Chapters 5-8 Exam Review

Planning

Choosing a goal and developing a strategy to achieve that goal

SMART Goals

Goals that are Specific, Measurable, Attainable, Realistic, and Timely

Steps to making an effective plan

Set goals, Development Commitment, develop effective action plans, track progress toward goal achievement, maintain flexibility

Goal Commitment

the determination to achieve a goal

Action Plan

A plan that lists the specific steps, people, resources, and time period needed to attain a goal

Proximal Goals

Short-term goals

Distal Goals

long-term or primary goals

Options-based planning

maintaining planning flexibility by making small, simultaneous investments in many alternative plans

Slack Resources

A cushion of extra resources that can be used with options based planning to adapt to unanticipated changes, problems, or opportunities

Strategic Plans

Overall company plans that clarify how well the company will serve customers and position itself against competitors over the next two to five years

Purpose Statement

A statement of a company’s purpose or reason for existing

Strategic Objective

a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and a time frame

Tactical Plans

plans created and implemented by middle managers that direct behavior, efforts, and attention over the next six months to two years

Management by objectives

a four-step process in which managers and employees discuss and select goals, develop tactical plans, and meet regularly to review progress toward goal accomplishment

Operational Plans

day-to-day plans, developed and implemented by lower-level managers, for producing or delivering the organization’s products and services over a 30-day to six-month period

Single-use plans

plans that cover unique, onetime-only events

Operational Plans

Single-use plans, standing plans, and budgets

Standing Plans

plans used repeatedly to handle frequently recurring events

Policies

standing plans that indicate the general course of action that should be taken in response to a particular event or situation

Procedures

standing plans that indicate the specific steps that should be taken in response to a particular event

Rules and Regulations

standing plans that describe how a particular action should be performed or what must happen or not happen in response to a particular event

Budgeting

quantitative planning through which managers decide how to allocate available money to best accomplish company goals

Decision-Making

the process of choosing a solution from available alternatives

Rational decision-making

a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions

Problem

a gap between a desired state and an existing state

Decision Criteria

the standards used to guide judgments and decisions

Absolute Comparisons

a process in which each decision criterion is compared to a standard or ranked on its own merits

Relative Comparisons

A process in which each decision criterion is compared directly with every other criterion

Maximize

Choosing the best alternative

Satisficing

Choosing a “good-enough” alternative

Groupthink

a barrier to good decision-making caused by pressure within the group for members to agree with each other

C-Type (Cognitive) Conflict

disagreement that focuses on the problem and issue-related differences of opinion

A-Type (affective) Conflict

disagreement that focuses on individuals or personal issues

Devil’s Advocacy

a decision-making method where one person assumes the role of critic

Dialectical Inquiry

a decision-making method in which decision makers state the assumptions of a proposed solution (a thesis) and generate a solution that is the opposite (antithesis) of that solution

Nominal Group Technique

a decision-making that begins and ends by having group members quietly write down and evaluate ideas to be shared with the group

Delphi Technique

A decision-making method in which members of a panel of experts respond to questions and to each other until reaching agreement on an issue

Brainstorming

a decision-making method in which group members build on each others’ ideas to generate as many alternative solutions as possible

Electronic Brainstorming

a decision-making process in which group members use computers to build on each-others ideas and generate as many alternative solutions as possible

Production Blocking

a disadvantage of face-to-face brainstorming in which a group member must wait to share an idea because another member is presenting an idea

Evaluation Apprehension

Fear of what others will think of your ideas

Resources

the assets, capabilities, processes, employee time, information, and knowledge that an organization uses to improve its effectiveness and efficiency and create and sustain competitive advantage

Competitive Advantage

Providing greater value for customers than competitors can

Sustainable competitive advantage

a competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate

Valuable Resource

a resource that allows companies to improve efficiency and effectiveness

Rare Resource

a resource that is not controlled or possessed by many competing firms

Imperfectly Imitable Resource

a resource that is impossible or extremely costly or difficult for other firms to duplicate

Non-Substitutable resource

a resource that produces value or competitive advantage and has no equivalent substitutes or replacements

Competitive Intertia

a reluctance to change strategies or competitive practices that have been successful in the past

Strategic Dissonance

a discrepancy between a company’s intended strategy and the strategic actions managers take when implementing that strategy

SWOT Analysis

an assessment of the strengths and weaknesses in an organization’s internal environment and the opportunities and threats in its external environment

