business

voluntary action

voluntary commitment to various interest groups, causes, and social problems (e.g., donating supplies to schools). Fitppl, a health foods brand, sponsors organized volunteer cleanups of waterways and other natural areas

forecasting

attempts to predict more precisely the changes in and the future values of important variables. For example, in making capital investments, firms forecast interest rates. In deciding to expand or downsize a business, firms may forecast the demand for goods and services and the supply and demand of labor

mergers and acquisitions

takes place when two or more firms combine, or one firm buys another, to form a single company. Mergers and acquisitions can offer greater efficiency from combined operations or give companies relatively quick access to new markets or industries.

planning

is specifying the goals to be achieved and deciding in advance the appropriate actions needed to achieve those goals

Cost Disadvantages Independent of Scale (Barriers to entry)

Established companies may be able to keep their costs lower because they are larger, have more favorable locations, and already have needed assets.

distribution channel

Existing competitors may have such efficient distribution channels that new entrants struggle to get their goods or services to customers. For example, established food products have supermarket shelf space. New entrants must displace existing products with promotions, price breaks, intensive selling, and other tactics.

capital requirements

Getting started in some industries, such as building aircraft or operating a railroad, may cost so much that companies won't even try to raise such large amounts of money. This helps explain why Boeing and Airbus have no direct competitors in manufacturing large, long-haul aircraft

controlling

is about monitoring performance and making necessary changes in a timely manner. By controlling, managers make sure the organization's resources are being used properly and the organization is meeting its goals for quality and safety.

management

The process of accomplishing the goals of an organization through the effective use of people and other resources. to be effective to achieve goals to be efficient achieve goals with minimal waste of resources—that is, to make the best possible use of money, time, materials, and people.

government policy

When a firm's patent for a drug expires, other companies can enter the market. The patent recently expired on Merck's asthma and allergy medicine, Singulair. At the same time, several research projects to introduce new, patented medicines were delayed or failed, so Merck had to lay off thousands of employees to cut costs.48

brand identification

When customers are loyal to a familiar brand, new entrants have to spend heavily. Imagine the costs involved in trying to launch a new chain of fast-food restaurants to compete against Taco Bell or Panda Express. Similarly, Google's name change to Alphabet surprised many people because of its brand dominance in the search engine domain. The company hopes the name change and subsequent restructuring will encourage faster growth among its younger, less-known ventures.

final consumer

a customer who purchases products in their finished form

divestiture

a firm selling one or more businesses

cooptation

absorbing new elements into the organization's leadership structure to avert threats to its stability or existence. Many universities invite wealthy alumni to join their boards of directors

strategic manuevering

an organization's conscious efforts to change the boundaries of its task environment

Middle-level managers

are located in the organization's hierarchy below top-level management and above the frontline managers and team leaders. Sometimes called tactical managers, they are responsible for translating the general goals and plans developed by strategic managers into more specific objectives and activities

demographics

are statistical characteristics of a group or population. An organization's customers, a university's faculty and staff, or a nation's current labor force can all be described statistically in terms of their members' ages, genders, education levels, incomes, occupations, and so forth.

Top-level managers

are the organization's senior executives and are responsible for its overall management. Top-level managers, often referred to as strategic managers, focus on the survival, growth, and overall effectiveness of the organization.

intermediate consumer

buy raw materials or wholesale products and then sell to final consumers, as when Sony buys components from Seagate (hard drives) and Bosch (motion sensor chips) and uses them to make consoles. These organizations are referred to as business-to-business (B2B) companies. Types of intermediate customers include retailers, who buy from wholesalers and manufacturers' representatives and then sell to consumers, and industrial buyers, who buy raw materials (such as chemicals) to be converted into final products. Intermediate customers make more purchases than individual final consumers do.

prospectors

companies that continuously change the boundaries for their task environments by seeking new products and markets, diversifying, and merging or acquiring new enterprises

defenders

companies that stay within a stable product domain as a strategic maneuver

barriers to entry

conditions that prevent new companies from entering an industry

competitive environment

consisting of rivalry among existing competitors and the threat of new entrants, the threat of substitute and complementary products, and the bargaining power of suppliers and buyers.

buffering

creates supplies of excess resources to meet unpredictable needs. On the input side, organizations establish relationships with employment agencies to hire part-time and temporary help during rush periods when labor demand is difficult to predict.

political action

efforts to influence elected representatives to create a more favorable business environment or limit competition (e.g., issue advertising or lobbying at state and national levels). In 2019, the top 20 special interest groups, like companies, labor unions, and other organizations, spent more than $13 billion in efforts to influence elected officials and candidates in the United States.

team leaders

engages in a variety of behaviors to achieve team effectiveness

legal action

engaging the company in a private legal battle (e.g., lawsuits against illegal music copying). Singer Ariana Grande sued the fashion retailer Forever 21 for using unlicensed images from her music videos and using a look-alike model in its promotional Instagram account.

public relations

establishing and maintaining favorable images in the minds of people in the environment (e.g., sponsoring sporting events). The oil and natural gas industry advertises its role in a country's energy independence

Competitive aggression

exploiting a distinctive competence or improving internal efficiency for competitive advantage (e.g., aggressive pursuit of green goals). Kohl's was the first U.S. retailer to achieve carbon neutrality or zero CO2 emissions.85

social capital

goodwill stemming from your social relationships

coalition

groups that act jointly on political initiatives. Local businesses may band together to curb the rise of employee health care costs, and organizations in some industries have formed industry associations and special interest groups

environmental scanning

includes searching for information that is not immediately evident and sorting through that information to interpret what is important

competitive pacification

independent action to improve relations with competitors (e.g., helping competitors find raw materials). Austin Beerworks, a craft brewery, promotes the beer industry as a whole through Beer-to-Go legislation and by building relationships with other local brewers

interpersonal and communication skills

influence the manager's ability to work well with people. These skills are often called people skills or soft skills. Managers spend the great majority of their time interacting with people,44 and they must develop their abilities to build trust, relate to, and communicate effectively with those around them. Your people skills often make a difference in the levels of success you achieve. LinkedIn founder Jeff Weiner said, "The biggest skills gap in the United States is soft skills. . . . Everyone's so keenly focused on technology and AI. It's related though. . . . If you don't have that foundation in place, it becomes almost prohibitively complex to learn multiple skills at the same time."

