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Planning
Coping with uncertainty and making future actions to achieve results; setting goals and deciding how to achieve them.
Business Plan
Starting a plan; document that outlines a proposed firms' goal, the strategy for achieving them and standards for measurement.
Business Model
Outlines the need the firm will fill, operates the business, it's components and functions, and expected revenues and expenses.
Strategy
Over all guiding; Large- scale plan that sets the direction for an organization; educated guess about what must be done long term
Strategic Management
Incorporating managers from all levels of the organization in the formulation and cooperation of the organizations strategy; Engaging with first line managers and top managers helps the organization because they can see what is realistic or feasible
Why planning and strategic management are important-
Provide direction and momentum, encourage new ideas, develop a sustainable competitive advantage.
Mission statement
"what is our reason for being" "description of product/ service and why it's offered" Purpose of organization.
Vision statement
"What do we want to become?" What the organization should become, where it wants to go strategically.
Strategic Planning
Top managers for next 5-10 yrs.- Goals- Action Plans- Top managers determine what the organization's long-term goals should be for the next 5-10 yrs, with the resources they expect to have available.
Tactical planning
"Done by middle managers for the next 6-24 mo.- Goals- Action Plans- How to get cusomers to make better purchasing decisions
Operational planning
"Done by first line managers for 1-52 wks." How to accomplish specific tasks with available resources.
Top management
Chief executive officer, president, vice president, general managers, division heads. 1-5 yrs; Long term, future oriented, pay attention to environment outside the organization.
Middle management
Functional managers, product-line managers, department managers. 6-24 mo. Implement policies of top management and coordinate activities of first- line managers below, make decision without base of clearly defined information procedures.
First- line management
Unit managers, team leaders, first- line supervisors. 1-52 wks. Direct daily tasks, decisions often predictable, follow well- defined set of routine procedures.
Operational goals
Set by and for first- line managers and are concerned with short- term matters associated with realizing tactical goals.
Action plan
Defines the course of action needed to achieve the stated goal.
SWOT Analysis
Acronym that stands for strengths, weaknesses, opportunities, and threats; Happens when company is trying to formulate strategy; Figures out: "Where are we now?" & "Where can we go?"; Strengths and weaknesses are internal Opportunity and threat are external
Operational plan
1 yr period, how you conduct your business based on action plan, clear targets such as revenue, cash flow, and market share.
Standing plans
Plans for activities that occur repeatedly over time, policies, procedures and rules.
Policy
Response to designated problem or situation
Procedure
Response to a particular problem or circumstance.
Rule
Designates specific required action
Single- use plans
Developed for activities that are not likely to be repeated in the future.
Program
Single use plan encompassing a Range of projects
Project
Single use plan of less scope and complexity than a program.
Specific goals
"Should be" "No more than 1 out of 25 planes should be later than 15mins"
Measureable
"Can have someone monitoring the gates."
Attainable
"Attainable but difficult and must be able to be successful."
Results- Oriented
"Make an impact"
Target dates
"Day you have to reach the goal by."
Management by Objectives
Managers/ employees jointly set objectives for the employee 2) Managers develop action plan 3) managers/ employees review employee's performance 4) Manager makes performance appraisal and rewards the employee
Cascading objectives
Objectives are structured in a unified hierarchy, becoming more specific at lower levels of the organization.
Planning/ Control cycle
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 correcting deviations, improving future plans.
Strategic positioning
Performing different activities from rivals or performing the same activities differently; Allows it to carve out its own position in the market; 3 principles- When a strategic position is executed, creates a unique and valuable position in the market, Requires trade-offs (having to pursue one activity or the other), Achieving strategic position requires finding a good fit between organizational activities
Strategic Positioning and Principles
Unique and Valuable position; requires trade off; requires creating a "fit" among activities.
Current reality assessment
Looking at where the organization is and where it can change/ grow. Organizational assessment
Grand strategy
How the organization's missions is to be accomplished.
Strategy formulation
Choosing among different strategies and alternating them to fit the organization's needs
Strategy implementation
Putting strategic plans into effect
Strategic control
Monitoring the execution of strategy and making adjustments if needed.
