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Creating supplies of excess resources in case of unpredictable needs.
This involves creating reserves of resources or supplies to ensure that the organization can cope with unexpected demands or disruptions.
Example: A retailer maintaining extra stock of popular products to handle sudden spikes in demand.
The immediate environment surrounding a firm; includes suppliers, customers, rivals, and the like.
This is the immediate environment surrounding a firm, which includes its suppliers, customers, rivals, and other factors that affect its operations and success.
Example: A company in the tech industry must constantly monitor competitors’ innovations and pricing strategies to remain competitive.
Information that helps managers determine how to compete better.
This refers to gathering information that helps managers make better decisions about how to compete effectively in the marketplace.
Example: A company gathering data on competitors' pricing and product features to adjust its own strategies.
Strategies used by two or more working organizations working together to manage the external environment.
These are strategies where two or more organizations work together to manage the external environment, often to gain competitive advantages.
Example: Two companies entering into a partnership to share resources for mutual benefit, like a tech firm partnering with a logistics company to improve delivery times.
Companies that stay within a stable product domain as a strategic maneuver.
These are companies that focus on maintaining stability by staying within a stable product domain and avoiding drastic changes.
Example: A traditional phone company continuing to focus on landline phones and avoiding venturing into the mobile phone market.
A firm’s investment in a different product, business, or geographic area.
This is when a company expands its investment into new products, businesses, or geographic markets to reduce risk and increase opportunities.
Example: A clothing brand that starts selling accessories or a tech company entering the mobile phone market after success with laptops.
A firm selling one or more businesses.
This refers to a company selling off one or more of its businesses or divisions to focus on its core operations or raise capital.
Example: A company selling its restaurant division to concentrate on its hotel business.
Entering a new market or industry with an existing expertise.
This is when a company enters a new market or industry where it can apply its existing skills or expertise to achieve success.
Example: A software company expanding into cloud storage because they already have technical expertise in IT services.
Searching for and sorting through information about the environment.
This involves systematically searching for and analyzing information about the external environment to identify opportunities and threats to the organization.
Example: A company analyzing market trends, government regulations, and competitor actions to anticipate changes in its industry.
Lack of information needed to understand or predict the future.
This is the lack of reliable information or predictability about future events, making it difficult to make informed decisions.
Example: A business might face environmental uncertainty during a recession when market conditions are unpredictable.
All relevant forces outside a firm’s boundaries, such as competitors, customers, the government, and the economy.
This refers to all the forces outside a company’s boundaries, such as competitors, customers, government regulations, and economic conditions, which affect its operations and decision-making.
Example: A tech company being impacted by government regulations regarding data privacy or by changing consumer preferences.
Those who purchase products in their finished form.
These are the people who purchase products in their finished form for personal use, rather than for resale or further processing.
Example: A person buying a smartphone for personal use rather than a retailer buying it for resale.
Methods for adapting the technical core to changes in the environment.
These are methods or procedures that allow a company to quickly adapt to changes in the environment, such as shifting market demand or new technologies.
Example: A manufacturing company that can quickly change its production lines to create different products in response to new customer preferences.
Method for predicting how variables will change the future.
Forecasting involves predicting future events or trends based on historical data, market analysis, and current information to guide decision-making.
Example: A business forecasting future sales based on past performance, seasonal trends, and economic conditions.
These are strategies where an organization works on its own to make changes in its current environment without depending on others.
Example: A company deciding to change its marketing strategy to attract more customers without forming any partnerships or alliances.
Strategies that an organization acting on its own uses to change some aspect of its current environment.
A customer who purchases raw materials or wholesale products before selling them to final customers.
This refers to a customer who purchases raw materials or wholesale products before selling them to final consumers.
Example: A wholesaler who buys electronics in bulk and sells them to retail stores.
is like a business or organization that isn't isolated. It interacts with and is affected by things outside of it, such as the market, customers, competitors, and society. This means the company doesn't just work on its own—it takes input from the outside world and also has an impact on things around it.
For example, a company might listen to customer feedback and change its products or services based on what customers want. In this way, the company is open to the external environment and adjusts accordingly.
The patterns of attitudes and behavior that shape people’s experience of an organization.
This refers to the overall atmosphere and culture within an organization, shaped by the collective attitudes and behaviors of its members.
