mgmt exam 2

Planning

setting goals and deciding how to achieve them

coping with uncertainty by formulating future courses of action to achieve specified results

strategy

sets the long-term goals and direction for organization

strategic management

the formulation and implementation of strategies and strategic goals

• important to provide direction and momentum

• encourage new ideas

• develop a sustainable competitive advantage

process of strategic management

1. Establish mission, vision, and values

2. asses current reality

3. formulate the strategies and plans

4. implement the strategies and plans

5. maintain strategic control

making plans - statements

mission, vision, values

mission statement

“what is our reason for being?”

purpose of the organization and identifies the goods/services that the org provides/will provide

top management/board of directors determine the mission

vision statement

“What do we want to become?”

what organization should become/where it wants to go strategically

• exhibit clarity = employees understand

• future focus = describes future

• abstractness and challenge = future described as hypothetical but achievable

• idealism - future = highly desirable

values statement

“What values do we want to emphasize?”

expresses what the company stands for, its core priorities, the values its employees embody, and what products contribute to the world

strategic planning

top management

determines an organization’s long-term goals (1-5 years) with the expected available resources

Managers need to pay attention to the environment outside the organization, be future oriented, and deal with uncertain and highly competitive conditions

tactical planning

middle management

(6-24 months) determine what contributions their departments or similar work units can make with their given resources

operational planning

first-line management and team leaders

(1 to 52 weeks) direct, daily tasks; decisions often predictable, following a well-defined set of routine procedures. 

top management

CEO, president, VP, general managers, division heads

middle management

functional managers, product-line managers, department managers

first-line management and team leaders

unit managers and first-line supervisor

SMART Goals

Specific, measurable, attainable, results-oriented, and has target dates

SMART - specific

goals should be stated in specific terms (instead of vague)

ex: focuses on achieving a 3.5 GPA through clear study habits and support

SMART - measureable

goals should be quantifiable/measurable

ex: GPA/study hours can be tracked

SMART - Attainable

goals should be realistic

ex: 2hrs a day and bi-monthly meetings

SMART - Results-oriented/Relevant

goals should support the organization’s vision

ex: directly support the student’s desire for good grades.

SMART - Target date/time-bound

goals should have deadline dates for attainment

ex: target is set for end of the semester

management by objectives

4-step process to motivate instead of control subordinates through clearly defined goals

1. jointly set objectives for the employee

2. develop action plans

3. periodically review the employee’s performance

4. make a performance appraisal and reward the employee according to results

cascading goals

process ensuring that the strategic goals set at the top level align w/ more specific short-term goals at lower levels, including employees’ objectives and activities.

strategic > divisional > departmental > individual

strategic positioning

process where a company or organization creates a unique and valuable position for itself in the market, differentiating its offerings from competitors to attract and retain customers

broad or narrow/niche market

corporate level strategy

focuses on organization as a whole

“C-suite”; “what business are we in?” & “What services/products should we offer?”

ex: acquisitions and joint-ventures

VRIO

a framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its value, rarity, imitability, and organization

VRIO - value

is the resource or capability valuable?

if no: competitive disadvantage

VRIO - Rarity

is the resource or capability currently controlled by only a few firms or no other firms? 

if no: temporary competitive advantage

VRIO - imitability

is the resource or capability costly for other firms to imitate?

if no: unexploited competitive advantage

VRIO - organization

is the firm structured to utilize its resources or capabilities effectively?

if no: you have an unexploited competitive advantage

trend analysis

a hypothetical extension of a past series of events into the future. The basic assumption is that the picture of the present can be projected into the future.

scenario analysis

the creation of alternative, hypothetical, but equally likely future conditions

benchmarking

process when a company compares its performance with that of high-preforming organizations

objective is to find examples of superior performance and understand the processes and practices driving that performance

copy them and do it better!

porter’s 5 competitive forces

Michael Porter’s model for industry analysis: business level strategies originate by evaluating the 5 competitive forces in the firm’s environment

• Threat of new entrants

• Bargaining power of suppliers

• Bargaining power of buyers

• Threats of substitute products or services

• Rivalry among competitors

growth strategy

used when an organization wants to expand the number of markets served or products offered through current or new business(es)

stability strategy

An organization continues to do what it’s currently doing

defensive/retrenchment strategy

a grand strategy that involves reducing the organization’s efforts. designed to address declining performance

understanding growth strategies

concentration - additional branches; do what works

diversification - related/unrelated: breaking into something new, doesn’t appeal to the same consumer)

horizontal integration - buy the competition

vertical integration - expand into our supply chain

BCG matric

? - growth or retrenchment strategy; poor position, growing industry

★ - growth strategy; dominant position, growing industry

🐶- retrenchment; poor position, low-growth industry

💰🐮- stability or modest growth strategy; dominant position, low-growth industry

decision-making

process od identifying opportunities

decision

a choice madse from available alternatives

optimizing decision

choose the absolute best among alternatives

classical:

• structured problem

• clearly defined

• certain environment

• complete information

• all alternatives and consequences known

satisficing decision

Choose first “satisfactory” alternative

behavioral model:

• unstructured problem

• not clearly defined

• uncertain environment

• incomplete information

• not all alternatives/consequences known

rational decision making

managers should make logical and optimal decisions

bounded rationality

numerous constraints limit decision maker’s ability to be rational

hubris

extreme, inflated sense of pride, certainty, and confidence

satisficing model

seeks alternatives to find one that is satisfactory

intuition

choosing w/o the use of conscious thought or logical inference

“it just feels right.”

pros: can speed up decision-making, helps when limited resources

cons: hard to convince that hunch makes sense, less effective when people face structured problems

SYSTEM 1 thinking

fast thinking; revert to what we know (or think we know); intuitive; reaction; innate skills

SYSTEM 2 thinking

slow thinking; rational, concentration use brain, eyes dialate

groupthink

when group members strive to agree for the sake of unaimity and thus aboid accurately assessing the decision situation