Managing Organizations - Chapter 6
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The larger vision that guides the activities of managers other employees in an organization.
A process that results in an outcome, which is the basis for organizational decisions and actions.
A determination of basic long term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.
Outcome of strategic thinking is strategy
Strategic Planning involves...
the review of market conditions, consumer needs, competitive strengths and weaknesses; sociopolitical, legal, and economic conditions; technological developments; and the availability of resources that lead to specific opportunities or threats facing the organization.
The development of strategic plans involves...
taking information from the environment and deciding upon an organizational mission and upon objectives, strategies, and a strategic architecture.
- An approach developed by the Boston Consulting Group that evaluates strategic business units with regard to the firm's market growth rate and market share.
Strategic Business Unit (SBU)
Divisions within an organization by product or service to establish goals and objectives that are in harmony with the firm's overall mission and to assign responsibility for profits and losses.
Four Characteristics of an SBU
- a. it has a distinct mission
- b. it has its own competitors
- c. it is a single business or collection of businesses
- d. it can be planned for independently of the other businesses of the total organization.
From the BCG Matrix, what are the four SBU classifications
- a. Star - High market growth and high market share
- b. Cash Cow - Low market growth and high market share.
- c. Question Mark - High market growth and low market share.
- d. Cash Trap - Low market growth and low market share.
According to BCG, the four strategies for SBU's using the BCG Matrix
- a. Build - for Stars and possibly Question Marks
- b. Hold - preserve market share and take advantage of cash flow of Cash Cow
- c. Harvest - good for all except Stars - use most of the cash flow for other businesses
- d. Divest - get rid of SBUs with low market share and low growth.
Porter's Five Forces
- a. Threats of new entrants
- b. Bargaining power of suppliers
- c. Rivalry among competitors
- d. Threat of substitute products or services
- e. Bargaining power of buyers
Andy Grove's addition to Porter's Five Forces
Complementors - the dependence that develops between companies whose products work in conjunction with each other's product.
Intel - PC Manufacturers
Porter's Value Chain
- All activities undertaken by an organization to create value for the customer.
According to Porter's Value Chain, a firm can grow competitive advantage by either of these two.
- a. Provide comparable buyer value but perform the activities of the value chain more efficiently (reducing cost)
- b. Perform the activities of the value chain in a unique way that creates higher value and commands a premium price.
Initiatives that create a ripple effect across the value chain according to Porter
- a. Inventory strategies such as JIT deliver, real time inventory tracking, synchronizing supply/demand planning and cross-docking
- b. Sharing critical information with suppliers, customers and other value-chain partners.
- c. Collaberative product development specifically, initiatives that involve suppliers and customers at early stages of development.
- d. Adoption of web technologies that improve the flow of information throughout the value chain improve
The strategic planning process
The process of examining the organization's environment, establishing a mission, setting up desired goals and objectives, and developing an operational plan.
The manager's involvement in the strategic planning process
- a. They usually influence the strategic planning process by providing information and suggestions relating to their particular area of responsibility.
- b. They must be completely area of what the process of strategic planning involves as well as the results because everything they do should derive from the strategic plan.
The strategic planning process in cyclical form
- a. Assessing the organization's internal and external environments
- b. Establishing a mission statement
- c. Establishing goals and objectives
- d. Establishing an operational plan
- Strength - financial, human, or other resources
- Weaknesses - financial, human, or other resources
- Opportunities - Anything that can strengthen the company
- Threats - Anything that can bring harm or destroy the company
Key components of an organizations environment
- Sociocultural milieu
- Technological developments
- Economic conditions
- political climate
Five critical elements addressed by competitive strategy
- a. Choosing the Future: articulates the organization's intentions for the future.
- b. Redefining competition: innovation is the hallmark of competitive strategy
- c. Turning ideas into action: how to move from ideas to action
- d. Accelerating competitive performance: organizational structure is aligned to optimize expertise and flexibility
- e. Sustaining competitive advantage: long term position
Changing cultural and social conditions that influence organizations
The environmental scanning technique for dealing with the sociocultural milieu
A technique that organizations use to stay in touch with the sociocultural milieu.
Provides firms with a framework for examining trends in business and society in general, to assess the impact of these trends on the industry or profession, and to view the organization's position as part of the ecosystem
The Issues management technique for dealing with the sociocultural milieu
Focuses on gathering inforamtion about a single issue and analyzing it.
The customer-perceived value technique for dealing with the sociocultural milieu
The need and value of customers identified through the use of conjoint analysis and focus groups.
- a. Obtain precise information on the needs and values of both internal and external customers
- b. Then tailor products and services to meet distinct market segments.
Define what "customer satisfaction" means
Kevin Kelly's Axes of "Network Economy" (Wired Magazine)
- a. Wealth in the new economy flows directly from innovation, that is, wealth is not gained by perfecting the known, but imperfectly seizing the unknown.
- b. The ideal environment for cultivating the unknown is to nurture the ability and nimbleness of networks.
- c. Domestication of the unknown means abandoning the known - undoing the perfected.
- d. The cycle of "find, nurture, destroy" happens faster and more intensely than ever before.
A long-term vision of what an organization is trying to become; the unique aim that differentiates one organization from similar organizations.
- What is our business?
- What should it be?
Reason for being
Considerations when formulating mission statements.
- a. History: What is known about the firm's history; accomplishments, failures, objectives, policies
- b. Distinctive Competence: Unique to the firm that is valued in the market
- c. Environment: SWOT analysis
Characteristics of a mission statement
- a. Customer focused: focus is not on what is produced but on customers served
- b. Achievable: Challenging but not unrealistic. measurable and attainable.
- c. Motivational: meaning to every employee
- d. Specific: What business firm competes in
Philip Crosby's Three Phases to get productive
- Conviction: dedication to an idea
- Commitment: the behavioral expression of the psychological conviction
- Conversion: the employee has rejected outdated non-compettive notions of success and has adopted the company's goals as his own.
A broad plan for action for pursuing and achieving a firm's goals and satisfying its mission.
The competitive Strategy Model's three distinctive ways to develop competence
- a. Differentiation Strategy: Offer a higher-priced products with more product-enhancing features than competitors
- b. Cost Leadership: Low prices, low costs, low profit margins, high volume.
- c. Niche Strategy: offering a unique product or service in a restricted market.
Strategic Management of Employees
Requires managers to dedicate time, money and attention to their employees' training and development.
Increases worker value
Enhances capacity for continuous improvement.
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