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