MGT301 Exam 2 Flashcards

Planning

Coping with uncertainty - setting goals and deciding how to achieve them. Formulates future courses of action to achieve specified results

Strategy

Setting long-term direction - it represents “an educated guess” about what long-term goals or direction to pursue for the survival or prosperity of the organization

Strategic Management

Involving all managers in strategy - formulation and the implementation of strategies and strategic goals. Derives from an organization’s mission and vision. Important because it provides direction and momentum, encourages new ideas, and develops a sustainable competitive advantage

Business Plan

A document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success

Competitive Advantage

The ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them

Sustainable Competitive Advantage

Occurs when an organization is able to get and stay ahead in four areas:
1) Responsiveness to customers
2) Innovation
3) Quality
4) Effectiveness

Mission Statement

“What is our reason for being?”

Vision Statement

“What do we want to become?”

Values Statement

“What values do we want to emphasize?”

Strategic Planning

1-5 years, for top management. Make long-term decisions about overall direction of organization. Managers need to pay attention to environment outside the organization, be future oriented, deal with uncertain and highly competitive conditions

Tactical Planning

6-24 months, middle management. Implement policies and plans of top management, supervise and coordinate activities of first-line managers below, make decisions often without base of clearly defined information procedures

Operational Planning

1-52 weeks, first-line management and team leaders. Direct daily tasks of nonmanagerial personnel; decisions often predictable, following well-defined set of routine procedures.

Short-term Goals

Sometimes referred to as tactical or operational goals, or just plain goals. Generally span 12 months and connected to strategic goals in a hierarchy known as a means-end chain

Long-term Goals

Generally referred to as strategic goals. Tend to span 1-5 years and focus on achieving the strategies identified in a company’s strategic plan

Operating Plan

A plan that breaks long-term output into short-term targets or goals. Turns strategic plans into actionable short-term goals and action plans

Action Plan

Defines the course of action (the tactics) needed to achieve a stated goal. Contains a project date for completing the desired activities for each tactic

Contingency plans

Responses to possible future events that could threaten a company’s operations (natural disasters, global pandemics. geopolitical disputes, runaway inflation, or economic recessions)

SMART Goals

Specific, measurable, attainable, results-oriented, target date

Management by Objectives (MBO)

1) Jointly set objectives

2) Develop an action plan

3) Periodically review of performance

4) Make performance appraisal and reward the employee according to results

Cascade

It is best for goals to be linked consistently down through the organization

Strategic Positioning

Attempts to achieve sustainable competitive advantage by preserving what is distinctive. Three sources:

1) Strategy is the creation of a unique and valuable position

2) Strategy requires trade-offs in competing

3) Strategy involves creating a “fit” among activities

Corporate-Level Strategy

Focuses on the organization as a whole. Executives generally referred to as the “C-Suite”

Business-Level Strategy

Focuses on individual business units or product/service lines. Senior-level managers below the C-Suite typically are responsible for this level of strategy

Functional-Level Strategy

Applies to each functional area of the organization to support higher level strategies. Functional managers lead planning discussions at this level

Five Steps of the Strategic-Management Process

1) Establish the mission, vision, and value statements

2) Assess the current reality

3) Formulate the strategies and plans

4) Implement the strategies and plans

5) Maintain strategic control: the Feedback Loop

SWOT Analysis

A situational analysis in which a company assesses its strengths, weaknesses, opportunities, and threats

Internal Environment

Analysis of organizational strengths (the skills and capabilities that give the organization special competencies and competitve) and organizational weaknesses (the drawbacks that hinder an organization)

External Task Environment

Analysis of organizational opportunities (environmental factors that the organization may exploit for competitive advantage) and organizational threats (environmental factors that hinder an organization’s achieving a competitive advantage)

Strengths and Weaknesses

Internal environment - could be work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, other internal matters

Opportunities and Threats

External environment - could be market segment analysis, industry & competition analysis, impact of technology on organization, product analysis, governmental impacts, other external matters

