CCT112 Quiz 2 Flashcards
Planning
Management function:
- setting goals
- establishing strategies for achieving those goals
- developing plans to integrate and coordinate work activities
Four Purposes of Planning
- providing direction
- reducing uncertainty
- minimizing waste and redundancy
- establishing the goals or standards used in controlling
Planning can be Formal and Informal
- Smaller businesses often use informal planning
- little is verbalized or written down
- the planning is general and lacks continuity
Formal Planning
- specific, time-oriented goals
- goals written and shared
Criticism of Formal Planning
- may create rigidity
- can’t replace intuition and creativity
- focuses attention on today’s success, not tomorrow’s survival
- reinforces success (what already works), which may lead to failure (limits innovation)
does it pay to plan?
YES
Planning-performance relationship
Formal planning is associated with positive financial performance
- higher profits
- a higher return on assets
- improved quality of planning
- appropriate implementation
Objectives
desired outcomes for individuals, groups, or the entire organization
- provide management with direction and serve as a means to measure progress
Stated Objectives
Official statements of what the organization wants the public to believe
Real Objectives
Objectives that the organization actually pursues
Goals (objectives)
desired outcomes or targets
Plans
documents that outline how goals are going to be met: resource allocations, schedules, etc.
Strategic plans
plans that apply to the entire organization and establish the organization’s overall goals
Operational plans
plans that encompass a particular operational area of the organization
Long-term plans
plans with a time frame beyond three years
Short-term plans
plans covering one year or less
Specific plans
plans that are clearly defined and leave no room for interpretation
Directional plans
plans that are flexible and set out general guidelines
Single-use Plans
a one-time plan specifically designed to meet the needs of a unique situation
- Budgets
- Project reports
Standing Plans
ongoing plans that guide activities performed repeatedly
- Policies
- Rules and regulations
Contingency Factors in Planning
- level in the organization
- degree of environmental uncertianty
- contingency factors in planning
- Tesla commits to producing electric cars for decades into the future
Approaches to Planning
- Top-down traditional approach
- Development by organizational members
Traditional Objective Setting
- setting objectives in which top managers set objectives
- flow down through the organization
- become subgoals for each organizational area
Management by objectives (MBO)
- setting mutually agreed-upon goals
- using those goals to evaluate employee performance
Well-Written Goals
- written in terms of outcomes rather than actions
- measurable and quantifiable
- clear as to a time frame
- challenging yet attainable
- written down
- communicated to all necessary organizational members
Steps in Goal Setting
- Review the organization’s mission and employees’ key job tasks.
- Evaluate available resources.
- Determine the goals individually or with input from others.
- Make sure goals are well written and communicate to all who need to know.
- Build feedback mechanisms to assess goal progress.
- Link rewards to goal attainment.
How Can Managers Plan Effectively in Dynamic Environments?
- Develop plans that are specific but flexible
- Keep planning even when the environment is uncertain
- Allow lower organizational levels to set goals and develop plans
How Can Managers Use Environmental Scanning?
- Environmental scanning
- Competitive intelligence
Environmental scanning
screening information to detect emerging trends
Competitive intelligence
- gathering information about competitors
- allows managers to anticipate competitors’ actions rather than reacting to them
Black Swan Events
- events that come as a surprise
- have a major effect
- are often inappropriately rationalized after the fact
Business intelligence
(digital tools)
data that managers can use to make more effective strategic decisions
Digital tools
technology, systems, or software that allow the user to collect, visualize, understand, or analyze data
Social Media
(digital tools)
Facebook, LinkedIn, Twitter, and other social media sites are becoming increasingly important places to extract competitive intelligence
Virtual Reality
(digital tools)
A three-dimensional, interactive, computer-generated experience that occurs within a simulated environment.
