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Chapter 1-13 GMS200 Final Exam Notes

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Global Management Studies
GMS 200
Peter Rambert

Global Management GMS 200 Chapter 1  An Overview of the New Workplace - World of work is undergoing dynamic and challenging changes. Changes provide great opportunities along with tremendous uncertainty. - Such changes can be ascribed to the impact of important trends regarding: intellectual capital, globalization, technology, workforce diversity, ethics and careers. - Because of continuous change impacting the workplace, this raises a host of new career challenges. - Smart people commit their energies and intellect to continuous learning and personal development. - Companies with a future are committed to people. - Companies with a future offer inspirational leadership; reward and respect people and provide supportive work environments (corporate culture). - High performing companies gain extraordinary results from people. - Intellectual capital: the collective brainpower or shared knowledge of a workforce. - Knowledge worker: someone whose mind is a critical asset to employers. - Workforce diversity: describes differences among workers in gender, race, ethnicity, age, religion, sexual orientation and able-bodiedness. - Prejudice: the display of negative, irrational attitudes towards members of diverse populations. - Discrimination: actively denies minority members the full benefits of organizational membership. - Glass ceiling effect: an invisible barrier limiting career advancement of women and minorities. - Globalization: is the worldwide interdependence of resource flows, product markets and business competition. - Technology: no matter what business, technology is an indispensable part of everyday life. - Ethics: a set moral standard of what is good and bad in one’s behavior. - Careers: Charles Handy’s shamrock organization: * Leaf 1: core-workers (full time, with success and maintenance of critical skills they can advance and remain employed for a long time). * Leaf 2: contract workers (perform specific tasks that are required by an organization and sell skills to employers over time). * Leaf 3: part-time workers (hired only when needed and for as long as they are needed). - Portfolio worker: has an up-to-date skill that allows for a job and career mobility; be able to categorize into one of the shamrock leaves.  Organizations in the New Workplace - Organization: a collection of people working together to achieve a common purpose. • Organization as systems - Open system: transforms resource inputs from the environment into product outputs. • Organizational performance - If operations add value to the original cost of resource inputs, then (1) a business can earn a profit. (2) A non-profit organization can add wealth to society. - Productivity: the quantity and quality of work performance, with resource utilization considered. Two common performances measures: effectiveness and efficiency. - Performance effectiveness: an output measure of task or goal accomplishment. - Performance efficiency: an input measure of resource cost associated with goal accomplishment. • Changing nature of organizations - Renewed belief in human capital: involvement that rally knowledge, experience and commitment of its members. - Demise of command-and-control: bosses proving too slow; not suitable for today’s competitions. - Emphasis on teamwork: increasingly driven teamwork; each member’s talents. 1 Global Management GMS 200 - Pre-eminence of technology: new developments of technology change how organizations work. - Embrace of networking: networking for intense, real-time communication and coordination. - New workforce expectation: new generation of workers change the traditional expectations. - Concern for work-life balance: attention to often-conflicting demands of work and personal affairs. - Focus on speed: everything moves fast in today’s society. • Organizational Environment - General environment: consists of all external conditions that set the context for managerial- decision making (forces: economic, legal-political, technological, socio-cultural and natural environment conditions). - Internet censorship: the deliberate blockage and denial of public access to info posted on the internet. - Sustainable business: both meets the needs of consumers and protects the well-being of our natural environment. - Sustainable innovation: creates new products and production methods that have reduced environmental impact. • Stakeholders and the specific environment - Specific environment (task environment): includes the people and groups with whom an organization interacts. - Stakeholders: the persons, groups or institutions directly affected by an organization. - Important stakeholders: customers, suppliers, competitors, regulators, owners and employees. - Value creation: the creation of value for and satisfying needs of stakeholders. • Competitive advantage: allows an organization to deal with market and