MCE test 2

value statement

list of the key values or ideological themes considered important for an organization.

Strategic direction of a firm

locus of a complex set of complex systems

Strong leadership with no management

meaningless change and chaos in organizations

Planning

mission, vision, values Strategic and financial objectives

Chain of accountability

non managerial, first line managers, middle managers, top managers, board of governance

Three skills

technical, human, conceptual

Accountability

the requirement of one person to answer to a higher authority

Enacted Values

the values you see a company actually enacting or practicing

Conceptual

think analytically, work with abstract ideas, solve complex problems

levels of management

top managers, middle managers, first-line managers

technical

use expertise, perform tasks with proficiency, apply strong skill set to operations

slogans

used to summarize and communicates values in simple terms

Espoused values

what an organization says it values

Value Congruence

when espoused values and enacted values align

human

work well with others, relate to people, develop social capital, build and manage relationships

Increasing commitment to goals

üMake public üSelf-set goal, or part of the process üIncrease self-efficacy

Reward Power

•: Ability to control the allocation of rewards valued by others, or remove negative sanctions (e.g., professor can reward with grades)

Venture Capitalists

•: individuals or companies that invest in new business in exchange for partial ownership of those businesses

Core Values

•A set of values that guide the actions and behaviors of organizational members •Typically 4-8

Objectives

•An organization's specific performance targets •The specific results management wants to achieve •Purpose: to convert the vision and mission into specific performance targets

organizing

•Arranging tasks, people, and other resources to accomplish the work üCreating structure üAssigning tasks to individuals or groups (who will do what) üAllocating resources

Strategy is about competing differently

•Cannot simply copy •Must have distinctive element •It is about doing what rival firms don't do or can't do. Should aim to: 1.Appeal to buyers in ways that sets a company apart from rivals 2.Staking out a market position that is not crowded by strong competitors

Expert Power

•Capacity to influence others by possessing knowledge or skills that they value. Based on a perception of competence (e.g., Einstein)

Marketing

•Consumer market: people with unsatisfied wants and needs who have both the resources and willingness to buy •Know your customers and adapt quickly to ever-changing demands Must listen, listen, listen

Revamping the value chain to increase differentiation

•Coordinate with downstream channel allies •Enhance customer value •Coordinate with suppliers •Address customer needs

to make value congruence

•Craft vision, mission, objectives, strategy, and operational practices that match the established values •Emphasize how value-based behavioral norms contribute to success •Strategies change, values endure Values should be at the core of decisions

Accounting

•Daily sales, expenses, and profits •Inventory control, customer records, and payroll Helps with: •Tax planning and financial forecasting •Choosing sources of financing and wiring requests for funds

Human Resources

•Deciding labor needs •Recruiting and selecting the right people •Training and development for growth •Rewards and culture for retention •Motivating for performance

With value incongruence

employees: •Reduced affective commitment •Turnover •Recruitment problems Consumers: •Compromised reputation •Impact on brand loyalty •Word-of-mouth

Step 2 of vision

everyone else can see the same picture in the same way that you have in your mind. Must be crystal clear. Tips: 1. think about what theyre thinking about 2. carefully choose signs, symbols, language 3. Consider length 4. Relentlessly repeat

strategic objectives

tangible outcomes or results to be achieved

Crowdfunding

•donation based or debt-investment (peer-to-peer lending)

proactive

•planned initiative to improve the company's financial performance and secure a competitive edge •Deliberate Strategy

Angels

•private individuals who invest their own money in potentially hot new companies before they go public

reactive

•responding to unanticipated developments and fresh market conditions •Emergent Strategy

When broad differentiation strategy works best

1.Buyer needs and uses of product are diverse 2.There are many ways to differentiate 3.Few rivals are following similar approach 4.Technology change and is fast-paced

Pitfalls to avoid: broad differentiation strategy

1.Easily copied strategies 2.Low value in unique attributes 3.Overspending on differentiation 4.Trivial improvements 5.Over-differentiating (e.g., over designed) 6.Charging too high of a premium

