Midterm Exam Study Material for Mgmt 303

Chapter 1:

What is management?

*There’s three major parts to the definition of management. Pursuit of the organizational goals, both in an efficient and effective manner, the integration of people and the work that you do in organizations, and finally the four functions of management which are planning, organizing, leading, and controlling. And we do this under the umbrella of what organizational resources that we have as a manager. 

*Additionally, it is important to understand the difference between efficiency and effectiveness. Efficiency really is about using the resources that you have, the people, the time, and the money in a cost-effective manner. For effective, it’s more how you’re going to achieve the results or the objectives that you want. The decisions that you make and carefully carry out them in a specific way. 

Why should you study management?

*Aspects that make it important for you to study management include understanding how to deal with organizations from the inside and out, how to relate to your supervisors and your subordinates, how to interact with coworkers and employees, how to manage your own self in the workplace, and then how do you experience a sense of accomplishment of actually getting a job well done and magnifying your own skill sets and your abilities in order to further your career. The other thing is that it helps build a successful product or service. So, when you get into management, it helps you see the plethora of the portfolio that you build for your lifestyle and career. Finally, it’s kind of like giving back, either mentoring other people or being mentored by others. 

What are the four functions of management?

*There are four major functions of management and it is important to understand the difference between each of four of these functions. In planning, we’ve set goals, we decide how we’re going to achieve them and we set action plans. In organizing, we’re really arranging the task and the functionality within the organization while accomplishing the work that needs to get done. In leading, it’s really about motivating and engaging people on how to get the work done and making sure they are engaged and enacting. Finally, in controlling, this is really about monitoring people’s performance and productivity. It’s about comparing the goals that you set in the planning stage and making sure you’re accomplishing them in the end and then taking any corrective action as needed. 

*There are seven challenges of being an actual manager. One of them is managing for competitive advantage, so staying ahead of your rivals and your competition is to make sure you’re relevant and not going to become obsolete within your industry. Managing for diversity includes how we have many diverse kinds of workforces (including today’s), like generations, gender, religions, ethnicities, etc come into factor of the workplace. Managing for globalization suggests how boundaries are very fluid and they aren’t really set to just domestic markets anymore. Anybody can come into your industry or marketplace based on the Internet, ease of communication, and transportation we have now. An expansion is generally done not just domestically, but internationally now. Managing for information technology deals with all new innovative things that are now the new normal and how do we keep up with those technology trends? Managing for ethical standards consists of the standards you have as an individual but how they may be different from what your manager has as far as ethical standards and premises. Managing for sustainability consists of thinking about how you’re impacting the world or the greater good. So, if the business of going green and how do you sustain that for a long haul. Lastly, managing for your own happiness, understanding, and well-being.

What are the levels of management? 

*The levels of management consist of the four top managers. So, top managers, middle managers, first line or frontline managers, team leaders, which are usually project managers or division managers, and then non-managerial personnel, which are people that are underneath that may have some managerial responsibilities, but in title are not actual managers, and they’re sometimes broken up into functionality as well. Regarding what their primary function is in the organization, for top managers, it’s really long term, which means looking strategically over the overall direction of the organization, establishing the strategic plans and policies that set the whole organization in place. For middle managers, they’re all about implementing those policy procedures that are set out by the top managers, communicating it to those below them, which are first line managers to make sure they’re executed. For first line or frontline managers, they make short-term decisions and are really looking at the daily tasks and operational functions of an organization. For a team leader, they usually have a responsibility of many one subset in facilitating those team activities to make sure the project gets done. 

What skills and roles do managers need?

*So, there are three major skills that a manager needs, which are technical, human and conceptual. Technical skills are knowledge and expertise that you need in order to perform well on the job. Conceptual skills are having that long-term kind of understanding, the visualization of where you want to go, and how you envision/communicate that to the rest of the organization. Human skills, interpersonal skills, or soft skills are really important at all different levels. It’s the ability to work with others, communicate, and motivate other people. Human skills are kind of essential for any kind of managerial job. Technical skills are more needed at the bottom levels, so as you rise up the ranks in the levels, you’re not usually getting or having as much technical expertise. At the top, you really need those conceptual level skills because conceptual is about strategizing and visioning where you want to go and the direction you want to go. 

*Mittsburgh also came up with some useful information about how managers function and what their role is. So, the role, according to his findings, was that a manager really relies on verbal communication rather than written. It’s actually kind of crucial that you’re communicating in a verbal fashion as you have to sometimes limit the emails or indirect kinds of information in written communication rather than talking to the person. Managers oftentimes work really long and intense hours. Lastly, managers have a lot of other responsibilities that are fragmented. There’s a lot of brevity, so they get to one thing and have to move to another thing. There’s a lot of variety so every day is different for a manager. 

