Unit 2 Flashcards
Monopoly
The ideal condition for a firm to operate is in monopoly conditions
Monopoly: No rivals, facing no competition for researches or customers
Lack of competitors = remains unchallenged
Oligopoly
Few competitors dominate the industry. Ex. Airline industry
Hyper-competition
Many direct competitors, and competitive advantages are short lived. Ex. Fast food industry
Define forecasting
The proccess of predicting what will happenin the future
State and explain the different types of forecasting.
Qualitative Forcasting: Uses expert opinions to predict the future
Quantitative Forcasting: Uses mathematical models and statistical analysis of historical data and surveys to predict future events.
Why should managers be cautious of forecasting?
Managers should be cautious of forecasting because they rely of human judgement, which as the potential to be wrong. As well, they are planning aids, and should not be used as substitutes.
What is contingency planning?
Contingency planning identifies alternative courses of action to take when things goes wrong.
Define scenario planning
Scenario planning identifies alternative future scenarios and makes plans to deal with each one.
Define benchmarking. Provide your own example
Customer Service: Comparing the time eah company takes on average to respond to customers helps identify areas fo improvement for customer satisfactions and efficiency.
Sales: Comparing the sales of different companies with similar products help determine ways to improve demand, conversion rates, and revenue.
Porter’s Five Forces Model
Industry competition: The intensity of rivalry among firms in its industry and the ways they behave competitively towards one another
New Entrants: the threats of new competitors entering the market, based on the presence or absence of barriers to entry
Substitute products or Services: the threat of substrate products or services, based on the ability of consumers to find what they want from other sellers.
Bargaining power of suppliers: the ability of resource suppliers to influence the price that they will pay for the firm’s products or services.
Bargaining power of customers: ability of customers to influence the price that they will pay the firm’s products or services
Industry Attractiveness
Determines the attractiveness of an industry
Influences a firm’s long-term returns
Long Range Plans
Long range plans will look 3 or more years into the future
Top-level management is more likely to be involved in setting long-range plans/directions for an organization. Everyone in an organization needs to understand who the long-term plan is.
Daily events will divert attention from important
People will end up working hard without achieve
Intermediate and Short range Plans
- Lower-level management focus more on short-range planning to help achieve the bigger goal
- Elliott Jaques suggested that people vary in their capacity to think with different time horizons.
Todays Planning Complexities
Long range planning for even top level managers have become more difficult because of how quickly things evolve
Technology has made long range planning shorter and shorter
Strategic Plans
Strategic planning is mainly used by top level management
These are long term plan that create general directions for an organization
This is helpful in appropriately allocating resources and tasks
It all starts with having a vision for your organization (clear purpose for the organization and what is hopes to be in the future)
Although this involved long term planning managers must also by dynamic
Tactical Plans
Tactical plans are developed to help implement strategic plans
These are typically intermediate range pland
In sports organizations you can think of this as the use of special plays or contingency plans
Tactical plans often take form the functional plans
Functional Plans
Production plans- dealing with work methods and technology
Financial Plans dealing with money and capital investments
Facilities plans dealing with facilities and work layout
Logistics pans dealing with suppliers and acquiring resource input
Marketing plan dealing with selling and distribution and distributing goods or service s
Human resources plans dealing with building a talented workforce
Operation Plans
Operational plans identity short term activities to implement strategic plans
Operational plans include both standing plans and single use plans
Standing plans policies and procedures that used over and over again
Single use plan used for one specific task or time period (ex. Budget plan)
Policy vs Procudure
Policy is a standing plan that communicated broad guidelines for decisions and actions
Procedure- rules that precisely describe actions that are to be taken in specific situations
Budget
a plan that commits resources to projects activities
Zero based budget
Zero based budget approached each budget period as if it were brand new and does not guarantee renewal of past budget or additional funds
What are the two main focuses of the planning process?
Decide where you want to go (setting objectives)
Decide how best to go about it
List and describe the 5 steps in the planning process.
Define your objectives: Identify what desires and results you want to accomplish. Be specific in your goal, and set certain goal points you want to reach in order to track how far off the mark you are.
Determine where you stand in relation to objectives: Determine what strengths work and weaknesses that may hold you back. Evaluate current accomplishments relative to the desired results.
