Business Test Review

Chapter 7
Key terms:
Administrative Managers: Those who manage an entire business or a major segment of a
business; they are not specialists but coordinate the activities of specialized managers.
Agenda: A calendar, containing both specific and vague items, that covers short-term goals and
long-term objectives.
Analytical Skills: The ability to identify relevant issues, recognize their importance, understand
the relationships between them, and perceive the underlying causes of a situation.
Conceptual Skills: The ability to think in abstract terms and to see how parts fit together to form
the whole.
Controlling: The process of evaluating and correcting activities to keep the organization on
course.
Crisis Management or Contingency Planning: An element in planning that deals with potential
disasters such as product tampering, oil spills, fire, earthquake, computer virus, or airplane crash.
Directing: Motivating and leading employees to achieve organizational objectives.
Downsizing: The eliminations of a significant number of employees from an organization.
Financial Managers: Those who focus on obtaining needed funds for the successful operations of
an organization and using those funds to further organizational goals.
First-line Managers: Those who supervise both workers and the daily operations of an
organization.
Human Relations Skills: The ability to deal with people, both inside and outside the organization.
Human Resources Managers: Those who handle the staffing function and deal with employees in
a formalized manner.
Information Technology (IT) Managers: Those who are responsible for implementing,
maintaining, and controlling technology applications in business, such as computer networks.
Leadership: The ability to influence employees to work toward organizational goals.
Management: A process designed to achieve an organization's objectives by using its resources
effectively and efficiently in a changing environment.

Managers: Those individuals in organizations who make decisions about the use of resources and
who are concerned with planning, organizing, staffing, directing, and controlling the
organization's activities to reach its objectives.
Marketing Managers: Those who are responsible for planning, pricing, and promoting products
and making them available to customers.
Middle Managers: Those members of an organization responsible for the tactical planning that
implements the general guidelines established by top management.
Mission: The statement of an organization's fundamental purpose and basic philosophy.
Networking: The building of relationships and sharing of information with colleagues who can
help managers achieve the items on their agendas.
Organizing: The structuring of resources and activities to accomplish objectives in an efficient
and effective manner.
Operational Plans: Very short-term plans that specify what actions individuals, work groups, or
departments need to accomplish in order to achieve the tactical plan and ultimately the strategic
plan.
Planning: The process of determining the organization's objectives and deciding how to
accomplish them; the first function of management.
Production and Operations Managers: Those who develop and administer the activities involved
in transforming resources into goods, services, and ideas ready for the marketplace.
Staffing: The hiring of people to carry out the work of the organization.
Strategic Plans: Those plans that establish the long-range objectives and overall strategy or
course of action by which a firm fulfills its mission.
Tactical Plans: Short-range plans designed to implement the activities and objectives specified in
the strategic plan.
Technical Expertise: The specialized knowledge and training needed to perform jobs that are
related to particular areas of management.
Top Managers: The president and other top executives of a business, such as the chief executive
officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have
overall responsibility for the organization.

Learning Objectives:
Define management and explain its role in the achievement of organizational objectives.
Management is a process designed to achieve and organization's objectives by using its resources
effectively and efficiently in a changing environment. Managers make decisions about the use of
the organization's resources and are concerned with planning, organizing, staffing, directing, and
controlling the organization's activities so as to reach its objectives.
Describe the major functions of management.
Planning is the process of determining the organization's objectives and deciding how to
accomplish them. Organizing is the structuring of resources and activities to accomplish those
objectives efficiently and effectively. Staffing obtains people with the necessary skills to carry
out the work of the company. Directing is motivating and leading employees to achieve
organizational objectives. Controlling is the process of evaluating and correcting activities to
keep the organization on course.
Distinguish among three levels of management and the concerns of managers at each level.
Top management is responsible for the whole organization and focuses on primarily on strategic
planning. Middle management develops plans for specific operating areas and carries out the
general guidelines set by top management. First-line, or supervisory, management supervises the
workers and day-to-day operations. Managers can also be categorized as to their area of
responsibility: finance, production and operations, human resources, marketing, or
administration.
Specify the skills managers need in order to be successful.
To be successful, managers need leadership skills (the ability to influence employees to work
toward organizational goals), technical expertise (the specialized knowledge and training needed
to perform a job), conceptual skills (the ability to think in abstract terms and see how parts fit
together to form the whole), analytical skills (the ability to identify relevant issues and recognize
their importance, understand the relationships between issues, and perceive the underlying
causes of a situation), and human relations (people) skills.
Summarize the systematic approach to decision making used by many business managers.
A systematic approach to decision making follows these steps: recognizing and defining the
situation, developing options, analyzing options, selecting the best option, implementing the
decision, and monitoring the consequences.
SWOT
Strengths- things a company does well or characteristics that give it an important capability, for

example access to unique resources.

