1 BMGT 289I Final Study Guide Mitchell Reichenberg Leading Requires creating a vision for others to follow and establish Communicate a vision and motivate others o Still must be sensitive Establish corporate vision o Creating and implementation Promote corporate ethics o Must demand honesty and integrity Accept and adapt to change o Must be able to transform strategies Leadership styles o Autocratic o Participative participation o Free Rein Controlling Five steps dictatorial form of leadership brings staff members together and enjoys group promotes employee empowerment and freedom o Establish clear standards o Monitor Performance o Evaluate Results o Communicate Results o Corrective Action when needed Staff feedback occasionally Area that gets least attention is standards setting Organizing Most businesses have the following levels Senior Executives o Top o Middle o First Line o Staff Organization Chart Mid Level Managers Supervisory Managers Non Exempt Employees o De facto standard for displaying the relationships among business personnel Centralized vs Decentralized lower level staff Span of Control people o Authority can either be focused at top levels or it can be delegated to o In general higher levels of the organization control small groups of 2 Tall vs Flat o Flat Orgs o Tall Orgs Departmentalization have few layers of management have a pyramid shape o Organizational functions are generally separated into separate units o Can offer productivity gains but can create internal issues that are hard to solve Organizational Models o Line Organizations o Matrix Organizations has direct two way top to bottom lines of responsibility and communications line orgs establishes divisions to help create enterprise synergies are made up of staff from different departments o Cross Functional Self Managed Teams developed in order to counteract weaknesses in relatively permanent teams Organizational Culture o Shared values that provide unity in the pursuit of enterprise goals o Best have a culture that pleases customers and employees o Many companies struggle to overcome the negative effects to the customers employees etc Potential Areas of Failure New Ventures o New business business lines creation has one of the highest mortality rates o Tend to fall into several common patterns o New Venture Product Development Over 80 of products fail in first year Venture Product Screening ideas come from a variety of sources reduces and focuses on areas with Idea Generation the highest potential Venture Product Analysis analyzed for profitability several alternatives target market s Commercialization distributors of scale Development Testing cost sales and other factors are creation of complete product usually with if profitability looks good the model can be tested on promoting and maintaining interest among Many new ventures depend on scale for success There must be enormous capital available No matter how well funded no business can survive without customers Scaled based business models are risky and expensive Large investments should create big barriers to entry o Dangers of Scale 3 Many projects make sense when looked at over the long but events change and the model may no longer work when it comes to market o Problems with Principals and Directors Issues with shareholders management date back as far as Adam Smith etc Traditional problem is when management is focused on self interest instead of return on investment In some cases management is too heavily invested in the company to make decisions that are in the best interest at the venture o Skilled Management is Critical With any new venture management talent is critical to success Experienced management can overcome start up challenges Two areas of management failures in new ventures Management belief that they are right Tendency to over estimate quality of management Mergers and Acquisitions o Mergers two firms join together to form one Can be vertical horizontal or conglomerate o Acquisition when one firm purchases another Can be hostile or financed through extensive borrowing Leveraged Buyout LBO There are also poison pill strategies that can be used to defend against takeover o Difficulties in Creating Synergies Merger and acquisitions rely on the creation of synergies a combination of assets that create more value when together than separate The larger the synergy potential larger the challenge Many leaders fail to recognize the expenses to establish to create synergies o Determinants of a Successful Merger Acquisition Participants must have clarity of focus and purpose If core competencies don t exist they must be developed o Failed Due Diligence Most neglected The details which are easily formed o Critical Post Merger Acquisition Actions Longer it takes higher risk of reduced synergies and returns Many fail due to inattention to critical stakeholders like Innovation and Change customers employees etc o Many companies do not act to innovate or change until it s too late 4 o Many management teams find themselves unable to harness their history and culture or provide the right structure to face challenging customer and market demands Company History and Culture o In some cases the historical and cultural institutions are so strong they can lead to dominance and disaster o Organization Inertia Some management teams stubbornly hold on to their strategies rather than learn from events competitors etc Many companies that have been historically innovative find it difficult to introduce next generation product lines even in the face of customer demand Inertia can invade most any form of organization even some of the most forward thinking o Corporate Organization Kills In many cases the corporate structure is the very undoing of the organization Some corporate structures entrench dangerous incentives include communication gaps or allow for unproductive micromanaging Strategy Gone Bad o Focus on the Strategists Basics of strategy competitor assessments tracking economic developments reviewing internal strengths and weaknesses Symptom of failing strategic management desperate companies jump from one strategy to another Some board of directors respond to poor strategic planning by firing their CEO Causes of Failure Fulfilling the Wrong Vision o Often management gets caught up in seriously inaccurate perceptions o Magic Answer of business market realities others focusing on one model principle to the exclusion of all Most magic answer failures
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