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CHAPTER 7

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Implementing Strategies: Management and Operations Issues

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Establishing annual objectives

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A decentralized activity that directly involves all managers in an organization.

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Annual objectives

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Essential for strategy implementation because they (1) represent the basis for allocating resources; (2) are a primary mechanism for evaluating managers; (3) are the major instrument for monitoring progress toward achieving long-term objectives; and (4) establish organizational, divisional, and departmental priorities.

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Annual objectives

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Serve as guidelines for action, directing and channeling efforts and activities of organization members.

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Policy

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Refers to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals.

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Resource allocation

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A central management activity that allows for strategy execution

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Conflict

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A disagreement between two or more parties on one or more issues.

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Avoidance

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Includes such actions as ignoring the problem in hopes that the conflict will resolve itself or physically separating the conflicting individuals (or groups).

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Defusion

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Include playing down differences between conflicting parties while accentuating similarities and common interests, compromising so that there is neither a clear winner nor loser, resorting to majority rule, appealing to a higher authority, or redesigning present positions.

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Confrontation

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Exemplified by exchanging members of conflicting parties so that each can gain an appreciation of the other's point of view or holding a meeting at which conflicting parties present their views and work through their differences.

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Functional Structure

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A groups tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, and management information systems.

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marketing

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The word "______" will mean product development to the engineer, studying customers through market research to the product manager, merchandising to the salesperson, and constant change in design to the manufacturing manager.

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Divisional or Decentralized structure

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This is the second most common type used by U.S. businesses

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Divisional structure

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Organized in one of four ways: by geographic area, by product or service, by customer, or by process. With a divisional structure, functional activities are performed both centrally and in each separate division.

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Divisional Structure by Geographic Area

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Appropriate for organizations whose strategies need to be tailored to fit the particular needs and characteristics of customers in different geographic areas.

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Divisional Structure by Product (or Services)

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Most effective for implementing strategies when specific products or services need special emphasis.

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Divisional Structure by Customer

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When a few major customers are of paramount importance and many different services are provided to these customers, then a divisional structure can be the most effective way to implement strategies.

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Divisional Structure by Process

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Similar to a functional structure, because activities are organized according to the way work is actually performed.

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Strategic Business Unit (SBU) Structure

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As the number, size, and diversity of divisions in an organization increase, controlling and evaluating divisional operations become increasingly difficult for strategists.

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Matrix Structure

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Most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication (hence the term matrix).

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Restructuring

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Also called downsizing, rightsizing, or delayering It involves reducing the size of the firm in terms of number of employees, number of divisions or units, and number of hierarchical levels in the firm's organizational structure.

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Reengineering

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Also called process management, process innovation, or process redesign Involves reconfiguring or redesigning work, jobs, and processes for the purpose of improving cost, quality, service, and speed.

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Benchmarking

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Simply involves comparing a firm against the best firms in the industry on a wide variety of performance related criteria.

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Profit sharing

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Another widely used form of incentive compensation.

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Gain sharing

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Requires employees or departments to establish performance targets; if actual results exceed objectives, all members get bonuses

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Effective Bonus System

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Criteria such as sales, profit, production efficiency, quality, and safety could also serve as bases for an _______.

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Resistance to change

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The single greatest threat to successful strategy implementation.

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Force Change Strategy

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Involves giving orders and enforcing those orders; this strategy has the advantage of being fast, but it is plagued by low commitment and high resistance.

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Educative Change Strategy

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Presents information to convince people of the need for change; the disadvantage of an educative change strategy is that implementation becomes slow and difficult.

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Rational or Self-Interest Change Strategy

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Attempts to convince individuals that the change is to their personal advantage.

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Just-in-time (JIT)

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Parts and materials are delivered to a production site just as they are needed, rather than being stockpiled as a hedge against later deliveries.

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Furloughs

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Temporary layoffs

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ESOP

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Tax-qualified, defined-contribution, employee-benefit plan whereby employees purchase stock of the company through borrowed money or cash contributions.

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Glass ceiling

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Invisible barrier in many firms that bars women and minorities from top-level management positions.

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CHAPTER 8

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IMPLEMENTING STRATEGIES: MARKETING, FINANCE/ACCOUNTING, R&D, AND MIS ISSUES

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Wikis

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Web sites that allows users to add, delete, and edit content regarding frequently asked questions and information across the firm's whole value chain of activities.

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Market segmentation

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Subdividing of a market into distinct subsets of customers according to needs and buying habits.

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Segmentation

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A key to matching supply and demand,

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Product positioning

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Identifying target customers to focus marketing efforts on sets the stage for deciding how to meet the needs and wants of particular consumer groups.

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Multidimensional scaling

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Examine three or more criteria simultaneously, but this technique requires computer assistance and is beyond the scope of this text

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Earnings Per Share/Earnings Before Interest and Taxes analysis (EPS/EBIT)

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Most widely used technique for determining whether debt, stock, or a combination of debt and stock is the best alternative for raising capital to implement strategies.

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Break-even Point

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It is where two lines cross each other. It is the EBIT level where various financing alternative represented by lines crossing are equally attractive in terms of EPS.

