Management Principles Overview

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Questions and Answers

Which of the following is NOT one of the four main functions of managers?

Planning

Controlling

Organizing

Executing (correct)

What does the 'Hawthorne Effect' refer to in management?

Behavior changes due to being observed (correct)

Improvement in worker skills through training

Collaboration among team members for project success

Increased productivity due to financial incentives

According to classical management theories, how should worker performance be primarily motivated?

By fostering self-management among workers

By enhancing personal relationships at work

By providing flexible working hours

By monetary compensation tied to performance (correct)

Which of the following statements best represents the 'unity of command' principle?

Each employee should report to one supervisor only. Signup and view all the answers

What is a key characteristic of bureaucratic management?

Stable and documented rules for behavior Signup and view all the answers

What management approach emphasizes the importance of social interaction within organizations?

Human relations movement Signup and view all the answers

Which role of managers is primarily concerned with the allocation of resources?

Resource allocator Signup and view all the answers

In which management approach is the concept of self-management most prominently featured?

Behavioral approach Signup and view all the answers

What is emphasized in Mary Parker Follett's management philosophy?

Group coordination and collaboration Signup and view all the answers

Which of the following is a key benefit of scientific management?

Creation of standardized work methods Signup and view all the answers

What is the primary factor that motivates individuals to fulfill higher-level needs according to Maslow?

The fulfillment of basic needs Signup and view all the answers

According to Herzberg, what are motivators primarily associated with?

Intrinsic job factors Signup and view all the answers

What concept does McGregor's theory suggest about managers' impact on motivation?

Managers can drive motivation based on their understanding of employee needs Signup and view all the answers

Which of the following statements describes the expectancy theory of motivation?

Efforts lead to high performance, which must be valued Signup and view all the answers

In equity theory, how do individuals determine the fairness of their returns?

By comparing their contributions and returns with others Signup and view all the answers

What is a key principle of Barnard's view on organizational authority?

Workers will follow orders when they see personal benefits Signup and view all the answers

What do satisfiers refer to in Herzberg's theory?

External factors that prevent dissatisfaction Signup and view all the answers

What occurs according to the satisfaction-progression principle in Maslow's hierarchy?

Fulfillment of lower-level needs is essential before advancing Signup and view all the answers

What is a key factor that may limit a customer's power in a monopoly?

The number of buyers compared to sellers Signup and view all the answers

What happens when there is a lack of differentiation among companies in a market?

Competition intensifies primarily on price Signup and view all the answers

Which of the following is NOT a reason for high exit barriers in an industry?

Strong market demand Signup and view all the answers

What does the VRIO model stand for?

Value, Rareness, Imitability, Organization Signup and view all the answers

What does cost leadership focus on in business-level strategies?

Reducing economic costs below competitors Signup and view all the answers

What is a limitation of the Five-Forces Model?

It assumes all firms have the same power relationships Signup and view all the answers

Which component is included in the SWOT model?

Threats Signup and view all the answers

Which factor does NOT impact the severity of competition among existing firms?

The geographic location of firms Signup and view all the answers

What characterizes an organization that is learning-oriented?

It adapts to its environment. Signup and view all the answers

Which of the following is a method organizations can use to facilitate change?

Training. Signup and view all the answers

What does the Five-Forces Model primarily address?

The external competitive forces affecting an industry. Signup and view all the answers

What is the impact of switching costs on buyers' power?

Lower switching costs increase buyer power. Signup and view all the answers

What factor contributes to the threat posed by new entrants in an industry?

Economies of scale. Signup and view all the answers

Which statement about suppliers' bargaining power is correct?

The critical resources held by suppliers can increase their power. Signup and view all the answers

What is a characteristic of double-loop learning?

It encourages questioning underlying assumptions. Signup and view all the answers

How do capital requirements affect new entrants in an industry?

High capital requirements can discourage entry. Signup and view all the answers

Which concept refers to the importance of a product to a buyer in terms of their power over a company?