Weaknesses- things a company does not have, does poorly, or conditions where it is at a
disadvantage, for example a deteriorating financial position.
Opportunities- found in the external environment and could potentially be an avenue for growth
or a source of competitive advantages, for example, online sales through the internet.
Threats- potentially present in the external environment, for example future demographic
changes that would curtail demand for the product the company sells.

Chapter 8
Key Terms:
Accountability: The principle that employees who accept an assignment and the authority to
carry it out are answerable to a superior for the outcome.
Centralized Organization: A structure in which authority is concentrated at the top, and very little
decision-making authority is delegated to lower levels.
Committee: A permanent, formal group that performs a specific task.
Customer Departmentalization: The arrangement of jobs around the needs of various types of
customers.
Decentralized Organization: An organization in which decision-making authority is delegated as
far down the chain of command as possible.
Delegation of Authority: Giving employees not only tasks, but also the power to make
commitments, use resources, and take whatever actions are necessary to carry out those tasks.
Departmentalization: The grouping of jobs into working units usually called departments, units,
groups, or divisions.
Functional Departmentalization: The grouping of jobs that perform similar functional activities,
such as finance, manufacturing, marketing, and human resources.
Geographical Departmentalization: The grouping of jobs according to geographic location, such
as state, region, country, or continent.
Grapevine: An informal channel of communication, separate from management's formal, official
communication channels.
Group: Two or more individuals who communicate with one another, share a common identity,

and have a common goal.

Line-and-Staff Structure: A structure having a traditional line relationship between superiors and
subordinates and also specialized managers-called staff managers-who are available to assist line
managers.
Line Structure: The simplest organizational structure in which direct lines of authority extend
from the top manager to the lowest level of the organization.
Matrix Structure: A structure that sets up teams from different departments, thereby creating two
or more intersecting lines of authority; also called a project
Multidivisional Structure: A structure that organizes departments into larger groups called
divisions.
Organizational Chart: A visual display of the organizational structure, lines of authority (chain of
command), staff relationships, permanent committee arrangements, and lines of communications.
Organizational Culture: A firm's shared values, beliefs, traditions, philosophies, rules, and role
models for behavior.
Organizational Layers: The levels of management in an organization.
Product Departmentalization: The organization of jobs in relation to the products of the firm.
Product-Development Teams: A specific type of project team formed to devise, design, and
implement a new product.
Project Teams: Groups similar to task forces that normally run their operation and have total
control of a specific work project.
Quality-Assurance Teams (or Quality Circles): Small groups of workers brought together from
throughout the organization to solve specific quality, productivity, or service problems.
Responsibility: The obligation, placed on employees through delegation, to perform assigned
tasks satisfactorily and be held accountable for the proper execution of work.
Self-Directed Work Team (SDWT): A group of employees responsible for an entire work process
or a segment that delivers a product to an internal or external customer.
Span of Management: The number of subordinates who report to a particular manager.
Specialization: The division of labor into small, specific tasks and the assignment of employees
to do a single task.
Structure: The arrangement or relationship of positions within an organization.

