Management 5&6

conglomerates

firms that pursue unrelated diversification strategies

cartel

A group of firms or nations that agree to act as a monopoly and not compete with each other

southern Common Market (Mercosur)

A political and economic agreement among the countries of Bolivia, Argentina, Brazil, Venezuela, Uruguay, and Paraguay.

global business (globalization)

A strategy in which organizations treat the entire world or major regions of it as the domain for conducting business

import Tariff

A tax levied by a nation on goods bought outside its borders and imported into the country.

U.K. Bribery Act

All organizations with business operations in the United Kingdom can be held liable for bribery, even if the bribery did not occur within the UK

Webb-Pomerene Export Trade Act

Allows selected American firms desiring international trade to form monopolies in order to compete with foreign cartels

World Bank

Formally known as the International Bank for Reconstruction and Development, it was established and supported by the industrialized nations in 1946 to loan money to underdeveloped and developing countries.

Foreign Corrupt Practices Act (FCPA)

Outlaws direct payoffs to and bribes of foreign governments or business officials by American companies.

international business

The buying, selling, and trading of goods and services across national boundaries.

Quota

The maximum number of units of a particular product that may be imported into a country.

embargo

The suspension of trade in a particular product by the government

North American Free Trade Agreement (NAFTA)

Went into effect on Jan 1, 1994 and effectively merged Canada, the US, and Mexico into one market of about 400 million consumers by eliminating most tariffs and trade restrictions on agricultural and manufactured products among the three countries.

focus

a business strategy in which the business concentrates on one part or segment of the market and tries to meet the demands of that segment

differentiation

a business strategy in which the strategic business unit offers a unique good or service to a customer at a premium price

cost leadership

a business-level strategy aimed at achieving the overall lowest cost structure in an industry

multinational corporation (MNC)

a corporation such as IBM, ExxonMobil, and Nestle, that operates on a worldwide scale, without significant ties to any one nation or region.

strategy

a course of action for implementing strategic plans and achieving strategic goals; a general statement of actions an organization intends to take or is taking that is based on the fit of the organization with its external environment.

trading company

acquires goods in one country and sells them to buyers in another country

Which of the following refers to the market value of a nation's total output of goods a. Exchange rate b. Quota c. Gross domestic product (GDP) d. Joint venture

c. Gross domestic product (GDP)

birth

the initial stage of the product life cycle when the product is introduced

What name is given to the final result that a firm wishes to achieve? a. Focus b. Mission c. Plan d. Goal

d. Goal

strategic goals

goals set by higher managers that deal with such general topics as the

outsourcing

involves transferring manufacturing or other functions (such as data processing) to countries where labor and supplies are less expensive.

contract manufacturing

occurs when a company hires a foreign company to produce a specified volume of the firm's product to specification; the final product carries the domestic firm's name.

tactical plans

plans that are designed to achieve tactical goals

operational plans

plans that are intended to achieve operational goals.

strategic plans

plans that are intended to achieve strategic goals

operational goals

short-term goals that are addressed to first-line managers and usually apply to specific work operations that lead to the production of goods or services.

unrelated diversification

the action of diversifying into any business that is potentially profitable for the organization

business-level strategy

the area of responsibility usually assigned to the divisional-level managers

portfolio analysis

a technique allowing for managers to visualize their businesses as a set or portfolio using certain common criteria, such as profitability or growth potential.

licensing

a trade arrangement in which one company - the licensor - allows another company - the licensee - to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee, or royalty.

What name is given to a business strategy in which the strategic business unit offers a unique good or service to a customer at a premium price? a. Differentiation b. Distinctive competence c. Diversification d. Divestment

a. Differentiation

What term describes what a firm does well relative to its competitors? a. Distinctive competence b. Cost leadership c. Related diversification d. Unrelated diversification

a. Distinctive competence

What term is used to describe the product life cycle stage characterized by dramatic increases in the product's market share? a. Growth b. Focus c. Maturity d. Cash Cow

a. Growth

What term describes the physical facilities that support a country's economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems? a. Infrastructure b. Joint venture c. Outsourcing d. Strategic alliance

a. Infrastructure

Organization of Economic Cooperation and Development (OECD)

An international economic organization compromised of 30 countries that accept the basic principles of free-market economies and representative democracy; recommends and promotes policies to improve the well-being of consumers and societies across the world.

International Monetary Fund (IMF)

Basic mission is to oversee the international monetary system and help ensure stable currencies and exchange rates throughout the world.

mission

a definition of an organization's fundamental purpose and its basic philosophy

franchising

a form of licensing in which a company - the franchise - agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with the franchiser's business, in return for a financial commitment and the agreement to conduct business in accordance with the franchiser's standard of operations.

mission statement

a formal written declaration of the organization's mission, often includes the firm's philosophy, its primary products and markets, the intended geographic scope, and the nature of the relationships between the firm, its stakeholders, and society.

