Management Test (CH. 4,5,8)

Functional-level strategy

"How do we support the business-level strategy" pertains to the major functional departments within the business unit, such as manufacturing, marketing, and R&D, marketing, and manufacturing

Business-level strategy

(How do we compete?) Pertains to each business unit or product line within the organization. Strategic decisions at this level concern the amount of advertising, direction, and extent of R&D; product changes; new-product development; equipment and facilities; and expansion or contradiction of product and service lines.

Corporate-level strategy

(What business are we in?) Pertains to the organization as a whole and the combo of business units and products that make it up. Strategic actions at this level usually relate to the acquisition of new businesses; additions or divestment of business units, plants, or product lines; and joint ventures with other corporations in new areas.

What are three criteria to determine whether a company is a multinational corporation

1. A MNC is managed as an integrated worldwide business system in which foreign affiliates act in close alliance and cooperation with one another. Capital, technology, and people are transferred among affiliate countries. The MNC can acquire materials and manufacture parts wherever in the world it is most advantageous to do so. 2. An MNC is ultimately controlled by a single management authority that makes key strategic decisions relating to the parent and all affiliates. Some centralization is required to maintain worldwide integration and profit maximization for the enterprise as a whole. 3. MNC top managers are presumed to exercise a global perspective. They regard the entire world as one market for strategic decisions, resource acquisition, and location of production, advertising, and marketing efficiency.

What are the three types of MNC?

1. Ethncentric companies- place emphasis on their home countries 2. Polycentric companies - oriented towards the markets of individual foreign hosts 3. Geocentric companies - truly world oriented and favor no specific country

What are the three types of direct investment?

1. Joint venture, wholly owned foreign affiliate, and greenfield venture

Joint venture

A company shares costs and risks with another firm, typically in the host country, to develop new products, build manufacturing facility, or set up a sales and distribution network

Licensing

A corporation (licencor) in a country makes certain resources available to a company (licensee) in a foreign country to enable that company to produce and market a product in that foreign country

Greenfield Venture

A form of market entry strategy with establishment of a new wholly owned subsidiary in a foreign country by constructing its facilities from start. Through Greenfield Venture, a business enters a new market without the help of another business which is already present there.

The dog

A poor performer. It has only a small share of a slow-growth market. The dog provides little profit for the corporation and may be targeted for divestment or liquidation if turnaround is not possible. Procter & Gamble has recently been re-balancing its portfolio and getting rid of some poor performers.

Franchising

A special form of licensing that provides a complete package of materials and services

Wholly owned foreign affiliate

A wholly owned subsidiary is a company whose common stock is 100% owned by another company, the parent company. Whereas a company can become a wholly owned subsidiary is 51% to 99% owned by the parent company.

What are the advantages and disadvantages of exporting?

Advantages: saving cost and reduced risk Disadvantages: physical distance, govt regulations, appreciation of domestic currency, foreign cultures

Target market

An effective strategy defines the customers and which of their needs are to be served by the company. Managers can define a target market geographically, such as serving people in a certain part of the country; demographically, such as aiming toward people in a certain income bracket or targeting preteen girls; or by a variety of other means.

Ethical dilema

An ethical dilemma arises in a situation concerning right or wrong when values are in conflict.

Opportunities

Characteristics of the external environment that have the potential to help the org achieve or exceed its strategic goals.

Threats

Characteristics of the external environment that may prevent the org from achieving its strategic goals

What are the four strategies to achieve competitive advantage?

Core competence, synergy, delivering value, and target market

What are the three levels of business strategy?

Corporate-level, business level, and functional level

Market share

Defines whether a business unit has a larger or smaller share than competitors

Delivering value

Delivering value to the customer is at the heart of strategy. Value can be defined as the combo of benefits received and costs paid.

What are the three forms of the justice approach?

Distributive justice, procedural justice, and compensatory justice

What are the three different domains of behavior?

Domain of codified law (legal standard), domain of free choice (personal standard), and Domain of ethics

Strengths and weaknesses

Executives acquire info about internal strengths and weaknesses from a variety of reports, including budgets, financial ratios, profit and loss statements, and surveys of employee attitudes and satisfaction. In addition, managers build a understanding of the company's internal strengths and weaknesses by talking with people at all levels of the hierarchy in frequent face-to-face discussions and meetings

The cash cow

Exists in a mature, slow-growth industry but is a dominant business in the industry, with a large market share. Because heavy investments in advertising and plant expansion are no longer required, the corporation earns a positive cash flow. It can milk the cash cow to invest in other, riskier businesses.

