MGMT 464 Final Exam SELU Honoree

Kaizen:

- "Continuous improvement"

3 Responses to Managing Resistance to Change:

- "Suck it up" - Use authority to implement change w/out feedback

Price Leadership Strategy:

- "Worst-named concept in the course" - The company who is the "weakest" sets the price - They have the highest costs in that industry - All the other competitor companies benefit from this

Program:

- A collection of tactics - Purpose is to make a strategy action-oriented

"Think Local, Act Local":

- A firm using a multi-domestic strategy does not focus on cost or efficiency but emphasizes responsiveness to local requirements within each of its markets. - Employ localized strategies - one for each country market: - Tailor the company's competitive approach and product offering to fit specific market conditions and buyer preferences in each country - Delegate strategy making to local managers with firsthand knowledge of local conditions - This includes considering foreign customs, traditions, and cultural traits - With a multi-domestic business strategy, company headquarters are often maintained in the country of origin. However, the company may establish localized headquarters overseas from which they can more easily manage relations with foreign customers.

4 Types of Unhealthy Cultures:

- A highly politicized internal environment in which many issues get resolved and decisions made based on which individuals or groups have the most political clout - Hostility to change and a general wariness of people who champion new ways of doing things - An insular "not-invented-here" mind-set that makes company personnel averse to looking outside the company for best practices, new approaches and ideas - A disregard for high ethical standards and an overzealous pursuit of wealth and status on the part of key executives

Six Sigma:

- A process for reducing costs, improving quality, and increasing customer satisfaction

Management by Objectives (MBO):

- A technique that encourages participative decision making through shared goal setting at all organizational levels and performance assessment based on the achievement of stated objectives

Location Economies:

- Access to raw materials could be less, value creation, lower costs - Necessary to differentiate/charge premium price - EX: watches made in Switzerland, fashion designer in Paris, energy HQ in Houston, TX (world capital of energy)

Assimilation:

- Acquiring firm's culture kept intact, but subservient to that of acquiring firm's corporate culture

Budgets:

- After programs/tactics - Last real check a firm has on the feasibility of its selected strategy

Six Sigma Phase - Analyze:

- After the data are collected and statistics analyzed, the company's six sigma team discovers/identifies the "best practices" for avoiding problems/defects in their organization - What are the most important causes of the defects?

Coordinated Strategies:

- Aligning the business strategies of two or more business units may provide a corporation significant advantage by reducing inter-unit competition and developing a coordinated response to common competitors (horizontal strategy)

"Nationalizing" an Industry:

- All companies in the industry in a country are now owned by that host country - EX: Mexico nationalized oil

Greatest Weakness of Stage II - Functional Structure:

- All eggs are in one basket

Forming ________ and ________ presents immediate opportunities and opens the door to future possibilities - but this requires relationships that can grow, develop, and blossom.

- Alliances - Cooperative relationships

Joint Ventures:

- An independent business entity created by two or more companies in a strategic alliance

There is going to be ________ with change.

- Anxiety/Resistance

Best Practices:

- Any practice that at least one company has proved works particularly well

Height of Barriers to Entry Question:

- Are these high enough so that others don't come in?

A synonym for Parochialism is ________.

- Arrogance

Expropriation:

- Assets may be seized if a nation has a purpose for it (they either pay for it or they just take it)

Parochialism:

- Assumes the ways of your culture are the BEST ways of doing things - Everyone else is wrong

Ethnocentrism:

- Assuming your cultural ways are the only ways of doing things - Thinking your ethnic group is superior compared to other ethnic groups - This view gives you the wrong assumption of other ethnic groups

Offensive Strategies Suitable for Foreign Markets:

- Attack Profit Sanctuaries - Employ Cross-Market Subsidization - Dumping

2 Ways to Manage Conflict in Resource Allocation:

- Avoidance - Defusion - Confrontation

3 Ways to Follow a Leadership Strategy:

- Beat them - the 4 P's - Buy them - Raising the stakes

Six Sigma Phase - Define:

- Because six sigma is aimed at reducing defects, the first step is to define WHAT CONSTITUTES a DEFECT? - Who is the customer and what are their needs?

BOT Concept:

- Build, Operate, Transfer - A variation of the turnkey operation - Instead of turning the facility over to the host country when completed, the company operates the facility for a fixed period of time during which it earns back its investment, plus a profit

Green-Field Development:

- Builds a company's manufacturing plant and distribution system in another country

3 Major Tools for Implementing Strategies:

- Business Process Reengineering - Total Quality Management (TQM) Programs - Six Sigma Quality Control

Key Features of the International Strategy:

- Business objectives and competitive advantage relate primarily to the home market - Products are produced in the company's home country then sent to customers all over the world - Often referred to as an exporting strategy - This strategy is often followed by small local businesses that are seeking to export resources to foreign markets.