Importance of the product. Signup and view all the answers

What is meant by 'cost disadvantages independent of scale'?

Competitive disadvantages due to factors like legal protections and policies. Signup and view all the answers

What type of business ownership features a single individual controlling all operations and taking full legal responsibility?

Sole proprietorship Signup and view all the answers

Which type of strategic alliance involves one firm having partial ownership in another?

Equity alliance Signup and view all the answers

What distinguishes a limited partnership from a general partnership?

Limited partners have limited liability Signup and view all the answers

What is a defining characteristic of a corporation?

Independent legal entity Signup and view all the answers

Which term refers to two or more firms combining resources to create a new independent entity?

Joint venture Signup and view all the answers

Which function is primarily the responsibility of the board of directors in corporate governance?

Providing strategic direction Signup and view all the answers

In the context of non-profit organizations, what is typically a primary focus of the board of directors?

Ensuring the mission remains central Signup and view all the answers

What does vertical integration primarily allow a firm to do?

Diversify its product offerings Signup and view all the answers

Which of the following best describes a cooperative?

A business owned by its members with equal say Signup and view all the answers

What type of business ownership usually pools resources from partners to share profits?

Partnership Signup and view all the answers

Which term refers to an agreement where firms work together without equity ownership?

Nonequity alliance Signup and view all the answers

What role do chief executive officers or executive directors serve in an organization?

Transformational and transactional leaders Signup and view all the answers

What is a key benefit of a corporation related to ownership?

Limited liability for owners Signup and view all the answers

Study Notes

Managing the Workforce

Managers' functions: Planning, organizing, controlling, leading
Managers' roles:
- Interpersonal: Figurehead, leader, liaison
- Informational: Monitor, disseminator, spokesperson
- Decisional: Entrepreneur, disturbance handler, resource allocator, negotiator

Classical Approach of Management

Scientific Management (Frederick Taylor):
- Standardize work: Compartmentalized tasks, observe & measure, one best method. Benefits: easy training, consistent performance, minimal discretion for workers
- Supervise workers: Managers specialize, separate mental & physical work, workers lack self-management
- Motivate workers: Money as primary motivator, performance-based pay
Administrative Management (Henry Fayol):
- Divide work: Simplifying tasks & assigning to specific workers, manager instructs and enforces.
- Unity of command: Each employee reports to one boss for clear instructions.
- Company goals: Organizational objectives take precedence over individual interests.
Bureaucratic Management (Max Weber):
- Rules & procedures: Stable & documented for consistent behavior
- Hierarchy of authority: Fixed positions with clear power & authority levels.
- Impersonality: Rules, not personalities, govern behavior, professional not personal.
- Selection & promotion: Hiring based on ability, not favoritism, promotions based on performance.

Behavioural Approach of Management

Human Relations Movement (Elton Mayo):
- Hawthorne Effect: Subjects changing behavior because of being observed.
- Organizations as social systems: Managers should recognize the social interaction in management
Mary Parker Follet:
- Coordination: Central to management, encourage productivity through involvement, not just coercion.
- Self-management: Workers involved in decisions affecting their work.
- Collaboration: Managers and workers as partners, promoting self-management.
Chester Barnard:
- Manager's critical functions: Establish communication, motivate employees to achieve shared goals, authority earned through understanding, benefit perception.
Modern Behavioural Science & Motivation-Based Perspectives:
- Motivation:
  - Need-based theories (Maslow, Herzberg, McGregor):
    - Maslow: Unfulfilled needs drive behavior, satisfaction and progression toward higher needs.
    - Herzberg: Divides needs into satisfiers (external factors like work environment) and motivators (internal factors like responsibility).
    - McGregor: Manager's view of employees' needs influence motivation levels.
  - Cognitive-based theories:
    - **Expectancy theory: ** Effort leads to good performance, performance leads to reward, reward is valued.
    - **Equity theory: ** Individuals compare their contributions and rewards to others, fairness is key.
- Learning Organizations:
  - Adapting to environment: Continuously learning and evolving based on external changes.
  - Learning from people: Value and leverage the knowledge of the organization's members.
  - Contributing to wider learning: Sharing knowledge with the wider community or context.
- Types of organizational learning:
  - Single-loop learning: Adjust actions within existing framework if goals are not achieved.
  - Double-loop learning: Examine underlying assumptions and values to adapt and change the framework itself.

