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105 Cards in this Set
- Front
- Back
Define Planning
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A decision making process that focuses on the future of the organization and how it will get there
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Define Objectives
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end states or targets for which organizational managers aim
End Goals |
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Plans
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the means by which managers hope to hit desired targets
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5 benefits of planning leading to____
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Improved...
1. focus and flexibility 2. action orientation 3. coordination 4. time management 5. control All of which lead to improved performance and productivity |
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Types of plans (3)
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strategic
tactical operational |
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Strategic plans (3 points)
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focus on the broad future of the organization
Based on environmental analyses Cover all major staff and operational areas of an organization |
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Tactical plans (3 points)
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translate strategic plans into specific goals to be be met by specific parts of the company
shorter time frame and narrower range than strategic plans generally applied to each single business unit |
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Operational plans
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translate tactical plans into specific goals for individual units withing business unit
short term narrow focus )just one department |
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Organizational levels
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Corporate level: strategic planning
Business level: tactical panning Functional level: operational planning |
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Corporate level
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plans overall direction of company
answer questions for 1. which industries should we be in 2. resource allocation across SBUs 3. international presence (which countries and what markets should the firm be in_ |
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Business level
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Each unit is interested in how it can best compet with other organizations in its industry
Answer questiosn concerning 1. who are our competitors 2. what are our strengths and weaknesses 3. what do our customers like and want |
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Functional Level
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individual department, regional or product managers plan how to acheive the aims of the SBU
These managers oversee the implementation of these plans and have responsibility for them Q: 1. what info do we need 2. what activities must we perform to meet expectations 3. what are our strengths and weaknesses |
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The Planning Process (5 parts)
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1. Analyze the environment
2. set objectives 3. develop action plans 4. implement plans 5. monitor and evaluate outcomes |
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Environmental analysis
Two types |
Type one (general big picture)
1. step analysis 2. five forces analysis 3. SWOT 4. scenario planning Type 2 (more specific, in response to big picture) 1. Forecasting 2. benchmarking 3. contingency planning |
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Setting Objectives
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Priorize
1. important so that resources are allocated systematically rather than randomly 2. assures agreement with and understading of organizational priorities set criteria for measuring results: this is important for later control process Determine needed and available resources |
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Developing action plans
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Sequence
Timing -gantt and pert charts -computer planning tools Accountability |
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Implementing plans and monitoring outcomes
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Feedback occurs at all points in the process but is particularly importnt in these stages
no matter how good your plan is, it can fail if not implemented right |
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Decision making
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The first criteria for good decision making is good information
-timely -high quality -complete -relevant -easily understood |
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Effective managers (part 1)
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1. Able to collect and analyze information
-keep current information on technology -recognize need for high quality information 2. capable of both systematic and intuitive thinking 3. Problem seekers rather than problem solvers |
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Effective managers (part 2)
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4. Understand the advantages and disadvantages of group decision making
5. understand, recognize and avoid or correct for decision biases ex. Escalation and groupthink |
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Rational Decision making model (definitions and origin)
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from economics
basic assumption: people are rational, logical, organized and have goals for each situations |
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Rational Decision Making Model Steps
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1. Identify the problem
2. Develop key objectives and criteria 3. generate alternatives 4 analyze alternatives 5. select best solution 6. implement the decision 7. Monitor and evaluate results |
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Decision making
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The first criteria for good decision making is good information
-timely -high quality -complete -relevant -easily understood |
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Effective managers (part 1)
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1. Able to collect and analyze information
-keep current information on technology -recognize need for high quality information 2. capable of both systematic and intuitive thinking 3. Problem seekers rather than problem solvers |
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Effective managers (part 2)
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4. Understand the advantages and disadvantages of group decision making
5. understand, recognize and avoid or correct for decision biases ex. Escalation and groupthink |
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Rational Decision making model (definitions and origin)
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from economics
basic assumption: people are rational, logical, organized and have goals for each situations |
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Rational Decision Making Model Steps
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1. Identify the problem
2. Develop key objectives and criteria 3. generate alternatives 4 analyze alternatives 5. select best solution 6. implement the decision 7. Monitor and evaluate results |
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Programmed Decisions
