Term
| Organizational Structure- |
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Definition
| The formalized patterns of interactions that link a firm’s tasks, technologies, and people. |
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Term
| Organizational Structure provides a means of balancing two conflicting forces |
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Definition
Need for the division of tasks into meaningful groupings
Need to integrate the groupings for efficiency and effectiveness |
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Term
Simple Organizational Structure
Advantages |
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Definition
Highly informal
Centralized decision making
Little specialization |
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Term
Simple Organizational Structure
Disadvantages |
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Definition
Employees may not understand their responsibilities
May take advantage of lack of regulation |
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Term
| Functional Organizational Structure |
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Definition
| An organizational form in which the major functions for the firm, such as production, marketing, R&D, and accounting, are grouped internally |
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Term
Functional Organizational Structure
Advantages |
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Definition
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 |
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Term
Functional Organizational Structure
Disadvantages |
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Definition
Impeded communication and coordination due to differences in values and orientations
May lead to short-term thinking (functions vs. organization as a whole)
Difficult to establish uniform performance standards |
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Term
| Divisional Organizational Structure |
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Definition
| Organizational form in which products, projects, or product markets are grouped internally (Also called multidivisional structure or M-Form) |
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Term
Divisional Organizational Structure
Advantages |
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Definition
Strategic business unit (SBU) structure
Separation of strategic and operating control
Quick response to important changes in external environment
Minimal problems of sharing resources across functional departments
Development of general management talent is enhanced |
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Term
Divisional Organizational Structure
Disadvantages |
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Definition
Can be very expensive
Can be dysfunctional competition among divisions
Differences in image and quality may occur across divisions
Can focus on short-term performance |
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Term
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Definition
| An organizational form in which products, projects, or product market divisions are grouped into homogeneous units |
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Term
Strategic Business Unit
Advantages |
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Definition
task of planning and control by the corporate office more manageable
individual businesses can react more quickly to important changes
task of planning and control by the corporate office more manageable
individual businesses can react more quickly to important changes |
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Term
Strategic Business Unit
Disadvantages |
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Definition
may become difficult to achieve synergies
additional level of management increases overhead expenses |
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Term
| Holding company structure |
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Definition
| An organizational form that is a variation of the divisional organizational structure in which the divisions have a high degree of autonomy both from other divisions and from corporate headquarters |
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Term
Holding company structure
Advantages |
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Definition
cost savings associated with lower overhead
autonomy increases the motivational level of divisional executives |
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Term
Holding company structure
Disadvantages |
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Definition
inherent lack of control and dependence
limited staff support |
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Term
| Matrix Organizational Structure |
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Definition
an organizational form in which there are multiple lines of authority and some individuals report to at least two managers
Advantages
Facilitates the use of specialized personnel, equipment and facilities
Provides professionals with a broader range of responsibility and experience
Disadvantages
Can cause uncertainty and lead to intense power struggles
Working relationships become more complicated
Decisions may take longer |
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Term
| Three major contingencies influence structure adopted by firms with international operations |
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Definition
Type of strategy driving the firm’s foreign operations
Product diversity
Extent to which the firm is dependent on foreign sales |
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Term
| Structures used to manage international operations |
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Definition
International division
Geographic-area division
Worldwide functional
Worldwide product division
Worldwide matrix |
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Term
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Definition
| a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries. |
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Term
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Definition
Vertical boundaries between levels in the organization’s hierarchy
Horizontal boundaries between functional areas
External boundaries between the firm and its customers, suppliers, and regulators
Geographic boundaries between locations, cultures and markets |
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Term
| Boundaryless organizational designs |
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Definition
| Organizations in which the boundaries, including vertical, horizontal, external, and geographic boundaries, are permeable. |
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Term
| Barrier-free organization |
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Definition
| An organizational design in which firms bridge real differences in culture, function, and goals to find common ground that facilitates information sharing and other forms of cooperative behavior. |
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Term
| Pros and Cons of barrier free structures |
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Definition
PROS
leverages the talents of all employees
enhances cooperation, coordination, and information sharing among functions, divisions, SBUs, and external constituencies
enables a quicker response to market changes through a single- goal focus
can lead to coordinated win-win initiatives with key suppliers, customers, and alliance partners
CONS
difficult to overcome political and authority boundaries inside and outside the organization
lacks strong leadership and common vision, which can lead to coordination problems
time consuming and difficult to manage democratic processes
lacks high levels of trust, which can impede performance |
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Term
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Definition
An organization in which non-vital functions are outsourced, which uses the knowledge and expertise of outside suppliers while retaining strategic control.
