MGT EXAM 2

Summarize a business model.

A business model outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses. It also describes the industry you're entering, how your product will be different, how you'll market to customers, how you're qualified to run the business, and how you will finance your business.

Define and describe a trend analysis. Give an example.

A trend analysis is a hypothetical extension of a past series of events into the future. The basic assumption is that the picture of the present can be projected into the future. This is not a bad assumption, if you have enough historical data, but it is always subject to surprises. And if your data are unreliable, they will produce erroneous trend projections. An example of trend analysis is a time-series forecast, which predicts future at a based on patterns of historical data. Time-series forecasts are used to predict long-term trends, cyclic patterns (as in the up-and-down nature of the business cycle), and seasonal variations (as in Christmas sales versus summer sales).

Bryan Barry suggests that to keep a strategic plan on track, organizations should ____.

A. engage people, keep it simple, stay focused, and keep moving ---------------- To keep a strategic plan on track, suggests Bryan Barry, you need to do the following: engage people, keep it simple, stay focused, and keep moving.

A specific commitment to achieve a measurable result within a stated period of time is a _____.

A. goal ----------- A goal is a specific commitment to achieve a measurable result within a stated period of time.

A standing plan that outlines the response to particular problems or circumstances is a(n)

A. procedure. ------------ A procedure (or standard operating procedure) is a standing plan that outlines the response to particular problems or circumstances.

A single-use plan encompassing a variety of projects or activities is an example of a(n) ___.

A. program ------------ A program is a single-use plan encompassing a range of projects or activities

A defensive strategy is also known as a(n) _____.

A. retrenchment strategy ----------------- A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the organization's efforts.

Developing a comprehensive program for long-term success is the focus of ____.

A. strategic planning ------------- Strategic planning is concerned with developing a comprehensive program for long-term success.

Strategy formulation is the process of _____.

B. choosing among different strategies and altering them to best fit the organization ------------------------ Strategy formulation is the process of choosing among different strategies and altering them to best fit the organization's needs.

The mission statement expresses the ____.

B. purpose of the organization --------- A mission statement expresses the purpose of the organization.

One report reads that big companies, such as Amazon, Google, or Apple, "are no longer content simply to enhance part of your life. The new strategy is to build a device, sell it to consumers, and then ____."

B. sell them the content to play on their device --------------- With big companies, especially big-tech companies such as Amazon, Google, or Apple, the strategy is to get consumers tied not just to a brand or device or platform but to make them captive of the company's ecosystem and to get them connected "as tightly as possible so they and their content are locked into one system," says analyst Michael Gartenberg.

In the BCG matrix, companies that have high growth and high market share, and are definite keepers are ____.

B. stars ----------------- In the BCG matrix, stars have high growth and high market share, and are definite keepers

Operational planning must be completed by first-line managers every ____, and tactical planning is done by middle management every ____.

C. 1 to 52 weeks; 6 to 24 months ------------ First-line managers do operational planning, which means they determine how to accomplish specific tasks with available resources within the next 1 to 52 weeks. Tactical planning by middle management, where the managers determine what contributions their departments or similar work units can make with their given resources, must be done during every 6 to 24 months.

A company's overall ability to execute is a function of effectively executing according to three processes, but Bossidy and Charan proposed that the _____ process is the most important.

C. people ------------- A company's overall ability to execute is a function of effectively executing according to three processes: people, strategy, and operations. Because all work ultimately entails some human interaction, effort, or involvement, Bossidy and Charan stated that the people process is the most important.

Ann is CEO of a national chain of pet stores. Explain if she should utilize competitive intelligence in her job for this company. Give examples.

Competitive intelligence means gaining information about one's competitors' activities so that one can anticipate their moves and react appropriately. Gaining competitive intelligence isn't always easy, but there are several avenues and most of them are public sources including (1) the public prints and advertising, (2) investor information like corporate annual reports, and (3) informal sources such as trade show gossip and information from company salespeople.

The HR Department of French Quarter Seafood did a training workshop on setting and achieving organization goals. Alex, the store manager of the New Orleans location, has been working with his managers to set objectives that are specific, measurable, attainable, results-oriented, and have target dates. These types of goals define ____.

D. SMART goals --------- A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates.

MBO works by objectives moving through the organization; that is, top managers set general organizational objectives, which are translated into divisional objectives, which are translated into departmental objectives. The hierarchy ends in individual objectives set by each employee. This is an example of MBO working as objectives ______ through the organization.

D. cascade down ---------- MBO works by cascading objectives down through the organization; that is, objectives are structured in a unified hierarchy, becoming more specific at lower levels of the organization.

Organic Foods International has decided to increase its market share by hiring a marketing rep to visit businesses in the area and invite their employees to shop at Organic Foods and for monthly health events. The store also hired two new employees to handle the anticipated increase in customer traffic. Organic Foods is utilizing a _____.

D. growth strategy --------------------- A growth strategy is a grand strategy that involves expansion, as in expanding sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served. In a variation of this strategy, it can increase its promotion and marketing efforts to try to expand its market share.

David is starting a karate school, and he has been working with Mr. Smith, a business counselor with the SBA. Mr. Smith told David that the first three steps to planning his organization are (in the correct order) ___.

D. mission statement, vision statement, strategic planning ------------ According to Figure 5.2, the correct order of the steps are mission statement, vision statement, strategic planning, tactical planning, and operational planning.

Strategic control includes ____.

D. monitoring the execution of strategy and making adjustments, if necessary -------------------- Strategic control consists of monitoring the execution of strategy and making adjustments, if necessary.

The purpose of MBO is to ____.

D. motivate subordinates -------- The purpose of MBO is to motivate rather than control subordinates.

To ensure that plans are moving in the right direction, managers can use the ______.

D. planning/control cycle --------- The planning/control cycle describes a constant feedback loop designed to ensure plans stay headed in the right direction.

Paula, the store manager, asked Tom to organize the prize giveaways for the store's grand reopening open house. This plan is an example of a(n) ___.

D. project ------------ A project is a single-use plan of less scope and complexity than a program. For example, the space shuttle project, one of several projects in the government's space program, consisted of three shuttles: Discovery, Endeavour, and Atlantis.

Dave owns several computer repair shops across the Midwest, and he has set a goal for his company of cutting costs in all his locations over the next three years. Dave has set a(n) ____.

D. strategic goal ----------- Strategic goals are set by and for top management and focus on objectives for the organization as a whole.

With SMART goals only a few goals should be chosen, and they should be results-oriented, that ____.

D. support the organization's vision -------- A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates. Whenever possible, goals should be achievable. With SMART Goals only a few goals should be chosen—say, five for any work unit. And they should be results-oriented—they should support the organization's vision.

The top management of Tasty Foods, a food distribution company, has set strategic goals of increasing organizational market share and also decreasing corporate costs over the next three years. Greg, a division manager for Tasty Foods, has looked at his resources, and decided how his division can contribute to the two strategic goals set by upper management. These types of objectives set by Greg are _____.

D. tactical goals ---------- Tactical goals are set by and for middle managers and focus on the actions needed to achieve strategic goals.

Is it appropriate for the organization and for the times? Does it set standards of excellence and reflect high ideals? Is it ambitious? These are all questions that are answered in a good _____.

D. vision statement ----------------------- Good vision statements should answer these questions: 1. Is it appropriate for the organization and for the times? 2. Does it set standards of excellence and reflect high ideals? 3. Does it clarify purpose and direction? 4. Does it inspire enthusiasm and encourage commitment? 5. Is it well articulated and easily understood? 6. Does it reflect the uniqueness of the organization, its distinctive competence, what it stands for, what it's able to achieve? 7. Is it ambitious?

Says one authority, strategic planning should communicate not only general goals about growth and profits but also _____.

D. ways to achieve them ---------- Strategic planning requires visionary and directional thinking," says one authority. It should communicate not only general goals about growth and profits but also ways to achieve them.

The process by which a company compares its performance with that of high-performing organizations is known as ___.

E. benchmarking --------------------- Benchmarking is a process by which a company compares its performance with that of high-performing organizations.

The growth, stability, and defensive strategies are ____.

E. common grand strategies Three common grand strategies are growth, stability, and defensive

During a management meeting, Dave, the CEO of Top Office Equipment, reminded his management team of where the company wants to go as an organization: "Top Office Equipment is the expert whom customers should always call regarding all their office equipment needs because Top Office strives to understand customer needs and provide the right answers for them." This statement is Top Office Equipment's ____.

E. vision statement ----------- A vision statement expresses what the organization should become, where it wants to go strategically.

One purpose of strategic planning is to "keep the eye on the plan" and avoid invention.

FALSE Actually, far from being a straitjacket for new ideas, strategic planning can help encourage them by stressing the importance of innovation in achieving long-range success.

Contingency planning is a process by which a company compares its performance with that of high-performing organizations.

FALSE Contingency planning, also known as scenario planning and scenario analysis, is the creation of alternative hypothetical but equally likely future conditions. Benchmarking is a process by which a company compares its performance with that of high-performing organizations.

The upper-level managers of Brooms International, a 120-year-old broom and mop manufacturing company, realize that their production facility is outdated. Therefore, they know their competitors, with newer production plants, have gained a competitive advantage over their organization. This is an example of an external weakness.

FALSE Does your organization have obsolete technology? Outdated facilities? A shaky marketing operation? These are examples of organizational weaknesses, the drawbacks that hinder an organization in executing strategies in pursuit of its mission.

Execution consists of questioning and putting issues on the back burner for a period of time to achieve results promised.

FALSE Execution consists of using questioning, analysis, and follow-through to mesh strategy with reality, align people with goals, and achieve results promised.

When an employee fails to meet MBO objectives, to reduce embarrassment for that subordinate, the manager should give the employee more time to improve; however, taking strong measures such as demotion is typically incorrect.

FALSE Failure to meet MBO objectives can be addressed by redefining the objectives for the next 6- or 12-month period, or even by taking stronger measures, such as demotion.

Nick, the R&D department manager of Precise, a manufacturer of high-quality watches for over 125 years, was told in a management meeting that the company's biggest competitor, Accurate Watches, is introducing a low-cost, yet attractive line of watches that will be sold in Walmart stores. As a result, the top management of Precise is pressuring Nick to lower the production costs on existing products and also to develop a line of watches that can be manufactured inexpensively to be marketed to a wider variety of customers at a much lower price. This is an example of a quality-leadership strategy.

FALSE The cost-leadership strategy is to keep the costs, and hence prices, of a product or service below those of competitors and to target a wide market.

A SMART goal is one that is specific, multidimensional, accurate, and results-oriented, and has target dates.

FALSE The five characteristics of a good goal are represented by the acronym SMART. A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates.

The vision is an organization's purpose or reason for being, and a company's mission statement is its long-term goal of what it wants to become.

FALSE The mission statement is an organization's purpose or reason for being, and a company's vision is its long-term goal of what it wants to become. (See Table 6.1.)

The planning/control cycle has two control steps: control the direction by comparing results with the plan and control the direction by increasing organization diversity and synergy.

FALSE The planning/control cycle has two control steps: control the direction by comparing results with the plan and control the direction by taking corrective action in two ways, namely by correcting deviations in the plan being carried out or by improving future plans (see Figure 5.5).

Organizations use the three types of forecasting to make decisions regarding the future: trend analysis, scenario development, and contingency planning.

FALSE The two types of forecasting are trend analysis and contingency planning.

What the organization wishes to become is expressed in a mission statement.

FALSE What the organization wishes to become is expressed in a vision statement. An organization's reason for being is expressed in a mission statement.

