Introduction to Management Studies Flashcards
1
Q
What the types of growth a company can experience?
A
- Financial
- Strategic (market share, reputation)
- Organisational (employees, divisions)
2
Q
What are the two recent socio-economic developments that seriously threaten established business models?
A
- Growing societal concerns about the environment, corresponding ecological regulations, and the increasing demand for sustainable solutions. This is driving the emergence of a closed-loop value chain.
- The increasing willingness—and ability—of stakeholders to participate in firm activities, particularly when enabled by emergent information and communication technologies (ICT).
3
Q
What are the 3 consecutive stages of a closed-loop value chain?
A
- The production stage (in the firm’s sphere)
- The consumption stage (in the consumer sphere)
- The subsequent circulation / reversed value chain stage (all firm activities)
4
Q
What are Kortmann and Piller’s nine business model archetypes?
A
- The Transaction-Oriented Manufacturer
- The Servitizing Manufacturer
- The Rebound Manufacturer
- The Co-Creating Manufacturer
- The Maker-Platform Operator
- Recycling Alliance
- The Circulation-Platform Operator
5
Q
What are the implications of moving to closed-loop value chains?
A
- Consumer communities can yield significant communication and production efficiencies that further enhance the profitability of open business models.
- Closed-loop systems are a positive driving factor for sustainability.
- Consumers may become less interested in product ownership and more open to leasing or rental agreements.
- Products are increasingly embedded in product-service bundles that yield additional revenues during the usage stage.
6
Q
What are the 4 general theories that describe change?
A
- Evolution
- Life cycle
- Dialectic
- Teleology
7
Q
Describe the evolution change theory.
A
Evolution - development through inherent natural selection processes, competition is present variation -> selection-> maintenance
8
Q
Describe the dialectic change theory.
A
Dialectic - organizations and ideas compete with each other for domination and control.
Thesis and antithesis ->conflict -> synthesis.
(Greiner)
9
Q
Describe the life-cycle change theory.
A
Life cycle - change can be predicted in a logical way in line with the logical constructs of institutions (startup - growth - harvest - termination) (Penrose, Greiner)
10
Q
Describe the teleology change theory.
A
Teleology- change through goal-setting, cooperation and approval. search -> set goals -> implement goals -> dissatisfaction (Penrose)
11
Q
What are the stages of organisational growth?
A
- Start up
- Growth (big/small)
- Plateauing (maturity)
- Renewal/ decline
12
Q
Define division of labour.
A
Division of labour is the splitting of composite tasks into their component parts and having these performed separately.
13
Q
Why does specialization occur?
A
- The increase of dexterity in every particular work-man.
- The saving of the time which is commonly lost in passing from task to another.
- The invention of a great number of
machines which facilitate and abridge labour.
14
Q
What does division of labour lead to?
A
Specialization
15
Q
What does specialization create the need for?
A
Coordination
16
Q
What are the 2 types of coordination?
A
- Market
- Organization
17
Q
What role does information play in the market/organization mix?
A
Information and communication costs
determine, to a large extent, the relative efficiency of the two broad coordination
mechanisms (markets and organizations)
18
Q
What role does environmental pressure and selection play in the market/organization mix?
A
It affects information as well as market and organization coordination.
19
Q
What is the liability of newness?
A
The concept that the risk of failure is high during the start-up phase but declines as the organization ages.
20
Q
What is the imprinting thesis?
A
The conditions (economical, political and cultural) at the time of an organization founding (imprinting forces) and events subsequent to founding (traditionalizing forces) tend to preserve organizational characteristics.
21
Q
What is the most influential force in the start-up phase?
A
Imprinting force
22
Q
What is the most influential force in the maturity phase?
A
Traditionalizing force
23
Q
What are the 4 business strategies proposed by Boeker 1989?
A
(1) The first-mover strategy
(2) The low-cost producer strategy
(3) The second-mover strategy
(4) The niche strategy
24
Q
What is the anchoring trap?
