Principles of Management Test 2 (chapters 5-8)
Clan Culture
(family-type organization) internal focus values flexibility rather than stability encourages collaboration among employees
cost-focus strategy
(low cost/ narrow market) keep the costs of a product below those of competitors and target a narrow market
cost-leadership strategy
(low cost/wide market) keeps the costs, and hence prices, of a product or service below those of competitions and target a wide
focused-differentiation strategy
(unique product / narrow market) offer products that are unique and superior value compared to those of competitors and target a narrow market
differentiation strategy
(unique product / wide market) offer products that are of unique and superior value compared to those of competitors but target a wide market
three principles of strategic positioning
1. Strategy is the creation of a unique and valuable position 2. Strategy requires trade-offs in competing 3. Strategy involves creating a "fit" among activities
porter's 5 competitive forces
1. Threat of new entrants 2. Bargaining power of suppliers 3. Bargaining power of buyers 4. Threat of substitute products or services 5. Rivalry among competitors
strategic-management process
1. establish the mission, vision, and values statements 2. assess the current reality 3. formulate corporate, business, and functional strategies 4. execute the strategies 5. maintain strategic control
3 sources of strategic positioning
1. few needs, many customers 2. broad needs, few customers 3. broad needs, many customers
four steps in decision making
1. identify problem or opportunity 2. think up alternative solutions 3. evaluate alternatives & select a solution 4. implement & evaluate the solution chosen
Level 3 of organizational culture
Basic assumptions - Core values of the organization
Level 1 of Organizational Culture
Observable Artifacts -Physical manifestations such as a manner of dress, awards, myths and stories about the company. -Visible behavior exhibited by managers and employees
satisficing model
One type of nonrational decision-making model; managers seek alternatives until they find one that is satisfactory, not optimal
SMART goals
Specific, Measurable, Attainable, Realistic, Time
VIRO
Value, Rarity, Imitability, Organization
decision support system
a computer-based information system that provides a flexible tool for analysis and helps managers focus on the future
predictive modeling
a data-mining technique used to predict future behavior and anticipate the consequences of change
modular structure
a firm assembles product chunks, or modules, provided by outside contractors
organizational structure
a formal system of task and reporting relationships that coordinates and motivates an organization's members so that they can work together to achieve the organization's goals
delphi technique
a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas
Strategy or strategic plan
a large-scale action plan that sets the long-term goals and direction for an organization
heros
a person whose accomplishments embody the values of the organization
benchmarking
a process by which a company compares its performance with that of high-performing organizations
bounded rationality
a process of making decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity
strategy innovation
the ability to reinvent the basis of competition within existing industries
coordinated effort
the coordination of individual effort into group-wide effort
middle management
the level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling
Adhocracy culture
external focus values flexibility adaptive, creative, and quick to respond to changes in the marketplace
Vertical Integration
firm expands into businesses that provided the supplies it needs to make its products or that distribute and sell its products
conceptual decision making
focus on people or social aspects, broad perspective, consider many options, rely on intuition
Market Culture
focused on the external environment values stability and control driven by competition and a strong desire to deliver results
for-profit organizations
formed to make money, or profits, by offering products or services
nonprofit organizations
formed to offer services to some clients, not to make a profit
span of control
the number of people reporting directly to a given manager; narrow or wide
the hollow or network structure
the organization has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster
organizational socialization
the process by which people learn the values, norms, and required behaviors of an organization
strategy formulation
the process of choosing among different strategies and altering them to best fit the organization's needs
big data analytics
the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information
common purpose
gives everyone an understanding of the organization's reason for being
Hierarchy Culture
has an internal focus values stability and control over flexibility formalized, structured work environment
division of labor
having discrete parts of a task done by different people
top management
highest level of management, consisting of the president and other key company executives who develop strategic plans
trend analysis
hypothetical extension of a past series of events into the future
tolerance for ambiguity
indicates the extent to which a person needs structure or control in his or her life
growth strategy
involves expansion, as in sales revenues, market share, number of employees, or number of customers
stability strategy
involves little or no significant change
defensive stragety
involves reduction in the organization's efforts
vision statement
it is a clear sense of the future and the actions needed to get there
matrix structure
least common combines functional and divisional chains of command in a grid so that there are two command structures: vertical and horizontal
intuition model
making a choice without the use of conscious thought or logical inference "trust your gut"
hierarchy of authority
making sure the right people do the right things at the right time
first-line management
managers who directly supervise non management employees
competitive intelligence
means gaining information about competitor's activities do that you can anticipate their moves and react appropriately
stories
narrative based on true events repeated- and sometimes embellished upon- to emphasize a particular value
consensus
occurs when members are able to express their opinions and reach agreement to support the final decision
diversification
operating several businesses in order to spread rist
virtual organization
