Business Semester 1 PDF

What is Management? It can be defined as the work process in which, with and through others, organizational goals are efficiently achieved. It can also be defined as the process to achieve goals defined by the organization based on the four basic functions: planning, organizing, leading, and control...

What is Management? It can be defined as the work process in which, with and through others, organizational goals are efficiently achieved. It can also be defined as the process to achieve goals defined by the organization based on the four basic functions: planning, organizing, leading, and controlling. Organizational performance is a measure of how efficiently and effectively managers use available resources to satisfy customers and achieve organizational goals. Efficiency is a measure of how productively resources are used to achieve a goal. Effectiveness is a measure of the appropriateness of the goals that managers have selected for the organization to pursue and the degree to which the organization achieves those goals. Organizations are effective when managers choose appropriate goals and then achieve them. Company: legal entity corresponding to an organizational unit to produce goods and services, enjoying a certain level of decision-making autonomy, particularly regarding the allocation of its current resources. Carries out one or more activities, in one or more locations. Large Company: company that employs 250 or more people, or whose turnover exceeds 50 million euros and net assets exceed 43 million euros. Medium Company: company that employs less than 250 people and whose annual turnover does not exceed 50 million euros or annual balance sheet total does not exceed 43 million euros, and which is not Small Company: company that employs less than 50 people and whose annual turnover or annual balance sheet total does not exceed 10 million euros, and which is not classified as a micro-enterprise. Microenterprise: company that employs less than 10 people and whose annual turnover or annual balance sheet total does not exceed 2 million euros. Small and Medium Enterprises (SMEs): companies that employ less than 250 people and whose annual turnover does not exceed 50 million euros or whose total annual balance sheet does not exceed 43 million euros, and which include micro-enterprises. In Portugal, around 97% of companies are SMEs  Legal form of organization individual Company: ltd. Covers the legal forms of sole proprietorship and self-employed worker. Entrepreneur (ENI): person who habitually carries out, on their own account and for profit, an organized and non-commercial economic activity, Independent Worker: individual who is registered with the tax authorities as a distinct and taxable. Economic. The company unit of organized human, technical and financial resources whose objective, through the production and/or sale of goods and services, is to satisfy the needs of the communities with which it maintains relations. Economic- acquire, sell goods. Sector-1-2-3 Commercial- acquire, sell goods. Management Factors of production: Land (natural resources) Labour (workers) Capital (machines, tools, not money) Entrepreneurship (take risk for business) Knowledge (tech) Traditional economy- produce. Command economy- filing quotas. Market economy- freedom, variety. Mixed- does not leave anyone out. Fundamental functions: Planning- leading- organizing- controlling.  Types of managers: Superior/ higher level- involve resources, determine course of action, formulate policies. Concerns entire company. Conceptual skills Intermediate/ tactical level- moves resources short term, elaborates plans related to area of managers. (Divisional, departmental, financial, marketing directors. Balance of TECH, HR, CONC. skills Operational level- activity of managers reflected in execution. (supervisors, service heads, section heads). Tech skills Skills that managers need: Conceptual skills: Analysing and diagnosing complex situations -à make good decisions. interpersonal skills: Working well with other people both individually and in groups by communicating, motivating, mentoring, delegating. Technical skills: Job-specific knowledge, expertise, and techniques needed to perform work tasks. Political skills: Building a power base and establishing the right connections to get needed resources for groups. Other important: decision making, team building, decisiveness, personal responsibility, trustworthiness, loyalty, professionalism, tolerance, adaptability, creative thinking, listening, self- development. Some service oriented, business use inverted organisation to empower employees. Redesign org. to serve customers more effectively and efficiently. Employees more relevant in business (nurses). Direct link between employees and customers. Employees Represent value of business to consumers. Mintzberg managerial roles: Interpersonal roles Figurehead- face of the business, representative. Leader- motivating others. Liaison- linking with managers of other businesses. Make people feel part of a group. Informational roles Monitor (receiver)- collecting relevant data. Keep up with changes. Disseminator- sending information to relevant people within an organisation. Informing staff. Spokesperson- communicating info about organisation. Dealing with questions. Decisional roles Entrepreneur- seeking new opportunities for the business, innovation. Disturbance handler- responding to crisis, making decisions. Resource allocator- deciding how finance is spent. Allocating physical and human resources. Negotiator- representing business