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Chapter 6

Chapter 6 Study Guide

Management (MGT)
Course Code
H Laurence

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Chapter 6: Business Strategy
Goals: Objectives that a business hopes and plans to achieve.
The Purposes of Goal Setting: An organization functions systematically because it sets goals
and plans accordingly.
1) 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 nits of the company.
2) Goal setting helps firms allocate resources. Areas that are expected to grow will get
first priority.
3) Goal setting helps to define corporate culture. Pushing each division of a company to
number one or two in its industry results in a competitive, often stressful environment and
a culture that rewards little success and has little tolerance for failure.
4) Goal setting helps managers assess performance. If a company sets a goal to increase
sales in a given year, managers in units who attain or exceed the goal can be rewarded.
Units failing to reach the goal will also be compensated accordingly.
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Mission Statement: an organizations statement of how it will achieve its purpose in the
environment in which it conducts its business.
Short Term Goals: Goals set for the very near future, typically less than one year.
Intermediate Goals: Goals set for a period of one to five years.
Long Term Goals: Goals set for extended periods of time, typically five years or more into the
Strategy Formulation: Creation of a broad program for defining and meeting an organizations
Strategic Goals: Long-term goals derived directly from a firms mission statement.
SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats): Identification and
analysis of organizational strengths and weaknesses and environmental opportunities and threats
as part of strategy formulation.
Environmental Analysis: The process of scanning the environment for threats and
Organizational Analysis: The process of analyzing a firms strengths and weaknesses.
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