125 Questions
What is management according to Frederick Winslow Taylor, the 'father of scientific management'?
Knowing exactly what you want people to do, and then seeing that they do it in the best and cheapest way
Define management based on Henry Fayol's components.
Forecast, plan, organize, command, coordinate, control
Centralization in an organization means power and authority are delegated to lower levels.
False
What are the most important positive aspects of decentralization? (Select all that apply)
Leads to faster decision-making at lower levels
What is delegation in management?
Assignment of part of a manager's work to others, along with responsibility and authority.
____ is the obligation to achieve goals related to a position.
Responsibility
Authority in management refers to the right to make decisions related to duties and goals.
True
What are the four main factors that lead to decentralization?
Technological diversity
Match the following types of departments with their respective authority:
Line departments = Line authority Staff departments = Functional authority
What are the advantages of a hybrid structure?
Alignment of corporate and divisional goals, functional expertise and/or efficiency, adaptability and flexibility in divisions.
What are the disadvantages of a hybrid structure?
Conflicts between corporate departments and divisions, excessive administrative overhead, slow response to exceptional situations.
Which factors weigh in determining the best structure for an organization?
All of the above
Organizations operating in unstable environments tend to have mechanistic characteristics.
False
What is the extent to which organization units differ from one another in terms of behaviors and orientations called? _ ______ _
Differentiation
What impact does rising interest rates have on firms' ability to invest?
More costly or unavailable
Which of the following factors have generated interest in resource reduction and healthier living? (Select all that apply)
Growing awareness of health maintenance
Competitive Intelligence Program involves corporate espionage.
False
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
Match the following components of the Porter’s Five-Forces Model to their descriptions:
Threat of New Entrants = Identifying new entrants who can threaten existing market share Intensity of Rivalry among Competitors = Competition among firms within an industry Threat of Substitute Products = Competition from substitute products or services in other industries Bargaining Power of Buyers = Buyers' influence on industries by exerting pressure on price reductions Bargaining Power of Suppliers = Suppliers' impact on industries by raising prices or reducing quality
What is the purpose of Strategic Group Mapping?
To identify key competitors and understand their competitive strategies
What type of companies have many product lines and focus on product innovation and market opportunities?
Prospector companies
Strategic Type defines a category of companies with a common strategic orientation and organizational processes.
True
What is the key role of Core Competencies in a firm?
create value for customers, enhance efficiency, foundation for new markets
Value Chain Analysis allows the firm to identify the parts of its operations that __________ value.
create
What is the aim of employing related diversification strategy?
to foster the development and utilization of economies of scale/scope among its business units
Which are forms of related diversification strategy?
All of the above
Backward integration involves gaining control over distributors or retailers.
False
__________ integration is a strategy of gaining ownership or increased control over distributors or retailers.
Forward
Match the following integration strategies with their descriptions:
Backward integration = Seeking control of suppliers Forward integration = Gaining ownership of retailers or distributors Horizontal integration = Increasing control over competitors
What are some common problems that may cause joint ventures to fail?
All of the above
When can a joint venture be an effective strategy?
When significant risks are involved that a single firm cannot handle alone
Match the strategic alliance examples with the correct partnerships:
Spotify And Uber = Allows music streaming in Uber rides MasterCard And Apple Pay = Contactless transactions with Apple devices Chevrolet And Disney = Create Test Track ride at Disney's EPCOT Vodafone India And ICICI Bank = Launch m-pesa mobile money service
Define a merger in business.
A merger occurs when two firms of about equal size unite to form one firm, integrating resources and competencies.
What is a strategic alliance?
A strategic alliance is a partnership between two or more firms to achieve mutually beneficial objectives, often involving shared resources and capabilities.
What is the purpose of benchmarking?
To determine the best practices used by competitors in the industry
Benchmarking is a tool used to improve a company's activities based on competitors' practices.
True
What are the advantages of benchmarking?
Incorporating best practices, stimulating firm's personnel, eliminating resistance to change, determining achievable costs, expanding professional knowledge
Benchmarking popularity has led to many consultancy firms in the USA that collect information, make benchmarking studies, and distribute the results without disclosing their ____________.
sources
Match the business strategies with their descriptions:
Cost leadership strategy = Firms offer standardized goods or services with a focus on lowest cost Differentiation Strategy = Firms offer unique characteristics and products at higher prices Focus Strategies = Firms target specific market segments or niches with specialized goods or services Integrated Cost Leadership/Differentiation Strategy = Firms aim to provide both low-cost and differentiated products
What is the main advantage of decentralization related to easing the heavy workloads of executives?
Leaving them more time to focus on major issues.
What is one of the main factors that lead to decentralization?
Large size
Delegation involves assigning work to others along with responsibility but not authority.
False
Line departments have ______ authority, which follows the chain of command.
line
Match the following types of departments with their authority in the organization:
Line departments = Line authority Staff departments = Functional authority
What did Frederick Winslow Taylor define management as?
Knowing exactly what you want people to do and then seeing that they do it in the best and cheapest way
According to Henry Fayol, what are the major components of management?
forecast and plan, organize, command, coordinate, control
Managers are always leaders.
False
An organization is a group of people working together in a structured fashion to attain a set of ______.
goals
What is benchmarking?
A tool to analyze a firm's competitive activities compared to its competitors.
