ST Chapter 10 – Flashcards

- gives operating personnel a better understanding of their role - process of developing them can resolve conflicts - working through tactics provides a basis for budgets, schedules, trigger points, critical factors, etc. - can be powerful motivators

1. specificity: business strategies provide general direction, functional tactics are specific activities 2. time horizon: functional must be done now or soon, business strategies are 3-5 yrs out 3. participants who develop them: strategy = general manager, tactics = subordinates who run the operating areas

- helps ensure managers know what needs to be done and focus on accomplishing results - clarifies how managers intend to accomplish the business strategy - increases managements confidence in and sense of control over the business strategy - facilitates coordination among operating units by clarifying areas of independence and potential conflict

- focuses the attention of managers on what needs to be done now to make strategies work - allows managers to adjust changing current conditions

acquiring an activity, service, or product necessary to provide a company's products from "outside" the company

allowing an individual or team the right and flexibility to make decision and initiate action

directives designed to guide the thinking, decisions, and actions of managers and their subordinated in implementing a firm's strategy

1. establish indirect control over independent action - control decisions but allow employees to make them without top management 2. promote uniform handling of similar activities 3. ensure quicker decisions through standardization of answers 4. institutionalize basic aspects of organization behavior 5. reduce uncertainty in repetitive and day-to-day decision making 6. counteract resistance to or rejection of chosen strategies by organization members 7. predetermined answers to routine problems 8. afford managers a mechanism for avoiding hasty and ill-conceived decisions in changing organizations

1. require managers to think through the policy's meaning, content, and intended use 2. reduce misunderstanding 3. consistent treatment of problems 4. ensure unalterable transmission of policies 5. communicate the authorization or sanction of policies 6. supply a convenient and authoritative reference 7. systematically enhance indirect control

right to purchase company stock at a fixed price at some future date - movement in share price does not explain all dimensions of managerial performance

prohibited from selling the stock for a certain time period and not at all if they leave

compensation is deferred - may promote risk-averse decision making due to downside risk borne by executive

guarantees cash payment if the exec is fired, quits, or retires - compensation achieved either way

- weak correlation between earnings measures and shareholder weather creation

- weak correlation between earnings measures and shareholder weather creation