MCE Test 2
horizontal merger
joining of two firms in the same industry
accounting
keeping records •Daily sales, expenses, and profits •Inventory control, customer records, and payroll Helps with: •Tax planning and financial forecasting •Choosing sources of financing and wiring requests for funds
percentage of 4 functions of management middle managers
leading 36% organizing 33% planning 18% controlling 13%
percentage of 4 functions of management front line
leading 51% organizing 24% planning 15% controlling 10%
Positional Sources of Social Power
legitimate, reward, coercive
The strategic direction of a firm is at the
locus of a complex set of complex systems
3 skills of managers distribution top management
mainly human and conceptual, less technical
3 skills of managers distribution front line
mainly technical and human, less conceptual
human resources
managing your employees •Deciding labor needs •Recruiting and selecting the right people •Training and development for growth •Rewards and culture for retention •Motivating for performance
Strong leadership with no management leads to...
meaningless change and chaos in organizations.
effectiveness
meeting the objective
vertical merger
the joining of two companies involved in different stages of related business
Yerkes-Dodson Law
the principle that performance increases with arousal only up to a point, beyond which performance decreases
Accountability
the requirement of one person to answer to a higher authority
Enacted Values
the values you see a company actually enacting/practicing
3 levels of management
top managers, middle managers, front line managers/team leaders
Efficiency
using the smallest amount of resources possible
Espoused Values
what an organization says it values
sustained competitive advantage
when the advantage persists despite the best efforts of competitors to match or surpass
value congruence
when these two align
Reward Power
•: Ability to control the allocation of rewards valued by others, or remove negative sanctions (e.g., professor can reward with grades)
core values
•A set of values that guide the actions and behaviors of organizational members typically 4-8
Objectives
•An organization's specific performance targets •The specific results management wants to achieve
four functions of management organize
•Arranging tasks, people, and other resources to accomplish the work -creating structure, allocating resources
successful differentiation allows a firm to
•Command a premium price for its products •Increase unit sales •Gain buyer loyalty
revamping of the value chain system to increase differentiation
•Coordinate with downstream channel allies •Enhance customer value •Coordinate with suppliers •Address customer needs
Mission
•Describe the organization's current business operations and purpose
values should be at the....of decisions
core everything based off of values
more efficient loses....
effectiveness
what happens when there is a lack of value congruence
employees: •Reduced affective commitment •Turnover •Recruitment problems consumers: •Compromised reputation •Impact on brand loyalty •Word-of-mouth
3 skills of managers distribution middle management
equal of technical, human, conceptual
Strategy must...
evolve over time •Seek enduring edge, not temporary advantage •Internal and external business environments are complex systems, so...things change! •Shifts in market conditions and buyer needs, disruptive innovations, advancing technology, changing political or economic climate, unexpected competitor moves, emerging market opportunities, new ideas, etc. •Must adjust strategy in response to unfolding events Crafting strategy is not a one-time event, rather a work-in-progress.
consumer market
•people with unsatisfied wants and needs who have both the resources and willingness to buy Know your customers and adapt quickly to ever-changing demands •Must listen, listen, listen! • It is not enough to get customers, you have to keep them!
proactive
•planned initiative to improve the company's financial performance and secure a competitive edge •Deliberate Strategy
angels
•private individuals who invest their own money in potentially hot new companies before they go public
reactive
•responding to unanticipated developments and fresh market conditions •Emergent Strategy Thus, a firm's actual (or realized) strategy is a combination.
