Management in Organizations Chapter 1
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Questions and Answers

What is the primary purpose of an organization?

  • To maximize profits
  • To provide employment opportunities
  • To provide a social platform for employees
  • To achieve a set of goals through structured collaboration (correct)

    • What is the main focus of the 'Manager's job' section in the introduction to management?

  • The external environment
  • The process of management
  • Organizational goals
  • The functions of management (correct)

    • What is the term for the process of analyzing and adapting to changes in the environment?

  • Innovation management
  • Change management
  • Environmental analysis (correct)
  • Organizational development

    • What is the primary objective of the planning phase in management?

    <p>To establish organizational goals and plans</p> Signup and view all the answers

    What is the term for the process of creating new ideas and solutions?

    <p>Innovation</p> Signup and view all the answers

    What is the primary purpose of organizational structure?

    <p>To define roles and responsibilities</p> Signup and view all the answers

    What is the term for the process of allocating tasks and responsibilities to individuals or teams?

    <p>Job design</p> Signup and view all the answers

    What is the term for the process of bringing about positive change in an organization?

    <p>Organizational development</p> Signup and view all the answers

    What is the primary characteristic of a tall organizational structure?

    <p>Many hierarchical levels and narrow spans of control</p> Signup and view all the answers

    What is the process of significantly reducing the layers of middle management and increasing the spans of control?

    <p>Downsizing</p> Signup and view all the answers

    What is the primary advantage of centralization in an organization?

    <p>It promotes strong leadership and coordination</p> Signup and view all the answers

    What is the opposite of centralization in an organization?

    <p>Decentralization</p> Signup and view all the answers

    What is the primary advantage of decentralization in an organization?

    <p>It reduces the workload of executives</p> Signup and view all the answers

    What is restructuring in an organization?

    <p>The process of making a major change in organization structure</p> Signup and view all the answers

    What is a characteristic of a flat organizational structure?

    <p>Few hierarchical levels and wide spans of control</p> Signup and view all the answers

    What is the term used to describe the process of reducing the layers of middle management and increasing the spans of control, as well as shrinking the size of the work force?

    <p>Downsizing</p> Signup and view all the answers

    What is the main goal of managers when conducting benchmarking?

    <p>To improve strategic competitiveness by identifying activities on the value chain</p> Signup and view all the answers

    What is a source of information for benchmarking competitors' value chain activities?

    <p>Trade publications</p> Signup and view all the answers

    What is an advantage of benchmarking?

    <p>It enables the best practices in the industry to be incorporated into your own business</p> Signup and view all the answers

    What is an essential element for the success of benchmarking?

    <p>Aligning benchmarking with the organization's mission</p> Signup and view all the answers

    What is a benefit of the staff involved in the benchmarking process?

    <p>They expand their professional knowledge due to contacts and interactions with other firms</p> Signup and view all the answers

    What is the outcome of incorporating the essential elements of benchmarking?

    <p>Drive for continuous improvement and sustainable success</p> Signup and view all the answers

    What is a reason why consultancy firms collect information and make benchmarking studies?

    <p>To distribute the results without disclosing their sources</p> Signup and view all the answers

    What can benchmarking lead to?

    <p>Elimination of resistance to change</p> Signup and view all the answers

    What is the primary purpose of Competitive Benchmarking?

    <p>To compare an organization's operations against those of its competitors</p> Signup and view all the answers

    What is the final step in the process of evaluating external factors?

    <p>Effectively communicating and widely distributing the final compilation of key external factors</p> Signup and view all the answers

    Which of the following is NOT a key external factor?

    <p>Employee morale</p> Signup and view all the answers

    What is the primary purpose of Porter's Five-Forces Model of Competition?

    <p>To determine the impact of each force on a firm's success</p> Signup and view all the answers

    What is the outcome if one of Porter's Five Forces exhibits higher intensity compared to others?

    <p>The firm is likely to experience reduced profitability</p> Signup and view all the answers

    What is the significance of relationships with suppliers or distributors in achieving success?

    <p>They often play a crucial role in achieving success</p> Signup and view all the answers

    What is the primary purpose of assimilating and evaluating information?

    <p>To identify key external factors</p> Signup and view all the answers

    What type of data can companies acquire by directly contacting the corporation?

    <p>Types of data not widely available in databases</p> Signup and view all the answers

    At which level of strategy formulation are functional strategies developed?

    <p>Functional level</p> Signup and view all the answers

    What is a potential source of competitive advantage for a company?

    <p>Either unique product differentiation or excelling as the industry's lowest-cost producer</p> Signup and view all the answers

    What is a characteristic of a firm that adopts a cost leadership strategy?

    <p>Offers standardized goods or services at the lowest cost</p> Signup and view all the answers

    Which of the following is an example of a company that has adopted a cost leadership strategy?

    <p>AirAsia</p> Signup and view all the answers

    What is a potential target market for a firm that adopts a cost leadership strategy?

    <p>Customers with small and medium income</p> Signup and view all the answers

    What is a limitation of a firm that adopts a cost leadership strategy?

    <p>It cannot completely ignore the possible sources of product differentiation</p> Signup and view all the answers

    What is the level of strategy formulation at which a firm decides which businesses to compete in?

