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MGMT 4390 Exam 1
Terms in this set (69)
Define Strategic Management
Art and science of formulating, implementing, and evaluating cross- functional decisions that enable an org to achieve its objectives
What is the goal of strategic management?
Long range planning to create new/diff opportunities for tomorrow
Also gaining/maintaining competitive advantage
What are the 3 stages of strategic management?
1. Strategy formulation 2.Strategy implementation 3. Strategy evaluation
Compare/ Contrast Strategic planning & management
Planning- Company's game plan
What are the steps of strategy evaluation?
1. Reviewing external/internal factors bases for current strategies 2. Measuring performance 3.TAKING CORRECTIVE ACTIONS
What is strategy implementation?
Firm to establish annual objectives, devise policies, motivate employees, & allocate resources.
What are the activities in strategy implementation?
Called action stage
Why is strategy evaluation necessary?
primary means obtaining information. Success today is no guarantee of success tomorrow
Define distinctive competency?
A firm's strengths that cannot be easily matched or imitated by competitors. Best strengths give competitive advantage.
Who are strategists?
Individuals who are most responsible for the success or failure of an organization. (We are)
What is a vision statement?
" What do we want to become?" 1st step in strategic planning.
What is a mission statement?
enduring statements of purpose that distinguish 1 business from other similar firms. Identifies scope of a firm's operations in product & market terms " What is our business"?"
What does Drucker say about when to make a vision statement?
When you have become successful
What is the purpose of the mission statement?
To declare " What is our business"? Identifies scope of a firm's operations in product and market terms.
What does a good mission statement have?`
1. customer orientation 2. declaration of attitude 3. social policy
According to Campbell and Yeung a mission statement should do what?
Create an emotional bond and sense of mission
Rarick and Vitton found that firms that use mission statements have what % on financial measures?
What did King and Cleland recommend?
Orgs carefully develop a mission statement to reap benefits.
What are the benefits?
1. ensure unanimity of purpose
2. provide basis/standard
3. establish a general tone or org culture
4. serve as a focal point for individuals to identify with organization's purpose & direction
5. facilitiate translation of objectives into a work structure involving the assignment of tasks to responsible elements within the org
6. specify org purposes & then translate purposes into obj.
What are the mission statement components?
2. Products or services
5. Concern for survival, growth, & profitability
7. Self- Concept
8. Concern for public image
9. Concern for employees
What is competitive advantage?
Anything that a firm does especially well compared to rival firms
Define external audit?
Develop FINITE list of opportunities that could benefit a firm, & threats that should be avoided.
What are the 5 key external forces?
2. Social, cultural, demographic, & natural environment
3. political, governmental, & legal
4. technological forces
5. competitive forces
What is the Industrial Organization (IO) view?
External factors are more important than internal factors
What will happen by the year 2075?
US will have no racial or ethnic majority
What will happen in year 2050 or 2058?
World population will continue to grow up to 9 billion
What is Porters 5 forces?
1. Rivalry among competing firms
2. Potential entry of new competitors
3. Potential development of substitute products
4. Bargaining power of suppliers
5. Bargaining power of consumers
What is the most powerful of the 5 competitive forces?
1. Rivalry among competing firms
What is External Factor Evaluation (EFE) matrix?
allows strategists to summarize and evaluate economic, social,cultural,demographic, environmental, political, governmental, legal, technological, & competitive information.
What is the 1st step in designing External Factor Evaluation (EFE) matrix?
List key external factors identified from the external audit process.
What is the Competitive Profile Matrix (CPM)?
Identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position.
Define Internal Audit?
Obj and strategies established with intention of capitalizing on internal strengths and overcoming weaknesses.
What are key internal forces?
Distinctive competencies; communication most important word in mgmt.
What did William King say about the task force of managers?
Charged with determining 10 -20 most important strengths and weaknesses that should influence the future of the org.
What is Resource Based View (RBV)?
Internal resources/factors are more important than external
What is organizational culture?
Pattern of behavior developed by an org as it learns to cope with problems of external adaptation & internal integration, which has worked well to teach new members as the correct way to perceive, feel, and think.
What are the 5 basic functions of management?
Include activities such as recruiting,interviewing, testing,selecting, orienting, training, developing, caring for, evaluating,.... (Also called personnel or human resource management)
What is the controlling function of management?
All activities undertaken to ensure that actual operations conform to planned operations. Establish performance standards
What is marketing?
Process of defining, anticipating, creating, & fulfilling customers' needs and wants for products/services.
What are the 7 functions of marketing?
1. Customer analysis
2. Selling products/ services
3. Product & service planning
6. Marketing research
7. Opportunity analysis
What are controlling basic steps?
1. Establishing performance standards
2. Measuring individual & organizational performance
3. Comparing actual performance to planned performance standards
4. Taking corrective actions
What is the Robinson- Patman Act?
Prohibits manufacturers and wholesalers from discriminating in price among channel member purchasers if competition is injured.
What are the 3 types of financial decision?
1. Investment 2. Financing 3. Dividend decision
What are the key 5 financial ratios?
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
5. Growth ratio
What does liquidity ratio measure?
Measure a firm's ability to meet maturing short-term obligations
What does leverage ratio measure?
the extent to which a firm has been financed by debt
What does activity ratio measure?
how effectively a firm issuing its resources
What does profitability ratios measure?
management's overall effectiveness as shown by the returns generated on sales & investment
What does growth ratios measure?
firm's ability to maintain its economic position in the growth of economy & industry
What Management function goes with what stage of strategic management?
Planning- Strategy formulation
Organizing, Motivating, & Staffing- Strategy Implementation
Controlling- Strategy Evaluation
What are approaches to R&D budget?
1. financing as many project proposals 2. Percentage- of- sales method 3. budgeting about the same amount that competitors spend for R&D 4. deciding how many successful new products are needed & working backward to estimate the required R&D investment
What are the 2 form R&D can take in an organization?
1. Internal R&D- Org operates its own R&D department
2. Contract R&D - firms hire independent researchers or independent agencies to develop new products.
What are vertical integration strategies?
Forward, backward, & horizontal integration
What is forward integration?
gaining ownership or increased control over distributors or retailers
What is backward integration?
seeking ownership or increased control of a firm's suppliers
What is Horizontal integration?
seeking ownership or increased control over competitors
What are intensive strategies?
Market penetration, market development, & product development
What is market penetration?
Seeks to increase market share for present products/services
What is divestiture?
selling a part of an organization
What is liquidation?
Selling all company's assets
What is retrenchment?
Organization regroups through cost and asset reduction to reverse declining sales and profits
What is Porter's 5 generic strategies?
Type 1: Cost leadership - low cost
Type 2: Cost leadership- Best Value
Type 3: Differentiation
Type 4: Focus- low cost
Type 5: Focus- Best value
What is a joint venture?
occurs when 2 or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opp.
What is a merger?
2 organizations of about equal size unite to form 1 enterprise
What is an acquisition?
A large organization purchases a smaller firm
what is a hostile takeover?
When a merger or acquisition is not desired by both parties.
What is a levered buyout (LBO)?
a corporation's shareholders are bought by the company's management & other private investors using borrowed funds.
What is Business Process outsourcing (BPO)?
Companies taking over the functional operations such as HR, IS, payroll, acct, customer service, etc.
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