MGMT Exam 2 Study Guide
MGMT Exam 2 Study Guide MGMT 301
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This 13 page Study Guide was uploaded by Lisa Thein on Monday February 29, 2016. The Study Guide belongs to MGMT 301 at Pennsylvania State University taught by Ronald Johnson in Winter2015. Since its upload, it has received 111 views.
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Date Created: 02/29/16
MGMT 301 Exam 2 Chapter 6 • Managerial control o The control process o Types of control o Ex video: blazing saddles § Out of control – decks horse • The management process regardless of level o Ex out of control: § GM - $28 million recalled cars § Ford - $9 million sexual harassment § GM - $900 million safety § VW - $18 billion emissions o Controlling – ensuring results by measuring performance and taking corrective action § 3 parts § Right things happen, right way, right time • 4 Step Control Process o Set performance objectives o Measure actual performance o Compare actual to objectives o Take actions to control process • Rides and control o Number of people on ride o Number who enjoyed ride o Capacity o Number of people by hour/day/month/season o Demographics and segmentation o Number of people in line – wait time o Technical control to make sure it operates right o Safety – injuries/death/illness § Lost time because of it o Maintenance o Cost of power/electricity/utility o Staffing o How much profit it brings • Restaurants and control o Average spending per customer o Portion size by segment o Health sanitation ratings o Number of illnesses/cost of cleanup/cleanup protocol o Inventory – forecasting o Table turnover rate (cycletime) o Floorplan layout o Most popular menu item o Food quality – quality of inputs o Nutritional value o Demographics and segments o Cost of staffing by day/hour/week/season o Number of customers o Profit by item o Number of people who order dessert o Customer satisfaction o Waste o Delivery/takeout • Application question o Do you love rides? I do. You have signed with Disney and are managing rides. You are asked to assess ride performance. How would you do that? § Control the process by time § Do benchmarking at other parks § Add information technology § Measure actual ridership § Start to develop objectives • Retail and Control o Store capacity, customers by time of day/day of week/month/season o Demographics o Sales per item (SKU – stock keeping unit), profit per item o Wait times o Average sales per worker o Sales per square foot o How long to restock – order timing o Money lost to shrinkage § Shoplifting, employee theft o Staffing by time of day/day of week/month/season o Placement of products (end caps) o Quality metrics o Forecasts and budgets accuracy o Salary o Customer acquisition value o Utilities, facilities, janitorial • Rest and Control • Types of Control • Managerial Feedback o Inputs to throughputs to outputs o Controls § Feed forward (inputs) § Concurrent (throughputs) § Feedback (outputs) o Key: solving problems at each stage using control mechanisms (measurements) • Feedback Example – Star Wars and Disney § CEO of Lucasfilm (Star Wars) § Disney buys Lucasfilm for $4 billion • Expectation of future films § Estimated $27 billion total star wars revenue from box office, DVD, books, toys, video games, other o Feed Forward § Locations for shoots project costs § Selection and cost of actors § Volume of production talent needed § Quantities of film materials needed § Accommodations for cast and crew § Logistics details for deliveries § Water and food § Security required § Secure financial banking – plan out § Accounting setup budgeting details o Concurrent § Payroll management cast and crew § Ongoing management of supplies needed daily § Weather for shooting assessment § Transportation for all members § Track each budget category (over/under) § Assess contingency needs § General understanding of our moral o Feedback § Total cost to produce § Total cost to promote § Cost to promote by region or channel § Impact of promotion § Tickets sold by theater/region/day § Assessment of each cost center § Secure future funding commitments § Final payouts § Merchandise (which character’s best) • External controls o Corporate: § Budgetary § Market § Bureaucractic o Personal: § Social norm (clan) • Management by objectives (IMPORTANT) o Peter Drucker: 1909-2005 § The man who invented management o Planning and controlling combined o Manager/employee --> joint plan, act alone, joint control § Controlling personal efforts on an individual § Joint plan • Setting objectives • Setting standards • Choosing actions § Act alone – reporting out • Performing tasks (member) • Providing support (leader) § Joint control • Reviewing results • Discussing implications • Renewing MBO cycle § Ex: Prof. Johnson planning management with his boss • Lululemon Story o Recalled 17% of its black yoga pants when customers discovered they were see through when worn o Full refunds were offered and the cost to the firm was damaged reputation plus some $60 million in lost revenues o CEO was replaced • Influencing behavior Chapter 4 Decision Making • Chilean Miners o Start working with all energy and resources from very first