Management EXAM 4
uses parts from over 20 different countries
Which is true about the Apple iPhone?
does not intend to expand globally but does export some products.
An export strategy is used when a global company
power distance, uncertainty avoidance, performance orientation
The GLOBE project identified differences in national culture. These nine dimensions include
The long term interest of the company
Tom must decide between two employees for a promotion. One is struggling financially and needs the raise. The other is more competent and enthusiastic. In making a decision, he might consider
Top-down controls
Budgets are financial controls that tell a manager how much he can spend to achieve his goals. Budgets are an example of
the ability to keep up with rapid technological and organizational changes
Economists historically found business advantages in land, labor, or capital. Today, competitiveness is based on
very low
In the United States, old t-shirts may be donated to secondhand stores. Because shipping rates are ________, the stores can make a profit shipping the t-shirts to Africa.
standardization
A ________ strategy produces efficiencies by centralizing many common activities, such as product design and technical expertise, gaining production economies of scale, simplifying the supply chain, and reducing marketing costs.
adapts to local needs and markets
A global company uses a multidomestic strategy when it
an employee performance review.
An example of a feedback control is
high for the industry
Before it went bankrupt in 2008, Lehman Brothers was leveraged over 30 to 1, meaning they had more than $30 in assets to $1 in equity. It also meant that if their asset values declined 3.3%, the loss would wipe out their equity. Lehman Brothers' level of leverage was probably
cost
Microsoft had an unusual approach to software bugs. They would often release software (such as Microsoft Windows) with bugs. Then customers would use it, find the bugs, and report them back to Microsoft. This reduced Microsoft's ________ to find the bugs, and it identified which bugs were important to customers.
getting materials from one place to another. It includes shipping and storing
Research indicates that global market value of logistics has surpassed US $4 trillion in 2015, more than 10% of global GDP. Logistics means
compare his turnover ratio to other grocery stores' ratios
The Humongous Food Store (HFS) has a turnover ratio of 12. The turnover ratio is revenue divided by average inventory. This means, in a sense, that they sold everything in the store once per month. But HFS is losing money. The manager should
Follow the 7 broad
The US Sentencing Commission Guidelines require most companies to create an ethics program. This can be challenging, so most companies
enforcing the program with disciplinary action for anyone engaging in unethical behavior
The compliance steps of the US Sentencing Guidelines include
lower product returns and greater customer loyalty.
Toyota has made a science of door closing. They measure the exact speed at which a car door should close in order to latch, without excess effort. They measure each car on the production line to see that it falls within the acceptable range. Because of this control, Toyota benefits from
compare it to the industry average
Wiley Coyote invests in Acme Manufacturing because he buys so much gear from them. Acme's debt/equity ratio is 1, meaning they have $1 of debt for every $1 of equity. What should Wiley do with this number?
adjusting the color
An example of a concurrent control is
an exporting strategy
If a company does not intend to expand globally, but exports some products without customizing for international markets, it should organize around
an operational control.
Suliman manages a manufacturing plant in North Carolina. Customers are unhappy over late deliveries. Inventories of some parts are high. Others are critically short. Senior management told him he has 3 months to become profitable or the plant will close. In this case, the plant's income statement is
to conduct regular training sessions
The key to an ethical company is strong communication of the expectations. One recommended method, also required by the US Sentencing Guidelines, is
lead to better organizational peformance
When properly designed, organizational controls should
Ethics
A broad survey of consumers shows that many factors affect reputation but that ________ is the primary concern. Customers will switch to other brands when a company appears in headlines reporting bad behavior.
essentially a moral compass
A code of ethics is
treats the whole world as one market with little meaningful variation.
A standardization strategy is used when a global company
a phone number or other method for employees or other stakeholders to report suspected acts of impropriety, such as fraud, waste, abuse, misconduct, or violations of policy, laws, or regulations.
A whistleblower hotline is
Personal virtue
Allison has been working long hours on a difficult assignment. Her boss won't know the difference if she lets the quality slip a bit and goes home to her children. What principle might help Allison in this decision?
the GLOBE project
An international team of scholars researching a theory of the relationship between culture and societal, organizational, and leadership effectiveness from 62 different societal cultures is known as:
poor reputation
An unethical management will pay the price in various ways including
limit the maximum amount allowed on each.
