Unit 11 - Business Strategy Flashcards
Management Process
Planning -> Organizing -> Leading -> Controlling ->
Planning
- Defining goals
- Establishing strategy
- Develop plans (strategic, functional, tactical)
Organizing
- What tasks to do
- Who will do them
- How to group tasks
- Who reports to whom
- Where decisions are to be made
- Also recruiting, selecting, training, and performance evaluation
Leading
- Motivating employees
- Directing activities of others
- Selecting effective communication channels
- Resolving conflicts
Controlling
- Monitoring performance
- Comparing it with goals
- Correcting significant deviations
Planning is…
the primary role of management
Internal Environment
- Organizational structure
- Vision
- Mission and Values
- Culture
- People and workforce diversity
- Technology
- Physical Assets
- Intellectual Property
External Environment
Macro forces like:
- Economic Cycles
- Technological Changes
- Social and demographic changes
- Environmental factors specific to the firm’s industry and markets
Planning must consider…
the external context of the firm, and is aligned with the internal resources and capabilities of the firm.
Why planning is important:
- Gives direction to managers and employees
- Reduces uncertainty
- Establishes goals and standards that facilitate control
- Involves and engages all levels of the organization
Residual Uncertainty
- Truly unknowable
- Important in assessing risk and will influence the methods used to formulate strategy
Control requires…
a collection of performance data
How to collect performance data:
- Fully automated processes
- Operational Monitoring
- Observing business activities
Managers and Employees who participate in business planning with tend to have…
higher job satisfaction
Business planning correlates with…
stronger financial performance
Quality business plans:
- Function of management participation
- Commitment to planning process
- Knowledge, skills, and abilities of planning teams
- Planning processes and methods that were followed
Types of Organizational Structures
- Hierarchical (Tall)
- Flat (Networked)
Hierarchical Structure
- Many layers of middle management - often inefficient bureaucracies
- Senior Managers make most operational decisions, authority gained from several layers up before taking action
- Information flows top down
- Works well in stable environment
Flat Structure
- Front line employees make range of decisions
- Information flows top down and bottom up
- Few levels of middle management
- Decentralized decision-making and planning critical in dynamic environments
The more hierarchical an organization is…
the more mechanistic or bureaucratic it becomes
Levels of management
1) Senior/Top Managers - Strategic Planning
2) Middle Manages - Functional Planning
3) First-line Managers - Tactical/Operational Planning
4) Team Leaders
Senior Managers plan for…
longer term and general goals
First-Line Managers plan for…
narrow, short and specific goals at lower levels
Tactical Plans also referred to as…
Operating Plans, work plans, and schedules
Most common types of strategic plans:
- Corporate
- Business Unit
- Functional plans
Most common tactical plans:
- Budgets
- Schedules
Strategic Plans:
- Broadly impact the firm
- Determines New Markets to enter or Existing Markets to leave.
- Identifies initiative to create and sustain competitive advantage
- Driven by management’s vision, mission and values
- Covers extended planning horizons
Key Issues addressed by strategic planning at Corporate Level:
- Determining markets
- How financial human capital will be allocated
- What services will be shared across the organizational units
Strategic planning at the business unit of functional levels deals with:
- Positioning the business unit’s products and services relative to competing firms
- Objective: Leverage resources of organization to achieve competitive advantages
Strategic Plans driven by:
- Organization’s overal mission
- Management’s vision
- Future goals and objectives of the organization
Goals developed at the strategic planning level tend to be:
- More directional in nature rather than specific.
- Made more specific as planning cascades down the organization.
Strategic Plans cover…
extended periods of time
Regardless of how volatile the industry is, most organizations will…
- set out very long term goals and objectives, 10 years or more out into the future.
- These goals do not drive the more immediate development strategic plans, but instead become long-term targets that guide several generations of strategic planning
SBUs
Business Unit Levels of the firm
2 Common Organizational Structures
1) Functional
2) Divisional
Functional Structure
1) CEO/President
2) SVP Marketing, Manufacturing, Finance, Logistics, Administration
- Single SBU- Business with 1 or more lines of business
Divisional Structure
1) CEO/President
2) EVP Infant Apparel, EVP Infant Toys, CTO Technology, CTO Finance, SVP HR
3) Marketing and Sales
4) Production
5) Design, Research and Development
- Infant Apparel and Infant Toys are 2 SBUs that Share Common Services: Technology, Finance and HR
The structure used by any specific organization will depend upon:
1) Management Objectives
2) Business Complexity
SBUs will usually have:
- Products
- Customers
- Competitors
- Supply Chains
- Logistical Operations
- Strategic Business Partners
SBU Strategy…
is directed towards creating and sustaining competitive advantage
A divisional structure allows senior managers to…
- delegate profit responsibilities down to the divisional leadership
- fixes accountability at a level below the CEO
Organizations with a single line of business may be…
organized divisionally by geography or by customer, but are usually organized functionally below the CEO level
Functional Structures tend to be…
More efficient than divisional structures
As you go down the SBU organization, the operating areas will be…
departmentalized for management, coordination, and control purposes
An SBU that uses functional departmentalization may be comprised of:
- Marketing
- Manufacturing
- Operations
- Technology
- Administration
- Supply Chain Management
among other functions
Functional departmentalization will vary based on:
- the industry the business unit competes in
- the firm’s propensity for outsourcing business activity