organization whose members are geographically distant, usually working via e-mail, collaborative computing, and other computer connections
divisional structure
people with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions
functional structure
people with similar occupational specialties are put together in formal groups
Three Core Processes of Business
people, strategy, operations
value orientation
reflects the extent to which a person focuses on either task and technical concerns or on people and social concerns when making decisions
person-organization (PO) fit
reflects the extent to which your personality and values match the climate and culture in an organization
Planning
setting goals and deciding how to achieve them
business analytics
sophisticated forms of business data analysis
sustainable competitive advantage
stays ahead in four areas 1. in being responsive to customers 2. in innovating 3. in quality 4. in effectiveness
"Big Data"
stores of data so vast that conventional database management systems cannot handle them
behavioral decision making
supportive, receptive to suggestions, show warmth, prefer verbal to written, avoid conflict, people-oriented
horizontal design
teams or workgroups, either temporary or permanent, are used to improve collaboration and work on shared tasks by breaking down internal boundaries
brainstorming
technique used to help groups generate multiple ideas and alternatives for solving problems
integration
tendency of the parts of an organization to draw together to achieve a common purpose/goal
organizational culture
the set of shared, taken-for-granted implicit assumptions that a group holds and that determine how it perceives, thinks about, and reacts to its various environments
differentiation
the tendency of the parts of an organization to disperse and fragment
grand strategy
translates the brand mission and vision statements into a corporate strategy which explains how the organization's mission is to be accomplished
evidence-based management
translating principles based on best evidence into organizational practice, bringing rationality to the decision-making process
mutual-benefit organizations
voluntary collectives whose purpose is to advance members' interests
value statement
what the company stands for: its core priorities, the value its employees embody, and what its product contribute to the world
contingency design
- The process of fitting the organization to its environment - Three factors to consider: 1. Environment: mechanistic versus organic 2. Environment: differentiation versus integration 3. Link between strategy, culture, and structure
Decison Tree
-a graph of decisions and their possible consequences -used to create a plan to reach a goal
operating plan
-a plan that breaks long-term output into short-term targets or goals -turns strategic plans into actionable short-term goals and action plan
strategic management
-a process that involves managers from all parts of the organization in the formulation and the implementation of strategies goals - organization's mission and vision
forecasting
-a vision or projection of the future
functional-level strategy
-applies to the key functional departments or units within the business units -focus more on tactical issues
mechanistic organizations
-centralized hierarchy of authority -many rules and procedures -specialized tasks -formalized communication -few teams or task forces -narrow span of control, taller structures
action plan
-define the course of action (the tactics) needed to achieve a stated goal -contains a projected date for completing the desired activities for each tactic
rational decision making
-explains how managers should make decisions -assumes managers will make logical decisions that will be optimum in furthering the organization's best interests -also called the classical model
Business-Level Strategy
-focuses on individual business units or product/service lines
corporate-level strategy
-focuses on the organization as a whole
long-term goal
-generally referred to as strategic goals -tend to span 1-5 years and focus on achieving the strategies identified in a company's strategic plan
short-term goals
-sometimes referred to as tactical or operational goals, or just plain goals -generally span 12 months and connected to strategic goals in a hierarchy known as a means-end chain
Planning and Strategic Management
1. Establish the organization's mission and vision 2. Formulate the grand strategy 3. Formulate the strategic plans, then the tactical and operational plans 4. Implement the strategic plans 5. Control the strategy
planning/control cycle
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- (1) Correcting deviations & (2) Improving future plans
blue ocean strategy
A company creates a new, uncontested market space that makes competitors irrelevant, creates new consumer value, and decreases costs
organic organization
Decentralized hierarchy of authority Few rules and procedures Shared tasks Informal communication Many teams or task forces Wider span of control, flatter structures
Level 2 of Organizational Culture
Espoused Values: Explicitly stated values and norms
what drives an organizational culture?
Founder's values Industry and business environment National culture Organization's vision and strategies Behavior of leaders
authority
accountability, responsibility, and delegation; line versus staff positions
rites and rituals
activities and ceremonies that celebrate important occasions and accomplishments
symbols
an object, an act, a quality, or event that conveys meaning to others
Nonrational Decision Making
assumes that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions
strategic positioning
attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company
simple structure
authority is centralized in a single person with few rules and low work specialization
Analytical Decision Making
careful, take longer, respond well in new or uncertain situations
single-product strategy
company makes and sells only one product within its market good: can focus on just one product bad: you are vulnerable in the market
virtual structure
company outside a company that is created "specifically to respond to an exceptional market opportunity" that is often temporary
Porter's Four Competitive Strategies
cost-leadership, differentiation, cost-focus, focused-differentiation
contingency planning (scenario planning // scenario analysis)
creation of alternative hypothetical but equally likely future conditions
directive decision making
efficient, logical, practical, systematic, action-oriented
mission statement
expresses the purpose of organization