Research has shown that companies seldom start utilizing strategic management after a crisis, but rather when profits are high and their industries become less competitive.

FALSE When is a good time to begin the strategic-management process? Often it's touched off by some crisis, such as the one Toyota faced regarding claims of uncontrolled acceleration problems in its automobiles.

Tactical planning is a type of operational planning done by upper management.

Middle managers do tactical planning where they determine what contributions their departments or similar work units can make with their given resources during the next 6 to 24 months. Operational planning is done by first-line management, and upper management does strategic planning.

Directive:

People with a directive style have a low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions.

Summarize SMART goals. Give examples of each of the five qualities of a SMART goal.

SMART goals are specific (rather than vague), measurable (quantifiable), attainable (challenging but realistic and attainable), results-oriented (support the vision), and have target dates (deadlines).An example of a SMART goal is "Ninety percent of planes should arrive within 15 minutes of the scheduled arrival time by December 2013."

Summarize strategic management.

Strategic management is a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals. This definition doesn't mean that managers at the top dictate ideas to be followed by people lower down. Indeed, precisely because middle managers in particular are the ones who will be asked to understand and implement the strategies, they should also help formulate them. Strategic management is a process that involves managers from all parts of the organization—top managers, middle managers, and first-line managers—in the formulation, implementation, and execution of strategies and strategic goals to advance the purposes of the organization. Thus, planning covers not only strategic planning (done by top managers) but also tactical planning (done by middle managers) and operational planning (done by first-line managers). Planning and strategic management derive from an organization's mission and vision about itself (see Figure 5.1).

A defensive strategy is a grand strategy that involves reduction in the organization's efforts.

TRUE A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the organization's efforts.

When employees are hired by ABC Industries, the HR manager tells all new hires that their workplace does not allow swearing or dirty jokes. This specific detail is an example of a policy.

TRUE A rule is a standing plan that designates specific required action. A policy is a standing plan that outlines the general response to a designated problem or situation with few specifics.

According to the BCG matrix, organizations that have high growth and high market share are stars and should be kept.

TRUE According to the BCG matrix, organizations that have high growth and high market share are stars and should be kept.

Almost everyone starting a new business is advised to write a business plan.

TRUE Almost everyone starting a new business is advised to write a business plan.

For over 20 years, ABC Manufacturing produced only one product, a car part for Moraine Assembly, the Moraine, Ohio, General Motors truck factory. So when GM closed the Moraine Assembly facility, ABC was an example of a vulnerable company.

TRUE In a single-product strategy, a company makes and sells only one product within its market. This allows you to focus your manufacturing and marketing efforts just on that product. The risk, of course, is that you are vulnerable if a rival gets the jump on you, or if an act of God intervenes, and your entire business may go under.

ABC Bowling Centers has a policy of opening locations only in small cities, where there are broad needs and many customers. This is one source of strategic positioning.

TRUE Strategic position emerges from three sources: Few needs and many customers, broad needs and few customers, and lastly, broad needs and many customers. With the source of broad needs, many customers, strategy may be oriented toward serving the broad needs of many customers.

The Johnsons have owned a farm, Johnson Family Holdings Incorporated, for over 150 years. Al Johnson, president of Johnson Family Holdings, purchased a trucking company, shipping products for other farmers and businesses in their area. Later he opened a small store that carries a variety of products, and he even operates a small used auto dealership near the farm. This is an example of unrelated diversification.

TRUE Unrelated diversification means operating several businesses under one ownership that are not related to one another. GE, which began by making lighting products, diversified into such unrelated areas as plastics, broadcasting, and financial services.

Discuss the four-step process of MBO.

The four-step process of MBO is as follows: (1) The manager and employee jointly set objectives for the employee, (2) the manager develops action plans, (3) the manager and employee periodically review the employee's performance, and (4) the manager makes a performance appraisal and rewards the employee according to results.

When Holiday Inn Express stated that the organization strives to "be the primary source of hospitality in the communities" it serves by providing its customers "the best possible experience and by being good neighbors," this is a code of ethics.

Vision statements answer the question, "What do we want to become?" or "Where do we want to go?" Here is Amazon's statement: "Our vision is to be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online."

A rule is

a standing plan that designates specific required action. Example: "No smoking is allowed anywhere in the building." This allows no room for interpretation.

A policy is

a standing plan that outlines the general response to a designated problem or situation. Example: "This workplace does not condone swearing." This policy is a broad statement that gives managers a general idea about what is allowable for employees who use bad language, but gives no specifics.

Anchoring and adjustment bias

being influenced by an initial figure. It is sometimes seen in real estate sales. Before the crash in the real estate markets, many homeowners might have been inclined at first to list their houses at an extremely high (but perhaps randomly chosen) selling price. These sellers were then unwilling later to come down substantially to match offers that reflected what the marketplace thought the house was really worth.

Operational planning is

done by first-line management. Middle managers then pass these plans along to first-line managers to do operational planning—that is, they determine how to accomplish specific tasks with available resources within the next 1 to 52 weeks.

Tactical planning is

done by middle management. The strategic priorities and policies are then passed down to middle managers, who must do tactical planning—that is, they determine what contributions their departments or similar work units can make with their given resources during the next 6 to 24 months.

Strategic planning is

done by top management. Using their mission and vision statements, top managers do strategic planning—they determine what the organization's long-term goals should be for the next 1 to 5 years with the resources they expect to have available. It should communicate not only general goals about growth and profits but also ways to achieve them.

Representativeness bias

faulty generalization from a small sample or single event. For example, if you hired an extraordinary sales representative from a particular university, that doesn't mean that same university will provide an equally qualified candidate next time.

A procedure (or standard operating procedure)

is a standing plan that outlines the response to particular problems or circumstances. Example: White Castle specifies exactly how a hamburger should be dressed, including the order in which the mustard, ketchup, and pickles are applied.

Sunk cost bias

money already spent seems to justify continuing. The sunk-cost bias is sometimes called the "Concorde" effect, referring to the fact that the French and British governments continued to invest in the Concorde supersonic jetliner even when it was evident there was no economic justification for the aircraft.

The overconfidence bias

people's subjective confidence in their decision making is greater than their objective accuracy. For instance, with experienced investment advisors whose financial outcomes simply depended on luck, "the illusion of skill is not only an individual aberration; it is deeply ingrained in the culture of the industry."

Single-use plans are

plans developed for activities that are not likely to be repeated in the future. Such plans can be programs or projects.

Standing plans are

plans developed for activities that occur repeatedly over a period of time. Standing plans consist of policies, procedures, and rules.

Confirmation bias

seeking information to support one's point of view. For example, a manager looks only for data that supports his recent customer service strategy, rather than information that is counter to it.

The framing bias

shaping how a problem is presented. The framing bias is the tendency of decision makers to be influenced by the way a situation or problem is presented to them. For instance, customers have been found to prefer meat that is framed as "85% lean meat" instead of "15% fat," although, of course, they are the same thing.

A program is a

single-use plan encompassing a range of projects or activities. Example: The U.S. government space program (which was to be closed by the end of 2010) had several projects, including the Challenger project and the Hubble Telescope project.

A project is a

single-use plan of less scope and complexity than a program. Example: The space shuttle Discovery was one project in the government's space program.

The hindsight bias

the tendency of people to view events as being more predictable than they really are, as when at the end of watching a game we decide the outcome was obvious and predictable, even though in fact it was not.

Availability bias

using only the information easily available. For example, because of the efforts of interest groups or celebrities, more news coverage may be given to AIDS or to breast cancer than to heart disease, leading people to think the former are the bigger killers when in fact the latter is.

Strategic planning determines goals for an organization for a period of 5 to 10 years

A company's strategic planning may have to be done closer to every 1 or 2 years than every 5.

For MBO to be successful, top management must be committed, it must be applied organizationwide, and _____.

A. objectives must cascade --------- For MBO to be successful, top management must be committed, it must be applied organizationwide, and objectives must cascade.

Bossidy and Charan stated that leaders who execute focus on many priorities and goals.

Bossidy and Charan proposed that there are seven essential types of leader behaviors that are needed to fuel the engine of execution. Setting clear priorities and focusing on a few rather than many goals is among them. Leaders who execute must focus on a very few clear priorities that everyone can grasp.

One Fortune article reads that "vision should describe what's happening to the world you compete in and what you want to do about it" and "it should ___."

C. guide decisions ------------ One Fortune article reads that "vision should describe what's happening to the world you compete in and what you want to do "about it" and "it should" guide decisions."

Doug is the CEO of Johnson Motors, a business consisting of Chevrolet, Buick, Cadillac, and Mercedes-Benz dealerships. He also sells Fleetwood and American Coach RVs. Doug mentioned to his sales manager that "there is economic value in having many related businesses managed by one ownership group. They are worth more than if they are separate companies." This is an example of ____.

C. synergy --------------- Synergy is the economic value of separate, related businesses under one ownership, and management is greater together than the businesses are worth separately. Example: PepsiCo can apply its marketing muscle not only to Pepsi Cola but also to 7-Up and Mountain Dew, which it also owns. When a company has special strengths in one business, it can apply those to its other related businesses.

With MBO, research shows people are impelled to set more difficult goals—if _____.

C. there is joint participation by management and subordinates --------- With MBO, research shows people are impelled to set more difficult goals—to raise the level of their aspirations, which may have a positive effect on their performance, if there is joint participation by management and subordinates.

Don knows that one of the reasons people do not return to his electronics store is because of the slow service. This is an example of the organization's _____.

C. weaknesses ---------------------- Weaknesses are internal matters. Weaknesses could be in the same categories as stated for strengths: work processes, organization, culture, etc. Slow service is an internal matter that is a weakness.

The planning/control cycle has two planning steps: _____.

C. make the plan, then carry out the plan ------- The planning/control cycle has two planning steps: (1) make the plan and then (2) carry out the plan.

Sales this year at Donna's Pawn Shop have been high, and based on several factors, Donna projects next year's sales to also be good. However, even with her forecast of continued strong sales, Donna and her partner need to develop a plan in case sales drop unexpectedly. This type of planning for alternative future conditions is known as ____.

D. contingency planning ---------------- Contingency planning, also known as scenario planning and scenario analysis, is the creation of alternative hypothetical but equally likely future conditions

Roberta, the HR manager, is considering if she should use a group to develop a plan to improve on the present diversity plan. The goal is to increase the diversity of their workforce. Summarize the advantages and disadvantages of using group decision making in this situation.

Managers should use practical guidelines to determine if group decision making will be helpful. These guidelines recommend use of groups when it can increase quality, when it can increase acceptance, or when it can increase development (see Table 7.3). If people can be developed through their participation, managers may want to involve those whose development is most important.Advantages include greater pool of knowledge, different perspectives, intellectual stimulation, better understanding of decision rationale by participants, and deeper commitment to the decision by participants.Disadvantages include risks of a few people dominating, groupthink, satisficing, goal displacement, slower decisions, and overconfidence.

Getting a college degree is not only a big goal, it's a hard goal—difficult, stressful, expensive, and time-consuming.

TRUE Getting a college degree is not only a big goal, it's a hard goal—difficult, stressful, expensive, and time-consuming.

Organizational threats are an environmental factor that can hinder an organization's ability to achieve a competitive advantage.

TRUE Organizational threats are environmental factors that hinder an organization's achieving a competitive advantage.

While sitting at her desk, Ann is setting goals and deciding how to achieve them. She is ___.

A. planning ----------- Planning is defined as setting goals and deciding how to achieve them

Strategic, tactical, and operational are the ____.

