Chapter 2 - Managing a Business Flashcards
What is management according to Stewart?
Getting things done through other people.
Why do we need managers?
Managers are responsible for running the business, ensuring objectives are set in line with shareholder interests, monitoring performance, and communicating corporate values and ethical principles.
What is needed for effective management? ACRONYM PARAD
Understanding the differences between power, authority, responsibility, accountability, and delegation.
PARAD
EFFECTIVE MANAGEMENT. power, authority, responsibility, accountability, and delegation.
What is power?
The ability to get things done.
What is coercive power?
The power of physical force or punishment.
What is reward (or resource) power?
Power based on access to or control over valued resources, such as information, contacts, or financial rewards.
What is legitimate (or position) power?
Power associated with a position in the organization, such as the authority to issue instructions or approve expenses.
What is expert power?
Power based on experience, qualifications, or expertise, e.g., accountants have expert power due to tax knowledge.
What is referent (or personal) power?
Power based on personality or ‘charisma,’ which can attract, influence, or inspire others.
What is negative power (Handy)?
The power to disrupt operations, such as through industrial action, refusal to communicate information, or sabotage.
What is authority?
The right to do something, or to ask someone else to do it and expect it to be done. It is another word for position or legitimate power.
How is managerial authority exercised? 2
- Making decisions within the scope of authority given to the position.
- Assigning tasks to subordinates and expecting satisfactory performance of these tasks.
What is responsibility?
The obligation a person has to fulfill a task which they have been given.
What is accountability?
A person’s liability to be called to account for the fulfillment of tasks they have been given by persons with a legitimate interest in the matter.
What is delegation?
Delegation involves giving a subordinate responsibility and authority to carry out a given task, while the manager retains overall responsibility.
What is a line manager?
A manager with authority over a subordinate, e.g., a production manager overseeing a production line worker.
What is a staff manager?
A manager with authority in giving specialist advice, even for another department where they have no line authority, e.g., an HR manager advising on interview techniques.
What is a functional manager?
A manager with functional authority to control performance in another department, e.g., a finance manager requiring timely reports from other departments.
What is a project manager?
A manager with authority over project team members, often temporary, where employees also report to their line managers.
What is the management hierarchy?
A structure for organizing authority and roles within a company.
What is planning in the management process?
Managers take overall organizational objectives and create detailed plans to direct work, including pinpointing specific aims, looking at resources, and using feedback.
What is leading in the management process?
Ensuring commitment to objectives by generating effort and motivating staff.
What is organizing in the management process?
Allocating time and effort to ensure objectives identified in the planning stage are met.
What is controlling in the management process?
Monitoring events to compare with the plan and taking remedial action as required.
What are managerial roles according to Henry Mintzberg?
Managerial roles describe what managers actually do, defined as informational, interpersonal, and decisional roles.
What is the informational role of a manager?
Checking data received and passing it to relevant people, and acting as the ‘spokesperson’ for their team.
What is the interpersonal role of a manager?
Acting as a leader for their own team and linking with managers of other teams, e.g., representing their team at a conference.
What is the decisional role of a manager? 5
Taking actions that define managing, such as allocating resources, handling disturbances, negotiating, solving problems, and acting as an entrepreneur by creating and controlling change.
What are examples of tasks in the decisional role? 5
- Allocating resources (e.g., organizing a staff rota).
- Handling disturbances.
- Negotiating.
- Solving problems.
- Acting as an entrepreneur (e.g., creating and controlling change).
What is culture in the context of management?
The common assumptions, values, and beliefs that people share, described as ‘the way we do things around here’.
What are the two tensions affecting business culture according to Quinn (1995)?
- The tension between having flexibility and having control.
- The tension between whether the business is inward-looking or outward-looking.
What is internal process culture?
An inward-looking culture with a stable/controlled environment, unchanging goals, defined methods, rules, and procedures. Security, stability, and order motivate staff. Example: public sector organizations.