A
The Anchoring Trap, also known as focalism, refers to the human tendency to accept and rely on, the first piece of information received before making a decision. That first piece of information is the anchor and sets the tone for everything that follows.
25
What is the status-quo trap?
The Status-Quo Trap: a strong bias toward alternatives that perpetuate the status quo.
26
What is The Sunk-Cost Trap?
The Sunk-Cost Trap: making choices in a way that justifies past choices, even when the past choices no longer seem valid.
27
The Confirming-Evidence Trap?
This bias leads us to seek out information that supports our existing instinct or point of view while avoiding information that contradicts it.
27
The Confirming-Evidence Trap?
A bias that leads us to seek out information that supports our existing instinct or point of view while avoiding information that contradicts it.
28
What is the framing trap?
The way a problem is framed can profoundly influence the choices you make.
29
What are the Estimating and Forecasting Traps?
- The overconfidence trap. Even though most of us are not very good at making estimates or forecasts, we actually tend to be overconfident about our accuracy.
- The prudence trap. When faced with high-stakes decisions, we tend to adjust our estimates or forecasts “just to be on the safe side.”
30
What are the 5 most important contingency factors?
- Size (Blau 1970)
- Age (Stinchcombe 1965)
- Strategy (Donaldson, 1995; Chandler, 1962)
- Technical system (Woodward, 1965)
- Environment (Burns & Stalker, 1962; Lawrence & Lorsch,1967)
31
Define contingency factor.
A contingency factor is anything that cannot be accurately predicted or forecast in the future.
31
Define contingency factor.
A contingency factor is anything that cannot be accurately predicted or forecast in the future.
32
What are the basic components of structures in fives?
- Strategic apex
- Middle line
- Operating core
- Technostructure
- Support Staff
33
What are the 4 dimensions of asset specificity?
Site, physical asset, human asset and dedicated specificity.
34
What are the determinants of the transaction cost?
- Asset specificity
- Uncertainty
- Frequency
35
According to Mintzberg what are the design parameters?
-Design of positions: Job position in company.
-Design of superstructure: build units in the company.
-Design of lateral linkages: the control systems, how to ensure people are doing what they're suppose to do.
- Design of decision-making systems.
36
What are the 3 criteria for something to be considered a substitute?
- Customer willing to substitute.
- Can be acquired in the same geographical region.
- Meet the same demand.
37
What are heuristics?
Simplifying cognitive shortcuts applied when identifying patterns in decision situations, especially in uncertain or complex situations. e.g affect heuristics, anchor heuristics
38
What are biases?
Systematic decision making flaws and misjudgments occurring when decision maker makes decisions based on heuristics and refuses to change or alternate their view on their choices.
39
Greiner's organizational life cycle model is combination of what two models?
Dialectic model and life cycle model.
40
What are the 3 characteristics of contracts?
1. Agent willing to accept the offer.
2. Principal is not overpaying agent.
3. Reducing and aligning the conflict of interests.
41
What are the assumptions of Resource-based theory?
- Resource heterogeneity: different bundle of resources, one with the superior ones gets rents.
- Resource Immobility.
- Imperfect factor mobility: Some resources cannot be expanded SR e.g management resources.
42
What are the two perspectives of Resource-based theory?
Firm perspective:
- Focus on the development of firm and management.
- Longitudinal analysis.
Market perspective:
- Focus on resources and creation of sustained competitive advantage.
- Cross sectional analysis.
43
What are the intangible imitation barriers?
-Casual ambiguity: when people in and out the firm can not easily identify how the company makes business good.
- Unique historical resources e.g ability to exploit resources from the patch.
44
Critique of resource based view:
- Does not look at the combination of resources.
- Limited empirical evidence.
- Limited explanatory power of competitive advantage in dynamic markets.
45
How is a firm's dominant logic viewed in the information filter?
Dominant logic viewed as an information filter(organisational intelligence) because firms focus on information that is relevant to the dominant logic.
46
What is organizational learning?
Activate the organizational type 2 thinking.
Revise our strategy, pay attention to changes in environment.
