Comprehensive MGMT 5900 Exam 3: Change Management, Negotiations, and Corporate Governance

What is the first step in the seven primary launch steps?

Finalize Budgets.

What does change management refer to in a practical sense?

Managing major transitions that affect entire divisions or the organization itself.

What is a qualifying trigger for change management?

Post-merger or post-acquisition integration.

What is the purpose of the launch-project budget?

To finance the launch and oversee early implementation.

What does the A-R-A model stand for?

Authority, Responsibility, Accountability.

What is the definition of Authority in the A-R-A model?

The power or right to make decisions, give orders, and enforce outcomes.

What is the definition of Responsibility in the A-R-A model?

The obligation to complete an assigned task at the required performance level or better.

What is the definition of Accountability in the A-R-A model?

The liability or answerability for the performance and result of an assigned activity.

What is the second step in the seven primary launch steps?

Designate Authority.

What is the importance of Board Approval in the launch process?

It is necessary for legal/regulatory, fiduciary, and organizational reasons.

What is the third step in the seven primary launch steps?

Board Approval.

What does Pre-Launch Dissemination involve?

Preparing selected managers, the board, and relevant stakeholders before the public launch.

What is the significance of the launch step?

It creates clarity, excitement, momentum, and a strong first impression.

What is the sixth step in the seven primary launch steps?

Adoption / Training.

What should be established in the Measure step?

Objective and transparent metrics to assess rollout and implementation.

What are the three types of budgets mentioned?

Regular annual budget, strategic-plan financial forecast/pro forma, launch-project budget.

Why is the launch usually more expensive than expected?

Due to lack of practice, mistakes, extensive training needs, and additional costs.

What is the fourth step in the seven primary launch steps?

Pre-Launch Dissemination.

What should be clear and transparent in the A-R-A model?

Who has authority, responsibility, and accountability.

What is a critical relationship between budgets?

The annual budget should become the first year of the strategic-plan pro forma.

What is the fifth step in the seven primary launch steps?

Launch.

What should be prepared for the Board before the vote?

Board members should not be surprised or embarrassed in the formal meeting.

What is the last step in the seven primary launch steps?

Measure.

What is the recommended study sequence for the exam?

Memorize definitions, learn launch steps, study recommendation lists, practice A-R-A application, self-test.

What is the purpose of pre-launch dissemination?

To prepare and train key managers and limit distribution of the plan before launch.

How often does a major launch typically occur?

Every four to five years at most.

What is the Hawthorne effect?

The phenomenon where people change their behavior because they know they are being observed.

What does Skinnerian psychology focus on?

Behavior modification through consequences, also known as operant conditioning.

What is positive reinforcement?

Providing a desirable consequence after a desired behavior to increase that behavior.

What is the definition of negotiation?

An interpersonal decision-making process where two or more parties agree on terms for resource allocation or action.

What is the difference between distributive and integrative negotiation?

Distributive negotiation is zero-sum, while integrative negotiation seeks win-win outcomes.

What does BATNA stand for?

Best Alternative to a Negotiated Agreement.

What is the ZOPA?

Zone of Possible Agreement; the range of acceptable outcomes that overlap between parties.

What is a reservation price?

The quantified walk-away threshold for a deal after considering context, costs, and risks.

What is the core rule regarding measurement in organizations?

"You get what you measure" and "You get what you reward or punish."

What should be avoided during the launch communication?

Excessive technical discussion; communication should be human and approachable.

What is the significance of training in change management?

Training is vital for employee satisfaction and successful performance of new responsibilities.

What is dysergy?

A situation where both parties are worse off, resulting in decreased total utility.

What is the importance of preparation in negotiations?

Preparation is identified as the number-one factor in negotiation success.

What is the role of communication efficacy in negotiations?

Listening and persuasiveness are essential for understanding interests and presenting proposals.

What is the purpose of using multiple training methods?

To ensure effective learning and accommodate different learning styles.

What does the 'hot stove' analogy refer to in punishment?

It emphasizes prompt, predictable, behavior-linked consequences.

What is the impact of the observer effect on employee performance?

Employees may improve performance simply because they know they are being observed.

What does the term 'synergy' mean in negotiation?

Both parties are better off, resulting in increased total utility.

What is the significance of knowing your counterparty in negotiations?

Understanding their objectives, options, and power position is crucial for success.

What are the axes of the 2 x 2 negotiation matrix?

Rows represent mindset (integrative vs. distributive) and columns represent interaction type (single vs. repeated).

What is the consequence of measuring one behavior while rewarding another?

It produces predictable implementation problems.

What should be included in the launch to create excitement?

Both internal and external audiences should be engaged.

What is the importance of allowing Q&A during the launch?

It helps clarify doubts and reinforces communication.

What is the impact of a merger on change management?

It requires new systems, roles, and training across the company.

What should you determine about the counterparty in negotiations?

Whether they can approve the deal or are only an intermediary.

