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Economic community of organizations and all their stakeholders.
Identifying the organization’s strengths and weaknesses.
Describing future situations at a given point in time.
Buyer perceives unique and superior value in a product.
Event outcome forecasts
Predictions of the outcome of highly probable future events.
Event timing forecasts
Predictions of when a given event will occur.
Predictions, projections, or estimates of future situations.
How the organization’s mission will be accomplished.
Describing how the future will evolve from the present.
Radically redesigning the entire business cycle for greater strategic speed.
Preparing written descriptions of equally likely future situations.
Finding the organization’s niche by performing a SWOT analysis.
Seeking a competitively superior organization-environment fit.
Integrated, externally oriented perception of how to achieve the organization’s mission.
The concept that the whole is greater than the sum of its parts.
Time series forecasts
Estimates of future values in a statistical sequence.
Hypothetical extension of a past series of events into the future.
Variables responsible for the difference between actual and desired conditions.
Teaming up to make decisions via a computer network programmed with groupware.
Condition of certainty
Solid factual basis allows accurate prediction of decision’s outcome.
Condition of risk
Decision made on basis of incomplete but reliable information.
Condition of uncertainty
No reliable factual information available.
The reorganization of experience into new configurations.
Identifying and choosing alternative courses of action.
Tells when and how programmed decisions should be made.
Escalation of commitment
People get locked into losing courses of action to avoid embarrassment of quitting or admitting error.
Documented and sharable information.
How information is presented influences one’s interpretation of it.
To change the nature of a problem’s situation.
Developing a system to improve the creation and sharing of knowledge critical for decision making .
Law of unintended consequences
Results of purposeful actions are often difficult to predict.
Decisions made in complex and nonroutine situations.
Odds derived mathematically from reliable data.
To systematically identify the solution with the best combination of benefits.
The difference between actual and desired states of affairs.
Conscious process of closing the gap between actual and desired situations.
Repetitive and routine decisions.
To settle for a solution that is good enough.
Odds based on judgment.
Knowledge personal, intuitive, and undocumented information.
The retention of decision-making authority by top management.
Collaborative structure in which teams are the primary unit.
Fitting the organization to its environment.
Management shares decision-making authority with lower-level employees.
Assigning various degrees of decision-making authority to lower-level employees.
Grouping related jobs or processes into major organizational subunits.
A three-layer structure with a constricted middle layer.
Line and staff organization
Organization in which line managers make decisions and staff personnel provide advice and support.
Flexible, adaptive organization structures.
Creating a coordinated authority and task structure.
Span of control
Number of people who report directly to a given manager.
Internet-linked networks of value-adding subcontractors.
Shared values, beliefs, and language that create a common identity and sense of community.
Process of transforming outsiders into accepted insiders.
Shared beliefs about what the organization stands for.
Visual display of organization’s positions and lines of authority.
Right to direct the actions of others.
Being effective, efficient, satisfying, adaptive and developing, and ultimately surviving.
Porter’s generic competitive strategies:
Porters model uses four strategies that helps managers to think strategically: it enables them to see the big picture as it affects the organization and its changing environment.
1. Cost leadership: Cost keeping strategy.
2. Differentiation Strategy: Products are considered unique or superior to other products.
3. Cost Focus Strategy: Orgs gain a competitive edge in the market due to strict control. They focus on what they do best.
4. Focused Differentiation Strategy: These orgs focus on delivering superior products or services.
Stuck in the middle
Companies that fail to develop a cost or a differentiation advantage. They will generate low profits.
- -They lose the high-volume customers that demand low price.
- –They lose the high-margin customers to the firms that have achieved differentiation.
Strengths, Weaknesses, Oppertunities, and Threats.
Strengths and Weaknesses > The Right Nitch < Oppertunities and threats.
The strategic management process.
- 1. Formulation of a grand strategy.
- 2. Formulation of strategic plans.
- 3. Implementation of strategic plans.
- 4. Strategic control.
Corrective action based on evaluation and feedback throught the whole process.
Sharpening your intuition:
- 1. Open up the closet: Trust your feelings/gut.
- 2. Don't mix up your I's: Instinct, insight, and intuition are not synonymous.
- 3. Elicit good feedback: Seek feedback.
- 4. Get a feel for our batting average: Get a sense for how reliable your hunches are.
- 5. Use imagery: Use imagery rather than words. Visualize future potential.
- 6. Play devil's advocate: Test intuitive judgements and raise objections to them.
- 7. Capture and validate your intuitions: Capture and log your intuituins before logic takes over.
Perceptual and Behavioral Decision Traps.
•Framing Error: The way in which information is presented influences one’s interpretation of it, which, in turn, may alter a decision based on the information.
- •Escalation of Commitment: Continuing on a course of action can lock a person into a losing position (“throwing good
- money after bad”).
•Overconfidence: Believing too much in one’s own capabilities is a trap.
–Developing a system to improve the creation and sharing of knowledge critical for decision making.
The cultivation of a learning culture where organizational members systematically gather and share knowledge with others in order to achieve better performance.
Group-aided decision making Advantages:
- 1. Greater pool of knowledge: A group can bring more information and experience.
- 2. Different perspectives: people with varied experience help to see problems froma different angle.
- 3. Greater comprehension: Greater understanding.
- 4. Increased acceptance: Outcome is viewed as "ours not theirs".
