Exam 2

What does Focus leadership emphasize in Porter's five generic strategies

Focus means producing product and services that fulfill the needs of small groups of consumers

1st approach of evaluating the worth of the business

Stockholders equity minus goodwill and intangibles

•Changes in strategy often require changes in the way an organization is structured for two reasons

Structure largely dictates how objectives and policies will be established Structure dictates how resource will be allocated

•People age 18 to 27 spend more time online than

TV, radio, DVDs, or VHS tapes

What is type 1 in Porter's five generic strategies

Type 1 is a low cost strategy ath offers products or services to a wide range of customer at the lowest price available on the market

What is type 2 in Porter's five generic strategies

Type 2 is a best value strategy that offers products or services to a wide range of customers at the brew price to value available on the market. It aims to offer users a range of processes at the lowest price available to a rival products with similar attributes

What is type 3 in Porter's five generic strategies

Type 3 is differentiation, a strategy aimed at production products and services consider new industry wide and direct at customer who are relatively price sensitive

What is type 4 in Porter's five generic strategies

Type 4 is a low cost focus strategy that offers rodcast or sedatives to a small rang(niche group) of customers at the lowest price available on the market

What is type 5 in Porter's five generic strategies

Type 5 is a best value focus strategy that offers products or services to a small range of customers at the best price-value available on the market

Autonomous divisions (or profit center) of an organization make up what is called

a business portfolio

•Conflict can be defined as

a disagreement between two or more parties on one or more issues

what are some examples of Strategic objectives

a larger market share, quicker on time delivery than rival, shorter design to market times than rival, lower cost than rivals, higher product quality than rivals, wider geographic coverage than rival, achieving technological leadership, consistently getting new or improved product to market ahead of rivals, and so on.

•Stage 3, called the decision stage, involves what?

a single technique, the Quantitative Strategic Planning Matrix(QSPM).

•A functional structure groups task and activities

by business function, such as production and operations, marketing, finance and account, R&D, and MIS

•An organization can perhaps be most effective when it workforce mirrors the

diversity of its customers. For global companies, this goal be optimistic, but it is a worthwhile goal

Medium sized firms tend to be

divisionally structured(decentralized)

•Employers today are looking for people who can

do things, not for people who make other people do things

•Matching external and internal critical success factor is the key to

effectively generating feasible alternative strategies

•Policies let both

employees and managers know what is expects of them, thereby increasing the likelihood that strategies will be implemented successfully

•Gain sharing requires

employees or departments to establish performance targets; if actual results exceed objectives all means get bonuses

•First mover advantages refer to the benefits a firm may achieve by

entering a new market or developing a new product or services prior to rival firms

•Multidimensional scaling could be used to

examine three or more criteria simultaneously but this technique requires computer assistance and is beyond the scope of this text

Dogs have what in the BCG matrix

low market share and low industry growth. Liquidated, divested, or trimmed though retrenchment

Question marks are what in the BCG matrix

low relative market share but compete in high growth industry. Their cash needs are high and their cash generation is low. Organizations must decide whether to strengthen them buy prising an intensive strages or to sell them

•Areas where there is cluster of ideal points indicates ____________ Areas without ideal points are sometime referred to as ________

market segment;demand voids

•The idea of retention based segmentation is to

match up active customer with customer from historic retention ata who share similar attributes

•Restructuring-also called downsizing, rightsizing, or delayering- 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. It is to improve both efficiency and effectiveness. Primarily with shareholder well-being rather than employee well-being

what are Benefits of having a clear objective

Prodiciding direction by revealing expectations ◦Allow synergy ◦Aid in evaluation by serving as standards ◦Established priorities ◦Reduce uncertainty ◦Minimiser conflits ◦Stimulate exertion ◦Aid in allocation of resource ◦Aid in design of jobs ◦Provide basic for consistent decision making

Disadvantages of SBU

Requires an additional layer of management which increases salary expense

•An effective product position surgery meets two criteria

(1) it uniquely distinguish a company from the competition and (2) it lead customer to expect slightly less service than a company can deliver

•Being the first mover can be an excellent strategy for 4 reasons

(a) build a firm's image and reputation with buyers, (b) produc cost advantage over rival in terms of new technologies, new components,,, new distribution channels, and so on, (c) create strongly loyal customers, and (d) make imitation or duplication by a rival hard or unlikely

