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-look ahead three or more years into the future
-Elliot Jacques, researcher, found that very few people have the capacity to think long-term; most of us work comfortably with only three month time spans
A policy communicates broad guidelines for taking action and making decisions in specific circumstances
describe exactly what actions to take in specific situations
-the process of predicting what will happen in the future
-identifies alternative courses of action to take when things go wrong.
-The recession, tsunami in Japan and resulting Fukshima nuclear plant disaster, BP Deepwater Horizon oil spill, Joplin Missouri tornado and recent devastating floods have caused many organizations to realize the importance of contingency plans.
-identifies alternative future scenarios
-makes plans to deal with each
-is a process of joint objective setting between a superior and subordinate
-Important to state as specifically and quantitatively as possible
-Measurable end product
-Verifiable work activities
-Pursuit of a common objective throughout the organization
-Focus on results on a time scale
-Greater participation, greater motivation
-Frequent check on the progress & feedback provided
-Improvement objectives - specific performance improvement is stated so it can be meassured
-Maintenance objectives - relate to the intention to maintain performance at previously established levels
-Personal development objectives are for employee development or personal growth
-Absence of TMT commitment
-Development of objectives not in a participatory way
-Too much pressure on employees
-Personal goals left out
-identifies lessons learned in a completed project, task force, or special operation
-is the process of measuring performance and taking action to ensure desired results
-measures performance results (outcomes or work) in terms of quantity, quality, cost, or time
-carefully calculated and predetermined standards
-past experiences as a basis to measure
-the practice of giving attention to situations that show the greatest need for action
-(preliminary controls) take place before work begins/prevent problems before they occur; proactive
-(steering controls) focus on what happens during the work process
systems established by management to directly control work processes
policies, procedures, job descriptions, budgets and supervision all keep behavior in line with organizational objectives
-quality standard that tolerates no more than 3.4 defects per million units produced.
automatic order of a pre-determined amount of inventory when inventory falls to a certain level. Examples include college bookstores and supermarkets.
-inventory arrives exactly when it is needed for production or sale.
-Break-even Point = Fixed Costs ÷ (Price - Variable Costs)
calculations that track financial success of the organization.
measures how well inventory is managed
-determines if the firm is producing a return on the owner's investment
-a comprehensive performance measurement system (help top managers exercise strategic control)
ü Financial Performance
ü Customer Satisfaction
ü Internal Process Improvement
ü Innovation and Learning
is a comprehensive action plan that identifies long-term direction for an organization and guides resource utilization to accomplish its goals
about what to do to be successful in the face of rivalry and changing conditions
is a way of operating that is difficult to imitate
provides direction and guides resource allocations as a whole
provides direction and guides resource allocations for an individual unit or division within a larger enterprise
-guides activities to implement strategies at a detail or specific operations level
-Such as Marketing, Finance, Manufacturing, Marketing, and Human Resources
-are those designed to increase the size of current operations
o Related – similar or complementary business areas
o Unrelated – entirely new business areas
o Vertical integration - acquire suppliers (backward) or customers (forward)
-seeks to correct weaknesses by making radical changes to current ways of operating
when a business closes and sells is assets to pay creditors
-seeks to correct weaknesses by reducing the scale or mix of operations
-Ex: Chapter 11 Bankruptcy
-protects an organization from creditors as it re-organizes in an attempt to restore solvency.
sells off parts of the organization to refocus attention on core business areas
adopts standardized products and advertising for worldwide use
customizes products and advertising to meet local cultural needs
seeks efficiencies of global operations with attention to local markets
-two or more organizations create a partnership to pursue an area of mutual interest or strengthen competitive advantage.
-suppliers have preferred relationships with others in the supply chain to facilitate smooth flow of supplies.
-firms cooperate for product/service sales and distribution.
-competitors share information or technology with the intent of creating a larger market for both
-IBM and Red Hat cooperate on some aspects of Linux development
business to business; uses web portals and IT to link organizations vertically in supply chains
business to customers; uses web portals and IT to link organizations with customers
social media is used to engage customers and other external groups
-social media strategy that becomes an interactive idea exchange with customers.
-is the process of formulating and implementing strategies to
-accomplish long-term goals and
-sustain competitive advantage
-is a tool used in strategic planning to determine the current status of the organization
-Internal assessment of the organizational strengths and weaknesses
-External assessment of environmental opportunities and threats
is a special strength that gives and organization a competitive advantage
· Porter’s five forces model examines _______?