Cost Drivers

1.Economies of scale 2.Learning and experience 3.Capacity utilization 4.Supply chain efficiencies 5.Lower-cost inputs 6.Production technology and design 7.Communication systems and information technology 8.Bargaining power 9.Outsourcing or vertical integration 10. Incentive systems and culture

pitfalls to avoid in broad low cost strategy

1.Getting carried away with price cutting 2.Relying on easily replicable cost reduction approaches 3.Becoming too fixated on cost reduction 4.Not spending when needed

ways to deliver superior value

1.Lower buyers' overall costs 2.Incorporate tangible features that increase satisfaction 3.Incorporate intangible features that increase satisfaction in noneconomic ways 4.Signal the value (e.g, high prices, fancy packaging, high luxury facilities, etc.)

options for low cost advantage

1.Lower price for higher market share of price sensitive consumer 2.Increase efficiency for higher profit margin

Ways to reach broad differentiation strategy

1.Managing the value chain to create differentiating attributes 2.Revamp the firm's overall value chain to increase differentiation

two ways for getting cost advantage

1.Perform value chain activities more cost-effectively than rivals 2.Revamp the firm's overall value chain to eliminate or bypass some cost-producing activities

When broad low-cost strategy works best

1.Price competition among rival sellers is vigorous 2.Rival firm's products are essentially identical 3.Difficult to achieve product differentiation that creates value for buyers 4.Most buyers use product in the same way 5.Low switching costs for buyers

Value Drivers

1.Product features and performance 2.Customer services 3.Production R&D 4.Technology and innovation 5.Input quality 6.Employee skills, training, & experience 7.Sales and marketing 8.Quality control processes

Two ways of Competitive advantage

1.Provide product or service that buyer values more highly than others (higher perceived value) 2.Produce product or service more efficiently (lower costs)

manager

A person that uses influence to set and achieve goals. A person who directly supervises, supports, and activates work effort to achieve performance goals of individuals, groups, and organizations.

Visions

A solid vision creates an idealized future state for your organization that everyone is motivated to pursue wholeheartedly. Tells people: 1.Where the organization is headed 2.Why its moving in that stated direction 3.Makes members want to do everything they can to help get it there

Coercive power

Ability to harm, penalize, or punish someone

Things organizations need

Capital, good ideas, planning, information management, budgets, accounting, marketing, good employee relations, overall managerial know how

Financing

Capital: personal, family, business associates -banks and finance institutions (lenders)

Financial Objectives

Communicate management's goals for financial performance

Missions HAVE to include

Constituents Who are the organization's customer or targeted population? Markets Where does the organization compete geographically? Survival How will the organization sustain? Is the firm committed to growth, financial stability, profitability, etc.?

Step 3 of Vision

Engage others 1. let them know exactly how they fit in 2. create freedom, 3. give them something to think about

Strategic objectives

Lay out target outcomes concerning a company's market standing, competitive positions, and future business prospects

In planning strategy

MUST consider actions of other stakeholders

Emergent Strategy

New strategy elements that emerge as managers react adaptively to changing circumstances

Referent Power

Occurs when others idolize, identify with, and/or are inspired by the person (e.g., celebrities)

Missions SHOULD include

Philosophy What are the organization's basic beliefs, values, and ethical priorities? Public image How responsive is firm to societal and environmental concerns? Products or services What are the organizations major products or services? What do you provide?

Deliberate Strategy

Planned initiatives plus ongoing strategy elements continued from prior periods

Dwight Eisenhower

Plans are useless, but planning is indispensable significant value in planning, strict adherence can lead to failure

Missions only include if special

Self-concept What are the organization's major competitive advantages or core competencies? What sets you apart from the rest? View on employees Are employees a valuable asset to the organization?

Step 4 of Vision

Test yourself, ask questions

Strategy

The coordinated set of actions that managers take to outperform organization's competitors and achieve superior success Provides direction and guidance

management

The process of getting things done effectively and efficiently, with and through people

Goal Setting Theory

To increase motivation by setting specific and difficult goals

Small Business Administration (SBA)

US government agency that advises and assists small businesses by providing management, financial advice and loans

Upside Down Pyramid

View of organizations that puts consumers at the top and positions upper levels of management as supporters of lower levels of management

Strategy is partly proactive and partly reactive

a firm's actual (or realized) strategy is a combination

Strategy needs:

acumen, planning, visioning, courage

Values

beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission

project objectives

defined in terms of the successful completion of a complex activity

positional sources of power

derived from the formal roles (i.e., particular office or rank) you hold in an organization, a social system, or society

personal sources of power

derived from your unique personal attributes and skills that lead others to respect, idolize, adore, trust, like and/or view you as an expert and knowledgeable