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Projected Financial Statement Analysis

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Central strategy-implementation technique because it allows an organization to examine the expected results of various actions and approaches.

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Financial Budget

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A document that details how funds will be obtained and spent for a specified period of time.

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Price-Earnings Ratio Method

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Dividing the market price of the firm's common stock by the annual earnings per share and multiplying this number by the firm's average net income for the past five years.

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Outstanding shares method

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Multiplying the number of shares outstanding by the market price per share and add a premium.

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Going public

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Selling off a percentage of your company to others in order to raise capital.

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Research and development (R&D) personnel

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These individuals are generally charged with developing new products and improving old products in a way that will allow effective strategy implementation.

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Management Information System (MIS)

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Most important factor in differentiating successful from unsuccessful firms.

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Posting messages of 140 characters or less on Twitter.com to describe features of bank products.

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CHAPTER 9

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Strategy Review, Evaluation, and Control

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Consonance

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Need for strategists to examine sets of trends, as well as individual trends, in evaluating strategies.

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Revised IFE Matrix

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Focus on changes in the organization's management, marketing, finance/accounting, production/operations, R&D, and management information systems strengths and weaknesses

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Revised EFE Matrix

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Indicate how effective a firm's strategies have been in response to key opportunities and threats.

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Measuring Organizational Performance

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This activity includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives

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Taking Corrective Actions

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Requires making changes to competitively reposition a firm for the future

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Balanced Scorecard Analysis

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Firms seek answers to the following questions and utilize that information, in conjunction with financial measures, to adequately and more effectively evaluate strategies being implemented

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Contingency plans

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Alternative plans that can be put into effect if certain key events do not occur as expected.

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Auditing

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A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users. -AAA

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Generally Accepted Auditing Standards (GAAS).

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Set of standards use by Independent auditors

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Top-down Approach

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Contend that top executives are the only persons in the firm with the collective experience, acumen, and fiduciary responsibility to make key strategy decisions.

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Bottom-up Approach

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Lower- and middle-level managers and employees who will be implementing the strategies need to be actively involved in the process of formulating the strategies to ensure their support and commitment.

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CHAPTER 10

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Business Ethics/ Social Responsibility/ Environmental Sustainability

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Social responsibility

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Actions an organization takes beyond what is legally required to protect or enhance the well-being of living things.

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Sustainability

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The extent that an organization's operations and actions protect, mend, and preserve rather than harm or destroy the natural environment.

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Business ethics

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Principles of conduct within organizations that guide decision making and behavior.

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Code of Business Ethics

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A document that provides behavioral guidelines that cover daily activities and decisions within an organization

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The Word Ethic

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This game asks players business ethics questions, such as how do you deal with a customer who offers you football tickets in exchange for a new, backdated IRA?

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Whistle-blowing

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Policies that require employees to report any unethical violations they discover or see in the firm

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Bribery

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The offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in discharge of a public or legal duty -Black's Law Dictionary

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Bribe

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A gift bestowed to influence a recipient's conduct.

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Social Policy

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Embraces managerial philosophy and thinking at the highest level of the firm

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gaikokujin roudousha

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Using foreign workers is known as _____ in Japanese.

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Environment

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Surroundings in which an organization operates, including air, water, land, natural resources, flora, fauna, humans, and their interrelation. -ISO

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Environmentally Proactive

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Doing more than the bare minimum to develop and implement strategies that preserve the environment.

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Environmentally Reactive

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Changing practices only when forced to do so by law or consumer pressure more often today leads to high cleanup costs, liability suits, reduced market share, reduced customer loyalty, and higher medical costs.

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ISO 14000

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A series of voluntary standards in the environmental field.

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ISO 14000

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Family of standards concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environmental performance.

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ISO 14001

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Set of standards adopted by thousands of firms worldwide to certify to their constituencies that they are conducting business in an environmentally friendly manner

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Environmental Management System

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The ISO 14001 standard requires that a community or organization put in place and implement a series of practices and procedures that, when taken together, result in an _______.

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Chapter 11

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Global/International Issues

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International Firms or Multinational Corporations

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Organizations that conduct business operations across national borders

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Protectionism

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Countries imposing tariffs, taxes, and regulations on firms outside the country to favor their own companies and people.

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Globalization

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A process of doing business worldwide, so strategic decisions are made based on global profitability of the firm rather than just domestic considerations.

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Global Strategy

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Includes designing, producing, and marketing products with global needs in mind, instead of considering individual countries alone.

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Recession

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Two consecutive quarters of a decline in real gross domestic product

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Mexico

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An authoritarian society in terms of schools, churches, businesses, and families

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Wa

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The Japanese place great importance on group loyalty and consensus

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Feng Shui

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Practice of harnessing natural forces

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Guanxi

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In China, business behavior revolves around personal relations

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Nemaswashio

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In China, feng shui is important in business, whereas in Japan, _____ is important

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Inhwa

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Harmony based on respect of hierarchical relationships, including obedience to authority (South Korea)

CHAPTER 7-11 STRATEGIC MANAGEMENT – Flashcards

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