Exam 4- Business Flashcards
GENERIC LEADERSHIP STYLES
AUTHORITATIVE LEADER
LAISSEZ FAIRE (FREE REIGN) LEADER
PARTICIPATIVE LEADER
Business etiquette
1. MAINTAIN EYE CONTACT BUT DO NOT STARE GIVE A “FIRM” HANDSHAKE BUT: 3. KEEP GOOD POSTURE 4. SPEAK CLEARLY/AVOID SLANG 5. DRESS APPROPRIATELY
- GET NAMES STRAIGHT
- BE A GOOD LISTENER
- LET THE OTHER PERSON BE THE CENTER OF ATTENTION
- PUNCTUALITY
- GET A MENTOR
- MAKE THE BOSS LOOK GOOD
- HAVE A POSITIVE ATTITUDE.
Delegating
MUST INCLUDE:
Authority to carry out the task
Accountability for the results
JACK WELCH ON LEADERSHIP
20-70-10
Rank 20 percent “best”
Rank 70 percent “near best”
Rank 10 percent “below best”
JACK WELCH—HANDLING THE MOVE FROM “PEER” TO BOSS
From “one of us” to “one of them”
Peers will cheer, then in private feel they deserved it, feel hurt, resentful
Most delicate and complicated situation
Campaign to win them over—3 to 6 months
Create an atmosphere of stability and cohesion
Gentler, kinder boss to lead from strength
JACK WELCH’S THREE BOSS-TYPES
ARRAYED ON TWO DIMENSIONS
THE “DESTROYER”—A “BAD” TOUGH BOSS
THE “IS EVERYBODY HAPPY?” BOSS—A ANOTHER BAD BOSS
THE “GOOD” TOUGH BOSS—SOMEWHERE IN BETWEEN
EVALUATING EMPLOYEES
SET PERFORMANCE STANDARDS
MONITOR AND RECORD ACTUAL PERFORMANCE (PAPER TRAIL
COMPARE RESULTS AGAINST PLANS AND STANDARDS
JACK WELCH—HOW TO KEEP PEOPLE PUMPED
MONEY IS A MOTIVATOR
INTERESTING WORK
ENJOYABLE CO-WORKERS
RECOGNITION
HOW TO FORM A BUSINESS
SOLE PROPRIETORSHIP
PARTNERSHIP
CORPORATION
LIMITED LIABILITY COMPANY
LLC
The fasted growing way to organize a business
Allows flexibility
Limited liability
Choice of whether to pay taxes as a corporation or a partnership
Flexibility in distributing profits—not just proportional to shares held
LIMITED LIABILITY PARTNERSHIP
LLP
Favorite among lawyers, accountants, engineers
General partners are not liable for the financial problems of other general partners
Limited liability
Profits are ordinary income and taxed as such
LEVERAGED BUYOUT (LBO)
Management or investors (or a combination of both) pool money to buy a corporation
Usually using borrowed money
Company is often weakened by huge debt load
Can be politically sensitive if foreign company buys U.S. icon
MERGERS AND ACQUISITIONS
When companies combine
Merger implies two equally sized firms
Acquisition is when one firm buys another smaller firm
Can be friendly or hostile “takeover”
TYPES OF MERGERS
HORIZONTAL MERGERS
VERTICAL MERGERS
CONGLOMERATE
Horizontal mergers
Mergers among competitors
Exxon merges with Mobil to form ExxonMobil
Staples merges with Office Max
Most likely to attract government regulators
Vertical mergers
Mergers in the channel of distribution
Exxon buys gas stations or pipelines
Staples buys an envelope company
Conglomerate
A company in unrelated businesses
GE buys wind turbine maker
GE also makes locomotives
Was most popular in the 1960s
FREDERICK TAYLOR’S “SCIENTIFIC MANAGEMENT”
Principles of Scientific Management, 1911
Goal was to increase productivity
Time-motion studies and speeding up the assembly line
ASSUMES PEOPLE ARE MACHINES
THINGS TO KNOW FROM THE “ORGANIZING” CHAPTER
CENTRALIZED VERSUS DECENTRALIZED CONTROL
FLAT VERSUS TALL ORGANIZATIONS
SPAN OF CONTROL
EMPOWERING WORKERS AND SELF-MANAGED TEAMS
Sole proprietership
A business owned and usually managed by one person
Partnership
Two or more people legally agree to become co owners of a business
Corporation
A legal entity with authority to act and have liability apart from its owners
Cities with the most minority run firms
Atlanta, Baltimore, Nashville, Houston, Miami
Benefits of a sole proprietership
- Ease of starting and ending the business
- Being your own boss
- Pride of ownership
- Leaving a legacy
- Retention of company profit
- No special taxes
Disadvantages of sole proprieterships
- Unlimited liability (any debts incurred by the business are yours too
- Limited financial resurces
- Management difficulties
- Overwhelming time committment
- Few fringe benefits
- Limited growth
- Limited life span
what percent of businesses are sole proprieterships?
