Strategic Management final
matching stage
Stage 2. SWOT, SPACE matrix, BCM Matrix, IE Matrix, Grand Strategy Matrix. Matching external and internal critical success factors is key to effectively generating feasible alternative strategies.
Commodity Nature of Product
The intensity of competition is greater in declining industries in which the product is perceived as a commodity
Local demand conditions:
The nature of home demand for the industry's product or service.
One the Mass Market Begins to Develop
The number of companies sharply decreases
unrelated diversification
The primary advantage of the __________ __________ structure is that it allows corporate managers to evaluate division performance accurately.
Define Strategic Management Process
The process an organization uses to formulate and implement its business strategies
What is strategic management?
The process of analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantage
Which of the following is not part of a culture of entrepreneurship?
The search for venture opportunities permeates every part of the organization. The key to creating value
Merger
a transaction involving two or more corporations in which stock is exchanged but in which only one corporation survives
social audit
an attempt to measure a company's actual social performance against its social objectives
Resource
an organization's assets and are thus the basic building blocks of the organization
According to the text, _____________, which support fledgling startups are often used to pursue specific entrepreneurial ventures developed by _____________.
business incubators; new venture groups
In Russia, estimated losses from copyright piracy total ________. A) $3,596 million B) $2,224 million C) $1,691 million D) $225 million
$2,224 million
One of the following is not a type of risk that executives must address. Which is it?
Product market risk taking
Strategies to Deter Entry
Product proliferation Limit pricing Strategic commitments
Vision
describes what the organization would like to become
External environment
opportunities and threats that are outside the organization and not typically within the short-run control of top management
Which of the following is typically correlated with developing economies? A) large elderly population B) few natural resources C) lack of cultural history D) poor education systems
poor education systems
When strategies fail its often because of
poor execution
value chain analysis
refers to the process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products
Stakeholder analysis
the identification and evaluation of corporate stakeholders
strategists
the individuals who are most responsible for the success or failure of an organization, they can have various job titles, such as chief executive officer, president, owner, chair of the board, or entrepreneur
In the Boston Consulting Group (BCG) matrix, Stars will evolve into Cash Cows as a result of:
the industry lifecycle
entrepreneurial mode
the informal, intuitive, and limited approach to strategic management associated with owner-managers of smaller firms
Marketing mix
the particular combination of key variables under a corporation's control that can be used to affect demand and to gain competitive advantage; product, place, promotion, price
Morality
the precepts of personal behavior based on religious or philosophical grounds
In instances involving universally applicable ethical norms (like paying bribes)
there can be no compromise on what is ethically permissible and what is not
Under ethical relativism
there can be no one-size-fits-all set of authentic ethical norm as against which to gauge the conduct of company personnel
continuous improvement
a form of strategic control in which managers are encouraged to be proactive in improving all operations of the firm
horizontal acquisition
a grand strategy based on growth through the acquisition of similar firms operating at the same stage of the production-marketing chain
vertical acquisition
a grand strategy based on the acquisition of firms that supply the acquiring firm with inputs or new customers for its outputs
joint venture
a grand strategy in which companies create a co-owned business that operates for their mutual benefit
turnaround
a grand strategy of cost reduction and asset reduction by a company to survive and recover from declining profits
market development
a grand strategy of marketing present products, often with only cosmetic modification, to customers in related marketing areas
conglomerate diversification
a grand strategy that involves that acquisition of a business because it presents the most promising investment opportunity available
concentric diversification
a grand strategy that involves the operation of a second business that benefits from access to the first firm's core competencies
concentrated growth
a grand strategy with which a firm directs its resources to the profitable growth of a single product, in a single market, with a single dominant strategy
industry
a group of companies that provide similar products and services
threat
a major unfavorable situation in a firm's environment
resource-based view
a method of analyzing and identifying a firm's strategic advantages based on examining its distinct combination of assets, skills, capabilities, and intangibles as an organization
balanced scorecard
a set of four measures directly linked to a company's strategy: financial performance, customer knowledge, internal business processes, and learning and growth
utilitarian approach
judging the appropriateness of a particular action based on a goal to provide the greatest good for the greatest number of people
social justice approach
judging the appropriateness of a particular action based on equity, fairness, and impartiality in the distribution of rewards and costs among individuals and groups
consortia
large interlocking relationships between businesses of an industry
strategy
large-scale, future-oriented plans for interacting with the competitive environment to achieve company objectives
strategic management
refers to strategy formulation, implementation and evaluation
board of directors
the group of stockholder representatives and strategic managers responsible for overseeing the creation and accomplishment of the company mission
strategy evaluation
the primary means for obtaining information on whether or not a strategy is working well; you review external and internal factors, measure performance, and take corrective actions
bankruptcy
when a company is unable to pay its debts as they become due
polycentric orientation
when the culture of the country in which the strategy is to be implemented is allowed to dominate a company's international decision-making process
ethnocentric orientation
when the values and priorities of the parent organization guide the strategic decision making of all its international operations
Effective ambidextrous organizations maintain adaptability, which means that _____________.