Example: A company with a supportive work environment where employees feel motivated and valued.
These are the products and services that an organization creates and delivers to the market.
Example: A car manufacturer’s finished vehicles or a software company’s app
Companies that continually change the boundaries for their task environments by seeking new products and markets, diversifying and merging, or acquiring new enterprises.
Example: A tech startup constantly exploring new technologies and expanding into different markets.
A narrative that describes a particular set of future conditions.
A scenario is a narrative or a story that describes a possible set of future conditions, helping organizations plan for different possibilities.
Example: A company considering scenarios where their market grows, remains stable, or shrinks.
Smoothing refers to leveling out fluctuations in the external environment, often to manage uncertainty and maintain stability.
Example: A company adjusting its production schedule to ensure consistent output despite seasonal demand changes.
This involves deliberate efforts by an organization to change its environment, such as entering new markets, changing product offerings, or altering competitive strategies.
Example: A retailer changing its pricing strategy to attract a new customer segment.
These are the costs a customer incurs when switching from one supplier or service provider to another.
Example: The cost of transferring data from one mobile phone provider to another or switching software systems.
This type of conflict involves emotional disagreements between people, often due to personal feelings or differences.
Example: Two team members arguing because they don’t like each other personally.
refers to the idea that decision-makers can’t make perfectly rational decisions because they are limited by incomplete information and cognitive limitations.
Example: A manager making a decision based on the best available information, even if it isn’t complete or ideal.
This model of decision-making occurs when groups with different interests use their power and negotiation skills to influence the decision-making process.
Example: Managers from different departments coming together to decide on a new company policy, each advocating for their team’s needs.
This is a type of conflict based on differences in viewpoints or judgments on a specific issue. It occurs when people have different opinions or ideas about a problem but are not attacking each other personally.
Example: Team members disagreeing on how to approach a project but discussing the pros and cons of different strategies.
Conflict happens when there are opposing pressures or disagreements between individuals or groups, either due to differing goals, values, or interests.
Example: Employees disagreeing on how to allocate resources for a project.
These are backup plans that can be implemented if the original plan doesn’t work out, helping to adapt to changing or unexpected circumstances.
Example: A business having a backup supplier in case the primary supplier fails to deliver.
These are unique, tailored solutions designed specifically to address a particular problem or need, often requiring creativity and innovation.
Example: A company developing a customized software solution to solve a specific operational challenge.
A structured debate or discussion between two opposing ideas or actions to understand their pros and cons before making a decision.
Example: A debate between whether a company should focus on cost-cutting versus increasing its product quality.
This is a bias where people tend to give more weight to short-term costs or rewards than to longer-term outcomes, which may lead to poor long-term decision-making.
Example: Choosing to spend money on immediate rewards rather than saving for future needs.
This refers to how a decision is presented affecting how people perceive and make choices. The way information is framed can influence decisions even if the underlying information is the same.
Example: People may choose a medical treatment when presented with a "90% success rate" rather than a "10% failure rate," even though both phrases mean the same.
Model of organizational decision making depicting a chaotic process and seemingly random decisions.
This model suggests that decision-making in organizations can be random and chaotic, with decisions often being made based on the combination of problems, solutions, and opportunities that happen to be present at the time.
Example: An organization making decisions based on who happens to be available or involved, rather than a structured, logical process.
A condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges.
This occurs when a decision-making group or organization loses focus on the original goal and starts pursuing a new, possibly less important goal.
Example: A committee initially created to improve customer service ending up focusing on improving internal processes instead.
This is when people believe they have control over events or outcomes even when they have no influence over them.
Example: A manager believing that their personal efforts can control market conditions even though the market is driven by factors outside their control.
This model suggests that major decisions emerge through a series of small, gradual decisions rather than a single, large change.
Example: A company making a series of small updates to its product line rather than a complete overhaul.
In decision-making, maximizing means choosing the option that provides the best possible outcome, even if it requires more time or resources.
Example: Spending more time to find the perfect location for a new store rather than settling for an average one.
These are new, complex decisions that require careful thought and do not have a straightforward or proven answer.
Example: Deciding how to enter a new market in a country with unfamiliar regulations.
Achieving the best possible balance among several goals.