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problem is simple routine, well defined and clearly understood
high levels of certainty in both formulation and problem solution frequently can be solved by referring to rules and regulations (SOPs) |
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Non programmed decisions (and crisis decisions)
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problems are poorly defined or new
no clear alternatives past experience is not helpful high levels of risk uncertainty |
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Three influences on decision making
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individual
--knowledge, ability and motivation problem: --unfamiliarity, ambiguity, complexity, instability Situation --irreversibility, significance, accountability, time and money constraints |
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Advantages of group decision making
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1. Larger knowledge base
2. Broader perspectives and can consider more alternatives 3. Individuals are more likely to support decisions made by a group they participated in |
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Disadvantages of group decision making
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1. Groups work slower
2. often less than optimal comprimizes 3. can be dominated by single person/clique 4. managers may be too relient on group decision |
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Successful decision makers
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Actually think fast
use real-time information shortcut the time needed to make decisions 1. examine many alternatives simultaneously 2. acheive concensus during, rather than after decision process 3. plan implementation during decision making process 4. Have the confidence to act 5. smooth group processes --two tiered |
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Groupthink
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a mode of thinking in which pursuit of agreement among members becomes so dominant it overrides a realistic appraisal of alternative courses of action
pursuit of agreement Occurs when groups are highly cohesive, insulated from outside information, leader focused may feel illusions of invulnerability, morality, unamity self-censorship, pressure for conformity, stereotyping of outsiders |
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Groupthink leads to
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limited search for information
limited analysis of alternatives rejection of expert opinions few, if any, contingency plans |
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How to overcome groupthink
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use more than one group to examine a problem
use outside experts use devil's advocates train decision makers in causes and consequences of groupthink |
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Escalation of commitment
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occurs when a decision maker continues to invest resources well beyond the point at which a rational decision maker would have pulled the plug
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Factors contributing to escalation behavior
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retrospective rationality
norm for consistency prospective rationality |
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How to improve decision making
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be aware of personal style
recognize decision making biases increase knowledge base be flexible (build it into decision plan) be creative develop alternative solutions --brainstorming --nominal group techniques --delphi technique --+variation: computer posting |
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The Control Function
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the regulation of activities and behaviors within organizations
a means of a acheiving a goal, not the goal itself follows planning, organizing and leading in application, but must be planned for early on in other processses |
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The control process 4 parts
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1. Establish objectives and standards
2. Measure actual performance 3. compare performance results against standards 4. Evaluate results and adjust as necessary |
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Strategic controls
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how the org as a whole fits in with environment
dificult to do in uncertain environments |
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Tactical controls
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assess the day to day function of the units of the org in achievement of strategy
include financial, budgetary, supervisory and hr controls |
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Operational Controls
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asess and regulate specific activivies and methods used to produce goods and services
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Types of operational controls
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Precontrol (feed forward, preliminary_
--used before production begins --raw material quality control Concurrent (steering) controls --used to monitor ongoing work --allow for correction before work is completed --reduces waste Postcontrol (feedback) --suggest needed changes by examinig the final product outcomes |
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Effectiveness of control
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Key factors in effectiveness of controls and their concerns
Focus of control --what will be controlled --who is responsible Amount --too much too little Quality of information collected by the controls --Is it: ----useful, accurate, timely, objective Flexibility of Controls --are the controls able to respond to varying conditions Favorable Cost-benefit ratio --is the information being gathered worth the cost of gathering it? Source --is control imposed by others --is the control decided by those who are affected |
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Define: Operations management
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methods used by managers to insure that the conversion of resources into end products and services is accomplished effectively and efficiently
efectively = job gets done efficiently = job gets done well |
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4 goals of ops mgmt
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1. Achieving the desired quality
2. producing the proper quantity 3. assuring timely availability for customers 4. maintaining cost efficientcy whil acheiving the first three |
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Define goal #1 (total quality management)
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quality = fitness for use
-reliability -durability -serviceability/repairability Higher quality leads to: -lower repair and warranty costs -higher customer satisfaction -higher revenues |
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How to reach goal #1 (total quality management)
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advocate attention of quality as the main management and organizational objective
--make part of org's culture Empowerment is critical for success --commitment of employees on all levels to search for ways to improve cust satisfaction through better quality --quality at all stages of production Main purpose is to identify the causes of poor performance and fix it Uses process control charts -figure out process acceptability boundaries -take measurement -fix any problems |
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What is the intent of goal 1?
