MGMT Exam 2 Review

what are the conditions that tend to surround decision making

the circumstances that exist for the decision maker are conditions of certainty, risk, or uncertainty

what is capacity utilization

involve choosing the amount of products, services, or both that can be produced -The capacity decision is truly a high-risk one because of the uncer-tainties of future product demand and the large monetary stakes involved. An organization that builds capacity exceeding its needs may com-mit resources (capital investment, space, and so forth) that will never be recovered. Alterna-tively, an organization can build a facility with a smaller capacity than expected demand. Doing so may result in lost market opportuni-ties, but it may also free capital resources for use elsewhere in the organization. A major consideration in determining capacity is demand. A company operating with fairly constant monthly demand might build a plant capable of producing an amount each month roughly equivalent to its demand. But if its market is characterized by seasonal fluc-tuations, building a smaller plant to meet normal demand and then adding extra shifts staffed with temporary workers or paying permanent workers extra to work more hours dur-ing peak periods might be the most effective choice.

multidomestic strategy

International strategy in which a company manages itself as a collection of relatively independent operating subsidiaries, each of which focuses on a specific domestic market

Transnational strategy

International strategy in which a company tries to combine the benefits of global scale efficiencies with the benefits and advantages of local responsiveness

what is the term satisficing mean

The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency

Formulating business strategies :: Frameworks of identifying the major strategic alternatives that organizations should consider when choosing their business-level strategies.

Three important classification schemes are Porter's generic strategies, 1. differentiation 2. overall cost leadership 3. focus strategy the Miles and Snow typology, 1. prospector 2. defender 3. analyzer 4. reactor strategies based on the product life cycle. 1. introduction 2. growth 3. maturity 4. decline

classical decision making model

a prescriptive approach that tells managers how they should make decisions; assumes that managers are logical and rational and their decisions will be in the best interests of the organization- these conditions rarely, if ever, exist- 1. Decision makers have complete information about the decision situation and possible alternatives. 2. They can effectively eliminate uncertainty to achieve a decision condition of certainty. 3. They evaluate all aspects of the decision situation logically and rationally.

advantages and disadvantages to group decision making

advantages: 1. more information and knowledge available 2. more alternatives are likely to be generated 3. more acceptance of final decision 4. enhanced communication of design 5. better decisions generally emerge disadvantages: 1. the process takes longer than individual decision making so it is costlier 2. compromise decisions resulting from indecisiveness may emerge 3. one person may dominate group 4. group think may occur (when a group or team's desire for consensus overwhelms its desire to reach best possible decision)

common organizational strengths

common strength is A skill or capability held by numerous competing firms Competitive parity: exists when large numbers of competing firms are able to implement the same strategy. In this situation, organizations generally attain only average levels of performance

what are the various strategy types?

effective strategy: The total set of managerial activities used by an organization to transform resource inputs into products, services, or both business level strategy: the set of strategic alternatives from which an organization chooses as it conducts business in a particular industry or market (smaller) focuses on the areas in which the firm may have an advantage and how much various organizational parts enhance each other 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 (larger) deliberate strategy: a chosen plan of action implemented to support specific goals/mission- often repeated & used often emergent strategy: a developed pattern of actions in the absence of a mission or goals or despite mission or goals- usually reactions to something that happened in the organization's environment differentiation strategy: seeks to distinguish itself from competitors through the QUALITY of its products and services - 1 of Porters Generic Strategies- ex/ rolls royce overall cost effective leadership strategy: seeks to gain a competitive advantage by reducing its COSTS below competing firms- 1 of Porter's Generic Strategies- ex/ amazon focus strategy: concentrates on a specific regional MARKET, product line, or group of buyers- 1 of Porter's Generic Strategies- ex/ H.E.B (only in TX) Prospector strategy: encourages CREATIVITY and FLEXIBILITY and is often decentralized - 1 of Miles and Snow Typology Strategies- ex/ Google defender strategy: focuses on lowering costs and improving performance of CURRENT PRODUCTS -1 of Miles and Snow Typology Strategies- ex/ Auntie Anne's Pretzels analyzer strategy :maintains current business and is SOMEWHAT innovative in new business (trying to stay current)- 1 of Miles and Snow Typology Strategies- ex/ IBM (in technology market for long time by continuously and slowly innovating technology to sustain current business) reactor strategy: has NO CONSISTENT APPROACH to strategy - 1 of Miles and Snow Typology Strategies- ex/ office depot (constantly disorganized & still looks the same) product life cycle strategy: a model that portrays how sales volume for products changes over the life of the products- ex/ Apple IPhone single product strategy: an organization manufactures one product or service and sells in a single geographic market - ex/ ma & pop shops Home replication strategy: a company uses the core competency it developed at home as its main competitive weapon- global strategic alternative multi domestic strategy: a company manages itself as a collection of subsidiaries, each with a domestic market- global strategic alternative global strategy: a company views the world as a single marketplace, standardizing products to address the needs of customers worldwide- global strategic alternative- combines benefits of global scale efficiencies with the benefits and advantages of local responsiveness

Facilities decisions

facilities :The physical locations where products or services are created, stored, and distributed Location: The physical positioning or geographic site of facilities and must be determined by the needs and requirements of the organization. A company that relies heavily on railroads for transportation needs to be located close to rail facilities. Layout: The physical configuration of facilities, the arrangement of equipment within facilities, or both

Intuition and Escalation of Commitment

intuition: An innate belief about something, without conscious consideration -Managers sometimes decide to do something because it "feels right" or they have a "hunch." This feeling usually is not arbitrary, however. Rather, it is based on years of experience and practice in making decisions in similar situations. An inner sense may help managers make an occasional decision without going through a full-blown rational sequence of steps. escalation of commitment:

Inventory management

inventory control: Managing the organization's raw materials (Provide the materials needed to make the product), work in process (Enable overall production to be divided into stages of manageable size), finished goods(Provide ready supply of products on customer demand and enable long, efficient production runs) , and products in transit (Distribute products to customers) Just in time: An inventory system that has necessary materials arriving as soon as they are needed (just in time) so that the production process is not interrupted First popularized by the Japanese, the JIT system reduces the organization's invest-ment in storage space for raw materials and in the materials themselves. JIT approach requires high levels of coordination and cooperation between the company and its suppliers. If shipments arrive too early, Mercedes has no place to store them. If they arrive too late, the entire assembly line may have to be shut down, resulting in enormous expense.