What is rational goal culture?
A goal-oriented culture focused on external requirements, structured, and controlled to deal effectively with the outside world. Competition and goal achievement motivate staff. Example: large established businesses.
What is open systems culture?
A culture responding to external opportunities, characterized by flexibility, openness to new ideas, and adaptability. Staff are motivated by growth, creativity, and variety. Example: a new business unit working with fast-changing technology.
What is human relations culture?
An inward-looking culture maintaining staff well-being, motivated by a sense of belonging. Example: support service units.
What is a model in management theory?
A model represents a complex reality, such as a client’s business, analyzed and broken into constituent parts.
What do management models help with according to Handy? 5
- Explaining the past.
- Understanding the present.
- Predicting the future.
- Influencing future events.
- Reducing disturbance from the unexpected.
What is the rational goal model of management?
It ensures tasks are done as well as possible, using structured and goal-oriented methods.
What are key ideas in the rational goal model of management? 4
- Systematic work methods.
- Detailed division of labor.
- Centralized planning and control.
- ‘Low involvement’ employment relations like contract work.
What does the internal process model of management focus on?
It focuses on how the organization is doing things, not why.
What are characteristics of the internal process model of management? 5
- Rationality: Use of efficient methods to meet objectives.
- Hierarchical lines of authority: Defined areas of authority.
- Detailed rules and procedures: Common in highly regulated sectors.
- Division of labor: Tight limits on staff responsibilities.
- Impersonality: Appraisals based on objective criteria.
- Centralization: Authority concentrated at the top.
What is marketing?
Marketing is the set of human activities directed at facilitating and consummating exchanges, or the management process that identifies, anticipates, and supplies customer requirements efficiently and profitably.
Define Customer
A customer, who purchases and pays for a good or service
Define Consumer
A consumer, who is the ultimate user of the good or service
What is the difference between a customer and a consumer?
A customer purchases and pays for a good or service, while a consumer is the ultimate user of the good or service.
What are consumer markets?
Markets for products and services bought by individuals for their own or family use.
What are examples of categories in consumer markets? 2
- FMCGs (Fast-moving consumer goods): High volume, low unit value, fast repurchase (e.g., bread, baked beans).
- Consumer durables: Low volume, high unit value (e.g., white, brown, or soft goods, and services).
What is a FMCGs?
FMCGs (Fast-moving consumer goods): High volume, low unit value, fast repurchase (e.g., bread, baked beans).
What is Consumer durables?
Consumer durables: Low volume, high unit value (e.g., white, brown, or soft goods, and services).
What is a B2C market?
A market where businesses sell directly to consumers, also known as ‘business to consumers.’
What are industrial markets?
Markets for goods and services sold between businesses, often referred to as ‘business to business’ or B2B.
What are the main goods and services covered by industrial markets? 5
- Raw materials.
- Processed materials and components.
- Capital goods.
- Supplies.
- Services.
What is the marketing mix?
The set of controllable marketing variables that a firm blends to produce the response it wants in the target market (Kotler).
What are the components of the marketing mix? 7 What two types or marketing it relates to?
APPLIES TO PHYSICAL GOODS AND SERVICES 1. Product: Quality as perceived by the customer (features, benefits, brand, packaging).
2. Price: Prices to the customer, including discounts and promotions.
3. Promotion: Advertising, sales promotions, and salesmanship.
4. Place: Distribution channels and geographic market definition. APPLIES TO SERVICES
5. People: Employees and their interaction with customers.
6. Processes: Effectiveness of service delivery.
7. Physical Evidence: Tangible items such as logos, uniforms, and store layouts.
What components of the marketing mix applied to physical goods and services? 4
- Product: Quality as perceived by the customer (features, benefits, brand, packaging).
- Price: Prices to the customer, including discounts and promotions.
- Promotion: Advertising, sales promotions, and salesmanship.
- Place: Distribution channels and geographic market definition.