Cost leadership strategy aims to offer products at the highest prices.
False
What is the main characteristic of differentiation strategy?
Unique characteristics of products or services
Benchmarking helps firms identify _________ used by competitors in the industry.
best practices
What is the purpose of strategic group mapping in business analysis?
All of the above
What are the steps involved in constructing a strategic group map?
Analyzing industry dynamics, selecting variables for the map, plotting firms, allocating firms to strategic groups, sketching circles around groups based on industry sales.
__________ companies focus on product innovation and market opportunities.
Prospector
Match the strategic orientation with the corresponding company type:
Prospector companies = Product innovation and market opportunities Defender companies = Improving existing activities without innovation Analyzers companies = Operating in stable and variable markets with different products Reactors = Lack of proper strategy-structure relationship
Core competencies must be valuable, rare, costly to imitate, and substitutable.
False
What is a competitive intelligence program?
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.
What are examples of sources for strategic information in competitive intelligence?
On-site Observations
Competitive Benchmarking is used to compare an organization's operations with its competitors.
True
The External Factor Evaluation (EFE) matrix is used to visualize and prioritize ____________ and threats confronting a business.
opportunities
Match the following components of Porter's Five-Forces Model of Competition with their descriptions:
Threat of New Entrants = Identifying new entrants and barriers to entry Intensity of Rivalry among Competitors = Influenced by slow industry growth, high fixed costs, lack of differentiation Threat of Substitute Products = Competition from substitute products in other industries Bargaining Power of Buyers = Influence on industries by exerting pressure on price and quality Bargaining Power of Suppliers = Impacting industries by raising prices or reducing quality
Why are diversification strategies becoming less popular nowadays?
Increased difficulty in managing diverse business activities
In the 1980s, there was a general reversal in thinking about diversification.
True
What is the main risk of being in a single industry?
Having all of the firm's eggs in one basket
____ entails reducing the cost per unit by expanding the production scale of a single product type.
Economies of scale
Match the integration strategy with its description:
Backward integration = Seeking ownership or increased control of a firm's suppliers Forward integration = Gaining ownership or increased control over distributors or retailers Horizontal integration = Seeking ownership or increased control over a firm's competitors
What are some common problems that may cause joint ventures to fail?
Poor service leading to customer complaints
Give an example of a joint venture between BMW and another automobile manufacturer.
Brilliance Auto Group
A joint venture may be an effective strategy when two or more firms have trouble competing with a ______ firm.
large
Match the following strategic alliances with the correct companies:
Spotify And Uber = Allows Uber users to connect to Spotify for music streaming MasterCard And Apple Pay = Apple's contactless payment system with MasterCard collaboration Chevrolet And Disney = Partnership to create Test Track at Walt Disney World's EPCOT theme park Vodafone India And ICICI Bank = Launched m-pesa mobile money transfer service
What are the advantages of a hybrid structure?
Alignment of corporate and divisional goals, Functional expertise and/or efficiency, Adaptability and flexibility in divisions.
What are the disadvantages of a hybrid structure?
Conflicts between corporate departments and divisions, Excessive administrative overhead, Slow response to exceptional situations.
What are the uses of hybrid structure?
Uncertain environments + functional expertise, Powerful organizations.
What is a matrix structure?
A structure that superimposes a horizontal set of divisional reporting relationships onto a hierarchical functional structure.
What are the advantages of a matrix structure?
Decentralized decision making, Strong project or product coordination, Fast response to change, Flexible use of human resources.
What are the disadvantages of a matrix structure?
High administrative costs, Potential confusion over authority and responsibility, Heightened prospects for interpersonal conflicts, Overemphasis on group decision making.
What are contingency factors in determining the organizational structure?
Technology, Size, Environment.
What are the effects of technology complexity on organizational structure?
Different organization structures are required for unit and small-batch production, large-batch and mass production, continuous-process production.
What are the three major types of technological interdependence?
Pooled interdependence, Sequential interdependence, Reciprocal interdependence.
How does organization size impact structure?
As organizations grow, they tend to become more complex structurally, add more departments, and levels. Different trends emerge such as increased decentralization and formalization.
What are mechanistic and organic characteristics in relation to organization structure?
Mechanistic characteristics are seen in stable environments, with centralized decision-making, many rules and regulations. Organic characteristics are prevalent in unstable environments, featuring decentralized decision-making, few rules, hierarchical and lateral communication channels.
According to Frederick Winslow Taylor, what is management?
Knowing what you want people to do and ensuring they do it in the best and cheapest way
What are the four functions of management according to Bartol & Martin?
Planning, organizing, leading, controlling
What is the difference between centralization and decentralization in an organization?
Centralization retains power at the top, while decentralization involves delegating power to lower levels.
What is the definition of delegation?
Delegation is the assignment of part of a manager's work to others, along with both the responsibility and the authority necessary to achieve expected results.
What are the four main factors that lead to decentralization?
Geographic dispersion
Responsibility is defined as the obligation to carry out duties and achieve goals related to a position.
True
A line position is a position that has authority and responsibility for achieving the major goals of the ____________.
organization
Match the following division types with their characteristics:
Product divisions = Serve a single product or related set of products Geographic divisions = Serve different geographic areas Customer divisions = Service particular types of clients or customers
What impact can rising interest rates have on firms' ability to invest?