in all important negotiations. Depending on a situation a good manager should adopt different roles, depending on which ones are more suitable for a specific situation. Divided in 4 (models) quadrants, depending on your role as a manager inside the organisation. Each model has 2 dif. approaches with characteristics from a leader. (will not ask specifically each role but can be asked about dif. Between models and a scenario which one would be a good option). Bec world and markets constantly change: Volatile- env. demands you to react quick to unpredictable ongoing changes out of our control. Uncertain- env, requires acting without certainty. Complex- env, is dynamic w/ interdependencies. Ambiguous- env, is unfamiliar outside of expertise. Theories- project evaluation Planning and controlling mechanisms. Decision making- process by which managers respond to opportunities and threats by analysing the options and making determinations, or decisions, about specific organizational goals and courses of action. Good decisions result in the selection of appropriate goals and courses of action that increase organizational performance. Bad decisions lower performance. Need to implement to decide if good or bad. Every decision is risky. Decision making in response to opportunities occurs when managers search for ways to improve organizational performance to benefit customers, employees, and other stakeholder groups. Programmed decision making - routine, virtually automatic process. decisions that have been made so many times in the past that managers have developed rules or guidelines to be applied when certain situations inevitably occur. This decision making is called programmed because office managers, for example, do not need to repeatedly make new judgments about what should be done. (They can rely on long established decision rules for example) Rule 1: When the storage shelves are three-quarters empty, order more copy paper. Rule 2: When ordering paper, order enough to fill the shelves. Managers can develop rules and guidelines to regulate all routine organizational activities. specify how a worker should perform a certain task, and rules can specify the quality standards that raw materials must meet to be acceptable. Most decision making that relates to the day-to-day running of an organization. Nonprogrammed decision making- managers are not certain that a course of action will lead to a desired outcome. Rules cannot be developed to predict uncertain events. required for these nonroutine decisions. Nonprogrammed decisions are made in response to unusual or novel opportunities and threats, occurs when there are no ready-made decision rules that managers can apply to a situation. Rules do not exist because the situation is unexpected or uncertain. The classical model: The Administrative model managers in the real world do not have access to all the information they need to decide. Moreover, they pointed out that even if all information were readily available, many managers would lack the mental or psychological ability to absorb and evaluate it correctly. As a result, developed the administrative model of decision making to explain why decision making is always an inherently uncertain and risky process (opposite of classical model) bonded rationality- managers are limited. And that they have incomplete information to make decisions, bec of these 3 factors: Risk is present when managers know the possible outcomes of a particular course of action and can assign probabilities to them. When uncertainty exists, the probabilities of alternative outcomes cannot be determined, and future outcomes are unknown. Managers are working blind. Ambiguous information- Info managers have, its meaning is not clear, can be interpreted in multiple and often conflicting ways. Time constraints and information costs - The third reason information is incomplete is that managers have neither the time nor the money to search for all possible alternative solutions and evaluate all the potential consequences of those alternatives. Cognitive bias (problems) – How knowledge of situations negatively affects your (managers) decision making. Confirmation bias- Decision makers who have strong existing beliefs about the relationship between two variables tend to make decisions based on those beliefs even when presented with evidence that those initial beliefs may be wrong. Representativeness Bias- Many decision makers inappropriately generalize from a small sample or even from a single vivid case or episode. Illusion of control- Other errors in decision making result from the illusion of control, which is the tendency of decision makers to overestimate their ability to control activities and events. Top managers seem particularly prone to this bias. Escalating commitment- Having already committed significant resources to a course of action, some managers commit more resources to the project even if they receive feedback that the project is failing. Feelings of personal responsibility for a project apparently bias the analysis of decision makers and lead to this escalating commitment. Planning and strategy Strategy- a cluster of related managerial decisions and actions to help an organization attain one of its goals. formulation must be based increasingly on a growing capacity to provide quick and flexible responses to the unpredictable changes that happen daily. Business strategy formulation must be guided by the company's mission and goals, based on a careful analysis of the environment and the company itself. Planning- is a process managers use to identify