environmental forces better than its competitors. - Strategic positioning: occurs when an organization does different things or the same things in different ways from its major competitors. - Competitive advantage can be achieved through: cost, quality, delivery, flexibility. • Environmental uncertainty: a lack of complete information about the environment. - Two dimensions of environmental uncertainty: (1) degree of complexity: ( number of different factors in the environment) either simple or complex (2) rate of change: stable or dynamic • Organizational effectiveness: sustainable high performance in using resources to accomplish a mission. - Systems resource approach: looks at input side - Internal process approach: looks at transformation process - Goal approach: looks at output side - Strategic constituencies approach: looks at external environment  Managers in the New Workplace - Manager: A person, who supports, activates and is responsible for the work of others. - Peter Drucker describes managers’ jobs “to make work productive and workers effective.” - Henry Mintzberg says “no job is more vital to our society than that of a manager.” • Levels of managers: - Top managers: (CEO, president, vice president) guide the performance of the organization as whole or one of its major parts. They should be future-oriented, strategic thinkers capable of making effective decisions. - Middle managers: (division manager, regional manager, plant manager) oversee the work of large departments or divisions. - Team leader/first line manager: (department head, supervisor, team leader) report to middle managers and supervise non-managerial workers. 2 Global Management GMS 200 - Non-managerial workers. • Types of managers - Line managers: directly contribute to producing the organization’s goods or services. - Staff managers: use special technical expertise to advice and support line workers. - Functional managers: are responsible for one area such as finance, marketing, production, personnel, accounting or sales. - General Managers: are responsible for complex, multifunctional units. - Administrators: a manager in a public or non-profit organization. • Managerial performance - Accountability: the requirement to show performance results to a supervisor. - Effective managers: helps others achieve high performance and satisfaction at work. - Quality of work life (QWL): overall quality of human experience in workplace. • Changing nature of managerial work - Upside-down pyramid: operating works are at the top, serving customers, while managers are at the bottom supporting them. - Top managers’  managers  operating workers  customers and clients.  The Management Process • Functions of management - Management: process of planning, organizing, leading and controlling the use of resources to accomplish performance goals. - Planning: process of setting objectives and determining what should be done to accomplish them. - Organizing: process of assigning tasks, allocating resources and coordinating work activities. - Leading: process of arousing enthusiasm and inspiring efforts to achieve goals. - Controlling: process of measuring performance and taking action to ensure desired results. • Managerial roles and activities - Managerial roles: Henry Mintzberg’s 10 managerial roles: (1) interpersonal roles: how a manager interacts with other people - figurehead, leader, liaison (2) informational roles: how manager exchanges and processes information - monitor, disseminator, spokesperson (3) decisional roles: how manager uses information in decision-making - entrepreneur, disturbance handler, resource allocator, negotiator - Managerial activities *long hours, intense pace *fragmented and varied tasks, many communication media *accomplish work through interpersonal relationships • Managerial agendas and networks - Two activities that John Kotter considers critical to manager’s success: agenda setting and networking. - Agenda setting: develops action priorities for accomplishing goals and plans. - Networking: process of maintaining positive relationship with people who can help advance agendas. - Social capital: a capacity to get things done with the help of others. • Essential managerial skills - Learning: change in behavior those results from experience. - Lifelong learning: process of continuous learning from all our daily experiences and opportunities. - Skill: ability to translate knowledge into action that results in desired performance. - Robert L. Katz skills of managers in 3 categories: (1) conceptual: ability to think analytically and achieve integrative problem solving. 