30. Three grand strategies for domestic operations.

Grand strategy is the general plan of major action by which a firm intends to achieve its long-term goals. Types of grand strategies:

Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions. Internal growth can include development of new or changed product. External growth typically involves diversification, which means the acquisition of businesses that are related to current product lines or that take the corporation into new areas. The number of companies choosing to grow through mergers and acquisitions is astounding, as organizations strive to acquire the size and resources to compete on a global scale, to invest in new technology, and to control distribution channels and guarantee access to markets

Stability sometimes called a pause strategy, means that the organization wants to remain the same size or grow slowly and in a controlled fashion.

Retrenchment means that the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses. The organization may have experienced a precipitous drop in demand for its products or services, prompting managers to order across-the-board cuts in personnel and expenditures.

31. Compare and contrast the three levels of strategy in an organization.

Question similar to 26

Corporate-level strategy focuses on the organization as a whole. Corporate strategy determines the direction that the organization is going and the roles that each business unit in the organization will plan in pursuing that direction.

Business-level strategy focuses on each business or product line. For a small organization in only one line of business or the large organization that has not diversified into different products or markets, the business strategy typically overlaps with the organization’s corporate strategy. For organizations with multiple businesses, however, each division will have its own strategy that defines the products or services it will offer and the customers it wants to reach.

Functional-level strategy focuses on major functional departments within a business unit. For organizations that have traditional functional departments such as manufacturing, marketing, human resources, research and development, and finance, these strategies need to support the business strategy.

32. Decision conditions of certainty, risk, uncertainty and ambiguity.

Programmed and nonprogrammed decisions differ because of uncertainty

• Certainty: the information needed is available

• Risk: the future outcome is subject to chance regardless of the information available

• Uncertainty: information about future events are incomplete

• Ambiguity and Conflict: the goals and/or problem are unclear and difficult to define

33. Briefly describe the assumptions underlying the classical model of decision making.

The classical model of decision making is based on four assumptions. First, the decision-maker attempts to accomplish goals that are known and agreed upon. In addition, problems are specified and defined precisely. Second, the decision-maker attempts to gather complete information, going for a condition of certainty. Third, the criteria for evaluating the alternatives are known and the decision-maker will select the alternative that maximizes the economic return to the organization. Fourth, the decision-maker is rational and relies upon logic to make sense of the information available.