Exam 3 Flashcards
Matrix Structures
An organizational arrangement that relies heavily on cross-functional teams that each work on a different project.
spin-off
Creating a new company whose stock is owned by investors out of a piece of a bigger company.
Hindsight Bias
Mistakes seem obvious after they have already occurred.
Poison Pill
An attempt to make the company’s stock unattractive to raiders by letting shareholders buy stock at a discount, which creates a conversion of equity to debt that makes the company less attractive.
Diversification Strategies
Involve a company entering entirely new industries.
S Corporation
A special type of corporation wherein the company’s profits and losses are reported on owners’ personal tax returns in proportion with each owner’s share of the company.
Divestment
Selling off part of a company’s operations.
Board Insiders
Members of the board of directors who are generally employed inside of the organization.
Escalation of Commitment
To continue on a falling course of action even after it becomes clear that this may be a poor path to follow.
Availability Bias
Readily available information is inncorrectly assessed to also be more likely.
Generation X
The generation born between 1965 and 1980. The X symbolizes the unknown nature of this generation.
Unrelated Diversification
When a company enters an industry that lacks any important similarites with the company’s existing industry or industries.
Horizontal Integration
Pursuing a concentration strategy by acquiring or merging with a rival.
Merger
The joining of two similarly sized companies into one company.
Greenmail
An unfriendly company forces a target company to repurchase a large block of stock at a premium to thwart a takeover attempt.
Liquidation
Shutting down portions of a company’s operations often at a tremendous financial loss
Corporate Social Performance (CSP)
The degree to which a company’s actions honor ethical values that respect individuals, communitites, and the natural environment.
Judgments About Correlation and Causality
To make inaccurate attributions about the causes of events.
Organizational Chart
A diagram that depicts how companies’ structures are built using two basic building blocks: vertical linkages and horizontal linkages.
Sole Proprietorship
A company that is owned by one person.
Portfolio Planning
A process that helps executives make decisions involving their compaines’ various industries.
Market Penetration
An attempt to gain additional share of existing markets using existing products.
Diversification Discount
The tendency of investors to undervalue the shares of a diversified company.
Framing
The way information is presented alters the decision an individual will make
Board of Directors
A group of individuals either elected or appointed that oversees the activities of an organization or corporation.
Division of Labor
A process of splitting up a task into a series of smaller tasks, each of which is performed by a specialist.
Informal Linkages
Unofficial relationships such as personal friendships, rivalries and politics.
Organizational Structure
How tasks are assigned and grouped together with formal reporting relationships.
Organizational Control Systems
Allow executives to track how well the organization is performing identify areas of concern and then take action to address the concerns.
Multidivisonal structure
An organizational arrangement whereby employees are divided into departments based on product areas and/or geographic regions.
Leveraged Buyout (LBO)
A company that is purchased through significant debt.
Simple Structure
An arrangement that does not rely on formal systems of division of labor, often because one person pefroms all the tasks that the organization needs to accomplish.
CEO Duality
When the chief executive officer is also the chairman of the board of directors.
Overconfidence Bias
To be more confident in your abilities to predict an event than logic suggests is actually possible
Product Development
Creating new products to serve existing markets.
Partnership
A legal form of business wherein two or more partners share ownership of a company.
Corporation
A legal form of ownership wherein shares of ownership are publicly traded in stock markets and management is performed by professional executives.
Dogs
Low market share units within slow-growing industries.
Vertical Integration
When a company gets involved in new portions of the value chain.
Horizontal Linkages
Relationships between equals in an organization.
Retrenchment
Reducing the size of part of a company’s operations often though laying off employees.
Market Development
Trying to sell existing products within new markets.
Limited Liability Company (LLC)
A form of ownership that is granted in state laws wherein owners are not personally responsible for debts that the LLC accumulates (like in a corporation) and the LLC can be run in a flexible manner (like in a partnership).
related diversification
When a company moves into a new industry that has important similarites with the firm’s existing industry or industries.
Hostile Takeover
An attempt to purchase a company that is strongly resisted by the targeted company’s CEO and/or board.
Anchoring and Adjustment Bias
Individuals react to arbitrary or irrelevant numbers when setting financial or other numerical targets.
Boundaryless Organization
When the usual barriers between parts of the organization as well as barriers between the organization and others are removed.
Social Entrepreneurship
Entrepreneurial actions where both economic and social value creation occur.
Baby Boomers
The generation born between 1946 and 1964 corresponding with a population “boom” following the end of World War II
Unity of Command
The principle that each person within an organization should only report directly to one supervisor.
Sensitivity Training Groups or T Groups
Groups of people who meet to discuss emotions, feelings, beliefs, and biases about workplace issues to gain a greater understanding of themselves and others
Clan Control
Relying on shared traditions, expectations, values, and norms to lead people to work toward the good of their organization.
Golden Parachute
A financial package (often including stock options and bonuses worth millions of dollars) given to executives likely to lose their jobs after a takeover.
Behavioral Control
A focus on specifying the actions that ultimately lead to results.
Quality Circle
A formal group of employees who meet regularly to brainstorm solutions to organizational problems.
Corporate Raiders
An individual or company that purchases stock in another company with the goal of an eventual takeover
Backward Vertical Integration
A strategy that involves a buyer entering the industry from which it purchases goods or services.
Vertical Linkages
Relationships within an organizational structure that show the lines of responsibility through which a supervisor delegates authority to subordinates, oversees their activities, evaluates their performance, and guides them toward improvement when necessary.
Management By Objectives (MBO)
A process wherein managers and employees work together to create goals.
Functional Structure
An organizational arrangement whereby employees are divided into departments that each handle activities related to an area of the business, such as marketing, production, human resources, information technology, and customer service.
Agency Problem
The interest of individuals who act as agents to manage the company may not align with the interest of the company’s stockholders.
Satisficing
To settle for the first acceptable alternative instead of seeking the best possible (optimal) decision.`
Forward Vertical Integration
A strategy that involves a supplier entering the industry to which it supplies inputs.
Self-serving Bias
When good outcomes are attributed to personal characteristics ( Intelligence) but undesirable outcomes are attributed to external circumstances ( the weather)
Representativeness
Managers who use stereotypes of similar occurrences when making judgments or decisions.
Question Marks
Low market share units within fast-growing industries.
Core Competency
A skill set that is difficult for competitors to imitate, can be leveraged in different businesses and contributes to the benefits enjoyed by customers within each business.
Board Outsiders
Members of the board of directors who are generally employed outside of the organization.
Concentration strategies
Actions that companies use to try to compete successfully only within a single industry.
Corporate Governance
The processes, policies, and laws that govern an organization (often corporations) to establish accountability and try to eliminate conflicts of interest associated with the principal-agent problems.
Acquisition
When one company purchases another company
Organizational Culture
Values and norms embraced by an organization that determines how people interact with other organizational members as well as external stakeholders.
Sarbanes-Oxley
Law that set new or increased standards for the boards of public U.S. companies and accounting companies.
Stars
High market share units within fast-growing industries.
Institutional Investors
Organizations that invest large sums of money into a broad portfolio of holding, such as banks, retirement funds, mutual funds, and pension funds.
Output Control
A focus on measurable results within an organization
Cash Cows
High market share units within slow-growing industries.
Stakeholders
Individuals and groups that have an interest to stake a claim in an organization.
