Quiz MGMT 1 & 2

reserve price

What a customer is willing to pay (the maximum they are will to pay for product)

Four areas of balanced scorecard

1. Financial - return on asset stock price - relate to effectiveness and profits 2. Customer - number of new/repeat customers and percentage of repeat customers - relate to customer attraction and satisfaction 3. Internal business process - speed at serving a new customer and time it takes to create a new product and get it to market -relate to organizational efficiency 4. Staff learning and growing - such as average number of new skills learned by each employee every year -relate to the future and emphasize that employee learning is more important than formal training

Triple bottom line & Three P's

1. People (making sure that the actions of the organization are socially responsible) 2. Planet (making sure organizations act in a way that promotes environmental sustainability 3. Traditional organization PROFITS

Two important considerations of organizational performance

1. Performance measures: metric by which an organizations progress can be gauged (profits, stock price, sales) 2. Performance benchmarks: used to make sense of an organizations standing compared to its own or competitors financial measures and/or performance indicators

Foundation of strategic management is the answer three questions

1. Where are we? - Assess organization, look at benchmarks and other organizational performance indicators (quality measures, productivity etc.) 2. Where are we going? - Organizational leadership provides answer to this question - Set vision (Vision is developed within organizations mission and aligned with core values) 3. How are we going to get there? - Organization develops strategies to work toward achieving its vision

Competitive advantage is useful because...

1. it does not change based on random perturbations (like stock price or profits), changes reflect relative shifts in the cost structure or shifts in customer willingness to pay 2. Useful because it better reflects the strategic helth of firms that reinvest in their business and therefore are healthy but do not observe profits

Competitive advantage

A firm has a competitive advantage if it has a larger economic value creation than that competitor

Mission Statement

Effectively capture an organization's identity and provide answers to the fundamental question who are we? Tells stakeholders what important role or purpose the organization plays in society

Value statements

Explicit principles that the company endorses and live by and expects their employees to embrace (ex. Integrity, diversity and customer service)

vision looks to the _____ and a mission captures the key elements of the organizations ____________

Future, Past and Present

SMART goals

Specific: Create explicit rather than vague goals to help target your energy toward what is important Measurable: quantifying goals allows you to track your accomplishments over time and can help reduce stress Attainable: creating challenging but attainable goals leads to higher performance Realistic Time-bound: setting interim deadlines help you stay on schedule

Unrealized strategy

abandoned parts of the intended strategy

Well constructed visions articulate organizations

aspirations

Learning and growth measure

can we continue to improve and create value, focus on innovation, and proceed with understanding that strategies change over time

Strategic management

comprehensive process designed for firms to best use their resources and capabilities to provide superior firm performance **why do some firms outperform other firms

Two pivotal events that firmly established strategic mgmt. as a field of study in 1980

creation of the strategic management journal & publication of competitive strategy: techniques for analyzing industries and competitors (Michael porter)

Customer measures

customer attraction, satisfaction, and retention (how do customers see us)

triple bottom line

help understand organizations performance triple bottom line highlights social responsibility

Market-based analysis

helps determine how the firm compares to its competitors in the market (2 measures to analyze a firm's position in the market): 1. Market share = Firm's total product Revenue / total revenue in the industry or market - Percentage of the market that a firm has 2. Price-earnings (PE) ratio = stock price / earnings per share (EPS) - Determines how much it costs to invest in the company to receive 1.00 in earnings (ex. Ratio is 5, it costs 5 investment in this company to receive 1 in earnings)

Strategies

higher level broad goal without a lot of specifics, provides direction that organization wants to move toward to be more successful

Organizational performance

how well an organization is doing to reach its vision, mission and goals (assessing this is vital aspect of strategic mgmt.)

Importance of Vision

key tool for executives to inspire people in an organization as the vision *describes what the organization hope to become in the future and helps guide its strategies*

Balanced scorecard

measurement of organizational performance in four equally important areas: finances, customers, internal operations, and innovation and learning **helps managers resist the temptation to fixate on financial measures and instead monitor a diverse set of important measures

Strategic Management Process

requires the ability to manage change (SWOT)

Intended strategy

strategy organization hope to execute (described in detail within an organizations strategic plan)

Realized strategy

strategy that an organization actually follows (product of a firm's intended strategy, what the firm planned to do, the firms deliberate strategy, parts of the intended strategy that the firm continues to pursue over time, and its emergent strategy, what the firm did in reaction to unexpected event)

Financial analysis

this is basically ratio analysis, being able to make apple to apple comparisons between firms or annual trends that account for variable volumes, sales, expenses and profits

Emergent strategy

unplanned strategy that arises in response to unexpected opportunities and/or challenges (can result in disasters or tremendous success)

Economic value creation =

what customer is willing to pay - cost incurred to produce the product