BUSINESS MANAGEMENT ESSENTIALS – KEY THEORIES AND CONCEPTS

BUSINESS MANAGEMENT ESSENTIALS – KEY THEORIES AND CONCEPTS – SUMMARY NOTES WITH DEFINITIONS "Globalization - CORRECT ANSWER the world interdependence of resource flows, product markets, and business conditions" "Organization - CORRECT ANSWER a collection of people working together to achieve a common purpose" "Productivity - CORRECT ANSWER the quantity and quality of work performance relative to the cost of inputs" "Performance Effectiveness - CORRECT ANSWER An output measure of task or goal accomplishment" Intellectual Capital - CORRECT ANSWER the collective brain power or shared knowledge of a workforce" "Knowledge Workers - CORRECT ANSWER Workers whose intelligence is a critical asset to employers" "Glass Ceiling Effect - CORRECT ANSWER an invisible barrier limiting career advancement of minorities" "Stakeholders - CORRECT ANSWER persons, groups, and institutions directly affected by an organization" "Competitive Advantage - CORRECT ANSWER something an organization does extremely well, a core competency that sets it apart from competitors which can be achieved through costs, quality, delivery, and flexibility" "Environmental Uncertainty - CORRECT ANSWER the lack of complete information about the environment" "Organizational Effectiveness - CORRECT ANSWER sustainable high performance in using resources to accomplish mission and objectives" "Performance Efficeincy - CORRECT ANSWER An input measure of resource cost associated with goal accomplishment" "General Environment - CORRECT ANSWER composed of economic, legal-political, technological, socio-cultural, and natural environment conditions" "Sustainable Business - CORRECT ANSWER A business that both meets customer needs and protects the well being of the environment" "Sustainable Innovation - CORRECT ANSWER New products and production methods that have reduced impact on the environment" "Specific Environment - CORRECT ANSWER people and groups with whom the "Manager - CORRECT ANSWER A person in an organization who directly supports,supervises, and helps activate the work efforts and performance of others" "Top Managers - CORRECT ANSWER Managers responsible for performance of an organization as a whole or for one of its larger parts" "Middle Managers - CORRECT ANSWER Managers in charge of relatively large departments or divisions" "Supervisors - CORRECT ANSWER Managers in charge of a small work group of non-managerial workers" "Line Managers - CORRECT ANSWER Managers responsible for work activities that directly affect organization's outputs" "Staff Managers - CORRECT ANSWER Managers that use technical expertise to advise and support the efforts of line workers" "Functional Managers - CORRECT ANSWER Managers responsible for a single area of activity" "General Managers - CORRECT ANSWER managers responsible for more complex units that include many functional areas" "Management - CORRECT ANSWER process of planning, organizing, leading, and controlling the use of resources to accomplish goals" "Leading - CORRECT ANSWER The process of arousing enthusiasm and inspiring efforts to achieve goals" Manager - CORRECT ANSWER A person in an organization who directly supports,supervises, and helps activate the work efforts and performance of others" "Top Managers - CORRECT ANSWER Managers responsible for performance of an organization as a whole or for one of its larger parts" "Middle Managers - CORRECT ANSWER Managers in charge of relatively large departments or divisions" "Supervisors - CORRECT ANSWER Managers in charge of a small work group of non-managerial workers" "Useful Information - CORRECT ANSWER Information that is timely, high quality, complete, relevant, and understandable" "Information Technology - CORRECT ANSWER Application of computers and telecom equipment to store, retrieve, transmit, an manipulate data" "Business Intelligence - CORRECT ANSWER taps information systems to extract and report data in organized ways that are helpful to decision makers" "Management Information Systems - CORRECT ANSWER uses IT to collect, organize, and distribute data for use in decision making" "Strategic Opportunism - CORRECT ANSWER Focuses on long term objectives while being flexible in dealing with short term problems" "Structured Problems - CORRECT ANSWER Routine recurring problems that are best solved using programmed decisions" "Programmed Decisions - CORRECT ANSWER Solutions to problems that are readily available from past experiences to solve structured problems" "Unstructured Problems - CORRECT ANSWER New and unusual situations which non-programmed decisions" "Problem Solving - CORRECT ANSWER identifying and taking action to resolve problems" "Problem Avoiders - CORRECT ANSWER Inactive in information gathering and solving problems" "Problem Solvers - CORRECT ANSWER Reactive in gathering information