COMM 1800 1

Public Sector

owned by gov’t, funded by taxes, workers are civil servants, fills the gaps the private sector can’t cover such as education, roads, police. 15% of jobs

Private Sector

owned by individuals or shareholders, key driver of innovation, funded by profits, investments, stock sales, loans, donations, workers are employees, independent contractors, self-employed, or volunteers. 85% of jobs

Profit-making Organizations (businesses)

operate with the goal of generating profits for their owners and shareholders by selling goods and services, retail stores, manufacturing firms, service providers. profit/loss = TR-TC

Non-profit-making Organizations

goal of supporting a cause or mission to benefit society through donations, grants, subscriptions, membership fees, charities, clubs, associations, NGOs. surplus/deficit = TR-TE

Economies of Scale

cost advantages with larger volumes

Economies of Scope

cost advantages with shared technology/resources (multiple products on the line)

Interconnectedness

each element interacts with each other and affects the behavior of the whole system

Goal-directedness

systems are oriented towards achieving specific goals (and use feedback to meet them)

Open/Closed Systems

open systems engage in exchanges with the environment, adapting and influencing one another (humans)

closed systems are isolated from external influences, does not adapt to environmental changes

Processes

all processes (input to output) require resources like people, equipment, technology, materials, etc.

Feedback mechanisms

ensure alignment and adaptation to achieve system goals

Subsystems

smaller parts that make up the larger system, contribute to the overall functionality and stability of the entire system. Characteristics: interdependence, specialization, adaptation.

Agrarian Era & Traditional Societies

agriculturally based or low production tasks, “generalist worker”, skills were broad and diverse, craftsmen and farmers controlled entire production process, work was often seasonal and tied to natural cycles (drought, disease)

Industrial Era

technology and mechanization increased production, infrastructure and urbanization, division of labor and specialization, specific and repetitive tasks, less control over entire production process, subordination of labor (working vs ownership class), labor unions

Frederick Taylor “Scientific Management”

concern for efficiency, divide tasks into specialized subtasks, standardization methods, geared toward mass production/assembly line organizations, separation of planning (managers) and execution (workers). Henry Ford applies these principles to automobiles “mechanization” of work.

Max Weber “Bureaucratic Management”

bureaucracy is a rational way to organize large institutions in an industrialized world. Characteristics: hierarchy of authority, division of labor and specialization, formal rules and regulations, impersonality in applying rules, technical qualifications for positions

Humanistic Management

developed to balance the extreme focus on efficiency and mechanistic labor practices of scientific management theories. Hawthorne Studies on workers to understand how to increase motivation.

Service Era

shift from manufacturing products to service provision (healthcare, education, restaurants), focus on creating memorable experience for customers, broader skill sets required (communication, problem solving), emphasis on interpersonal ability, transition from blue-collar to white-collar jobs

Information Era

rise of computers/internet/e-commerce → knowledge-based economy. shift to mental labor, emphasis on information processing and speed, collaboration across time zones and cultures, continuous learning and adaptation to new tools

Gig economy - short term contracts, freelance work instead of permanent jobs, greater autonomy but less job security, work increasingly detached from physical locations

Adam Smith The Wealth of Nations

father of capitalism, free market economy, says no gov’t regulation is needed to promote economic wealth, invisible hand emerges from individual self-interested choices, free markets harness self-interest to meet societal needs without gov’t intervention

Karl Marx The Communist Manifesto

father of modern socialism, says capitalism leads to exploitation of workers by capitalists who extract surplus value from labor, only the elite-capitalist has access to means of production, the masses depend on the elite for survival, to maximize profit the elite squeeze out as much labor from the masses for as little cost as possible

Entropy

moving toward disorder over time without investing energy → organizations must input enough resources to maintain and grow

Differentiation

moving toward specialization to fulfill environmental demands, increase complexity → organizations know when to grow

Equifinality

more than one way to succeed → organization’s openness to opportunities

Cyclic Nature

ongoing process → organization’s continuous learning/adapting

Homeostasis

desire to achieve steady-state/balance → organization is balancing stability and change

B2C

Business to customer (commercial)

B2B

Business to business (industrial/enterprise) ex. machinery, equipment, supplies

B2G

Business to government (government) ex. aerospace firm building missile or surveillance systems to Dept of Defense

Agency Theory

agency relationship where one party (the principal) delegates work to another party (the agent) to act on the principal’s interests

Agency Problem - Situational

people tend to act on their self-interest, creating the potential of a misalignment between principal and agents interests. ex. realtors

Ethical Fading - Situational

when ethical aspects of decision disappear from view, in the moment it’s easy for people to convince themselves that the behavior is unproblematic. ex. Ford Pinto

Ill-conceived goals - Environmental

hyper-focused on outcomes, setting goals and incentives to promote a desired behavior that actually end up promoting undesired behavior. Ex. efficiency, sales, Wells Fargo, Enron

Slippery Slope - Environmental

small ethical indiscretions leading to gradually larger unethical transgressions over time

moral disengagement

reframing behavior to appear less harmful/wrong: moral justification, euphemistic labeling, advantageous comparison

minimizing victim’s distress: distortion of consequences, dehumanization

obscuring agency: displacement of responsibility, diffusion of responsibility, attribution of blame

Utilitarian

doing the greatest good for the greatest number of people → focus on consequences

Deontological

there are moral rules or duties that must be adhered to regardless of the outcomes “don’t kill” → focus on the action

Shareholder

individual, group, or organization that holds one or more shares in a firm, in whose name the stock certificate is issued, also called stockholer

Stakeholder

individual, group, or organization that has a direct or indirect stake in an organization because it can affect or be affected by that organization’s actions, objectives, and policies

Corporate social responsibility (CSR)

organization maximizes its positive impact and minimizes its negative impact on society. proactively contributing to societal well-being beyond moral and regulatory obligations.

