Principles of MGT CHAPTER 3

SWOT analysis strategies

(1) exploiting an organization's opportunities and strengths while (2) neutralizing its threats and (3) avoiding (or correcting) its weaknesses.

Kinds of Organizational Plans

Strategic, Tactical, Operational

decision making

• Is the cornerstone of planning • Is the catalyst that drives the planning process • Underlies the formulation and implementation of all plans

three types of diversification strategies

• Single-product strategy • Related diversification • Unrelated diversification

2 forms of operational plans

▪ Single-use plans ▪ Standing plans

Project

A single-use plan of less scope and complexity than a program • Introducing a new product in a product line up or new benefit to a salary package

Organizational weaknesses

A skill or capability that does not enable an organization to choose and implement strategies that support its mission.

Organizational strength

A skill or capability that enables an organization to create and implement its strategies.

SOP

A standard plan that outlines the steps to be followed in particular circumstances

Distinctive competence

A strength possessed by only a small number of competing firms.

Organizational opportunities

An area in the environment that, if exploited, may generate higher performance.

Organizational threats

An area that increases the difficulty of an organization performing at a high level.

Overall cost leadership strategy

An organization attempts to gain a competitive advantage by reducing its costs below the costs of competing firms

Components of Strategy

Distinctive competence Scope Resource deployment

BCG matrix

framework for evaluating businesses relative to the growth rate of their market and the organization's share of the market

Rita has been asked to analyze the introduction, growth, maturity, and decline stages projected for a new product at her company. By doing so, she is analyzing the _____________________

product life cycle

A big issue at a company's budget meeting relates to whether it should open new store locations or focus on updating the existing stores. This is a question of ____________________

resource deployment

SWOT

stands for strengths, weaknesses, opportunities, and threats

Mission

A statement of an organization's fundamental purpose

Effective strategies

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

What factors can help to ensure a successful execution of a tactical plan? Check all that apply.

-The manager must monitor ongoing activities derived from the plan to be sure the results are as expected. -Each decision maker must have the information and resources necessary for getting the job done -The manager needs to evaluate every possible course of action in light of the goal.

Purpose of Goals

1. Provide guidance and a unified direction for people in the organization. 2. Affect other aspects of planning. 3. Source of motivation for employees. 4. Mechanism for evaluation and control.

Strategy

A comprehensive plan for accomplishing an organization's goals.

Operational Plan

A goal set by and for an organization's lower-level managers. Short-term issues tied to tactical plan − Solicit bids for solar cells

Tactical Plan

A goal set by and for an organization's middle managers. Focus on actions needed to achieve strategic plan − Convert facility to solar power and add green roof

Strategic Plan

A goal set by and for an organization's top management. Focuses on broad, general issues − Reduce carbon emission by 20% by 2030

GE Business Screen

A method of evaluating businesses along two dimensions 1. Industry attractiveness 2. Competitive position

Program

A single-use plan for a large set of activities • Mergers, acquisitions, integration of multiple components

What must you do to ensure the party is implemented successfully?

Be sure the people involved get the information they need when they need it

When conducting a SWOT analysis, budgets, ratios, and sales reports can be used to identify:

Company strengths and weaknesses

Organizational Goals

Decision making Planning Mission

Decline stage

Demand for the product or technology decreases, the number of organizations producing the product drops, and total sales drop.

Introduction stage

Demand may be very high and sometimes outpaces the firm's ability to supply the product.

Rules and regulations

Describe exactly how specific activities are to be carried out

Standing plan

Developed for activities that recur regularly over a period of time

Resource Deployment

How an organization distributes its resources across the areas in which it competes

Tactical goals link a company's strategy with its operations. Which of the following would be an appropriate tactical goal for Twitter?

Launch special #NFL timeline: users can see NFL-related Tweets from people in their network, along with relevant Tweets from teams, players, coaches, press, fans, and celebrities

Portfolio management techniques

Methods that diversified organizations use to determine which businesses to engage in and how to manage these businesses to maximize corporate performance

Growth stage

More firms begin producing the product, and sales continue to grow.

