MGT 301 Exam 2
What are the three levels of strategy?
1) Corporate-Level Strategy (Thinks: "What business or businesses should we be in?") 2) Business-Level Strategy (Thinks: "How should we compete in this industry?") 3) Functional-Level Strategy (Thinks: "How can business functions support the business-level strategies?")
What are the five steps in the 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 strategy. 5) Maintain strategic control: The feedback loop.
What are the characteristics of group decision making?
1) Groups take longer to make decisions. They are less efficient. 2) The larger the group, the lower quality of the decision. The size of groups affects decision quality. An odd number is considered best. 3) Groups are more confident about their judgements and choices than individuals are. They may be too confident. 4) Decision making accuracy is higher when group members know a good deal about the relevant issues. Knowledge counts. *Note: Efficiency is not effectiveness. While group decision making may be less efficient, results may be more effective.*
What are the nine common decision-making biases.
1) The availability bias: Using only the information available. This is the use of information readily available from memory to make judgements. 2) The representativeness bias: Faulty generalizing from a small sample or single event. This bias is the tendency to generalize from a small sample or single event. 3) The confirmation bias: Seeking information to support your pov. The confirmation bias occurs when people seek information to support their pov and discount data that does not support it. 4) The sunk-cost bias: Money already being spent seems to justify continuing. The sunk-cost bias, or sunk-cost fallacy, occurs when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it. 5) The anchoring and adjustment bias: Being influenced by an initial figure. This bias is the tendency to make decisions based on an initial figure. *6) The overconfidence bias: Blind to our own blindness. This bias is the bias in which people's subjective confidence in their decision making is greater than their objective accuracy.* 7) The hindsight bias: The I-knew-it-all-along effect. This bias is the tendency of people to view events as more predictable than they really are. 8) The framing bias: Shaping the way a problem is presented. This bias is the tendency of decision makers to be influenced by the way a situation or problem is presented to them. 9) The escalation of commitment bias: Feeling overly invested in a decision. This bias occurs when decision makers increase their commitment to a project despite negative information about it.
What is the definition of a decision?
A decision is a choice made from among available alternatives. Decision making is the process of identifying and choosing alternative courses of action.
Why are planning and strategic management important?
An organization should adopt these for three reasons: They can 1) provide direction and momentum, 2) encourage new ideas, and above all 3), develop a sustainable competitive advantage.
Describe the purpose of the mission, vision, and values statement for an organization? What is derived from these statements?
An organization's reason for being is expressed in the mission statement. What the organization wishes to become is expressed in the vision statement. The values that the organization wishes to emphasize are expressed in the values statement. From these are derived strategic planning, then tactical planning, and finally operational planning.
Definition of analytics.
Analytics, or *business analytics*, is the term used for sophisticated forms of business data analysis.
Why are cascading goals important?
Cascading goals help employees understand how their work contributes to overall corporate success and it ends when all individuals have set goals that support the overall strategic goals.
How do employees learn culture?
Culture is transmitted to employees through the following: 1) Symbols: An object or action that represents an idea or quality. With respect to culture, symbols are artifacts used to convey an organization's most important values. 2) Stories: A narrative based on true events that is repeated, and sometimes embellished upon, to emphasize a particular value. 3) Heros: A person whose accomplishments embody the values of the organization. 4) Rites and Rituals: The activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's life. 5) Organization Socialization: The process by which people learn the values, norms, and required behaviors that permit them to participate as members of an organization.
Definition of predictive modeling.
*Predictive modeling* is a data-mining technique used to predict future behavior and anticipate the consequences of change.
What are the three types of corporate strategy? The following are common grand strategies.
1) The GROWTH Strategy. The growth strategy is a grand strategy that involves expansion (sales revenues, market share, # of employees, or customers/clients served). Growth strategy often takes the form of an "innovation strategy"*, growing market share or profits by innovating improvements in products or services. 2) The STABILITY Strategy. The stability strategy is a grand strategy that involves little to no significant change. 3) The DEFENSIVE Strategy. A defensive strategy, or a "retrenchment strategy," is a grand strategy that involves a reduction in the organization's efforts.
What is an ethics officer?
An ethics officer is someone trained about matters in ethics in the workplace, particularly about resolving ethical dilemmas.
