Chapter 01

Transcript Chapter 01

Chapter 1 Management

Why Do We Have Organizations?

To Accomplish Something = Goal It Takes More Than 1 Person CEO Master batches Europe Asia/ Pacific Functional Chemicals Soaps Process Chemicals Fine Chemicals Electric Materials Specialty

What Is An Organization?

MANAGEMENT

The process of administering and coordinating resources effectively and efficiently in an effort to achieve the goals of the organization.

MANAGEMENT

measure of how well an organization its objectives achieves resources measure of how well an organization uses it that contributes to the fulfillment of the organization's mission

MISSION = Reason for existence

Effectiveness & Efficiency

Effectiveness is achieved when the organization pursues appropriate goals. This means “doing the right thing.” Efficiency is achieved by using fewer inputs (e.g., people, money) to generate a given output. This means “doing things right.”

The Four Functions of Management

Planning Assessing the management determines how the firm’s human, financial, physical, informational, and technical resources are arranged and coordinated to perform tasks to environment to set future objectives goals Organizing and map out it to objectives, objectives.

Managers

Managers are the people who plan, organize, lead, and control the activities of the organization so that its goals can be achieved.

Levels of Management

Top-level Managers Strategic Middle Managers Tactical First-line Managers Operational Operational Employees

Management Levels in the Organizational Hierarchy

CEO Top Managers Corp Head VP Admin Business Unit Head Gen. Mgr.

Administrator Dept. Manager Product Line Mgr Info Srvcs Mgr Functional Head Production Supervisor MIS Supervisor Nonmanagerial Employees Staff Jobs Middle Managers First-Line Managers

Management as a set of skills: (continued) • Four major categories of skills will help you become a good manager: – Strategizing Skills – Task-Related Skills – People-Related Skills – Self-Awareness Skills

• • • • • Skills for Managerial Success

Strategic Skills Environmental assessment scanning Strategy formulation Mapping strategic intent and defining

• • •

Task Skills Setting and prioritizing objectives Developing plan of action and implementation Responding in a flexible manner mission Strategy

• •

Creating value Working through the organizational structure implementation Human resource

•

Allocating human resources congruency

•

Managing time efficiently

• • • • • • • • • • Skills for Managerial Success (continued)

People Skills Self-Awareness Skills Delegating

•

Personal adaptability Influencing Motivating Handling conflict

•

Understanding personal biases Win-win negotiating Networking

•

Internal locus of control Communicating

–

Verbal --Nonverbal Listening Cross-cultural management Heterogeneous teamwork

Evolution of Management Thought

The Evolution of Management Thought

Early Management Thought Classical Perspective Contemporary Management Perspectives Behavioral Perspective

Early Management Thought • Early ideas about

management strategy

– Sun Tzu,

The Art of War

• Early ideas about

leadership

– Nicolò Machiavelli,

The Prince

• Early ideas about the

design and organization of work

– Adam Smith,

The Wealth of Nations

• division of labor

Classical Perspective

The oldest formal viewpoints of management, it includes the following approaches: Scientific Management Focuses on the productivity of the individual worker Frederick W. Taylor Administrative Management Focuses on the functions of management Henri Fayol Bureaucratic Management Focuses on the overall organizational system Max Weber

Scientific Management • Frederick W. Taylor (1865-1915) – Father of “Scientific Management.

– Taylor was convinced that there was “one best way” to perform every task.

– Taylor attempted to define “the one best way” to perform every task through systematic study and other scientific methods.

Taylor’s Four Principles of Scientific Management 1.

Scientifically study each part of a task and develop the best method of performing the task.

Carefully select workers and train them to perform the task by using the scientifically developed method.

Cooperate fully with workers to ensure that they use the proper method.

Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly.

Scientific Management • Frank Gilbreth – Specialized in time and motion studies to determine the most efficient way to perform tasks.

– Used the new medium of motion pictures to examine the work of bricklayers.

– Identified 17 work elements (such as lifting and grasping) and called them

therbligs

Scientific Management • Lillian Gilbreth – Was a strong proponent of better working conditions as a means of improving efficiency and productivity.

– Wrote an entertaining book about raising her family entitled “Cheaper by the Dozen.”

Administrative Management • Focuses on the managers and the functions they perform – This approach to management is most closely identified with Henri Fayol (1841-1925).

– Fayol was the first to recognize that successful managers had to understand the basic managerial functions.