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intent is to examine the processes used in an oranization and redesign them to improve throughput (the transformation of raw materials into goods and services), and the collection of revenues
Increase Throughput |
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Continuous process improvement
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objective: what should this process accomplish
design: how can we minimize the complexity of critical sequences in the process capabilities: what skills are needed to manage and/or perform the process effectively? Infrastructure: do we need to add or change any organizational infrastructure elements in order for the process to succeed? metrics: what data is needed to measure and evaluate success Evaluate at every step |
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Six Sigma (goal 1)
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data driven approach
seeks 99.99966% reliability in production purpose is to have virtually zero variability can be applied to existing and new processes |
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What are two issues addressed in goal 2 -- Produce the proper quantity
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1. Capacity Planning
2. Inventory control |
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Capacity Planning
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1. Design capacity: the maximum amount of products or services that could be produced under ideal conditions
2. Effective capacity: the actual expected maximum amount the unit can be produced EC = EC/DC |
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Isues that might affect needed capacity might include:
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changes in supplier material availability
changing customer demand changing customer desires future growth plans for yoru company layoffs economic changes technology changes |
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Inventory control -- Materials Requirement Planning
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Materials requirement planning
--systematic computer programs used to optimize odering and routing of raw materials --analysis is frequently done using: ++economic order quantity ++abc analysis |
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Inventory Control
--Economic Order Quantity --ABC Analysis |
Economic Order quantity
--what is the most economic amount of material to order? ++you want to order in bulk quantity only if the carrying costs are less than the amount you would be ordering sequentially ABC analysis --Classifies goods or serices by their value --let's managers know which goods or services require the most attention ++you don't want to order too many of your most expensive items ++you don't want people stealing your most expensive items |
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Goal 3
Assure timely availability of your products and services What percentages of customers will leave during a stockout and go to another store? What percent of stockouts is based on poor inventory control |
between 20 and 40 %
72% |
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Methods for managing inventory
Just-in -time systems |
produce stock the product or service just when it is needed, no earlier, not later
reduces inventory carrying levels and costs reduces labor and equitment time, thus reducing production costs improves customer satisfaction, improving revenues through increased purchases |
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goal 3
methods for timing segments Gantt charts Pert/CPM |
gantt charts: track elements in a project to insure there are no gaps or overlaps in a sequence of activities
Pert cpm --method to determine the optimal order of the steps in a process --adds the avility to determine which are the most important steps, where a timing error would be most costly |
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Goal 4 -- achieving cost efficiency
What is the issue for goal 4 How do you measure how well an organization used its resources |
the issue is increasing productivity while reducing costs
measured by productivity --outputs/inputs ++products made per hour ++customers served per hour |
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Goal 4
Word standard how is it measured |
work standard: how long a trained employee should take to complete a process or activity
measured by time and motion studies (for standardized jobs work sampling (for non-routine jobs) |
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What is the main focus of strategic planning?
