Chapter 6
Management- the process of planning, organizing, leading, and controlling a business’s financial,
physical, human and information resources in order to achieve its goals.
Efficiency- Achieving the greatest kevel of output with a given amount of input.
Effectiveness- Achieving set organizational goals.
Planning- the process of determining the firms goals and developing a strategy for achieving hose goals.
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Goals are established for the organization
Managers identify weather a gap exists between the companies desired and actual position.
Managers develop plans to achieve the desired objectives
The plans that have been decided upon implantation
The effectiveness of the plan assessed
Strategic Plans- Plans that reflect decisions about resource allocations, company priorities, and steps
needed to meet strategic goal.
Tactical Plans- generally, short-range plans concerned with implementing specific aspects of a
company’s strategic plans.
Operational Plans- Plans setting short term targets for daily, weekly or monthly performance.
Organizing- The process in deciding which jobs must be performed, and how those jobs should be
coordinated so that the company’s goals are reached.
Leading- Managers guide and motivate workers to meet the company’s objectives.
Controlling- The process of monitoring the firms performance to make sure that it is meeting its goals.
Types of Managers
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Top Managers- set policies, formulate strategies, oversee significant decisions, and represent
and represent the company in dealing with other businesses and government.
Middle Management- responsible for implementing the decisions made by top managers
First-line Managers- Supervising the work of employees
Human Resource Managers- Responsible for hiring, evaluating, and compensating employees
Operations Managers- Responsible for controlling production, inventory, and quality of the firms
products
Information Managers- Responsible for the design and implementation of systems to gather,
process, and disseminate information
Marketing Managers- responsible for developing, pricing, promoting, and distributing goods and
services to buyers.
Financial Managers- Responsible for planning and overseeing the financial resources of a firm.
Technical Skills- Skills associated with performing specialized tasks within a firm
Human Relations Skills- Skills in understanding and getting along with people.
Conceptual Skills- Abilities to think in the abstract, diagnose and analyze various situations, and see
beyond the present situation
Time Management Skills- Skills associated with productive use of time
Decision- Making Skills- Skills in defining problems and selecting the best course of action.
Organizational Policies- The actions that people take as they try to get what they want
Intuition- An innate belief about something, often without conscious consideration.
Escalation of Commitment- Condition in which a decision maker becomes so committed to a course
of action that he or she stays with in even when there is evidence that the decision is wrong.
Risk propensity- Extent to which a decision maker is willing to gamble when making a decision
Strategic Management – the process of helping an organization maintain and effective alignment
with its environment
Strategy- The broad set of organizational plans for implementing the decisions made for achieving
organizational goals.
Vision- A statement indicating why an organization exists and what kind of organization it wants to
be
Mission Statement- An organization’s statement of how it will achieve its purpose in the
environment in which it conducts its business.
Long-term goals- Goals set of an extended period of type, typically longer than five years.
Intermediate goals- Goals set for a period of one to five years.
Short-term goals- Goals set or the very near future, typically less than a year.
SMART goals- Goals that are specific, measurable, achieving, realistic, time-framed
Strategy Formulation- Creation for a broad program for defining and meeting an organizations goals.
Strategic Goals- Long-term goals derived directly from the firms missions statement.
Organizational Analysis- The process of analyzing a firm’s strengths and weaknesses
Environmental Analysis- The process of scanning the environment for threats and opportunities .
Corporate- level strategy- Identifies the various businesses that accompany will be in, and how these
businesses will relate to each other.
Business level( Competitive strategy)- Identifies the ways a business will compete in its chosen line
of products or services.
Functional strategies- Identify the basic courses of action that each department in the firm will
pursue so that it contributes to the attainment of the businesses overall goals.
Concentration Strategy- Involves focusing the company on one product or product line
Corporate Level Strategies- Concentration, growth, integration. Diversification, and investment
reduction
Market Penetration- Boosting sales of present product by more aggressively selling In the firms
markets.
Geographic expansion- Expanding operations in new geographic areas or countries
Product development- developing improved products for current markets
Horizontal Integration – Acquiring control of competitors in the same or similar markets with the
same similar products
Vertical Integration- Owning or controlling the inputs to the firm’s processes and/or the channels
through which the products or services are distributed.
Diversification- Expanding into related unrelated products or market segments.
Investment Reduction- Reducing the company’s investment in one or more of its lines of business.
Cost Leadership- Becoming the low-cost leader in an industry
Differentiation Strategy- A firm seeks to be unique in its industry along some dimension that is
valued by buyers.
