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Food Service Management Exam 1

Nonprogrammed decisions are made a what level of management
Rational Decision Making Model
1) Identification of the problem
2) Development of alternatives
3) Evaluation of alternatives
4) Selection of an alternative
5) Implementation of the alternatives
6) Evaluation of the choice
Planning for implementation requires the following
-Clearly envision what the implementation looks like
-Outline the specific tasks that must be completed
- Identify the resources that are required for each task
-Identify how much time it will take to complete each task
- Someone is assigned the responsibility for each task
How to make high quality decisions
Tips in using the rational decision making model
- Select criteria against your alternatives that will be tested
- Generate several ideas
- Weigh the pros and cons of each alternative
- Keep searching for new information
- Be aware of all consequences for each alternative
- Plan meticulously for the implementation
operational decisions are made at what level of management
Tools for operations decision makers
1) Decision Trees
Are tree diagrams depicting alternatives and pay offs

2) Cost-Benefit
Compares costs and financial benefits of a project or decision

3) Cost-Effectiveness
Comparison of alternative courses of action in terms of their cost and effectiveness

4) Networks
Graphic representation of a project depicting flow and
and sequence of defined activities

5) Linear Programming
An aid in allocating resources
Creativity def
generation of unique ideas
Innovation def
using these unique ideas
How to encourage creativity
-hire creative people
-train employees to be creative
-create climate that encourages
-be flexible
-value new ideas
-provide opportunities for employees to interact
-celebrate success
Characteristics of creative organzations
- open communication
- no limits on how to preform work
- hetergeneous
- ideas are objectively based on merit
- encourage risk taking
- personal freedom
- participative decision making
Successful decision makers
- always prepared
- know culture of organization
- use decision making process
- include employees in decision making process
- support group decision making
- ensure reliable info is used
- creative problem solving when needed
- create open climate to encourage feedback
Management Def
process of integrating resources for accomplishment of objectives
Management Functions (5)
planning: determining in advance what should happen
2 aspects of effective management
1. Task Accomplishment- getting others to do their work
2. Employee Satisfaction
Old vs. New Management
Old = power over people
New = partnership
Rules of New Management
1. Take responsibility/make decisions
2. listen to your instincts
3. lead by example
4. good communcation
Effective def
doing the right things
Efficient def
doing things right

(cant compensate for lack of effectiveness)
General Manager
responsible for all activities of a unit
Functional Manager
responsible for only one area of the organization
3 Managerial levels
1. First Line Manager- day to day operations
2. Middle Manager- coordinated activities that implement policies + facilitate activities at technical level
3. Top Manager- executives that control the organization, vision of future, overall responsible
3 types of management skills
1. technical
2. human
3. conceptual
technical skills
ability to understand the technology available to perform job (lower skills)
human skills
working with people and understanding their behavior (required by all levels)
conceptual skills
ability to see the big picture by viewing organization as a whole

(top level management)
Planning divided by levels
first line- 1 yr at most (procedures + methods)
middle- 1-5 yrs (policies)
top- 5-20 yrs (goals + objectives)
3 components of planning
1. setting goals + objectives
2. developing + placing policies, procedures, and methods
3. developing mission and vision statements
Planning: repetitiveness
indicates the relationship of standing and single-use plans

standing = used over and over again
single = not repeated but remain part of records (i.e. budget)
Planning flexibility + Rigidity
goal is to develop fixed short range plans and more flexible long range strategic plans
Organizing def
process of grouping activities, delegating authority to accomplish activities, and providing coordination of relationships
Authority def
the right of the manager to direct others and to take action because of the position held in the organization
Delegation Def
is the process of assigning job activities to specific individuals within the organization
Vertical division of labor
(traditional organizations) based on establishment lines of authority
- chain of command
- authority
- responsibility
chain of command def
clear and distinct lines of authority that need to be established among all positions in the organzation
Unity of command
employee reports to 1 manager
scalar principle
having more than one person to report to
responsibility def
obligation to perform an assigned activity
Horizontal Division of Labor
(new organizations) emphasis on sharing ideas and encouraging employees
empowerment def
the level or degree to which managers allow employees to act within their job descriptions
rightsizing def
eliminating unneeded managers and empowering employees
Positives of horizontal division of lab
- focus on customer
- repetition = proficiency
- fewer skills for each worker
= more conformity as product