First, managers must explore new opportunities and adjust to volatile markets in order to avoid complacency
Product Development
Is the creation of new or improved products to replace existing one Is crucial for maintaining product differentiation and building market share
Compatibility
Is the degree to which a new product is perceived as being consistent with the current needs or existing values of potential adopters
Trialability
Is the degree to which potential customers can experiment with a new product during a hands-on trial basis
Observability
Is the degree to which the results of using and enjoying an ew product can be seen and appreciated by other people
Cash cows
in the declining stage of their life cycle; typically bring in more money than is needed to maintain their market share; these products are "milked" for cash that will be invested in new question marks
strategic objectives
include larger market share, quicker on-time delivery, shorter design-to market times, etc.
cultural products
include values, beliefs, rites, rituals, ceremonies, myths, stories, legends, sagas, language, metaphors, symbols, heroes, and heroines
controlling
includes all of those activities undertaken to ensure that actual operations conform to planned operations
Environmental scanning
involves the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation
The quality of an org's people
is always an essential ingredient of successful strategy execution
merger
is an agreement between equals to pool their operations and create a new entity.
In corporations with a strong entrepreneurial culture, the willingness and ability to change _____________.
is considered a core capability
CSR strategy
is defined by the specific combination of socially beneficial activities the company opts to support with its contributions of time, moey, and other resources
Customer Demand for the Products of an Embryonic Industry
is initially limited
The two best signs of good strategy execution are whether a company
is meeting or beating its performance targets and whether thy are performing value chain activities in a manner that is conducvie to companywide operating excellenc
competitive intelligence
is not corporate espionage because 95 percent of the information a company needs to make strategic decisions is available and accessible to the public
acts makes it illegal for U.S. firms to offer bribes to foreign parties in order to secure or retain business?
the U.S. Foreign Corrupt Practices Act
Acquisition
the purchase of a company that is completely absorbed as an operating subsidiary or division of the acquiring corporation
Innovators
Is the first group of customers to enter the market They are people who are delighted to be the first to purchase and experiment with a product based on a new technology Enter the market in the embryonic stage of the life cycle
Price Signaling
Is the process by which companies increase or decrease product prices to convey their intentions to other companies and influence the price of an industry's products
Growth Rate
Is the rate at which customers in that market pruchase the industry's product
Divestment Strategy
Is when a company decides to exit an industry by selling off its business assets to another company
Leadership Strategy
Is when a company develops strategies to become the dominant player in a declining industry
Important advantages of a holding company structure include _____________.
SAVINGS IN PERSONNEL AND OVERHEAD EXPENSES ASSOCIATED WITH A SMALL CORPORATE OFFICE.
What type of analysis is used to determine the current sate of a company?
