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Chapter 6

CHAPTER 6

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
CHAPTER 6: BUSINESS STRATEGY WHO ARE MANAGERS? -all corporations depend on effective management -regardless of type of business, managers perform many of same functions, responsible for many of same tasks, and have many of same responsibilities -all involve developing strategic and tactical plans -must also analyze their competitive enviros and plan, organize, direct and control day-to-day operations -managers work in all kinds of organizations (charities, churches, social organizations, etc.) -PM of Canada, president of U of T…all managers -managers bring to small organizations, many of same kinds of skills—ability to make decisions and respond to variety of challenges—that they bring to large ones SETTING GOALS AND FORMULATING STRATEGY -starting point in effective management is setting goals -goals: objectives that a business hopes and plans to achieve; performance targets -deciding what it intends to do is only step 1 for organization -managers must also make decisions about actions that will & won’t achieve its goals -strategy is broad program that underlies those decisions Setting Goals -goals are means by which organizations and their managers measure success or failure at every level The Purposes of Goal Setting -an organization functions systematically b/c it sets goals and plans accordingly -it commits its resources on all levels to achieving its goals -4 main purposes in organizational goal setting: 1) Goal setting provides direction, guidance, and motivation for all managers -if managers know precisely where company is headed, there’s less potential for error in diff units of company 2) Goal setting helps firms allocate resoursts -areas that are expected to grow will get 1 priority -company allocates more resources to new projects w/ large sales potential than it allocates to mature products with established but dull sales potential 3) Goal setting helps to define corporate culture -result is competitive, often stressful, enviro and a culture that rewards success and has little tolerance for failure 4) Goal setting helps managers assess performance -managers in units who attain or exceed goal can be rewarded Kinds of Goals -goals differ from company to company depending on firm’s purpose and mission -every enterprise has a purpose—reason for bing -most enterprises have a mission statement—statement of how it will achieve its purpose -should include some statement about company’s core values and its commitment to ethical behaviour -2 business firms can have same purpose but very diff missions -regardless of a company’s purpose and mission, every firm needs long-term, intermediate, and short-term goals -long-term goals: related to extended periods of time (5 or more years into future) -intermediate goals: set for a period of 1-5 years into future -companies usually have intermediate goals in several areas -short-term goals: set for 1 year or less are developed for several diff areas Formulating Strategy -business strategy outlines how it intends to meet its goals and includes the organization’s responsiveness to new challenges and new needs -strategy formulation involves 3 basic steps (fig 6.1); creation of a broad program for defining and meeting an organization’s goals Set strategic goalsanalyze organization and environmentmatch organization and its environmentformulate strategy Setting Strategic Goals -strategic goals: long-term goals derived directly from a firm’s mission statement SWOT Analysis -after strategic goals have been established, organizations usually go through SWOT analysis as they continue to formulate their strategy -SWOT analysis: identification and analysis of organizational strengths and weaknesses (S and W) and environmental opportunities and threats (O and T) as part of strategy formulation -S and W are internal to company, while O and T are external -in formulating strategy, companies attempt to capitalize on organizational strengths and take advantage of environmental opportunities -they seek ways to overcome organizational weaknesses and cope with enviro threats Analyzing the Organization and Its Environment -environmental analysis: scanning enviro for threats and opportunities -changing consumer tastes and hostile takeover offers are threats as are new gov’t regulations -even more important threats come from new products and new competitors -opportunities are areas in which firm can potentially expand, grow, or take advantage of existing strengths -performing environmental analysis is analysis of external factors, managers must examine internal factors too -purpose of organizational analysis is to better understand a company’s strengths and weaknesses -strengths could include surplus cash, a dedicated workfor
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