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AU / Business Management / MNGT 3100 / What is the corporate and business strategy?

What is the corporate and business strategy?

What is the corporate and business strategy?


School: Auburn University
Department: Business Management
Course: Principles of Management
Professor: Jordan mcsweeney
Term: Fall 2018
Tags: Management
Cost: 50
Name: Management - exam 2 study guide NEWEST VERSION
Description: These notes cover exam 2 material
Uploaded: 10/20/2018
20 Pages 31 Views 10 Unlocks

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Management – Study Guide Exam 2

What is the corporate and business strategy?

∙ 50 questions  

∙ chap 5,6,7,8


∙ Strategy

o A plan of action or policy designed to achieve an  overall aim

 o Elements of Strategy 

 Strategic Formulation

∙ The set of processes involved in creating  

or determining the strategies of the  


∙ ***Planning*** We also discuss several other topics like What is the difference between an hmo and ppo?
Don't forget about the age old question of What are the basic probability rules?

 Strategic Implementation

∙ the methods by which strategies are  

operationalized or executed within the  


∙ ***Organizing, Leading, Controlling***

What is organizational structure?

∙ Corporate and Business Strategy

 o Corporate Strategy 

 What business or businesses should we be in?  How does being in one business help us  

compete in our other businesses?

 The set of strategic alternatives that an  

organization chooses from as it manages its  If you want to learn more check out What is the arithmetic expression?

operations simultaneously across several  

industries and several markets

 o Business Strategy 

 How should we compete?

 The set of strategic alternatives that an  

organization chooses from as it conducts  

business in a particular industry or market

What is the matrix organizations?

∙   Diversification

o The number of different businesses that an  

organization is engaged in

o It helps to spread out risk and opportunities over a  larger set of businesses

  Related diversification  

∙   Occurs when a firm operates multiple  

businesses within the same industry

∙   Ex: Estee Lauder

o Makeup, jewelry, handbags

  Unrelated diversification 

∙   Occurs when a firm engages in businesses

in different industries

∙   Ex: Samsung

o Property, phones, cars, buildings, etc

∙ 5 different analysis tools

  SWOT  

∙   Strengths We also discuss several other topics like What is brand terminology?

o Represent unique advantages of the  


o Cannot be easily duplicated or  

imitated by competitors create  

Sustainable Competitive Advantage

∙   Weaknesses

o Represent the drawbacks of the firm

o A firm always aims at eliminating its  



∙   Opportunities

o Assess the external attractive factors  

that represent the reason for a  

business to exist and prosper

∙   Threats

o Include the factors beyond your  

control that could place the strategy,  We also discuss several other topics like What are the steps of replication?

or the business, at risk

o Also external – managers typically  

have no control over threats

  Industry Analysis 

∙   Asks you to map out the different  

relationships that the organization might  

have with suppliers, customers, and  


∙   Porter’s 5 Forces Model

o Threat of New Entry  

o Threat of Substitution

o Power of Suppliers  

o Power of Buyers

o Rivalry among existing firms If you want to learn more check out Which part of the newborn's body is the least controlled?


∙ Political, Economic, Sociocultural,  

Technological, Environmental, Legal

∙ Directs you to collect info about an  

environmental dimension to identify the  

broad range of Threats and Oppurtunities  

facing the organization



∙ Valuable, Rare, Inimitable, and  


o Suggests that a capability or resource

that is valuable, rare, difficult to  

imitate, and supported by the  

organization is likely to lead to  

competitive advantage

 Value Chain Analysis

∙ Asks you to take the organization apart  

and identify the important constituent  

parts and how they add value

 Strategy Diamond

∙ Economic Logic

o Arenas

o Vehicles

o Differentiations

o Staging



∙ Goals

o Outcome statements that define what an  

organization is trying to accomplish

 Increase revenue by 20 percent annually

∙ Objectives 

o Very precise, time based, and measurable actions  that support the completion of a goal

 Open twenty new stores by year end

o Related directly to goal 

o Clear and concise

o Stated in term of results

o Begins with an action verb

o Specified date and/or deadline 

o measurable 

∙ Scope

o The tasks required to fulfill the project’s goals ∙ Time

o The schedule for the project to reach completion 5

∙ Measurement

o To set and management goals and objectives need  a variety of measurement approaches