Decision Making chap 6

is the cornerstone of planning is the catalyst that drives the planning process underlies the formulation and implementation of all plans

Manufacturing Technology

newer forms of technology not considered by Woodward also warrant attention. Two of these are automation and computer-assisted manufacturing

Strategies Based on Product Life Cycle:

product life cycle:A model that portrays how sales volume for products changes over the life of products. Understanding the four stages in the product life cycle helps managers recognize that strategies need to evolve over time. the cycle begins when a new product or technology is first introduced. In this introduction stage, demand may be very high, sometimes outpacing the firm's ability to supply the product. At this stage, managers need to focus their efforts on "getting product out the door" without sacrificing quality. Managing growth by hiring new employees and managing inventories and cash flow are also concerns during this stage. During the growth stage, more firms begin producing the product, and sales continue to grow. Important management issues include ensuring quality and delivery and beginning to differentiate an organization's product from competitors' products. Entry into the industry during the growth stage may threaten an organization's competitive advantage; thus, strategies to slow the entry of competitors are important. After a period of growth, products enter a third phase. During this maturity stage, overall demand growth for a product begins to slow down, and the number of new firms producing the product begins to decline. The number of established firms producing the product may also begin to decline. This period of maturity is essential if an organization is going to survive in the long run. Product differentiation concerns are still important during this stage, but keeping costs low and beginning the search for new products or services are also important strategic considerations. In the decline stage, demand for the product or technology decreases, the number of organizations producing the product drops, and total sales drop. Demand often declines be-cause all those who were interested in purchasing a particular product have already done so. Organizations that fail to anticipate the decline stage in earlier stages of the life cycle may go out of business. Those that differentiate their product, keep their costs low, or develop new products or services may do well during this stage.

service operations

service organization An organization that transforms resources into an intangible output and creates time or place utility for its customers

focus strategy

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 overall cost leadership focus, whereby the firm manufactures and sells its products at low cost in the focus market. Tag Heuer (watches)Vosges (chocolate)Ferrari, Alfa Romeo (automobiles)Hasselblad (cameras)Waterman (writing instruments)

Organizational technologies

technology: The set of processes and systems used by organizations to convert resources into products or services 2 types ::: Manufacturing Technology Service Technology

Evidence based management

translating principles based on best evidence into organizational practice, bringing rationality to the decision-making process evidence-based management as "a commitment to finding and using the best theory and data available at the time to make decisions," but their "Five Principles of Evidence-Based Management" make it clear that EBM means more than just sifting through data and crunching numbers 1. Face the hard facts and build a culture in which people are encouraged to tell the truth, even if it's unpleasant. 2. Be committed to "fact-based" decision making—which means being committed to get-ting the best evidence and using it to guide actions. 3. Treat your organization as an unfinished prototype— encourage experimentation and learning by doing. 4. Look for the risks and drawbacks in what people recommend (even the best medicine has side effects). 5. Avoid basing decisions on untested but strongly held beliefs, what you have done in the past, or on uncritical "benchmarking" of what winners do.

Improving Productivity

two broad categories: improving operations and increasing employee involvement.

