BA 101 Midterm #3
countries in NAFTA (North American Free Trade Agreement)
USA, Canada, Mexico
keep: maintain current customers
customers are your best source of new ideas, referrals, and revenue
organizations culture
de-emphasizes ethics and considers primarily economic consequences
decision making process
define, describe, develop, decide, do, and determine outcome
licensing benefits
gaining revenue, spending little or no money to product/market ie.) paw patrol Kraft dinner, Nestle-Starbucks coffee
patent
gives inventors exclusive rights to their inventions
contract manufacturing (outsourcing) benefits
- can allow a firm to experiment in a new market without heavy start-up costs - temporarily meet an unexpected increase in orders
Dodd-Frank Act
- comprehensive regulation of financial markets - consolidation of regulatory agencies - consumer protection reforms - tightened regulation of Credit Rating Agencies
cons of free trade
1) domestic workers (esps manufacturing based jobs) can lose their jobs due to increased imports/productions shifts to low-wage global markets 2) workers may be forced to accept pay cuts and threats of moving jobs to lower-cost global markets 3) moving operations overseas because of intense competitive pressure often means loss of service jobs / growing numbers of white-collar jobs 4) domestic companies can lose their comparative advantage when competitors build advanced production operations in low-wage countries
strategies for reaching global markets, in order of risk (least to most)
1- licensing 2- exporting 3- franchising 4- contract manufacturing 5- foreign direct investment
anticompetitive behavior
actions aimed at harming actual or potential competitors
arbitration
binding and non-binding dispute resolution. 3rd party makes final decision
mutually beneficial exchange
countries with abundant nature resources need access to foreign markets or technological resources from other countries
integrity based ethic codes
defines the organizations guiding values, creates an environment that supports ethically sound behavior, and promotes shared accountability
environmental degradation
directly or indirectly take actions that result in environmental harm
criminal law
dispute between the government and individual (fines or imprisonment
Organization for Economic Cooperation and Development (OECD) & Transparency International
fight to end corruption and bribery in foreign markets and have had limited success
fraud triangle: perceived pressure
financial pressure / personal pressure
subsidies
government payment to a domestic producer - helps DPs compete against low-cost foreign goods
grow: sell more to your customer base
it is less expensive to sell more to existing customers than to find new customers
common law
judges establish when deciding disputes
What is the branch of government chosen to oversee the legal system through the court system?
judiciary
private enterprise
market turns self-interest into social good
technical skills
skills that involve the ability to perform tasks in a specific discipline or department
7 instruments of trade policy
tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative policies, and antidumping duties
tariffs
tax levied on imports, raising the cost of imported products relative to domestic products
What is the purpose of the Uniform Commercial Code (UCC)?
to standardize commercial law and facilitate commercial transactions
balance of trade
total value of a nation's exports compared to its imports measured over a particular period
balance of trade
total value of a nations exports compared to imports over a particular period
opportunistic exploitation
unethical behavior sometimes used by managers to unilaterally rewrite the terms of a contract with suppliers, buyers, or complement providers in a way that favors to the firm
licensing
when a firm (licensor) provides the right to manufacture its product or use its trademark to a foreign company (licensee) for a fee (royalty
trade deficit (unfavorable)
when the value of country's exports is less than that of its imports
trade surplus (favorable)
when the value of the country's exports is more than that of its imports
fraud
where someone hurts another by deception or manipulation, said or done in a dishonest way to trick people
personal ethics
will have a profound influence on behavior as a businessperson
2.) customer segments
your customers do not exist to buy... you exist for them geographical, social, demographic, etc who are they, and why would they buy?
Freeman Stakeholder Theory
** corporations are no longer simply 'profit-machines' ** cannot be thought of as being responsible to only one group, but must be seen to bear responsibilities to all of the individuals their activities affect, and upon whom their existence depends.
fraud triangle: rationalization
- 'i'll pay it back" - "i deserve a pay raise" - "it's for a good purpose"
What two questions do entrepreneurs often ask themselves?