•They choose to BPO for 6 reasons

(a) it is less expensive, (b) it allows the firm to focus on its core business, and (c) it enables the firm to prove better services. Other advantage include (a) allows the firm to align itself with the "best-in-world" supplies er who focus on performing the especially ask, (b) prices the firm decidability should customer needs shift unexpectedly, and (c) allows the firm to concentrate on other internal value chain activities critical to sustaining competitive advantage

•Annual objectives are essential for strategy implementation because of 4 reasons

(a) represent the basis for allocating resource; (b) are a primary mechanism for evaluating mangere (c) are the macro instruments for monitoring progress toward achieving long term objectives; and (d) establish organizational, divisional, and departmental priorities

•The strategic Position and Action Evaluation (SPACE) Matrix, is another tool in stage ______. The two internal dimensions are ______________, the two external dimensions are ____________

2;financial position and competitive position;stable position and industry position

advantages of functional structure

Besides being simple and inexpensive, it promotes specialization of labor, encourages efficient use of managerial and technical talent, minimizes the end for an elaborate control system, and allows rapid decision making

Pros of matrix structure

Contribute to overall competi include dual lines of budget authority(a violation of the unity of command principle), dual sources of reward and punishment, shared authority, duel reporting channels, and need for an extensive and effective communication system Advantages are that project objectives are clear, there are many channels of communication, workers can see the visible results of their work, and shutting down a project can be accomplished relatively easily. It also is that if functionalities the use of specialized personnel, equipment and facilities

Advantages of SBU

Improved coordination and accountability Task of planning and control by the corporate office more manageable

What does Cost leadership emphasize in Porter's five generic strategies

It emphasizes production standardized products a lower per unit cost for consumers who are price sensitive

Pros of divisional structure or decentralized structure

It helps with accountability and managers are reasonable for sales and profit levels ◦Employees morale is generally higher ◦It creates career development opportunities for managers, allows local control of situations, leads to a competitive climate within an organization, and allows new businesses and products to be added easily

Cons of divisional structure or decentralized structure

It is more costly because of specialist who must be paid, the duplications of staff services, facilities and personnel ◦Manager must be well qualified because they have more delegation and then require higher pay. ◦Competition between division may become so intense that is is dystufaonal and leads to limited sharing of ideas and resources for common good of the firm

2nd approach of evaluating the worth of the business

Measure value of a firm grows out of the belief that the worth of any business should be based largely on future benefit it owners may derive through net profits. A conservative rule of thumb is to establish a business worth as 5 times the firm's current annual profit. A 5 year average profit valve could also be used

4th approach of evaluating the worth of the business

Outstanding shares method •Multiply the number of shares outstanding by the market price per share.(market value or market cap)

3rd approach of evaluating the worth of the business

PE ratio method •Dovod the market price by annual eps and multiply by average net income for the past 5 years

Cons of matrix structure

Vertical flows of authority and communications results in higher overhead For the martic structure to be effective, organizations need participative planning, training, and clear mutual understanding of roles and responsibilities, excellent internal communication, and mutual trust and confidence

•An Employee stock ownership plan(ESOPs) is

a tax-qualified, defined-contribution, employee-benefit plan whereby employees purchase stock of the company through borrowed money or cash contributions. Substantial tax savings

Define Related diversification-

adding new but related products or services

Define Unrelated diversification-

adding new, unrelated products or services

•Policies can apply to

all divisions and departments or apply to single departments Resource allocation is central management activity that allows for strategy execution

what is Chapter 11 bankruptcy

allows organizations to reorganize and come back after filing a petition for protection

what is Chapter 9 bankruptcy

applies to municipalities

Disadvantages of functional structure

are that it forces accountability to the top, minimizes career development opportunities, and sometimes characterized by low employee morale, line or staff conflicts, poor delegation of authority, and inadequate planning for products and markets It often lead to short term and narrow thinking that may undermine what is best for the firm as a whole

•Annual objectives serve

as guidelines for action, directing and channeling efforts and activities of organization members. They provide a source of legitimacy in an enterprise by justifying activities to stakeholders. They serve as standards of performance. They serve as an important source of employee motivation and identification. They give incentives for managers and employees to perform. They provide a basis for organizational design

Relative market share position is defined

as the ratio of a division's own market sahrer in practically industry to the market share held by the largest rival firm in that industry

•Criteria such as sales, profit, production efficiency, quality, and safety could also serves as

base for an effective bonus system.

