Management
line management
formal authority and responsibility for management of organization. valuable source for inside info. Must execute the plans developed
escalation of commitment
managers will stick to their decisions even after they appear to be wrong
multidomestic strategy
manages itself as independent operating subsidiaries. customizes products campaigns and operation techniques to meet needs of locals
location departmentalization
groups jobs on geographic areas. Advantages: responds easily to customer and environment. Disadvantages: larger admin
strategy implementations
methods where strategies are executed
resource deployment
how well it distributes resources
analyzer strategy
maintain current businesses and innovative in new businesses combining elements of prospector and defender, Protect base and enter new markets
decision making under uncertainty
most of major decisions does not know all alternatives or all risks or all consequences. Must get all info and approach from a logical perspective, intuition, judgment, & experience
Home replication strategy
used firm specific advantages used at home in foreign markets
Standing plans
used for activities that recur regularly over time
Delphi groups
used to develop a consensus of exper opinions experts contribute individually, away from group, and with their opinions combined with explanations, they average them out and decision is made
global strategy
views world as single marketplace. standardized goods
Differentiation strategy
distinguishes itself from competitors
Overall cost leadership strategy
gain competitive advantage by reducing costs
Strategical plans
general plan outlining decisions of resource allocation, priorities, and action steps to reach goals. Set by board of directors and top management
nominal groups
group of experts, they do not talk to each other freely, they write it down on a piece of paper and tak turns sharing ideas, vote on best decision
global efficiencies
location efficiencies, locate facilities anywhere that has lower labor costs or distribution costs.
Single use operational plans
Developed to carry out an action not likely to be repeated
Porter's generic strategies
Differentiation strategy, overall cost leadership strategy, focus strategy
functional departmentalization
groups jobs involving same activities. advantages: department staffed by experts & managers need to know small set of skills. Disadvantages: decisions are slower, think too narrowly instead of whole organization
cost Leadership Strategy
how products can meet needs at low costs
Product life cycle
-Introduction stage: demand high, focus on producing -Growth stage: sales grow, ensure quality, delivery, differentiation -Maturity stage: demand slows down, costs low and product differentiation -Decline stage: demand decreases, sales drop
Disadvantages of unrelated diversification
1) 1 manager does not know enough about different kinds of businesses 2) fail to exploit important synergies making them at a competitive disadvantage
Parts of delagation process
1) assign responsibility 2) grant authority 3) establish accountability
Four action points
1) develops basic plans 2) plan put into effect 3) specifies certain indicators saying event is about to take place 4) successful completion of original or contingency plan
Executing tactical plans
1) needs to evaluate every course of action possible 2) decision maker has info and resources they need to do job 3) monitor on going activities derived from plan
purposes of goals
1) provide guidence and a direction 2) promotes good planning 3) source of motivation for employees 4) mechanizm for evaluation and control
Steps in rational decision making
1) recognize and define situation, sees a decision has to be made 2) identifying alternatives, obvious and creative alternatives desired 3) evaluating alternatives, evaluated to determine feasibility and satisfaction 4) selecting best alternative, consider all factors 5)implement chosen alternative 6) follow up to see if working
developing tactical plans
1) recognize that it must address goals derived from strategic goal 2) tactics must specify resources and time frames and activities it will do 3) use of human resources
Advantages of related diversification
1) reduces dependence on one activity and reduces risks 2) reduce overhead cost 3) allows exploit of strengths and capabilities
Formal goal setting process
1) tell subordinates what top managers established 2) meet with subordinates and give them goals 3) give deadlines 4) meet quarterly 5) discuss what goals were met
benefits of specialization
1) workers become efficient at small tasks 2) transfer time between tasks decreases 3) more narrowly defined, easier to develop equipment to assist 4) employee is absent, manager can train someone new
Classical model of decision making
have conditions that rarely ever exist 1) decision makers have all info about decision and alternatives 2) they can eliminate uncertainty to acheive a decision condition of certainty 3) they evaluate all aspects of decision logically and rationally
Emergent strategy
pattern of action developing over time with no missions or goals
job enlargement
perform a wide variety of tasks but training costs increase, unions argue pay should increase and work is still boring
types of decisions
programmed and non programed decisions
defender strategy
protecting its markets maintaining stable growth, serving current customers by lowering cost and improving performance
Worldwide learning
pursuit of global inefficiencies or multimarket flexibilities may stifle firm's attempts to worldwide learning.