Organizational change
any alteration of people, structure, or technology in an organization
Change Agent
someone who acts as a catalyst and assumes the responsibility for managing the change process
VUCA
(volatility, uncertainty, complexity, and ambiguity)
- volatility, uncertainty, complexity, and ambiguity
- change is the only constant
- managers must deal with that reality
External Forces for Change
- Consumer needs and wants
- New governmental laws
- Technology
- Economy
Internal Forces for Change
- New organizational strategy
- Composition of workforce
- New equipment
- Employee attitudes
Calm Waters Metaphor
- Unfreezing the status quo
- Changing to a new state
- Refreezing to make the change permanent
White-Water Rapids Metaphor
- lack of environmental stability and predictability
- requires that managers and organizations continually adapt
- manage change actively to survive
Managers Focus on 4 Main Areas of Change
- Strategy
- Structure
- Technology
- People
Strategy
(Types of Change)
- Failure to change strategy when circumstances dictate could undermine a company’s success.
- Competition can dictate a change in strategy.
- Organizations that don’t recognize a need to change strategy may not survive in the long run.
Structure
(types of change)
- Changing structural components
- Changing structural design
Technology
(types of change)
- New equipment, tools, or methods
- Automation
- Computerization
People
(types of change)
Organizational development
- change methods that focus on people and the nature and quality of interpersonal work relationships
Why do People Resist Change?
- Uncertainty
- Habit
- Fear of loss
- Belief change is inconsistent with goals of organization
Reducing Resist to Change
- Education and communication
- Participation
- Facilitation and support
- Negotiation
- Manipulation and co-optation
- Coercion
Changing an organization’s Culture
- organization’s culture is made up of relatively stable and permanent characteristics
- tends to make it very resistant to change
- cultures can be changed even if the process is difficult.
Understanding Situational Factors
Conditions that facilitate change:
- dramatic crisis occurs
- leadership changes hands
- organization is young and small
- culture is weak
Changing Culture
- Set the tone through management behaviour
- new stories, symbols, and rituals
- Redesign socialization processes
- change the reward system
- specified expectations
- Shake up current subcultures
- employee participation
Creativity
the ability to combine ideas in a unique way or to make unusual associations between ideas
Innovation
taking creative ideas and turning them into useful products or work methods
Stimulating Innovation
- foundation of many of the world’s most successful organizations
- The top five innovative firms are Apple, Netflix, Square, Tencent, and Amazon.
3 innovation variables are important:
human resources, structural variables and cultural variables.
Disruptive Innovation
- Innovations in products, services, or processes
- radically change an industry’s rules of the game
Sustaining Innovation
small and incremental changes in established products rather than dramatic breakthroughs
Who’s Vulnerable?
- Large, established, and highly profitable organizations are most vulnerable to disruptive innovations:
- have the most to lose
- are most vested in their current markets and technologies.
Skunk Works
- A small group in a large organization
- a high degree of autonomy unhampered by corporate bureaucracy
- mission is to develop a project for radical innovation
Strategic Management
what managers do to develop the organization’s strategies
Strategies
- plans for how the organization will do what it’s in business to do
- how it will compete successfully
- how it will attract and satisfy its customers to achieve its goals
Business Model
how a company is going to make money
Why is Strategic Management Important?
- positive impact on performance
- Helps managers decide how to act in face of change and uncertainty
- Helps complex and diverse organizations work together
Opportunities
positive trends in the external environment
Threats
negative trends in the external environment
Strategic Management Process
1: Identifying the Organization’s Current Mission, Goals, and Strategies
2: External Analysis
3: Internal Analysis - (SWOT Analysis)
4: Formulating Strategies
5: Implementing Strategies
6: Evaluating Results
1: Identifying the Organization’s Current Mission, Goals, and Strategies
(Strategic Management Process)
Mission: the purpose of an organization
- A mission statement can be too limiting.
2: Doing an External Analysis
(Strategic Management Process)
- Opportunities: positive trends in the external environment
- Threats: negative trends in the external environment
3: Doing an Internal Analysis
(Strategic Management Process)
- Resources: an organization’s assets that are used to develop, manufacture, and deliver products to its customers
- Capabilities: an organization’s skills and abilities in doing the work activities needed in its business
- Core competencies: the organization’s major value-creating capabilities that determine its competitive weapons
- Strengths: any activities the organization does well or its unique resources
- Weaknesses: activities the organization does not do well or resources it needs but does not possess
SWOT Analysis
an analysis of the organization’s strengths, weaknesses, opportunities, and threats
4: Formulating Strategies
(Strategic Management Process)
3 main types of strategies managers will formulate:
- Corporate
- Competitive
- Functional
5: Implementing Strategies
(Strategic Management Process)
- performance will suffer if the strategies aren’t implemented properly
6: Evaluating Results
( Strategic Management Process)
- How effective have strategies been at helping the organization achieve its goals
- What adjustments are necessary?