- What really irritates me, and what product or service would help? - What do I want, but can never find?
examples of torts
- assault - slander - libel - product liability - fraud
a person can legally protect their ideas by obtaining...
- copyright - patent - trademark
environmental forces
- developing countries have transportation and storage systems that make international distribution difficult or impossible. - often, technological capabilities are far from those in the US. which makes for a tough business environment.
as a manager, you shape the organization and the world your employees inhabit through...
- employment agreement - structure of the job (task) - interpersonal interaction
ethics in global business
- employment practices - human rights - environmental regulations - corruption
government intervention
- ensures fair competition, private property, freedom of choice, and right to keep profits - promotes economic health & social responsibility - corrects market failures & ethical lapses
what are the functions of export assistance centers? (EAC's)
- hands-on exporting assistance - trade-finance support
5.) revenue model
- how does the company make money from each customer segment? - what value is the customer paying for? - revenue models (direct sales) are the strategy, pricing is the tactics
why globalization?
- increase revenue - access different markets - reduce costs - access different materials
3 major factors of Corporate Social Responsibility
- maximize positive societal impact - minimize negative societal impact - act in the company's best interest for profit
control (in management)
- measures performance relative to the planned objectives and standards -rewards people for work well done - takes corrective action when needed.
legal and regulatory forces
- no global/international system of laws - laws may be inconsistent from country to country - US firms must follow US laws when conducting global business
What two advantages do small businesses have over larger companies?
- personalized customer service - quick response time to new opportunities
problems with business
- power of business vs consumer - actions of business vs consumer - public reaction - governments reaction
requirements of private enterprise
- private property - freedom of choice - right to keep profits - fair competition
business model thinking
- product development to startup ventures language for communicating - understand the startup process - positioning for launch and growth
What two items are described in a business plan?
- resources and qualifications of its owner(s) - the target market
global trade with 7.7 billion potential customers is attractive, but the threats to trading globally include which of the following?
- rogue states - terrorism - income inequality - nuclear proliferation
joint venture benefits
- shared technology - shared risk - shared marketing
forces affecting trade in global markets
- sociocultural forces - economic and financial forces - legal and regulatory forces - physical and environmental forces
intentional tort
- the required intent is the desire to cause harm - include acts that harm property or other persons
basic rights of consumers
- the right to safety - the right to be informed - the right to choose - the right to be heard
ethical dilemmas occur when...
- there is no agreement over what the accepted principles - none of the available alternatives seem ethically acceptable
Causes of small business failure
- underpricing or overpricing goods or services - starting with too little capital - going into business without first learning something about the industry / market - underestimating how much time it will take to build a market.
fraud triangle: perceived opportunity
- weak internal controls - ineffective monitoring of controls - assets susceptible to fraud
Small business
-independently owned and operated -not dominant in its field - meets certain standards of size in terms of employees or receipts
CRM (Customer Relationship Management)
-acquire new customers -retain existing customers -upsell to existing customers
Business incubators
-centers that offer new businesses in the critical stage of early development -low-cost offices with basic services such as accounting, legal advice, and secretarial help
Intrapreneur
-creative person who works within a corporation - uses company's resources to launch new products -generates profits by leveraging a firm's human, financial , and physical resources.