PROS
directs a firms managerial and technical talent to the most critical activities, maintians full strategic control over most core activities- core competencies
achieves "best in class" performance in each link of the value chain
leverages core competencies by outsourcing with smaller capital commitment
encourages information sharing and accelerates organizational learning
CONS
inhibits common vision through reliance on outsiders
diminishes future competitive advantages if critical technologies or other competencies are outsourced
increases the difficulty of bringing back into the firm activities that now add value to market shifts
leads to an erosion of cross-functional skills
decreases operational control and potential loss of control over a supplier |
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Term
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Definition
a continually evolving network of independent companies that are linked together to share skills, costs, and access to one another’s markets
PROS
enables the sharing of costs and skills
enhances access to global markets
increases market responsiveness
creates a "best of everything" organization since each partner brings core competencies to the alliance
encourages both individual and organizational knowledge sharing and accelerates organizational learning
CONS
harder to determine where one company ends and the other begins, due to close inter dependencies among players
leads to potential loss of operational control among partners
results in loss of strategic control over emerging technology
Requires new and difficult-to-acquire managerial skills |
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Term
boundaryless organizations
Factors facilitating effective coordination and integration of key activities |
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Definition
Common culture and shared values
Horizontal organization structures
Horizontal systems and processes
Communications and information technologies
Human resource practices |
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Term
| Ambidextrous organizational designs |
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Definition
| Organization designs that attempt to simultaneously pursue modest, incremental innovations as well as more dramatic, breakthrough innovations. |
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Term
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Definition
The use of new knowledge to transform organizational processes or create commercially viable products and services
Latest technology, results of experiments, creative insights, competitive information |
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Term
| There are “five disciplines” for creating what customers want |
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Definition
Identify important customer needs
Create solutions that fill those needs
Build innovation teams
Empower "innovation champions" who keep the effort on track
Align the entire enterprise around creating value for customers |
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Term
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Definition
Efforts to create product designs and applications of technology to develop new products for end users
More common during early stages of an industry’s life cycle
Associated with differentiation strategies |
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Term
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Definition
Efforts to improve the efficiency of organizational processes, especially manufacturing systems and operations
More likely to occur in later stages of an industry’s life cycle
Associated with cost leader strategies |
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Term
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Definition
An innovation that fundamentally changes existing practices
Can be highly disruptive
Can transform or revolutionize a whole industry |
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Term
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Definition
| A type of radical innovation that overturns markets by providing an altogether new approach to meeting customer needs. |
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Term
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Definition
An innovation that enhances existing practices or makes small improvements in products and processes
Evolutionary applications within existing paradigms |
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Term
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Definition
| extend sales in an existing market, usually by enabling new products or services to be sold at higher margins. |
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Term
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Definition
Deciding the merits of innovative ideas
Seeds – likely to bear fruit
Weeds – should be cast aside
Dilemma
Some innovation projects require considerable level of investment before merit can be determined |
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Term
| Experience versus Initiative |
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Definition
Deciding who will lead an innovation project
Senior managers have experience and credibility and tend to be more risk averse
Midlevel employees may be the innovators themselves and have more enthusiasm |
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Term
| Internal versus External Staffing |
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Definition
People drawn from inside the firm
May have greater social capital
Know the organization’s culture and routines
May not be able to think outside the box
People drawn from outside the firm
Are costly to recruit, hire, train
May have difficulty building relationships |
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Term
| Building Capabilities versus Collaborating |
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Definition
Firms can seek help
Other departments
Partner with other companies that bring resources and experience
Partnerships
Create dependencies and inhibit internal skills development
Sharing benefits of innovation may create conflict |
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Term
| Incremental versus Preemptive Launch |
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Definition
Incremental launch
Less risky
Requires few resources
Can undermine the project’s credibility if too tentative
Large-scale launch
Requires more resources
Can effectively preempt a competitive response |
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Term
| Defining the Scope of Innovation |
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Definition
Firms must define the “strategic envelope” (scope of the innovation efforts)
Firms ensure that their innovation efforts are not wasted on projects that are outside the firm’s domain of interest. |
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Term
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Definition
| A firm specific view of innovation that defines how a firm can create new knowledge and learn from an innovation initiative even if the product fails. |
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Term
| In defining the strategic envelope, a firm should answer several questions |
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Definition
How much will the innovation cost?
How likely is it to actually become commercially viable?
How much value will it add; that is, what will it be worth if it works?