Administrative Management • Henri Fayol – Developed a set of 14 general principles of management. – His managerial functions of planning, leading, organizing, and controlling are routinely used in modern organizations.

Bureaucratic Management • Focuses on the overall organizational system and is based upon firm rules, policies, and procedures; a fixed hierarchy; and a clear division of labor – Max Weber (1864-1920), a German sociologist and historian, is most closely associated with bureaucratic management.

Bureaucratic Management • Max Weber – Envisioned a system of management that would be based upon impersonal and rational behavior.

– Conceptualized the approach to management referred to as bureaucracy.

• Division of labor • Hierarchy of authority • Rules and procedures • Impersonality • Employee selection and promotion

Behavioral Perspective • Behavioral Perspective – Followed the classical perspective – Acknowledged the importance of human behavior in shaping management style – Associated with the following scholars: • Mary Parker Follett • Elton Mayo • Douglas McGregor • Chester Barnard

Behavioral Perspective • Mary Parker Follett – Concluded that a key to effective management was coordination.

– Felt that managers needed to coordinate and harmonize group effort rather than force and coerce people.

– Believed that management is a continuous, dynamic process.

– Felt that the best decisions would be made by people who were closest to the situation.

Behavioral Perspective • Elton Mayo – Conducted the famous Hawthorne Experiments.

– Concluded that productivity increased because someone was “paying attention” to the workers.

– Mayo’s work represents the transition from scientific management to the early human relations movement.

Behavioral Perspective • Douglas McGregor – Proposed the Theory X and Theory Y styles of management.

– Theory X managers perceive that their subordinates have an inherent dislike of work and will avoid it if at all possible.

– Theory Y managers perceive that their subordinates enjoy work and that they will gain satisfaction from performing their jobs.

Maslow’s Hierarchy of Needs Self-Actualization Need for Self Esteem Need for Social Relations Need for Security Physical Needs

Contemporary Management Perspectives • Systems Theory • Contingency Theory • Total Quality Management • The Learning Organization

The Basic Elements of a System

Environment

Inputs Transformation Process Outputs Feedback

SIMPLE SYSTEM

Closed System

Battery

Open System

wires (communication network)

BASIC COMPONENTS OF ANY SYSTEM

System has an objective which can be accomplished by interaction of the system sub-units An energy source to “drive” system An energy conversion process to “produce” the objective

Transformation Process

A communication network between system units

Contingency Perspective • A view that proposes that there is no one best approach to management for all situations.

• Asserts that managers are responsible for determining which managerial approach is likely to be most effective in a given situation.

• This requires managers to identify the key contingencies in a given situation.

The Contemporary Manager Slide 1 of 2 • The New Manager Profile – Managers will no longer think of themselves as “the boss,” but will view themselves as sponsors, team leaders, or internal consultants.

What a Difference a Century Can Make

Contrasting views of the corporation

CHARACTERISTIC

ORGANIZATION FOCUS STYLE SOURCE OF STRENGHT STRUCTURE RESOUCES OPERATIONS PRODUCTS REACH

20TH CENTURY 21ST CENTURY

The Pyramid Internal Structured Stability The Web or Network External Flexible Change Self-sufficiency Interdependencies Atoms-physical assetsBits-information Vertical integration Mass production Domestic Virtual integration Mass customization Global DATA: BUSINESS WEEK

What a Difference a Century Can Make

Contrasting views of the corporation

CHARACTERISTIC

FININCIALS INVENTORIES STRATEGY LEADERSHIP WORKERS JOB EXPECTIONS MOTIVATION IMPROVEMENTS QYALITY

20TH CENTURY

Quarterly Months Top-down Dogmatic Employees Security To compete Incremental Affordable best

21ST CENTURY

Real time Hours Bottom-up Inspirational Employees/free agents Personal growth To build Revolutionary No compromise DATA: BUSINESS WEEK

The Contemporary Manager • Competencies of Tomorrow’s Managers – The great communicator – The team player – The technology master – The problem solver – The foreign ambassador – The change maker – The 21st-century leader

Chapter 3 Social Responsibility and Ethics

Ethics

• Ethics – The established customs, morals, and fundamental human relationships that exist throughout the world.

• Ethical Behavior – Behavior that is morally accepted as good or right as opposed to bad or wrong.

Three Domains of Human Action

Domain of Codified Law (Legal Standard) Domain of Ethics (Social Standard ) Domain of Free Choice (Personal Standard)

Amount of Explicit Control

High Low

Ethics

• Lies between the domains of codified law and free choice • No specific laws • Based on shared principles and values • Obedience is to unenforceable norms and standards • Disagreements and dilemmas about proper behavior often occur.

