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1
Chapter
The
Management
Environment
Copyright ©2015 Pearson Education, Inc.
2-1
Learning Outcomes
• Explain what the external environment is and
why it’s important.
• Discuss how the external environment affects
managers.
• Define what organizational culture is and why
it’s important.
• Describe how organizational culture affects
managers.
Copyright ©2015 Pearson Education, Inc.
2-2
2.1 Explain what the
external
environment is and
why it’s important.
Copyright ©2015 Pearson Education, Inc.
2-3
External Environment
Factors, forces, situations, and events outside
the organization that affect its performance.
Copyright ©2015 Pearson Education, Inc.
2-4
Components of the External
Environment
Copyright ©2015 Pearson Education, Inc.
2-5
How Has the Economy Changed?




Turmoil in mortgage markets
Spread to businesses
“Great Recession”
Foreclosures, unemployment, public debt, and
social problems
Copyright ©2015 Pearson Education, Inc.
2-6
Economic Inequality
Harris Interactive Poll:
Only 10 percent of adults think economic
inequality is “not a problem at all.”
Copyright ©2015 Pearson Education, Inc.
2-7
How Much Difference Does a
Manager Make?
Managers:
All powerful OR helpless?
Copyright ©2015 Pearson Education, Inc.
2-8
Demographics
Demography is destiny.
Age Cohorts




Baby Boomers
Gen X
Gen Y
Post-Millenials
Copyright ©2015 Pearson Education, Inc.
2-9
2.2 Discuss how the
external
environment affects
managers.
Copyright ©2015 Pearson Education, Inc.
2-10
How Does External Environment
Affect Managers?
• Jobs and employment
• Assessing environmental uncertainty
• Managing stakeholder relationships
Copyright ©2015 Pearson Education, Inc.
2-11
Assessing Environmental
Uncertainty
Copyright ©2015 Pearson Education, Inc.
2-12
Managing Stakeholder
Relationships
Stakeholders:
any constituencies in an organization’s
environment that are affected by that
organization’s decisions and actions.
Copyright ©2015 Pearson Education, Inc.
2-13
Organizational Stakeholders
Copyright ©2015 Pearson Education, Inc.
2-14
2.3 Define what
organizational
culture is and
explain why it’s
important.
Copyright ©2015 Pearson Education, Inc.
2-16
What is Organizational Culture?
Copyright ©2015 Pearson Education, Inc.
2-17
Organizational Culture
Shared values, principles, traditions,
and ways of doing things that influence the
way an organization’s members act.
Copyright ©2015 Pearson Education, Inc.
2-18
Culture is:
1. Perceived
2. Descriptive
3. Shared
Copyright ©2015 Pearson Education, Inc.
2-19
Dimensions of Culture
Copyright ©2015 Pearson Education, Inc.
2-20
Copyright ©2015 Pearson Education, Inc.
2-21
2.4 Describe how
organizational
culture affects
managers.
Copyright ©2015 Pearson Education, Inc.
2-22
How Does Organizational Culture
Affect Managers
• Effect on what employees do and how they
behave
• Effect on what managers do
Copyright ©2015 Pearson Education, Inc.
2-23
How Does Culture Affect What
Employees Do?
Strong cultures:
cultures in which the key values are deeply held
and widely shared.
Copyright ©2015 Pearson Education, Inc.
2-24
Strong Cultures Can:
• Substitute for formal rules and regulations
• Create predictability, orderliness, and consistency
Copyright ©2015 Pearson Education, Inc.
2-25
Acclimating to Corporate Culture
Copyright ©2015 Pearson Education, Inc.
2-26
How Does Culture Affect What
Managers Do?
Copyright ©2015 Pearson Education, Inc.
2-27
Company Values Affect Managers’
Behavior
“Ready-aim-fire” versus “Ready-fire-aim”
Copyright ©2015 Pearson Education, Inc.
2-28
Managerial Decisions Influenced by
Culture
Copyright ©2015 Pearson Education, Inc.