Controls start with handling cash. On average, fraud takes 5% from US business revenues. It pays to pay attention. For example, a company may give some employees company credit cards and
delegates spending authority
Donna runs a chain of barber shops. She cannot be everywhere at once or make every decision. She estimates revenue and gives each manager a budget for spending. This way, each manager can make the local decisions about staffing and supplies. Donna
countries, like the North American Free Trade Agreement.
Globalization of business first requires agreements between
strategic controls
If an organization tracks its strategy implementation, looks for problem areas, evaluates whether the problem areas indicate any weakness in the strategy, and makes any necessary changes, then it is using:
decreased responsiveness
If controls are well designed and implemented, they provide all of these types of benefits, EXCEPT:
good for workers in Ethiopia.
In 2015, Calvin Klein looked to Ethiopia to manufacture its clothing. Pay was as low as $21 a month there. The work was
CSR
Investors will punish companies that suffer bad news. For example, if a restaurant reports contamination, investors will sell the stock. But economic studies suggest that some activities can mitigate the market reaction. Institutional investors will act more cautiously if the company has a good ________ reputation
assertiveness, future orientation, and humane orientation.
The GLOBE project identified differences in national culture. These nine dimensions include
World Trade Organization (WTO)
The ________ oversees the implementation and administration of agreements between member nations.
Proximity of the decision maker to the victim or beneficiary of the decision
The degree of importance of an ethical decision depends, in part, on
long-term profitability
The relationship between communities and local employers is complex. President Trump and Governor Scott Walker announced in 2017 that Foxconn, a Chinese firm, would build a plant in Wisconsin and employ 13,000 people in the state. Wisconsin offered tax breaks that totaled $230,000 per job. Another CSR concern is
documentary training
Training an employee for an overseas assignment represents a significant investment for the company. The cost of a three-year assignment averages $1 million. The first and usually least expensive step is textbook and classroom learning, also called
Punishing violators caught defrauding customers
Wells Fargo was fined for customer fraud in 2016. They ignored employee reports of fraud. But they did some things right: they had a code of ethics, investigated when customers reported fraud, and enforced the ethics program by
customer retention
What is an example of a measure for the customer analysis area of the balanced scorecard?
transnational strategy
Cost pressure from international competitors pushes companies toward greater scale and efficiency. But some products must also meet local customer needs. Preference for soap scents, for example, differs by country and region. Global soap manufacturers therefore try to balance these pressures with a
Can be held legally responsible, despite its best efforts to prevent unethical behavior.
If an employee's actions go against company policy, the company
bureaucratic controls
Most companies use some top-down controls, such as rules, regulations, and formal authority, to guide performance. Top-down controls are also known as
analyze
Professor Karl's class has a DFW rate of 75%! DFW stands for dropped, failed, or withdrawn, and it shows the percentage of students who do not succeed. The college wants to keep DFW rates below 30 percent, on average. The class is Business Statistics, a difficult class. Perhaps the students are ill-prepared, or perhaps Professor Karl's course is harder than necessary. What step should the Dean take next?
also requires that any changes to an established code of ethics be disclosed to the public
The US Congress passed the Sarbanes-Oxley Act (SOX) in 2002 in reaction to accounting abuses. It requires that public companies establish and enforce a code of ethics. SOX ________ .
financial cost of introduction and implementation of controls
There is a price to pay in using controls. What are examples of the price of controls being imposed?
the cost of doing business
To improve quality, companies need to purchase new software and equipment, hire and train employees, conduct studies, and consult with experts. These activities add to
"honest and ethical conduct; full, fair, accurate, timely and understandable disclosure in periodic reports" and "compliance with applicable governmental rules and regulations."
To meet the standards of the Sarbanes-Oxley Act (SOX), a code of ethics must include standards to promote
gross margin
What is an example of a measure for the financial analysis area of a balanced scorecard?
