MRKT 301 Exam 2

operational

goals that are set by and for first-line managers and are connected with short-term matters associated with realizing tactical goals

operational time length of goals

1-52 weeks

operational goals managers

unit and first-line

tasks of unit and first-line management

tasks of non-managerial personnel, decisions often predictable, following well-defined set of routine procedures

tactical

goals that are set by and for middle managers and focus on the actions needed to achieve strategic goals

tactical time length of goals

6-24 months

tactical goals managers

middle management: functional, product-line, department

tasks of 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

strategic

goals that are set by and for top management and focus on objectives for the organization as a wholetim

strategic goals time frame

1-5 years

strategic goals managers

top management: chief executive officer, president, vice president, general managers, division heads

roles of 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

types of organizational plans

operational, tactical, strategic

strategy formulation

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

strategy implementation

the implementation of strategic plans

michael porter’s five competitive forces

threats of new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute products or services, rivalry among competitors

michael porter’s four business level competitive strategies

cost leadership, differentiation, focused cost leadership, focused differentiation

cost-leadership strategy

keeping costs and prices of a product or service below those of competitors and to target a wide market

differentiation strategy

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

cost-focus strategy

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

focused-differentiation strategy

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

vertical integration

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

related diversification

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

unrelated diversification

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

BCG Matrix

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

stars

have high growth, high market share - definite keepers

question marks

risky new ventures, some will become stars, some dogs, high market growth rate, low market share

cash cows

have slow growth but high market share - income finances stars and question marks

dogs

have low growth, low market share, should be gotten rid of

rational decision making

managers should make logical and optimal decisions, the style of decision making that explain how managers should make decisions; it assumes that managers will make logical decisions that are the optimal means of furthering the organization’s vast interests

four stages of rational decision making model

1. identify the problem or opportunity - determining the actual versus the desirable

2. think up alternative solutions - both the obvious and the creative

3. evaluate alternatives and select a solution - ethics, feasibility, and effectiveness

4. implement and evaluate the solution chosen

rational decision making model

It is prescriptive; tells how managers ought to make decisions, but not how they actually make decisions; makes highly desirable assumptions: managers have complete information, are able to make an unemotional analysis, and are able to make the best decisions for the organization 

bounded rationality

one type of nonrational decision-making; the ability of decision-makers to be rational is limited by numerous constraints

constraints of the bounded rationality decision making model

complexity

time and money

different cognitive capacity, values, skills, habits, and unconscious reflexes

imperfect information

information overload

different priorities

conflicting goals

four personal styles of decision making

directive, analytical, conceptual, behavioral

directive style

action oriented decision makers who focus on facts, low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions; efficient, logical, practical, and systematic

analytical style

careful decision makers who like lots of information and alternative choices, higher tolerance for ambiguity and respond well to new or certain situations, like to consider more information and alternatives than those adopting the direct style, careful decision makers, take longer to make decisions, overanalyze

conceptual style

decision makers who rely on intuition and have long-term perspective, high tolerance for ambiguity and focus on the people or social aspect of a work situation, broad perspectives to problem solving, like to consider many options and future possibilities, enjoy abstract challenges, research shows that they have particular difficulty with well-structured problems, require specific facts and information as well as concrete methodology

behavioral style

the most people-oriented decision makers, work well with others and enjoy social interactions in which opinions are openly exchanged, supportive and receptive to suggestions, show warmth, and prefer verbal and written information, can lead to wishy-washy approach to decision making and having a hard time saying no, tend to avoid conflict

decision making ten biases

availability, representativeness, confirmation, sunk-cost, anchoring and adjustments, overconfidence, hindsight, framing, escalation of commitment, categorical thinking

availability bias

using only the information available

representativeness bias

faulty generalizing from a small sample or a single event

confirmation bias

tweeking information to support your point of view

sunk-cost bias

money already spent seems to justify continuing

anchoring and adjustments bias

being influenced by an intial figure

overconfidence bias

blind to our own blindness, people’s subjective confidence in their decision making is greater than their objective accuracy

