MGT 4000 Chapter 9

Governance

*Board of Directors: __________ Issues:* A *board of directors* is a group of individuals at the top of an organization with oversight and guidance over management and who look out for shareholders' interests. The act of oversight and direction is referred to as __________.

Strategists

*Four Challenges Facing __________:* 1. Is the process more of an art or a science? 2. Should strategies be visible or hidden from stakeholders? 3. Contingency planning 4. Auditing

Effective

*Guidelines for ________ Strategic Management:* 1. Keep the process simple and easily understandable. 2. Eliminate vague planning jargon. 3. Keep the process non routine; vary assignments, team membership, meeting formats, settings, and even the planning calendar. 4. Welcome bad news and encourage devil's advocate thinking. 5. Do not allow technicians to monopolize the planning process. 6. To the extent possible, involve managers from all areas of the firm.

Performance

*Measuring Organizational _________:* Strategists use common quantitative criteria to make *three critical comparisons:* 1. Comparing the firm's performance over different time periods 2. Comparing the firm's performance to competitors' 3. Comparing the firm's performance to industry averages

Bases of Strategy

*Reviewing _____ __ _____:* 1. How have competitors reacted to our strategies?2. How have competitors' strategies changed? 3. Have major competitors' strengths and weaknesses changed? 4. Why are competitors making certain strategic changes? 5. Why are some competitors' strategies more successful than others? 6. How satisfied are our competitors with their present market positions and profitability? 7. How far can our major competitors be pushed before retaliating? 8. How could we more effectively cooperate with our competitors?

Activities

*Strategy Evaluation _________:* Corrective actions are almost always needed except when - External and internal factors have not significantly changed, and - The firm is progressing satisfactorily toward achieving stated objectives

management

*Table 9.5 Board of Director Duties and Responsibilities* 1. Control and Oversight over __________. - Select the Chief Executive Officer (CEO) - Sanction the CEO's team. - Provide the CEO with a forum. - Ensure managerial completely. - Evaluate management's performance. - Set management's salary levels, including fringe benefits. - Guarantee managerial integrity through continuous auditing. - Evaluate corporate strategies. - Devise and revise policies to be implemented by management.

Legal Prescriptions

*Table 9.5 Board of Director Duties and Responsibilities* 2. Adherence to _____ _____________: - Keep abreast of new laws. - Ensure the entire organization fulfills legal prescriptions. - Pass bylaws and related resolutions. - Select new directors. - Approve capital budgets. - Authorize borrowing, new stock issues, bonds, and so on.

Stakeholders' Interests

*Table 9.5 Board of Director Duties and Responsibilities* 3. Consideration of __________ _______: - Monitor product quality. - Facilitate upward progression in employee quality of work life. - Review labor policies and practices. - Improve the customer climate. - Keep community relations at the highest level. - Use influence to better governmental, professional association, and educational contacts. - Maintain good public image.

Stockholders' Rights

*Table 9.5 Board of Director Duties and Responsibilities* 4. Advancement of _____________ ______: - Preserve stockholders' equity. - Stimulate corporate growth so that the firm will survive and flourish. - Guard against equity dilution. - Ensure equitable stockholder representation. - Inform stockholders through letters, reports, and meetings. - Declare proper dividends. - Guarantee corporate survival. - Guarantee the film's financial statements are feasible and accurate.

Strategic Planning

*Table 9.6 Guidelines for _______ ________ to be Effective:* 1. It should be a people process more than a paper process. 2. It should be a learning process for all managers and employees. 3. It should be words supported by numbers rather than numbers supported by words. 4. It should be simple, non-routine, economical, and provide timely information. 5. It should vary assignments, team memberships, meeting formats, and even the planning calendar. 6. It should challenge the assumptions underlying the current corporate strategy. 7. It should welcome bad news and provide a true picture of what is happening. 8. It should welcome open-mindedness and a spirit of inquiry and learning. 9. It should not be a bureaucratic mechanism. 10. It should not become ritualistic, stilted, or orchestrated. 11. It should not be too formal, predictable, or rigid. 12. It should not contain jargon or arcane planning language. 13. It should not be a formal system for control and should not dominate decisions. 14. It should not disregard qualitative information. 15. It should not be controlled by "technicians." 16. Do not pursue too many strategies at once. 17. Continually strengthen the "good ethics is good business" policy.

Difficult

*Why Strategy Evaluation is more _______ today:* 1. Domestic and world economies are today more interrelated 2. Product life cycles are shorter 3. Technological advancements are faster 4. Change occurs rapidly 5. Competitors abound globally 6. Planning cycles are shorter 7. Social media and smartphones have changed everything

Corrective Actions

1. Alter the firm's structure. 2. Replace one or more key individuals. 3. Divest a division. 4. Alter the firm's vision or mission. 5. Revise objectives. 6. Alter strategies. 7. Devise new policies. 8. Install new performance incentives. 9. Raise capital with stock or debt. 10. Add or terminate salespersons, employees, or managers. 11. Allocate resources differently. 12. Outsource (or reshore) business functions.

Auditing

A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users

Contingency Plan

Can be defined as alternative plans that can be put into effect if certain key events do not occur as expected. If a major competitor withdraws from particular markets as intelligence reports indicate, what actions should our firm take? If our sales objectives are not reached, what actions should our firm take to avoid profit losses? If demand for our new product exceeds plans, what actions should our firm take to meet the higher demand? If certain disasters occur, what actions should our firm take? If a new technological advancement makes our new product obsolete sooner than expected, what actions should our firm take?

Balanced Scorecard

The ________ ________ is a strategy evaluation and control technique. There is a wide variation in how the ________ _______ is used. The technique is based on the need to "balance" financial measures with nonfinancial ones.

Strategy Evaluation

Three basic activities: 1. Examine the underlying bases of a firm's strategy. 2. Compare expected results with actual results. 3. Take corrective actions to ensure that performance conforms to plans.