How specifically can organizational culture promote better strategy execution? (3 items)

- By producing significant peer pressure from coworkers to conform to culturally acceptable norms - Steers company personnel to culturally approved behaviors/activities thus making it far simpler to root out any operating practice that is a misfit - By promoting strong employee identification with and commitment to the company's vision, performance targets, and strategy

"Organizational Structure Follows Strategy":

- Changes in corporate strategy led to changes in organizational structure - Organizations follow pattern of development from one kind of structure to another as they grow/expand

Defusion Type of Conflict Management:

- Cognitive diffusion/Deliteralization - Acceptance and Commitment Therapy

Key Features of the Transnational Strategy:

- Combination of global and multi-domestic strategies - Allows the establishment of full-scale operations/value chain in foreign markets - Companies have separate marketing, research, and development departments to respond to local customers - Product or service is largely the same for different markets - locally responsive for market but product is standardized - This means that the business is still operating from its headquarters in its country of origin, however, it also allows the company to expand with full-scale operations in foreign markets. (Marketing is same, product are different) - A transnational product is the same regardless of the country in which it is sold. It doesn't change to suit a new market - the product is the same everywhere and isn't modified to appeal to local customs or preferences. (EX: Coca-Cola)

Shared Tangible Resources:

- Combined units can sometimes save money by sharing resources, such as a common manufacturing facility or R&D lab

Shared Know-How:

- Combined units often benefit from sharing knowledge or skills

Late Mover:

- Companies that enter a new market only after other companies have done so

3 Organizational Benefits of Outsourcing:

- Company improves its chances for outclassing rivals in the performance of strategy critical activities and turning a core competence into a distinctive competence (doing one thing and doing it really well) - Often acts to decrease internal bureaucracies, flatten organizational structure, speed internal decision making, and shorten time to respond to a changing marketplace (more layers = takes longer) - Outsourcing to suppliers may add to a company's number of capabilities and contribute to better strategy execution

3 Questions to Ask That Lead to Embryonic/Growth Industry Strategies:

- Complementary Assets - Height of Barriers to Entry - Capable of Competitors

Cellular/Modular Organization:

- Composed of cells which can operate alone but which can interact with other cells to produce a more potent and competent business mechanism

Greatest Strength of Stage II - Functional Structure:

- Concentration and specialization in one industry

Separation:

- Conflicting cultures kept intact, but kept separate in different units

Mature industries are mainly ________ industries.

- Consolidated

Context:

- Context is the situation surrounding something - Context can influence meaning

Turnkey Operations:

- Contracts for the construction of operating facilities in exchange for a fee

Educative Change Strategy:

- Convincing someone to do something - Educating people as to why they need to change

Classic Method:

- Coordinate the activities of organizational units is to position them in the hierarchy so that the most related units report to a single person (functional dept head; geographic area head, etc....) - Higher level managers generally have the clout/ability to coordinate, integrate, an arrange for the cooperation of units under their supervision

Economies of Scale or Scope:

- Coordinating the flow of products or services of one unit with that of another unit can reduce inventory, increase capacity utilization, and improve market access

Firms pursuing an international strategy are neither concerned about ________ nor ________.

- Costs - Adapting to the local cultural conditions

Culture is the "Software of the Mind":

- Culture is the "personality" of a country - Basically, we are shaped by the country in which we are born (EX: we aren't born American just because we're born there; we are taught how to be American)

TQM focuses on total ________.

- Customer satisfaction

Timing Tactic:

- Deals with when a company implements a strategy

Market Location Tactic:

- Deals with where a company implements a strategy

Centralized Decision Making:

- Decision-making is done at the top

5 Phases of Six Sigma (DMAIC Steps):

- Define - Measure - Analyze - Improve - Control

Confucian Dynamism:

- Denotes the time orientation of a culture, defined as a continuum with long-term and short-term orientations as its two poles - How do you view the world/life? Short-term or long-term?

Need for Clear Annual Objectives:

- Desired milestones a firm needs to achieve to ensure successful strategy implementation

Cost pressures and local responsiveness pressures are ________ opposed to one another.

- Diametrically

4 Categories of Unique Pressures that Make Companies More Locally Responsive:

- Differences in tastes and preferences - Differences in infrastructure and traditional practices - Differences in distribution channels - Host government demands

Pressures for Local Responsiveness:

- Differentiation - Under pressure to give the people what they want - custom, unique, etc. - EX: Chinese & Mexican food in the US are locally responsive - it's not what they eat in China & Mexico

Complementary Assets Question:

- Do you have/Can you get a hold of the money, knowledge, assets, employees, etc. on your own?

License the Innovation Strategy:

- Does not have required complementary assets, low barriers to imitation, many capable competitors

Firms pursuing a global strategy are under pressure to keep costs ________ but not to be ________.