*He also went over the three major roles of a manager which are interpersonal, informational, and decisional. When we’re talking about interpersonal, we’re really looking at being a spokesperson, managing, and interacting with people inside and outside of the organization. Information is about communicating the information on what you’re doing. This role is for a monitor, disseminator, and spokesperson. For decisional, this person is about who’s making the decision and why. For example, if an entrepreneur has a start up company, who is making the decisions, the directionality of the company, resource allocator, and negotiator, are all a part of that role. 

Chapter 2:

What are the historical and contemporary management perspectives? 

*The historical and contemporary period structure of management theory are important to understand. When we look at historical, we’re looking at classical, behavioral, and quantitative viewpoints. This is looking from the period of the 1900s to 1950s. In the 1900s, we’re really looking at an industrial revolution. We’re looking at classical viewpoints and scientific management theory. In behavioral, we start to think that what the manager is doing is actually important to human behavior and the people that are following them. Then, we transition over to the 1940s-1950s where we realize that we need some statistics or data to back up what we’re doing as managers. In the contemporary area, which was around the 1960s to present time, we’re really looking at the systems viewpoint, contingency viewpoint, and quality management, and kind of a learning organization viewpoint. When we look at the historical perspective, we break it down into three major categories, so we see classical, scientific management theory, and administrative management theory. When we look at the behaviorlist approach, there’s three major sectors, which are early behaviorlist, human relations effort, and behavioral science. Finally, when we look at the quantitative aspect, we focus on the metrics, which is the management science and the operational management. 

*So, within scientific management, we’re really looking at emphasizing how we’re studying work being done and how we can improve the productivity of workers. Frederick Taylor is who we call the father of management, as he set out with scientific management to study industrial workers in the factories to figure out how he could streamline it to be more effective and efficient. Frank and Lily Gilbreth were a couple that started to look at how they could systematically help improve the task of bricklayers at the time. 

*The principles of the scientific management theory says four things. Scientifically study each particular task that a person does, carefully selecting the workers with the right abilities and knowledge in order to do those tasks, giving training if they don’t have that and incentives them to do the task well, and finally using this plan to the work in an according way. 

Why should we study the classical viewpoint of management?

*Work activity is really about the rational approach which means taking a kind of scientific approach to how work is done. We’re looking at scientific methods, time, motion, and job specialization in order to boost productivity and performance of workers. 

What is the behavioral viewpoint of management? 

*Behavioral viewpoint looks at the importance of the human understanding of how people behave in the workplace. How do we motivate and influence them? There’s three basic phases of this. The early behaviorlism looks at how the manager interacts with the worker, the human relations was the motivation theories behind how people work, and the behavioral science mirrors both the scientific rationale approach with the behavior approach together. 

*One of the key theories we talk about in Chapter 2 is theory X versus theory Y. Douglas McGregor believed that there are two kinds of major approaches that we look at. A theory X manager believes their workers are lazy, irresponsible, need to be hovered over, and lack ambition. They have a very negative view of workers. However, theory Y managers have a more positive view of the workers. They believe they’re capable, should be given autonomy and responsibility, they’re creative, and if you give them the right tools, they will run with it. 

*Within the contemporary kind of perspective, we had three buckets again. So, the systems viewpoint looks at the whole organization and how it interacts with each other. The contingency viewpoint is looking at it on a case-by-case basis, meaning that managers may have to change their kind of style based on the situation and the context at hand. Total quality management viewpoint looks at three approaches and how to improve the quality and standards within the overall perspective. 

*Within a systems viewpoint, we look at three integral subsystems within an organization. We’re trying to get a holistic view of the whole business. We have inputs, throughputs, outputs, and a feedback mechanism. Within the inputs, we’re looking at your money, time, resources, equipment, materials, and factory. All of those are the things that are going to go into your organization. The throughput or the transformation process is how we take those raw materials and transform it into something that we are going to sell. Meaning that using the management, technology, and skills of your workers in order to make something of that. The output is the product or service that you’re selling as a business. What you want to see is that there's a constant feedback loop of the outputs into the inputs and fine tuning that process. There are three major systems that we see within organization, closed systems and open systems. A closed system doesn’t pay attention to or interact with its outside environment. Generally, this is a bad case because if they’re not paying attention to the outside environment, oftentimes, things sneak up on them and it causes their businesses to go under. Open systems are constantly interacting with their environment and having a kind of synergy between the outside and the inside so they can constantly improve themselves. The ultimate open system is what we call complexity theory. It’s a series of networks and how the environments or the external stakeholders are impacting the business and interacting with each other to feed off of information. 

