MGMT 466 Exam 1 Review

Management Definition and Goals

• Management: The art and science of managing others to achieve goals.

• Goals Include:

  • Economic objectives: Return on investments, stock market returns, market share, growth, profitability

  • Social welfare and satisfaction of key stakeholders

• Management Functions: Achieving goals through planning, organizing, leading, and controlling (P-O-L-C).

P-O-L-C Framework as Principles of Management

• Planning:

  • Set objectives and position the firm by analyzing internal strengths/weaknesses and external opportunities/threats.

• Organizing:

  • Establish internal structure to accomplish objectives.

• Leading:

  • Use influence to inspire action.

• Controlling:

  • Set, monitor, and enforce performance standards.

Mission, Vision, and Values

• Mission:

  • Current purpose of the organization; answers "Who are we?"

• Vision:

  • Future-oriented purpose; answers "Where do we want to go?"

• Values:

  • Core principles and standards guiding behavior and decision-making.

Importance of Missions, Visions, and Values

• Role:

  1. Communicate organizational purpose to stakeholders

  2. Inform strategy development

  3. Develop measurable goals to gauge strategy success

• Impact: Mission and vision drive the overall strategy of the organization.

Stakeholders

• Definition: Those who have a claim on company outcomes.

• Includes: Shareholders, investors, customers, employees, suppliers, activist groups, government agencies.

Differences Between Mission, Vision, Strategy, and Goals

• Mission Statement: "Who we are" and "what we value"

• Vision Statement: "What we want to become"

• Strategy: "How we will achieve our vision"

• Goals & Objectives: Measures of success for the strategy.

Characteristics of Effective Mission/Vision Statements

• Should remain relatively fixed

• Ambitious enough to create tension with strategies

• Should encapsulate purpose and aspirations

• BHAGs (Big, Hairy, Audacious Goals): Encourage continuous progress.

Porter's Five Forces Model

• Forces Identified:

  1. Threat of New Entrants

  2. Bargaining Power of Suppliers

  3. Industry Rivalry

  4. Threat of Substitutes

  5. Bargaining Power of Buyers

• Market Attractiveness:

  • High profits when barriers to entry are high, rivalry is limited, buyers and suppliers are weak, and few substitutes exist.

  • Low profits occur under the opposite conditions.

Internal Analysis

• Focuses on understanding differences in firm performance within the same industry by assessing unique resources and capabilities.

• Porter’s Value Chain: A framework for mapping out key capabilities necessary for business success.

• VRIO Framework:

  1. Valuable: Resources provide value.

  2. Rare: Unique resources not commonly possessed by competitors.

  3. Inimitable: Difficult for competitors to imitate.

  4. Organized: Structure to effectively exploit these resources.

Corporate Strategy & Diversification

• Corporate Strategy: The decisions related to what businesses to participate in.

• Diversification Types:

  1. Horizontal (product variety)

  2. Geographic (market expansion)

  3. Vertical (supply chain integration)

Acquisitions and Alliances

• Advantages of M&A:

  • Time-saving in acquiring resources.

• Disadvantages of M&A:

  • Higher costs, risks, and potential for failed integrations.

• Strategic Alliances:

  • Flexible arrangements to access resources, but may be prone to issues of opportunism and control.

Porter’s Generic Strategies

• Strategic Options:

  • Low-cost Leadership

  • Differentiation

• Focus Strategy: Targeting particular market segments.

Combining Strategies and Risks

• Combining strategies can lead to being stranded in the middle, lacking clear differentiation or cost advantage.