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MGMT 309 Test 2
Terms in this set (90)
- Cornerstone of Planning
- Catalyst that drives the planning process
- Underlies every aspect of setting goals and formulating plans
- best way to achieve goals
- all organizations do it, but not in the same fashion
- occurs within an environmental context
- required to guide in achievement
Purpose of Goals
-provide guidance and direction for people of the organization
-strong effect on quality of other aspects of planning
- source of motivation
- mechanism for evaluation and control of the organization
statement of an organizations fundamental purpose
-goals set by and for top management of the organization that address broad, general issues.
-top management/ long-run
-set by and for middle managers; their focus is on how to operationalize actions to strategic goals.
-set by and for lower-level managers to address issues associated with tactical goals
- year or less
Kinds of Goals: By Area
Different Functional areas of the organization
3 Kinds of Goals
By Time Frame
Who sets goals?
All Managers (every individual should set goals)
- Managerial responsibility for goal setting should correspond to the manager's level in the organization
-allows managers to balance and reconcile inconsistent or conflicting goals
- Managers can pursue one goal and exclude
all others to seek a mid-range goal
-figure a way out of a conflict to
meet your goal.
Criteria for Effective Goals
-Specific & Measurable
-Cover Key Result Areas
-Defined time period
-linked to rewards
Kinds of Organizational Plans
A general plan set by and for top management that outlines resource allocation, priorities, and action steps to achieve strategic goals
-long term, 5 years or more
-a plan aimed at achieving the tactical goals set by and for middle management
-intermediate duration (1-5 years)
Shorter plans for lower level managers
-less than a year
Time Frames for Planning
Long-Range: 5 or more years/ strategic
Intermediate: 1-5 years and parallel tactical plans
Short-Range: operational action and contingency plans of one year or less
Time Dimension of Planning
-Planning must provide sufficient time to fulfill the managerial commitments involved
Responsibilities for Planning
Planning Task Force
Board of Directors
Chief Executive Officer
-Gather information, coordinate planning activities, and take broader view that individual managers.
Planning Task Force
Temporary/For certain tasks
Board of Directors
-Establishes corporate mission and strategy
-May engage in strategic planning
Chief Executive Officer
-May serve as president or board chair; has a major role in planning and implementing the strategy
-Composed of top executives
-meets regularly with the CEO to review strategic plans
-Have the formal authority and responsibility for management of the organization
-Help to formulate strategy by providing
-responsible for executing the plans of top management
-determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate
-plans help managers to cope with uncertainty and change
-What would you do if....
-anticipating something that could happen
-Set of procedures the organization uses in the event of a disaster or other unexpected calamity
-Difficult to anticipate
-not having a plan before something happens
-Apollo 13 Clip
Major Barriers to Goal Setting and Planning
-inappropriate goals, improper reward system, dynamic and complex environment, reluctance to establish goals, resistance to change, constraints
Overcoming the Barriers
-Understanding the purposes of goals and planning
-Communication and Participation
-Effective Rewards System
-Programs are made up of a bunch of projects
Policy, Standard Operating Procedure, Rules & Regulations
Management by Objectives (MBO)
-A technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish
Strengths of Formal Goal Setting (Success)
-Improved employee motivation
-Fosters more objective performance appraisals
-Focuses attention on appropriate goals and plans
-Helps identify managerial talent
-Facilitates control of the organization
Weaknesses of Formal Goal Setting (Failure)
-Poor implementation of the goal setting process
-Lack of top-management support for goal setting
-Delegation of the goal-setting process to lower levels
-Overemphasis on quantitative goals
-Too much paperwork and record keeping
-Managerial resistance to goal setting
-comprehensive plan for accomplishing an organization's goals
-Involves formulating and implementing strategies to take advantage of business opportunities and meet competitive challenges
-Promote superior alignment between an organization, its environment, and its goals
Components of Strategy
-Something an organization does exceptionally well.
-Something that makes you stand out.
-Range of markets in which an organization will compete
-How an organization will distribute its resources across the areas in which it competes
Types of Strategic Alternatives
-The set of strategic alternatives that an organization chooses from as it conducts business in a particular industry or a particular market
-How do we compete?
-The set of strategic alternatives that an organization chooses from as it manages its operations simultaneously across several industries and several markets.
-What type of business are we in?
-The set of processes involved in creating or determining the organization's strategies; it focuses on the content of strategies.
-The methods by which strategies are operationalized or executed within the organization; it focuses on the processes through which strategies are achieved.
Strategy that you set out to do
-A plan, chosen and implemented to support specific goals, that is the result of a rational, systematic, and planned process of strategy formulation and implementation.
-A pattern of action that develops over time in the the absence of goals or missions, or despite goals and missions.
-Things that come about unintentionally
-Some will not get implemented
SWOT Analysis Strategy
Evaluating Organizational Strengths
-skills and abilities enabling an organization to conceive of and implement strategies
Common Organizational Strengths
-organizational capabilities possessed by numerous competing firms
Distinctive Competencies (element of the strategy)
-useful for competitive advantage and superior performance
Imitation of Distinctive Competencies
Sustained Competitive Advantage (why someone should choose you)
-occurs when a distinctive competence cannot be easily duplicated (difficult to recreate)
Evaluating Organizational Weaknesses
-skills and capabilities that do not enable an organization to choose and implement strategies that support its mission
-occurs when an organization fails to implement strategies being implemented by competitors
Weaknesses can be overcome by:
-investments to obtain the strengths needed
-modification of the organization's mission so it can be accomplished with the current workforce.