3 Global Management GMS 200 (2) Human: ability to work well with others; emotional intelligence. (3) Technical: ability to apply expertise and perform a special task with proficiency. • Developing managerial competencies - Managerial competency: a skill based capability for high performance in a management job. *communication, teamwork, self-management, critical thinking, leadership, professionalism. Chapter 2  Classical Management Approaches • Scientific management (Fredrick Taylor): emphasis careful selection and training or workers and supervisory support. - Motion study: science of reducing a task to its basic physical motion. - Frank and Lillian Gilbreths’ work led to later advances in areas of job simplification, work standards and incentive wage plans. • Administrative principles (Henri Fayol): he identified 14 principles managers should follow: *division of labor *authority *discipline *unity of command *unity of direction *subordination of individual interests *remuneration (fair pay) *centralization *scalar chain (line of authority) *order *equity *personnel tenure *initiative *spirit de corps (build harmony and cohesion) - Fayol identified 5 rules of management: (1) Foresight: to complete a plan of action for the future. (2) Organization: to provide and organize resources to apply the plan. (3) Command: to lead, select and evaluate workers to get the best work toward the plan. (4) Coordination: working together. (5) Control: make things happen according to plan. • Bureaucratic organization (Max Weber) - Bureaucracy: a rational and efficient form of organization founded on logic, order and legitimate authority. - Weber’s identified characteristics of bureaucratic organization: *clear division of labor *clear hierarchy of authority *formal rules and procedures *impersonality *careers based on merit  Behavioral Management Approaches: maintain that people are social and self-actualizing. • Mary Parker Follet’s organizations as communities: - Groups were mechanisms which diverse individuals could combine their talents for a greater good. - Making every employee an owner in a business would create feelings of collective responsibility (today: “employee ownership,” “profit sharing,” “gains sharing plans”). - Business problems involve a wide variety of factors that must be considered in a relationship to one another (today: “systems,” “contingency thinking”). - Businesses were service organization and private profits should always be considered vis-à-vis the public good (today: “managerial ethics,” “corporate social responsibility”). • The Hawthorne Studies: - Understanding human interactions in workplace. - Special importance given to group atmosphere and participative supervision. - Groups can have strong negative, as well as positive, influences on individual productivity. 4 Global Management GMS 200 - Hawthorne effect: tendency of persons singled out for special attention to perform as expected. - Human relations movement: suggested that managers using good human relations will achieve productivity. - Organizational behavior: study of individuals and groups in an organization. • Maslow’s theory of human needs - Need: physiological or psychological deficiency that a person wants to satisfy. - 2 underlying principles: (1) deficit principle: people act to satisfy deprived needs, those for which a satisfaction deficit exists. (2) Progression principle: five needs exist in a hierarchy of prepotency. - 5 levels of need: (1) self actualization: self fulfillment (2) esteem: respect, recognition, prestige, self-esteem (3) social: love, affection, belongingness (4) safety: security, protection, stability (5) physiological: basic needs for biological maintenance • McGregor’s theory X and theory Y - Managers should give more attention to the social and self actualizing needs of people at work. - Theory x: assumes people dislike work, lack ambition, act irresponsibly and prefer to be led. - Theory y: assumes people are willing to work, like responsibility, self-directed and creative. - Self-fulfilling prophecy: occurs when a person acts in ways that confirm another’s expectations. • Argyris’s theory of adult personality - Some practices, especially those influenced by the classical management approaches, are inconsistent with the mature adult personality. - If managers treat people positively and as responsible adults, they will achieve higher productivity.  Modern Management Foundations • Quantitative analysis and tools - Management science and operations research use quantitative analysis and applied math to solve problems. - Operation management: study of how organizations produce goods and services. • Organizations as systems - Systems: a collection of interrelated parts working together for a purpose. - Subsystem: smaller part of a larger system. • Contingency thinking: tries to match management practices with situational demands. • Quality management (Edward Deming) - Total quality management (TQM): managing with an organization-wide commitment to continuous improvement, quality or product and customer needs. - Continuous improvement: always searching for ways to improve. - ISO certification: indicates agreement with a thorough set of international quality standards. • Knowledge management and organizational learning - Knowledge management: process of using intellectual capital for competitive advantage. - Learning organization (Peter Senge): continuously changes and improves, using the lessons of experience. - Characteristics