Term
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Definition
| Process of deciding on the programs that the organization will undertake and on the approximate amount of resources that will be allocated. AKA long-range planning and programming. |
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Term
| Strategy formulation vs. strategic planning |
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Definition
| Strategy formulation is the process of deciding on new strategies and strategic planning is implementing them. Formulation involves creativity. Planning lasts for 3-5 years. |
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Term
| A formal strategic planning process can give to the organization 4 benefits |
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Definition
1. Framework for developing the annual budget
2. Management development tool
3. Mechanism to force managers to think l-t
4. Means of aligning mgrs with l-t org. strategies |
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Term
| Limitations of strategic planning (3) |
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Definition
1. Danger that planning can end up become a "form-filling" bureaucratic exercise, devoid of strategic planning
2. Organization may create a large strategic planning department and delegate the preparation of the strategic plan to that staff dept.
3. Strategic planning is time consuming and expensive |
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Term
| A formal strategic plan is desirable in organizations that have the following 3 characteristics |
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Definition
1. Top mgmt is convinced that strategic is important.
2. Organization is relatively large and complex.
3. Considerable uncertainty about the future exists, but org. has the flexibility to adjusted to changing circumstances. |
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Term
| # of years a typical strategic plan covers |
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Definition
| 5 years. should be carried out by people carrying out the plan - line mgmt |
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Term
| 2 techniques for analyzing capital investment proposals |
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Definition
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Term
| 4 reasons for not using PV techniques |
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Definition
1. Proposal may be so obviously attractive that a PV calculation is unnecessary
2. Estimates involved in the proposal are so uncertain, making PV calculations is pointless
3. Rational for the proposal is something other than increased profitability (safety, morale, image).
4. No feasible alternative to adoption (regulation) |
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Term
| Considerations useful in implementing capital expenditure evaluation systems (3) |
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Definition
1. Rules - relating to the approval of capital expenditure proposals
2. Avoiding manipulation - if project has a negative PV, may manipulate #'s to make it look good
3. Models - risk analysis, sensitivity analysis, simulation, etc. |
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Term
| 2 ways of analyzing ongoing problems |
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Definition
1. ABC
2. Value chain analyis |
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Term
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Definition
| linked set of value creating activities - from acquiring RM to end user product |
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Term
| 3 potentially useful areas VC highlights |
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Definition
1. Linkages with suppliers
2. Linkages with customers
3. Process linkages with the value chain of the firm. Ex. linking promotional campaign and production |
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Term
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Definition
- Use cause and effect drivers
- Purpose is to improve accuracy of cosing
- ABM: purpose: proactive. Continuous mgmt to get rid of non value-added activities to improve operations |
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Term
| Strategic planning process steps (6) |
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Definition
1. Reviewing and updating the strategic plan (whenever necessary, not often)
2. Deciding on assumptions and guidelines (wages and salary increases)
3. First iteration of strategic plan
4. Analysis
5. Second iteration of strategic plan
6. Final review and approval |
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Term
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Definition
| - sum of individual plans does not add up to the attainment of corporate objectives. |
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Term
| 3 ways to close the planning gap |
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Definition
1. Find opportunities for improvements in the b/u plans (senior mgmt usually focuses on this one.)
2. Make acquisitions
3. Review corporate objectives |
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Definition
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