World Trade Organization (WTO)

a global association of member countries that promotes free trade.

strategic alliance

a partnership formed to create competitive advantage on a worldwide basis

strategic business unit (sbu)

a separate division within a company that has its own mission, goals, strategy, and competition

plan

a set of activities intended to achieve goals, whether for an entire organization, department, or an individual.

diversification

a strategy of acquiring or developing other businesses, which must ultimately be justified by its ability to build stockholder wealth

divestment

a strategy of selling off businesses that the company no longer wishes to maintain, either because they are failing or bc the company has changed its corporate strategy and does not wish to be in those businesses any longer.

What name is given the transfer of manufacturing or other functions (such as data processing) to countries where labor and supplies are less expensive? a. Outsourcing b. Exporting c. Importing d. Franchising

a. Outsourcing

What name is given to the maximum number of units of a particular product that may be imported into a country? a. Quota b. Cartel c. Exchange controls d. Dumping

a. Quota

Which of the following characteristics relates to a business-level strategy? a. The area of responsibility usually assigned to the divisional-level managers b. Short-term goals that are addressed to first-line managers and usually apply to specific work operations that lead to the production of goods or services c. The scope and resource deployment components of strategy for the enterprise as a whole d. Plans that are intended to achieve operational goals

a. The area of responsibility usually assigned to the divisional-level managersThis answer is correct.

If it wants to reduce the dollars flowing out of the country, the United States can limit the number of garments being imported from China and Vietnam by imposing a. a quota. b. an exchange control. c. a trade deficit. d. an embargo.

a. a quota.

When Reebok has some of its athletic shoes produced by a Korean company, but the Reebok name still appears on the shoes, this illustrates a. contract manufacturing. b. licensing. c. direct investment. d. exporting.

a. contract manufacturing.

The first step in strategic planning is a. determining the mission and strategic goals. b. doing a comprehensive environmental analysis. c. carrying out a careful SWOT analysis. d. identifying the firm's distinctive competencies.

a. determining the mission and strategic goals.

Your saltwater taffy, which you produce right next to the Pacific Ocean in Orchard Park, Oregon, has a national reputation. You sell all you can make, and people drive hundreds of miles to your shop to buy it. You have a a. distinctive competence. b. virtual monopoly. c. rare synergy. d. strategic goal

a. distinctive competence.

When a company produces a high-tech, expensive bicycle aimed at serious and affluent bike enthusiasts, it is using the business-level strategy called a. focus. b. cost leadership. c. differentiation. d. cult marketing.

a. focus.

The purpose of a strategy is to a. take advantage of what the organization does well, or hopes to do well. b. get the organization moving on a path to achieve its tactical goals. c. boost market share. d. control organizational resources in a rational and efficient manner.

a. take advantage of what the organization does well, or hopes to do well.

strategic management

all the processes an organization undertakes to develop and implement its strategic plan

contingency plan

alternate courses of action to be undertaken if certain organizational or environmental conditions change

European Union

an Economic and political union of 28 member nations that are located primarily in Europe.

self-reference criterion

an unconscious referencing to the way things are done in one's own culture and experiences in making global business decisions.

You are the international marketing manager for Checker Burger, Inc., producer of a popular soy burger. There is an excellent market for your burgers in the republic of East Slabovia, a producer of high-quality brandy. The only problem is that East Slaboviar currency is not accepted on the international currency exchange. What can you do to help your trade? a. Appeal to the International Monetary Fund for help. b. Barter burgers for brandy. c. Hire an export agent. d. Trade in a mutually acceptable currency.

b. Barter burgers for brandy.

What term describes a group of firms or nations that agree to act as a monopoly and not compete with each other? a. Global business (globalization) b. Cartel c. World Trade Organization (WTO) d. Embargo

b. Cartel

What term describes a business-level strategy aimed at achieving the overall lowest cost structure in an industry? a. Distinctive competence b. Cost leadership c. Related diversification d. SWOT analysis

b. Cost leadership

What term describes the purchase of overseas production and marketing facilities, in which a company may control the facilities outright, or it may be the majority stockholder in the company that controls the facilities? a. International business b. Direct investment c. Joint venture d. Strategic alliance

b. Direct investment

Which of the following characteristics relates to the North American Free Trade Agreement (NAFTA)? a. Established and supported by the industrialized nations in 1946 to loan money to underdeveloped and developing countries b. Effectively merged Canada, the United States, and Mexico into one market of about 400 million consumers by eliminating most tariffs and trade restrictions on agricultural and manufactured products among the three countries. c. A global association of member countries that promotes free trade d. Allows selected American firms desiring international trade to form monopolies in order to compete with foreign cartels

b. Effectively merged Canada, the United States, and Mexico into one market of about 400 million consumers by eliminating most tariffs and trade restrictions on agricultural and manufactured products among the three countries.

