Managers coordinate and oversee the work of other people so that organizational goals can be accomplished. In traditionally-structured organizations, managers can be first-line, middle, or top. Two key changes are the increasing importance of both customers and innovation.
Managers coordinate and oversee the work of other people so that organizational goals can be accomplished. In traditionally-structured organizations, managers can be first-line, middle, or top. Two key changes are the increasing importance of both customers and innovation.
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Managers coordinate and oversee the work of other people so that organizational goals can be accomplished. In traditionally-structured organizations, managers can be first-line, middle, or top. Two key changes are the increasing importance of both customers and innovation.
Direitos autorais:
Attribution Non-Commercial (BY-NC)
Formatos disponíveis
Baixe no formato DOC, PDF, TXT ou leia online no Scribd
CHAPTER SUMMARY – play interpersonal roles, decisional
roles, and decisional roles. (See Exhibit
CHAPTER 1 1-4.) According to the skills approach, managers need technical, human, and Who Are Managers? conceptual skills to perform the duties and activities associated with being a Explain how managers differ from manager. (See Exhibit 1-5.) However, non-managerial employees. because of changing technology Describe how to classify managers (digitization), increased security threats, in organizations. increased emphasis on ethics, and increased competitiveness; the Managers coordinate and oversee the manager’s job is changing. (See Exhibit work of other people so that 1-8.) Two key changes are the organizational goals can be increasing importance of both accomplished. Non-managerial customers and innovation. employees work directly on a job or task What Is An Organization? and have no one reporting to them. In traditionally-structured organizations, Describe the characteristics of an managers can be first-line, middle, or top. organization. (See Exhibit 1-1.) In other more loosely Explain how the concept of an configured organizations, the managers organization is changing. may not be as readily identifiable. But someone must fulfill that role of Without organizations, there would be coordinating and overseeing the work of no need for managers. An organization others. is a deliberate arrangement of people to What Is Management? accomplish some specific purpose. (See Exhibit 1-9.) The concept of Define management. organizations is changing. (See Exhibit Explain why efficiency and 1-10.) Many contemporary organizations effectiveness are important to no longer have clearly identifiable management. divisions, departments, and work units, but instead may be more open, flexible, Management involves coordinating and and responsive to changes. overseeing the efficient and effective Why Study Management? completion of others’ work activities. Efficiency means doing things right; Explain the universality of effectiveness means doing the right management concept. things. (See Exhibit 1-2.) Discuss why an understanding of What Do Managers Do? management is important. Describe the rewards and Describe the four functions of challenges of being a manager. management. Explain Mintzberg’s managerial There are three reasons why it’s roles. important to study management. First, Describe Katz’s three managerial is the universality of management, skills and how the importance of which means that managers are needed these skills changes depending on in all types and sizes of organizations, at managerial level. all organizational levels and work areas, Discuss the changes that are and in all global locations. (See Exhibit impacting manager’s jobs. 1-11.) The second is the reality of work Explain why customer service and —that is, you will either manage or be innovation are important to the managed. And the third reason is that manager’s job. there are significant rewards and challenges in being a manager. (See According to the functions approach, Exhibit 1-12.) managers plan, organize, lead, and CHAPTER SUMMARY – control. (See Exhibit 1-3.) According to the roles approach, managers engage in CHAPTER 2 specific categories of behavior as they Historical Background of bureaucracy, the characteristics of Management which many of today’s large Explain why studying organizations still exhibit. (See Exhibit management history is 2-4.) Today’s managers still use important. general administrative theories when Describe some early evidences they perform the functions of of management practice. management and structure their Studying management history is organizations so that resources are used important because it helps us understand efficiently and effectively. today’s management practices by seeing Quantitative Approach their origins. History also helps us see Explain what the quantitative what did and did not work. Management approach has contributed to the has been needed by organized endeavors field of management. for thousands of years, and we can see Discuss how today’s managers early examples of management practice use the quantitative approach. in the construction of the Egyptian pyramids and in the Arsenal of Venice. The quantitative approach involves Scientific Management applications of statistics, optimization Describe the important models, information models, and contributions made by Frederick W. computer simulations to management Taylor and Frank and Lillian activities. Today’s managers use the Gilbreth. quantitative approach especially when