of following Peter Senge learning organization: (1) mental models: set aside old ways of thinking (2) personal mastery: self aware and open to others (3) systems thinking: learns how whole organization works (4) shared vision: understands and agrees to action plan (5) team learning: works together to accomplish a plan 5 Global Management GMS 200 - Google principles of managing for knowledge development and organizational learning: (1) hire by committee (5) seek consensus (2) cater to every need (6) use data (3) make coordination easy (7) don’t be evil (4) encourage creativity • Evidence based management (Peters and Waterman) - High-performance organization: consistently achieves excellence while creating high quality workplace. - Many organizations are oriented in: people, team, information, achievement, and learning. - Evidence-based management: involves making decisions based on hard facts about what really works. • 21 century leadership - Global strategist - Mastery of technology - Inspiring leader - Model of ethical behavior Chapter 3  Management and Globalization - Global economy: resources, markets and competition are worldwide in scope. • Global management: managing operations in more than one country. - Global managers: culturally aware and informed o international affairs. • Why companies go global - Profits, customers, suppliers, capital (financial resources) and labor • How companies go global - Global business: conducts commercial transactions across national boundaries. - Market entry strategies: global sourcing, exporting/importing, licensing/franchising - Direct investment strategies: joint ventures, foreign subsidiaries - Global sourcing: things are purchased around the world for local use. - Exporting: local products sold abroad. - Importing: selling products which came from abroad. - Licensing: local firm pays a fee to foreign firm for right to produce or sell its products. - Franchising: fee paid to foreign firm to locally operate using its name/products/brand. - Foreign direct investment: building, buying ownership of a business in another country. - Insourcing: job creation through foreign direct investment. - Joint venture: operates in a foreign country through co-ownership by foreign and local partners. - Global strategic alliance: partnership in which foreign and domestic firms share resources and knowledge for mutual gains. - Foreign subsidiary: local operation completely owned by foreign firm. - Greenfield investment: builds an entirely new operation in foreign country. • Global business environments - Political risk: potential loss in value of foreign investment due to political changes in host country. - Political-risk analysis: tries to forecast political disruptions that can threaten the value of a foreign investment. - World trade organization: member nations agree to negotiate and resolve disputes about tariffs and trade restrictions. - Most favored nation status: gives a trading partner most favorable treatment for imports and exports. - Tariffs: taxes governments charge on imports from abroad. 6 Global Management GMS 200 - Protectionism: a call for tariffs and favorable treatment to protect domestic firms from foreign competition. - NAFTA: north American free trade agreement linking Canada, US and Mexico in an economic alliance. - European Union: a political and economic alliance of European countries.  Global Business - Global corporations (MNC): multinational business with extensive operations in more than one foreign country. • Types of global businesses - Transnational Corporation: an MNC that operates worldwide on a boundaries basis. • Pros and cons of global corporations - Host country issues - Home country issues • Ethics challenges for global managers - Corruption: illegal practices to further one’s business interests. - Child labor: full time employment of children for adult jobs. - Sweatshops: employ work for low pay, long hours and poor working conditions. - Sustainable development: meets the needs of present without hurting future generations.  Culture and Global Diversity - Culture shock: how someone feels when in an unfamiliar culture. - Ethnocentrism: tendency to consider one’s culture superior to others. - Cultural intelligence: ability to accept and adapt to new cultures. • Silent languages of culture - Low context cultures: emphasize communication via spoken or written words. - High context cultures: rely on non-verbal and situational cues. - Monochronic cultures: people tend to do one thing at a time. - Polychronic cultures: doing more than one thing at a time. - Proxemics: how people use space to communicate. • Values and national cultures - Ecological fallacy: assumes a culture value applies equally to all the culture members. - Power distance: degree to which a society accepts unequal distribution of power. - Individualism-collectivism: degree to which a society emphasizes individuals and their self- interests. - Uncertainty avoidance: degree to which a society tolerates risks and uncertainty. - Masculinity-femininity: degree to which society values assertiveness and materialism. - Time orientation: degree to which a society emphasizes short term or long term goals.  