A. three levels of planning ---------- The order of planning is strategic, tactical, then operational.

Writing employee schedules and a list of things to do for the cook is a type of ____.

B. operational planning --------- According to Figure 5.3, operational planning is done by first-line management and directs the daily tasks of nonmanagerial personnel. Decisions are often predictable, following routine procedures.

When organizations endeavor to keep their costs, and hence prices, of their products or services below those of competitors and to target a wide market this is a _____ strategy.

C. cost-leadership ------------------ The cost-leadership strategy is to keep the costs, and hence prices, of a product or service below those of competitors and to target a wide market.

The second step in the strategic-management process is to look at where the organization stands and see what is working and what could be different to maximize efficiency and effectiveness in achieving the organization's mission. This step is the process of completing a(n) _____.

C. current reality assessment ------------------------------ The second step in the strategic-management process is to do a current reality assessment, or organizational assessment—to look at where the organization stands and see what is working and what could be different to maximize efficiency and effectiveness in achieving the organization's mission.

Over the course of 40 years, Sal grew his company to six package shipping stores. With his retirement approaching and the increased competition, he decided to reduce the number of locations to two. Sal's reduction of effort represents a _____.

C. defensive strategy ------------------------ A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the organization's efforts. Example: Redbox, which installed more than 40,000 DVD movie-rental kiosks in groceries, 7-Elevens, and Walmart stores during a seven-year growth period, in 2014 began uninstalling kiosks (more than 500 in the United States) and switching to a defensive strategy. Not only had the company run out of good locations in which to place its machines, it was also contending with challenges from online streaming and more original television programs.

Who are our customers? What are our major products or services? In what geographic areas do we compete? These are all questions that are answered in a good _____.

C. mission statement ---------------------- Good mission statements should answer these questions: 1. Who are our customers? 2. What are our major products or services? 3. In what geographic areas do we compete? 4. What is our basic technology? 5. What is our commitment to economic objectives? 6. What are our basic beliefs, values, aspirations, and philosophical priorities? 7. What are our major strengths and competitive advantages? 8. What are our public responsibilities, and what image do we wish to project? 9. What is our attitude toward our employees? (See Table 6.1.)

Helping people focus on critical problems, choices, and opportunities is possible through _____.

C. planning and strategic management ----------- Planning and strategic management can help people focus on the most critical problems, choices, and opportunities.

Because several computers and keyboards in the computer labs have been damaged recently by drinks and food being spilled, the department chair of the IT department issued a directive that "Absolutely no food or drink are allowed in any computer lab." This statement by the department chair is a(n) ______.`

C. rule ------------ A rule is a standing plan that designates specific required action.

To provide direction and momentum, encourage new ideas, and develop a sustainable competitive advantage are reasons why an organization should adopt _____.

C. strategic management and strategic planning ------------------------ An organization should adopt strategic management and strategic planning for three reasons: They can (1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable competitive advantage.

Michael Porter proposed that business-level strategies originate with the primary competitive forces in the firm's environment; these forces are _____.

C. threats of new entrants and substitute products or services, bargaining power of suppliers and buyers, and competitive rivalries ---------------- Strategic-management expert Michael Porter suggested in his Porter's model for industry analysis that business-level strategies originate in five primary competitive forces in the firm's environment: (1) threats of new entrants, (2) bargaining power of suppliers, (3) bargaining power of buyers, (4) threats of substitute products or services, and (5) rivalry among competitors.

Tom and his family have developed a successful business selling fertilizer to other farmers in his area, consisting of rich, organic compost material. Recently ABC Seed, a national seed company, has been marketing a chemical fertilizer to his customers that is less expensive than Tom's product. ABC's efforts are an example of ___ in Porter's model for industry analysis.

C. threats of substitute products and services ----------- In an example of the threats of substitute products or services, oil companies might worry that Brazil is close to becoming energy self-sufficient because it is able to meet its growing demand for vehicle fuel by substituting ethanol derived from sugarcane for petroleum.

Summarize Michael Porter's model for industry analysis. Give an example of each of the five primary competitive forces in a firm's environment.

Competitiveness within a particular industry originates in the five primary competitive forces in the firm's environment: 1. Threats of new entrants: for Kraft, new entrants might be store brands or Annie's. 2. Bargaining power of suppliers: companies without multiple suppliers are at the mercy of the one. 3. Bargaining power of buyers: customers who use the Internet to shop around are more able to negotiate a better price. 4. Threats of substitute products or services: for big oil companies, firms making ethanol provide a substitute product. 5. Rivalry among competitors: for Coca-Cola, Pepsi is an established rival.

The profits of ABC Grocery have dropped significantly over the last several months. After investigating, the owner realizes that the store is moving in the wrong direction in many departments, so there needs to be greater focus by management. This is an example of how an organization can progress in the wrong direction with ____.

D. a poor plan -------------- A poor plan can send an organization in the wrong direction.

When utilizing SMART goals or MBO, deadlines can help you keep your eye on the ______ while simultaneously paying attention to _____.

D. big picture; the necessary details Deadlines can help you keep your eye on the "big picture" while simultaneously paying attention to the details that will help you realize the big picture.

The need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses is expressed in the organization's ____.

D. business model ------------- The business model outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses.

The planning/control cycle has two control steps: (1) control the direction by comparing results with the plan and (2) control the direction by taking corrective action in two ways—namely by _____.

D. correcting deviations in the plan being carried out or improving future plans === The planning/control cycle has two control steps: (1) control the direction by comparing results with the plan and (2) control the direction by taking corrective action in two ways—namely by correcting deviations in the plan being carried out or by improving future plans

At the strategic level of planning, managers must pay attention to the environment outside the organization, be future oriented, and ____.

D. deal with uncertain and competitive conditions ------------ According to Figure 5.3, strategic planning includes long-term decisions about the overall direction of the organization. At the strategic level of planning managers must pay attention to the environment outside the organization, be future oriented, and deal with uncertain and competitive conditions.

Organic Market sells high-quality products and grocery items that are unique to their area; in addition it offers delivery for customers who are unable to leave their home and a number of regular workshops regarding eating healthy. By offering these types of products and services, Organic Market is pursuing a _____ strategy.

D. differentiation ----------------- The differentiation strategy is to offer products or services that are of unique and superior value compared to those of competitors but to target a wide market.

The upper-level managers of Synergy Technology are meeting for the week to look at the long-term company goals and overall direction of the organization. The CEO has expressed her concern over the economy and has told her managers to look closely at the environment outside the organization before making decisions and to be future oriented. In this meeting, top managers of Synergy are _____.

D. doing strategic planning ---------- According to Figure 5.3, strategic planning includes long-term decisions about the overall direction of an organization. Managers need to pay attention to the environment outside the organization, be future oriented, and deal with uncertain and highly competitive conditions.

In the strategic-management process, the final step, maintaining strategic control, is the source of _____.

D. feedback and evaluation --------------------- The feedback loop, which provides an opportunity to monitor progress and revise actions, originates at the final step of the strategic-management process, to maintain strategic control (see Figure 6.1).

Abe and April are considering starting a family business, so their banker advised them to write a business plan because it helps an entrepreneur ____.

D. get financing and think through important details, and it better guarantees success --------------- Almost everyone starting a new business is advised to write a business plan. The reasons: Creating such a plan helps you get financing ("If you want us to invest our money, show us your plan"). It helps you think through important details ("Don't rush things; it's best to get the strategy right"). Finally, it better guarantees your firm will succeed. (A study of 396 entrepreneurs in Sweden found that a greater number of firms that failed never had a formal business plan.)

Christopher's Restaurant and Catering serves delicious vegetarian and vegan dishes. So when the local community became interested in eating a healthier diet, Christopher's benefited. The changing community attitudes are an example of a(n) _____ for Christopher's.

D. opportunity =--------------- Opportunities are outside matters. Opportunities could be market segment analysis, industry and competition analysis, impact of technology on organization, product analysis, governmental impacts, and other external matters.

Regarding the findings from a SWOT analysis, organizational strengths are ____.

D. skills and capabilities that give a company advantages in executing its strategies ------------------------ Organizational strengths are the skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its mission

Planning done by middle managers to determine what contributions their departments or similar work units can make with their given resources during the next 6 to 24 months is ____.

D. tactical planning ----------- Tactical planning is done by middle managers to determine what contributions their departments or similar work units can make with their given resources during the next 6 to 24 months.

Summarize the four decision making styles. Discuss with each style the extent to which a person has a high need for structure, control, and ambiguity in his or her life.

Directive: People with a directive style have a low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions.Analytical: People with an analytical style have a high tolerance for ambiguity and are oriented toward task and technical concerns in making decisions.Conceptual: People with a conceptual style have a high tolerance for ambiguity and are oriented toward people and social concerns in making decisions.Behavioral: People with a behavioral style have a low tolerance for ambiguity and are oriented toward people and social concerns in making decisions.

Delux Technology has a reputation of reliability and winning customer service, building this highly respected name brand over the last 15 years. As a speaker at a business conference, Steve, the CEO of Delux, told his audience that "We have built our reputation by changing little over the last several years, but consistently helping customers with great, caring service and a reliable product." Delux Technology utilizes a ____.

E. stability strategy A stability strategy is a grand strategy that involves little or no significant change.

With small businesses in very competitive industries, small differences in performance may affect that company's survival. So in this case, it is worth the effort to implement _______.

E. strategic planning Researchers conclude that "it may be that the small improvement in performance is not worth the effort involved in strategic planning unless a firm is in a very competitive industry where small differences in performance may affect the firm's survival potential."

Rashid, the CEO of Top Productions, was telling his new vice president of accounting that "In the past I had resistance to new ideas by people who felt that one of our plans threatens their influence or jobs. So when you tell your collections department that we just hired a collection agency to handle bad debt, you may have to sell your collections manager and his supervisors on using the agency and that nobody is going to be laid off." Selling middle and supervisory managers on changes to overcome their resistance is often a necessary part of _____.

E. strategy implementation Often strategy implementation means overcoming resistance by people who feel the plans threaten their influence or livelihood. Thus, top managers can't just announce the plans; they have to actively sell them to middle and supervisory managers.

According to Richard Branson, founder of Virgin Atlantic airlines, you can set a really hard goal, such as increasing your class study time 50%, which is "stretching yourself beyond what your mind might think is safe," also known as a(n) ____.

E. stretch goal ----------------- If you have outsize ambitions, you might set yourself a really hard goal (Increase study time 50%)—what's known as a stretch goal, "stretching yourself beyond what your mind might think is safe."

Ben attended a workshop hosted by SCORE, a SBA organization that counsels small-business owners on developing a good vision statement. In that workshop the speakers discussed how an organization's vision needs to describe _____.

E. what the company wants to become, and its long-term direction and strategic intent An organization's vision is its long-term goal describing what it wants to become, and it is expressed in a vision statement, which describes its long-term direction and strategic intent.

Setting target dates or deadline dates for when goals are to be attained is not always needed.

FALSE A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates. Goals should specify the target dates or deadline dates when they are to be attained. For example, it's unrealistic to expect an airline to improve its on-time arrivals by 10% overnight. However, you could set a target date of 3 to 6 months to achieve the goal.

A business model is a type of business plan.

FALSE A business model is not a type of business plan. A businessmodel outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses. A businessplan is a document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success. Here you would describe the basic idea behind your business.

A business plan is a management tool that contains a list of the competition, along with the competitors' product strengths and prices.

FALSE A business plan is a document that outlines a proposed firm's goals, the strategy for achieving them, and the standards for measuring success.