Steps in rational decision making

used even if conditions are not perfect 1) recognizing and defining the situation The first step in rational decision making is recognizing that a decision is necessary—that is, there must be some stimulus or spark to initiate the process. For many decisions and problem situations, the stimulus may occur without any prior warning.-equipment malfunctions, the manager must decide whether to repair or replace it. Or, when a major crisis erupts, as described in Chapter 3, the manager must quickly decide how to deal with it.-The manager must develop a complete understanding of the problem, its causes, and its relationship to other factors. This understanding comes from careful analysis and thoughtful consideration of the situation. 2) identifying alternatives Once the decision situation has been recognized and defined, the second step is to identify alternative courses of effective action. Developing both obvious, standard alternatives and creative, innovative alternatives is generally useful.-In general, the more important the decision, the more attention is directed to developing alter-natives. If the decision involves a multimillion-dollar relocation, a great deal of time and expertise will be devoted to identifying the best locations.-Although managers should seek creative solutions, they must also recognize that various constraints often limit their alternatives. Common constraints include legal restrictions, moral and ethical norms, authority constraints, and constraints imposed by the power and authority of the manager, available technology, economic considerations, and unofficial social norms. 3) evaluating alternatives each alternative be evaluated in terms of its feasibility, its satisfactoriness, and its con-sequences.1. The first question to ask is whether an alternative is feasible. Is it within the realm of probability and practicality? For a small, struggling firm, an alternative requiring a huge financial outlay is probably out of the question. Other alternatives may not be feasible because of legal barriers. And limited human, material, and information resources may make other alternatives impractical.2. When an alternative has passed the test of feasibility, it must next be examined to see how well it satisfies the conditions of the decision situation. 3. Finally, when an alternative has proven both feasible and satisfactory, its probable consequences must still be assessed. To what extent will a particular alternative influence other parts of the organization? What financial and nonfinancial costs will be associated with such influences?-The manager, then, must put "price tags" on the consequences of each alternative. Even an alternative that is both feasible and satisfactory must be eliminated if its consequences are too expensive for the total system. 4) selecting best alternative Even though many alternatives fail to pass the triple tests of feasibility, satisfactoriness, and affordable consequences, two or more alternatives may remain. Choosing the best of these is the real crux of decision making.-One approach is to choose the alternative with the optimal combination of feasibility, satisfactoriness, and affordable consequences. Even though most situations do not lend themselves to objective, mathematical analysis, the manager can often develop subjective estimates and weights for choosing an alternative.-Optimization is also a frequent goal. Because a decision is likely to affect several individuals or units, any feasible alternative will probably not maximize all of the relevant goals.-Decision makers should also remember that finding multiple acceptable alter-natives may be possible; selecting just one alternative and rejecting all the others might not be necessary. 5) implementing chosen alternative After an alternative has been selected, the man-ager must put it into effect. In some decision situations, implementation is fairly easy; in others, it is more difficult.In the case of an acquisition, for example, managers must decide how to integrate all the activities of the new business, including purchasing, human resource practices, and distribution, into an ongoing organizational framework.Managers must also consider people's resistance to change when implementing decisions. The reasons for such resistance include insecurity, inconvenience, and fear of the unknown.-Managers should anticipate potential resistance at various stages of the implementation process.- Managers should also recognize that even when all alternatives have been evaluated as precisely as possible and the consequences of each alternative weighed, unanticipated consequences are still likely. Any number of factors—unexpected cost increases, a less-than-perfect fit with existing organizational subsystems, or unpredicted effects on cash flow or operating expenses, for example—could develop after implementation has begun. 6) following up & evaluating results The final step in the decision-making process requires that managers evaluate the effectiveness of their decision—that is, they should make sure that the chosen alternative has served its original purpose. If an implemented alternative appears not to be working, the manager can respond in several ways.-Another previously identified alternative (the original second or third choice, for instance) could be adopted.-the manager might recognize that the situation was not correctly defined to begin with and start the process all over again.-the manager might decide that the original alternative is in fact appropriate but has not yet had time to work or should be implemented in a different way -Failure to evaluate decision effectiveness may have serious consequences. When managers realize that they have made a poor decision, of course, they should take steps to set things right.

what is computer aided design CAD

—the use of computers to design parts and complete products and to simulate performance so that prototypes need not be constructed. Boeing uses CAD technology to study hydraulic tubing in its com-mercial aircraft. Japan's automotive industry uses it to speed up car design. GE used CAD to change the design of circuit breakers, and Benetton uses CAD to design new styles and products. CAD is usually combined with computer-aided manufacturing (CAM) to ensure that the design moves smoothly to production. - because of their tremendous complexity, CAD systems are not always reliable.

Flexible Manufacturing System (FMS)

(FMS) usually have robotic work units or workstations, assembly lines, and robotic carts or some other form of computer-controlled transport system to move material as needed from one part of the system to another.

Purchasing management

- controlling the buying of materials and resources is at the heart of effective supply chain mgmt- ability to get product when you need it

What is Bounded Rationality

A concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits They are also limited by less-than-complete informa-tion and knowledge. Bounded rationality partially explains how U.S. auto executives allowed Japanese automakers to get such a strong foothold in the U.S. domestic market. If managers had gathered complete infor-mation from the beginning, they might have been better able to thwart foreign competitors. the concept of bounded rationality suggests that although people try to be rational decision makers, their rationality has limits.

What's the escalation of commitment?

A decision maker's staying with a decision even when it appears to be wrong decision makers sometimes make decisions and then become so committed to the courses of action suggested by those decisions that they stay with them even when the decisions appear to have been wrong. For example, when people buy stock in a company, they sometimes refuse to sell it even after repeated drops in price. They choose a course of action—buying the stock in anticipation of making a profit—and then stay with it even in the face of increasing losses. -On the one hand, they must guard against stick-ing too long with an incorrect decision. To do so can bring about financial decline. On the other hand, managers should not bail out of a seemingly incorrect decision too soon,

reactor strategy

A strategy in which a firm has no consistent approach to strategy it drifts with environmental events, reacting to but failing to anticipate or influence those events. Not surprisingly, these firms usually do not perform as well as organizations that implement other strategies. International Harvester. Joseph Schlitz Brewing Co. Kmart. Montgomery Ward

Porter's Generic Strategies

According to Michael Porter, organizations may pursue a differentiation, overall cost leader-ship, or focus strategy at the business level.

SWOT analysis

An acronym that stands for strengths, weaknesses, opportunities, and threats analysis is a careful evaluation of an organization's internal strengths and weak-nesses as well as its environmental opportunities and threats. In SWOT analysis, the best strategies accomplish an organization's mission by (1) exploiting an organization's opportunities and strengths while (2) neutralizing its threats and (3) avoiding (or correcting) its weaknesses. -SWOT analysis is one of the most important steps in formulating strategy. Using the organization's mission as a context, managers assess internal strengths (distinctive competencies) and weaknesses as well as external opportunities and threats. The goal is then to develop good strategies that exploit opportunities and strengths, neutralize threats, and avoid weaknesses.

political forces in decision making

Coalition: An informal alliance of individuals or groups formed to achieve a common goal -This common goal is often a preferred decision alternative. For example, coalitions of stockholders often band together to force a board of directors to make a certain decision.

