Exam 3

Question 1

List the four components of a SWOT analysis

Answer 1

• Strengths
• Weaknesses
• Opportunities
• Threats

Question 2

Compare and contrast the three levels of strategy in an organization

Answer 2

• There are 3 levels of strategy in an organization:
  1) Corporate-level: involves the whole organization, most concerned with answering the question “What business are we in?”, and these decisions often involve issues of growth, retrenchment, and/or joint ventures.
  2) Business-level: Concerned with the question “How do we compete?”, focus on how the individual business unit competes within its industry, and may involve such issues as advertising, product changes, and new-product development.
  3) Functional-level: Concerned with the question “How do we support the business-level strategy?”, involving all of the organization’s major functions, these types of strategies link the functional unit with the strategic business unit.

Question 3

In order for companies to remain competitive, their strategies must focus on three things. Describe these three focuses

Answer 3

1) Core competence- something the organization does very well in comparison to its competitors, and represents the competitive advantage because the company acquires expertise that the competitors do not have
2) Synergy-Occurs when organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone, which may cause the organization to attain a special advantage with respect to cost, market power, technology, or management skill.
3) Value Creation-Should be at the heart of strategy, because value is the combination of benefits received and costs paid by the customer and is created by devising strategies that exploit core competencies and attain synergy.

Question 4

Briefly discuss Porter’s three competitive strategies

Answer 4

1) Differentiation-Involves the organization attempting to distinguish its product or service from those of its competition. Advertising, product features, and customer service are some of the ways an organization can successfully differentiate
2) Cost Leadership-Based on the organization achieving a low-cost position relative to the competition. Cost leadership must be achieved through the operation of efficient facilities, cutting costs, or maintaining tight cost control.
3) Focus-When a company uses differentiation or a cost leadership strategy in a particular market or buyer group, and it allows the organization to concentrate on a narrow market niche.

Question 5

List the guidelines of innovative group decision-making in today’s businesses

Answer 5

• Start with brainstorming
• Know when to bail
• Avoid groupthink
• Engage in rigorous debate

Question 6

What are the six steps in the managerial decision making process?

Answer 6

1) Recognize the decision requirement
2) Diagnose and analyze the causes
3) Develop alternatives
4) Select the desired alternatives
5) Implement the chosen alternative
6) Evaluate and determine feedback

Question 7

Compare and contrast authority, responsibility, accountability, and delegation

Answer 7

• Authority is the formal and legitimate rights of a manager to make decisions, issue orders, and allocate resources
• Responsibility is the duty to perform the task that has been assigned
• -Many argue that authority and responsibility go hand-in-hand; for example, in order for someone to fulfill their responsibility, they must have an equivalent level of authority
• Accountability means that those with authority and responsibility are subject to reporting and justifying task outcomes to those higher in the chain of command
• -Accountability brings authority and responsibility together
• -Delegation allows managers to transfer authority and responsibility to those lower in the organizational hierarchy.
• Delegation should increase an organization’s flexibility by allowing people “on the spot” to make decisions.

Question 8

List the factors that are associated with less supervisor involvement and thus larger spans of control

Answer 8

1) Work performed by subordinates is stable and routine
2) Subordinates perform similar work tasks
3) Subordinates are concentrated in a single location
4) Subordinates are highly trained and need little direction in performing tasks
5) Rules and procedures defining task activities are available
6) Support systems and personnel are available for the manager
7) Little time is required in nonsupervisory activities such as coordination with other departments or planning
8) Managers’ personal preferences and styles favor a large span

Question 9

Identify the three factors that typically influence centralization versus decentralization

Answer 9

1) Greater change and uncertainty in the environment are usually associated with decentralization
2) The amount of centralization or decentralization should fit in the firm’s strategy
3) In times of crisis of company failure, authority may be centralized at the top

Question 10

Describe reengineering and what it involves

Answer 10

• Reengineering, sometimes called business process reengineering, is the radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed.
• It involves a shift to a horizontal structure based on teams.
• Basically, it means starting over, throwing out all the notions of how work was done and deciding on how it can best be done now