Mgmt Ex 4.1

Front 1

mechanisms

Back 1

used to align interests of stock holders and mgmt

Front 2

stock options

Back 2

most common pay for performance system. Right to purchase company stock at predetr. Price at a future time. Opposition: incentive too huge, dilutes shareholder equity.

Front 3

takeover constraints

Back 3

risk of being aquired by another compan. Limits the extent to which managers can pursue strategies and actions of their own interest. Occurs in cycles, last resort- only when other mechanisms fail

Front 4

Raiders

Back 4

perform takeover- buy underperforming companies, motivated by gain. Greenmail- profit they receive whether the company is sucessful or not.

Front 5

strategic conrol systems

Back 5

primary governance mechanism, established w/I to reduce scope of agency problem. Formal target setting, measurment. Feedback. Allows mgmt to evaluate if strategies are maximizing long term profitability.

Front 6

purpose of strategic controls

Back 6

establish standards, create systems for measuring, compare actual performance against targets, evaluate

Front 7

true picture of performance

Back 7

financials should be supplemented w/ performance measures that indicate how well the cmopany has been achieving; CA, CR, EFF, INNOV

Front 8

opportunistic exploitation

Back 8

unethical behavior sometimes used by managers to unilaterally rewrite the terms fo a contract w/ suppliers

Front 9

Roots of ethical behavior

Back 9

personal ethics, people don't realize they're being unehtical, orginizational culture that de-emphasizes ethics, unethical leadership, top mgmt unethical.

Front 10

organizational design

Back 10

process of deciding how a company should create/use/combine organizational structure, control systems, and culture to pursue business model

Front 11

organizational structure

Back 11

means through which a company assigns employees to specific tasks and roles. Coordinate and integrate the efforts of employees at all levels.

Front 12

control system

Back 12

provide managers with incentives for employees and feedback

Front 13

reduce bearucratic costs

Back 13

group tasks into functions, group functions into units

Front 14

dectralize authority

Back 14

vest authority in managers at lower levels in the hierarchy as well as at the top. Reduces tall hier. And beau. Costs. 3 advantages: reduce info overload, increased motivation and accountability, fewer managers needed.

Front 15

Strat. Control systems

Back 15

mechanism allows managers to monitor and evaluate. Eff-contains measures to see how eff. Production is. Quality- gives feedback (customer complaints).INNOv- encourage risk taking. CR- how well employees w/ customer contact are doing their jobs.

Front 16

Organizational control levels: who sets controls for whom?

Back 16

BOD for corporate level for business level for funtional level for first level

Front 17

standardization

Back 17

degree of which a company specifies how a decision is made so employee behavior becomes measurable and predictable. Can standardize with inputs, outputs and conversion activities.

Front 18

inputs

Back 18

are screened according to preestablished criteria (qualities and skills employees should posess)

Front 19

conversion activities

Back 19

program work activities so they can be done the same way everytime (rules/procedures)

Front 20

Outputs

Back 20

what performance characteristic the final product should have

Front 21

IT

Back 21

making it easier for orgs to cost effectively develop output behavior controls-give mangers more and better info.

Front 22

organizational socialization

Back 22

how people learn org. culture, people internalize and learn the norms

Front 23

functional structure

Back 23

grouping of employees on the basis of their common expertise and experience or bc they use the same resources. EX: R&D, Sales/mkt, mtfg

Front 24

Adv of functional structure

Back 24

allows for strategic reward system, easier output control. People learn from eachother- greater productivity, creates capabilities and competencies at each function. More efficient(monitoring eachother, reducing costs and increasing flexability). Gives managers greater control- several different hierarchies.

Front 25

Functional struct. And mtfg

Back 25

improves eff and quailty, find match between structure, control and TQM

Front 26

F/s and R and D

Back 26

innovation and quality as excellence,

Front 27

F/S and sales

Back 27

encourage hig responsiveness to customers w/ output and behavior controls

Front 28

building capabilities

Back 28

begins at functional level

Front 29

good organizational design

Back 29

economizes bue. Costs and lowers cost structure, enhances cap. And comp., leads to diff and premium price

Front 30

product structure

Back 30

a way of grouping employees into separate product groups or units so each product group can focus on best ways to increase effectiveness of product

Front 31

P structure

Back 31

lowers cost due to communication, measuremnt. Value functions are centralized at top of org and diff product groups share their services. Each supp. Function divided into product oriented teams of functional specialists. Food processors, furniture mtfgs

Front 32

Market structure

Back 32

grouping employees into separate customer groups that each can focus on satisfying the needs of a particular segment. Support functions are centralized. Works well for well identified customer groups

Front 33

geographic structure

Back 33

grouping employeees into geo regions to best satisfy needs, reduces transport costs, more coordination and control than functional. Fedex, merchandisers, can achieve EOS

Front 34

Matrix structure

Back 34

grouping employees in two ways: eimulatneously by function and product/project to max rate at which diff kinds of products can be developed. Distinctive comp in R &D, vertically by function and horizontally by product. Flat and decentralized. 2 bosses. promotes innov and speeds prod. development. Aerospace, electronics. creates flex, min direct hierarch control.

Front 35

Restructuring

Back 35

process by which a company streamlines its hierarchy of authority and reduces the # of levels in it to a minimum to lower operating costs. 2 steps: aka downsizing, occurs bc of change in bix model and mostly bc fail to monitor and control biz ops.

Front 36

reengineering

Back 36

process of redesigning business process to achieve dramatic improvements in performance (cost/quality/speed/service). Must completely rethink value chain activities. Managers make business process focus not on functions.

Front 37

multidivisional structure

Back 37

complex org design that allows a company to grow and diversify while it also reduces coord and control problems; uses self contained divisions and seperat corp HQ staff. Large complex companies, each division an individual profit center and can have diff structure. functional resources are duplicated.

Front 38

unrelated diversification

Back 38

easiest and cheapest strat. Appropriate for multidiv. Low need for integration(no exch. Between divisions), some use for behavioral control and little use for org. culture. Allows evaluation of performance accurately.

Front 39

integration

Back 39

multidiv; medium need for integration(sched. Resource transf.), great use for financial conrols(ROIC and transfer pricing), great use for behavioral controls(standardized budgets), some use for org culture(shared norms and values). Sequential resource flow.

Front 40

transnational strat

Back 40

focused so that it can achieve local responsiveness and cost reduction. Some functions cetralized and some de. At global location best suited. Global matrix

Front 41

global strat

Back 41

oriented towards cost reduction, w all principal value creating functions centralized at optimal global location. Global division, product group

Front 42

transfer pricing

Back 42

problem of establishing the fair/competitive price of a resource/skill developed in one division and transferred and sold to another

Front 43

joint ventures

Back 43

used to maintain momentum and grow profits by entering new mkts. Two companies agree to pool resources and capa to establish new biz unit.

Front 44

new venture division

Back 44

separate and independent division est. to give managers the autonomy to develop new products

Front 45

first major issue of joint venture

Back 45

allocating authority and responsibility, implementation of issuse is diff, time consuming and expensive.

Front 46

mergers

Back 46

corp managers capabilities in org. design are vital in ensuring success of merger