and select appropriate goals and courses of action for an organization. Determine missions and goals, formulate strategy and implement strategy. Why is planning important? Give sense of direction and purpose, get managers to participate in decision making, too coordinate managers to reach business future desired state, control managers. Levels of planning: line back means feedback and adjustment. To create more efficiency. Vision Desires, values, dreams, and ambitions. Explanation of what is idealized. Usually set by owners. Where the company wants to go. Future situations. Vision established from values promotes a more authentic, immutable direction, despite changes in the market. What we want to be. Mission Main activity of a company. Follow the mission statement daily. Behaving according to the mission. What I must do to reach the vision. Must have 3 characteristics: Incorporate idea of triumph, may be stable over time, involve the whole organisation. What we do Mission and vision statements must be original. The consumer-oriented business definition allows the company to visualize its business in the present and be prepared to strategically anticipate and take advantage of changes in the environment. Values So, after defining the organization's Mission, Vision and Values statement, a very important step is to communicate them to everyone and carry out daily actions to internalize these elements in each employee, so that they are lived and remembered in each of their actions and of the organization. Goals a set of objectives that allow the company to guide its decisions, to ensure that it moves in the direction established by the mission. Specific Measurable Attainable Relevant Time-based. (SMART). The strategy definition process External and Internal Analysis - The Analysis of the Environment External analysis, 2levels: macro or contextual environment analysis. PESTLE analysis. T try to understand which factors in the economic and social environment in general affect the company's activity, both now and in the future. Political Economical Social Tech Legal Environment Micro or sector/industry environment analysis his analysis focuses on the set of actors and factors that have a direct influence on the company. Internal analysis Intends to study the characteristics of its resources and its abilities to compete in general and operational conditions. Strengths and weaknesses are identified. Functional analysis- departments. Functional departments as well as the variables to be analysed, these vary from company to company depending on organisation of business etc. Value Chain Analysis- identify basic activities that are necessary for the company to be able to market a product or service. Primary activities- form part of company’s production process. Support activities- activities that support primary activities. (search this analysis)  Formulating strategies Porters five forces SWOT analysis Part of strategic planning, method to know better and plan the future, analyse organisation and its surroundings. Advantages: simplicity, lower cost, flexibility, integration, collaboration. hypercompetition applies to industries that are characterized by permanent, ongoing, intense competition brought about by advancing technology or changing customer tastes and fads and fashions. Clearly, planning and strategy formulation are much more difficult and riskier when hypercompetition occurs. Corporate strategy (stability strategies, expansion, retrenchment, combination)- business strategy, functional strategy. Organization The organizational structure is the way its employees are organised, department, function or position. The structure shows the relationships and hierarchies that make up a company and allows to achieve distribution of authority, activities between sectors and a communication system. 4 types ofrganisations: Functional- division by area of knowledge to carry out activity. Allows specialization of tech areas. Effectively uses humans and material resources. Geographic- need to deal differently with the different areas in which the company operates; Allows to understand problems in each area; must be a critical mass of activities. By process- Division of activities according to the phases of the process (casting, manufacturing, assembly, painting...) Very common in the production sector, leads to a high level of expertise in each of the areas. By client- When organization works with different types of customers that require specialized treatment (Large companies' segment, Small, Individuals...); Allows to better understand the needs of each customer. (el cortingles) yellow. Innovational departments are organic and are always changing. They have low levels of formalization and use various forms of organisation. Depending on the purpose the strategy and what was planned we can suggest more than one structure for a business. Innovative org structures: By profit center: units with a high degree of autonomy but linked to the “parent company” because the financial system, decisions and policies remain centralized. Branch that adds to profit of company. Treated as a separate business. Ooposite is cost centre w no revenue. Matrix: simultaneous use of two or more types of org. By project: people are grouped according to the project in which they are allocated. They are “temporary departments” and allow people to develop a variety of skills. Space and tech. in relation to authority (hierarchical and a direct one) and in relation to employee mobility (employees permanently linked to org, when project is completed, return to