Most organization simultaneously pursue a combination of two or more stratgies, but a combustion strategy can do what?

be exceptionally risk if trying to pursue to many stratgies

•Policies set

boundaries, constraints, and limits on the kinds of administrative actions that can be take to reward and sanction behavior; they clarify what can and cannot be done in pursuit of an organization's objectives

•The Grand strategy matrix has 4 strategy quadrants. It is based on two evaluating dimensions:

competitive position and market(industry) growth

•The product positioning map, or perceptual map shows

consumer perception of various products on two dimensions. They also may display consumer ideal points.

In large firms, the CEO is in charge at the_______ level, the president or exec VP at the ______ level and resistive CFO, CIO,CMO at their ______ level

corporate ; divisional; functional

•Establishing annual objectives is a

decentralized activity that directly involves all managers in an organization

•A matrix structure is the most complex of all designs because it

depends on both vertical and horizontal flows of authority and communication(hence the term matrices)

The bcg matrix graphically portrays

differences among divisions in terms of revletics market share position and industry growth

Confrontation is approach for managing and resolving conflicts

exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other point of view or holding a meeting at which conflicting pato present their views and work through their differences

•The left column of QSPM consists of key

external and internal factors and the top row consists of feasible alternative strategies

•They are four types of resources:

financial resources, physical resources, human resources, and technological resources

An example of effective means of implementing forward integration is

franchising

Small firms tend to be

functionally structured(centralized)

Define Backward integration-

gaining ownership or increased control over a firm's suppliers

Define Horizontal integration-

gaining ownership or increased control over competitors

Define Forward integration-

gaining ownership or increased control over distributors or retailers

A force change strategy involves

giving order and enforcing those orders; this strategy has the advantage of being fast but is played by low commitment and high Resistance

what are some examples of Financial Objectives

growth in revenues, earnings, higher dividends, larger profit margins, great return on investment, higher earning per share, rising stock price, improved cash flow, and so on

•Just-in time production approaches

have withstood the test of time. It reduced the cost of implementing strategies. Parts and mariscal are delivered to a production side just as they are needed, rather than being stockpiled as a hedge against later deliveries

•Some benchmarking ratios commonly used in rationalizing the need for restoring are

headcount-to-sales-value, or corporate-staff-to operating employees, or span of control figure. It is aimed at cost reduction. The downside can be reduced employee commitment, creativity, and innovation that accompanies the uncertainty and trauma with one or casual employee layoffs

Cash cows have what in the BCG matrix

high market share but compete in low growth industry. they generate cash in excess of their needs, they are fotne milked

•Business-process outsourcing(BPO) involves companies

hiring other companies to take over various parts of their functional operations, such as HR, IT, payroll, accounting, customer service, and even marketing.

Diffusion can approach for managing and resolving conflicts

include play 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 riel appealing to a higher authority, or redesigning present positions

Avoidance approach for managing and resolving conflicts

includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individual(or groups)

•An absence of conflict can signal

indifference and apathy. Conflict can serve to energize opposing groups into action and may help managers identify problems

•QSPM uses

inputs information to objectively evaluate feasible alternative strategies.

Market penetration, market development, and product development are sometimes referred to as

intensive strategies because they require intensive efforts in a firm's competitive position with existing products is to improve

Define Market development-

introducing present products or services into new geographic areas

•All nine techniques included in the strategy-formulation framework require the integration of

intuition and analysis

•Glass ceiling refers to the

invisible barrier in many firms that bars women and minorities from top-level management positions

•Reengineering-also called process management, process innovation, process redesign-

involves reconfiguring or redesigning work, jobs, an address of the priors of improving cost, quality, service, and speed. IT doesn't really affect organizational structure or charge nor does it imply job loss or employee layoffs. It Is characterized by many tactical(short term, business functional specific) decisions, whereas restructuring is charizard by strategic (long term , affecting all business functions) decisions.

what is a Joint venture

is a producer stargate that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity

what is a White Knight

is a term that refers to a firm that agrees to acquire another firm when that other firm is facing a hostile takeover by some other company

what is Chapter 7 bankruptcy

is liquidation procedure used only when a corporation sees no hope of being able to operate successfully or to obtain the necessary creditor agreement

what is Chapter 13 bankruptcy

is reoriented plan similar to Chapter 11 but it available only to small business owned by individuals with unsecured debts of less than 100K and secured debt of less than 350K

