MGMT exam 2 Madden
Relativism
holds that differing religious beliefs, customs, and behavioral norms across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong
Ethical universalism
holds that the most fundamental conceptions of right and wrong are universal and apply to members of all societies, all companies and all businesspeople
How is the nine cell matric used to assess performance across multiple business? pg 241
one firm, no competitors. Assess competitive strength measures, use scores of what you're good at and plot it on none cell
What does it mean that a business is related or unrelated?
related businesses possess competitively valuable cross-business value chain and resource commonalities unrelated businesses have dissimilar value chains and resource requirements, with no competitively important cross-business commonalities at the value chain level
broad differentiation strategy
seeking to differentiate the company's product offering from rivals' with attributes that will appeal to a broad spectrum of buyers
How is divestment related to acquisition?
two sides of the same coin. Reversed acquision. getting something else while divestment is working within your company.
What are some of the risks associated with international expansions?
• Political risk (weak governments, hostility to foreign businesses) • Economic Risk( unstable monetary market, regulations, property rights lack)
What are the key differences between global and multi-domestic strategies?
A global strategy is One in which a company employs the same basic competitive approach in all countries where it operates, sells standardized products globally, strives to build global brands, and coordinates its actions worldwide with strong headquarters control. It represents a think global act global approach. A multidomestic strategy is One in which a company varies its product offering and competitive approach from country to country in effort to be responsive to differing buyer preferences and market conditions. Think local, act local.
CH 9 What is the difference between a stockholder and a stakeholder?
A shareholder owns part of a public company through shares of stock, while a stakeholder has an interest in the performance of a company for reasons other than stock performance or appreciation. Stakeholder can be consumers.
What is the primary difference between acquisition and internal development?
Acquisition -involves purchasing an already existing business; popular means of diversifying into another industry -it is time consuming Internal development -process of starting a new business subsidiary from scratch
CH 8 Why do firms pursue multi-business approaches to competition?
Advantage to being in more than one industry at a time.
What is the difference between forward and backward vertical integration?
Forward integration involves entry into value chain system activities closer to end user. Ex: a farmer sells produce directly to a grocery store rather than going through someone who will distribute it to stores -moves down the supply chain -they want to increase control over suppliers, manufacturers and distributers -Backward integration Involves entry into activities previously performed by suppliers or other enterprises positioned along earlier stages of the industry value chain system. -moving up the supply chain -mergers between two people on the supply chain -might cut transportation costs
Which is more likely to trigger an antitrust action from a regulatory agency?
Horizontal integration because if you merge your company with too many companies in the same industry it is not regulated right DOJ gets involved in you try to own all horizontal agencies in your field but they don't care if you won everything in your supply chain. If you get o big in any one field is when they care
What is the difference between horizontal and vertical integration?
Horizontal scope- the range of product and service segments that a firm serves within its focal market -can do this via internal expansion, acquisitions and mergers Vertical scope- the extent to which a firms internal activities encompass the range of activities that make up the entire value chain system, from raw-material production to final sales and service activities -could reduce transportation expenses
What are the four main components of the Diamond National Advantage?
Demand condition Related and supporting industries Firm strategy structure and rivalry Factor conditions
How does a focused market target differ from a broad market strategy?
Focus market target - focused on a small group of buyers only appealing to a few customers. They have a focused differentiation strategy. Broad market target - they have something for everyone, appeals to everyone.
What are the three test of corporate advantage and what do they do?
Industry attractiveness test, cost of entry, and better off test
Focused low cost strategy
concentrates on the needs and requirements for a narrow buyer segment and strives to meet these needs at a low cost
Best cost provider strategy
incorporate upscale product attributes at lower costs than rivals (blend of them)
overall low-cost provider strategy
striving to achieve lower overall costs than rivals on comparable products that attract a broad spectrum of buyers, usually by under-pricing rivals
which diversification test does not apply to unrelated diversification
the better off test
What are the common pitfalls associated with a low-cost strategy?
1. Getting carried away with overly aggressive price cutting.- selling more units of a product doesn't always translate to higher profits 2. Relying on a approach to reduce costs that can be easily copied by rivals 3. Becoming too fixated on cost reduction
How is outsourcing related to a firm's scope?
-It reduces the scope of the firm because they will do less. The more stuff you do in house the bigger the scope is.
When does a differentiation strategy work best?
1. Buyer needs and uses of the product are diverse 2. There are many ways to differentiate the product or service that have value to buyers. 3. Few rivals are following a similar differentiation approach 4. Technological change is fast paced and competition revolves around rapidly evolving product features
What is the difference between a strategic alliance and a joint venture?
-A strategic alliance is A formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective. -A joint venture involves the establishment of an independent corporate entity that the partner's own and control jointly. sharing its revenues and expenses.
What are the risks associated with attempting a best-cost provider strategy?
-Getting squeezed between the strategies of firms using low-cost and high-end differentiation strategies. -Low-cost: steal customers away with the appeal of lower prices -High-end: steal customers away with the appeal of better product attributes
CH 6 What does the "scope of the firm" mean as it relates to strategic management?
