MGMT 2 Exam Textbook

What kind of questions are asked during after-action review

"What was the intent?" "What actually happened?" "What did we learn?" Encourages people to take responsibility for their efforts and accomplishments

5 steps in the decision-making process

1) Identify & define problem 2) Generate & evaluate alternative solutions 3) Decide on preferred course of action 4) Implement decision 5) Evaluate results

4 steps of the central process

1) Set performance objectives and standards 2) Measure actual performance 3) Compare actual performance with objectives and standards 4) Take corrective action as needed

Satisficing decisions

1st alternative that appears satisfactory

Long-range plans

3 or more years

San José Copper and Gold Mine collapse in Chile

32 miners & their shift leader, Luis Urzúa, "Most difficult moment was when the air cleared and we saw the rock" Urzúa Trapped 2,300 feet below the surface for 69 days After the rescue shaft was completed, Urzúa was the last out

Strategic intent

A clear sense of where you are going in the future

Why aren't decision-making processes complete until results are evaluated

A decision isn't much good if it doesn't achieve the desired outcomes or causes undesired side effects

Analytical competency

Ability to evaluate & analyze info to find meaningful patterns, make decisions, & solve real problems

Information competency

Ability to locate, retrieve, organize, & display info of potential value to decision making & problem solving

Technological competency

Ability to understand new technologies and use them to their best advantage

Intuitive thinkers

Abstract & unstructured situations Idealistic, prone to intellectual and theoretical positions Logical Impersonal Avoid details

Good Planning Makes Us and Our Organizations...

Action oriented Priority oriented Advantage oriented Change oriented Control oriented

Strategy

Action plan for allocating resources to accomplish long-term goals

An individual with flexibility

Adjusts career and life plans to fit new and developing opportunities

Sample Web-Based Business Models

Advertising model Brokerage model Community model Freemium model Infomediary model Merchant model Referral model Subscription model

What program was pioneered by the US army & now used in many other settings

After-action review

Cooperation strategies focus on

Alliances & partnerships

Nonmonetary budgets

Allocate resources such as labor, equipment, and space

Fixed budget

Allocates a fixed amount of resources for a specific purpose

Organizing

Allocating and arranging resources to accomplish tasks

Flexible budget

Allows resources to vary in proportion with various levels of activity

Ajax Case Step 2

Alternatives considered—close plant on schedule, delay closing & try again to sell it to another firm, offer to sell plant to employees & local interests, close plant & offer employees transfers to other Ajax locations, close plant, offer transfers, help employees find new jobs around Murphysboro

Sensation feelers

Analysis and human relations Realistic Open communicators Sensitive to feelings

1st to market with an innovative product linking design, technology, and customer appeal

Apple & its iPad

Example of backward vertical integration

Apple Compute Firm bought chip manufacturers to give it more privacy and sophistication in developing microprocessors

Who are tactics in sports teams decided by

Assistant coaches, in consultation with the head coach

Example of feedforward controls

At fast-food restaurants preliminary control of ingredients plays an important role in quality programs Suppliers of hamburger buns produce them to exact specifications

Bureaucratic control

Authority, policies, procedures, job descriptions, budgets, and day-to-day supervision ensure people behave in ways consistent with organizational interests

Good management of goal setting helps to

Avoid problems, keep goals clear, make them challenging but attainable, allow participation, set and discuss goals frequently, and allow room for failure

Why was poor contingency planning in the news when debates raged over how BP managed the disastrous Deepwater Horizon oil spill in the Gulf of Mexico

BP failed to contain the spill quickly & to anticipate & have contingency plans in place to handle such a crisis

Feedforward/preliminary controls,

Before work begins Forward-thinking and proactive approach We should all try to follow

Analytical competency examples

Being able to digest & sort through info, even large amounts of data, & use it to make good decisions that solve problems

Competitive advantage

Being able to outperform rivals

Complacency trap

Being passively carried along by the flow of events

Relative comparisons

Benchmark actual performance against other people, work teams, or organizations

Planning helps us to deal with such tendencies by challenging the status quo and reminding us not to always accept things as they are. One way to do this is through

Benchmarking

1 reason we underestimate our creativity is too much focus on

Big-C creativity

Management by exception

Boss looking at department performance compared to previous performance to determine why the department fell short in some areas so they can prescribe corrective action Giving attention to high-priority situations that show the greatest need for action

