Mgmt 309 Exam 2

Evidence-Based Management

uses rationality and evidence when making decisions

Miles and Snow Typology

Prospector Strategy Defender Strategy Analyzer Strategy Reactor Strategy

Product Differentiation

a positioning strategy that some firms use to distinguish their products from those of competitors Firms that successfully implement a differentiation strategy can charge more than competitors because customers are willing to pay more to obtain the extra value they perceive. Example: Rolex watches

Reactor Strategy

a strategy in which a firm has no consistent approach to strategy - no clear strategy - reacts to changes in the environment - drifts with events Example: Office Depot (they suck)- Proff and his wife walked in and the place was a mess, everything was over priced, not just a local thing, it was everywhere. Company recognizes they are not competing and start to slow down and stop. - Could be because of poor leadership -make a huge commitment to how they structure their company from the start Example: Sears did this by making themselves associated with malls. In order to compete they would have to rebuild their whole model and build new stores which they couldn't afford

Focus Strategy

a strategy in which an organization concentrates on a specific regional market, product line, or group of buyers This strategy may have either a differentiation focus, whereby the firm differentiates its products in the focus market, or an overall cost leadership focus, whereby the firm manufactures and sells its products at low cost in the focus market. Example: HEB focusing on Texas

Analyzer Strategy

a strategy in which the firm attempts to maintain its current businesses and to be somewhat innovative in new businesses - moderate emphasis on innovation Example: yahoo.. unlike google (gmail) they have not advanced much but they are a good email server

Prospector Strategy

a strategy in which the firm encourages creativity and flexibility and is often decentralized - innovative and growth oriented - searches for new markets and new growth opportunities - encourages risk taking Example: Google, 3M

Defender Strategy

a strategy in which the firm focuses on lowering costs and improving the performance of current products - protects current markets - maintains stable growth - serves current customers Example: a company focusing on what they do really well and finding ways to do so cheaper such as BIC

Effective Strategy

a strategy that promotes a superior alignment between the organization and its environment and the achievement of strategic goals

Just-In-Time Inventory System

a system designed to ensure that materials or supplies arrive at a facility just when they are needed so that storage and holding costs are minimized

Quality and Productivity have an..

inverse relationship however, it is possible to have both increase simultaneously

Productivity

is an economic measure of efficiency and summarizes what is produced relative to the resources used to produce it often assessed at different levels of analysis and in different forms

Decision Making

the act of choosing one alternative from a set of alternatives

Porter's Generic Strategies

1. differentiation strategy 2. overall cost leadership strategy 3. focus strategy

Decision Making is..

- the cornerstone of planning - the catalyst that drives the planning process

Decision-Making Models

1. Classical Model 2.Administrative Model 3. Behavioral Model

Components of Strategy

1. Distinctive Competence 2. Scope 3. Resource Deployment

Levels of Goals

1. Mission Statement: states an organization's fundamental purpose 2. Strategic Goal: set by/for top management; focus is on broad, general goals 3. Tactical Goal: set for/by middle mangers; focus is on actions necessary to achieve strategic goals 4. Operational Goal: set for/by lower-level managers; focus is on short term issues associated with tactical goals

8 Dimensions of Quality

1. Performance: a product's primary operating characteristic 2. Features: supplements to a product's basic functioning characteristcs 3. Reliability 4. Conformance: degree of meeting established standards 5. Durability 6. Serviceability: speed and ease of repair 7. Aesthetics 8. Perceived Quality: as seen by a customer

Steps in the Rational Decision-Making Model

1. Recognizing and defining the decision situation 2. Identify alternatives 3. Evaluating alternatives 4. Select the best alternative 5. Implement the chosen alternative 6. Follow up and evaluate the results

4 Purposes of Organizational Goals

1. They provide guidance and a unified direction 2. Affects other aspects of planning (effective goal setting promotes good planning; good planning facilitates future goal setting) 3. Specific (aka measurable) and moderately difficult (but obtainable) goals can motivate employees 4. Goals provide an effective mechanism for evaluation and control