What is groupthink?
Groupthink occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation. This is a disadvantage to group decision making.
Organizational forms: What is the matrix structure?
In a matrix structure, an organization combines functional and divisional chains of command in a grid so that there are two command structures: vertical and horizontal.
Describe non-rational decision-making.
Nonrational modes of decision making explain how managers make decisions. These models assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions. The nonrational models are *descriptive* rather than prescriptive. They describe how managers actually make decisions rather than how they should. There are two non-rational models.
Organizational Structure: Who reports to whom and who does what?
Org structure is 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. The challenge for top managers is to align the organization's vision and strategies with its organizational culture and organizational structure.
Organizational Culture. What is it and what drives it?
Org. culture consists of the set of shared, taken-for-granted implicit assumptions that a group holds in the workplace. Creating an exceptional culture is the only way to build a sustainable competitive advantage. These are the beliefs and values shared among a group of people in the workplace that are passed on to new employees by way of socialization and mentoring. The cultural tone is often set in the hiring process. The founder's values, industry and business environment, national culture, organization's vision and strategies, and behavior of leaders are what *drive* an organizational culture.
What are Michael Porter's five competitive forces? Memorize for the exam.
Porter suggested 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. 5) Rivalry among competitors.
What is the purpose of strategic, tactical, and 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.
What are the three core processes of business?
The three core processes of business are PEOPLE, STRATEGY, and OPERATIONS. First Core: PEOPLE. "You need to consider who will benefit you in the future. [...] If you don't get the people process right, you will never fulfill the potential of your business. Second Core: STRATEGY. "You need to consider how success will be accomplished." In most organizations, the strategies developed fail to consider the "how" of execution. Third Core: OPERATIONS. "You need to consider what path will be followed." The operations core, or the operating plan, provides the path for the people to follow.
What are the advantages of group decision making?
There are five possible advantages to group decision making: 1) Greater pool of knowledge. 2) Different perspectives. 3) Intellectual stimulation. 4) Better understanding of decision rational. 5) Deeper commitment to the decision.
What are the disadvantages of group decision making?
There are four possible disadvantages to group decision making: 1) A few people dominate or intimidate. 2) Groupthink. 3) Satisficing. 4) Goal displacement.
What are the time constraints that strategic, tactical, and operational planning fall in to?
These are called time horizons.
What is strategic management?
This form of management is a process that involves managers from all parts of the organization in the formulation and implementation of strategies and strategic goals. To reiterate: It is a process that involves managers from all parts of the organization (top managers, middle managers, and first line managers) in the formation, implementation, and execution of strategies and strategic goals to advance the purposes of the organization. Planning and strategic management derive from an organization's mission and vision about itself.
What is a goal?
This is also known as an objective. It is a specific commitment to achieve a measurable result within a stated period of time. They may be long-term or short-term.
Definition of planning:
This is defined as setting goals and deciding how to achieve them. Another definition is coping with uncertainty by formulating future courses of action to achieve specified results.
Definition of competitive advantage.
This is the ability an organization has to produce goods or services more effectively than its competitors do, thereby outperforming them. Companies must have products or services that are valuable, rare, non-imitable, and an organization poised to exploit its strengths.
What is a business model?
This 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.
What is a strategic plan?
This sets the long-term goals and direction for an organization. This plan represents an "educated guess" about long-term goals or direction to pursue for the survival or prosperity of the organization. This plan is generally reconsidered every year because of ever-changing business conditions.
What are some group problem-solving techniques?
*1) Brainstorming.* Brainstorming is a technique used to help groups generate multiple ideas and alternatives for solving problems and leads to increasing creativity. Quantity>Quality *2) Devil's Advocacy.* *3) The Dialectic Method.* The dialectic method calls for managers to foster a structured dialogue of opposing viewpoints prior to making a decision. 4) Project Post-Mortems. This is a review of recent decisions in order to identify possible future improvements. *Devil's advocate and the dialectic method are techniques for stimulating functional conflict.*
Instances where the importance of culture is prominent:
*An organization's financial performance (profit and revenue growth) is related to market and hierarchy culture.* Clan and market cultures are more likely to deliver higher customer satisfaction and market share.