2-29
2-30
2
Chapter
Integrative
Managerial
Issues
Copyright ©2015 Pearson Education, Inc.
3-1
Learning Outcomes
• Explain globalization and its impact on
organizations.
• Discuss how society’s expectations are
influencing managers and organizations.
Copyright ©2015 Pearson Education, Inc.
3-2
Learning Outcomes (cont.)
• Discuss the factors that lead to ethical and
unethical behavior in organizations.
• Describe how the workforce is changing and its
impact on the way organizations are managed.
Copyright ©2015 Pearson Education, Inc.
3-3
3.1 Explain
globalization and its
impact on
organizations.
Copyright ©2015 Pearson Education, Inc.
3-4
Globalization and its Impact
Global village
a boundaryless world where goods and
services are produced and marketed
worldwide.
Copyright ©2015 Pearson Education, Inc.
3-5
What Does it Mean to Be “Global”?
• Exchanging goods and services with consumers in
other countries.
• Using managerial and employee talent from
other countries.
• Using financial sources and resources outside
home country.
Copyright ©2015 Pearson Education, Inc.
3-6
Types of Global Organizations
MNC (multinational corporation)
• Multidomestic corporation
• Transnational organization
• Global corporation
Copyright ©2015 Pearson Education, Inc.
3-7
How Do Organizations Go Global?
Copyright ©2015 Pearson Education, Inc.
3-8
Managing in a Global Organization
A person with a parochial attitude cannot
succeed in today’s world.
Copyright ©2015 Pearson Education, Inc.
3-9
Hofstede’s Framework
Copyright ©2015 Pearson Education, Inc.
3-10
GLOBE Findings
Global Leadership and Organizational
Behavior Effectiveness (GLOBE)
Copyright ©2015 Pearson Education, Inc.
3-11
GLOBE: 9 Dimensions of Cultural
Difference
1. Assertiveness
2. Future orientation
3. Gender
differentiation
4. Uncertainty
avoidance
5. Power distance
6. Individualism/
Collectivism
7. In-group
collectivism
8. Performance
orientation
9. Humane orientation
Copyright ©2015 Pearson Education, Inc.
3-12
3.2
Discuss how
society’s
expectations are
influencing
managers and
organizations.
Copyright ©2015 Pearson Education, Inc.
3-13
Society’s Expectations
Copyright ©2015 Pearson Education, Inc.
3-14
Social Responsibility
• Corporate social responsibility (CSR)
• Social obligations
• Social responsiveness
Copyright ©2015 Pearson Education, Inc.
3-15
Should Organizations be Socially
Involved?
Copyright ©2015 Pearson Education, Inc.
3-16
Does Social Involvement Affect
Economic Performance?
• Positive?
• Negative?
• Neutral?
Copyright ©2015 Pearson Education, Inc.
3-17
Sustainability Means Different
Things to Different People
Meeting the needs of people today without
compromising the ability of future generations to
meet their own needs.
A company’s ability to achieve its business goals
and increase long-term shareholder value by
integrating economic, environmental, and social
opportunities into its business strategies.
Copyright ©2015 Pearson Education, Inc.
3-19
3.3 Discuss the factors
that lead to ethical
and unethical
behavior in
organizations.
Copyright ©2015 Pearson Education, Inc.
3-20
Ethical Behavior
Ethics:
a set of rules or
principles that
defines right and
wrong conduct
Copyright ©2015 Pearson Education, Inc.
3-21
Different Views of Ethics
• Utilitarian view of ethics
• Rights view of ethics
• Theory of justice view of ethics
Copyright ©2015 Pearson Education, Inc.
3-22
Factors Determining Ethical
Behavior






Morality
Values
Personality
Experience
Organization’s culture
Issue being faced
Copyright ©2015 Pearson Education, Inc.
3-23
Encouraging Ethical Behavior
• Code of ethics
• Ethical leadership
• Ethics training
Copyright ©2015 Pearson Education, Inc.
3-24
Ethical Leadership
Copyright ©2015 Pearson Education, Inc.