*Within the contingency viewpoint, we really emphasize that managers' approach should vary based on circumstances, environmental, and situations that they’re in. So, this is kind of a case-by-case basis. It’s scenario planning, where a lot of it is based on what kind of contextual factors are happening at this particular time. Evidence based management is a kind of practical approach. It’s translating some of these best practices or best evidence that we see in organizations and how we then use a rational approach to make decisions in our organizations. So, Pfeiffer and Sutton kind of came up with this because they saw that people need a more systematic kind of view of how they make their decisions and give them a more educated guess of best alternatives and case scenarios. 

Chapter 3:

What are stakeholders?

*There are internal and external stakeholders. Stakeholders are the people that are interested and affect our organizations and businesses. When we look at this kind of circle approach, the internal stakeholders in the orange box are our employees, owners, and board of directors, which is everyone that is internal to the organization. In the green box, we have what is called our task environment or external stakeholders. These are our customers, competitors, suppliers, distributors, government that you’re operating in, media, or interest groups. Finally, in the blue circle is our general environment. These are external stakeholders that have an impact on our business, but we can’t control. Examples include economic, political, international, and demographic forces. All of those impact how our business will operate, but oftentimes we as managers can’t control those factors. 

*Within internal stakeholders, they consist of employees, owners, and board of directors. External stakeholders are those outside environments and they’re broken down into that task and the general environment. 

What is ethics? How does it impact managers?

*Part of this ethical premise is how you’re going to handle yourself within an organization and how that impacts you. The definition of ethics refers to the standards of right and wrong that influence our behavior. Values are part of how we determine our ethics. These are permanently held beliefs that are oftentimes taught to us either by our parents, grandparents, or environments that we’ve grown up in, and they help us determine our behavior as well. 

*There are four major approaches to the ethical decision or ethical dilemma process. The utilitarian approach is guided by the greatest good for the greatest number of people. The individual approach is guided by the greatest good for the best long-term interest of oneself. So, you have approaches with a kind of holistic view of selfless versus selfish perspectives. The utilitarian approach is looking for the greater good of other people, whereas the individual approach is looking out of yourself. 

*Then, we have a more societal perspective where there is a moral versus justice approach. A moral-rights approach is guided by the respect that everybody has fundamental human rights and they deserve that. In the justice approach, you’re guided by your decisions through the respect of everybody around you and are being treated fairly and equitable. 

*How do we actually learn our ethics? There’s three major levels that we learn within our ethics. Level one is pre-conventional. We are given rules, regulations, and policies where we follow those rules. Level two is conventional. There are expectations around us from peers and coworkers that we kind of influence our behavior by that. Lastly, level three is post-conventional. We have a strong moral compass or an internal value set that guides our decisions and our ethical premise. The statistics for research says that about 80% never get to level three, so most people are operating at a level two or level one as far as ethical premises. 

*Regarding corporate social responsibility, we know that the definition of that term refers to the notion that corporations are responsible for not only just doing the financial portion, but also contributing to a greater good and going above just profits. Examples include following the law and also helping those around them in their community serving. 

*Referring to the triple bottom line, we know what it stands for, which are the people, planet, and profit. Organizations now are having to look at their social and environmental impact, along with their financial performance as a business. Generally, how we understand the triple bottom line is usually through a social audit, which is a systematic process that we use in companies in order to determine if we’re being socially responsible. 

Chapter 4: 

What is globalization? What is the positive and negative impact? 

*Moving on to globalization and its impact on the world and businesses, globalization is the trend of the shrinking economy. Everything is interdependent upon each other and the economy is becoming one. There are both positive and negative factors about globalization. A positive would be that globalization helps us be interconnected, we’re getting more affordable products, and we actually have a better communication style amongst the nations. A negative impact would be that we’re outsourcing a lot more for cheaper goods and services, we’re taking well-paying jobs overseas, we’re looking for cheaper labor, and we’re also changing our manufacturing because we’re pushing things abroad. 

*There is a difference between a multinational corporation versus a multinational organization. So, a multinational corporation is a for-profit firm, whereas a multinational organization is a non-for-profit organization that operates in multiple countries. 