Decision making chap 8

Decision making per se is the act of choosing one alternative from among a set of alternatives. decision-making process includes recognizing and defining the nature of a decision situation, identifying alternatives, choosing the "best" alternative, and putting it into practice.The word best, of course, implies effectiveness. Effective decision making requires that the decision maker understand the situation driv-ing the decision. Most people would consider an effective decision to be one that optimizes some set of factors, such as profits, sales, employee welfare, and market share. In some situations, though, an effective decision may be one that minimizes losses, expenses, or employee turnover

home replication strategy

International strategy in which a company uses the core competency or firm-specific advantage it developed at home as its main competitive weapon in the foreign markets that it enters

Global Strategy

International strategy in which a company views the world as a single marketplace and has as its primary goal the creation of standardized goods and services that will address the needs of customers worldwide

Productivity

Managers today have learned the hard way that such an assumption is almost always wrong. If a firm installs a meaningful quality enhancement program, three things are likely to result. First, the number of defects is likely to decrease, causing fewer returns from customers. Second, because the number of defects goes down, resources (materials and people) dedicated to reworking flawed output will be decreased. Third, because making employees responsible for quality reduces the need for quality inspectors, the organization can produce more units with fewer resources.

what are the various models of decision making?

Rational perspectives on decision making = Classical decision making Model -evidence based management Behavioral perspectives for decision making = The Administrative Model -A decision-making model that argues that decision makers (1) use incomplete and imperfect information, (2) are constrained by bounded rationality- (limited by their values and unconscious reflexes, skills, and habits)- , and (3) tend to "satisfice" - (search for alternatives until one is found that meets some minimum standard of sufficing)- when making decisions Group and Team Decision Making -Interacting groups and teams -delphi groups -nominal groups

State of Risk

State of Risk : A condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates -On the basis of past experience, relevant information, the advice of others, and her own judgment, she may conclude that there is about a 75 percent chance that union representatives are bluffing and about a 25 percent chance that they will back up their threats. -When making decisions under a state of risk, managers must reasonably estimate the probabilities associated with each alternative. -decision making under conditions of risk is accompanied by moderate ambiguity and chances of a bad decision.

The Nature of Strategic Management

Strategy, Strategic Management, Effective Strategies A strategy is a comprehensive plan for accomplishing an organization's goals. Strategic management, in turn, is a way of approaching business opportunities and challenges—it is a comprehensive and ongoing management process aimed at formulating and implementing effective strategies. Finally, effective strategies are those that promote a superior alignment between the organization and its environment and the achievement of strategic goals.

Supply chain management

The process of managing operations control, resource acquisition, and inventory so as to improve overall efficiency and effectiveness -One way of using operations management as control is to coordinate it with other functions.

computer-aided manufacturing (CAM)

The production computer shares the design computer's information and can have machines with the proper settings ready when production is needed. A CAM system is especially useful when reorders come in because the computer can quickly produce the desired product, prepare labels and copies of orders, and send the product out to where it is wanted.

How do you formulate strategy as business

The set of strategic alternatives from which an organization chooses as it conducts business in a particular industry or market Such alternatives help the organization focus its competitive efforts for each industry or market in a targeted and focused manner. (smaller) focuses on the areas in which the firm may have an advantage and how much various organizational parts enhance each other -one market trying to dominate

What factors impact productivity?

Total factor productivity is defined by the following formula: Productivity = outputs / inputs Total factor productivity is an overall indicator of how well an organization uses all of its resources, such as labor, capital, materials, and energy, to create all of its products and ser-vices. The biggest problem with total factor productivity is that all the ingredients must be expressed in the same terms—dollars (it is difficult to add hours of labor to number of units of a raw material in a meaningful way). Total factor productivity also gives little insight into how things can be changed to improve productivity. Consequently, most organizations find it more useful to calculate a partial productivity ratio. Such a ratio uses only one category of resource. For example, labor productivity could be calculated by this simple formula: Labor Productivity = outputs / direct labor This method has two advantages. First, it is not necessary to transform the units of input into some other unit. Second, this method provides managers with specific insights into how changing different resource inputs affects productivity

what is synergy

Two or more subsystems working together to produce more than the total of what they might produce working alone exists among a set of businesses when the business's economic value together is greater than their economic value separately - advantage of related diversification at the corporate level (org operates in several businesses that are somewhat linked to each other) economic value is greater when working together than the sum of the parts . HINT: when you have a group of people that work together and accomplish something much greater than they could simply working by themselves

what are the components of the BCG matrix

Under implementing corporate strategies under managing diversification -it is a portfolio management technique: A method of determining which businesses to engage in and how to manage these businesses to maximize corporate performance BCG (boston consulting group) Matrix: A method of evaluating businesses relative to the growth rate of their market and the organization's share of the market -It also prescribes the preferred distribution of cash and other resources among these businesses. The BCG matrix uses two factors to evaluate an organization's set of businesses: the growth rate of a particular market and the organization's share of that market. -- superstar= high market growth rate & high market share (capitalizing on market) - cash cow= low market growth rate & high market share (reaping in benefits of market share while no growth) - Question marks= high growth rate & low market share (wondering how do they capitalize on growth rate?) - Dogs= low growth rate & low market share (product that no one wants) BCG matrix is relatively narrow and overly simplistic

Operations Management as Control

Within operations, managerial control ensures that resources and activities achieve pri-mary goals such as a high percentage of on-time deliveries, low unit-production cost, or high product reliability. Any control system should focus on the elements that are most crucial to goal attainment. Clearly, then, poor supply chain management can be disastrous, especially for major new products.

what Is optimization

Balancing and reconciling possible conflicts among -Because goals may conflict with one another, the manager must look for inconsistencies and decide whether to pursue one goal to the exclusion of another or to find

what is computer integrated manufacturing CIM

CAD Computer aided design and CAM computer aided manufacturing are linked together -and computer networks automatically adjust machine placements and settings to enhance both the complexity and the flexibility of scheduling. In settings that use these technologies, all manufacturing activities are con-trolled by the computer network. Because the network can access the company's other infor-mation systems, CIM is both a powerful and a complex management control tool. -CIM systems are so expensive that they raise the breakeven point for firms using them. This means that the firm must operate at high levels of production and sales to be able to afford the systems.