SWOT
What do Successful Enterprises have in Mature Industries
They have normally gained substantial economies of scale and established strong brand loyalty
competitive intelligence
a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals
Functional strategy
achieves corporate and business unit objectives and strategies by maximizing resource productivity
In attempting to enter the Chinese market, Tressel Tattoos inc quickly realized that it could not afford the time it would take to build a manufacturing facility from scratch, determined that TTI would enter the Chinese market through ________
acquisitions
related diversification
adding new but related products or services
a companies capabilities must be continually refreshed and renewed to remain aligned with
changing customer expectations, altered competitive conditions and new strategic initiatives
eco-efficiency
company actions that produce more useful goods and services while continuously reducing resource consumption and pollution
According to integrated social contract theory
adherence to universal or "first-order" ethical norms should always take precedence over local or "second-order" norms
Stakeholders
affect or are affected by the achievement of the firm's objectives
In the four-step framework for making ethical decisions, when should a decision be implemented and evaluated? A) immediately after the facts of the situation are obtained B) as the first step in the decision-making process C) immediately after all relevant persons have been consulted D) after alternative courses of action have been evaluated
after alternative courses of action have been evaluated
All of the following industries are particularly vulnerable to the threat of terrorism except A) agriculture B) entertainment C) retailing D) travel
agriculture
weaknesses-opportunities strategies
aim at improving internal weaknesses by taking advantage of external opportunities
investment decision
capital budgeting. Allocation/reallocation of resources to projects, products, assets, and divisions of an organization
According to Peters and Waterman's famous business book, "In Search of Excellence", corporate culture is one of the most powerful and sustainable sources of competitive advantage. In the ensuing decades since the book was published, however, companies wishing to benchmark and copy the successful cultures of their competitors have found it a difficult, if not impossible undertaking. The primary reasons for the companies' struggles are the __________ and _________ associated with corporate cultures.
casual ambiguity, social complexity
internal audit
compared to an external audit, the process of performing this provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization
The $50K that Acme Inc. invested in a small start-up named Karmac is an example of ________
corporate venture capital
remote environment
economic, social, political, technological, and ecological factors that originate beyond, and usually irrespective of, any single firm's operating situation
Corporate Level Strategy
"What business or businesses are we in or should we be in?" Determines types and potential profitability of the businesses or activities undertaken. Long-Term Strategy for all levels
Corporate level strategy & the Multibusiness model
-Concentration -Related Diversification -Unrelated Diversification -Restructuring/Outsourcing -Acquisition -Merger -Internal Development -Spin Off/Divestment
For diversification to increase profitability, a company's top managers must
... have superior capabilities in strategic management. -They must possess the intangible skills that are required to manage different business units in a way that enables these units to perform better than they would if they were independent companies. -These skills are a rare and valuable capability.
Three basic components of strategy formulation listed:
1) Analysis of external and internal environments; 2) Development of long-term strategies and organizational strategies; 3) Determine of strategy at different organizational levels;
To promote entrepreneurship, a company must:
1) Encourage managers to take risks. 2) Give them the time and resources to pursue novel ideas. 3) Not punish managers when a new idea fails. 4) Not pursue too many risky new ventures that have a low probability of generating a profit.
Basic four global strategies:
1) Global Standardization Strategy 2) Localization Strategy 3)Transnational Strategy 4) International Strategy
Excess Capacity May be Caused By
A shortfall in demand
Merger Defined
A type of acquisition in which two or more business entities are combined into one
control system
A______________ provides managers with: 1) a set of incentives to motivate employees to work toward increasing efficiency, quality, innovation, and responsiveness to customers, and 2) specific feedback on its members performance.
What is the primary advantage of a merger?
Ability of two companies to combine resources and reduce overhead expenses, allowing the new company to be more successful than the sum of the paris to merger. Note: international mergers carrier a high degree of risk
Which of the following is an advantage of a divisional type of organizational structure?
An enhanced ability to respond quickly to changes in the external environment
Bastillo Conglomerates is a Spanish paella company that is poised to enter the growing international market for the seafood-based treat. The fact that competition in Spain's paella market was incredibly intense suggests ________
Bastillo will have a competitive advantage over its international competitors from less competitive markets
Why is the Curve S-Shaped?
Because as the stage of market development moves from embryonic to mature, customer demand first accelerates then decelerates as the market approaches the saturation point
Functional Level Strategy
Carried out by individual departments performing specific organizational functions, such as marketing, finance, underwriting, Etc...