- 5. Training ground: Less experienced learn more.
- 1. Social pressures: individuals scared to contribute.
- 2. Domination by a vocal few: Quality is reduced by those who talk the loudest and longest.
- 3. Logrolling: "Wheeling and dealing".
- 4. Goal displacement: Secondary motives become the primary task.
- 5. Groupthink: Unanimus vote overrides sound judgement.
Creative Problem Solving
Generating Alternative Solutions:
- –Free association
- –Edisonian method
- –Attribute listing
- –Scientific method
- –Creative Leap
- –“Grouping of related jobs or processes into major organizational units”.
- •Overcomes some of the effect of fragmentation caused by differentiation (job specialization).
- •Permits coordination (integration) to be handled in the least costly manner.
- –Sometimes refers to divisions, groups, or units in large organizations.
•Advantages of Delegation
- –Frees up managerial time for other important tasks
- –Serves as a training and development tool for lower-level managers
- –Increases subordinates’commitment by giving them challenging assignments
- –“The collection of shared beliefs, values, rituals, stories, myths, and specialized language that creates a common identity and sense of community.”
- –“The way we do things around here.”
- –The “social glue” that binds an organization’s members together
- –The degree of sharing and the degree of intensity determine whether an organization’s culture is strong or weak
- Mechanistic: Cost minimizing companies
- ·High specialization
- ·Rigid departmentalization
- ·Clear chain of command
- ·Narrow spans of control
- ·High Formalization
- Organic: Innovative companies
- ·Cross-functional teams
- ·Cross-Hierarchical Teams
- ·Free Flow of information
- ·Wide spans of control
- ·Low formalization
K-Mart case discussed from class:
There is no reason that the consumer need Kmart. Kmart failed to find a nitch or a specific market to operate in.
Four Organization Shapers
- 1. Buyer power: New competition gives buyers greater power.
- 2. Variety: Greater information gathering is required to better know the customers. Greater variety and customization is required among product offerings.
- 3. Change: Rapid decision making and relearning is required, this leads to decentralization.
- 4. Speed: Means that decisions need to be moved to the work level which leads to decentralization.
Competitive strategies (Porter’s “5 Forces” Model)
- Internal force:
- -Industry Competitors
- External forces:
- -Potential Entrants: Threat of new entrants
- -Suppliers: Bargaining power of suppliers
- -Substitutes: Threat of substitute products or services
- -Buyers: Bargaining power of buyers
How Disney Keeps the Ideas Coming
The Gong show: Three times a year employees get 3-5 minutes to pitch their ideas to Disney executives.
- -Immediate direct feedback is given.
- -Goals and direction are established for a new story.
- -Creation boundaries are set to keep the process flowing.
- -Deadlines are used to focus the creativity process.
- -Athority is assigned to groups instead of one person.
- - leaders choose leaders. Give them a sense of "Hey, they want me".
- -The lines of hierarchy are so blurred that it makes no differernce who you get access to.
Lay off the layers
- -Layers slow everything down.
- -Every layer is a bad layer.
- -Layers pop-up because they seem necessary.
- -Your job is to fight layers.
Who's got the monkey?
5 degrees of initiative that the manager can exercise from lowest to highest:
- 1. Wait until told.
- 2. Ask what to do.
- 3. Recommend , then take resulting action.
- 4. Act, but advise at once.
- 5. And act on own, then routinely report.
- -Quite often managers are eafer to take on their subordinates monkeys.
- -Self-imposed time: Time for the manager to do things the manager originates to do.
- -Subordinate-imposed time: time taken by the subordinates.
- -Discretionary time: whatever time is left over for the manager.
How Pixar Fosters Collective Creativity.
- 1. Everyone must have the freedom to communicate with anyone.
- 2. It must be safe for everyone to offer ideas.
- 3. We must stay close to innovations happening in the academic community.
- -Success is not due to luck but an adherence to a set of principles and practices.
- -"The high concept": One step in a long arduous process.
- -To be original you have to accept uncertainity even when it is uncomfortable.
- -It is ok to hire people smarter than you.
- -Good people are better than good ideas.
- -A safe enviroment must exist where ideas can flow.
- -People must be able to work togeather efficiently.
- -The creative brain trust: A give and take session where ideas can be exchanged without egos.
- -Daily reviews force people to present their unfinished work, this encourages people to finish their work before showing it and improves creativity.
Jim Collins on Tough Calls
- -Having the right people around you helps prepare for uncertainty.
- -Really great people make will make a series of great decisions over time.
- -Ones personality can overshadow or hinder the creativity of others.
- -Debate leads to good decisions which leads to good answers. bla, bla, bla.
- -Greatness starts with internal drive and how one responds to the outside world.
- -All decisions need to be a small fraction of the outcome. We should avoid the singular decision.
- -Outside factors should not be considered over inside factors for success.
- -Decisions should be to benifit the company not ones self for long term survival.
How to hit a moving target.
- -Companies must differentiate themselves and creat entirely new markets.
- -Cooperation works better than direct competition.
- -The best of the bunch look forward not around them to find breakthroughs.
- -Companies don't compete for the best product, they compete to be unique.
- -Inventing new markets is better than finding a nitch.
- -Caterpillar. Focus on the customer instead of the competition.
- -Amazon: offer personalized service.
- -Even dominant companies need to stay competitive.