original bodies. Generally hired for a fixed period. (Resource bank professionals enrolled who are summoned in accordance with the need of each projects). Cellular: is the almost total absence of structure and is characterized by high flexibility. It is made up of groups without defined heads or sectors. team leader defined by the characteristics of the task. Absence of structure and high flexibility. Framework for new ventures: innovation activities operate separately from routine activities. Network Dynamic, highly changeable structures adapt quickly and easily to a situation, offering agility that customers require. Organized horizontally and/or in a network. Leadership Process of influencing others to get them to do what the leader wants done or the ability to influence a group to act towards the pursuit of the group’s goals. Good leadership includes a good structure, tech, powerful info systems, good cost structure, diversification and people. Goleman’s six leadership styles: 1. Commanding- demands immediate compliance, good in a crisis. 2. Visionary- mobilizes people towards a vision, when changing and clear direction. 3. Affiliative- creates harmony and builds emotional bonds. Good to motivate team during stress. 4. Democratic- forces consensus through participation. Get valuable input from employees. 5. Pacesetting- sets high standards for performance. Quick results from highly competent team. 6. Coaching- develops people for the future. Help employees improve performance and team skills.  Best is 9,9. Power- the leader must affect other people’s behaviour and to get them to act in certain ways. Power based on special knowledge, skills and expertise Power that comes from a leader possesses. employees and co-workers respect, admiration and loyalty. Ability of manager to give or Natural leader receives power, withhold tangible and accepted by all others. intangible rewards. Ability of manager to punish others. Autocratic/authoritative leadership Democratic leadership Leader decides. Activities planned and distributed according to groups Not involved in group work description. Good productivity levels Steps towards groups role Causes tension in team. Leader tries to be involved in the group w/out doing too No creativity allowed. much of the work. Guides and supports behaviours. Group is spontaneous and creative. Laissez-faire leadership Groups or individuals have all freedom to make decisions without leaders’ intervention. No rules. Leader provides materials only if asked will provide additional info. Leader absents in participation. No comments on groups activity. No attempt to interfere with the course of events. Situational leadership leadership style should be different depending on the task or goal the person is performing. We all have high performance and the motivation to do some things and less others, perhaps because we have never done them or are not confident in our abilities. To apply Ken Blanchard's situational leadership model, one begins by identifying the level of those who perform in relation to the task or objective, considering two dimensions: The dimension of competence to perform the task (generally related to technical or other skills); The dimension of commitment (and by commitment here we mean motivation and confidence to carry out the task). Transformational leadership- one who not only inspires his team members, giving space to develop creativity autonomy but also one who can change behaviours. Able to transform employees into better people both personally and professionally. Each org. Has its own culture, leaders must be aligned with its values. Team development- Setting goals and defining tasks. Group-two or more people who interact with each other to accomplish certain goals or meet certain needs. Team- group whose members work intensely with one another to achieve a specific common goal or objective. All teams are groups but not all groups are teams. Formal groups- those that managers establish to achieve organizational goals. Cross functional teams composed of members from dif. departments and or cultures or countries. Informal groups- org. members, managers and nonmanagers form groups to help them achieve their own goals or meet their own needs. Example- nurses who work in a hospital and have lunch tgthr twice a week constitute an informal group. Group Cohesiveness- the degree to which members are attracted or loyal to their group or team. When this is high, individuals strongly value their group membership, appealing and desirable to remain part of it. When this is low, it is the opposite. Managers should have a moderate level of such in teams and groups they manage as it is likely to give it a competitive advantage. Teams performance depends on members knowledge, skills and abilities. A team needs ppl w technical expertise, members w problem solving a decision-making skillS and someone w interpersonal skills. Organisational culture- set of a basic assumption that a group invented, discovered or developed by learning how to deal w external adaptation problems and internal integration ones. Motivates new members to be taught how to correctly perceive, think and feel about these problems. Culture type classification: Open culture- encourages risk, supportive, team oriented, humanistic, easy to live with, focused on growth. Closed culture- structured, task-oriented, individualistic, tense and orientated towards stability. Entropies- tends to lead to disorganisation, necessary to open system and replenish with energy and info to maintain existence. Called negative entropy or negentropy.