Brokerage model

Bring buyers and sellers together for online business transactions and takes a percentage from the sales (e.g., eBay, Priceline)

Multidomestic strategy example

Bristol Myers, Procter & Gamble, and Unilever all vary their products to match consumer preferences in different countries and cultures

Intuitive feelers

Broad and global issues Insightful Tend to avoid details Comfortable with intangibles Flexibility and human relationships

Vertical integration

Business acquires its suppliers (backward vertical integration) or its distributors (forward vertical integration)

Liquidation

Business closes down and sells its assets to pay creditors

B2B business strategies

Business-to-business. Link businesses with members of their supply chains

B2C business strategies

Business-to-consumer Use Web and apps to link businesses directly with customers

Strategic control

CEO and other top managers must stay in close with the strategy, know whether it is successful, and recognize when the strategy needs to be changed or discarded

Engineering comparisons

Carefully measure routine to establish the times expected

3 different conditions or problem environments in which managers make decisions

Certainty, risk, uncertainty

Decision

Choice among possible alternatives

Typical business strategy decisions include

Choices about product and service mix, facilities locations, and new technologies

What are 2 companies that filed for Chapter 11 bankruptcy and were successful

Chrysler and General Motors

Vision

Clarifies purpose of the organization & what it hopes to be in the future

How to write a good performance objective

Clarify target Make it measurable Define timetable Avoid the impossible Add challenge Don't overcomplicate

2 ways that alternatives get explored & decisions are made in step 3

Classical and behavioral models

Mission

Clear and ideally sense of purpose of why you exist

Policy

Communicates broad guidelines for making decisions & taking action in specific circumstances

Step 2 in planning

Compare where you are at present with the objectives Establishes a baseline for performance

Cost-benefit analysis

Compares what an alternative will cost with its expected benefits Benefits should exceed costs Alternative should be timely, acceptable to many stakeholders, and ethical The better the pool of alternatives/analysis, the more likely you'll get a good decision

Planning focuses attention on priorities and helps us to avoid the

Complacency trap

What are the different growth strategies

Concentration Diversification

Restructuring & divestiture strategies focus on

Consolidation

Escalating commitment

Continuation of a course of action even when it's not working

Outsourcing alliances

Contracting to purchase specialized services from another organization

Step 3 of control process

Control compares results with objectives & standards

Step 2 of control process

Control measures actual performance

Step 4 in control process

Control takes corrective action as needed

3 levels of strategies

Corporate Business Functional

Retrenchment strategy

Correct performance difficulties by making radical changes to an organization's current ways of operating

Short-range plans

Cover a year or less

Why are creative decisions more likely when the person has a lot of expertise

Creativity extends in new directions for something we are already good at or know something about

One of the most challenging of all decision situations

Crisis

C2C business strategies

Customer-to-customer Use Web and apps to link customers to one another, with the host site collecting a fee for setting up the opportunity

Multidomestic strategy

Customize products and advertising to fit local cultures and needs

Research shows that downsizing is most successful when

Cutbacks are done selectively and focused on key performance objectives

Downsizing

Cuts the size of operations and reduces the workforce

Zero-based budget

Deals with budgeting problem by approaching each budget period as if it were brand new No guarantee for renewing any past funding Helps to eliminate waste by making sure scarce resources are not spent on unproductive, outdated, or low-priority activities

Ajax Case

December 31, Ajax decided to close Murphysboro plant Every employee was fired and given severance pay equal to 1 week's pay per year of service

Examples of certain enviornments

Decision to take out a fixed-rate loan Can make decision knowing future interest costs and repayment timetables

How did the miners survive

Decisions Urzúa made as shift leader—organizing the miners into work shifts, keeping them busy, studying mine diagrams, making escape plans, raising morale—all contributed to the successful rescue Chile's President Sebastian Pinera said, "He was a shift boss who made us proud"

Step 1 in planning

Define objectives and identify the specific results you want to achieve

5 steps of implementing the planning process

Define your objectives. Determine where you stand vis-à-vis objectives Develop premises regarding future conditions Make a plan Implement the plan and evaluate results

Step 1 related to Ajax Case

Defines problem as how to minimize impact of plant closing on the employees, their families, & the community

3 common mistakes in identifying & defining the problem

Defining problem too broadly or narrowly Focusing on symptoms instead of causes Dealing with the wrong problem