Makes capital expansion more costly or unavailable
Competitive Intelligence is necessary for firms as it provides insights into industry dynamics and potential threats to market position.
True
What does Porter's Five-Forces Model help determine within an industry?
It helps determine whether competition within a particular industry allows a firm to achieve acceptable profits.
Competitive forces can act as constraints on business activities, but strategic shifts over the long term may alter the intensity of one or more forces in favor of the __________.
firm
Match the component of the Michael Porter Model with its description:
Threat of New Entrants = Identifying new entrants that may pose a threat to market share. Intensity of Rivalry among Competitors = Factors include the number of balanced competitors and lack of differentiation. Threat of Substitute Products = Competition from products in other industries that serve as alternatives. Bargaining Power of Buyers = Influence industries by pressuring price reductions and quality improvements. Bargaining Power of Suppliers = Impacts industries by raising prices or reducing product quality.
What is the purpose of strategic group mapping?
To recognize both favorable and unfavorable positions within the market landscape
What are the guidelines for constructing strategic group maps?
Guidelines include using two variables with no correlation, using discrete variables, plotting all firms in the industry on a two-variable map, allocating firms in the same strategy space to the same strategic group, and sketching circles around each strategic group based on their share of total industry sales revenue.
Match the strategic types with their descriptions:
Prospector companies = Focus on product innovation and market opportunities Defender companies = Focus on improving effectiveness of existing activities without innovation Analyzers companies = Operate in stable and variable markets with emphasis on efficiency and innovation Reactors = Firms lacking proper relationship between strategy and organizational structure/culture
What is the internal factor evaluation matrix (IFE) method used for?
The IFE method is used to assess and appraise major strengths and weaknesses within the functional areas of a business.
What are the advantages of a hybrid structure?
Alignment of corporate and divisional goals, functional expertise and/or efficiency, adaptability and flexibility in divisions
What are the disadvantages of a hybrid structure?
Conflicts between corporate departments and divisions, excessive administrative overhead, slow response to exceptional situations
What are the uses of a hybrid structure?
Uncertain environments + functional expertise, powerful organizations
What are the advantages of a matrix structure?
Decentralized decision making, strong project or product coordination, improved environmental monitoring, fast response to change, flexible use of human resources, efficient use of support systems
What are the disadvantages of a 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
What are the critical factors that influence the best structure for a given organization?
Technology, size, environment
What are the two critical aspects of technology that influence organization structure?
Technological complexity and technological interdependence
What is differentiation in terms of organization units?
The extent to which organization units differ from one another in behaviors, orientations, and structures
What is integration in terms of organization units?
The extent to which collaboration exists among departments needing to coordinate their efforts
What is strategic management?
Strategic management involves formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives
What is the main focus of a diversification strategy?
Enhancing shareholder value
Diversification strategies are gaining popularity due to the ease of managing diverse business activities.
False
What is the greatest risk of being in a single industry?
having all of the firm's eggs in one basket
Unrelated diversification strategy aims to create value through financial ________.
economies
What are some common problems that can cause joint ventures to fail?
All of the above
A joint venture can be an effective strategy when two firms have incompatible competencies.
False
Give an example of a joint venture mentioned in the text involving BMW.
BMW Brilliance
A joint venture may be an effective strategy when a domestic firm is forming a joint venture with a _____ firm.
foreign
Match the following strategic alliance examples with the correct companies:
Spotify And Uber = Uber users to connect to Spotify while on a ride MasterCard And Apple Pay = Apple's collaboration with MasterCard for contactless transactions Chevrolet And Disney = Creation of Test Track at Walt Disney World's EPCOT theme park Vodafone India And ICICI Bank = Launch of m-pesa mobile money transfer and payments service
What is benchmarking?
A tool to identify best practices used by competitors
Benchmarking helps firms improve their strategic competitiveness by identifying activities on the value chain where competitors have a competitive advantage.
True
What are the advantages of benchmarking?
incorporates best practices, motivates personnel, eliminates resistance to change, determines achievable costs, expands professional knowledge
Benchmarking helps firms drive ___________ improvement and achieve sustainable success.
continuous
What is the objective of a cost leadership strategy?
Offer products at the lowest cost relative to competitors
Competitors imitating the cost leader's strategy is a risk associated with the differentiation strategy.
True
Match the strategy type with its characteristics:
Cost Leadership Strategy = Offer standardized goods or services with low cost relative to competitors Differentiation Strategy = Offer unique characteristics in products to satisfy specific customer needs Focus Strategy = Serving the needs of a particular industry segment or niche
Study Notes
Introduction to Management
- Management is the process of administering the activity of an organization or division.
- It involves handling, controlling, and directing the activity to achieve organizational goals.
- The word "management" comes from the Latin words "manus" (hand) and "agere" (to drive, to act), and has evolved through different languages.
Who is a Manager?
- A manager is someone whose primary activities are part of the management process.
- They are responsible for the work performance of group members and hold formal power to commit organizational resources.
- There are many managerial job types, varying in vertical and horizontal dimensions.
- Top managers are responsible for the entire organization, middle managers oversee specific departments, and first-line managers supervise employees.
The Functions of Management
- The traditional approach to management functions includes forecasting, planning, organizing, commanding, coordinating, and controlling.
- The contemporary approach recognizes planning, organizing, leading, and controlling as the four major functions of management.