Explain how today’s managers use making decisions as they plan and scientific management. control work activities such as allocating resources, scheduling work, or Frederick W. Taylor is known as the determining optimum inventory levels. “father” of scientific management as he Toward Understanding studied manual work using scientific Organizational Behavior principles – that is, guidelines for Describe the contributions of the improving production efficiency. (See early advocates of OB. Exhibit 2-2.) The Gilbreths’ primary Explain the contributions of the contribution was finding efficient hand- Hawthorne Studies to the field of and-body motions and designing/using management. proper tools and equipment for optimizing Discuss how today’s managers work performance. Today’s managers use the behavioral approach. continue to use the concepts of scientific management when they analyze basic The contributions of the early OB work tasks to be performed, use time- advocates (Robert Owen, Hugo and-motion study to eliminate wasted Munsterberg, Mary Parker Follett, and motions, hire the best qualified workers Chester Barnard) were varied and for a job, and design incentive systems distinct, but all believed that people based on output. were the most important asset of the General Administrative Theory organization and should be managed Discuss Fayol’s contributions to accordingly. (See Exhibit 2-5.) The management theory. Hawthorne Studies had a dramatic Describe Max Weber’s contribution impact on management beliefs about to management theory. the role of people in organizations, Explain how today’s managers use which led to a new emphasis on the general administrative theories of human behavior factor in managing. management. The behavioral approach has largely shaped how today’s organizations are Henri Fayol believed that management managed. Many of our current theories was common to all business endeavors of motivation, leadership, group but also was distinct from other business behavior and development and other functions. He developed 14 principles of behavioral issues can be traced to the management from which many current early OB advocates and the conclusions management concepts have evolved. from the Hawthorne Studies. (See Exhibit 2-3.) Weber described an The Systems Approach ideal type of organization he called a Describe an organization using the 1), globalization, ethics, workforce systems approach. diversity, entrepreneurship, e-business, Discuss how the systems approach and knowledge management and helps us understand management. learning organizations. CHAPTER SUMMARY – Using the systems approach, an organization takes in inputs (resources) CHAPTER 3 from the environment and transforms or processes these resources into outputs The Manager: Omnipotent or that are distributed into the environment. Symbolic (See Exhibit 2-6.) The systems approach Contrast the actions of managers helps us understand management since according to the omnipotent and managers must ensure that all the symbolic views. interdependent units are working Explain the parameters of together so that the organization’s goals managerial discretion. can be achieved. It also helps managers realize that decisions and actions taken in According to the omnipotent view, one organizational area will affect others managers are directly responsible for an and vice versa. Finally, the systems organization’s success or failure. approach helps managers recognize that However, the symbolic view argues that organizations are not self-contained, but much of an organization’s success or instead rely on their environment for failure is due to external forces outside essential inputs and as outlets to absorb managers’ control. their outputs. The parameters of managerial The Contingency Approach discretion (see Exhibit 3-1) include the Explain how the contingency organization’s culture and the approach differs from the early environment in which the organization theories of management. exists. However, these parameters don’t Discuss how the contingency totally constrain a manager; managers approach helps us understand can and do influence their culture and management. environment. The Organization’s Culture Unlike early theories of management Describe the seven dimensions of which were generally assumed to be organizational culture. universally applicable, the contingency Discuss the impact of a strong approach says that organizations are culture on organizations and different, face different situations, and managers. require different ways of managing. (See Explain the source of an Exhibit 2-8.) The contingency approach organization’s culture. helps us understand management Describe how culture is because it stresses there are no simplistic transmitted to employees. or universal rules for managers to follow. Describe how culture affects Instead, managers must look at their managers. situation and determine that if this is the way my situation is, then this is the best The seven dimensions (see Exhibit 3-2) way for me to manage. are as follows: (1) attention to detail Current Trends and Issues (degree to which employees are Explain why we need to look at the expected to exhibit precision, analysis, current trends and issues facing and attention to detail); (2) outcome managers. orientation (degree to which managers Describe the current trends and focus on results or outcomes rather issues facing managers. than on how those outcomes are achieved); (3) people orientation The current trends and issues facing (degree to which management decisions managers are