- Down - Locally responsiveness

Types of Restructuring:

- Downsizing - Rightsizing - Delayering

Dumping:

- Dump goods at cut-rate prices in the markets of foreign rivals - Dumping is illegal - World Trade Organization polices this

Expanding into Foreign Markets - Achieving Lower Costs and Enhancing the Firm's Competitiveness:

- Economies of scale - increases volume - Location economies - it matters where in the world certain things are done

Examples of Innovation

- Electric cars & 3D printers

6 Guidelines for Successful Downsizing:

- Eliminate unnecessary work instead of making across-the-board cuts - Contract out work that others can do cheaper - Plan for long-run efficiencies - Communicate the reasons for actions - Invest in the remaining employees - Develop value-added jobs to balance out job elimination

Rightsizing:

- Elimination of divisions/units

Leading:

- Emphasizes the use of programs to better align employee interests and attitudes with a new strategy

Employing Cross-Market Subsidization:

- Employ cross-market subsidization to win customers and sales away from select rivals in select country markets - Tremendous growth potential in other markets

"Think Global, Act Local":

- Employ essentially the same basic competitive Generic Strategy in all country markets (low-cost provider everywhere) - Give local managers the latitude to adapt the global approach as needed to accommodate local buyer preferences and be responsive to local market and competitive conditions. (Ability to tweak, not change completely) - When companies adopt a global business strategy, they treat the world as one market and leverage economies of scale to boost reach and revenue. - Global companies have little local variation, as products and services are homogenized to reduce costs while reaching as many people as possible. - Usually, these companies have a central office or headquarters in their country of origin, while also establishing operations in foreign markets

Chief Advantages of Decentralized Decision Making:

- Encourages lower-level initiative - Promotes motivation & involvement - Spurs creative thinking - Faster response times - Fewer layers

TQM:

- Entails creating a total quality culture bent on continuously improving the performance of every task and value chain activity

Stage II - Functional Structure:

- Entrepreneur is replaced by a team of managers who have functional specializations - Requires a substantial managerial style change for the chief officer of the company

6 Steps in Business Process Reengineering Cycle:

- Envision New Process - Initiate Change - Process Diagnosis - Process Redesign - Reconstruction - Process Monitoring

Integration:

- Equal merger of both cultures into a new corporate culture

4 Steps in the MBO Process:

- Establishing and communicating organizational objectives - Setting individual objectives (through superior-subordinate interaction) that help implement organizational ones - Developing an action plan of activities needed to achieve the objectives - Periodically (at least quarterly) reviewing performance as it relates to the objectives and including the results in the annual performance appraisal

Resource Allocation:

- Every org. has finite resources/assets - Strategy = choice - Strategic Management Process = Resource Allocation Process

New Business Creation:

- Exchanging knowledge and skills can facilitate new products or services by extracting discrete activities from various units and combining them in a new unit or by establishing joint ventures among internal business units

Market Development Strategy:

- Existing product in a new marketing segment - Get an existing product and get new people to buy it

Market Penetration Strategy:

- Existing product in an existing marketing segment

Advantages of Outsourcing:

- Expertise/know-how (outside source has the knowledge and time) - Better/cheaper ("paying to not be wrong")

Expanding into Foreign Markets - Capitalizing on Core Competencies:

- Exploit competencies/advantages in other countries

Types of International Entry:

- Exporting - Licensing - Franchising - Joint Ventures - Acquisitions - Green-Field Development - Production Sharing - Turnkey Operations - BOT Concept - Management Contracts

Greatest Weakness of Stage I - Simple Structure:

- Extreme reliance on the entrepreneur to decide general strategies as well as detailed procedures

Theodore Leavitt:

- FACT - the world is getting smaller = tastes become homogeneous - OPINION - depends on the product category

T/F: It is uncommon for companies to have subcultures within the organization.

- False

Advantage of Managing Resistance to Change:

- Fastest way to implement change

4 Different Assets/Resources:

- Financial - Physical - Technological - Human Resources/Human Assets

Global Web:

- Find one place in the world where every level/segment in value chain is at its best

Advantages of International Operations:

- Firms can gain new customers for their products. (maturity in home country, but growth in other places) - Foreign operations can absorb excess capacity, reduce unit costs, and spread economic risks over a wider number of markets. - Foreign operations can allow firms to establish low-cost production facilities in locations close to raw materials or cheap labor. (using "global web" to find good places to lower costs) - Competitors in foreign markets may not exist, or competition may be less intense than in domestic markets. - Foreign operations may result in reduced tariffs, lower taxes, and favorable political treatment. (worried about protectionism, so getting in a joint venture, partnership, etc. in another country can help) - Joint ventures can enable firms to learn the technology, culture, and business practices of other people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign countries. (better together than apart) - Economies of scale can be achieved from operation in global rather than solely domestic markets. Larger-scale production and better efficiencies allow higher sales volumes and lower-price offerings. - A firm's power and prestige in domestic markets may be significantly enhanced if the firm competes globally. Enhanced prestige can translate into improved negotiating power among creditors, suppliers, distributors, and other important groups (become legitimized, get more respect, get more concessions)