Business Ethics

The application of the general ethical rules to business behavior.

Approaches for Ethical Dilemmas

• Individual Approach – Acts are moral when they promote the individual's best long-term interests.

• Utility Approach – A situation in which decisions are based on an evaluation of the overall amount of good that will result.

Approaches for Ethical Dilemmas

• Human Rights Approach – A situation in which decisions are made in light of the moral entitlements of human beings.

• Justice Approach – A situation in which decisions are based on an equitable, fair, and impartial distribution of benefits and costs among individuals and groups.

Corporate Social Responsibility

The interaction between business and the social environment in which it exists.

What does Business owe society?

Stakeholders

Stakeholders are all those who are affected by or can affect the activities of the firm.

Primary and Secondary Stakeholders

• Primary Stakeholders – Those who have a formal, official, or contractual relationship with the organization.

Task/Industry Environment customers, suppliers, employers, owners

• Secondary Stakeholders – Other societal groups that are affected by the activities of the firm.

General/Societal Environment community, special interest groups, media, etc.

The Premises of the Social Responsibility Debate • Social contract – An implied set of rights and obligations that are inherent in social policy and assumed by business.

• Moral agent – The obligation of a business to act honorably and to reflect and enforce values that are consistent with those of society.

Three Perspectives of Social Responsibility

• Economic Perspective – The responsibility of business is to make a profit within the “rules of the game.” – Organizations cannot be moral agents. Only individuals can serve as moral agents.

• Public Responsibility – Businesses should act in a way that is consistent with society’s view of responsible behavior, as well as with established laws and policies.

Three Perspectives of Social Responsibility

• Social Responsiveness – Business should proactively seek to contribute to society in a positive way.

– Organizations should develop an internal environment that encourages and supports ethical behavior at an individual level.

Social Responsibility Strategies Slide 1 of 3

Continuum of strategies based on the organization’s tendency to be socially responsible or responsive.

Reaction Do Nothing Defense Accommodation Proaction Do Much

Social Responsibility Strategies • Reaction – An organization that assumes a reaction stance simply fails to act in a socially responsible manner. • Defense – Organizations that pursue a defense strategy respond to social challenges only when it is necessary to defend their current position.

Social Responsibility Strategies • Accommodation – Corporations with an accommodation strategy readily adapt behaviors to comply with public policy and regulation where necessary and, more importantly, attempt to be responsive to public expectations.

• Proaction – Organizations that assume a proaction strategy subscribe to the notion of social responsiveness.

Active

Chapter 6 Effective Managerial Decision Making

Managerial Decision Making Decision

Choice from available alternatives

Decision Making

The process through which managers identify and resolve problems and capitalize on opportunities.

Types of Decisions

Programmed Decisions

Involve situations that have occurred often and decision rules can be developed and applied Managers formulate decision rules so subordinates can make decisions freeing managers for other tasks.

Nonprogrammed Decisions

Decisions required for unique and complex management problems.

Poorly defined Largely unstructured Important consequences Uncertainty is great Routine decision rules for solving the problem do not exist.

Certainty, Risk Uncertainty and Ambiguity

All the information

Organizational Problem

Know Objectives Don’t Know Probabilities Low Possibility of Failure High Certainty Programmed

Decisions

Clear-cut objectives Know the probabilities Risk Uncertainty

Problem Solution

Ambiguity

Nonprogrammed Decisions

Objectives Unclear Outcomes Unclear

Steps in the Decision-Making Process

Recognize Identifying problems and opportunities Ignore Diagnosis and fact gathering Symptoms Change WHO

Revise Revise

Establishing specific goals and objectives and Generating Alternatives SUG Consistency Specific, Measurable, Attainable Quantity Brainstorming Don’t evaluate

Revise

Evaluation of alternative solutions Establish criteria

Revise

Solution selection

Revise Revise

Choosing Implementation strategy Goals Action Plan Who What Where When Verify Monitoring & Evaluating Did It Work?

Follow up Plan Decision Process

Models of Decision Making • Rational-Economic Model A prescriptive framework of how a decision should be made that assumes managers have completely accurate information.

• Behavioral Decision Model Unlike the rational-economic model, the behavioral decision-making model acknowledges human limitations that make rational decisions difficult to achieve.