Quality Carwash is developing a new philosophy on company diversity. Like most organizations, Quality Carwash's reason for being is expressed in its diversity statement.

FALSE An organization's reason for being is expressed in a mission statement.

An organization's vision is its short-term goals.

FALSE An organization's vision is its long-term goal of what it wants to become.

Contingency planning is also known as time management and compartmentalization.

FALSE Contingency planning is also known as scenario planning and scenario analysis.

MBO works by the upper movement of goals through the organization; that is, top managers set general organizational objectives based on what individual employees and then departments voice as their objectives.

FALSE MBO works by cascading objectives down through the organization; that is, objectives are structured in a unified hierarchy, becoming more specific at lower levels of the organization. Top managers set general organizational objectives, which are translated into divisional objectives, which are translated into departmental objectives. The hierarchy ends in individual objectives set by each employee.

Don, a CEO, has decided to utilize MBO in his retail outlets across the Midwest. He made this decision because of its emphasis on converting general objectives into broad ones for the upper management of an organization.

FALSE Management by objectives (MBO) has spread largely because of the appeal of its emphasis on converting general objectives into specific ones for all members of an organization.

When Pablo and his partner wrote the mission for their fitness center, like any good mission statement it did not include descriptions of their customers or the products and services they offer.

FALSE Mission statements may include information about customers and products or services.

Strategic goals concentrate on objectives for handling competition and the competitive environment.

FALSE Strategic goals are set by and for top management and focus on objectives for the organization as a whole.

In the Porter's model for industry analysis, business-level strategies originate in the three primary competitive forces of the firm's environment: threats of new entrants, bargaining power of suppliers, and threats of substitute products.

FALSE Strategic-management expert Michael Porter suggested in his Porter's model for industry analysis that business-level strategies originate in five primary competitive forces in the firm's environment: (1) threats of new entrants, (2) bargaining power of suppliers, (3) bargaining power of buyers, (4) threats of substitute products or services, and (5) rivalry among competitors.

Sandra and her partner are involved in the time-consuming, yet vital process of choosing among different strategies and altering them to best fit the long-term goals of their preschool for the next three years. This process is known as goals formulation.

FALSE Strategy formulation is the process of choosing among different strategies and altering them to best fit the organization's needs.

Most strategies are compatible. Therefore, organizations need only to choose what strategies to follow.

FALSE Strategy requires trade-offs in competing. Some strategies are incompatible. Thus a company has to choose not only what strategy to follow but also what strategy not to follow.

Tactical goals, a type of strategic goal, are determined by and for nonmanagerial employees as part of the MBO process to help employees achieve organizational goals.

FALSE Tactical goals are set by and for middle managers and focus on the actions needed to achieve strategic goals. Strategic goals are set by and for top management and focus on objectives for the organization as a whole.

The concept that the economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately is known as reduced risk.

FALSE The concept of synergy is that the economic value of separate, related businesses under one ownership and management is greater together than the businesses are worth separately.

Brilliante Pens, a 125-year-old pen manufacturer, has continued to market very high-quality pens, many over $1,000, to executives globally, always maintaining its reputation of superior value. Brilliante is an example of an organization utilizing a cost-focus strategy.

FALSE The focused-differentiation strategy is to offer products or services that are of unique and superior value compared to those of competitors and to target a narrow market. Some luxury cars, like the Rolls-Royce, Ferrari, and Lamborghini, are so expensive that only a few car buyers can afford them. The cost-focus strategy is to keep the costs, and hence prices, of a product or service below those of competitors and to target a narrow market.

Corporate has decided that each of the store managers needs to develop clear goals for next year on how to increase revenue, cash flow, and market share. Geoff, like the other store managers, is also required to develop a specific plan of action on how he plans to accomplish these objectives in his local market. This is an example of an operating plan.

FALSE The goal should be followed by an action plan, which defines the course of action needed to achieve the stated goal, such as a marketing plan or sales plan. The operating plan, which is typically designed for a 1-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flow, and market share.

Recently Paul, the CEO of Stage Productions, felt the company's strategic plan is getting off track. Immediately he discussed this situation with the other members of the top management team and adjustments were made to correct the situation. To steer a strategic plan back on track, organizations should engage as few employees as possible and make the plan very specific, covering only the needed scenarios for the future.

FALSE To keep a strategic plan on track, make it very comprehensive, covering as many scenarios for the future as you can and engage people, keep it simple, stay focused, and keep moving toward your vision of the future.

Explain how strategic management works well for small as well as large organizations

One analysis of several studies found that strategic planning was appropriate not just for large firms—indeed, companies with fewer than 100 employees could benefit as well, although the improvement in financial performance was small. Nevertheless, the researchers concluded, "it may be that the small improvement in performance is not worth the effort involved in strategic planning unless a firm is in a very competitive industry where small differences in performance may affect the firm's survival potential." Example: Whereas the strategy of big e-commerce companies is to try to tightly connect consumers with discounted prices, free shipping, and easy-to-use apps, the strategy of small retailers—like Hello Hello Books in Maine—is to discourage price comparisons (as in creating "buy it where you try it" campaigns or refusing to carry popular items carried by big retailers), offer freebies, and attempt to establish a personal or emotional connection with customers. They also try to exploit the sympathies of shoppers to "support the little guy."

Summarize how a company would utilize two of Porter's four competitive strategies. Give examples of each.

Porter identified two "wide" strategies (cost-leadership and differentiation) that deal with broad markets, and two "narrow" strategies (cost-focus and focused-differentiation) that target specific markets. 1. Cost-leadership focuses on keeping costs and prices low for a wide market; examples are Dell, Timex, Home Depot, and Bic. 2. Differentiation stresses offering unique and superior products and services to a wide market; examples include Ritz-Carlton, Lexus, and PepsiCo. 3. Cost-focus emphasizes keeping low costs and prices, but to a narrow market and examples include low-cost products sold at discount store and discount regional gas station chains; examples are Terrible Herbst, Rotten Robbie, and Maverik chains in parts of the West. 4. Focused-differentiation stresses unique and superior products to a narrow market and examples include Rolls-Royce, Cartier, Turnbull & Asser, and niche books.

Discuss the textbook suggestions on ways of writing out and achieving your biggest goals. Give an example or two of the suggestions provided.

Research suggests that writing approximately two paragraphs outlining your goals will help you feel more confident. Some advice for writing out—and achieving—your biggest goals are as follows: (1) Make a concrete plan—which embeds your intentions firmly in your memory. (2) Break your goals into manageable bites—and set out clear steps that you can use to record and track your progress. (3) Put something of value on the line—such as money that will be forfeited if you're unsuccessful. (You can deposit the money at stickK.com.) (4) Bundle your temptations or rewards to your efforts—such as tying your reading of pleasurable trashy novels to when you do gym workouts. (5) Seek social support—pursue your goal with the help of a mentor or fellow strivers.

Choose an organization you are familiar with and develop a SWOT analysis for that organization, utilizing the four elements of a SWOT analysis for that organization. Give specific examples with the four elements.

SWOT analysis—also known as a situational analysis—is a search for the strengths, weaknesses, opportunities, and threats affecting the organization.Examples of a firm's strengths and weaknesses: work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, and other internal matters.Examples of a firm's opportunities and threats: market segment analysis, industry and competition analysis, impact of technology on organization, product analysis, governmental impacts, and other external matters (see Figure 6.2).

Explain strategic control. Summarize the suggestions of Bryan Barry to keep a strategic planning on track.

Strategic control consists of monitoring the execution of strategy and taking corrective action, if necessary. To keep a strategic plan on track, suggests Bryan Barry, you need to do the following: (1) Engage people. You need to actively engage people in clarifying what your group hopes to accomplish and how you will accomplish it. (2) Keep it simple. Keep your planning simple, unless there's a good reason to make it more complex. (3) Stay focused. Stay focused on the important things. (4) Keep moving. Keep moving toward your vision of the future, adjusting your plans as you learn what works

Sandra displays and sells paintings and local art in her gallery, and in the evenings she teaches art classes in the back of her studio, a business named Sandra's Art School. This is an example of related diversification.

TRUE An example of related diversification is an organization under one ownership that operates separate businesses related to one another.

In the retail industry, time-series forecasts, a type of trend analysis, are used to predict long-term trends such as seasonal variations, as in Christmas sales versus summer sales

TRUE An example of trend analysis is a time-series forecast, a hypothetical extension of a past series of events into the future. The basic assumption is that the picture of the present can be projected into the future. An example of trend analysis is a time-series forecast, which predicts future data based on patterns of historical data. Time-series forecasts are used to predict long-term trends, cyclic patterns (as in the up-and-down nature of the business cycle), and seasonal variations (as in Christmas sales versus summer sales).

To provide direction and momentum, encourage new ideas, and develop a sustainable competitive advantage are reasons why an organization should adopt strategic management and strategic planning.

TRUE Organizations should adopt strategic management and strategic planning for three reasons: They can (1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable competitive advantage.

A company's mission and vision is the foundation of an organization's planning and strategic management.

TRUE Planning and strategic management derive from an organization's mission and vision about itself, as shown in Figure 5.1.

When Joseph, a restaurant manager, plans, he sets goals and then decides how to achieve them. This is the definition of planning.

TRUE Planning is defined as setting goals and deciding how to achieve them. Another definition is planning is coping with uncertainty by formulating future courses of action to achieve specified results.

When setting a SMART goal, it should be results-oriented.

TRUE The five characteristics of a good goal are represented by the acronym SMART. A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates.

Professor Jones, a business teacher, meets with his students mid-quarter to give out midterm reports and discuss with students how to improve their grade for the remainder of term. Also, he likes to meet with his students each week after midterm to discuss how they are progressing on suggestions related to the midterm reports. Discuss how Professor Jones is using the planning control steps of the planning/control cycle with his students.

The planning/control cycle has two planning steps (1 and 2) and two control steps (3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results with the plan. (4) Control the direction by taking corrective action in two ways—namely, by correcting deviations in the plan being carried out, or by improving future plans.

Summarize the three sources strategic position emerges from. Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means, according to Porter, "performing different activities from rivals, or performing similar activities in different ways."Strategic position emerges from three sources:

1) Few needs, many customers: Strategic position can be derived from serving the few needs of many customers. Example: Jiffy Lube provides only lubricants, but it provides them to all kinds of people with all kinds of motor vehicles.(2) Broad needs, few customers: A strategic position may be based on serving the broad needs of just a few customers. Example: Wealth management and investment advisory firm Bessemer Trust focuses exclusively on high-net-worth clients.(3) Broad needs, many customers: Strategy may be oriented toward serving the broad needs of many customers. Example: National movie theater operator Carmike Cinemas operates only in cities with populations of fewer than 200,000 people.

Describe the characteristics of a good vision statement. List some of the questions that a good vision statement will ask. Although a vision statement can be short, it should be positive and inspiring, and it should stretch the organization and its employees to achieve a desired future state that appears beyond its reach.A good vision statement will ask:

1. Is it appropriate for the organization and for the times?2. Does it set standards of excellence and reflect high ideals?3. Does it clarify purpose and direction?4. Does it inspire enthusiasm and encourage commitment?5. Is it well articulated and easily understood?6. Does it reflect the uniqueness of the organization, its distinctive competence, what it stands for, what it's able to achieve?7. Is it ambitious? (See Table 6.1.)

Summarize how a company would utilize a cost-leadership strategy and a differentiation strategy. Provide an example of a company that uses each type of strategy.