3-25
Ethics Training
Can ethics be taught?
Critics: value systems learned in youth.
Proponents: ethical problem solving increases
ethical behavior, moral development, awareness.
Copyright ©2015 Pearson Education, Inc.
3-26
3.4
Describe how the
workforce is
changing and its
impact on the way
organizations are
managed.
Copyright ©2015 Pearson Education, Inc.
3-27
The Changing Workforce
Diversity is visible in age, gender, race, physical
attributes, styles of dress, and personality type.
Copyright ©2015 Pearson Education, Inc.
3-28
Workplace Diversity
Workforce diversity
the ways in which people in an organization are
both different from and similar to one another.
Copyright ©2015 Pearson Education, Inc.
3-29
Types of Diversity
Copyright ©2015 Pearson Education, Inc.
3-30
Adapting to a Changing Workforce
• Work-life balance programs
• Contingent workforce
• Generational differences
Copyright ©2015 Pearson Education, Inc.
3-31
3-32
3
Chapter
Foundations
of Decision
Making
Copyright ©2015 Pearson Education, Inc.
4-1
Learning Outcomes
• Describe the decision-making process.
• Explain the three approaches managers can use
to make decisions.
• Describe the types of decisions and decisionmaking conditions managers face.
Copyright ©2015 Pearson Education, Inc.
4-2
Learning Outcomes (cont.)
• Discuss group decision-making.
• Discuss contemporary issues in managerial
decision making.
Copyright ©2015 Pearson Education, Inc.
4-3
4.1 Describe the
decision-making
process.
Copyright ©2015 Pearson Education, Inc.
4-4
How Do Managers Make Decisions?
Copyright ©2015 Pearson Education, Inc.
4-5
Identifying a Decision Problem
Problem:
a discrepancy between an existing and a desired
state of affairs.
Copyright ©2015 Pearson Education, Inc.
4-6
Identifying Decision Criteria
Relevant Factors:
• Price
• Model
• Size
• Manufacturer
• Options
• Repair record
Copyright ©2015 Pearson Education, Inc.
4-7
Weighting Criteria
1.
2.
Most important
criterion assigned a
weight of 10.
Other weights
assigned against
this standard.
Copyright ©2015 Pearson Education, Inc.
4-8
Developing Alternatives
Copyright ©2015 Pearson Education, Inc.
4-9
Analyzing Alternatives
Copyright ©2015 Pearson Education, Inc.
4-10
Selecting the Best Alternative
Copyright ©2015 Pearson Education, Inc.
4-11
Implementing the Decision
Decision implementation:
putting a decision into action.
Copyright ©2015 Pearson Education, Inc.
4-12
Evaluating the Decision
Appraising the outcome of the decision:
Was the problem resolved?
Copyright ©2015 Pearson Education, Inc.
4-13
Common Errors
Copyright ©2015 Pearson Education, Inc.
4-14
4.2 Explain the three
approaches
managers can use to
make decisions.
Copyright ©2015 Pearson Education, Inc.
4-15
Three Approaches Used to Make
Decisions: Types of Decisions
Copyright ©2015 Pearson Education, Inc.
4-16
Rational Model
Rational decision making:
choices that are consistent and value-maximizing
within specified constraints.
Copyright ©2015 Pearson Education, Inc.
4-17
Bounded Rationality
Satisfice
Escalation of
commitment
Copyright ©2015 Pearson Education, Inc.
4-18
Intuitive Decision Making
Copyright ©2015 Pearson Education, Inc.
4-19
4.3 Describe the types
of decisions and
decision-making
conditions that
managers face.
Copyright ©2015 Pearson Education, Inc.
4-20
Types of Problems
1.
2.
Structured problem
Unstructured problem
Copyright ©2015 Pearson Education, Inc.
4-21
Types of Decisions
Programmed:
Repetitive decisions that can be handled
using a routine approach.
Copyright ©2015 Pearson Education, Inc.
4-22
Types of Decisions (cont.)
