Management and ORG Study Guide

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1  Management and Organizations 8 Multiple Choice on Course Terms (8 pts) Specific Porter’s 5 Forces Strategy (graph) difference between functional and divisional 6 Short Answer - 1 or 2 sentences on Course Terms (21 pts) pros and cons ** definitions (espoused values vs. enacted values) 3 Short Essay - Short paragraphs 4 or 5 sentences on Case Studies (26 pts) Big Picture strategy , structure , culture ex: this company is in similar situation as netflix, big spaceship, or google. given their circumstances, what do you recommend they do, what kind of steps should they take, and why? 2 on-case 1 sample case Don’t regurgitate facts of case, pick up concepts and have more critical thinking (what structure or strategy should they adopt? How would it affect them?) FRAMEWORKS FOR UNDERSTANDING ORGANIZATIONS ● Organizational Research ○ Scientific theory allows you to predict (and control) future behavior or outcomes ○ Correlation vs. Causation ■ Correlation: Association between two variables; the extent to which they co-occur ■ Correlation does not mean Causation ■ Evidence-Based Management: Basing managerial decisions and organizational practices on empirical data and scientific evidence ● Outside of company (Customer surveys, market reports) ● Inside of company (employee surveys, quality control of production) ● Does not recognize Intuition, gut feelings, common sense ○ Open Systems Model ■ Organization: Social collective with assigned tasks and roles that are coordinated to achieve a purpose or set of goals (mission) ■ Creates system of interdependent components/pieces ● Change one component and it affects other components ■ “Open” System Model: Interacts with environment in which it operates ■ Inputs ● Environment: External Stakeholders (competitors, clients/customers), Broad Envmt (Ntnl/Global cultures, economic conditions, business trends, gov) ● Internal Resources: Employees (skills, demographics), Financial/Capital (Cash flow, liquid assets, technology), Reputation ● History: Past decisions, Past performance, Crises ○ Source of collective expertise ○ Organizational inertia: Organizations tend to continue doing what they’ve done in the past; making major changes is difficult ○ How long does it take to realize you need to change? ■ Organizational Components 2  ● Transform inputs to outputs; MAIN FOCUS ● Strategy ○ Goals/Missions/Competitive Advantage ○ Decisions about how to use inputs to accomplish goals ■ Outputs ● Individual-level effectiveness (Turnover, performance, worklife) ● Group-level effectiveness (Performance, efficiency, cohesion) ● Organizational-level effectiveness (Quantifiable fin’l performance, innovation, mission fulfillment, efficient utilization of resources) ■ Feedback Loops: The return to the input of part of the output; filtering; Occurs at every stage along Open Systems Model ■ Congruence Theory : Organizational effectiveness is driven in large part by the congruence/fit among elements of system (Incentive systems, leadership needs); Alignment ● Congruence: Degree to which needs, demands, goals, objectives, and/or structures of one component are consistent w/ needs, demands, goals, objectives, and/or structures of another ● ORGANIZATIONAL STRATEGY ○ Mission → Objectives/Goals → Strategy (w/ Strategic Analysis) ○ Strategy : Central, integrated, externally focused concept of how firm will achieve its objectives; Helps how to reach competitive advantage ○ 5 Elements of Strategy ■ Arenas: Where will we be active and with how much emphasis? ● Product categories, Market segments, Geographic areas, Core technologies, Value Creation Stages (manufacturing, selling, distribution, servicing, etc.) ■ Vehicles: How will we get there? ● Internal Development, Joint Ventures, Acquisitions, Licensing/Franchising ● Usually focus on one mode of growth ■ Differentiators: How will we win? ● Through price, image, customization, service, style, product (choice and trade-offs) ■ Staging: What is the speed and sequence of moves? ● Order and speed of expansion, choosing whether to expand product line or geographic presence ■ Economic Logic: How will we obtain our returns? ● Low costs via efficiencies of scale ● High prices due to unique product/service features ○ Operational Effectiveness (OE) : Performing similar activities better than competitors perform them with more effective transformation of inputs into outputs (lower costs, faster production, reduced defects) ○ Successful Strategy ■ Differentiation: Performing activities differently OR Performing different activities ■ Trade-Offs: Choices to serve certain markets and not others; Provide certain services and not others ○ 5 Porter’s Forces that Shape Strategy 3  ■ Risk of Entry by Potential Competitors ● Reduce entry barriers: Economies of scale, Switching costs, Reputation, Brand Loyalty, High entry costs, Government regulation, Access to distribution channels ■ Rivalry Among Established Firms (Price competition depending on demand, height of industry exit barriers, excess capacity, and industry structure) ■ Bargaining Power of Buyers ● Buyers most powerful when the buyer industry is more concentrated than seller industry, buyers purchase in large quantities, a single buyer is a