Optimizing means achieving the best balance between several competing goals or factors in a decision-making process.
Example: A company balancing cost, quality, and speed to deliver a product that satisfies customer needs while staying within budget.
These are decisions that have been made before, with known solutions and are usually handled by following established rules or procedures.
Example: Reordering supplies once inventory reaches a certain level, based on a set policy.
These are pre-existing solutions that have been used before to solve similar problems and don’t require new innovation.
Example: Using a proven marketing strategy that worked for another campaign.
Risk refers to the uncertainty of outcomes, where there is a chance that losses may occur because the probability of success is not 100%.
Example: Investing in a new product line where there is a chance it could fail.
This is the process of choosing an option that is good enough to meet the minimum requirements, rather than striving for the best possible outcome.
Example: Selecting a supplier that meets basic quality standards rather than finding the ideal one.
Uncertainty exists when decision-makers don’t have enough information to predict outcomes accurately.
Example: A business unsure about the economic impact of a potential trade war.
Vigilance refers to being careful and thorough in the decision-making process, ensuring all steps are followed and alternatives are considered.
Example: A manager carefully reviewing all aspects of a new business plan before approving it.
Business strategy refers to the major actions an organization takes to compete effectively in a specific industry or market.
Example: A tech company focusing on innovation to stand out in a crowded market.
This strategy involves focusing on a single business or industry, rather than diversifying into multiple areas.
Example: A company specializing in producing only one type of product, like smartphones.
This is a strategy where a company adds related businesses or products, usually targeting similar markets or activities.
Example: A soft drink company expanding into snacks and packaged food.
This strategy involves adding new businesses that are unrelated to the company's existing products, services, or markets. It’s a way for organizations to spread their risks by entering completely different industries.
Example: A technology company acquiring a food production business.
Core competence refers to a unique skill or knowledge an organization has that provides it with a competitive advantage. It’s something the company does particularly well compared to its competitors.
Example: Apple’s expertise in design and user experience is a core competence.
This is the overarching plan that defines the set of businesses, markets, or industries an organization competes in and how it allocates resources across them.
Example: A multinational conglomerate might focus on both technology and healthcare, determining where to allocate its resources in these industries.
A strategy an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensions.
This strategy is about creating a unique product or service that stands out from competitors in the market, often by emphasizing quality, features, or customer experience.
Example: Tesla differentiates its cars by focusing on electric technology and high-end design.
Functional strategy refers to the specific strategies implemented by each department or functional area within an organization (e.g., marketing, HR, finance) to support the overall business strategy.
Example: A marketing team focusing on digital advertising to support the company’s goal of increasing brand visibility.
is a specific target or end result that management aims to achieve. It provides direction and a benchmark for measuring progress.
Example: A company setting a goal to increase sales by 10% in the next quarter.
This strategy aims to achieve competitive advantage by being more efficient than competitors and offering a standardized, no-frills product at a lower price.
Example: Walmart focuses on offering products at the lowest possible prices through efficiency in operations.
An organization’s basic purpose and scope of operations.
Google’s mission is “to organize the world’s information and make it universally accessible and useful.”
Operational planning is the process of setting specific procedures and processes at the lower levels of the organization to ensure that day-to-day activities align with the overall strategic plan.
Example: A retail store creating plans for inventory management to ensure products are stocked efficiently.
Plans are the actions or means managers intend to use to achieve the organization’s goals. They outline the steps that will be taken to reach desired outcomes.
Example: A company might plan to expand its market by targeting new geographic areas.
Resources are the inputs that help an organization perform better, including financial, human, and physical resources.
Example: Financial capital, skilled employees, or advanced technology that helps improve a company's productivity.
A scenario is a narrative or storyline that describes a specific set of possible future conditions, often used in planning to anticipate different outcomes.
Example: A company might create a scenario for a recession affecting its business and plan responses accordingly.
Situational analysis is the process of gathering, interpreting, and summarizing information about internal and external factors that might influence planning, within the constraints of time and resources.
Example: Analyzing competitors’ strategies to understand market conditions before launching a new product.
This is a system designed to monitor the progress of an organization’s strategy, track performance, and make necessary adjustments if there are discrepancies.
Example: A company reviewing quarterly sales data and making adjustments to its marketing approach to stay on track with its annual goals.