What is diversification?
*Diversification is the strategy of moving into new lines of business*, such as Amazon purchasing Whole Foods or CVS buying Aetna. Companies generally diversify to either grow revenue or reduce risk. They grow revenue because the company now has new products and services to sell. When a company purchases a new business that is RELATED to the company's existing business portfolio, the organization is implementing RELATED DIVERSIFICATION. UNRELATED DIVERSIFICATION occurs when a company acquires another company in a completely unrelated business. *** In VERTICAL INTEGRATION, a firm expands into businesses that provide the supplies it needs to make its products or that distribute and sell its products.*** (Examples of vertical integration include starbucks buying and roasting its own coffee and selling it through the stores, and, hypothetically, Ford purchasing a microchip manufacturing facility to supply all the microchips for their auto production, or Netflix producing and distributing its own entertainment programming.)
Characteristics of mechanistic organizations versus organic organizations.
*Mechanistic Organizations* have: -Centralized hierarchy of authority, -Many rules and procedures, -Specialized tasks, -Formalized communication, -Few teams or task forces, -Narrow span of control, taller structures. In mechanistic organizations, authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. *Organic Organizations* have: -Decentralized hierarchy of authority, -Few rules and procedures, -Shared tasks, -Informal communication, -Many teams or task forces, -Wider span of control, flatter structures. In an organic organization, authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks. It's a "loose" structure.
What are the two nonrational models of decision making?
1) Bounded Rationality and the Satisficing Model: "Satisfactory is good enough." *Herbert Simon* studied how managers actually make decisions. He proposed that managers could not truly act logically because their rationality was bounded by so many restrictions called *bounded rationality*. Bounded rationality is the concept that suggests that the ability of decision makers to be rational is limited by numerous constraints (the 7 hindrances of rationality). Because of these hindrances, Simon says managers follow the *satisficing model*, that is, managers seek alternatives until they find one that is satisfactory, not optimal. 2) The Intuition Model: "It just feels right." Intuition is making a choice without the use of conscious thought or logical inference. Intuition that stems from expertise, a person's explicit and tacit knowledge about something, is known as a *holistic hunch*. Intuition based on feelings, the involuntary emotional response to those same matters, is known as *automated experience*.
What are the four types of organizational culture?
1) Clan. The clan culture has an internal focus and values flexibility rather than stability and control. They value cohesion, participation, communication, and empowerment. 2) Adhocracy. The adhocracy culture has an external focus and values flexibility. They value adaptability, creativity, and agility, growth, cutting-edge output. 3) Market. A market culture has a strong external focus and values stability and control. They are driven by competition and a strong desire to deliver results, customers, productivity, and profits take precedence over employee development and satisfaction. 4) Hierarchy. A hierarchy culture has an internal focus and values stability and control over flexibility. Companies with a hierarchy culture are apt to have a formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms.
What are the seven hindrances of rational decision making?
1) Complexity. 2) Time and money constraints. 3) Different cognitive capacity, values, skills, habits, and unconscious reflexes. 4) Imperfect information. 5) Information overload. 6) Different priorities. 7) Conflicting goals.
What do each of the three levels of strategy (Corporate-Level, Business-Level, and Functional-Level) do?
1) Corporate-Level strategy focuses on the organization as a whole. Executives at the most senior levels (C-Suite) typically conduct this type of strategic planning. This analysis answers questions such as "What business are we in?" and "What products and services should we offer?" Strategic decisions at this level can also involve mergers and acquisitions, joint ventures, and significant investments in plant and equipment. 2) Business-Level strategy focuses on individual business units or product/service lines. Senior level managers BELOW the C-Suite typically are responsible for business-level strategy. Issues under consideration flow from decisions made at the corporate level and involve considerations such as how much to spend on marketing, new-product development, product expansion or contraction, facilities expansion or reduction, equipment, pricing, and employee development. 3) Functional-Level strategy applies to the key functional departments or units within the business units. Functional managers lead planning discussions at this level, and the focus is more on tactical issues that support the business-level strategies.
Tips for improving your intuition.
1) Immerse yourself in data and facts. 2) Practice "first principles thinking." 3) Be mindful and open to insights. 4) Test your intuition. 5) Reward your intuitions.