Dwight Eisenhower
"Plans are useless, but planning is indispensable" Significant value in planning ü Forces you to get creative about possible futures ü Stimulates learning and creativity ü Aids in contingency planning and risk management But strict adherence can lead to failure ü Only works in complicated systems ü Assumed future must be actual future ü Cannot accurately predict in complex systems
to create a clear and compelling vision
1. imagine the invisible 2. paint the picture 3. engage others 4. test your vision
strategy competing differenty aims to
1.Appeal to buyers in ways that sets a company apart from rivals 2.Staking out a market position that is not crowded by strong competitors
5 generic competitive strategies
1.Broad low-cost strategy 2.Broad differentiation strategy 3.Focused low-cost strategy 4.Focused differentiation strategy 5.Best-cost strategy
what to avoid when using broad differentiation strategy
1.Easily copied strategies 2.Low value in unique attributes 3.Overspending on differentiation 4.Trivial improvements 5.Over-differentiating (e.g., over designed) 6.Charging too high of a premium
cost drivers
1.Economies of scale 2.Learning and experience 3.Capacity utilization 4.Supply chain efficiencies 5.Lower-cost inputs 6.Production technology and design 7.Communication systems and information technology 8.Bargaining power 9.Outsourcing or vertical integration 10. Incentive systems and culture cost of input factors, economies of scale, learning-curve effects, experience-curve effects
pitfalls to avoid when using broad low cost strategy
1.Getting carried away with price cutting 2.Relying on easily replicable cost reduction approaches 3.Becoming too fixated on cost reduction 4.Not spending when needed Should continuously invest in complex, cost-saving technologies.
avenues for delivering superior value
1.Lower buyers' overall costs 2.Incorporate tangible features that increase satisfaction 3.Incorporate intangible features that increase satisfaction in noneconomic ways 4.Signal the value (e.g, high prices, fancy packaging, high luxury facilities, etc.)
two avenues for achieving differentiation
1.Managing the value chain to create differentiating attributes 2.Revamp the firm's overall value chain to increase differentiation
a mission clearly states the...
1.Organization's products/services 2.Constituent group or market the org serves 3.Constituent needs that org seeks to satisfy 4.Unique identity of org
two avenues for achieving cost advantage
1.Perform value chain activities more cost-effectively than rivals 2.Revamp the firm's overall value chain to eliminate or bypass some cost-producing activities
when does broad low-cost strategy work best
1.Price competition among rival sellers is vigorous 2.Rival firm's products are essentially identical 3.Difficult to achieve product differentiation that creates value for buyers 4.Most buyers use product in the same way 5.Low switching costs for buyers example: dish sponges, most ppl just buy cheapest, hard to differentiate
value drivers
1.Product features and performance 2.Customer services 3.Production R&D 4.Technology and innovation 5.Input quality 6.Employee skills, training, & experience 7.Sales and marketing 8.Quality control processes Actions, processes, or results that are needed to deliver a desired value.
two avenues for competitive advantage
1.Provide product or service that buyer values more highly than others (higher perceived value) 2.Produce product or service more efficiently (lower costs)
vision tells people
1.Where the organization is headed 2.Why its moving in that stated direction 3.Makes members want to do everything they can to help get it there
when does broad differentiation strategy work best
1.buyer needs and uses of product are diverse 2.There are many ways to differentiate 3.Few rivals are following similar approach 4.Technology change and is fast-paced
strategy is stage...
3 Crafting a strategy to achieve objectives and vision
Coercive Power
: Ability to harm, penalize, or punish someone (e.g., a mugger with a gun demanding your
venture capitalists
: individuals or companies that invest in new business in exchange for partial ownership of those businesses
Organization
A group of people who work together to achieve some specific purpose
planning
A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives. •Mission, Vision, and Values •Strategic and financial objectives
Manager
A person that uses influence to set and achieve goals. A person who directly supervises, supports, and activates work effort to achieve performance goals of individuals, groups, and organizations.