What components of the marketing mix applied to services only? 3
- People: Employees and their interaction with customers.
- Processes: Effectiveness of service delivery.
- Physical Evidence: Tangible items such as logos, uniforms, and store layouts.
What is market segmentation?
The division of the market into homogeneous groups of potential customers who may be treated similarly for marketing purposes.
What are examples of market segments and their focus? 3
- High-income groups: Focus on promotion to create quality and status image.
- Families with children: Focus on product size and safety.
- Low-income groups: Focus on low price, reliability, and economy.
What is a product?
Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations, and ideas.
What are the three main elements of a product?
- Basic (or core) product: E.g., a car.
- Actual product: E.g., a Ford Focus.
- Augmented product: E.g., a Ford Focus with 0% finance or extended warranty.
What factors should a business consider when taking a product from basic to augmented? 6
- Quality and reliability.
- Packaging.
- Branding.
- Aesthetics.
- Product mix.
- Associated services.
Why is price important in the marketing mix?
Price is the only element in the marketing mix that produces revenue, while the other elements incur costs.
What are the influences on a business’s pricing policy? 4
- Costs.
- Competitors.
- Customers.
- Corporate objectives, including:
- Maximizing profits.
- Achieving target ROI or revenue figures.
- Achieving target market share.
- Matching competition.
- Driving competitors out of the market (predatory pricing).
What are the possible pricing objectives that influence a business pricing policy?
Corporate objectives, including:
- Maximizing profits.
- Achieving target ROI or revenue figures.
- Achieving target market share.
- Matching competition.
- Driving competitors out of the market (predatory pricing).
What is the basic decision in distribution strategy?
Whether to sell direct (e.g., via the internet) or use intermediaries to create a longer distribution chain.
What are the advantages of selling direct? 3
- No need to share profit margins.
- Control over ultimate sale.
- Faster delivery to the ultimate consumer.
What are the advantages of using intermediaries? 4
- More efficient logistics.
- Lower costs.
- Consumers expect choice at the point of sale.
- Producers may lack resources to sell directly.
What is promotion in marketing?
Promotion involves communicating with customers to inform and persuade them to buy a product.
What are the four main types of promotion?
- Advertising.
- Sales promotion (e.g., ‘buy one, get one free’).
- Public relations.
- Personal selling.
What are the two elements of promotion?
- Push: Ensuring products/services are available to consumers.
- Pull: Persuading ultimate consumers to buy.
What 2 factors should a business consider in its promotion package?
- Customer and ultimate consumer (B2C market).
- Buyer, customer, and user (B2B market), ensuring all are satisfied if they differ.
What is digital marketing?
Any form of marketing that is conducted through electronic devices and computers.
What are examples of digital marketing? 6
- Search engine optimization and marketing.
- Pay-per-click (e.g., adverts on web, social media).
- Social media marketing (promoting via social media).
- Content marketing (e.g., distributing media such as TikToks and podcasts).
- Affiliate marketing (using third parties like Rightmove and social media influencers).
- Email marketing.
What is operations (or production) management?
The creation of goods or services required by the business, involving the design, implementation, and control of processes to transform inputs (materials, labor, resources, information) into outputs (products and services).
What are the ‘four Vs’ of operations?
- Volume: High (capital-intensive, low unit costs) vs. Low (higher unit costs, specialization not achievable).
- Variety: High (flexibility/adaptability, high costs) vs. Low (standardized, regular routines, low costs).
- Variation in demand: High (capacity adjustments needed, under-utilization off-peak) vs. Low (high capacity utilization, lower costs).
- Visibility: High (customer interaction, high costs) vs. Low (less direct customer interaction, low costs).
Volume - of operation. High and Low
- Volume: High (capital-intensive, low unit costs) vs. Low (higher unit costs, specialization not achievable).
Variety - of operation. High and Low
- Variety: High (flexibility/adaptability, high costs) vs. Low (standardized, regular routines, low costs).