B2B business strategy example

Dell Computer sets up special Web site services that allow major corporate customers to manage their accounts online

Procedure/rule

Describes exactly what actions to take in specific situations Often found in employee handbooks/manuals as SOPs (standard operating procedures)

BCG Matrix

Developed by the Boston Consulting Group Strategic management framework analyzes business and product strategies based on market growth rate and market share

Operational/tactical plans

Developed to implement strategic plans Shorter-term Step-by-step

The makers of Coke and Pepsi follow a ____ strategy

Differentiation

Porter believes that competitive strategies can be built around

Differentiation, cost leadership, and focus

When do nonprogrammed decisions work well

Difficult & dynamic circumstances

Restructuring approaches

Downsizing Diverstiture

What way does the hierarchy flow

Downwards

Output standards examples

Earnings per share for a business and standing ovations for a symphony

How do participation and involvement help build commitments to plans

Easier to get commitment when people responsible for implementation have opportunity to participate Better plans, deeper understanding, strengthened commitment to fully implementing the plans, increase creativity & info available

C2B business strategy example

Elance Links customers needing a special project completed—say a Web animation or a document translation task—with businesses and independent contractors who are willing to bid on and complete the project

Goal of Chapter 11 bankruptcy is to

Emerge from bankruptcy as a stronger and profitable business

Common human resource policies address such matters as

Employee hiring, termination, performance appraisals, pay increases, promotions, discipline, and civility

T. J. Rodgers, founder and former CEO of Cypress Semiconductor, supports a planning system where

Employees work with clear and quantified work goals that they assist in setting Believes system helps people identify problems before they interfere with performance

What should be done at each step along the way in the decision-making process

Ethics double-check

Good first step in checking the ethics of a decision

Evaluate using 4 criteria described in the work of ethicist Gerald Cavanagh and his associates

Goals that are set unrealistically high can have negative consequences that include

Excessive stress for goal seeker, poor performance results, possible unethical or illegal behavior

Step 3 Ajax Case

Executives decide to close the plant, offer employees transfers to company plants in another state, and help displaced employees find new jobs in and around Murphysboro

Uncertain environment

Exists when facts are few & info is so poor that managers have a difficult time assigning probabilities Most difficult decision condition & very common Decisions depend on intuition, judgment, informed guessing, and hunches

Related diversification

Expanding into similar or complementary new business areas

Growth strategies focus on

Expansion

Diversification

Expansion occurs by entering new business areas

Historical comparisons

Experience establishes a baseline to evaluate current performance

Example of feedback controls

Experiences as a student Most course evaluation systems ask, "Was this a good learning experience?" only when the class is almost over

Unrelated diversification example

Exxon once owned Izod

Lack-of-participation error

Failure to include the right people in the decision-making process

True or False: While strategy provides the targets, mission and strategic intent provide the plan for reaching them

False While mission and strategic intent provide the targets, strategy provides the plan for reaching them

3 types of managerial controls

Feedforward, concurrent, feedback

6 rules for crisis management

Figure out what is going on Remember that speed matters— Remember that slow counts, too Respect the danger of the unfamiliar Value the skeptic Be ready to "fight fire with fire"

Types of budgets

Financial Operating Nonmonetary Flexible 0-baed Fixed

What do functional plans include

Financial plans Facilities plans Marketing plans Human resource plans Production plans

In large, complex organizations, such as PepsiCo, IBM, and General Electric, decisions on corporate strategy identify how the

Firm intends to compete across multiple industries, businesses, and markets

Why does diversification involve risk

Firm may be moving outside its existing areas of competency

Intuitive thinking

Flexible & spontaneous Creative Imaginative solutions Many aspects of a problem at once, jump quickly from one issue to another

Planning can help sharpen ____ and increase ____

Focus Flexibility

Learning goals

Focus on acquiring knowledge and skills necessary for performance

Personal development objectives

Focus on expanding job knowledge or skills

Improvement objectives

Focus on improving performance in a specific way

Concurrent/steering controls

Focus on what happens during the work process Take place while people are doing their jobs

Porter's 2 forms of the focus strategy

Focused differentiation Focused cost leadership

Business strategy

Focuses on the strategic intent for a single business unit or product line

Examples of input standards

For a college professor might be having an orderly course syllabus, showing up at all class sessions, and returning exams and assignments in a timely fashion