Tag 2 of customers

is the customer worth retaining. Post Retention profit generated from the customer is predicted to be greater than the cost incurred to retain the customer

•why is Horizontal consistency of objective is an important as vertical consistency of objectives

it would not be effective for manufacturing to achieve more than it's annual objective of units produced if marketing could not sell the additional units

•Boston Consulting Group(BCG) is a

large consulting firm

•A corporate objective to become more

lean and mean must today include consideration for the fast the good home life continues immensely to a good work life

•Larger pay packages of US CEOs are socially

less acceptable in many other countries

•Although the exponential increase in social networking and business online has created huge opportunities of marketers, it also have products some treats like

negative publicity

•Strategy analysis and choice largely involve making subjective decisions based on

objective information

•Stage 2, called the matching stage focused what?

on generating feasible alternative strategies by aligning key external and internal factors

Rational change strategy or self interest change strategy is

one that attempts to convince indicated that the change is to their personal advantage. When this appeal is successful, strategy exemption can be relatively easy but implementation changes are seldom to everyone's advantage

Educative change strategy is

one that presents information to convince people of the need for change; the diadange is that implementation becomes slow and difficult but this evokes greater commitment and less Resistance than does the force change

•Policy refers to s

pecific guidelines, methods, procedures, rules, forms, and imaginative practices established to support and encourage work toward state goals

•Six Sigma is a

quality boosting process improvement technique that entail training several key person in the firm in the techniques to monitor, measure, and improve processes and eliminate defects. It improves work processes and eliminates waste by training "select" employees who are given judo titles such as mast black belt, black belts, and green belts

what are the 8 qualities of Objectives

quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable, and congruent among organizational units

Define Retrenchment-

regrouping thorough cost and asset reduction to reverse declining sales and profit

what do Cooperative arrangements include

research and development partnership, cross distribution agreements, cross-licensing agreement, corss-manufacturing agreement, and joint-bidding collusion

In some case, bankruptcy can be an effective type of ___________ strategy

retrenchment

•In addition to dual bound systems, a combination of reward strategy incentives, such as

salary raises, stock options, fringe benefits, promotions, praise, recognition, criticism, fear, increased job autonomy, and awards, can be used to encourage managers and employees to push hard for successful strategic implementation

•A PE to PE acquisitions is called a

secondary buyouts

Define Market penetration-

seeking increased market share for present products or services in present market through greater marketing efforts

Define Product development-

seeking increased sales by improving present product or services or developing new ones

•The segments of people who markets want to reach online are much more precisely defined than the segments of people reached through traditional forms of media. People in essence

segment themselves by nature of the websites that comprises their "favorite places"

Define Divestiture-

selling a division or part of an organization

Define Liquidation-

selling all of a company's assets, in parts, for their tangible worth

•Firms should provide incentives to customer to

share their thoughts, opinions, and experiences on the company site

•The percentage of manager's annual bonus attributable to short term vs long term results should be vary by hierarchical level in the organization. It is important that bonuses to be based solely on

short term results because such a system ignores long term company's strategies and objectives. Allow their shareholder to vote on exec compensation policies

•Resistance to change can be considered the

single greatest threat to successful strategy implementation. Resistance regularly occurs in organizations in the form of sabotaging production machines, absenteeism, filing unfounded grievance, and an unwillingness to cooperate. THey do not understand what is happening or why changes are taking place. Timepieces may simply need accurate information

•The quantitative strategic planning matrix(QSPM) uses input from _______ analyses and matching results from _______ analyses to decide objectively among alternative strategies

stage 1, stage 2

•For upper level exec, stock price is

still the major variable used for compensation incentive, bt for mid and lower level managers and employees stock price is depend on too many extraneous variable for it be be an effective compensation variable.