- Management is performed through the deployment and manipulation of resources, including human, financial, physical, informational, intellectual, and intangible resources.
Manager's Job
- A manager's job involves a range of activities, including planning, organizing, leading, controlling, and decision-making.
- The manager's role is to achieve organizational goals by engaging in these four functions.
Organizational Environments
- The external environment includes factors outside the organization that can impact its performance, such as market trends, customer needs, and government policies.
- The internal environment includes factors within the organization, such as company culture, employee skills, and resources.
- Analyzing environmental conditions is essential for effective management.
Planning
- Planning involves establishing organizational goals and plans, as well as managing innovation and change.
- The overall planning process includes setting goals, identifying alternatives, evaluating options, and selecting a course of action.
- Organizational goals and plans are crucial for achieving success.
Organizational Structure
- Organizational structure refers to the way jobs and tasks are divided, organized, and coordinated.
- The five types of departmentalization are functional, product, customer, geographic, and matrix.
- Each type of structure has its advantages and disadvantages, and the choice of structure depends on various contingency factors.
Organizational Design
- Organizational design involves creating an organization structure that is aligned with the organization's strategy and goals.
- Contingency factors, such as technology, size, and environment, influence the effectiveness of an organization structure.
- The four major types of structures are functional, divisional, hybrid, and matrix.
Functional Structure
- Functional structure is a type of departmentalization that groups positions according to their main functional area.
- It is often used in organizations with a single product or service line.
- Advantages of functional structure include in-depth development of expertise, clear career paths, efficient use of resources, and potential technical advantage over competitors.### Organizational Structure
- Functional Structure:
- Disadvantages: slow response time, backlog of decisions, bottlenecks, restricted view, inexact measurement, and narrow training.
- Uses: small or medium-size organizations, stable environments, and inter-related products.
Divisional Structure
- Definition: departmentalization based on similarity of products, services, or markets.
- Types: product, geographic, and customer divisions.
- Advantages: fast response, simplified coordination, simultaneous emphasis, strong orientation, accurate measurement, and broad training.
- Disadvantages: duplication of resources, reduction of in-depth expertise, heightened competition, limited sharing of expertise, restriction of innovation, and neglect of overall goals.
- Uses: large organizations with multiple targets.
Hybrid Structure
- Definition: combination of functional and divisional structures at the same level of management.
- Advantages: alignment of goals, functional expertise, and adaptability.
- Disadvantages: conflicts between departments, excessive administrative overhead, and slow response.
- Uses: uncertain environments with functional expertise and powerful organizations.
Matrix Structure
- Definition: superimposition of a horizontal set of divisional reporting relationships onto a hierarchical functional structure.
- Advantages: decentralized decision making, strong coordination, improved environmental monitoring, fast response, flexible use of resources, and efficient use of support systems.
- Disadvantages: high administrative costs, potential confusion, heightened prospects for conflicts, excessive focus on internal relations, and overemphasis on group decision making.
- Uses: none specified.
Contingency Factors
- Technology:
- Types: unit and small-batch, large-batch and mass, and continuous-process production.
- Complexity: technological complexity and interdependence.
- Size:
- Measured by: number of employees, gross sales, or profits.
- Effects: increased complexity, addition of staff positions, growth of rules and regulations, and decentralization.
- Environment:
- Types: stable and unstable.
- Effects: mechanistic and organic characteristics, and differentiation and integration.
Strategic Management
- Definition: art and science of formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives.
- Involves: managing resources, analyzing internal and external forces, and developing strategies to achieve vision and mission.
External Environment
- General Environment:
- Political and legal forces: opportunities and threats, environmental protection laws, tax regulations, import-export policies, and government regulations.
- Economic forces: interest rates, inflation rates, unemployment trends, economic conditions, and worker productivity.
- Social, cultural, demographic, and ecological forces: consumer trends, resource reduction, and healthier living.
- Technological forces: AI, cutting-edge technology, licenses, and online transactions.
- Industry Environment:
- Competitive Intelligence: gathering and analyzing information about competitors and industry trends.
- Sources of strategic information: surveys, on-site observations, defensive competitive intelligence, reverse engineering, government agencies, online databases, and direct contact.