moment o Chilean President Sebastion Pinera § Analytical skills, information competencies § Find experts to help § Need money/resources § Set up housing by mines, food, water § What’s our current state? § Decisional role • Decision Making o Decisions and information o Decision making steps o Issues in decision making • Decisions and Information o Decision making = problem solving o To solve a problem or take advantage of an opportunity • Context for management problem solving o Technical competency (computer literacy) o Analytical competency (interpersonal skills) o Planning, organizing, leading, controlling o Information competency • Managers and Problems • Problem Avoider - Costa Concordia o Before § Hits a rock putting a gash in the hull so it starts going down § 32 deaths § Captain leaves ship and goes to shore o Today § Problem avoider § Captain who is principle decision maker just avoided the problem § Afraid of accountability § Organizations have to support decision makers § Pay managers to figure out how to do things better • Penn State’s Hockey Arena Breaks Ground Feb. 2012 o Sandusky scandal broke – Nov. 2011 o Ex video: ice hockey at Penn State • Problem Seeker o Solve it before it becomes a problem o The best decision makers are always thinking about the environment o Dell – managers paid “to make the diving catch” • Problem Solver o Make decisions and try to solve them but only when needed • Performance Threat vs. Performance Opportunity o Threat = negative o Opportunity = positive • Coca Cola and Honest Tea o Threat - People are switching from soda to tea (natural) o Opportunity – could we partner with or buy honest tea? o Threat – if coke starts using natural products etc. o Opportunity – partner with coke, use their marketing • Systematic vs. Intuitive Sensation Intuitive Thinkers Thinkers (IT's) (ST's) Theory/ Facts/Goals Concept Senstation Feelers Intuitive (SF's) Feelers (IF's) Facts/ Thoughtful Feelings o o Intuitive – people impact 1 st o Level 1 – the X and Y axis § X - Information gathering/processing § Y - Information evaluation o Level 2 § Sensing/intuition, thinking/feeling § Sensing – details, practical, applied info, flow § Intuitive – concepts, big picture, future § Think – solve problem 1 , objective, detached § Feeling – starts with people, then problem § Thinking and feeling can result in the same decision o Level 3 – the 4 quadrants • US Airways Flight 1549 Chesley Sullenberger o Example of using systematic and intuitive decision making o Landed plan in Hudson River o Saved 150 people, no lives lost o Sully was a fighter pilot and an emergency trainer – considered expert on aviation safety • Decision Making Steps o Programmed and Non-Programmed Decision-Making § Continuing policy vs. new policy § Programmed – low complexity § Non-programmed – making a new company policy • Ex: smoke free workplace o Risk and decision-making types of environments certain risk uncertain • Risk of failure • Low and programmed <--> high and non-programmed • Types of decisions o Decision under certainty – know all the data § Optimize routine decisions o Decision under risk – don’t know everything, but have enough info to compute probability of success o Decision under uncertainty – something brand new. Can’t compute probabilities o Classic vs behavioral • Traditional decision making process o Identify problem o Develop alternatives o Decide on action o Implement decision o Evaluate results • Super Soaker Developer Lonnie Johnson Example o Worked at Nasa o Developed super soaker o Laramy company licenses the toy o Launching under uncertainty o Super Soaker comes alive “creativity” • Cisco-DMAIC Problem Solving and Decision Making Video o News team that was terrible o Uses DMAIC model to become better • Advanced Six Sigma Decision Making Process o Define o Measure o Analyze § Based on data, where can we improve o Improve o Control § Go back and measure again. Did improvement work? • Amazon Case #4 o Went from book retailer to just a retailer o Carrying everything from A to Z o Goal is same day delivery o Prime Air Distribution § D – same day delivery § M – measure everything – delivery length now etc § A – more distribution centers § I – have we improved? § C – now what can we do to get it even shorter? • Audi and Drones Sarcasm o Drones everywhere • Issues in Decision-Making o Group decision making (pros and cons) o Heuristics (overall) Chapter 7 Strategy • Practical business strategy models o Chess, poker, Nascar, all need strategy • Basic definition o Strategy – comprehensive plan guiding resource allocations to achieve long term organization goals o Strategic intent – focuses energy on a compelling goal o Connection to planning • Strategy is the umbrella and underneath is planning, organizing, leading, controlling • Personal strategic management o Job o Dating o Relationship o Family o Learning o Eating o Hobby o Sleep o College o Spiritual o Educational • Dunkin Brands – Corporate Example o 19,095 stores in 60 countries o Own Dunkin Donuts and Baskin Robbins o Dunkin Donuts Strategy § Franchise based, model based on taking away friction, expandable throughout US, strong free cash flow, stable, enormous growth