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MGM 101-102 ch 7-10.docx

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Department
Management
Course
MGM102H5
Professor
Dax Urbszat
Semester
Fall

Description
MGM Test 3 Review The Concept of Business Strategy -The development of an organizations business strategy is fundamentally one of ehte most important responsibilities of a senior management team or in the case of a small business , the business owner. 1. The ability to define and create a strategic direction and market position for the organization (strategic plan). 2. The ability to execute the core tactical initiatives within the plan in a manner that ensures the organization's success. Business Strategy -For a business managers, the development of a business strategy means making decisions and determining direction in six key areas: 1. Purpose 2. Markets 3. Products and services 4. Resources 5. Business System Configuration 6. Responsibility and accountability Purpose -Purpose refers to the mission of the organization and the vision its managers or owners have for the business. Mission -Defines an organizations purpose or reason for existence. Vision -Is a forward-thinking statement that defines what a company wants to become where its going. Markets -Refers to the specific markets segments the business sees itself competing in. As part of the strategy development process, managers and owners need to assess their success in existing markets and evaluate the potential new markets. Markets that have become unprofitable or marginally profitable and lack significance future growth will be evaluated in terms of market exit strategies or harvesting strategies. Harvesting -Is a strategy that reflects a reduced commitment to particular market given its perceived weak future growth or profitability potential. Resources -Refers to the allocation of a business's resources in support of its strategic decisions. Business System Configuration -Refers to modifying the organization's infrastructure and the way it does business to ensure the success of the plan. Responsibility and Accountability -Refers to identifying who within the business will be responsible for each aspect of the strategic plan. Revisit our purpose: Who are we and where do we want to go? Undertake an I/E (internal/external) analysis to understand our environment: What changes or shifts are occurring that threaten us or that provide us with opportunities? Assess our View of our world: Based on what we know, what are our choices? Chooses a direction: Given our capabilities, competencies, competitive advantages , and resources, which strategic choices should we pursue (where will we play)? What threats must we respond to? Implement our strategy: How do we develop the strategic thrusts and tactics to achieve our objectives and successfully execute the plan (how we will win)? I/E (Internal/External) Analysis -The I/E analysis is all about assessing business risk and change in four key areas. Stage of Strategic Planning Process Focus Revisiting Our Purpose Assessing the fit of the current mission and vision of the organization. I/E Analysis Understanding the external and interval enivronment External - PESTEL, Porter's five forces, competitor SWOT Internal-Company SWOT, 3C analysis- competencies, capacity Customer - Changes in attitudes, behaviour, needs Our View of Our World Given what we know about ourselves, our customers, our competitors, and the overall environment, what are our options? What is/are our competitive advantage(s)? Strategic Choices Which opportunities make the most sense, given our market position, resources, and environmental dynamics? What threats must we respond Strategy Implementation Develop the plan. Define the key performance indicators for monitoring it. Execute it. Business Model Focus of Analysis PESTEL Guides us in developing an understanding of the macro-economic environment-political, economic, societal, technological, environmental, legal Porter's Five Forces Guides us in understanding the dynamics of the industry within which we compete— Porter’s five forces are: • Intensity of rivalry within the industry • Threat of new entrants into the industry • Threat of new product/service substitutes within the industry • Power or control of suppliers within the industry • Power or control of buyers within the industry Types of Competition Guides us in understanding the nature of the industry’s competitive landscape: • Perfect competition • Monopolistic competition • Oligopoly • Monopoly SWOT Analysis Strengths, weaknesses, opportunities, threats Competitive SWOT to size up competition Company SWOT to define company strengths, weaknesses, opportunities, and threats. 3C Analysis An assessment of our competencies, capabilities, and capacity with respect to the resources that we possess Strategy Development -For Managers, the next step after completing the I/E analysis and identifying the organizations competitive advantages is to make decisions as to which opportunities. The Corporate-level strategy -defines what the organization intends to accomplish and where it plans to compete Business-level strategy -Outlines specific objectives the organization hopes to achieve each of its identified business initiatives and/or business units. Operating Plan -is a detailed, immediate-term set of objectives and corresponding tactics designed to achieve a specific business initiative. Strategic Execution -The final phase of the strategic planning process is the strategy execution phase. It is this proportion of the process where management shifts its emphasis from what it wants to do, and hopes to achieve, to actively engaging the business into executing the desired strategic thrusts and tactics. Directional Lock-in -is the level of financial and operational commitment an organization incurs as a result of implementing the organization's strategies. Mission Balance: Maintain the balance between the need to create an effective economic base for the NFP while ensuring that the social mission and goals of the NFP are met. Vitality: Enhance the vitality of the organization through maintenance and growth of its membership or community support base. Collective entrepreneurship: ensures that the involvement of the community where an organization is located and the population that it serves are reflected in the formulation and implementation of the strategy. Rootedness: refers to the extent to which the NFP is interwoven into the fabric of the community that it serves and is supported by broad representation of its organizations, businesses, and citizens. Operational Effectiveness: Operate in a manner that demonstrates the product and services offered by the NFP are priced at levels that ensure their accessibility by the targeted social audience, and provide mechanisms for support for those who are in need yet truly unable to pay. The Management Function of Organization Organization Architecture - The totality of a firm's organization, including formal organization structure, control systems. incentive systems. organizational culture, and people. Organization Structure The location of decision-making responsibilities in the firm, the formal division of the organization into subunits, and the establishment of integrating mechanisms to coordinate the activities of subunits. Control - Metrics used to measure the performance of subunits and to judge how well managers are running subunits. Incentives - Devices used to encourage desired employees behaviour. Organizational Culture - Values and assumptions that are shared among the employees of an organization People - The employees of an organizations: the strategy used to recruit, compensate, motivate, and retain those individuals: and the type of their skills, values and orientation Vertical Differentiation: The location of decision making responsibilities within a structure. Horizontal Differentiation - The formal division of the organization into subunits. Integrating Mechanisms - Mechanisms for coordinating subunits. Centralization - The concentration of decision-making authority at a high level in a management hierarchy. Arguments For  Centralization can facilitate coordination  Centralization can help ensure that decisions are consistent with organizational objectives  Centralization can avoid duplication of activities by various subunits within the organization  By concentrating power and authority in one individual or a management team, centralization can give top-level managers the means to bring about needed major organizational changes Decentralization - Vesting decision-making authority in lower-level managers or other employees. Arguments for  Top management can become overburden when decision making authority is centralized. (increases amount of info senior managers are required to process)  Motivational research favours decentralization. (people are willing to give more to their job when they have greater degree of individual freedom and control over their work)  Decentralization permits greater flexibility more rapid response to environmental changes. (In cen. the need to run decisions buy the higher managers can significantly slow down decision making and making it unable to adapt to rapid environmental changes)  Decentralization can result in better decisions. In a decen. structure decisions are made closer to the spot by individuals who have better information than managers several levels up the hierarchy.  Decentralization can increase control. Decen can establish relatively autonomous, sekf- contained subunits within an organization. Autonomous -A unit that has all the resources and decision-making power required to run it operation daily. Decentralization or Centralization  Decisions regarding overall for strategy, major financial expenditures, financial objectivs and legal issues are all centralized at the senior manager level.  When the realization of economics of scale is an important factor , there ten
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