- Competitive Benchmarking: comparing operations with those of competitors.### Competitive Intelligence and AI
- AI-driven competitive intelligence accelerates research productivity
- Critical external factors to be recorded and prioritized:
- Relationships with suppliers or distributors
- Market share
- Range of competing products
- Global economies
- Foreign affiliations
- Proprietary and key account advantages
- Price competitiveness
- Technological advancements
- Population shifts
- Interest rates
- Pollution abatement
Porter's Five-Forces Model of Competition
- Identifies five competitive forces:
- Threat of new entrants
- Intensity of rivalry among competitors
- Threat of substitute products
- Bargaining power of buyers
- Bargaining power of suppliers
- Weak competitive forces present opportunities for higher profits
- Competitive forces can be altered in favor of the firm through strategic shifts
Threat of New Entrants
- Barriers to entry:
- Economies of scale
- Product differentiation
- Switching costs
- Access to distribution channels
- Government policies
- Examples:
- Intel Company's economies of scale advantage
- Procter & Gamble's product differentiation advantage
Intensity of Rivalry among Competitors
- Factors influencing rivalry:
- Number of balanced competitors
- Slow industry growth
- High fixed costs
- Lack of differentiation
- Size of production capacity
- High exit barriers
- Examples:
- Competition between Coca-Cola and Pepsi
- Slow industry growth leading to intense rivalry
Threat of Substitute Products
- Factors increasing threat of substitute products:
- Declining relative prices
- Decreasing consumer switching costs
- Examples:
- Sweeteners as substitutes for sugar
- Laser surgery as a substitute for glasses and contact lenses
Bargaining Power of Buyers and Suppliers
- Factors influencing buyer power:
- Large quantity purchases
- Potential to integrate upstream
- Multiple suppliers for standardized products
- Low switching costs
- Significant supply costs
- Factors influencing supplier power:
- Limited number of suppliers
- Unique products or services
- Potential to integrate downstream
- Examples:
- Bargaining power of drivers in fuel purchases
- Oil industry's supplier power
EFE Matrix External Factor Evaluation
- Steps to construct an EFE matrix:
- List factors
- Assign weights
- Rate factors
- Multiply weights by ratings
- Sum the weighted scores
- Example of an EFE matrix
Strategic Groups and Strategic Types
- Strategic group mapping:
- Analyzes market or competitive positions of rival firms
- Identifies strategic groups and entry barriers
- Guides firms in determining which strategic groups to target
- Strategic types:
- Prospectors: Focus on product innovation and market opportunities
- Defenders: Focus on improving efficiency and reducing costs
- Analyzers: Operate in multiple markets with different products and strategies
- Reactors: Lack a clear strategy and respond to environmental pressures
- Examples:
- IBM and Procter & Gamble as analyzers
- Most airlines in the U.S. as reactors
Internal Environment
- Internal environment analysis:
- Management
- Marketing
- Finance and accounting
- Production and operations
- Research and development
- Management information systems
- Advantages of internal audit:
- Improves communication
- Provides a clear view of the firm's future strategy
- Helps gain a competitive advantage
Resources and Competencies
- Types of resources:
- Tangible resources: Financial and physical resources
- Intangible resources: Knowledge, trust, reputation, leadership skills, and employee loyalty
- Strategic value of resources:
- Contribution to competencies and competitive advantage
- Interacting and combining resources to create competencies
- Examples:
- Ford Company's resources and competencies in research and development
- Amazon.com's distribution and service resources
Core Competencies
- Meet four essential criteria:
- Valuable
- Rare
- Costly to imitate
- Non-substitutable
- Examples:
- Dell Computer's core competencies in manufacturing and distribution
Value Chain Analysis
- Value chain activities:
- Primary activities: Inbound logistics, operations, outbound logistics, marketing and sales, and service
- Support activities: Procurement, technological development, human resources management, and firm infrastructure
- Examples:
- Value chain activities for a product category
Internal Factor Evaluation Matrix (IFE)
- Steps to construct an IFE matrix:
- List factors
- Assign weights
- Rate factors
- Multiply weights by ratings
- Sum the weighted scores
- Example of an IFE matrix
Introduction to Management
- Management is the process of administering the activity of an organization or division.
- It involves handling, controlling, and directing the activity to achieve organizational goals.
- The word "management" comes from the Latin words "manus" (hand) and "agere" (to drive, to act), and has evolved through different languages.
Who is a Manager?
- A manager is someone whose primary activities are part of the management process.
- They are responsible for the work performance of group members and hold formal power to commit organizational resources.
- There are many managerial job types, varying in vertical and horizontal dimensions.
- Top managers are responsible for the entire organization, middle managers oversee specific departments, and first-line managers supervise employees.
The Functions of Management
- The traditional approach to management functions includes forecasting, planning, organizing, commanding, coordinating, and controlling.
- The contemporary approach recognizes planning, organizing, leading, and controlling as the four major functions of management.
- Management is performed through the deployment and manipulation of resources, including human, financial, physical, informational, intellectual, and intangible resources.
Manager's Job
- A manager's job involves a range of activities, including planning, organizing, leading, controlling, and decision-making.
- The manager's role is to achieve organizational goals by engaging in these four functions.
Organizational Environments
- The external environment includes factors outside the organization that can impact its performance, such as market trends, customer needs, and government policies.
- The internal environment includes factors within the organization, such as company culture, employee skills, and resources.
- Analyzing environmental conditions is essential for effective management.
Planning
- Planning involves establishing organizational goals and plans, as well as managing innovation and change.
- The overall planning process includes setting goals, identifying alternatives, evaluating options, and selecting a course of action.
- Organizational goals and plans are crucial for achieving success.
Organizational Structure
- Organizational structure refers to the way jobs and tasks are divided, organized, and coordinated.
- The five types of departmentalization are functional, product, customer, geographic, and matrix.
- Each type of structure has its advantages and disadvantages, and the choice of structure depends on various contingency factors.
Organizational Design
- Organizational design involves creating an organization structure that is aligned with the organization's strategy and goals.
- Contingency factors, such as technology, size, and environment, influence the effectiveness of an organization structure.
- The four major types of structures are functional, divisional, hybrid, and matrix.
Functional Structure
- Functional structure is a type of departmentalization that groups positions according to their main functional area.
- It is often used in organizations with a single product or service line.