Focus Strategy- Selecting a market segment and serving the customers in that market niche better
than competitors.
Contingency Planning-Identifying aspects of a business or in its environment that might require
changes in strategy.
Crisis Management- An organization’s methods for dealing with emergencies
Corporate Culture- The shared experiences, stories, beliefs, and norms that characterize a firm
Chapter 7
Organizational structure- The specification of the jobs to be done within a business and how those
jobs relate to one another.
Organizational Chart- A physical depiction of the company’s structure showing employee tittles and
their relationship to one another.
Chain Of Command- Reporting relationships within a business; the flow of decision making in a firm
Job specialization- The process of identifying the specific jobs that need to be done and designating
the people who will perform them
Departmentalization- The process of grouping jobs into logical units.
Profit center- a separate company unit responsible for its own costs and profits (functional,
Customer, Product, Process, Geographically)
Customer Departmentalization- Departmentalization according to the types of customers likely to
buy a given product
Functional Departmentalization- Departmentalization according to the functions or activities. (Firms
typically have sales, marketing, personnel, accounting and finance departments)
Product-Department Mentalization- Departmentalization according to the products being created or
sold.
Process Departmentalization- Departmentalization according to the production process used to
create a good or service.
Geographic Departmentalization- Departmentalization according to the area of the country or world
supplied.
Responsibility- The duty to perform an assigned task.
Authority- The power to make the decisions necessary to complete a task
Delegation- Assignment of a task, a responsibility, or authority by a manager to a subordinate
Accountability- Liability of subordinates for accomplishing tasks assigned by managers.
Centralized Organization- Top managers retain most decision-making rights for themselves.
Decentralized Organization- Lower and Middle level managers are allowed to make significant
decisions
Span of Control- The number of people managed by one manger
Downsizing- The planned reduction in the scope for an organizations acidity.
Line Authority- An organizational structure in which authority flows in a direct chain of command
from the top of the company to the bottom.
Line Department- A department directly linked to the production and sale of a specific product.
Staff Authority- Authority that is based on expertise and that usually involves advertising line
managers. – drinking problem example
Functional Structure-Various units are included in a group based on functions that need to be
performed to reach the organizations goals.
Divisional Structure- Divides the organization into divisions, each of which operates as a
semiautonomous unit.
Project Organization- An organization that uses terms of specialists to complete specific tasks.
Matrix Organization- A project structure in which the project manager and the regular line managers
share authority until the project is over.
International Organizational Structure- The organizational structure that is designed to help a
company succeed in international markets, international divisions, or an integrated global
organization are all variations of the international organizational structure.
Informal Organization- A network of personnel interactions and relationships among employees
unrelated to the firms formal authority structure.
Grapevine- An informal communications network that carries gossip and other information
throughout the organization
Chapter 8
Service Operations- production activities that yield tangible and intangible activities.
Goods Production- production activities that yield tangible products
Utility- The power of a product to satisfy a human want: something of value.
Time Utility- That quality of a product satisfying a human want because of the time at which it is
made available
Place Utility- That quality of a product satisfying a human want because for where the product was
made.
Ownership (Possession Utility)- That quality of a product satisfying a human want during its
consumption or use.
Form Utility- That quality of a product satisfying a human want because of its form; requires raw
materials to be transformed into finished product.
Operations( Production Management)- A set of methods and technologies used in the production of
a good or service
Production Managers- Managers responsible for ensuring that operations processes create value
and provide benefits . Bring raw materials, equipment, and labor together under a production plan
that will effectively use all resources available in the production facility.
Operations Process- A set of methods and technologies used in the production of a good or service.
Types of transformation technologies (turn raw materials into finished goods )
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Chemical processes
Fabrication process
Assembly process
Transport processes
Clerical Processes( reports)
Analytical process- Any Production process in which resources are broken down into their
component parts
Synthetic Process- Any production process in which resources are combined
High- contact system- A system in which the service cannot be provided without the customer being
physically in the system (transit system)
Low-contact system- A system in which the service can be provided without the customer being
physically in the system (lawn care )
Operations Capability (Production Capability) – The activity or process that production must do
especially well and with high proficiency
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Quality (Toyota) – High Quality, Just in time production, specialized equipment, Experts in
operations personnel.
Low Cost (Save-a-Lot) – Aviods exsesive overhead, Limited assortment or products, small store
in many locations
Flexibility(3M) Maianitains some expensive production capacity for fast start on new products
Dependability(FedEx)
Forecasts- Estimates on future demand on both new and existing products
Capacity- the amount of a good that a firm can produce under normal working conditions
Process Layout- A way of organizing production activities such that equipment and people are grouped
together according to their function
Assembly Line- A type of product layout in which a partially finished product moves through a plant on a
conveyer belt or other equipment.