Vision
A solid vision creates an idealized future state for your organization that everyone is motivated to pursue wholeheartedly
three skills of managers conceptual
Ability to: think analytically work with abstract ideas solve complex problems
three skills of managers technical
Ability to: use expertise perform tasks with proficiency apply strong skill set to operations
three skills of managers human
Ability to: work well with others relate to people develop social capital build and manage relationships behavioral flexability
Stakeholder
An individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project/business
vision: test your vision
Ask yourself: ØIs my vision easy for other people to see? ØDoes my vision stimulate their interest and generate spontaneous energy? ØAre people sharing my vision? ØIs my vision realistic? ØIs my vision so clear that people can easily understand and share? ØWould everyone continue to pursue this vision even in my absence? ØAvoiding should nots and implementing shoulds?
characteristics for a vision should not
Be generic, vague, or run on and on Be a complicated plan with quantitative objectives or detailed action steps Use overly broad language, bland language, or superlatives Emphasize immediate tangible benefits or dwell on the present Be a wishful fantasy
top manager business
CEO President Vice President
Expert Power
Capacity to influence others by possessing knowledge or skills that they value. Based on a perception of competence (e.g., Einstein)
Financial Objectives
Communicate management's goals for financial performance Examples: •An X percent increase in annual revenues •Annual increases in after-tax profits of X percent •Annual increases in earnings per share of X percent •Profit margins of X percent
front line manager business
Department head Supervisor Team leader
stages of executing strategy
Developing a strategic vision, mission, and core values - Setting Objectives - Crafting a strategy to achieve objectives and vision - Executing strategy - Monitoring developments, evaluating performance, and initiating corrective adjustments NOTE: Revise as needed (consider: actual performance, changing conditions, new opportunities, and new ideas)
middle manager business
Division manager Regional manager Plant manager
middle manager nonprofit
Division manager Regional manager Plant manager
top manager nonprofit
Executive director President, VP Administrator
visions need to be...
Focused enough to guide decisions and actions and General enough to allow innovation and creativity in strategies for attaining it
vision: engage others
Get others to buy into the vision. How do you get others on board? •Let them know exactly how they fit in •Create freedom •Give them something to talk about
people must accept the goal
Increasing commitment to goals Make public Self-set goal, or part of the process Increase self-efficacy Feedback is necessary!
four functions of management lead middle manager
Influences groups, departments, or divisions Ex: Establishing a sense of "we-ness"
four functions of management lead front line
Inspires individuals or small teams Ex: Relationship building
Strategic Objectives
Lay out target outcomes concerning a company's market standing, competitive positions, and future business prospects Examples: •Winning X percent market share •Achieving lower overall costs than rivals •Overtaking key competitors on product performance, quality, or customer service •Deriving X percent of revenues from the sale of a new product introduced within past five years
four functions of management control front line
Looks at individuals or small team performance Ex: Annual employee performance review
four functions of management control top manager
Looks at performance of entire organization Ex: Annual organizational performance analysis
four functions of management control middle manager
Looks at the performance of groups, departments, or divisions Ex: Quarterly performance audits
management is about....leadership is about...
Management is about seeking order and stability. Leadership is about seeking adaptive and constructive change.
characteristics for a vision should
Meaningful - appeal to the values, hopes and ideals of members Make it memorable Be simple and idealistic Keep it focused Picture a desirable future Forward thinking and directional Emphasize distant ideological objectives Include "wiggle room" Be challenging but realistic (credible)
four functions of management lead top manager
Mobilizes entire organization Ex: Creating a clear and compelling vision; creating culture
four functions of management organize top manager
Organizes entire organization Ex: Organizational structure
four functions of management organize middle manager
Organizes groups, departments, or divisions Ex: Distribution of resources among departments
four functions of management organize front line manager
Organizes individuals or small teams Ex: Day-to-day tasks of employees
a mission statement could probaby include
Philosophy What are the organization's basic beliefs, values, and ethical priorities? Self-concept What are the organization's major competitive advantages or core competencies? What sets you apart from the rest? Survival How will the organization sustain? Is the firm committed to growth, financial stability, profitability, etc.?
four functions of management planning middle manager
Plans for groups, departments, or divisions Ex: Quarterly department production goals
four functions of management planning front line
Plans for individuals or small teams Ex: Daily employee sales goals
four functions of management planning top manager
Plans for the entire organization Ex: Company long-term strategic goals
a mission statement has to include
Products or services What are the organizations major products or services? What do you provide? Population Who are the organization's customer or targeted population? Markets Where does the organization compete geographically?
a mission statement could if necessary include
Public image How responsive is firm to societal and environmental concerns? View on employees Are employees a valuable asset to the organization?
