CM 4223_Mo 5_Cha 7&8
List 4 types of resources
(1) financial resources (2) physical resources (3) human resources (4) technological resources
List some types of organizational structures
(1) functional (2) divisional by geographic area (3) divisional by product (4) divisional by customer (5) divisional by process (6) strategic business unit (SBU) (7) matrix
Which to criteria's does an effective product-positioning strategy have to meet?
(1) it uniquely distinguishes a company from the competition (2) it leads customers to expect slightly less service than a company can deliver.
List 7 human resource issues
(1) linking performance and pay to strategy (2) balancing work life with home life (3) developing a diverse work force (4) using caution in hiring a rival's employees (5) creating a strategy-supportive culture (6) using caution in monitoring employees' social media (7) developing a corporate wellness program.
List 7 principles marketing
1. Do not just talk at consumers—work with them throughout the marketing process. 2. Give consumers a reason to participate. 3. Listen to—and join—the conversation outside your company's website. 4. Resist the temptation to sell, sell, sell. Instead attract, attract, attract. 5. Do not control online conversations; let it flow freely. 6. Find a "marketing technologist," a person who has three excellent skill sets (marketing, technology, and social interaction). 7. Embrace instant messaging and chatting.
List 7 potential limitations of EPS/ EBIT
1. Flexibility 2. Control 3. Timing 4. Extent leveraged 5. continuity 6. EBIT range 7. Dividends
6 reasons why policies are essential for strategy implementation
1. Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior. 2. Policies let both employees and managers know what is expected of them, thereby increasing the likelihood that strategies will be implemented successfully. 3. Policies provide a basis for management control and allow coordination across organizational units. 4. Policies reduce the amount of time managers spend making decisions. Policies also clarify what work is to be done and by whom. 5. Policies promote delegation of decision making to appropriate managerial levels where various problems usually arise. 6. Policies clarify what can and cannot be done in pursuit of an organization's objectives.
List seven guidelines to follow in developing an organizational chart.
1. Reserve the title of CEO for the top executive of the firm. 2. Use the title of President for division top managers. 3. Do not use a dual title (like Chairperson and President) for a single executive. 4. Have a COO report to the CEO and division Presidents report to the COO. 5. Avoid having a particular person reporting to more than one supervisor. 6. The CFO, CIO, CSO, and HRM officers should report directly to the CEO. 7. The CEO should not also be Chairperson of the Board.
What is Strategy Formulation?
1. Strategy formulation is positioning forces before the action. 2. Strategy formulation focuses on effectiveness. 3. Strategy formulation is primarily an intellectual process. 4. Strategy formulation requires good intuitive and analytical skills.
What is Strategy Implementation?
1. Strategy implementation is managing forces during the action. 2. Strategy implementation focuses on efficiency. 3. Strategy implementation is primarily an operational process. 4. Strategy implementation requires special motivation and leadership skills.
List 5 reasons for annual objectives
1. They represent the basis for allocating resources. 2. They are a primary mechanism for evaluating managers. 3. They enable effective monitoring of progress toward achieving long-term objectives. 4. They establish organizational, divisional, and departmental priorities. 5. They are essential for keeping a strategic plan on track.
List 3 three commonly used strategies to implementing change
1. a force change strategy, 2. an educative change strategy, 3. a rational or self-interest change strategy
Why is market segmentation important?
1. strategies such as market development, product development, market penetration, and diversification require increased sales through new markets and products. 2. market segmentation allows a firm to operate with limited resources because mass production, mass distribution, and mass advertising are not required. 3. market segmentation decisions directly affect marketing mix variables: product, place, promotion, and price.
What are ESOP?
= employee stock ownership plans (ESOPs) An ESOP is a tax-qualified, defined-contribution, employee-benefit plan whereby employees purchase stock of the company through borrowed money or cash contributions.
Discuss human resource issue: Develop a Diverse Workforce
An organization can be most effective when its workforce mirrors the diversity of its customers.