A cost-leadership strategy is to keep the costs, and hence prices, of a product or service below those of competitors and to target a wide market. This puts the pressure on R&D managers to develop products or services that can be created cheaply, production managers to reduce production costs, and marketing managers to reach a wide variety of customers as inexpensively as possible. Firms implementing the cost-leadership strategy include Timex, computer maker Acer, hardware retailer Home Depot, and pen maker Bic.A differentiation strategy is to offer products or services that are of unique and superior value compared with those of competitors but to target a wide market. Because products are expensive, managers may have to spend more on R&D, marketing, and customer service. This is the strategy followed by Ritz-Carlton hotels and the makers of Lexus automobiles.

Paul, who is the CEO of a shoe retailer, needs to make a tough decision on if he should close 3 of the 200 stores that are unprofitable. Identify and explain how the decision tree will assist Paul in making this ethical decision.

A decision tree is a graph of decisions and their possible consequences, and is used to help with ethical decision making. Paul will ask several questions: Is the proposed action legal? If yes, does the proposed action maximize shareholder value? If yes, is the proposed action ethical? If no, would it be ethical NOT to take the proposed action?

Prior to opening her new restaurant, Nia is determining what items to offer on the menu, the anticipated profits and expenses, the tasks of various employees, and how those jobs will be handled. Nia is writing her ____.

A. business model ----------- The business model outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses.

George, a chef and owner of a popular restaurant, is always visiting his competition to observe how they are doing things in their restaurants. He told one of his managers that "I do this because I want to know what is going on. I am always concerned that one of our competitors will surprise us with a new service or menu item like us, but better." George is utilizing ___.

A. competitive intelligence ----------------------- Practicing competitive intelligence means gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately.

John, the owner of a lawn care service, likes to meet with his employees six months after their yearly evaluation to discuss how they are progressing on suggestions on and plans to improve their yearly job evaluation. At this point, by comparing the six-month results with the past evaluation, John is in the ______ steps of the planning/control cycle.

A. control ---- Controlling the direction includes the corrective action in step 4 of the cycle, which (a) can get a project back on track before it's too late by correcting deviations or (b) if it's too late, can provide data for improving future plans. In this case, at the end of the performance period, the information can be used to improve future plans.

Mountain Rescue Incorporated sells emergency safety and rescue products to ski patrols and rescue workers at prices that are below those of its competitors, who offer a larger line of products and focus on broader markets. Mountain Rescue Incorporated is pursuing a ____ strategy.

A. cost-focus ----------------- The cost-focus strategy is to keep the costs, and hence prices, of a product or service below those of competitors and to target a narrow market.

Regarding the results of a SWOT analysis, organizational opportunities are ____.

A. environmental factors that the organization may exploit for a competitive advantage -------------------- Organizational opportunities are environmental factors that the organization may exploit for competitive advantage.

Strategic position emerges from three sources: _____.

A. few needs, many customers; broad needs, few customers; broad needs, many customers -------------- Strategic position emerges from three sources: (1) few needs, many customers; (2) broad needs, few customers; and (3) broad needs, many customers.

Access Office Equipment has shifted to sales and service of laptops and PCs, and is no longer offering repairs on older types of office equipment because the demand for service on this equipment is low, costly, and the profits have dropped significantly. This is an example of an organization implementing a ______.

A. growth strategy ----------------- A growth strategy is a grand strategy that involves expansion, as in expanding sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served. In a variation of this strategy, it can acquire similar or complementary businesses.

A 2013 survey found that among managers, the use of _____ is popular.

A. mission and vision statements ---------------------- The 2013 survey found that the most widely used management tool in 2012 was used 12, even 14 years earlier—namely, strategic planning, thought to be effective by about 80% of the senior managers surveyed. The use of mission and vision statements also continued to be popular, also favored by about 80%.

Clothing maker Patagonia states that its purpose as an organization is to "build the best product, cause no unnecessary harm, [and] use business to inspire and implement solutions to the environmental crisis." This is the company's ___.

A. mission statement ---------- A mission statement expresses the purpose of the organization. The mission statement for clothing maker Patagonia is to "build the best product, cause no unnecessary harm, [and] use business to inspire and implement solutions to the environmental crisis."

With increasing competition in the restaurant business, Sal, owner of Mom's Pizza, is dealing with growing uncertainty. He is meeting with his managers to develop a future course of action to meet company goals. This process is known as _____.

A. planning ----------- Planning is coping with uncertainty by formulating future courses of action to achieve specified results. When you make a plan, you make a blueprint for action that describes what you need to do to realize your goals.

Many customers shop at Organic Foods because of the employees' extensive product knowledge. This is an example of the company's _____.

A. strengths ----------------------- Strengths are inside matters. Strengths could be work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, and other internal matters.

Define and describe analytics. Give an example of an organization using analytics and how they are using it.

Analytics, or business analytics, is the term used for sophisticated forms of business data analysis. One example of analytics is portfolio analysis, in which an investment adviser evaluates the risks of various stocks. Another example is the time-series forecast, which predicts future data based on patterns of historical data.

Billy told his boss, Gwen, that he is going to start training for the upcoming marathon to be healthier and to have more energy for work. When Gwen asked him about his running history, Billy said, "I really have never run before and don't exercise much. I just know I need to do something." Gwen told Billy, "You should start slowly, maybe setting smaller, realistic exercise goals that are achievable." Gwen is helping Billy with an achievable goal, a type of _____.

B. SMART goal ------ A SMART goal is specific, measurable, attainable, results-oriented, and has target dates. Only choice C has all of these characteristics. Whenever possible, goals should be achievable.

According to Harvard Business School professor Michael Porter, strategic positioning means _____ to achieve sustainable competitive advantage

B. distinctive positioning --------------- According to Porter, strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. "It means," he says, "performing different activities from rivals, or performing similar activities in different ways."

When an organization operates several businesses to spread the risk, such as a landscaping company that offers not only landscaping services but also lawn care, snow removal, and other services, that business is utilizing a ____ strategy.

B. diversification ------------- A diversification strategy means operating several businesses to spread the risk. A grocery store sells food, toiletries, pharmaceuticals, cards, flowers, and often more.

Quality Services is an organization that operates several companies that market food products, restaurant equipment, and paper and plastic products, and it even has a division that counsels restaurant owners, helping them become established. Quality Services is involved in a _____ strategy.

B. diversification ------------------- Diversification strategy means operating several businesses to spread the risk. Major entertainment/media companies follow this strategy.

Sue keeps a close eye on her company's internal and external environment to discover possible opportunities for new products and threats from competition, as soon as possible. This is an example of ____.

B. environmental scanning ------------------- Environmental scanning is careful monitoring of an organization's internal and external environments to detect early signs of opportunities and threats that may influence the firm's plans.

ABC Office Supply in Dayton sells high-quality, unique pens that are a real value to executives in the area. No other company in its area markets pens of such quality and value. By offering this type of product, ABC Office Supply is an example of a company utilizing a _____ strategy.

B. focused-differentiation ------------- The focused-differentiation strategy is to offer products or services that are of unique and superior value compared to those of competitors and to target a narrow market.

Research suggests that when writing out and achieving a person's biggest goals, it is important to ____.

B. make a concrete plan and break goals into manageable bites ------------------ Research suggests the advice for writing out and achieving a person's biggest goals are to (1) make a concrete plan, (2) break your goals into manageable bites, (3) put something of value on the line, (4) bundle your temptations or rewards to your efforts, and (5) seek social support.

Successful controlling within an organization, according to Bossidy and Charan, demands that managers build a foundation of controlling using the three core processes of _____.

B. people, strategy, and operations ---------------- Bossidy and Charan outline how organizations and managers can improve the ability to execute. Effective execution requires managers to build a foundation for execution within three core processes found in any business: people, strategy, and operations

This month, Alice, the branch manager of Quality Computer Sales, has heard several complaints from customers that Quality employees do not return calls. Today a good customer told Alice that "my phone calls and e-mails are returned after maybe a week or so." Hearing enough, Alice mandated that "all customer phone calls and e-mails must be returned within 24 hours." This new directive by Alice is an example of a(n) _____.

B. policy ------------ A policy is a standing plan that outlines the general response to a designated problem or situation.

Steve, a hotel general manager, has had great success using MBO. Hannah, his district manager, has found that his employees are highly motivated, and she believes that this is the case because in using MBO, Steve ____.

B. rewards his employees with compliments, raises, and other benefits as they meet their goals ----------- Because the purpose of MBO is to motivate employees, performance that meets the objectives should be rewarded with compliments, raises, bonuses, promotions, or other suitable benefits.

The upper management of a large national retail grocery store has passed along the new goals of improving customer service to the district managers. At this point, the district managers need to determine how the stores in their district will achieve top management's goal with the given resources during the next 6 to 24 months. This type of planning is known as ____.

B. tactical planning ----------- The strategic priorities and policies are then passed down to middle managers, who must do tactical planning.

The owners of Smith's Yard Mart, a family-owned garden center in a rural community, is concerned over the news that a large retailer with a garden center is building a new store on the other side of town. This new retailer is a(n) ____ for Smith's.

B. threat ------------ Threats are outside matters. Threats could be in the same categories as stated for opportunities: market segment analysis, etc. A competitor's new product may be a threat if it is likely to capture market share.

The process for motivating employee performance in which the manager and employee jointly set objectives for the employee, the manager develops action plans, the manager and employee periodically review the employee's performance, and the manager makes a performance appraisal and rewards the employee according to results is known as ____.

C. MBO -------- Management by objectives (MBO) is a four-step process for motivating employee performance.

A SWOT analysis is _____.

C. a search for the strengths, weaknesses, opportunities, and threats affecting an organization ------------------- SWOT analysis, also known as a situational analysis, is a search for the strengths, weaknesses, opportunities, and threats affecting an organization.

Instructor Services is a technology company that offers many IT services in highly populated southern Ohio. Services and products include computer training, support, monitoring, repair, network design, virus removal, and software upgrades. It even sells refurbished computers. The source of Instructor Services' strategic position is _____.

C. broad needs and many customers --------------- Strategy is the creation of a unique and valuable position. Strategic position emerges from three sources. One of the sources, like Instructor Services', is broad needs, many customers. This strategy may be oriented toward serving the broad needs of many customers.

The BCG matrix is a means of evaluating strategic business units on the basis of their _____.

C. business growth rates and share of the market ------------------------

The BCG matrix is a means of evaluating strategic business units on the basis of their _____.

C. business growth rates and share of the market ------------------------ The BCG matrix is a means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market.

In the BCG matrix, organizations that have slow growth but high market share, and income from them often finances stars and question marks, are ____.

C. cash cows --------------------- In the BCG matrix, cash cows have slow growth but high market share, and income from them often finances stars and question marks.

Alicia, a district manager for a global retailer, is traveling to different stores in her district to discuss with store managers how to increase profitability for the rest of the fiscal year. What is Alicia doing?

C. controlling the direction of the planning/control cycle -------- Controlling the direction includes comparing the results with the plan, improving future plans, and correcting deviations in the plan being carried out.

The primary reason for an organization to adopt planning and strategic management is to _____.

C. develop a sustainable competitive advantage ============== An organization should adopt planning and strategic management for three reasons: They can (1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable competitive advantage.

In order, the steps of the strategic-management process are _____.

C. establish the mission and vision; assess the current reality; formulate the grand strategy; implement the strategy; maintain strategic control ---------------------- The steps of the strategic-management process are establishing the mission and vision, assessing the current reality, formulating the grand strategy, implementing the strategy, and maintaining strategic control and the feedback loop (see Figure 6.1).