and solving problems" "Problem Seekers - CORRECT ANSWER Proactive in anticipating problems and opportunities and taking appropriate action to gain an advantage" "Non Programmed Decisions - CORRECT ANSWER Decisons that use specific solutions crafted for a unique problem" "Certain Environments - CORRECT ANSWER Offer complete information about possible action alternatives and their outcomes" "Optimizing Decision - CORRECT ANSWER Choosing the absolute best decision among alternatives" Risk Environments - CORRECT ANSWER Environments that lack complete information about action alternatives and their consequences, but offer some estimates of probabilities of outcomes for possible action alternatives" "Uncertain Environments - CORRECT ANSWER An environment in which Information is so poor that probabilities cannot be assigned to likely outcomes of known action alternatives." "Licensing Agreement - CORRECT ANSWER A local firm pays a fee to a foreign firm for rights to make or sell its products in a particular region" "Franchising - CORRECT ANSWER A form of licensing in which the foreign firm buys the rights to use another name and operating methods in its home country" "Foreign Direct Investment - CORRECT ANSWER Building, buying all or part ownership of a business in a foreign country" "Global Strategic Alliance - CORRECT ANSWER A partnership in which foreign and domestic firms share resources and knowledge for mutual gains" "Satisficing Decision - CORRECT ANSWER Choosing the first "satisfactory" alternative" "Political Risk - CORRECT ANSWER A potential loss of value of foreign investment due to instability and changes in host country" "Local Legal Systems - CORRECT ANSWER complex and unfamiliar laws can create problems" "Protectionism - CORRECT ANSWER Giving favourable treatments to domestic businesses" "Global Economy - CORRECT ANSWER Resources, markets, and competition are worldwide in scope" "Global Sourcing - CORRECT ANSWER The process of purchasing materials, manufacturing components, or business services from around the world for local use" "Transnational Corporation - CORRECT ANSWER Operates on a worldwide borderless basis" "Ethnocentrism - CORRECT ANSWER tendency to consider one's own culture as superior to others" "Ethnocentric Attitude - CORRECT ANSWER Believes the best approaches are found at home and tightly control foreign operations" "Foreign Subsidiary - CORRECT ANSWER local operation completely owned by a foreign firm" "Greenfield Investment - CORRECT ANSWER building an entirely new operation in a foreign country" "Open Systems - CORRECT ANSWER transforms resource inputs from the environment into product outputs" "Analytics - CORRECT ANSWER the systematic gathering and processing of data to make informed decisions." "Joint Ventures - CORRECT ANSWER Operating in a foreign country through co ownership by foreign and local partners" "Scientific Management - CORRECT ANSWER Management approach that emphasizes careful selection and training of workers and supervisory support." "Multinational Corporations - CORRECT ANSWER business firms with extensive international operations in foreign countries" "Polycentric Attitude - CORRECT ANSWER Respects local knowledge and allows foreign operations to run with substantial freedom" "Scalar Chain Principle - CORRECT ANSWER Administrative prinicple that states there should be a clear and unbroken line of communication from the top to the bottom of the organization" "Unity of Command - CORRECT ANSWER Administrative prinicple that states each person should receive orders from only one boss" "Unity of Direction Principle - CORRECT ANSWER Administrative prinicple that states one person should be in charge of all activities that have the same performance objectives" "Geocentric Attitudes - CORRECT ANSWER High in cultural intelligence and take a collaborative approach to global management practices." "Modern Management - CORRECT ANSWER Management approach that uses a quantitative and evidence based apporach" "Hawthorn Effect - CORRECT ANSWER The tendency of persons singled out for attention to perform as expected" "Human Relations Movement - CORRECT ANSWER Movement that suggests that managers using good human relations will achieve productivity" "Theory X - CORRECT ANSWER Assumes people dislike work, lack ambition, act irresponsibly, and prefer to be led" "Theory Y - CORRECT ANSWER Assumes people are willing to work,like responsibility, and are self directed and creative" "Management Science - CORRECT ANSWER Use quantitative analysis and applied mathematics to solve problems" "Operations Management - CORRECT ANSWER the study of how organizations produce goods and services" "Contingency Thinking - CORRECT ANSWER Tries to match management practices with situational needs" "Knowledge Management - CORRECT ANSWER The process of using intellectual capital for competitive