Develop future premises regarding future conditions: Anticipate future events. Generate sceneries that may happen. Identify things that may help or hinder your progress towards the goal.
Analyze alternatives and make a plan: List and evaluate possible actions. Describe what must be done to follow the best course of action
Implement the plan and evaluate results: Take action and carefully measure your progress towards objectives. Follow through with the plan. Evaluate results, correct actions, and revise plans as needed.
List and describe the 3 benefits of planning
Planning improves focus and flexibility: An organization with flexibility is willing to change and adapt to shifting circumstances. Improves performance for success and allows for more opportunities within the workplace.
Planning improves action orientation:
Planning helps individuals and organizations to stay competitive through setting clear performance targets. It prevents complacency traps, and avoids making impulsive.
Planning improves coordination and control:
When plans are coordinated, there is a likelihood that their combined accomplishments will advance performance for the organization. Well done planning facilitates control. Without planning, control lacks objectives and standards for measuring the progress within an organization, and evaluating measures to take to improve performance.
What is a complacency trap?
When an organization lacks awareness and concern for potential problems, resisting change and being overly comfortable in current strategies, leading to failure. It’s an organization simply being carried along by the flow of events.
What does it mean to be calendar bound?
When an organization is tightly scheduled and maintains a highly structured daily agenda. It prevents flexibility and plans for spontaneous events that may occur.
Why do even the most well thought out plans need to sometimes be revised?
Every plan needs to allow for flexibility and revision as there are the risks of unexpected events that occur and are out of control of the organization. As well, if the initial plan does not meet the organizations’ expectations, then reviewing a plan may be beneficial and improve efficiency and outcomes. As well, flexibility allows businesses for more opportunities.
Mission
Mission: statement that express the organization’s reason for existence
What are we moving to?
What kind of impact do we want to make in the world?
What do we want to be known for?
A clear mission also helps inspire the support and respect of an organization’s stakeholders
What is Organizational Culture
Organizational Culture is the predominant value system for the organization as a whole
The observable and audible atmosphere in an organization, noticed by visitors, customers, and employees. It’s reflected in conversations and actions, often summarized as “the way we do things here.”
Levels of Organizational Culture
Organizational culture has two main levels, often compared to an iceberg:
- Observable Culture (Above the Surface)
Visible actions and events – What one sees and hears in the workplace.
Examples:
Dress code and office arrangement
Interactions between employees and with customers
Language and tone used in conversations
Daily behavior patterns. - Core Culture (Below the Surface)
Underlying values – The deep-rooted beliefs and assumptions that guide behavior.
Examples of Core Values:
Innovation & risk-taking
Ethics & integrity
Social responsibility
Customer service
Performance excellence
Teamwork
Worker involvement
Strong Core Culture:
Found in high-performing organizations.
Shared and enduring values.
Shapes decisions, behaviors, and company direction
Operating Objectives
Purpose
Translate the mission statement and core values into specific performance targets..
Typical Business Operating Objectives:
Profitability – Achieving a net profit.
Financial Health – Securing capital and generating positive returns.
Cost Efficiency – Using resources effectively to minimize costs.
Customer Service – Meeting customer needs and building loyalty.
Product Quality – Delivering high-quality goods or services.
Market Share – Gaining a greater portion of the customer base.
Human Talent – Attracting and retaining a skilled workforce.
Innovation – Creating new products, services, or processes.
Social Responsibility – Contributing positively to society.
Stakeholders
Being individuals and groups who are directly affected by the organization.
In many cases the personal values of a found/leader become part of the organizational culture
Refers to the predominant values system of the organization as a whole
Business Stakeholders
(mission statements) - asked to identify of tet by writing down which ones there are, people usually mess up on supplier
Employees
Communities
Shareholders
Customers
Supplies: we think of our supplies as patterns who share our goal of…. Highest quality
Elliot Jaques Time Horizons
Most of us in 3 month time frame
A few of us 1 year time frame
Very few of us 20 year time frame
Pest Analysis
An analysis of the Organization’s Environment
Political: Laws and regulations, government policies.
Economics: general environment influenced by customer spending, resource supplies, and investment capital
Socio-Cultural: Norms, customs, social values, general roles.
Technological: developments in technology and the edge of another technology revolution.