Variation of demand - of operation. High and Low
- Variation in demand: High (capacity adjustments needed, under-utilization off-peak) vs. Low (high capacity utilization, lower costs).
Visibility - of operation. High and Low
- Visibility: High (customer interaction, high costs) vs. Low (less direct customer interaction, low costs).
What is research and development (R&D)?
The function involving pure or applied research and development to improve products or processes.
What are the 2 types of research in R&D?
- Product research: Finding new/improved products for the market (e.g., new product development).
- Process research: Developing new and better ways of producing goods/services.
Define Product research
Product research: Finding new/improved products for the market (e.g., new product development).
Define Process research
Process research: Developing new and better ways of producing goods/services.
What is procurement?
The acquisition of goods/services at the best total cost of ownership, considering quantity, quality, price, and lead time.
What is a supply chain?
The network of organizations, systems, resources, and activities required to turn raw resources into products or services for consumers.
What are upstream and downstream supply chain members?
- Upstream: Provide materials and production of goods/services (e.g., suppliers, production function).
- Downstream: Handle activities after manufacturing, such as marketing and customer functions.
Define Upstream
Upstream: Provide materials and production of goods/services (e.g., suppliers, production function).
Define Downstream
Downstream: Handle activities after manufacturing, such as marketing and customer functions.
What are the five rights of procurement?
- The right quality.
- The right quantity.
- The right price.
- The right place.
- The right time.
How can a procurement team help secure competitive advantage?
By managing links between the organization, suppliers, and customers effectively as part of a supply chain.
What is human resource management (HRM)?
HRM is the creation, development, and maintenance of an effective workforce, matching business requirements and responding to the environment (Naylor).
What are the responsibilities of HRM? 2
- HR department tasks: Personnel planning, job descriptions, employee contracts.
- Line manager tasks: Performance appraisal, discipline.
What are the two approaches to HRM?
- Hard approach: Focuses on the resources element of HRM to maximize employee effectiveness and control costs.
- Soft approach: Focuses on the human element, including employee relations, skill development, and staff welfare.
What is the four Cs model of HRM developed at Harvard?
A framework encouraging critical analysis of stakeholder demands and situational factors in HRM effectiveness.
What are the components of the four Cs model of HRM?
- Commitment: Motivation, loyalty, job satisfaction (e.g., labor turnover, surveys).
- Competence: Employee skills, abilities, potential (e.g., skills inventory, appraisals).
- Congruence: Shared vision between management and employees (e.g., absence of grievances/conflicts).
- Cost-effectiveness: Operational efficiency, labor cost effectiveness compared to competitors.
Define four Cs model of HRM - Commitment
Commitment: Motivation, loyalty, job satisfaction (e.g., labor turnover, surveys).
Define four Cs model of HRM - Competence
Competence: Employee skills, abilities, potential (e.g., skills inventory, appraisals).
Define four Cs model of HRM - Congruence
Congruence: Shared vision between management and employees (e.g., absence of grievances/conflicts).
Define four Cs model of HRM - Cost-effectiveness
Cost-effectiveness: Operational efficiency, labor cost effectiveness compared to competitors.
What is organisational behaviour?
The study and understanding of individual and group behaviour in an organisational setting to improve performance and effectiveness (Mullins).
What is the organisational iceberg model?
A model by Hellriegel, Slocum, and Woodman illustrating how human behaviour is affected by overt and covert variables.
What are the formal (overt) aspects in the organisational iceberg model? 6
- Customers.
- Technology.
- Facilities.
- Organisational design.
- Rules and regulations.
- Surface competencies/skills.
What are the behavioural (covert) aspects in the organisational iceberg model? 7
- Attitudes.
- Communication patterns.
- Informal processes.
- Personality.
- Conflict.
- Politics.
- Underlying competencies/skills.
What is motivation?
The degree to which a person wants certain behaviours and chooses to engage in them.