(neg. = boredom)
process of grouping jobs according to some logical arrangement which is the most used method for implementing division of labor

(function, product, geography, customer, equipment, time)
2 divisions of Labor
Line- a position in the direct chain of command that is responsible for the achievement of the organizational goals
Staff- is intended to provide expertise, advise, and support for line positions
Mission statement includes
summation of purpose, competition, target market, product and service, recipients of service

(departments' should match organizations)
*quality assurance (QA)
a procedure that defines and ensures maintenance of standards within prescribed tolerance for a product or service
*Total Quality Management
management philosophy directed at improving customer satisfaction while promoting positive change and an effective cultural environment for continuous improvement of all organizational aspects
*Continuous Quality Management
focused management philosophy for providing leadership, structure, training, and environment to continuously improve organizational processes
Six Sigma
Quality Assurance Process
1. Identify and define the problem
2. Evaluation of the problem
3. Data collection
4. Analysis of the data
5. Corrective actions
6. Quality improvement reports
Why interested in quality?
- ethical
- saves money
- good for patients/clients
- attracts customers
- eliminates hassels
- self respect/pride
- meet accreditation requirements
- competitive must
Quality in health care is doing the right things to ensure
- best possible clinical outcomes
- satisfaction for all customers
- retention of talented staff
- sound financial performance
Joint Commission on Accreditation of Health Care Organizations
- determines degree to which organization complies with est. control standards
- published original QA standards for hospitals
4 elements of continuous quality improvement (CQI)
1. customer expectations
2. performance improvement
3. process improvement
4. supportive culture
CQI 2 kinds of change
1. raising standards of performance
2. reducing variation in performance
Difference between QA and QI
QA: inspects for quality, searchers for problem people, satisfied to meet standards, clinical people involved, lots of paperwork
QI: prevents quality problems, searches for problem processes, never satisfied, everyone involved, lots of problem solving
Tools for QI
1. benchmarking
2. pareto analysis
3. plan, do, check (results), Act (PDCA) approach
setting goals based on knowing what has been achieved by others. involves rating companies products and services against those of the front runners in the industry
Pareto Analysis
approximately 80% of total sales volume comes from approximately 20% of customers

Markets def
groups of actual or potential buyers who can afford to buy the product, need to have authority, desire, and will respond similarly to a marketing mix appeal
= money, authority, desire, response
Market Mix
combinations of marketing tools that marketing managers orchestrate to satisfy customers and company objectives (4 P's)
- product
- price
- promotion
- place/packing
Product def
anything tangible or intangible, offered for attention, acquisition, or consumption that is capable of satisfying needs

(objects, people, places, services, ideas
Price is based on
cost, needs, competitive prices, government reg., political demands
Trial pricing
introductory price
image pricing
price the product for the image your customers want
tier pricing
lower prices once they pass certain quantity bought
bundling pricing
selling products together as a package
value-added pricing
value added services (free delivery)
captive pricing
sell product at low price in order to pay more later
pay one price
one fixed fee
promotion def
programs designed to persuade customers to buy the product
image =
every experience with your company makes an impression
positioning visuals
people remember
what draws customer in
marketing segmentation
process of dividing a total market into groups of people with similar product needs

(i.e. for large market = geographic, demographic, etc.)
Psychographic segmentation
"state of mind" variables = have direct influence on buyer behavior

(social class, values, personality, lifestyle)
Behavioristic Segmentation
in terms of how members behave toward a sellers offering