*One of the things that is important to learn is how to develop a global mindset, and what does that mean to develop a global mindset? So a part of that is to be patient and quiet, to listen and learn. So, you’re globale in focus, but study and respect the local customs. You learn what’s appropriate behavior and appropriate language. You learn mutual signs of respect, shaking hands, dressing appropriately, and hopefully learn a minimal skill of one language. 

*There are different types of international managers. Ethnocentric managers believe that they are superior and that their native country knows best. Therefore, their actions and behaviors are geared around their own culture. Polycentric managers say they go to another country (the host country) and then they defer to those natives in that particular country that they feel like they know best and they follow their home practices of the home country they’re serving in. Neither of these are right or wrong, but they’re not great because they are skewed results of how you manage in an international operation. 

*As a geocentric manager, you will accept that there are similarities and differences between both the home and host country. You will figure out which policies and practices work best in the business. Whichever is most effective is what you will implement in your particular company. 

Why do companies expand internationally?

*Primarily, companies go to new markets that they have overseas that they can’t tap into their domestic markets and the other could be availability of suppliers. So, they’ve tapped out everything in their domestic market and they have to go overseas to get further supplies. Sometimes, it’s lower labor costs because they are trying to streamline their process and they go find manufacturing that is cheaper elsewhere. It could be that you’ve tapped out yor capital domestically and you’re looking for financial capital abroad, you could try to avoid tariffs or import quotes, and so they then move or shift their operations overseas. 

*There are five major ways that we expand internationally as businesses. On the left-hand side is the least risky and on the right-hand side is the most risky and most investment. The first step that most companies take is global outsourcing, where they take one little entity of their company and push it overseas. They do that because they usually don’t have expertise in that particular area. So, it helps give them a little bit of variety and streamline their process. One of the most common outsourcing is customer service. Customer service operations for a lot of companies are pushed and you’ll find them mainly in India or even in Central America as they will have customer service lines. Next, would be your import, export, or your counter trading. So, an import and export are taking in goods into your country or you’re pushing out goods to other countries. Counter trading is when you’re not exchanging money but instead exchanging good for good. Right in the middle ground is licensing and franchising. Licensing and franchising are a good way to get exposure of your products and services out to the markets without putting a lot more of your investment. When we think of international licensing and franchising, the best example would be McDonad’s as they are all over the world, but they also customize their products and services to their local markets. So, they kind of have the best of both worlds because their brand is well known, but then locally, they will customize to the food needs of those particular people. Joint ventures now start to get a little bit more intense as there is more investment and risk. This is where you’re finding a partnership with somebody abroad. The percentages vary and could be 50/50 or 80/20. Does it matter? They are both still strategic partnerships and joint ventures. But, the benefit of a joint venture is that both parties have a stake in it. However, usually, the local party of the new market that you’re going into has expertise within that particular region of the world so they can provide directionality for you. Now, wholly owned subsidiaries are all in. These are greenfield ventures, meaning that you start from the ground up in new territories and new regions of the world. It is really risky as it costs a lot of money. 

Chapter 5:

What is planning? How is it executed in business?

*There are four functions of management and the first is planning. Planning refers to coping with uncertainty, trying to figure out what the future holds for your business, and then setting the direction of your business. Usually, this comes with setting goals and deciding how to achieve them. Part of the planning process is strategy. Strategy is that long-term plan of what you want your business to accomplish. It’s the direction and vision for your company. It’s usually an educated guess because you don’t know what the future holds, but it is there to make sure that you have stability and survival for your future. 

*It is important to understand the five steps to the strategic management process. First, you establish your mission, vision, and value statement. Next, you assess the current reality. You then develop your grand strategy and your strategic tackle and operational plans. Then, you implement those plans, strategy, and monitor for strategic control and change anything. There’s usually a feedback loop if you need to adjust anything in your admission and vision or change up your strategy. 

*Why is it important to have strategic management and strategic management skills? It provides direction and momentum for your company. What’s most frustrating for employees in organizations is when they don’t have a vision or strategy, and you’re kind of just floundering. You don’t know where things fit in and how it’s going to help you accomplish things for your future. It also helps to have a creative space if you have strategic management. New ideas oftentimes are innovative from these kinds of processes and procedures. It also helps you develop a sustainable competitive advantage over your rivals. 

*There are three levels within this kind of planning process. There is strategic planning, which happens by the top managers in one to five years. There’s tactile planning, which happens from six to twenty-four months, and it’s the middle managers formulating those goals and operations. Finally, in operational planning, this is your daily task that’s usually a year-long plan that the first line managers execute. 

