3013 lecture 2 slides

3013 lecture 2 slides - FUNDAMENTALS OF MANAGEMENT DeGroot...

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Oklahoma State University FUNDAMENTALS OF MANAGEMENT
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Performance, Shareholders, Control Systems & Ethics
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Strategic Direction Statement explaining why a company exists Crystallization of what leaders want firm to be How to beat present and potential competitors •Provides context for all decisions within the organization Describes and enduring reality •Is capable of infinite fulfillment (no time frame) Useful for both internal and external audiences MISSION •Guides development of strategy and organization Describes an inspiring new reality •Is achievable within a specific time period Primarily useful internally (slogans can be used externally) VISION •Lists set of actions to provide products or services that create more value than their cost •Describes the “value proposition” chosen by the company Constantly changes in response to analysis, trial and error •For internal use STRATEGY
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Establishing Goals and Standards (add on slide, not in video presentation) Most organizations operate with a hierarchy of goals. In the case of a business enterprise, the major goals at the top of the hierarchy are normally expressed in terms of profitability and profit growth. These goals are normally translated into subgoals that can be applied to individuals or units within an organization. As with major goals, subgoals should be precise and measurable, address important issues, be challenging but realistic, and specify a time period.
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Measuring Performance (add on slide, not in video presentation) Once goals, subgoals, and standards have been established, performance must be measured against the criteria specified. This is not as easy as it sounds. Information systems have to be put in place to collect the required data; and the data must be compiled into usable form and transmitted to the appropriate people in the organization. With the massive advances in computing power that have occurred over the last three decades, managers have seemingly infinite quantitative information at their disposal.
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Alternative views of performance The economic value model Objective is to maximize shareholder wealth Objectives other than wealth creation Objectives that are used as surrogates for eventual wealth or the fulfillment of a mission Stakeholder surplus model Defines beneficiary group and maximizes wealth for total group
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Objectives other than wealth maximization Risk aversion / tolerance Total risk avoidance Specific risk-avoidance Satisficing Good-enough syndrome Nonwealth-based Proxies: Mkt. Share, Customer Satisfaction, Volume Institutional: Employment, Continuity, Welfare Mission-based e.g.: Superior quality at lower cost (e.g. HMO)
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How do different companies perform?
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framework
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This note was uploaded on 04/07/2008 for the course MGMT 3013 taught by Professor Dasborough during the Spring '08 term at Oklahoma State.

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3013 lecture 2 slides - FUNDAMENTALS OF MANAGEMENT DeGroot...

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