(how frequently they use it, loyalty, benefits they seek from it)
Large firms vs small firms market research
large firms have own departments for research, small depend on outside MR firms
Marketing Research Includes
1. sales and market research
2. business economics
3. product research
4. advertising research
Communication based marketing tactics
1. advertising
2. marketing messages (slogans, tag line)
3. brochures
4. trade shows
5. publicity (press release, newsletter)
6. direct mail
Effective project management entails
- good communication
- plan clearly communicated to team members
- everyone involved must agree
- effective management
PM Planning Issues (Identify)
goals and objectives
boundaries and contraints
goal =
aim or purpose of project
objectives =
monitor progess and determine the success upon completion
3 phases of projects
I. Planning
- WBS work breakdown structure
- resource requirements
II. Scheduling
III. Controlling
PM planning def:
process in which you identify who, what, where, and how much with respect to project
work breakdown structure

taking a large project and breaking it down into smaller parts that can be easily managed
(remember people, resources, and equipment needed)
PM With scheduling consider
- how long each task will take
- time
- people (their skills)
- resources
To measure critical points in the projects progress by:
- Gantt Chart: graphical depiction of the progress of your projects
- Networks such as program evaluation and review technique (PERT) & critical path method (PM)
PM controlling def
monitoring the progress of the project
- actual performance against objectives, resources, costs, and quality
Project Manager
oversees the project
project sponser
primary support person
team members
members skilled in technical and business skills
How to close a project
- report or meeting
- getting feedback
- disband team
Why plans fail
- people do not know how to plan
- no solicited input from major stakeholders
- only project manager completes the plan
- team thinks it will be easy
In order to own a restaurant you need
- location, feasibility, theme, budget, loans
- team = owner, architect, engineer, builder
- Plan- including equipment, heating, cooling, storage, decor
- Bids for building
- choose contractor and build
- inspect facility
- final decor + equipment, utilities
- print menus, marketing
- hire manager, employees, train, establish payroll, policies
- get bids from food vendors
- open
Budgeting def
plan for operating business expressed in financial terms
Type of budget
1. operating
2. capital
Operating Budget
- sales and revenue
- expenditures (food, labor, operational expenses)
- labor (salaries, wages, payroll taxes)
Capital Budget
completed at same time as operating, improvements, expansions, replacements, prorated over several periods
fixed budget
prepared at 1 level of revenue
flexible budget
various levels of revenues
financial statements help monitor
your financial resources to ensure that you are making more money than you are spending
4 primary financial statements
1. balance sheet
2. income statement
3. cash flow statement
4. statement of change in stockholders equity
Balance sheet provides info concerning (3)
1. assets= accounts that list what is owned by the business
2. liabilities = are obligations to creditors that the company has acquired through the normal course of business
3. owner's equity = accounts that deal with the net worth of a business
2 types of assets
1. current assets: are converted to cash in less than one yrs time (cash, inventory, accounts receivable, prepaid expenses)
2. fixed assets: have an expected life greater than one year or are permanent in nature (plan + equipment, land, buildings, accumulated depreciation)
2 types of liabilities
1. current liability (short term) acquiring goods and services on credit that must be paid within one year (income tax payable, short-term debt, accrued expenses, accounts payable)
2. Fixed liability (long term) acquiring goods and services on credit for more than one year (mortgage payable, long term debt)
components of owner's equity
capital stock
additional paid in capital
retained earnings
Income Statement
provides a picture of the company's financial performance over a specified period of time
- tells if profit or loss
2 types of accounting methods
1. cash accounting methods- does not recognize that items are prepaid or accrued, revenues are reported in the period in which they were paid
2. accrual accounting method- record expenses when they occur
Income Statement Weighted Average
total value of the inventory and determines the average price based upon all the items in the current inventory
*utilizes the cost of sales formula for inventory
Cash flow statment
reflects the cash position of the firm
- lists cash at beginning of fiscal period, and then shows how cash was generated and used by business
Items recorded on Statement in change of stockholder's equity
net profit, net loss
selling additional shares of stock
repurchases of company of its own stock
3 basic organizational forms
1. sole proprietorship (1 owner) - simplest, owner completely liable
2. partnership (2 or more owners)- have unlimited liability
3. corporations (business incorporated under laws of the state with ownership held by stockholders. )
Corporations continued

legal entity =
profits are taxed..
= limited liability

taxed twice

higher costs associated with operating an organization
Standard of comparison (2)
internal standard of comparison- review of current performance in relation to budgeted performance, past performance, or pre-established department standards