  MBO – Management by Objectives 

∙ A systematic and organized approach that  

aims to increase organizational  

performance by aligning the subordinate  

objectives throughout the organization  

with the overall goals set by management  

∙ Peter Drucker

∙ To ensure that people know what the  

organization is trying to achieve and what  

their role should be in accomplishing those


∙ Managers and employees agree upon  

specific performance goals, or objectives,  

and jointly develop a plan for reaching  


∙ Setting company-wide goals derived from  

corporate strategy (manage operations  

across industries

∙ Determining team – and department-level  


∙ Collaboratively setting individual-level  

goals aligned with corporate strategy  

∙ Developing an action plan


  Balance Scorecard 

∙   A framework designed to translate an  

organization’s mission and vision  

statements and overall business strategy  

into specific, quantifiable goals and  

objectives and to monitor the  

organization’s performance in terms of  

achieving those goals

∙   Robert Kaplan and David Norton

o Customers  

 Looks at customer satisfaction  

and retention

o Learning and growth

 Explore the effectiveness of  

management in terms of  

measures of employee  

satisfaction and retention and  

information system performance

o Internal processes

 Looks at production and  

innovation, measuring  

performance in terms of  

maximizing profit from current  

products and following indicators

for future productivity

o Financial performance


 Most traditional

 Includes asessments of  

measures as operating costs and


∙   Balanced scorecard dimensions

o Performance measures in the  

balanced scorecard can include both  

leading and lagging indicators

 o Leading Indicators 

 Measures that might be  

examined to predict poor  

performance of the organization  

in the future (such as increase in  

employee turnover

 o Lagging Indicators 

 Reflect performance that is in  

decline such as decrease in  


∙   Advantages of Balanced Scorecard 

o More clearly ties goals and objectives  

to the organizations’ vision, mission  

and strategy 

o Allows firms move beyond financial  

measurement of just goals and  


o SMART goals

 Specific


 Measureable

 Aggressive

 Realistic

 Time-Bound


∙ Organizational Structure

o How work is coordinated between individuals and  teams within an organization

o Valuable tool in achieving coordination

o Includes setting organizational hierarchy

 o 4 building blocks  

 Centralization

∙ The degree to which decision-making  

authority is concentrated at higher levels  

in an organization

∙ Decentralized companies give more  

authority to lower level employees,  

resulting in a sense of empowerment


o Centralized

 Can lead to inefficiencies in  

decision making in an uncertain  

or highly competitive


 In a stable environment, can  

lead to more efficient operations

o Decentralized

 Decisions can be made more  


 Can provide greater levels of  

procedural fairness to employees

 Formalization

∙ The extent to which an organization’s  

policies, procedures, job descriptions, and  

rules, are written and explicitly articulated

∙ Combo of written rules and explicit  


∙ Pro: employee behavior more predictable  

(highly formal)

∙ Con: employee has little autonomy

  Hierarchical Levels 

∙ Tall

o Several layers of management  

between frontline employees and the  

top level

o Fewer employees report to each  


o Greater opportunities for managers to

supervise and monitor employee  



∙ Flat

o Few management layers

o Larger number of employees  

reporting to each manager

o Can lead to greater levels of freedom  

for each employee

o Advantages

 Companies such as IKEA, are  

successfully using flat structures  

within stores to build an  

employee attitude of job  

involvement and ownership

 Departmentalization

∙ Organizing using functional structures  

group jobs based on similarity in fucntions

o Marketing

o Manufacturing  

o Finance

o Accounting

o Human resources

o Info technology

∙ In organizations using divisional  

structures, departments represent the  

unique projects, services, customers, or  

geographic locations the company is  



o Each unique product or service the  

company is producing will have its  

own department

o Functional structure

 Advantages

∙ Enhanced coordination and control

∙ Centralized decision making

∙ Enhanced organizational-level perspective

∙ More efficient use of managerial and  

technical talent

∙ Facilitated career paths and development  

in specialized areas

 Disadvantages

∙ Impeded communication and coordination  

due to differences in values and  


∙ May lead to short-term thinking (functions  

vs. organization as a whole)

∙ Difficult to establish uniform performance  


o Divisional Structure

 Advantages

∙ Separation of strategic and operating  


∙ Quick response to important changes in  

external environment

∙ Minimal problems of sharing resources  

across functional departments

∙ Development of general management  

talent is enhanced


 Disadvantages

∙ can be expensive

∙ can be dysfunctional competition among  


∙ differences in image and quality may  

occur across divisions

Structural Configurations

∙ Mechanistic 

o Resemble a bureaucracy

o Highly formalized and centralized

o Rigid and resist change

o Unsuitable for innovativeness and limit individual  autonomy and self-determination

∙ Organic 

o Flexible and decentralized

o Low levels of formalization

o Communication lines are fluid and flexible

o Employee job descriptions are broader

o Related to higher levels of job satisfaction

o Conducive to entrepreneurial behavior and  


Contemporary Forms of Organizational Structures

∙ Matrix organizations

o Balance a traditional functional structure with a  product structure

∙ Boundaryless Organizations

o Eliminate traditional barriers between departments  and the external environment

