Midterm Exam Review ADMS 1000

The 7 External Environmental Forces: 1. Political and Legal (Federal, Provincial or Municipal levels. Laws, regulations. Trade. Tax.) 2. Economic (The state of the economy, Interest rates, inflation, recession, employment ) 3. Technological (Technology of all types) 4. Societal (Social attitudes, values, or trends on issues: work, health, religion, culture, lifestyle) 5. Environmental (Sustainability) (Sustainability issues: Climate, Polution, Pressures/influences) 6. Labour (Anyform of work being done by an individual, Union influences Cost of labour) 7. Global (Everything from above with a global/foreign aspect) “PETS have Ears and LeGs” Internal challenges 1. 2. 3. 4. Style Structure Strategy Status ______________________________________________________________ Roles of Managers ● Interpersonal roles - Figurehead: Ceremonial or symbolic in nature. EG: employee of the month - Leader: A motivator, a communicator. - Liaison: Developing relationships with members of the organization ● Informational roles - Monitor: Constantly monitor the internal and external environments - Disseminator: share or distribute information - Spokesperson: Transmit information to individuals outside their area of authority ● Decisional roles - Entrepreneur: Individual who operates business - Disturbance handler: When hit an unexpected roadblock - Resource allocator: Manage and distribute resources - Negotiator: Communicate to reach goals Management Philosophies: 1. Classical Approaches to Managing Three (3) theories: - Scientific Management: (Frederick Taylor) ● Standardizing the work ● Supervising the workers ● Motivating the workers - Administrative Management: (Henry Fayol - 1841-1925) ● Work compartmentalized. ● Each employee reports to only one boss. ● Team spirit and harmony. ● Company goals take priority over individual interests. - Bureaucratic Management: (Max Weber: 1864-1920) ● Rules and procedures ● Hierarchy of authority ● Division of labour ● Impersonality ● Selection and promotion 2. Behavioural Approaches to Managing Three (4) approches: - Human Relations Movement (Elton Mayo: 1880-1949) ● Social factors ● Hawthorne effect: increasing output in response to being watched - Mary Parker Follet ● Coordination ● Self-management ● Collaboration - Chester Barnard ● Organizations are social systems ● Communication system ● Organizational objectives ● Authority over subordinates ● Collaboration - Motivation-Based Perspectives ● Modivation is key - This approach is acceptable if there is no best way to manage employees - the way you manage should change depending on the circumstances Contingency Theory: 1. Strategy 2. Organizational Size 3. Technology 4. Environment ______________________________________________________________ The Changing Nature of Organizations: Just Look Over: Organizations are: ● Social ● Interactive with their environment ● Goal-oriented ● Structure-based Five Elements of Organizational Structure: 1. Work Specialization: ● Functional specialization - Division of jobs into simple, repetitive tasks, with high degree of job specialization ● Social specialization - Specialization of individuals rather than jobs (Lawyers, Doctors, Accountants 2. Decision making source ● Centralization - Top-down approach – employees at lower levels are not involved in the decision-making process ● Decentralization - Team-based approach – employees at lower levels are involved in decision-making 3. ● ● ● ● Level of administration (span of control) How many employees a single manager must be responsible for Reporting structure Tall/narrow – many layers of management Flat/wide – few levels 4. Formalization ● High - Lots of rules; rigid, standardized ● Low - Less rules; more individual discretion 5. Departmentation ● Functional - Finance, marketing, HR, production ● Divisional/matrix - Product, process, geography, customer *** What is a virtual organization? ● Outsourcing ● Networking ● Shedding Noncore Functions ⬇️⬇️ Shedding Noncore Functions: eliminating tasks that aren't crucial to the organization's core purpose. Virtual organization: What are the Benefits: 1. Cost savings are significant. 2. Great alternative for entrepreneurs. 3. Fast way to develop and market new products. 4. Fast and flexible. What are the Risks: 1. Losing control. 