changing the way take into account the effects on people managers do their jobs. These current in the organization); (4) team trends and issues include customer orientation (degree to which work is service management and innovation organized around teams rather than (both of which were introduced in Chapter individuals); (5) aggressiveness (degree to which employees are aggressive and freedom, trust and openness, idea time, competitive rather than cooperative); (6) playfulness/humor, conflict resolution, stability (degree to which organizational debates, and risk-taking. A customer- decisions and actions emphasize responsive culture has six maintaining the status quo); and (7) characteristics: employees who are innovation and risk taking (degree to outgoing and friendly; few rigid rules, which employees are encouraged to be procedures, and regulations; innovative and to take risks). widespread use of empowerment; clear Research results are suggesting that in roles and expectations; and employees organizations with strong cultures: who are conscientious in their desire to employees tend to be more committed to please the customer. their organizations; recruitment efforts Workplace spirituality is important for and socialization practices are used to the following reasons: employees are build employee commitment; and there is looking for ways to counterbalance the higher organizational performance. The stresses and pressures of a turbulent impact of a strong culture on managers is pace of life; people are looking for that as the culture becomes stronger, it involvement and connection that they has an increasing impact on what often don’t find in contemporary managers do and constrains their lifestyles; aging baby boomers are decision-making options as they plan, looking for something meaningful in organize, lead, and control. their lives; and for some people, An organization’s culture and general way organized religion hasn’t fulfilled their of doing things are largely the result of needs. what it has done before and how Spiritual organizations tend to have five successful it has been doing things that characteristics: strong sense of purpose, way. The original source of the culture focus on individual development, trust usually reflects the vision or mission of and openness, employee the organization’s founders. (See Exhibit empowerment, and toleration of 3-5.) employee expression. Culture is transmitted to employees The Environment through stories (narratives of significant Describe the components of the events or people); rituals (repetitive specific and general sequences of activities); material symbols environments. (objects, facilities, and other aspects of Discuss the two dimensions of the physical work environment); and environmental uncertainty. language (special and unique terms, Identify the most common acronyms, and jargon). These elements organizational stakeholders. help employees “learn” what values and Explain the four steps in behaviors are important as well as who managing external stakeholder exemplifies those values. relationships. Culture affects how managers plan, organize, lead, and control. (See Exhibit The specific environment (those 3-6.) external forces that have a direct Current Organizational Culture impact on manager’s decisions and Issues Facing Managers actions and are directly relevant to an Describe the characteristics of an organization’s goals) includes ethical culture, an innovative customers, suppliers, competitors, and culture, and a customer-responsive pressure groups. The general culture. environment (those broad external Explain why workplace spirituality forces that affect the organization) seems to be an important concern. includes economic, political/legal, Describe the characteristics of a sociocultural, demographic, spiritual organization. technological, and global conditions. (See Exhibit 3-9.) A culture that is most likely to shape high The two dimensions of environmental ethical standards is high in risk tolerance, uncertainty include degree of change low to moderate in aggressiveness, and (stable or dynamic) and degree of focuses on means as well as outcomes. complexity (simple or complex). (See An innovative culture is characterized by Exhibit 3-11.) the following: challenge and involvement, Stakeholders are any constituencies in obligations, to pursue long-term goals the organization’s environment that are that are good for society. (See Exhibit 5- affected by the organization’s decisions 3.) and actions. The most common ones are Social Responsibility and Economic customers, social and political action Performance groups, competitors, trade and industry Explain what research studies associations, governments, media, have shown about the suppliers, communities, shareholders, relationship between an unions, and employees. (See Exhibit 3- organization’s social involvement 12.) and its economic performance. The four steps in managing stakeholder Explain what conclusion can be relationships are (1) identifying the reached regarding social organization’s stakeholders; (2) responsibility and economic determining the interests or concerns performance. these stakeholders might have; (3) deciding how critical each stakeholder is Although the majority of the research to the organization’s decisions and studies have shown a positive actions; and (4) determining how to relationship between social involvement manage those stakeholders. and economic performance, it was thought that no generalizable CHAPTER SUMMARY – conclusions could be made because of methodological and