Lean Manufacturing- A system designed for smooth production flows that avoid inefficiencies, eliminate
unnecessary inventories, and continuously improve production processes.
Flexible Manufacturing System(FMS)- A production system that allows a single factory to produce small
batches of different goods on the same production line.
Soft Manufacturing- Emphasizes computer software and computer networks instead of production
machines
Movable Factory- Purchasing relatively modern production equipment and transporting it to another
location to create a new manufacturing plant, typically in a developing country.
Master Production Schedule- Schedule showing which products will be produced, when production will
take place, and what resources will be used.
Operations control- Managers monitor production performance by comparing results with plans and
schedules.
Follow-up- Checking to make sure that production decisions are being implemented
Materials Management- Planning, organizing, and controlling the flow of materials from purchase
through distribution of finished goods.
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Transportation
Warehousing
Inventory control
Supplier selection
Purchasing
Standardization- using standard and uniform components in the production process
Transportation- The means of transporting resources to the company and finished goods to buyer
Warehousing
Inventory Control
Supplier Selection- Finding and determining what suppliers to by from
Purchasing- raw materials and services a company needs to buy to produce its products.
Just-in-Time Production- A method of inventory control in which materials are acquired and put into
production just as they are needed.
Material requirement planning (MRP)- A method of inventory control in which a computerized bill of
materials in used to estimate production need so that the resources are acquired and put into
production only as needed
Bill of Materials- production control that specifies the necessary ingredients of a product, the order in
which they should be combined, and how many of each are needed to make one batch.
Manufacturing resource planning- An advanced version of MRP that ties together all parts of the
organization into the company’s production activities.
Quality Control- the management of the production process so as to manufacture goods or supply
services that meet specific quality standards
Quality- The products fitness for use in terms of offering the features that consumers want
Labor Productivity- Partial productivity ratio calculated by dividing gross domestic product by total
number of workers.
Total Quality Management- A concept that emphasizes that no defects are tolerable and that all
employees are responsible for maintaining quality standards.
Performance Quality- the overall degree of quality; how well the features of a product meet customers
need and how well the product performs.
Quality Reliability- the consistency of quality from product to product.
Quality Ownership- The concept that quality belongs to each employee who creates or destroys it in
producing a good or service; the idea that all workers must take responsibility for producing a quality
product.
COMPETITIVE Product Analysis- A process in which a company analyzes a competitors products to
identify desirable improvements.
Value-Added Analysis- The evaluation of all work activities, materials flow, and paper work to determine
the value they add for the customer.
Statistical Process Control- Statistical analysis techniques that allow managers to analyze variations in
production data and the detect when adjustments are needed to create products with high quality
reliability
Process variation- Any change in employees, materials, work, methods, or equipment that affects
output quality.
Control Chart- A statistical process control method in which results of test sampling of a product are
plotted on a diagram that reveals when the process is beginning to depart from normal operating
conditions.
Quality/cost Studies- A method of improving product quality by assessing a firms current quality-related
costs and identifying areas with the greatest cost saving potential
Internal failures- Expenses incurred during production and before bad product leaves the plant
External failures- Allowing defective products to leave the factory and into consumers’ hands.
Benchmarking- Comparing the quality of a firms output with the quality of the output of the industry
leaders
ISO 1400- certification program attesting the fact to the fact that a factory, laboratory, or office has
improved environmental performance
Business Process re-engineering- Redesigning of business processed to improve performance, quality,
and productivity
Supply Chain (Value Chain) Flow of all information materials, and services that starts with raw materials
and continues through other stages in the operations process until the product reaches the customer.
SCM- Process of looking at the chain as a whole to improve the overall flow through the system.
Electronic Storefront- A sellers website in which consumers collect information about products and
buying opportunities, place, sales order, and pay for their purchases
Cybermalls- Collections of virtual storefronts representing diverse products (yahoo1)
Interactive Marketing- Selling products through multimedia, social networks
Video Marketing- Selling to consumers by showing products on tv that cinsumers can buy by telephone.
Physical Distribution- Those activities needed to move a product from the manufacturer to the end
consumer
Warehousing- Storing goods
Private Warehousing- storing goods of one firm
Public Warehousing- Storing goods of many firms
Intermodal Transportation- Combined use of different modes of transportation
Order fulfillment – All activities included in completing a sales transaction, beginning with making the
sale and ending with on time delivery to the customer.