2. Lack of employee loyalty. 3. Potential sacrifice of competitive learning opportunities. ____ What is downsizing? ● the planned reduction in the breadth of an organization’s operations. Forms of Business Ownership: ● Sole proprietorship ● Partnership ● Cooperative ● Corporation Corporate Governance: A system of rules, practices and processes by which a company is directed and controlled. Stakeholder: An individual or group that has an interest or stake in a business. - Examples: Managers, Customers, Local communities, Suppliers, Business partners, Government/regulators, Banks, ETC Principal-Agent Problem: ● Managerial interests are in conflict with shareholder interests Good governance is: ● Accountability ● Fairness ● Transparency ● Reliable leadership ● Stakeholder engagement ______________________________________________________________ Industry Analysis Michael Porters: Five Forces Model – an industry analysis *** 1. 2. 3. 4. Threat of new entrants: (Is the threat of new entrants high or low?) Threat of Suppliers: (Is the threat of suppliers high or low?) Threat of buyers: (Is the power of buyers high or low?) Threat of substitutes: (Is the power of substitutes high or low?) - Practice: What is a substitute for: Coffee? Television? Cell phone? 5. Rivalry Amongst Existing Firms: (Is the threat of current competition high or low?) Limitations of the Five Forces Model: ● Assumes power relationships are the same in each force ● Time-based The VRIO Model: An internal analysis *** ● Are they Valuable ● Are they Rare ● Are they difficult to Imitate ● Is the firm organized to exploit these valuable, rare, and difficult to imitate resources SWOT analysis: [Combines both!] *** Business Analysis Business-Level Strategies: *** 1. Cost leadership - To gain a competitive advantage by being the lowest-cost producer of a product, service, etc. 2. Product Differentiation (Uniqueness) - “Perceived value” through… 3. Focus A focus strategy targets a: Particular buyer group, segment of the product line, or geographic market ● A focus strategy can also have a cost leadership or differentiation strategy Corporate level strategy: ● Related diversification ● Unrelated diversification ● Vertical integration ______________________________________________________________ Strategic Decision-Making What sort of decisions do people make in organizations? ● Top managers: non-programmed ● Low-level/middle managers: mix of programmed and non-programmed ● Non-managerial employees: programmed The rational model of decision making: STAGE 1 - IDENTIFY PROBLEMS & OPPORTUNITIES STAGE 2 - CHOOSE THE BEST DECISION STYLE STAGE 3 - DEVELOP ALTERNATIVE SOLUTIONS STAGE 4 - CHOOSE THE BEST SOLUTION STAGE 5 - IMPLEMENT STAGE 6 - EVALUATE DECISION OUTCOMES ● Assumptions of the rational model - All alternatives and outcomes to a decision are known - Individuals are capable of fully processing all available info in an objective manner - A decision-rule exists for choosing alternatives ● Limitations of the rational model - Bounded rationality - Satisficing Non-rationality in strategic decision-making: risk/uncertainty DECISION-MAKING UNDER RISK: ● PROSPECT THEORY: Decisions involving risky prospects, can be framed as: A choice between losses ---> risk-seeking - that humans tend to prefer certainties over probabilities Escalated commitment to a failing course of action:"Throwing good money after bad” TYPICAL ESCALATION SCENARIO: 1. initial decision results in loss or negative outcome. 2. decision-maker commits more resources to the project (ie desire to avoid a sure loss by quitting now). 3. Further losses experienced. SO WHAT SHOULD WE DO?: MINIMIZING DECISION ERRORS? A. IMPROVING PERCEPTUAL ACCURACY IN DECISIONS B. STRUCTURAL APPROACHES TO BETTER DECISIONS How organizations can learn: 1. Single-loop learning – addresses the current problem & maintains organizational status quo - Error detection and correction - Deal with symptoms - Does not consider underlying causes 2. Double-loop learning – aims to change the status quo, promotes innovation, modifies underlying policies - Considers the underlying system - Goes to the source of the problem - Deals with the root causes of the problem How to change strategic direction ● Paradigm shift (Change in the way we think) ● Bureaucracies/roles ● Cognitive scripts