advantage" "Adult Personality Theory - CORRECT ANSWER states people in the workplace are adults and may react negatively when constrained by strict management practices and rigid organizational structure" "Bureaucracy - CORRECT ANSWER a rational and efficient form of organization founded on logic, order, and legitimate authority" "High Performance Organization - CORRECT ANSWER An organization that consistently achieves excellence while creating a high quality work environment" "Evidence Based Management - CORRECT ANSWER Management that involves making decisions based on hard facts about what really works" "Enterprise Resource Planner - CORRECT ANSWER Information Technology used for inventory planning, purchasing, and keeping organizational objectives clear" "Administrative Principles - CORRECT ANSWER Fourteen principles developed by Henri Fayol that suggest managers should learn the management functions of planning organizing,leading, and controlling" "Bureaucratic Organization - CORRECT ANSWER Organizations should have a clear hierarchy with formal rules and well-defined jobs" "Learning Organization - CORRECT ANSWER An organization that continuously changes and improves using the lessons of experience" "RFID - CORRECT ANSWER Tags that transfer data without physical contact that track goods and indicate where they belong." "Tactical Plans - CORRECT ANSWER plans that help to implement all or parts of a strategic plan" "Functional Plans - CORRECT ANSWER plans that indicate how different operations within the organization will help advance the overall strategy" "Operational Plans - CORRECT ANSWER plans that identifies short term activities to implement strategic plans" "Efficiency - CORRECT ANSWER how well resources are used" "Zero Based Budget - CORRECT ANSWER allocates resources as if each budget were brand new" "Forecasting - CORRECT ANSWER planning aid that attempts to predict future" "Contingency Planning - CORRECT ANSWER planning that identifies alternative courses of action to take when things go wrong" "Effectiveness - CORRECT ANSWER how well objectives are acheived" "Smart Goals - CORRECT ANSWER Goals that are specific,measurable,attainable,realistic, and timely" "Improvement Objectives - CORRECT ANSWER Objectives that describe intentions for specific performance objectives" "Participatory Planning - CORRECT ANSWER Planning that includes the persons who will be affected by the plans and or those who will implement them" "Benchmarking - CORRECT ANSWER Process of using external and internal comparisons to plan for future improvements" "Strategy - CORRECT ANSWER a comprehensive plan guiding resource allocation to achieve long term organization goals" "Strategic Intent - CORRECT ANSWER Focusing and applying organizational energies on a unifying and compelling goal" "Sustainable Competitive Advantage - CORRECT ANSWER The ability to outperform rivals in ways that are difficult or costly to imitate" "Planning - CORRECT ANSWER the process of setting objectives and determining how to accomplish them" "Business Strategy - CORRECT ANSWER A strategy that identifies how a division or strategic business unit will can compete in its own product domain" "Functional Strategy - CORRECT ANSWER A strategy that guides activities within one specific area of operation" "Strategic Management - CORRECT ANSWER The process of formulating and implementing strategies to accomplish long term goals and sustain competitive advantage" "Strategic Plan - CORRECT ANSWER Plan that identifies long term directions for the organization" "Scenario Planning - CORRECT ANSWER planning that identifies alternative future scenarios and makes plans to deal with each" "Strategic Implementation - CORRECT ANSWER The process of putting strategies into action" "Strategic Constituencies Analysis - CORRECT ANSWER Analysis that assesses the interests of stakeholders and how well the organization is responding to them" "Porters Five Forces Model - CORRECT ANSWER analyzes industry attractiveness in "Strategic Formulation - CORRECT ANSWER The process of creating strategies to guide the allocation of resources "Growth Strategy - CORRECT ANSWER Corporate level strategy that involves expansion of the organization's current operations" " "Strategic Analysis - CORRECT ANSWER the process of analyzing the competitive position of the organization and current strategies" "Renewal Strategy - CORRECT ANSWER Corporate level strategy that tries to solve problems and overcome weaknesses that affect performance" "Liquidation - CORRECT ANSWER When business operations cease and assets are sold to creditors" "Stability Strategy - CORRECT ANSWER Corporate level strategy that maintains current operations without substantial changes" "Organizational Culture - CORRECT ANSWER the predominant value system for the organizers as a whole" "Corporate Strategy - CORRECT ANSWER