Chapter 6 Flashcards
Banana Republic Example
Banana Republic changed their product into an marketing offering that consumer did not like. As a result they had to change back to their old clothing line. This illustrates the idea that once you take an exit its not so easy to get back on the highway.
Unrelated Diversification
This is when a company moves into industries that are unrelated to the ones that they are currently it. This called Unrelated Diversification. Ex: Walmart doing credit cards.
Related Diversification
This is when a company moves into industries that are related to the one they are currently in. Ex: 9West selling shoes and watches alongside the purses they currently sell.
Goals
Goals are outcome statements that depict what an organization is trying to accomplish. They are a reflection of major actions of the organization and provide rallying points for managers.
Ex: Walmart - grow their revenue 20% per year. (Outcome Statements: What outcome do we want)
Objectives
These are precise, time bound and measurable action statements that support a goal. They are more detail oriented than goals. They are the micro to the goals macro.
Ex: Walmart - Open 20 new stores in the next 6 months. (Action Statements: What action are we going to do)
Objectives in Relation to Goals
Objectives usually must be
1) Directly Related to Goals
2) Be clear, concise, and understandable
3) Be stated in terms of results
4) Begin with an action Verb
5) Specify a date for accomplishment
6) Be measurable
Strategic Goals
Broad and Unspecific (MACRO) It is longer on a timescale than an operational goal but shorter than Mission and Vision.
Operational Goals
Specific, targeted, dated, calculated (MICRO) It is shorter on a timescale than Strategic Goals and Mission and Vision
Strategic and Operational Goals:
They must work together in order to complete the firms mission and vision.
Management by Objectives (MBO)
A process where employees and their supervisors negotiate the objective that both parties should be responsible in fulfilling. This way, all team members have an idea of what to do and what they should expect the others to be doing. Generally the subordinates are not gives clear paths that they must follow to achieve a goal but rather they are allowed to be free and creative in their process. This is done to provide empowerment to the employees to achieve their own goals and plans, which plays into the corporation as a whole.
Management by Objectives Process
1) Set Company Wide Goals
2) Set Team and Department Level Goals
3) Negotiate the Individual Goals for employees and Managers
4) Developing and Action Plan
5) Periodically reviewing performance and revising goals
(CTNPR)
Management by Objectives (MBO) vs Scientific Management
MBO = Focuses on goals, managers and employees can negotiate individual goals, employees are empowered
SM = Focused on tasks, No room for negotiation, employees are treated as Robots
SMART Goals
- Scientific
- Measurable
- Agressive
- Realistic
- TImely
Why do measure performance?
- This way you can see what you have been doing right and what you have been doing wrong. We can assign accountability this way.
- It allows us to reward staff who are doing a good job.
- Can be a source of motivation
- Tells us if we are on track
- Directs attention to key tasks and outcomes
On the Folly
Promote thing A but reward the opposite thing B
