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MGTA01H3 (583)
Chapter 6

MGTA03 Chapter 6 Notes.docx

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

MGTA03 Introduction to Management Chapter 6—Business Strategy Setting and Formulating Strategy  effective management requires one to set goals, objectives that a business hopes and plans to achieve Setting Goals  goals are performance targets, the means by which organizations and their managers measure success or failure at every level The Purposes of Goal Setting  four main purposes of organizational goal setting:  provides direction, guidance and motivation for all managers  help firms allocate their resources  helps to define corporate culture  helps managers to assess performance Kinds of Goals  a mission statement is an organization’s statement of how it will achieve its purpose in the environment in which it conducts its business; two business firms can have the same purpose but have very different missions  long-term goals are goals set for extended periods of time, typically five years or more into the future  intermediate goals are goals set for a period of one to five years, in larger organizations companies have several intermediate goals within departments  short-term goals are goals set for the very near future, typically less than one year, developed in several different areas Formulating Strategy  strategy is determining the organization’s long term goals and taking the actions necessary to achieve those goals  strategy formulation is the creation of a broad program for defining and meeting an organization’s goals: 1) set strategic goals, 2) analyze the organization and environment, 3) math the organization and its environment, 4) formula strategy Setting Strategic Goals  strategic goals are long-term goals derived directly from the firm’s mission statement  once strategic goals have been established organizations conduct a SWOT analysis which is identification and analysis of organizational strengths and weaknesses (internal) and environmental opportunities and threats (external) Analyzing the Organization and its Environment  environmental analysis is the process of scanning the environment for threats and opportunities (e.g. changing consumer tastes, government regulations, areas in which the firm can potentially expand, etc.)—external  organizational analysis is the process of analyzing a firm’s strengths and weaknesses (e.g. dedicated workforce, technical expertise, weak competition)—internal Matching the Organization and Its Environment  final step in strategy formulation is matching environmental threats and opportunities with corporate strengths and weaknesses A Hierarchy of Plans  strategic plans reflect decisions about resource allocations, company priorities and the steps needed to meet strategic goals, set by BOD and top management  tactical plans are shorter-range plans concern
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