Chapter 7

Question 1

Planning

Answer 1

The process of deciding what objectives to pursue during a future time period and what to do to achieve those objectives.

Question 2

Formal Plan

Answer 2

Written, documented plan developed through an identifiable process.

Question 3

Functional Plan

Answer 3

Originate from the functional areas of an organization such as production, marketing, finance, and personnel.

Question 4

Short-range plan

Answer 4

Generally cover up to one year.

Question 5

Long-range ploan

Answer 5

Span at least 3 to 5 years; some extend as far as 20 years into the future.
- Top level mgmt.

Question 6

Strategic Planning

Answer 6

Analogous to top-level long-range planning

• Covers long period
• Affects many parts of the organization.

Question 7

Operational/Tactical Planning

Answer 7

Short-range planning

• Middle to lower level mgmt.
• Concentrates on the formulation of functional plans.

Question 8

Contingency Plans

Answer 8

Address the what-ifs of the manager’s job; gets the manager in the habit of being prepared and knowing what to do if something does go wrong.

Question 9

Objectives

Answer 9

Statements outlining what the organization is trying to achieve; give an organization and its members direction.

Question 10

Long-range objectives

Answer 10

Go beyond the current fiscal year; must support and not conflict with the organizational missions.

Question 11

Short-range objectives

Answer 11

Generally tied to a specific time period of a year or less and are derived from an in-depth evaluation of long-range objectives.

Question 12

4 categories of objectives

Answer 12

1. Profit oriented
2. Service to customers
3. Employee needs and well-being
4. Social responsibility

Question 13

Primary Objectives

Answer 13

Relate directly to profit.

Question 14

Secondary Objectives

Answer 14

Apply to specific units of the organization

Question 15

Individual Objectives

Answer 15

Directly concern the organization’s employees.

Question 16

Societal Objectives

Answer 16

Relate to the local, national, and global communities

Question 17

SMART

Answer 17

• Specific
• Measurable
• Achievable
• Relevant
• Time-based
  Helps when writing objectives.

Question 18

Specific

Answer 18

An observable action, behavior, or achievement is described and linked to a rate, number, percentage, or frequency.

Question 19

Measurable

Answer 19

A system, method, or procedure must exist that allows the tracking and recording of the specific action, behavior, or achievement upon which the objective is focused.

Question 20

Achieveable

Answer 20

Objectives should be set so that people are capable of achieving them.

Question 21

Relevant

Answer 21

The objective is viewed by affected employees as being important to the organization and as something they can impact.

Question 22

Time-based

Answer 22

Specific dates or time frames for reaching the objective.

Question 23

Management by Objectives

Answer 23

• Converting organizational objectives into personal objectives.
• MBO works best when the objectives of each organizational unit are derived from the objectives of the next higher unit in the organization.
• Peter Drucker
• Elicits ee commitment and leads to improved performance.

Question 24

Policies

Answer 24

Broad, general guides to action that constrain or direct the attainment of objectives.
- Establish boundaries, but don’t tell members exactly what to do.

Question 25

Procedure

Answer 25

Series of related steps or tasks expressed in chronological order for a specific purpose.

Question 26

Rules

Answer 26

Require specific and definite actions to be taken or not to be taken in a given situation.

Question 27

Strategy

Answer 27

Outlines the basic steps that management plans to take to reach an objective or a set of objectives.

Question 28

Corporate (grand) strategy

Answer 28

Address which businesses an organization will be in and how resources will be allocated among those businesses. - Growth, stability, defensive, and combination.

Question 29

Growth stragegy

Answer 29

Used when the organization tries to expand in terms of sales, product line, number of ees, or similar measures. - Concentration (focus on extending sales of current products) - Vertical integration (moves into areas it previously served as a supplier or as a customer) - Diversification (different products than usual)

Question 30

Stability strategy

Answer 30

Used when the organization is satisfied with its present course.

Question 31

Defensive (retrenchment) Strategy

Answer 31

Used when a company wants or needs to reduce its operations. - Reverse a negative trend. - Turnaround (reverse negative trend), divestiture (company sells itself or divests), liquidation (entire company is sold).

Question 32

Combination strategy

Answer 32

Used when an organization simultaneously employs different strategies for different parts of the company.

Question 33

Business Strategies

Answer 33

Focus on how to compete in a given business.

Question 34

Overall Cost Leadership

Answer 34

Designed to produce and deliver the product or service for a lower cost than the competition.

Question 35

Differentiation

Answer 35

Makes the product or service unique in its category | - Can charge higher prices.

Question 36

Focus

Answer 36

Direct attention to a new market segment.

Question 37

Functional Strategies

Answer 37

Concerned with the activities of the different functional areas of the business.

Question 38

Strategic Management

Answer 38

The application of the basic planning process at the highest levels of the organization. - formulation, proper implementation, and continuous evaluation.

Question 39

Formulation Phase

Answer 39

- 1st phase in strategic mgmt. | - Initial strategic plan is developed.

Question 40

Implementation Phase

Answer 40

- 2nd phase is strategic mgmt. | - The strategic plan is put into effect.

Question 41

Evaluation Phase

Answer 41

- 3rd phase is strategic mgmt. | - The implemented strategic plan is monitored, evaluated, and updated.

Question 42

Mission

Answer 42

Defines the basic purpose of an organization and why it exists. 1. Customers 2. What does the customer buy? 3. What does the customer want in a product?

Question 43

SWOT

Answer 43

Strength, weakness, opportunity, and threat.

Question 44

External environment

Answer 44

Consists of everything outside of an organization.

Question 45

5 forces model

Answer 45

1. Buyer Power 2. Supplier Power 3. New Entrants 4. Existing Rivals 5. Substitutes

Question 46

SWOT Diagram

Answer 46

``` Aggressive = O+S Diversification = S+T Defensive = T+W Turnaround = W+O ```

Question 47

SBU

Answer 47

- strategic business unit | - Distinct business that has its own set of competitors and can be managed reasonably.