees in the way they do
their jobs
• Code of ethics A formal statement of an organization’s primary values and the ethical rules
it expects its employees to follow
• Whistle-blower Individual who raises ethical concerns or issues to others
• Social entrepreneur An individual or organization that seeks out opportunities to improve
society by using practical, innovative, and sustainable approaches

Chap 7
• Organizational change Any alteration of people, structure, or technology in an organization
• Change agent Someone who acts as a catalyst and assumes the responsibility for managing
the change process
• Structure Structural components and structural design
• Technology Work processes, methods, and equipment
• People Attitudes, expectations, perceptions, and behavior—individual and group
• organizational development (OD) Change methods that focus on people and the nature and
quality of interpersonal work relationships
 • role conflicts Work expectations that are hard to satisfy
• role overload Having more work to accomplish than time permits
• role ambiguity When role expectations are not clearly understood
• idea champion Individual who actively and enthusiastically supports new ideas, builds
support, overcomes resistance, and ensures that innovations are implemented

Chap 8

• planning Management function that involves setting goals, establishing strategies for
achieving those goals, and developing plans to integrate and coordinate work activities
• goals (objectives) Desired outcomes or targets
• plans Documents that outline how goals are going to be met
• Stated goals Official statements of what an organization says, and what it wants its various
stakeholders to believe, its goals are
Real goals Goals that an organization actually pursues, as defined by the actions of its
members
• strategic plans Plans that apply to the entire organization and establish the organization’s
overall goals
operational plans Plans that encompass a particular operational area of the organization
long-term plans Plans with a time frame beyond three years
short-term plans Plans covering one year or less
specific plans Plans that are clearly defined and leave no room for interpretation
directional plans Plans that are flexible and set out general guidelines
single-use plan A one-time plan specifically designed to meet the needs of a unique
situation
standing plans Ongoing plans that provide guidance for activities performed repeatedly
• Traditional goal-setting An approach to setting goals in which top managers set goals that
then flow down through the organization and become sub goals for each organizational area
• means-ends chain An integrated network of goals in which the accomplishment of goals at
one level serves as the means for achieving the goals, or ends, at the next level
• management by objectives (MBO) A process of setting mutually agreed upon goals and
using those goals to evaluate employee performance
Step 1: The organization’s overall objectives and strategies are formulated.
Step 2: Major objectives are allocated among divisional and departmental units.
Step 3: Unit managers collaboratively set specific objectives for their units with their
managers.
Step 4: Specic objectives are collaboratively set with all department members.
Step 5: Action plans, dening how objectives are to be achieved, are specied and agreed upon
by managers and employees.
Step 6: The action plans are implemented.
Step 7: Progress toward objectives is periodically reviewed, and feedback is provided.
Step 8: Successful achievement of objectives is reinforced by performance-based rewards.
 • formal planning department A group of planning specialists whose sole responsibility is
helping to write organizational plans
• environmental scanning Screening information to detect emerging trends
• competitor intelligence Gathering information about competitors that allows managers to
anticipate competitors’ actions rather than merely react to them

Chap 9

• strategic management What managers do to develop the organization’s strategies

• strategies The plans for how the organization will do what it’s in business to do, how it will
compete successfully, and how it will attract and satisfy its customers in order to achieve its
goals
• business model How a company is going to make money

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• Strategic management process
Step 1: Identifying the Organization’s Current Mission, Goals, and Strategies
Step 2: Doing an External Analysis
Opportunities Positive trends in the external environment
Threats Negative trends in the external environment
Step 3: Doing an Internal Analysis
Resources An organization’s assets that are used to develop, manufacture, and deliver
products to its customers
Capabilities An organization’s skills and abilities in doing the work activities needed in its
business
Core competencies The organization’s major valuecreating capabilities that determine
its competitive weapons
Strengths Any activities the organization does well or its unique resources
Weaknesses Activities the organization does not do well or resources it needs but does
not possess
Step 4: Formulating Strategies
Step 5: Implementing Strategies
 Step 6: Evaluating Results
• corporate strategy An organizational strategy that determines what businesses a company
is in or wants to be in, and what it wants to do with those businesses
• growth strategy A corporate strategy that’s used when an organization wants to expand the
number of markets served or products offered, either through its current business(es) or
through new business(es)
• stability strategy A corporate strategy in which an organization continues to do what it is
currently doing
• renewal strategy A corporate strategy designed to address declining performance
• BCG matrix A strategy tool that guides resource allocation decisions on the basis of market
share and growth rate of SBUs
• competitive strategy An organizational strategy for how an organization will compete in its
business(es)
• strategic business unit (SBU) The single independent businesses of an organization that
formulate their own competitive strategies
• competitive advantage What sets an organization apart; its distinctive edge
• functional strategy A strategy used by an organization’s various functional departments to
support the competitive strategy
• strategic leadership The ability to anticipate, envision, maintain flexibility, think
strategically, and work with others in the organization to initiate changes that will create a
viable and valuable future for the organization
• strategic flexibility The ability to recognize major external changes, to quickly commit
resources, and to recognize when a strategic decision was a mistake
• first mover An organization that’s first to bring a product innovation to the market or to use
a new process innovation
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