    <p>Firm level</p> Signup and view all the answers

    What is the term for the strategy that focuses on offering standardized goods or services at the lowest cost?

    <p>Cost leadership strategy</p> Signup and view all the answers

    What happens when the industry is dominated by a limited number of suppliers?

    <p>Supplier power is strong.</p> Signup and view all the answers

    What is the first step in the EFE matrix method?

    <p>List and categorize major external factors.</p> Signup and view all the answers

    What does a rating of 1 in the EFE matrix indicate?

    <p>The firm has a poor response to the factor.</p> Signup and view all the answers

    What is the purpose of allocating a weight to each factor in the EFE matrix?

    <p>To prioritize the factors.</p> Signup and view all the answers

    Which industry is an example of one where suppliers have significant power?

    <p>Oil</p> Signup and view all the answers

    What is the outcome of multiplying the weight of each factor by its corresponding rating in the EFE matrix?

    <p>The total weighted score for the company.</p> Signup and view all the answers

    Why is it important to consider supplier power when analyzing an industry?

    <p>Because suppliers can integrate downstream and compete with current buyers.</p> Signup and view all the answers

    What is the purpose of the EFE matrix?

    <p>To visualize and prioritize the opportunities and threats confronting a business.</p> Signup and view all the answers

    What is the primary purpose of evaluating the effectiveness of implemented strategies?

    <p>To replace ineffective strategies with more viable ones</p> Signup and view all the answers

    What is the primary focus of the external environment in strategic management?

    <p>Compiling a list of potential advantages and threats</p> Signup and view all the answers

    What is included in the general environment in strategic management?

    <p>External forces that may influence long-term decisions</p> Signup and view all the answers

    What is an example of a political and legal force that may impact an organization?

    <p>Environmental protection laws</p> Signup and view all the answers

    Why is it important for firms to assess the potential impact of political variables on competitive strategies?

    <p>Due to the increasing global interdependence among economies</p> Signup and view all the answers

    What is the impact of the imposition of high taxes on an organization?

    <p>It prompts many firms to relocate elsewhere</p> Signup and view all the answers

    What is the primary purpose of monitoring the business landscape and internal operations?

    <p>To continue to improve competitiveness</p> Signup and view all the answers

    What is the outcome of ineffective strategies in an organization?

    <p>They are replaced with more viable ones</p> Signup and view all the answers

    What is the primary benefit of the strategic alliance between Spotify and Uber?

    <p>To provide personalized experiences to Uber riders</p> Signup and view all the answers

    What is the outcome of MasterCard's partnership with Apple Pay?

    <p>MasterCard was able to up its brand presence by associating itself with Apple</p> Signup and view all the answers

    What is the potential threat to the sustainability and trust between partners in a strategic alliance?

    <p>One partner's strategic intent may involve gaining specific knowledge to become a competitor</p> Signup and view all the answers

    What is the result of the partnership between Chevrolet and Disney?

    <p>Creation of Test Track at Walt Disney World's EPCOT theme park</p> Signup and view all the answers

    What is a key aspect to consider when choosing a partner for a strategic alliance?

    <p>The partner brings in complementary skill sets and expertise</p> Signup and view all the answers

    What is a common goal of strategic alliances?

    <p>To drive significant revenue and growth for the organizations involved</p> Signup and view all the answers

    What is the role of MasterCard's expertise in the Apple Pay system?

    <p>To address bugs and resolve issues for customers promptly and efficiently</p> Signup and view all the answers

    What is the benefit of the strategic alliance between Uber and Spotify to Spotify?

    <p>To gain access to a wider customer base</p> Signup and view all the answers

    What type of organizational characteristics are typically found in firms that operate in a stable environment?

    <p>Highly centralized decision making, many rules and regulations</p> Signup and view all the answers

    What is the primary focus of Strategic Management?

    <p>Managing an organization's resources, analyzing internal and external forces, and developing strategies to achieve its vision and mission</p> Signup and view all the answers

    What is the outcome of differentiation within an organization?

    <p>Units within the organization differ from one another in terms of behaviors and orientations</p> Signup and view all the answers

    What is the primary goal of integration within an organization?

    <p>To enable collaboration among departments that need to coordinate their efforts</p> Signup and view all the answers

    What type of organizational characteristics are typically found in firms that operate in a highly unstable and uncertain environment?

    <p>Decentralized decision making, few rules and regulations</p> Signup and view all the answers

    What is the outcome of an organization's strategic management process?

    <p>The organization achieves its vision and mission</p> Signup and view all the answers

    What is the primary benefit of organizations operating in a highly unstable and uncertain environment adopting organic characteristics?

    <p>Improved ability to adapt to changes in the environment</p> Signup and view all the answers

    What is the primary purpose of Strategic Management in relation to an organization's resources?

    <p>To manage an organization's resources to achieve its objectives</p> Signup and view all the answers

    What is the primary purpose of Strategic Group Mapping?

    <p>To identify the competitive positions of rival firms in an industry</p> Signup and view all the answers

    What is a guideline for constructing Strategic Group Maps?

    <p>The variables selected as axes should have a big difference between them</p> Signup and view all the answers

    What determines the relative size of each strategic group?

