Test 2 Flashcards
Planning
-Choosing a goal
-developing a strategy to achieve that goal
Benefits of planning
-intensifies efforts
-leads to persistence
-provides direction
-encourages the development of tasks/strategies
-works for companies/individuals
Goal Commitment
Determination to achieve a goal
Goal Commitment Techniques
-Setting goals participatively
-Making the goal public
-Obtaining top management support
Proximal Goals
short-term/subgoals
Distal Goals
long-term or primary goals
Strategic Plans
-Overall company plans
-clarify how the company will serve customers and position itself against competitors
-over two to five years
-Top management
Tactical Plans
-Plans created and implemented by middle managers
-direct behavior, efforts, and attention
-over six months to two years
Operational Plans
-Day to day plans
-developed and implemented by lower-level managers
-producing or delivering the organization’s products and services
-over a 30 day to 6 month period
Type of Operational Plans
-single use
-standing plans
-budgets
Standing Plans
Plans used repeatedly to handle frequently recurring events
Decision Making
process of choosing a solution from available alternatives
Rational Decision Making
-Systematic process
-defining problems
-evaluating alternatives
-choosing optimal solutions
Rational Decision Making Steps
1.) define the problem
2.) identify decision criteria
3.) weigh the criteria
4.) generate alternative courses of action
5.) evaluate each alternative against each criterion systematically
6.) compute the optimal decision
Two ways to weigh the criteria
-Absolute comparison (compared to standard)
-Relative comparison (compared to one another)
Rational Decision Making Limits
-Managers don’t operate in a perfect world with no restraints
-Makes it difficult to maximize decisions
-Maximize
-Satisfying
Maximize (Rational Decision Making)
choosing best alternative
Satisfying (Rational Decision Making)
choosing a “good enough” alternative
Resources
-The assets and knowledge used by an organization
-Improves effectiveness/efficiency
-Creates and sustains competitive advantage
Competitive Advantage
Providing greater value for customers than competitors can
Strategy-making process steps
1.) Assess need for strategic change
2.) Conduct situational analysis (SWOT)
3.) Choose strategic alternatives
Competitive Inertia
A reluctance to change strategies or competitive practices that have been successful in the past
Strategic Alternatives
-Managers should choose a risk avoiding strategy/risk seeking strategy
- based on whether the company falls above or below strategic reference points
SWOT
-assessment of the strengths and weaknesses in an organization’s internal environment
-opportunities and threats in its external environment.
Distinctive Competence
What a company can make, do, or perform better than its competitors
Portfolio Strategies
A corporate level strategy that minimizes risk
-diversifying investment among various businesses or product lines
Diversification (Portfolio)
-A strategy for reducing risk
-buying a variety of items
-failure of one stock or one business does not doom the entire portfolio
Boston Consulting Group (BCG)
-BCG categorizes a corporation’s businesses by growth rate and relative market share
-helps managers decide how to invest corporate funds
BCG Categorization
-Question mark
-Cash cow
-Dog
-Stars
Question Mark (BCG)
-small market share
-high market growth
Cash Cow (BCG)
-large market share
-low market growth
Dog (BCG)
-small market share
-low market growth
Stars (BCG)
Large market growth
-high market growth
Grand Strategies
-used to achieve strategic goals
-guide strategic alternatives that managers of individual businesses or subunits may use
Grand Strategy Types
-Growth strategy
-Stability
-Retrenchment
-Recovery
Growth strategy (grand strategy)
-Focuses on increasing profits, revenues, market share, or the number of places in which the company does business
-Merger/acquisition (external)
-Expanding existing business
Stability strategy (grand strategy)
Focuses on improving the way in which the company sells the same products or services to the same customers
Retrenchment strategy (grand strategy)
-Focuses on turning around very poor company performance by shrinking the size or scope of the business
-Cost reductions, laying off employees, closing stores
Recovery strategy (grand strategy)
Taken after retrenchment to return to growth strategy
Porter Industry Strategies
-Bargaining power of suppliers
-Threat of new entrants
-Bargaining power of buyers
-Threat of substitute product/service
Positioning Strategies