72 percent
General partnership
All owners share in operating the business and sharing the businesses debts
Limited partnership
A partnership with one or more general partners and more limited partners. Can have only one general partner.
Limited partner
Invested in business but enjoys limited liability
General partner
Manages bysiness and assumes unlimited liability
Master limited partnership
Looks like corporation but taxed like a partnership thus avoiding corporate tashes
Limited liability partnership
Limits liabilities in the risk of losing personal assets
Advantages of partnerships
More financial resources Shared management Longer survival No special taxes and pooled skills/knowledge Longer survival No special taxes
Disadvantages of partnerships
Unlimited liability
Division of profits
Disagreements
Difficult to terminate
Conventional corporation
A state chartered legal entity with authority to act and have its liability separate from its stockholders
Advantages of corporations
Limited liability Ability to raise money Size Perpetual life Ease of ownership change Ease of attracting talented employees Separation of ownership from management
How do owners affect management
Owners/stockholders/elect board of directors -> board of directors (hire officers) -> officers (set corporate objectives and select managers)-> managers (supervise employees) -> employees
Largest corporations in us
Walmart, exxon mobil, chevron, conocophillips, fanniemae
Largest privste corporations
Cargill, koch industries, bechtel, hca,mars, chrysler, pricewatercoopers, publix, ernst and young, c and s wholesale grocers
Disadvantages of corporations
Initial cost Extensive paperwork Duble taxatioj Two tax returns Sixe Difficulty of termination Possible conflict with stockholders and board of directors
Who can incorporate
Anyone
S corporation
Government creation that Looks like a corporation but is taxed like sole proprietorships and partnerships
Have shareholders, directors and employees, plus benefit of limited liability. Profits are taxed only as perosnal income of the shareholder.
Qualifications for s corporations
Have no more than 100 sharehodlers
Have shareholders that are us citizens
Have only one class of stock
Derive no more than 25 percent of income from passive sources
Limited liability company
Similar to an s corporation but without the eligibility Advantages Operating flexibility Flexible ownership rules Choices of taxation Flexible ownership rules No stock therefor ownerhsip is nontransferable Limited life span Paperwork Fewer incentives
Virtual companies
Online LLCs
Merger
The result of two firms joining to form one company
Acquisition
One company’s purchase of the property and obligations of another company
Vertical merger
Joins two firms in different stages of related businesses
Horizontal merger
Joins two firms in the industry nd allows them to diversify or expand their products
Conglomerate merger
United firms in compltely unrelated industries in order to diversify business operatons and investments
Leveraged buyout (LBO)
An attempt by employees, management or a group of investors to buy out the stockholders in a company
Foreign investors do this in US frequently
Franchise agreement
An arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service(franchise) to others (franchisees)
Advantages of franchising
Management and marketing asisstance Personal ownership Nationally recognized name Financial advice and asistnce Lower failure rate
Disadvantages of franchising
Large start up cost Shared profit Management regulauton Coattail effects Restrictions on selling Fraudulent franchisors
Home based franchiens advantages nd disadvantages
Advanatages:
Relief from commuting
Extra family time
Low overhead expenses
Disadvantages:
Isolation
Long hours
Examples: jazzercise, vanguard clesning, lawn doctor
Franchises and rhe internet
Tricky because of regulation
Utilization of facebook
Global franchising
Canada is most popular for us chains
Top ten performing franchises
Hampton hotels Ampm Mcdonalds 7eleven Supercuts Days inn Vanguard cleaning Subway Dennys
Cooperstives
Businesses owned and controlled by the people wh o use them-producers, consumers or workers with similar needs who pool their resources for mutual gain
Management
The process used to accomplish organizational goals through planning, organizing, leading and controlling people and other organizational resources
Todays managers
Are younger More progressive Less from elite universities Growing numbers of women Ephasis on teams and team building Need to be skilled communicators and team players
Respect and how to get it
In order of importance -strong management Sound business strategy Ethical practices Cmpetitve edge Product innovation
Four functions of management
Planning
Organizing
Leading
Controlling
Vision
More than a goal, its a broad explanation of why the organizations exists and where its trying to go
Mission statementq
Outlines the organizations fundamental purposes
It includes
Organizations self concept, philosohy, long term survival needs, customer needs, social responiblity, nature of the product or service
Goals
The broad long term accomplishments an organizations wishes to attain
Objectived
Specific short term stteents detailing how to achieve the organization’s goals
SWOT analysis
Analyzes the Strengths, Weakneses, Opportunities, and Threats
Potential internal Strengths
Core competencies in some areas An acknolweged market leader Well conceived funcitonal area strategies Proven management Cost advantages Better advertising campigns
Potential external Opportunities
Abiliity to serve additional customer groups
Expand product lines
Ability to transfer skills/technology to new products
Falling trade barriers in attractive foreign markets
Complacency among rival firms
Ability to grow due to increases in market demand
Potential internal Weakneses
No clear strategic direction Obsolete facilities Subpar profitbility Lack of managerial depth and talent Weak market image Too narrow a product line
Potential external Threats
Entry of lower cost foreign competitiom Rising dales of substitute products Slower market growth Costly rgulatory requirements Vulnerability to rcession and business cycles Changing buyer needs and tastes
Planning Functions
Strategic planning. Tactical planning. Operational planning. Contingency planning.