    <p>The combined sales of the firms in each group</p> Signup and view all the answers

    What is the first step in the construction of a Strategic Group Map?

    <p>Analyzing the overall industry and identifying competitive characteristics</p> Signup and view all the answers

    Why should different competitive variables be used as axes for the Strategic Group Map?

    <p>Because different variables may lead to different insights</p> Signup and view all the answers

    What can Strategic Group Mapping help firms to recognize?

    <p>Both favorable and unfavorable market positions</p> Signup and view all the answers

    What is a characteristic of a strategic group?

    <p>A set of firms emphasizing similar strategies with similar resources</p> Signup and view all the answers

    What can Strategic Group Mapping guide firms in determining?

    <p>Which strategic groups to target for market entry</p> Signup and view all the answers

    What is the definition of management according to Frederick Winslow Taylor?

    <p>Knowing exactly what you want people to do, and then seeing that they do it in the best and cheapest way</p> Signup and view all the answers

    What is the core part of management, according to the contemporary approach?

    <p>Coordinating</p> Signup and view all the answers

    What is the origin of the word 'management'?

    <p>Latin words</p> Signup and view all the answers

    Who is credited with defining the major components of management?

    <p>Henry Fayol</p> Signup and view all the answers

    What is the primary purpose of management?

    <p>To achieve organizational goals</p> Signup and view all the answers

    What is the primary advantage of a matrix structure in an organization?

    <p>Efficient use of support systems</p> Signup and view all the answers

    What are the four functions of management?

    <p>Planning, organizing, leading, and controlling</p> Signup and view all the answers

    What is the definition of management according to Bartol and Martin?

    <p>The process of achieving organizational goals by engaging in the four functions of planning, organizing, leading, and controlling</p> Signup and view all the answers

    What is the primary disadvantage of a matrix structure in an organization?

    <p>High administrative costs</p> Signup and view all the answers

    What is the primary focus of contingency factors in determining the best organizational structure?

    <p>Size, technology, and environment</p> Signup and view all the answers

    What is the etymology of the word 'management'?

    <p>From Latin words 'manus' and 'agere'</p> Signup and view all the answers

    What is the primary characteristic of unit and small-batch production technology?

    <p>Products are customized to meet customer specifications</p> Signup and view all the answers

    What is the primary focus of technological interdependence in organizational structure?

    <p>The degree of information exchange between departments</p> Signup and view all the answers

    What is the primary characteristic of continuous-process production technology?

    <p>Products are made through a continuous process</p> Signup and view all the answers

    What is the primary advantage of considering contingency factors in organizational structure?

    <p>It ensures the best structure for a given organization</p> Signup and view all the answers

    What is the primary disadvantage of a high level of technological interdependence in an organization?

    <p>It slows down the response to change</p> Signup and view all the answers

    What is the primary purpose of strategic group mapping in business analysis?

    <p>To identify key competitors and understand their competitive strategies</p> Signup and view all the answers

    What is the outcome of performing an internal audit in an organization?

    <p>Improving the process of communication</p> Signup and view all the answers

    What is the primary characteristic of tangible resources?

    <p>They are observable and quantifiable</p> Signup and view all the answers

    What is the primary benefit of involving representative managers and employees in internal environment analysis?

    <p>To improve the process of communication</p> Signup and view all the answers

    What is the primary purpose of internal environment analysis?

    <p>To gather and assimilate information about a firm's management and operations</p> Signup and view all the answers

    What is the primary benefit of internal audit in an organization?

    <p>It provides an excellent occasion for improving the process of communication</p> Signup and view all the answers

    What is the primary characteristic of intangible resources?

    <p>They lack a physical presence but provide substantial benefits to the organization</p> Signup and view all the answers

    What is the primary outcome of conducting internal environment analysis?

    <p>Improving the process of communication and enabling the company to gain a competitive advantage</p> Signup and view all the answers

    What percentage of the information a firm needs to make strategic decisions is available and accessible to the public?

    <p>90%</p> Signup and view all the answers

    What is the primary purpose of a competitive intelligence program?

    <p>To analyze industry dynamics and competitor vulnerabilities</p> Signup and view all the answers

    Which of the following sources of strategic information involves disassembling products to gain insights?

    <p>Reverse Engineering</p> Signup and view all the answers

    What is the primary focus of defensive competitive intelligence?

    <p>Monitoring one's own business activities from an external perspective</p> Signup and view all the answers

    Why is competitive intelligence gathering not considered corporate espionage?

    <p>Because most of the information is publicly available</p> Signup and view all the answers

    Which of the following sources of strategic information provides valuable data, but often requires an excessive lead time?

    <p>Government Agencies</p> Signup and view all the answers

    What is the primary purpose of gathering competitive intelligence?

    <p>To further a business's own goals</p> Signup and view all the answers

    What is the primary advantage of searching online databases for competitive intelligence?

    <p>It's a quicker and less expensive method</p> Signup and view all the answers

    What is the primary purpose of Inbound Logistics in the Value Chain?

    <p>To store and distribute inputs to a product</p> Signup and view all the answers

    Which of the following is NOT a primary activity in the Value Chain?

