MGMT Quiz 3 Chapters 5+6

Identification of Core Competencies

Rare/Valuable/Organized/Inimitable

SMART goal acronym

S=Specific M=Measurable A=Attainable R=Relevant T=Time-Based

Organizational 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

Operational Planning

Specific descriptions of actions that must be taken by a work group to carry out the tactical plans -Plans that are intended to achieve operational goals

Strategic decision making

Structured, Semi structured, and unstructured *this becomes important because you do not want senior level management that is responsible for strategic decision within a company, making structured decisions and you don't want them making semi structured either; the abilities should match the person within that job to the type of decision making (senior level should be doing unstructured decision making) *When we think about strategic decision making, we need to think about the kind of decisions being made, who is making them, and who they are assigned to dependent upon level of employment should be assigned correctly

Business-level strategy

The area of responsibility usually assigned to the divisional-level managers -Business-level strategy refers to the actions that an individual strategic business unit should undertake to meet corporate strategy. -The major general business strategies are: ◦Cost leadership (attempting to achieve the overall lowest cost structure in an industry) - Walmart ◦Differentiation (offering a unique good or service to a customer at a premium price) - usually this is the sign of stuff ◦Focus (concentrating on meeting the demands of one part or segment of the market) -The proper business strategy is determined, in part, by the product life cycle.

Product Life Cycle

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

SWOT Analysis

The evaluation of the organization's internal strengths and weaknesses and the opportunities and threats associated with the business's external environment (third step in strategic management process)

Tactical Goals

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

Gross Domestic Product (GDP)

The market value of a nation's total output of goods and services for a given period GDP per capita is GDP in relation to population

Quota

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

(Foreign) 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 facilities

Corporate strategy

The scope and resource deployment components of strategy for the enterprise as a whole -Corporate strategy is concerned with the organization as a whole, particularly which business or set of businesses the organization should be in. -If the company operates many businesses, corporate-level strategy should account for the relationship among these. -Three general corporate-level strategies are: ◦Diversification ◦Joint ventures Divestment

Embargo

The suspension of trade in a particular product by the government

Gross National Product (GNP)

The total value of goods produced and services provided by a country during one year, equal to the gross domestic product plus the net income from foreign investments Total domestic and foreign output claimed by residents of a country, consisting of gross domestic product, plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents

Core Competencies

These are the resources and capabilities that comprise the strategic advantages of a business. A modern management theory argues that a business must define, cultivate and exploit its core competencies in order to succeed against the competition -should be done after making a mission statement but before the SWOT analysis

Ad valorem tariff

This type of tariff is based on the value of the item

Distinctive competence

What a firm does well relative to its competitors

Unstructured decision making

What makes it unstructured because there are a lot of variables that need to be considered, moreover there is additional risk with the amount of additional decisions Senior level management will be making these decisions

Joint Venture

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

Tactical Planning

Describe how the strategic plans may be implemented and are developed for each part of the organization -plans that are designed to achieve tactical goals

Stating Goals

-A goal is the final result that a firm wishes to achieve and contains several components: ◦The attribute sought ◦The target to be achieved ◦An index to measure progress ◦A time frame -Organizations set goals for a variety of areas, including market standing, innovation, productivity, physical or financial resources, profitability, manager performance and development, worker performance, and public responsibility -Organizations can develop three types of goals: strategic goals, tactical goals, and operational goals -Achieving operational goals leads to fulfillment of the tactical goals, which leads to the fulfillment of the strategic goals

Evaluating the Results of the Plan

-A well-done assessment of the outcomes that resulted from the plan provides valuable feedback. -The company learns which goals are possible and which may not be, as well as which steps can be implemented easily and which cannot be Reintegrative process, will loop back over once the process is over and it will start over again

Specifying Assumptions about the Future

-All planning involves making some assumptions about the future of both the organization itself and the external environment. -If the company can reliably assume that the organization and the external environment will remain relatively stable and similar to that of the recent past, planning is much easier. -If the present status of the organization or its external environment is expected to change in an unpredictable fashion, planning obviously becomes much more difficult and complex.

Creating a mission statement

-An organization's mission defines its fundamental purpose—what it values and how it wishes to conduct itself. -A mission statement is a formal written declaration of the organization's purpose that contains all, or at least most, of the following: ◦The firm's philosophy ◦Its primary products and markets ◦The intended geographic scope ◦The nature of the relationships between the firm, its stakeholders, and society

Nature of Planning

-At the most basic level, a plan is a road map that answers the fundamental question, "How do we get there from here?" -Planning does not necessarily guarantee success. -However, companies and managers who develop specific plans have a definite head start in reaching goals and a distinct advantage over those who do not adequately plan.