-Protects your company from the negative effects of industry-wide competition
-creates a sustainable competitive advantage
Positioning Strategy Types
-Cost leadership
-Differentiation
-Focus strategy
Cost Leadership (positioning strategy)
-Producing a product or service of acceptable quality at consistently lower production costs than competitors can
-firm can offer the product or service at the lowest price in the industry
Differentiation (positioning strategy)
-Providing a product or service that is sufficiently different from competitors offerings
-customers are willing to pay a premium price for
Focus Strategy (positioning strategy)
-produce a specialized product or service
-for a limited, specifically targeted group of customers in a particular geographic region/market segment
Organizational innovation
The successful implementation of creative ideas in organizations
Various innovation streams
-Technological discontinuity
-Discontinuous change
-Dominant design
Technological Discontinuity (innovation streams)
-Performance/functional breakthrough
-created by a scientific advance or a unique combination of existing technologies
Discontinuous change (innovation streams)
-Technological substitution
-Design competition
Dominant Design (innovation streams)
New technological design/process that becomes the accepted market standard
Creative Work environments
Workplace cultures in which workers perceive new ideas are welcomed, valued, and encouraged
organization decline
-A large decrease in organizational performance
-occurs when companies don’t anticipate, recognize, neutralize, or adapt to the internal or external pressures that threaten their survival
Managing Resistance to Change
-Unfreezing
-Change intervention
-Refreezing
Unfreezing (resistance to change)
Getting people affected by change to believe that change is needed
Change Intervention (resistance to change)
The process used to get workers and managers to change their behaviors and work practices
Refreezing (resistance to change)
Supporting and reinforcing new changes so they stick
Direct Foreign Investment
Method of investment in which a company builds a new business or buys an existing business in a foreign country
Different types of Trade Barriers
-Protectionism
-Tariff
-Nontariff barriers
-Quotas
-Voluntary export restraints
-Gov’t import standard
-Subsidies
-Customs classification
Protectionism (barrier)
Gov’t trade barriers to shield domestic companies and their workers from foreign competition
Tariff (barrier)
Direct tax on imported goods
non tariff barriers
Nontax methods of increasing cost/reducing the volume of imported goods
Quotas (barrier)
Limit on the number of imported goods
voluntary export restraints (barrier)
Imposed limits on the number or volume of products exported to a particular country
Government import standard (barrier)
Standard established to protect the health and safety of citizens
Subsidies (barrier)
Gov’t loans, grants, and tax deferments given to domestic companies to protect from foreign trade
Customs classification (barrier)
Classification assigned to imported products by gov’t officials that affects the size of the tariff and the imposition of import quotas
Trade agreements
-General Agreement on Tariffs and Trade (GATT)
-World Trade Organization (WTO)
General Agreement on Tariffs and Trade (GATT)
-Worldwide trade agreement
-Limited government subsidies
-Establish protections for intellectual property
World Trade Organization (WTO)
-Successor of GATT
-Only international organization dealing with the global rules of trade between nations
-Main function is to ensure that trade flows as smoothly, predictably, and freely as possible
global consistency
-The multinational company has offices, manufacturing plants, and distribution facilities in different countries
-runs them all using the same rules, guidelines, policies, and procedures
-Simplifies decisions
-Involves risk using management procedures poorly suited to country’s markets, cultures, and employees
Local Adaption
-Modifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, gov’t, and regulatory agencies
-Risk of losing cost-effectiveness and productivity that result from using standardized rules/procedures
-Locally sourcing inputs is desired
Exporting
Selling domestically produced products to customers in foreign countries
Strategic alliance
Agreement in which companies combine key resources, cost, risks, technology, and people
Joint venture (Strategic alliance)
-Two existing companies collaborate to form a third
-independent company
-engage in a clearly defined business activity
wholly owned affiliates
Foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company