Many companies are aggressively buying its own stock. What are situations when this practice is recommended or especially beneficial? What are the pros and cons of increasing Treasury Stock on the balance sheet?
Answer: A firm would want to buy back its own stock, called Treasury Stock, whenever it 1) believes its own corporate ROI and ROE will exceed alternative ways to invest that money, and/or whenever it 2) desires to protect itself from a hostile takeover, and/or 3) whenever the price of its own stock is arguably very inexpensive given the outlook for the firm. Also, 4) increasing Treasury Stock reduces the company's number of shares outstanding which increases its EPS (since the denominator is #shares outstanding). A drawback of increasing Treasury Stock is that the firm could perhaps utilize those monies to grow the company.
Which term is being described? A disagreement between two or more parties on one or more issues.
Answer: Conflict
____________ can use different valuation methods, which will yield different results.
Answer: Corporate valuation
Which term is being described? The set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm.
Answer: Culture
T/F: Most financial institutions require 5 years of projected financial statements whenever a business seeks capital.
Answer: FALSE 3 Years
T/F: Firms must be cautious when offering well-being programs due to the increasing number of lawsuits based on noncompete agreements.
Answer: False Firms must be cautious when hiring employees from rival firms due to the increasing number of lawsuits based on noncompete agreements.
Which term is being described? A type of organizational design that groups tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, and management information systems.
Answer: Functional structure
Give a hypothetical example where Company A buys Company B for a 15.0% premium.
Answer: If the purchase price is more than the stock price times number of shares outstanding, the additional dollars are called a premium. The premium is a per-share dollar amount that a person or firm is willing to pay beyond the book value of the firm to control (acquire) the other company. Thus, if a firm acquires another firm for $1.15B when the stock price times # shares out = $1.0B, then that would be a 15% premium.
Which term is being described? The means by which annual objectives will be achieved. These include guidelines, rules, and procedures established to support efforts to achieve stated objectives.
Answer: Policies
_______ method involves dividing the market price of the firm's common stock by the annual earnings per share and multiplying this number by the firm's average net income for the past 5 years.
Answer: Price-Earnings Ratio Method
Which term is being described? Reconfiguring or redesigning work, jobs, and processes in a firm, for the purpose of improving cost, quality, service, and speed.
Answer: Reengineering
Which term is being described? Modifying the firm's chain of command and reporting channels to improve efficiency and effectiveness.
Answer: Restructuring
List five important benefits of a company or organization having a diverse workforce.
Answer: Six benefits of having a diverse workforce, listed in the chapter, are as follows: 1. Women and minorities have different insights, opinions, and perspectives that should be considered. 2. A diverse workforce portrays a firm committed to non-discrimination. 3. A workforce that mirrors a customer base can help attract customers, build customer loyalty, and design/offer products/services that meet customer needs/wants. 4. A diverse workforce helps protect the firm against discrimination lawsuits. 5. Women and minorities represent a huge additional pool of qualified applicants. 6. A diverse workforce strengthens a firm's social responsibility and ethical position.
For companies in general, identify and discuss three opportunities and three threats associated with social networking activities on the Internet.
Answer: Social networking is a reliable method for allowing consumers to share product and service needs, wants, and opinions with other consumers and with companies. Second, social networking activities foster communication of the company message to more potential consumers. Third, social networking may lead to increased revenue from online advertising. Perhaps the greatest threat is that any kind of negative publicity travels fast online. Other threats include increased competition from other firms that are more savvy in the areas of social networking, and lower exposure in global areas with limited Internet service.
T/F: Many practitioners and students of strategic planning use an Excel template provided by www.strategyclub.com to develop existing and projected financial statements.
Answer: TRUE
T/F: Treasury stock refers to shares of a firm that were once a part of shares outstanding but were subsequently repurchased by the company and decommissioned.
Answer: TRUE
Explain how and why the Internet makes market segmentation easier.