Corporate Strategy
- an organizational strategy that determines what businesses a company is in or wants to be in
- what it wants to do with those businesses
Growth Strategy
(corporate strategy)
A corporate strategy that’s used when an organization wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es)
- Concentration: focuses on its primary line of business (e.g. Nike, MacDonald’s)
- Vertical integration: backward, forward, or both (e.g.: Walmart).
- Horizontal integration: combining with competitors (e.g.: Facebook and Instagram).
- Diversification: related or unrelated industries (Tata Group).
Stability Strategy
(corporate strategy)
a stability strategy in which an organization continues to do what it is currently doing”
- (Airbus)
Renewal Strategy
(corporate strategy)
a renewal strategy designed to address declining performance:
- Retrenchment: e.g.: Ford exit of the Indian market in 2019
- Turn around: e.g.: Rebranding and Innovation
BCG Matrix
- guides resource allocation decisions based on market share and growth rate of SBUs
How to Create a BCG Matrix
1: choose the unit of analysis: business unit, brands, products or the firm.
2: Define the market that fits the unit of analysis: (luxury market, retail, wholesale)
3: Determine the relative market share of the unit of analysis:
Relative Market Share =Unit sales this year/Leading rival’s sales this year
4: Find out the market growth rate
Unit’s sales this year – Unit’s sales last year)/Unit’s sales last year
Competitive Strategy
An organizational strategy for how an organization will compete in its business(es)
Strategic Business Unit (SBU)
The single independent businesses of an organization that formulate their own competitive strategies
Competitive Advantage
What sets an organization apart; its distinctive edge
What Competitive Advantage Can Stem From
- Quality
- Low cost
- Technology
- Other factors
Economic Moat
(sustaining competitive advantage)
WARREN BUFFET
Sustaining competitive advantage by protecting long-term profits and market share using various means.
Cost Leadership Strategy
(competitive strategy)
Lowest costs (costs or expenses, not prices).
Differentiation Strategy
(competitive strategy)
Exceptionally high quality, extraordinary service, innovative design, technological capability, or an unusually positive brand image.
Focus Strategy
(competitive strategy)
niche/segment based on product variety, customer type, distribution channel, or geographical location
Stuck in the Middle
(competitive strategy)
not able to follow low cost or differentiate its products
Functional Strategy
- strategy used by an organization’s various functional departments to support the competitive strategy
Differentiation Strategies
-Quality
Innovation strategies
- Transfer technology from one division to another
- Invest in R&D
- Improve the process
- First mover: an organization that’s first to bring a product innovation to the market or to use a new process innovation
Entripenureship
the process of starting new businesses, generally in response to opportunities
Entrepreneurial Ventures
- organizations that pursue opportunities
- characterized by innovative practices
- have growth and profitability as their main goals
Small Business VS Entrepreneurship
- organization that is independently owned, operated and financed.
- owners see risk where as entrepreneurs see opportunity.
- Entrepreneurs want to change the world and have a passion beyond profits.
Self-employment
Individuals who work for profit or fees in their own business, profession, trade, or farm
Why is Entrepreneurship Important
- Innovation
- Economic growth
- Job creation
- Global entrepreneurship
Entrepreneurial Process
- Explore the entrepreneurial context
- Identify opportunities and possible competitive advantages
- Start the venture
- Manage the venture
What do Entrepreneurs do?
No two entrepreneurs are the same. Generally, they:
- Create something new and different
- Search for, respond to, and exploit change
- Research feasibility
- Launch and manage new ventures
Hybrid Pathway to Entrepreneurship
Over half of new-venture start-ups fail in the first four years.
One way to increase the odds of success is to keep your day job and start the venture on the side.
