Principles of Management

Midterm Exam Revision

Essay Questions

 Chapter 1: Managing Today

o Organization: A deliberate collection of people brought together to accomplish some specific

purpose

o Common Characteristics of Organizations:

1. Goals, which express the distinct purpose of a particular organization.
2. People, who make decisions and engage in work activities to reach the organization’s goals.
3. A deliberate structure, which systematically defines and limits its members’ behavior.

o Management:
The process of getting things done effectively and efficiently, with and through people.

o Effectiveness: Doing the right things

o Efficiency: Doing things right

 Which one is more important and helps to adapt the environmental change?

 Is the Manager’s Job Universal?

o Four Functions Approach:

1. Planning includes defining goals, establishing strategy, and developing plans to coordinate
activities.
2. Organizing includes determining which tasks need to be done and by whom, how tasks are
to be grouped, who reports to whom, and who will make decisions.
3. Leading includes motivating employees, selecting the most effective communication
channel, and resolving conflicts.
4. Controlling includes monitoring performance, comparing it with goals, and correcting any
significant deviations.

o Management Roles Approach:

1. Interpersonal relationships: Figurehead, leader, and liaison.
2. Informational transfer: Monitor, disseminator, and spokesperson.
3. Decision-making: Entrepreneur, disturbance handler, resource allocator, and negotiator.
o Another way to describe what managers do is by looking at the skills they need for
managing. Management researcher Robert L. Katz and others describe four critical skills:
1. Conceptual skills: Analyzing and diagnosing complex situations to see how things fit
together and to facilitate making good decisions.
2. Interpersonal skills: Working well with other people both individually and in groups by
communicating, motivating, mentoring, and delegating.
3. Technical skills: Job-specific knowledge, expertise, and techniques needed to perform work
tasks. (For top-level managers − knowledge of the industry and a general understanding of
the organization’s processes and products; For middle- and lower-level managers −
specialized knowledge required in the areas where they work—finance, human resources,
marketing, computer systems, manufacturing, information technology).
4. Political skills: Building a power base and establishing the right connections so they can get
needed resources for their groups.

o What Factors are Reshaping and Redefining Management?

Managers today are dealing with changing workplaces, a changing workforce, global economic
and political uncertainties, and changing technology. Distributed labor companies are changing
the face of temporary work. Some 30-45 percent of the world’s work force works from home or
are virtual employees. More and more businesses are relying on apps and mobile-enhanced
Websites to run their businesses.
Managers everywhere are likely to have to manage in changing circumstances, which means that
how managers manage is changing. We will now look at four specific changes that are
increasingly important to organizations and managers everywhere: customers, innovation, social
media, and sustainability.

o Sustainability: A company’s ability to achieve its business goals and increase long-term
shareholder value by integrating economic, environmental, and social opportunities into its
business strategies.

 Chapter 2: The Manager as Decision Maker

o The Decision-Making Process

o Problem: A discrepancy between an existing and a desired state of affairs.

o How do managers become aware of such a discrepancy? They have to compare the current
state of affairs with some standard, which can be past performance, previously set goals, or
the performance of another unit within the organization or in another organization. If, for
example, a car is no longer worth repairing, then the best decision may be to purchase
another car.

o Rational decision making: Choices that are consistent and value-maximizing within specified
constraints.

o Intuitive Decision Making:

o Types of Problems:
1. Structured problem: Straightforward, familiar, easily defined.
2. Unstructured problem: New or unusual for which information is ambiguous or
incomplete.

o Types of Decisions:
1. Programmed: Repetitive decisions that can be handled using a routine approach.
2. Nonprogrammed: A unique and nonrecurring decision that requires a custom-made
solution.

o Groupthink: When a group exerts extensive pressure on an individual to withhold his or her
different views in order to appear to be in agreement.

o Differentiate between individual and group work:

Individual:
1. Faster decision making
2. More efficient use of work hours
Group:
1. More accurate decisions
2. More creative
3. More heterogeneous representation
4. Greater acceptance of final solution

o Brainstorming: Is an idea-generating process that encourages any and all alternatives while
withholding any criticism of those alternatives. The group leader states the problem clearly
and members then “freewheel” as many alternatives as they can in a given time and all
alternatives are recorded for later discussion.

o Design thinking: Approaching management problems as designers approach design

problems.

 Chapter 6: Planning and Goal Setting

Focus on all the strategies in chapter 6 and the following:
o Managers should plan for more than one reason, discuss that.

Managers should plan for at least four reasons:

1. Planning establishes coordinated effort. It gives direction to both managers and
nonmanagerial employees so each knows what he or she must contribute—individually
 and as a group—to reach the organization’s goals. Planning stimulates intra- and inter-
department coordination of activities, which fosters teamwork and cooperation.
2. Planning reduces uncertainty. It forces managers to look ahead, anticipate change,
consider the impact of change, and develop appropriate responses. It also clarifies the
consequences of the actions managers might take in response to change.
3. Planning reduces overlapping and wasteful activities. Coordination before the fact is
likely to uncover waste and redundancy.
4. Planning establishes the goals or standards that facilitate managerial control. To
ensure that the plans are carried out and the goals are met.

o Competitive strategy: A strategy for how an organization will compete in its business.

1.
Cost leadership strategy
Having the lowest costs in
its industry and aimed at
broad market.
• Highly efficient.
• Overhead kept to a
minimum.
• Does everything it can to
cut costs.
• Product must be
perceived as comparable
in quality to that offered
by rivals or at least
acceptable to buyers.
4.
2. 3.
Stuck in the
Differentiation strategy Focus strategy
middle
Offering unique products A cost advantage What happens if an
that are widely valued by (cost focus) or a organization can’t
customers and aimed at differentiation develop a cost or
broad market. advantage differentiation
• Product differences: (differentiation advantage—bad
exceptionally high focus) in a narrow place to be.
quality, extraordinary segment or niche
service, innovative (which can be
design, technological based on product
capability, or an variety, customer
unusually positive brand type, distribution
image. channel, or
geographical
location).

 Chapter 7: Structuring and Designing Organizations

o Types of Departmentalization:

Functional Groups employees based on work performed (e.g., engineering,

 accounting, information systems, human resources)
Product Groups employees based on major product areas in the
corporation (e.g., women’s footwear, men’s footwear, and apparel
and accessories)
Customer Groups employees based on customers’ problems and needs (e.g.,
wholesale, retail, government)
Geographic Groups employees based on location served (e.g., North, South,
Midwest, East)
Process Groups employees based on the basis of work or customer flow
(e.g., testing, payment)

o Types of Power:

Coercive power Power based on fear.

Reward power Power based on the ability to distribute something that others
value.
Legitimate power Power based on one’s position in the formal hierarchy.
Expert power Power based on one’s expertise, special skill, or knowledge.
Referent power Power based on identification with a person who has desirable
resources or personal traits.

 Chapter 8: Managing Human Resources and Diversity

o Downsizing Options:

OPTION DESCRIPTION
Firing Permanent involuntary termination
Temporary involuntary termination; may last only a few
Layoffs
days or extend to years
 Not filling openings created by voluntary resignations
Attrition
or normal retirements

Moving employees either laterally or downward; usually

Transfers does not reduce costs but can reduce intraorganizational
supply–demand imbalances
Having employees work fewer hours per week, share
Reduced workweeks jobs, or through furloughs perform their jobs on a parttime
basis

Providing incentives to older and more-senior employees

Early retirements
for retiring before their normal retirement date

Having employees, typically two part-timers, share one

Job sharing
full-time position

o Selecting Job Applicants: