UNIT 2: ENVIRONMENT, MANAGERS, DECISION MAKING PROCESS Flashcards
What is environment?
It is the set of forces and conditions that exist outside and inside of organizations and that include their performance.
External environment: macro environment (general) and micro environment (sector specific )
Internal environment
What do we use for analyzing the external environment?
Analyzing the macro environment: PESTEL
Analyzing the micro environment: Porter’s 5 forces
What is PESTEL analysis?
PESTEL is a framework or tool used by marketers to analyze the macro-environmental factors that have an impact on an organization.
It is used to identify the opportunities and threats.
Political, economical, social, technological, environmental and legal
What is Porter’s five forces analysis? And what do we use it for?
Is a model, that identifies and analyses 5 competitive forces that shape every industry and helps to determine the strengths and weaknesses.
We use it to analyze the micro environmental factors.
- POWER OF SUPPLIERS: how much would it cost to the company to switch suppliers
- POWER OF CUSTOMERS: how many buyers does the company has and how much would it cost to get new customers
- THREAT OF NEW ENTRANTS: the less time and money does it cost for a company to enter the market, the more the other companies in competition can be weakened.
- THREAT OF SUBSTITUTE PRODUCTS: when these products are available, customers may choose them because of the price, quality or some reason, the company’s power can be weakened.
- EXISTING RIVALS: the larger the number of the rivals, the lesser the power of a company.
What analysis do we use for analyzing the internal environment?
Porter value chain and resources and capabilities analysis
What is Porter value chain? What benefits does it have?
Is a framework, that analyzes a company’s activities and identifies the competitive advantages from them.
It consists of the primary activities directly involved in production and delivery
Benefits:
- competitive differentiation
- cost reduction
- increased efficiency
What is resources and capabilities analysis?
It concerns an appraisal of an organization’s resources and capabilities in the context of value creation opportunities and other external developments.
Resources are the set of factors and assets under the control of the firm.
Capabilities are collective skills to perform certain activity.
What is SWOT analysis?
Is a method for identifying and analyzing internal strengths and weaknesses and external opportunities and threats that shape current and future operations and help develop strategic goals
STRENGTHS: what our company do well?, what unique is about our company
WEAKNESSES: what can we improve?, where do we fall behind?
OPPORTUNITIES: what trends can we take advantage of?
THREATS: What is our competition doing?
WHO ARE THE MANAGERS? What are the 4 levels?
A person or a group of people who plan, supervise and coordinate to achieve the goals.
- TOP managers: organization-wide decisions
- MIDDLE managers: who manage the first-line managers
- FIRST LINE managers: who manage the work of non-managerial employees
- NON MANAGERIAL employees: no management responsibilities.
Level of governance: define the 3 levels
- BOARD OF DIRECTORS: where the key decisions are made
- SUPERVISORY BOARD: who supervise and guide
- BOARD OF MANAGEMENT: lead functional areas
What is the job of the managers?
Plan, organize, lead and control
Define the 3 management skills
Conceptual: the ability to think and decide in complex situations
Technical: the knowledge of proficiency in a specific field.
Human: ability to work well with people.
What is the difference between boss and leader?
Leader is someone who can influence others and who has managerial authority. A person with skills which make people follow him or her.
Boss: a person who exercise control over a company.
Mention some leadership responsibilities:
- Initiate action: managers should start the work by clear communication
- Motivate: with economical and non-economical rewards
- Provide guidance: give instructions to make the work efficient and effective
- Create confidence: by giving feedback
- Build work environment: for a stable growth.
Identify the 7 steps of decision making process.
First, a decision is a choice made between two or more alternatives.
- Identify the problem what needs to be solved
- Explicit objectives and criteria, like what is the goal and what are those factors what we should consider or take into account like price, brand, size etc.
- Generate alternatives
- Analyze the alternatives
- Select the best alternative
- Implement into the plan
- Monitor and evaluate
