Module 1: Business Management & Strategy Flashcards
Decentralization
degree to which decision-making authority is given to lower levels in an organization’s hierarchy. Pushing a decision down to its lowest authority level in an organization produces a quick response to problems.
Centralization
the degree to which decision-making authority is restricted to higher levels of management. When economies of scale are important, a single decision-making authority can best guarantee the consistency of results.
strategic planning phases
Strategy formulation - vision and mission statements are developed. Organizational values are defined.
Strategy Development - SWOT analysis, long term objectives defined. Strategies to achieve those objectives are defined.
Strategy implementation - Short-term organizational objectives are established. Action plans to achieve those objectives are developed. Resources are allocated, focus on motivating employees to manage the plan.
Strategy Evaluation - Strategies are reviewed. Performance toward objectives is measured. Corrective action is taken.
Think F-DIE
Environmental scanning
process that involves a systematic survey and interpretation of relevant data to identify external opportunities and threats and to assess how these factors affect the organization currently and how they are likely to affect the organization in the future.
Seven general factors shape the external environment and affect an organization’s success and productivity. HR professionals should consider demographic, economic, employment, international, political, social, and technological factors when conducting an environmental scan.
Michael porter
According to Michael Porter, there are three potentially successful generic strategies: cost leadership, differentiation, and focus.
Balance sheet
The balance sheet is a statement of a firm’s financial position: its assets, liabilities, and equity at a particular time. Balance sheets change as each transaction is recorded. Transactions without a definite monetary amount are not placed on a balance sheet.
Assets = liabilities + equity (ALE)
Long term objective
A long-term objective outlines specific results that an organization seeks to achieve in pursuing its basic mission. This type of objective generally is achieved within a three- to five-year time frame.
Roles of HR
Administration: focuses on dealing with compliance issues and record keeping, often via human resource information systems (HRIS)
Operations: day-to-day tasks necessary to run an organization - recruiting for current job openings, resolving employee complaints, communicating with employees—that are typically associated with the day-to-day management of people.
Strategic: may involve helping the organization prepare for change, forecasting human capital needs for specialized skills and knowledge that will be required to achieve strategic goals, leading talent management, restructuring the organization, and developing performance management systems that support strategic objectives.
Extended organization
The businesses remain separate entities but may appear to outsiders as one entity. Extended organizations are commonly formed through the use of outsourcing. The extended organization is becoming more common today as supply chain partners create processes and information channels that allow their organizations to communicate and collaborate fluidly at many different functional points.
M&A process
- Preparation: issue identification, team formation and training, preparation for change
- Due diligence: intensive investigation to ensure risks are understood - structural, technological, financial, legal, cultural
- Planning integration of the business entities
- Implementation, monitoring, and measurement
Divestiture
Shedding assets or business units that do not contribute to the bottom line
“Say on Pay” provision of Dodd-Frank
Executive compensation for publicly held financial companies must be reviewed and approved by shareholders at least every three years.
Incremental budgeting
In incremental budgeting, the prior budget is the basis for funding allocation.
Formula-based budgeting
In formula budgeting, a specific cost is applied to calculate funding. This method applies an average cost to comparable expenses, and general funding is changed by a specific amount. E.g 5% system wide decrease
Zero-based budgeting
In zero-based budgeting, budgets start at zero and all expenditures must be justified for each new period—even those that repeat from the prior budget.