Principles of Management Test 2 (chapters 5-8)

Clan Culture

(family-type organization) internal focus values flexibility rather than stability encourages collaboration among employees

cost-focus strategy

(low cost/ narrow market) keep the costs of a product below those of competitors and target a narrow market

cost-leadership strategy

(low cost/wide market) keeps the costs, and hence prices, of a product or service below those of competitions and target a wide

focused-differentiation strategy

(unique product / narrow market) offer products that are unique and superior value compared to those of competitors and target a narrow market

differentiation strategy

(unique product / wide market) offer products that are of unique and superior value compared to those of competitors but target a wide market

three principles of strategic positioning

1. Strategy is the creation of a unique and valuable position 2. Strategy requires trade-offs in competing 3. Strategy involves creating a "fit" among activities

porter's 5 competitive forces

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

strategic-management process

1. establish the mission, vision, and values statements 2. assess the current reality 3. formulate corporate, business, and functional strategies 4. execute the strategies 5. maintain strategic control

3 sources of strategic positioning

1. few needs, many customers 2. broad needs, few customers 3. broad needs, many customers

four steps in decision making

1. identify problem or opportunity 2. think up alternative solutions 3. evaluate alternatives & select a solution 4. implement & evaluate the solution chosen

Level 3 of organizational culture

Basic assumptions - Core values of the organization

Level 1 of Organizational Culture

Observable Artifacts -Physical manifestations such as a manner of dress, awards, myths and stories about the company. -Visible behavior exhibited by managers and employees

satisficing model

One type of nonrational decision-making model; managers seek alternatives until they find one that is satisfactory, not optimal

SMART goals

Specific, Measurable, Attainable, Realistic, Time

VIRO

Value, Rarity, Imitability, Organization

decision support system

a computer-based information system that provides a flexible tool for analysis and helps managers focus on the future

predictive modeling

a data-mining technique used to predict future behavior and anticipate the consequences of change

modular structure

a firm assembles product chunks, or modules, provided by outside contractors

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

delphi technique

a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas

Strategy or strategic plan

a large-scale action plan that sets the long-term goals and direction for an organization

heros

a person whose accomplishments embody the values of the organization

benchmarking

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

bounded rationality

a process of making decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity

strategy innovation

the ability to reinvent the basis of competition within existing industries

coordinated effort

the coordination of individual effort into group-wide effort

middle management

the level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling

Adhocracy culture

external focus values flexibility adaptive, creative, and quick to respond to changes in the marketplace

Vertical Integration

firm expands into businesses that provided the supplies it needs to make its products or that distribute and sell its products

conceptual decision making

focus on people or social aspects, broad perspective, consider many options, rely on intuition

Market Culture

focused on the external environment values stability and control driven by competition and a strong desire to deliver results

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

span of control

the number of people reporting directly to a given manager; narrow or wide

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

organizational socialization

the process by which people learn the values, norms, and required behaviors of an organization

strategy formulation

the process of choosing among different strategies and altering them to best fit the organization's needs

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

common purpose

gives everyone an understanding of the organization's reason for being

Hierarchy Culture

has an internal focus values stability and control over flexibility formalized, structured work environment

division of labor

having discrete parts of a task done by different people

top management

highest level of management, consisting of the president and other key company executives who develop strategic plans

trend analysis

hypothetical extension of a past series of events into the future

tolerance for ambiguity

indicates the extent to which a person needs structure or control in his or her life

growth strategy

involves expansion, as in sales revenues, market share, number of employees, or number of customers

stability strategy

involves little or no significant change

defensive stragety

involves reduction in the organization's efforts

vision statement

it is a clear sense of the future and the actions needed to get there

matrix structure

least common combines functional and divisional chains of command in a grid so that there are two command structures: vertical and horizontal

intuition model

making a choice without the use of conscious thought or logical inference "trust your gut"

hierarchy of authority

making sure the right people do the right things at the right time

first-line management

managers who directly supervise non management employees

competitive intelligence

means gaining information about competitor's activities do that you can anticipate their moves and react appropriately

stories

narrative based on true events repeated- and sometimes embellished upon- to emphasize a particular value

consensus

occurs when members are able to express their opinions and reach agreement to support the final decision

diversification

operating several businesses in order to spread rist

virtual organization

organization whose members are geographically distant, usually working via e-mail, collaborative computing, and other computer connections

divisional structure

people with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions

functional structure

people with similar occupational specialties are put together in formal groups

Three Core Processes of Business

people, strategy, operations

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

person-organization (PO) fit

reflects the extent to which your personality and values match the climate and culture in an organization

