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Business ecosystem
Economic community of organizations and all their stakeholders.
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Capability profile
Identifying the organization’s strengths and weaknesses.
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Cross-sectional scenarios
Describing future situations at a given point in time.
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Differentiation
Buyer perceives unique and superior value in a product.
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Event outcome forecasts
Predictions of the outcome of highly probable future events.
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Event timing forecasts
Predictions of when a given event will occur.
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Forecasts
Predictions, projections, or estimates of future situations.
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Grand strategy
How the organization’s mission will be accomplished.
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Longitudinal scenarios
Describing how the future will evolve from the present.
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Reengineering
Radically redesigning the entire business cycle for greater strategic speed.
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Scenario analysis
Preparing written descriptions of equally likely future situations.
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Situational analysis
Finding the organization’s niche by performing a SWOT analysis.
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Strategic management
Seeking a competitively superior organization-environment fit.
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Strategy
Integrated, externally oriented perception of how to achieve the organization’s mission.
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Synergy
The concept that the whole is greater than the sum of its parts.
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Time series forecasts
Estimates of future values in a statistical sequence.
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Trend analysis
Hypothetical extension of a past series of events into the future.
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Causes
Variables responsible for the difference between actual and desired conditions.
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Collaborative computing
Teaming up to make decisions via a computer network programmed with groupware.
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Condition of certainty
Solid factual basis allows accurate prediction of decision’s outcome.
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Condition of risk
Decision made on basis of incomplete but reliable information.
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Condition of uncertainty
No reliable factual information available.
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Creativity
The reorganization of experience into new configurations.
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Decision making
Identifying and choosing alternative courses of action.
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Decision rule
Tells when and how programmed decisions should be made.
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Escalation of commitment
People get locked into losing courses of action to avoid embarrassment of quitting or admitting error.
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Explicit knowledge
Documented and sharable information.
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Framing error
How information is presented influences one’s interpretation of it.
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Idealize
To change the nature of a problem’s situation.
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Knowledge management
Developing a system to improve the creation and sharing of knowledge critical for decision making .
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Law of unintended consequences
Results of purposeful actions are often difficult to predict.
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Nonprogrammed decisions
Decisions made in complex and nonroutine situations.
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Objective probabilities
Odds derived mathematically from reliable data.
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Optimize
To systematically identify the solution with the best combination of benefits.
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Problem
The difference between actual and desired states of affairs.
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Problem solving
Conscious process of closing the gap between actual and desired situations.
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Programmed decisions
Repetitive and routine decisions.
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Satisfice
To settle for a solution that is good enough.
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Subjective probabilities
Odds based on judgment.
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Tacit
Knowledge personal, intuitive, and undocumented information.
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Centralization
The retention of decision-making authority by top management.
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Cluster organization
Collaborative structure in which teams are the primary unit.
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Contingency design
Fitting the organization to its environment.
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Decentralization
Management shares decision-making authority with lower-level employees.
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Delegation
Assigning various degrees of decision-making authority to lower-level employees.
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Departmentalization
Grouping related jobs or processes into major organizational subunits.
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Hourglass organization
A three-layer structure with a constricted middle layer.
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Line and staff organization
Organization in which line managers make decisions and staff personnel provide advice and support.
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Mechanistic organizations
Rigid bureaucracies.
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Organic organizations
Flexible, adaptive organization structures.
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Organizing
Creating a coordinated authority and task structure.
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Span of control
Number of people who report directly to a given manager.
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Virtual organizations
Internet-linked networks of value-adding subcontractors.
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Organizational culture
Shared values, beliefs, and language that create a common identity and sense of community.
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Organizational socialization
Process of transforming outsiders into accepted insiders.
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Organizational values
Shared beliefs about what the organization stands for.
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Organization chart
Visual display of organization’s positions and lines of authority.
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Authority
Right to direct the actions of others.
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Organizational effectiveness
Being effective, efficient, satisfying, adaptive and developing, and ultimately surviving.
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Porter’s generic competitive strategies:
Porters model uses four strategies that helps managers to think strategically: it enables them to see the big picture as it affects the organization and its changing environment.