Strategic planning
The setting of broad long range goals by top managers
Done by top management nd determines the major goals of the organization and the policies, procedures, strategies and resources it will need to achieve them.
Tactical planning
The identification of specific short range objectives by lower level managers
The process of developing detsiled, short term statements bout what is to be done who is to do it and how
Operational planning
The setting of work standards and schedules
Te process of setting work standards and schedules necessary to implement the company’s tactical objectives
Contingency planning
Backup plans in case primary plans fail
The process of preparing alterntive courses of action the firm can use if its primary plans don’t work out.
Decision making
Choosing between two or more alternatives
What makes a great CEO
Keep global business issues in mind and be a citizen of he world
Identify and manage risks before they grow
Change strategies and models with the times
Skillfully mange relationships with governments as government involvement rises
Problem solving
The process of solving the everyday problems that occur, less formal than decision making and needs quicker action
Problem solving techniques include brainstorming and PMI
PMI
Listing all of the pluses for a solution in one column, all the minuses in another and the implicaitons in a third
Organization chart
Visual device thwt dhows relationships among people and divides the organizations work. It shows who reports to whom.
Levels of managemen
Top management, middle management, supervisory management
Top management
The highest level, consists of the president and othe rkey company executives who develop strategic plans
Middle management
Includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling
Supervisory management
Those directly responsible for supervising workers and evalutng daily performance
CEO
Chief executive officer
Introduce change into an organization
COO
Chief Operating Officer
Implements CEOs changes
CFO
Chief financial officer
Obtains funds, plans budgets, collects funds, etc
CIO
Chief information officer
Gets the right information to the right people so decisions can be made
Managerial skills
Technical, human relations, conceptual
Technical skills
The ability to perform tasks in a specific discipline or department
Human relations skills
Skills that involve communication and motivation- they enable managers to work through and with people
Conceptual skills
Sills that involve the ability to picture the organization as a whole and the relationship among its various parts
The most basic human relations skill
Saying Thank You
Staffing
Recruiting, hiring, motivating, and retaining the best peiple available to accomplish the company’s objectives
Recruiting good people is crucial.
Many people are not willing to work at companies unless they are treated well with fair pay.
