MGMT 309: EXAM 2
156 Cards in this Set
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Chapter 7
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Basic Elements of Planning and Decision Making
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Decision Making
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-Is the cornerstone of planning
-Is the catalyst that drives the planning process
-Underlies every aspect of setting goals and formulating plans
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Planning
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-All organizations plan, but not in the same fashion
-All planning occurs within an environmental context
-All goals require plans to guide in their achievement
-All goals are tied higher goals and plans
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Purpose of Goals
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1. Provide guidance and a unified direction for people in the organization
2. Strong effect on the quality of other aspects of planning
3. Serve as a source of motivation for employees
4. Provide a mechanism for evaluation and control of the organization
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Kinds of Goals
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By Level, Area, and Time Frame
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Level
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1. Mission Statement - statement of an organization's fundamental purpose
2. Strategic Goals - goals set by and for top management of the organization that address broad, general issues
3. Tactical goals - set by and for middle managers; their focus is on how to operationalize actions t…
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Area
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Different functional areas of the organization
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Time Frame
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long-term, intermediate, and short-term time frames and explicit time frames
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Responsibilities of Setting Goals
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1. Who sets goals
-All managers are responsible for goal setting as it corresponds to the respective level in the organization.
2. Managing Multiple Goals
-Optimizing allows managers to balance and reconcile inconsistent or conflicting goals. Managers can pursue one goal and exclude al…
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Kinds of Organizational Plans
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Strategic
Tactical
Operational
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Strategic Plans
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A general plan set by and for top management that outlines resource allocation, priorities, and action steps to achieve strategic goals
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Tactical Plans
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A plan aimed at achieving the tactical goals set by and for middle management
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Operational Plans
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short term focus plans that are set by and for lower level managers
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Time Dimension of Planning
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Planning must provide sufficient time to fulfill the managerial commitments involved
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Time Frames for Planning
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1. Long-range Plans - strategic, 5+ years
2. Intermediate Plans - usually cover 1-5 years and parallel tactical plans
3. Short-range Plans - (operational) Short-range action and contingency plans of 1 year or less
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Responsibilities for Planning
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1. Planning Staff.
2. Planning Task Force
3. Board of Directors
4. Chief Executive Officer
5. Executive Committee
6. Line Management
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Planning Staff
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Gather information, coordinate planning activities, and take a broader view than individual managers
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Planning Task Force
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created when an organization wants a special circumstance addressed
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Board of Directors
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- Establishes corporate mission and strategy.
- May engage in strategic planning
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Chief Executive Officer
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May serve as president or board chair; has a major role in planning and implementing the strategy
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Executive committee
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- Composed of top executives
- Meets regularly with the CEO to review strategic plans
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Line Management
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- Have formal authority and responsibility for management of the organization
- Help to formulate strategy by providing information
- Are responsible for executing the plans of top management
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Contingency Planning
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- The determination of alternative course of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate
-These plans help managers to cope with uncertainty and change
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Crisis Management
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- The set of procedures the organization uses in the event of a disaster or other unexpected calamity; difficult to anticipate
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Barriers to Goal Setting and Planning
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-As part of managing the goal-setting and planning process, managers must understand the barriers that can disrupt them
-Managers must also know how to overcome them
continued next page
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Barriers to Goal Setting and Planning, cont'd
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1. Major barriers:
-inappropriate goals, improper reward system, dynamic and complex environment, reluctance to establish goals, resistance to change.
2. Overcoming barriers:
-understanding the purposes of goals and planning, communication and participation, consistency, revision and u…
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Management by Objectives (MBO)
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-A technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish
-Formal goal setting gives subordinates a say in the process
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Chapter 8
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Managing Strategy and Strategic Planning
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Strategy
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A comprehensive plan for accomplishing an organization's goals
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Strategic Management
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Involves formulating and implementing strategies to take advantage of business opportunities and meet competitive challenges
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Effective Strategies
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Promote superior alignment between an organization, its environment, and its goals
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Components of Strategy
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1. Distinctive Competence
2. Scope
3. Resource Deployment
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Distinctive Competence
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Something an organization does exceptionally well
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Scope
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Range of Markets in which an organization will compete
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Resource Deployment
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How an organization will distribute its resources across the areas in which it competes
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Types of Strategic Alernatives
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-Business-Level Strategy
-Corporate-Level Strategy
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Business Level-Strategy
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The set of strategic alternatives that an organization chooses from as it conducts business in a particular industry or a particular market
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Corporate-Level Strategy
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The set of strategic alternatives that an organization chooses from as it manages its operations simultaneously across several industries and several markets
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Strategy Formulation and Implementation
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1. Strategy Formulation
2. Strategy Implementation
3. Deliberate Strategy
4. Emergent Strategy
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strategy Formulation
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The set of processes involved in creating or determining the organization's strategies; it focuses on the content of the strategies
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Strategy Implementation
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The methods by which strategies are operationalized or executed within the organization; it focuses on the processes through which strategies are achieved
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Deliberate Strategy
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A plan, chosen and implemented to support specific goals, that is the result of a rational, systematic, and planned process of strategy formulation and implementation
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Emergent Strategy
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A pattern of action that develops over time in the absence of goals or missions, or despite goals and missions
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SWOT Analysis and Strategy
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SWOT - Strength, Weaknesses, Opportunities, Threats
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Evaluating Organizational Strengths
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1. Organizational Strengths - Are skills and abilities enabling an organization to conceive of and implement strategies.
2. Common Organizational strengths - are organizational capabilities possessed by numerous competing firms.
3. Distinctive competencies - are useful for competitive a…
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Evaluating Organizational Strengths, cont'd
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5. Sustained Competitive advantage - Occurs when a distinctive competence cannot be easily duplicated. It is what remains after all attempts at strategic imitations cease.
6. Strategic imitation of a distinctive competence is difficult when:
-it is based on unique historical circumstan…
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Evaluating Organizational Weaknesses
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1. Organizational weaknesses - skills and capabilities that do not enable an organization to choose and implement strategies that support its mission
2. Weaknesses can be overcome by - investments to obtain strengths needed. Modification of the organization's mission so it can be accompl…
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Evaluating an Organization's Opportunities and Threats
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1. Organizational opportunities - areas in the organization's environment that may generate high performance.
2. Organizational Threats - areas in the organization's environment that make it difficult for the organization to achieve high performance.
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Porter's Generic Strategies
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1. Differentiation Strategy - an organization seeks to distinguish itself from competitors through the quality of its products or services.
2. Overall cost leadership strategy - an organization attempts to gain competitive advantage by reducing its costs below the costs of competing f…
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Porter's Generic Strategies, cont'd
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3. Focus Strategy - an organization concentrates on a specific regional market, product line, or group of buyers
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Implementing Porter's Generic Strategies
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1. Differentiation - Marketing and sales emphasize high-quality, high-value image of the organization's products or services.
2. Overall Cost Leadership - Marketing and sales focus on simple product attributes and how these product attributes meet customer needs in a low-cost and effecti…
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Implementing Porter's Generic Strategies, cont'd
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3. Focus - Either differentiation or cost leadership, depending on which one is the proper basis for competing in or for a specific market segment, product category, or group buyers
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Miles and Snow's Strategy Types
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1. Prospector
2. Defender
3. Analyzer
4. Reactor
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Prospector
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-Encourages creativity to seek out new market opportunities and to take risks.
-Developes the flexibility to meet changing market conditions by decentralizing its organizational structure
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Defender
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-Focuses on defending its current markets by lowering its costs and/or improving the performance of its current products
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Analyzer
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-Incorporates elements of both the prospector and the defender strategies to maintain business and to be somewhat innovative
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Reactor
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-A firm has no consistent approach to strategy
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Implementing Business-Level Strategies
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Product Life Cycle:
1. Introduction Stage - Focus on getting product out the door without sacrificing quality
2. Growth Stage - Focus on ensuring quality and delivery, and begin to differentiate products
3. Mature Stage - Focus on low costs and new products. Essential stage if company …
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Formulating Corporate-Level Strategies
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1. Strategic Business Units
2. Diversification
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Strategic Business Units
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Each business or group of businesses within an organization is engaged in serving the same markets, customers, or products
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Diversification
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The number of businesses an organization is engaged in and the extent to which these businesses are related to one another
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Corporate-Level Strategies
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1. Single-Product Strategy
2. Related Diversification
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Single-Product Strategy
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An organization manufactures one product or service and sells it in a single geographic market
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Related Diversification
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-A strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked.
-Basis of relatedness (similar technology, common distribution and marketing skills, common brand name and reputation)
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Advantages of Related Diversification
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Look up in notes, not gonna type it up
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Unrelated Diversification Organization
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-Operates multiple businesses that are not logically associated with one another
-Advantages: stable performance over time due to business cycle differences among the multiple businesses. Allocation of resources to areas with the highest return potentials to maximize corporate performan…
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Implementing Corporate-Level Strategies: Becoming a Diversified Firm
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1. Internal development of new products (developing products or services within the boundaries of traditional business operations)
2. Replacement of suppliers and customers: backward and vertical integration
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Backward vertical Integration
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beginning a business that furnishes resources previously handled by a supplier
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Forward Vertical Integration
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beginning a business that conducts activities previously handled by customers
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Becoming a Diversified Firm, cont'd
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3. Merger - purchase of one firm by another firm of approximately the same size
4. Acquisition - purchase of a firm by a considerably larger firm
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Purposes of mergers and acquisitions
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1. To diversify through vertical integration
2. To acquire complementary products or services linked by a common technology and common customers
3. To create or exploit synergies that reduce the combined organizations' costs of doing business to increase revenue
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Major Tools for Managing Diversification
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1. Organization Structure (chapter 12)
2. Portfolio management technique - Methods used by diversified firms to make decisions about what businesses to engage in and how to manage these businesses to maximize corporate performance
3. Two important portfolio management techniques: Th…
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BCG Matrix
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1. Evaluates a portfolio of businesses on the growth rate of their respective markets and each business's relative share of its market
2. Classifies the types of businesses in a diversified firm's portfolio as: (next page)
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BCG Matrix cont'd
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businesses classified as:
1. "Dogs" have small market shares and no growth prospects
2. "Cash Cows" have large shares of mature markets
3. "Question marks" have small market shares in quickly growing markets
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GE Business Screen
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1. A method of evaluating businesses in a diversified portfolio along two dimensions, each of which contain multiple factors: industry attractiveness, competitive position (strength) of each firm in portfolio
2. In general the more attractive the industry and the more competitive a busin…
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Developing International and Global Strategies
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1. Global Efficiencies
2. Multimarket flexibility
3. Worldwide Learning
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Global Efficiencies
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1. Location efficiencies - seeking lower input cost locations
2. Economies of scale - larger facilities results in lower costs
3. Economies of scope - like economies of scale but with more than 1 product (diversification)
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Multimarket Flexibility
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international businesses may respond to a change in one country by implementing a change in another country
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Worldwide Learning
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The diverse operating environments of multinational corporations (MNCs) contribute to organizational learning that can be transferred to other operating environments
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Strategic Alternatives for International Businesses
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1. Home Replication
2. Multi-Domestic Strategy
3. Global Strategy
4. Transnational Strategy
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Home Replication
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Utilizing a core competency or a firm-specific advantaged developed at home as a main competitive weapon in foreign markets
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Multi-Domestic Strategy
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Managing a corporation as a collection of independent operating subsidaries frees a firm to customize its products, its marketing campaigns, and operating techniques to meet local customer needs
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Global Strategy
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Viewing the world as a single marketplace and having as a primary goal the creation of standardized goods and services that will address the needs of customers worldwide
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Transnational Strategy
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Attempting to combine the benefits of scale efficiencies pursued by a global corporation, with the benefits and advantages of local responsiveness of a multi-domestic corporation
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Chapter 9
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Managing Decision Making and Problem Solving
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Decision Making
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The act of choosing one alternative from among a set of alternatives
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Decision-Making Process
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-The process of recognizing and defining the nature of a decision situation, identifying alternatives, choosing the "best" alternative, and putting it into practice
-An effective decision optimizes some set of factors such as profits, sales, employee welfare, and market share
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Types of Decisions
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1. Programmed Decision
2. Nonprogrammed Decision
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Programmed Decision
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a fairly structured decision or one that recurs with some frequency or both
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Nonprogrammed Decision
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is relatively unstructured and occurs much less often than a programmed decision
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Decision-Making Conditions
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1. Decision Making Under Certainty
2. Decision Making Under Risk
3. Decision Making Under Uncertainty
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Decision Making Under Certainty
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The decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative
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Decision Making Under Risk
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The availability of each alternative and its potential payoffs and costs are all associated with risks
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Decision Making Under Uncertainty
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The decision maker does not know all the alternatives, risks associated with each, or the consequences each alternative is likely to have
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Factors that Prevent Rationality
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1. Lack of Consensus
2. Unclear Means-end Relations
3. Noisy Environment
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Lack of Consensus
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there must be a general agreement of the definition of problems, decisions and decision-making goals at the beginning
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Unclear Means-end Relations
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It is impossible to generate an exhaustive list of alternatives then select the most promising
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Noisy Environment
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The link between outcome and actions is hard to predict
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Behavioral Aspects that affect Decision Making
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1. Bounded Rationality
2. Satisficing
3. Coalition
4. Intuition
5. Escalation of Commitment
6. Risk Prospensity
7. Ethics and Decision Making
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Bounded Rationality
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Decision makers are limited by their values and unconscious reflexes, skills, and habits
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Satisficing
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the tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency to resolve the problem
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Coalition
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A positive or negative political force in decision making which consists of an informal alliance of individuals or groups formed to achieve a goal
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Intuition
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An innate belief about something without conscious consideration
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Escalation of Commitment
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Staying with a decision even when it appears to be wrong
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Risk Prospensity
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extent to which decision maker is willing to gamble when making a decision
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Ethics and Decision Making
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-Individual ethics combine with the organization's ethics to create managerial ethics.
-Components of managerial ethics: Relationship of the firm to employees, Employees to the firm, the firm to other economic agents
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Forms of Group Decision Making
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1. Interacting groups or teams
2. Delphi Groups
3. Nominal Groups
4. Brainstorming
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Interacting groups or teams
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the most common form of decision-making groups which consists of an existing group or newly formed team interacting and then making a decision
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Delphi Groups
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sometimes used for developing a consensus of expert opinion from a panel of experts who individually contribute through a moderator
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Nominal Groups
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a structure technique designed to generate creative and innovative ideas through the individual contributions of alternatives that are winnowed down through a series of rank-ordering of the alternatives to reach a decision
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Brainstorming
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Criticism is not allowed; free wheeling is welcome quantity is encouraged combination and improvement are sought
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Disadvantages of Group and Team Decision Making
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-Groupthink: the group's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision
-Compliance: people conform to others' expectations or behaviors in the hope of acquiring rewards or avoiding punishment
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Chapter 21
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Managing Operations, Quality, and Productivity
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Operations Management
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The set of managerial activities used by an organization to transform resource inputs into products, services, or both
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Importance of Excellence in Operations
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-Is necessary for competitiveness and overall organization performance
-Creates value and utility through production of products and services
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Types of Operations
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1. Manufacturing Organization
2. Service Organization
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Manufacturing Organization
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a form of business that combines and transforms resource inputs into tangible outcomes that are then sold to others
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Service Organization
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An organization that transforms resources into an intangible output and creates time and place utility for its customers
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Role of Operations in Organizational Strategy
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-Operations management has a direct impact on competitiveness, quality, productivity, and effectiveness
-Operations management and organizational strategy have reciprocal effects on each other.
-Strategic goals cannot be met if there are deficiencies and insufficiencies in operations re…
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Designing Operations Systems
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1. Determining Product-Service Mix
2. Capacity Decisions
3. Facilities Decisions
4. Types of Layouts (product, process, fixed position, cellular)
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Determining Product-Service Mix
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Involves deciding how many and what kinds of products to offer in the marketplace
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Capacity Decision
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Can be high-risk decisions due to uncertainty about future product demand and incurred costs of additional, possibly excess, capacity
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Facilities Decision
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-Facilities are the physical locations where products or services are created, stored, and distributed.
-Layout is the physical configuration of facilities, the arrangement of equipment within facilities or both
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Types of Layouts: Product Layout
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Facilities arranged around the product; used when large quantities of a single product are needed
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Types of Layouts: Process Layout
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facilities arranged around the process; used in facilities that create or process a variety of products
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Types of Layouts: Fixed Position Layout
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facilities arranged around a single work area; used for the manufacturing of large and complex products such as airplanes
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Types of Layouts: Cellular Layout
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a configuration of facilities used when families of products can follow similar paths
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Manufacturing Technology
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technology used in making products
1. Technology
2. Automation
3. Robot
4. Robotics
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Technology
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the set of processes and systems used by organizations to convert resources into products or services
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Automation
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The process of designing work so that it can be completely or almost completely performed by machines
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Robot
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any artificial device that can perform functions ordinarily thought to be appropriate for human beings
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Robotics
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Coming soon
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Service Technology
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Services are rapidly moving toward automated systems and procedures (e.g., ATMs)
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Operations Systems in Supply Chain Mangagement
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1. Supply Chain Management
2. Operations Management as Control
3. Purchasing Management (Procurement)
4. Inventory Management
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Supply Chain Management
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The process of managing operations control, resource and inventory acquisition and purchasing, and thus improving overall efficiency and effectiveness
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Operations Management as Control
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Coordinating operations management with other functions helps insure the system focuses on critical elements crucial to goal attainment
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Purchasing Management (Procurement)
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Controlling the buying of the materials and resources is at the heart of effective supply chain management
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Inventory Management
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1. Inventory control (materials control) - managing the organization's raw materials, work-in-process, finished goods, and products-in-transit
2. Just-in-Time (JIT) method - an inventory system that has necessary materials arriving as soon as they are needed (JIT) so that the production…
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Managing Total Quality
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1. The Meaning of Quality
2. The Importance of Quality
3. TQM Tools and Techniques
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The Meaning of Quality
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-The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
-Quality is both a relative and absolute concept.
-Quality is relevant to both products and services
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The Importance of Quality
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1. Competition - Quality has become one of the most important competitive points in business today
2. Productivity - Quality enhancement programs decrease defects, reduce rework, and eliminate the need for inspectors as employees assume responsibility for quality
3. Costs - Improved qua…
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TQM Tools and Techniques
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1. Benchmarking
2. Outsourcing
3. Reducing cycle time
4. Statistical quality control (SQC)
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Benchmarking
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the process of learning how and what other firms do in an exceptionally high-quality manner
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Outsourcing
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Subcontracting operations/services to those who can do them cheaper and/or better
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Reducing cycle time
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The time needed by the organization to accomplish activities such as developing, making, and distributing products or services
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Statistical quality control (SQC)
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A set of specific statistical techniques that can be used to monitor quality
1. Acceptance sampling - customer accepts products based on sample quality after production
2. In-process sampling - run a sample during production
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Managing Productivity
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1. Productivity
2. Levels of Productivity (Aggregate, Industry, Company, Unit, and Individual productivity)
3. Improving Productivity
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Productivity
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An economic measure of efficiency that summarizes the value of outputs relative to the value of the resources used to produce them
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Aggregate Productivity
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the total level of productivity for a country
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Industry Productivity
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the total productivity of all firms in an industry
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Company Productivity
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the level of productivity of a single company
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Unit Productivity
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the productivity level of a unit or department
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Individual productivity
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hodor
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Improving Productivity
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1. Improving Operations
2. Increasing Employee Involvement
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Improving Operations
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-Spending more resources on research and development helps identify new products, new uses for existing products, and new methods for making products
-Reworking transformation processes and facilities can boost productivity
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Increasing Employee Involvement
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-Increased employee participation can increase both quality and productivity
-Cross-training of employees allows firms to function with fewer workers
-Rewards are essential to success in improving productivity
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Study Guide: Exam 3