Assessing the Current Situation

-Before a company can make any plan, it must evaluate the current status of the internal organization by determining: ◦The extent of the organization's resources: financial assets, employee skills, technology, and data about the work process ◦The firm's working relationship with its suppliers, financial backers, and consumers *idea of core competencies!

Managing Global Business

-Competing in an increasingly global economy provides both opportunities and challenges for today's managers and affects how they engage in planning, organizing, leading, and controlling. -Global managers must guard against the self-reference criterion, which involves an often unconscious referencing to the way things are done in one's own culture and experiences in making global business decisions.

Implementing Strategy

-Factors to keep in mind during the implementation phase: ◦Structure—The firm's hierarchy or pattern of the organization ◦Systems—The procedures or guidelines that firms use in the course of doing business ◦Skills—Organization members' knowledge of the technical aspects of the business's goods or services and how to apply this knowledge, as well as general work abilities ◦Staffing—Finding and placing employees in jobs for which they have the appropriate skills ◦Shared values

Strategic management process

-First, the organization should identify its mission and strategic goals -Second, Dr. Richardson says to identify core competencies and to figure out the values of the company the products/services provided -Third, the organization should conduct a SWOT analysis analysis - identify the strength, weaknesses, opportunities, and threats it faces -Fourth, the organization should formulate a strategy to capitalize on its greatest strengths and to keep its organizational weaknesses from being exploited by competitors and other factors in the environment -The final steps are implementing, evaluating, and controlling the strategic plan

Implementing the Plan

-Implementation is carrying out the steps specified in the plan, where the organization goes from the "thinking" mode to the "doing" mode. -Implementation requires the coordination of people, resources, and activities. -The implementation stage is where many plans come undone. -The implementation stage therefore requires realistic decision making at each step of the implementation.

Evaluating the Gap between Current Position and Goals

-Once the organization has assessed its present status and set goals for the future, the next step is to determine how much difference there is between the current situation and organizational goals—the gap between actual and anticipated states. ◦Are the changes needed to close this gap major or minor? Is it necessary to develop a plan that will require a dramatic amount of time, effort, and resources by the organization or merely an increase in t

The Benefits of Planning

-Planning benefits organizations by forcing managers to focus on the organization's present status and environment. -Planning also provides a mechanism for coordinating the activities of groups and individuals. -Planning can help create an environment conducive to motivating managers and employees. -The focus and coordination arising from planning can lead to higher performance levels, as organizational members recognize the firm's overall goals.

Political-Legal Environment

-Political considerations affect international business daily as governments enact tariffs or other types of trade restrictions in response to political events -Managers engaged in international trade must consider the relative stability of the countries in which they wish to do business -A firm that decides to enter the international marketplace must contend with the laws of its own nation, international laws, and the laws of the nation with which it will be trading

Difficulty in Setting Goals

-Setting goals can be a difficult task in an organization because ◦Every organization has many groups of stakeholders, both internal and external, and each group has its own goals. ◦The environment may change in an unforeseen manner and make the plans impossible to carry out. ◦Organizational rewards may reinforce a short-term orientation. ◦Good planning requires courage and risk taking.

Strategic Management pros and cons

-Some critics argue that strategic management is often all about planning, with little emphasis placed on implementation. -Strategic management can be costly and time consuming for the organizational members involved. -Many charge that strategic management's preoccupation with a long-term time frame is unrealistic, given the short-term expectations of stockholders and other financial stakeholders.

Levels of Strategy

-Strategic planning can be discussed at a number of levels: ◦Ethics and compliance ◦Corporate ◦Business ◦Functional -The different levels of strategies overlap, as do the managers usually associated with the various levels.

Two Major tools of Corporate Strategic planning (portfolio analysis)

-The Boston Consulting Group's Growth/Share matrix, a four-grid matrix that identifies strategic business units (SBUs) as stars, question marks, cash cows, and dogs, relative to the business's market growth rate and relative market share -The GE matrix, which places SBUs into one of nine cells of a matrix, depending on their industry attractiveness and business strength

Creating the Plan

-The plan is the document that designates methods, time frames, alternate procedures, and who is to implement it. -The process of creating a plan can be broken down into four basic steps: ◦Determining alternatives ◦Evaluating alternatives ◦Selecting an alternative Specifying the steps What is plan B if plan A does not work out? Do we need to make a plan B?