Which of the following refers to an economic and political union of 28 member nations that are located primarily in Europe? a. World Bank b. European Union (EU) c. International Monetary Fund d. World Trade Organization (WTO)

b. European Union (EU)

The basic mission of which of the following is to oversee the international monetary system and help ensure stable currencies and exchange rates throughout the world? a. World Bank b. International Monetary Fund (IMF) c. World Trade Organization (WTO) d. Organization of Economic Cooperation and Development (OECD)

b. International Monetary Fund (IMF)

Which of the following refers to a definition of an organization's fundamental purpose and its basic philosophy? a. Strategy b. Mission c. Plan d. Focus

b. Mission

Which of the following refers to a set of activities intended to achieve goals, whether for an entire organization, department, or an individual? a. Mission b. Plan c. Goal d. Strategy

b. Plan

Which of the following characteristics relates to the product life cycle? a. A business-level strategy aimed at achieving the overall lowest cost structure in an industry b. The cycle of birth, growth, maturity, and decline of a product c. A business strategy in which the strategic business unit offers a unique good or service to a customer at a premium price d. A definition of an organization's fundamental purpose and its basic philosophy

b. The cycle of birth, growth, maturity, and decline of a product

What is meant by decline? a. The product life cycle stage when the product's market share either slows or has no growth b. The product life cycle stage marked by decreases in the product's market share. c. The product life cycle stage characterized by dramatic increases in the product's market share d. The initial stage of the product life cycle when the product is introduced

b. The product life cycle stage marked by decreases in the product's market share.

What is an embargo? a. The market value of a nation's total output of goods and services for a given period b. The suspension of trade in a particular product by the government c. The buying, selling, and trading of goods and services across national boundaries d. The maximum number of units of a particular product that may be imported into a country

b. The suspension of trade in a particular product by the government

The United States' prohibition of the importing of Cuban cigars is an example of a. a quota. b. an embargo. c. a tariff. d. a countertrade.

b. an embargo.

The purchase of goods and services from a foreign source defines a. countertrade b. importing c. exporting d. free trade

b. importing

When Weseeyu, Inc., of Rochester, New York, sells contact lenses to people in Moscow, Russia, the company a. is importing the lenses. b. is exporting the lenses. c. has an absolute advantage. d. is increasing the trade deficit.

b. is exporting the lenses.

Miller Beer allows a Canadian firm to use its name, formula, and brands in return for a royalty. This arrangement is known as a. exporting. b. licensing. c. direct investment. d. a joint venture.

b. licensing.

If companies do research to learn about cultural differences before engaging in trade in a particular country, then problems arising from these cultural differences can be a. completely avoided. b. minimized c. unaffected. d. exploited.

b. minimized

Which of the following characteristics relates to contingency plans? a. Plans that are designed to achieve tactical goals b. Plans that are intended to achieve operational goals c. Alternate courses of action to be undertaken if certain organizational or environmental conditions change d. Plans that are intended to achieve strategic goals

c. Alternate courses of action to be undertaken if certain organizational or environmental conditions change

What name is given to the ratio at which one nation's currency can be exchanged for another nation's currency or for gold? a. Exchange controls b. Direct investment c. Exchange rate d. Quota

c. Exchange rate

What are strategic goals? a. A set of activities intended to achieve goals, whether for an entire organization, department, or an individual b. A business-level strategy aimed at achieving the overall lowest cost structure in an industry c. Goals set by higher managers that deal with such general topics as the firm's growth, new markets, or new goods and services d. Alternate courses of action to be undertaken if certain organizational or environmental conditions change

c. Goals set by higher managers that deal with such general topics as the firm's growth, new markets, or new goods and services

What term describes an international economic organization comprised of 30 countries that accept the basic principles of free-market economies and representative democracy, and that recommend and promote policies to improve the well-being of consumers and societies across the world? a. World Bank b. European Union (EU) c. Organization of Economic Cooperation and Development (OECD) d. International Monetary Fund (IMF)

c. Organization of Economic Cooperation and Development (OECD)

Which of the following characteristics relates to a joint venture? a. A strategy in which organizations treat the entire world or major regions of it as the domain for conducting business b. A tax levied by a nation on goods bought outside its borders and imported into the country c. When a company that wants to do business in another country finds a local partner (occasionally, the host nation itself) to share the costs and operation of the business. d. Exporting that involves bartering products for other products instead of for currency

c. When a company that wants to do business in another country finds a local partner (occasionally, the host nation itself) to share the costs and operation of the business.