definitional CHAPTER 5 concerns. And one study showed that social involvement had a neutral What Is Social Responsibility? impact, while another study found that Contrast classical and social activities not related to the socioeconomic views of social organization’s primary stakeholders had responsibility. a negative impact on shareholder value. Discuss the role that stakeholders However, a recent re-analysis of these play in the four stages of social studies concluded that managers can responsibility. afford to be socially responsible. Differentiate between social Considering these studies and the obligation, social responsiveness, performance of socially responsible and social responsibility. mutual stock funds, the most meaningful conclusion we can reach is The classical view says that that there is little evidence to say that a management’s only social responsibility is company’s social actions hurt its long- to maximize profits. The socioeconomic term economic performance. view says that management’s social The Greening of Management responsibility goes beyond making profits Describe how organizations can to protecting and improving society’s go green. welfare. In the four-stage stakeholder Relate the approaches to being model of social responsibility, (see Exhibit green to the concepts of social 5-1), a stage 1 manager feels responsible obligation, social responsiveness, to only the stockholders. At stage 2, and social responsibility. managers expand their responsibility to the employees. At stage 3, managers Organizations can “go green” by using expand their responsibilities to other different approaches. (See Exhibit 5-5.) stakeholders in the specific environment, The light green approach is simply primarily customers and suppliers. Finally, doing what is required legally, or the at stage 4, managers feel they have a social obligation approach. Using the responsibility to society as a whole. Social market approach, organizations respond obligation is when a firm engages in to the environmental preferences of social actions because of its obligation to their customers. Using the stakeholder meet certain economic and legal approach, organizations respond to the responsibilities. Social responsiveness is environmental demands of multiple when a firm engages in social actions in stakeholders. Both the market and response to some popular social need. stakeholder approaches can be viewed Social responsibility is a business’s as social responsiveness. The activist or intention, beyond its economic and legal dark green approach involves an organization looking for ways to respect A code of ethics is a formal and preserve the earth and its natural statement of an organization’s primary resources, which can be viewed as social values and the ethical rules it expects responsibility. employees to follow. Managers can Values-Based Management improve their effectiveness by Discuss what purposes shared recognizing the role that the values serve. organization’s leaders play in setting Describe the relationship of values- the ethical tone, by continually based management to ethics. reaffirming the importance of the ethics Shared values serve four purposes (see code, by publicly reprimanding rule Exhibit 5-6): to guide managerial breakers, by considering the important decisions and actions; to shape employee critical stakeholders when developing or behavior and communicate what the changing the ethics code, by organization expects of its members; to communicating and regularly influence marketing efforts; and to build reinforcing the code to employees, and team spirit. An organization’s values have by using decision rules in guiding a big influence on whether employees act managers as they handle ethical ethically. dilemmas (see Exhibit 5-13). Managerial Ethics Managers play an important Discuss the factors that affect ethical leadership role in many ways: ethical and unethical behavior. through whom and what are rewarded Discuss the six determinants of with pay increases and promotions; by issue intensity. punishing ethical offenders and publicizing the outcome; through Explain what codes of ethics are establishing performance appraisal and how their effectiveness can be systems that focus on means as well as improved. ends; by providing ethics training; by Describe the important roles using independent social audits; managers play in encouraging through establishing formal protective ethical behavior. mechanisms; and most importantly, by setting a good example. The factors that affect ethical and Social Responsibility and Ethics unethical behavior (see Exhibit 5-8) Issues in Today’s World include: an individual’s level of moral Explain why ethical leadership is development (preconventional, important. conventional, or principled – see Exhibit 5-9); individual characteristics (values Discuss how managers and and two personality variables – ego organizations can protect strength and locus of control); structural employees who raise ethical variables (structural design, use of goals, issues or concerns. performance appraisal systems, and Explain what role social reward allocation procedures); entrepreneurs play. organizational culture (content and Describe social impact strength); and issue intensity which management. includes six elements including greatness of harm, consensus of wrong, probability Ethical leadership is important because of harm, immediacy of consequences, the example set by managers has a proximity to victims, and concentration of strong influence on whether employees effect (see Exhibit 5-10). The