Effective Planning

-To facilitate planning, goals and plans should be communicated to all members of the organization so that they have an accurate idea of what the organization is attempting to accomplish. -Contingency plans—alternatives to the original plan that allow the organization to continue to function effectively in the face of change—should be developed. -Involving many employees in planning is effective in achieving involvement throughout the organization.

International Trade Facilitators

-Trade facilitators such as the World Trade Organization, the World Bank, the International Monetary Fund, and the Organization of Economic Cooperation and Development foster global business by working to reduce trade restrictions and loaning money to developing nations. -Individual countries may offer incentives to promote import and export trade, such as loans and free trade zones.

Regional Trade Alliances and Agreements

-Various regional trade alliances and specific markets have created both difficulties and opportunities for organizations engaging in global business. -These include the United States, Mexico, Canada Trade Agreement (USMCA formerly NAFTA), the European Union (EU), the Association of Southeast Asian Nations (ASEAN), and the Southern Common Market (Mercosur).

The Economic environment

-When considering doing business in another country, managers must look at the other country's level of economic development, which is commonly measured through gross domestic product -They also look at the other country's infrastructure (the physical facilities that support the country's economic activities) -The exchange rate (the ratio at which one nation's currency can be exchanged for another nation's currency or for gold) is also a factor to consider

Steps in Planning

1. Create the mission statement 2. Assess the current situation 3. State goals 4. Evaluate the gap between current position and goals 5. Specify assumptions about the future 6. Create the plan 7. Implement the plan 8. Evaluate the results of the plan

Four basic steps of creating a plan

1. Determining alternatives 2. Evaluating alternatives 3. Selecting an alternative 4. Specifying the steps

Focus

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

Differentiation

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

Cost Leadership

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

Levels of Organizational Involvement in Global Business

A company may be involved in international trade at several levels, each requiring a greater commitment of resources and effort Levels include: 1. exporting/importing 2. countertrade agreements 3. trading companies 4. Licensing and franchising 5. Contract Manufacturing 6. Joint Ventures and Strategic alliances 7. (Foreign) Direct Investment

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 implement 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

Mission

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

Franchising

A form of licensing in which a company - the franchiser - 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 -They administered the WTO agreement, so as a member country you have to agree to about negotiation, handling disputes, trade policies internally. Disagreements in trade is taken to the WTO and they help diffuse situations; enforce agreements that are made for world trade and handle trade disputes between countries

Strategic alliance

A partnership formed to create competitive advantage on a worldwide basis

Strategic Business Unit

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

Plan

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

Fixed tariff

A specific amount of money of money levied on each unit of a product brought into the country

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

Import Tariff

A tax levied by a nation on goods bought outside its borders and imported into the country Two types: fixed and ad valore

Licensing

A trade agreement 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

Balance Score Card

A way of identifying what your stakeholders believe you're doing and whether it is the right thing; it another tool that is used that tells us look at what your financial condition is think about your shareholders believe the financial condition is -are they satisfied with financial condition, if not then why? -what do your customers think about you and your company; are they satisfied with product/service? -what do you think about we can become a learning organization? Are we continuing to learn and grow? -what are our processes and how do we appear to ourselves - what do we think about ourselves? *another tool to use in process of looking at ourselves like the core competencies

GE Matrix

Does not have the popularity of BCG matrix - used y axis of industry attractiveness a d x-axis of business strengths (in use with BCG matrix can evaluate an entire company)

Countertrade Agreements

Exporting that involves bartering products for other products instead of for currency

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 -basically an international financial institution to provides loans; primary responsibility is the loans to developing countries

Hofstede's Cultural Dimension Theory

Geert Hofstede, a leading expert in cultural values classification, developed a model of 5 dimensions of natural culture that help to explain basic value differences in culture. The model distinguishes cultures according to the following five different dimensions: 1. Power distance 2. Individualism/collectivism 3. Masculinity/Femininity 4. Uncertainty avoidance 5. Long-term orientation

Sociocultural environment

Includes culture, language, body language, local customs, time perception, religious considerations, and more The Hofstede framework and the GLOBE project are two common frameworks for evaluating a country's culture Want to do business where you are not going to want to offend the people you are doing business with - this is very important -sensitivity to things that will offend people, cultural awareness to the culture you are dealing with -do not take a superiority position towards other people in the world just because we are from the US

