Business Management 1 - Chapter 4 Flashcards

Question

PLANNING STRATEGIC PLANNING CORPORATE LEVEL What does Grand strategies include?

Answer 1

These include growth, stability, turn-around and combination strategies.

Answer 2

Growth strategies attempt to increase the organisation's size through increased sales. Examples of growth strategies are concentration, integration, diversification, mergers and acquisitions.

Answer 3

A stability strategy attempts to hold or maintain the organisation's present size or to grow slowly.

Answer 4

A turn-around strategy is an attempt to reverse a declining business as soon as possible.

Answer 5

An organisation can consider combining growth,stability and turn-around strategies for different lines of business in the organisation.

Answer 6

At the business level, generic strategies identified by Porter (2003) are formulated

Answer 7

Generic strategies include cost leadership, differentiation and focus strategy.

Answer 8

Generic strategies allow the organisation to create or maintain a competitive advantage.

Answer 9

An organisation consisting of more than one business unit, each business unit will have its own generic strategy, linking up with the grand strategy at corporate level.

Answer 10

At the functional level, strategies are developed for each management function (e.g. marketing and sales, logistics and operations) and must be aligned with the business unit generic strategy as well as the corporate level grand strategy, to ensure success and a competitive advantage.

Answer 11

The implementation of the planned strategies is the responsibility of first level managers.

Answer 12

An effective support system provided by higher level managers is of great importance to ensure the successful implementation of strategic planning.

Answer 13

Functional planning refers to medium term planning

Answer 14

Functional planning is carried out by middle management (in cooperation with top management)

Answer 15

Functional planning is carried out for the various functional departments to realize their objectives (which are derived from the long-term goals)

Answer 16

Examples of functional strategies or functional plans include human resources strategy on employment equity, marketing strategy on product positioning and financial strategy on profit management and dividend payments.

Answer 17

Operational plans have short-term objectives that should be met in less than one year.

Answer 18

Middle and first-level managers develop operational plans

Answer 19

Examples include plans that reflect the day-to-day activities of the organisation, such as equipment maintenance in order to maximize plant production or sending sales staff to training seminars.

Answer 20

Tactical (Functional) plans have an intermediate range between strategy and operational plans and focus on functional planning issues as discussed in the previous sections.

Answer 21

The organisational structure of the organisation will indicate whether a distinction is made only between strategic and operational planning (applicable to flat organisation structures) or between strategic, tactical (functional) and operational planning (applicable to high organisational structures).

Answer 22

- corporate level - business level - functional level

Answer 23

The corporate-level strategy is the plan for managing multiple lines of businesses. This includes broad strategies for the organisation as a whole, such as Woolworths or McCarthy Retail, each of which consists of a variety of independent businesses.

Answer 24

The business level strategy is the plan for managing one line of business, for example Game Stores or Dion. This strategy focuses on the product line or service provided by one of the enterprises.

Answer 25

The functional level strategy is the plan for managing one functional area of the business, for example the marketing or financial division.

Answer 26

if the allocation of resources (eg human, capital and technology) is well planned.

Answer 27

Planning allows management to identify opportunities, anticipate and avoid problems (threats) and develop courses of action with the related risks involved.

Answer 28

These goals include adapting and innovating in order to create desirable change, improving productivity and maintaining organizational stability.

Answer 29

Achieving these goals should enable the organisation to achieve future performance, including long-term growth, profitability and survival in a growing, turbulent business environment.

Answer 30

* Planning gives direction to the organisation and its employees * Planning allows for the use of advanced technology in all business processes. * Planning ensures that all related entities (departments, teams, functions) interact effectively I order to establish synergy in practice. * Planning forces all managers to look towards the future.

Answer 31

Step 1: This step is the awareness of opportunities. Step 2: Develop a mission and vision for the organisation. Step 3: Develop your planning premises. Step 4: Search for the alternate courses of action (or plans) that will help you reach your objective. Step 5: You must now evaluate each alternative with its use of resources, ease of implementation, impact on other departments, and effectiveness. Step 6: Select the plan you will use. Step 7: The final step is to convert the plan into a budget, where necessary.

Answer 32

Analyse the macro and market environments (Part three) for changes that affect your organisation. Identify opportunities and threats to your organisation. Be aware of what the customer (whether internal or external) wants from the section, department, and organisation as a whole.

Answer 33

Where do we want to be, what we want to accomplish and by when? Develop purpose statements for each functional department. They must be based on the mission statement and show its contribution to the organisation. Set objectives or goals for the organisation as a whole and each of its functional areas. Clearly state the results to be achieved.