knowledge managers
-keep information in a readily accessible place -find the right information - make information known to everyone in the organization
3 levels of ethical standards
1.) the law 2.) organizational policies and procedures 3.) the moral stance employees take when faced with decisions not governed by formal rules
CEO
Introduces change into an organization
the Friedman doctrine
Milton Friedman's position that the only social responsibility of business is to increase profits ** as long as the company stays within the law and the rule s of the game without deception or fraud **
passed in 1890 to stop large organizations from stifling competition
Sherman Antitrust Act
example of foreign subsidiary
a company in another country that is owned by a U.S. company
patent trolls
a company or person that acquires a lot of the patents without the desire to actually develop the products
foreign subsidiary
a company owned in a foreign country by another company, called the parent company
franchising
a contractual agreement where someone with a good idea for a business sells the rights to use the business name and sell a product / service in a specific territory franchisors need to carefully adapt product to countries
absolute advantage
a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries
comparative advantage
a country should sell the products it produces most efficiently and buy from other countries the products it cannot produce as efficiently
import quotas
a direct restriction on the quantity of a good that can be imported into a country
contract manufacturing (outsourcing)
a foreign company produces private-label goods to which a domestic company then attaches its own brand name / trademark
joint venture
a partnership in which two or more companies, often from different countries, join to undertake a major project
common market (trading bloc)
a regional group of countries that have a common external tariff and no internal tariffs coordinate laws to facilitate exchange
The Environmental Protection Agency (EPA) was created by Congress and has the authority to create rules and regulations regarding the environment. The EPA is an example of a ...
administrative agency
traits of a good boss
allows independence, acknowledges others' actions, set standards for staff and self, walk the talk, is trustworthy, timely feedback, shows respect
organizational ethics
begins at the top; managers can help instill corporate values in employees trust between workers/managers must be based on fairness, honesty, openness, and moral integrity
judiciary
branch of government which settles disputes through the application of law
which behaviors are illegal in the US, but potentially put companies at a disadvantage overseas?
bribery & influence peddling
strategic planning
broad, long-range goals set by top managers
ethics
business ethics are the accepted principles of right or wrong governing the conduct of busied people
importing
buying products from another country
COO
chief operating officer. Implements CEO's changes
human relations skills
communication and motivation; enable managers to work with people
uniform commercial code
comprehensive commercial law that covers sales laws and other commercial laws
what is a business model?
describes the rationale of how an organization... - creates - delivers - captures value
civil law
dispute between two individuals (fines)
trial courts
dispute is first heard
information manipulation
distort or hide information to enhance their personal situation
low value of the dollar
dollar is trading for less foreign currency; foreign goods are more expensive
high value of the dollar
dollar is trading for more foreign currency; foreign goods are less expensive
compliance based ethic codes
emphasize preventing unlawful/unethical behavior by increasing control and penalizing wrong-doers
statutory law
enacted by a federal or state legislature
unrealistic performance goals
encouraging and legitimizing unethical behavior
external customers
end users and dealers
A(n) ______ team is a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product.
entrepreneurial
Sarbanes-Oxley Act of 2002
establishes new or enhanced standards for all US public company boards, management, and public accounting firms
administrative agencies
federal or state institutions and other government organizations created by congress / state legislatures with delegated power to create rules and regulations within their area of authority
negotiable instruments
forms of commercial paper that are transferable among businesses and individuals and represent a promise to pay a specified amount
deregulation
government withdrawal of certain laws and regulations that seem to hinder competition
warranty
guarantees that the product sold will be acceptable for the purpose for which the buyer intends to use it
staffing
hiring, motivating, and retaining the best people available to accomplish the company's objectives
What is product liability?
holds businesses liable for harm that results from the production, design, or inadequate warnings of products they market
4. customer relationships
how does a company get, keep, and grow customers? just like channels, these are different ways to market and interact with consumers in order to build up rapport
3. channels
how does the product get from our company to the customer? speech, web/mobile channels, signage, vending machines, etc.
Customer Acquisition Costs (CAC)
how much does it cost to get a customer? what percent close on that sale? (sales funnel) (1000 leads, 100 prospects, 10 customers)
tactical planning
identification of specific, short-term goals set by lower-level managers
A favorable balance of trade occurs when...
