BUSMHR 4490 FINAL

Moral Hazard

A situation in which information asymmetry increases the incentive of one party to take undue risks or shirk other responsibilities because the costs incur to the other party.

CAGE Framework

A decision framework based on the relative distance between home and a foreign target country along four dimensions: cultural distance, administrative and political distance, geographic distance, and economic distance.

Architectural Innovation

A new product in which known components based on technologies are reconfigured in a novel way to attack new markets.

growth stage

Second stage of the product life cycle when the product gains acceptance, demand and sales increase, and competitors emerge in the product category

transaction cost economics

a theoretical framework in strategic management to explain and predict the boundaries of the firm, which is central to formulating a corporate strategy that is more likely to lead to competitive advantage

Platform Business

an enterprise that creates value by matching external producers and consumers in a way that creates value for all participants, and that depends on the infrastructure or platform that the enterprise manages

Diversification

an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes

disruptive innovation

an innovation that leverages new technologies to attack existing markets from the bottom up

incremental innovation

an innovation that squarely builds on an established knowledge base and steadily improves an existing product or service

product market diversification strategy

corporate strategy in which a firm is active in several different product markets and several different countries

external transaction costs

cost of searching for a firm or an individual with whom to contract, and then negotiating, monitoring, and enforcing the contract

early majority

customers coming into the market in the shakeout stage of the industry life cycle. Mainly concerned with wether adopting a new technological innovation serves a practical purpose or not.

early adopters

customers entering the market in the growth stage of the industry life cycle that are eager to by easy into a new technology or product concept

late majority

customers entering the market in the maturity stage of the industry life cycle that are less confident about their ability to master new technology.

Pressure for Cost Reduction

force the firm to lower unit costs

FDI

foreign direct investments - nvestment made by a foreign company in the economy of another country.

maturity stage

fourth stage of the product life cycle when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them

people who pursue entrepreneurship's within an existing company are called

intraprenuers

MNE

multinational enterprise - a company that DEPLOYS RESOURCES AND capability in the procurement production and distribution of goods and services in at least 2 countries .

Global Strategy

part of a firm's corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world

An enterprise that creates value by matching external producers and consumers in a way that creates value for all participants and that depends on the infrastructure that the platform manages is a(n)

platform business

the market environment in which all players participate relative to the platform is the

platform ecosystem

PixelPower is a small app developer seeking to enter the highly competitive mobile games industry. In order to overcome the industry's barriers to entry and compete against incumbent firms, Pixel Power has an economic incentive to

pursue radical innovations

information asymmetry

situation in which one party is more informed than another because of the possesionof private information.

Attempting to address social or ecological issues when building a for-profit business is known as

social entrepreneurship

Corporate Strategy

the decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously

Globalization

the process by which businesses or other organizations develop international influence or start operating on an international scale.

strategic entrepreneurship

the pursuit of innovation using tools and concepts from strategic management.

Adverse Selection

the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction

strategic alliances what why and how

voluntary arrangements between firms that involve the sharing of knowledge resources and capabilities with the intent of developing processes products or services.

Shakeout Stage

Third stage in the industry life cycle. Firms begin to compete more intensely. Weaker firms forced out The industry consolidates Only the strongest competitors survive. Biggest competitive weapon: low price

International Expansion

When a firm begins operations in a foreign country. In franchising, this involves having franchisees open outlets in foreign countries. Because of the risks involved in entering other countries, franchisors that are expanding internationally tend to own fewer outlets themselves and rely more on franchising than they do within their home country.

first-mover advantage

a competitive advantage that occurs when a firm is first to offer desirable products or services that secure customer loyalty

core competence-market matrix

a framework to guide corporate diversification strategy by analyzing possible combinations of existing/new core competencies and existing/new markets

Corporate Governance

a system of mechanisms to direct and control an enterprise in order to ensure that it pursues its strategic goals successfully and legally

Agency Theory

a theory that views the firm as a nexus of legal contracts

Forward vertical integration

changes in an industry value chain that involve moving ownership of activities closer to the end (customer) point of the value chain

Backward vertical integration

changes in an industry value chain that involve moving ownership of activities upstream to the originating point of the value chain.

geographic diversification strategy

corporate strategy in which a firm is active in several different countries

product diversification strategy

corporate strategy in which a firm is active in several different product markets

internal transaction costs

costs pertaining to organizing an economic exchange within a hierarchy; also called administrative costs

industry value chain

depiction of the transformation of raw materials into finished goods and services along distinct vertical stages, each of which typically represents a distinct industry in which a number of different firms are competing

Which type of innovation uses new technologies to invade an existing market from the bottom up?

disruptive innovation

principal-agent problem

situation in which an agent performing activities on behalf of a principal pursues his or her own interests

integration-responsiveness framework

strategy framework that juxtaposes the pressures an MNE faces for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally

multidomestic strategy

strategy pursued by MNEs that attempts to maximize local responsiveness, with the intent that local consumers will perceive them to be domestic companies

International Strategy

strategy that involves leveraging home-based core competencies by selling the same products or services in both domestic and foreign markets

platform ecosystem

the market environment in which all players participate relative to the platform

social entrepreneurship

the pursuit of social goals while creating a profitable business

crossing the chasm framework

Conceptual model that how's how each stage of the industry life cycle is dominated by a different customer group

Laggards

Customers entering the market in the declining stage of the industry life cycle. Will adopt a new product only if absolutely necessary, generally don't want new technology, and are generally not a customer segment worth pursuing.

Pressure for Local Responsiveness

Customizing products according to local differences

introducing a new technology to an existing market to better address consumer needs is known as

Disruptive innovation

The customers coming into the market during the shakeout stage are called

Early Majority

decline stage

Final stage of the product life cycle when sales decline and the product eventually exits the market

shareholder capitalism

Shareholders—the providers of the necessary risk capital and the legal owners of public companies—have the most legitimate claim on profits.

Types of Strategic Alliances

1. Joint Venture 2. Equity Strategic Alliance 3. Non-Equity Strategic Alliance

Business Ethics

An agreed-upon code of conduct in business, based on societal norms.

Radical Innovation

An innovation that draws on novel methods or materials, is derived either from an entirely different knowledge base or from a recombination of the existing knowledge bases with a new stream of knowledge.

shared value creation framework

a model proposing that managers have a dual focus on shareholder value creation and value creation for society

global standardization strategy

strategy attempting to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost

Transnational Strategy

strategy that attempts to combine the benefits of a localization strategy (high local responsiveness) with those of a global-standardization strategy (lowest-cost position attainable)

innovation

the commercialization of any new product or process, or the modification and recombination of existing ones

Vertical Integration

the firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs

Industry Life Cycle

the five different stages - introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time

product innovation

New or recombine knowledge embodied win new products

process innovation

New ways to produce existing products or deliver existing services

introduction stage

The initial stage of a product's life cycle; its first appearance in the marketplace, when sales start at zero and profits are negative