Entrepreneurship, Innovation, and Organizational Structures in Business

Entrepreneurship

The pursuit of lucrative opportunities by enterprising individuals.

Creative destruction

Joseph Schumpeter

-A process of industrial mutation that incessantly revolutionizes the economic structure

from within, incessantly destroying the old one, incessantly creating a new one.

Entrepreneurial activities

invention, innovation, imitation

Innovation

The process of commercializing an invention, making it into something of value.

Imitation

The adoption of an innovation by similar firms.

Entrepreneur

One who takes advantage of an opportunity.

Intrapreneur

A manager within a company who promotes innovative product development and marketing, with corporate support.

Recipes for success

A great product, a viable market, and good timing

Franchising

market presence, market share and profit margins, a franchisor has already developed a successful product or service and is looking to expand their store.

Transaction fee

Selling goods and services for a price.

Advertising support

Advertisers pay the site operator to gain access to the demographic group visiting the site.

Intermediary

An entity that brings together buyers and sellers and charges a commission on their sale.

Affiliate

A business model where commissions are paid to other sites to drive traffic to one's own site.

Subscription models

Charging a monthly or annual fee for site visits or access to content.

Social entrepreneurship

Leveraging resources to address social problems using market-based methods.

Social Enterprise

organization that applies business models and leverages resources in ways to address social problems

Going Public

The process of conducting Initial Public Offerings (IPOs) to raise capital.

Opportunity analysis

A description of the product or service, assessment of the opportunity, and specification of activities and resources needed, sources of capital

Business plan

A document that describes all the elements involved in starting a new venture.

Corporate Entrepreneurship

Also known as intrapreneurship, it involves building idea support within an organization.

Skunkworks

Project teams designated to produce a new product within a specified time frame.

Bootlegging

Informal efforts by employees to create new products and processes of their own choosing and initiative.

Organization chart

A diagram that depicts the formal position in the firm, lines of authority, and decision-making locations.

Alfred Chandler

structure follows strategy

Differentiation

An aspect of an organization's internal environment created by job specialization and division of labor.

Division of Labor

Division of work into a number of separate tasks to be performed by different workers

Specialization

different people perform specific parts of a task

Coordination

link the various parts of the organization to achieve the organization's mission.

Sequential interdependence

work completed in succession

reciprocal interdependence

work completed by different jobs or groups working together in a back-and-forth manner

pooled interdependence

work completed by having each job or department independently contribute to the whole

Integration

The process of coordinating differentiated units to achieve an overall product.

Authority

The right to make decisions and direct others. Position rather than person

Board of Directors

Major decisions, governed by charter and bylaws

CEO

accountable to board and/or president

Top Management Teams

regularly meet with their top management teams to make decisions as a unit

Centralization

An organizational structure where high-level executives make most decisions and pass down to lower levels

Decentralization

An organizational structure where lower-level managers also make decisions.

Span of control

Wide = flatter, Narrow = Taller

Functional Structure

structured around functional, specialized activities such as production, marketing, and HRM.

Divisional Structure

departments around product, customer, geographic regions

Matrix Structure

Dual reporting relationships in which an employee reports to two superiors

Hybrid Structure

consists of any combination of the above structures

Network Structure

A collection of independent, mostly single-function firms that collaborate on a good or service

Organizational Integration

standardization, formalization, coordination by plan, coordination by mutual adjustment

Standardization

establishing common rules and procedures, apply to all

Formalization

presence of rules and regulations governing how ppl in organizations interact

coordination by plan

Interdependent units contribute to a common goal.

coordination by mutual adjustment

feedback and discussions to jointly figure out how to approach problems and devise solutions that are agreeable to everyone

Span of Control Principle

There's a finite number of people a manager can supervise effectively

Unity of Command Principle

Employees must have one and only one boss.

Scalar Principle

There is a chain that connects people up and down the organizational hierarchy; communication must go through everyone in the chain

authority-and-responsibility principle

A manager has the right & obligation to make decision, use resources, but he/she must report and justify outcomes to those above

Delegation-Accountability Principle

When transferring authority and responsibility to subordinates, the accountability remains with the 'delegator'

Peter Principle

In most organizations, people tend to be promoted to their level of incompetence.

HR Planning Process

right number and types of people are available, programming specific activities, evaluating results

Demand Forecast

determining how many and what type of people are needed

Labor Supply Forecasts

How many and what types of employees the organization actually will have.

Job analysis

Systematic study of the job itself (tasks, responsibilities, conditions, etc.)

Job description

The role, responsibilities, duties, and scope of a particular job

Job specification

Skills, experience, education required to perform the job

RJP

explaining the important aspects of the job prior to the offer

Recruitment

Help to increase the pool of candidates that might be selected for a job

Selection

Decision on whom to hire. Based on application, resume, interview, reference, background checks

Structured Interviews

Situational and behavioral description

Applicant Testing

Options for assessing candidates

Layoffs

Result of acquisitions, divestiture, and increased competition

Outplacement

Helping people who have been dismissed regain employment

Termination

Employment at will → employee can be terminated for any reason

Equal Pay Act

Legal issue concerning pay equity

Title VII

Prohibits discrimination on the basis of race, color, religion, sex, national origin, age

BFOQ

Bona Fide Occupational Qualification; allows discrimination on basis of religion, sex, national origin, age

Training

Teaching lower-level employees how to perform their present job

Orientation training

Familiarize new employees with their new jobs

Team training

Facilitate working together on the job

Diversity training

Building awareness of diversity issues and increasing skills

Performance Appraisal

Assessment of an employee's job performance

Trait appraisal

Subjective judgments about employee performance

Behavioral appraisal

Based on observable aspects (e.g., Graphic Rating Scales; BARS, Critical incidents)

Results appraisals

Sales volume, units produced, or profits

Management by Objectives (MBO)

Subordinate + supervisor meet and agree in advance on goals for the subordinate

360-degree appraisal

Using multiple sources of appraisal to gain full perspective on performance

Pay Decisions

Determining compensation for employees

Incentive Systems

Programs designed to motivate employees through rewards

Merit pays

Objective based performance not available, but pay is on performance

Cafeteria benefits

Employees choose from a menu of benefits

Individual incentive plans

objective standard in which performance is observed

Comparable Worth Doctrine

The belief that women should receive the same wages as men if the levels of skill and responsibility in their jobs are equivalent

Required Benefits

social security, unemployment insurance, workers compensation

Gainsharing

saving money, profit sharing - incentives based on productivity

Determinants of Union Voting Behavior

Economic needs, beliefs in union power, job attitudes, Union image

Managing Diversity

involves recruiting, training, promoting, and utilizing individuals with different backgrounds, beliefs, capabilities, and cultures

Diversity challenges

Unexamined assumptions, lower cohesiveness, communication problems, mistrust and tension, and stereotyping

Multicultural Organizations

Values cultural diversity and seeks to utilize and encourage it. Fully integrate gender, racial, and minority group members both formally and informally.

monolithic organization

low degree of structural integration, few women and minorities. If groups other than the norm are employed, they are in low status jobs and must conform to the group

Pluralistic Organization

relatively diverse population, effort to involve women and minorities

-use an affirmative action approach to managing diversity:

-Fails to address the cultural aspects of integration

How to cultivate a diverse workforce

Top Management, funding, accommodating work and family needs,

Competitive advantage through diversity

- Attracting, motivating, and retaining employees.

• Understanding differentiated markets.

• Creative problem solving.

• Organizational flexibility.

Power

Ability to get others to do things that they otherwise would not do.

Legitimate power

Leader has authority to tell others what to do.