- Lets you test ideas with less pressure to make a living.
- It’s a lower-risk path with higher survival rates.
Environmental Opportunities and Competitive Advantage
Sources of opportunity:
- The Unexpected
- The incongruous
- The process need
- Industry and market structures
- Demographics
- Changes in perception
- New knowledge
Researching the Venture’s Feasibility—Ideas
When exploring idea sources, entrepreneurs should look for:
- Limitations of what is currently available
- New and different approaches
- Advances and breakthroughs
- Unfilled niches
- Trends and changes
Feasibility Study
an analysis of the various aspects of a proposed entrepreneurial venture designed to determine its feasibility
Venture Capalists
external equity financing provided by professionally managed pools of investor money
(Shark Tank)
Angel Investors
- private investor (or group of private investors)
- offers money to entrepreneurial venture in return for equity in the venture
Initial Public Offering (IPO)
the first public registration and sale of a company’s stock
Business Plan
- a written document that summarizes a business opportunity
- defines and articulates how the identified opportunity is to be seized and exploited
Business Plan - Major Areas
- Executive summary
- Analysis of opportunity
- Analysis of the context
- Description of the business
- Financial data and projections
- Supporting documentation
Organizing
- management function
- arranging and structuring work to accomplish the organization’s goals
Organizational Structure
formal arrangement of jobs within an organization
Organizational Chart
the visual representation of an organization’s structure
Organrganizational Design
creating or changing an organization’s structure
Purpose of Organizing
- Divides work to be done into specific jobs and departments.
- Assigns tasks and responsibilities associated with individual jobs.
- Coordinates diverse organizational tasks.
- Clusters jobs into units.
- Establishes relationships among individuals, groups, and departments.
- Establishes formal lines of authority.
- Allocates and deploys organizational resources.
Work Specilizaiton
dividing work activities into separate job tasks
Departmentalization
The basis by which jobs are grouped together
Cross-functional teams
-A work team made of individuals from various functional specialties
-has become more popular as tasks become more complex
Customer departmentalization
emphasizes monitoring and responding to customers’ needs
Chain of Command
- the line of authority extending from upper organizational levels to the lowest levels
- clarifies who reports to whom
Authority
- the rights inherent in a managerial position to tell people what to do and to expect them to do it
Line Authority
- authority that entitles a manager to direct the work of an employee
Staff Authority
- positions with some authority
- have been created to support, assist, and advise those holding line authority
Responsibilities
the obligation or expectation to perform any assigned duties
Unity of Command
The management principle that each person should report to only one manager
Span of Control
the number of employees a manager can efficiently and effectively manage
Centralization
the degree to which decision making is concentrated at upper levels of the organization
Decentralization
the degree to which lower-level employees provide input or actually make decisions
Employee Empowerment
giving employees more authority (power) to make decisions
formalization
- how standardized an organization’s jobs are
- the extent which employee behaviour is guided by rules and procedures
Mechanistic Organization
an organizational design that’s rigid and tightly controlled
Organic Organization
an organizational design that’s highly adaptive and flexible
Weakness of Mechanistic Structure
- Slow moving
- Internally-focused
- Disempowering
- Little room for creativity
Weakness of Organic (emergence) Structure
- Not enough clarity on where to focus effort
- Too much freedom to experiment, too few boundaries
- Lack of supporting systems
Bureaucratic vs Organic Structures
- Bureaucracy and Organic or Emergence are opposing principles for how coordination is achieved in organizations
- There are benefits and costs to both, so many companies end up moving back and forth
- There are also hybrid models available that seek to get the “best of both worlds”
Capacity refers to the degree where an environment can support growth. - Volatility refers to the level of unpredictable change.
- Complexity refers to the degree of heterogeneity and concentration among environmental elements.
Simple Strategy
Simple Structure
Elaborate Strategy
more complex structure
Unit Production
(tech & structure)
the production of items in units or small batches
Mass Production
(tech & structure)
the production of items in large batches
Process Production
(tech & structures)
the production of items in continuous processes
Environmental Uncertainty and Structure
- stable and simple environments, mechanistic designs can be more effective.
- The greater the uncertainty, the more an organization needs the flexibility of an organic design.