Planning

Occurs within an environmental context

Maturity stage

Overall demand growth for the product begins to slow down, and the number of new firms producing the product begins to decline.

Theo Chocolate is considering opening a cooking school which will teach students techniques for working with chocolate and recipes that feature Theo chocolate as an ingredient. This would be an example of:

Related diversification

Given that UNIQLO is in the growth stage, with demand high and little competition, which of the following would be appropriate activities to include in the company's short-term plan?

Research whether supplies will be sufficient to provide necessary inputs to the manufacturing plants

Considering all of the factors listed in the preceding SWOT analysis question, what strategy would make the most sense for the Giants in the upcoming season?

Sign a free-agent outfielder to bolster the current roster and sign the young pitchers to long-term contracts

Which of the following factors should be classified as a strength for the team?

The Giants' starting pitchers are exceptionally strong and young and can potentially keep the Giants at the top of the league for years to come.

Contingency planning

The determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate

Focus strategy

An organization concentrates on a specific regional market, product line, or group of buyers

Differentiation strategy

An organization seeks to distinguish itself from competitors through the quality of its products or services

Distinctive competence

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

When referring to a SWOT analysis, the letter T stands for_________________, and it refers to factors that are _____________ to the organization

threats, external

Single-use plan

Developed to carry out a course of action that is not likely to be repeated in the future

UNIQLO has had strong demand for its products and it entered the growth stage quickly. Which of the following challenges is most common during this stage?

Managing inventories

Two important portfolio management techniques

• BCG matrix • GE Business Screen

You are developing a plan for your department to use when replenishing supplies needed to accomplish ongoing activities. What type of plan should you create?

Standard operating procedure

Diversification

The number of different businesses that an organization is engaged in and the extent to which these businesses are related to one another

Single-product strategy

an organization manufactures just one product or service and sells it in a single geographic market

Unrelated diversification

an organization operates multiple businesses that are not logically associated with one another

How do goals help to motivate employees?

by focusing their attention on getting a specific outcome, by encouraging employees to increase their effort and persistence at a task, and by providing a standard against which to give feedback.

SWOT analysis

careful evaluation of an organization's internal strengths and weaknesses as well as its environmental opportunities and threats.

Strategic management

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

UNIQLO offers clothing made with Heattech, a fabric that absorbs moisture and retains heat from the body. The clothing is very lightweight, while still keeping people warm. No other store carries Heattech fabric. Heattech clothes are associated with a _________________ strategy for UNIQLO.

differentiation

The Bose Corporation's _____________________ is based on the high technology of its products, which few other companies can match.

distinctive competence

Related diversification

entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses

If UNIQLO decided to direct its marketing toward people between the ages of 16 and 30, it would be using a _________________ strategy.

focus

A company is pursuing a______________strategy when it decides to offer only health insurance brokerage services in the Upper Midwest.

single-product

When formulating strategy, Theo Chocolate's managers scan the business environment for factors that will or could impact the company's competitive advantage. Which of the following would pose a threat to Theo? Check all that apply.

-unlike other chocolate brands, Theo sources their cacao beans directly from farmers in Peru and the Democratic Republic of Congo, incurring greater costs than competitors who purchase from suppliers. -The USDA releases a report about the potential link between chocolate and cancer.

Policy

A standing plan that specifies the organization's general response to a designated problem or situation • Granting admission to a university based on GPA or ACT/SAT test scores

A company's _________________ serves as an organizational plan, outlining how the company will create a competitive advantage.

strategy

Scope

When applied to strategy, it specifies the range of markets in which an organization will compete

A company's strategic goals specify a direction for accomplishing the company's mission. Which one of the following would be an appropriate strategic goal for Twitter?

Strengthen the core user base usage by time spent on timeline, content generation, and mobile engagement

Crisis management

The set of procedures the organization uses in the event of a disaster or other unexpected calamity.