imports are less than the value of exports
whistleblowers
insiders who report illegal or unethical behavior
globalization
integration and free movement of people, goods, services, and capital across national borders
1.) value propositions
it's not about your idea or product, it's about solving a need or problem and satisfying a customer's need
bankruptcy
legal process by which a person, business, or government entity, unable to meet financial obligations, is relieved of those debts by a court
CIO
makes decisions requiring IT equipment and/or creation of new IT systems
autocratic leadership
making managerial decisions without consulting others
self-dealing
managers weather their nest with corporate money
______ want to maintain a balanced life style while doing the kind of work they want to do.
micro-preneurs
free trade
movement of goods and services among nations without political or economic barriers
mediation
non binding, 3rd party just there to bounce off of
CFO
obtains funds, plans budgets, collects money
strategic alliances
partnerships in which two or more companies combine resources and capital to create competitive advantages in a new market
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
passed in order to reduce the total number of bankruptcy filings and eliminate the perceived ease of filing for bankruptcy
Dodd-Frank Wall Street Reform and Consumer Protection Act
passed in response to the financial crisis of 2008- the most significant changes to financial regulation of the US since the Great Depression
document that gives inventors exclusive rights to their inventions for 20 years
patent
SWOT analysis
planning tool which aims to define strengths, weaknesses, opportunities, threats
P.O.L.C
planning, organizing, leading, and controlling (process used to accomplish organizational goals)
top management
president, vice president, CEO, CFO, COO
outsourcing
process by which a firm contracts with other companies to do some or all of its functions.
the part of tort law that holds businesses liable for harm that results from the production, design, or use of products they market is called...
product liability
copyrights
protects a creator's rights to materials such as books, articles, cartoons, and paintings
trademark
protects name, symbol, or design
value proposition development
question assumptions, get out of the building (talk to potential customers), and iterate through learning (try try again!)
administrative law
regulations passed by state and federal administrative agencies
what most influences a company's effectiveness and financial performance most?
responsible management of human resources
Principle characteristic of an entrepreneur
self-discipline
dumping
selling goods in a foreign market below the cost of production or selling goods in a foreign market below their fair market value, a method to unload excess production predatory behavior- provide from home markets to subsidize prices in a foreign market
exporting
selling products to another country
sociocultural forces
set of values, beliefs, rules, and institutions held by a specific group of people includes: social structures, religion, manners, customs, manners, customs, values/attitudes, language, and personal communication
operational planning
setting work standards and schedules needed to implement the company's tactical objectives
consumerism
social movement that seeks to increase and strengthen the rights and powers of buyers in relation to sellers
What type of law is referred to as a written law?
statutory law
social audit
systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs
a major advantage of licensing is...
the bulk of the revenues gained by licensing come back to the licenser
foreign direct investment (FDI)
the buying of permanent property and businesses in foreign nations
corporate social responsibility
the concern businesses have for the welfare of society, not just its owners
corporate policy
the dimension of social responsibility that refers to a position a firm takes or statement it makes on social and political issues
appellate court
the dispute can be heard again if lower court errors
bad apple theory
the notion that blame for unethical behavior rests with a few unsavory individuals
contigency planning
the process of preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives
trade protectionism
the use of government regulations to limit the import of goods and services
True or false: The principles of management are similar for a small neighborhood business and a giant global firm.
true
substandard working conditions
underinvest in working conditions or pay below market wages
exchange rates
value of one nation's currency relative to currencies of other countries
What term is given to individuals or companies that invest in new businesses in exchange for partial ownership in those businesses?
venture capitalists
traits of a bad boss
weak, political, micromanager, invisible, task master
6.) key resources
what are the most important assets required to make the business model work? - finance (raising money, line of credit) - physical (manufacturing, machines, vehicles) - intellectual (patents, customer lists, people) - human (software engineering)
9.) cost structure
what are the most important costs to operate the business model? - fixed or variable? - economies of scale? - what are the most important costs? - what are the most expensive resources? - what key activities are the most expensive?
8.) key activities
what are the most important things the company must do to make the business model work? - production - problem-solving (consulting, engineering) - supply chain management
7.) key partnerships
whom are the key partners and suppliers needed to make the business model work? - what key resources are we getting from them? - what key activities do they perform - strategic alliances between non-competitors