Time Frames for Goals

1. long term 2. intermediate term 3. short term

Strategy

A comprehensive plan for accomplishing an organization's goals

Bounded Rationality

A concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits - a piece of the administrative model of decision making example: partially explains how U.S. auto executives allowed Japanese automakers to get such a strong foothold in the U.S. domestic market

Escalation of Commitment

A decision maker's staying with a decision even when it appears to be wrong - important behavioral process that influences decision making Example: when people buy stock in a company, they sometimes refuse to sell it even after repeated drops in price

Programmed Decisions

A decision that is fairly structured or recurs with some frequency (or both) Example: Starbucks uses pro- grammed decisions to purchase new supplies of coffee beans, cups, and napkins, and Star- bucks employees are trained in exact procedures for brewing coffee. Example: Bryan Ford dealer made a decision that he will sponsor a youth soccer team each year. Thus, when the soccer club president calls, the dealer already knows what he will do.

Delphi Groups

A group is used to achieve a consensus of expert opinion no biased opinions compared to internal members

GE Business Screen

A method of evaluating businesses along two dimensions: (1) industry attractiveness and (2) competitive position; in general, the more attractive the industry and the more competitive the position, the more an organization should invest in a business

BCG Matrix

A method of evaluating businesses relative to the growth rate of their market and the organization's share of the market

Fixed Positon Layout

A physical configuration of facilities arranged around a single work area; used for the manufacture of large and complex products such as airplanes

Process Layout

A physical configuration of facilities arranged around the process; used in facilities that create or process a variety of products incoming jobs that may bounce around to several different processes - very efficient way of doing things if you have multiple products Example: Auto repair shops; healthcare clinics -Each car and each person is a separate "product." The needs of each incoming job are diagnosed as it enters the operations system, and the job is routed through the unique sequence of workstations needed to create the desired finished product

Product Layout

A physical configuration of facilities arranged around the product; used when large quantities of a single product are needed Standard assembly line layout Example: Dell's personal computer factories

Cellular Layouts

A physical configuration of facilities used when families of products can follow similar flow paths Example: a clothing manufacturer

Classical Model of Decision Making

A prescriptive model of decision making that assumes the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action for the organization. Tells managers how they should make a decision Assumes that managers are logical and rational and their decisions will be in the best interests of the organization Example:

Single-Product Strategy

A strategy in which an organization manufactures just one product or service and sells it in a single geographic market Example: red bull; mom & pop shops Strength: By concentrating its efforts so completely on one product and market, a firm is likely to be very success- ful in manufacturing and marketing the product. Weakness: if the product is not accepted by the market or is replaced by a new one, the firm will suffer.

Behavioral Elements in Decision Making

Administrative Decision Making: making a decision with incomplete and imperfect information Coalition: informal alliance formed to achieve a common goal Intuition: an innate belief about something without conscious decision Escalation of Commitment: when managers stay with a decision even if they know it's wrong Risk Propensity: the extent to which a decision maker gambled when deciding Personal Ethics

Intuition

An innate belief about something, often without conscious consideration - plays a huge factor in the decision making process Aka that "gut" feeling

Backward Vertical Integration

An organization's beginning the business activities formerly conducted by its suppliers Example: Campbell Soup once bought soup cans from several different manufacturers but later began manufacturing its own cans.

Impact of Automation Manufacturing

Automation: process of designing work so that it can be completely or almost completely performed by machines. Because automated machines operate quickly and make few errors, they increase the amount of work that can be done. Thus automation helps to improve products and services and fosters innovation.

Optimization

Balancing and reconciling possible conflicts among goals Example:Home Depot first achieved success in the retailing industry by offering do-it-yourselfers high-quality home improvement products at low prices and with good service. The firm then added an additional goal of doubling its revenues from professional contractors. To help achieve this, many Home Depot stores have separate checkout areas and special products for contractors. The challenge, however, has been to keep loyal individual customers while also satisfying professional contractors.