What are the three types of planning for three levels of management?
1) Strategic planning. Strategic planning is carried out by top managers. They determine what the organization's long-term goals should be for the next* one to five* years with the resources they have available. In today's market it may be done every* one to two* years though. It requires visionary and directional thinking. It should communicate not only general goals about growth and profits but ways to achieve them. 2) Tactical planning. Tactical planning is carried out by middle managers/management. The strategic priorities and policies are passed down to middle managers who must carry out the tactical planning, that is, they must determine what contributions their departments or similar work units can make with their given resources during the next* 6 to 24* months. 3) Operational planning. Operational planning is carried out by first-line managers/management. Middle managers pass on tactical plans to the first-line managers to do the operational planning, that is, they determine how to accomplish specific tasks with available resources within the next* 1 to 52* weeks.
What makes it hard to be evidence based?
1) There's too much evidence. 2) There's not enough good evidence. 3) The evidence doesn't quite apply. 4) People are trying to mislead you. 5) You are trying to mislead yourself. 6) The side effects outweigh the cure. 7) Stories are more persuasive, anyway.
What are cascading goals? For goal setting to be successful, what following three things need to happen?
1) Top management and middle management must be committed. 2) The goals must be applied organization-wide. Ex. Goals cannot be applied in just some* divisions, they must be applied in all of them to be effective. 3) The goals must CASCADE through the organization. Cascading goals is the process of ensuring that the strategic goals set at the top level align, or "cascade," downward with more specific short-term goals at the lower levels within an organization, including employees' objectives and activities. Top managers set strategic goals, which are translated into divisional goals, which are translated into departmental goals, which are translated into individual goals.
What are three practical guidelines for whether a group can help in decision making?
1) When it can increase quality. 2) When it can increase acceptance. 3) When it can increase development. In general, group decision making is more effective when members feel they can freely and safely disagree with each other. This is referred to as *minority dissent*, dissent that occurs when a minority in a group publicly opposes the beliefs, attitudes, ideas, etc. assumed by the majority of the group.
What are the five steps of planning and strategic management?
1. Establish the mission, vision, and values. 2. Assess current reality. 3. Formulate the grand strategy and strategic, tactical, and operational plans. 4. Implement the strategy. 5. Maintain strategic control.
Describe decision-making styles.
A *decision-making style* reflects the combination of how an individual perceives and responds to information. They vary along two different dimensions: *value orientation* and *tolerance for ambiguity*.
Describe a boundaryless organization.
A boundaryless organization is a fluid, highly adaptive organization whose members, linked by information technology, come together to collaborate on common tasks. The hollow structure (network structure): Operating with a central core and outsourcing functions to outside vendors. An organization that is hollow structured has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster. The virtual structure: An organization whose members are geographically apart, usually working with e-mail and other forms of information technology, yet which generally appears to customers as a single, unified organization with a real physical location. With a virtual structure, companies can "tap into a wider talent pool not limited by geography."
Definition of a decision tree.
A decision tree is a graph of decisions and their possible consequences. It is used to create a plan to reach a goal.
What is forecasting?
A forecast is a vision or projection of the future. Forecasting is used for developing long-term strategy and predicting the future. Forecasting includes trend analysis* and contingency planning*. Trend analysis is a hypothetical extension of a past series of events into the future. It assumes that the picture of the present can be projected into the future. Contingency planning, also known as scenario planning and scenario analysis, is the creation of alternative hypothetical but equally likely future conditions.
What is tolerance for ambiguity?
A person's tolerance for ambiguity indicates the extent to which a person has a high need for structure or control in his or her life. For those that desire a high level of control and structure, they have a low tolerance for ambiguity. For those that have a low desire for control and structure, they have. a high tolerance for ambiguity. For ex. You have a very low tolerance of ambiguity.
The contingency design: Factors in creating the best structure.
According to the *contingency approach to organizational design*, organizations are more effective when they are structures to fit the demands of the situation, and when the structure is aligned with the strategies and internal actions of the organization. Managers taking a contingency approach must consider the following factors in designing the best kind of structure for their particular organization at that particular time: 1) Environment: Mechanistic vs Organic. 2) Environment: Differentiation vs Integration. 3) Link between strategy, culture, and structure.