What are the characteristics of motivated workers? 5
- Higher productivity.
- Better quality work with less waste.
- Greater sense of urgency.
- More feedback and suggestions for improvement.
- More feedback demanded from superiors.
What do research findings show about motivated and unmotivated workers?
Motivated workers typically operate at 80%-95% of their capacity, while unmotivated workers manage only about 30%.
What is Maslow’s hierarchy of needs?
A framework for understanding individual behavior based on needs that may be conscious or subconscious.
What are the levels in Maslow’s hierarchy of needs? 5
- Basic/physiological needs.
- Safety/security needs.
- Social needs.
- Status/ego needs.
- Self-actualization.
What is the role of money in Maslow’s hierarchy of needs?
Money is a contributory factor that helps satisfy basic and safety needs. It is less significant for status needs unless status symbols are valued by others.
What did Maslow emphasize in his theory?
The significance of non-financial motivators over money, except where money supports basic and safety needs.
What is a group in organisational behaviour? 5
A collection of people with the following characteristics:
1. Common sense of identity.
2. Common aim or purpose.
3. Existence of group norms (expected/accepted standards of behaviour).
4. Communication within the group.
5. Presence of a leader.
What are the 4 Tuckman’s stages of group development?
- Forming
- Storming
- Norming
- Performing
What are Tuckman’s stages of group development? 4
- Forming: Group members define the purpose of the group and how it will operate.
- Storming: Conflict stage where norms and preconceptions are challenged; members compete for roles.
- Norming: Group norms are established, defining decisions, behaviour patterns, trust, and roles.
- Performing: Group operates at full potential, with adjustment difficulties and leadership contests resolved.
What did Tuckman suggest about group efficiency at different stages?
Groups are inefficient at the forming and storming stages, become more efficient at the norming stage, and achieve maximum efficiency at the performing stage.
What are Belbin’s eight team roles? 8
- The leader: Coordinates and operates through others.
- The shaper: Committed to the task; aggressive and challenging.
- The plant: Thoughtful and thought-provoking.
- The evaluator: Critically analyzes ideas; brings the team down to earth.
- The resource-investigator: Picks up and builds on others’ ideas; acts as a bridge to the outside world.
- The company worker: Practical and efficient; turns general ideas into specifics.
- The team worker: Supports relationships; defuses conflicts.
- The finisher: Ensures timetables are met; progress chaser.
- The specialist: Brings specific skills/knowledge, often from outside the team.
What did Belbin suggest about the composition of an effective team? 4
- Only one leader and/or shaper is required.
- Equal numbers of plants and evaluators.
- Equal numbers of company workers and team workers.
- Not too many finishers (probably one is enough).
What factors influence a manager’s effectiveness? 3
- Authority: Rights to control and judge subordinates’ actions.
- Autonomy: Giving subordinates reasonable freedom of action.
- Leadership: Exercising power to win a willing and positive response from subordinates.
Define Auhority
Authority: Rights to control and judge subordinates’ actions.
Define Autonomy
Autonomy: Giving subordinates reasonable freedom of action.
Define Leadership
Leadership: Exercising power to win a willing and positive response from subordinates.
What are Likert’s four basic leadership styles?
- Exploitative-authoritative: Decisions imposed, motivated by threats, centralized decision-making, little communication, no teamwork.
- Benevolent-authoritative: Increasing trust in subordinates, more participative motivation, increasing delegation, communication, and teamwork.
- Consultative: Higher trust and delegation, frequent communication, teamwork.
- Participative: Complete trust, motivation by rewards/goals, high delegation, teamwork.
What did Likert consider to be the ideal leadership style?
The participative style, as it suits profit-oriented and human-conscious businesses.
What are the four characteristics of effective managers identified by Likert?
- Employee-centered rather than work-oriented.
- Set high standards but are flexible in methods.
- Natural delegators with high levels of trust.
- Encourage participative management.
