Business Essentials Chapter 6

Management
The process of planning, organizing, leading and controlling a business’s financial, physical, human and information resources in order to achieve its goals.
Efficiency
Achieving the greatest level of output with a given amount of input.
Effectiveness
Achieving set organizational goals.
Planning
That portion of a manager’s job concerned with determining what the business needs to do and the best way to achieve it.
Strategic Plans
Plans that reflect decisions about resource allocations, company priorities and steps needed to meet strategic goals.
Tactical Plans
Generally, short-range plans concerned with implementing specific aspects of a company’s strategic plans.
Operational Plans
Plans setting short-term targets for daily, weekly or monthly performance.
Organizing
That portion of a manager’s job concerned with mobilizing the necessary resources to complete a particular task.
Leading
That portion of a manager’s job concerned with guiding and motivating employees to meet the firm’s objectives.
Controlling
That portion of a manager’s job concerned with monitoring the firm’s performance and if necessary acting to bring it in line with the firm’s goals.
Top Managers
Those managers responsible for a firm’s overall performance and effectiveness and for developing long-range plans for the company.
Middle Managers
Those managers responsible for implementing the decisions made by top managers.
First-Line Managers
Those managers responsible for supervising the work of employees.
Human Resource Managers
Those managers responsible for hiring, training, evaluating and compensating employees.
Operations Managers
Those managers responsible for controlling production, inventory, and quality of a firm’s products.
Information Managers
Those managers responsible for the design and implementation of systems to gather, process and disseminate information.
Marketing Managers
Those managers responsible for developing, pricing, promoting and distributing goods and services to buyers.
Financial Managers
Those managers responsible for planning and overseeing the financial resources of a firm.
Technical Skills
Skills associated with performing specialized tasks within a firm.
Human Relations Skills
Skills in understanding and getting along with people.
Conceptual Skills
Abilities to think in the abstract, diagnose and analyze various situations, and see beyond the present situation.
Time Management Skills
Skills associated with the productive use of time.
Decision Making Skills
Skills in defining problems and selecting the best courses of action.
Organizational Politics
The actions that people take as they try to get what they want.
Intuition
An innate belief about something, often without conscious consideration.
Escalation of Commitment
Condition in which a decision maker becomes so committed to a course of action that he or she stays with it even when there is evidence that the decision was wrong.
Risk Propensity
Extent to which a decision maker is willing to gamble when making a decision.
Strategic Management
The process of helping an organization maintain an effective alignment with its environment.
Strategy
The broad set of organizational plans for implementing the decisions made for achieving organizational goals.
Vision (or Purpose)
A statement indicating why an organization exists and what kind of organization it wants to be.
Mission Statement
An organization’s statement of how it will achieve its purpose in the environment in which it conducts its business.
Long-Term Goals
Goals set up for extended periods of time, typically five years or more into the future.
Intermediate Goals
Goals set for a period of one to five years.
Short-Term Goals
Goals set for the very near future, typically less than a year.
Smart Goals
Goals that are Specific, Measurable, Achievable, Realistic and Time-framed.
Strategy Formulation
Creation of a broad program for defining and meeting an organization’s goals.
Strategic Goals
Long-term goals derived directly from the firm’s mission statement.
SWOT Analysis
Identification and analysis of organizational strengths and weaknesses and environmental opportunities and threats as part of strategy formulation.
Organizational Analysis
The process of analyzing a firm’s strengths and weaknesses.
Environmental Analysis
The process of scanning the environment for threats and opportunities.
Corporate-Level Strategy
Identifies the various businesses that a company will be in, and how these businesses will relate to each other.
Business-Level (Competitive) Strategy
Identifies the ways a business will compete in its chosen line of products or services.
Functional Strategies
Identify the basic courses of action that each department in the firm will pursue so that it contributes to the attainment of the business’s overall goals.
Concentration Strategy
Involves focusing the company on one product or product line.
Market Penetration
Boosting sales of present products by more aggressive selling in the firm’s current markets.
Geographic Expansion
Expanding operations in new geographic areas or countries.
Product Development
Developing improved products for current markets.
Horizontal Integration
Acquiring control of competitors in the same or similar markets with the same or similar products.
Vertical Integration
Owning or controlling the inputs to the firm’s processes and/or the channels through which the products or services are distributed.
Diversification
Expanding into related or unrelated products or market segments.
Investment Reduction
Reducing the company’s investment in one or more of its lines of business.
Cost Leadership
Becoming the low-cost leader in an industry.
Differentiation Strategy
A firm seeks to be unique in its industry along some dimension that is valued by buyers.
Focus Strategy
Selecting a market segment and serving the customers in that market niche better than competitors.
Contingency Planning
Identifying aspects of a business or its environment that might require changes in strategy.
Crisis Management
An organization’s methods for dealing with emergencies.
Corporate Culture
The shared experiences, stories, beliefs and norms that characterize a firm.