Principles of Management
Substitute
A potential threat, customers use it as an alternative (ex: apple watch and galaxy watch)
vigilance
A process in which a decision maker carefully executes all stages of decision making
Concentric diversification strategy
A strategy used to add new businesses that produce related products or are involved in related markets and activities
system 2 information processing
A type of decision-making process that is reflective and done slowly with deliberative thought.
system 1 information processing
A type of decision-making process that is reflexive and done quickly without careful thought.
high-involvement organization
A type of organization in which top management ensures that there is consensus about the direction in which the business is heading
U.S. Patient Protection and Affordable Care Act
This act requires businesses with 50 or more FT employees to offer health insurance.
Attractive environment
This type of environment provides competitive advantage and high potential
unattractive environment
This type of environment puts a firm at a competitive disadvantage and offers low potential
contingency plans
alternative courses of action that can be implemented based on how the future unfolds
strategic maneuvering
an organization's conscious efforts to change the boundaries of its task environment
organic structure
an organizational form that emphasizes flexibility
ordinary capabilities
capabilities pertaining to basic administrative and operational functions
prospectors
companies that continuously change the boundaries for their task environments by seeking new products and markets, diversifying and merging, or acquiring new enterprises
defenders
companies that stay within a stable product domain as a strategic maneuver
This type of environment includes... -rivals -suppliers -buyers -new entrants -substitutes and complements
competitive environment
Barriers to entry
conditions that prevent new companies from entering an industry
buffering
creating supplies of excess resources in case of unpredictable needs
Political action
efforts to influence elected representatives to create a more favorable business environment or limit competition (ex: issue advertising; lobbying at state and national levels)
legal action
engaging company in private legal battle (ex: apple and qualcomm engaging in multibillion-dollar legal dispute)
Public relations
establishing and maintaining favorable images in the minds of those making up the environment (ex: adidas sponsoring the olympics)
Competitive aggression
exploiting a distinctive competence or improving internal efficiency for competitive advantage (ex: aggressive pricing, comparative advertising)
-raw materials -human resources -energy -financial resources -information -equipment
external environmental factors
Macroenvironment
general environment; includes legal, political, economic, technological, demographic, and social & natural factors that generally affect organizations
Inputs
goods and services organizations take in and use to create products or services
Regulators
government agencies that have the power to investigate company practices and take legal action to ensure complaince with law
ready-made solutions
ideas that have been seen or tried before
This type of environment includes... -economy -technology -legal/regulations -demographics -social issues -natural environment
macroenvironment
Communication occurring through orders and instructions occurs in a(n) _________ structure
mechanistic
Jobholders relay more heavily on rules occurs in a(n) _________ structure
mechanistic
Communication occuring through advice and information occurs in a(n) _________ structure
organic
Expertiste being highly valued occurs in a(n) _________ structure
organic
Jobholders relying more heavily on judgement occurs in a(n) _________ structure
organic
Open Systems
organizations that are affected by, and that affect, their environment
illusion of control
people's belief that they can influence events, even when they have no control over what will happen
Complement
potential opportunity because customers buy more of a given product if they also demand more of the complementary product (ex: Gym membership and workout clothes)
environmental scanning
searching for and sorting through information about the environment
independent strategies
strategies that an organization acting on its own uses to change some aspect of its current environment
outputs
the goods, services, and ideas that result from the conversion of inputs
benchmarking
the process of comparing an organization's practices and technologies with those of other companies
empowerment
the process of sharing power with employees, thereby enhancing their confidence in their ability to perform their jobs and their belief that they are influential contributors to the organization
certainty
the state that exists when decision makers have accurate and comprehensive information
uncertainty
the state that exists when decision makers have insufficient information
risk
the state that exists when the probability of success is less than 100 percent and losses may occur
Coalition
two or more group coalescing and acting jointly with respect to some set of issues for some period of time (ex: the business roundtable and the U.S. chamber of commerce lobby congress on behalf of business)
Voluntary action
voluntary commitment to various interest groups, causes, and social problems (ex: walmart donating supplies to wildfire victims)
environmental uncertainty
when managers do not have enough information about the environment to understand or predict the future
strategic alliance
A formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals.
b
A(n) ________ illustrates the four key drivers of a firm's long-term success and shows how goals in each area are linked to others. a. objective script b. strategy map c. GANTT chart d. PERT chart e. decision tree
External Environment
All relevant forces outside a firm's boundaries, such as competitors, customers, the government, and the economy.
Corporate Diplomacy
An umbrella term for attempting to influence external stakeholders through a variety of strategic activities
corporate diplomacy
An umbrella term for attempting to influence external stakeholders through a variety of strategic activities
Ordinary
Capable people, facilities and equipment, procedures and routines, and administrative coordination are all examples of __________ capabilities
satisficing
Choosing an option that is acceptable, although not necessarily the best or perfect.
programmed decisions
Decisions encountered and made before, having objectively correct answers, and solvable by using simple rules, policies, or numerical computations.