Filtered data is incorporated into our strategy, systems, value, expectations.
OLD LOGIC MUST BE UNLEARNED.
47
According to Mintzberg, what design parameters does senior management rely on when designing structure of organization?
-Design of positions: Job position in company.
-Design of superstructure: build units in the company.
-Design of lateral linkages: the control systems, how to ensure people are doing what they're suppose to do.
- Design of decision-making systems.
48
What is the configuration thesis?
Efficient structuring requires an internal consistency among the design parameters and the contingency factors.
49
Describe Machine Bureaucracy.
Older and larger organizations.
Simple and stable environment.
Coordination mechanism: Standardisation of work processes.
Dominating component: Technostructure.
50
Describe Professional Bureaucracy.
Complex but stable environments.
Simple technical systems.
Coordination Mechanisms: Standardisation of skills
Dominating component: Operating core.
51
What are the 3 dimensions of authority and responsibility that Mintzberg mentions?
- Centralised: all power rests at a single point in the organization.
- Decentralised: extent to which power is dispersed among many individuals.
- Selective decentralisation: extent to which decision-making power is delegated to different units within the organization i.e technostructure in machine bureaucracy
52
Explain the dual process theory.
Type 1 processes:
- Native processes: unconscious, automatic, parallel fast processes(found in system 1).
- Learned processes: Routines in long term memory (found in system 2).
Type 2 Processes:
- Conscious, controlled, sequential, slow processes in system 2.
53
What are 3 examples of behaviour explained by prospect theory?
- Dispositions effect: refers to investors' reluctance to sell assets that have lost value and greater likelihood of selling assets that have made gains
- Endowment effect: e.g value home more due to emotional connection.
- Myopic loss aversion: combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently.
54
Greiner: Phase 2
- Growth through direction.
- Crisis of autonomy: information overload, middle management unsatisfied with centralisation.
- Corresponds to Mintzberg's Machine Bureaucracy
55
Greiner: Phase 3
Growth through delegation.
Crisis of control:decentralization of decision rights, sub-optimization
Corresponds to Mintzberg's Divisionalised form.
56
Greiner: Phase 4
Growth through coordination.
Crisis of red tape: increasing amounts of bureaucracy, trust issues between head office and divisions, change and innovation declines.
Corresponds to Mintzberg's Divisionalised form
57
Greiner: Phase 5
Growth through collaboration.
Crisis of internal growth.
58
Neoclassical economics rests on three assumptions:
Clear and rational preferences.
Individuals maximise utility and firms maximise profit.
Perfect information.
59
PENROSE: key points
- The amount of activity that can be planned limits the amount of new personnel that can profitably be absorbed in the "next period".
- Penrose believes that there is no such thing as too much growth and optimal sizes don't exist.
- Through learning and training, managerial services get absorbed in the film.
-The managerial services will gradually be released.
-A firm can go grow through release of excess managerial resources.
- Resources may be excess through routinisation.
- Excess capacity of productive services or resources is a driver of firm growth, so these unused unproductive resources may be a source of innovation.
- Firm level diversification is often based on a firm's competencies that can lead to sustained competitive advantage(economies of scope).
60
What are the global organisational challenges?
- Increased complexity and differentiation.
- Need for integration.
- Knowledge Transfer.
61
Give examples of Hybrid forms:
Joint venture
Strategic alliance
Franchising
Partnership
Trade Partners: long term supplier customer relations.
62
Explain the determinants of the size of transaction costs.
Asset specificity:
- Site, physical, human and dedicated specificity.
- Uncertainty/Complexity: more costly to write contract and try to foresee future if there is an uncertain environment.
- Frequency: several repeated deals help spread transaction costs.
63
What are the safeguards to avoid the hold up situation?
Third party enforcements: a legitimate authority to enforce contractual terms.
Self enforcing contracts:
Formal safeguard: asymmetric/irreversible investment, both parties invest in the same assets, so less opportunistic behaviour.
Informal safeguard: trust and reputation, behave nicely for future transactions.