Improving Operations

Focuses on improving how existing programs and services are carried out; is internally focused and is one part of how to implement strategic thinking Can be done through.. 1. Research and Development: helps identify new products, new uses for existing products, and new methods for making products (ultimately boosts productivity) 2. Reassessing and revamping their transformation facilities (not limited to manufacturers)

Resource Deployment

How a firm distributes its resources across the areas in which it competes

Risk Propensity

The extent to which a decision maker is willing to gamble when making a decision - The organization's culture is a big factor in fostering different levels of risk propensity.

Strategic Imitation

The practice of duplication another organization's distinctive competence and thereby implementing a valuable strategy

Satisficing

The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency Reasons that people satisfice 1. managers may be unwilling to ignore their own motives (such as reluctance to spend time making a decision) 2. the decision maker may be unable to weigh and evaluate large numbers of alternatives and criteria 3. subjective and personal considerations often intervene in decision situations

Operations Management

The total set of managerial activities used by an organization to transform resource inputs into products, services, or both Core of the organization; provides utility (form, time, place) Example: When Dell Computer buys electronic com- ponents, assembles them into PCs, and then ships them to customers, it is engaging in operations management.

Related Diversification

an organization operates in several businesses that are somehow linked with one another Example: Disney, Universal Advantages: - reduces economic risk -reduces overhead costs (legal & acct.) -allows an org. to create synergy

T/F Because of the inherent imperfection of information, bounded rationality, and satisficing, the decisions made by a manager may or may not actually be in the best interests of the organization.

True Example: A manager may choose a particular location for the new plant because it offers the lowest price and best availability of utilities and transportation. Or she may choose the site because it is located in a community where she wants to live.

Synergy

Two or more subsystems working together to produce more than the total of what they might produce working alone

Distinctive Competence

an organizational strength possessed by only a small number of competing firms

Strategic Management

a comprehensive and ongoing management process aimed at formulating and implementing effective strategies a way of approaching business opportunities and challenges

Nonprogrammed Decisions

a decision that is relatively unstructured and occurs much less often than a programmed decision Example: Disney's decision to buy Pixar Example: Most of the decisions made by top managers involving strategy (including merg- ers, acquisitions, and takeovers) and organization design are nonprogrammed.

Administrative Model of Decision Making

a decision-making model that decision makers.. 1. use incomplete and imperfect 2. are constrained by bounded rationality 3. tend to "satisfice" when making decisions. Example:

Forward Vertical Integration

an organization begins activities formerly conducted by its customers Example: Using the Internet and social media to market their products and services directly to consumers

Interacting Groups

members discuss, argue and reach agreement upon the best alternatives the most common form

Groupthink

occurs when a group or team's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision Example: NASA had fallen out of public favor... so they decided it would be a great PR move to send a civilian into space. They decided that a teacher would be the best option. On the day this was supposed to happen, there ended up being a problem in mission control. One group of engineers decided it was a no go - said it was too cold and would malfunction equipment. Everyone else still wanted to launch because the whole world was watching - even though it wasn't a good idea. The launch was a failure and it exploded and killed everyone.

Labor Productivity Index

outputs / direct labor Example: Suppose that an organization can manufacture 100 units of a particular product with 20 hours of direct labor. The organiza- tion's labor productivity index is 100/20, or 5 (5 units per labor hour).

Differentiation Strategy

seeking to distinguish an organization from its competitors through the quality of its products or services Ex: Rolls-Royce cars

Overall Cost Leadership

seeks to gain a competitive advantage by reducing its costs below competing firms Example: Amazon; Price Matching at Walmart

Scope

specifies that range of markets in which an organization will compete

Capacity Utilization

the measure of how much of the available capacity is being used

Business-Level Strategy

the set of strategic alternatives from which an organization chooses as it conducts business in a particular industry or market

Corporate-Level Strategy

the set of strategic alternatives from which an organization chooses as it manages its operations simultaneously across several industries and several markets

Quality

the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs the heart of manufacturing

Computer Aided Design (CAD)

the use of computers in the design of products usually combined with computer-aided manufacturing (CAM) to ensure that the design moves smoothly to production. these systems are not always reliable