SMART goals
Specific Measurable Attainable Relevant Time-based 1.Use clear, specific language 2.Start your goal statement with "To + Verb" 3.Write your goals down and put them where you will see them! and read them often! 4.Share your list with people who care 5.Review and revise your list when necessary 6.ALWAYS THINK AND SPEAK IN THE AFFIRMATIVE
establishing direction
Stages 1 and 2 Developing a strategic vision, mission, and core values - Setting Objectives
vision: paint the picture
Such that everyone else can see the same picture in the same way that you have in your mind. Must be crystal clear. Tips and tricks: •Think about what they're thinking about •Carefully choose your signs, symbols, and language •Consider length •Relentlessly repeat
strategy
The coordinated set of actions that managers take to outperform organization's competitors and achieve superior success Provides direction and guidance What you should do What you should not do
Strategy
The coordinated set of actions that managers take to outperform organization's competitors and achieve superior success requires: Acumen Planning Visioning Courage
Goal Setting Theory
The types of goals we set impact our achievements need specific and difficult goals
vision: imagine the invisible
This state does not exist, it is not tangible. As the leader, it is up to you to look ahead and see this positive future state in your mind's eye. Must consider: •The needs of the people •What the people value •What is going to get the people moving
Upside-down pyramid
View of organizations that puts consumers at the top and positions upper levels of management as supporters of lower levels of management top managers support -> middle managers support -> first line managers -> support non managerial serve -> consumer
Values
beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission
Chain of accountability
bottom up: non managerial -> first line managers -> middle managers -> top managers -> board of governance
two biggest factors of 5 generic competitive strategy
broad or narrow market lower costs or differentiation
Governance
business: board of directors nonprofit: board of trustees
strategy is about
competing differently •Cannot simply copy •Must have distinctive element It is about doing what rival firms don't do or can't do
strategy is...
complex •Unpredictability, lack of reproducibility, lack of control, role of serendipity, and inability to rely on complicated knowledge, skill, and training •Strategy designed with complexity in mind has a much greater success of leading to long-term competitive success •Flexible and creative •Leverages connections •Reacts to patterns Takes advantage of complexity mindset and systems thinking
Abandoned Strategy Elements
components of a company's deliberate strategy that fail in the marketplace -deliberate strategy is proactive strategy elements
three skills of managers
conceptual, human, technical
operations
deciding on logistics •Manufacturing plan •Plant size •Machinery required •Production capacity • •Supply chain considerations •Inventory and inventory control-methods •Location of plants and distributors, etc. •Transportation costs
front line manager nonprofit
department head Supervisor Team leader
positional social power derived from
derived from the formal roles (i.e., particular office or rank) you hold in an organization, a social system, or society
personal social power derived from
derived from your unique personal attributes and skills that lead others to respect, idolize, adore, trust, like and/or view you as an expert and knowledgeable
crowdfunding
donation based or debt-investment (peer-to-peer lending)
economies of scale
factors that cause a producer's average cost per unit to fall as output rises ex: using 1 bottle with different labels rather than 5 different bottles
Influence
having an effect or impact on the actions, behavior, opinions, etc., of another or others
Management has to do with...
hitting targets and achieving goals
low-cost leadership
industry's lowest cost producer
Management and leadership are....