Chapter 9
Leadership- The process of motivating others to work to meet specific objectives
Trait Approach- A leadership approach focused on identifying the essential traits that distinguished
leaders
Behavioral Approach- The leadership approach focused on determining what behaviors are employed by
leaders
Task-Oriented Leader Behavior- Leader behavior focusing on how tasks should be performed in order to
meet certain goals and try to achieve certain performance standards
Employee-Oriented Leader Behavior- Leader behavior focusing on satisfaction, motivation, and wellbeing of employees.
Autocratic Style- A form of leader behavior in which the manager issues orders and expects them to be
obeyed without questions
Democratic Style- A form of leader behavior in which the manager requests input from subordinates
before making decisions, but the manager retains the decisions making power.
Free-Rein Style- A form of leader behavior in which the manager serves as an advisor to subordinates
who are given a lot of discretion when making decisions
Situational(Contingency) approach to leadership- Leadership approach that assumes that appropriate
leader behavior varies from one situation to another
Transformational Leadership- The set of abilities that allows a leader to recognize the need for change,
to create a vision to guide that change, and to execute the change effectively
Transactional Leadership- Comparable to management, it involves routine, regimented activities
Charismatic Leadership- Type of influence based on the leaders personal charisma
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Envisioning- Articulating a compelling vision, setting high expectations, modeling consistent
behaviors
Energizing- Demonstrating person excitement, expressing personal confidence, seeking, finding,
and using success
Enabling- Expressing personal support, emphasizing, expressing confidence in people
Chapter 16
Financial managers- Those managers responsible for planning and observing that financial resources of
the firm (long term investments, obtaining funds to pay for investments, everyday financial activities,
managing firms risks)
Finance- The business function involving decisions about a firms long-term investments and obtaining
the funds to pay for those investments.
Cash Flow Management- managing the pattern in which cash flows into the firm in the form of revenues
and out if the firm in the form of debt payments.
Financial Control- The process of checking actual performance against plans to ensure that the desired
financial status is achieved(planned rev based on forecasts)
Financial Plan- A description on how a firm will reach some financial position it seeks for the future;
includes projections for sources and uses of funds.
Credit Policy- Rules governing a firm’s extension of credit to customers. (2/10, 30)
Inventory- Materials and goods currently held by the company that will be sold within the year.
Raw Materials Inventory- That portion of a firms inventory consisting of basic supplies used to
manufacture products for sale
Work in Process Inventory- That portion of a firms inventory consisting of goods partway through the
production process
Finished Goods Inventory- that portion of a firms inventory consisting of completed goods ready for
sale.
Trade Credit- The granting of credit by selling firm to a buying firm
Open-Book Credit- Form of trade credit in which sellers ship merchandise on faith that payment will be
forthcoming.
Promissory Note- Form of trade credit in which buyers sign a promise-to-pay agreements before
merchandise is shipped.
Trade Draft- Form of trade credit in which buyers must sign statements of payment terms attached to
merchandise by sellers
Trade Acceptance- Trade draft that has been sign by the buyer.
Secured Loans- A short-term loan in which the borrower is required to put up collateral.
Collateral- Any asset that a lender has the right to seize if a borrower does not repay a loan
Pledging Accounts receivable- using accounts receivable as collateral for a loan.
Unsecured Loan- A short-term loan which the borrower is not required to put up collateral
Line of Credit- A standard agreement between a bank and a firm in which the bank specifies a maximum
amount it will make available to the borrower for a short-term unsecured loan; the borrower can then
draw on those funds, when available.
Revolving Credit Agreement- A guaranteed line of credit for which the firm pays the bank interest on
funds borrowed, as well as a fee for extending the line of credit.
Commercial Paper- A method of short-run fundraising a firm sells unsecured notes for less than the face
value and then repurchases them at the face value within 270 days; buyers’ profits are the difference
between the original price and the face value
Debt Financing- Raising money to meet long term expenditures by borrowing from outside the
company; usually takes the form of long-term loans or the sales of corporate bonds.
Corporate Bond- A promise by the issuing company to pay the holder a certain amount of money on a
specified date, with stated interest payment in the interim; o form of long term financing
Bond Indenture- Indicates the key terms of a bond, such as the amount, the interest, rate, and the
maturity date.
Equity Financing- Raising money to meet long-term expenditures by issuing common stock or by
retained earnings.
Capital Structure- Relative mix of a firms debt and equity structure.
Risk-Return Relationship- Shows the amount of risk the likely rate of return on various financial
instruments.
Venture Capital- outside equity funded in return for part ownership of company