What did Michael Porter say is the 5 forces model analyzes industry attractiveness

Force 1:Competitors Force 2:New entrants Force 3:Suppliers Force 4:Customers Force 5:Substitutes

Transnational strategy example

Ford strives to be a global brand, not just an American one Draws on design, manufacturing, and distribution expertise from around the world and modifies products within regions to meet local tastes

Periodicals such as Bloomberg Business, Fortune, and The Economist regularly report ____ of industry conditions, interest rates, unemployment trends, and national economies, among other issues

Forecasts

Step 3 in planning

Formulate premises about future conditions

Henry Schacht, former CEO of Cummins Engine Company, once discussed control in terms of what he called

Friendly facts- reinforce what you are doing are nice because they help in terms of psychic reward

In business, tactical plans often take the form of

Functional plans

Example of a company where strategic management is complicated because it operates multiple businesses selling many different products and services

General Electric (GE)

Creativity

Generation of a novel idea or unique approach to solving performance problems or exploiting performance opportunities

Globalization strategy example

Gillette sells and advertises razors around the world You get the same product in Italy as in America

Framing error example

Glass 1/2 empty vs 1/2 full dilemma

Supplier alliances

Guarantee a smooth and timely flow of quality supplies among alliance partners

Functional strategy

Guides activities to implement higher-level business and corporate strategies Within a specific functional area

Leading

Guiding efforts of human resources to ensure high levels of task accomplishment

How does Michael Porter describe a strategic leader

Has to be the guardian of trade-offs Create a sense of urgency Must make sure that everyone understands the strategy Must be a teacher

Value of the control equation depends on

Having goals that clearly identify desired performance and measurements that clearly define actual performance

Who came up with the term satisficing decisions

Herbert Simon

Why do well-intentioned people sometimes make bad decisions

Heuristics Framing error Confirmation error Escalating commitment

Good planning facilitates coordination by linking people and subsystems in a

Hierarchy of objectives

Stars in the BCG Matrix

High market shares in high-growth markets Produce large profits through substantial penetration of expanding markets Preferred strategy is growth Offer future potential to do the same or even better

Cash cows

High market shares in low-growth markets Produce large profits and a strong cash flow, albeit with little upside potential Preferred strategy is stability or modest growth Matrix advises firms to "milk" these businesses to generate cash for investing in other more promising areas

Strategic question at the business strategy level is

How are we going to compete for customers within this industry and in this market?

Strategic question for functional strategies

How can we best use resources within the function to support the business strategy?

Step 5 Ajax case

How effective was Ajax's decision? Well, we don't know for sure After Ajax ran the ads, the plant's industrial relations manager said: "I've been very pleased with the results." However, we need more info for a true evaluation

Certain environment

Ideal decision situation where factual info exists on alternative courses of action & their consequences

Contingency planning

Identifies alternative courses of action that can be implemented to meet the needs of changing circumstances

Careful attention to ethical analysis helps

Identify any underlying moral problems moving from one step to anothe

Managers as problem avoiders

Ignore info that signals a performance threat or opportunity Inactive in gathering info & prefer not to make decisions or deal with problems

Sensation thinkers

Impersonal Realistic Hard facts, clear goals, certainty, & controllable situations

Step 5 in planning

Implement plan and evaluate results

When a team leader and team member work together in an MBO approach, it is helpful to consider these 2 types of objectives

Improvement Personal development

Strategic question at the corporate strategy level

In what industries and markets should we compete?

Participatory planning

Includes in process people whose ideas and inputs can benefit the plans and whose support is needed for implementation Unlocks the advantages of group decision making

The levels of risk and uncertainty in problem environments tend to ____ the higher one moves in management ranks

Increase

Growth strategies

Increase the size and scope of current operations

Functional plans

Indicate how different parts of the enterprise contribute to the overall strategy

Market control

Influence of competition on the behavior of organizations and their members

Clan control

Influences behavior through social norms and peer expectations Power of collective identity

Risk environments

Info & facts are incomplete Future is hard to predict Alternative courses of action & consequences can be analyzed only as probabilities

Strategic intent of Khan Academy

Inspire the world to learn

Strategic leadership

Inspiring people to successfully implement organizational strategies

According to Porter, an unattractive industry will have

Intense competitive rivalries, substantial threats in the form of possible new entrants and substitute products, and powerful suppliers and buyers who dominate bargaining with the firm