more behave ethically. Ethical leaders also intense an issue is (the larger number of are honest, share their values, stress people harmed, the more agreement that important shared values, and use the the action is wrong, the greater the reward system appropriately. Managers likelihood the action will cause harm, the can protect whistleblowers (employees more immediately the consequences will who raise ethical issues or concerns) by be felt, the closer the person feels to the encouraging whistleblowers to come victims, and the more concentrated the forward; by setting up toll-free ethics effect of the action on the victims), the hotlines; and by establishing a culture more we should expect employees to where employees can complain and get behave ethically. heard without fear of reprisal, against which the Sarbanes-Oxley Act offers some legal protection. Social entrepreneurs play an Explain the managerial decision- important role in solving social problems making model. by seeking out opportunities to improve society by using practical, innovative, and The assumptions of rationality (see sustainable approaches. Social Exhibit 6-6) are as follows: the problem entrepreneurs want to make the world a is clear and unambiguous; a single, well- better place and have a driving passion to defined goal is to be achieved; all make that happen. alternatives and consequences are Social impact management known; preferences are clear, constant, attempts to get managers to understand and stable; no time or cost constraints the interdependency between business exist; and the final choice will maximize needs and wider social concerns. Thus, as the payoff. managers plan, organize, lead, and Bounded rationality says that managers control, they would ask how their make rational decisions but are decisions would work in the societal bounded (limited) by their ability to context within which they’re operating. process information. Satisficing is when CHAPTER SUMMARY – decision makers accept solutions that are good enough. Escalation of CHAPTER 6 commitment is when managers increase commitment to a decision even when The Decision-Making Process they have evidence it may have been a Define decision and decision- wrong decision. making process. Intuitive decision making is making Describe the eight steps in the decisions on the basis of experience, decision-making process. feelings, and accumulated judgment. (See Exhibit 6-7.) A decision is a choice. The decision- Programmed decisions are repetitive making process consists of eight steps decisions that can be handled by a that begin with (1) and (2) identifying a routine approach and are used when problem and decision criteria and (3) the problem being resolved is allocating weights to those criteria; move straightforward, familiar, and easily to (4) developing, (5) analyzing, and (6) defined (structured). Nonprogrammed selecting an alternative that can resolve decisions are unique decisions that the problem; (7) implementing the require a custom-made solution and are alternative; and concludes with (8) used when the problems are new or evaluating the decision’s effectiveness. unusual and for which information is (See Exhibit 6-1.) ambiguous or incomplete. (See Exhibit The Manager as Decision Maker 6-8.) Discuss the assumptions of rational Certainty is a situation when a manager decision making. can make accurate decisions because Describe the concepts of bounded all outcomes are known. Risk is a rationality, satisficing, and situation when a manager can estimate escalation of commitment. the likelihood of certain outcomes. Explain intuitive decision making. Uncertainty is a situation where a Contrast programmed and manager is not certain about the nonprogrammed decisions. outcomes and can’t even make reasonable probability estimates. Contrast the three decision-making When decision makers face uncertainty, conditions. their psychological orientation will Explain maximax, maximin, and determine whether they follow a minimax decision choice maximax choice (maximizing the approaches. maximum possible payoff); a maximin Describe the four decision-making choice (maximizing the minimum styles. possible payoff); or a minimax choice Discuss the twelve decision-making (minimizing the maximum regret— biases managers may exhibit. amount of money that could have been Describe how managers can deal made if a different decision had been with the negative effects of made). decision errors and biases. There are four decision-making styles. The directive style has a low tolerance for ambiguity and a rational way of acknowledges both subjective and thinking. The analytic style has a high objective thinking and blends both tolerance for ambiguity and a rational analytical and intuitive approaches; (4) way of thinking. The conceptual style has it requires only “enough” information as a high tolerance for ambiguity and an is necessary to resolve a problem; (5) it intuitive way of thinking. The behavioral encourages and guides gathering style has a low tolerance for ambiguity relevant information and informed and an intuitive way of thinking. (See opinions; and (6) it’s straightforward, Exhibit 6-12.) reliable, easy to use, and flexible. The 12 common decision-making errors The five habits of highly reliable and biases including: overconfidence, organizations are (1) not being tricked immediate gratification, anchoring, by their successes; (2) deferring to selective perception, confirmation, experts on the front line; (3) letting framing, availability, representation, unexpected circumstances provide the