Strategic Business Management

Strategy: Actions taken to achieve organizational goals.
Strategic management: Analysis, decisions, implementation, and evaluation to create and sustain competitive advantages.
Five Forces Model:
- Threat of new entrants: New competitors with resources and desire for market share. Barriers to entry: economies of scale, capital requirements, switching costs, access to distribution channels, cost disadvantages.
- Threat of substitutes: Greater variety of alternatives increases threat.
- Threat of suppliers: Suppliers with critical resources and limited alternatives can influence companies by increasing prices or lowering quality.
- Threat of buyers: Powerful buyers can negotiate lower prices, better quality, or superior service.
- Rivalry among existing firms: Impacts competition based on differentiation, number of competitors, and exit barriers.
Limitations of the Five Forces Model:
- Doesn't explicitly address technological change or government regulations
- Assumes all incumbents experience the same power relationships with each force

Internal Environment: VRIO Model

VRIO Framework: Analyzes an organization's internal resources and capabilities for competitive advantage
- Value: Do resources provide value to customers?
- Rarity: Are the resources unique and scarce to competitors?
- Imitability: Are the resources difficult or costly for competitors to copy?
- Organization: Is the organization structured to exploit the resources and capabilities effectively?

External Environment: SWOT Model

SWOT analysis: Evaluates how an organization's internal strengths and weaknesses interact with external opportunities and threats.

Different levels of Strategy

Business-Level Strategies:
- Competitive strategies within a given market.
- Types:
  - Cost leadership: Achieving competitive advantage by minimizing costs.
  - Differentiation: Creating unique and valuable products or services.
  - Focus: Targeting a narrow market segment with cost leadership or differentiation.
Corporate-Level Strategies:
- Strategies across multiple businesses or markets.
- Types:
  - Growth Strategies: Expanding through market penetration, market development, product development, or diversification.
  - Stability Strategies: Maintaining the current position in the market.
  - Renewal Strategies: Responding to declining performance by retrenchment or turnaround.
Means to Diversify:
- Internal development: Creating new products or services in-house
- Mergers & acquisitions: Combining with other firms.
- Strategic alliances: Collaboration between firms with shared goals (non-equity, equity, joint ventures).

Corporate Governance

Forms of Business Ownership:
- Sole Proprietorship: Owned and managed by one person, owner assumes all liabilities.
- Partnership: Two or more individuals share a common ownership and liabilities.
- Corporation: Legal entity separate from its owners, offers limited liability, permanence, transferability of ownership, and access to capital.
- Cooperative: Owned and controlled by its members, democratic structure, profits are shared among members.
Components of Corporate Governance:
- Shareholders: Ultimate control, elect board members.
- Board of Directors: Oversees management, provides legitimacy, accountability, and responsible ownership.
- Management: Hired by the board to run the company.
- Employees: Hired to perform operational tasks.

The Non-Profit Organization:

Sectors of the Economy:
- Private Sector: Generates profit through goods/services.
- Public Sector: Provides essential societal functions (government).
- Non-Profit Sector: Purpose beyond profit generation, may generate revenue but reinvest it back into the organization.
Governance of a Non-Profit Organization:
- Board of Directors: Focuses on mission, values, stakeholder needs, performance, strategic leadership, and vision for the organization.
- Chief Executive Officer/Executive Director: Leads the organization, can utilize transactional leadership or transformational leadership.

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Description

This quiz covers key concepts in management, including the functions and roles of managers, as well as classical approaches to management such as scientific and administrative management. Test your understanding of these foundational principles that guide effective workforce management.