External General Envrionment

PESTEL - Political, Economic, Social, Technological, Environmental, Legal

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

Trend Analysis

Is 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 futureS

Scenario Analysis

The creation of alternative hypothetical but equally likely future conditions

The Growth Strategy

A grand strategy that involves expansion—as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served

Stability Strategy

A grand strategy that involves little or no significant change

Defensive/Retrenchment Strategy

A grand strategy that involves reduction in the organization’s efforts

BCG Matrix

A management strategy companies use to evaluate their portfolio of strategic business units

Stars

HIGH market growth rate and HIGH market share

Question Marks

HIGH market growth rate and LOW market share. Risky new ventures—some will become stars, some dogsC

Cash Cows

LOW market growth rate and HIGH market share. Income finances stars and question marks

Dogs

LOW market growth rate and LOW market share. Should be gotten rid of

Related Diversification

A company purchases a new business that is related to the company’s existing business portfolio

Unrelated Diversification

A company acquires another company in a completely unrelated business. This strategy reduces risk

Vertical Integration

A firm expands into businesses that provide the supplies it needs to make its products or that distribute and sell its products

Porter’s Model for Industry Analysis

Business-level strategies originate by evaluating five competitive forces in the firm’s environment:
1) Threat of new entrants
2) Bargaining power of suppliers
3) Bargaining power of buyers
4) Threats of substitute products or services
5) Rivalry among competitors

Cost-Leadership Strategy

Keeping costs and prices low for a wide market

Differentiation Strategy

Offering unique and superior value for a wide market

Cost-Focus strategy

Keeping costs and prices low for a narrow market

Focused-Differentiation Strategy

Offering unique and superior value for a narrow market

Functional Strategy

A plan of action by each functional area of the organization to support higher-level strategies (flow down)

Execution

Not simply tactics but a central part of any company’s strategy. Consists of using questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and achieve results promised

People, Strategy, and Operations

A company’s overll ability to execute is a function of effectively managing three processesT

People

The first core process: “you need to consider who will benefit you in the future”

Strategy

The second core process: “you need to consider how success will be accomplished”

Operations

The third core process: “you need to consider what path will be followed”

Execution Roadblocks

Misaligned organizational culture, poor performance leadership management, conflicting functional objectives, employees resistance to change

Strategic Control

Consists of monitoring strategic implementation and taking appropriate action based on results. Progress is monitored and evaluated in the control phase. Many forms include: dashboards, budgets to monitor and control financial expenditures, and total quality management

Decision

A choice made from among available alternatives

Decision Making

The process of identifying and choosing alternative courses of action

Rational of Decision Making (The Classical Model)

Explains how managers should make decisions. Predicts managers will make logical decisions that are the optimal means to further the organization’s best interests.

Stage 1 in Rational Decision Making

Identifying the problen or opportunity—determining the actual versus the desirable. As a manager, you’ll probably find no shortage of problems. You also will often find opportunities. The decision you’re called on to make is how to make improvements-changing from present to more desirable. Diagnosis (identifying and analyzing the underlying causes)

Stage 2 in Rational Decision Making

Think up alternative solutions—both the obvious and the creative. Come up with alternative solutions. Focus should be to solve for the most important causes by generating novel ideas about what to do about them. Don’t accept the first solution that comes to mind. It is more effective to brainstorm multiple solutions and then evaluate them in Stage 3.

Stage 3 in Rational Decision Making

Evaluate alternatives and select a solution—ethics, feasibility, and effectiveness. Evaluate each alternative not only according to cost and quality. Consider:

1) Is it ethical?

2) Is it feasible?

3) Is it ultimately affective?

Using big data and artificial intelligence can help facilitate evaluating alternatives

Stage 4 of Rational Decision Making

Implement (plan carefully and be sensitive to those affected) and evaluate the solution chosen (give it more time, change it slightly, try another alternative, start over)

Bounded Rationality

Suggests that decision makers’ ability to be rational is limited by numerous constraints

Hubris

Defined as an extreme and inflated sense of pride, certainty, and confidence

Satisficing Model

Seeks alternatives until they find one that is satisfactory, not optimal. “Satisfactory is good enough.”