Change Leaders vs. Status Quo Managers
Change Leaders
Confident, proactive, risk-takers
Embrace new ideas & innovation
Make things happen
Expect surprises and adapt
Status Quo Managers
Reactive, avoid risk
Prefer predictability and routine
Wait for things to happen
Feel threatened by change
Top-Down Change
Initiated by senior management.
Focused on performance improvement.
Risk: Often fails (~70% of large-scale efforts in North America fail).
Key problem: Poor implementation and lack of employee support.
Needs buy-in from all levels for success.
Bottom-Up Change
Change initiatives come from any level of the organization.
Encourages employee empowerment, participation, and creativity.
Example:
Valérie Mac-Seing at Stikeman Elliott LLP—started green initiatives that were initially resisted but became part of company identity.
Integrated Change Leadership
Combines both top-down and bottom-up approaches.
Top-down breaks old habits and makes structural adjustments.
Bottom-up builds long-term adaptability and employee engagement
External Forces
Globalization
Market competition
Local economic conditions
Government laws and regulations
Technological developments
Market trends
Social forces and values
Organizations must adapt to these evolving external conditions—or risk failure.
Internal Forces
Changes within the organization that require alignment across various systems and departments
Planned change = proactive, goal-driven, and strategic.
Unplanned change = reactive, often crisis-driven, and immediate.
Incremental Change & Transformational Change
🔹 Incremental Change:
Definition: Small, gradual improvements or adjustments made over time.
Pace: Slow and steady.
Scope: Limited – affects specific processes or areas.
Risk Level: Low risk.
Examples:
Updating software features.
Tweaking a marketing strategy.
Slightly improving customer service protocols.
Goal: To enhance or optimize existing systems without major disruption.
🔹 Transformational Change:
Definition: Major, radical shifts that significantly alter the way an organization or system operates.
Pace: Fast or sudden.
Scope: Broad – affects the entire organization or structure.
Risk Level: High risk.
Examples:
Changing an organization’s mission or business model.
Merging with another company.
Adopting a completely new technology or process.
Goal: To reinvent or drastically improve performance, culture, or direction.
Coporate-Level Strategy Formulation
Focus & Goal
Handled by CEO and senior management.
Goal: Position organization effectively within its industry.
Grand/Master Strategies
Growth – Expand operations, market share, sales.
Methods: Acquisition, merger, global expansion.
Risk: Expansion Trap – growth exceeds management capacity (e.g., Facebook hiring COO).
Stability – Maintain current operations.
Used when performance is strong or change is too risky.
Ex: Retail firm stays in same markets.
Renewal – Fix poor performance.
Methods: Downsizing, restructuring, liquidation.
Ex: Bankruptcy protection, selling assets.
Combination – Mix of growth, stability, and renewal.
Ex: Global and Mail downsized locally, invested in tech.
Growth Strategies
Concentration – Grow in same business area (e.g., Tim Hortons, Roots).
Diversification – Acquire new, unrelated businesses (e.g., PepsiCo buying Tropicana).
Vertical Integration:
Backward: Acquire suppliers (e.g., carmakers buy part manufacturers).
Forward: Acquire distributors/retailers (e.g., Coca-Cola buys bottlers).
Restructuring Strategies
Used for underperformance or over-complexity.
Turnaround – Fix specific issues (e.g., McDonald’s upgrades).
Downsizing – Reduce scale (e.g., layoffs).
Rightsizing – Downsizing focused on performance.
Divestiture – Sell parts to focus on core business.
Global Strategies
Globalization – Standard products/ads worldwide (e.g., Gillette).
Multi-Domestic – Customize per country; local control (e.g., McDonald’s local menus).
Transnational – Combine global efficiency + local adaptation (e.g., Ford car platforms).
Co-Operative Strategies
Strategic Alliance – Partnering for mutual benefit (common globally).
Co-Operation – Collaborate with rivals (e.g., Daimler & BMW).
Supplier Alliances – Strong supplier relationships.
Distribution Alliances – Share distribution efforts.
E-Business Strategies
Use internet for competitive advantage.
B2B – IT connects suppliers, manufacturers, retailers.
B2C – Connect directly to customers via web platforms.
Strategic Portfolio Planning
Used by large, diversified firms (e.g., Tata Group).
Allocate resources like managing investments.
BCG Matrix:
Analyzes units by market share & market growth.