NOT order processing time
What is an example of a measure for the learning and growth area of the balanced scorecard?
trading dollars per employee
What is an example of a measure for the learning and growth area of the balanced scorecard?
financial risk is lower because he need not make a direct investment.
A franchiser like McDonald's risks a loss of quality control in foreign countries. The franchiser must ensure that the local owner/manager can implement the quality control measures to safeguard the corporate brand. The franchiser's
NOT adapts to local needs and markets
A global company uses a transnational strategy when it
lower product returns
Altec Electronica Chihuahua is a Mexican producer of electronic products. The company's fragile electronics replacement parts were often damaged as they moved to customers. Altec designed a reusable packaging that protected the parts. Altec expects to see
Benefits from having a steady, profitable outlet for their products.
General Motors, a car manufacturer, has a tight relationship with its parts supplier, Delta. GM and Delta coordinate on engineering designs and share inventory information. When GM does well, Delta
Hire someone who is naturally inclined to behave in an ethical manner
It is better to
delegated the authority and decisions.
Legg Mason's senior management was concerned about the risk that portfolio managers were taking. Rather than dictate changes in the portfolios, they gave each manager a risk budget. In this way, they
Luke is looking at the long-term interest of the firm. John may be relying on individual rights — to choose to smoke or not
Luke and John disagree about the new smoking policy. Luke says the company should not employ smokers. They cost about $6,000 per year more than non-smokers, on average. John disagrees. What principles might cause them to disagree?
balanced scoreboard
Management creates performance measures to see how the company is doing. Profit and revenue are typical measures. When management includes broader strategic measures such as quality, customer retention, and learning, then they have created
costs
McDonald's appeals to customers with low prices, Consumers rate McDonald's food the worst quality among the large fast food chains. In response, McDonald's has made a new commitment to quality. But McD's management must weigh quality against
found that customers returned more to buy more lights.
Phillips Electric makes LED lights. To move to market quickly, they did not worry about quality before shipping. They allowed easy returns and generous refunds during this period. As they gained experience with improving the manufacturing quality, the quality improved, and they
use a balanced scorecard approach to incentives.
Researchers found that, in the early 1990s, less than 10% of total executive compensation at publicly held firms was contingent on stock prices. By 2003, that share had ballooned to almost 70%. Critics pointed out that many top executives had been heavily rewarded for short-term performances that ultimately proved disastrous. Stockholders are better off in the long run when companies
About 5 percent of revenues, or $900 billion per year across the U.S
The Association of Certified Fraud Examiners estimates that fraud costs US companies
The significance of the consequences and the number of people affected
The factors affecting ethical intensity of a decision include
diverse skills and knowledge
The foreign exchange markets trade the equivalent of $5.3 trillion per day in various currencies. Every large firm has employees from all over the world. The international competition requires
damage to company culture and reputation
A company required every employee to wear their employee badge all day and use it to enter the building, and also to use the break room and bathroom. When company policies were changed surrounding use of various facilities, it was discovered that the company had collected individuals' habit data in a chart. It identified, by name, how long each employee used the various facilities and when. This did not sit well with employees, and word got out to the press, who put negative social pressure on the company. This example illustrates what cost of a control for that organization?
improved quality control
David's Healthcare of Austin, TX has ranked in the American College of Cardiology's top 10 percent since 2010 for its "door-to-balloon" time in treating the most severe form of heart attack known as STEMI (in which the coronary artery is completely blocked off by a clot). The "door-to-balloon time" refers to the amount of time between a heart attack patient's arrival at the hospital and the point when the patient receives intervention, such as a balloon angioplasty. This is an example of what control benefit?
continually adapt and apply new strategies.