Task Force: A temporary group of employees responsible for bringing about a particular change.
Team: A small group whose members have complementary skills; have a common purpose, goal,
and approach; and hold themselves mutually accountable.
Learning Objectives:
Define organizational structure, and relate how organizational structures develop.
Structure is the arrangement or relationship of positions within an organization; it develops when
managers assign work activities to work groups and specific individuals and coordinate the
diverse activities required to attain organizational objectives. Organizational structure evolves to
accommodate growth, which requires people with specialized skills.
Describe how specialization and departmentalization help an organization achieve its goals.
Structuring an organization requires that management assign work tasks to specific individuals
and groups. Under specialization managers break labor into small, specialized tasks and assign
employees to do a single task, fostering efficiency. Departmentalization is the grouping of jobs
into working units (departments, units, groups, or divisions). Businesses may departmentalize by
function, product, geographic region, or customer, or they may combine two or more of these.
Determine how organizations assign responsibility for tasks and delegate authority.
Delegation of authority means assigning tasks to employees and giving them the power to make
commitments, use resources, and that whatever actions are necessary to accomplish the tasks. It
lays responsibility on employees to carry out assigned tasks satisfactorily and holds them
accountable to a superior for the proper execution of their assigned work. The extent to which
authority is delegated throughout an organization determines its degree of centralization. Span of
management refers to the number of subordinates who report to particular manager. A wide span
of management occurs in flat organizations; a narrow one exists in tall organizations.
Compare and contrast some common forms of organizational structure.
Line structures have direct lines of authority that extend from the top managers to employees at
the lowest level of the organization. The line-and-staff structure has a traditional line relationship
between superiors and subordinates, and specialized staff managers are to assist line managers. A
multidivisional structure gathers departments into larger groups called divisions. A matrix, or
project-management, structure sets up teams from different departments, thereby creating two or
more interesting lines of authority.
Distinguish between groups and teams, and identify the types of groups that exist in
organizations.
A group is two or more persons who communicate, share a common identity, and have a

common goal. A team is a small group whose members have complementary skills, a common
purpose, goals, and approach; and who hold themselves mutually accountable. The major
distinction is that individual performance is most important in groups, while collective work
group performance counts most in teams. Special kinds of groups include task forces,
committees, project teams, product-development teams, quality-assurance teams, and selfdirected work teams.
Describe how communication occurs in organizations.
Communication occurs both formally and informally in organizations. Formal communication
may be downward, upward, horizontal, and even diagonal. Informal communication takes place
through friendships and the grapevine.

Organizations with a few layers are flat and have wide spans of management. When
managers supervise a large number of employees, fewer management layers are needed
to conduct the organization's activities. Managers in flat organizations typically perform
more administrative duties than managers in tall organizations because there are fewer of
them. They also spend more time supervising and working with subordinates.

Upward communication flows from lower to higher levels of the organization and
includes information such as progress reports, suggestions for improvement, inquiries,
and grievances. Downward communication refers to the traditional flow of information
from upper organizational levels to lower levels. This involves directions, the assignment
of tasks and responsibilities, and certain details about the organization's strategies and
goals.

Horizontal communication involves the exchange of information among colleagues and

peers on the same organizational level, such as across or within departments. This
informs, supports, and coordinates activities both within the department and with other
departments. When the individuals from different units and organizational levels
communicate, it is diagonal communication.

Chapter 9
Key Terms:
Capacity: The maximum load that an organizational unit can carry or operate.
Computer-Assisted Design(CAD): The design of components, products, and processes on
computers instead of on paper.
Computer-Assisted Manufacturing(CAM): Manufacturing that employs specialized computer

systems to actually guide and control the transformation process.

Computer-Integrated Manufacturing(CIM): A complete system that designs products, manages
machines and materials, and controls the operations function.
Continuous Manufacturing Organizations: Companies that use continuously running assembly
lines, creating products with many similar characteristics.
Customization: Making products to meet a particular customer's needs or wants.
Economists Order Quality (EOQ) Model: A model that identifies the optimum number of items
to order to minimize the costs or managing (ordering, storing, and using) them.
Fixed-Position Layout: A layout the brings all resources required to create the product to a
central location.
Flexible Manufacturing: The direction of machinery by computers to adapt to different versions
of similar operations.
Inputs: The resources-such as labor, money, materials, and energy-that are converted into
outputs.
Intermittent Organizations: Organizations that deal with products of a lesser magnitude than do
project organizations; their products are not necessarily unique but possess a significant number
of differences.
Inventory: All raw materials, components, completed or partially completed products, and pieces
of equipment a firm uses.
Inventory Control: The process of determining how many supplies and goods are needed and
keeping track of quantities on hand, where each item is, and who is responsible for it.
ISO 9000: A series of quality assurance standards designed by the International Organization for
Standardization (ISO) to ensure consistent product quality under many conditions.
Just-in-Time (JIT) Inventory Management: A technique using smaller quantities of materials that
arrive "just in time" for use in the transformation process and therefore require less storage space
and other inventory management expense.
Manufacturing: The activities and processes used in making tangible products; also called
production.
Material-Requirements Planning (MRP): A planning system that schedules the precise quantity
of materials needed to make the product.
Modular Design: The creation of an item in self-contained units, or modules, that can be

combined or interchanged to create different products.