Rational-Economic Model • Concentrates on how decisions should be made, not on how they actually are made • The model is based on the following assumptions: – Managers have “perfect information.” – Managers attempt to accomplish objectives that are known and agreed upon and have an extensive list of alternatives from which to choose.

Rational-Economic Model • Assumptions of Rational-Economic Model (continued) – Managers are rational, systematic, and logical in assessing alternatives and their associated probabilities.

– Managers work in the best interests of their organizations.

– Ethical decisions do not arise in the decision making process.

Rational-Economic Model • Conclusion – As these assumptions suggest, the rational economic model does not address the influences that affect decision environments or describe how managers actually make decisions.

– As a consequence, in practice the model may not always be a realistic depiction of managerial behavior.

Behavioral Decision Model • Unlike the rational-economic model, the behavioral decision model acknowledges human limitations.

• The behavioral decision model suggests that a person’s cognitive ability to process information is limited.

Behavioral Influence on Decision Making • Perception: A person's view of the world – Stereotyping projecting characteristics of a small number of people as characteristics of the entire group – Halo Effect one characteristic overshadows all other characteristics or aspects of the decision • Subjective Rationality Thinking logically but within one's own framework • Bounded Rationality - personal, environmental, time, and organizational constraints which place limits on decisions

Behavioral Influence on Decision Making • Recency - tendency to ascribe more importance to things that happened most recently • Satisficing tendency to accept "adequate" decision instead of the best • Values • Personality • Propensity For Risk • Escalation of Commitment Refers to an increasing commitment to a previous decision when a “rational” decision maker would withdraw.

What Makes a Quality Decision?

Vigilance can make a good decision more likely. Vigilance means being concerned for and attentive to the correct decision-making procedures.

Probable Relationship Between Quality of Decision and Method Utilized Quality of Decision More Less Individual Average individual Minority control Majority control Consensus

Group Considerations in Decision Making

Group decision making is becoming more common as organizations focus on improving customer service and push decision making to lower levels.

Impact of Group Size on Participation in Decision Making • In general, as group size increases, the following changes in the decision-making process are likely to be observed: – The leader becomes more psychologically distant from the other members.

– The group’s tolerance of direction from the leader is greater, and the team’s decision making becomes more centralized.

– The atmosphere is less friendly.

– Rules and procedures become more formalized.

Advantages of Group Decision Making • Experience and expertise of several individuals available.

• More information, data, and facts accumulated.

• Problems viewed from several perspectives.

• Higher member satisfaction.

• Greater acceptance and commitment to decisions.

Disadvantages of Group Decision Making • Greater time requirement • Minority domination • Compromise • Concern for individual rather than group goals • Social pressure to conform • Groupthink

Groupthink

An agreement-at-any-cost mentality that results in ineffective group decision making.

Groupthink • Characteristics of Groupthink – Illusions of invulnerability – Collective rationalization – Belief in the morality of group decisions – Self-censorship – Illusion of unanimity in decision making – Pressure on members who express arguments

Techniques for Quality in Group Decision Making • Brainstorming • Nominal Group Technique • Delphi Technique • Devil’s Advocacy Approach • Dialectical Inquiry

Brainstorming • A technique used to enhance creativity that encourages group members to generate as many novel ideas as possible on a given topic without evaluating them.

Rules of Brainstorming • Freewheeling is encouraged.

• Group members will not criticize ideas as they are being generated.

• Quality is encouraged.

• The wilder the ideas the better.

• Piggyback on previously stated ideas.

• No ideas are evaluated until after all alternatives are generated.

Nominal Group Technique (NGT) • A structured process designed to stimulate creative group decision making where agreement is lacking or the members have incomplete knowledge concerning the nature of the problem.

Delphi Technique • Uses experts to make predictions and forecasts about future events without meeting face-to-face.

Devil’s Advocacy & Dialectical Inquiry • Devil’s Advocacy – An individual or subgroup appointed to critique a proposed course of action and identify problems to consider before the decision is final.

• Dialectical Inquiry – Approaches a decision from two opposite points and structures a debate between conflicting views.

Guidelines for Decision Making • Be committed to the decision-making process; use it, and let data, not emotions, drive decisions.

• Seek employees’ input before you make key decisions.

• Believe in, foster, and support group decision making in the organization.

Guidelines for Decision Making • Believe that the best way to improve the quality of decisions is to ask and listen to employees who are doing the work.

• Seek and use high-quality information.

• Avoid “top-down” power-oriented decision making wherever possible.