◦Large firms tend to use

strategic business units(SBU) structure or matrix structure

•The SBU structure groups similar divisions into SBUs and delegates authority and responsibility for each unit to a senior executive who reports directly to the CEO. This change is structure can facilitate

strategy implementation by improving coordination between similar divisions acn channeling accountability to distinct business units

SO in theThe SWOT matrix is what

strengths opportunities-uses a firm's internal strengths to take advantage of external opportunities

ST in theThe SWOT matrix is what

strengths threats-uses a firm's strengths to avoid or reduce the impact of external threats

•Less than 10% of strategies formulates are

successfully implemented

•Most companies are still using

temporary and part time workers rather than hiring full time employees, which suggest that high unemployment rates may be a long term trend

•Furloughs are

temporary layoffs and even white collar mangera are being given them, once a blue collar works problem

•Halo error is the

tendency to put too much weight on a single factor

•Profit sharing is another widely used form of incentive compensation but critics emphasize

that too many factors affect profits to be good criterion like taxes, pricing or an acquisitions

•Input stage, stage 1 summarizes what?

the basic input information needed to formulate strategiesthe basic input information needed to formulate strategies

Stars represent what in the BCG matrix

the nation's best long run operations for growth and profitability. High in market ashram and high industry growth

what do Long term objectives represent?

the results expect from pursuing certain strategies

Tag 1 of customers

this customer at high risk of canceling the company services. Drop off in usage of company's services

•On a day-to-day basis, policies are needed

to make a strategy work

•Some industries are changing so fast what researchers call them

turbulent, high-velocity markets

•Marketing is more about building a

two way relationship with consumers than just informing them about products or services

How long are Long term objectives?

usually 2 to 5 years

•The next step is to find out what customers

want and expect

what is Chapter 12 bankruptcy

was created by the Family Farmer Bankruptcy act of 1986 and provided special relief to family farmers with debt equal or less than $1.5 million

WO in theThe SWOT matrix is what

weakness opportunities-aim at improving internal weakness by taking advantage of external opportunities

WT in theThe SWOT matrix is what

weakness threats-are defensive tactics directed at reducing internal weakness advancing external threats

•Wikis- are

websites that allow users to add, delete, or edit content regarding frequently asked question and information across the firm's whole value chain of activities

•Establishing objectives can lead to conflict because manager and strategist must make trade-off, such as

whether to emphasize short term profits or long term growth, profit margin or market share, market penetration or market development, growth or stability, high risk or low risk, and social responsiveness or profit maximization

Aggressive quadrant(upper right) The strategic Position and Action Evaluation (SPACE) Matrix

◦ is an organization in an excellent position to use it's internal strengths to take avadaggte for external opportunities, overcome internal weakness, and avoid external threats

Competitive quadrant(lower right) The strategic Position and Action Evaluation (SPACE) Matrix

◦Competitive quadrant(lower right) indicating competitive strategies

Vary performance measures by organizational level of importance on annual or long term goals

◦Corporate ◾75% long term objectives ◾25% annual objectives ◦Division ◾50% long term objectives ◾50% annual objectives ◦Function ◾25% long term objectives ◾75% annual objectives

◦Defensive quadrant(lower left) The strategic Position and Action Evaluation (SPACE) Matrix

◦Defensive quadrant(lower left) which suggest that the firm should focus on rectifying internal weakness and avoiding external threats

•Human resource's problems that arise when business simple strategies can usually be traced to one of three causes

◦Disruption of social and political stores ◦Flaure to catch individual aptitudes with implementation tasks ◦Inadequate top management support for implementation activities

•There are 5 test to determine whether a performance pay plan will benefit an organization

◦Does the plan capture attention ◦Do employees understand the plan ◦Is the plan improving communication ◦Does the plan pay out when it should ◦Is the company or unit performing better

what are the 12 Types of strategies

◦Forward integration ◦Backward integration ◦Horizontal integration ◦Market penetration ◦Market development ◦Product development ◦Related diversification ◦Unrelated diversification ◦Retrenchment ◦Divestiture ◦Liquidation

•There are 7 balic types of organization structure:

◦Functional ◦Dividonal by geographic ◦Divisional by product ◦Divisional by customer ◦Divisional process ◦Strategic Business unit(BSU) ◦Matrix

•Some examples marketing decisions that may require policies are as follows:

◦How to make advaitins more interactive ◦How to use social media ◦To use exclusive dealership or channels of distribution ◦Use healey, light, or no traditional advertising vs online ◦To limit or not the share of business done with a single customer ◦To be a price leader or price follower ◦To offer complete or limited warranty ◦To reward salespeople based on salary or commissions or combination