PRODUCT/SERVICE MIX

How many and what kinds of products or services (or both) to offer This decision flows from corporate, business, and marketing strategies. Managers have to make a number of decisions about their products and services, starting with how many and what kinds to offer -closely related to demand

state of uncertainty

State of Uncertainty : A condition in which the decision maker does not know all the alternatives, the risks associated with each, or the consequences each alternative is likely to have -Most of the major decision making in contemporary organizations is done under a state of uncertainty. -This uncertainty stems from the complexity and dynamism of contemporary organizations and their environments. The emergence of the Internet as a significant force in today's competitive environment has served to increase both revenue potential and uncertainty for most managers. -To make effective decisions in these circum-stances, managers must acquire as much relevant information as possible and approach the situation from a logical and rational perspective. Intuition, judgment, and experience always play major roles in decision making process under uncertainty -uncertainty is the most ambiguous condition for managers and the one most prone to error

Levels of Productivity

productivity: An economic measure of efficiency that summarizes what is produced relative to resources used to produce it By level of productivity we mean the units of analysis used to cal-culate or define productivity aggregate productivity: is the total level of productivity achieved by a country. Industry productivity: is the total productivity achieved by all the firms in a particular industry. Company productivity, just as the term suggests, is the level of productivity achieved by an individual company. Unit and individual productivity refer to the productivity achieved by a unit or department within an organization and the level of productivity attained by a single person.

Prospector strategy

A strategy in which the firm encourages creativity and flexibility and is often decentralized. is a highly innovative firm that is constantly seeking out new markets and new opportunities and is oriented toward growth and risk taking Amazon.com 3M Rubbermaid

defender strategy

A strategy in which the firm focuses on lowering costs and improving the performance of current products Rather than seeking new growth opportunities and innovation, a company that follows a defender strategy concentrates on protecting its current markets, maintaining stable growth, and serving current customers, generally by lowering its costs and improving the performance of its existing products. BIC eBay Mrs. Fields

analyzer strategy

A strategy in which the firm tries to maintain its current businesses and to be somewhat innovative in new businesses combines elements of prospectors and defenders. Most large companies use this approach because they want to both protect their base of operations and create new market opportunities. DuPont. IBM. Yahoo!

Nominal groups

A structured technique used to generate creative and innovative alternatives or ideas Unlike the Delphi method, in which group mem-bers do not see one another, nominal group members are brought together in a face-to-face setting. The members represent a group in name only, however; they do not talk to one another freely like the members of interacting groups. Nominal groups are used most often to generate creative and innovative alternatives or ideas.

computer assisted manufacturing

A technology that relies on computers to design or manufacture products -Current extensions of automation generally revolve around computer-assisted manufacturing. -One type of computer-assisted manufacturing is computer-aided design (CAD) These systems are not without disadvantages, however. For example, because they represent fundamental change, they also generate resistance.

what is operations improvement

- firms can better improve operations by spending more on research and development (R&D) - helps identify new products, new uses for existing products, new methods for making products, & overall contributes productivity - OR firms can improve operations by reassessing/revamping their transformation facilities to increase productivity * Q's on exam about Toyota installed a flexible manufacturing assembly line in its plants outside Columbus, Ohio.... & Almost 20,000 UPS employees are now equipped with ring scanners....* -1. Start from scratch 2. Minimize number of approvals needed to do something 3. Use teams as basis of organization 4. Develop and adhere to schedule 5. Do not ignore distribution 6. Integrate speed into organnization's culture

The Administrative Model

-A decision-making model that argues that decision makers (1) use incomplete and imperfect information, (2) are constrained by bounded rationality- (limited by their values and unconscious reflexes, skills, and habits)- , and (3) tend to "satisfice" - (search for alternatives until one is found that meets some minimum standard of sufficing)- when making decisions 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. 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.

Increasing Employee Involvement

-Increased employee participation can increase both quality and productivity -Cross-training of employees allows firms to function with fewer workers -Rewards are essential to success in improving productivity

Interacting groups and teams

A decision-making group or team in which members openly discuss, argue about, and agree on the best alternative are the most common form of decision-making group. The format is simple—either an existing or a newly desig-nated group or team is asked to make a decision.

distinctive competencies

A distinctive competence is a strength possessed by only a small number of competing firms. Distinctive competencies are rare among a set of competitors. -Organizations that exploit their distinctive competencies often obtain a competitive advantage and attain above-normal economic performance. Indeed, a main purpose of SWOT analysis is to discover an organization's distinctive competencies so that the organization can choose and implement strategies that exploit its unique organizational strengths.

Delphi groups

A form of group decision making in which a group is used to achieve a consensus of expert opinion Delphi procedure solicits input from a panel of experts who contribute individually. Their opinions are combined and, in effect, averaged. The time, expense, and logistics of the Delphi technique rule out its use for routine, everyday decisions, but it has been successfully used for forecasting technological breakthroughs at Boeing

what is the product life cycle

A model that portrays how sales volume for products changes over the life of products Managers can use the framework of the product life cycle—introduction, growth, maturity, and decline—to plot strategy. For example, management may decide on a differentiation strategy for a product in the introduction stage and a prospector approach for a product in the growth stage. By understanding this cycle and where a particular product falls within it, managers can develop more effective strategies for extending product life.