1. Cost leadership: Cost keeping strategy.
2. Differentiation Strategy: Products are considered unique or superior to other products.
3. Cost Focus Strategy: Orgs gain a competitive edge in the market due to strict control. They focus on what they do best.
4. Focused Differentiation Strategy: These orgs focus on delivering superior products or services.
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Stuck in the middle
Companies that fail to develop a cost or a differentiation advantage. They will generate low profits.
- -They lose the high-volume customers that demand low price.
- –They lose the high-margin customers to the firms that have achieved differentiation.
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SWOT analysis:
Strengths, Weaknesses, Oppertunities, and Threats.
Strengths and Weaknesses > The Right Nitch < Oppertunities and threats.
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The strategic management process.
- 1. Formulation of a grand strategy.
- 2. Formulation of strategic plans.
- 3. Implementation of strategic plans.
- 4. Strategic control.
Corrective action based on evaluation and feedback throught the whole process.
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Sharpening your intuition:
- 1. Open up the closet: Trust your feelings/gut.
- 2. Don't mix up your I's: Instinct, insight, and intuition are not synonymous.
- 3. Elicit good feedback: Seek feedback.
- 4. Get a feel for our batting average: Get a sense for how reliable your hunches are.
- 5. Use imagery: Use imagery rather than words. Visualize future potential.
- 6. Play devil's advocate: Test intuitive judgements and raise objections to them.
- 7. Capture and validate your intuitions: Capture and log your intuituins before logic takes over.
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Perceptual and Behavioral Decision Traps.
•Framing Error: The way in which information is presented influences one’s interpretation of it, which, in turn, may alter a decision based on the information.
- •Escalation of Commitment: Continuing on a course of action can lock a person into a losing position (“throwing good
- money after bad”).
•Overconfidence: Believing too much in one’s own capabilities is a trap.
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Knowledge Management
–Developing a system to improve the creation and sharing of knowledge critical for decision making.
The cultivation of a learning culture where organizational members systematically gather and share knowledge with others in order to achieve better performance.
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Group-aided decision making Advantages:
- Advantages:
- 1. Greater pool of knowledge: A group can bring more information and experience.
- 2. Different perspectives: people with varied experience help to see problems froma different angle.
- 3. Greater comprehension: Greater understanding.
- 4. Increased acceptance: Outcome is viewed as "ours not theirs".
- 5. Training ground: Less experienced learn more.
- Disadvantages:
- 1. Social pressures: individuals scared to contribute.
- 2. Domination by a vocal few: Quality is reduced by those who talk the loudest and longest.
- 3. Logrolling: "Wheeling and dealing".
- 4. Goal displacement: Secondary motives become the primary task.
- 5. Groupthink: Unanimus vote overrides sound judgement.
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Creative Problem Solving
Generating Alternative Solutions:
- –Brainstorming
- –Free association
- –Edisonian method
- –Attribute listing
- –Scientific method
- –Creative Leap
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•Departmentalization
- –“Grouping of related jobs or processes into major organizational units”.
- •Overcomes some of the effect of fragmentation caused by differentiation (job specialization).
- •Permits coordination (integration) to be handled in the least costly manner.
- –Sometimes refers to divisions, groups, or units in large organizations.
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•Advantages of Delegation
- –Frees up managerial time for other important tasks
- –Serves as a training and development tool for lower-level managers
- –Increases subordinates’commitment by giving them challenging assignments
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•Organizational Culture
- –“The collection of shared beliefs, values, rituals, stories, myths, and specialized language that creates a common identity and sense of community.”
- –“The way we do things around here.”
- –The “social glue” that binds an organization’s members together
- –The degree of sharing and the degree of intensity determine whether an organization’s culture is strong or weak
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Mechanistic/organic organizations
- Mechanistic: Cost minimizing companies
- ·High specialization
- ·Rigid departmentalization
- ·Clear chain of command
- ·Narrow spans of control
- ·Centralization
- ·High Formalization
- Organic: Innovative companies
- ·Cross-functional teams
- ·Cross-Hierarchical Teams
- ·Free Flow of information
- ·Wide spans of control
- ·Decentralization
- ·Low formalization
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Handout:
K-Mart case discussed from class:
There is no reason that the consumer need Kmart. Kmart failed to find a nitch or a specific market to operate in.