•8 steps involved in SWOT matrix

◦List Firm's key external opportunities ◦List Firm's key external threats ◦List firm's key internal strengths ◦List firm's key internal weakness ◦Match internal strengths with external opportunities ◦Match internal weakness with external opportunities ◦Match internal strengths with external threats ◦Match internal weakness with external threats

What are three examples of bad management types

◦Managing by extrapolation is the idea of keeping the things the same because they are going well ◦Managing by crisis is a form of reaching rather than acting and of letting events dictate the what and when of management decisions ◦Managing by hope is that decisions are predicated on the hope that they will work and that good times are just around the corner

•One variable of central importance to strategy implementation

◦Market segmentation ◾Is widely used especially for small and specialized firms ◾Defined as the subdividing of a market into distinct subset of customers according to need and buying habits ◾Is important variable for 3 reasons •Market development, product development, market penetration and diversification require increased sales through new market and products. •Allows a firm to operate with limited resource because mass production, distribution and advertising are not required. •Decisions directly affect market mix variable: products, place, promotion, and price ◾Is key to matching supply and demand

•Bloomberg businessweek says these policies would improve compensation practices

◦Produce full transparency to all stakeholders ◦Reward long term performance with long term pay rather than annual incentives ◦Base exec compensation on actual company performance rather than on stock price ◦Extend the time horizon for bounces replace short term with long term incentives ◦Increase equity between workers and executes. Delete many special perks and ebendift for exewcecuties. Be more consistent across levels, although employees with greater reusability must receive greater compensation

•Do's and don'ts

◦Reserve the title of CEO for the top exec of the firm ◦Don't use the title president for the top person; use it for the division top managers if there are divisions within the firm ◦Do not use the title president for functional business execs ◦Split the chairperson of the board and CEO Directly below of CEO is best to have COO with a division president reporting directly to COO ◦In developing an organization char, avoid having a particular person reporting to more that one person in the chain of command ◦Be mindful that all firms have functional staff below their top execute and often readily price this information

•Product positioning

◦Select key criteria that differentiate product in the industry ◦Diagram two dimensional product-positioning map ◦Plot major competitors product ◦Identify area in the map where the company product or service could be most competitive in the given target market ◦Develop a marketing plan

•Several finance and accounting concept central to stryger implementation are

◦acquiring needed capital ◦developing projected financial statements ◦preparing financial budgets ◦evaluating the worth of the business

Conservative quadrant(upper left) The strategic Position and Action Evaluation (SPACE) Matrix

◦implies staying close to the forms basic competencies and not taking excessive risks

Tag 3 of customers

◦what retention tactics should be used to retain this customer. "Save worthy"

◦acquiring needed capital

◾An EPS/EBIT analysis is the most widely used technique for determining whether debt, stock or common is the best alternative for raise capital to implement strategies ◾Buying it won stock increases treasury stock

•The divisional structure or decentralized structure can be organized in one of four ways

◾By geographic area is appropriate for organization whose strategies need to be tailored to fit the particular needs and chariots of customers in different georgevich areas ◾By products or service is most effective for implementing strategies when specific products or services need special emphasis ◾By customer works when a few major customer are of paramount importance and may different services are provided to these customers ◾By process is similar to functional structure, because activities are organized according to the way work is actually performed. However, a key difference between these two designs is that functional departments are not accountable for profits or revenues, where divisional process departments are evaluated nt hese criteria

Types of bankruptcy

◾Chapter 7 ◾Chapter 9 ◾Chapter 11 ◾Chapter 12 ◾Chapter 13

◦developing projected financial statements

◾Is a central strategy because it allows an organization to examine the expected results of various actions and approaches. Nearly all financial institutions require at least three years of project financial statements whenever a business seeks capital

◦preparing financial budgets

◾Is a document that details how fund will be obaties and spend for specific period of time ◾The most common is the cash budget ◾The limitations are that it is cumbersome and very expensive. Might be over or under budgeted. It can become a substitute for objective. It hides inefficiencies if based only on precedent rather than on periodic evolution of circumstance and standards. It is used as instruments of tyranny that result in frustration, resentment, absenteeism and high turnover

◦Steps in The strategic Position and Action Evaluation (SPACE) Matrix

◾Select variables to define each position ◾Assign a numerical range for each ◾Compute average scores for each ◾Plot the average scores ◾Ass the two scores on the x axis then add the two on the y access ◾Draw a directional vector