Capstone

The Rights view

Evaluate organizational decisions on the extent to which they protect basic individual rights.

forward integration

a firm acquiring its buyers (i.e., expanding "downstream")

External Growth

acquiring other companies

Switching costs

are the upfront costs that buyers must incur if they switch from one competitor to another.

metaphor of the ledger

arguing that they have the right to engage in certain unethical practices because of other good things they have done.

Stakeholders

individuals or groups who are affected by or can influence an organization's operations

core competencies

the firm's key capabilities and collective learning skills that are fundamental to its strategy, performance, and long-term profitability.

culture

the generally accepted values, traditions, and patterns of behavior in a society.

Comparative Advantage

the idea that certain products may be produced more cheaply or at a higher quality in particular countries due to advantages in labor costs or technology

Mission

the reason for the firm's existence

Environmental Scanning

the systematic collection and analysis of information about relevant macroenvironmental trends.

Resource-based theory

views performance primarily as a function of a firm's ability to utilize its resources and emphasize the development of a distinctive competence.

Realized Strategy

what management actually implements.

Intended Strategy

what management originally plans.

self-reference criterion

when competing abroad because they consciously refer to their own cultural values as a standard of judgment, a phenomenon known as

horizontal related diversification

when it acquires a business outside its present scope of operation, but with similar or related core competencies

CEO Duality

when the CEO also serves at the chairman of the board—represents a potential conflict of interest.

information symmetry

whereby buyers and sellers share information.

information asymmetry

whereby sellers control key information that is not available to buyers.

deny rights of the victims

rationalizing that "they deserve what they got anyway."

deny responsibility

rationalizing that they have no other choice but to participate in unethical behavior.

The Self-Interest view

Benefits of the decision-maker(s) should be the primary considerations.

Pension Security Act (2002)

Gives workers more freedom to diversify their investments and greater access to quality investment advice concerning their 401(k) plans.

clicks and bricks

Many traditional firms are integrating e-commerce into their existing business models, a combination known as clicks and bricks. These firms are attempting to build synergy between traditional and virtual storefronts.

CAN SPAM Act (2003)

Prescribes rules and penalties for e-mail "spammers," although enforcement is difficult

Food Quality Protection Act (1996)

Reduces the amount of carcinogenic pesticides allowed in foods.

Goals

desired ends toward which efforts are directed

conglomerate (unrelated) diversification.

When a corporation acquires a business in an unrelated industry to reduce cyclical fluctuations in cash flows or revenues,

backward integration

When a firm acquires its suppliers (i.e., expanding "upstream"),

Business model

is the mechanism whereby the organization seeks to earn a profit by selling its goods.

Liquidation

is the strategy of last resort, and terminates the business unit by selling its assets. In effect, liquidation represents a divestment of all the firm's business units and should be adopted only under extreme conditions

corporate-level strategy

is the strategy top management formulates for the overall corporation.

Synergy

occurs when the combination of two organizations results in higher effectiveness and efficiency than would otherwise be generated separately.

Merger

occurs when two or more firms, usually of roughly similar sizes, combine into one through an exchange of stock

Managerial Ethics

refers to an individual's responsibility to make business decisions that are legal, honest, moral, and fair.

Vertical integration

refers to merging various stages of activities in the distribution channel.

Social Responsibility

refers to the expectation that business firms should serve both society and the financial interests of the shareholders.

Industrial organization (IO),

a branch of microeconomics, emphasizes the influence of the industry environment on the firm.

Mass Customization

is the ability to individualize product and service offerings to meet specific buyer needs.

retrenchment strategy

A firm deliberately reduces its size when it employs a retrenchment strategy.

horizontal integration

A firm that acquires other companies in the same line of business is engaging in

Takeover

A purchase of a controlling quantity of shares of a firm by an individual, a group of investors, or another organization

corporate restructuring

A retrenchment strategy is often accompanied by a reorganization process known

The Justice view

All decisions will be made in accordance with pre-established rules or guidelines

Compete in related industries

Allows a firm to develop synergy among the business units.

Compete in a single industry

Allows a firm to specialize, but "all eggs are in a single basket."

The Utilitarian view

Anticipated outcomes and consequences should be the only considerations when evaluating an ethical dilemma.

The Integrative Social Contracts view

Decisions should be based on existing norms of behavior, including cultural, community, or industry factors

The Religious view

Decisions should be based on personal or religious convictions.

Leveraged Buyout (LBO)

Takeovers that rely heavily on borrowed funds.

Internet as distribution channel

The Internet acts as a distribution channel for non-tangible goods and services. Consumers can purchase items such as airline tickets, insurance, stocks, and computer software online without the necessity of physical delivery.

Stability

attempting to maintain the present size and scope of operations—may be more attractive than growth in four instances

social weighting

by making carefully controlled comparisons.

appeal to higher values

by suggesting that justification of the unethical behavior is due to a higher order value.

Outsourcing

contracting out a firm's non-core, non-revenue-producing activities to other organizations primarily to reduce costs

Internal Growth

expanding by internally increasing its size and sales.

critical success factors

factors that tend to be essential for success for most or all companies in a given industry—for the industry.

Sustainable strategic management (SSM)

is a broader notion of social responsibility refers to the strategies and related processes that promote superior performance from both market and environmental perspectives.

Acquisition

is a form of merger whereby one firm purchases another, often with a combination of cash and stock.

industry

is a group of companies that produce competing products or services.

Strategic Management

is a process that includes top management's analysis of the environment in which the organization operates prior to formulating a strategy, as well as the plan for implementation and control of the strategy.

Commoditization

is a process whereby firms are having a more difficult time distinguishing their products and services from those of their rivals

Competitive advantage

is a state whereby a firm's successful strategies cannot be easily duplicated by its competitors.

Boston Consulting Group (BCG) Matrix

is corporate portfolio framework that examines the relationships among business units held by a single firm.

Strategic alliances

often called partnerships. occur when two or more firms agree to share the costs, risks, and benefits associated with pursuing new business opportunities.

Strategy

refers to top management's plans to develop and sustain competitive advantage so that the organization's mission is fulfilled.

Offshoring

relocating some or all of a firm's manufacturing or other business processes to another country to reduce costs—is similar to outsourcing, but enables the firm to retain control of the operations abroad instead of relinquishing them to other firms.

Exit barriers

represent costs a firm must incur if it leaves an industry.

market share

represents a firm's position within an industry.

Contingency theory

represents a middle ground perspective that views organizational performance as the joint outcome of environmental forces and the firm's strategic actions.

turnaround

seeks to transform the corporation into a leaner, more effective firm, and includes such actions as eliminating unprofitable outputs, pruning assets, reducing the size of the workforce, cutting costs of distribution, and reassessing the firm's product lines and customer groups.

Divestment

selling one or more of a firm's business units—may be necessary when the industry is in decline, or when a business unit drains resources from more profitable units, is not performing well, or is not synergistic with other corporate holdings.

relative market share

share—the firm's percentage of sales in an "industry" restricted to select competitors—is a useful measure.

Objectives

specific, often quantified, versions of goals

deny injury

suggesting that the unethical behavior did not really hurt anyone.