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FINAL exam review: all chapter.docx

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Dave Swanston

Midterm # 1 Review Management: art of getting things done through people Managers: responsible for making decisions under conditions of uncertainty about allocation of scarce resources towards achieving organization’s strategic objectives 5 main functions • Planning: identify goals, allocate responsibility, compare results against goals and revise plan accordingly • Organizing: process of deciding who within organization will perform tasks, who reports to whom, coordinate activities • Controlling: intervening when goals not met, take corrective action, creating incentive • Leading: process of motivating, influencing, direction others in organization, articulating strategic vision o Developing employees : hiring, training, mentoring, rewarding employees o Human Capital: knowledge, skills, and capabilities embedded in individuals Types of Managers • General: lead their division, overall strategic visions for corp • Functional: confined to one organization activity (e.g. accounting, marketing) • Frontline: manage employees who aren’t themselves (lowest level of hierarchy) CEO: leads entire firm, formulate strategies to span business, help develop human capital, manage relationships w/ ppl of own company/shareholders, overall financing of corporation Interpersonal Roles : interaction w/ ppl inside and outside firm Figureheads (greet visitors, serves as spokespeople) , Leader, Liason (connect with ppl outside their unit) Informational Roles: scan environment outside/inside firm, regularly inform staff about company’s direction, deliver specific information to individuals and groups located outside of department Decisional Roles: deals w/ real action; translates ppl and info into processes • Entrepreneur: managers make sure firm innovates, changes, develop and adopt • Disturbance Handler: address unanticipated problems as arise • Resource Allocator: allocate scare resources • Negotiator Managerial Competencies • Managerial skills: conceptual(see big picture), technical(enable managers to perform specific activities), human (communicate) • Managerial Values: enacted(guide behaviour), enspoused( what ppl say important to them), shared values, ethical values • Managerial Motivation: desire to compete for management jobs, exercise power, be distinct, take action Stakeholders • Inner circle (transact w/ firm on regular basis and have stake in operations) e.g. employee • Outer circle(do not transact on regular basis but still have stake in operations)e.g. public, gov Management Theories: Classical Approaches: assumption ppl are rational Scientific Management Theory: • job specialization and division of labour(employees specialize in different tasks over time) by Adam Smith, F.W Taylor uses adam smith’s job specialization theory to study relationship b/w ppl and tasks to redesign work process to increase efficiency, taylor say ignore human side of firm • 4 principles : study workers perform and gather info, create new methods of performing tasks into rules and operating procedures, carefully select workers so they possess skills that match needs of task, establish acceptable level of performance for task and pay system for reward • Problems : pay may increase but so does work • Next, Gilbreths (Lillian and Frank) : time and motion study o Time employees, separate task action into competent movement  max efficiency by increase savings of time and effort Fayol’s Administrative Principles: study how to create organizational structure that leads to high efficiency and effectiveness Weber’s Bureaucratic Organization: manager’s formal authority derives from position they hold in firm, authority exercised effectively in form – hierarchy important  power = authority, performance affects authority Behavioural Management Theory(assumption ppl are social and self-actualizing): study of how managers should behave to motivate employees and encourage them to perform high levels and be committed to achieve goals • Mary Parker Follett: knowledge and expertise decide who lead • Hawthorne Studies and Human Relations: understand feelings of workers and managers and how it affects performance • Theory X: negative assumption about employee – lead to manager supervising closely • Theory Y:positive assumption about employee-manager’s task to create encouraging environment and provide opportunities for initiative, imagination • Maslow’s Theory of Hierarchy: basic, safety, belonging, self-esteem and self- actualization Organizational Environment Theory: set of forces and conditions that operate beyond organization’s boundaries – manager’s ability to acquire/use resources • Open system: system that takes in resources from external environ and converts into g/s • Closed system: self-contained – not affected by external environ • Entropy: tendency of system to dissolve and disintegrate b/s loses ability to control self • Synergy: performance gain that results when individuals and dpt coordinate their actions • Contingency Theory: control system and organizational structure depend on external environ in which firm operates Management Science Theory: numerical data to allocate resources, techniques to operate, input = conversion=output  use quantitative technique to help managers use firm’s resources Big Picture: actions that ensure organization develops and grows market for g/s which create value behalf of stakeholders Business 4 fundamentals: assets, labour, capital and managerial acumen(leadership); 3 C’s – capabilities, competencies and overall capacity; competitive advantage – advantage firm has over its competitors (economies of scale, profit