opportunities § Strategic – Dunkin was northeast US only, take it international, franchise based o Big strategy issue (top #1 plus 3 other) § What is unique about company • Competitive advantage and sustainable advantage § Dunkin sales mix: • Drinks – 65% • Donuts – 8% • Other – 27% § Dunkin is a coffee shop, not a donut shop o Strategic Analysis § Nigel Travis – CEO § “We’ve got great drinks” establishes strategy is on coffee § Speed is another strategy § “Coffee is the main battle, but the whole thing is breakfast” • Strategy Levels in Business o Level 1 – Corporate § Buy/sell business unit § Big, comprehensive plans for whole company o Level 2 – Business o Level 3 – Functional • Strategy and General Electric o GE corporate level § What should we do? § Ex: moving into new countries o Business or division level § GE aircraft § GE financial services § GE lighting § GE motors § GE plastics § How do we get customers? What types of things do we want to sell? o Functional level § Manufacturing § Accounting § Marketing § Supply chain • Two strategy approaches for corporations o Getting bigger or getting smaller o More productive! More profitable! • Strategy – getting bigger o Foundational growth strategies § Basic growth – within current operations § Concentration – expansion current businesses § Diversification – related or new business (unrelated) § Vertical integration – buy partners in supply chain • Strategy – getting smaller (retrenchment) o Consolidate and Divest: § Restructure § Downsizing § Bankruptcy § Liquidation § Divestiture (sold) o Ex: Blockbuster filed Chapter 11 – sold to Dish § A repositioning strategy § Dish bought Blockbuster for the brand name, not stores § Deal creates cross marketing opportunities § Blockbuster first downsized, then filed for bankruptcy, then was sold • Basic Growth Strategy o Growth within the exact same footprint as you have today o Ex: Dunkin tries to emphasize sandwiches o Ex: Microsoft launching a new version of Microsoft Office o Ex: Starbucks Blonde Roast (year 1 - $1 billion in sales) o Ex: McDonald’s all day breakfast • Concentration (replication) Strategy o Walmart and Sam’s Club in the US § Walmart hub and spokes system o Can concentrate with partners § In airports, resorts, etc o Almost 5,000 stores today • Diversification Strategy and General Electric o Unrelated diversification – buy things completely different from what you do § A lot does not go well o Related diversification – same channels, same marketing/distribution problems § Leverages your core § Ex: Pepsico owns Frito Lay, Gatorade, Quaker Oats, Tropicana, Lipton • Vertical Integration o Energy, raw materials, equipment --> Dunkin Donuts <-- franchises § Backward integration – buy suppliers § Forward integration – buy distribution § Ex: buy kitchen supplier • Global and Cooperative strategy • Strategy formulation and implementation • Mission compared to Vision Mission Vision Current Future Goals/Objectives Beliefs/values Internal Driven External Driven Defines the company’s business, Describes the future desired its objectives and approach to position of the company reach those objectives o Many companies use these terms but combine them into a statement of purpose o Ex: Pepsi and Coke both flip flopped around mission and vision • SWOT o Internal (analyze you) § Strengths § Weaknesses o External (in the world) § Opportunities § Threats • Ex: Blockbuster – Netflix • Ex: Facebook - Instagram o Impact – high, medium, low o What can we do a SWOT analysis on? § Person – you and your life § Sports team or individual § Product – new or existing § Division § Function § Entire company § New venture o Safe Desk Example § Strengths • Good supplier relations (H) • Using existing tech (M) • Simple design (L) § Weaknesses • High production cost (H) • High startup cost (M) • Bulky design (L) § Opportunities • Large market (H) • Few competitors (H) • Upgrade generationality (M) • Customization (L) § Threats • Easy to reproduce (H) • Seasonal demand (M) • Recession (L) • Porter’s Five Forces (Airlines and Computer ex) o Strategy model used by almost every company o Michael E. Porter Harvard professor o 5 forces work everywhere § Any industry § Any company § Any business segment § Any new product § Any new service o o M Cost a Leadership Differentiation Strategy Strategy r Bro d k McDonalds Red Lobster e t Focused s Focused Low Differentiation c Narrow Cost Strategy Strategy o p China Buffet Carnegie House e Unique Low price product Source competitive advantage • BCG Portfolio Planning and Product Life Cycle o BCG Matrix § Question Mark Star High (growth (grow or strategy) retrench) t Cash Cow r M Low Dog (stable or (retrench) low growth mode) Low High Market Share • Strategic Leadership o Inspires people to implement organizational strategies o Leader must have ability to make strategic choices and learn from mistakes o Strategic control – makes sure strategies are well implemented and that poor strategies are scrapped or changed o Responsibilities § Guardian of tradeoffs § Create a sense of urgency § Make sure everyone understands the strategy § Be a teacher • B2B, B2C, Hybrid (from exam 1)
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