Nonprogrammed:
Repetitive decisions that can be handled
using a routine approach
Copyright ©2015 Pearson Education, Inc.
4-23
Problems, Decision Types, and
Organizational Levels
Copyright ©2015 Pearson Education, Inc.
4-24
Decision-Making Conditions
• Certainty
• Risk
• Uncertainty
Copyright ©2015 Pearson Education, Inc.
4-25
4.4
Discuss group
decision-making.
Copyright ©2015 Pearson Education, Inc.
4-26
How Do Groups Make Decisions?
Decisions are often made by groups representing
the people who will be most affected by those
decisions.
•Committees
•Task forces
•Review panels
•Work teams
Copyright ©2015 Pearson Education, Inc.
4-27
Advantages of Group Decision
Making





More complete information
Diversity of experiences/perspectives
More alternatives generated
Increased acceptance of solution
Increased legitimacy
Copyright ©2015 Pearson Education, Inc.
4-28
Disadvantages of Group Decision
Making




Time-consuming
Minority domination
Ambiguous responsibility
Pressures to conform
Copyright ©2015 Pearson Education, Inc.
4-29
Groupthink
When a group exerts extensive pressure on an
individual to withhold his or her different views in
order to appear to be in agreement.
• What it does
• How it occurs
• How to minimize it
Copyright ©2015 Pearson Education, Inc.
4-30
When Are Groups Most Effective?
Individual
•Faster decision making
•More efficient use of
work hours
Group
•More accurate
decisions
•More creative
•More heterogeneous
representation
•Greater acceptance of
final solution
Copyright ©2015 Pearson Education, Inc.
4-31
Improving Group Decision Making
Make group decisions more creative by:
1. Brainstorming
2. The nominal group technique
3. Electronic meetings
Copyright ©2015 Pearson Education, Inc.
4-32
4.5 Discuss
contemporary
issues in
managerial decision
making.
Copyright ©2015 Pearson Education, Inc.
4-33
Contemporary Issues
National culture influences the way decisions are
made and the degree of risk involved.
Copyright ©2015 Pearson Education, Inc.
4-34
Contemporary Issues
Creativity lets the decision maker:
• Understand a problem more fully
• See problems others can’t
• Identify all viable alternatives
Copyright ©2015 Pearson Education, Inc.
4-35
Contemporary Issues
Design thinking:
approaching
management problems
as designers approach
design problems
Copyright ©2015 Pearson Education, Inc.
4-36
Contemporary Issues
Big data
The vast amounts of quantifiable information
that can be analyzed by highly sophisticated data
processing.
Copyright ©2015 Pearson Education, Inc.
4-37
4-38
4
Chapter
Foundations
of
Planning
Copyright ©2015 Pearson Education, Inc.
5-1
Learning Outcomes
• Discuss the nature and purposes of planning.
• Explain what managers do in the strategic
management process.
• Compare and contrast approaches to goal setting
and planning.
• Discuss contemporary issues in planning.
Copyright ©2015 Pearson Education, Inc.
5-2
5.1 Discuss the nature
and purposes of
planning.
Copyright ©2015 Pearson Education, Inc.
5-3
What is Planning?
Planning:
The primary management function.
Copyright ©2015 Pearson Education, Inc.
5-4
Reasons for Planning
Copyright ©2015 Pearson Education, Inc.
5-5
Criticisms of Formal Planning
• May create rigidity.
• Can’t replace intuition and creativity.
• Focuses attention on today’s success, not
tomorrow’s survival.
• Reinforces success, which may lead to failure.
Copyright ©2015 Pearson Education, Inc.
5-6
Formal Planning and Organizational
Performance
Does it pay to plan?




Higher profits
Higher return on assets
Improved quality of planning
Appropriate implementation
Copyright ©2015 Pearson Education, Inc.
5-7
5.2 Explain what
managers do in the
strategic
management
process.
Copyright ©2015 Pearson Education, Inc.
5-8
Strategic Management
What managers do to develop an organization’s
strategies.
Copyright ©2015 Pearson Education, Inc.