Why is creativity important in negotiations?

It allows for reframing issues and developing alternative combinations.

What does cultural awareness entail in negotiations?

Understanding differences in norms, values, roles, expectations, and communication.

How can deadlines affect negotiation options?

A real deadline can reduce options, while a suggested deadline can be used strategically.

What is the significance of first impressions in negotiations?

People often form judgments within the first seconds or minutes of an interaction.

How does communication before a meeting impact negotiations?

Negotiations often begin before the parties physically meet.

What should you do to prepare for a negotiation?

Prepare before the interaction and update your knowledge as the process unfolds.

What is the appropriate dress for negotiations?

Dress professionally and polished, but context may vary.

What psychological games should you watch for in negotiations?

Arriving late, sitting in an elevated position, or bringing unexpected numbers of people.

What should you maintain when provoked in negotiations?

Patience and composure to avoid damaging your credibility.

What is corporate governance?

The set of mechanisms used to manage relationships among stakeholders and oversee the strategic direction and performance of organizations.

Who is a fiduciary?

A person or organization that makes financial decisions on behalf of another party and is legally obligated to act in the best interests of the client.

What are agency costs?

The sum of costs incurred by principals due to governance mechanisms that cannot guarantee total compliance by the agent.

What is an insider board member?

A director who directly works for the company, such as the CEO, CFO, or COO.

What defines a related or conflicted board member?

A director who has a non-trivial relationship or interest that could bias their judgment.

What characterizes an independent board member?

A director who does not work for the company and has no identifiable conflict of interest.

What is a conflict of interest?

A situation where an interest could bias a director's judgment on a specific issue or transaction.

What is recusal in the context of board members?

Disclosure of a potential conflict followed by separation from decision-making on that matter.

What is a stock option?

The right to buy a share of stock at a specified price during a specified time window.

What does corporate compliance involve?

Defining, assessing, and conforming to legal, regulatory, ethical, and internal policy requirements.

What is the agency relationship?

The relationship where principals hire and compensate agents to make decisions using the principals' capital.

What is the role of common shareholders?

They provide capital, hire managers, and face bankruptcy risk but can diversify their investments.

What is the role of professional managers?

They make corporate decisions using the owners' money and their wealth may be concentrated in one company.

What is the significance of independent directors in corporate governance?

They should chair certain committees, especially the Audit Committee, to ensure unbiased oversight.

What is the importance of recognizing and disclosing conflicts of interest?

Immediate disclosure and proper handling are crucial for maintaining board integrity.

What is the fiduciary responsibility of the board?

To act for the owners of the firm, normally common shareholders, and shift focus in bankruptcy.

What does the board do regarding executive remuneration?

They review salary, bonuses, stock options, and other forms of executive compensation.

What is the role of the board in overseeing compliance?

To confirm that laws, regulations, controls, and internal requirements are being followed.

What is the primary role of the board of directors?

To oversee compliance and approve major actions such as strategic plans and transactions.

What does 'Nose In - Hands Out' mean in corporate governance?

Directors should be informed and ask questions but not manage daily operations.

What is the main responsibility of the Audit Committee?

To oversee financial reporting, internal controls, and compliance with regulations.

What does the Compensation Committee do?

Sets executive pay and incentives and ensures alignment with shareholder value.

What is the purpose of the Governance Committee?

To identify board candidates, recommend assignments, and support succession planning.

What is the Risk Committee responsible for?

Overseeing industry-specific risks, especially in high-risk sectors.

What is a Special Transactions Committee?

A temporary group focused on major events like acquisitions or CEO selection.

What does 'lack of independence' refer to in board criticisms?

When directors are biased towards executive opinions, failing to provide objective oversight.

What is meant by 'rubber stamp' in the context of board actions?

The board agrees with management recommendations without critical review.

What does excessive pay refer to in board criticisms?

The perception that executive compensation is too high.

What does misaligned remuneration mean?

When compensation does not effectively tie executive behavior to shareholder value.

What is the definition of corporate compliance?

The process of conforming to legal, regulatory, ethical, and internal policy requirements.

What is a cliff or vesting period?

A holding period during which stock options cannot yet be exercised.

What is the strike price in stock options?

The predetermined price at which the holder may buy the stock.

What is the expiration date of a stock option?

The final date on which the option may be exercised.

What is the formula for calculating pretax option value?

Pretax option value = (Market price at exercise - Strike price) x Number of options exercised.

What does agency costs refer to?

The costs associated with incentives, monitoring, and enforcement due to managerial divergence.

What is the role of an independent director?

A director with no employment or identifiable conflict of interest.

What does recusal mean in a board context?

When a director discloses a conflict and abstains from the analysis and vote.

What is the purpose of the Audit Committee?

To oversee financial reporting and the relationship with external auditors.

What is the significance of the Hawthorne effect?

The phenomenon where observed employees change their behavior.

What is BATNA in negotiation?

Best Alternative to a Negotiated Agreement.