Answer: The Internet makes market segmentation easier because the segments of people whom marketers want to reach online are much more precisely defined than the segments of people reached through traditional forms of media such as television. Marketers can reach persons interested in specific topics, such as travel or fishing, by placing banners on related websites. The Internet consists of customers self-selected into certain groups doing certain things, so in this sense, customers on the Internet are easier for marketers to reach. In addition, business analytics also enables tracking of Internet usage, also making customers on the Internet easier for marketers to reach. Most marketers do not know if you are watching television, but many do know what websites you are visiting. Tracking you online is easier than tracking you on the sofa watching TV.
Which valuation method is most feasible for small business evaluation?
Answer: The Net Income Method
T/F: A tool marketers use to develop schematic representations that reflects how a firm's goods or services compare to competitors' in the mind of consumers is called perceptual mapping.
Answer: True
T/F: Initial Public Offering (IPO) is when a private firm goes public by selling its shares of stock to the public in order to raise capital.
Answer: True
T/F: The focus of reengineering is changing the way work is actually carried out.
Answer: True
T/F: To create an organization chart, one guideline is to use Chairperson of the Board instead of Chairman.
Answer: True
Two primary sources of capital are _____ and _____.
Answer: debt and equity
An EPS/EBIT analysis is used to:
Answer: determine the appropriate mix of debt and equity in a firm's capital structure
In order to ensure successful implementation of a strategy, an organization must achieve milestones, also known as ____________.
annual objectives
What indicates a market segment?
Areas where there is a cluster of ideal points
What is a demand void?
Areas without ideal points are sometimes
What does EPS/EBIT stand for
Earnings per share or Earnings before interest and taxes
_________ is NOT a type of resource that can be used to achieve desired organizational objectives.
Environmental
How are medium-sized firms divisionally structured (mostly)?
decentralized
What does JIT stand for and what is it?
Just-in-time significantly reduces the costs of implementing strategies. Parts and materials are delivered to a production site just as they are needed, rather than being stockpiled as a hedge against later deliveries
Factors that prohibit effective resource allocation:
including an overprotection of resources, too great an emphasis on short-run financial criteria, organizational politics, vague strategy targets, a reluctance to take risks, and a lack of sufficient knowledge
_______consist of specific guidelines, rules, procedures, forms, and administrative practices that support and encourage the achievement of stated goals.
Policies
Describe the functional structure.
A functional structure groups tasks and activities by business function, such as production and operations, marketing, finance and accounting, research and development, and management information systems.
List 4 production/operations issues
Four production/operations issues—(1) restructuring/reengineering, (2) managing resistance to change, (3) deciding where/how to produce goods, and (4) managing an ESOP
Which structure is most widely used?
Functional
What is a Glass ceiling?
It refers to the invisible barrier in many firms that bars women and minorities from top-level management positions.
How can you change a strategy?
It requires changes in the way an organization is structured
What are Vertical consistency of objectives?
Compatibility of objectives from the CEO (corporate level) down to the presidents (divisional level) on down to the managers (functional level).
Discuss human resource issue: Corporate Wellness Program
Corporate wellness programs have proliferated over the years due in part to the Affordable Care Act, which increased the maximum incentives and penalties employers may use to encourage employee well-being. Most companies therefore now have "carrots" and "sticks". Carrots include giving employee discounts on insurance premiums or extra cash, and "sticks," impose surcharges on premiums for those who do not make progress towards getting healthy.
What is a bonus system?
Criteria such as sales, profit, production efficiency, quality, and safety
What is gain sharing?
Gain sharing requires employees or departments to establish performance targets; if actual results exceed objectives, all members get bonuses.
What is a Conflict?
It can be defined as a disagreement between two or more parties on one or more issues.
What is resource allocation?
It can be defined as distributing an organization's "assets" across products, regions, and segments according to priorities established by annual objectives. Type: STRATEGY IMPLEMENTATION
What is a Projected financial analysis?
It can be explained in seven steps
What is Defusion?