Six sins of staffing
Don’t hire someone because someone else says so
Dont get caught up in applicants appearences
Dont give someone the wrong job
Dont forget about feedback
Dont give promotions just because ‘its time’
Dont cheat your employees
Five things leaders must do
Communicate a vision and rally others around tha vision Establish corporwte values Promote corporate ethics Embrace change Stress accountability and responsiblity
Transparency
The presention of the company’s facts and figures in a way that is clear and apparent to all stakeholders
Autocratic leadership
Making managerial decisions without consulting others
Participtive or democratic leadership
Managers and employees work together to make decisions
Free rein leadership
Managers set objectives wnd employees are free to do whatever is appropriate to accomplish those objects
Four types of executives
Rationalists
Humanists
Culturists
Politicists
Epowerment
Progressive lesders give employees the authority to make decisions on their own without comsulting a manager
Customer needs are handled quickly
Managers role becomes less of a boss and more of a coach
Enabling
Giving workers the education and tools they need to make decisions
How to ease pressure on workers
Manage output instead of hours
Train workers to be ready for a more complex corporate structure
Allow lower level managers to make decisions
Use technology to foster teamwork
Shift hiring emphasis to collaboration
Knowledge management
Finding the rit information, keeping information in a readily accessible place and making the information known to everyone in the firm
Tries to keep people from reinventing the wheel
Five steps of controlling
Establishing clear standards Monitor and record performance Cmpare results against standards Cmmunicate results If needed take corrective action
Ask wuestion ‘are standards realistic?’ And repeat chain
Measurements of success
Financials
Then Pleasing emoloyees, stakeholders and customers
External customers
Dealers, who buy products to sell to others,and ultimate customers who buy products for their own use
Internsl customers
Individuals and units within the firm and receive services from other individuals and units
How to structure an organization
Create a division of labor Set up teams or departments Allocate resources Assign tasks Establish procedures Adjust to new realities
Change in organizations is due to
More global competiton
Declining economy
Faster technological change
Pressure to protect the environment
Economies of scale
Companies can reduce their production costs by purchasing raw materials in bulk
Fayol’s principles
Unity of command Hierachy of authority Division of labor Subordination of individual interests to the general interest Authority Degree of centrlaization Clear communication channels Order Equity Espirit de corps
Organizational theories based on fayol’s principles
Organizairojs in which employees have no more than one boss. Lines of authority are clear.
Rigid organizations that often dont respond to customers quickly.
Weber’s principles
Employees just need to do what they’re told
Also emphasized
Job descriptions
Written rules, decision guidelines, detsiled records
Cnsistent procedures, regulations, and policies
Staffing nd promotion based on qualifications
Hierarchy
Fayol and weber
A system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down
Chain of command
Te line of authority that moves from the top of the hierrchy to the lowest level
Beaurocracy
A organization with many layers of managers who set rules and regularions and oversee all decisions
This can annoy customerd as it can take weeks or months to have info passed down to lower level employees.
Centralized authority
When decision making is concentrated at the top level of management
Decentralized authority
When decision making is delegsted to lower level managers and meployees mo familiar with local conditions than headquartees is
Span of control
The optimal number of subordinates a manager supervises or should supervise
When work is standardizwd, broad spans of control are possible
Appropriate span narrows at hogher levels of the organization
Te trend today is to reduce middle managers and hire bette rlow level employees
Organizarional structures
Tall organization structures
Flat organization structures
Tall organization strcutures
An organizational structure in which the organization chart would be tall because of the various levels of management
Flat organization structures
A organizational structure that has few layers of management and a broad span of control
Departmentalization
Divides organizations into seperate units
Workers are grouped by skills and expertise to specilaize their skills
Advantages of departmentlaization
Eployees can develop skills and progress within a department as they master skills
Te company can achieve economies of scale
Employees can coordinte work within the fucntion and top management can easily direct activites.
Disadvantages of departmentslizaion
Departments my not communicate well
Eployees may identify with their departments goals rather than their organization’s
Te company’s respose to external changes mAy be slow
People may not be trained to take different managerial responsibilities instead they become specialists
Department members may engage in groupthink snd may need outside input
Ways to departmentalize
By product
By function
Four ways to structure an organization
Line organizations
Line and staff organizations
Matrix style organizations
Cross functional self managed teams
Line organization
Hs directed two way lines of responsibility authority and communication running from the top to the bottom. Everyone reports to the supervisor.
There are no specilaists, legal, accounting, human reources, or informaiton technology departments
Line managers issue orders enforce discipline and adjust the organization to changes
Line personnel
Workers responsible for directly achieving organizational goals, and include production, distribution and marketing employees
Line personnel have authority to make decisions
Staff personnel
Employees who advise and assist the personnel in meeting their goals and include marketing research, legal advising, IT and human resource employees
Matrix organizations
Specialists from different parts of the organization work together temporarily on specific project but still remain part of a line and staff structure.
Advantages of the matrix style
Managers have flexibility in asigning peiple to projects
Interorganizatonal Cooperation and teamwork is encouraged
Creative solutioms ot prduct development problems are produced
Efficient use of organizational resurces
Disadvantage sof matrix style
Costly and complex
Employees confused bout where loylty belongs
Cross functional self msnaged teamsq
Groups of employees from different departments working together on s long time basis
Cross functional teams work best when
The voice of the customer is heard
Teams tht include customers suppliers and distributors go beyond organizational boundsries.
Important conditions for small teams
Clear purpose Clear goals Correct skills Mutual accountability Shift roles when appropriate
Networking
Using communications technology to link organizations and allow them to work together.