Simple Structure
organizational design
- little departmentalization
- wide spans of control
- centralized authority
- little formalization
functional structure
an organizational design that groups together similar or related occupational specialties
Divisional Structure
An organizational structure made up of separate, semiautonomous units or divisions
team structure
An organizational structure in which the entire organization is made up of work teams
matrix structure
an organizational structure that assigns specialists from different functional departments to work on one or more projects
project structure
an organizational structure in which employees continuously work on projects
virtual organization
- consists of a small core of full-time employees
- outside specialists are temporarily hired as needed to work on projects
- sometimes called “Network” or “Modular” organization
Telecommuting
- work arrangement where employees work at home
- are linked to the workplace by computer
compressed workweek
a workweek where employees work longer hours per day but fewer days per week
flextime (flexible work hours)
- a scheduling system where employees are required to work a specific number of hours a week
- are free to vary those hours within certain limits
job sharing
the practice of having two or more people split a full-time job
contingent workers
- temporary, freelance, or contract workers
- employment is contingent on demand for their services
group
two or more interacting and interdependent individuals who come together to achieve specific goals
- Formal groups
- Informal groups
forming
(stages of development)
- first stage of group development
- people join the group and then define the group’s purpose, structure, and leadership
storming
(stages of development)
- second stage of group development
- characterized by intragroup conflict
norming
(stages of development)
- third stage of group development
- characterized by close relationships and cohesiveness
performing
(stages of development)
- fourth stage of group development
- group is fully functional and works on group task
adjourning
(stages of development)
- final stage of group development for temporary groups
- group members are concerned with wrapping up activities rather than task performance
external conditions imposed on group
- Organization’s strategy
- Authority relationships
- Formal rules and regulations
- Availability of resources
- Employee selection criteria
group member resources
Knowledge
Abilities
Skills
Personality traits
group structure
- role
- norms
- conformity
- groupthink
- status systems
- status
- group size
- social loafing
- group cohesiveness
role
(group structure)
behavior patterns expected of someone occupying a given position in a social unit
norms
(group structure)
standards or expectations that are accepted and shared by a group’s members
conformity: groupthink
(group structure)
- a group puts a lot of pressure on an individual to align his or her opinion with others’ opinions
status systems: status
(group structure)
a prestige grading, position, or rank within a group
group size: social loafing
(group structure)
- individuals give less effort when working collectively than when working individually
group cohesiveness
(group structure)
- group members are attracted to one another and share the group’s goals
group process: decision making
(POSITIVE)
- Generate more complete information and knowledge
- Increase acceptance of a solution
- Increase legitimacy
group process: decision making
(NEGATIVE)
- Take more time
- A dominant minority can unduly influence the outcome; groupthink
- Individual responsibilities are ambiguous
conflict
perceived incompatible differences that result in interference or opposition
traditional view of conflict
the view that all conflict is bad and must be avoided
human relations view of conflict
the view that conflict is a natural and inevitable outcome in any group
Interactionist view of conflict
the view that some conflict is necessary for a group to perform effectively
functional conflicts
Conflicts that support a group’s goals and improve its performance
dysfunctional conflicts
conflicts that prevent a group from achieving its goals
task conflict
conflict over content and goals of the work
relationship conflict
conflict based on interpersonal relationships
process conflict
conflict over how work gets done
work teams
- members work intensely on a specific, common goal using their positive synergy, individual and mutual accountability, and complementary skills
problem solving teams
(types of work teams)
- from the same department or functional area
- involved in efforts to improve work activities or to solve specific problems
self-managed work teams
(types of work teams)
- operates without a manager
- is responsible for a complete work process or segment
cross-functional work teams
(types of work teams)
a work team composed of individuals from various functional specialties
virtual teams
(types of work teams)
- uses technology to link physically dispersed members to achieve a common goal
creating effective work teams
- Clear goals
- Relevant skills
- Mutual trust
- Unified commitment
- Good communication
- Negotiating skills
- Appropriate leadership
- Internal and external support
building team skills
- managers must view their role as more of being a coach and developing team members
- creates more committed, collaborative, and inclusive teams
motivation
person’s efforts are energized, directed and sustained toward attaining a goal
- Energy
- Direction
- Persistence
McGregor’s Theory X
- Little ambition
- Dislike work
- Avoid responsibility
- Must be closely controlled
McGregor’s Theory Y
- Enjoy work
- Seek and accept responsibility
- Exercise self-direction
McClelland’s 3 Needs Theory
- Need for achievement
- Need for power
- Need for affiliation
goal setting hteory
- Working toward a goal is a major source of job motivation
- Specific and challenging goals are superior motivating forces.