randomness, sunk costs, self-serving bias, solution; (4) embracing complexity and; and hindsight. (See Exhibit 6-13.) (5) anticipating, but also anticipating Managers can avoid the negative effects limits. of such errors and biases by being aware CHAPTER SUMMARY – of them and then not doing them. They should also pay attention to how they do CHAPTER 7 make decisions and the heuristics (rules of thumb) they actually use. Finally, What Is Planning and Why Do managers might want to ask those Managers Plan? around them to help identify weaknesses Define planning. in their decision-making style and try to Differentiate between formal and improve on them. informal planning. The managerial decision making model Describe the purposes of (see Exhibit 6-14) helps explain how the planning. decision-making process is used to Discuss the conclusions from choose the best alternative(s) either studies of the relationship through maximizing or satisficing and between planning and then implement and evaluate the performance. alternative. It also helps explain what factors affect the decision-making Planning involves defining the process including the decision-making organization’s goals, establishing an approach (rationality, bounded rationality, overall strategy for achieving those intuition); the types of problems and goals, and developing plans for decisions (well-structured and organizational work activities. programmed or unstructured and Formal planning has three nonprogrammed); the decision-making characteristics: (1) specific goals cover conditions (certainty, risk, uncertainty); a defined period of years, (2) these and the decision maker’s style (directive, goals are written and shared with analytic, conceptual, behavioral). organizational members, and (3) Decision Making for Today’s World specific action plans exist for achieving Explain how managers can make these goals. Informal planning is effective decisions in today’s world. general and lacks continuity. Also, List the six characteristics of an nothing is written down and there is effective decision-making process. little or no sharing of goals. Describe the five habits of highly The four purposes of planning include: reliable organizations. provides direction, reduces uncertainty, minimizes waste and redundancy, and Managers can make effective decisions establishes the goals or standards used by understanding cultural differences in in controlling. decision making; knowing when it’s time Conclusions from studies of the to call it quits; and by using an effective planning-performance relationship decision-making process. include the following: for the most part, The six characteristics of an effective formal planning is associated with decision-making process include (1) it positive financial performance; it’s more focuses on what’s important; (2) it’s important to do a good job of planning logical and consistent; (3) it and implementing the plans than having more and extensive planning done; the In traditional goal setting, goals are set external environment is usually the at the top of the organization and then reason why companies don’t achieve high broken into subgoals for each levels of performance even when organizational level. (See Exhibit 7-4.) planning; and the planning/performance The means-end chain is an integrated relationship seems to be influenced by network of goals, which means that the planning time frame. higher-level goals (or ends) are linked to How Do Managers Plan? lower-level goals, which serve as the Define goals and plans. means for their accomplishment. Describe the types of goals MBO (management by objectives) is a organizations might have. process of setting mutually-agreed upon Explain why it’s important to know goals and using those goals to evaluate an organization’s stated and real employee performance. (See Exhibit 7- goals. 5.) Describe each of the different Well-designed goals have six types of plans. characteristics: (1) written in terms of outcomes, (2) measurable and Goals are desired outcomes. Plans are quantifiable, (3) clear as to time frame, documents that outline how goals are (4) challenging but attainable, (5) going to be met. written down, and (6) communicated to Organizations do have multiple goals. all organizational members who need to These goals might be strategic or know them. (See Exhibit 7-6.) financial and they might be stated or real. To set goals, follow these steps: review It’s important to know the stated and real the organization’s mission; evaluate goals to help understand what might available resources; determine the appear to be management goals individually or with input from inconsistencies. others; write down the goals and Strategic plans apply to the entire communicate them to all who need to organization while operational plans know them; and review results and specify how the overall goals are going to change goals as needed. be achieved. Long-term plans are those The contingency factors that affect with a time frame beyond three years. planning include a manager’s level in Short-term plans are those covering one the organization; the degree of year or less. Specific plans are clearly environmental uncertainty; and the defined and leave no room for length of future commitments. (See interpretation. Directional plans are Exhibit 7-7.) flexible and set out general guidelines. A The two main approaches to planning single-use plan is a one-time plan include the traditional approach, which designed to meet the needs of a unique uses a formal planning department and situation. Standing plans are