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| is coping with uncertainty by formulating future courses of action to achieve specified results |
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| defenders, prospectors, analyzers, reactors |
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| are expert at producing and selling narrowly defined products or services |
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| focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen |
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| let other organizations take the risks of product development and marketing and then imitate (or perhaps slightly improve on) what seems to work best. |
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| make adjustments only when finally forced to by environmental pressures |
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| portrays businesses as continuously cycling through decisions about three kinds of business problems: (1) entrepreneurial (selecting and making adjustments of products and markets), (2) engineering (producing and delivering the products), and (3) administrative (establishing roles, relationships, and organizational processes). |
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| determine what the organization’s long-term goals should be for the next 1–5 years with the resources they expect to have available |
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| determine what contributions their departments or similar work units can make with their given resources during the next 6–24 months |
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| determine how to accomplish specific tasks with available resources within the next 1–52 weeks |
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| one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates |
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| is a four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) managers and employees periodically review the employee’s performance, and (4) the manager makes a performance appraisal and rewards the employee according to results |
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| The planning/control cycle |
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Definition
| A cycle that has two planning steps (1 and 2) and two control steps (3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results with the plan. (4) Control the direction by taking corrective action in two ways—namely, (a) by correcting deviations in the plan being carried out, or (b) by improving future plans. |
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| Course of action needed to achieve a stated goal. |
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| typically designed for a one year period this type of plan defines how a manager will conduct his or her business based on the action plan, the operating plan identifies clear targets such as revenue, cash flow and market share |
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| a large-scale action plan that sets the direction for an organization |
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| a process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals |
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| Why is Strategic Management Important? |
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| (1) provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable competitive advantage |
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| the ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them. |
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| Strategic Management Process |
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| Establish the mission and the vision, establish the grand strategy, Formulate Strategic plans, carry out strategic plans, Maintain stragetic control (the feedback loop) |
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| Growth, Stability, Defensive strategies. |
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| a grand strategy that involves expansion—as in sales revenues, market share, number of employees, or number of customers or (for nonprofits) clients served |
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| a grand strategy that involves little or no significant change |
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| or a retrenchment strategy, is a grand strategy that involves reduction in the organization’s efforts |
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| Importance of SWOT analysis |
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| A SWOT analysis should provide you with a realistic understanding of your organization in relation to its internal and external environments so you can better formulate strategy in pursuit of its mission |
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| Porters 5 competitive forces |
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Definition
| Threats of new entrants, Bargaining power of suppliers, bargaining power of buyers, threats of substitute products or services, Rivalry among competitors. |
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| Porters 4 competitive strageties |
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Definition
| (also called four generic strategies) are (1) cost-leadership, (2) differentiation, (3) cost-focus, and (4) focused-differentiation |
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Definition
| to keep the costs, and hence prices, of a product or service below those of competitors and to target a wide market |
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| to offer products or services that are of unique and superior value compared with those of competitors but to target a wide market. |
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| to keep the costs, and hence prices, of a product or service below those of competitors and to target a narrow market |
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| Focused Differentiation Strategy |
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Definition
| to offer products or services that are of unique and superior value compared to those of competitors and to target a narrow market. |
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| operating several businesses in order to spread the risk |
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| a means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market |
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| Rational Model of Decision Making |
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Definition
| also called the classical model, explains how managers should make decisions; it assumes managers will make logical decisions that will be the optimum in furthering the organization’s best interests |
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| Non-Rational model of decision making |
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Definition
| explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions |
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Definition
| the concept suggests that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time and money, and their cognitive capacity, values, skills, habits, and unconscious reflexes |
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Definition
| that is, managers seek alternatives until they find one that is satisfactory, not optimal |
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| began to study how managers actually make decisions. From his research he proposed that managers could not act truly logically because their rationality was bounded by so many restrictions. Nobel Prize Winner, Economist. Made Bounded Rationality. |
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| Evidence Based Management. |
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Definition
| the translation of principles based on best evidence into organizational practice, bringing rationality to the decision-making process.....(read more on it.) |
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Term
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Definition
| or business analytics, the term used for sophisticated forms of business data analysis |
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Term
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| is a loosely-defined term used to describe data sets so large and complex that they become awkward to work with using on-hand database management tools. Difficulties include capture, storage,[3] search, sharing, analysis,[4] and visualization |
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| Analytical, Conceptual, Directive, Behavioral |
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Definition
| Availability Bias, Confirmation, Representative, Sunk Cost Bias, Anchoring & Adjustment, Escalation of commitment bias. |
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Definition
| is when people seek information to support their point of view and discount data that do not |
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| managers use information readily available from memory to make judgments |
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| the tendency to generalize from a small sample or a single event. |
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| or sunk-cost fallacy, is when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it |
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| Anchoring and Adjustment Bias |
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Definition
| the tendency to make decisions based on an initial figure. |
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| Escalation of commitment Bias |
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Definition
| whereby decision makers increase their commitment to a project despite negative information about it |
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| Advantages of Group Decision Making |
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Definition
| Greater pool of knowledge, Different perspective, intellectual stimulation, better understanding of decision rational, deeper commitment to the decision. |
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| Disadvantages of group decision making |
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Definition
| few people dominatate or intimidate, Groupthink, Satisficing, Goal Displacement |
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Term
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Definition
| occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation |
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Definition
| occurs when the primary goal is subsumed by a secondary goal. |
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| Participative Management (PM) |
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Definition
| the process of involving employees in (a) setting goals, (b) making decisions, (c) solving problems, and (d) making changes in the organization |
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