What are SMART goals?
An example of this goal is one that is specific, measurable, attainable, result-oriented*, and has a target date. 1) S. Goals should be stated in SPECIFIC rather than vague terms. For ex. The goal "As many planes as possible should arrive on time," is too general. The goal that "90% of planes should arrive within 15 minutes of scheduled arrival" is specific. 2) M. Whenever possible, goals should be MEASURABLE or quantifiable (as in, 90% of planes should arrive within 15 minutes). There should be some way to measure the degree to which a goal has been reached. 3) A. Goals should be challenging, but above all, they should be realistic and ATTAINABLE. Ambitious goals are fine, but the goals should always be achievable within the scope of the time, equipment, and financial support available. 4) R. Goals should be results-oriented, they should support achieving the organization's vision. For example, "90% of planes should land within 15 minutes of scheduled arrival in order TO maintain customer satisfaction and competitive advantage in the market." 5) T. Goals should specify the TARGET DATE(s) 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, by setting a target date, say, three to five months away, this allows enough time for lower-level management and employees to revamp their systems and work habits and gives them a clear time frame in which they know what they are expected to do.
General notes: More on "Assessing the current reality."
Assessing the current reality looks at where the organization stands internally and externally, to determine what's working and what's not in order to see what can be changed in order to create SUSTAINABLE COMPETITIVE ADVANTAGE. Sustainable competitive advantage exists when other companies cannot duplicate the value delivered to customers. We use SWOT and VRIO analysis, forecasting, and benchmarking to assess the current reality (internal/external standing of the company).
What is benchmarking?
Benchmarking is a process by which a company compares its performance with that of high-performing organizations. The objective of benchmarking is to "find examples of superior performance and understand the processes and practices" that are driving that performance. "Companies then improve their performance by tailoring and incorporating these best practices into their own operations, not by imitating, but by innovating." Benchmarking entails measuring and comparing performance across companies. Its effectiveness depends on comparing multiple companies on strategically relevant outcomes such as efficiency, customer service, or safety.
Why are deadlines important?
Deadlines are essential to goal setting because the whole purpose of planning and goals is to deliver specified results within a specified period of time and as a result, deadlines become a great motivator both for you and subordinates. Deadlines can help keep your eye on the "big picture," while simultaneously paying attention to the details that will help you realize the big pictures. Deadlines help you ignore extraneous matters (cleaning a messy desk) in favor of focusing on what's important. Deadlines also provide a mechanism for giving ourselves feedback.
Describe evidence-based management.
Evidence-based management is the translation of principles based on best evidence into organizational practice, bringing rationality to the decision-making process. 1) Treat your organization as an unfinished prototype. 2) No brag, just facts. 3) See yourself and your organization as outsiders do. 4) Evidence-based management is not just for senior executives. 5) Like everything else, you still need to sell it. 6) If all else fails, slow the spread of bad practice. 7) The best diagnostic question: What happens when people fail?
What geographic divisions?
Geographic divisions are group activities around defined regional locations. This form of division is used in the divisional structure of organizational form where people with diverse occupational specialties are put together in formal groups by similar products or services, customers, clients, or geographic regions.
Describe Peter Drucker's management by objectives.
MBO is a four-step process by which 1) Managers and employees jointly set objectives for the employee, 2) Managers develop action plans, 3) Managers 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 employees rather than control them.
What are the common elements of organizations:
Org psychologist Edgar Schein proposed four common elements of organizations: 1) Common Purpose: The means for unifying members. A common purpose unifies employees or members and gives everyone an understanding of the organization's reason for being. 2) Coordinated effort: The coordination of individual efforts into a group or organizational wide effort. 3) Division of labor: Work specialization for greater efficiency. 4) Hierarchy of authority: The chain of command. This is a control mechanism for making sure the right people do the right things at the right time. A *flat organization* is defined as one with an organizational structure with few or no levels of middle management between top managers and those reporting to them. *Three more Schein did not propose.* 5) Span of control: Narrow (tall) versus Wide (flat). The span of control refers to the number of people reporting directly to a given manager. 6) Authority, Responsibility, and Delegation: Line versus staff positions. With authority goes accountability, responsibility, and the ability to delegate. 7) Centralization versus decentralization of authority. Centralized authority means that important decisions are made by higher-level managers. Decentralized authority means important decisions are made by middle-level and supervisory-level managers. An *advantage to decentralized authority* is that managers are encouraged to solve their own problems rather than buck the decision to a higher-up. Decisions are also made more quickly which increases the organization's flexibility and efficiency.