large customer, switch suppliers at low cost, buyers purchase from multiple sellers at once ■ Bargaining Power of Suppliers ● Suppliers most powerful when products have few substitutes and important to buyers, focal industry isn’t an important customer to the supplier, differentiation makes it costly for buyers to switch suppliers ■ Threat of Substitute Products ● Different products serving similar customer needs; Subjective and highly variable ■ 6th FORCE: Complementors ● Companies whose products are sold in tandem with another company’s products; The 2 are best used together ○ Industry Structure ■ Fragmented Industry: Many firms, no dominant firm ● Each firm produces small % of total industry output ● Products: Standardized commodities ● Low barriers to entry (Dry cleaning, hair salons, health clubs) ● Increased competition on Price ■ Oligopoly: Few firms, shared dominance ■ Concentrated/Consolidated Industry: Monopoly, 1 firm or 1 dominant firm ● Few players account for large % of total industry output (Carbonated drinks, airlines, national TV networks); Low rivalry ○ Internal Analysis : External (Attractiveness of the industry) → Internal (self-awareness) ○ ***Why within the same industry do some firms outperform others? ■ Look “inside” for sustained basis of competitive advantage and what resources to protect and build ○ Why even in ‘unattractive’ industries can some firms thrive? (Southwest/Apple) ■ They have internal resources/capabilities that enable them to neutralize disadvantages in their external envmt ○ Looking Backward: Which resources are basis for sustained competitive advantage? ■ Is the resource ● Competitively Superior? Neutralize competitive forces in industry better than rivals; Gain bargaining power for buyers and sellers ● Appropriable? ● Inimitable? Able to be acquired at reasonable costs or duplicated ○ Barriers to imitation: Restrictive Access, Path Dependence, Casual Ambiguity ● Scarce? Available to other firms and how scarce; easily substituted? 4  ○ Looking Forward: Which resources should we build, acquire, or develop? Cost? ○ Netflix ● ALIGNING ORGANIZATIONAL STRUCTURE ○ How an organization arranges ppl and activities in the interest of meeting goals ○ More differentiation = More Integration ■ Differentiation: Division of Labor ● Horizontal: Division of work into units at same hierarchical level ● Vertical: Division of work by level of authority ● Spatial: Tasks divided by geographical area ■ Integration: Coordination across levels and between units ● Formalization: rules, policies, procedures ● Info systems: reports, computer-based communication systems ● Chain of command: formal reporting relationships ● Centralization: having decision making authority at the top of the organization ● Standardization: use of uniform inputs, processes, output standards ○ Specialization/Division of Labor ■ Division of Labor: The more tasks are divided into separate, narrowly-defined jobs, the greater degree of specialization ■ Pros of Specialization: Expertise, efficient, skills are resources ■ Cons of Specialization: Turnovers potential threat to firm ○ Chain of Command/Formal Hierarchy ■ Determines formal authority to make decisions, issue orders, allocate resources and responsibility ■ Informal authority: respect/prestige for each other ○ Span of Control ■ Number of employees that report to a given supervisor ■ Wide span: Many subordinates reporting (flat hierarchy), more competitive ■ Narrow span: few subordinates reporting (tall hierarchy), less competitive ■ Helps determine how closely supervisors can be involved with activities of subordinates and how much delegation there tends to be ■ Good span of control: Good info systems, same area of workers, simple tasks ○ Centralization ■ The extent to which decision-making authority is centralized in few individuals versus spread out ■ Highly centralized: Authority and decision making is concentrated among few top managers ● Less need for coordination and less potential for conflict → things get done, Decisions made by individuals who understand “big picture” ■ Decentralized: Authority and decision making is spread throughout all levels of an organization (lower-level employees also has decision making authority) ● Decisions made by ppl closest to problems (more info and expertise); Employees have sense of voice, feelings of responsibility/motivation ○ Formalization ■ Extent to which organization relies on rules and procedures (Documents) 5  ■ Pros: Efficiency with routine tasks, reduce employee error ■ Cons: Less differentiation for workers, eliminates common sense, less efficiency for complex tasks, not organic, reduces flexibility ○ Bureaucracy: Highly centralized, formalized, and specialized; useful in contexts ○ Organizational Charts: Visual representation of organizational structure ■ Hierarchy of authority/chain of command ■ Specialization/division of labor ■ Span of control ■ No degree of (de)centralization or formalization ○ Functional Structure: People grouped by similar function, like similar expertise/background/tasks (Sales, R&D, Marketing, etc); Each dept performs tasks for org as a whole ■ Small to medium orgs w/ stable environments, one or few products/services ■ Strengths: Efficient, ec
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