Global strategies focus on

International business opportunities

SWOT analysis

Involves a detailed exam of organizational strengths and weaknesses & environmental opportunities and threats

Technological competency examples

Involves moving skills —social media, smart devices, and more—into work-related applications

How can managers react to crises the wrong way

Isolate themselves Denies them access to crucial info when they need it most

Sustainable competitive advantage

It's difficult for competitors to imitate

Stretch goals

Jack Welch, former CEO of GE, believed in these Performance targets that we have to work extra hard and really stretch to reach

Uncertain environment example

Japanese built a nuclear power plant at Fukushima were decision makers just taking a calculated risk, or were they acting in the face of absolute uncertainty?

Personal development objective example

Learn the latest version of our firm's customer relationship management software

Types of goals by scholars Gary Latham and Gerard Seijts

Learning Outcome

Even though improving performance through learning is one of the great opportunities offered by the control process, the potential benefits are realized only when

Learning is translated into corrective actions

All budgets play important roles in organizations by

Linking planned activities with the resources needed to accomplish them

Most extreme form of retrenchment is

Liquidation

Types of retrenchment

Liquidation Restructuring

Plan

List of actions to accomplish the objectives

Although to-do lists can help, they aren't much good unless

Lists contain high-priority things

According to Porter, an attractive industry will have

Little existing competition, few threats from new entrants or substitutes, and low bargaining power among suppliers and buyers

Information competency examples

Locating credible & valuable information

Management researcher Elliot Jaques found that very few people have the capacity to think ____

Long term

Scenario planning

Long-term version of contingency planning Identifies several alternative future scenarios

Strategic plans

Longer-term Set broad & comprehensive directions for an organization Take a vision & set out ways to turn it into reality

Question marks

Low market shares in high-growth markets Don't generate much profit at the moment Upside potential is there because of the growing markets Make for difficult strategic decision making Target only the most promising question marks for growth, while retrenching those that are less promising

Dogs

Low market shares in low-growth markets Produce little if any profit Low potential for future improvement Preferred strategy is retrenchment by divestiture

Example of focused cost leadership strategy

Low-fare airlines offer heavily discounted fares and no frills service for customers who want to travel point to point for the lowest prices

Step 4 in planning

Make a plan

Classical decision model

Making decisions under complete info

Behavioral decision model

Making decisions with the limited info & bounded rationality

Restructuring

Making major changes to cut costs and buy time to try new strategies to improve future success

Step 4 Ajax Case

Management ran an ad in newspapers Announced to potential employers an "Ajax skill bank" composed of "qualified, dedicated, and well-motivated employees with a variety of skills and experiences" Ad urged interested employers to contact Ajax for further info

Hierarchy of objectives

Means-ends chain where lower-level objectives (the means) lead to higher-level objectives (the ends)

Output standards

Measure actual outcomes or work results

Input standards

Measure work efforts Helpful in situations where outputs are difficult or expensive to measure

Best practices

Methods that lead to superior performance

Order from top to bottom of hierarchy of objectives

Mission & purpose Top management objective Senior management objective Middle management objective Team leader objective

To successfully put strategies into action, the entire organization and all its resources and systems must be

Mobilized

Controlling

Monitoring task accomplishments and taking necessary corrective action

Advantages of group decisions

More info available More alternatives considered Increased understanding Greater commitment

Findings of Elliot Jacques

Most of us work comfortably with only 3-month time spans Only 1 person in several million can handle a 20-year time frame

Management consultant Stephen R. Covey says

Most successful executives "zero in on what they do that adds value to an organization"

To Porter's list of what makes a strategic leader we must add

Must be the champion of control

Control equation

Need for Action=Desired Performance−Actual Performance

Example of focused differentiation strategy

NetJets offers air travel by fractional ownership of private jets to wealthy customers

When to think of Little-C creativity

Next time you solve relationship problems at home, build something for the kids, or even find ways to pack too many things into too small a suitcase

Internal/self-control

Occurs as people exercise self-discipline in fulfilling job expectations

Freemium model

Offers a free service and encourages users to buy extras (e.g., Skype, Zynga)

Focused differentiation strategy

Offers a unique product to customers in a special market segment

C2C strategy example

Online marketplaces such as eBay and Etsy, where customers sell, buy, and trade with one another