Equal Employment Opportunity Commission (EEOC)
Enforces federal laws that prohibit discrimination in the workplace
Occupational Safety and Health Administration (OSHA)
Enforces workplace safety and health standards
domain selection
Entering a new market or industry with an existing expertise
d
Giselle wants to apply the differentiation strategy to build competitive advantage in her plumbing company. Of the strategies below, which one best exemplifies the differentiation strategy? a. hiring qualified professionals to offer the service b. sending out marketing fliers to new home owners c. offering prices that are competitive in the market d. offering a free hour of service to first-time customers e. assuring that the plumbers keep appointments on time
Michael Porter
Harvard Business School professor who states successful managers do more than simply react to the environment; they act in a way that shapes/changes the organization's environment
dynamic capabilities
Higher-level strategic capabilities (compared with ordinary capabilities) that aid rapid adaptation.
a
In a SWOT analysis, the lack of spare production capacity would be considered a(n) a. weakness. b. opportunity. c. strength. d. weakness and a threat. e. threat.
Office of Federal Contract Compliance Programs (OFCCP)
Monitors federal contractors to make sure they take affirmative action to ensure equal employment opportunity
Securities and Exchange Commission (SEC)
Protects investors and maintains fair, honest, efficient markets
National Labor Relations Board (NLRB)
Safeguards employees' rights to organize and to determine whether to have unions as their bargaining representative
Dynamic
Sensing change, seizing opportunities, and changing practices faster than competitors do are all examples of __________ capabilities
cooperative strategies
Strategies used by firms who want to reach their objectives in cooperation with other firms through alliances and partnerships rather than by competing with them.
competitive environment
The immediate environment surrounding a firm; includes suppliers, customers, rivals, and the like.
Supply Chain Management
The managing of the network of facilities and people that obtain materials from outside the organization, transform them into products, and distribute them to customers
Organizational climate
The patterns of attitudes and behavior that shape people's experience of an organization
b
The planning level with the longest time horizon is known as ________ planning. a. tactical b. strategic c. operational d. managerial e. vertical
c
The planning process is similar to the ________ process in that both have a series of steps that are typically repeated in a cycle. a. environmental analysis b. goal-setting c. decision-making d. strategy-mapping e. tactical alignment
Organization culture
The set of important assumptions about the organization and its goals and practices that members of the company share
d
Which of the following is one among the six major components of the strategic management process? a. technology assessment b. stockholder reporting c. stakeholder analysis d. SWOT analysis e. skill improvement plan
d
Which of the following is true of operational planning? a. It is performed by top-level managers. b. It is a long-term plan spanning over three years. c. It focuses only on processes required in the higher organizational levels. d. It identifies specific plans and procedures. e. It translates broad strategic goals into specific goals.
c
________ include sets of actions to be taken when a company's initial plans have not worked well or if events in the external environment require a sudden change. a. Strategic maps b. Business incubators c. Contingency plans d. Differentiation strategies e. Functional plans
e
________ provides individuals and work units with a clear map to follow in future activities. a. Charting b. Staffing c. A mission statement d. A BCG matrix e. Planning
discounting the future
a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits
final consumer
a customer who purchases products in their finished form
intermediate consumer
a customer who purchases raw materials or wholesale products before selling them to final customers
framing effects
a decision bias influenced by the way in which a problem or decision alternative is phrased or presented
maximizing
a decision realizing the best possible outcome
divestiture
a firm selling one or more businesses
diversification
a firm's investment in a different product, business, or geographic area
mechanistic organization
a form of organization that seeks to maximize internal efficiency
groupthink
a phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus
Cooptation
absorbing new elements into the organization's leadership structure to avert threats to its stability or existence (ex: consumer and labor representatives are added to a large retailer's board of directors)
optimizing
achieving the best possible balance among several goals
competitive pacification
independent action to improve relations with competitors (ex: a food truck parking farther away from an established truck)
competitive intelligence
information that helps managers determine how to compete better
This type of environment includes... -culture -values -climate
internal environment
smoothing
leveling normal fluctuations at the boundaries of the environment
Flexible processes
methods for adapting the technical core to changes in the environment
flexible processes
methods for adapting the technical core to changes in the environment
contraction
negotiating an agreement between the organization and another group to exchange goods, services, info, patents, etc. (ex: starbucks and keurig green mountain enter into a contract to offer more starbucks L-Cup pack offerings)
custom-made solutions
new, creative solutions designed specifically for the problem
nonprogrammed decisions
new, novel, complex decisions having no proven answers
acquisition
one firm buying another
merger
one or more companies combining with another
conflict
opposing pressures from different sources, occurring on the level of psychological conflict or conflict between individuals or groups