64
Explain the Agency Problem.
The more dispersed ownership, the less control and the higher the risk of opportunistic behaviour of the agent.
65
What are the 3 main assumptions in the Principal Agent Theory?
1. Assume Principals and Agents characterised by self interest, seek to maximise utility hence they have conflicting objectives.
2. Asymmetric Information present, risk for being exploited.
3. Different attitudes towards risk taking: agent is risk averse, managers are risk neutral and attempt to place risk on them.
66
What are the 3 characteristics of contracts?
1. Agent willing to accept the offer i.e low opportunity cost.
2. Principal is not overpaying agent.
3. Reducing and aligning the conflict of interests.
67
According to the principal agency theory, when are incentives not effective?
According to the principal agency theory, when are incentives not effective?
68
Define Strategy.
Plan of action and behavioural pattern to achieve long run goal by using and developing resources and navigating in a competitive environment.
69
What is Porter's five forces model based on?
The Structure- Conduct - Performance Paradigm:
-Assumes that important resources give competitive advantage only for limited time and over time they will be available to all competitors.
70
What four positioning strategies can firms take according to Porter?
- Cost leadership.
- G/S differentiation.
- Niche: narrow market segment with cost leadership.
- Niche: narrow market segment with differentiation.
71
Critique Porter's Five Forces Model.
- Static model: focus on existing industries not innovation.
- Only considers competitive context, not heterogeneity of companies.
Assumes:
- Stability in environment.
- Rational decision making.
- Efficient factor markets:
- Short term competitive advantage of resources.
72
Industry Life Cycle Model:
Fragmentation, Growth, Shakeout, Mature, Decline.
73
What are the differences between Porter's Five Forces Model and Barney's VRIN-model?
Porter:
- Positioning strategy.
- External perspective.
- Firms are homogenous: outcompeted in the LR.
- Perfect factor markets.
-Industry profitability.
- Focus on business unit strategy.
Barney:
- Resource-building strategy.
- Internal perspective.
- Firm profitability.
- Imperfect factor markets.
- Firms are heterogenous.
74
What are the four categories of resources?
Tangible, human, organisational, financial.
75
Resource-based theory assumes...
Resource heterogeneity: different bundle of resources, one with the superior ones gets rents.
Resource Immobility.
Imperfect factor mobility: Some resources cannot be expanded SR e.g management resources.
76
What are the two perspectives of Resource-based theory?
Firm perspective: (Penrose, Prahalad & Hamel)
- Focus on the development of firm and management.
- Longitudinal analysis.
Market perspective: (Barney)
- Focus on resources and creation of sustained competitive advantage.
- Cross sectional analysis.
77
What are the intangible imitation barriers?
-Casual ambiguity: when people in and out the firm can not easily identify how the company makes business good.
- Unique historical resources e.g ability to exploit resources from the patch.
78
Critique of resource based view:
- Does not look at the combination of resources.
- Limited empirical evidence.
- Limited explanatory power of competitive advantage in dynamic markets.
79
What are core competences?
Core competence is a complex set of resources and capabilities that binds existing businesses within a firm, e.g. managerial competencies, know-how, experience and knowledge. ”the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies” (Prahalad & Hamel)
80
What are linkage economies?
“Linkage” economies are better routines, procedures, cross-activity coordination, learning and innovation across activities and tasks. They may be realized by controlling multiple activities in the value system, since information and knowledge may flow more easily between functions associated with different activities within a firm.
81
What is the paradox of trust?
Paradox of trust- informal safeguards; more trust of one partner increases the opportunistic behaviour of the second partner
82
Define dynamic capabilities.
”The ability to sense and then to seize new opportunities, and to reconfigure and protect knowledge assets, competences and complementary assets and technologies to achieve sustainable competitive advantage”
83
Describe the organisational filter.
- Dominant logic
84
Describe the organisational learning process.
- Values and expectations
- Measurements of performance
- Reinforced behaviour
- Competitive strategy
- Analytics and dominant logic