a strategy that sets long term direction for the total enterprise "Combination Strategy - CORRECT ANSWER Corporate level strategy that pursues growth, stability, and renewal in some combination" "Growth through Concentration - CORRECT ANSWER growth within the same business area" "Turnaround Strategy - CORRECT ANSWER A renewal strategy that tries to fix specific performance problems" "Downsizing Strategy - CORRECT ANSWER A renewal strategy that decreases the size of operations" "Divestiture Strategy - CORRECT ANSWER A renewal strategy that sells off parts of the organization to refocus attention on core business areas" "Growth through Diversification - CORRECT ANSWER Growth by acquisition of or investment in new and different business areas" "Growth through Vertical Integration - CORRECT ANSWER Growth by acquiring suppliers or distributors" "Restructuring - CORRECT ANSWER A renewal strategy that tries to correct weaknesses by changing the scale of operations" "Globalization Strategy - CORRECT ANSWER A global strategy of adopting standardized products and advertising for use worldwide" "Multidomestic Strategy - CORRECT ANSWER A global strategy that customizes product and advertising to best fit local needs" "Transnational Strategies - CORRECT ANSWER A global strategy that seeks efficiencies of global operations with attention to local markets" "Coopetition - CORRECT ANSWER A Cooperative strategy of working with rivals on projects of mutual interest" "ebusiness Strategy - CORRECT ANSWER A business strategy of using the internet to gain a competitive advantage" "Portfolio Planning - CORRECT ANSWER A planning approach that seeks the best mix of investments among alternative business opportunities" "Focused Differentiation - CORRECT ANSWER A focus strategy that offers a unique product to a special market segment" "Focused Incrementalism - CORRECT ANSWER A focus strategy that makes modest changes in strategies as experience builds over time" "Strategic Control - CORRECT ANSWER Makes sure strategies are well implemented and that poor strategies are scrapped or modified" "BCG Matrix - CORRECT ANSWER Analyzes business growth opportunities according to market growth rate and market share" "Differentiation Strategy - CORRECT ANSWER strategy of offering products that are different from the competition" "Power - CORRECT ANSWER the ability to get someone else to do something you want done or to make things happen the way you want" "Power Of The Position - CORRECT ANSWER power based on things managers can offer to others" "Reward Power - CORRECT ANSWER Power based on the capacity to influence through rewards" "Focus Strategy - CORRECT ANSWER A strategy that concentrates on serving a unique market segment better than anyone else" "Strategic Leadership - CORRECT ANSWER Leadership that inspires people to continuously change,refine,and improve strategies and their implementation" "Leadership - CORRECT ANSWER the process of inspiring others to work hard to accomplish important tasks" "Referent Power - CORRECT ANSWER Power based on the ability to influence others because they identity with you" "Vision - CORRECT ANSWER A clear sense of the future" "Visionary Leadership - CORRECT ANSWER Leadership that brings to the situation a clear sense of the future and an understanding of how to get there" "Servant Leadership - CORRECT ANSWER leadership that is follower centred and committed to helping other in their work" "Expert Power - CORRECT ANSWER Power based on the ability to influence through expertise" "Empowerment - CORRECT ANSWER Enabling others to gain and use decision making power" "Leadership Style - CORRECT ANSWER the recurring pattern of behaviour exhibited by a leader" "Autocratic Leadership - CORRECT ANSWER Leadership style that emphasizes task over people, retains authority and information, and acts in a unilateral command and control fashion" "Coercive Power - CORRECT ANSWER Power based on the ability to influence through punishment" "Legitimate Power - CORRECT ANSWER the ability to influence through authority" "Personal Power - CORRECT ANSWER Power based on how managers are viewed by others" "Laissez Faire Leadership - CORRECT ANSWER Leadership style that shows little concern for task and lets group make decisions" "Democratic Leadership - CORRECT ANSWER Leadership style that tries to get things done while sharing information, encouraging participation in decision making, and emphasizes both people and task" "Fielders Contingency Model - CORRECT ANSWER Theory that states that effective leadership is contingent on both the characteristics of the leader and of the situation." "Supportive Leadership - CORRECT ANSWER Leadership based on doing things to make work more pleasant; treating group members as equals; being friendly and approachable; showing concern for the well-being of subord" "Achievement Oriented