external standard of comparison- include review of performance in relation to similar operations or comparisons with industry performance
Ratio Analysis
Common ratio: Between X:Y
Percentage ratio:Expressed as a %
Turnover ratio: Y divided by X
On a per unit basis: Dollars per unit
liquidity ratios
organizations ability to meet current obligations or its ability to pay bills when due
solvency ratios
used to examine an establishments ability to meet long-term financial obligations
activity ratios
measures how effectively an organization is utilizing its assets, usually expressed as a percent (%) turnover
profitability ratios
measures the ability of an organization to generate profit in relation to sales of the investment of assets
operating ratios
concerned with analysis of success of the operation in generating revenues and in controlling expenses.
Trend Analysis
is a comparison of results over several periods of time which is used to forecast future revenue or levels of activity
break-even analysis
point at which the organization is just breaking even financially, making no profit but incurring no loss. (total revenues = total expenses)
components of breakeven analysis
fixed costs- costs required or an operation to exist, even if it produces nothing

variable costs- costs that change in direct proportion to the volume of sales
Break even equation
Fixed cost/ (1-[variable cost/sales])
2 investment decision
payback period

net present value (NPV)
Def of Communication
transfer of information that is meaningful to those involved
primary components of communication
sender- person who encodes the message and sends it
message- communication that is intended, sent through channel (face to face, bill board, etc.)
receiver- responsible for decoding (interpretation) message
feedback- return to the message, enhances effectiveness of the communication process
Noise DEF
any factor that hinders the receipt of the intended message (physical or actual)
One way communication
sender communicates without expecting or getting feedback from reciever
Two way communication
exists when feedback is provided by the receiver
3 main communication methods
face to face
barriers to comm.
physical separation
info overload
techniques for improved communication
Many channels
Face-to-face communication (encourages feedback)
Sensitivity to the receiver
Awareness of symbolic meanings
Careful timing and reinforcing words with actions
Simple language
study of how space is used (comfort zones, personal space, seating)
reengineering 3 phases
1. planning
2. designing
3. implementing
Job Design 4 choices
1. job simplification
2. job enlargement
3. job rotation- employees preform 1 task for a period of time and then another
4. job enrichment- adding responsibility can provide motivation
3 stages of the change process
1. unfreezing- need 4 change recognized, open to accepting new behaviors
2. change- actually occurs
3. refreezing- change is reinforced
2 components of compensation
direct = money paid for work
indirect = benefits portion
exempt vs nonexempt workers
exempt = receive salaries, ineligible for overtime
nonexempt = receive min. wage + overtime
alternative pay systems
1. skill based or knowledge based
2. pay for performance
3. broadbanding = several paygrades are combined into one band
internal factors determining wage
job rank
job classification
point system
factor comparison
employees relative worth
employers ability to pay
external factors
area wage rates
condition of the local labor market
govnt influences
point system (internal)
various elements of a job are assigned point values, such as skill level requirement, proficiencies, or working conditions
factor comparison
scale is developed as the standard measurement against which all jobs are compared
collective bargaining
unionized companies, formal bargaining between management and labor representatives sets wage levels for specific groups of workers, based on market rate, and the employer's resources available to pay wages
Government influences
Fair labor standards Act
SS act
employment retirement income security act
workers comp
*Standard Package of Benefits
- SS
- Unemployment comp
- workers comp
Voluntary benefits
-child/elder care
- insurance
- pension
- severance
- supplemental employment
- time off with pay
- wellness programs
SS provides
retirement, survival benefits, disability
unemploy comp
subsistence payment that is administered by each state, employer pay a premium into a fund for unemployment
401 K
tax deferred saving for retirement into an investment account
comparable for nonprofit organizations
supplemental employment
are paid to employees who are temporarily laid off, allows employees to receive close to full pay
performance appraisal
systematic evaluation of employees performance
comparative appraisals
employees performance compared to others (ranking)
absolute methods include
graphic rating scales (numerical scale)
behaviorally anchored ratings scales (BARS)- focus on employee behaviors at difference performance levels ($$$)
360 degree performance
full circle of people, complete pic
law of effect
behaviors followed by positive consequences are more likely to be repeated
contingent reinforcement
employee has to engage in the appropriate behavior to recieve the reward
traditional progressive discipline
1. verbal
2. written- include follow up plan of action, monitor
3. termination- should not be a suprise