Role of the General Manager Flashcards
What is strategic management?
An ongoing process that evaluates and evolves a firm’s direction to create and sustain a competitive advantage.
What are the roles of a general manager?
Strategy formulation and implementation via assessing performance, setting direction, creating strategy, and implementing change
What are2 ways to assess firm performance?
- Organizational Health / Operating Performance
- Balanced scorecard
What are operating performance measures?
Quantitative measures of financial and market performance
What are organizational health measures?
Qualitative and quantitative measures of operating performance
What are the 4 quadrants of the organizational health/operating performance matrix?
- Desired state
- Complacent organization
- Troubled organization
- Crisis
What quadrant of the performance matrix are you in if you have high organizational health and operating performance?
Quadrant 1: Desired state
What quadrant of the performance matrix are you in if you have high organizational health and low operating performance?
Quadrant 2: Complacent organization
What quadrant of the performance matrix are you in if you have low organizational health and high operating performance?
Quadrant 3: Troubled organization
What quadrant of the performance matrix are you in if you have low organizational health and operating performance?
Quadrant 4: Crisis
What are the 4 questions of the balanced scorecard?
- Can we continue to improve and create value? Innovation/Learning
- What must we excel at? Internal
- How do customers see us? Customer
- How do we look to shareholder? Financial
How does the balanced scorecard work?
For each of the 4 areas, create key goals with leading and lagging measures attached to them. Data for the measures needs to be timely
What are some important points to ensure success of the balanced scorecard approach?
- Compensation of managers should be directly linked to the achievement of measures
- Must have ongoing support and involvement of senior management
What are the five types of quantitative financial indicators?
- Profitability ratios
- Liquidity ratios
- Financial leverage ratios
- Asset turnover ratios
- Other - dividends, cash flow
What are some examples of profitability ratios?
- Gross profit margin
- Return on assets
- Return on equity
- Earnings per share
Trend should be upward for these
What are some examples of liquidity ratios?
- Current ratio
- Quick ratio
- Working capital
Bigger amounts may or may not be better because the company has more internal funds
What are some examples of financial leverage ratios?
- Debt-to-assets ratio: low fractions are better
- Debt-to-equity ratio: should be around or less than 1
- Long-term debt to equity ratio: low ratios indicae greater capacity to borrow
- Time-interest earned (coverage) ratio: lenders insist minimum of 2.0
What are some examples of asset turnover ratios?
- Days of inventory: fewer is usually better
2.Inventory turnover: Higher is better - Average collection period: Shorter is better
What are some examples of other financial ratios?
- Dividend yield on common stock
- Price/earnings ratio
- Internal cash flow
- Percentage of sale from new products
What is the purpose of a vision for a company?
- It sets a strong sense of direction for the company
- It clearly communicates the purpose of the business
- Reinforces day to day actions
- Provides direction for strategy formulation
What is the difference between a vision and a mission?
- A vision is a guiding philosophy while a mission is a tangible image
- Mission can be thought of as vision after the influence of the external environment
- Vision concerns future business path while mission focuses on present business purpose
What are the components of a vision?
- Values which are the basic beliefs that guide behaviour
- Core beliefs which are the reason for being and are long term
What is the acid test for a useful vision statement?
A vision should be desirable and feasible, there should be flexibility in how management gets there and it should be a stretch for the organization to achieve
How do general managers create value for a company?
They play a key role in setting long term direction and are accountable for company performance