Weak Culture Companies:

- Firms that lack values and principles, have few widely revered traditions, and few culture-induced norms - Employees experience little co-worker peer pressure to do things in particular ways and little to no employee allegiance to the company

Chief Advantage of Centralized Decision Making:

- Fixes accountability

Greatest Strengths of Stage I - Simple Structure:

- Flexibility - Dynamism

Key Features of the Multidomestic Strategy:

- Focus on establishing a presence and tailoring products to suit new markets - Competitive advantage determined separately for each country

Staffing:

- Focuses on the selection and use of employees

Key Features of the Global Strategy:

- For such firms, variance in local preferences is not very important, but pricing is. - Homogenized products to minimize costs and reach a broad audience - Small adjustments needed to break into international markets

Deculturation:

- Forced replacement of conflicting acquired firm's culture with that of the acquiring firm's culture

Disadvantages of International Operations:

- Foreign operations seized by nationalistic factions - Communication difficulties (language, cultural, value systems) - Weaknesses of competitors abroad is often overestimated, and strengths underestimated - Dealing with two or more monetary systems can complicate business - Increased difficulty of learning and working with regional organizations (International Bank, IMF, Latin American Free Trade Area, EU, etc...)

The Matrix Structure:

- Functional and product forms are combined simultaneously at the same level of the organization

Delayering:

- Getting rid of hierarchical levels

Strategies in Embryonic/Growth Industries to Profit from Innovation:

- Going It Alone - has required complementary assets, high barriers to imitation, very low number of capable competitors - Entering Into an Alliance - has required complementary assets, high barriers to imitation, moderate number of capable competitors - License the Innovation - does not have required complementary assets, low barriers to imitation, many capable competitors

Disadvantage of Rational Change Strategy/Self-Interest Change Strategy:

- Hard to find where everyone is better off

Entering Into an Alliance Strategy:

- Has required complementary assets, high barriers to imitation, moderate number of capable competitors

Go It Alone Strategy:

- Has required complementary assets, high barriers to imitation, very low number of capable competitors

Maintaining Excess Capacity Strategy:

- Have the ability to have more supply than demand due to a high fixed capacity (when demand increases, they already have the fixed capacity to cover it)

Stage 5 (MNC with Global Emphasis):

- Have worldwide Human Resources, R&D, and financing strategies - Typically operating in a global industry, it denationalizes its operations and plans product design, manufacturing, and marketing around worldwide considerations

TQM needs ________ commitment.

- High

A Transnational Strategy has ________ local responsiveness and ________ cost reductions.

- High - High

The poorer nations score ________ on collectivism, while the wealthier nations score ________ on individualism.

- High - High

A Multidomestic Strategy has ________ local responsiveness and ________ cost reductions.

- High - Low

Advantage of Rational Change Strategy/Self-Interest Change Strategy:

- High commitment and almost no resistance

Language/Vocabulary is a Result of:

- History - Expression - how we relate to our environment

Processes/Concepts of Confrontation:

- Hold a meeting where both parties show their position to reach an understanding - Exchange members of the groups and make them work with that group ("walking in their shoes")

International Strategy:

- How companies initially get into international business - Initially an exporting strategy - Attempt to sell products internationally with little to no change - EX: Belgium chocolates; Rolex watches

Capable of Competitors Question:

- How many competitors are capable of competing? Do they have the skills or access necessary to do so?

Differences in Distribution Channels:

- How things get to people - EX: in the Philippines, Ivory Soap was sold door-to-door in a pretty box w/ a bow to look like a gift for someone

Challenges of Transnational Strategy:

- Identifying effective management tactics and large investment costs

Why make strategy critical activities the main building blocks that drive the structure decision?

- If activities crucial to strategic success are to have the resources/decision-making influence/organizational impact, they need - they must be centerpieces in the organizational scheme - Implementing new/changed strategy will likely entail different key activities/competencies/capabilities that require different organizational arrangements - Mismatch between strategy and structure will present execution and performance problems (e.g., attempting a new strategy with an old organizational structure)

Inevitable Imitation

- If someone has a great idea, people are going to copy it - Plan for imitation

A synonym for Ethnocentrism is ________.

- Ignorance

Avoidance Type of Conflict Management:

- Ignoring the problem - Physically separating the people in conflict

Network Structure - The Virtual Organization:

- In-house business functions are virtually eliminated - Composed of a series of project groups or collaborations linked by constantly changing non-hierarchical, cobweb-like electronic networks

Examples of Individualism and Collectivism:

- Individualistic - US, Australia, Great Britain - Collectivistic - Singapore, Hong Kong, Mexico

Differences in Infrastructure and Traditional Practices:

- Infrastructure - makes you be locally responsive (EX: driving on the left side of the road; different outlets in different countries) - Traditional Practices - the way people live their lives

4 Methods of Managing Diverse Cultures Following an Acquisition:

- Integration - Assimilation - Separation - Deculturation

Organizational Bridges - Relationship Managers:

- Job is to cultivate relationships b/t competitors, distributors, government, etc.