Confirmation error

Only looking at the info that confirms decision the decision you've already made

How do decision makers behave in certain environments

Only needs to study the alternatives and choose the best solution

Strategic alliances

Organizations join together in partnership to pursue an area of mutual interest

Scholars Gary Latham and Gerard Seijts point out that undesirable effects of goal setting are likely when

Outcome goals are emphasized at the expense of the learning goals on which they depend

Forms of cooperation

Outsourcing alliances Supplier alliances Distribution alliances Co-opetition

P2P business strategies

Peer-to-peer connections Web and apps link persons needing services with those willing to provide them

Related diversification example

PepsiCo purchasing Tropicana Business related to its expertise in the beverages industry

What happens to firms that get into too much unrelated diversification

Performance declines

When actual is more than desired, a ____ exists

Performance opportunity

Most obvious problem-solving situation

Performance threat

When actual is less than desired, a ____ exists

Performance threat/deficiency

Budget

Plan that commits resources to activities, programs, or project Allocates scarce resources among multiple, competing uses

1st function of management

Planning

Why should forecasts be used with caution

Planning aids, not substitutes

Benchmarking

Planning technique that makes use of external comparisons to better evaluate current performance

What are the 4 management functions

Planning, organizing, leading, controlling

Operating budgets

Plot anticipated sales or revenues against expenses

Difference between policy & procedures

Policy sets broad guidelines Procedures define specific actions to be taken

Success with differentiation strategy example

Polo Ralph Lauren Polo redefined how American style and quality is perceived. Polo has always been about selling quality products by creating worlds and inviting our customers to be part of our dream Polo aggressively markets this perception

When an organization's core competencies are unique and costly for others to imitate—say, for example, Amazon's "1-Click" order technology and efficient logistics—they become

Potential sources of competitive advantage

Goal of feedforward controls

Prevent problems before they occur

In what ways do managers approach problems

Problem avoiders Problem seekers

A sexual harassment policy should be backed up with ____ that spell out how to file a sexual harassment complaint, & the steps through which any complaint will be handled

Procedures

Strategy formulation

Process of crafting strategy to fit mission and strategic intent, objectives, and environmental conditions Establishes strategic plan to deliver future competitive advantage

Strategic management

Process of formulating & implementing strategies to accomplish long-term goals & sustain competitive advantage

Problem solving

Process of identifying a discrepancy between an actual and a desired situation and then taking action to resolve it

Forecasting

Process of predicting what will happen in the future

Strategy implementation

Process of putting strategies into action Activates entire organization to put strategies to work

Planning

Process of setting goals & objectives & determining how to best accomplish them

Key Operating Objectives of Organizations

Profits Cost efficiency Market share Product quality Talented workforce Innovation Social responsibility Sustainability

Types of decisions

Programmed & nonprogrammer

Financial budgets

Project cash flows & expenditures

Chapter 11 bankruptcy

Protects firm from creditors while management reorganizes to restore solvency When a firm is in desperate financial condition and unable to pay its bills

Mission of Khan Academy

Provide a free world-class education for anyone anywhere

Community model

Provide a meeting point sold by subscription or supported by advertising (e.g., eHarmony, Facebook)

Infomediary model

Provides a free service while collecting information on users and selling it to other businesses (e.g., Epinions, Yelp)

Advertising model

Provides free information or services and then generates revenues from paid advertising to viewers (e.g., Yahoo!, Google)

Referral model

Provides free listings and gets referral fees from online merchants after directing customers to them (e.g., Shopzilla, PriceGrabber)

How to moderate the risk of diversification

Pursue related diversification

What do periodicals rely on

Qualitative forecasting- uses expert opinions to predict future Quantitative forecasting- uses mathematical models & analysis of data & surveys

Why is the classical decision model too good to be true

Rare to face problems in environments of complete certainty Limits to human info-processing capabilities Cognitive limitations makes it is difficult for us to be fully informed and make perfectly rational decisions

Systematic thinking

Rational, step-by-step, analytical Break complex problems into smaller components Make a plan before taking action

Confirmation error example

Rationalize with statements such as "No one will ever find out" or "The boss will protect me"

Managers as problem seekers

Really good ones Looking for problems to solve or opportunities to explore Proactive info gatherers, forward thinking Anticipate threats & opportunities & are eager to take action to gain the advantage in dealing with them