Conceptual and decision skills

involve the ability to identify and resolve problems for the benefit of the organization and everyone concerned. Managers use these skills when they consider the overall strategy of the firm, the interactions among different parts of the organization, and the role of the business in its external environment. Managers (like Mary Barra of GM) are increasingly required to think out of their comfort zones to make periodic and major changes in the way they do business to ensure the long-term success of their missions and organizations

leading

is stimulating people to be high performers. It includes motivating and communicating with employees, individually and in groups. Leaders maintain contact with people, guiding and inspiring them toward achieving team and organizational goals. Leading takes place in teams, departments, and divisions, as well as at the tops of large organizations

scenarios

is that they help managers develop contingency plans for what they might do given different outcomes.72 For example, as a manager, you will be involved in budgeting for your area. You will almost certainly be asked to list initiatives you would eliminate in case of an economic downturn and new investments you would make if your firm does better than expected.

technical skills

is the ability to perform a specialized task that involves a certain method or process. The technical skills you learn in college will give you the opportunity to get an entry-level position or change careers; they will also help you as a manager. For example, your accounting and finance courses will develop the technical skills you need to understand and manage an organization's financial resources.

domain selection

is the entrance by a company into another suitable market or industry. For instance, the market may have limited competition or regulation, ample suppliers and customers, or high growth. For example, Anheuser-Busch recently entered the fast-growing hard seltzer market by acquiring Bob & Viv's Spiked Seltzer.95 Using its brewing tanks, the beverage company can make both beer and seltzer to broaden its offered goods.

innovation

is the introduction of new goods and services. Your firm must adapt to changes in consumer demand and to new competitors. Products don't sell forever; in fact, they don't sell for nearly as long as they used to because so many competitors are introducing so many new products all the time

organizing

is the process of assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals. Organizing activities include attracting people to the organization, specifying job responsibilities, grouping jobs into work units, marshaling and allocating resources, and creating conditions so that people and things work together to achieve maximum success.

knowledge management

is the set of practices aimed at discovering and harnessing an organization's intellectual resources—fully utilizing the intellects of the organization's people. Knowledge management is about finding, unlocking, sharing, and capitalizing on the most precious resources of an organization: people's expertise, skills, wisdom, and relationships

smoothing

leveling normal fluctuations at the boundaries of the environment. For example, during winter months in the north, when automobile sales drop off, dealers commonly cut the price of their in-stock vehicles to increase demand.

Benchmarking

means identifying the best-in-class performance by a company in a given area—say, product development or customer service—and then comparing your processes with theirs. A benchmarking team collects information about its own company's operations and those of the other firm in order to determine gaps.

environmental uncertainty

means that managers do not have enough information about the environment to understand or predict the future.

flexible process

methods for adapting the technical core to changes in the environment

contracts

negotiating an agreement between the organization and another group to exchange goods, services, information, patents, and so on. Suppliers and customers, or managers and labor unions, may sign formal agreements about the terms and conditions of their future relationships. These contracts are explicit attempts to make their future relationship predictable.

diversification

occurs when a firm invests in different types of businesses or products or when it expands geographically to reduce its dependence on a single market or technology. Google, which earns the bulk of its revenues from advertising on its ubiquitous search engine, has changed its name to Alphabet (and changed its structure) in order to better manage its growing diversification.

frontline managers

or operational managers, are lower-level managers who execute the operations of the organization. These managers often have titles such as supervisor or sales manager. They are directly involved with nonmanagement employees, implementing the specific plans developed with middle managers.

independent strategies

strategies that an organization acting on its own uses to change some aspect of its current environment

cooperative strategies

strategies used by two or more organizations working together to manage the external environment

Dynanism

the degree of discontinuous change that occurs within the industry. High-growth industries (e.g., smartphones) with products and technologies that change rapidly are more uncertain than stable industries where change is less dramatic and more predictable (e.g., utilities)

competitive intelligence

the information necessary to decide how best to manage in the competitive environment.

complexity

the number of issues to which a manager must attend, and the degree to which they are interconnected. Industries (e.g., the automotive industry) with many different firms that compete in vastly different ways tend to be more complex—and uncertain—than industries with only a few key competitors (e.g., airplane manufacturers

empowerment

the process of sharing power with employees to enhance their confidence in their ability to perform their jobs and contribute to the organization

Macroenvironment

which includes the general elements in the external environment that potentially can influence strategic decisions. , the five components of an organization's macroenvironment include laws and regulations, the economy, technology, demographics, and social values.

cost competitiveness

which means keeping costs low enough so the company can realize profits and price its products (goods or services) at levels that are attractive to consumers. Toyota's efforts to trim product development processes are also partly aimed at cost competitiveness. Making the processes more efficient through collaboration between design and manufacturing employees eliminates wasteful steps and procedures. Needless to say, if you can offer a desirable product at a lower price, it is more likely to sell.