- Advantages of functional structure include in-depth development of expertise, clear career paths, efficient use of resources, and potential technical advantage over competitors.### Organizational Structure
- Functional Structure:
- Disadvantages: slow response time, backlog of decisions, bottlenecks, restricted view, inexact measurement, and narrow training.
- Uses: small or medium-size organizations, stable environments, and inter-related products.
Divisional Structure
- Definition: departmentalization based on similarity of products, services, or markets.
- Types: product, geographic, and customer divisions.
- Advantages: fast response, simplified coordination, simultaneous emphasis, strong orientation, accurate measurement, and broad training.
- Disadvantages: duplication of resources, reduction of in-depth expertise, heightened competition, limited sharing of expertise, restriction of innovation, and neglect of overall goals.
- Uses: large organizations with multiple targets.
Hybrid Structure
- Definition: combination of functional and divisional structures at the same level of management.
- Advantages: alignment of goals, functional expertise, and adaptability.
- Disadvantages: conflicts between departments, excessive administrative overhead, and slow response.
- Uses: uncertain environments with functional expertise and powerful organizations.
Matrix Structure
- Definition: superimposition of a horizontal set of divisional reporting relationships onto a hierarchical functional structure.
- Advantages: decentralized decision making, strong coordination, improved environmental monitoring, fast response, flexible use of resources, and efficient use of support systems.
- Disadvantages: high administrative costs, potential confusion, heightened prospects for conflicts, excessive focus on internal relations, and overemphasis on group decision making.
- Uses: none specified.
Contingency Factors
- Technology:
- Types: unit and small-batch, large-batch and mass, and continuous-process production.
- Complexity: technological complexity and interdependence.
- Size:
- Measured by: number of employees, gross sales, or profits.
- Effects: increased complexity, addition of staff positions, growth of rules and regulations, and decentralization.
- Environment:
- Types: stable and unstable.
- Effects: mechanistic and organic characteristics, and differentiation and integration.
Strategic Management
- Definition: art and science of formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives.
- Involves: managing resources, analyzing internal and external forces, and developing strategies to achieve vision and mission.
External Environment
- General Environment:
- Political and legal forces: opportunities and threats, environmental protection laws, tax regulations, import-export policies, and government regulations.
- Economic forces: interest rates, inflation rates, unemployment trends, economic conditions, and worker productivity.
- Social, cultural, demographic, and ecological forces: consumer trends, resource reduction, and healthier living.
- Technological forces: AI, cutting-edge technology, licenses, and online transactions.
- Industry Environment:
- Competitive Intelligence: gathering and analyzing information about competitors and industry trends.
- Sources of strategic information: surveys, on-site observations, defensive competitive intelligence, reverse engineering, government agencies, online databases, and direct contact.
- Competitive Benchmarking: comparing operations with those of competitors.### Competitive Intelligence and AI
- AI-driven competitive intelligence accelerates research productivity
- Critical external factors to be recorded and prioritized:
- Relationships with suppliers or distributors
- Market share
- Range of competing products
- Global economies
- Foreign affiliations
- Proprietary and key account advantages
- Price competitiveness
- Technological advancements
- Population shifts
- Interest rates
- Pollution abatement
Porter's Five-Forces Model of Competition
- Identifies five competitive forces:
- Threat of new entrants
- Intensity of rivalry among competitors
- Threat of substitute products
- Bargaining power of buyers
- Bargaining power of suppliers
- Weak competitive forces present opportunities for higher profits
- Competitive forces can be altered in favor of the firm through strategic shifts
Threat of New Entrants
- Barriers to entry:
- Economies of scale
- Product differentiation
- Switching costs
- Access to distribution channels
- Government policies
- Examples:
- Intel Company's economies of scale advantage
- Procter & Gamble's product differentiation advantage
Intensity of Rivalry among Competitors
- Factors influencing rivalry:
- Number of balanced competitors
- Slow industry growth
- High fixed costs
- Lack of differentiation
- Size of production capacity
- High exit barriers
- Examples:
- Competition between Coca-Cola and Pepsi
- Slow industry growth leading to intense rivalry
Threat of Substitute Products
- Factors increasing threat of substitute products:
- Declining relative prices
- Decreasing consumer switching costs
- Examples:
- Sweeteners as substitutes for sugar
- Laser surgery as a substitute for glasses and contact lenses
Bargaining Power of Buyers and Suppliers
- Factors influencing buyer power:
- Large quantity purchases
- Potential to integrate upstream
- Multiple suppliers for standardized products
- Low switching costs
- Significant supply costs
- Factors influencing supplier power:
- Limited number of suppliers
- Unique products or services
- Potential to integrate downstream
- Examples:
- Bargaining power of drivers in fuel purchases
- Oil industry's supplier power
EFE Matrix External Factor Evaluation
- Steps to construct an EFE matrix:
- List factors
- Assign weights
- Rate factors
- Multiply weights by ratings
- Sum the weighted scores
- Example of an EFE matrix
Strategic Groups and Strategic Types
- Strategic group mapping:
- Analyzes market or competitive positions of rival firms
- Identifies strategic groups and entry barriers
- Guides firms in determining which strategic groups to target
- Strategic types:
- Prospectors: Focus on product innovation and market opportunities
- Defenders: Focus on improving efficiency and reducing costs
- Analyzers: Operate in multiple markets with different products and strategies
- Reactors: Lack a clear strategy and respond to environmental pressures
- Examples:
- IBM and Procter & Gamble as analyzers
- Most airlines in the U.S. as reactors
Internal Environment
- Internal environment analysis:
- Management
- Marketing
- Finance and accounting
- Production and operations
- Research and development
- Management information systems
- Advantages of internal audit:
- Improves communication
- Provides a clear view of the firm's future strategy
- Helps gain a competitive advantage
Resources and Competencies
- Types of resources:
- Tangible resources: Financial and physical resources
- Intangible resources: Knowledge, trust, reputation, leadership skills, and employee loyalty
- Strategic value of resources:
- Contribution to competencies and competitive advantage
- Interacting and combining resources to create competencies
- Examples:
- Ford Company's resources and competencies in research and development
- Amazon.com's distribution and service resources
Core Competencies
- Meet four essential criteria:
- Valuable
- Rare
- Costly to imitate
- Non-substitutable
- Examples:
- Dell Computer's core competencies in manufacturing and distribution
Value Chain Analysis
- Value chain activities:
- Primary activities: Inbound logistics, operations, outbound logistics, marketing and sales, and service
- Support activities: Procurement, technological development, human resources management, and firm infrastructure
- Examples:
- Value chain activities for a product category
Internal Factor Evaluation Matrix (IFE)
- Steps to construct an IFE matrix:
- List factors
- Assign weights
- Rate factors
- Multiply weights by ratings
- Sum the weighted scores
- Example of an IFE matrix
Introduction to Management
- Management is the process of administering the activity of an organization or division.