Little-C creativity

Regular people come up with unique ways to deal with daily events and situations

One of the most common budgeting problems

Resource allocations are rolled over from one time period to the next without any real performance review

Less extreme and more common form of retrenchment

Restructuring

Steps in the strategic management process

Review of current mission, objectives, and strategies to set a baseline for further action Organizational strengths and weaknesses and environmental opportunities and threats are analyzed Strategies are crafted at corporate, business, and functional levels Strategies are put into action

Co-opetition

Revolution mind-set that business competitors can be cooperating partners

Unrelated diversification

Seeking growth in entirely new business areas

Cost leadership strategy

Seeks competitive advantage by operating with lower costs than competitors

Differentiation strategy

Seeks competitive advantage through uniqueness

Concentration

Seeks expansion within an existing business area, one in which the firm has experience and presumably expertise

Divestiture

Selling parts of the organization to refocus on core competencies, cut costs, and improve operating efficiency

Subscription model

Sells access to high-value content through a subscription Web site (e.g., Netflix, Wall Street Journal Interactive)

Merchant model

Sells products directly to customers through e-tailing (e.g., Amazon, Apple iTunes Store)

4 master cognitive styles

Sensation thinkers Intuitive thinkers Intuitive feelers Sensation feelers

Outcome goals

Set actual performance targets

How to avoid escalation trap

Set advance limits on your involvement to a particular course of action (stick with these limits) Make your own decisions (don't follow the lead of others because they are also prone to escalation) Carefully determine why you are continuing a course of action (insufficient reasons to continue, don't) Remind yourself of costs of a course of action (consider saving these costs as a reason to discontinue)

Step 1 of control process

Set performance objectives and standards

Example of concurrent controls

Shift leaders at fast-food restaurants Constantly observe what is taking place Trained to correct things on the spot

2 types of plans relating to time

Short-range Long-range plans

Even most top managers would likely agree that long-range planning is becoming

Shorter and shorter

Part of what makes strategy so challenging today is that the world's fast-changing environment is

Shrinking the period of time competitive advantage can be maintained

Heuristics

Simplifying strategies when making decisions with limited info, time, and energy

Performance opportunity

Situation that offers the possibility of a better future if the right steps are taken now

Performance threat

Situation were something is wrong or like to be wrong

Disadvantages of group decisions

Social pressures to conform Domination by a few Time delays

Nonprogrammed decisions

Solve new or unusual problems full of ambiguities & info deficiencies Craft novel solutions to meet the unique demands of unstructured problems

Goal of concurrent controls

Solve problems as they occur

Programmed decisions

Solve routine & repetitive problems Apply preplanned solutions based on past experience

Framing error

Solving a problem only in the context perceived, whether positive or negative

Crowdsourcing

Special type of social media strategy Uses Web to engage existing & potential customers to make suggestions and express opinions on products and their designs

Objectives

Specific results that 1 wishes to achieve

Best objectives are

Specific, have a timeline Agreement on a measurable end product

Hierarchy of great goals

Specific, measurable, attainable, relevant, timely

Tactical plans example

Sports team involving special teams or plays designed to meet a particular threat or opportunity

Strategic plan example

Sports teams use strategy set by head coach & assistants Goal: win the game Call for tactics

When do you se cost-benefit analysis

Step 2

When planning for the organization as a whole or a major component, the focus is on ____ plans

Strategic

2 types of plan relating to focus

Strategic Operational

E-business strategy

Strategic use of the Web and mobile apps to gain competitive advantage

External control

Structure situations so things happen as planned

When do programmed decisions work well

Structured problems that are familiar & have clear-cut info needs

After-action review

Structured review of lessons learned and results accomplished through a completed project, task force assignment, or special operation

Significance of Salman Khan & Khan Academy

Success helped to spur the development of MOOCs—massive open online courses—as disrupters of the traditional university model of instructors delivering pay-per-credit courses in person and on campus

Do effective managers and leaders use individual or group decision making

Switch back and forth to use the best methods for any given situation

2 types of managerial thinking

Systematic & intuitive

Feedback/postaction controls

Take place after a job or project is done

Transnational strategy

Tap business resources and customer markets worldwide Operates without a strong national identity, hoping instead to blend seamlessly with the global economy

What are the 3 personal creativity drivers

Task expertise Task motivation Creativity skills

Managing by objectives (MBO)

