CCT112 Quiz 2 Flashcards
Planning
Management function:
- setting goals
- establishing strategies for achieving those goals
- developing plans to integrate and coordinate work activities
Four Purposes of Planning
- providing direction
- reducing uncertainty
- minimizing waste and redundancy
- establishing the goals or standards used in controlling
Planning can be Formal and Informal
- Smaller businesses often use informal planning
- little is verbalized or written down
- the planning is general and lacks continuity
Formal Planning
- specific, time-oriented goals
- goals written and shared
Criticism of Formal Planning
- may create rigidity
- can’t replace intuition and creativity
- focuses attention on today’s success, not tomorrow’s survival
- reinforces success (what already works), which may lead to failure (limits innovation)
does it pay to plan?
YES
Planning-performance relationship
Formal planning is associated with positive financial performance
- higher profits
- a higher return on assets
- improved quality of planning
- appropriate implementation
Objectives
desired outcomes for individuals, groups, or the entire organization
- provide management with direction and serve as a means to measure progress
Stated Objectives
Official statements of what the organization wants the public to believe
Real Objectives
Objectives that the organization actually pursues
Goals (objectives)
desired outcomes or targets
Plans
documents that outline how goals are going to be met: resource allocations, schedules, etc.
Strategic plans
plans that apply to the entire organization and establish the organization’s overall goals
Operational plans
plans that encompass a particular operational area of the organization
Long-term plans
plans with a time frame beyond three years
Short-term plans
plans covering one year or less
Specific plans
plans that are clearly defined and leave no room for interpretation
Directional plans
plans that are flexible and set out general guidelines
Single-use Plans
a one-time plan specifically designed to meet the needs of a unique situation
- Budgets
- Project reports
Standing Plans
ongoing plans that guide activities performed repeatedly
- Policies
- Rules and regulations
Contingency Factors in Planning
- level in the organization
- degree of environmental uncertianty
- contingency factors in planning
- Tesla commits to producing electric cars for decades into the future
Approaches to Planning
- Top-down traditional approach
- Development by organizational members
Traditional Objective Setting
- setting objectives in which top managers set objectives
- flow down through the organization
- become subgoals for each organizational area
Management by objectives (MBO)
- setting mutually agreed-upon goals
- using those goals to evaluate employee performance
Well-Written Goals
- written in terms of outcomes rather than actions
- measurable and quantifiable
- clear as to a time frame
- challenging yet attainable
- written down
- communicated to all necessary organizational members
Steps in Goal Setting
- Review the organization’s mission and employees’ key job tasks.
- Evaluate available resources.
- Determine the goals individually or with input from others.
- Make sure goals are well written and communicate to all who need to know.
- Build feedback mechanisms to assess goal progress.
- Link rewards to goal attainment.
How Can Managers Plan Effectively in Dynamic Environments?
- Develop plans that are specific but flexible
- Keep planning even when the environment is uncertain
- Allow lower organizational levels to set goals and develop plans
How Can Managers Use Environmental Scanning?
- Environmental scanning
- Competitive intelligence
Environmental scanning
screening information to detect emerging trends
Competitive intelligence
- gathering information about competitors
- allows managers to anticipate competitors’ actions rather than reacting to them
Black Swan Events
- events that come as a surprise
- have a major effect
- are often inappropriately rationalized after the fact
Business intelligence
(digital tools)
data that managers can use to make more effective strategic decisions
Digital tools
technology, systems, or software that allow the user to collect, visualize, understand, or analyze data
Social Media
(digital tools)
Facebook, LinkedIn, Twitter, and other social media sites are becoming increasingly important places to extract competitive intelligence
Virtual Reality
(digital tools)
A three-dimensional, interactive, computer-generated experience that occurs within a simulated environment.
Organizational change
any alteration of people, structure, or technology in an organization
Change Agent
someone who acts as a catalyst and assumes the responsibility for managing the change process
VUCA
(volatility, uncertainty, complexity, and ambiguity)
- volatility, uncertainty, complexity, and ambiguity
- change is the only constant
- managers must deal with that reality
External Forces for Change
- Consumer needs and wants
- New governmental laws
- Technology
- Economy
Internal Forces for Change
- New organizational strategy
- Composition of workforce
- New equipment
- Employee attitudes
Calm Waters Metaphor
- Unfreezing the status quo
- Changing to a new state
- Refreezing to make the change permanent
White-Water Rapids Metaphor
- lack of environmental stability and predictability
- requires that managers and organizations continually adapt
- manage change actively to survive
Managers Focus on 4 Main Areas of Change
- Strategy
- Structure
- Technology
- People
Strategy
(Types of Change)
- Failure to change strategy when circumstances dictate could undermine a company’s success.
- Competition can dictate a change in strategy.
- Organizations that don’t recognize a need to change strategy may not survive in the long run.
Structure
(types of change)
- Changing structural components
- Changing structural design
Technology
(types of change)
- New equipment, tools, or methods
- Automation
- Computerization
People
(types of change)
Organizational development
- change methods that focus on people and the nature and quality of interpersonal work relationships
Why do People Resist Change?