-Range of activities that the firm performs internally, -The breadth of its product and service offering, -The extent of its geographic market presence, -Its mix of businesses
What are the main ways that firms can achieve diversification?
-acquisition -internal startup -joint ventures with other companies
What advantages does second-mover status bring?
-cheaper, -less risky, -can learn from all the mistakes of the first mover.
How do joint ventures play a role in diversification?
-it is a good vehicle for pursuing an opportunity that is too complex, uneconomical, or risky for one company to pursue alone -make sense when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own -used to diversify into a new industry when the diversification move entails having operations in a foreign country
Industry attractiveness test
-must be structurally attractive (the five forces), have resource requirements that meet that of the parent company, and offer good prospects for growth, profitability, and ROI
Better off test
-must offer potential for the company to perform better than as an independent company
What is meant by "blue ocean" strategy?
-offers growth in profits by discovering or inventing new industry segments that create altogether new demand -Seeks to gain a dramatic and durable competitive advantage by abandoning efforts to beat out competitors in existing markets and, instead, inventing a new market segment that renders existing competitors irrelevant and allows a company to create and capture all together new demand.
Cost of entry
-the cost of entering the target industry must not be so high as to exceed potential for good profitability
What disadvantages?
-you may not be able to compete with the first mover if they knock it out of the park and everyone loves there product.
What are common pitfalls associated with a differentiation strategy?
1. A strategy keyed to product or service attributes that are easily and quickly copied is always suspect 2. Can falter when buyers see little value in the unique attributes of a company's product 3. Overspending on efforts to differentiate the company's product offering, thus eroding profitability
What are the main methods for entering international markets? pg 188
1. Maintain a home-country production base and export goods to foreign markets 2. License foreign firms to produce and distribute company products abroad 3. Employ a franchising strategy in foreign markets 4. Establish subsidiary in market via acquisition or internal development 5. Rely on strategic alliances or joint ventures with foreign companies
When does a low-cost strategy work best?
1. Price competition among rival sellers is vigorous 2. The products of rival sellers are essentially identical and readily available from many eager sellers 3. It is difficult to achieve product differentiation in ways that have value to buyers 4. Most buyers use the product in the same ways 5. Buyers incur low costs in switching their purchases from one seller to the other
CH 7 What are the main reasons that firms decide the engage in international activities?
1. To gain access to new customers 2. Achieve lower cost through economies of scales 3. Lower cost inputs of production 4. To further exploit its core competencies 5. To gain access to resources and capabilities located in foreign markets
What advantages does first-mover status bring?
1.When pioneering helps build a firm's reputation and creates strong brand loyalty 2. When a first mover's customers will thereafter face switching costs 3. When property rights protections thwart rapid imitation of the initial move 4. When an early lead enables the first mover to move down the learning curve ahead of rivals 5. When a first mover can set the technical standard for the industry
What disadvantages?
1.When the costs of pioneering are high relative to the benefits accrued and imitative followers can achieve similar benefits with far lower costs. 2. When an innovator's products are somewhat primitive and do not live up to the buyer expectations. 3. When rapid market evolution give second movers the opening to leapfrog a first mover's products with more attractive next-version products 4. When uncertainties make it difficult to ascertain what will eventually succeed 5. When customer loyalty to the pioneer is low
CH 5 What are two main dimensions associated with generic competitive strategies?
Market Target and Competitive advantage being pursued (focus differentiation, broad differentiation strategy, and overall low-cost provider strategy) pg 122
What is the primary difference between the moral case for CSR and the business case for CSR? pg 272
Moral: it's the right thing to do Business: visible costs, internal administrative costs, intangible or less visible costs
Does restructuring always lead to divestment?
No. Restructuring refers to overhauling and streamlining the activities of a business - combining plants with excess capacity, selling off underutilized assets, reducing unnecessary expenses, and otherwise improving the productivity and profitability of a company
What are the three P's of the triple bottom line?
People: various social initiatives that make up CSR strategies, such as corporate giving, community involvement, and company efforts to improve the lives of its internal and external stakeholders Planet: firm's ecological impact and environmental practices Profit: encompasses not only the profit a firm earns for its shareholders but also the economic impact that the company has on society more generally in terms of the overall value that it creates and the overall costs that it imposes on society.
Which is more likely to lead to ethical breaches in business conduct? pg 260
Relativism
What is the model used for?
Where industries are more likely to develop competitive strength depends on a set of factors that describe the nature of each country's business environment and vary from country to country. Because industries are made up of strong firms, the strategies of firms that expand internationally are usually grounded in one or more of these factors
Focus Differentiation
concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals' products
What are some of the main drivers of unethical business strategies?
corporate cultures that put the bottom line ahead of ethics heavy pressures on company managers to meet or beat performance targets overzealous or obsessive pursuit of wealth accumulation, power, status, and other selfish interests.