Guidelines for Decision Making • Encourage decision-making creativity through risk taking, and be tolerant of honest mistakes.

• Develop an open atmosphere that encourages organizational members to offer and accept feedback.

Chapter 7 Decision-Making Tools and Techniques

Chapter 4 Planning in the Contemporary Organization

Planning Defined

The process of outlining the activities that are necessary to achieve the goals of the organization.

how are we going to get there Where to we want to go

Planning as a Linking Mechanism

Goals Plans Control

Goal

A desired future state the organization attempts to realize.

Plan

Blueprint for specifying resource allocations, schedules and other actions necessary to obtain goals

Objective

Specific, short term target for which measurable results can be obtained

Criteria for Effective Goals  Be specific and measurable  Cover key result areas  Be challenging but realistic  Be for a defined time period  Be linked to rewards.

The Importance of Goals and Plans  Legitimacy to external audiences such as:  Investors, Customers, Suppliers  A source of motivation and commitment  Help employees identify with the organization  Reduce uncertainty and clarify what employees should accomplish. Guides to action  Guides to action  Rationale for decisions  Standard of performance

Benefits of Planning • Better Coordination – Planning provides a foundation for the coordination of a broad range of organizational activities.

– A plan helps to define the responsibilities of individuals and work groups and helps coordinate their activities.

Gives people direction on what they are supposed to do

Benefits of Planning • Focus on Forward Thinking – The planning function forces managers to think ahead and consider resource needs and potential opportunities or threats that the organization may face in the future.

Benefits of Planning • Participatory Work Environment – Successful planning requires the participation of a wide range of organizational members.

Broad base of knowledge, experience and ideas More likely to “buy-in” to plan they helped to develop

Benefits of Planning • More Effective Control System – Foundation for control. – The mechanism for ensuring that the organization is moving in the right direction toward achieving its goals.

Costs of Planning • Managerial Time – Done properly, the planning process requires a substantial amount of managerial time and energy.

• Delay in Decision Making – Planning can result in delays in decision making, which must be weighed against the importance of speed in response time.

Weighing the Benefits Against the Costs of Planning

In the final analysis, managers plan because planning leads to higher performance. Planning also helps managers cope with the many complex situations they face.

Where Does Planning Start?

• Top-Down Planning – Begins with the Board of Directors and top executives – Top managers generally more, knowledgeable about the firm as a whole.

• Bottom-Up Planning – Initiated at the lowest level of the organization – People closest to the operating system, customers, and suppliers.

Where Does Planning Start?

Top-down planning works best when – success is dependent upon the ability to make high-level organizational changes in response to general threats and pressures.

A bottom-up approach works best when – success is dependent upon sensitivity to customer needs and demands.

STRATEGY

Insight into how to create value

Strategic Planning • Strategic Planning – Is the process by which an organization makes decisions and takes actions that affect its long run performance.

– A strategic plan is the output of the strategic planning process. Strategic plans define both the markets in which the firm competes and the ways in which it competes in those markets.

Levels of strategic planning We will cover this more

•Corporate

in the next section

What business should we be in?

Broad Strategies Board of Directors and top level executives •Business How will we compete?

Defines how each business unit will operate in its market area

Levels of Goals/Plans

Reason for existence

Mission Statement Broad statements Strategic Goals/Plans describing where Senior Management wants to be in the future.

Middle Management (Major and departments divisions, functions) Define specific Operational Goals/Plans

Harcourt Brace & Company.

results expected Lower Management (Departments, individuals departments, work groups, individuals.

Time frame for Goals/Plans

Reason for existence

Mission Statement Long-term Planning Strategic Goals/Plans Senior Management Up to five years.

(Organization as a whole) Intermediate term Planning Tactical/Functional Goals/Plans Middle Management (Major divisions, functions) One to two years Short-term

Harcourt Brace & Company.

Planning Operational Goals/Plans Lower Management (Departments, individuals One year or less

Operational Planning • Operational Planning – Focuses on determining the

day-to-day activities

that are necessary to achieve the long-term goals of the organization.

– Operational plans • Are more specific than strategic plans, address shorter-term issues, and are formulated by the mid and lower-level managers who are responsible for the work groups in the organization.

• Operational plans can be categorized as standing or single-use plans.

Standing Plans • Standing Plans – Are designed to deal with organizational issues or problems that recur frequently.

– Standing plans include policies, procedures, and rules: •

Policies

- general guidelines that govern how certain organizational situations will be addressed.

•

Procedures

- are more specific and are designed to give explicit instructions on how to complete a recurring task.

