Ch. 2

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Emergent strategy:

-Any unplanned strategic initiative -Bubbles up from the bottom of the organization -Can influence and shape a firm's overall strategy

Organizational Core Values have two important functions:

-Form the groundwork for long-term success -Help keep the company on track

Resource-allocation process (RAP)

-How a firm allocates resources based on policy -Helps shape realized strategy

Formulation Stage (of Scenario Planning):

-Identify strategic options. -Develop contingency plans. -Use analytical tools. -Build future options.

Serendipity

-Random events, surprises, coincidences -Has an effect on strategic initiatives

Autonomous actions

-Strategic initiatives undertaken by employees -In response to unexpected external or internal opportunities

Key Aspects of an Effective Vision:

1. Captures an organization's aspiration 2. Identifies what it ultimately wants to accomplish 3. Motivates employees to aim for a target 4. Leaves room for contributions

Two Foundational Ingredients for Competitive Advantage:

1. Inspiring vision & mission statements 2. An effective strategic management process

Which of the following summarizes the difference between a firm's vision and mission?

A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision.

What are the functions within Each SBU?

Accounting, finance, human resources, product development, operations, manufacturing, marketing, and customer service

Strategic initiatives:

Any activity a firm pursues to explore and develop -New products and processes -New markets -New ventures

What is the strategic management process?

a method put in place by strategic leaders to formulate and implement a strategy.

In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the

CEO Top-down strategic planning is a rational, top-down process through which executives attempt to program future success

Realized strategy:

Combination of intended and emergent strategy

Business Strategy:

Cost leadership, differentiation, or integration

Strategic Commitments are actions to achieve the mission that are...

Costly Long-term oriented Difficult to reverse

Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented? Customer-oriented visions tend to be more flexible when adapting to changing environments. Customer-oriented visions tend to be more stable when dealing with changing environments. Customer-oriented visions tend to have a more myopic view of changing environments. Customer-oriented visions tend to have a more short-range view of changing environments.

Customer-oriented visions tend to be more flexible when adapting to changing environments.

Product-Oriented Vision Statements:

Define a business in terms of a good or service provided Ex: Typewriter business or railroads

Customer-Oriented Vision Statements:

Define a business in terms of providing solutions to customer needs Ex: Google: "To organize the world's information and make it universally accessible and useful."

Why is a Vision important?

Employees tend to feel part of something bigger than themselves. Helps employees find meaning in their work Allows employees to experience a greater sense of purpose

Implementation Stage (of Scenario Planning):

Execute dominant strategic plan. •Use the option that best matches the current reality •Modifications made as needed

Mission statements: _________ the vision will be accomplished

HOW

Mission:

HOW do we accomplish our goals?

Corporate Strategy:

Industry, markets, and geography

Shortcomings Top-down Strategic Planning:

May not adapt well to change Formulation separate from implementation Information flows top-down (one-way) The leaders' future vision can be wrong

Upper Echelon's Theory:

Organizational outcomes reflect the values of the top management team and leadership actions reflect Age, education, and career experiences, Personal interpretations of situations, etc..

__________________ ____________ are best described as the ethical standards and norms that govern the behavior of individuals within a firm.

Organizational values

SBU Example: Sam's Club

Rosalind Brewer, CEO of Sam's Club Reports to Walmart's CEO, C. Douglas McMillon Pursues a different strategy than Walmart Offers higher-quality products and brand names

According to the upper-echelons theory, the organizational outcomes of a company primarily reflect the values of the

The CEO

Intended strategy:

The outcome of a rational and structured top-down strategic plan

Strategic Leadership:

The use of power and influence to direct the activities of others and pursue organizational goals

Visions Can Help Create Competitive Advantage if...

The vision is customer-oriented Internal stakeholders help define the vision Organizational structures align with the vision statement

Which of the following statements about product-oriented visions is true? They allow firms to take a need-based approach to their goals. They tend to force managers to take a myopic view of the landscape They define a business in terms of providing solutions to customers. They allow companies to effectively adapt to changing environments.

They tend to force managers to take a myopic view of the landscape Product-oriented vision defines a business in terms of a good or service provided.

Strategy as Planned Emergence:

Top Down AND Bottom Up -Bottom-up strategic initiatives emerge -Evaluated & coordinated by management

Top-down Strategic Planning:

Top management attempts to program future success through detailed analysis of: •Prices •Costs •Margins •Market demand •Head count •Production runs

Vision statements: what an organization __________ to accomplish

WANTS

Vision:

WHAT do we want to accomplish?

Values:

What commitments do we make? What guardrails do we put in place? How can we act legally and ethically in pursuit of the vision and mission?

Strategic Management Process is foundational for sustainable....

competitive advantage

Strategic leadership pertains to the use of power and influence by ______________ ___________________ to direct the activities of others when pursuing an organization's goals.

corporate executives

Mission statements describe what an organization ________

does -The products and services it provides

Functional Strategy:

how to implement a chosen business strategy

Strategy Implementation:

how work gets done

Mission statements also describe the __________ in which it competes

markets

A positive relationship between vision statements and firm performance is more likely to exist when stakeholders are isolated from defining and revising the visions. vision statements are equivalent to listening to the customers. visions are product-oriented. organizational structures are aligned with the firm's vision statement.

organizational structures are aligned with the firm's vision statement.

Values are ______________ to guide behavior and provide employees with a moral compass

principles

Strategy Effectiveness is dependent on...

rate of change firm size

The CEO of Juliet Computers was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable computers that could be bought by low-income households. Which of the following does this example demonstrate?

upper-echelons theory

Strategy Formulation:

where & how to compete

Strategic Business Units (SBUs)

•Standalone divisions of a larger conglomerate •Has profit-and-loss responsibility •Receive guidelines from corporate headquarters Implement business strategy

What Is Strategic Leadership?

•Successful use of power and influence •Directing the activities of others •Pursuing an organization's goals Enabling organizational competitive advantage

Scenario Planning:

•Uses a top-down approach •Asks "what if" questions -Top management envisions different scenarios. -Then they derive strategic responses. •Consider optimistic and pessimistic futures


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