Global Management Learning - Comparative management: studies how management practices differ among countries and cultures. • Global management attitudes and learning - Ethnocentric attitude: believe the best approaches are found at home and tightly control foreign operations. - Polycentric attitude: respect local knowledge and allow foreign operations to run with substantial freedom. - Geocentric attitude: high in cultural intelligence and take a collaborative approach to global management practices. 7 Global Management GMS 200 Chapter 5  The Nature of Entrepreneurship - Success in a highly competitive business environment depends on entrepreneurship. - Entrepreneurship: risk-taking behavior that results in new opportunities. - Entrepreneur: willing to pursue opportunities in situations others view as problems or threats. • Characteristics or entrepreneurs - Internal locus of control: believing they control their own destiny; self directed. - High energy level: persistent, hardworking and willing to exert extraordinary efforts to succeed. - High need for achievement: motivated to accomplish challenging goals; they thrive on performance feedback. - Tolerance for ambiguity: risk-takers; tolerates situations with high degree of uncertainty. - Self confidence: feel competent, believe in them and are willing to make decisions. - Passion and action orientation: try to act ahead of problems; do not like wasting valuable time. - Self-reliance and desire for independence: they want to be their own boss and not work for others. - Flexibility: are willing to change according to situations as they arise. • Diversity and entrepreneurship - Necessity-based entrepreneurship: takes place because other employment options do not exist. - Entrepreneurship offers women and visible minorities’ opportunities to strike out on their own and gain economic independence, providing a pathway for career success that may be blocked otherwise.  Entrepreneurship and Small Businesses - Small business: has fewer than 100 employees, is independently owned and operated and doesn’t dominate its industry. - Entrepreneurs may wish to own a small business: *to be their own boss *work for a family owned business *seek to fulfill a dream - Usually they may begin by buying a franchise; where a business owner sells to another the right to operate the same business in another location. • Family businesses - Family business: is owned and controlled by members of a family. - Family business feud: occurs when family members have major disagreements over how the business should run. - Succession problem: the issue of who will run the business when the current head leaves. - Succession plan: describes how the leadership transition and related financial matters will be handled.  Why So Many Businesses Fail - Lack of experience: not having a lot of knowledge on how to run a business in the chosen market or area. - Lack of expertise: not having expertise in the essentials of business operations, including financing, purchasing, selling and production.  Choosing the Form of Ownership - Sole proprietorship: where an individual pursues a profit. - Partnership: where two or more people agree to contribute resources to start and operate a business together. - Corporation: a legal entity that exists separately from its owners. - Limited liability Corporation: a hybrid business form combining advantage of the sole proprietorship, partnership and corporation.  Financing the New Venture 8 Global Management GMS 200 - Two major ways an entrepreneur can obtain outside financing for a new venture: *Debt financing: involves borrowing money that must be repaid overtime with interest. *Equity financing: involves exchanging ownership shares for outside investment monies. -usually obtained from venture capitalists, companies and individuals that make investments in new ventures in return for an equity stake in the business. -initial public offering (IPO): an initial setting of shares of stock to the public at large. -angel investor: a wealthy individual willing to invest in a new venture in return for equity in a new venture. Chapter 6  Why and how managers plan - Planning: process of setting objectives and determining how to accomplish them. • Planning process - Objectives: specific results that one wishes to achieve. - Plan: statement of intended mean for accomplishing objectives. (1) define your objective (2) determine where you stand vis-a-vis objectives (3) develop premises regarding future conditions (4) analyze alternatives and make a plan (5) implement plan and evaluate results • Benefits of planning - Improves focus and flexibility - Improves action orientation (competency trap: being carried along by flow of events) - Improves coordination and control  Types of Plans Used by Managers - Long range and short range plans - Strategic plan: identifies long term directions for organization - Tactical