LP

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.