It can include playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner nor loser, resorting to majority rule, appealing to a higher authority, or redesigning present positions.
What is product positioning aka. perceptual mapping?
It entails developing schematic representations that reflect how products or services compare to those of the competitors on dimensions most important to success in the industry.
What is avoidance?
It includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals (or groups).
What is a force change strategy?
It involves giving orders and enforcing those orders; this strategy has the advantage of being fast, but it is plagued by low commitment and high resistance
What is Reengineering?
It involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed.
What is restructuring?
It involves reducing the size of the firm in terms of number of employees, number of divisions or units, and number of hierarchical levels in the firm's organizational structure.
What is Six Sigma?
It is a quality-boosting process improvement technique that entails training several key persons in the firm in the techniques to monitor, measure, and improve processes and eliminate defects
What is a Projected financial statement analysis?
It is a technique that allows an organization to examine the expected results of strategies being implemented.
What is Confrontation?
It is exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other's point of view or holding a meeting at which conflicting parties present their views and work through their differences.
Discuss human resource issue: linking performance and pay to strategy
It is important that bonuses not be based solely on short-term results, because such a system ignores long-term company strategies and objectives.
What is a rational or self-interest change strategy?
It is one that attempts to convince individuals that the change is to their personal advantage.
What is an educative change strategy?
It is one that presents information to convince people of the need for change.
What is the matrix structure?
It is the most complex of all designs because it depends on both vertical and horizontal flows of authority and communication (hence the term matrix).
Discuss three ways for linking performance and pay to strategies.
Methods of linking performance to pay include profit sharing, gain sharing, and bonus systems. Profit sharing is simply using some formula to pay some profits back to employees/managers before reinvesting such funds back into the firm. Gain sharing requires employees or departments to establish performance targets; to the extent that actual results exceed objectives, employees/managers get bonuses. Bonus systems entail a firm paying a lump sum of monies to employees/managers, perhaps at year-end, based on annual sales, profit, production efficiency, quality, and/or safety.
What are Horizontal consistency of objectives?
Objectives need to be compatible across functions; for example, if marketing wants to sell 10% more, then production must produce 10% more.
What does SBU structure stand for?
Strategic business unit
Should companies monitor employees' social media? Why or why not? If yes, how?
There are numerous pros and cons of this practice. However, in balance, companies generally should monitor employee and potential employee's social media activities whenever they have a reason to believe the person is engaged in illegal or unethical conduct - but to systematically investigate every employee and job candidate's social media activities is arguably counterproductive. The bottom line is that companies have the legal right to monitor employees' conduct, but have the legal duty to do so only if there is sufficient reason for concern
What are Two primary sources of capital?
They are debt and equity.
What are Annual objectives?
They are desired milestones an organization needs to achieve to ensure successful strategy implementation. They should be measurable, consistent, reasonable, challenging, clear, communicated throughout the organization, characterized by an appropriate time dimension, and accompanied by commensurate rewards and sanctions
What are Policies?
They refer to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals.
Which qualities should Objectives have?
They should state quantity, quality, cost, and time—and also be verifiable.
How are large firms structured (mostly)?
They tend to use a strategic business unit (SBU) structure or matrix structure.
Describe the divisional (decentralized) structure.
With a divisional structure, functional activities are performed both centrally and in each separate division. The divisional structure can be organized in one of four ways: (1) by geographic area, (2) by product or service, (3) by customer, or (4) by process.
Discuss human resource issue: balancing work life with home life
Work and family strategies now represent a competitive advantage for those firms that offer such benefits as elder care assistance, flexible scheduling, job sharing, adoption benefits, onsite summer camp, employee helplines, pet care, and even lawn service referrals.
Which 3 categories can resolving conflict be classified?
avoidance, defusion, and confrontation
How are small firms functionally structured (mostly)?
centralized
What does MIS stand for?
management information system
What can Strategic management be called also?
resource allocation process
When a firm changes its strategy, ______.
the organizational structure may become ineffective