Elite Coffee and Bakery, a café that offers a relaxing environment to enjoy quality coffees, teas, soups, and other menu items, has a poster in the front of its restaurants that reads, "We will always provide a quality product to help our customers better meet the challenges of their day and always take the time to offer caring service one person at a time." This statement is Elite's ___.

C. mission statement ---------- A mission statement expresses the purpose of the organization. Whether the organization is for-profit or nonprofit, the mission statement identifies the goods or services the organization provides and will provide. Sometimes it also gives the reasons for providing them (to make a profit or to achieve humanitarian goals, for example).

The management of Quality Carpet Cleaning finalized the company's action plan for increasing its market share over the next few years. The management then set up a 12-month plan that defines how the organization will conduct its business based on the action plan, including clear sales targets for each week. The second plan is an example of a(n) _____ plan.`

C. operating ------------- The operating plan, which is typically designed for a one-year period, defines how you will conduct your business based on the action plan; it identifies clear targets such as revenues, cash flow, and market share.

A forecast is a(n) _____.

C. projection for the future ------------------ A forecast is a vision or projection of the future.

A goal is also known as a(n) ____.

D. objective --------- A goal, also known as an objective, is a specific commitment to achieve a measurable result within a stated period of time.

Contingency planning is also known as _____.

D. scenario planning and scenario analysis ----------------------- Contingency planning is also known as scenario planning and scenario analysis, which is the creation of alternative hypothetical but equally likely future conditions.

ABC Technology makes and sells only one product, a high-quality processor for mainframe computers, within its market, Silicon Valley, California; ABC utilizes a _____ strategy.

D. single-product ------------------ In a single-product strategy, a company makes and sells only one product within its market. Making just one product allows you to focus your manufacturing and marketing efforts just on that product. This means that your company can become savvy about repairing defects, upgrading production lines, scouting the competition, and doing highly focused advertising and sales.

Plans developed for activities that are not likely to be repeated in the future, such as plans for programs or projects, are _____.

D. single-use plans ------------ Single-use plans are plans developed for activities that are not likely to be repeated in the future. Such plans can be programs or projects.

Brenda, the district manager for Beautiful Florist, told the store managers in her district that she needs the sales goals for next year. A new manager, Paula, said, "I am going to sell over $100,000 in flowers next year." Brenda later told Paula that "I need to know specifically, in each category, how much you plan on selling." Brenda's request for a specific answer is an example of a _____.

E. SMART goal -------------- Whenever possible, goals should be measurable, or quantifiable. Some goals such as those concerned with improving quality, are not precisely quantifiable. In that case, something on the order of "Improve the quality of customer relations by instituting 10 follow-up telephone calls every week" will do. You can certainly quantify how many follow-up phone calls were made.

The planning process begins with two attributes: a mission statement, which answers the question _____, and a vision statement, which answers the question ______

E. What is our reason for being?; What do we want to become? ----------- The planning process begins with two attributes: a mission statement (which answers the question "What is our reason for being?") and a vision statement (which answers the question "What do we want to become?").

When an organization is able to get and stay ahead in the four areas of (1) being responsive to customers, (2) innovating, (3) quality, and (4) effectiveness, that company can develop ____.

E. a sustainable competitive advantage Sustainable competitive advantage occurs when an organization is able to get and stay ahead in four areas: (1) in being responsive to customers, (2) in innovating, (3) in quality, and (4) in effectiveness.

Tom is the CEO of Yost Tech, a large global manufacturing company, and he is having lunch with a longtime friend, Greg, owner of a small office supply store. Tom told Greg that "Strategic management and planning have really increased our success at Yost. I just read an article about an analysis of several studies that found that strategic management and planning _____."

E. benefits both small and large organizations One analysis of several studies found that strategic planning was appropriate not just for large firms. Companies with fewer than 100 employees could benefit as well, although the improvement in financial performance was small.`

Because of frequently changing competition and technology, a company's strategic planning may have to be done _____.

E. closer to every 1 or 2 years than every 5 years ---------- Strategic planning determines what the organization's long-term goals should be for the next 1 to 5 years with the resources it expects to have available. Today, because of the frequency with which world competition and information technology alter marketplace conditions, a company's strategic planning may have to be done closer to every 1 or 2 years than every 5.

Pedro, CEO of a successful IT company, is constantly reading press releases, ads, and news articles about his competition, and he regularly checks information about new competitive products and visits trade shows to study his competition. Pedro is involved in ____.

E. competitive intelligence ---------------------- Gaining competitive intelligence isn't always easy, but there are several avenues and, surprisingly, most of them are public sources including the public prints and advertising, investor information, and informal sources. A competitor's customer records are not available publicly, nor would they yield much information about upcoming plans.

Planning done by first-line managers to determine how to accomplish specific tasks with available resources within the next 1 to 52 weeks is known as _____.

E. doing operational planning ------------ Operational planning is done by first-line managers to determine how to accomplish specific tasks with available resources within the next 1 to 52 weeks.

More important than profit growth, stimulating innovation, customer loyalty, and finding qualified employees, global CEOs desire ____.

E. excellence in execution How important is execution to organizational success in today's global economy? A survey of 769 global CEOs from 40 countries revealed that "excellence in execution" was their most important concern, more important than "profit growth," "customer loyalty," "stimulating innovation," and "finding qualified employees."

In a late October marketing meeting, Theresa, the branch manager, told her marketing manager, Sal, that she needed two things by the end of the year from him: "First I want your goals for next year, and then I need your action plan to reach your goals, your ____."

E. marketing plan ------------ The goal should be followed by an action plan, which defines the course of action needed to achieve the stated goal, such as a marketing plan or sales plan.

Susan is a front-line supervisor in a grocery retailer. She desires to decrease the time she spends working on doing her daily closing work. This objective set by Susan and for her is an example of a(n) ____.

E. operational goal Operational goals are set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals

Goals that are set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals are called _______.

E. operational goals ------------ Operational goals are set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals.

Fast Delivery trains its truck loaders how to set the packages in the delivery vehicles, so that when delivery drivers are pulling packages off their trucks, they are organized in a specific order and with the label facing forward to reduce errors and save time. This precise method of loading a truck is known is a(n) ____.

E. procedure ------------ A procedure (or standard operating procedure) is a standing plan that outlines the response to particular problems or circumstances. For example, White Castle specifies exactly how a hamburger should be dressed, including the order in which the mustard, ketchup, and pickles are applied.

What is the assessment of the external environment? What are the critical issues facing the business? Can the business execute the strategy? According to Bossidy and Charan, these are some of the questions that should be addressed in a _____.

E. strong strategic plan ------------- According to Bossidy and Charan, a strong strategic plan addresses nine questions, among them: What is the assessment of the external environment? What are the critical issues facing the business? Can the business execute the strategy? Are the short term and long term balanced?

Andre, the plant manager, is interested in increasing the facility's productivity by utilizing MBO so that his managers and their employees are more focused on objectives. This month Andre asked his managers to concentrate on the two first steps of MBO, which are ____.

E. to jointly set objectives and have managers develop action plans -------- Management by objectives (MBO) is a four-step process in which (1) the manager and employee jointly set objectives for the employee, (2) the manager develops action plans, (3) the manager and employee periodically review the employee's performance, and (4) the manager makes a performance appraisal and rewards the employee according to results.

The basic assumption that the picture of the present can be projected into the future is the basis of a _____.

E. trend analysis ---------- A trend analysis is a hypothetical extension of a past series of events into the future. An example of trend analysis is a time-series forecast, which predicts future data based on patterns of historical data. Time-series forecasts are used to predict long-term trends, cyclic patterns (as in the up-and-down nature of the business cycle), and seasonal variations (as in Christmas sales versus summer sales).

Porter's competitive strategies of cost-leadership and differentiation focus on ____ markets, and the cost-focus and focused-differentiation strategies focus on ____ markets.

E. wide; narrow ---------------- Porter's four competitive strategies (also called four generic strategies) are (1) cost leadership (wide markets), (2) differentiation (wide markets), (3) cost-focus (narrow markets), and (4) focused-differentiation (narrow markets). (See Figure 6.3.)

Deon is opening a car wash, and he has approached SCORE, a SBA organization that assists small-business owners in setting up their companies. As a new business owner, the SCORE counselors would probably advise Deon to _____.

E. write a business plan ----------- Almost everyone starting a new business is advised to write a business plan.

A growth strategy involves the increase in employee knowledge.

FALSE A growth strategy is a grand strategy that involves expansion, as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served.

The basic assumption with a trend analysis is that the picture of the present can be projected into the future. This is a bad assumption, because even if you have enough historical data, it is unproductive to assume.

FALSE A trend analysis is a hypothetical extension of a past series of events into the future. The basic assumption is that the picture of the present can be projected into the future. This is not a bad assumption, if you have enough historical data, but it is always subject to surprises.

The upper-level managers of Deluxe Coffee are meeting to discuss the long-range goals and vision of the company. Like any organization, an organization should adopt planning and strategic management for two reasons: to provide direction and momentum and to encourage retention of high-value employees.

FALSE An organization should adopt planning and strategic management for three reasons: They can (1) provide direction and momentum, (2) encourage new ideas, and (3) develop a sustainable competitive advantage.

Because all work ultimately entails some human interaction, effort, or involvement, Bossidy and Charan stated that focusing on organization synergy is the most important process in strategy execution.

FALSE Because all work ultimately entails some human interaction, effort, or involvement, Bossidy and Charan stated that the people process is the most important. A company's overall ability to execute is a function of effectively executing according to three processes: people, strategy, and operations.

Bossidy and Charan suggested that making realism a priority begins with leaders first being cautious and then being realistic only if the situation allows this.

FALSE Bossidy and Charan proposed that there are seven essential types of leader behaviors that are needed to fuel the engine of execution. Insisting on realism is among them. Many people want to avoid or shade reality, hiding mistakes or avoiding confrontations. Making realism a priority begins with the leaders being realistic themselves, and making sure realism is the goal of all dialogues in the organization.

According to Burt Nanus, "powerful mission and vision statements challenge and inspire people in the organization and help to align their energies in multiple directions."

FALSE Burt Nanus says that a good vision statement helps align people's energies in a common direction, and prevents people from being overwhelmed by immediate problems because the vision statement helps distinguish what is truly important from what is merely interesting.

The Strategic Management Society voted Michael Porter, a Harvard Business School professor, the most influential living economist.

FALSE Certainly Michael Porter's status as a leading authority on competitive strategy is unchallenged. The Strategic Management Society, for instance, voted him the most influential living strategist.

Like planning, goals are arranged in a hierarchy known as a means-end chain because in the chain of management, the accomplishment of high-level goals is the means leading to the accomplishment of low-level goals or ends.

FALSE Goals are arranged in a hierarchy known as a means-end chain because in the chain of management, the accomplishment of low-level goals is the means leading to the accomplishment of high-level goals or ends.

Upper-level managers prepare the action plans for attaining objectives for all levels of management.

FALSE Once objectives are set, managers at each level should prepare an action plan for attaining them. Precisely because middle managers in particular are the ones who will be asked to understand and implement the strategies, they should also help to formulate them.

An analysis of several studies found that strategic planning was appropriate only for large firms and companies with more than 500 employees, where the improvement in financial performance was also quite large.

FALSE One analysis of several studies found that strategic planning was appropriate not just for large firms. Companies with fewer than 100 employees could benefit as well, although the improvement in financial performance was small.

Research has proven that writing out goals does not necessarily help a person feel more confident when entering a new group.

FALSE Research suggests that writing about two paragraphs outlining your goals will help you feel more confident and energetic when entering a new group.

Developing a program focused on individual aspects of an organization for short-term success is the focus of strategic planning.