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Handout:
Four Organization Shapers
- 1. Buyer power: New competition gives buyers greater power.
- 2. Variety: Greater information gathering is required to better know the customers. Greater variety and customization is required among product offerings.
- 3. Change: Rapid decision making and relearning is required, this leads to decentralization.
- 4. Speed: Means that decisions need to be moved to the work level which leads to decentralization.
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Handout:
Competitive strategies (Porter’s “5 Forces” Model)
- Internal force:
- -Industry Competitors
- External forces:
- -Potential Entrants: Threat of new entrants
- -Suppliers: Bargaining power of suppliers
- -Substitutes: Threat of substitute products or services
- -Buyers: Bargaining power of buyers
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Handout:
How Disney Keeps the Ideas Coming
The Gong show: Three times a year employees get 3-5 minutes to pitch their ideas to Disney executives.
- -Immediate direct feedback is given.
- -Goals and direction are established for a new story.
- -Creation boundaries are set to keep the process flowing.
- -Deadlines are used to focus the creativity process.
- -Athority is assigned to groups instead of one person.
- - leaders choose leaders. Give them a sense of "Hey, they want me".
- -The lines of hierarchy are so blurred that it makes no differernce who you get access to.
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Article 9A
Lay off the layers
Jack Welch
- -Layers slow everything down.
- -Every layer is a bad layer.
- -Layers pop-up because they seem necessary.
- -Your job is to fight layers.
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Article 9B
Who's got the monkey?
Oncken, Wass
5 degrees of initiative that the manager can exercise from lowest to highest:
- 1. Wait until told.
- 2. Ask what to do.
- 3. Recommend , then take resulting action.
- 4. Act, but advise at once.
- 5. And act on own, then routinely report.
- -Quite often managers are eafer to take on their subordinates monkeys.
- -Self-imposed time: Time for the manager to do things the manager originates to do.
- -Subordinate-imposed time: time taken by the subordinates.
- -Discretionary time: whatever time is left over for the manager.
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Article 8B
How Pixar Fosters Collective Creativity.
- 1. Everyone must have the freedom to communicate with anyone.
- 2. It must be safe for everyone to offer ideas.
- 3. We must stay close to innovations happening in the academic community.
- -Success is not due to luck but an adherence to a set of principles and practices.
- -"The high concept": One step in a long arduous process.
- -To be original you have to accept uncertainity even when it is uncomfortable.
- -It is ok to hire people smarter than you.
- -Good people are better than good ideas.
- -A safe enviroment must exist where ideas can flow.
- -People must be able to work togeather efficiently.
- -The creative brain trust: A give and take session where ideas can be exchanged without egos.
- -Daily reviews force people to present their unfinished work, this encourages people to finish their work before showing it and improves creativity.
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Article 8A
Jim Collins on Tough Calls
- -Having the right people around you helps prepare for uncertainty.
- -Really great people make will make a series of great decisions over time.
- -Ones personality can overshadow or hinder the creativity of others.
- -Debate leads to good decisions which leads to good answers. bla, bla, bla.
- -Greatness starts with internal drive and how one responds to the outside world.
- -All decisions need to be a small fraction of the outcome. We should avoid the singular decision.
- -Outside factors should not be considered over inside factors for success.
- -Decisions should be to benifit the company not ones self for long term survival.
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Article 7A
How to hit a moving target.
Hof.
- -Companies must differentiate themselves and creat entirely new markets.
- -Cooperation works better than direct competition.
- -The best of the bunch look forward not around them to find breakthroughs.
- -Companies don't compete for the best product, they compete to be unique.
- -Inventing new markets is better than finding a nitch.
- -Caterpillar. Focus on the customer instead of the competition.
- -Amazon: offer personalized service.
- -Even dominant companies need to stay competitive.
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