Answer 34

They are assumptions the management team make about changes in the macro and market environments. Existing organisation strengths and weaknesses, policies and plans are also considered. Forecasts of possible environmental changes are critical inputs to this process.

Answer 35

Search for the alternate courses of action (or plans) that will help you reach your objective. Several courses of action are often available to reach an objective.

Answer 36

You must now evaluate each alternative with its use of resources, ease of implementation, impact on other departments, and effectiveness.

Answer 37

you will have to think of supporting plans to make the main plan work. At middle manager, supervisor, and operator levels, other sections and departments will frequently be involved. (This occurs because you are all working to satisfy customers’ needs).

Answer 38

Some objectives must be converted into financial results, and the resources and actions needed to achieve them must also be put into financial terms.

Answer 39

Organising entails structuring the activities of the organisation to facilitate the attainment of its objectives.

Answer 40

7 organising concepts

Answer 41

- Unity of command - Chain of command - Span of control - Division of labour - Coordination - Responsibility and authority - Delegation

Answer 42

This means that each employee should report to only one boss or superior to whom he or she is directly responsible. This allows employees to know who is giving direction and to whom he or she reports.

Answer 43

Chain of command is the clear line of authority running from top level of management to the first level of management, including non-managerial employees within a particular organisation. This is a vertical separation between levels based on differences in authority and responsibility.

Answer 44

This refers to the number of employees reporting to a manager. The number of employees reporting to manager should be limited to a number that can effectively be supervised.

Answer 45

Specialization, or the degree to which a person’s work is limited to one or a few tasks, becomes more pronounced as we move down the organizational hierarchy With the division of labour, employees have specialized jobs, and related functions are grouped together under a single manager.

Answer 46

This means that all departments and individuals within the organisation should work together to accomplish the strategic, tactical and operational objectives and plans. Coordination requires conceptual skills in order to understand the greater organisation.

Answer 47

All employees should be given the authority needed to meet their responsibilities and should be held accountable for meeting them .It is therefore extremely important that each employee’s responsibility and authority are clearly defined.

Answer 48

Delegation is the process of assigning responsibility and authority for accomplishing objectives. Responsibility and authority are delegated down the chain of command from top management to enable managers to concentrate on more important issues or to get more work done

Answer 49

Responsibility can be defined as the obligation to achieve objectives by performing required activities.

Answer 50

Accountability ensures that individuals meet their responsibilities.

Answer 51

Authority is the right to make decisions, issue orders or utilize resources.

Answer 52

Organizational structure can be described as a formal system of working relationships that both separates and integrates tasks.

Answer 53

Separation of tasks makes clear who should do what.

Answer 54

and integration of tasks indicates how efforts should interact and interrelate.

Answer 55

Planning can be implemented and leading can take place only once human resources are assigned to tasks.

Answer 56

Leading can be effective only once clear responsibilities and authority are allocated to employees.

Answer 57

Controlling can take place once procedures are established for collecting and evaluating information to help managers make decisions, evaluate performance and solve problems

Answer 58

Departmentalization can be described as the grouping of related activities into units.

Answer 59

Departments can be created with an internal or external focus.

Answer 60

An internal focus would result in functional departmentalization.

Answer 61

An external focus would result in product, customer, or geographic departmentalization.

Answer 62

* It systematises tasks, resources, methods and procedures * It spreads the workload evenly and according to ability * It ensures the productive application and utilisation of resources * It allows individuals to concentrate on their field of expertise * It is necessary for coordinating activities within the organisation

Answer 63

Organising means that management has to: • develop mechanisms to put the strategy or plan into effect. • make arrangements to determine what activities will be carried out. • determine what resources will be employed. • determine who will perform the various activities.

Answer 64

Leadership may be defined as “the process by which an individual exerts influence over other people and inspires, motivates, and directs their activities to help achieve group or organisational goals” (Jones, et al, 1998: 403).

Answer 65

Another definition proposed by Smit and de Cronje (2011) is “That management function that activates people to do things willingly”.

Answer 66

Charismatic leaders have the ability to enable ordinary people to achieve extra- ordinary results. They are known for their capacity to inspire their employees to over-achieve.

Answer 67

Some of the characteristic qualities of the charismatic leader are: self- confidence, a clear vision, extra-ordinary behaviour and environmental sensitivity.

Answer 68

Leaders have to communicate their vision, strategies and expectations to their followers.

Answer 69

- Authority - Power - Influence - Delegation - Responsibility and Accountability

Answer 70

provides the leader with the right, by virtue of his/her position within the organisation, to give instructions and delegate work to subordinates.