Distinctive Competence

what a company can make, do, or perform better than its competitors

Shadow-strategy task force

a committee within a company that analyzes the company’s own weaknesses to determine how competitors could exploit them for competitive advantage

Core Capabilities

the internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs

Strategic Group

a group of companies within an industry against which top managers compare, evaluate, and benchmark strategic threats and opportunities

Core firms

The central companies in a strategic group

Secondary Firms

the firms in a strategic group that follow strategies related to but somewhat different from those of the core firms

Strategic Reference Point

the strategic targets managers use to measure whether a firm has developed the core competencies it needs to achieve a sustainable competitive advantage

Corporate-level strategy

the overall organizational strategy that addresses the question “What business or businesses are we in or should we be in?”

Diversification

a strategy for reducing risk by buying a variety of items (stocks or, in the case of a corporation, types of businesses) so that the failure of one stock or one business does not doom the entire portfolio

Portfolio Strategy

a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines

Acquisition

the purchase of a company by another company

Unrelated diversification

creating or acquiring companies in completely unrelated businesses

BCG Matrix

\n a portfolio strategy developed by the Boston Consulting Group that categorizes a corporation’s businesses by growth rate and relative market share and helps managers decide how to invest corporate funds

Star

a company with a large share of a fast-growing market

Question Mark

a company with a small share of a fast-growing market

Cash Cow

a company with a large share of a slow-growing market

Dog

a company with a small share of a slow-growing market

Related Diversification

creating or acquiring companies that share similar products, manufacturing, marketing, technology, or cultures

Grand Strategy

a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use

Growth Strategy

a strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business

Stability Strategy

a strategy that focuses on improving the way in which the company sells the same products or services to the same customers

Retrenchment Strategy

a strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business

Recovery

the strategic actions taken after retrenchment to return to a growth strategy

Industry-Level Strategy

a corporate strategy that addresses the question, “How should we compete in this industry?”

Character of the Rivalry

a measure of the intensity of competitive behavior between companies in an industry

Threat of new entrants

a measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry

Threat of substitute products or services

a measure of the ease with which customers can find substitutes for an industry’s products or services

Bargaining Power of Suppliers

a measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs

Bargaining Power of Buyers

a measure of the influence that customers have on a firm’s prices

Cost Leadership

the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can, so that the firm can offer the product or service at the lowest price in the industry

Differentiation

the positioning strategy of providing a product or service that is sufficiently different from competitors’ offerings that customers are willing to pay a premium price for it

Focus Strategy

the positioning strategy of using cost leadership or differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment

Defenders

companies using an adaptive strategy aimed at defending strategic positions by seeking moderate, steady growth and by offering a limited range of high-quality products and services to a well-defined set of customers

Prospectors

companies using an adaptive strategy that seeks fast growth by searching for new market opportunities, encouraging risk taking, and being the first to bring innovative new products to market

Analyzers

companies using an adaptive strategy that seeks to minimize risk and maximize profits by following or imitating the proven successes of prospectors

Reactors

companies that do not follow a consistent adaptive strategy but instead react to changes in the external environment after they occur

Firm-level strategy

a corporate strategy that addresses the question, “How should we compete against a particular firm?”

Direct Competition

the rivalry between two companies that offer similar products and services, acknowledge each other as rivals, and act and react to each other’s strategic actions

Market Commonality

the degree to which two companies have overlapping products, services, or customers in multiple markets

Resource Similarity

the extent to which a competitor has similar amounts and kinds of resources

Attack

a competitive move designed to reduce a rival’s market share or profits

Response

a competitive countermove, prompted by a rival’s attack, to defend or improve a company’s market share or profit

Organizational Innovation

the successful implementation of creative ideas in organizations

Technology Cycle

a cycle that begins with the birth of a new technology and ends when that technology reaches its limits and is replaced by a newer, substantially better technology

S-Curve Pattern of Innovation

a pattern of technological innovation characterized by slow initial progress, then rapid progress, and then slow progress again as a technology matures and reaches its limits

Innovation Streams

patterns of innovation over time that can create sustainable competitive advantage

Technological Discontinuity

the phase of an innovation stream in which a scientific advance or unique combination of existing technologies creates a significant breakthrough in performance or function

Discontinuous Change

the phase of a technology cycle characterized by technological substitution and design competition

Technological Substitution

the purchase of new technologies to replace older ones