Competitive Intelligence
Means gaining information about competitors activities so you can anticipate their moves. Public prints, advertising, investor information, informal sources.
Environmental Scanning
Monitoring an organization's internal and external environments to detect early signs of opportunities and threats.
S-
Strengths; Inside maters; Work processes, organization, culture, staff, products quality, production capacity, image, financial resources and requirements, service levels and other internal matters.
W-
Weaknesses; Inside matters; Could be same as strengths: work process, organization, culture, ect..
O-
Opportunity; Outside matters; Markets segment analysis, industry and competition analysis, impact of technology on organization, product analysis, governmental impacts.
T-
Threats; Outside matters; Could be same as opportunities.
Organizational strengths
Skills that give organization special competencies and advantages in strategies in pursuit of its mission.
Organizational Weakness
Drawbacks that hinder an organization in executing strategies in pursuit of its mission
Organizational Opporutnities
Environmental factors that the organization may exploit for competitive advantage
Organizational Threats
Environmental factors that hinder an organization's achieving a competitve
Trend analysis
Hypothetical extension of a past series of events into the future.
Contingency planning
Alternative hypothetical but equally likely future conditions; Scenario Planning and Scenario Analysis
Benchmarking
Process by which a company compares its performance with that of high- performing organizations.
Porter's Five Competitive Forces
Threat of new entrances 2) Bargaining power of suppliers 3) Bargaining power of buyers 4) Threat of substitute products or services 5) rivalry among competitors
Growth Strategy
Expansion- sales revenues, market share, number of employees, or number of cousomers
Stability
Little or no significant change
Defensive
Reduction in the organization's efforts, retrenchment
Cost Leadership
Wide; Keep the costs or prices, of a product or service below the competitors and target a wide market. EX- Walmart
Differentiation
Wide; Offer products that are unique and superior value compared to competitors. EX- Coca Cola
Cost- Focus
Narrow; Keep cost of product below competitors. EX- Dollar Tree
Focused- Differentiation
Narrow; Offer products that are unique and superior value compared to competitors. EX- Rolex
Single- Product strategy
Company makes and sells only one product within it's market; benefit- focused; risk- vulnerability
(Diversification Strategy) Diversification
Operating several businesses in order to spread the risk; related, unrelated
Advantages of Related Diversification; Reduced risk
More than on product
Advantages of Related Diversification; Management efficiencies
Administration spread over several businesses
Advantages of Related Diversification; Synergy
Economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately
BCG matrix
Evaluating strategic business units on the basis of 1) Their business growth rates 2) Share of the market
Three Core processes of Business
People, Strategy and Operations
Two kinds of decision making
Decision and Decision Making
Decision
Choice made from among available alternatives
Decision Making
Process of identifying and choosing alternative courses of action.
4 Ways to make decisions
Analytical, Conceptual , Directive, Behavioral
Rational Decision Making Stage 1
Identify the problem or opporunity
RDM Stage 2
Think up alternative solutions.
RDM Stage 3
Evaluate alternatives and select a solution.
RDM Stage 4
Implement and evaluate the solution chosen; best interest in organization; short term personal goals; contract
Rational Model of Decision Making
Leave emotion out, pre- descriptive; determine how a decision Should be made
Non-rational models of decision making
Descriptive; How people actually make decisions; assumes decision making is always uncertain and risky
Bounded Rationality
Constrained from making the optimum decision; Limited by numerous constraints to make a decision; complexity, time and money, cognitive capacity
Intuition
Timely; but no research, difficult to gain buy in. Making a choice without the use of conscious thought or logical inference. Expertise and feelings.
Ethics Officer
Trained about ethics in workplace, resolving ethical dilemmas.
Decision tree
Graph of decision and their possible consequences; used to create a plan to reach a goal.
Analytics
Sophisticated forms of business data analysis, portfolio analysis, time- series forecast- Business Analytics.
Big Data
Web- browsing data trails, social network communications, sensor data, and surveillance data.