    <p>Procurement</p> Signup and view all the answers

    What is the purpose of Technological Development in the Value Chain?

    <p>To enhance a firm's products and manufacturing processes</p> Signup and view all the answers

    What is the primary purpose of Outbound Logistics in the Value Chain?

    <p>To collect, store, and distribute the final product to customers</p> Signup and view all the answers

    Which of the following Value Chain activities is focused on facilitating the means by which customers can purchase products?

    <p>Marketing and Sales</p> Signup and view all the answers

    What is the primary purpose of Support activities in the Value Chain?

    <p>To provide the necessary assistance for primary activities to unfold effectively</p> Signup and view all the answers

    What is the primary purpose of Procurement in the Value Chain?

    <p>To acquire the necessary inputs for production</p> Signup and view all the answers

    Which of the following Value Chain activities is focused on enhancing or maintaining a product's value?

    <p>Service</p> Signup and view all the answers

    What is the main basis for grouping positions in a functional structure?

    <p>Similarity of expertise, skills, and work activities</p> Signup and view all the answers

    What is the primary advantage of a functional structure?

    <p>In-depth development of expertise</p> Signup and view all the answers

    Which of the following is NOT a common function in an organization?

    <p>Information Technology</p> Signup and view all the answers

    What is the total value of the strengths of a company in the given scenario?

    <p>2.74</p> Signup and view all the answers

    What is a disadvantage of a functional structure?

    <p>Slow response time on multifunctional problems</p> Signup and view all the answers

    What is the primary purpose of benchmarking?

    <p>To identify the best practices used by competitors and implement them to improve activities</p> Signup and view all the answers

    What is the primary responsibility of the Research and Development (R&D) function?

    <p>Producing unique ideas and methods for new products and services</p> Signup and view all the answers

    What is the value of the strength 'Diversified income'?

    <p>0.4</p> Signup and view all the answers

    Which of the following is a characteristic of a functional structure?

    <p>Clear career path within function</p> Signup and view all the answers

    What is the primary benefit of a functional structure in terms of employee development?

    <p>Narrow training for potential managers</p> Signup and view all the answers

    What is the weakness with the highest rating in the given scenario?

    <p>Over-dependence on sales from UK</p> Signup and view all the answers

    What is the primary characteristic of a tall organizational structure?

    <p>Many hierarchical levels and narrow spans of control</p> Signup and view all the answers

    What is the main advantage of decentralization in an organization?

    <p>It eases the heavy workloads of executives, leaving them more time to focus on major issues</p> Signup and view all the answers

    What is the primary reason why functional structure can lead to slow response time on multifunctional problems?

    <p>Sequential tasks and bottlenecking</p> Signup and view all the answers

    What is the total value of the weaknesses of a company in the given scenario?

    <p>2.74</p> Signup and view all the answers

    What is the primary purpose of identifying the strengths and weaknesses of a company?

    <p>To identify areas for improvement and opportunities for growth</p> Signup and view all the answers

    What is the primary goal of downsizing in an organization?

    <p>To reduce the layers of middle management and increase the spans of control</p> Signup and view all the answers

    What is the primary advantage of centralization in an organization?

    <p>It is easier to coordinate the activities of various units and individuals</p> Signup and view all the answers

    What is the value of the strength 'Brand reputation valued at $35 billion'?

    <p>0.24</p> Signup and view all the answers

    What is the key difference between downsizing and restructuring?

    <p>Downsizing involves reducing management levels, while restructuring involves changing components of the organization</p> Signup and view all the answers

    What is the primary benefit of benchmarking?

    <p>To identify areas for improvement and opportunities for growth</p> Signup and view all the answers

    What is the primary characteristic of a flat organizational structure?

    <p>Few hierarchical levels and wide spans of control</p> Signup and view all the answers

    What is the outcome of decentralization in an organization?

    <p>Executives have more time to focus on major issues</p> Signup and view all the answers

    What is the primary reason why companies downsize?

    <p>To reduce the layers of middle management and increase the spans of control</p> Signup and view all the answers

    At which level of strategy formulation is a firm's strategy established to compete in a specific business?

    <p>Business level</p> Signup and view all the answers

    What is a characteristic of a firm that adopts a cost leadership strategy?

    <p>Offering standardized goods or services at the lowest cost</p> Signup and view all the answers

    What is a potential source of competitive advantage for a company?

    <p>All of the above</p> Signup and view all the answers

    What is the primary purpose of formulating a strategy at the firm level?

    <p>To establish the fields of activities and the markets on which the firm will compete</p> Signup and view all the answers

    What is an example of a company that has adopted a cost leadership strategy?

    <p>AirAsia</p> Signup and view all the answers

    What is a limitation of a firm that adopts a cost leadership strategy?

    <p>It cannot completely ignore the possible sources of differentiation of products</p> Signup and view all the answers

    What is a potential target market for a firm that adopts a cost leadership strategy?

    <p>Customers with small and medium income</p> Signup and view all the answers

    What is the term for the strategy that focuses on offering standardized goods or services at the lowest cost?

    <p>Cost leadership strategy</p> Signup and view all the answers

    What is a characteristic of a firm that adopts a differentiation strategy?