Easy communication through the Internet is changing the organization of some activities. The traditional hotel industry now competes with Airbnb. Airbnb is a platform for renting out a room in your house. Analysts suggest that hotels may partner with Airbnb by listing properties with them. To succeed, organizations must
The greater good for all employees and the harm to this one family
Francis worked for GM for 39.9 years, but died 1 month short of retirement. Since he did not retire, his family normally receives nothing from the retirement funds. His widow petitions Mark, his manager, to make an exception and allow the retirement benefits. Mark wants to say no because if this were a regular policy, it would hurt stockholders and draw down retirement funds for the true retirees. But he is sympathetic to the family. What principles is Mark struggling between?
across the globe
Hewlett-Packard (HP) is one of the world's largest technology companies and has one of the industry's most extensive supply chains. Comprising more than 1,000 production suppliers and tens of thousands of nonproduction suppliers, it spans 6 continents, more than 45 countries and territories, and many cultures. HP's suppliers compete
standardization
McDonald's customers experience predictable, reliable service. Go into a McD's anywhere in the world, and the building design and service will be very similar. Consistent service processes means reduced manpower costs and consistent products - which ultimately builds brand equity for McDonald's. McDonald's global process strategy is
the costs and benefits of quality management.
Measuring teaching quality is difficult. If quality is measured by test scores, teachers and administrators have an incentive to cheat. The Chicago and Atlanta school systems suffered scandals from widespread cheating. If quality is measured by direct observation, the observations tend to be highly favorable. Administrators must weigh
Corporate social responsibility
Michael Porter of Harvard Business School developed a concept of "shared value." The central premise behind creating shared value is that the competitiveness of a company and the health of the communities around it are mutually dependent. Shared value is similar to
Calculate appropriate ratios
Ngozi is a new manager at Vallee Manufacturing and she found that the company has added $1 million in debt recently to their account. This debt total is troubling to Ngozi, and she's been hired to help reset the business. What should she do first?
an objective control.
Nick's Pub wants employees to be friendly to customers. To be clear what that means, Nick's made a rule that employees should smile and greet any customer within 5 feet. This is
If performance is not measured, we cannot know whether standards have been met.
Professor Claris does not give any tests in her class. She believes education should be an adventure, knowledge for its own sake, not a hurdle to jump. All students receive an "A" in her course. The students are happy, but the dean and the accreditation board are not. They would say:
A budget
TPE's cashflow swings over the calendar year. Revenues come in early when students enroll in summer camps before June. In the summer, the camp pays camp counselors, rents performance locations, and buys gasoline for the buses. TPE needs to be disciplined about expenses in the spring, when the bank account is fat, so they can pay everyone through the summer. For this, TPE needs
By conducting training programs and disseminating relevant information
The US Sentencing Commission recommends that senior management "periodically communicate the aspects of the compliance and ethics program to its members ________."
more risk of disruptions to supplies.
The airlines are dependent on a very unstable international commodity, oil. Prices were over $140 per barrel in 2008 and fell to $30 per barrel in early 2016. Southwest Airlines scored a coup in 2007-2008 by hedging most of it fuel costs at $51 per barrel. Wars in the Middle East and hurricanes in Houston, Texas, affect the price of fuel. International supply chains mean
-To conduct regular training classes
The key to an ethical company is strong communication of the expectations. One recommended method, also required by the US Sentencing Guidelines, is
integrate nonfinancial
The purpose of the balanced scorecard is to:
future orientation
When General Motors and SAIC Motor created their joint venture in 1997, the employees noticed cultural differences influencing their planning. The employees of SAIC Motor, a Chinese company, could be described as patient investors focused on organizational success, and they had a more rigid organization. General Motors employees were said to be looking for quick wins with an eye on personal success as well as the venture's success, and more egalitarian in their treatment of colleagues. In the GLOBE analysis, the difference in quick wins vs. patient investors describes what dimension?
a budget
Without a planned allocation of resources, there is the risk of spending too much money in one or a few areas, thereby not having enough for other areas. The plan governing spending is often called
organizational control
________ is the process through which an organization influences its members and subunits to act in ways that lead to the realization of organizational goals and objectives.
performance standard.