influence processes that move a group of individuals towards accomplishing shared goals Has everything to do with other people
three roles of managers
informational, interpersonal, decisional
we want to use tangible/intangible elements strategy
intangible bc its harder to replicate
comglomerate merger
joining of firms in completely unrelated industries
acquisition
one company's purchase of the property and obligations of another company
percentage of 4 functions of management top managers
organizing 36% planning 28% leading 22% controlling 14%
Social Power sources
personal and positional
four functions of management
planning, organizing, leading, controlling
Strategy is partly ___ and partly ___
proactive and reactive
Realized Strategy
proactive and reactive strategy
Deliberate Strategy Elements
proactive strategy elements Planned initiatives plus ongoing strategy elements continued from prior periods
Emergent Strategy Elements
reactive, adaptive elements New strategy elements that emerge as managers react adaptively to changing circumstances
proactive and reactive strategy combined is
realized strategy
personal sources of social power
referent, expert
merger
result of two firms forming one company
value chain
set of activities that an organization carries out to create value for its customers •Primary (e.g., operations, service, etc.) and support (e.g., infrastructure, HRM, etc.) activities
Competitive advantage
some type of edge over rivals in attracting buyers and competing with competitive forces •Sustainable when the advantage persists despite the best efforts of competitors to match or surpass
Strong management with no leadership leads to....
stagnant, inflexible organizations.
three roles of managers informational
•Exchanging and processing information •Ex: monitoring and disseminating
Most organizations have these undesirable characteristics in their visions
•Generic, feel-good statements •"To become a global leader and the first choice for customers in every market we serve" •General market quests •"to be the market leader in..." •"to be the most innovative..." •Vague and unrevealing statements •"To fill the earth with light and the warmth of hospitality" (Hilton)
four functions of management lead
•Inspiring people to work hard to achieve high performance
three roles of managers interpersonal
•Interacting with people •Ex: building relationships, influencing
purpose of objectives
•Purpose: to convert the vision and mission into specific performance targets
managers and leaders similarities and diff
•MANAGER Influence, groups, goals •Based on position and authority (positional power) • • •Planning and budgeting •Organizing and staffing •Controlling and problem solving LEADER •Influence, groups, goals •Does not need to be associated with position (personal power) •Establishing vision •Aligning people •Motivating and inspiring
four functions of management control
•Measuring performance and taking action to ensure desired results Measuring and collecting metrics of work performance Comparing performance to standards or goals Taking corrective action where needed Note: directly related to planning
objectives must be ......
•Must be specific and quantifiable or measurable •Concrete, measurable objectives: ü Focus organizational attention and align actions throughout organization ü Serve as yardsticks for tracking organizational performance and progress ü Motivate employees to expend greater effort and perform at a high level
How are managers different from non-managerial employees
•Non-managerial employees: •Work directly on tasks •Not responsible for overseeing others' work •Managers: •Set objectives for individuals, groups, and organizations •Direct and oversee the activities of others May have work duties not related to overseeing others
Referent Power:
•Occurs when others idolize, identify with, and/or are inspired by the person (e.g., celebrities, social media influencers).
broad differentiation strategy
•Offer unique product attributes that a wide range of buyers find appealing and worth paying more for •Can pursue from many angles •Unique taste, superior service, engineering design and performance, product reliability, high fashion design, technology leadership, etc.
broad low-cost strategy
•Produce goods or services for a broad base of buyers at a lower cost than rivals •Cost advantage over rivals •Meaningfully lower, not simply absolute lowest •Two options for low-cost advantage: 1.Lower price for higher market share of price sensitive consumer 2.Increase efficiency for higher profit margin
revamping of the value chain system to lower costs
•Selling direct to consumers •Bypass activities and costs of distributors •Streamlining operations •Eliminate low-value-added work steps and activities • •Reducing materials-handling and shipping costs •Have suppliers locate plants and warehouses near company's own facilities
four functions of management planning
•Setting performance objectives and deciding how to achieve them Establishing goals, objectives, and direction of individuals, groups, or the organization Deciding how you will achieve the objectives
SBA
•Small Business Administration (SBA): US government agency that advises and assists small businesses by providing management, financial advice, and loans
Management
•The process of getting things done effectively and efficiently, with and through people.
three roles of managers decisional
•Using information to make decisions •Ex: resource allocation, address opportunities
financing
•You need money to start a business! •Potential sources of capital: •Personal, family, or business associates •Banks and finance institutions (lenders)
Productivity
•amount of output generated given amount of input
Legitimate Power
•associated with having status or formal job authority. There is a mutual agreement that people in certain roles can request certain behaviors of others (e.g., police officers)