ongoing has plans developed by top managers plans that provide guidance for activities that flow down through other performed repeatedly. (See Exhibit 7-2.) organizational levels. The other Establishing Goals and Developing approach is to involve more Plans organizational members in the planning process. Discuss how traditional goal setting Contemporary Issues in Planning works. Explain the criticisms of planning Explain the concept of the means- and whether they’re valid. end chain. Describe how managers can Describe the management by effectively plan in today’s objectives (MBO) approach. dynamic environment. Describe the characteristics of well- designed goals. The main criticisms of planning are: (1) Explain the steps in setting goals. planning may create rigidity; (2) plans Discuss the contingency factors can’t be developed for a dynamic that affect planning. environment; (3) formal plans can’t Describe the approaches to replace intuition and creativity; (4) planning. planning focuses managers’ attention on today’s competition, not tomorrow’s; (5) formal planning reinforces success, which may lead to failure; and (6) just (6) evaluate strategies. (See Exhibit 8- planning isn’t enough. These criticisms 1.) are valid if planning is rigid and inflexible. During an internal analysis, managers Managers can effectively plan in today’s assess the organization’s resources dynamic environment using plans that (assets) and capabilities (how work is are specific but flexible. It’s also done). The major value-creating skills important to “shove” responsibility for and capabilities are the organization’s establishing goals and developing plans core competencies. Any activities the to lower organizational levels. organization does well or any unique CHAPTER SUMMARY – resources it has are its strengths. Activities the organization doesn’t do CHAPTER 8 well or resources it needs but doesn’t have are its weaknesses. During an The Importance of Strategic external analysis, managers assess the Management specific and general environments to Define strategic management, determine opportunities (positive strategy, and business model. trends) and threats (negative trends). Explain why strategic management Types of Organizational Strategies is important. Describe the three major types of corporate strategies. Strategic management is what managers Discuss the BCG matrix and how do to develop the organization’s it’s used. strategies. Strategies are the decisions Describe the role of competitive and actions that determine the long-run advantage in business strategies. performance of the organization. A Explain Porter’s five forces model. business model is a strategic design for Describe Porter’s three generic how a company intends to profit from its competitive strategies and the strategies, work processes, and work rule of three. activities. Strategic management is important for The three major types of corporate four reasons. First, it makes a difference strategies are growth, stability, and in how well organizations perform. renewal. (See Exhibit 8-4.) A growth Second, it’s important for helping strategy is used when an organization managers cope with continually changing wants to grow its business and does so situations. Third, strategic management by expanding the number of products helps coordinate diverse divisions, offered or markets served. The types of departments, functions, and work growth strategies include concentration, activities, and keeps all focused on vertical integration (backward and achieving the organization’s goals. forward), horizontal integration, and Finally, it’s important because it’s diversification (related and unrelated). A involved in many of the decisions that stability strategy is when an managers make. organization stays as it is; that is, it The Strategic Management Process makes no significant change in what it’s List the six steps in the strategic doing. Renewal strategies address management process. organizational weaknesses that are Describe what managers do during leading to performance declines. The external and internal analyses. two types of renewal strategies are Explain the role of resources, retrenchment and turnaround. capabilities, and core The BCG matrix is a way to analyze a competencies. company’s portfolio of businesses. The Define strengths, weaknesses, analysis is based on a business’s market opportunities, and threats. share and its industry’s anticipated growth rate. The four categories of the The six steps in the strategic BCG matrix are cash cows, stars, management process are: (1) identify the question marks, and dogs. (See Exhibit current mission, goals, and strategies; (2) 8-5.) do an external analysis; (3) do an internal An organization’s competitive analysis – steps 2 and 3 collectively are advantage is what sets it apart, its known as SWOT analysis; (4) formulate distinctive edge. A company’s strategies; (5) implement strategies; and competitive advantage becomes the basis for choosing an appropriate include deciding their organization’s business or competitive strategy. innovation emphasis (basic scientific Porter’s five forces model assesses the research, product development, or five competitive forces that dictate the process development) and its rules of competition in an industry. These innovation timing (first mover or five forces are threat of new entrants, follower). (See Exhibit 8-8.) threat of substitutes, bargaining power of CHAPTER SUMMARY – buyers, bargaining power of suppliers, and current rivalry. (See Exhibit 8-6.) CHAPTER 9 Porter’s three generic