Global corporate citizenship

recognition that the social contract of business is global → aim to produce higher standards of living for all communities. Triple bottom line: people, planet, and profit

Creating shared value (CSV)

strategy to create economic and societal value simultaneously

CSR vs. CSV

CSR is about doing good things for society and the planet that have no direct benefit to the company

CSV focuses on creating competitive and sustainable growth while helping society

Entrepreneurship

the process of creating value by combining resources to transform ideas into economic goods and services

Intrapreneurship

activities within a firm that can lead to innovation or spin-off organizations (Google’s 20% time policy)

Entrepreneur

one who organizes, manages, and assumes the risk of a business or enterprise. heterogeneous nature, openness to experience, high conscientiousness, self-efficacy and internal locus of control.

Innovation

process of making changes to something that adds value to customers

Invention - totally new product

Extension - new use of existing product

Duplication - creative replication of an existing concept

Synthesis - combination of existing concepts and factors into a new formation or use

Pass-through taxation

income is passed directly to the owners and taxes on their personal tax returns (all business types except corporations)

Double-taxation

corporations pay taxes at both the corporate and individual levels (profits at corporate level, then dividends on shareholder’s individual tax returns)

Unlimited Liability

personally responsible for all the debts and obligations of the business. if business cannot pay its debts, creditors can go after the personal assets of the owner(s) (sole proprietorships and general partners)

Vision/Mission Statement

Vision is the goal, where we want to be

Mission: by doing what/how

Proprietorship

unlimited liability, continuity - ends with death or decision of owner, management - personal, unrestricted, personal source of investment. Largest % of US businesses, smallest % of sales revenue

General Partnership

unlimited liability, continuity - ends with death or decision of any partner, management - unrestricted or depends on partnership agreement, personal source of investment by partner(s). 10% of US businesses, 14% of sales revenues

Corporation

liability - limited, capital invested, continuity - perpetual or for specified period of years, management - under control of board of directors which is selected by stockholders, purchase of stock is source of investment. 17% of US businesses, 82% of sales revenue

Limited Liability Corporation (LLC)

hybrid of a publicly held corporation and a partnership in which owners are taxes as partners but enjoy the benefits of limited liability

Board of Directors

governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets

Introduction Stage

creation of business, risks and sacrifices

Seed: initial concept development, market research

Startup: launch business, develop products/services, establish foothold in market

Growth Stage

rapid expansion, increasing market share, issue: stability and reputation, need additional resources to continue momentum, trying to keep quality while scaling up, competitors begin to enter market

Maturity Stage

optimizing operations, maintaining market position, finding new opportunities for growth. issue: streamline and adapt. growth slows, business is stable and profitable, shrinking profit margins due to competition, need to merge & acquire

institutionalization - emerging similarity among orgs in the same field

Stability - sub-systems start to develop

Decline (or Renewal) Stage

managing gradual reduction of activities or reinvention. issue: decide whether to reinvest or prepare to divest. profitability decreases, potentially leading to losses. (Kodak)

Renewal: innovate the product, market, or business model to extend the life cycle (Nintendo)

Tall Structure

characteristic of centralized companies with several layers of management, fewer employees reporting to each manager, narrow span of control, slower communication, ex. US Army

Flat Structure

characteristic of decentralized companies with few management layers, larger number of employees reporting to each manager, wide span of control, faster communication, more freedom for employees. Ex. typical law firm

Formalization

degree to which an employee’s tasks are governed by explicit rules and procedures. better for industries where behavior needs to be more predictable, greater consistency of output is necessary (but also lots of innovation)

Centralization

degree to which decision making authority is concentrated at higher levels in the organization

Centralized: ensures consistency, may be slow in responding to market needs

Decentralized: quick response to market needs, employee autonomy, less consistent responses

Hybrid - centralized core functions and decentralized for better market response

Chain of Command

unbroken line of authority that extends from the top of the organization to the lowest echelon outlining reporting relationships

Line functions: direct responsibility for accomplishing the objectives of the org (operations, production, sales)

Staff functions: help support the line function to work more effectively (HR, IT)

Functional Departmentalization

popular, based on business function (marketing, accounting, IT)

Pros: efficiencies, easy to scale, good coordination and communication within functional area

Cons: can lead to poor coordination and communication across functional areas, may result in limited view of organizational goals

Product (Divisional) Departmentalization

based on major product areas (shoes, accessories, apparel)

Geographic (Divisional) Departmentalization

based on location served (North America, Europe)

Process (Divisional) Departmentalization

based on good or service flow (raw material, manufacturing, disposal)

Customer (Divisional) Departmentalization

departmentalization by customer: B2C, B2B, military, gov’t

Divisional Departmentalization

Pros: highly responsive to market changes, allows for tailored strategies for different divisions

Cons: duplication of efforts across divisions, potential for resource suboptimization, may lead to inconsistent processes

Matrix Structure

combination of 2+ types, most commonly the functional and some divisional types

often used in project-based industries (tech, consulting) where cross-functional collaboration is critical. balances efficiency, agility, and coordination → dynamic, complex markets. can be challenging to manage