What are Michael Porter's four competitive strategies and examples of them?
Porter's four competitive strategies are: 1) Cost-leadership: Keeping Costs and Prices Low for a Wide Market. The cost-leadership strategy is to keep the costs, and hence prices, of a product or service below those of competitors to target a wide market. 2) Differentiation: Offering Unique and Superior Value for a Wide Market. Differentiation strategy is to offer products and services that are unique and superior in value compared with those of competitors but to target a wide market. 3) Cost-focus: Keeping Costs and Prices Low for a Narrow Market. 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. 4) Focused-differentiation: Offering Unique and Superior Value for a Narrow Market. The focused-differentiation strategy is to offer products or services that are unique and superior in value compared to competitors and to target a narrow market. Cost-leadership and differentiation focus on WIDE markets. Cost-focus and focused-differentiation focus on NARROW markets.
Describe the two systems of decision making.
System 1: Intuitive and largely unconscious. System 1 operates automatically and quickly; it is our fast, automatic, intuitive, and largely unconscious mode. System 2: Analytical and conscious. System 2 is our slow, deliberate, analytical, and consciously effortful mode of reasoning, which swings into action when we have to fill out a tax form or park a car in a narrow space. System 1 uses association and metaphor to produce a quick and dirty draft of reality while system 2 draws one system 1 to arrive at explicit beliefs and reasoned choices.
What is the SWOT analysis?
The SWOT analysis is a situational analysis in which a company assesses its strengths, weaknesses, opportunities, and threats. Results from the SWOT provide you with a realistic understanding of your organization in relation to its INTERNAL AND EXTERNAL environments so you can better formulate strategy in pursuit of the company's mission. SWOT INSIDE MATTERS: Looks at the Strengths and Weakness within the company. SWOT EXTERNAL MATTERS: Looks at the Opportunities and Threats outside the company.
Big Data: What is it? How is it used?
The phenomenon known as *Big Data*, is the stores of data so cast that conventional database management systems cannot handle them so very sophisticated analysis software and supercomputing-level hardware are required. *Big Data* includes not only data in corporate databases, but also web-browsing data trails, social network communications, sensor data, and surveillance data. *Big Data analytics* is the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information.
What is the feedback loop, or better defined "planning/control cycle" that helps you keep in control, to make sure you're headed in the right direction?
The planning/control cycle as two planning steps and two controlling steps for ensuring control and that you're headed in the right direction. 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 in two ways either a) by correcting deviations in the plan being carried out or b) improving future plans. It serves as a continuous feedback loop/cycle.
What are three *wrong* assumptions of the Rational Model of Decision Making?
The rational model is prescriptive, as in, it describes how managers *ought* to make decisions. It doesn't describe how managers actually make decisions. 1) It assumes managers have complete information. 2) It assumes managers are able to make completely logical, unemotional analysis with no prejudices or emotional blind spots. 3) It assumes managers are able to make the best decision for their organization.
Define the rational model of decision making.
The rational model of decision making, also called the classical model, explains how managers should make decisions. It assumes managers will make logical decisions that are the optimal means of furthering the organization's best interests. There are four stages associated with rational decision making. Stage 1: Identify the problem or opportunity. Stage 2: Think up alternative solutions. Stage 3: Evaluate alternatives and select solution. 4) Implement and evaluate the solution chosen.
Why is "Assessing the current reality," step 2 in the strategic management process, important, and what is it?
The second step in the strategic mgt process is to do a "current reality assessment," or an organizational assessment, to look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organization's mission. Among the tools for assessing the current reality are* the SWOT analysis, VRIO analysis, forecasting, and benchmarking.
What are long-term goals?
These goals are generally referred to as strategic goals. They tend to span one to five years* and focus on achieving the strategies identified in a company's strategic plan. Ex. "We will increase revenue from new customers by 10% over the next 12 months."
