Management Exam 2 10 21 2013 7 1 Strategy A comprehensive plan guiding resource allocation to achieve long term organization goals Strategic Intent Focuses organizational energies on achieving a compelling goal Competitive Advantage Operating in successful ways that are difficult to duplicate Corporate Strategy Directions and guidelines for use of resources Business Strategy Identifies how a strategic business unit will compete in its product or service domain Functional Strategy Guides activities within one specific area of operations Growth Strategy Expansion through current operations Concentration Expansion within an existing area McDonalds Walmart Diversification Expansion by entering new areas Pepsi buying Tropicana Vertical Integration Expansion by acquiring suppliers or distributers o Backwards Business acquires its suppliers Car company buying parts company o Forwards Business acquires its distributor Coke Pepsi Retrenchment Changes operations to correct weakness Liquidation Business closes and sells of assets to back creditors Restructuring Reduce scale or mix of operations o Cut costs short term efficiency to buy some time o Downsizing Cuts size of operations and reduces workforce Most successful when cutbacks are focused on performance Bankruptcy Protects the firm from creditors while management reorganizes things in an attempt to restore solvency Try to emerge profitable GM and Chrysler both did Divestiture selling parts of organization to refocus on core competencies cut costs and improve efficiency Skype and Ebay Globalization Strategy Adopts standard products and advertising for use worldwide Multi Domestic Strategy Customize ads and products for local needs Trans National Strategy Seeks efficiencies of global operations with attention to local markets E Business Strategy Focus on using internet for business transactions B2B Business Strategy Use web to vertically link organizations with members of their supply chains B2C Business Strategy Use web to vertically link organizations with members of their customers Social Media Strategy Use of Facebook Twitter and other to engage customers Crowdsourcing Interactive social media strategy that becomes an interactive idea exchange with customers 7 2 Strategic Management Process of formulating and implementing strategies to accomplish long term goals and sustain competitive advantage Strategy Formulation Creating Strategy Mission Reason organization exists Operating Objectives Specific results attempting to achieve o Review Current Situation Mission Objectives Strategies o SWOT Analysis Strength Weakness Opportunity Threats o Develop new strategy Corporate Business Functional Strategy Implementation Putting into action Implement Strategy Management systems practices Strategic leadership Evaluate results Strategic Control Renew management process Porters Five Forces New Entrants Threat of new competition Suppliers Bargaining power of suppliers Buyers Bargain power of buyers Substitutes Availability of subs Unattractive Industry Intense Rivalry Easy Entry Substitutes Powerful suppliers buyers Attractive Industry Low rivalry barriers to entry Few or no subs weak buyers suppliers Porters Competitive Strategies Differentiation Strategy Offers products and services that are uniquely different from competition Polo Focused Differentiation Offers unique products to special market segment NetJets Cost Leadership Seeks to operate at lower costs than competitors Walmart Focused Cost Leadership Uses cost leadership and target needs of a special market Low fare Airlines BCG Matrix Boston Consulting Group analyzes business and product strategies based on market growth rate and market share Question Marks Low Market Share growing industry o Growth or Retrench Stars High Market Share growing industry o Growth Dogs Low Market Share low growth industry o Retrench Cash Cows High Market Share low growth industry o Stability or modest growth Management Exam 2 10 21 2013 8 1 Management Process Organizing Divide up work arrange resources coordinate activity Planning Set the direction Controlling Ensure results Leading Inspire Effort Structure System of tasks reporting relationships and communication that links people and positions within an organization Organization Charts Describe the formal structure how it should work What you can learn from them o Division of work Positions and titles show responsibility o Supervisor Relationships Lines between positions show who reports to whom o Span of Control Number of persons under a supervisor o Communication Channels Lines between positions show routes for formal communication flows o Major Subunits How jobs are grouped together in work units departments or divisions o Staff Positions Staff specialists who supports other positions o Levels of management Number of management layers Top to Bottom Informal Structure Unofficial important working relationships between members Good and Bad Social Network analysis identifies communication relationships Who they ask for help talk with energizes them Good points include Problem solving support friendship and fill gaps in formal structure Bad points include Rumors false information resistance to change 8 2 Functional Structures Group people by skills Departmentalization Grouping people and jobs into one unit Functional Structure Work units have similar skills and tasks Best in smaller more stable organizations Potential Advantages o Economies of scale make efficient use of HR o Functional experts are good at solving technical problems o Training within functions promotes skill development o Career paths are available within each function Functional Chimneys Problem When people in different functions fail to communicate with one another Divisional Structures Group together people who work on similar product in same region or serve same customers Toyota Advantages o Expertise focused on special products customers regions o Better coordination across functions within divisions o Better accountability for product or service delivery o Easier to grow or shrink in size as conditions change Product Structures Group jobs and activities devoted to a single product or service to more quickly respond to changing market demands Fiat Geographical Structures Group jobs and activities in the same location Used when need to focus on unique product tastes or operating requirements UPS Customer Structures Group jobs that serve same customers Gives ability to best serve