    <p>It targets customers with high and medium income</p> Signup and view all the answers

    What can be a competitive risk of a differentiation strategy?

    <p>Customers balking at the price gap</p> Signup and view all the answers

    What is an example of a company that has adopted a differentiation strategy?

    <p>Nike Inc.</p> Signup and view all the answers

    What can be a way to differentiate a product or service?

    <p>Improving quality</p> Signup and view all the answers

    What is the primary purpose of a focus strategy?

    <p>To serve the needs of a particular industry segment or niche</p> Signup and view all the answers

    What is a characteristic of a product or service that is differentiated?

    <p>It has unique characteristics</p> Signup and view all the answers

    What can be a result of imitation by rivals in a differentiation strategy?

    <p>Diminished perceived uniqueness of a differentiated product</p> Signup and view all the answers

    What is a common target market for a firm that adopts a differentiation strategy?

    <p>High and medium-income customers</p> Signup and view all the answers

    What is the primary responsibility of a line position in an organization?

    <p>Achieving the major goals of the organization</p> Signup and view all the answers

    What is the term for the authority of staff departments over others in the organization in matters related directly to their respective functions?

    <p>Functional authority</p> Signup and view all the answers

    What is the primary purpose of lateral relations in an organization?

    <p>To link activities across departments at similar levels</p> Signup and view all the answers

    What is the term for the linking of activities across departments at similar levels?

    <p>Horizontal coordination</p> Signup and view all the answers

    Decentralization leads to which of the following?

    <p>More emphasis on authority and accountability</p> Signup and view all the answers

    What is the main reason for individuals at lower levels being in a better position to make good decisions?

    <p>They are closer to the problem and have more information</p> Signup and view all the answers

    What type of authority do staff departments have in an organization?

    <p>Functional authority</p> Signup and view all the answers

    What is the primary difference between responsibility and authority?

    <p>Responsibility is the obligation to carry out duties, while authority is the right to make decisions</p> Signup and view all the answers

    What is the primary purpose of information systems in an organization?

    <p>To promote horizontal coordination</p> Signup and view all the answers

    What is the result of decentralization leading to the establishment of relatively independent units?

    <p>Divisions or business units that operate independently</p> Signup and view all the answers

    What type of authority do line departments have in an organization?

    <p>Line authority</p> Signup and view all the answers

    What is the primary purpose of slack resources in an organization?

    <p>To promote horizontal coordination</p> Signup and view all the answers

    What is the relationship between delegation and responsibility?

    <p>Delegation is a way to assign responsibility</p> Signup and view all the answers

    Which of the following is a reason why decentralization occurs?

    <p>Environmental certainty of the organization</p> Signup and view all the answers

    What is accountability related to?

    <p>Providing satisfactory reasons for deviations from duties or expected results</p> Signup and view all the answers

    What is the benefit of decentralization in terms of employee development?

    <p>It enriches the jobs of lower-level employees</p> Signup and view all the answers

    In a functional structure, which department is responsible for producing unique ideas and methods that will lead to new and/or improved products and services?

    <p>Research and Development (R&amp;D)</p> Signup and view all the answers

    What is an advantage of a functional structure?

    <p>In-depth development of expertise</p> Signup and view all the answers

    Which of the following is a disadvantage of a functional structure?

    <p>Backlog of decisions at the top of the hierarchy</p> Signup and view all the answers

    In a functional structure, which department is concerned with obtaining and managing financial resources?

    <p>Finance</p> Signup and view all the answers

    What is a benefit of a functional structure in terms of career development?

    <p>Clear career path within a function</p> Signup and view all the answers

    Which of the following is NOT a characteristic of a functional structure?

    <p>Positions are grouped according to their product or market</p> Signup and view all the answers

    What is a potential drawback of a functional structure in terms of decision-making?

    <p>Backlog of decisions at the top of the hierarchy</p> Signup and view all the answers

    Which of the following is a common function in a functional structure?

    <p>All of the above</p> Signup and view all the answers

    What is the primary driver of tall organizational structures?

    <p>Many hierarchical levels</p> Signup and view all the answers

    What is the primary advantage of decentralization in an organization?

    <p>Eases the heavy workloads of executives</p> Signup and view all the answers

    What is the primary difference between downsizing and restructuring?

    <p>Downsizing focuses on reducing management levels, while restructuring focuses on changing components of the organization</p> Signup and view all the answers

    What is the primary advantage of centralization in an organization?

    <p>It helps ensure that similar activities are not carried on by different organizational units</p> Signup and view all the answers

    What is the primary characteristic of a flat organizational structure?

    <p>Few hierarchical levels and wide spans of control</p> Signup and view all the answers

    What is the primary purpose of directly contacting a corporation for data?

    <p>To acquire types of data not widely available in databases</p> Signup and view all the answers

    What is the primary goal of downsizing in an organization?

    <p>To reduce the layers of middle management and increase the spans of control</p> Signup and view all the answers

    What is the outcome of having one of Porter's Five Forces exhibiting higher intensity compared to others?

    <p>Reduced profitability</p> Signup and view all the answers

    What is the primary outcome of decentralization in an organization?

