Principles of Management - Competency 1 PDF

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Notes from the book, Competency 1...

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Principles of Management Strategic Planning Competency 317.2.1 https://wgu.vitalsource.com/#/books/1259826961/cfi/6/2[;vnd.vst.idref=covera]! The graduate can explain the strategic planning process. 1. Describe the concepts of strategic vision (intent), mission, and goals a. Chapter 4- "Levels of Planning" 2. Explain what a Core Competency/Capability means for an organization a. Chapter 4- "Resources and Core Capabilities" 3. Describe what Porter's Five Forces Model is and how it is used in the strategic planning process a. Chapter 2- "The Competitive Environment" 4. Explain the components of a SWOT analysis and how it is used in the strategic planning process a. Chapter 4- SWOT Analysis and Strategy Formulation 5. Describe the types of corporate strategies that organizations can use a. Chapter 4- " Resources and Core Competencies" 6. Understand the difference between backward and forward vertical integration a. http://www.strategicmanagementinsight.com/topics/verticalintegration.html 7. Understand the two kinds of business strategies that companies can use to gain competitive advantage a. Chapter 4- "Business Strategy" 8. Describe the steps in the strategic planning process a. Chapter 4- "The Basic Planning Process" 9. Define what the Value Chain concept means, as well as the purpose of a value chain analysis a. Chapter 9- "Customers and the Responsive Organization" 10. Identify and understand the differences between mechanistic and organic organizational structures a. Chapter 9- "The Responsive Organization"

NOTES - Chapter 4

1. Planning is a formal expression of managerial intent. It describes what managers decide to do and how they will do it. provides the framework, focus, and direction required for a meaningful effort. 2. Until the mid-1900s, most planning was unstructured and fragmented, and formal planning was restricted to a few large corporations. 3. Alfred Sloan of General Motors instituted formal planning processes. 4. Planning is the conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future. a. Step 1: Situational Analysis - thorough situational analysis studies past events, examines current conditions, and attempts to forecast future trends. Within their time and resource constraints, planners should gather, interpret, and summarize all information relevant to the planning issue in question. b. Step 2: Alternative Goals and Plans - generate alternative goals that may be pursued in the future and the alternative plans that may be used to achieve those goals. stress creativity. planning should outline alternative actions that may lead to the attainment of each goa. To be effective, GOALS should have certain qualities - SMART: i. Specific ii. Measurable iii. Attainable iv. Relevant v. Time-bound c. Step 3: Goal and Plan Evaluation - managers will evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan. Prioritize and eliminate. To decide, you would estimate the costs and expected returns of such alternatives. d. Step 4: Goal and Plan Selection - select the one that is most appropriate and feasible. Identify priorities and trade-offs. Experience plays a role in this. e. Step 5: Implementation - best plans are useless if they are not implemented properly. successful implementation requires a plan to be linked to other systems in the organization, particularly the budget and reward systems. f. Step 6: Monitor and Control - Without it, you will never know whether your plan is succeeding. develop control systems to measure that performance and allow them to take corrective action when the plans are implemented improperly 5. Levels of Planning a. Strategic planning involves making decisions about the organization's

b.

c.

d.

e.

long-term goals and strategies. have a strong external orientation and cover major portions of the organization. i. Strategic goals are major targets or results that relate to the longterm survival, value, and growth of the organization. Typical strategic goals include growth, increasing market share, improving profitability, boosting return on investment, fostering both quantity and quality of outputs, increasing productivity, improving customer service, and contributing to society. Usually mutual reinforcing goals. ii. A strategy is a pattern of actions and resource allocations designed to achieve the goals of the organization. An effective strategy provides a basis for answering five broad questions about how the organization will meet its objectives: 1. Where will it be active? 2. How will we get there? 3. How will we win the marketplace? 4. How fast will we move and in what sequence will we make changes? 5. How will we obtain financial returns? Tactical and Operational Planning - Once the organization's strategic goals and plans are identified, they serve as the foundation for planning done by middle-level and frontline managers. goals and plans become more specific and involve shorter periods of time as they move from the strategic level to the tactical level and then to the operational level. i. Tactical planning translates broad strategic goals and plans into specific goals and plans that are relevant to a definite portion of the organization, often a functional area like marketing or human resources ii. Operational planning identifies the specific procedures and processes required at lower levels of the organization. Frontline managers usually focus on routine tasks such as production runs, delivery schedules, and human resource requirements Aligning Tactical, Operational, and Strategic Planning - consistent, mutually supportive, and focused on achieving the common purpose and direction. A strategy map provides a tool managers can use to communicate their strategic goals and enable members of the organization at every level to understand the parts they will play in helping to achieve them. They align the organization's strategic and operational goals. Traditionally, strategic planning emphasized a top-down approach, but as a result, a gap can often develop between strategic managers and tactical