The question mark

Exists in a new, rapidly growing industry, but has only a small market share. The question mark business s risky: It could become a star, or it could fail. The corporation can invest the cash earned from cash cows in questiion marks with the goal of nurturing them into future stars

Preconventional stage

Follows rules to avoid punishment. Acts in own interest. Obedience for its own sake Leader style: Autocratic/coercive Employee behavior: Task accomplishment

Postconventional Stage

Follows self-chosen principles of justice and right. Aware that people hold different values and seeks creative solutions to ethical dilemmas. Balances concern for individual with concern for common good Leader style: Transforming, or servant leadership Employee behavior: empowered employees, full participation

The Star

Has a large market share in a rapidly growing industry. It is important because it has additional growth potential, and profits should be plowed into this business as investment for future growth and profits. The star is visible and attractive and will generate profits and positive cash flow even as the industry matures and market growth slows.

Direct investing

High level of involvement, company manages and controls assests

Moral-rights approach

Holds that ethical decisions are those that best maintain the fundamental rights of the people affected by them

Domain of Codified Law

In which values and standards are written into the legal system and enforceable in the courts. Lawmakers set rules that people and corporations must follow in a certain way, such as obtaining licenses for driving, paying corporate taxes, and following other local, state, and national laws.

Compensatory Justice

Individuals should be compensated for the cost of their injuries by the party responsible. Note that there are psychological and physical injuries in the workplace that can be compensated.

Weaknesses

Internal characteristics that might inhibit or restrict the org's performance.

Conventional Stage

Lives up to expectations of others. Fulfills duties and obligations of social system. Upholds laws. Leader style: Guiding/encouraging, team oriented Employee behavior: Work group collaboration

Opportunities and threats

Managers obtain external info about opportunities and threats from a variety of sources, including customers, gov. reports, professional journals, suppliers, bankers, friends in other orgs, consultants, and association meetings.

Utilitarian approach

Moral behavior that produces the greatest good for the greatest number. Who represents the greates number depends on the cases you are analyzing (e.g. a company versus an individual employee, a company versus a community, etc.)

justice approach

Moral decisions must be based on standards of equity, fairness, and impartiality

High-context culture

People are sensitive to circumstances surrounding social exchanges. People use communication primarily to build personal socal relationships; meaning is derived from context- setting, status, and nonverbal behavior- more than from explicit words; relationships and trust are more important than business; and the welfare and harmony of the group are valued.

Low-context culture

People use communication primarily to exchange facts and info; meaning is derived primarily from words; business transactions are more important than building relationships and trust; and individual welfare and achievement are more important than group

business growth rate

Pertains to how rapidly the entire industry is increasing

Strength

Positive internal characteristics that the org can exploit to achieve its strategic performance goals.

Competitive advantage

Refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customer or client needs in the marketplace. The essence of formulating strategy is choosing how the organization will be different.

Distributive justice

Requires that different treatment of people not be based on arbitrary characteristics. For example, men and women should not receive different salaries if they have the same qualifications and are performing the same job. About the balance b/w one's input and output.

Procedural justice

Requires that rules be administered fairly. Rules should be clearly stated and consistently and impartially enforced. About the fainess in the process of making a decision by a manager.

Core competence

Something that the organization does especially well in comparison to its competitors. A core competence represents a competitive advantage because the company acquires expertise that competitors do not have. A core competence may be in the area of superior research and development (R&D), expert tech know-how, process efficiency, or exceptional customer service.

Ethics

The code of moral principles and values that governs that behaviors of a person or group with respect to what is right or wrong.

Domain of ethics

This domain has no specific laws, yet it does have standards of conduct based on shared principles and values about moral conduct that guide an individual or company

Synergy

When organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone. The org may attain a special advantage with respect to cost, market power, tech, or management skill.

global outsourcing

also called offshoring, means engaging in the international division of labor so that work activities can be done in countries with the cheapest sources of labor and supplies

Domain of Free choice

at the opposite end of the scale and pertains to behavior about which the law has no say and for which an individual or organization enjoys complete freedom. Examples include a manager's choice of where to buy a new suit and an organizations choice of which of two well-qualified suppliers to use

Exporting

transferring products for sale to foreign countries