    <p>Executives have more time to focus on major issues</p> Signup and view all the answers

    What is the primary purpose of assimilating and evaluating information?

    <p>To determine opportunities and threats</p> Signup and view all the answers

    What is the primary reason why organizations adopt a flat structure?

    <p>To reduce the layers of middle management and increase the spans of control</p> Signup and view all the answers

    What is a common external factor considered by organizations?

    <p>All of the above</p> Signup and view all the answers

    What is the primary purpose of Porter's Five-Forces Model of Competition?

    <p>To determine industry competition intensity</p> Signup and view all the answers

    What is the outcome of effective communication of key external factors within an organization?

    <p>Wide dissemination of information</p> Signup and view all the answers

    What type of relationships can significantly impact an organization's success?

    <p>Relationships with suppliers or distributors</p> Signup and view all the answers

    What is an essential element in analyzing key external factors?

    <p>All of the above</p> Signup and view all the answers

    Study Notes

    Management in Organizations

    • An organization is a group of people working together in a structured fashion to attain a set of goals.

    Manager's Job

    • Management involves considering available assistance, high motivational possibilities of work, and spans of management.
    • Tall structures have many hierarchical levels and narrow spans of control, while flat structures have few hierarchical levels and wide spans of control.
    • Downsizing is the process of reducing the layers of middle management, increasing spans of control, and shrinking the size of the work force.
    • Restructuring is the process of making a major change in organization structure, often involving reducing management levels and changing components of the organization.

    Organizational Environments

    • The external environment includes factors such as market share, competing products, global economies, foreign affiliations, proprietary and key account advantages, price competitiveness, technological advancements, population shifts, interest rates, and pollution abatement.
    • The internal environment includes factors such as relationships with suppliers or distributors, key external factors, and opportunities and threats.

    Planning

    • Establishing organizational goals and plans involves the overall planning process, organizational goals, and organizational plans.
    • Managing innovation and change involves the nature of change and innovation, organizational life cycles, the change and innovation process, and key organizational change components.
    • Decision-making involves the nature of managerial decision making, differences in decision-making situations, managers as decision-makers, overcoming barriers to effective decision making, group decision making, and the creativity factor in decision making.

    Organizing

    • Organizational structure involves the nature of organization structure, job design, types of departmentalization, methods of vertical coordination, and methods of horizontal coordination.
    • Organization design involves designing organization structures, functional structure, divisional structure, hybrid structure, matrix structure, and weighing contingency factors.

    Centralization and Decentralization

    • Centralization is the extent to which power and authority are retained at the top organizational levels.
    • The advantages of centralization include easier coordination, ensuring similar activities are not carried out by different units, and strong leadership.
    • Decentralization is the extent to which power and authority are delegated to lower levels.
    • The advantages of decentralization include easing workloads, acquiring data, and competitive benchmarking.

    Porter's Five-Forces Model of Competition

    • The model serves as a tool to determine whether competition within a particular industry allows a firm to achieve acceptable profits.
    • The five forces are:
      • The influence of industry competition intensity
      • The threat of new entrants
      • The bargaining power of suppliers
      • The bargaining power of buyers
      • The threat of substitute products or services

    Benchmarking

    • Benchmarking involves identifying and adopting best practices in the industry to improve strategic competitiveness.
    • The advantages of benchmarking include:
      • Incorporating best practices into your own business
      • Stimulating and motivating personnel
      • Eliminating resistance to change
      • Determining achievable costs
      • Expanding professional knowledge
    • The essential elements for successful benchmarking include:
      • Aligning benchmarking with the organization's mission
      • Setting measurable objectives
      • Securing commitment from top management
      • Building a robust team
      • Directing team efforts towards the most pertinent issues
      • Selecting competitor firms whose practices merit study
      • Cultivating a culture of change within the organization

    Organization Structure and Environment

    • Two major issues related to the influence of environment on organization structure:
      • Mechanistic and organic characteristics
      • Differentiation and integration

    Mechanistic and Organic Characteristics

    • Firms operating in a stable environment tend to have mechanistic characteristics:
      • Highly centralized decision making
      • Many rules and regulations
      • Hierarchical communication channels
      • Emphasis on vertical coordination
      • Limited delegation from one level of management to the next
    • Firms operating in a highly unstable and uncertain environment tend to have organic characteristics:
      • Decentralized decision making
      • Few rules and regulations
      • Both hierarchical and lateral communication channels
      • Emphasis on horizontal coordination
      • Considerable delegation from one level of management to the next

    Differentiation and Integration

    • Differentiation is the extent to which organization units differ from one another in terms of:
      • Behaviors and orientations of their members
      • Formal structures
    • Integration is the extent to which there is collaboration among departments that need to coordinate their efforts

    Strategic Management

    • Definition: The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
    • Involves:
      • Managing an organization's resources
      • Analyzing internal and external forces
      • Developing strategies to achieve its vision and mission
    • Evaluating the effectiveness of implemented strategies using defined metrics
    • Monitoring the business landscape and internal operations to maintain effective strategies

    The External Environment

    • Examining the external environment involves:
      • Compiling a list of potential advantages for a firm
      • Identifying threats to be mitigated
    • Focus on key variables, not all opportunities and threats