5-9
The Importance of Strategic
Management
• It has a positive impact on organizational
performance.
• It prepares managers to cope with changing
situations.
• It guides managers to examine relevant factors in
planning future action.
Copyright ©2015 Pearson Education, Inc.
5-10
Steps in the Strategic Management
Process
Copyright ©2015 Pearson Education, Inc.
5-11
Step 1: Mission, Goals & Strategies
Copyright ©2015 Pearson Education, Inc.
5-12
External and Internal Analyses
Step 2: External
Analysis
•Competition
•Components of
environment
•Threats and
opportunities
Step 3: Internal
Analysis
•Resources
•Capabilities
•Core competencies
•Organizational
strengths and
weaknesses
Copyright ©2015 Pearson Education, Inc.
5-13
Formulating, Implementing, and
Evaluating Results
Step 4:
Formulating Strategies
•Corporate
•Business
•Functional
Step 6: Evaluating
Results
•How effective have
strategies been?
•What adjustments are
necessary?
Step 5:
Implementing
Strategies
Copyright ©2015 Pearson Education, Inc.
5-14
Strategies Managers Use
Copyright ©2015 Pearson Education, Inc.
5-15
Stability and Renewal Strategies
Stability strategy:
Organization continues
to do what it’s doing
Renewal strategy:
Organization addresses
declining organizational
performance
• Retrenchment
• Turnaround
Copyright ©2015 Pearson Education, Inc.
1-17
Competitive Strategy
A competitive strategy is a strategy for how an
organization will compete in its business.
Copyright ©2015 Pearson Education, Inc.
1-18
Competitive Advantage
What sets an organization apart; its distinctive
edge that comes from its core competencies and
resources.
Copyright ©2015 Pearson Education, Inc.
1-19
Functional Strategy
Those strategies used by an organization’s various
functional departments to support the
competitive strategy.
Copyright ©2015 Pearson Education, Inc.
1-20
Strategic Weapons
1.
2.
3.
4.
5.
6.
Customer service
Employee skills & loyalty
Innovation
Quality
Social media
Big data
Copyright ©2015 Pearson Education, Inc.
1-21
Strategic Weapons (cont.)
5. Social Media
•Help people connect
•Reduce costs and/or
increase revenue.
6. Big Data
Translate business
knowledge into
improved decision
making and
performance.
Copyright ©2015 Pearson Education, Inc.
1-22
5.3 Compare and
contrast
approaches to goal
setting and
planning.
Copyright ©2015 Pearson Education, Inc.
5-23
Setting Goals and Developing Plans
Types of Plans
Financial versus strategic
Stated versus real
Copyright ©2015 Pearson Education, Inc.
5-24
Traditional Goal Setting
Copyright ©2015 Pearson Education, Inc.
5-25
Management by Objectives
1.
2.
3.
4.
Goal specificity
Participative decision making
Explicit time period
Performance feedback
Copyright ©2015 Pearson Education, Inc.
5-26
Well-Written Goals
Copyright ©2015 Pearson Education, Inc.
5-27
Steps in Goal-Setting
1. Review the organization’s mission and
employees’ key job tasks.
2. Evaluate available resources.
3. Determine the goals individually or with input
from others.
4. Make sure goals are well-written and
communicate to all who need to know.
5. Build in feedback mechanisms to assess goal
progress.
6. Link rewards to goal attainment.
Copyright ©2015 Pearson Education, Inc.
5-28
Types of Plans
Copyright ©2015 Pearson Education, Inc.
1-29
Developing Plans
Copyright ©2015 Pearson Education, Inc.
1-30
Approaches to Planning
Top-down
traditional approach
Development by
organizational
members
Copyright ©2015 Pearson Education, Inc.
1-31
5.4 Discuss
contemporary
issues in planning.
Copyright ©2015 Pearson Education, Inc.
5-32
Contemporary Issues
• Planning in dynamic environments
• Environmental scanning
Copyright ©2015 Pearson Education, Inc.
5-33
5-34

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