∙ Learning Organizations


o Actively seeks to acquire knowledge and change  behavior as a result of the newly acquired  


Matrix Organizations

∙ Balance a traditional functional structure with a product  structure

∙ Combines two forms of departmentalization

o Functional

o Division

∙ Advantages

o Makes quick response to uncertainty and dynamism of the environment

o Increases communication and cooperation among  departments

o Increases the frequency of informal and formal  communication within the organization

o Provides quick responses to technical problems and  customer demands

∙ Disadvantages

o Two managers per individual can result in power  struggles

o More effort is required to coordinate work flow o Potential for interpersonal conflict with team  members as well with leaders

o Can create role ambiguity and role conflict

Boundary-less Organizations

∙ Eliminate traditional barriers between departments and  the external environment

∙ Two types of boundary-less organizations

o Modular organizations

o Strategic alliances (M&A and joint-ventures)

∙ Modular Organization


o Where all nonessential functions are outsourced  Ex: Toyota manages relationships with  

hundreds of suppliers

o Focus on outsourcing

∙ Strategic alliances

o Two or more companies combine their efforts to  create a partnership that is beneficial for both  parties

 Ex: starbucks achieved distribution success of  Frappuccino by partnering with pepsi

o Focus on M&A and joint ventures


∙ Organizational Culture

o A system of shared assumptions, values, and beliefs that indicate appropriate and inappropriate  

behavior within a given organization

o It is related to the second of the three factors  comprising the POLC function of ORGANIZING

o The culture of the organization is closely linked to  organizational design

o An organization’s culture may be one of its  

strongest assets or its biggest liability

o Organizational culture is an effective control  mechanism dictating employee behavior

o Culture, or shared values within the organization,  may be related to increased performance

o Organizations which have a rare and hard to imitate culture may enjoy a competitive advantage

∙ Levels of Organizational Culture

o 1. Assumptions

 basic assumptions lie below awareness


 assumptions are taken for granted, and reflect  beliefs about human nature and reality

 ex: happy people are productive

o 2. Values

 values are shared principles, standards, and  goals

 ex: try to have fun at work

o 3. Artifacts

 on the surface, or visible, tangible, aspects of  organizational culture

 ex: executive open door policy

Multiple Cultures Within an Organization

∙ Cultures that emerge within different departments,  branches, or geographic locations are called subcultures

∙ Sometimes a subculture may take the form of a  counterculture, shared values and beliefs that are in  direct opposition to the values of the broader  

organizational culture

Creating and Maintaining Organizational Culture ∙ Attraction

∙ Selection

∙ Attrition

∙ Onboarding

∙ Leadership

∙ Reward System


Founder Values and Preference

∙ The social activism of Ben and Jerry’s was instilled in the  company because founders strongly believed in these  issues

∙ Social activism helped distinguish Ben and Jerry’s from  larger corporate brands

∙ The values were retained as part of the corporate culture and taught to new members as the right way to do  businesss

How are cultures maintained?

∙ Attraction

∙ Selection

∙ Attrition

∙ Onboarding

∙ Leadership

∙ Reward system

ASA Framework

∙ Attraction

o How do we get people into the organization

o How do we make ourselves look attractive as a  company?

∙ Select


o How to we choose them

o The characteristics valued by the organization ∙ Attrition

o Do they stay or do they leave?

o Refers to the need to eliminate individuals that do  not adequately fit within the organizations


∙ The process through which new employees learn the  attitudes, knowledge, skills, and behaviors required to  function effectively within an organization

o Use of formal orientation programs

o Mentoring by supervisors and coworkers


∙ What leaders do directly influence the cultures of their  organizations

∙ Part of the leaders influence over culture is through role  modeling

∙ Leaders also shape culture by their reactions to the  actions of others around them

Rewards Influence Culture

∙ The types of behaviors that are rewarded or ignored set  the tone for the culture

o Behaviors  

o Results


o Performance

o Seniority

Visual elements of culture

∙ Signs of culture

o Rituals

o Rules and policies

o Physical layout

o Stories and language

o Mission statement

Process of Cultural Change

∙ 1. Create a sense of urgency

∙ 2. Change leaders and other key players ∙ 3. Role model

∙ 4. Train

∙ 5. Change the reward system

∙ 6. Create new stories and symbols

Developing Your Personal Skills: Learning to Fit In ∙ Do your research  

∙ Observe the physical environment

∙ Read between the lines

∙ Reflect on how you are treated


∙ Ask questions

∙ Listen to your gut 20

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