    The General Environment

    • Includes external forces that do not directly affect short-term activities but may influence long-term decisions
    • Examples:
      • Political and legal forces (e.g., environmental protection laws, tax regulations, import-export policies)
      • Economic forces (e.g., changes in consumer demand, market segmentation strategies)

    Bargaining Power of Suppliers

    • Suppliers can impact industries by:
      • Raising prices
      • Reducing product/service quality
    • Supplier power is strong when:
      • Industry is dominated by a limited number of suppliers
      • Products or services are unique with no substitutes
      • Suppliers can integrate downstream and compete with current buyers

    External Factor Evaluation (EFE) Matrix

    • A strategic management tool used to visualize and prioritize opportunities and threats
    • Steps:
      • List factors and categorize them into opportunities and threats
      • Assign weights to each factor (0-1, cumulative value = 1)
      • Rate factors (1-4, reflecting how effectively the firm's current strategies address the factor)
      • Multiply weights by ratings to calculate the weighted score for each factor
      • Total all weighted scores to derive the total weighted score for the company

    Strategic Group Mapping

    • An analytical tool used to show the different market or competitive positions that rival firms occupy in the industry
    • A strategic group consists of a set of firms emphasizing similar strategies with similar resources
    • Guidelines for constructing strategic group maps:
      • Use two variables with no correlation
      • Select variables with a big difference between them
      • Use discrete variables (e.g., sales, market share)
      • Analyze the overall industry and identify competitive characteristics that differentiate firms

    Strategic Alliances

    • Examples:
      • Spotify and Uber
      • MasterCard and Apple Pay
      • Chevrolet and Disney
    • Benefits:
      • Drive significant revenue and growth
      • Provide a competitive edge
      • Increase brand presence
      • Address bugs and resolve issues efficiently

    Organization and Management

    • An organization is a systematic effort to accomplish an activity, involving two or more persons.
    • Management is the process of administering the activity of an organization or division.
    • To manage means to handle, be in charge of, control, and administer an activity.

    Frederick Winslow Taylor and Henry Fayol

    • Frederick Winslow Taylor defined management as knowing exactly what people should do and seeing that they do it in the best and cheapest way.
    • Henry Fayol defined management by naming its major components: forecasting, planning, organizing, commanding, coordinating, and controlling.

    Contemporary Approach to Management

    • The four functions of management are planning, organizing, leading, and controlling.
    • Management is the process of achieving organizational goals by engaging in these four functions.

    Matrix Structure

    • Advantages of matrix structure:
      • Flexible use of human resources
      • Efficient use of support systems
    • Disadvantages of matrix structure:
      • High administrative costs
      • Potential confusion over authority and responsibility
      • Heightened prospects for interpersonal conflicts
      • Excessive focus on internal relations
      • Overemphasis on group decision making
      • Possible slow response to change

    Contingency Factors

    • The best structure for a given organization depends on contingency factors such as technology, size, and environment.
    • Technology is the set of knowledge, tools, equipment, and work techniques used by an organization in delivering its product or service.
    • There are two critical aspects of technology: technological complexity and technological interdependence.

    Technology and Organization Structure

    • Three types of technology:
      • Unit and small-batch production
      • Large-batch and mass production
      • Continuous-process production
    • Each type of technology requires an appropriate organization structure.

    Technological Interdependence

    • Technological interdependence is the degree to which different parts of the organization must exchange information and materials in order to perform their required activities.
    • Three major types of technological interdependence.

    Competitive Intelligence

    • Competitive intelligence is a systematic and ethical process for gathering and analyzing information about the competition’s activities and general business trends to further a business’s own goals.
    • Sources of strategic information:
      • Surveys and interviews
      • On-site observations
      • Defensive competitive intelligence
      • Reverse engineering
      • Government agencies
      • Searching online databases

    Internal Environment Analysis

    • Internal environment analysis requires gathering and assimilating information about a firm’s management, marketing, finance and accounting, production and operations, research and development, and management information systems.
    • The internal analysis is conducted in parallel with the analysis of the external environment.
    • Advantages of performing an internal audit:
      • Excellent occasion for improving communication
      • Provides opportunity for managers and employees to understand their roles in the organization
      • Enables the company to gain competitive advantage
      • Helps the company to have a clear view of its future strategy

    Resources and Competencies

    • Resources of a firm serve as inputs in the production or service process and can be categorized as tangible or intangible.
    • Tangible resources are assets that are observable and quantifiable, such as financial resources, equipment, facilities, and raw materials.
    • Intangible resources lack a physical presence but provide substantial benefits to the organization.

    Value Chain Activities

    • Value chain activities are categorized into primary and support activities.
    • Primary activities:
      • Inbound logistics
      • Operations
      • Outbound logistics
      • Marketing and sales
      • Service
    • Support activities:
      • Procurement
      • Technological development
    • Primary activities create value, while support activities play a crucial role in providing necessary assistance for primary activities.

    Organizational Structure

    • A tall structure has many hierarchical levels and narrow spans of control, while a flat structure has few hierarchical levels and wide spans of control.
    • Downsizing is the process of reducing the layers of middle management, increasing spans of control, and shrinking the size of the workforce.
    • Restructuring is the process of making a major change in organization structure, often involving reducing management levels and changing components of the organization.