and operational managers, and managers and employees throughout the organization became alienated and uncommitted to the organization's success. The problems just described and the rapidly changing environment of the past 25 years have forced executives to look to all levels of the organization. 6. Strategic management - Involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies. It integrates strategic planning and management into a single process. Has six major components: a. Establishment of mission, vision, and goals i. mission is a clear and concise expression of the basic purpose of the organization. ii. Vision - long-term direction and strategic intent of a company. iii. Strategic goals - evolve from the mission and vision of the organization. iv. drive the second component b. Analysis of external opportunities and threats. i. Industry and Market ii. Competitor iii. Political and Regulatory iv. Social v. Human Resources vi. Macroeconomic vii. Technological viii. Stakeholders are groups and individuals who affect and are affected by the achievement of the organization’s mission, goals, and strategies. c. Analysis of internal strengths and weakness i. Financial ii. Marketing iii. Operations iv. Other Internal Resources v. Human Resources vi. gives strategic decision makers an inventory of the organization’s existing functions, skills, and resources vii. Resources and Core Capabilities 1. Resources are inputs to production that can be accumulated over time to enhance the performance of a firm a. Tangible and intangible

2. Core capability is something a company does especially well relative to its competitors. A unique skill that gives an advantage. 3. Use competitive advantage, be organized viii. Benchmarking - assess and improve performance. how well one company’s basic functions and skills compare with those of another company. d. SWOT(strengths, weakness, opportunities, and threats) analysis and strategy formulation. i. will have the information they need to assess the organization’s strengths, weaknesses, opportunities, and threats. ii. SWOT analysis helps managers summarize the relevant, important facts from their external and internal analyses. iii. formulate a strategy that will build on the SWOT iv. corporate strategy identifies the set of businesses, markets, or industries in which the organization competes and the distribution of resources among those businesses. v. Four basic alternative strategies ranging from very specialized to highly diverse. 1. concentration strategy focuses on a single business competing in a single industry 2. vertical integration strategy involves expanding the domain of the organization into supply channels or to distributors. used to eliminate uncertainties and reduce costs associated with suppliers or distributors. 3. concentric diversification involves moving into new businesses that are related to the company’s original core business. 4. conglomerate diversification is a corporate strategy that involves expansion into unrelated businesses. vi. The diversified businesses of an organization are sometimes called its business portfolio 1. BCG matrix - analyze a corporation’s strategy for managing its portfolio vii. After the management makes the corporate strategic decisions, executives must determine how they will compete in each business area. Business strategy - major actions by which an organization builds and strengthens its competitive position in the marketplace. two generic business strategies

1. low-cost strategies - efficient and offer a standard, no-frills product. often are large and try to take advantage of economies of scale in production or distribution. 2. differentiation strategy - unique in its industry or market segment along some dimensions that customers value. high product quality, excellent marketing and distribution, or superior service. viii. Functional Strategy - final step in strategy formulation. implemented by each functional area of the organization, support business strategy. 1. include production, human resources, marketing, research and development, finance, and distribution e. Strategic implementation - ensure that the new strategies are implemented effectively and efficiently. i. Everything must all support the strategy. fit the multiple factors ii. Managers at all levels are involved with formulating strategy and identifying and executing ways to implement it. iii. Four Related Steps 1. Define strategic tasks. 2. Assess organization capabilities. - ability to implement 3. Develop an implementation agenda. 4. Create an implementation plan. f. Strategic control - support managers in evaluating the organization’s progress with its strategy and, when discrepancies exist, taking corrective action. i. encourage efficient operations that are consistent with the plan while allowing flexibility to adapt to changing conditions. ii. develop performance indicators

