MAN 3025 Exam 2 - UF

Planning

setting goals and deciding how to achieve them

Plan

a document that outlines how goals are going to be met

Business Plan

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

Business Model

outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses

Strategy (or Strategic Plan)

sets the long-term goals and direction for an organization; an "educated guess" about long-term goals or direction to pursue for the survival or prosperity of the organization

Strategic Management

a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals

1. Establish the missions, visions & values

2. Assess the current reality

3. Formulate the grand strategy, & strategic, tactical & operational plans

4. Implement the strategy

5. Maintain strategic control

Strategic Management Process

3 reasons why an organization should adopt planning & strategic management:

1. Provide direction & momentum

2. Encourage new ideas

3. Develop a sustainable competitive advantage

Mission Statement

What is our reason for being?

Expresses the purpose of the organization

Vision Statement

"What do we want to become?"

Expresses what the organization should become, where it wants to go strategically

Values Statement

What values do we want to emphasize?

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

Strategic Planning

determine what the organization's long-term goals should be for the next 1-5 years with the resources they expect to have available (done by top management)

Tactical Planning

determine what contributions their departments or similar work units can make with their given resources during the next 6-24 months (done by middle management)

Operational Planning

determine how to accomplish specific tasks with available resources within the next 1-52 weeks (done by first-line management)

Goal (or Objective)

a specific commitment to achieve a measurable result within a stated period of time

Long-Term Goals (Strategic Goals)

tend to span 1 to 5 years and focus on achieving the strategies identified in a company's strategic plan; they are by and for top management and focus on objectives for the organization as a whole

Short Term Goals (Tactical or Operational Goals)

generally span 12 months and are connected to strategic goals in a hierarchy known as a means-end chain

Means-End Chain

shows how goals are connected or linked across an organization

Action Plan

defines the course of action needed to achieve the stated goal

Standing Plans

activities that are repeated or occur frequently over time

Single-Use Plans

plans developed for activities that are not likely to be repeated in the future

What are the two types of plans?

Standing plans and single use plans

Policy

outlines the general response to a designated problem or situation

Procedure

outlines response to a particular problem or circumstances

Rule

designates specific required action

Program

encompasses a range of projects or activities

Project

has less scope and complexity than a program

For goal setting to be successful, what 3 things must happen?

1. Top management & middle management must be committed

2. The goals must be applied organizationwide

3. Goals must cascade - be linked consistently down through the organization

Cascading Goals

the process of ensuring that the strategic goals set at the top level align, or "cascade," downward with more specific short-term goals at lower levels within an organization, including employees' objectives and activities

Planning/Control Cycle

has two planning steps (1 and 2) and two control steps (3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results with the plan. (4) Control the direction by taking corrective action in two ways—namely (a) by correcting deviations in the plan being carried out or (b) by improving future plans

Strategic Positioning

attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company

"performing different activities from rivals, or performing similar activities in different ways."

3 Key Principles of Strategic Positioning

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

What are the 3 levels of strategic management?

1. Corporate-Level Strategy

2. Business-Level Strategy

3. Functional-Level Strategy

Corporate-Level Strategy

focuses on the organization as a whole; asks "What type of business are we in?" "What products and services shall we offer?"

Business-Level Strategy

focuses on individual business units or product/service lines

Functional-Level Strategy

applies to the key functional departments or units within the business units

Current Reality Assessment (Organizational Assessment)

assessment to look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organization's mission

Strategy Formulation

the process of choosing among different strategies and altering them to best fit the organization's needs

Strategy Implementation

putting strategic plans into effect

Strategic Control

consists of monitoring the execution of strategy and making adjustments, if necessary

Sustainable Competitive Advantage

exists when other companies cannot duplicate the value delivered to customers

What are the tools for assessing current reality?

SWOT analysis, VRIO analysis, forecasting and benchmarking

SWOT Analysis

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

Organizational Strengths

skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission

Organizational Weaknesses

drawbacks that hinder an organization in executing strategies in pursuit of its vision

Organizational Opportunities

environmental factors that the organization may exploit for competitive advantage

Organizational Threats

environmental factors that hinder an organization's achieving a competitive advantage

VRIO Analysis

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

Forecast

a vision or projection of the future

Trend Analysis

hypothetical extension of a past series of events into the future

Contingency Planning (Scenario Analysis)

creation of alternative hypothetical but equally likely future conditions

Benchmarking

a process by which a company compares its performance with that of high-performing organizations

What are the 3 fundamental types of Corporate Strategy?