What will be learned if it does not pan out? |
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Term
| Corporate entrepreneurship |
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Definition
| The creation of new value for a corporation, through investments that create either new sources of competitive advantage or renewal of the value proposition |
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Term
| Focused approaches to corporate entrepreneurship- |
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Definition
| Corporate entrepreneurship in which the venturing entity is separated from the other ongoing operations of the firm |
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Term
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Definition
| A group of individuals, or a division within a corporation that identifies, evaluates, and cultivates venture opportunities |
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Term
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Definition
Innovation and experimentation
Coordinating with other corporate divisions
Identifying potential venture partners
Gathering resources
Launching the venture |
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Term
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Definition
A corporate new venture group that supports and nurtures fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses
Funding
Physical space
Business services
Mentoring
Networking |
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Term
| Staffing to Capture Value from Innovation |
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Definition
Create innovation teams with experienced players
Require that employees seeking to advance their career serve in the new venture group
Once people have experience with the new venture group, transfer them to mainstream management positions
Separate the performance of individuals from the performance of the innovation. |
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Term
| Dispersed Approaches to Corporate Entrepreneurship |
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Definition
| Corporate entrepreneurship in which a dedication to the principles and policies of entrepreneurship is spread throughout the organization |
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Term
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Definition
| Corporate culture in which change and renewal are a constant focus of attention. |
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Term
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Definition
| An individual working within a corporation who brings entrepreneurial ideas forward, identifies what kind of market exists for the product or service, finds resources to support the venture, and promotes the venture concept to upper management. |
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Term
| Product (or project) champions |
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Definition
Bring entrepreneurial ideas forward
Identify what kind of market exists for the product or service
Find resources to support the venture
Promote the venture concept to upper management |
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Term
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Definition
| An individual work within a corporation who is willing to question the viability of a venture project by demanding hard evidence of venture successes and challenging the belief system that carries a venture forward |
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Term
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Definition
| An investment analysis tool that looks at an investment or activity as a series of sequential steps, and for each step the investor has the option of (a) investing additional funds to grow or accelerate, (b) delaying, (c) shrinking the scale of, or (d) abandoning the activity |
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Term
| Potential Pitfalls of Real Options Analysis |
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Definition
Agency Theory and the Back-Solver Dilemma
Managerial Conceit: Overconfidence and the Illusion of Control
Managerial Conceit: Irrational Escalation of Commitment |
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Term
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Definition
| Problem with investment decisions in which managers scheme to have a project meet investment approval criteria, even though the investment may not enhance firm value |
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Term
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Definition
| Biases, blind spots, and other human frailties that lead to poor managerial decisions |
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Term
| Escalation of Commitment- |
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Definition
| Tendency for managers to irrationally stick with an investment even one that is broken down in a sequential series of decisions, when investment criteria are not met. |
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Term
| Entrepreneurial Orientation- |
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Definition
| The strategy-making practices that businesses use in identifying and launching new ventures, consisting of autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking |
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Term
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Definition
| Independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it though to completion |
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Term
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Definition
| A willingness to introduce novelty through experimentation and creative processes aimed at developing new products and services as well as new processes. |
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Term
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Definition
| A forward-looking perspective characteristic of marketplace leader that has the foresight to seize opportunities in anticipation of future demand |
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Term
| Competitive aggressiveness |
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Definition
| An intense effort to outperform industry rivals characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace |
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Term
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Definition
| Making decisions ad taking action without certain knowledge of probable outcomes. Some undertakings may also involve making substantial resource commitments in the process of ventureign |
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Term
| Four Key Attributes to Strategic Management |
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Definition
Directs the organization toward overall goals and objectives
Includes multiple stakeholders in decision making
Needs to incorporate short-term and long-term perspectives
Recognizes trade-offs between efficiency and effectiveness |
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Term
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Definition
| A firm’s strategy for recognizing and responding to the interests of all its salient stakeholders. |
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Term
Strategy formulation READ PG 30
Who is involved |
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Definition
| decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage. |
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Term
Strategy Implementation
Who is involved |
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Definition
| ctions made by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership. |
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Term
| Resources-Based View of the Firm |
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Definition
perspective that firms’ competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute.
Two perspective: the internal analysis of phenomena within a company and an external analysis of the industry and its competitive environment. |
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Term
| Pressures to reduce costs require firms to |
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Definition
Strong integration across various businesses
Standardization leads to higher economies of scale, which lowers costs
Helps create uniform standards of quality throughout the world |
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Term
| How can product differentiation by an incumbent act as an entry barrier |
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Definition
| When existing competitors have strong brand identification and consumer loyalty, differentiation creates a barrier to entry by forcing entrants to spend heavily to overcome existing consumer loyalties |
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Term
| Primary and Support Categories of Value Chain |
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Definition
Primary activities: inbound logistics, operations, outbound logistics, marketing and sales, service
support activities:
general administration, human resource management, technology development, procurement |
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Term
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Definition
| Managerial opportunism is basically when a person takes takes advantage of a managment position, and tries to get their in any manner that they can. Some examples of this are: job hopping, on the job consumption, and excessive product diversification. |
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Term
| michael porter tqm benchmarking business process engineering can't lead to sustainable competetive advantage |
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Definition
| management tools have taken the place of strategy. these don't establish preservable differences. |
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Term
| how do firms that acheive cost leadership and differentiation perform |
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Definition
have an enviable place.
but: firms that fail to attain both may end up stuck in the middle
underestimating challenges
miscalculating sources of revenue |
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