Companies are no longer self sufficient and rely on a global business network
Real time
Te present moment or actual time in which smething takes place
Transparency in electronics
Cmpny is very open to share electronic information with other companies as if they were one
Virtual corporation
A temporary networked organization made up of replacable firms that join and leave as needed
Benchmarking
Compares an organizations practices, processes and products against the world best.
Core competencies
The functions an organization can do as well or better than any other organization in the world
Restructuring
Redesigning an organization so it can more effectively and efficiently serve its customers.
Inverted corporation
An organization that has contact people at the top and the ceo at the bottom.
A manager assists and supports workers, not bosses them.
Corporate culture
The widely shared values within an organization that fosters unity and cooperwtion to achieve commo goals.
Some of the best organizational cultures emphasize service.
Formal organization
Details lines of responsibility, authority, and position
Informal organization
The system of relationships that develop spontaneously as employees meet and form relationships
Limitations of informal organziations
Too unstructured and emotional on its own
Intrinsic goals
Personal satisfaction you feel when you perform well and complete goals
Extrinsic rewards
Something given as a recognition of good work
Scientific management
Studying workers to find the most efficient ways of doing things and hen teaching people those techniques
Three element to increase productivity
Time
Mthods of work
Rules of work
Taylor’s four key principles
Study how a job is performed
Codify the best method into rules
Choose workers whose skill matches the rules
Establish a fair level of performance and pay
Time motion studies
Tudies of which tasks must be performed the complete a job and the time neede to do each task
Principle of motion economy
Every job can be broken down into a series of elementsry motions
Hawthorne effect
People act diffeeently when they know htey are being studied
Mslows hierchy of needs
Theory of motivation based on unmet human needs from basic hysiologic needs to safety, social and esteems needs to self actualizatuon needs.
Herzberg’s motivating factors
Researched two questions
- what factors controlled by managers re most effective in increasing worker motivation
- how do workers rank job related factors in order of importance related to motivation
Discovered that job content factors were most importsnt- workers like to feel that they contribute to the company
Hygiene factors
Job factors that can cause dissatisfaction if missing but do not necessarily morivate employees if increased
Ways to reinvigorate work life
Dnt work alone all the time
Redecorate your space to get away from same old
Dont complain- think of things to celebrate
Theory x and theory y
Two types of mangers according to douglas mcgregor
Assumptions of theory x managers
Workers dislike work and seek to avoid it
Workers must be forced to work with punishment
Workers prefer to avoid responsiblity
Primary motvators are fear and money
Assumptions of Theory y managers
People like to work its a part of life
Workers seek goals which they are committed
People are motivated by a variety of rewards
William ouchi
Researched cultural differences between us and japan
Type j commited to the group
Type a focused on the indidivudal
Theory z was hybrid of type j and type a approahc
Goal setting theory
Setting ambitious but attainable goals can motivate workers and improve perofrmance if the goals are accepted, accompanied by feedback and facilitated by organizational conditions
Management by objectives (MBO)
Involves a cycle of discussion, review and evalution of objectives among to nd middle level managers, supvisrs and employees
Expectancy theory
The amount of effort employees exert on a specific task deends on their expecstions of the outcome
Nadler and lewis
Five steps for managwrrs
- determine what rewards employees value
- determine workers performance standard
- make sure perofamnce stndards are attainable
- tie tewards to performance
- be sure employees feel rewards are adequate
Reinforcement theory
Positive and negative reinforcers motivate a person to behave in certain ways
Positive and negative reiforcment plus extinciton
Equity theory
Eployees try to maintain equity between inouts and outputs compared to oer sin similar positions
Job enrichment
A motivational strategy that emohasies motivating the worker through the job itself
Bsed on herzerg’s motivatorss
Key characteristics of work
Skill variety Task identity Task significance Autonomy Feedback
Types of job enrichment
Job enlargement
Job rotation
Job enlargement
A job enrichment strategy that involves combinng a serie skof tasks into one challengin and interesting asisgnment
Job rotation
A job enrichment strategy that involves moving emoloyees from one job to another
Open communciation
Fosters a culture that rewards listneing, trains mangers to listen, uses effective wuesitoning techniques, akss employees whats imprtsnt to them
High context
Require relationships and group trust before performance
Low context
Believe relationship building distracts from tasks
Rational decision making model
Define the situation Describe and collect needed information Devleop alternarives Develop agreement among those involved Decide which alternative is best Do what is indicated Determine whether the decision was a good one and follow up.