- It involves handling, controlling, and directing the activity to achieve organizational goals.
- The word "management" comes from the Latin words "manus" (hand) and "agere" (to drive, to act), and has evolved through different languages.
Who is a Manager?
- A manager is someone whose primary activities are part of the management process.
- They are responsible for the work performance of group members and hold formal power to commit organizational resources.
- There are many managerial job types, varying in vertical and horizontal dimensions.
- Top managers are responsible for the entire organization, middle managers oversee specific departments, and first-line managers supervise employees.
The Functions of Management
- The traditional approach to management functions includes forecasting, planning, organizing, commanding, coordinating, and controlling.
- The contemporary approach recognizes planning, organizing, leading, and controlling as the four major functions of management.
- Management is performed through the deployment and manipulation of resources, including human, financial, physical, informational, intellectual, and intangible resources.
Manager's Job
- A manager's job involves a range of activities, including planning, organizing, leading, controlling, and decision-making.
- The manager's role is to achieve organizational goals by engaging in these four functions.
Organizational Environments
- The external environment includes factors outside the organization that can impact its performance, such as market trends, customer needs, and government policies.
- The internal environment includes factors within the organization, such as company culture, employee skills, and resources.
- Analyzing environmental conditions is essential for effective management.
Planning
- Planning involves establishing organizational goals and plans, as well as managing innovation and change.
- The overall planning process includes setting goals, identifying alternatives, evaluating options, and selecting a course of action.
- Organizational goals and plans are crucial for achieving success.
Organizational Structure
- Organizational structure refers to the way jobs and tasks are divided, organized, and coordinated.
- The five types of departmentalization are functional, product, customer, geographic, and matrix.
- Each type of structure has its advantages and disadvantages, and the choice of structure depends on various contingency factors.
Organizational Design
- Organizational design involves creating an organization structure that is aligned with the organization's strategy and goals.
- Contingency factors, such as technology, size, and environment, influence the effectiveness of an organization structure.
- The four major types of structures are functional, divisional, hybrid, and matrix.
Functional Structure
- Functional structure is a type of departmentalization that groups positions according to their main functional area.
- It is often used in organizations with a single product or service line.
- Advantages of functional structure include in-depth development of expertise, clear career paths, efficient use of resources, and potential technical advantage over competitors.### Organizational Structure
- Functional Structure:
- Disadvantages: slow response time, backlog of decisions, bottlenecks, restricted view, inexact measurement, and narrow training.
- Uses: small or medium-size organizations, stable environments, and inter-related products.
Divisional Structure
- Definition: departmentalization based on similarity of products, services, or markets.
- Types: product, geographic, and customer divisions.
- Advantages: fast response, simplified coordination, simultaneous emphasis, strong orientation, accurate measurement, and broad training.
- Disadvantages: duplication of resources, reduction of in-depth expertise, heightened competition, limited sharing of expertise, restriction of innovation, and neglect of overall goals.
- Uses: large organizations with multiple targets.
Hybrid Structure
- Definition: combination of functional and divisional structures at the same level of management.
- Advantages: alignment of goals, functional expertise, and adaptability.
- Disadvantages: conflicts between departments, excessive administrative overhead, and slow response.
- Uses: uncertain environments with functional expertise and powerful organizations.
Matrix Structure
- Definition: superimposition of a horizontal set of divisional reporting relationships onto a hierarchical functional structure.
- Advantages: decentralized decision making, strong coordination, improved environmental monitoring, fast response, flexible use of resources, and efficient use of support systems.
- Disadvantages: high administrative costs, potential confusion, heightened prospects for conflicts, excessive focus on internal relations, and overemphasis on group decision making.
- Uses: none specified.
Contingency Factors
- Technology:
- Types: unit and small-batch, large-batch and mass, and continuous-process production.
- Complexity: technological complexity and interdependence.