Emergent Strategy

A pattern of action that develops over time in an organization in the absence of mission and goals or despite mission and goals Implementing emergent strategies involves allocating resources even though an organization has not explicitly chosen its strategies. -The invention of invisible tape, for instance, provides a good example. -in absence of mission statement -reactive 10% over next 5 years - recession = need to re strategize

Deliberate strategy

A plan of action that an organization chooses and implements to support specific goals Sometimes the processes of formulating and implementing strategies are rational, systematic, and planned. This is often referred to as a deliberate strategy -TI's objective is to help managers make short-term operational decisions while keeping in mind longer-term goals and objectives. -10% in the next 5 years - developing marketing plans, falls under mission statement

Organizational weakness

A skill or capability that does not enable (and may limit) an organization to choose and implement strategies that support its mission An organization has essentially two ways of addressing weaknesses. First, it may need to make investments to obtain the strengths required to implement strategies that support its mission. Second, it may need to modify its mission so that it can be achieved with the skills and capabilities that the organization already has. calls into question the judgment of managers who chose the organization's mission in the first place and who failed to invest in the skills and capabilities needed to accomplish it. An organization has a competitive disadvantage when it is not imple-menting valuable strategies that are being imple-mented by competing organizations. Organizations with a competitive disadvantage can expect to attain below-average levels of performance.

what is an organizational strength

A skill or capability that enables an organization to conceive of and implement its strategies -Strengths may include such things as a deep pool of managerial talent, surplus capital, a unique reputation and/or brand name, and well-established distribution channels. -Different strategies call on different skills and capabilities. -SWOT analysis divides organizational strengths into two categories: common strengths and distinctive competencies.

TQM (Total Quality Management)

A strategic commitment by top management to change its whole approach to business in order to make quality a guiding factor in everything it does -Strategic Commitment The starting point for TQM is a strategic commitment by top management. Such commitment is important for several reasons. First, the organiza-tional culture must change to recognize that quality is not just an ideal but an objective goal that must be pursued.30 Second, a decision to pursue the goal of quality carries with it some real costs—for expenditures such as new equipment and facilities. Thus, without a commitment from top management, quality improvement will prove to be just a slogan or gimmick, with little or no real change. Employee Involvement Employee involvement is another critical ingredient in TQM. Virtually all successful quality enhancement programs involve making the person responsi-ble for doing the job responsible for making sure it is done right. Technology New forms of technology are also useful in TQM programs. Automation and robots, for example, can often make products with higher precision and better consistency than can people. Investing in higher-grade machines capable of doing jobs more precisely and reliably often improves quality. For example, Nokia has achieved notable improve-ments in product quality by replacing many of its machines with new equipment. Simi-larly, most U.S. auto and electronics firms make regular investments in new technology to help boost quality. Materials Another important part of TQM is improving the quality of the materials that organizations use. Suppose that a company that assembles stereos buys chips and circuits from another company. If the chips have a high failure rate, consumers will return defective stereos to the company whose nameplate appears on them, not to the company that made the chips. The stereo firm then loses in two ways: refunds back to customers and a damaged repu-tation. As a result, many firms have increased the quality requirements they impose on their suppliers as a way of improving the quality of their own products. Methods Improved methods can improve product and service quality. Methods are operating systems used by the organization during the actual transformation process. American Express Company, for example, has found ways to cut its approval time for new credit cards from three weeks to only two days. This results in improved service quality

single product strategy

A strategy in which an organization manufactures just one product or service and sells it in a single geographic market The single-product strategy has one major strength and one major weakness. By concentrating its efforts so completely on one product and market, a firm is likely to be very successful in manufacturing and marketing the product. Because it has staked its survival on a single product, the organization works very hard to make sure that the product is a success. Of course, if the product is not accepted by the market or is replaced by a new one, the firm will suffer.

Related diversification

A strategy in which an organization operates in several businesses that are somehow linked with one another Given the disadvantage of the single-product strategy, most large businesses today operate in several different businesses, industries, or markets. If the businesses are somehow linked, that organization is implementing a strategy of related diversification. Virtually all larger businesses in the United States practice related diversification. Organizations link their different businesses, industries, or markets in different ways.-similar types of technology -common distribution network andcommon marketing skills -common strong brand names and reputation-common customers

unrelated diversification

A strategy in which an organization operates multiple businesses that are not logically associated with one another -Unrelated diversification was a very popular strategy in the 1970s.-Even if there are important potential synergies among their different businesses, organizations implementing a strategy of unrelated diversification do not try to exploit them.

differentation strategy

A strategy in which an organization seeks to distinguish itself from competitors through the quality(broadly defined) of its products or services Firms that success-fully implement a differentiation strategy can charge more than competitors because customers are willing to pay more to obtain the extra value they perceive. -Rolex (watches) Godiva (chocolate) Mercedes-Benz (automobiles) Nikon (cameras) Cross (writing instruments)

Overall Cost effective Leadership strategy

A strategy in which an organization tries to gain a competitive advantage by reducing its costs below the costs of competing firms or manufacturing By keeping costs low, the organization can sell its products at low prices and still make a profit. Timex (watches)Hershey (chocolate)Kia (automobiles)Kodak (cameras)BIC (writing instruments)

imitation of distinctive competencies

An organization that possesses distinctive competencies and exploits them in the strategies it chooses can expect to obtain a competitive advantage and above-normal economic performance. However, its success will lead other organizations to duplicate these advantages. strategic imitation: The practice of duplicating another organization's distinctive competence and thereby implementing a valuable strategy Although some distinctive competencies can be imitated, others cannot be. When a distinctive competence cannot be imitated, strategies that exploit these competencies generate sustained competitive advantage. sustained competitive advantage: A competitive advantage that exists after all attempts at strategic imitation have ceased 3 reasons a distinctive competence might not be imitated : 1. the acquisition or development of the distinctive competence may depend on unique historical circumstances that other organizations cannot replicate. 2. because its nature and character might not be known or understood by competing firms. 3. if it is based on complex social phenomena, like organizational teamwork or culture.