FALSE Strategic planning is concerned with developing a comprehensive program for long-term success.

MBO works the best if the objectives from upper and middle management are given to subordinates by their manager, and the supervisor simply says, "Here are the objectives I want you to meet."

FALSE The purpose of MBO is to motivate rather than control subordinates. MBO probably works best if the objectives aren't simply imposed from above (Don't say, "Here are the objectives I want you to meet").

There are four types of objectives in MBO: improvement objectives, personal development objectives, diversity objectives, and maintenance objectives.

FALSE There are three types of objectives in MBO: improvement objectives, personal development objectives, and maintenance objectives (see Table 5.2).

When using MBO, managers should meet about once a year, either informally or formally, to review progress on meeting objectives.

FALSE You and your manager should meet reasonably often—either informally as needed or formally every three months—to review progress, as should you and your subordinates. Indeed, frequent communication is necessary so that everyone will know how well he or she is doing in meeting the objectives.

Summarize how a company would utilize a single-product strategy and a diversification strategy. Provide an example of a company that uses each type of strategy.

In a single-product strategy, a company makes and sells only one product within its market. Making just one product allows you to focus your manufacturing and marketing efforts just on that product. This means that your company can become savvy about repairing defects, upgrading production lines, scouting the competition, and doing highly focused advertising and sales. The risk, of course, is that if you do not focus on all aspects of the business, if a rival gets the jump on you, or if an act of God intervenes (for a florist, roses suffer a blight right before Mother's Day), your entire business may go under. The single-product strategy is seen all the time as you drive past the small retail businesses in a small town: There may be one shop that sells only flowers, one that sells only security systems, and so on.Diversification is operating several businesses in order to spread the risk. Diversification may be related or unrelated. Related diversification has three advantages: reduced risk—because if one product is weak, others may take up the slack, management efficiencies—because administration is spread over several businesses, and synergy, that the sum is greater than the parts. You see the diversification strategy at the small retailer level when you drive past a store that sells gas and food and souvenirs and rents DVD movies.

Define the concept of deciding to decide. Give an example with each of the three ways to help you make this decision.

In deciding to decide, a manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps. Three ways to help you decide whether to decide are to evaluate the following:1. Importance—"How high priority is this situation?" You need to determine how much priority to give the decision situation. If it's a threat, how extensive might prospective losses or damage be? If it's an opportunity, how beneficial might the possible gains be?2. Credibility—"How believable is the information about the situation?" You need to evaluate how much is known about the possible threat or opportunity. Is the source of the information trustworthy? Is there credible evidence?3. Urgency—"How quickly must I act on the information about the situation?" Is the threat immediate? Will the window of opportunity stay open long? Can actions to address the situation be done gradually?

Discuss how every organization has a mission and a vision, and how a company's approach to planning and its mission becomes translated into action plans.

Journalist Dick Leider writes, "Everyone wants a clear reason to get up in the morning." He continues, "As humans we hunger for meaning and purpose in our lives." And what is that purpose? "Life never lacks purpose." "Purpose is innate—but it is up to each of us individually to discover or rediscover it." An organization has a purpose, too—a mission. And managers must have an idea of where they want the organization to go—a vision.The approach to planning can be summarized in the diagram in Figure 5.2, which shows how an organization's mission becomes translated into action plans. An organization's reason for being is expressed in a mission statement. What the organization wishes to become is expressed in a vision statement. From these are derived strategic planning, then tactical planning, and finally operational planning. The purpose of each kind of planning is to specify goals and action plans that ultimately pave the way toward achieving an organization's vision.

Summarize management by objectives. Describe the three types of objectives used in MBO and give examples of each type

Management by objectives (MBO) is a four-step process in which (1) the manager and employee jointly set objectives for the employee, (2) the manager develops action plans, (3) the manager and employee periodically review the employee's performance, and (4) the manager makes a performance appraisal and rewards the employee according to results. The purpose of MBO is to motivate rather than control subordinates.

Tasty Sandwiches trains its employees to always put the sandwich condiments on the sandwich in the same order. Also, Tasty Sandwiches is known for treating its employees well and enjoys some of the lowest employee turnover in the industry. As a result, it is one of three companies being featured in a 20-minute piece on a national newscast to discuss this honor. Identify the types of standing plans and single-use plans. Discuss how Tasty Sandwiches might apply a standing plan and a single-use plan. Include examples in your response.

Standing plans are plans developed for activities that occur repeatedly over a period of time. Standing plans consist of policies, procedures, and rules.A policy is a standing plan that outlines the general response to a designated problem or situation. Example: "This workplace does not condone swearing." This policy is a broad statement that gives managers a general idea about what is allowable for employees who use bad language, but gives no specifics.A procedure (or standard operating procedure) is a standing plan that outlines the response to particular problems or circumstances. Example: White Castle specifies exactly how a hamburger should be dressed, including the order in which the mustard, ketchup, and pickles are applied.A rule is a standing plan that designates specific required action. Example: "No smoking is allowed anywhere in the building." This allows no room for interpretation.Single-use plans are plans developed for activities that are not likely to be repeated in the future. Such plans can be programs or projects.A program is a single-use plan encompassing a range of projects or activities. Example: The U.S. government space program (which was to be closed by the end of 2010) had several projects, including the Challenger project and the Hubble Telescope project.A project is a single-use plan of less scope and complexity than a program. Example: The space shuttle Discovery was one project in the government's space program.

When top-management commitment to MBO is high, the average gain in productivity is above average, and when upper management commitment is low, the average gain in productivity is low.

TRUE "When top-management commitment [to MBO] was high," said one review, "the average gain in productivity was 56%. When commitment was low, the average gain in productivity was only 6%."

A 2013 survey found that the use of mission and vision statements is popular among managers.

TRUE A 2013 survey found that the most widely used management tool in 2012 was used 12, even 14 years earlier—namely, strategic planning, thought to be effective by about 80% of the senior managers surveyed. The use of mission and vision statements also continued to be popular, also favored by about 80%.

Donna, the sales manager, asked Al, one of her sales representatives, "Why did you set next year's sales goal at only 90 copiers? This year you are on track to sell 85 copiers, and I believe with your ability, selling 120 copiers would be challenging, but I believe it is realistic and possible." Donna's belief about setting a challenging, yet realistic and attainable goal for Al is an example of a SMART goal.

TRUE A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates. Goals should be challenging, of course, but above all they should be realistic and attainable. It may be best to set goals that are quite ambitious to challenge people to meet high standards. Always, however, the goals should be achievable within the scope of the time, equipment, and financial support available.

When Donna asked her sales representatives for their sales goals for the year, Al, one of her salespeople, said, "I am going to sell more copiers next year than this year." Donna's response to Al was, "Specifically, how many copiers do you plan on selling?" Al replied, "I'm going to sell 90 copiers." Al's specific answer is an example of a SMART goal.

TRUE A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates. The example is not measurable

A business model outlines what customer needs the company will satisfy, the operations of the business, the company components and functions, and the projected revenue and expenses.

TRUE A business model outlines the need the firm will fill, the operations of the business, its components and functions, as well as the expected revenues and expenses.

Tom, the store manager in a hardware store, routinely sets specific sales and cost targets for his store, which he promises to achieve in a certain period of time. These specific objectives are known as goals.

TRUE A goal, also known as an objective, is a specific commitment to achieve a measurable result within a stated period of time.

The way a particular problem or circumstance is handled, such as the company policy of always returning customer phone calls and e-mails within 24 hours, is a standard operating procedure.

TRUE A procedure (or standard operating procedure) is a standing plan that outlines the response to particular problems or circumstances.

The production plant for Ace Manufacturing has been located in the same place for over 100 years. It has just completed its new factory, which includes its new corporate offices. The planning required for moving of Ace into a new facility is a single-use plan.

TRUE A program is a single-use plan encompassing a range of projects or activities. For example, the U.S. government space program had several projects, including the space shuttle project and the Hubble Telescope project.

A stability strategy involves little or no significant change.

TRUE A stability strategy is a grand strategy that involves little or no significant change.

At a time when many retailers are offering men's suits at cheap prices and reducing their quality to compete, Suave Clothing has continued to live by the tagline "Quality never goes out of style," believing that offering a quality product to the customer always will mean success. It has also aggressively focused on ways to reduce costs. Suave clothing is utilizing a stability strategy.

TRUE A stability strategy is a grand strategy that involves little or no significant change. Example: Without much changing its product, Timex watches decided to stress the theme of authenticity ("Wear it well") over durability (the old slogan was "It takes a licking and keeps on ticking"). In an age of smartphones and other gadgets, when people don't need a watch to tell the time, the new theme of authenticity makes sense, according to the NewYorkTimes, "as consumers watching what they spend seek out products with longevity whose ability to stand the test of time implies they are worth buying."

Every five years, the upper-level managers of ABC Technology meet to develop a new large-scale action plan that will set the direction for the company for the next five years. In that meeting the managers are developing a strategy

TRUE A strategy is a large-scale action plan that sets the direction for an organization.

Sustainable competitive advantage occurs when an organization is able to get and stay ahead in being responsive to customers, in innovating, in quality, and in effectiveness.

TRUE A sustainable competitive advantage is the ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them.

A trend analysis is a hypothetical extension of a past series of events into the future.

TRUE A trend analysis is a hypothetical extension of a past series of events into the future.

Frank is interested in rewriting the vision for his antique shops, and he wants his employees and his business to grow. So the vision for Frank's stores should be positive and inspiring, and it should stretch the company and his employees to achieve objectives that they believe are not possible.

TRUE A vision should be positive and inspiring, and it should stretch the organization and its employees to achieve a desired future state that appears beyond its reach.

Peter, the night supervisor in a fast-food restaurant, was given the responsibility by Mr. Jones, the general manager, of planning a number of the normal daily tasks by his workers over the next 3 months. This type of planning by Peter is known as operational planning.

TRUE According to Figure 5.3, operational planning helps direct daily tasks of nonmanagerial personnel, and decisions are often predictable, following a well-defined set of routine procedures.

Writer Geoffrey Colvin stated that successful managers need to be able to make large, painful decisions and radically alter their business design, such as "exiting businesses, firing people, admitting you were wrong (or at least not omniscient)."

TRUE Because of fast-spreading world conditions, such as the threat of products becoming commodities, rapidly increasing productivity, and global overcapacity, managers must be able to make difficult decisions. The writer Geoffrey Colvin puts it as, "The future will demand ever more people with the golden trait, the fortitude to accept and even seek psychic pain."

Competitive intelligence, SWOT analysis, forecasting, benchmarking, and Porter's five competitive forces are all tools that can be used to gather data and make projections to develop a grand strategy.

TRUE Competitive intelligence, SWOT analysis, forecasting, benchmarking, and Porter's five competitive forces are all tools that can be used to gather data and make projections to develop a grand strategy.

Mona, the CEO of an auto dealership, told her managers that "based on the high sales for this year, the forecast for next year looks very good." So after completing their budget for the upcoming year, based on the forecast that predicts continued strong sales, Mona and her managers are developing a plan in case sales drop unexpectedly. This type of planning is known as contingency planning.

TRUE Contingency planning, also known as scenario planning and scenario analysis, is the creation of alternative hypothetical but equally likely future conditions.

In a management meeting, Paula, the CEO of ABC Industries, mentioned that deadlines are a great motivator. She believes this because the entire purpose of making a plan and setting goals is to deliver to a customer specified results within a specified period of time. Therefore, Paula can claim that deadlines are a great motivator.