    Centralization and Decentralization

    • Centralization is the extent to which power and authority are retained at the top organizational levels.
    • Decentralization is the extent to which power and authority are delegated to lower levels.
    • Positive aspects of centralization:
      • Easier coordination of activities
      • Ensuring similar activities are not carried out by different units
      • Top managers have more experience and a broader perspective
      • Promotes strong leadership
    • Positive aspects of decentralization:
      • Eases the workload of executives
      • Allows for more focus on major issues

    Functional Structure

    • A type of departmentalization in which positions are grouped according to their main functional area.
    • Common functions include:
      • Production (operations)
      • Marketing
      • Research and development (R&D)
      • Finance
      • Accounting
      • Human resources
    • Advantages of functional structure:
      • In-depth development of expertise
      • Clear career path within function
      • Efficient use of resources
      • Possible economies of scale
      • Ease of coordination within function
      • Potential technical advantage over competitors
    • Disadvantages of functional structure:
      • Slow response time on multifunctional problems
      • Backlog of decisions at top of hierarchy
      • Bottlenecks due to sequential tasks
      • Restricted view of organization among employees
      • Inexact measurement of performance
      • Narrow training for potential managers

    Business Level Strategies

    • Strategies are formulated on different hierarchical levels within a firm:
      • Firm level: establishing fields of activities and markets
      • Business level: establishing how to compete in a business
      • Functional level: developing functional strategies to implement business strategy
    • Sources of competitive advantage:
      • Unique product differentiation
      • Excelling as the industry's lowest-cost producer
      • Targeting a broad market or a specific niche market

    Generic Strategies

    • Cost leadership strategy:
      • Firms offer standardized goods or services
      • Produce goods or services with features that are acceptable to customers at the lowest cost
      • Targeting customers with small and medium income
    • Differentiation strategy:
      • Firms offer value to customers through unique characteristics of products or services
      • Manufacturing differentiated products to satisfy specific needs of customers
      • Prices are high
      • Targeting customers with high and medium income
    • Focus strategy:
      • Firms choose a focus strategy to serve the needs of a particular industry segment or niche at the exclusion of others.

    Organizational Structure

    • A tall structure has many hierarchical levels and narrow spans of control, while a flat structure has few hierarchical levels and wide spans of control.
    • Downsizing is the process of reducing the layers of middle management, increasing the spans of control, and shrinking the size of the workforce.
    • Restructuring is the process of making a major change in organization structure, often involving reducing management levels and changing components of the organization.

    Centralization and Decentralization

    • Centralization: power and authority are retained at the top organizational levels, promoting strong leadership and easier coordination of activities.
    • Decentralization: power and authority are delegated to lower levels, easing the workloads of executives, enriching the jobs of lower-level employees, and leading to faster decision making.
    • Four main factors lead to decentralization: large size, geographic dispersion, technological diversity, and environmental uncertainty.

    Delegation

    • Delegation is the assignment of part of a manager's work to others, along with the responsibility and authority necessary to achieve expected results.
    • Responsibility: the obligation to carry out duties and achieve goals related to a position.
    • Authority: the right to make decisions, carry out actions, and direct others in matters related to the duties and goals of a position.
    • Accountability: the requirement to provide satisfactory reasons for significant deviations from duties or expected results.

    Line and Staff Departments

    • Line positions: have authority and responsibility for achieving the major goals of the organization.
    • Line departments: have line authority, which is authority that follows the chain of command established by the formal hierarchy.
    • Staff positions: provide specialized expertise and assistance to line positions.
    • Staff departments: have functional authority, which is authority of staff departments over others in the organization in matters related directly to their respective functions.

    Horizontal Coordination

    • Horizontal coordination: linking of activities across departments at similar levels.
    • Three major means of promoting horizontal coordination: slack resources, information systems, and lateral relations.

    Functional Structure

    • Functional structure: a type of departmentalization in which positions are grouped according to their main functional (or specialized) area.
    • Common functions: production, marketing, research and development, finance, accounting, and human resources.
    • Advantages of functional structure: in-depth development of expertise, clear career path within function, efficient use of resources, possible economies of scale, ease of coordination within function, and potential technical advantage over competitors.
    • Disadvantages of functional structure: slow response time on multifunctional problems, backlog of decisions at the top of the hierarchy, bottlenecks due to sequential tasks, restricted view of organization among employees, inexact measurement of performance, and narrow training for potential managers.

    Competitive Intelligence

    • Competitive intelligence: collecting and analyzing information about competitors to gain a competitive advantage.
    • Methods of collecting information: directly contacting the corporation, competitive benchmarking, and using AI-driven tools.
    • Importance of assimilating and evaluating information, and prioritizing critical external factors that can affect the organization's success.
    • Porter's Five-Forces Model of Competition: a tool to determine the impact of industry competition intensity on a firm's success, considering five forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and rivalry among existing competitors.

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    Description

    This quiz covers the basics of management in organizations, including the definition of management, roles of managers, and the process of management. It also explores the external and internal environments of organizations.

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