Management Quiz 2

3) Fit

"Fit" has to do with the ways a company's activities interact and reinforce one another. Example: A mutual fund such as Vanguard Group follows a low-cost strategy and aligns all its activities accordingly, distributing funds directly to consumers and minimizing portfolio turnover.

Three Levels of Organizational Culture

*Level 1: Observable Artifacts—Physical Manifestations of Culture.* At the most visible level, organizational culture is expressed in observable artifacts—physical manifestations such as manner of dress; awards, myths and stories about the company; rituals and ceremonies and decorations; as well as visible behavior exhibited by managers and employees. *Level 2: Espoused Values—Explicitly Stated Values and Norms* Espoused values are the explicitly stated values and norms preferred by an organization, as may be put forth by the firm's founder or top managers. *Level 3: Basic Assumptions—Core Values of the Organization*. Basic assumptions, which are not observable, represent the core values of an organization's culture—those that are taken for granted and, as a result, are difficult to change.

3 Definitions of Planning

1. Planning is defined as setting goals and deciding how to achieve them. 2. Planning is coping with uncertainty by formulating future courses of action to achieve specified results. 3. A plan is a document that outlines how goals are going to be met.

Why Planning and Strategic Management are Important

1. Providing direction and momentum 2. Encouraging new ideas 3. Developing a sustainable competitive advantage

Example of Means-End Chain

1. Strategic goal: Increase revenue from new customers by 10% over the next 12 months 2. Operational goal: Introduce (roll out) out two new product offerings over the next 12 months 3. Action plan: a.Product development team to propose two new products by March 31 b.Products to be produced and pilot-tested in selected markets by May 1 c.Products to be modified as needed and a marketing plan prepared to support their introduction (rollout) by May 31 d.Sales force to be trained to sell products and execution of marketing plan: begun by June 30 e. Sales managers to meet with sales force to discuss progress and receive comments on marketing plan: ongoing

What Questions Should a Strong Strategic Plan Address?

1. What is the assessment of the external environment? 2. How well do you understand the existing customers and markets? 3. What is the best way to grow the business profitability, and what are the obstacles to growth? 4. Who is the competition? 5. Can the business execute the strategy? 6. Are the short term and long term balanced? 7. What are the important milestones for executing the plan? 8. What are the critical issues facing the business? 9. How will the business make money on a sustainable basis? In considering whether the organization can execute the strategy, a leader must take a realistic and critical view of its capabilities and competencies. If it does not have the talent in finance, sales, and manufacturing to accomplish the vision, the chances of success are drastically reduced.

The Organization Chart

An organization chart is a box-and-lines illustration showing the formal lines of authority and the organization's official positions or work specializations Two kinds of information that organization charts reveal about organizational structure are (1) the vertical hierarchy of authority, who reports to whom, and (2) the horizontal specialization, who specializes in what work.

Decision Tree: Road Map to Ethical Decision Making

A graph of decisions and their possible consequences Used to create a plan to reach a goal

The Delphi Technique

A group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas The judgments are combined and in effect averaged to achieve a consensus of expert opinion Originally designed for technological forecasting but now is used as a multipurpose planning tool The Delphi technique is useful when face-to-face discussions are impractical. It's also practical when disagreement and conflicts are likely to impair communication, when certain individuals might try to dominate group discussions, and when there is a high risk of groupthink.

Strategic Plan

A large-scale *action plan* that sets the long-term goals and direction for an organization Represents an "educated guess" about what must be done in the *long term* for the survival or the prosperity of the organization or its principal parts Strategic plans generally reconsidered every year due to everchanging business conditions

2) Benchmarking: Comparing with the Best

A process by which a company compares its performance with that of high-performing organizations

Strategic Management

A process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals Strategic management can be critically important for businesses. It aligns the goals of the organization through all levels of management.

Relationship Between Goal Difficulty and Performance

A: committed individuals with adequate ability B: committed individuals who are working at capacity C: individuals who lack commitment to high goals If goals are too easy (as in "half the flights should arrive on time"), goals won't impel people to make much effort. If impossible ("all flights must arrive on time, regardless of weather"), employees won't even bother trying. Or they will try and continually fail, which will end up hurting morale. Or they will cheat. An example was the unrealistic goal of cutting wait times for appointments by more than half at Veterans Affairs hospitals, as revealed in ongoing scandals in which VA administrators were found to have falsified figures.

Group Decision Making: How to Work With Others

Advantages of group decision making: Greater pool of knowledge Different perspectives Intellectual stimulation Better understanding of decision rationale Deeper commitment to the decision

Link Between Strategy, Culture, and Structure

Aligning strategy, culture, and structure: Organizational culture and organizational structure should be aligned with its vision and strategies. If managers change the strategy of the organization, they need to change the culture and structure to support it. Similarly, as companies grow, the culture and structure need to grow with it. All the organizational cultures and structures described in this chapter are used today because all of them have advantages that make them appropriate for some cases and disadvantages that make them not useful for others. For example, the clear roles and strict hierarchy of an extremely mechanistic organization are clearly suitable in a system valuing careful routines and checks and balances, such as a nuclear power plant. A fast-moving start-up drawing on sources of expertise throughout the world may benefit from a more flexible culture and organic structure that lower boundaries between functions and organizations.

Strategic Positioning

Developed by famous strategist Michael Porter Attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company "Performing different activities from rivals, or performing similar activities in different ways"

Evidence-Based Decision Making

Evidence-based management The translation of principles based on best evidence into organizational practice Brings rationality to the decision-making process

Rational Model of Decision Making

Explains how managers should make decisions Assumes managers will make logical decisions that will be optimum in furthering the organization's best interests Also called the classical model

For MBO goal-setting to be successful, the following three things have to happen.

For MBO goal-setting to be successful, the following three things have to happen. 1. Commitment: "When top-management commitment [to MBO] was high," said one review, "the average gain in productivity was 56%. When commitment was low, the average gain in productivity was only 6%." 2. Organization-wide goals: The goal-setting program has to be put in place throughout the entire organization. That is, it cannot be applied in just some divisions and departments; it has to be done in all of them. 3. Cascading goals: Top managers set strategic goals which are translated into divisional goals, which are translated into departmental goals, which are translated into individual goals. The cascading process ends when all individuals have a set of goals that support the overall strategic goals. This process helps employees understand how their work contributes to overall corporate success

The Organization: Three Types

For-profit organizations Formed to make money, or profits, by offering products or services Nonprofit organizations Formed to offer services to some clients, not to make a profit (example: hospitals, colleges) Mutual-benefit organizations Voluntary collectives whose purpose is to advance members' interests (example: unions, trade associations)

2) Forecasting: Predicting the Future

Forecasting A vision or projection of the future Trend analysis Hypothetical extension of a past series of events into the future Contingency planning Creation of alternative hypothetical but equally likely future conditions Also called scenario planning and scenario analysis

Common Elements of Organizations

Four proposed by Edgar Schein: Common purpose: gives everyone an understanding of the organization's reason for being Coordinated effort: the coordination of individual effort into group-wide effort Division of labor: having discrete parts of a task done by different people Hierarchy of authority: making sure the right people do the right things at the right time (unity of command) Three more that authorities agree on: Span of control: the number of people reporting directly to a given manager; narrow or wide Authority: accountability, responsibility, and delegation; line versus staff positions Centralized versus decentralized authority: who makes decisions; upper management or middle

Line Positions and Staff Positions

Line Position. Line managers have authority to make decisions and usually have people reporting to them. Examples are the president, the vice presidents, the director of personnel, and the head of accounting. Line positions are indicated on the organization chart by a solid line (usually a vertical line). Staff Position. Staff personnel have authority functions; they provide advice, recommendations, and research to line managers (examples: specialists such as legal counsels and special advisers for mergers and acquisitions or strategic planning). Staff positions are indicated on the organization chart by a dotted line (usually a horizontal line).

For implementation to be successful, you need to do two things:

Plan carefully Especially if reversing an action will be difficult, you need to make careful plans for implementation. Some decisions may require written plans. Be sensitive to those affected You need to consider how the people affected may feel about the change—inconvenienced, insecure, even fearful, all of which can trigger resistance. This is why it helps to give employees and customers latitude during a changeover in business practices or working arrangements.

Planning/Control Cycle

Planning happens in two steps: (1) Make the plan, and (2) Carry out the plan. Next, control happens in two following steps: (3) Control the direction by comparing the results with the plan, and (4) Control the direction in two ways (correct deviations or improve future plans).

2) Porter's Five Competitive Forces

Porter contends that business-level strategies originate in five primary competitive forces in the firm's environment 1. threat of new entrants. 2. bargaining power of suppliers. 3. bargaining power of buyers. 4. threat of substitute products or services. 5. rivalry among competitors.

Nonrational Decision Making

The nonrational models are descriptive rather than prescriptive: They describe how managers actually make decisions rather than how they should.

Basic Types of Organizational Structures:The Hollow or Network Structure

The organization has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster. The opposite of a bureaucracy, with its numerous barriers and divisions, a boundaryless organization is a fluid, highly adaptive organization whose members, linked by information technology, come together to collaborate on common tasks. The collaborators may include not only coworkers but also suppliers, customers, and even competitors. This means that the form of the business is ever-changing and business relationships are informal. In the hollow structure, often called the network structure, the organization has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster. A company with a hollow structure might retain such important core processes as design or marketing and outsource most other processes, such as human resources, warehousing, or distribution, thereby seeming to "hollow out" the organization.

Tips for Improving your Intuition

Trust your intuitive judgments: Your feelings count. Trust them and rely on your "gut" when it feels right. Seek feedback: Confirm your intuitive judgments by asking trusted others for feedback. Test your intuitive success rate: Think back over the last year and assess how many times you relied on your intuition. What was your success rate? If your intuition was wrong, assess why and try to use this knowledge in the future. Try visualizing solutions: Visualizing solutions will help engage the System 1 thinking needed to activate your intuition.  Challenge your intuition. Rather than automatically accepting your intuitive thoughts, challenge them. Test your intuition by thinking of counterarguments. Then challenge those counterarguments

1) Unique and Valuable Position

Unique and valuable position - Few needs, many customers: Strategic position can be derived from serving the few needs of many customers. Example: Jiffy Lube provides only lubricants, but it provides them to all kinds of people with all kinds of motor vehicles. Broad needs, few customers: A strategic position may be based on serving the broad needs of just a few customers. Example: Wealth management and investment advisory firm Bessemer Trust focuses exclusively on high-net worth clients. Broad needs, many customers: Strategy may be oriented toward serving the broad needs of many customers. Example: National movie theater operator Carmike Cinemas operates only in cities with populations of fewer than 200,000 people.

Using VRIO to Analyze Competitive Potential

VRIO is a framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its Value, Rarity, Imitability, and Organization

Rules for Brainstorming

1. Defer judgment. 2. Build on the ideas of others. 3. Encourage wild ideas. 4. Go for quantity over quality. 5. Be visual. 6. One conversation at a time.

Strategic Management Process

1. Establish the mission the vision and the values 2. Assess the current reality 3. Formulate the grand strategy 4. Implement the strategy 5. Maintain strategic control

Nine Common Decision-Making Biases

1. When managers use only information that is readily available from memory to make judgments, an availability bias exists. 2. A representativeness bias refers to the tendency to generalize from a small sample or a single event. 3. When people seek information to support their point of view and discount data that do not, a confirmation bias exists. 4. When managers add up all the money already spent on a project and conclude it is too costly to simply abandon it, sunk cost bias exists. 5. The tendency to make decisions based on an initial figure is anchoring and adjustment bias. 6. The overconfidence bias is the bias in which people's subjective confidence in their decision making is greater than their objective accuracy. 7. The hindsight bias is the tendency of people to view events as being more predictable than they really are. 8. The framing bias is the tendency of decision makers to be influenced by the way a situation or problem is presented to them. 9. Escalation of commitment bias occurs when decision makers increase their commitment to a project despite negative information about it.

5 Steps of Planning & Strategic Management

1. establish mission and vision and values 2. asses the current reality 3. formulate the grand strategy & strategic, tactical, & operational plans 4. implement the strategy 5. Maintain Strategic Control

3 Core Processes of Business

A company's overall ability to execute is a function of effectively executing according to three processes 1. People - consider who will benefit you in the future 2. Strategy - consider how success will be accomplished 3. Operations - consider what path will be followed Because all work ultimately entails some human interaction, effort, or involvement, Bossidy and Charan believe that the people process is the most important.

Predictive Modeling

A data-mining technique used to predict future behavior and anticipate the consequences of change Perhaps the purest application of evidence-based management is the use of analytics. Thomas H. Davenport and others at Babson College's Working Knowledge Research Center studied 32 organizations that made a commitment to quantitative, fact-based analysis and found three key attributes among analytics competitors: use of modeling, multiple applications, and support from top management

Business Plan

A document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success

Disadvantages of Group Decision Making

A few people dominate or intimidate. Sometimes a handful of people will talk the longest and the loudest, and the rest of the group will simply give in. Or one individual, such as a strong leader, will exert disproportionate influence, sometimes by intimidation. This cuts down on the variety of ideas. Satisficing. Because most people would just as soon cut short a meeting, the tendency is to seek a decision that is "good enough" rather than to push on in pursuit of other possible solutions. Satisficing can occur because groups have limited time, lack the right kind of information, or are unable to handle large amounts of information. Goal displacement. Although the primary task of the meeting may be to solve a particular problem, other considerations may rise to the fore, such as rivals trying to win an argument. Groupthink. Groupthink occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation. Here the positive team spirit of the group actually works against sound judgment.

Results from Studying the Importance of Culture

An organization's culture matters Employees have more positive work attitudes when working in organizations with clan cultures Clan and market cultures are more likely to deliver higher customer satisfaction and market share Operational outcomes, quality, and innovation are more strongly related to clan, adhocracy, and market cultures than to hierarchical ones An organization's financial performance is not strongly related to organizational culture Companies with market cultures tend to have more positive organizational outcomes

Some Uses of Big Data

Analyzing consumer behavior and spurring sales Improving hiring and personnel management Tracking movie, music, TV, and reading data Exploiting farm data Advancing health and medicine Aiding public policy

2) Establishing Current Reality

Assess the current reality Look at where the organization stands internally and externally, to determine what's working and what's not See what can be changed so as to increase efficiency and effectiveness in achieving the organization's vision Tools include competitive intelligence, SWOT analysis, forecasting, benchmarking, Porter's model for industry analysis

Nonrational Models of Decision Making

Assumes that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions Two types are discussed: satisficing and intuition

Basic Types of Organizational Structures:Simple Structure

Authority is centralized in a single person with few rules and low work specialization. Small firms all over the country are organized in this way. Hundreds of thousands of organizations are arranged according to a simple structure: for instance, small mom-and-pop firms running landscaping, construction, insurance sales, and similar businesses. Examples: Both Hewlett-Packard and Apple Computer began as two-man garage start-ups that later grew.

How to Stand Out in a New Job: Fitting intoan Organization's Culture in the First 60 Days

Be aware of the power of first impressions See how people behave by arriving early and staying late Network with people and find out how the organization works Ask for advice Overdeliver

Satisfying Model

Because of constraints, managers don't make an exhaustive search for the best alternative. Instead, managers seek alternatives until they find one that is satisfactory, not optimal. During the 1950s, economist Herbert Simon—who later received the Nobel Prize—began to study how managers actually make decisions. From his research he proposed that managers could not act truly logically because their rationality was bounded by so many restrictions. Because of constraints,, managers don't make an exhaustive search for the best alternative. Instead, they follow what Simon calls the satisficing model. While satisficing might seem to be a weakness, it may well outweigh any advantages gained from delaying making a decision until all information is in and all alternatives weighed.

"Big Data": What It Is, How It's Used

Big data Includes not only data in corporate databases but also web-browsing data trails, social network communications, sensor data, and surveillance data Big data analytics The process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information

A Dozen Ways to ChangeOrganizational Culture

Changing organizational culture is essentially a teaching process: that is, a process in which members instruct each other about the organization's preferred values, beliefs, expectations, and behaviors. The process is accomplished by using one or more of the following 12 mechanisms Formal statements: mission, vision, values Language, slogans, sayings, and acronyms Rites and rituals Stories, legends, and myths Managerial responses to critical incidents Role modeling, training, and coaching Through physical design With rewards, titles, promotions, and bonuses Establishing goals and performance criteria Through measurable and controllable activities By changing organizational structure Using organizational systems and procedures

Four Types of Organizational Culture (1 of 2)

Clan culture Has an internal focus Values flexibility rather than stability Encourages collaboration among employees Like a family-type organization, it encourages collaboration among employees, striving to encourage cohesion through consensus and job satisfaction and to increase commitment through employee involvement. Clan organizations devote considerable resources to hiring and developing their employees, and they view customers as partners. Example: Chick-fil-A. Adhocracy culture Has an external focus Values flexibility Adaptable, creative, and quick to respond to changes in the marketplace This type of culture attempts to create innovative products by being adaptable, creative, and quick to respond to changes in the marketplace. Employees are encouraged to take risks and experiment with new ways of getting things done. Adhocracy cultures are well suited for start-up companies, those in industries undergoing constant change, and those in mature industries that are in need of innovation to enhance growth. Example: Google.

Basic Types of Organizational Structures:Matrix Structure

Combines functional and divisional chains of command in a grid so that there are two command structures: vertical and horizontal In a matrix structure, an organization combines functional and divisional chains of command in a grid so that there are two command structures: vertical and horizontal. The functional structure usually doesn't change; these are the organization's normal departments or divisions, such as finance, marketing, production, and research & development. The divisional structure may vary, as by product, brand, customer, or geographic region.

3) Formulate the Grand Strategy

Comes after assessing the current reality Explains how the organization's mission is to be accomplished

4) Single Product Strategy

Company makes and sells only one product within its market Benefit is that a company can focus on just one product

Developing a Sustainable Competitive Advantage

Competitive advantage- The ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them The final reason why planning and strategic management are important is to develop a sustainable competitive advantage. The key here is that an organization can get ahead - and stay ahead - in four areas.

What's Wrong With Rational Model?

Complete information, no uncertainty-You should obtain complete, error-free information about all alternative courses of action and the consequences that would follow from each choice. Logical, unemotional analysis-Having no prejudices or emotional blind spots, you are able to logically evaluate the alternatives, ranking them from best to worst according to your personal preferences. Best decision for the organization-Confident of the best future course of action, you coolly choose the alternative that you believe will most benefit the organization. What's wrong with the rational model? The rational model is prescriptive, describing how managers ought to make decisions. It doesn't describe how managers actually make decisions. Indeed, the rational model makes some highly desirable assumptions—that managers have complete information, are able to make an unemotional analysis, and are able to make the best decision for the organization. We all know that these assumptions are unrealistic.

Some Hindrances to Perfectly Rational Decision Making

Complexity Time and money constraints Different cognitive capacity, values, skills, habits, and unconscious reflexes Imperfect information Information overload Different priorities Conflicting goals

Group Problem-Solving Techniques

Consensus Occurs when members are able to express their opinions and reach agreement to support the final decision Brainstorming Technique used to help groups generate multiple ideas and alternatives for solving problems

5) Execution: Getting Things Done

Consists of using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve results promised In implementing strategy and maintaining strategic control, what we are talking about is effective execution.

Factors in Creating the Best Structure

Contingency design The process of fitting the organization to its environment Three factors to consider 1. Environment: mechanistic versus organic 2. Environment: differentiation versus integration 3. Link between strategy, culture, and structure Hotels often have mechanistic designs.

4) Porter's 4 Competitive Strategies

Cost-leadership: focuses on keeping prices low in a wide market: firms include Timex, computer maker Acer, hardware retailer Home Depot, and pen maker Bic. Cost-focus: keeps prices low that target a narrow market: often executed with low-end products sold in discount stores, such as low-cost beer or cigarettes, or with regional gas stations Differentiation: focuses on unique and superior products targeting a wide market: This is the strategy followed by Ritz-Carlton hotels and the makers of Lexus automobiles. Focused-differentiation: focuses on unique and superior products targeting a narrow market: Norwegian Cruise Line offers on its cruise ship Norwegian Escape a special section called the Haven for 275 elite passengers, who enjoy 24-hour butler service as well as a private pool, sun deck, and restaurant.

2 Kinds of Decision Making

Decision Choice made from among available alternatives Decision making Process of identifying and choosing alternative courses of action Can be made rationally, but often it is nonrational -System 1: intuitive and largely unconscious -System 2: analytical and conscious

Computer-Aided Decision Making

Decision support system A computer-based information system that provides a flexible tool for analysis and helps managers focus on the future Produces collected information known as business intelligence As in nearly every other aspect of business life, computers have entered the area of decision making, where they are useful not only in collecting information more quickly but also in reducing roadblocks to group consensus. Example: American Airlines developed a decision support system called the yield management system that helps managers decide how much to overbook and how to set prices for each seat so that a plane is filled and profits are maximized.

General Decision-Making Styles

Decision-making style Reflects the combination of how an individual perceives and responds to information Value orientation Reflects the extent to which a person focuses on either task and technical concerns or on people and social concerns when making decisions Tolerance for ambiguity Indicates the extent to which a person has a high need for structure or control in his or her life

4) BCG Matrix

Developed by the Boston Consulting Group, the BCG Matrix is a means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market. Business growth rate is concerned with how fast the entire industry is increasing. Market share is concerned with the business unit's share of the market in relation to competitors. Market growth is divided into two categories, low and high. Market share is also divided into low and high. Thus, in this matrix, "stars" are business units that are highly desirable (high growth, high market share), compared to "dogs," which are not so desirable (low growth, low market share).. Question marks are high market growth rate and low market share. Cash Cows are low market growth with high market shares.

Bounded Rationality

Developed in the 1950s by economist Herbert Simon Suggests that the ability of decision makers to be rational is limited by numerous constraints -Complexity, time and money, cognitive capacity

Differentiation Versus Integration

Differentiation: This impulse toward dispersal arises because of technical specialization and division of labor. As a result, specialists behave in specific, delimited ways, without coordinating with other parts of the organization. For example, a company producing dental floss, deodorants, and other personal-care products might have different product divisions, each with its own production facility and sales staff—a quite differentiated organization. Integration: In a highly integrated organization, the specialists work together to achieve a common goal. The means for achieving this are a formal chain of command, standardization of rules and procedures, and use of cross-functional teams and computer networks so that there is frequent communication and coordination of the parts.

Four General Decision-Making Styles

Directive: Efficient, logical, practical, and systematic in their approach to solving problems action oriented, decisive, and like to focus on facts Analytical: Careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations Conceptual: Tend to focus on the people or social aspects of a work situation. They take a broad perspective to problem solving and like to consider many options and future possibilities Behavioral: Supportive, receptive to suggestions, show warmth prefer verbal to written information; have a tendency to avoid conflict

4) Diversification Strategy

Diversification Operating several businesses in order to spread the risk Products may be related or unrelated You see the diversification strategy at the small retailer level when you drive past a store that sells gas and food and souvenirs and rents DVD movies. Vertical Integration Vertical integration is a specific diversification strategy where the company owns the suppliers and distributors of its products. Example: Starbucks has long followed a plan of vertical integration by buying and roasting all its own coffee and then selling it through Starbucks coffee stores.

1) Establish Mission Statement

Does your company's mission statement answer these questions: Who are our customers? What are our major products or services? In what geographical areas do we compete? What is our basic technology? What is our commitment to economic objectives? What are our basic beliefs, values, aspirations, and philosophical priorities? What are our major strengths and competitive advantages? What are our public responsibilities, and what image do we wish to project? What is our attitude toward our employees? Characteristics of a Good Mission Statement: The mission is the organization's purpose or reason for being; it is expressed in a mission statement.

1) Establishing Values Statement

Does your company's values statement answer these questions: Does it express the company's distinctiveness, its view of the world? Is it intended to guide all the organization's actions, including how you treat employees, customers, etc.? Is it tough, serving as the foundation on which difficult company decisions can be made? Will it be unchanging, as valid 100 years from now as it is today? Does it reflect the beliefs of those who truly care about the organization—the founders, CEO, and top executives—rather than represent a consensus of all employees? Are the values expressed in the statement limited (five or so) and easy to remember, so that employees will have them top-of-mind when making decisions? Would you want the organization to continue to hold these values, even if at some point they become a competitive disadvantage? Characteristics of a Good Values Statement: An organization's values are expressed in a values statement, which should describe what the organization stands for, its core priorities, the values its employees embody, and what its products contribute to the world.

1) Establishing Vision Statement

Does your company's vision statement answer these questions: Is it appropriate for the organization and for the times? Does it set standards of excellence and reflect high ideals? Does it clarify purpose and direction? Does it inspire enthusiasm and encourage commitment? Is it well articulated and easily understood? Does it reflect the uniqueness of the organization, its distinctive competence, what it stands for, what it's able to achieve? Is it ambitious? Characteristics of a Good Vision Statement: An organization's vision, its long-term goal of what it wants to become, is expressed in a vision statement, which describes its long-term direction and strategic intent.

One management expert offers the following dos and don'ts for achieving consensus

Dos: Use active listening skills. Involve as many members as possible. Seek out the reasons behind arguments. Dig for the facts. Don'ts: Avoid log rolling and horse trading ("I'll support your pet project if you'll support mine"). Avoid making an agreement simply to keep relations amicable and not rock the boat. Finally, don't try to achieve consensus by putting questions to a vote; this will only split the group into winners and losers, perhaps creating bad feelings among the latter.

5) To keep a strategic plan on track, suggests Bryan Barry, you need to do the following:

Engage people: Actively engage people in clarifying what your group hopes to accomplish and how you will accomplish it Keep it simple: Keep your planning simple, unless there's a good reason to make it more complex Stay focused: Stay focused on the important things Keep moving: Keep moving toward your vision of the future, adjusting your plans as you learn what works

2) Establishing Current Reality: Swot Analysis

Environmental Scanning: Monitoring of an organization's internal and external environments to detect early signs of opportunities and threats that may influence the firm's plans SWOT, process for scanning Organizational strengths: skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission Organizational weaknesses: drawbacks that hinder an organization in executing strategies in pursuit of its mission Organizational opportunities: environmental factors that the organization may exploit for competitive advantage Organizational threats: environmental factors that hinder an organization's achieving a competitive advantage

Long-Term and Short-Term Goals

Goals-A specific commitment to achieve a measurable result within a stated period of time Long-Term Goals: Generally referred to as *strategic goals* Tend to span 1 to 5 years and focus on achieving the strategies identified in a company's strategic plan Short-Term Goals: Sometimes referred to as *tactical or operational goal*s, or just plain goals Generally span 12 months and connected to strategic goals in a hierarchy known as a means-end chain

What Managers Need to Know About Groups and Decision Making

Groups take longer to make decisions. Their size affects decision quality. -Optimal group size may be 5 or 7 people -Odd group numbers are best They may be too confident. Knowledge counts.

4) How Companies can Implement a Grand Strategy

Growth Strategy: It can improve an existing product or service to attract more buyers. It can increase its promotion and marketing efforts to try to expand its market share. It can expand its operations, as in taking over distribution or manufacturing previously handled by someone else. It can expand into new products or services. It can acquire similar or complementary businesses. It can merge with another company to form a larger company. Stability Strategy: It can go for a no-change strategy (if, for example, it has found that too-fast growth leads to foul-ups with orders and customer complaints). It can go for a little-change strategy (if, for example, the company has been growing at breakneck speed and feels it needs a period of consolidation.) Defensive Strategy: It can reduce costs, as by freezing hiring or tightening expenses. It can sell off (liquidate) assets—land, buildings, inventories, and the like. It can gradually phase out product lines or services. It can divest part of its business, as in selling off entire divisions or subsidiaries. It can declare bankruptcy. It an attempt a turnaround—do some retrenching, with a view toward restoring profitability.

3) Common Grand Strategies

Growth strategy Involves expansion, as in sales revenues, market share, number of employees, or number of customers Stability Involves little or no significant change Defensive Involves reduction in the organization's efforts Retrenchment

3) Examples of Common Grand Strategies

Growth strategy example: Etsy is a Brooklyn, New York, company that runs an online marketplace for handmade and vintage goods—jewelry, housewares, T-shirts—for which it charges fees to sellers for use of its platform. The firm showed strong growth in 2015, when revenues in the fourth quarter rose 35% to $87.9 million. Stability example: Without much changing their product, the makers of Timex watches decided to stress the theme of authenticity ("Wear it well") over durability (the old slogan was "It takes a licking and keeps on ticking"). Defensive example: The "big sales numbers that have sustained the recorded music business for years are way down, and it is hard to see how they could ever return to where they were even a decade ago," says one analysis.

Michael Porter

Harvard Business School professor Michael Porter "is the single most important strategist working today, and maybe of all time," raved Kevin Coyne of consulting firm McKinsey & Co. He is "the most famous and influential business professor who has ever lived," says Fortune writer Geoffrey Colvin. "He is widely and rightly regarded as the all-time greatest strategy guru."

Knowledge of your decision-making style:

Helps you to understand yourself and facilitates self-improvement Can increase your ability to influence others by being aware of your—and their—style Gives you an awareness of how people can take the same information, yet arrive at different decisions

Three Types of Objectives Used in MBO

Improvement Objectives: - Purpose: Express performance to be accomplished in a specific way for a specific area -Examples- "Increase sport utility sales by 10%;" "Reduce food spoilage by 15%" Personal Development Objectives: -Purpose:express personal goals to be realized -Examples: "Attend 5 days of leadership training;" "learn basics of Microsoft office software by 6/1" Maintenance Objectives -Purpose: express the intention to maintain performance at previously established levels -Examples: "Continue to meet the increased sales goals specified last quarter;" "Produce another 60000 case of wine this month"

Mechanistic Versus Organic Organizations Cont.

In a mechanistic organization, authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. Mechanistic organizations, then, are bureaucratic, with rigid rules and top-down communication. This kind of structure is effective in certain aspects of hotel work, for example, because the market demands uniform product quality and cleanliness. In general, mechanistic design works best when an organization is operating in a stable environment. Yet new companies that have gone through a rough-and-tumble start-up period may decide to change their structures so that they are more mechanistic, with clear lines of authority. In an organic organization, authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks. Tom Peters and Robert Waterman called this kind of organization a "loose" structure. Organic organizations are sometimes termed "adhocracies" because they operate on an ad hoc basis, improvising as they go along. As you might expect, information-technology companies favor the organic arrangement because they constantly have to adjust to technological change.

Three Effective Reactions: Deciding to Decide

In deciding to decide, a manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps. Three ways to help you decide whether to decide are to evaluate the importance, credibility, and urgency of the situation. 1. Importance—"How High Priority Is This Situation?" You need to determine how much priority to give the decision situation. If it's a threat, how extensive might prospective losses or damage be? If it's an opportunity, how beneficial might the possible gains be? 2. Credibility—"How Believable Is the Information about the Situation?" You need to evaluate how much is known about the possible threat or opportunity. Is the source of the information trustworthy? Is there credible evidence? 3. Urgency—"How Quickly Must I Act on the Information about the Situation?" Is the threat immediate? Will the window of opportunity stay open long? Can actions to address the situation be done gradually?

Intuition Model

Intuition is making a choice without the use of conscious thought or logical inference. Stems from both: Expertise—a person's explicit and tacit knowledge about a person, a situation, an object, or a decision opportunity—is known as a holistic hunch Automated experience - the involuntary emotional response to those same matters

Building a Foundation of Execution

Know your people and your business: "engage intensely with your employees" Insist on realism: "don't let others avoid reality" Set clear priorities: "focus on a few rather than many goals" Follow through: "establish accountability and check on results" Reward the doers: "show top performers that they matter" Expand people's capabilities: "develop the talent" Know yourself: "do the hard work of understanding who you are"

Mechanistic Versus Organic Organizations

MECHANISTIC ORGANIZATIONS Centralized hierarchy of authority Many rules and procedures Specialized tasks Formalized communication Few teams or task forces Narrow span of control, taller structures ORGANIC ORGANIZATIONS Decentralized hierarchy of authority Few rules and procedures Shared tasks Informal communication Many teams or task forces Wider span of control, flatter structures

Apple Watch Example

Making the plan. The Apple Watch would be designed to solve a problem created by technology—namely, overwhelming the user with distracting texts, e-mails, and other alerts. Carrying out the plan. In developing the watch, everything that worked on a smartphone was completely rethought and re-engineered. Comparing results. Apple shipped 11.6 million Watches in 2015, making Apple the third-largest wearable maker that year. Taking corrective action. The Watch claimed over half the 2015 smartwatch market in less than a year of sales. What else could it do? Drop the price, provide accessories, and make it thinner and faster

Management by Objectives: The Four-Step Process for Motivating Employees

Management by objectives (MBO) is a four-step process. 1. Managers and employees jointly set objectives for the employee. 2. Managers develop action plans. 3. Managers and employees periodically review the employee's performance. 4. Managers make a performance appraisal and reward the employee according to results. The purpose of MBO is to motivate rather than to control subordinates

Four Types of Organizational Culture (2 of 2)

Market culture Focused on the external environment Values stability and control Driven by competition and a strong desire to deliver results Because market cultures are focused on the external environment and driven by competition and a strong desire to deliver results, customers, productivity, and profits take precedence over employee development and satisfaction. Employees are expected to work hard, react fast, and deliver quality work on time; those who deliver results are rewarded. Example: Uber. Hierarchy culture Has an internal focus Values stability and control over flexibility Formalized, structured work environment Companies with this kind of culture are apt to have a formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency, timeliness, and reliability in the creation and delivery of products. Example: Amazon (especially to manage its vast shipping processes).

2) Establishing Current Reality: Competitive Intelligence

Means gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately Sources of information include public print and advertising, investor information, informal sources

Fundamentals of Planning

Mission Statement->Vision Statement->Values Statement Strategic Planning-> Tactical Planning-> Operational Planning

Hilton Hotel's Example

Mission Statement: "To be the preeminent global hospitality company—the first choice of guests, team members, and owners alike." Vision Statement: "To fill the earth with the light and warmth of hospitality." Values Statement (spelled H I L T O N): Hospitality—We're passionate about delivering exceptional guest experiences. Integrity—We do the right thing, all the time. Leadership—We're leaders in our industry and in our communities. Teamwork—We're team players in everything we do. Ownership—We're the owners of our actions and decisions. Now—We operate with a sense of urgency and discipline.

Mission, Vision, and Values Statement

Mission: Expresses the purpose of the organization What is our reason for being? Why are we here? Vision:It is a clear sense of the future and the actions needed to get there. What do we want to become? Where do we want to go? Values: What the company stands for: its core priorities, the values its employees embody, and what its products contribute to the world What values do we want to emphasize? The planning process begins with three attributes: a mission statement (which answers the question "What is our reason for being?"), a vision statement (which answers the question "What do we want to become?"), and a values statement (which answers the question "What values do we want to emphasize?").

Sustainable Competitive Advantage

Occurs when an organization is able to get and stay ahead in four areas: In being responsive to customers In innovating In quality In effectiveness

Operating and Action Plan

Operating Plan- A plan that breaks long-term output into short-term targets or goals Turns strategic plans into actionable short-term goals and action plans Action Plan- Defines the course of action (the tactics) needed to achieve a stated goal Contains a projected date for completing the desired activities for each tactic whether it be a short-term or long-term goal, can be broken down into smaller pieces, such as an operating plan, and then an action plan, so that there is alignment between the strategy (created at the top) with the actions of middle- and front-line managers to carry out the strategic plan.

Organizational Culture: The Shared Assumptions That Affect How Work Gets Done

Organizational culture The set of shared, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environments What drives an organizational culture? Founder's values Industry and business environment National culture Organization's vision and strategies Behavior of leaders

Organizational Structure: Who Reports to Whom and Who Does What

Organizational structure A formal system of task and reporting relationships that coordinates and motivates an organization's members so that they can work together to achieve the organization's goals Concerned with who reports to whom and who specializes in what work To implement a particular strategy, managers must determine the right kind of (1) organizational culture and (2) organizational structure, which mutually influence each other.

Business Model

Outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses

Basic Types of Organizational Structures:Divisional Structure

People with diverse occupational specialties are put together in formal groups by similar products, customers or geographic regions. Product divisions group activities around similar products or services. Examples: The media giant Time Warner has different divisions for magazines, movies, recordings, cable television, and so on. The Warner Bros. part of the empire alone has divisions spanning movies and television, a broadcast network, retail stores, theaters, amusement parks, and music. Customer divisions tend to group activities around common customers or clients. Examples: Ford Motor Co. has separate divisions for passenger-car dealers, for large trucking customers, and for farm products customers. A savings and loan might be structured with divisions for making consumer loans, mortgage loans, business loans, and agricultural loans. Geographic divisions group activities around defined regional locations. Example: This arrangement is frequently used by government agencies. The Federal Reserve Bank, for instance, has 12 separate districts around the United States. The Internal Revenue Service also has several districts.

Basic Types of Organizational Structures:Functional Structure

People with similar occupational specialties are put together in formal groups. The second organizational form is the functional structure. In a functional structure, people with similar occupational specialties are put together in formal groups. This is a quite commonplace structure, seen in all kinds of organizations, for-profit and nonprofit.

Person-organization fit

Reflects the extent to which your personality and values match the climate and culture in an organization A good fit of this kind is important because it is associated with more positive work attitudes and task performance, lower stress, and fewer expressions of intention to quit. According to the textbook, more than 50% of the evaluators in one study considered "fit" to be the most important criterion of the interview process.

4 Steps in Rational Decision Making

Stage 1: Identify the problem or opportunity—determining the actual versus the desirable Stage 2: Think up alternative solutions—both the obvious and the creative Stage 3: Evaluate alternatives and select a solution—ethics, feasibility, and effectiveness Stage 4: Implement and evaluate the solution chosen

Symptoms of Groupthink

Sense of invulnerability. Group members have the illusion that nothing can go wrong, breeding excessive optimism and risk taking. They may also be so assured of the rightness of their actions that they ignore the ethical implications. Rationalization. Rationalizing protects the pet assumptions underlying the group's decisions from critical questions. Illusion of unanimity and peer pressure. The illusion of unanimity is another way of saying that a member's silence is interpreted as consent. If people do disagree, peer pressure leads other members to question the dissenters' loyalty. "The wisdom of crowds." Groupthink's pressure to conform often leads members with different ideas to censor themselves—the opposite of collective wisdom, says James Surowiecki, in which "each person in the group is offering his or her best independent forecast. It's not at all about compromise or consensus.

Corporate Culture

Sometimes called corporate culture, these are the beliefs and values shared among a group of people in the workplace that are passed on to new employees by way of socialization and mentoring, which significantly affect work outcomes at all levels. The culture is the "social glue" that binds members of the organization together. Just as a human being has a personality—fun-loving, warm, uptight, competitive, or whatever—so an organization has a "personality," too, and that is its culture. The culture helps employees understand why the organization does what it does and how it intends to accomplish its long-term goals.

Business Analytics

Sophisticated forms of business data analysis Examples: portfolio analysis, time-series forecast

Smart Goals

Specific: Goals should be stated in specific rather than vague terms. The goal that "As many planes as possible should arrive on time" is too general. The goal that "Ninety percent of planes should arrive within 15 minutes of the scheduled arrival time" is specific. Measurable: Whenever possible, goals should be measurable, or quantifiable (as in "90% of planes should arrive within 15 minutes"). That is, there should be some way to measure the degree to which a goal has been reached. Attainable: Goals should be challenging, of course, but above all they should be realistic and attainable. It may be best to set goals that are quite ambitious so as to challenge people to meet high standards. Always, however, the goals should be achievable within the scope of the time, equipment, and financial support available. (See Figure 5.4 on the next slide). Results-oriented: Only a few goals should be chosen—say, five for any work unit. And they should be results-oriented —they should support the organization's vision. Target dates: Goals should specify the target dates or deadline dates when they are to be attained. For example, it's unrealistic to expect an airline to improve its on-time arrivals by 10% overnight. However, you could set a target date—3 to 6 months away, say—by which this goal is to be achieved.

Ethics/ Ethics Officer

Standards of right and wrong that influence behavior Ethics officer Someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas

Standing and Single-Use Plans

Standing Plan-for activities that occur repeatedly over a period of time -Policy: outlines general response to a designated problem or situation -Procedure: outlines response to particular problems or circumstances -Rule: designates specific required action Single Use Plan- for activities not likely to be repeated in the future -Program: encompasses a range of projects or activities -Project: has less scope and complexity than a program

5) Implementing and Controlling Strategy

Strategy implementation Putting strategic plans into effect Means dealing with roadblocks within the organization's structure and culture and seeing if the right people and control systems are available to execute the plans Strategic control Monitoring the execution of strategy and taking corrective action, if necessary To keep on track, you must (1) engage people, (2) keep it simple, (3) stay focused, and (4) keep moving

How Employees Learn Culture

Symbols: an object, an act, a quality, or event that conveys meaning to others Stories: narrative based on true events repeated—and sometimes embellished upon—to emphasize a particular value Heroes: person whose accomplishments embody the values of the organization Rites and rituals: activities and ceremonies that celebrate important occasions and accomplishments Organizational socialization: the process by which people learn the values, norms, and required behaviors of an organization

System 1

System 1—intuitive and largely unconscious: operates automatically and quickly; it is our fast, automatic, intuitive, and largely unconscious mode, as when we detect hostility in a voice or detect that one object is more distant than another.

System 2

System 2—analytical and conscious: is our slow, deliberate, analytical, and consciously effortful mode of reasoning, which swings into action when we have to fill out a tax form or park a car in a narrow space. Why don't we use the more deliberate and rational System 2 more often? Because it's lazy and tires easily, so instead of slowing things down and analyzing them, it is content to accept the easy but unreliable story that System 1 feeds it.

Basic Types of Organizational Structures:The Horizontal Design

Teams or workgroups, either temporary or permanent, are used to improve collaboration and work on shared tasks by breaking down internal boundaries. The first organizational design was the functional structure, that included the last three structures. The second organizational design is the horizontal design. In a horizontal design, also called a team-based design, teams or workgroups—either temporary or permanent—are used to improve collaboration and work on shared tasks by breaking down internal boundaries. For instance, when managers from different functional divisions are brought together in teams—known as cross-functional teams—to solve particular problems, the barriers between the divisions break down. The focus on narrow divisional interests yields to a common interest in solving the problems that brought them together. Yet team members still have their full-time functional work responsibilities and often still formally report to managers above them in the functional-division hierarchy.

Strategy Innovation

The ability to reinvent the basis of competition within existing industries—"bold new business models that put incumbents on the defensive" Can students see why Apple might be described as having "strategy innovation"? It was a company that was still competing in the personal computer market, but they upended the entire industry with the introduction of the "smart phone" (iPhone) to the market.

3 Main Plans

The approach to planning can be summarized in the diagram, which shows how an organization's mission becomes translated into action plans. The three main plans are: Strategic planning, done by top managers for the next 1-5 years Tactical planning done by middle managers for the next 6-24 months Operational planning done by first-line managers for the next year

Competing Values Framework

The competing values framework (CVF) provides a practical way for managers to understand, measure, and change organizational culture. The CVF, which has been validated by extensive research involving 1,100 companies, classifies organizational cultures into four types: (1) clan, (2) adhocracy, (3) market, and (4) hierarchy, as discussed in the previous slides. The horizontal dimension—inward or outward focus? This dimension expresses the extent to which an organization focuses its attention and efforts inward on internal dynamics and employees ("internal focus and integration") versus outward toward its external environment and its customers and shareholders ("external focus and differentiation").  The vertical dimension-flexibility or stability? This dimension expresses the extent to which an organization prefers flexibility and discretion versus stability and control. Combining these two dimensions creates the four types of organizational culture based on different core values—namely, clan, adhocracy, market, and hierarchy

Basic Types of Organizational Structures:The Modular Structure

The firm assembles product chunks, or modules, provided by outside contractors. The modular structure differs from the hollow structure in that it is oriented around outsourcing certain pieces of a product rather than outsourcing certain processes (such as human resources or warehousing) of an organization. In a modular structure, a firm assembles product chunks, or modules, provided by outside contractors. One article compares this form of organization to "a collection of Lego bricks that can snap together."

What Does It Mean to "Fit"? Anticipating a Job Interview

The four most frequently asked interview questions used by hiring managers, according to a survey involving 285,000 kinds of interview questions. "Whats your favorite movie?" "What's your favorite website?" "What makes you uncomfortable?" "What's the last book you read for fun?"

How to Overcome Barriers to Decision Making

There are four defective problem-recognition and problem-solving approaches that act as barriers when you must make an important decision in a situation of conflict: Relaxed avoidance - taking no action in the belief that there will be no great negative consequences Relaxed change - realizing complete inaction will have negative consequences but opts for the first available alternative Defensive avoidance - can't find a good solution and follows by (a) procrastinating, (b) passing the buck, or(c) denying the risk Panic - so frantic to get rid of the problem that one can't deal with the situation realistically

What Makes it Hard to be Evidence Based

There's too much evidence. There's not enough good evidence. The evidence doesn't quite apply. People are trying to mislead you. You are trying to mislead you The side effects outweigh the cure. Stories are more persuasive anyway.

Strategic Positioning Principles

Three key principles underlie strategic positioning. Strategy is the creation of a unique and valuable position. -Few needs, many customers -Broad needs, few customers -Broad needs, many customers Strategy requires trade-offs in competing. Strategy involves creating a "fit" among activities

3 Types of Planning for 3 Levels of Management

Top Management: CEO, President, VP, GM, Divisional Head: Strategic Planners (1-5 years)- long term decisions about overall direction of organization. Managers need to pay attention to environment outside of organization, be future oriented, deal with uncertain and highly competitive conditions Middle Management: functional managers, product-line managers, document managers: Tactical Planners (6-24 months)- implement policies and plans of top management, supervise and coordinate activities of 1st line managers below, make decisions often without base of clearly defined info procedures First Line Managers: unit managers, team leaders, first-line supervisors: Operational planning (1-52 weeks): direct daily tasks of non managerial personnel; decisions often predictable, following well-defined set of routine procedures

Seven Implementation Principlesof Evidence-Based Management

Treat your organization as an unfinished prototype: Leaders need to think and act as if their organization were an unfinished prototype that won't be ruined by dangerous new ideas or impossible to change because of employee or management resistance. No brag, just facts: This slogan is an antidote for over-the-top assertions about forthcoming products. See yourself and your organization as outsiders do: "Having a blunt friend, mentor, or counselor," Pfeffer and Sutton suggest, "can help you see and act on better evidence." Evidence-based management is not just for senior executives: The best organizations are those in which everyone is guided by the responsibility to gather and act on quantitative and qualitative data and share results with others. Like everything else, you still need to sell it: To sell an evidence-based approach, you may have to identify a preferred practice based on solid if unexciting evidence, then use vivid stories to grab management attention. If all else fails, slow the spread of bad practice: It may be necessary for you to ignore orders you know to be wrong or delay their implementation. The best diagnostic question: What happens when people fail? "Failure hurts, it is embarrassing, and we would rather live without it," the authors write. "Yet there is no learning without failure. . ."

VRIO

Value - The idea of an on-demand ride service for unaccompanied children provided by drivers in their personal cars exploits an opportunity—it is valuable because some parents say they really need such a service. Rare - No other firms in your area are yet offering on-demand children's ride services; it is rare, so this is a competitive advantage. Costly to imitate - Offering a children's ride service with drivers using their own personal cars is probably not so costly that other firms might not try to imitate you. Here you have a competitive advantage, but it may be temporary. Is the firm organized to exploit value, rarity, and imitability - Only the company would know this for sure. Shuddle in San Francisco was not, and they went out of business in April 2016.

Basic Types of Organizational Structures:The Virtual Structure

Virtual organization Organization whose members are geographically distant, usually working via e-mail, collaborative computing, and other computer connections Virtual structure Company outside a company that is created "specifically to respond to an exceptional market opportunity" that is often temporary Virtual structure: an organization whose members are geographically separated, usually working through e-mail, and other forms of information technology yet which generally appears to customers as a single, unified organization with a real physical location.

Who's Better at Financial Decisions?

Warren Buffett and female investors have something in common A study found that women trade less often than men, do a lot more research, and tend to base their investment decisions on more than just numbers Men tend to trade more, and the more you trade, typically the more you lose A seven-year study of single (unmarried) investors found females outperformed males by 2.3%, female investment groups outperformed male groups by 4.6%, and women overall outperformed men by 1.4%. The basic reason, suggests one account: "Women trade much less often than men, do a lot more research, and tend to base their investment decisions on considerations other than just numbers." Men, offers another report, "tend to trade more, and the more you trade, typically the more you lose—not to mention running up transaction costs."

When a Group Can Help in Decision Making: Three Practical Guidelines

When it can increase quality: If additional information would increase the quality of the decision, managers should involve those people who can provide the needed information. Thus, if a type of decision occurs frequently, such as deciding on promotions or who qualifies for a loan, groups should be used because they tend to produce more consistent decisions than individuals do. When it can increase acceptance: If acceptance within the organization is important, managers need to involve those individuals whose acceptance and commitment are important. When it can increase development: If people can be developed through their participation, managers may want to involve those whose development is most important.

2) Requires Trade-Offs

a company has to choose not only what strategy to follow but what strategy not to follow. Example: Neutrogena soap, points out Porter, is positioned more as a medicinal product than as a cleansing agent. In achieving this narrow positioning, the company gives up sales based on deodorizing, gives up large volume, and accordingly gives up some manufacturing efficiencies.

4) Blue Ocean Strategy

a completely new market, in contrast to a "red ocean," in which industry boundaries are defined and accepted and the competitive rules of the game are known. Examples: There are two ways to create a blue ocean. One is to invent a completely new industry, as eBay did when it created the online auction industry and as Cirque du Soleil did when it reinvented the circus by blending opera, dance, and athletic skill and eliminating star performers and animals. The second way is to create a blue ocean within a red ocean, as when a company expands the boundaries of an existing industry, as Home Depot did in offering the prices and ranges of a lumberyard along with do-it-yourself classes for customers.