Chapter 6 Textbook Notes

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Management (MGT)
Ingrid L.Stefanovic

MGTA03 / 01 Chapter 6: Business Strategies Who Are Managers (pg. 89) - All kinds of organization needs managers that perform tasks such as developing strategic and tactical plans, analyze their competitive environments and plan, organize, direct and control day-to-day operations - Managers could be found in charities, churches, social organizations, government agencies, and educational institutions - #0J,7/O08841,347J,3L],9L43¶88L]0473,9:702,3,J078,70,243JL982489L25479,39 resources Setting Goals and Formulating Strategy (pg. 89 ± 95) - The starting point in effective management is to set goals which are 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 Purpose of Goal Setting - The four main purposes in organizational goal setting are: N Goal setting provides direction, guidance, and motivation for all managers. If managers know precisely where the company is headed, there is less potential for error in the different units of the company. N Goal setting helps firms allocate resources. Areas that are expected to grow will get first priority. Companies will allocate more resources to new projects with large sales potential than mature products with established but stagnant sales potential N Goal setting helps to define corporate culture. When a company strives to push each of their divisions to number one or number two in its industry, the result is a competitive, often stressful, environment and a culture that rewards success and has little tolerance for failure. N Goal setting helps managers assess performance. If a company sets a goal to increase sales by 10 percent in a given year, managers in units who attain or exceed the goal can be rewarded but managers who do not will be compensated accordingly Kinds of Goals - Every company or enterprise has a purpose or a reason for being - Most enterprises will also have a mission statement which states how it will achieve its purpose in the environment in which it conducts business - L88L4389,90203988K4:O/,O84L3.O:/089,9020398,-4:99K0.425,3\¶8.470;,O:08,3/ L98.422L920399409KL.,O-0K,;L4:70J0OO,3,/,¶82L88L4389,902039L894-0, world leader in helping communicate and manage information) - Two business firms may have the same purpose but very different mission statements (e.g. Timex ± reliable & affordable / Rolex ± high quality, high priced fashion watches) MGTA03 / 02 - #0J,7/O08841,.425,3\¶85:75480,3/2L8sion, every firm needs long-term goals, intermediate, and short-term goals: N Long-term goals are goals set for extended period of time, typically five years or more into the future (e.g. MasterCard, to double the number of participating merchants during the next 10 years) N Intermediate goals are goals set for a period of one to five years (e.g. Finance departments may aim for a 3 % increase in return on investment in three years) N Short-term goals are goals set for the very near future, typically less than one year (e.g. increasing sales by 2 percent this year) Formulating Strategy - Planning is concerned with the nuts and bolts of setting goals and choosing tactics - $97,90J\903/894K,;0,ZL/078.4509K,9/08.7L-08,347J,3L],9L43¶8L39039L438 - A strategy formulation is the creation of a broad program (strategy) for defining and meeting an organizati43¶8J4,O8. There are three basic steps: Setting Strategic Goals - Strategic goals are long-9072J4,O8/07L;0//L70.9O\1742,1L72¶82L88L4389,902039 - After strategic goals have been established, organizations usually go through a process called a SWOT analysis as they continue to formulate their strategy - This process involves assessing organizational Strengths and Weaknesses and environmental Opportunities and Threats - Strengths and weaknesses are internal and opportunities and threats are external - While formulating strategies, companies attempt to capitalize on organizational strengths and take advantage of environmental opportunities. As well, they seek ways to overcome organizational weaknesses and cope with environmental threats Analyzing the Organization and Its Environment - Environmental analysis is the process of scanning the environment for threats and opportunities [analysis of external factors] - Threats: changing customer tastes and hostile takeover threats from new competitors and products - Opportunities: when a firm can potentially expand, grow, or take advantage of existing strengths - Organizational analysis L89K0574.08841,3,O\]L3J4794-09907:3/0789,3/,1L72¶8 strengths and weaknesses [analysis of internal factors] - Strengths: may include surplus cash, a dedicated workforce, weak competition - Weaknesses: any absence of the above characteristics Matching the Organization and Its Environment - Matching environmental threats and opportunities with corporate strengths and weaknesses - The most important step; matching companies with their environments lays the foundation for successfully planning and conducting business - Over the long term, this process may also determine whether a firm typically takes risks or behaves more conservatively A Hierarchy of Plans - Plans can be viewed on three levels: strategic, tactical, and operational MGTA03 / 03 - Managerial responsibilitie
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