Management chapter 5

writing effective objectives

(1) To + (2) action verb + (3) specific and measurable result + (4) target date

company situation analysis

1. Assessment of the present strategy based on performance 2. SWOT analysis 3. Assessment of competitive strength and identification of competitive advantage 4. Conclusions concerning competitive position 5. Determination of the issues and problems that need to be addressed through the strategic planning process.

competitive advantage

A competitive advantage specifies how an organization offers unique customer value Benchmarking is the process of comparing an organization's products or services and processes with those of other companies

merger and acquisition growth strategy

A merger occurs when two companies form one corporation. An acquisition occurs when one business buys all or part of another business Portfolio Analysis : Business portfolio analysis is the corporate process of determining which lines of business the corporation will be in and how it will allocate resources among them

strategic and operational strategies

A strategy is a plan for pursuing a mission and achieving objectives. Three planning levels: corporate, business, and functional. The corporate and business levels are part of strategic planning, and the functional level is part of operational planning. A corporate strategy is the strategic plan for managing multiple lines of business. In essence, there is more than one business within the corporation A business strategy is the strategic plan for managing one line of business. Functional strategies are part of operational planning. A functional strategy is the operational plan for managing one area of a business.

contingency plan

Alternative plans Implemented if uncontrollable events occurs Construction work is an example of contingency plans To develop a contingency plan, you should answer three questions: 1. What might go wrong? 2. How can I prevent it from happening? 3. If it does occur, what can I do to minimize its effect?

criteria for objectives

As the model for writing objectives implies, an effective objective conforms to three "must" criteria: It expresses a specific and measurable result, and it sets a date for achieving that result. It should also have a single result. In addition to the three "must" criteria, objectives should meet three "want" criteria when possible. Difficult but Achievable (Realistic). Participatively Set. Acceptance and Commitment

three growth strategies

Concentration (a firm grows in its exiting line(s) of business) Integration (a firm grows by entering forward or backward line(s) of business) Diversification (a firm grow by adding related or unrelated products)

strategic planning process

Developing the mission Analyzing the environment Setting objectives Developing strategies Implementing and controlling strategies DEVELOPING THE MISSION: A mission is often based on or also creates a vision that defines where the company is headed in inventing its future and why. ANALYZING THE ENVIRONMENT : A situation analysis focuses on those features in a company's environment that most directly affect its options and opportunities. Three parts: industry and competitive situation analysis, company situation analysis, and identification of a competitive advantage. Industry and Competitive Situation Analysis : In the global village, you need to understand the competitive environment. Company Situation Analysis. A company situation analysis is used at the business level to determine the strategic issues and problems that need to be addressed through the next three steps of the strategic planning process A complete company situation analysis has five key parts

competitive strategies

Differentiation Strategy. Cost Leadership Strategy Focus Strategy

setting objectives

Distinguish between goals and objectives. Goals state general, broad targets to be accomplished. Objectives state what is to be accomplished in specific and measurable terms with a target date.

single use plans

For specific purposes Programs and budgeted for handling non repetitive situations Used as a model for future version of the program or budget Growth Strategy is an example of single-use plans

operational planning

Functional strategies are strategies developed and implemented by managers in marketing, operations, human resources, finance, and other departments of a company. Marketing Strategy. Operations Strategy Finance Strategy Human Resources Strategy Other Functional Strategies

corporate strategies

Grand strategy is an overall corporate strategy for growth, stability, or turnaround and retrenchment, or for some combination of these. Each grand strategy aligns with different objectives

four grand strategies

Growth (a firm pursues increasing its size) Stability (a firm maintains the same size or grows slowly) Turnaround and retrenchment (a firm attempts a comeback, retrenchment decreases in size) Combination of these strategies (two or more of the three strategies are used for different lines of business)

competitive analysis overall

How large is the market? What is the growth rate? How many competitors are there?

strategic planning

Long range objective's ( more than 1 year) Upper level management Corporate and business planning levels

management objectives

Management by objectives (MBO) is the process in which managers and their employees jointly set objectives for the employees, periodically evaluate performance, and reward according to the results

management by objective steps

Managers and employees set individual objectives Give feedback Evaluate performance Reward according to performance

growth strategies

Most large MNC have growth strategies, and that is a major reason they are global companies. Growth strategies are: concentration backward and forward integration related and unrelated diversification.

business strategy- adaptive strategy

Prospecting: a firm offers new products and enters to new markets Defending: a firm stays its product line and markets Analyzing: a firm moves into new markets and seeks new opportunities

standing plans

Purpose: to guide employee's actions in decision making Policies, rules and procedures for handling repetitive situations Policies provide general guidelines to be followed when making decisions. A procedure is a sequence of actions to be followed in order to achieve an objective. Rules state exactly what should or should not be done

operational planning

Short-range objectives (less than 1 year) Middle and lower level managers Functional planning level

Explain the reason for conducting a company situation analysis.

The company situation analysis is used at the business level to determine the issues and problems that need to be addressed through the strategic planning process.

Explain the reason for conducting an industry and competitive situation analysis.

The industry and competitive situation analysis is used to determine the attractiveness of an industry. It is primarily used at the corporate level to make decisions regarding which lines of business to enter and exit and how to allocate resources among lines of business.

state the difference between standing plans and single-use plans

The major difference is the repetitiveness of the situation the plan is intended to address. Standing plans are policies, procedures, and rules developed for handling repetitive situations. Single-use plans are programs and budgets developed for handling nonrepetitive situations.

List the parts of an effective written objective.

The parts of the objective are (1) to + (2) action verb + (3) singular, specific, and measurable result to be achieved + (4) target date.

describe how strategic planning differs from operational planning

The primary differences concern the time frame and the level of management involved. Strategic planning involves developing a mission and long-range objectives and plans; operational planning involves short-range objectives and plans. Upper-level managers develop strategic plans, and middle- and lower-level managers develop operational plans.

corporate portfolio management

The primary objective of corporate portfolio management (CPM) is to make strategic decisions about the allocation of resources among SBU. Cash cows Question marks Stars Dogs

strategic vs operational planning strategies

There are two types of plans. Strategic planning is the process of developing a mission and long-range objectives and determining in advance how they will be accomplished. Operational planning is the process of setting short-range objectives and determining in advance how they will be accomplished.

describe the three growth strategies

With a concentration strategy, the firm grows aggressively in its existing line(s) of business. With integration, the firm grows by entering forward or backward line(s) of business. With diversification, the firm grows by adding related or unrelated products.

Describe the four grand strategies.

With a growth strategy, the firm aggressively pursues increasing its size. With a stability strategy, the firm maintains the same size or grows slowly. With a turnaround strategy, the firm attempts a comeback; with retrenchment, it decreases in size. With a combination strategy, two or more of the three strategies are used for different lines of business.

discuss the three adaptive strategies

With the prospecting strategy, the firm aggressively offers new products or services and/or enters new markets. With the defending strategy, the firm stays with its product line and markets. With the analyzing strategy, the firm moves into new markets cautiously and/or offers a core product group and seeks new opportunities