"Improving people's lives by providing gas and electric services in a sustainable way -- affordable, reliable and clean" is an example of a. an operational goal. b. an operational plan. c. a mission statement. d. a strategic goal.

c. a mission statement.

You sell Gourmet Mushrooms (GMs) at $100 an ounce. You have a secret source of supply, jealously guarded. Your GMs are better than your competitors' mushrooms, and only the very wealthiest Americans buy them. You are using the business strategy called a. strategic analysis. b. differentiation. c. focus. d. premium pricing.

c. focus.

According to Hofstede's cultural dimensions theory, _____ tend to be self-reliant and place a high level of importance on freedom and ambition, while _____ place more value on the team than the individual. a. collectivists; individualists b. men; women c. individualists; collectivists d. women; men

c. individualists; collectivists

At even the largest and most affluent corporation, the strategic management process begins with a. perceived failure. b. strong leadership. c. limited resources. d. an illuminating vision.

c. limited resources.

A corporation that operates in several countries without significant ties to any of them is a a. joint venture. b. cartel. c. multinational. d. strategic alliance.

c. multinational.

MidAmerican Energy Holdings Company has doubled its wind energy capacity by installing windmills and high-tech batteries to make it a "cleaner" utility company. In high-tech renewable energy, this company has a a. rare synergy. b. distinctive competence. c. successful strategy. d. consumer monopoly.

c. successful strategy.

Association of Southeast Asian Nations (ASEAN)

compromised of ten Southeast Asian countries with the goal to promote eceonomic growth and overall progress in the area via trade and security

What is meant by focus? a. A course of action for implementing strategic plans and achieving strategic goals b. A business strategy in which the strategic business unit offers a unique good or service to a customer at a premium price c. The product life cycle stage marked by decreases in the product's market share d. A business strategy in which the business concentrates on one part or segment of the market and tries to meet the demands of that segment

d. A business strategy in which the business concentrates on one part or segment of the market and tries to meet the demands of that segment

What name is given to a form of licensing in which a company agrees to provide a name, logo, methods of operation, advertising, products, and other elements associated with the company's business, in return for a financial commitment and the agreement to conduct business in accordance with the company's standard of operations? a. Licensing b. Exporting c. Outsourcing d. Franchising

d. Franchising

What name is given to the evaluation of the organization's internal strengths and weaknesses and the opportunities and threats associated with the business's external environment? a. Business-level strategy b. Corporate strategy c. Strategic management d. SWOT analysis

d. SWOT analysis

In SWOT analysis, an environmental circumstance that is potentially beneficial for the firm is called a. a strength. b. a threat. c. a weakness. d. an opportunity.

d. an opportunity.

When a firm offers a unique good or service to a customer at a premium price, it is following the business-level strategy of a. market penetration. b. cost leadership. c. premium branding. d. differentiation.

d. differentiation.

You are the executive vice president of Banana Computer, Inc. You have a competitive machine, but your major competitor has the benefit of large-scale production, making its products less expensive to manufacture. In order to remain price-competitive, you send your parts and subassemblies to Mexico for the final stage of assembly, thereby taking advantage of a. direct investment. b. contract manufacturing. c. a strategic alliance. d. outsourcing.

d. outsourcing.

Strategic planning differs from general planning in that it focuses on a. creating a distinctive corporate mission. b. the rational allocation of resources. c. internal problems affecting long-term problems. d. the external environment and long-term goals.

d. the external environment and long-term goals.

countertrade agreements

exporting that involves bartering products for other products instead of currency.

dumping

occurs when a country or business firm sells products at less than what it costs to produce them.

exchange controls

restrictions on the amount of a particular currency that may be bought or sold.

product life cycle

the cycle of birth, growth, maturity, and decline of a product

goal

the final result that a firm wishes to achieve

tactical goals

the intermediate goals of the firm, which are designed to stimulate actions necessary for achieving the strategic goals.

gross domestic product

the market value of a nation's total output of goods and services for a given period

infrastructure

the physical facilities that support its economies activities, such as railroads, highways, ports, airfields, utitilites and power plants, schools, hospitals, communication systems, and commercial distribution systems.

growth

the product life cycle stage characterized by dramatic increases in the products market share

declin

the product life cycle stage marked by decreases in the product's market share

maturity

the product life cycle stage when the products market share either slows or has no growth

importing

the purchase of goods and services from a foreign source

direct investment

the purchase of overseas production and marketing facilities; a company may control the facilities outright, or it may be the majority stockholder in the company that controls the facility.

exchange rate

the ratio at which one nation's currency can be exchanged for another nation's currency or for gold.

exporting

the sale of goods and services to foreign markets

corporate strategy

the scope and resource deployment components or strategy for the enterprise as a whole

distinctive competence

what a firm does well relative to its competitors