-areas in the organization's environment that may generate high performance
-areas in the organization's environment that make it difficult for the organization to achieve high performance
Porter's Generic Strategies
Overall cost leadership strategy
-An organization seeks to distinguish itself from competitors through the quality of its products or services
-Ritz Carlton, haagen dazs
-Companies products usually cost more
Overall Cost Leadership Strategy
-An organization attempts to gain competitive advantage by reducing its cost below the costs of competing firms
-Marketing and sales focus on simple product attributes and how these product attributes meet customer needs in a low-cost and effective manner
-An organization concentrates of a specific regional market, product line, or group of buyers
-Choosing to appeal to certain people
-Either differentiation or cost leadership, depending on which one is the proper basis for competing in or for a specific market segment, product category, or group buyers.
Miles and Snow's Strategy Types
-Encourages creativity to seek out new market opportunities and to take new risks.
-Develops the flexibility to meet changing market conditions by decentralizing its organizational structure
-Amazon, 3M, Rubbermaid
-Focuses on defending its current markets by lowering its costs and/or improving the performance of its current products
-BIC, eBay, Mrs. Fields
-Need to be able to respond to the new people that come into the marketplace
-Incorporates elements of both the prospector and the defender strategies to maintain business and to be somewhat innovative.
-Combination of Prospector and Defender
-DuPont, IBM, Yahoo
-Wait to see what happens
-Business usually will go out of business
Product Life Cycle
-Focus on getting the product out the door without sacrificing quality. People have to try it first.
-Focus on ensuring quality and delivery, and begin to differentiate product
-Focus on low costs and new products. Essential stage if company is going to survive in the long-run.
Strategic Business Units (SBU)
-Each business or group of businesses within an organization is engaged in serving the same markets, customers, or products.
The number of businesses an organization is engaged in and the extent to which these businesses are related to one another.
-An organization manufactures one product or service and sells it in a single geographic market.
-Most companies start with one product
-A strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked
-similar technology, common distribution and marketing skills, common brand name and reputation, common customers.
Basis of Relatedness for Related Diversification
-Common Distribution & Marketing Skills
-Common Brand Name & Reputation
Advantages of Related Diversification
-Reduces an organization's dependence on any one of its business activities and thus reduces economic risk
-Reduces overhead costs associated with managing any one business through economies of scale and economies of scope.
-Allows an organization to exploit its strengths and capabilities in more than one business
-Synergy exists among a set of businesses when the businesses' value together is greater than their economic value separately
-Operates multiple businesses that are not logically associated with one another. No commonality between the different companies & products you own.
-Stable performance over time due to business cycle differences among the multiple businesses
-Allocation of resources to areas with the highest return potentials to maximize corporate performance
-Poor performance due to the complexity of managing a diversity of businesses
Internal Development of New Products
Developing products and services within the boundaries of traditional business operations
-create a product from what you already have
Backward Vertical Integration
-Beginning with a business that furnishes resources previously handled by a supplier
-acquiring your supplier. Ex. McDonalds purchased its buns supplier
Forward Vertical Integration
-Skipping the distributor
ex. instead of buying a tshirt from walmart, you can order it online.
Purchase of one firm by another firm of approximately the same size
-two companies join together of same size.
ex. United and Continental
Purchase of a firm by another firm that is considerably larger
Purposes of Mergers and Acquisitions
-To diversify through vertical integration
-to acquire complementary products or services linked by a common technology and common customers.
-To create or exploit synergies that reduce the combined organizations' costs of doing business to increase revenues.
Tools for Managing Diversification
Organization Culture & Portfolio Management Techniques
Two important portfolio management techniques
The BCG Matrix
The GE Business Screen
-evaluates a portfolio of businesses on the growth rate of their respective markets and each business's relative share of its market.
-2x2 (relative market share to Market Growth Rate)
GE Business Screen
-Method of evaluating businesses in a diversified portfolio along two dimensions, each of which contains multiple factors:
-Competitive position of each firm in the
-seeking lower input cost locations. Choosing location based on businesses' needs.
Economies of Scale
-larger facilities result in lower costs. Buying in bulk to save $
Economies of Scope
-Broaden product line
-International Businesses may respond to a change in one country by implementing a change in another country.
-The diverse operating environments of multinational corporations (MNCs) contribute to organizational learning that can be transferred to other operating environments
Strategic Alternatives for International Businesses
-Utilizing a core competency or a firm-specific advantage developed at home as a main competitive weapon in foreign markets
-Works best when the firm's competences are valuable in many different types of markets
-Managing a corporation as a collection of independent operating subsidiaries frees a firm to customize its products, its marketing campaigns, and operating techniques to meet local customer needs
-Do something different in each place you do business in. Assess what is important
Viewing the world as a single marketplace and having as a primary goal the creation of standardized goods and services that will address the needs of customers worldwide.
-Works best for a commodity like product or in an industry that demands high efficiency
-Attempting to combine the benefits of sclae efficiencies pursued
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