- Size:
- Measured by: number of employees, gross sales, or profits.
- Effects: increased complexity, addition of staff positions, growth of rules and regulations, and decentralization.
- Environment:
- Types: stable and unstable.
- Effects: mechanistic and organic characteristics, and differentiation and integration.
Strategic Management
- Definition: art and science of formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives.
- Involves: managing resources, analyzing internal and external forces, and developing strategies to achieve vision and mission.
External Environment
- General Environment:
- Political and legal forces: opportunities and threats, environmental protection laws, tax regulations, import-export policies, and government regulations.
- Economic forces: interest rates, inflation rates, unemployment trends, economic conditions, and worker productivity.
- Social, cultural, demographic, and ecological forces: consumer trends, resource reduction, and healthier living.
- Technological forces: AI, cutting-edge technology, licenses, and online transactions.
- Industry Environment:
- Competitive Intelligence: gathering and analyzing information about competitors and industry trends.
- Sources of strategic information: surveys, on-site observations, defensive competitive intelligence, reverse engineering, government agencies, online databases, and direct contact.
- Competitive Benchmarking: comparing operations with those of competitors.### Competitive Intelligence and AI
- AI-driven competitive intelligence accelerates research productivity
- Critical external factors to be recorded and prioritized:
- Relationships with suppliers or distributors
- Market share
- Range of competing products
- Global economies
- Foreign affiliations
- Proprietary and key account advantages
- Price competitiveness
- Technological advancements
- Population shifts
- Interest rates
- Pollution abatement
Porter's Five-Forces Model of Competition
- Identifies five competitive forces:
- Threat of new entrants
- Intensity of rivalry among competitors
- Threat of substitute products
- Bargaining power of buyers
- Bargaining power of suppliers
- Weak competitive forces present opportunities for higher profits
- Competitive forces can be altered in favor of the firm through strategic shifts
Threat of New Entrants
- Barriers to entry:
- Economies of scale
- Product differentiation
- Switching costs
- Access to distribution channels
- Government policies
- Examples:
- Intel Company's economies of scale advantage
- Procter & Gamble's product differentiation advantage
Intensity of Rivalry among Competitors
- Factors influencing rivalry:
- Number of balanced competitors
- Slow industry growth
- High fixed costs
- Lack of differentiation
- Size of production capacity
- High exit barriers
- Examples:
- Competition between Coca-Cola and Pepsi
- Slow industry growth leading to intense rivalry
Threat of Substitute Products
- Factors increasing threat of substitute products:
- Declining relative prices
- Decreasing consumer switching costs
- Examples:
- Sweeteners as substitutes for sugar
- Laser surgery as a substitute for glasses and contact lenses
Bargaining Power of Buyers and Suppliers
- Factors influencing buyer power:
- Large quantity purchases
- Potential to integrate upstream
- Multiple suppliers for standardized products
- Low switching costs
- Significant supply costs
- Factors influencing supplier power:
- Limited number of suppliers
- Unique products or services
- Potential to integrate downstream
- Examples:
- Bargaining power of drivers in fuel purchases
- Oil industry's supplier power
EFE Matrix External Factor Evaluation
- Steps to construct an EFE matrix:
- List factors
- Assign weights
- Rate factors
- Multiply weights by ratings
- Sum the weighted scores
- Example of an EFE matrix
Strategic Groups and Strategic Types
- Strategic group mapping:
- Analyzes market or competitive positions of rival firms
- Identifies strategic groups and entry barriers
- Guides firms in determining which strategic groups to target
- Strategic types:
- Prospectors: Focus on product innovation and market opportunities
- Defenders: Focus on improving efficiency and reducing costs
- Analyzers: Operate in multiple markets with different products and strategies
- Reactors: Lack a clear strategy and respond to environmental pressures
- Examples:
- IBM and Procter & Gamble as analyzers
- Most airlines in the U.S. as reactors
Internal Environment
- Internal environment analysis:
- Management
- Marketing
- Finance and accounting
- Production and operations
- Research and development
- Management information systems
- Advantages of internal audit:
- Improves communication
- Provides a clear view of the firm's future strategy
- Helps gain a competitive advantage
Resources and Competencies
- Types of resources:
- Tangible resources: Financial and physical resources
- Intangible resources: Knowledge, trust, reputation, leadership skills, and employee loyalty
- Strategic value of resources:
- Contribution to competencies and competitive advantage
- Interacting and combining resources to create competencies
- Examples:
- Ford Company's resources and competencies in research and development
- Amazon.com's distribution and service resources
Core Competencies
- Meet four essential criteria:
- Valuable
- Rare
- Costly to imitate
- Non-substitutable
- Examples:
- Dell Computer's core competencies in manufacturing and distribution
Value Chain Analysis
- Value chain activities:
- Primary activities: Inbound logistics, operations, outbound logistics, marketing and sales, and service
- Support activities: Procurement, technological development, human resources management, and firm infrastructure
- Examples:
- Value chain activities for a product category
Internal Factor Evaluation Matrix (IFE)
- Steps to construct an IFE matrix:
- List factors
- Assign weights
- Rate factors
- Multiply weights by ratings
- Sum the weighted scores
- Example of an IFE matrix
Test your knowledge of management principles and concepts, including the theories of Frederick Winslow Taylor and Henry Fayol, and the advantages of decentralization and delegation.
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