- Uncertainty
- Habit
- Fear of loss
- Belief change is inconsistent with goals of organization
Reducing Resist to Change
- Education and communication
- Participation
- Facilitation and support
- Negotiation
- Manipulation and co-optation
- Coercion
Changing an organization’s Culture
- organization’s culture is made up of relatively stable and permanent characteristics
- tends to make it very resistant to change
- cultures can be changed even if the process is difficult.
Understanding Situational Factors
Conditions that facilitate change:
- dramatic crisis occurs
- leadership changes hands
- organization is young and small
- culture is weak
Changing Culture
- Set the tone through management behaviour
- new stories, symbols, and rituals
- Redesign socialization processes
- change the reward system
- specified expectations
- Shake up current subcultures
- employee participation
Creativity
the ability to combine ideas in a unique way or to make unusual associations between ideas
Innovation
taking creative ideas and turning them into useful products or work methods
Stimulating Innovation
- foundation of many of the world’s most successful organizations
- The top five innovative firms are Apple, Netflix, Square, Tencent, and Amazon.
3 innovation variables are important:
human resources, structural variables and cultural variables.
Disruptive Innovation
- Innovations in products, services, or processes
- radically change an industry’s rules of the game
Sustaining Innovation
small and incremental changes in established products rather than dramatic breakthroughs
Who’s Vulnerable?
- Large, established, and highly profitable organizations are most vulnerable to disruptive innovations:
- have the most to lose
- are most vested in their current markets and technologies.
Skunk Works
- A small group in a large organization
- a high degree of autonomy unhampered by corporate bureaucracy
- mission is to develop a project for radical innovation
Strategic Management
what managers do to develop the organization’s strategies
Strategies
- plans for how the organization will do what it’s in business to do
- how it will compete successfully
- how it will attract and satisfy its customers to achieve its goals
Business Model
how a company is going to make money
Why is Strategic Management Important?
- positive impact on performance
- Helps managers decide how to act in face of change and uncertainty
- Helps complex and diverse organizations work together
Opportunities
positive trends in the external environment
Threats
negative trends in the external environment
Strategic Management Process
1: Identifying the Organization’s Current Mission, Goals, and Strategies
2: External Analysis
3: Internal Analysis - (SWOT Analysis)
4: Formulating Strategies
5: Implementing Strategies
6: Evaluating Results
1: Identifying the Organization’s Current Mission, Goals, and Strategies
(Strategic Management Process)
Mission: the purpose of an organization
- A mission statement can be too limiting.
2: Doing an External Analysis
(Strategic Management Process)
- Opportunities: positive trends in the external environment
- Threats: negative trends in the external environment
3: Doing an Internal Analysis
(Strategic Management Process)
- Resources: an organization’s assets that are used to develop, manufacture, and deliver products to its customers
- Capabilities: an organization’s skills and abilities in doing the work activities needed in its business
- Core competencies: the organization’s major value-creating capabilities that determine its competitive weapons
- Strengths: any activities the organization does well or its unique resources
- Weaknesses: activities the organization does not do well or resources it needs but does not possess
SWOT Analysis
an analysis of the organization’s strengths, weaknesses, opportunities, and threats
4: Formulating Strategies
(Strategic Management Process)
3 main types of strategies managers will formulate:
- Corporate
- Competitive
- Functional
5: Implementing Strategies
(Strategic Management Process)
- performance will suffer if the strategies aren’t implemented properly
6: Evaluating Results
( Strategic Management Process)
- How effective have strategies been at helping the organization achieve its goals
- What adjustments are necessary?
Corporate Strategy
- an organizational strategy that determines what businesses a company is in or wants to be in
- what it wants to do with those businesses
Growth Strategy
(corporate strategy)
A corporate strategy that’s used when an organization wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es)
- Concentration: focuses on its primary line of business (e.g. Nike, MacDonald’s)
- Vertical integration: backward, forward, or both (e.g.: Walmart).
- Horizontal integration: combining with competitors (e.g.: Facebook and Instagram).
- Diversification: related or unrelated industries (Tata Group).
Stability Strategy
(corporate strategy)
a stability strategy in which an organization continues to do what it is currently doing”
- (Airbus)
Renewal Strategy
(corporate strategy)
a renewal strategy designed to address declining performance:
- Retrenchment: e.g.: Ford exit of the Indian market in 2019
- Turn around: e.g.: Rebranding and Innovation
BCG Matrix
- guides resource allocation decisions based on market share and growth rate of SBUs
How to Create a BCG Matrix
1: choose the unit of analysis: business unit, brands, products or the firm.
2: Define the market that fits the unit of analysis: (luxury market, retail, wholesale)
3: Determine the relative market share of the unit of analysis:
Relative Market Share =Unit sales this year/Leading rival’s sales this year
4: Find out the market growth rate
Unit’s sales this year – Unit’s sales last year)/Unit’s sales last year
Competitive Strategy
An organizational strategy for how an organization will compete in its business(es)
Strategic Business Unit (SBU)
The single independent businesses of an organization that formulate their own competitive strategies
Competitive Advantage
What sets an organization apart; its distinctive edge
What Competitive Advantage Can Stem From
- Quality
- Low cost
- Technology
- Other factors
Economic Moat
(sustaining competitive advantage)
WARREN BUFFET
Sustaining competitive advantage by protecting long-term profits and market share using various means.