Height of Exit Barriers in a Declining Industry:

- Keeps people in an industry who should have left - Results in excess capacity (supply exceeds demand) - Tremendous downward pressure on pricing

4 Popular Dimensions of Culture:

- Language - Time Orientation - Use of Space - Religion

4 Strategies for Declining Industries:

- Leadership Strategy - Niche Strategy - Harvest Strategy - Divestment Strategy

Divestment Strategy (Declining Industry):

- Leaving - The company can maximize its net investment recovery from a business by selling it early before the industry has entered steep decline - The sooner you get out, the better (assets are worth more today than later) - sell out early - Ideally, find someone following a leadership strategy and sell to them

Harvest Industry (Declining Industry):

- Leaving - When a company wishes to get out of a declining industry and perhaps optimize cash flow in the process - Take cash flow in exchange for market share - Put product on sale when going out of business and don't buy any more product for the store - liquidate the rest at the end - EX: A "going out of business" sale

Primary Disadvantages of Centralized Decision Making:

- Lengthens response times - Doesn't encourage responsibility among lower-level managers - Discourages lower-level initiative

Advantage of Educative Change Strategy:

- Less resistance and more commitment

Expanding into Foreign Markets - Spreading Business Risk Across a Wider Market Base:

- Less risk when stationed in several countries

Monochronic Time Culture:

- Linear view - "One chance at time"; time is money - Long range goals/future is important - Save time, not wasting time - People appreciate schedules and appointments

Multidomestic Strategy:

- Localized/Multinational/Multi-Country Strategy - 180 degrees difference from Global Strategy EX: Netflix; HG Heinz; Nestle

Benchmarking:

- Looks outward to find best practices and then develop the data for measuring how well a company's own performance of an activity stacks up against that standard

A Global Strategy has ________ local responsiveness and ________ cost reductions.

- Low - High

An International Strategy has ________ local responsiveness and ________ cost reductions.

- Low - Low

Examples of Low and High Uncertainty Avoidance:

- Low - Singapore, Jamaica, Denmark - High - Greece, Portugal, Japan

Examples of Low and High Power Distance:

- Low - US and Canada - High - Japan and Singapore

Disadvantage of Managing Resistance to Change:

- Low commitment/motivation and high resistance/anger to change

Pressures for Cost Reductions:

- Low cost - Economies of Scale - Production, Advertising, Purchasing - Standardization

Attacking Profit Sanctuaries:

- Make them have to defend it - increase costs/spend money to defend it (drives profits down)

4 Non-Price Competitive Strategies:

- Market Penetration - Product Development - Market Development - Product Proliferation

Masculinity-Femininity:

- Masculinity (Quantity of Life) or Femininity (Quality of Life) - Quantity is about being competitive, keeping score, accumulating wealth, status - Quality is about interpersonal relationships, being happy

Examples of Masculinity and Femininity:

- Masculinity - Japan, Austria, Italy - Femininity - Sweden, Norway, Netherlands

Flexible Types of Organizational Structure:

- Matrix Structure - Network Structure - Virtual Organization - Cellular/Modular Organization

Dangers of Excessive Outsourcing:

- May hollow out the knowledge base (lose knowledge of industry) - Lose control of own destiny (become dependent on people outside of the organization)

Stage IV - Beyond SBUs:

- May result in a red tape crisis in which the corporation has grown too large and complex to be managed through formal programs and rigid systems - Procedures take precedence over problem solving

Conflict in Resource Allocation:

- Misunderstandings, differences on resource allocations (trade-offs), differences of personalities, etc.

Expanding into Foreign Markets - Gaining Access to New Customers:

- More money to be had outside of any 1 country - Can also fund growth rates - EX: Could be maturity stage in 1 country, but in a growth stage

Confrontation Type of Conflict Management:

- Most direct - Want both parties to understand the other party's position

Restructuring:

- Motivation comes from that of a shareholder or owner - Motivation is to cut costs - Org. structural change - people lose their jobs

Re-engineering:

- Motivation is customer/employee benefit - not primarily about cutting costs - Motivation is to increase quality of output, response time, customer service, etc. - Will not necessarily have an org. structural change

Multinational Competition vs. Global Competition:

- Multinational: Different markets of the world are unique - Global: The world is 1 market and is the same everywhere

Subculture:

- Multiple cultures within the organization

Cross-Unit Collaboration:

- Needed to build core competencies/competitive capabilities in strategically important areas (e.g., like bringing new products to market)

Product Proliferation Strategy for Non-Price Competition:

- New product in a new marketing segment - Get a new product and new people to fill in the gaps

Product Development Strategy:

- New product in an existing marketing segment - People pay more for products that are "new and improved"

Six Sigma Phase - Measure:

- Next is to collect data to find out WHY, HOW AND HOW OFTEN this defect occurs - How is the process defined and how are defects measured?