*When you’re looking at the strategic management and strategic planning, you’re really looking at managers paying attention to the outside environment and how it’s impacting their business. The tactile planning state is looking at how we take the plans that the top managers made and do we coordinate the efforts at all different levels of divisions and departments so that they can execute and make the necessary decisions. Finally, in operational, this is about getting your daily task and understanding/directing to make sure you’re accomplishing the right goals and having the right procedures in place. Within those planning processes, there are strategic goals set up by the top managers, tactile goals set up by the middle managers, and then operational goals set by the first line managers. 

*SMART goal is an acronym for specific, measurable, attainable, results-oriented, and target dates. Another important thing that is discussed in class is that you can’t have too difficult og foals and you can’t have too easy of goals because you’ll never accomplish them. The goal difficulty is there’s a sweet spot in the middle that makes people more committed to actually accomplishing the goals. If you write your goals down, you’re 80% more likely to accomplish them rather than them just staying in your head as a thought.  

*Part of the process that we go through within an organization is the MBO or the management by objective. This is a kind of process and procedure of how we motivate and encourage our employees. The first step is that the managers and employees set the objective and goals for themselves for each employee. Then, they work together as the manager drives this, but they develop action plans of how you’re actually going to accomplish those goals. Then periodically, the manager and the employee sit down and make sure that they’re making progress, and that if they need any other skills, assistance, or training, they would do that at that point. Finally, it’s usually a performance appraisal at the end, and based on results that the employee is given, they’re rewarded or incentivized for how they’ve accomplished their goals. 

*There are a few kinds of principles around MBO. It has to be top management committed to it. So, it has to be driven by the top managers, applied organization-wide, and not just one department can do this in order for it to work effectively. All of the objectives have to cascade from the top to the bottom, meaning they all work together to accomplish the overall objective. 

*So, in the planning process, there are four stages of planning and controlling. This is where it mirrors the controlling function. You make the plan, carry out the plan, but also make sure that you take corrective action and control the directionality of what the plan is. If it’s going off course, the manager is important as they can analyze to see where it’s going off course and how you could correct it for the future. You do that by two things, you correct the deviations or you improve for future plans and make a new plan to then carry out. 

Chapter 6:

What makes an effective strategy? 

*As a manager, it is important to know your strategic positioning, meaning where do you fit with your competitors and rivals? How do you achieve sustainable competitive advantage and what makes you distinct versus everybody else that’s in your industry and marketplace? So, performing different activities from rivals could be one way or performing similar activities but in a different way than your competition. 

*Strategic positioning comes with a few different principles. You can look and serve a few needs to many customers. You can have some broad needs and a few customers, or you can have broad needs and many customers. So, you have to figure out what your positioning is for your actual company. There are some trade-offs where you have to figure out where you’re going to give and where you’re going to take from your company, resources, and time. You also have to figure out where you want to fit. What is your niche amongst all the activities? Where are you going to create your own expertise in that particular field?

*When we’re assessing that current reality, we’re looking at how the organization is within retrospect to everybody else surrounding them. So, what are you doing differently? How are you doing it more efficiently or effectively in order to achieve your overall mission? We also call this organizational assessment. 

*How we do this is generally we create trend analysis, we see what our past events were, what was successful, and what was not successful. We may be doing contingency planning, meaning we have hypothetical situations that we anticipate what may happen within one scenario or another. We call this scenario planning or scenario analysis. 

*The final thing we do is allow benchmarking. So, we compare ourselves to other companies that are doing really well within our industry. Where do we get benchmarking surveys and data? Oftentimes, there are companies that sell benchmarking data. So, people that are similar in your industry and are your key competitors will sometimes not have them by name, but you can base on their statistics, know who they are, and how your performance engages/compares to theirs. 

*We often use a SWOT analysis or an environmental scan to help us develop our strategy. We’re looking at our strengths and weaknesses, as those are the internal factors we can control. Then, we’re looking outside externally. What are our opportunities and threats? This kind of overall environmental scan gives us a good picture of where we sit in comparison to others. 

*Once you’ve done the current analysis of your situation and assessment, then you start to come up with what strategy you want to execute as a business. First, you come up with a grand strategy which is formulated. How are you going to make yourself look a little different than everybody else in the industry? Then, you have strategy implementation once you’ve formulated the grand strategy, strategic control of execution, and monitoring on how you’re doing. 

