MGMT 309 Exam 2 Study Guide Chapter 7 Basic Elements of Planning and Decision Making Decision making drives planning and planning is required for successful goals A mission provides purpose premises values and direction Begin with goals then plan accordingly From top to bottom management strategic tactical then operational Goals guidance dictate planning motivation basic for evaluation and control Kinds of Goals Strategic set by top management concerning organization s general issues Tactical set by middle managers and focus on operational actions Operational set by lower managers on how to utilize tactical goals Goals are set for a specific area Goals must be long intermediate or short term Must have a time limit All managers should be setting goals regardless of level Effective goals specific and measureable cover keys areas difficult but attainable definite time period reward based Kinds of Plans Strategic general plan by top management outlining resource allocation priorities and steps Tactical plan to achieve tactical goals set by middle management Operational short term plan set by lower management Long Range five plus years Intermediate one to five years Short range any plan less than one year This includes contingency plans Responsibility for Planning Planning Staff Concerned with broad view gathering information and coordinating activities Planning Task Force Only when required for a special circumstance Board of Directors Creates corporate strategies and mission Chief Executive Officer President for board of directors Influential in the planning process and in creating strategies Executive Committee Made up of top executives Reviews strategic plans and gives advice to CEO Line Managers Executes plans of top management Helps create strategy by providing information Contingency Planning Alternative plans in case original plan becomes unexpectedly disrupted These help mangers deal with quick changes Single use plan intended to be used only once Standing plan regularly used over a period of time Policy general response to a certain situation Crisis Management Procedures used in case of disaster Barriers to goal setting Major Barriers inappropriate goals improper rewards dynamic environment reluctance to create goals resistance to change constraints Overcoming Barriers understanding the purpose of goals and planning communication participation consistency revision updating finding effective rewards Formative Goals Manager and employee work together in making goals Advantages improved motivation better communication performance feedback focus on appropriate goals Disadvantages lack of top management support poor implementation delegating to lower levels overemphasis on numbers more paperwork Chapter 8 Managing Strategy and Strategic Planning Strategic Management Strategy comprehensive plan for reaching goals Strategic Management continuing management process for building effective strategies and strengthen organization s goals Effective Strategies Promote success between an organization its environment and goals Parts of a Strategy Distinctive Competence an area a company excels in Scope range of markets a business competes in Resource Development How a business allocated resources throughout its market Business level Strategy strategic alternatives a business uses in a certain market or industry Corporate level strategy strategic alternatives a business uses to manage operations across different industries and markets Strategy Formulation process for creating a business s strategies Focuses on content Strategy Implementation methods which strategies are operationalized or executed within an organization Deliberate Strategy Plan used to achieve specific goals that is the result of a planned process Emergent Strategy Actions that develop over time regardless of pre planned goals or missions SWOT Analysis SWOT Strengths Weaknesses Opportunities and Threats Organizational Strengths ability to create and implement strategies Common organizational strengths capabilities possessed by many competitors Distinctive competencies needed for advantage and superior performance Imitation of distinctive competencies copying another business s distinctive competency Sustained competitive advantage competitors cannot duplicate a competitive advantage Strategic imitation can become difficult when distinctive competence is based on a historical circumstance or organizational culture Evaluating Organizational Weakness lacking skills that allow a business to excel in a certain area to fulfill its goals This can be overcome by investing in the lacking areas or modifying the current goals so that the business can reach the goals with its current abilities Competitive disadvantage a business fails to implement strategies being used by competitors Organizational opportunities areas that a business can reach high performance Organizational threat environmental deficiencies that hinder an organization s high performance Business Level Strategies Differentiation strategy business distinguishes itself through the quality of its products or services Emphasizes high quality and image Overall cost leadership strategy business distinguishes itself by under selling its competitors Focuses on meeting the customer s needs at low cost Focus Strategy business concentrates on a specific region market product or group of buyers This uses either differentiation or overall cost leadership Prospector Develops flexibility and seeks market opportunities through innovation Defender Lowers cost or improves performance to keep currents market share Analyzer Combines parts of prospector and defender to maintain business Reactor Has no pre determined strategy only reacts to events Product Lifestyle begins in the introduction phase then growth period of high expansion maturity high sales volume but little growth then decline negative growth and less sales volume Corporate Level Strategies Strategic Business Units each business in an organization serves the same market customers or products Diversification amount of businesses in an organization and how they are related Single Product Strategy Business focuses on producing one product very well One product is produced in a single geographic area Advantages The one product can be made very well Disadvantages If the product fails there are no other products to rely on Related Diversification A business operated in several industries or markets Often with similar technologies