Low power distance means ________, and high power distance means ________.

- No respect for authority - Respect for authority

Transnational Strategy:

- Not sustainable long-term (being low cost & locally responsive) - not a good place to be - EX: Coca-Cola - Only 2 countries where you can't buy coke: North Korea & Cuba

Management Contracts:

- Offer a means through which a corporation can use some of its personnel to assist a firm in a host country for a specified fee and period of time

Collectivism:

- People are integrated into strong, cohesive groups that protect individuals in exchange for unquestioning loyalty

Weaknesses of Traditionally Functionally Organized Structures:

- Pieces of strategically relevant activities/capabilities get scattered across many different departments - with the result that no one group/manager being accountable - These hand-offs from department to department lengthen completion time and frequently drive-up administrative costs (coordinating fragmented pieces across departments takes effort and time)

Processes/Concepts of Defusion:

- Playing down the differences b/t people (find things in common) - Finding some element of compromise (both sides "won" something) - Settle by majority rule - Appeal to a higher authority - Separate people/redesign jobs or organizations

Hofstede's Cultural Dimensions:

- Power Distance - Individualism vs. Collectivism - Masculinity-Femininity - Uncertainty Avoidance - Confucian Dynamism

Strategies to Manage Rivalry in Mature Industries/Avoiding a Price War:

- Price-Signaling (tit-for-tat strategy) - Price Leadership - Non-Price Leadership

Stage 1 (Domestic Company):

- Primarily domestic company exports some of its products through local dealers and distributors in the foreign countries

Strategies to Deter Entry in Mature Industries:

- Product Proliferation - Price Cutting - Maintaining Excess Capacity

Host Government Demands:

- Product is different b/c the gov. says it has to be different - EX: California emissions regulations; European car headlights

Product Proliferation Strategy to Deter Entry in Mature Industries:

- Proliferation - takes off in big numbers/exploded - Extend product line/come up with a lot of different product

Policies and Operating Procedures Facilitate Strategy Execution By:

- Providing top-down guidance regarding how things need to be done - Helping ensure consistency in how execution-critical activities are performed - Promoting the creation of a work climate (organizational culture) that facilitates good strategy execution

Use of Space:

- Proxemics - Interpersonal Space - how close/far people are apart

Acquisitions:

- Purchasing another company already operating in that area

Decentralized Decision Making:

- Push decision-making down to lower levels

Primary Disadvantages of Decentralized Decision Making:

- Puts organization at risk with lack of control - Impedes cross-business coordination (siloed in individual places)

Standardization is not a bad thing, it provides ________.

- Quality

Process Departments:

- Rather than scattering related pieces of a strategy-critical business process across several functional departments (attempting to integrate them) - It is often better to re-engineer the work effort and pull the people who performed the pieces in functional departments into a group that works together to perform the whole process

Price Cutting Strategy:

- Reduces amount of people thinking about coming in

Downsizing:

- Reduction/elimination of employees

Need for Clear Policies:

- Refers to specific guidelines, methods, procedures, rules, forms, and admin. practices established to support and encourage work toward stated goals (policies are the how-to)

Corporate Culture:

- Refers to the character of a company's internal work climate and personality - as shaped by its core values, beliefs, business principles, traditions, ingrained behaviors, work practices and styles of operating

Outsourcing General Rule:

- Refrain from outsourcing those activities that you need to 1) build core competencies, 2) achieve competitive advantages, or 3) effectively manage key supplier/distributor relationships

Why There is a Need for Clear Annual Objectives:

- Represent basis for allocating resources (budgeting) - They are the primary mechanism to evaluate managers - They enable effective monitoring of progress toward achieving long-term objectives - The establish organizational, divisional, and departmental priorities (priorities get more funding/emphasis) - They are essential for keeping a strategic plan on track

Geert Hofstede:

- Researcher of organizational studies, organizational culture, cultural economics, and management - Coined the term that culture is the "software of the mind"

Business Process Reengineering:

- Rethinking and radical redesign of business processes to improve performance, quality, and productivity - Reengineer the work effort

How to Perpetuate a Culture: (6 Items)

- Screening and selecting new employees that will mesh well with the culture - Systematic indoctrination of new members in the culture's fundamentals - Efforts of senior group members to reiterate core values in daily conversations and pronouncements - Telling and retelling of company legends - Regular ceremonies honoring members who display cultural behaviors - Visibly rewarding those who display cultural norms and penalizing those who do not

Individualism vs. Collectivism:

- Self-centered or group-centered?