Prospector strategy
innovative firm constantly finding new markets, opportunities, and looking for growth and risk taking
coalition
informal alliance of individuals or groups formed to achieve a goal
Alternatives to specialization
job rotation, job enlargement, job enrichment, job characteristics, work teams
job characteristics approach
jobs should improve along skill variety, task identity, task significance, autonomy, and feedback
single product strategy
just one product or service sold in a single market (like WD-40)
cash cows
large share not expected to grow
stars
largest share of quickly growing market, invest
projects
less scope and complex, part of broader program or used for single use plan, Sometimes own manager, schedule, etc
Bounded rationality
limited by their values and unconscious reflexes and habits. And not complete information and knowledge.
Planning task forces
line managers with a special interest in planning create task force to help decelop plans
Economies of scale
lower products costs
economies of scope
lowering production and costs, enhancing bottom line
decision making under risk
more common, state of risk is estimated the amount of costs or pay off from a set of alternatives, lots of chance for bad decisions
interacting groups
most common form of group decision making, team is asked to make decision, can be hoc committees, task forces or newly constructed teams
reactor strategy
no consistent strategic approach. drifts with environmental changes
diversification
number of different businessses that an organizatino is engaged in
Related diversification
operating in several different linked businesses
tactical planning
organized sequence of steps designed to execute strategic plans
Standing operation procedures
outlines steps to be followed in certain circumstances
Advantages of unrelated dicersification
Stable performance, allocate capital to max corporate performance
satisficing
rather than conducting a search for best alternative, they tend to search only until they find an alternative that meets standard of sufficiency
crisis management
set of procedures organization used in disasters or unexpected events
Strategy formulation
set of processes involved in creating strategies
PRograms
single use plan for a large set of activities, identifying procedures for a new product line opening new facilities changing mission statement
dogs
small share not expected to grow
question marks
small share of quickly growing market, invest carefully
Distinctive competences
something the organization does well
Decision making
specific act or process. act of choosing one alternative from many alternatives
Policies
specifies organizations general response to a problem or situation ex) not accepting anyone into a college with SAT under 1200
Scope
specifies the range of markets
decision making under certainty
state of certainty exists when they know what alternatives are and their consequences, very uncommon
deliberate strategy
a plan is chosen to support goals, know what they are doing by making a product or etc
programmed decision
structured or recurs with frequency, like buying the same amount of supplies
Customer deparmentalization
structures activities to interact with customers Advantage: skilled specialist to ddeal with customer
decentralization
systematically delagation power to middle and lower level managers
Purpose of formal goal setting
to give subordinates a voice in goal setting so they know what they need to accomplish
executive committee
top executives working together as a group to provide input on proposals
First step of planning
understanding environment
nonprogrammed decisions
unstructured and less often, like buying out another company
Unity of command
eash person must report to one boss
BCG Matrix
Framework for evaluating performance. Prescribed preferred distribution of cash and other resources used two factors, growth rate and organizations share of market
strategic alternatives for international business
Home replication strategies, multidomestic strategy, global strategy, transnational strategy
Barriers to goal setting (6)
Inappropriate goals, improper reward system, dynamic and complex environment, reluctance to establish goals, resistance to change, constraints
Four basic levels of goals
Mission: statement of its purpose Strategic goals: set by top management, general issues Operational goals: lower management, short term issues tactical: set by middle management, operationalize actions necessary to achieve strategic goals
unrelated diversification
Operate multiple business not logically associated with another
Product departmentalization
arranging activities around product/product groups advantages: products easily integrated, decision speed is enhanced, performance of products accesed easily. Disadvantages: focus on one product more, admin costs rise
GE business screen
better approach to manage diversified business units, also considers attractiveness of industry and competitive position. Greater market growth, larger the market. Smaller capital requirements and less competitive intensity more attractive industry will be
Operational plans
carry's out tactical plans to achieve operational goals. Middle and lower level managers. Short term focus
business level strategy
chooses to conduct business in a particular industry (only one)
Corporate level strategy
chooses to manage operations in several industries
Miles and snow typology
classification of strategic options developed by raymond miles and charles snow, four categories: prospector strategy, defender strategy, analyzer strategy, reactor strategy
scalar principle
clear line of authority from lowest to highest positions
transnational strategy
combines benefits of global scale efficiencies and benefits of local responsiveness
Focus strategy
concentrates on specific market, product line, group of buyers
job specialization
degree to which the task of organizing is broken down into parts
Administrative model
describes how decision are actually made and that managers use 1) use incomplete and imperfect information 2) constrained by rationality & 3) tend to satisfice when making decisions
Contingency planning
determination of alternative courses of action is unexpected or disrupted
Planning: Operation managers
develop cost cutting programs and better inventory control
Planning: Marketing managers
develop plans for targe market penetration and sales
Tactical plans
developed to implement specific parts of a strategic plan. Upper and middle management. Shorter time horizon
differentiation strategy
emphasize high quality/value. Chanel, Louis Vuitton. Focuses on what the customer wants not price
multimarket flexibility
face challenge of reacting to diverse and changing environments