Miles and Snow Typology

Raymond Miles and Charles Snow. These authors suggested that business-level strategies generally fall into one of four categories: prospector, defender, analyzer, and reactor. different businesses within the same company might pursue different strategies.

international businesses can exploit three sources of competitive advantage unavailable to domestic firms. these are the goals for multinational corporations

Global efficiencies: 1. location efficiencies: by locating their facilities anywhere in the world that yields them the lowest production or distribution costs or that best improves the quality of service they offer their customers. 2. economies of scale: by building factories to serve more than one country, international firms may also lower their production costs 3. economies of scope: By broadening their product lines in each of the countries they enter, international firms may enjoy economies of scope, lowering their pro-duction and marketing costs and enhancing their bottom line. 4. can take action to centralize operations in order to increase control over far-flung activities. term-18 Multimarket Flexibility: International businesses thus face the challenge of responding to these multiple diverse and chang-ing environments. Often firms find it beneficial to empower local managers to respond quickly to such changes. However, unlike domestic firms, which operate in and respond to changes in the context of a single domestic environment, international businesses may also respond to a change in one country by implementing a change in another country. Worldwide Learning: The diverse operating environments of multinational corporations (MNCs) may also contribute to organizational learning.44 Differences in these operating envi-ronments may cause the firm to operate differently in one country than in another. An astute firm may learn from these differences and transfer this learning to its operations in other coun-tries.45 For example, McDonald's U.S. managers once believed that its restaurants should be freestanding entities located in suburbs and small towns. A Japanese franchisee convinced Mc-Donald's to allow it to open a restaurant in an inner-city office building. That restaurant's success caused McDonald's execu-tives to rethink their store location criteria. Nontraditional loca-tions—office buildings, Walmart superstores, even airplanes—are now an important source of new growth for the firm.

Manufacturing

Manufacturing is a form of business that combines and transforms resources into tangible outcomes that are then sold to others. The Goodyear Tire & Rubber Company is a manufacturer because it combines rubber and chemical compounds and uses blending equipment and molding machines to create tires.

Corporate Level Strategies

Most large organizations are engaged in several businesses, industries, and markets. Each business or set of businesses within such an organization is often referred to as a strategic business unit, or SBU. Even organizations that sell only one product may operate in several distinct markets. -Decisions about which businesses, industries, and markets an organization will enter, and how to manage these different businesses, are based on an organization's corporate strategy. The most important strategic issue at the corporate level concerns the extent and nature of organizational diversification. Diversification describes the number of different businesses that an organization is engaged in and the extent to which these businesses are related to one another. There are three types of diversification strategies: single-product strategy, related diversification, unrelated diversification.

What are multinational corporations?

Multinational corporations are companies that produce and sell their goods and services all over the world. -Conversely, managers responsible for developing a strategy for an international firm must understand and deal with multiple governments, multiple currencies, multiple accounting systems, multiple political systems, multiple legal systems, and a variety of languages and cultures. -managers in an international business must also coordinate the implementation of their firm's strategy among business units located in different parts of the world, with different time zones, different cultural contexts, and different economic conditions, as well as monitor and control their performance.

what are the various manufacturing layouts

Product: A physical configuration of facilities arranged around the product; used when large quantities of a single product are needed -It makes sense to custom-design a straight-line flow of work for a product when a specific task is performed at each workstation as each unit flows past. Most assembly lines use this format. process : A physical configuration of facilities arranged around the process; used in facilities that create or process a variety of products - Auto repair shops and healthcare clinics are good examples. 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. All welding is done in one designated shop location, and any car that requires welding is moved to that area. Fixed position: A physical configuration of facilities arranged around a single work area; used for the manufacture of large and complex products such as airplanes - remains stationary, and people and machines move around it as it is assembled. Cellular: A physical configuration of facilities used when families of products can follow similar flow paths - relatively new approach to facilities design. - A clothing manufacturer, for example, might create a cell, or designated area, dedicated to making a family of pockets, such as pockets for shirts, coats, blouses, and slacks. Although each kind of pocket is unique, the same basic equipment and methods are used to make all of them.

what are programmed vs non-programmed decisions

Programmed : A decision that is fairly structured or recurs with some frequency (or both) - usually quick decisions -new supplies of coffee beans, cups, and napkins, and Star-bucks employees are trained in exact procedures for brewing coffee. -Likewise, the 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. Non-Programmed : A decision that is relatively unstructured and occurs much less often than a programmed decision -- occurs mostly when facing new challenges & requires a lot of thought -Managers faced with such decisions must treat each one as unique, investing enormous amounts of time, energy, and resources into exploring the situation from all perspectives. Intuition and experience are major factors in non-programmed decisions. Most of the decisions made by top managers involving strategy (including mergers, acquisitions, and takeovers) and organization design are nonprogrammed. So are decisions about new facilities, new products, labor contracts, and legal issues.

Robotics

Robotics refers to the science and technology of the construction, mainte-nance, and use of robots. The robot : Any artificial device that is able to perform functions ordinarily thought to be appropriate for human beings - Welding was one of the first applications for robots, and it continues to be the area for most applications. A close second is materials handling. Other applications include machine loading and unloading, painting and finishing, assembly, casting, and such machining appli-cations as cutting, grinding, polishing, drilling, sanding, buffing, and deburring. - The use of robots in inspection work is increasing. They can check for cracks and holes, and they can be equipped with vision systems to per-form visual inspections. - Robots are also beginning to move from the factory floor to other applications. brain surgeons are assisted by a robot arm that drills into the patient's skull with extreme precision. Some newer applications involve remote work. - Robots are also used by small manufacturers. At a jewelry company, a robot holds class rings while they are engraved by a laser. These robots are lighter, faster, stron-ger, and more intelligent than those used in heavy manu-facturing and are the types that more and more organizations will be using in the future.