Intuition

Making a choise without the use of conscious thought or logical inference. “It just feels right”

Holistic Hunch

Intuition that stems from expertise

Automated Experience

Intuition based on feelings

Benefits to Nonrational Decision Making

• Can speed up decision making when deadlines are tight

• Helps managers when resources are limited

  • Hard to convince others that your hunch makes sense

Drawbacks to Nonrational Decision Making

• Subject to the same biases as those that affect rational decision

• Less effective when people face structured problems

Causes the Growth in Ethical Lapses

Organizational, group, and individual level factors

How companies respond to ethical lapses

Hiring an ethics officer and designing ethical principles to guide employees’ day-to-day ethical behavior

Decision Tree

A graph of decisions and their possible consequences. Used to aid in making decisions, especially when there is uncertainty

Evidence-Based Decision Making

The process of gathering and analyzing high-quality data to develop and implement a plan of action

Big Data

An extremely large quantity of data that is too large for a typical computer to handle and requires the use of new technologies and statistical approaches to process it

Descriptive Analysis

Identifies trends and relationships within big data

Artificial Intelligence

A set of technologies that develop human-like capabilities such as gathering and interpreting information, generating responses, and learning from decisions to attain specific objectives

Predictive Analytics

Combines historical data with statistical models and machine learning to specify the likelihood of future outcomes

Data Analytics

Includes descriptive and predictive analytics; improving organizations’ efficiency and decision-making accuracy via specialized systems and software. Ex: healthcare professionals can now share electronic health records across all sectors of health care, which helps reduce medical errors and improve patient care

Volume, Variety, Velocity, Veracity, Value

The 5 V’s

Volume

Refers to the quantity of data and the storage capacity required to house it

Variety

Refers to different sources of data generated by humans or machines

Velocity

The speed at which data accumulates

Veracity

Refers to the degree to which data is of high quality and comes from a trustworthy source

Value

The extent to which analyzing data produces insights that contribute to an organization’s effectiveness

Big Data

Meeting customer needs, improving human resource management practices, and enhancing production efficiency

Automate, Analyze, Advice, Anticipate

Artifical Intelligence’s Four Functions

Automate

Robotic AI - enables robots to scan their environments, gather new information, respond to the information, and learn

Analyze

Biometric AI - Analyze data for identification and information security

Advise

Conversational AI - Reflects computers’ ability to facilitate conversations with humans by understanding their questions and providing intelligent responses

Anticipate

Algorithmic AI - Gather new information and make predictions about the future

AI Challenges

AI implementation, data issues, and cost

Analytical Decision-Making Style

HIGH for ambiguity tolerance and respond well to new or uncertain situations. Like to consider more information and alternatives than those adopting the directive style. Are careful decision makers who take longer to make decisions, but they also tend to overanalyze a situation

Directive Decision-Making Style

LOW ambiguity tolerance and are oriented toward task and technical concerns in making decisions. Are efficient, logical, practical, and systematic in their approach to solving problems. Are action oriented, decisive, and like to focus on facts

Conceptual Decision-Making Style

HIGH ambiguity tolerance and tend to focus on the people or social aspects of a work situation. Take a broad perspective to problem solving and like to consider many options and future possibilities. Adopt a long-term perspective and rely on intuition and discussions with others to acquire information. Are willing to take risks and are good at finding creative solutions to problems

Behavioral Decision-Making Style

LOW ambiguity tolerance and work well with others/enjoy social interactions in which opinions are openly exchanged. Are supportive, are receptive tot suggestions, show warmth, and prefer verbal to written information. Like to hold meetings, some people with this style have a tendency to avoid conflict and to be overly concerned about others. Can adopt a wishy-washy approach to decision making and have a hard time saying no

Availability Bias

Using only the information available