2 Types of Dumping:

- Sell products at below costs - Sell products significantly below the price in your home market

6 Forms Synergy Can Take Place:

- Shared Know-How - Coordinated Strategies - Shared Tangible Resources - Economies of Scale or Scope - Pooled Negotiating Power - New Business Creation

Exporting:

- Shipping goods produced in the company's home country to other countries for marketing

Examples of short-term and long-term Confucian Dynamism:

- Short-term - US and Canada - Long-term - China and Japan

4 Stages of Corporate Development:

- Simple Structure - Functional Structure - Divisional Structure - Beyond SBUs

Technique of Re-Engineering:

- Six Sigma

To follow a Leadership Strategy, the declining industry must have a ________ decline, ________ distinctive competency, ________ exit barrier, and ________ commodity.

- Slow - Very high - Lower - Low

Disadvantage of Educative Change Strategy:

- Slow and difficult - Don't always get what you want

Masculinity:

- Social gender roles are clearly distinct

Femininity:

- Social gender roles overlap

Good Conflict in Resource Allocation:

- Some conflict can motivate/reenergize people - Management benefits b/c they are made aware of things they haven't considered

5 Stages of International Development:

- Stage 1 (Domestic Company) - Stage 2 (Domestic Company with Export Division) - Stage 3 (Primarily Domestic Company with International Division) - Stage 4 (Multinational Corporation with Multidomestic Emphasis) - Stage 5 (MNC with Global Emphasis)

Procedures (SOPs):

- Standing Operating Procedures - They detail the various activities that must be carried out to complete a firm's program's/tactical plans - Mainly used for routine tasks/activities

Whorfian Hypothesis:

- States that language influences our thoughts, not the other way around - We think differently around the globe because we speak different languages

Action Plan:

- States what actions are going to be taken, by whom, during what time frame, and with what expected results

Leadership Strategy (Declining Industry):

- Staying - Aims at growing in a declining industry by picking up the market share of the companies that are leaving the industry

Niche Strategy (Declining Industry):

- Staying - Focuses on those pockets of demand in the industry in which demand is stable or declining less rapidly than the industry as a whole

Managing conflict is a ________ issue.

- Strategic

8 Elements of TQM:

- Strategic, Systemic Approach - Continual Improvement - Customer-Focused - Total Employee Involvement - Process-Centered - Integrated System - Fact-Based Decision Making - Communications

Differences in Tastes and Preferences:

- Strategies are more towards locally responsive - It is impossible to explain tastes and preferences

Cross-Market Subsidization:

- Subsidized = Supports - Use profit sanctuaries to subsidize/support another weaker location

Stage 2 (Domestic Company with Export Division):

- Success in Stage 1 leads company to establish own sales company with offices in other countries to eliminate the middlemen and better control marketing

Stage 3 (Primarily Domestic Company with International Division):

- Success in earlier stages leads the company to establish manufacturing facilities in addition to sales and service offices in key countries

TQM focuses on ________ assignments.

- Team based

Intensity of Competition in a Declining Industry is Determined By:

- The Severity/Speed of Decline - Height of Exit Barriers - Commodity Nature of the Product

Stage 4 (Multinational Corporation with Multidomestic Emphasis)

- The company increases its investments in other countries The company establishes a local operating division or company in the host country, to better serve the market

Six Sigma Phase - Control:

- The company teaches new and existing employees the best practice technique - over time this leads to increased customer satisfaction and business - What actions are needed to sustain improvement?

What makes the dumping strategy attractive?

- The company you're looking at is financially distressed/weak - kill them off by taking their market share (Your company has deep pockets - it's very expensive to do this) - You're sitting on a tremendous amount of unused/excess capacity (Great way to enter a market - not always intended to kill a company)

International Competitor vs. Global Competitor:

- The difference is the international competitive scope - International: In a few nations - Global: In dozens of countries

Power Distance:

- The extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally - How much do you respect authority/levels of authority?

Uncertainty Avoidance:

- The extent to which the members of a culture feel threatened by uncertain or unknown situations - How comfortable/uncomfortable are you with risk?

First Mover:

- The first company to manufacture and sell a new product or service

Franchising:

- The franchiser grants the rights to another company to open a retail store using the franchiser's name and operating system

Tactic:

- The individual action taken by the firm to accomplish a plan

Licensing:

- The licensing firm grants rights to another firm in the host country to produce and/or sell a product

The tighter the culture-strategy fit, ________.

- The more that the culture steers company personnel into displaying behaviors and adopting operating practices that promote good strategy execution

Strategy Implementation:

- The process by which objectives, strategies, and policies are put into action through the development of programs, tactics, budgets, and procedures

Production Sharing:

- The process of combining the higher labor skills and technology available in developed countries with the lower-cost labor available in developing countries

Executive Succession:

- The process of replacing a key top manager

Synergy:

- The return on investment of each division is greater than what the return would be if each division were an independent business

High Context Culture:

- The situation has more meaning than the actual words - Body language, setting, past relationships

Six Sigma Phase - Improve:

- The six-sigma team implements the documented best practice as a standard operating procedure - How can the causes of the defects be eliminated?