Robin's financial advisor explained that her stock portfolio did very well last year. It grew by 6 percent, better than bonds that earned only 2 percent. During the same period, the S&P 500 grew 14 percent. The S&P 500 is an index of 500 large companies having common stock listed on the NYSE or NASDAQ. The financial advisor is using the wrong
each partner carries out
SAIC General Motors Corporation Limited is a joint venture between General Motors Company and SAIC Motor that manufactures and sells Chevrolet, Buick, and Cadillac brand automobiles in mainland China. SAIC Motor Corporation Limited is a Chinese state-owned automotive design and manufacturing company. One advantage of this arrangement is that
power distance
The German car company, Daimler-Benz, merged with Chrysler in 1998. Cultural differences and organizational culture are both acknowledged to have played a role in the failure of the merger. Daimler was a German company that could be described as "conservative, efficient, and safe," while Chrysler was known as "daring, diverse, and creative." The hierarchy attitude was different as well. Daimler was heavily hierarchical, with a clear chain of command and respect for authority. Chrysler, on the other hand, was more team-oriented and egalitarian in its approach. Daimler valued reliability and achieving the highest levels of quality, while Chrysler relied on catchy designs and offering cars at competitive prices. These cultural differences led to conflicting orders and goals in different departments. The difference in attitude toward hierarchy in the two companies is an example of:
assist managers and leaders in making modifications to their strategy
The purpose of a feedback loop is to
a transnational strategy.
Today, ABB is a Swedish-Swiss multinational corporation headquartered in Zürich, Switzerland, operating in robotics and in the power and automation technology areas. The robotics industry requires high investment costs in developing the new technology and in manufacturing facilities. ABB would like to spread these costs over as large a customer base as possible. But each customer also requires small adaptations to their way of doing things. For its robotics business, ABB needs
consumers
________ benefit from healthy competition between businesses. But sometimes companies will drive prices below costs to win market share and put competitors out of business. This is called predatory pricing. In the short run, customers benefit from lower prices, but in the long run, the predator can raise prices.
Ethics training
________ improves employee morale and productivity. It convinces employees that the company is committed to ethical treatment for all stakeholders including themselves. Employees internalize the mission and values of the company more.
operational control
________ is concerned with executing a strategy, not making strategy. This type of control functions within the framework the strategy establishes, such as standards, objectives, goals for business units, products, projects, and functions.
seek out responsible products
Consumers today expect a lot out of companies. According to a study by Cone Communications, 84 percent of consumers actually ________ .
is the riskiest type of direct investment
A greenfield venture is when a company builds a subsidiary from scratch in a foreign country instead of acquiring an established firm. If successful, this can be more profitable because the profits do not have to be shared with a partner or another firm. It also
can ask relevant questions that can lead to answers that reveal a lot about the candidate
Best practices in the selection and hiring of ethical employees involve including the company's most ethical employees in the interview process. Interviewers already doing the job
compete in a global arena
Fiber optic cable laid in the late 1990s and early 2000s has connected the world in astonishing ways. Through the internet, travelers can stay in touch with their home country at almost no expense. It also means information businesses, like software companies,
Acting ethically and making this visible to employees
In addition to hiring ethical employees and offering ethics training, it is also important for senior management to model ethical behavior. The responsibilities of senior management include
enhancing the firms reputation and the ability to generate profits by differentiating its product
The St. Louis Federal Reserve reports that "firms can strategically engage in socially responsible activities to increase private profits." The firm's stakeholders value the firm's social efforts, and the firm can obtain additional benefits from these activities, including
exporting.
Bunge Limited supplies the world with agricultural commodities, such as grains and oilseeds. Corn grown in the USA is sent to Japan, Mexico, and South America. Bunge international activities are managed from its headquarters in White Plains, New York. Bunge's global strategy is
Benefits the organization internally by helping to ensure its success
Business Ethics
Look for additional vendors by using a competitive bidding process.
Days for Girls International is a nonprofit creating a more dignified world for girls through advocacy, health education, and sustainable feminine hygiene. They implemented financial controls to better position the organization for sustainability and growth. Headquarters manager Lora and executive director Celeste must sign off on each check. Each month, Melissa presents the reconciled bank statements to Celeste, and she is also in charge of the small petty cash account, which Celeste checks monthly. They purchase their materials from two vendors, and the inventory is regularly checked against the books. Expenses and travel must be pre-approved. Each year a budget is set and approved by their board. Lora is also well versed in grant administration and manages those as well. Identify one additional control step for Days for Girls.
not a variable
In 2007, Microsoft (MS) had a dominant share of the cell phone market. MS was displaced by Research-in-Motion (RIM), maker of the BlackBerry phone, in 2010. RIM was replaced by Android phones and the Apple iPhone. For a tech company, doing the same thing is
Over 60 million
In 2011, the SEC issued new whistleblower rules required by the Dodd-Frank Act. Under the new rules, a whistleblower is eligible for a bounty equal to 10 percent to 30 percent of monetary sanctions resulting from an enforcement action. The largest reward to date under this law was
multidomestic strategy.