•

Rules

- provide detailed and specific guidelines for action.

Single-Use Plans • Single-Use Plans – Are developed to address a specific organizational situation. – Single-use plans include: •

Programs

- govern a relatively comprehensive set of activities that are designed to accomplish a particular set of goals.

•

Projects

- direct the efforts of individuals or work groups toward the achievement of specific, well-defined objectives.

•

Budgets

- specify how financial resources should be allocated.

Management by Objectives

Preparation of next period’s objectives by employees End-of-period review by employee and supervisor Mutual setting of objectives by employee and supervisor Intermittent review of ongoing performance as needed Mutual agreement on criteria for measuring accomplishment of Action planning and job performance by employee objectives

Management by Objectives • Benefits of Management by Objectives:  Manager and employee efforts are focused on activities that will lead to goal attainment  Performance can be improved at all company levels  Employees are motivated  Departments and individual goals are aligned with company goals.

Management by Objectives • Disadvantages of Management by Objectives: – Requires time and commitment of top management.

– May require excessive paperwork.

– May create a tendency to focus on short-term vs. long-term planning.

– Can be difficult to establish and operationalize.

Contingency Planning

Contingency planning requires the development of two or more plans, each of which is based on a different set of strategic or operating conditions that could occur.

Contingency Planning • When is Contingency Planning Needed?

– Contingency planning is necessary in business environments that change rapidly and in unpredictable ways.

– Contingency planning is useful when a firm’s effectiveness is dependent on a particular set of business conditions.

Barriers to Effective Planning • Demands on the Manager’s Time • Ambiguous and Uncertain Operating Environments • Resistance to Change

Overcoming the Barriers to Planning • Involve Employees in Decision Making – Input from all levels of a firm is essential for successful planning.

• Tolerate a Diversity of Views – Diverse views lead to a broader assessment of organizational problems and opportunities.

• Encourage Strategic Thinking – Effective strategic thinking can be developed through training and practice.

Strategic Management

BUSINESS

the art of making irrevocable decisions based on insufficient knowledge

STRATEGY

Insight into how to create value

Strategy Formulation

Strategy Formulation

The process of developing long-range plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknesses

Composed of

Mission Objectives Strategies Policies

Mission

Mission

The purpose or reason for the corporation’s existence. It may be narrow or broad in scope.

Narrow

Railroad Insurance

Broad

Transportation Financial Services

•

Scan External

•

Environment Evaluate Current:

•

Mission

•

Goals

•

Strategies

Societal Environment

Sociocultural

external environment

Shareholders

that affects the

Task/Industry Environment

Economic

Suppliers

The layer of the external indirectly.

Special Interest Groups

Internal Environment

Structure Employees/

organization’s operations

Culture

and performance.

Competitors Customers Resources Trade Associations Creditors Communities

Political-Legal Technological

•

Scan External

•

Environment Evaluate Current:

•

Mission

•

Goals

•

Strategies Scan Internal Environment Identify Strategic Factors:

•

Opportunities

•

Threats

General & Task Environment

Identify Strategic Factors:

•

Strengths

•

Weaknesses

SWOT Analysis

Internal Environment

Scan External Environment Evaluate Current:

•

Mission

•

Goals

•

Strategies Scan Internal Environment Identify Strategic Factors:

•

Opportunities

•

Threats Define New:

•

Mission

•

Goals Formulate Strategy:

•

Corporate

•

Business

•

Functional Identify Strategic Factors:

•

Strengths

•

Weaknesses Implement Strategy via Changes in:

•

Leadership

•

Culture

•

Human Resources

•

Information and Control Systems

Levels of Strategy

Corporate

What business should we be in?

Corporation’s overall direction and the management of its businesses

Business

How will we compete?

Emphasizes improving the competitive position of a corporation’s products or units

Formulating Corporate Strategy

What Business Should We Be IN?

GENERIC CORPORATE STRATEGIES

GROWTH STABILITY RETRENCHMENT

GENERIC CORPORATE STRATEGIES

GROWTH

Vertical Integration Horizontal Integration

Geographic locations Increasing Range of products

Concentric Diversification

Related industries

Conglomerate Diversification

Unrelated

GENERIC CORPORATE STRATEGIES

STABILITY

Pause/ Proceed with Caution No Change

RETRENCHMENT

Turnaround Divestment Liquidation

Formulating Business Strategy How Will We Compete?

Porter's Competitive Strategies • Differentiation