*Michael Porter was a guru from Harvard about strategy. One of the things he says is that there are five competitive forces that a business needs to pay attention to. There’s threads of new entrants, which means new products or services that could take over your part of the marketplace. There’s bargaining power for both suppliers and buyers, and with suppliers, they can basically write their ticket of what they want to charge for they are particularly supplying, whereas for buyers, they have the upper power and can say what they want to charge. There is a threat for substitute products or services, meaning people might buy that alternative instead of yours. One of the prime examples would be pharmaceuticals where a patent runs out from a specific drug that is sold in the pharmacy, then it goes on the shelf for everybody to be able to use because that formula is no longer owned by that particular pharmaceutical company. Generics come into play, and they’re usually a tenth of what you’d pay in a normal amount for that drug. Or, think about when you go to the grocery store and the Giant or Harris Teeter has their own name brand. That is a subsidy product for some other type of product that they may be selling. A Coca-Cola or Sprite might have a generic kind of beverage that is just from the store-bought brand and it’s a lot cheaper. So, what are you going to compromise? Do you want the name brand or do you just want the generic? Finally, the biggest one on this list is your rivalry for competition. Among your competitors, where do you sit? This is a force of how you need to survive in the marketplace. 

*There’s some overall grand strategies that are often common in most businesses. The first is growth strategy. How are you going to grow your business? Are you going to grow in market shares, number of employees, customers, sales, or revenues? What is it that you’re going to grow in? The other two are more trying to survive within the marketplace. Stability is where you don’t have to change anything and have a strategy of maintaining what you have. That is good for a certain period of time but if you can only maintain the stability strategy for so long, then you become obsolete. You then typically become into a defensive strategy when your business is going under. This is usually when you are trying to survive and not lose the company and go into a defensive strategy. This usually is a reduction in workforce, organizational activities, and efforts. We call this re-entrenchment, meaning we’re just hunkering down to try to survive whatever we can. A lot of companies during post Covid-19 were in defensive strategy mode, specifically brick and mortar stores that were trying to survive because of the pandemic. 

*Michael Porter also came up with four major strategies that companies use in the marketplace. We have a cost-leadership strategy, where you have a wide market share. Differentiation also has a wide market share. Cost focused and focus differentiation have a narrow market share. 

*Cost leadership strategies are about keeping your costs down, where your prices are lower than all of your competitors. You usually have a wide market share. When you think of cost leadership, refer to Walmart because they’ve had cost leadership from beginning till now. They have rollback prices, making sure that they’re always the cheapest versus any of their competitors on the marketplace. Differentiation, how’re you setting yourself up? There is still a wide market share, but you’re having a little bit more of a superiority or unique quality than your competitors. Target might be an example of differentiation strategy because they have a little bit higher in products but sometimes they’re some unique things, like having a store within a store. So, they’re trying to differentiate themselves from any other kind of consumer products. Then, we have more of the narrow markets like cost-focused strategy. This usually means that their products or services are below any of their competitors. They have a very niche market because not everybody is going to use them. Dollar Tree or Five Below is an example of a cost-focused strategy because they have a narrow market of who they’re serving, but also have the cheapest products. So, you know you’re going there because it has cheap prices. Lastly, you have focus differentiation where it’s usually high-end luxury goods. They’re unique and superior as they have top value, but specific to a customer base. For example, Ferrari or Tesla are particular kinds of cars for certain types of people. The same goes with hotel chains like Four Seasons or the Ritz-Carlton because they have a focus differentiation kind of strategy. 

*We also have diversification of strategies. Within a strategy, you are buying a business or growing your business but you’re trying to spread out the risk. This can be in two ways, it can be related or unrelated risks.

*One of the tools we use in order to develop a strategy is the BCG matrix or the Boston Consulting Group, who came up with this matrix that looks at how we evaluate our products and services for our strategic business units. We look at market growth and market share. 

*When we take a company, we look at where their products or services fit in with everything else. We have starts, question marks, cash cows, and dogs. Within the stars, these are high growth, high market share. So these are factors that you’re going to keep and be the backbone of your company. You then have the cash cows, which are slower in growth, but higher in market share. They are usually the financiers of some of your riskier ventures. Then, you have the question marks which are new innovative products that may or may not work, so you invest a little bit to see if they become a star, cash cow, or they can become a dog. A dog has low growth and low market share. These are the items you want to get rid of because they’re weighing you down in your resources and you want to re-strategize. 

*Three important things to remember within strategy is that you have people, strategy, and your operations. These are all important pieces of the pie that help you operate as a business. But, you have to figure out how they all work together and the core business functions in order for you to have a successful business.