Growth, stability, and defensive

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

Innovation Strategy

growing market share or profits by innovating improvements in products or services

Stability Strategy

a grand strategy that involves little or no significant change

Defensive Strategy (Retrenchment Strategy)

a grand strategy that involves reduction in the organization's efforts

BCG Matrix

management strategy by which companies evaluate their strategic business units on the basis of (1) their business growth rates and (2) their share of the market

Diversification Strategy

strategy by which a company operates several businesses in order to spread the risk

Related Diversification

when a company purchases a new business that is related to the company's existing business portfolio

Unrelated Diversification

occurs when a company acquires another company in a compltely unrelated business

Vertical Integration Strategy

diversification strategy where a firm expands into businesses that provide the supplies it needs to make its products or that distribute and sells its products

Porter's Model for Industry Analysis

business-level strategies originate in five primary competitive forces in the firm's environment: (1) threats of new entrants, (2) bargaining power of suppliers, (3) bargaining power of buyers, (4) threats of substitute products or services, and (5) rivalry among competitors

Porter's 4 Competitive Strategies (4 Generic Strategies)

(1) Cost-leadership, (2) differentiation, (3) cost-focus, and (4) focused-differentiation

Cost-Leadership Strategy

keep the costs, and hence prices, of a product or service below those of competitors and to target a wide market

Differentiation Strategy

to offer products or services that are of unique and superior value compared with those of competitors but to target a wide market

Cost-Focus Strategy

to keep the costs, and hence prices, of a product or service below those of competitors and to target a narrow market

Focused-Differentiation Strategy

to offer products or services that are of unique and superior value compared with those of competitors but to target a narrow market

Execution

Using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve the results promised

To keep a strategic plan on track, suggests Bryan Barry, you need to do the following:

Engage people.

Keep it simple.

Stay focused.

Keep moving.

What are the 3 core processes of business?

people, strategy, operations

Decision

choice made from among available alternatives

Decision Making

process of identifying and choosing alternative courses of action

What are the 2 systems of decision making?

System 1 - intuitive & largely unconscious

System 2 - analytical & conscious

Curse of Knowledge

when we know something, we often make the mistake of assuming others know it too

Rational Model of Decision Making (Classical Model)

explains how managers should make decisions; it assumes managers will make logical decisions that are the optimal means of furthering the organization's best interests

What are the 4 steps in rational decision making?

1. identify the problem or opportunity

2. think up alternative solutions

3. evaluate alternatives and select a solution

4. implement and evaluate the solution chosen

Problems

difficulties that inhibit the achievement of goals

Opportunities

situations that present possibilities for exceeding existing goals

Diagnosis

analyzing the underlying causes

In stage 3 (evaluation of alternatives), what questions must you ask?

1. Is it ethical?

2. Is it feasible?

3. Is it ultimately effective?

For implementation of a chosen solution in decision making to be successful, what two things do you need to do?

Plan carefully & be sensitive to those affected

What's wrong with the rational model?

It's prescriptive, describing how managers ought to make decisions. It doesn't describe how managers actually make decisions.

Assumes:

Complete information, no uncertainty

Logical, unemotional analysis

Best decision for the organization

Nonrational Models of Decision Making

explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions

**are descriptive, rather than prescriptive

What are the 2 Nonrational Decision Making models?

Satisficing & Intuition

Bounded rationality

the ability of decision makers to be rational is limited by numerous constraints; such as complexity, time & money, their cognitive capacity, values, skills, habits, & unconscious reflexes

Satisficing Model

managers seek alternatives until they find one that is satisfactory, not optimal

"Satisfactory is good enough"

Intuition Model

making a choice without the use of conscious thought or logical inference; "going with your gut"

"It just feels right"

Holistic Hunch

intuition that stems from expertise

Automated Experience

intuition based on feelings

What are 2 benefits of intuition decision making?

it speeds up decision making and helps managers when resources are limited.

Ethics Officer

someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas

Decision Tree

a graph of decisions and their possible consequences; it is used to create a plan to reach a goal

Analytics (Business Analytics)

the term used for sophisticated forms of business data analysis

3 key attributes among analytics competitors

1. Use of modeling: going beyond simple descriptive statistics

2. Multiple applications, not just one

3. Support from top management

Predictive Modeling

a data-mining technique used to predict future behavior and anticipate the consequences of change

Big Data

Stores of data so vast that conventional database management systems cannot handle them. Includes not only data in corporate databases but also web-browsing data trails, social network communications, sensor data, and surveillance data

Big Data Analytics

the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information

Decision Making Style

reflects the combination of how an individual perceives and responds to information

Value Orientation

reflects the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions