MGMT 309 EXAM 2
strategic plans
a general plan set by and for top management that outlines resource allocation, priorities, and action steps to achieve strategic goals
emergent strategy
a pattern of action that develops over time in the absence of goals or missions, or despite goals and missions; EX: VW bug after the crazy response from customers
tactical plans
a plan aimed at achieving the tactical goals set by and for middle management; are to battles what strategy is to war...an organized sequence of steps designed to execute strategic plans
deliberate strategy
a plan, chosen and implemented to support specific goals, that is the result of a rational, systematic, and planned process of strategy formulation and implementation; intentional
coalition
a positive or negative political force in decision making which consists of an informal alliance of individuals or groups formed to achieve a goal; EX: coalition of stockholders try to persuade BOD to make a certain decision
mission statement
a statement of an org's fundamental purpose; includes purpose, premises, values, and directions
escalation of commitment
staying with a decision even when it appears to be wrong
distinctive competencies
strength possessed by only a small number of competing firms; useful for competitive advantage and superior performance
choice shift
tendency for groups to make decisions that appear more extreme than the decisions group members would have made on their own; avoid by giving the decision some time for people to think over
decision making under risk
the availability of each alternative and its potential payoffs and costs are all associated with risks
decision making under uncertainty
the decision maker doesn't know all the alternatives, the risks associated with each, or the consequences of each alternative; high level of ambiguity
decision making under certainty
the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative; low level of ambiguity
contingency planning
the determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate; EX: Y2K anticipation
worldwide learning
the diverse operating environments of multinational corporations contribute to org learning that can be transferred to other operating environments; EX: McDonalds japanese store in an office building success convinced american stores to diversify their restaurant locations
risk propensity
the extent to which a decision maker is willing to gamble when making a decision; some are conservative, while others are aggressive and rely on intuition
groupthink
the group's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision; avoid this with a devil's advocate; EX: Secret of My Success movie
strategy implementation
the methods by which strategies are operationalized or executed within the org; it focuses on the processes through which strategies are achieved
diversification
the number of businesses an org is engaged in and the extent to which these businesses are related to one another
organizational weaknesses
skills and capabilities that do not enable an org to choose and implement strategies that support its mission
distinctive competence
something an org does exceptionally well; what you're known for
manufacturing organization
a form of business that combines and transforms resource inputs into tangible outcomes that are then sold to others
strategy
a comprehensive plan for accomplishing an org's goals; effective strategies promote superior alignment between an org, its env, and its goals
programmed decision
a fairly structured decision or one that recurs with some frequency or both; EX: starting your car in the morning
nominal groups
a structured technique designed to generate creative and innovative ideas through the individual contributions of alternatives that are winnowed down through as series of rank-ordering of the alternatives to reach a decision; forced participation; no group discussion at first; EX: if she called on us individually for our opinion
management by objectives (MBO)
a technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish
optimizing
allows managers to balance and reconcile inconsistent or conflicting goals; EX: Nike shoes that are durable and affordable, but super ugly...conflict between production and marketing
intuition
an innate belief about something without conscious consideration; EX: a "hunch", may be based on years of experience
service organization
an organization that transforms resources into an intangible output and creates time and place utility for its customers
Delphi groups
are sometimes used for developing a consensus of expert opinion from a panel of experts who individually contribute through a moderator; do not meet in person; EX: research paper sent to an editor who sends it to subject matter experts who give their opinion
organizational threats
areas in the org's env that make it difficult for the org to achieve high performance
organizational opportunities
areas in the org's env that may generate high performance
transnational strategy
attempting to combine the benefits of scale efficiencies pursued by a global corporation, with the benefits and advantages of local responsiveness of a multi domestic corporation; works best for complex industries and for companies with highly-skilled international managers
forward vertical integration
becoming a diversified firm by beginning a business previously handled by an intermediary and selling more directly to customers; EX: order movies online instead of going to blockbuster
backward vertical integration
becoming a diversified firm by beginning a business that furnishes resources previously handled by a supplier; EX: McDonalds buying a bakery
internal development of new products
becoming a diversified firm by developing products and services within the boundaries of traditional business operations
acquisition
becoming a diversified firm by purchasing of a firm by another firm that is considerably larger
merger
becoming a diversified firm by purchasing of one firm by another firm of approximately the same size
overall cost leadership strategy
business-level strategy where an org attempts to gain competitive advantage by reducing its costs below the costs of competing firms; marketing and sales focus on simple product attributes and how these product attributes meet customer needs in a low-cost and effective manner; EX: Walmart
focus strategy
business-level strategy where an org concentrates on a specific regional market, product line, or group of buyers; either differentiation or cost leadership, depending on which one is the proper basis fro competing in or for a specific market segment, product category, or group buyers; EX: Bluebell appeals to certain states
differentiation strategy
business-level strategy where an org seeks to distinguish itself from competitors through the quality of its products or services; marketing and sales emphasize high quality, high value image of the org's products or services; EX: people are willing to pay more for quality, Neiman Marcos
planning task force
created when the org wants a special circumstance addressed; for a defined time period or purpose; once the plan/goal has been set/achieved they go back to their full time job
brainstorming
criticism not allowed, free-wheeling is welcome, quantity is encouraged, combination and improvement are sought
capacity
can be high risk decisions due to uncertainty about future product demand and incurred costs of additional, possibly excess, capacity; choosing amount of products, services, or both that can be produced by an org
analyzer
combination of prospector and defender; maintains business and is somewhat innovative; EX: IBM, Yahoo!
executive committee
composed of top executives; meets regularly with the CEO to review strategic plans
product-service mix
deciding how many and what kinds of products to offer in the marketplace; EX: Coke decides what flavors and sizes
bounded rationality
decision makers are limited by their values and unconscious reflexes, skills, and habits; also limited by less-than-complete information and knowledge
single-product strategy
diversification strategy where an org manufactures one product or service and sells it in a single geographic market; simplicity
related diversification
diversification strategy where an org operates in several different businesses, industries, or markets that are somehow linked; synergy; basis of relatedness can be similar technology, common distribution and marketing skills, common brand name and reputation, etc; reduced risk
unrelated diversification
diversification strategy where an org operates multiple businesses that are not logically associated with one another; stable performance over time due to business cycle differences among the businesses; poor performance can happen; allocation of resources to areas with the highest return potentials to max corporate performance; disadvantaged to related diversification synergy; risk/return
strategic business units
each business or group of businesses within an org; each is engaged in serving the same markets, customers, or products
prospector
encourages creativity to seek out new market opportunities and to take risks; develops the flexibility to meet changing market conditions by decentralizing its org structure; EX: Amazon, 3M
board of directors
establishes corporate mission and strategy; may engage in strategic planning
BCG Matrix
evaluates a portfolio of businesses on the growth rate of their respective markets and each business's relative share of its market DOGS= small market shares and no growth prospects- want to get rid of CASH COWS= large shares of mature markets- take investments and invest in stars and question marks QUESTION MARKS= small market shares in quickly growing markets STARS= large shares of rapidly growing markets
GE Business Screen
evaluating businesses in a diversified portfolio along industry attractiveness and competitive position of each firm in the portfolio; generally, the more attractive the industry and the more competitive a business is, the more resources an org should invest in that business DOGS= poor competitive position and low industry attractiveness CASH COWS= good competitive position and low industry attractiveness; profit producer QUESTION MARKS= poor competitive position and high industry attractiveness; needs investments STARS= good competitive position and high industry attractiveness
process layout
facilities arranged around the process; used in facilities that create or process a variety of products; EX: hospital, custom products
product layout
facilities arranged around the product; used when large quantities of a single product are needed; EX: chairs in this classroom
defender
focuses on defending its current markets by lowering its costs and/or improving the performance of its current products; EX: BIC, eBay
planning staff
gather info, coordinate planning activities, and take a broader view than indiv managers
operational goals
goals set by and for lower-level managers to address issues associated with tactical goals
tactical goals
goals set by and for middle managers; their focus is on how to operationalize actions to strategic goals
strategic goals
goals set by and for top management of the org that address broad, general issues
reactor
has no clear strategy and reacts to changes and events; nobody will do this; EX: Kmart
line management
have formal authority and responsibility for management of the org; help to formulate strategy by providing info; are responsible for executing the plans of top management
resource deployment
how an org will distribute its resources across the areas in which it competes
base rate bias
initial probability given no other information; bias occurs when people put too much weight on evidence provided, or additional info, and not enough weight on the info provided by the base rate; EX: dependent tasks probabilities are multiplied to get overall risk: =.52
multimarket flexibility
international businesses may respond to a change in one country by implementing change in another country; EX: Tyson sells chicken breasts here (health conscious), dark chicken meat in russia, and feet in china
strategic management
involves formulating and implementing strategies to take advantage of business opportunities and meet competitive challenges
multi-domestic strategy
managing a corporation as a collection of independent operating subsidiaries frees a firm to customize its products, its marketing campaigns, and operating techniques to meet local customer needs; works best when national demands for customization are high
chief executive officer
may serve as president or board chair; has a major role in planning and implementing the strategy
portfolio management techniques
methods used by diversified firms to make decisions about what businesses to engage in and how to manage these businesses to max corporate performance; the BCG Matrix & the GE Business Screen
interacting groups or teams
most common form of decision-making groups which consists of an existing group or newly formed team interacting and then making a decision
competitive disadvantage
occurs when an org fails to implement strategies being implemented by competitors
short-range plans
operational action and contingency plans of 1 year or less
common organizational strengths
organizational capabilities possessed by numerous competing firms
compliance
people conform to others' expectations or behaviors in the hope of acquiring rewards or avoiding punishment; avoid by a leader being silent at first
intermediate plans
plans that cover from 1 to 5 years and parallel tactical plans
long-range plans
plans that take longer than 5 years and are strategic
imitation of distinctive competencies
practice of duplicating another firm's distinctive competence and thereby implementing a valuable strategy; removes the competitive advantage of the competency; difficult when: it is based on unique historical circumstances, when it is difficult for competitors to understand its nature or character, or when it is based on a complex phenomenon (org culture)
unclear means-end relations
prevents rationality; it is impossible to generate an exhaustive list of alternatives then select the most promising
lack of consensus
prevents rationality; must be a general agreement of the definition of problems, decisions, and decision-making goals at the beginning
noisy environment
prevents rationality; the link between outcome and actions is hard to predict; EX: you accidentally delete a voicemail you needed
scope
range of markets in which an org will compete
nonprogrammed decision
relatively unstructured decision and occurs much less often than a programmed decision; EX: choosing a vacation destination
growth stage
section of product life cycle that focuses on ensuring quality and delivery, and begins to differentiate product
introduction stage
section of product life cycle that focuses on getting the product out the door without sacrificing quality
mature stage
section of product life cycle that focuses on low costs and new products; essential stage if company is going to survive
decline stage
section of product life cycle where demand for the product decreases; focus on developing new products and keeping costs low
operational plans
short-term focus plans that are set by and for lower-level managers
organizational strengths
skills and abilities enabling an org to conceive of and implement strategies
operations management
the set of managerial activities used by an org to transform resource inputs in to products, services, or both; application of management science
crisis management
the set of procedures the org uses in the event of a disaster or other unexpected calamity; response to lack of contingency planning; EX: houston hurricane evacuation, Apollo 13
strategy formulation
the set of processes involved in creating or determining the org's strategies; it focuses on the content of the strategies
business-level strategy
the set of strategic alternatives that an org chooses from as it conducts business in a particular industry or a particular market; helps orbs focus its competitive efforts for each industry or market in a targeted and focused manner; "how do we compete?"
corporate-level strategy
the set of strategic alternatives that an org chooses from as it manages its operations simultaneously across several industries and several markets; overall strategy that helps define the mix of industries and markets that are of interest to the firm; "what business are we in?"
availability bias
the tendency to judge the likelihood that something will happen by the ease with which you can call examples to mind; EX: believe there are more words that begin with 'k' than have the 3rd letter of 'k'
satisficing
the tendency to search for alternatives only until one is found that sets some minimum standard of sufficiency to resolve the problem; EX: where to eat for dinner, we settle instead of working to make the best decision
home replication
utilizing a core competency or a firm-specific advantage developed at home as a main competitive weapon in foreign markets; works best when the firm's competencies are valuable in many different types of markets
global strategy
viewing the world as a single marketplace and having as a primary goal the creation of standardized goods and services that will address the needs of customers worldwide; works best for a commodity-like product or in an industry that demands high efficiency
sustained competitive advantage
when a distinctive competence cannot be imitated; what remains after all attempts at strategic imitations cease