-five forces model which include competitors, new entrants, suppliers, customers and substitutes
-intense rivalry, easy entry, substitute products, powerful suppliers and customers
low rivalry, barriers to entry, few or no substitute products, weak supplier and customer power
seeks competitive advantage seeks competitive advantage through uniqueness
seeks competitive advantage through operating with lower costs than competitors
seeks competitive advantage through concentration on one special market segment and offering a unique product to that segment’s customers
seeks competitive advantage through concentration on one special market segment and being the low cost provider to that market segment’s customers
· Portfolio planning examines ________?
Ø Stars - high market share in high growth markets
Ø Cash cows - high market share in low growth markets
Ø Question marks - low market share in high growth markets
Ø Dogs - low market share in low growth markets
the capability to inspire people to successfully engage in a process of continuous change, performance enhancement, and implementation of organizational strategies
-responsibility of top managers to keep in touch with strategy, how well it is being implemented and if it needs to be changed to be more effective in accomplishing the mission
· Entrepreneurs are ______________?
dynamic, risk-taking, creative, growth-oriented behavior
-person willing to pursue opportunities that others fail to recognize or view as problems
moving faster than competitors to stop, exploit, and enter a new market or an unrecognized niche in an existing one
-See Table 18.1 for myths about entrepreneurs
-Anita Roddick, founder of The Body Shop, PLC
-Earl Graves, founder of Earl G. Graves Ltd, a multimedia company including Black Enterprise.com
-David Thomas, founder of Wendy's
-Caterina Fake and Stewart Butterfield founders of Flickr
· Entrepreneurs often share similar ______________?
-Backgrounds and experiences
Experiences may include:
-Career and work history
-Windows of opportunity
are employees of a larger firm that display entrepreneurial behavior such as developing a new product or process
-Internal locus of control
-High energy level
-Tolerance for ambiguity
-Need for achievement
-Passion and action orientation
Social entrepreneurs seek _______________?
-novel solutions to social problems
-Social entrepreneurs are similar to other entrepreneurs except a social mission drives them
-Employ 52% of workers,
-provide 51% of private sector output,
-provide 7 of every 10 new jobs in the economy,
-and receive 35% of federal government contract dollars
-The Internet has had a huge impact;
-85% of small firms are already conducting business over the Internet
Small businesses must master three life-cycle stages:
where the business model begins to work well, growth takes place, and the complexity of the business expands significantly
-where the entrepreneur experiences market success and financial stability, but also has to face competitive challenges in a dynamic environment
Family business feud:
the issue of who will run the business when the current head leaves
A succession plan:
· Most small businesses fail _________________?
-within five years
-Small Business Administration reports that as many as 60 to 80% of new businesses fail within the first five years of operation.
Eight reasons small businesses fail:
-Lack of expertise
-Lack of commitment
-Lack of strategy
-Lack of expertise
-Growing too fast
-Lack of strategic leadership
-Poor financial control
-Business incubators :
-offer services to help new businesses get started
-Help includes offices, and access to expertise and financing.
-Small Business Development Centers:
· A small business should start with ___________?
-describes the goals for a new business, its operating plans, and the required financing
-Banks and senior managers want to see a well-developed and justified business plan before committing funds
-See Tips to Remember inset box for key items to include in a business plan
There are different forms of small business ownership:
-an individual that pursues business for a profit
-this is the most common form of ownership
-owner has personal liability for all business debts and claims
-when two or more people agree to contribute resources to start and operate a business together
-Limited - a general partner and one or more limited partners whose losses are limited to their investment
-General - simplest and most common form; owners share management and liability
-Limited liability partnerships - usually professionals such as accountants, lawyers and doctors; limits the liability of the partners
-usually “Inc.” is a legal entity that exists separately from its owners
-Grants the right to engage in contracts
-The corporation is responsible for its own liabilities
-Life of its own
-Major disadvantage is the cost to incorporate
Limited liability corporation (LLC):
There are different ways of financing a small business:
-borrowing money that must be repaid with interest over time
-Requires collateral that pledges personal or business assets
-capital investments made by individuals or companies that pool capital to invest in new ventures;
-hope is that initial stake will can become profitable when the company becomes successful
-Initial Public Offering (IPO):
-a wealthy investor willing to invest in return for equity in a new venture
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