Tactical plans specify how a company will use resources, budgets, and accomplish specific goals within
its mission.
Operational plans are day-to-day plans, developed and implemented by lower-level managers, for
producing or delivering the organization’s products and services over a 30-day to six-month period
Single-use plans deal with unique, one-time-only events.
Standing plans can be used repeatedly to handle frequently recurring events.
A policy indicates the general course of action that company managers should take in response to a
particular event or situation
A procedure is more specific than a policy because it indicates the series of steps that should be taken in
response to a particular event.
Rules and regulations are even more specific than procedures because they specify what must or must
not happen
Budgeting is quantitative planning because it forces the managers to decide how to allocate available
money to best accomplish company goals
Decision making is the process of choosing a solution from available alternatives
Rational decision making is a systematic process in which managers define problems, evaluate
alternatives, and choose optimal solutions that provides maximum benefits to their organizations
A problem exists when there is a gap between a desired state and an existing state.
Decision criteria are the standards used to guide judgments and decisions
Absolute comparison in which each criterion is compared to a standard or ranked on its own merits
Relative comparisons, in which each criterion is compared directly to every other criterion
Maximizing is choosing the best alternative
Satisficing is choosing a “good enough” alternative
Groupthink occurs in highly cohesive groups when group members feel intense pressure to agree with
one another so that the group can approve a proposed solution
C-type conflict or “cognitive conflict” focuses on problem-and issue-related differences of opinion
A-type conflict, meaning “affective conflict” refers to the emotional reactions that can occur when
disagreements become personal rather than professional
Devil’s advocacy is an approach that can be used to create c-type conflict by assigning an individual or a
subgroup the role of critic
The nominal group technique received its name because it begins with a quiet time in which group
members independently write down as many problem definitions and alternative solutions as possible
Brainstorming, in which group members build on other’s ideas, is a technique for generating many
alternative solutions.
Electronic brainstorming, where team members share information online, using computers to
communicate possible solutions
Decision making process
1.
Define the problem
2. Identify the decision criteria
3. Weight the decision criteria
4. Generate alternative courses of action
5. Evaluate each alternative
6. Compute the optimal decision
7. Implement the decision
8. Evaluate the effectiveness of the decision
Chapter 5
Resources are the assets, capabilities, processes, employees, information, and knowledge that an
organization control
Competitive advantage is providing greater value for customers than competitors can
Sustainable competitive advantage is a competitive advantage that other companies have tried
unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate
Valuable resources allow companies to improve their efficiency and effectiveness
Rare resources are resources that are not controlled or possessed by many competing firms
Imperfectly imitable resources are impossible or extremely costly or difficult to duplicate
Competitive inertia is a reluctance to chance strategies or competitive practices that have succeeded in
the past
Strategic dissonance is a discrepancy between a company’s intended strategy and the strategic actions
managers take when implementing that strategy
A situational analysis (SWOT) is an assessment of the strengths and weaknesses in an organizations’
internal environment and the opportunities and threats in the external environment.
Core capabilities are the less visible, internal decision-making routines, problem-solving processes, and
organizational cultures that determine how efficiently inputs can be turned into outputs
Diversification is a strategy for reducing risk by owning a variety of items (stocks or, in the case of a
corporation, type of businesses) so that failure of one stock or one business does not doom the entire
portfolio
Portfolio strategy is a corporate-level strategy that minimizes risk by diversifying investment among
various businesses or product lines
Unrelated diversification is creating or acquiring companies in completely unrelated businesses
The BCH matrix is a portfolio strategy that managers use to categorize their corporation’s businesses by
growth rate and relative market share; this helps them decide how to invest corporate funds
A star is a company that has large share of a fast-growing market and its strength in that market
A question mark is a company that has a small share of a fast-growing market
A cash cow is a company that has a large share of a slow-growing market
A dog is a company that has a small share of a slow-growing market
Related diversification in which the different business units have similar products ,technologies, and
approaches to manufacturing and marketing
A grand strategy is a broad strategic plan to help an organization achieve its strategic goals
Growth strategy is to increase profits, revenues, market share, or the number of places in which the
company does business
Stability strategy, the company keeps doing what it has been doing, just does it better
Retrenchment strategy is to turn around very poor company performance by shrinking the size or scope
of the business
Recovery involves taking strategic actions to return the company to a growth strategy
Industry-level strategy addresses the question “How should we compete in this industry?”
Competitive rivalry is a measure of the intensity or characteristics of competitive behavior between
companies in an industry
The threat of new entrants is a measure of the degree to which barriers to entry make it easy or difficult
for new companies to get started in the industry
The threat of substitutes products or services is a measure of the ease with which customers can find
substitutes for an industry’s products or services
Bargaining power of suppliers is a measure of the influence that suppliers of parts, materials, and
services to firms in an industry have on the prices of these inputs
Bargaining power of buyers is a measure of the influence that customers have on the firm’s prices
Cost leadership strategy involves producing a product or service of comparable quality at consistently
lower cost than competitors
Differentiation means making your product or service sufficiently different from competitor’s offerings
that customers are willing to pay a premium price for the extra value or performance
Focus strategy, a company uses either a cost focus or a differentiation focus to produce a specialized
product or service for a limited, specially targeted group of customers in a particular geographic region
or market segment
Firm-level strategy addresses the question “How should we compete a gainst a particular firm?”
Direct competition is the rivalry between two companies offering similar products and services
Market commonality is the degree to which two companies have overlapping products, services, or
customers in multiple markets
Resource similarity is the extenent to which a competitors has similar amounts and kids of resousrces,
For ex, similar assets and capabilities