plan: helps implement parts or all of a strategic plan - Functional plan: different operations within organization will advance overall strategy *production, financial, facilities, logistics, marketing, human resource - Operational plan: identifies short term activities to implement strategic plan - Budget: plan that commits resources to a project or activities. - Zero based budget: allocates resources as if each budget were brand new  Planning Tools and Techniques - Forecasting: attempts to predict future - Contingency planning: identifies alternative actions to take if things go wrong. - Scenario planning: identifies future scenarios and makes plans to deal with each. - Bench marking: uses external and internal comparisons to plan for future improvements. - Best practices: things done to lead to superior performance.  Implementing Plans to Achieve Results - Goal setting (Rodgers and Kitz); Goals are SMART *specific, measurable, attainable, referred to, timely - Goal alignment *hierarchy of goals: lower level goals are means to accomplishing higher level goals. - Management by objectives: (MBQ) process of joint objective-setting between a superior and subordinate. - Improvement objectives: intentions for specific performance improvements. - Participatory planning: includes persons who will be affected by plans and/or those who will implement them. 9 Global Management GMS 200 Chapter 7  Strategic Management • Competitive advantage - Competitive advantage: the ability to do something so well that one outperforms competitors. - Typical sources of competitive advantage: *cost and quality: where strategy drives an emphasis on operating efficiency and product or service quality. *knowledge and speed: where strategy drives an emphasis on innovation and speed of delivery to market for new ideas. *barriers to entry: where strategy drives an emphasis on creating a market stronghold that is protected from entry by others. *financial resources: where strategy drives an emphasis on investments or loss absorption that competitors can’t match. - Sustainable competitive advantage: the ability to outperform rivals in ways that are difficult or costly to imitate.  Strategy and Strategic Intent - Strategy: a comprehensive plan guiding resource allocation to achieve long term organization goals. - Strategic intent: focuses and applies organizational energies on a unifying and compelling goal. • Levels of strategy - Corporate level strategy: sets long term direction for the total enterprise. - Business level strategy: identifies how a division or strategic business unit will compete in its product or service domain. - Functional strategy: guides activities within one specific area of operations. • The strategic management process - Strategic management: the process of formulating and implementing strategies. - Strategic analysis: process of analyzing the organization, the environment and the organization`s competitive position and current strategies. - Strategy formulation: the process of crafting strategies to guide the allocation of resources. - Strategy implementation: process of putting strategies into action.  Essentials of Strategic Analysis • Analysis of mission, values and objectives - Mission and stakeholders *stakeholders: individuals and groups directly affected by the organization and its strategic accomplishments. *strategic constituencies’ analysis: assess interests of stakeholders and how well the organization is responding to them. - Core values *core values: broad beliefs about what is or is not appropriate behavior. *organizational culture: the predominant value system for the organization as a whole. - Objectives *operating objectives: specific results that organizations try to accomplish. *profitability: operating with a net profit. *financial health: acquiring capital; earning positive returns. *cost efficiency: using resources well to operate at low cost. *customer service: meeting customer needs and maintaining loyalty. *product quality: producing high quality goods or services. *market share: gaining a specific share of possible customers. *human talent: recruiting and maintaining a high quality workforce. 10 Global Management GMS 200 *innovation: developing new products and processes. *social responsibility: making a positive contribution to society. • SWOT analysis of organization and environment - SWOT analysis: examines organizational strengths and weaknesses and environmental opportunities and threats. - Organizational strengths and weaknesses *a major goal in assessing strengths is to identify core competencies. *core competencies: a special strength that gives an organization a competitive advantage. *the goal in assessing weaknesses is to identify things that inhibit performance and hold the organization back from fully accomplishing its objectives. - Environmental opportunities and threats • Analysis of rivalry and industry attractiveness - Porter`s five forces model (1) Industry competition: the intensity of ri
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