Planning

setting goals and deciding how to achieve them

business analytics

sophisticated forms of business data analysis

sustainable competitive advantage

stays ahead in four areas 1. in being responsive to customers 2. in innovating 3. in quality 4. in effectiveness

"Big Data"

stores of data so vast that conventional database management systems cannot handle them

behavioral decision making

supportive, receptive to suggestions, show warmth, prefer verbal to written, avoid conflict, people-oriented

horizontal design

teams or workgroups, either temporary or permanent, are used to improve collaboration and work on shared tasks by breaking down internal boundaries

brainstorming

technique used to help groups generate multiple ideas and alternatives for solving problems

integration

tendency of the parts of an organization to draw together to achieve a common purpose/goal

organizational culture

the set of shared, taken-for-granted implicit assumptions that a group holds and that determine how it perceives, thinks about, and reacts to its various environments

differentiation

the tendency of the parts of an organization to disperse and fragment

grand strategy

translates the brand mission and vision statements into a corporate strategy which explains how the organization's mission is to be accomplished

evidence-based management

translating principles based on best evidence into organizational practice, bringing rationality to the decision-making process

mutual-benefit organizations

voluntary collectives whose purpose is to advance members' interests

value statement

what the company stands for: its core priorities, the value its employees embody, and what its product contribute to the world

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

Decison Tree

-a graph of decisions and their possible consequences -used to create a plan to reach a goal

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 plan

strategic management

-a process that involves managers from all parts of the organization in the formulation and the implementation of strategies goals - organization's mission and vision

forecasting

-a vision or projection of the future

functional-level strategy

-applies to the key functional departments or units within the business units -focus more on tactical issues

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

action plan

-define the course of action (the tactics) needed to achieve a stated goal -contains a projected date for completing the desired activities for each tactic

rational 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

Business-Level Strategy

-focuses on individual business units or product/service lines

corporate-level strategy

-focuses on the organization as a whole

long-term goal

-generally referred to as strategic goals -tend to span 1-5 years and focus on achieving the strategies identified in a company's strategic plan

short-term goals

-sometimes referred to as tactical or operational goals, or just plain goals -generally span 12 months and connected to strategic goals in a hierarchy known as a means-end chain

Planning and Strategic Management

1. Establish the organization's mission and vision 2. Formulate the grand strategy 3. Formulate the strategic plans, then the tactical and operational plans 4. Implement the strategic plans 5. Control the strategy

planning/control cycle

1. Make the plan 2. Carry out the plan 3. Control the direction by comparing results with the plan 4. Control the direction by taking corrective action in two ways- (1) Correcting deviations & (2) Improving future plans

blue ocean strategy

A company creates a new, uncontested market space that makes competitors irrelevant, creates new consumer value, and decreases costs

organic organization

Decentralized hierarchy of authority Few rules and procedures Shared tasks Informal communication Many teams or task forces Wider span of control, flatter structures

Level 2 of Organizational Culture

Espoused Values: Explicitly stated values and norms

what drives an organizational culture?

Founder's values Industry and business environment National culture Organization's vision and strategies Behavior of leaders

authority

accountability, responsibility, and delegation; line versus staff positions

rites and rituals

activities and ceremonies that celebrate important occasions and accomplishments

symbols

an object, an act, a quality, or event that conveys meaning to others

Nonrational Decision Making

assumes that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions

strategic positioning

attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company

simple structure

authority is centralized in a single person with few rules and low work specialization

Analytical Decision Making

careful, take longer, respond well in new or uncertain situations

single-product strategy

company makes and sells only one product within its market good: can focus on just one product bad: you are vulnerable in the market

virtual structure

company outside a company that is created "specifically to respond to an exceptional market opportunity" that is often temporary

Porter's Four Competitive Strategies

cost-leadership, differentiation, cost-focus, focused-differentiation

contingency planning (scenario planning // scenario analysis)

creation of alternative hypothetical but equally likely future conditions

directive decision making

efficient, logical, practical, systematic, action-oriented

mission statement

expresses the purpose of organization