competitive strategies are as follows: cost leadership Techniques for Assessing the (organization competes on the basis of Environment having the lowest costs in the industry); List the different approaches to differentiation (organization competes on assess the environment. the basis of having unique products that Explain what competitor are widely valued by customers); and intelligence is and ways that focus (organization competes in a narrow managers can do it legally and segment with either a cost advantage or ethically. a differentiation advantage). The rule of Describe how managers can three concept explains how, in many improve the effectiveness of industries, three major players (highly- forecasting. efficient, full-line generalists) emerge to Explain the steps in the dominate the market. An industry also benchmarking process. has the highly-focused super-niche players. Any firm that doesn’t fit into one There are three techniques to assess of these categories is “in the ditch.” the environment including Strategic Management in Today’s environmental scanning, forecasting, World and benchmarking. Explain why strategic flexibility is Competitor intelligence is a process by important. which organizations gather information Describe e-business strategies. about their competitors. Managers can Explain what strategies do it legally and ethically by using such organizations might use to become methods as scanning advertisements, more customer oriented and to be promotional materials, press releases, more innovative. government reports, annual reports, want ads, newspaper reports; by Strategic flexibility—that is, the ability to attending trade shows; and by recognize major external environmental debriefing the company’s sales force. changes, to quickly commit resources, Managers can improve the effectiveness and to recognize when a strategic of forecasting in various ways including decision isn’t working—is important understanding that forecasts are most because managers oftentimes face highly accurate when the environment is not uncertain and changing environments. rapidly changing; using simple (See Exhibit 8-7.) forecasts; involving more people in the Managers can use e-business strategies process; comparing every forecast with to reduce costs, to differentiate their a “no change” forecast; using rolling firm’s products and services, or to target forecasts; using more than one type of (focus on) specific customer groups or to forecast; and remembering that lower costs by standardizing certain office forecasting is a skill that can be functions. Another important e-business practiced and improved. (See Exhibit 9- strategy is the clicks-and-bricks strategy, 1.) which combines online and traditional The four steps in the benchmarking stand-alone locations. process include forming a Strategies managers can use to become benchmarking planning team to more customer-oriented include giving determine what needs to be customers what they want, benchmarked, comparative communicating effectively with them, and organizations, and data collection having a culture that emphasizes methods; gathering internal and customer service. Strategies managers external data; analyzing data to identify can use to become more innovative performance gaps; and preparing and implementing an action plan. (See Exhibit Project management is the task of 9-2.) getting a project’s activities done on Techniques for Allocating Resources time, within budget, and according to List the four techniques for specifications. The steps in the project allocating resources. planning process include defining Describe the different types of objectives; identifying activities and budgets. resources; establishing sequences; Explain what a Gantt chart and a estimating time for activities; load chart do. determining project completion date; Describe how PERT network comparing with objectives; and analysis works. determining additional resource requirements. (See Exhibit 9-13.) Understand how to compute a Scenario planning is important because breakeven point. managers can use it to play out Describe how managers can use potential situations under different linear programming. environmental conditions. The four techniques for allocating resources include budgeting, scheduling, breakeven analysis, and linear programming. Budgets can either be variable or fixed. Also, managers might use cash, revenue, expense, or profit budgets. (See Exhibit 9- 4.) A Gantt chart is a scheduling chart that shows actual and planned output over a period of time. A load chart is a modified Gantt chart that schedules capacity by entire departments or specific resources. (See Exhibit 9-5 and 9-6.) PERT network analysis is useful for large, complex projects because it depicts the sequence of activities needed to complete the project and the time or cost associated with each. (See Exhibits 9-7, 9-8, and 9-9.) The breakeven point is calculated by dividing total fixed costs by the price per unit minus the variable cost per unit. (See Exhibit 9-10.) Managers can use linear programming to help solve resource allocation problems as it shows the optimum way to combine resources to produce a certain number of outputs. (See Exhibits 9-11 and 9-12.) Contemporary Planning Techniques Explain why flexibility is so important to today’s planning techniques. Describe project management. List the steps in the project planning process. Discuss why scenario planning is an important planning tool.
Flexibility is important to today’s planning
techniques because the environment can be both dynamic and complex.