Leadership - CORRECT ANSWER Leadership based on setting challenging goals; expecting the highest levels of performance; emphasizing continuous improvement in performance; displaying confidence in meeting high standards." "Participative Leadership - CORRECT ANSWER Leadership based on involving subordinates in decision-making; consulting with subordinates; asking for suggestions from subordinates; using these suggestions when making a decision." "Situational Leadership Model - CORRECT ANSWER Leadership Theory that states successful leaders must adjust their leadership styles between delegating, participating,selling, and telling depending on the maturity levels of followers as indicated by their readiness to perform in a given situation." "Path Goal Leadership - CORRECT ANSWER Theory that states effective leadership deals with the paths through which followers can achieve goals." "Directive Leadership - CORRECT ANSWER Leadership based on letting subordinates know what is expected; giving directions on what to do and how; scheduling work to be done; maintaining definite standards of performance; clarifying the leader's role in the group." "Consultative Decision - CORRECT ANSWER A decision made by a leader after receiving information, advice, or opinions from the group's members" "Focused cost leadership - CORRECT ANSWER strategy that seeks the lowest costs of operations within a special market segment." "Transactional Leadership - CORRECT ANSWER Leadership that directs the efforts of others through tasks, rewards, and structures" "Leader Member Exchange Theory - CORRECT ANSWER Theory that states not all people are treated the same by leaders" "Leader Participation Theory - CORRECT ANSWER Theory that states leadership success results when the decision making method used by a leader best fits the problem being faced." "Authority Decision - CORRECT ANSWER A decision made by the leader and then communicated to the group" "Interactive Leadership - CORRECT ANSWER Leadership based on strong communication and acting in a democratic and participative manner with followers" "Authentic Leadership - CORRECT ANSWER Leadership that activates positive psychological states to achieve self awareness and positive self regulation" "Small Business - CORRECT ANSWER An independently owned and operated business with fewer than 100 employees and does not dominate its industry" "Family Business - CORRECT ANSWER A business that is owned and controlled by members of a family" "Succession Problem - CORRECT ANSWER The issue of who will run the family business when the current head leaves" "Electronic Grapevine - CORRECT ANSWER The use of electronic media to pass messages and information among members of social networks" "Entrepreneurship - CORRECT ANSWER risk taking behaviour that results in new opportunities" "Necessity Based Entrepreneurship - CORRECT ANSWER Entrepreneurship that takes place because other employment options don't exist due to the glass ceiling effect" "Social Entrepreneurship - CORRECT ANSWER Ethical entrepreneurship that seeks novel ways to solve pressing social problems" "Business Plan - CORRECT ANSWER A plan that describes the direction for a new business and the financing needed to operate it" "Sole proprietorship - CORRECT ANSWER a form of business ownership where an individual pursues a profit and does not involve incorporation" "Debt Financing - CORRECT ANSWER financing that involves borrowing money that must be repaid over time with interest" "Equity Financing - CORRECT ANSWER financing that involves giving ownership shares in the business to outsiders in return for their cash investments" "Venture Capitalists - CORRECT ANSWER companies and individuals that make investments in new ventures in return for an equity stake in the business" "Partnership - CORRECT ANSWER a form of business ownership where two or more people agree to contribute resources to start and operate a business together" "Corporation - CORRECT ANSWER a legal entity that is chartered by the government and exists separately from its owners" "Formal Structure - CORRECT ANSWER the official structure of the organization" "Informal Structure - CORRECT ANSWER the set of unofficial relationships among an organization's members" "Social Network Analysis - CORRECT ANSWER Analysis that identifies the informal structures and their embedded social relationships that are active in an organization" "Departmentalization - CORRECT ANSWER the process of grouping people and jobs into work units" "Limited Liability Corporation - CORRECT ANSWER a hybrid business form combining advantages of the sole proprietorship, partnership, and corporation." "Organizing - CORRECT ANSWER the process of arranging people and other resources to work together to accomplish a goal" "Organization Structure - CORRECT ANSWER the system of tasks, workflows, reporting relationships, and