The Severity of Decline:

- The slope of decline matters in our strategy - Is it steep or slow?

Profit Sanctuaries:

- The source of profit is due to some protected status in a market (strong market position is protected in that country/market)

Job Design:

- The study of individual tasks in an attempt to make them more relevant to the company and to the employee(s)

7 Key Features of a Company's Corporate Culture:

- The values, business principles, and ethical standards that management preaches and practices - The company's approach to people management - The spirit and character that pervade the work climate - How managers and employees interact and relate to each other - The strength of peer pressure to do things in particular ways and conform to expected norms - The company's revered traditions and oft-repeated stories - The manner in which the company deals with external stakeholders

Strategy Formulation vs. Implementation:

- There is a shift in responsibility - There is a need for clear annual objectives and a need for clear policies

Fluctuating Currency Exchange Rates:

- There is a winner and a loser every time there's fluctuating exchange rates - EX: $1.27:1 Euro to $1.10:1 Euro - the $ strengthened, the Euro weakened; Exports from US to Europe goes down b/c American goods are now more expensive to Europe; Europe exports more to the US

High uncertainty avoidance means ________, and low uncertainty avoidance means ________.

- They don't like risk - They like risk/reward relationship

Short-term Confucian Dynamism means ________, and long-term Confucian Dynamism means ________.

- They live for the moment - They give up things for themselves so their kids/grandchildren can have things

Why there is a Need for Clear Policies:

- They set boundaries/limits on the kinds of actions that can be taken and to reward/sanction behavior - They let both employees & management know what is expected of them - increasing likelihood of success - They are the basis for management control and coordination across organizational units - They reduce the amount of time managers spend making decisions (what is to be done; by whom) - They promote delegation of decision making to appropriate managerial levels where the problems arise

Polychronic Time Culture:

- Things can happen again; not worried about time - Things happen whenever they happen

Individualism:

- Ties between individuals are loose

4 Reasons Companies Expand into Foreign Markets:

- To gain access to new customers - To achieve lower costs and enhance the firm's competitiveness - To capitalize on its core competencies - To spread its business risk across a wider market base

T/F: It is very risky to be involved in foreign operations.

- True

T/F: Strategy implementation takes the longest time to do.

- True

Rational Change Strategy/Self-Interest Change Strategy:

- Trying to convince someone by telling them how they will personally be better off

Stage III - Divisional Structure:

- Typified by the corporation's managing diverse product lines in numerous industries - Decentralizes the decision-making authority

Stage I - Simple Structure:

- Typified by the entrepreneur or a small team - Entrepreneur or team tends to make all the important decisions and is involved in every detail and phase of the organization - Little formal structure - Planning is short range or reactive - Typical managerial functions are performed to a very limited degree

Commodity Nature of the Product in a Declining Industry:

- Undifferentiable/all the same - Can only compete on price

Pooled Negotiating Power:

- Units can combine their volume of purchasing to gain bargaining power over common suppliers to reduce costs and improve quality

In any business - some ________ are always more critical to the success/competitive advantage of the firm.

- Value chain activities

Low Context Culture:

- Very explicit in use of language; very literal; words matter more than context - EX: United States

Risks of Dumping:

- WTO finds out - Tariffs and taxes can be place on all of the country's goods if one company dumps its goods in a foreign country

Non-Price Leadership Strategy:

- Want to increase market share, but not by lowering prices - Want to create the perception that your product is superior - increase advertising & sales promotion to increase brand recognition - Can charge a higher price due to superior perception of product

Price-Signaling/Tit-for-Tat Strategy:

- Way of conveying what you're going to do and why you're going to do it - Letting competitors know you're going to lower prices - Tit-for-tat: "If you lower prices, I'll lower prices. So you shouldn't do it."

Collaboration with Outsiders:

- What is your relationship w/ the external environment going to be? Can you account for it? - Someone/some group must be authorized to collaborate as needed with each major outside constituency involved in strategy execution

Strong Culture Companies:

- Where culturally approved behaviors and ways of doing things are nurtured, while culturally disapproved behaviors and work practices get squashed - Where values/behavioral norms are like crabgrass: deeply rooted and hard to get out

Major Strategic Issues Unique to Competing Internationally:

- Whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers OR to offer a mostly standardized product worldwide - Whether to employ essentially the same basic competitive strategy in all countries OR modify the strategy country by country - Where to locate the company's production facilities, distribution centers, and customer service operations so as to realize the greatest location advantages (finding best location economy for each stage of the value chain) - How to efficiently transfer the company's resource strengths and capabilities from one country to another in an effort to secure competitive advantage (Is it something able to be replicated in another country, or was it only something good in the home country?)

Robert Reich:

- Wrote the book "Work of Nations" & made the term "global web"