What are short-term goals?
These goals are sometimes referred to as tactical or operational goals, or just plain goals. They generally span 12 months and are connected to strategic goals in a hierarchy known as a means-end chain.
What form of planning are first-line managers responsible for?
These managers are responsible for operational planning (1 to 52 weeks). They direct daily tasks of non managerial personnel, decisions that are often predictable, following a well-defined set of routine procedures.
What form of planning are top managers responsible for?
These managers are responsible for strategic planning (1-5 years). They make long-term decisions about the overall direction of the organization. They need to pay attention to the environment outside* the organization, be future oriented, and deal with uncertain and highly competitive conditions.
What form of planning are middle managers responsible for?
These managers are responsible for tactical planning (6 to 24 months). They are responsible for implementing the policies and plans of top management, supervise and coordinate activities of first-line managers below, and make decisions often without base of clearly defined information procedures.
What is the operating plan and how is it related to the action plan?
This plan is defined by one that "breaks long-term output into short-term targets [goals]." This plan turns strategic plans into actionable short-term goals and action plans. An action plan is defined as the course of action needed to achieve a stated goal. Whether it's a long/short-term goal, action plans outline the tactics that will be used to achieve a goal. These tactics may also contain a projected date for completing the desired activities.
What is a company's vision statement?
This statement answers the "What do we want to become?" A _______ is a long-term goal of describing "what" an organization wants to become. It is a clear sense of the future and the actions needed to get there. This statement expresses what the organization should become and where it wants to go strategically.
What does a company's values statement look like?
This statement answers the "What do we want to emphasize?" This statement is often called a core values statement, which expresses what the company stands for, its core priorities, the values its employees embody, and what its products contribute to the world. These statements become the "deeply ingrained principle and fabric that guide employee behavior and company decisions and actions, the behaviors the company and employees expect of themselves."
What is a company's mission statement?
This statement answers the "What is our reason for being?" An organization's ________ is its purpose or reason for being, and the _________ statement expresses the purpose of the organization. This statement also identifies the goods or services the organization provides and will provide. Sometimes, it also gives the reasons for providing them.
What are three types of objectives used in MBO?
Three types of objectives used in MBO are performance, behavioral, and learning. 1) Performance Objectives. Express the objective as an outcome or end-result. Ex. "Increase sport utility sales by 10%", "Reduce food spoilage by 15%." 2) Behavioral Objectives. Express the objective as the beheaviors needed to achieve an outcome. Ex. "Greet all customers with a smile and offer to assist, Ensure food is stored seal-proof, Attend five sessions of leadership training, Learn BMC by August 1." 3) Learning Objectives. Express the objective in terms of acquiring knowledge or competencies. Ex. "Attend sales training class, Learn how the features in our sports utility vehicles compare to competitors."
How is the VRIO analysis used to assess competitive potential?
VRIO is a framework for analyzing a resource or capability to determine its competitive strategic potential by answering four questions about its value, rarity, imitability, and organization. VALUE: Is the resource or capability valuable? (Valuable means "Does the resource or capability allow your firm to exploit and opportunity or neutralize a threat?" RARITY: Is the resource or capability currently controlled by only a few or no other firms? IMITABILITY: Is the resource or capability costly for other firms to imitate? ORGANIZATION: Is the firm organized to exploit the resource or capability?
What is value orientation?
Value orientation reflects the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions.
What are the three principles underlying strategic positioning and who is responsible for the work regarding strategic positioning?
fgMichael Porter/Strategic positioning. Porter claims strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. He said "It means performing different activities from rivals, or performing similar activities in different ways." 1) Strategy is the creation of a unique and valuable position.* Strategic position emerges from three sources: a) Few needs, many customers. b) Broad needs, few customers. c) Broad needs, many customers. 2) Strategy requires trade-offs in competing.* As a glance at the preceding choices shows, some strategies are incompatible. Thus, a company has to choose not only what strategy to follow but what strategy NOT to follow. 3) Strategy involves creating a "fit" among activities.* "Fit" has to do with the many ways a company's activities interact and reinforce one another. For instance, a strategy that looks really good at one company may not be successful in another because of the way that one strategy interacted/reinforced others within the company that made it successful or not.