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the main focus of strategic panning is to identify, develop and hopefully maintain a Sustainable Competitive Advantage for your firm
SCA = the ability of a firm to win consistently over the long term in a competitive situation |
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5 elements of a sustainable competitive advanatage
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1. Superiority: you must have a comparative advantage
2. inimitability : your compartitive advantage must be difficult for others to replicate 3. Durability: your comparative advantage must last a long time (brand image, patents, etc.) 4. Nonsubstitutability: your competition should not be able to substitute something else for your comparative advantage 5. Appropriability: your comparative advantage must provide for subnormal returns |
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4 opurtunities for competitive advantage
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Cost and quality
--operating efficientcy; product/service quality Knowledge and speed --innovation, time to market Barriers to entry --protection against competition Financial Resources --investments |
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Vrio anaysis part one
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Determine if your company has any comparative advantages over your competition in these areas:
1. human: employees and their skill 2. Physical: capital assets (plant equipment 3. Financial: cash reserves, borrowing capacity 4. Organizational: culture, leadership, reputation etc |
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Vrio analysis part 2
4 criteria |
evaluate any comparative advantage using the four vrio criteria
1. Is the resource valuable (does it help neutralize threats and exploit opurtunities 2. Is the resource rare? (is it not widely owned in the industry?) 3. Is the resource inimitatable (is it difficult to copy) 4. Is the resource exploited by the ORG? (is the org taking full advantage of the resources that it owns? |
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The Industry's environment
Porter's five forces |
competitive rivalry
threat of new entrants threat of substitute products power of the customers power of the suppliers |
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Porter's five forces
Competitive Rivalry What are the two basic type's of competition? |
Price
-if prices drop faster than costs, industry profits fall (gas, wars, airlines) -when costs drop faster than prices, price competition is not as damaging to the industry -customers are price sensitive -little profit per sale; lots of sales Quality -if the cost of adding additional features rises faster than the price, profits are hurt -generally, this type of rivalry results in higher industry profits -customer's don't usually care about price -lots of profit per sale, few sales |
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Porter's five forces
Threat of new entrants |
how likely is it that new companies will enter your industry and try to take your customers?
Factors taht limit entry include, 1. starting costs 2. switching costs 3. exit costs |
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Porter's five forces
Threat of substitute products |
Competitive products -made within the industry
substitute products -- made in other industries that can take the place of yoru product Industry boundaries make the differene --in the sweetner industry, sugar, sweet n low and equal are all competitors to the sugar industry: sweet n low and equal are substitutes |
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Porter's five forces
The power of customers |
THIS IS AN ESTIMATE OF THE POWER HELD BY THE CUSTOMERS IN AN INDUSTRY
--Few or organized customers have power to dictate prices, quality, deliver schedules --when customers have power, your profits are reduced |
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Porter's five forces
the power of suppliers |
An estimate of the power held by the suppliers of the industry
--few or organized suppliers have power to dictate terms and prices of raw materials --when suppliers have power, your profits are reduced |
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Higher profits come from...:
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1. few competitors
2. quality based competition 3. high entry barriers 4. few new entrants 5. few substitutes 6. many customers 7. fragmented customers 8. many suppliers |
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Lower profits come from
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1. price based competition
2. lowe entry barriers 3. many new entrants 4. many substitutes 5. few customers 6. united customers 7. few suppliers |
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The domestic Environment: Step analysis
Sociocultural factors |
1. Demographics
2. societal values |
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The domestic Environment: Step analysis
Technological factors |
1. product technology changes
2. process technology changes |
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The domestic Environment: Step analysis
Economic factors factors |
current conditions
economic cycles structural changes |
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The domestic Environment: Step analysis
Political and Legal factors |
political
-government spending ++how much and in which industries ++effects of deficits on availability of money Legal --laws and regulations ++originate at all levels of government |
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The Global Environment: STEP +2:
Sociocultural Forces |
1. Demographics: average age, birthrate, education levels
2. Cultural Issues: elder care, attitudes towards work and time |
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The Global Environment: STEP +2:
Technological Forces |
1. new technology
2. Technology Transfer 3. Technological sophistication |
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The Global Environment: STEP +2:
Economic Forces |
Interest Rates
Unemployment Rates Inflation Gross Domestic Product |
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The Global Environment: STEP +2:
Political and Legal Forces |
Environmental laws
tariff regulation taxes foreign policy Monetary and fiscal policies industrial policies social policies |