The components of service technology (what it is, how it works, etc)

Service technology is also changing rapidly. And it, too, is moving more and more toward auto-mated systems and procedures. - electronic banking - Hotels use increasingly sophisticated technology to accept and record room reservations. - Universities use new technologies to electronically store and provide access to books, scientific journals, government reports, and articles. Hospitals and other healthcare organizations use new forms of service technol-ogy to manage patient records, dispatch ambulances and EMTs, and monitor patient vital signs. Restaurants use technology to record and fill customer orders, order food and supplies, and prepare food. - Given the increased role that service organizations—from restaurants and dry cleaners to hotels and circuses—are playing in today's economy, even more technological innovations are certain to be developed in the years to come.

State of certainty

State of certainty : A condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative -know the alternative conditions associated with each. There is little ambiguity and relatively little chance of making a bad decision. -Few organizational decisions, however, are made under conditions of true certainty. The complexity and turbulence of the con-temporary business world make such situations rare. Even the airplane purchase decision we just considered has less certainty than it appears.

Strategy Formulation

The set of processes involved in creating or determining the strategies of the organization; it focuses on the content of strategies -whereas strategy implementation is the methods by which strategies are operationalized or executed within the organization. The primary distinction is along the lines of content versus process: The formulation stage determines what the strategy is, and the implementation stage focuses on how the strategy is achieved and the content of the strategies

what is operations management

The total set of managerial activities used by an organization to transform resource inputs into products, services, or both -When Dell Computer buys electronic com-ponents, assembles them into PCs, and then ships them to customers, it is engaging in operations management. When a Pizza Hut employee orders food and paper products and then combines dough, cheese, and tomato paste to create a pizza, he or she is engaging in operations management. in a sense, operations management creates value and utility of one type or another, depending on the nature of the firm's products or services. If the product is a physical good, such as a Harley-Davidson motorcycle, operations creates value and provides form utility by combining many dissimilar inputs (sheet metal, rubber, paint, internal combustion engines, and human skills) to make something (a motorcycle) that is more valuable than the actual cost of the inputs used to create it. In contrast, the operations activities of Delta Airlines create value and provide time and place utility through its services. The airline transports passengers and freight according to agreed-upon departure and arrival places and times. - best improved by starting from scratch - has a direct impact on competitiveness, quality, productivity, and effectiveness

Quality

The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs 1. Performance. A product's primary operating characteristic; examples are automobile acceleration and a television's picture clarity2. Features. Supplements to a product's basic functioning characteristics, such as power windows on a car3. Reliability. A probability of not malfunctioning during a specified period4. Conformance. The degree to which a product's design and operating characteristics meet established standards5. Durability. A measure of product life6. Serviceability. The speed and ease of repair7. Aesthetics. How a product looks, feels, tastes, and smells8. Perceived quality. As seen by a customer -Quality is also an important concern for individual managers and organizations for three very specific reasons: competition, productivity, and costs.

TQM Tools

Value-added analysis: The comprehensive evaluation of all work activities, materials flows, and paperwork to determine the value that they add for customers Benchmarking:The process of learning how other firms do things in an exceptionally high-quality manner Outsourcing : Subcontracting services and operations to other firms that can perform them more cheaply or better Reduced cycle time: The time needed by the organization to accomplish activities such as developing, making, and distributing products or services ISO 9000/14000 A set of quality standards created by the International Organization for Standardization and revised in 2000 A set of standards for environmental performance Statistical process control : A set of specific statistical techniques that can be used to monitor quality; includes acceptance sampling and in-process sampling Six Sigma/Lean Six Sigma: The Six Sigma method tries to eliminate mistakes. Although firms rarely obtain Six Sigma quality, it does provide a challenging target. Sigma refers to a standard deviation, so a Six Sigma defect rate is six standard deviations above the mean rate;

what are the impacts of automation

automation: The 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. -Automation is the most recent step in the development of machines and machine-controlling devices. Machine-controlling devices have been around since the 1700s. -Automation relies on feedback, information, sensors, and a control mechanism. Feedback is the flow of information from the machine back to the sensor. Sensors are the parts of the system that gather information and compare it to preset standards. The control mechanism is the device that sends instructions to the automatic machine. Early automatic machines were primitive, and the use of automation was relatively slow to develop. -All automation includes feedback, information, sensors, and a control mechanism. A simple thermostat is an example of automation. Another example is Benetton's distribution center in Italy. Orders are received, items pulled from stock and packaged for shipment, and invoices prepared and transmitted, with no human intervention. -The big move to automate factories began during World War II. The shortage of skilled workers and the development of high-speed computers combined to bring about a tremendous interest in automation. Programmable automation (the use of computers to control machines) was introduced during this era, far outstripping conventional automation (the use of mechanical or electromechanical devices to control machines). -In the short term, people whose jobs are automated may find themselves without a job. In the long term, how-ever, more jobs are created than are lost. Nevertheless, not all companies are able to help displaced workers find new jobs, so the human costs are sometimes high. -Designing work so it can be partly or wholly completed by machines, decreases labor costs

what is an organizational opportunity and threat

opportunity: An area in the environment that, if exploited, may generate higher performance Threat : an area in the environment that increases the difficulty of an organization's achieving high performance Whereas evaluating strengths and weaknesses focuses attention on the internal workings of an organization, evaluating opportunities and threats requires analyzing an organization's environment. Porter's "five forces" model of the competi-tive environment, as discussed in Chapter 3, can be used to characterize the extent of opportunity and threat in an organization's environment. Re-call that Porter's five forces are level of competitive rivalry, power of suppliers, power of buy-ers, threat of substitutes, and threat of new entrants. In general, when the level of competitive rivalry, the power of suppliers and buyers, and the threat of substitutes and new entrants are all high, an industry has relatively few opportunities and many threats. Firms in these types of industries typically can achieve only normal economic performance. On the other hand, when the level of rivalry, the power of suppliers and buyers, and the threat of substitutes and new entrants are all low, then an industry has many opportunities and relatively few threats. Firms in these industries hold the potential for above-normal performance.