influences on goal-performance relationship
- Feedback
- Goal commitment
- Adequate self-efficacy
- National culture
job design and motivation
get internal rewards when an employee learns that they performed well on a task they care about.
country culture & motivation
Managers can’t assume that motivational programs that work in one geographic location are going to work in others.
cross-cultural differences
- Equity theory has strong following in the United States
- In collectivist cultures, employees expect outcomes to be greater than their inputs
- Growth, achievement, and responsibility are top three outcomes and had identical rankings
- Intrinsic factors identified by Herzberg in his two-factor theory are to some degree universal.
diverse motivation methods
- Men and women preferences
- Opportunities to learn
- Independence and varied experiences
- Open Books
- Employee recognition programs
leader
- someone who can influence others
- who has managerial authority
leadership
- leading a group and influencing that group to achieve its goals
theories of leadership
- the person
- the behaviours
Big 5 Traits
- Extraversion has strongest relation to leadership
- Conscientiousness and openness to experience also strongly relate to leadership
Emotional Intelligence (IE) and leadership
EI contributes to emergence of leaders
What traits do leaders have?
- drive
- desire to lead
-honesty and integrity
what traits do leaders have
- drive
- desire to lead
- honesty and integrity
- self-confidence
- intelligence
- job-relevant knowledge
- extraversion
- proneness to guilt
contingency theories of leadership
- Fiedler’s Model
- Hersey-Blanchard Situational theory
- Leader-participation
- Path-goal
Fiedler leadership model
(natural leadership style)
- The more positively you rate your least preferred coworker on various criteria, the more relationship-oriented you are
- The less favourably you rate them on the same criteria, the more task-oriented you are:
- If you’re a high LPC leader, you’re a relationship-oriented leader
- If you’re a low LPC leader, you’re a task-oriented leader
Fiedler leadership model
(situational favorableness)
determined by three variables:
- leader-member relations: Does your team trust you as a leader?
- task structure: Refers to the clarity of the tasks required to complete a project
- position power: The authority you have over your team as a leader
situational leadership
Situational leadership theory (SLT): successful leadership depends on selecting the right leadership style, contingent on the followers’ readiness to accomplish a task and their development level
- Creates four specific leadership styles incorporating Fiedler’s two leadership dimensions:
- Telling: high task–low relationship leadership
- Selling: high task–high relationship leadership
- Participating: low task–high relationship leadership
- Delegating: low task–low relationship leadership
path goal theory
- leadership contingency theory
- leader’s job is to assist followers in reaching their goals & provide direction or support needed ensuring goals are compatible with those in the group
- Developed by Robert House, according to who, a leader’s style depends on the situation:
- Directive
- Supportive
- Participative
- Achievement-oriented
4 path-goal theories
- Directive leadership
- Supportive leader
- Participative leader
- Achievement-oriented leader
directive leadership
(4 path-goal theories)
-leader lets employees know what’s expected of them
- schedules work to be done
- gives specific guidance on how to accomplish tasks
supportive leadership
(4 path-goal theories)
leader shows concern for the needs of followers and is friendly
participative leader
(4 path-goal theories)
- leader consults with group members
- uses their suggestions before making a decision
achievement-oriented leader
- leader sets challenging goals
- expects followers to perform at their highest level
leader-member exchange theory
- leaders create in-groups and out-groups
- those in the in-group will have higher performance ratings, less turnover, and greater job satisfaction
transactional leaders
lead primarily by using social exchanges (or transactions)
transformational leaders
Stimulate and inspire (transform) followers to achieve extraordinary outcomes