margin) Commercial Endeavors: market firm serves, g/s it offers, needs it satisfies Organizational Efficiency and Structure: reflection of business activities that occur in firm Profit & Profitability: profit : TR-TC=P (bottom line result), improving profitability: develop new g/s opp, meet needs of emerging markets, etc Value Proposition = service benefits + product benefits+ brand benefits + cost benefits + emotional benefits  benefits purchaser realizes IN EXCHANGE OF PRICE (product+cost) Midterm #2 Liability: responsibility to pay all normal debts Sole Proprietorship: one person owning/operating w/o forming corp. • Adv: easy to start/end, be own boss, pride, keep company profit, no special tax, less regulation • Disadv: unlimited liab, management difficulties, time commitment, limited growth/lifespan Partnership: 2 or more co-owners • General: owners share operating business and assume liabilities  unlimited liab, actively involved • Limited: partnered w/ general partners  invest money but do not manage or take losses beyond investment • Adv: more resources, more knowledge skills, longer survival, shared risk • Disadv: unlimited liab, divide profits, hard to terminate Corporations: legal entity – acts/liability separate from owners • Public Corp: issue stock to public • Private Corp: not to public, limited to 50 or less shareholders • Other types: professional, non resident , not for profit • Adv: limited liability, size, perpetual ,ease of ownership change • Disadv: paperwork, double tax, initial cost, difficulty to terminate • Corporate governance: how firm interacts w/ stakeholders • Articles of incorporation: authorization for company to use corporate format Franchising: arrangement where someone w/ business model sells rights to use business name and sell g/s • Franchisor : product developer ; Frachisee: person who buys franchise • Adv: assistance, personal ownership, recognized name , low fail rate • Disadv: Shared profit, regulations, coattails effect ( if one franchise location fails , then entire franchise rep ruined) Corporate Expansion • Merger: 2 firms combine to make one , Acquisition : takeover o Vertical: input + business , join 2 related businesses o Horizontal: 2 firms same industry , competitors join o Conglomerate: join unrelated industries Leveraged Buyout : employees try to buy out stockholders of company to become owners thru borrowed funds Home Based Business, Ecommerce franchising, franchising in international market Co-operative: owned by members and customers who pay annual fee and share profits • Meets common needs of members instead of trying maximize profit Comparative Advantage: ability of country to produce @ lower cost than other countries Foreign Direct Investment: country makes investment into business within another country Economic Model: law of supply and demand, allowance of ownership, gov involve Gov Involvement • Open system: no gov involved • Controlled system: gov controls • Mixed system: both open and controlled , some gov involve Economic Activity = expense + savings +invest+ credit Bank of Canada: manage monetary policies/interest rates GDP: total market value of g/s nation produces Inflation: rise in level of g/s within economy over time Purchasing Power Parity: relative cost of living and inflation rates of each country and adjusts value of economy accordingly Hostile Takeover: attempt take over another company whose management unwilling Protectionism: protect domestic industries by restricting foreign competition Ponzi Scheme: fraud – existing investors paid by new investors Triple Yes Rule: accepted standards? Published decision? Family/friend support? Whistleblowing: snitching CSR: purpose of firm to create shared value by strategically integrating into actions a partnership mentality w/ society where objectives of both parties met Zones of Decision Making : red (clear unethical), grey (unclear unethical), Green (unclear ethical), Blue (clear ethical) CSR Pyramid: strategic partnering (partner w/ community services) , operational initiatives (being as ethical as company in operations), philanthropy (donations/welfare of others) , personal projects (company’s personal initiatives for greater good) Ethical Wheel: individual, societal, business culture, professional Midterm #3 Fundamental Principles: strategic direction and market position , execute plan Core Elements for Assessing Strategy: 1. Purpose a. Mission : purpose of existence b. Vision: forward thinking 2. Markets a. Harvesting : reducing focus in certain market given perceived weak future growth 3. G/s : review current & potential new g/s 4. Resources: allocation of resources 5. Business System Configuration : modifying infrastructure and ensure success 6. Responsibility and Accountability: see who’s responsible Strategic Plan • Revisit purpose • Internal/external analysis o Porter’s 5 forces(industry), swot analysis(competitor & company), 3 c’s (company) • Assess view of world : opportunities and threats • Choose direction  market position, resources, etc • Implement strategy PESTEL: political, economic, societal, technological, environmental, legal Porter’s 5 forces: rivalry, entrants, substitutes, control/ power of suppliers and buyers SWOT Analysis: strengths, weakness, opportunities and threats 3 Cs: competencies, capabilities and capacity Strategy Development • Corporate level - what intend to accomplish • Business level- how to accomplish • Operating level – immediate tactics Not for Profit • Mission Balance: economic goals vs. social • Vitality: sustain membership and donor base • Collective Entrepreneurship: community involvement where nfp located • Rootedness: NFP interwoven into community, strengthen partnerships • Operational Effectiveness: g/s priced to ensure accessible to target audience Organization Architecture: totality of firm’s organization, division of organization into subunits, establishing mechanisms to coordinate activities of subunits • Control systems : measure performance of subunit • Incentive system: encourage desired employee behaviour • Organizational culture: values shared among employees Designing Structure • Centralization : most decision making authority at high level in mgm hierarchy o Helps coordination, consistent decisions, avoid duplication of activities • Decentralization: most decision making authority in lower level in mgm hierarchy o Top mgm not overburdened, decentralization allows for freedom and control over one’s own work, more flexibility, fast response to environmental changes Layer in Hierarchy • Tall (usually expanding firms) : many layers and narrow spans of control (cons: low efficiency and effectiveness, information can get “accidentally” get distorted as passes thru layers, expensive – salaries of multiple managers) • Flat : few layers and wide span of control (usually new firm) Horizontal Differentiation • Functional structure: division of labour within firm o Multidivisional structure: firm divided into different division, each responsible for distinct business area o Geographic structure: divided into different units on basis of geography o Matrix structure: 2 overlapping hierarchies Knowledge Network: organization structure based on informal contacts Human Resources Needs 1. Prepare HR inventory of employees (age, name, education,etc) 2. Prepare Job Analysis a. Job analysis : what done by employees who hold the job title b. Job description : types of responsibilities, type of work / objectives of job c. Job specifications: summary of min qualifications of workers 3. Assess future HR demand (training programs, etc) 4. Assess HR supply 5. Establish strategic plan (recruitment, training, development, etc) Training and Developing Employees : Employees orientation (introduce to firm, values, policies, etc), on job training (immediately begin task and learn by doing) , apprentice program, off job training, online training, vestibule training (employees taught on similar equipment used on job), job simulation(duplicate job conditions and tasks before attempting on job) Management Development: on job coaching (assist lower level manager by teaching skills and providing directions), understudy position (assistant), job rotations (learn about diff functions of firm), off job courses and training (periodic school and seminars to help develop) Enabling: giving workers education and tools needed to make decision Networking: establishing/maintaining contacts w/ key managers in own organization and others Mentor: experienced employee who supervises, coaches, guides lower level employees Performance Appraisal: evaluating performance level of employees 1. Establish performance standards 2. Communicate standards 3. Evaluating performance 4. Discuss results 5. Take corrective action 6. Use results to make decision Pay equity: equal pay for work of equal value Flextime Plans: give employees freedom to choose when to work as long as work required hours Compressed Workweek: allow employee to work required hours in fewer days Telework: work away from normal play of business Job sharing plans: 2 part time employees share one full time job Competency Perspective: traits acquired thru learning Behaviour Perspective: leadership behaviour result in greater commitment on part of subordinates = higher performance • People oriented : leader has mutual trust and respect for subordinates • Task oriented : leader clarifies rules, dueties and procedures and to performance capacity Contingency Perspective: (fiedler’s theory) leadership style cannot be changed and contingent upon leader member relations and position power. Weakness in theory : too simplistic, classification too broad Path-Goal Theory: assume leadership style can be changed. Limitations of theory : assume leader can adopt one style at a time, norrow definition of leadership effectiveness, other factors ignored Leadership Styles • Directive : direct workers, help clarify paths • Supportive : help increase subordinate confidence • Participative: clarify needs of employees and change rewards to improve performance • Achievement oriented: motivate by setting high goals and expressing confidence in them Transformational Leadership: strategic and organizational change agents, create new directions Midterm #4 Finance : business that acquires funds for firm and manages those funds within firm Financial Management: job of managing a firm’s resources so it can meet goal and objectives Financial Managers: managers who make recommendations to top executives regarding strategies for improving the financial strength of a firm Financial Planning: key responsibility of financial manager in a business o Forecasting both short term and long term financial needs • Short Term Forecast: predicts revenues, costs, and expenses for a period of one year or less • Cash flow forecast: forecast that predicts the cash inflows and outflows in future periods, usually months or quarters • Long Term Forecast: predicts revenues, costs, expenses for a period longer than one year, and sometimes as far as 5 or 10 years into future Budget: financial plan sets forth management’s expectations and on basis of those expectations, allocates use of specific resources throughout firm • Operating Budget: ties together all of a firm’s other budgets; it = projection of dollar allocations to various costs and expenses needed to run or operate the business, given projected revenues • Capital Budget: highlights fi
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