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Strategic Formulation
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Firms seek to create competitive advantage through the adoption of an appropriate strategy
Strategies can be formulated at all three organizational levels -corporate (what types of businesses should we be in) --business how should we compete --functional (what can this department do to help achieve the goals of the other levels |
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Corporate level strategies
Growth |
Concentration
Diversification --related diversification --unrelated diversification --vertical integration ++forward (distribution channels) ++backward (supplier channels) |
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Corporate level strategies
Retrenchment Strategies Cooperative Strategies |
Retrenchment Strategies
--liquidation --divestiture --restructuring ++downsizing Cooperative Strategies --joint ventures --strategic alliances ++outsourcing ++supplier ++distribution Cooperative Strategies |
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Porter's generic strategies
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Cost Leadership
Differentiation Focused Low Cost Focused differentiation |
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Strategy Implementation
What are two things to be considered with any scheme? |
considered
1. Is it good in itself 2. can it be easily put into practice An average strategy superbly implemented is better than a great strategy poorly implemented |
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Strategy Implementation
McKinsey 7S model |
A new strategy must fit with all elements of the organization
strategy, structure, shared values, systems, skills, style, staff |
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3 Elements of Organizational Structure
Summary |
1. Differentiation / Integration
2. Formalization / Informalization 3. Centrilazation / decentrilization |
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3 Elements of Organizational Structure
Differentiation |
The extent to which tasks are divided into sub-tasks and performed by individuals with specialized skills
Key benefit: greater specialization questions: which activities should be divided and to what extent |
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4 types of differentiation
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1. Task
--how tasks are broken down 2. Cognitive --how people talk about things 3. Horizontal --how many departments are there 4. Vertical --how many layers of management there are |
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3 Elements of Organizational Structure
Integration |
The degree to which various parts of the organization interact with each other and are interdependent
Key benefit: coordination between people and activities to meet organizational goals Key Drivers of integration: 1. Interdependence 2. Uncertainty Ways to accomplish integration --rules --goals --values |
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Key reason for needing integration:
Interdependence |
the degree to which one unit or one person depends on another unit or person in order to accomplish an assigned task
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Two types of interdependence
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Pooled interdependence
Sequential interdependence |
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Key reason for needing integration:
Uncertainty |
the extent to which you can predict future needs for the organization
the greater the levels of uncertainty, the greater the need for effective and efficient integration |
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How to accomplish integration
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Rules
--useful when tasks are independent Goals --helpful in uncertainty and interdependence increase --specify quantitative outcomes Values --act as a unifier --when there are high levels of uncertainty --do no specify quantitative outcomes --specify underlying objectives (ex. customer satisfaction |
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Formalization vs. informalization
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variance as to the use of formal or defined structures and systems in decision making, communication and control
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Formal organizations
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< have a high level of reliance on:...
1. Chain of command --trend is to shorter chains 2. Unity of --trend is cross-functional teams, task forces, and horizontal structures thus fracturing unity of command 3. Specified spans of control --trend is to widen spans of control |
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Centralization vs. Decentralization
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Refers to the level at which decisions are made
1. Centralized: decision making restricted to a very fe individuals, usually high up in the org. 2. Decentralized decision making authority pushed down to the lowest possible level |
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Functional Structure
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Environment:
1. small organiztions 2. stable, predictable environments Advantage: 1. economies of scale 2. efficient use of resources 3. expertise leading to high quality of problem solving Disadvantages 1. assigning accountability for cross-functional concerns such as containment quality 2. functional chimney problems (cognitive differentiation) |
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Holy shit... I'm not going to do it.... at least not now. These structure slides are too long to type out.
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11. Structure of org
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International Structures
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Growth of an international organization
--domestic org with export department --domestic org with international division --advanced global structures based on the 6 basic structures |
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Globalization / Localization
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Globalization:
--the need to integrate activities on a coordinated, worldwide basis Localization --the need to differentiate activities country by country |