Answer 71

refers to the leader’s ability to influence (without necessarily using his/her authority).

Answer 72

5 types of power

Answer 73

- legitimate, - reward, - coercive, - referent and - expert power

Answer 74

involves using authority and power in a manner which inspires and motivates subordinates to take action

Answer 75

leader allocates a part of his/her own task to a subordinate to perform together with the necessary authority to execute it.

Answer 76

leaders are responsible for carrying out his tasks and must account for his/her performance

Answer 77

Power is the ability to influence the behaviour of others.

Answer 78

John French and Bertram Raven

Answer 79

This is based on the leader’s formal position in the organisation’s hierarchy. Legitimate power is the same as authority.

Answer 80

This is the power to give or withhold rewards such as • a salary increase • bonuses • recognition • interesting assignments The more important these rewards are to subordinates, the greater will be the reward power of the leader.

Answer 81

``` This is the ability of a leader to obtain compliance through fear of punishment. Punishment may take the form of • official reprimands, • less desirable work assignments, • pay cuts, • demotions, • suspensions • or even termination. Coercive power is usually less effective than reward power. Some employees respond to coercion by falsifying performance reports or stealing company property rather than improving their performance ```

Answer 82

This refers to personal power. The followers are apt to like, admire, and want to emulate the leader. Subordinates will follow the leader because they like and respect him /her. In other words the leader has “charisma” which makes this person attractive. Nelson Mandela has much referent power.

Answer 83

This is power based on specialised knowledge and expertise. The more important the information, and the fewer people who possess it, the greater the power of the person who commands it .

Answer 84

Control can be defined as the management task that ensures the coordination and effective functioning of all the organizational activities, so that formulated organisational objectives are implemented and pursued according to plan.

Answer 85

There are three types of organizational control.

Answer 86

- pre-control or proactive control, - concurrent or steering control and - post or reactive control.

Answer 87

Pre-control, focuses on inputs (human resources, materials, capital, technology and entrepreneurship)

Answer 88

steering control focuses on the transformation process(production process and service process)

Answer 89

post control focuses on outputs(produced goods and services)

Answer 90

* Setting of performance standards according to formulated objectives. * Measuring of actual performance. * Comparing actual performance to standards. * Taking corrective action if necessary.

Answer 91

* Control systems should be linked to the desired objectives of the organisation. * The control process must be objective in order to eliminate subjectivity. * The control process must be completed by considering all relevant factors and evaluating what is supposed to be evaluated. * Timely control provides information when it is needed most. * Acceptable control is recognized by employees as necessary and appropriate for establishing and maintaining good performance. * All individuals exposed to a control system must fully understand the meaning of the system and specifically the implications of the set standards. * The cost-benefit scenario regarding control must be clearly evaluated in * order to establish the economic viability of the measure. * Control is of no use if the control measures indicate deviations, but no applicable corrective action follows.

Answer 92

* Planning entails determining what the objectives and goals of the enterprise are. * Organising means establishing the structures and processes required to achieve those objectives. * Leading involves directing, equipping and motivating employees to achieve the objectives. * Control means determining whether the objectives have been achieved.

Answer 93

Decision making is the process of making a choice between various alternatives in order to select the most appropriate alternative to solve the problem or utilize the opportunity.

Answer 94

False - Decision making is a supportive secondary management task that assists managers in the process of planning, organising, leading and controlling.

Answer 95

- Routine decisions - Adaptive decisions - Innovative decisions

Answer 96

Routine decisions are described as a selection or choice in response to relatively well-defined and common problems and alternative solutions. Such decisions are made under conditions of low risk and a high degree of certainty, using organizational policies, rules and procedures as a frame of reference, for example, ordering stock on a monthly basis.

Answer 97

Adaptive decisions are choices under conditions of average levels of risk and uncertainty. Adaptive decisions are decisions made in order to continuously adapt to changes and can involve improving past routine decisions and practices. Continuous improvement is a core component of the learning organisation.

Answer 98

Innovative decisions are choices under conditions of high risk and uncertainty. These problems involve decisions about unusual and unknown problems and hence require the development of creative solutions.

Answer 99

7 steps in the rational decision making process.

Answer 100

Step 1: Definition and diagnosis of the problem. Step 2: Setting of goals and objectives. Step 3: Searching for alternative solutions. Step 4: Comparing and evaluating alternative solutions. Step 5: Choosing from among alternative solutions. Step 6: Implementing the solutions selected. Step 7: Follow up and control.