Team leader and member jointly set performance objectives with a timeline and review results

Managers as problem solvers

They make decisions and try to solve problems, but only when required Reactive, gathering info & responding to problems when they occur, but not before Deal well with performance threats, but likely to miss many performance opportunities

Core competencies (special strengths)

Things the organization does well compared to competitors

Crowdsourcing example

Threadless.com Firm's online visitors submit designs for T-shirts Designs are voted on by other viewers—the "crowd"—and top-rated ones get selected for production and sale to customers

Success with the cost leadership strategy requires

Tight cost and managerial controls, as well as products or services that are easy to create and distribute

Key to success for executives on a tight schedule with little time

Time management

Improvement objective example

To reduce quality rejects in our apparel supply chain by 10%

Corporate

Top level Provides direction and guides resource use for the organization as a whole

Why are many organizations developing formal crisis management programs

Train managers in the rules of crisis decision making Assign people to crisis management teams Develop plans to deal with contingencies

Focused cost leadership strategy

Tries to be the low-cost provider for a special market segment

A really good contingency plan will contain

Trigger points for activating preselected alternatives

True or False: Strategic goals set by top management should cascade down the organization to become goals and objectives for lower levels

True

P2P strategy example

Uber—matching riders with drivers, TaskRabbit—matching small jobs with "taskers" willing to do them, and Airbnb—matching travelers with host residences

Planning fallacy

Underestimating time required to complete a task

Crisis

Unexpected problem that can lead to disaster if not resolved quickly and appropriately

Co-opetition example

United and Lufthansa are international competitors They cooperate in the Star Alliance network that allows customers to book both airlines' flights and share frequent flyer programs

C2B business strategy

Use the Web to link customers with businesses to provide products or services Puts the initiative for the transaction in the hands of the potential customer

4 criteria described by Gerald Cavanagh

Utility—Does the decision satisfy all constituents or stakeholders Rights—Does the decision respect the rights of everyone? Justice—Is the decision consistent with the canons of justice? Caring—Is the decision consistent with responsibilities to care?

Knowledge workers

Value to organizations rests with their intellectual and analytical talents, not physical capabilities

Risk environment examples

Variable-rate loan scenario

Types of diversification

Vertical integration Horizontal integration

Globalization strategy

View the world as 1 large market Advertise and sell standard products for use everywhere

What is the cost leadership strategy also known as

Walmart strategy—do everything you can to keep costs so low that you can offer customers lower prices than competitors and still make a reasonable profit

Cognitive styles

Way individuals deal with info while making decisions

E-business strategies use the

Web & apps for business success

An organization with focus knows

What it does best and what it needs to do

Big-C creativity

When extraordinary things are done by exceptional people

When does divestiture often occur

When organizations have become too diversified

Why are creative decisions more likely when people are highly task motivated

When people work hard to resolve a problem, they accomplish something new and different

B2C business strategy example

Whenever you buy a music download from Apple's iTunes Store, order a book from Amazon or shop at Patagonia for the latest outdoor gear, you are the "C" in a B2C strategy

Distribution alliances

Where firms join together to accomplish product or services sales and distribution

Individuals with focus know

Where they want to go in a career or personal situation, and they keep that focus even when difficulties arise

An organization with flexibility is

Willing and able to change and adapt to shifting circumstances

How does Xerox make good use of best practices benchmarks

Xerox has benchmarked L.L.Bean's warehousing and distribution methods, Ford's plant layouts, and American Express's billing and collections

When was scenario planning developed

Years ago at Royal Dutch/Shell Top managers asked themselves: "What will Shell do after its oil supplies run out?" Shell executive said it helps "condition the organization to think" and better prepare for "future shocks" Shell uses it to tackle climate change, sustainable development, fossil fuel alternatives, human rights, and biodiversity

Classic growth by concentration strategies examples

You don't see Chipotle trying to grow by buying bookstores or gas stations; instead, the company keeps opening more restaurants

Example of divestiture

eBay spent $3.1 billion to buy Skype Expected synergies between Skype and eBay's online auction business never developed, Skype was sold to private investors They sold it to Microsoft, which is still working to integrate Skype into its business model

When to think about Big-C creativity

iPhone—Steve Jobs's creativity, or browse Facebook—Mark Zuckerburg's creativity, or chat on WhatsApp—Brian Acton's and Jan Koum's creativity