management-chapter 1

Business

An activity that seeks to provide goods and services to others, while operating to make a profit.

Goods

Tangible products that people buy or use, such as food, clothes, and furniture.

Services

Intangible products that cannot be held in hand, such as healthcare and education.

Revenue

The total amount of money a business takes in during a given period of time.

Profit

The amount of money a business earns above and beyond what it spends for salaries and other expenses, occurring when $\text{Revenue} > \text{Expenses}$.

Loss

The financial situation that occurs when a business's expenses exceed its revenue, occurring when $\text{Revenue} < \text{Expenses}$.

Entrepreneur

A person who risks time, effort, and money to start and manage a business.

Risk

The chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

Business Stakeholders

All the people who stand to gain or lose by the policies and activities of a business, whose concerns and needs must be addressed.

Stockholders

Holders of stocks and bonds (investors) in a business, representing a specific subset included within the broader category of stakeholders.

Five Factors of Production

The essential resources required to produce goods and services: Land, Labor, Capital, Entrepreneurship, and Knowledge.

Capital (Factor of Production)

Machines, tools, and buildings used in production; it does not include money itself, which is only used to buy factors of production.

Knowledge (Factor of Production)

The information and expertise that, when combined with entrepreneurship, serves as the primary driver creating wealth in rich countries today.

Positive Effects of Business

Societal benefits provided by business activity: offering valuable goods and services, providing employment, paying taxes, and contributing to national growth, stability, and security.

Negative Effects of Business

Societal drawbacks caused by business activity: generating pollution, creating health and safety risks, disrupting communities, and causing financial instability.

Objectives of Business

The four main organizational goals of a business: Survival, Growth, Profit, and Social Responsibility.

Working for Others (Employee)

A career path where someone else assumes the entrepreneurial risk and provides benefits such as paid vacation time and health insurance.

Starting Your Own Business (Entrepreneur)

A career path where an individual manages their own business, assumes all risk, keeps the profit, and must self-provide benefits like vacations and health insurance.

What is Management?

The planning, organizing, leading, and controlling of human and other resources to achieve organizational goals efficiently and effectively.

What is an Organization?

Collections of people who work together and coordinate their actions to achieve a wide variety of goals.

Define Organizational Performance.

A measure of how efficiently and effectively a manager uses resources to satisfy customers and achieve a goal.

What is Effectiveness?

Doing the right things; a measure of the appropriateness of the goals being pursued (تحقيق الأهداف).

What is Efficiency?

Doing things right; a measure of how productively resources are used to achieve a goal without waste (استغلال أمثل للموارد).

Manager chooses the right goals but makes poor use of resources. What is this?

High Effectiveness, Low Efficiency (e.g., A product customers want, but it is too expensive).

Manager chooses the right goals and makes good use of resources. What is this?

High Effectiveness, High Efficiency (e.g., A product customers want at a quality and price they can afford).

Manager chooses wrong goals and makes poor use of resources. What is this?

Low Effectiveness, Low Efficiency (e.g., A low-quality product customers do not want).

Manager chooses wrong goals but makes good use of resources. What is this?

Low Effectiveness, High Efficiency (e.g., A high-quality product customers do not want).

What are the Four Essential Managerial Tasks?

1. Planning 2. Organizing 3. Leading 4. Controlling

What is Planning?

The process of identifying and selecting appropriate goals and courses of action.

What are the 3 steps of the Planning process?

1. Decide which goals to pursue. 2. Decide courses of action/strategies. 3. Allocate organizational resources.

What is the outcome of Planning?

A Strategy (a cluster of decisions about what goals to pursue, actions to take, and how to use resources).

What is a Low-Cost Strategy?

Driving the organization's total costs down below the total costs of competitors.

What is a Differentiation Strategy?

Distinguishing the organization's products from competitors on one or more important dimensions.

What is Organizing?

Creating a structure of working relationships that allows organizational members to interact and cooperate to achieve goals.

What is the outcome of Organizing?

Organizational Structure (a formal system of task and reporting relationships).

What is Leading?

Articulating a clear vision and energizing/enabling members so they understand their part in achieving goals.

What is the outcome of Leading?

Achieving the organization's vision and having a highly motivated workforce.

What is Controlling?

Evaluating how well an organization has achieved its goals and taking corrective actions to improve performance.

What is the outcome of Controlling?

The ability to measure performance accurately and regulate organizational efficiency and effectiveness.

What are the 3 categories of Mintzberg's managerial roles?

Interpersonal, Informational, Decisional.

Which Mintzberg role involves attending a ribbon-cutting ceremony?

Figurehead (Interpersonal role).

Which Mintzberg role involves launching an advertising campaign or giving a speech to the community?

Spokesperson (Informational role).

Which Mintzberg role involves solving a dispute between labor unions and the company?

Negotiator (Decisional role).

Who is responsible for the daily supervision of non-managerial employees?

First-line managers (Supervisors).

Who supervises first-line managers and finds the best way to use resources?

Middle Managers.

Who establishes goals for all departments and has cross-departmental responsibility?

Top Managers.

Who is responsible for the success or failure of the entire organization?

Top Managers.

What is the role of the CEO (Chief Executive Officer)?

The most senior manager to whom all top managers report; monitors top managers' performance.

Top managers spend most of their time on which functions?

Planning and Organizing.

Lower-level (first-line) managers spend most of their time on which functions?

Leading and Controlling.

What is the ability to analyze and diagnose a situation and distinguish between cause and effect?

Conceptual skills.

What skill involves understanding, leading, and controlling the behavior of individuals and groups?

Human skills.

What are job-specific skills required to perform a particular type of work?

Technical skills.

Which managerial skill is most important for Top Managers?

Conceptual skills.

Which managerial skill is most important for First-line Managers?

Technical skills.

What is Core Competency?

A specific set of departmental skills and knowledge that allows an organization to outperform competitors.

What is Restructuring (downsizing)?

Simplifying an organization's operations to lower operating costs.

What is Outsourcing?

Contracting with another company to perform a work activity the company previously performed itself.

What is Empowerment?

Giving employees more authority and responsibility over their work activities.

What is a Self-Managed Team?

Groups of employees who assume collective responsibility for organizing and controlling their own work.

What are the 4 building blocks of a Competitive Advantage?

1. Efficiency 2. Quality 3. Innovation 4. Responsiveness to customers.

What is Turnaround Management?

Creating a new vision for a struggling company using new approaches to planning and organizing to survive and prosper.

What are the two main causes of a global crisis?

1. Natural causes (hurricanes, diseases). 2. Human causes (pollution, terrorism).

Which management function involves setting goals and choosing courses of action?

Planning.

Which management function involves assigning tasks and creating a structure of working relationships?

Organizing.

Which management function involves motivating and influencing employees?

Leading.

Which management function involves evaluating performance and taking corrective actions?

Controlling.

What is the difference between Efficiency and Effectiveness?

Efficiency = using least amount of resources (without waste). Effectiveness = producing the desired result.

A manager who holds periodic meetings to review an employee's progress is performing which function?

Controlling.