Starbucks operates in 62 countries around the world. It tailors its products and services to the needs of each market. Marketing strategy is shaped by local culture. Even the taste of the coffee changes for local preferences. The company's decision to open branches in foreign markets is based on research information on customer traffic and local real estate. Starbucks uses a
future orientation
The German car company, Daimler-Benz, merged with Chrysler in 1998. Cultural differences and organizational culture are both acknowledged to have played a role in the failure of the merger. Daimler was a German company that could be described as "conservative, efficient and safe," while Chrysler was known as "daring, diverse, and creative." The attitude toward hierarchy was different as well. Daimler was heavily hierarchical, with a clear chain of command and respect for authority. Chrysler, on the other hand, was more team-oriented and egalitarian in its approach. Daimler valued reliability and achieving the highest levels of quality, while Chrysler relied on catchy designs and offering cars at competitive prices. These cultural differences led to conflicting orders and goals in different departments. The difference in the two companies' views of reliability vs. competitive pricing is an example of:
to adapt and innovate
The cell phone is one of the great innovations of recent decades. Yet the innovation has not come from any one place. The list of manufacturers includes Samsung, Apple, Lenovo, LG, Sony, Nokia, BlackBerry, and Xiaomi. These manufacturers operate in South Korea, the United States, China, Japan, Canada, and Finland. The major parts suppliers are in over 20 countries. When your business competes on a global scale, it is more important than ever
cultural simulation training
To prepare for an overseas assignment, employees will often role play various situations and practice responding in culturally sensitive ways. This process is most effective when the trainer can include people from the actual host country to help. The goal is to duplicate as closely as possible scenarios that the employees may face, such as having to question or reprimand a local employee, making a presentation to host country upper-level managers, or approaching a person of the opposite gender in countries where the sexes do not mix as freely as in the United States. This process is called
transnational strategy
Unilever sells consumer products around the world. They produce Dove soap, for example. The company thinks globally and acts locally. The nature of products requires a close relationship with local customers; yet economies of scale justify a number of head-office departments, and the need to benefit globally from everybody's creativity and experience makes sharing information highly desirable. Unilever combines product expertise and local knowledge in a deliberate
transnational strategy.
Unilever sells consumer products around the world. They produce Dove soap, for example. The company thinks globally and acts locally. The nature of products requires a close relationship with local customers; yet economies of scale justify a number of head-office departments, and the need to benefit globally from everybody's creativity and experience makes sharing information highly desirable. Unilever combines product expertise and local knowledge in a deliberate
field simulation training.
When employees have learned the basics of a foreign culture, the next step is to visit a neighborhood of the same ethnic background as the destination or, if the trainees are already in-country, then they move out to the "real world." Depending upon the conditions, a family may move into temporary housing so that they can meet their neighbors, shop for food, locate transportation, and just explore the area. To finish the exercise, trainees compare notes and share experiences with others. This process is called
Standardization
Today, ABB is a Swedish-Swiss multinational corporation headquartered in Zürich, Switzerland, operating in robotics and in the power and automation technology areas. ABB was created from the merger of ASEA (Swedish) and BBC (Swiss) in 1967. The joint companies made lights and generators. Although electrical outlets differed by country, customers are primarily concerned with function and efficiency. ABB's strategy, at this time, was
multidomestic strategy
Today, ABB is a Swedish-Swiss multinational corporation headquartered in Zürich, Switzerland, operating in robotics and in the power and automation technology areas. In the 1990s, ABB purchased power companies in the United States to enter the North American market. Utility companies have local monopolies. As a result, local governments closely regulate them. A utility commission will set prices after hearing arguments from the company executives. ABB needed to adapt to local demands and switched to