hindsight bias

the I-knew-it-all-along effect, view events as more predictable than they really were

framing bias

shaping the way a problem is presented

escalation of commitment bias

feeling overly invested in a decision so you keep throwing money at it

categorical thinking bias

sorting information into buckets, classify people or information based on observed or inferred characteristics

disruptive innovation

a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses entering at a low-end foothold or new-market foothold, begin by successfully targeting overlooked segments and delivering more suitable functionality for lower prices

low-end foothold

the segments companies focus less on

new market footholds

create a market where none existed before

uber

not disruptive

Xerox

was overtaken by new-market disrupters

netflix

disruptivea

Apple’s iPhone

disruptive, disrupted the laptop by making phones the primary way to access the internet

community/online college

looking to disrupt normal college education but not yet

nucor

disrupted the steel industry very slowlyte

tesla

not disruptive yet

According to the article “What is Disruptive Innovation?” what incumbent companies should NOT do to react to disruptive entrants? 

Incumbent companies should not overreact to disruption by dismantling a still-profitable business. Instead they should strengthen relationships with core customers while also creating a new division focused on the growth opportunities that arise from the disruption 

levels of scaling (Blitzscaling)

growing your revenues, growing your customer base, growing your organization

As a company advances through levels of scaling, which management functions change and do not change in the process?  

financing the company, hiring and onboarding employees, and marketing the product change significantly 

planning

setting goals and deciding how to achieve them; coping with uncertainty by formulating future courses of action to achieve specified results

plan

a document that outlines how goals are going to be met

strategy or strategic plan

sets the long-term goals and direction for an organization

strategic management

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

mission statement

organization’s reason for being is expressed

values statement

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

means-end chain

shows how goals are connected or linked across an organization

accomplishing lower level goals leads to accomplishing higher level goals

operating plan

breaks long-term output into short-term targets or goals

turns strategic plans into actionable short-term goals and action plans

action plan

the course of action needed to achieve the stated goal

outline the tactics that will be used to achieve the goal

SMART

specific, measurable, attainable, results-oriented, has target dates

MBO

managers and employees jointly set objectives for the employee

managers develop action plans

managers and employees periodically review the employee’s performance

the manager makes a performance appraisal and rewards the employee according to results

planning/control cycle

make the plan

carry out the plan

control the direction by comparing results with the plan

control the direction by taking corrective action in two ways

• correcting deviations in the plan being carried out

  • improving future plans

strategic positioning

based on the principles that strategy is the creation of a unique and valuable position, requires trade-offs in competing, and involves creating a “fit” among activities so that they interact and reinforce each other

three levels of strategy

corporate, business, functional

strategic-management process

establish the mission, vision, and value statements

do a current reality assessment, to look at where the organization stands and see what6 is working and what could be different to maximize efficiency and effectiveness in achieving the mission

formulate corporate, business, and functional strategies

strategy execution

strategic control, monitoring the execution of strategy, and making adjustments

mission statement

expresses the organization’s purpose or reason for being

vision statement

states what the organization wants to become and where it wants to go strategically

values statement

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

organizational strengths

the skills and capabilities that give the organization special competencies and competitive advantages

organizational weaknesses

the drawbacks that hinder an organization in executing strategies

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

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

forecasting

trend analysis and contingency planning

trend analysis

a hypothetical extension of a past series of events into the future

contingency planning

the 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

three corporate-level strategies

growth strategy involving expansion

stability strategy

defensive strategty

bcg matrix

their business growth rates and their share of hte market

diversification strategy

deciding whether to expand or grow into other businesses: related and unrelated

functional strategy

a plan of action by each functional area of the organization to support higher-level strategies

execution

a central part of any company’s strategy; using questioning, analysis, and follow=through to mesh strategy with reality, align people with goals, and achieve results promised

three core processes of execution

people, strategy, and operations

strategic control

monitoring the execution of strategy and taking corrective action

decision making

the process of identifying and choosing alternatives courses of action

evidence-based management

translating principles based on best evidence into organizational practice

top challenges of AI

implementation, data issues, and cost