TRUE Deadlines are as essential to goal setting in business as they are to your college career. Because the whole purpose of planning and goals is to deliver to a client specified results within a specified period of time, deadlines become a great motivator, both for you and for the people working for you.

The responsibility for the development of an organization's mission statement, which outlines the company's competition and how it will ethically compete in the market, is the responsibility of top management and the board of directors.

TRUE Determining the mission is the responsibility of top management and the board of directors. It is up to them to formulate a mission statement, which expresses the purpose of the organization.

Maria's Mart is a small store located along a major interstate highway that sells gas and diesel, food, souvenirs, DVD movies, and a wide variety of other items. There is even a café inside the store. Maria's Mart is an example of a diversification strategy.

TRUE Diversification is operating several businesses in order to spread the risk. You see this at the small retailer level when you drive past a store that sells gas and food and souvenirs and rents DVD movies.

Mr. Smith, CEO of an auto dealership, has been working on the two planning steps of the planning/control cycle with his managers. To do this, Mr. Smith and his managers need to make their plan and then carry out the plan.

TRUE In Figure 5.5, the two planning steps are (1) make the plan, and (2) carry out the plan.

In a single-product strategy, a company makes and sells only one product within its market, such as a farmer who grows and sells only corn.

TRUE In a single-product strategy, a company makes and sells only one product within its market.

With the first step in management by objectives, it is necessary to have back-and-forth negotiation between managers and their subordinates to make the objectives practicable.

TRUE In the first step of MBO, you sit down with your manager and the two of you jointly set objectives for you to attain. It's necessary to have back-and-forth negotiation to make the objectives practicable.

In the planning/control cycle, managers take corrective action by correcting deviations in the plan being carried out or by improving future plans.

TRUE In the planning/control cycle, managers take corrective action by correcting deviations in the plan being carried out or by improving future plans (see Figure 5.5).

Paula is the store manager for a national grocery retailer, and she received the yearly tactical plan from Greg, her district manager. Paula is meeting with her department managers to plan how to implement the specific tasks outlined in Greg's plan for the next year. This type of planning by Paula is operational planning.

TRUE Middle managers pass along their tactical plans to first-line managers to do operational planning, whereas first-line managers determine how to accomplish specific tasks with available resources within the next 1 to 52 weeks

Humberto, the owner of a small floral shop, is worried because he recently heard that a popular local grocery store, just two blocks away, is adding a floral department soon. Humberto is concerned because new competitors can take away customers from existing organizations.

TRUE New competitors can take away customers from existing organizations, which is called the threat of new entrants in the model. Example: Kraft Macaroni & Cheese is a venerable, well-known brand but is threatened from the low end by store brands, such as Walmart's brand, and from the high end by Annie's Organic & Natural Mac and Cheese.

Often strategy implementation means overcoming resistance by people who feel the plans threaten their influence or livelihood.

TRUE Often implementation means overcoming resistance by people who feel the plans threaten their influence or livelihood. This is particularly the case when the plans must be implemented rapidly, since delay is the easiest kind of resistance there is.

A forecast is a vision or projection of the future.

TRUE Once they've analyzed their organization's strengths, weaknesses, opportunities, and threats, planners need to do forecasting for making long-term strategy. A forecast is a vision or projection of the future.

Once Instructor Services, an IT company, analyzes the company's strengths, weaknesses, opportunities, and threats, managers will be able to do forecasting to develop a long-term strategy.

TRUE Once they've analyzed their organization's strengths, weaknesses, opportunities, and threats, planners need to do forecasting for making long-term strategy. A forecast is a vision or projection of the future.

Competitive intelligence means gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately.

TRUE Practicing competitive intelligence means gaining information about one's competitors' activities so that you can anticipate their moves and react appropriately. If you are a manager, one of your worst nightmares is that a competitor will surprise you with a service or product.

The top management of Finest Papers has set a strategic goal of cutting costs over the next three years. Upper management is researching possible roadblocks within the company's structure and culture and if the right people and control systems are available to execute their strategic plans to accomplish this goal. This is an example of strategy implementation.

TRUE Putting strategic plans into effect is strategy implementation

A and B Supply, a small family-owned company, sells high-priced pens, some as expensive as $2,500, to executives in its area. Very few companies have chosen to market this product, and A and B has enjoyed record profits over the last 25 years. A and B Office Supply is an example of a company that would typically not choose not to utilize strategic planning.

TRUE Research results indicate that for small companies strategic planning is probably not worth the effort unless the company is in a highly competitive industry where small differences in performance may affect the firm's survival potential.

The managers of a small bakery decided to do a SWOT analysis to study the strengths and weaknesses within the organization and the external environment so they can better formulate strategies in pursuit of the firm's mission. This defines the benefits of a SWOT analysis.

TRUE SWOT analysis should provide a realistic understanding of the organization in relation to its internal and external environments so you can better formulate strategy in pursuit of the firm's mission.

Single-use plans are plans developed for activities that are not likely to be repeated in the future.

TRUE Single-use plans are plans developed for activities that are not likely to be repeated in the future.

Standing plans are plans developed for activities that occur repeatedly over a period of time.

TRUE Standing plans are plans developed for activities that occur repeatedly over a period of time and consist of policies, procedures, and rules.

Jerome's Italian Pizza is in a very competitive industry, and its upper management believes that by focusing on the strategy of lowering costs and prices, providing quicker delivery, and providing good customer service, this will result in higher profits. This is an example of a strategic goal.

TRUE Strategic goals are set by and for top management and focus on objectives for the organization as a whole. For example, top managers of Dallas-based Southwest Airlines ensure that the airline is highly profitable by following the general strategy of (1) keeping costs and fares down, (2) offering a superior on-time arrival record, and (3) keeping customers happy.

Strategic management involves all managers within the organization.

TRUE Strategic management is a process that involves managers from all parts of the organization—top managers, middle managers, and first-line managers—in the formulation, implementation, and execution of strategies and strategic goals to advance the purposes of the organization.

Jiffy Lube provides only lubricants, but it provides them to all kinds of people with all kinds of motor vehicles. This is an example of how a strategic position can result from serving the few needs of many customers.

TRUE Strategic position emerges from three sources: Few needs and many customers, broad needs and few customers, and last, broad needs and many customers. With the source of few needs, many customers, strategic position can be derived from serving the few needs of many customers. Example: Jiffy Lube provides only lubricants, but it provides them to all kinds of people with all kinds of motor vehicles.

According to Harvard Business School professor Michael Porter, strategic positioning "means performing different activities from rivals, or performing similar activities in different ways" to achieve sustainable competitive advantage.

TRUE Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. According to Harvard Business School professor Michael Porter, strategic positioning "means performing different activities from rivals, or performing similar activities in different ways" to achieve sustainable competitive advantage.

Donna's Restaurant is a popular café that specializes in home-cooked meals, friendly service, and a menu that contains vegan and vegetarian dishes, something no other restaurant in the area does. Donna's is engaging in strategic positioning by offering the unique menu items of vegan and vegetarian dishes.

TRUE Strategic positioning means performing different activities from rivals, or performing similar activities in different ways.

When the CEO of Tasty Coffee and Bakery dictated that all company districts needed to increase their profitability, district managers across the country focused on improving customer service ratings in their stores by offering customer service training. This goal by the district managers of customer service ratings is an example of a tactical goal.

TRUE Tactical goals are set by and for middle managers and focus on the actions needed to achieve strategic goals.

In general, the BCG matrix suggests that an organization will do better in fast-growing markets in which it has a high market share rather in slow-growing markets in which it has a low market share.

TRUE The BCG matrix is a means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market. In general, the BCG matrix suggests that an organization will do better in fast-growing markets in which it has a high market share rather in slow-growing markets in which it has a low market share.

Greg, owner of Comfortable Home Heating and Air, has been having problems with employee morale. After investigating, he found that some of his department managers were using management by objectives, but the accounting and sales managers were not utilizing MBO in their departments. For the MBO program to be successful, it has to be put in place throughout the entire organization.

TRUE The MBO program has to be put in place throughout the entire organization. That is, it cannot be applied in just some divisions and departments; it has to be done in all of them

Lily, the CEO of Beautiful Flowers, is interested in using strategic management in her florist shops nationwide. When she attended the workshop on strategic management, the speaker suggested to first establish the mission and the vision, second to assess the current reality, and third to formulate the grand strategy as the first three steps in the strategic-management process.

TRUE The first three steps of the strategic-management process are (1) establish the mission and the vision, (2) assess the current reality, and (3) formulate the grand strategy (see Figure 6.1).

Instructor Services, a technology training company, realizes that with the closing of factories in the area, there will be a large increase in the number of individuals needing computer training to prepare for the workplace. This is an opportunity for Instructor Services.

TRUE The increased number of individuals needing computer training to prepare for the workplace represents an opportunity for the company because it is an environmental factor that the organization may exploit for competitive advantage.

The planning/control cycle has two planning steps: make the plan and carry out the plan.

TRUE The planning/control cycle has two planning steps: make the plan and carry out the plan (see Figure 5.5).

The planning/control cycle loop exists for each level of planning—strategic, tactical and operational.

TRUE The planning/control cycle, the planning/control cycle loop exists for each level of planning—strategic, tactical, and operational.

To develop a grand strategy, you need to gather data and make projections, using the tools of competitive intelligence, SWOT analysis, forecasting, benchmarking, and Porter's five competitive forces.

TRUE To develop a grand strategy, you need to gather data and make projections, using the tools of competitive intelligence, SWOT analysis, forecasting, benchmarking, and Porter's five competitive forces.

When utilizing MBO, the manager and employee jointly set objectives for the employee, the manager develops action plans, the manager and employee periodically review the employee's performance, and the manager makes performance appraisals and rewards the employee according to the results.

TRUE When utilizing MBO, the manager and employee jointly set objectives for the employee, the manager develops action plans, the manager and employee periodically review the employee's performance, and the manager makes a performance appraisal and rewards the employee according to the results.

Alison, the vice president of marketing for a global company, is planning what contributions she and her department will make to the organization over the next 24 months. This type of planning is operational planning

Tactical planning is determining what contributions middle managers and their departments or similar work units can make with their given resources during the next 6 to 24 months.

Dave, CEO of a chain of family-style restaurants, is interested in implementing the strategic management process in his restaurants. Summarize the strategic management process and explain how Dave would execute each of the steps and the feedback loop of the strategic management process in his restaurant.

The strategic-management process involves five steps:1. Establish the mission and vision.2. Assess the current reality.3. Formulate the grand strategy.4. Implement the strategy.5. Maintain strategic control.The feedback loop comes out of strategic control. Through control, managers monitor progress and take corrective action early and rapidly when things go awry, returning to earlier steps to fix problems.

Summarize the three common grand strategies.

These are the three common grand strategies:1. A growth strategy is a grand strategy that involves expansion—as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served. Examples: It can improve an existing product or service to attract more buyers. It can increase its promotion and marketing efforts to try to expand its market share. It can expand into new products or services. It can acquire similar or complementary businesses.2. A stability strategy is a grand strategy that involves little or no significant change. Examples: It can go for a no-change strategy (if, for example, it has found that too-fast growth leads to foul-ups with orders and customer complaints). It can go for a little-change strategy (if, for example, the company has been growing at breakneck speed and feels it needs a period of consolidation).3. A defensive strategy, or a retrenchment strategy, is a grand strategy that involves reduction in the organization's efforts. Examples: It can reduce costs, as by freezing hiring or tightening expenses. It can sell off (liquidate) assets—land, buildings, inventories, and the like. It can gradually phase out product lines or services. It can declare bankruptcy.