communication channels that link together the work of diverse individuals and groups within an organization" "Functional Structure - CORRECT ANSWER organizational structure that groups together people with similar skills who perform similar tasks" "Divisional Structure - CORRECT ANSWER organizational structure that groups together people working on the same product, in the same area, with similar customers, or on the same processes" "Boundaryless Organization - CORRECT ANSWER Horizontal organization structure that eliminates internal boundaries among subsystems and external boundaries within the external environment" "Virtual organization - CORRECT ANSWER A special form of a boundary less organization that uses IT and the Internet to engage a shifting network of strategic alliances" "Organization Design - CORRECT ANSWER The process of choosing and implementing structures to accomplish the organization's mission and objectives" "Matrix Structure - CORRECT ANSWER Organizational structure that combines functional and divisional approaches to emphasize project or program teams" "Team Structure - CORRECT ANSWER Horizontal organization structure that uses permanent and temporary cross functional teams to improve lateral relations" "Network Structure - CORRECT ANSWER Horizontal organization structure that operates with a central core that is linked through "networks" of relationships with outside contractors and suppliers of essential services" "Mechanistic Design - CORRECT ANSWER Highly bureaucratic organization designs "Span of Control - CORRECT ANSWER the number of subordinates directly reporting to a manager" "Centralization - CORRECT ANSWER The concentration of authority for most decisions at the top level of an organization" "Decentralization - CORRECT ANSWER The dispersion of authority to make decisions throughout all organization levels" that operate with centralized authority, many rules and procedures, a precise division of labour, narrow spans of control, and formal means of coordination" "Organic Design - CORRECT ANSWER Adaptive organizational designs that operate with decentralized, with fewer rules and procedures, open divisions of labour, wide spans of control, and more personal coordination" "Chain of Command - CORRECT ANSWER links all persons with successively higher levels of authority" "Supply Chain - CORRECT ANSWER All facilities,functions,and activities associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows" "Organizations as Communities - CORRECT ANSWER Theory developed by Mary Parker Follett that views organizations as communities in which managers and workers should labour in harmony without one party dominating the other, and with the freedom to talk over and reconcile conflicts and differences" "Classical Management Approach - CORRECT ANSWER Management approach that assumes that people work in a rational manner that is primarily driven by economic concerns." "Classical Decision Model - CORRECT ANSWER Describes decision making in a certain environment with complete information in which solutions are determined using an optimizing decision" "EU Agreements - CORRECT ANSWER 27 countries agreed to support mutual economic growth by removing barriers that previously limited cross border trade and business development" "Human Resource Management - CORRECT ANSWER The process of attracting, developing, and maintaining a high-quality workforce" "Behavioural Management Approach - CORRECT ANSWER Management approach that assumes people are social and self-actualizing and seek satisfying social relationships, respond to group pressures, and search for personal fulfillment at work." "Behavioural Decision Model - CORRECT ANSWER Describes decision making in an uncertain environment with limited information and bounded rationality in which solutions are determined using a satisficing decision" "Multicultural Organization - CORRECT ANSWER An organization based on pluralism and operates with inclusivity and respect for diversity" "Acceptance Theory of Authority - CORRECT ANSWER Theory that states a manager's authority rests on their subordinates’ acceptance of their right to give orders and comply with them" "Cost leadership strategy - CORRECT ANSWER strategy that seeks to operate with low costs so that products can be sold at low prices" "Supply Chain Analysis - CORRECT ANSWER Identifies each step in the supply chain to ensure it is efficient" "Customer Relationship Management - CORRECT ANSWER The use of information technology to gather information on customers and strategically build lasting relationships with customers" "Equifinality - CORRECT ANSWER the principle that in an open system a given end state can be reached by many potential means" "Internal Customer - CORRECT ANSWER An employee who receives goods or services produced elsewhere in an organization as inputs to their work"