Outsourcing

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

Exporting

Level of organization involvement; the sale of goods and services to foreign markets

Functional strategy

Managers at the functional level will typically develop short-term goals and strategies but their primary purpose is to implement selected aspects of the firm's strategic plan

The global business environment

Managers considering international business must research a country's sociocultural, political-legal, and economic environments before choosing an appropriate level of involvement and operating strategies *Much of what we talked about in the macro environment also applies to doing business international as well - where and how we are doing business internationally this applies

Trading Company

Acquires goods in one country and sells them to buyers in another country; links buyers and sellers in different countries to facilitate trade

Strategic management

All the processes an organization undertakes to develop and implement its strategic plan -central to strategic planning and strategic management is the development of a strategy, a course of action for implementing strategic plans and achieving strategic goals

Contingency Plans

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

Organization of Economic Cooperation and Development (OECD)

An international economic organization comprised 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 -These people do data collection, analysis, and have discussions where they get together and talk about assisting developing nations to improve their economic standing

Structured Decision making

Not a lot of variables and things are clearly defined, things are done in an order and systematic way Low-level mangers make these decisions

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

Masculinity/Femininity

One of Hofstede's five cultural dimensions; involves the emotional characteristics valued within a culture. For instance, some cultures value characteristics such as assertiveness, competitiveness, and materialism - traditionally associated as masculine traits

Uncertainty Avoidance

One of Hofstede's five cultural dimensions; refers to how a culture handles uncertain situations

Power Distance

One of Hofstede's five cultural dimensions; refers to how much perceived power there is between managers and subordinates. In cultures with higher of these, it would be less acceptable for a subordinate to question a manager's decision

Individualism/Collectivism

One of Hofstede's five cultural dimensions; related to whether an employee tends to approach a situation more from an individual level or as a team

Long-term orientation

One of Hofstede's five dimensions; cultures tend to differ on how they perceive time. Some cultures have a very long time horizon or orientation, while others want things to happen quickly

International Monetary Fund

Basic mission is to oversee the international monetary system and help ensure stable currencies and exchange rates throughout the world -they do loan money but not their primary function; they work to build infrastructure within countries so that they can do their own development in underdeveloped countries (consulting group) as a primary function; work to facilitate trade and do other things as other functions

Foreign Corrupt Practices Act (FCPA)

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

Strategic Planning

Plans that focus on reaching the general, long-term strategic goals of the organization and usually address the organization's relationship to its environment -plans that are intended to achieve strategic goals

Purchasing Power Parity (PPP)

Popular metric used by macroeconomic analysts that compares different countries' currencies through a "basket of goods" approach Allows for economists to compare economic productivity and standards of living between countries A reflection of the economy and how the economy is doing; more of a reflection of the ability to buy things within an economy (buying a house around here and buying a house in CA or NYC; housing is incredibly expensive in those places; a person at a fixed income of 150,000 they could handle a larger home here rather than something of the same size in CA or NYC)

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

BCG Matrix

developed in order to make investment decisions, but can be used in planning -y axis looking at the potential for growth between product and industry -x axis looking at what the market share *a company that has a high potential growth rate and a high market share (Amazon) the BCG refers to them as a star (will quantify all elements in terms of growth rate and market share with life cycle of product and where it will be in the future) *not much growth but the market share is quite high, they are referred to as a cash cow (McDonalds) *low market share but potential for high growth (Tik Tok) are called question marks *if there is a low market share and low growth rate, companies are referred to as dogs (traditionally brick and mortar companies)

Strategic goals

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

Importing

level of organizational involvement; the purchase of goods and services from a foreign source

Semi-structured decision making

requires additional variables and additional information to be able to process, not very complex but different level of complexity in this type of decision than in structured decision making Middle level managers are making these decisions

Four components of strategy

scope, resource development, synergy, and distinctive competence

Levels of Planning

strategic planning, tactical planning, operational planning *The three levels of plans all address the same topics and are all related to attaining the organization's strategic goals

GLOBE Project

the Global Leadership and Organizational Behavior Effectiveness project was begun in 1993 and intended to identify different cultural dimensions in its study of leadership In addition to Hofstede's five cultural dimensions, this project studied humane orientation, assertiveness, performance orientation, gender egalitarianism, and future orientation

Goal

the final result that a firm wishes to achieve