NOTES - Chapter 9

1. “The Responsive Organization” a. adaptable—prepared to meet the complex and ever-changing challenges that managers and their organizations constantly confront. b. an ambidextrous organization is simultaneously good at exploitation and exploration. c. Speed is vital to an organization’s survival. d. mechanistic organization - A form of organization that seeks to maximize internal efficiency. e. In contrast, an organic structure - An organizational form that emphasizes flexibility. i. The more organic a firm is, the more responsive it will be to changing competitive demands and market realities. 2. “Strategy and Organizational Agility” a. Core capabilities can be a source of quality and innovation. i. gives value to customers, makes the company’s products different from—and better than—those of competitors ii. well-developed core capability can enhance a company’s responsiveness and competitiveness. 1. Identify them 2. Acquire, build, and invest in them 3. Extend, opportunities for tomorrow iii. Not enough to have the resources to build capabilities, also need to be managed in a way that gives the organization an advantage over competitors. 1. accumulate the right resources 2. Next, they combine the resources in ways that give the organization capabilities a. researching new products or resolving problems for customers 3. leverage or exploit their resources a. identifying the opportunities where their competencies deliver value to customers b. Strategic Alliances - competitors working together to achieve their strategic goals. formal relationship created with the purpose of joint pursuit of mutual goals. i. modern organization has a variety of links with other organizations. ii. allow participants to respond to customer demands or environmental threats far faster and less expensively than each would be able to do on its own.

c. Learning Organization - skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights. Being responsive requires continually changing and learning new ways to act. i. How do firms become true learning organizations? 1. Engage in disciplined thinking and paying attention to details 2. Searching constantly for new knowledge and ways to apply it 3. Valuing and rewarding individuals who expand their knowledge 4. Reviewing successes and failures carefully to find lessons 5. Benchmarking - implementing the best business practices of other organizations 6. Sharing ideas throughout the organization via reports, and mentoring less experienced employees. d. The High-Involvement Organization - top management ensures that there is a consensus about the direction in which the business is heading. i. fundamental to the high-involvement organization is continual feedback to participants regarding how they are doing compared with the competition ii. Task forces, study groups, and other techniques are used to foster participation in decisions that affect the entire organization iii. structurally, this usually means that even lower-level employees have a direct relationship with a customer iv. organizational form is a flat, decentralized structure built around a customer 3. “Organizational Size and Agility” a. Large size often leads to scale economies. Large organizations are typically less organic and more bureaucratic. with size comes greater complexity, and complexity brings a need for increased control. i. Bigger was better after World War II, when foreign competition was limited ii. Size also creates economies of scope; materials and processes employed in one product can be used to make related products. b. Bureaucracy can run rampant. Too much success can breed complacency. Larger companies also are more difficult to coordinate and control. Can create administrative difficulties that inhibit efficient performance. i. diseconomies of scale, or the costs of being too big. ii. Smaller companies can move fast, provide quality goods and services to targeted market niches, c. The challenge is to be both big and small to capitalize on the advantages of each.

d. To avoid problems of growth and size, Starbucks and Amazon decentralize decision making and organize around small, adaptive, teambased work units. e. Downsizing is the planned elimination of positions or jobs. i. the negative consequences of downsizing are greater at highinvolvement organizations f. Rightsizing - A successful effort to achieve an appropriate size at which the company performs most effectively. g. increase the effectiveness of downsizing: i. Use downsizing only as a last resort, ii. Choose positions with careful analysis and strategic thinking. iii. Train people to cope with the new situation. iv. Identify and protect talented people. v. Give special attention and help to those who have lost their jobs. vi. Communicate constantly with people about the process vii. Identify how the organization will operate more effectively in the future h. survivor’s syndrome - Loss of productivity and morale in employees who remain after a downsizing. 4. “Customer Relationship Management” a. (CRM) is a multifaceted process, typically mediated by a set of information technologies, that focuses on creating two-way exchanges with customers so that firms have an intimate knowledge of their needs, wants, and buying patterns. i. part of a business strategy for managing customers to maximize their long-term value to an enterprise. ii. Using it effectively helps them understand, as well as anticipate, the needs of current and potential customers. b. World-class companies know that the trade-off mentality no longer applies. c. Value chain - sequence of activities that flow from raw materials to the delivery of a good or service, with additional value created at each step. i. Research and development focus on innovation and new products. ii. Inbound logistics receive and store raw materials and distribute them to operations. iii. Operations transform the raw materials into final product. iv. Outbound logistics warehouse the product and handle its distribution. v. Marketing and sales identify customer requirements and get customers to purchase the product.

vi.

Service offers customer support, such as repair, after the item has been bought.

NOTES - Chapter 2 1. The Competitive Environment- includes the organizations with which the

organization directly interacts. d. Identify competitors e. How do they compete? i. Use tactics such as price reductions, new product introductions, and advertising campaigns f. (left off page 53)...