Operations: The activities and processes used in making both tangible and intangible products.
Operations Management (OM): The development and administration of the activities involved in
transforming resources into goods and services.
Outputs: The goods, services, and ideas that result from the conversion of inputs.
Process Layout: A layout that organizes the transformation process into departments that group
related processes.
Product Layout: A layout requiring that production be broken down into relatively simple tasks
assigned to workers, who are usually positioned along an assembly line.
Production: The activities and processes used in making tangible products; also called
manufacturing.
Project Organization: A company using a fixed-position layout because it is typically involved in
large, complex projects such as construction or exploration.
Purchasing: The buying of all the materials needed by the organization; also called procurement.
Quality Control: The processes an organization uses to maintain its established quality standards.
Routing: The sequence of operations through which the product must pass.
Scheduling: The assignment of required tasks to departments or even specific machines, workers,
or teams.
Standardization: The making of identical interchangeable components or products.
Statistical Process Control: A system in which management collects and analyzes information
about the production process to pinpoint quality problems in the production system.
Supply Chain Management: Connecting and integrating all parties or members of the distribution
system in order to satisfy customers.
Total Quality Management (TQM): A philosophy that uniform commitment to quality in all areas
of an organization will promote a culture that meets customers' perceptions of quality.
Learning Objectives:
Define operations management and differentiate between operations and manufacturing.
Operations management (OM) is the development and administration of the activities involved in
transforming resources into goods and services. Operations managers oversee the transformation

process and the planning and designing of operations systems, managing logistics, quality, and
productivity. The terms manufacturing and production are used interchangeably to describe the
activities and processes used in making tangible products, whereas operations is a broader term
used to describe the process of making both tangible and intangible products.

Explain how operations management differs in manufacturing and service firms.

Manufacturers and service firms both transform inputs into output, but service providers differ
from manufacturers in several ways: They have greater customer contact because the service
typically occurs at the point of consumption; their inputs and outputs are more variable than
manufacturers', largely because of the human element; service providers are generally more labor
intensive; and their productivity measurement is more complex.
Describe the elements involved in planning and designing an operations system.
Operations planning relates to decisions about what product(s) to make, for whom, and what
processes and facilities are needed to produce them. OM is often joined by marketing and
research and development in these decisions. Common facility layouts include fixed-position
layouts, process layouts, or product layouts. Where to locate operations facilities is a crucial
decision that depends on proximity to the market, availability of raw materials, availability of
transportation, availability of power, climatic influences, availability of labor, and community
characteristics. Technology is also vital to operations, particularly computer-assisted design
(CAD), computer-assisted manufacturing (CAM), flexible manufacturing, robotics, and
computer-integrated manufacturing (CIM).
Specify some techniques managers may use to manage the logistics of transforming inputs
into finished products.
Logistics, or supply chain management, includes all the activities involved in obtaining and
managing raw materials and component parts, managing finished products, packing them, and
getting them to customers. The organization must first make or purchase (procure) all the
materials it needs. Next, it must control its inventory by determining how many suppliers and
goods it needs and keeping track of every raw material, component, completed or partially
completed product, and piece of equipment, how many of each are on hand, where they are, and
who has responsibility for them. Common approaches to inventory control include the economic
order quality (EQO) model, the just-in-time (JIT) inventory concept, and material-requirements
planning (MRP). Logistics also includes routing and scheduling processes and activities to
complete products.
Assess the importance of quality in operations management.
Quality is a critical element of OM because low-quality products can hurt people and harm the

business. Quality control refers to the processes an organization uses to maintain its established
quality standards. To control quality, a company must establish what standard of quality it desires
and then determine whether its products meet that standard through inspection.