Mission statement

describes the purpose of your organization—the reason for its existence

visions in complex systems

focused enough to guide decisions and actions and general enough to allow innovation and creativity in strategies for attaining it

Undesirable parts of visions

generic feel good statements, general market quests, vague and unrevealing statements

Step 1 of vision

imagine the invisible, a positive future state. Considers 1. needs of the people, 2 what people value 3 what gets people moving

Low Cost Leadership

industry's lowest cost producer

Three roles of a manager

interpersonal, informational, decisional

Yerkes-Dodson Law

optimal performance occurs at a medium level of arousal, in between fatigue and sleepiness and high stress and anxiety

Managing a small buisness

planning, financing, marketing (knowing customers), HR (knowing employees), logistics (operations), records (accounting)

Four functions of management

planning, organizing, leading, controlling

talent vs genius

talent hits a target no one else can hit, genius hits a target no one else can see

process of leadership

seeking adaptive and constructive change

Process of management

seeking order and stability

value chain

set of activities that an organization carries out to create value for its customers •Primary (e.g., operations, service, etc.) and support (e.g., infrastructure, HRM, etc.) activities

Competitive advantage

some type of edge over rivals in attracting buyers and competing with competitive forces

Strong management and no leadership

stagnant, inflexible organizations

Missions

•Describe the organization's current business operations and purpose A mission clearly states the: 1.Organization's products/services 2.Constituent group or market the org serves 3.Constituent needs that org seeks to satisfy 4.Unique identity of org

informational

•Exchanging and processing information

manager

•Influence, groups, goals •Based on position and authority (positional power) •Planning and budgeting •Organizing and staffing •Controlling and problem solving

leader

•Influence, groups, goals •Does not need to be associated with position (personal power) •Establishing vision •Aligning people Motivating and inspiring

Leading

•Inspiring people to work hard to achieve high performance üGetting people enthused, excited, and inspired üBuilding commitment to goals and organization üAligning individual and organizational values

interpersonal

•Interacting with people

Operations

•Manufacturing plan: •Plant size •Machinery required •Production capacity •Supply chain considerations: •Inventory and inventory control-methods •Location of plants and distributors, etc. •Transportation costs

Controlling

•Measuring performance and taking action to ensure desired results üMeasuring and collecting metrics of work performance üComparing performance to standards or goals üTaking corrective action where needed üNote: directly related to planning

Setting Objectives

•Must be specific and quantifiable or measurable •Concrete, measurable objectives: ü Focus organizational attention and align actions throughout organization ü Serve as yardsticks for tracking organizational performance and progress ü Motivate employees to expend greater effort and perform at a high level

Broad differentiation strategy

•Offer unique product attributes that a wide range of buyers find appealing and worth paying more for •Can pursue from many angles Successful differentiation allows a firm to: •Command a premium price for its products •Increase unit sales Gain buyer loyalty

Broad Low Cost Strategy

•Produce goods or services for a broad base of buyers at a lower cost than rivals •Cost advantage over rivals •Meaningfully lower, not simply absolute lowest

Strategy must evolve over time

•Seek enduring edge, not temporary advantage Internal and external business environments are complex systems, so...things change •Must adjust strategy in response to unfolding events Crafting strategy is not a one-time event, rather a work-in-progress.

Revamp the system to lower costs

•Selling direct to consumers •Bypass activities and costs of distributors •Streamlining operations •Eliminate low-value-added work steps and activities •Reducing materials-handling and shipping costs •Have suppliers locate plants and warehouses near company's own facilities

Planning

•Setting performance objectives and deciding how to achieve them üEstablishing goals, objectives, and direction of individuals, groups, or the organization üDeciding how you will achieve the objectives

Strategy is complex

•Strategy designed with complexity in mind has a much greater success of leading to long-term competitive success •Flexible and creative •Leverages connections •Reacts to patterns Takes advantage of complexity mindset and systems thinking

Desired type of competitive advantage

•Sustainable when the advantage persists despite the best efforts of competitors to match or surpass

decisional

•Using information to make decisions

Legitimate Power

•associated with having status or formal job authority. There is a mutual agreement that people in certain roles can request certain behaviors of others (e.g., police officers)