Strategies that Enterprises use to Replicate their Offering Once they Get it Right
Chaining Franchising
The job of Robin Page, the main protagonist in the UPS in India case was:
Chief Strategy Officer
Define Related Diversification
Corporate-level strategy that is based on the goal of establishing a business unit (division) in a new industry that is related to a company's existing business units by some form of commonality or linkage between the value-chain functions of the existing and new business units.
Which of the following is not a disadvantage of virtual structures?
DIFFICULTY IN INDIVIDUAL AND ORGANIZATIONAL KNOWLEDGE SHARING.
Strategic business unit (SBU) and holding company structures result from extensive _____________.
Diversification
AIG sold stakes in London City Airport in 2008 and sold AIG Life of Canada in 2009 to reduce losses from unprofitable businesses. What type of corporate level strategy is being performed?
Divestiture Strategy Example
A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to ______________ structure.
Divisional
Which of the following do corporate business incubators typically not provide?
Do Provide: funding, physical space, business services, mentoring and networking
At the time of today's case, UPS:
Had entered the India market via two strategic alliances
Mass Market
Is on in which large numbers of customers enter the market
Franchising
The founding company - the franchisor - licenses the right to open and operate a new location to another enterprise - franchisee - in return for a fee
Diversified company
a company that makes and sells in two or more distinct industries.
weaknesses-threats strategies
are defensive tactics directed at reducing internal weakness and avoiding external threats
Groupthink is less likely if a board of directors is:
diverse
Currency controls harm companies that export products, but favor companies that rely heavily on imported parts and components.
false
Demands for automobiles and computers by the middle class in emerging markets constitute the majority of total U.S. exports.
false
Single business firms do not have a corporate-level strategy.
false
A CEO's promise to always give the proverbial 110% on the job is easier for the Board of Directors to accept than it is for them to verify. The board must therefore deal with _____________ regardless of whether the CEO is capable, or not. agency theory
moral hazard
Exporting
shipping goods produced in the company's home country to other countries for marketing
Joint ventures and long-term contracts are examples of:
strategic alliance
Objective
the end results of planned activity
Ways to acquire capabilities
- mergers and acquisitions, developing internally,
acquisitions
A company is particularly likely to use ____________ when it needs to move fast to establish a presence in an industry. -a much quicker way for a company to establish a significant market presence. -perceived as being less risky than internal new ventures because they involve less commercial uncertainty. -It is an attractive way to enter an industry that is protected by high barriers to entry.
Reengineering
A company may operating more effectively using ________________, which involves the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance. ________________ and TQM are highly interrelated and complementary.
Strategies across countires
A localized strategy An international strategy A global standardization strategy A transnational strategy
Which of the following is representative of a developing economy? A) Australia B) Bangladesh C) France D) Mexico
Bangladesh
Corporate level strategies associated with decline mode?
Bankruptcy Divestiture Turnaround Harvest Strategies
Amazon was able to define the online bookselling market by entering the market early and defining the user experience. This is an example of _____________.
Being a first mover
Strategy and formulation consists of 6 parts, what are they?
Business-level strategy Competitive dynamics Corporate-level strategy Cooperative strategies International strategy Acquisitions & restructuring
Interdependent Companies can Help Protect their Competitive Advantage and Profitability
By adopting strategies and tactics, first, to deter entry into an industry, and second, to reduce the level of rivalry within an industry
Business ethics
C
Governments impose export controls for the purpose of ________. A) improving available opportunities for domestic sales B) limiting the number of exported products to certain countries C) preventing the export of security-related products to specific nations D) restricting the export of products to all nations during wartime
C) preventing the export of security-related products to specific nations
When the Sze of the Toal Market is Shrinking
Competition tends to intesify in a declining industry and profit rates tend to fall
Overcapacity may also be Caused by
Competitive factors within an industry
Define Unrelated Diversification
Corporate-level strategy based on a multibusiness model whose goal is to increase profitability through the use of general organizational competencies to increase the performance of all the company's business units. No intention of transferring or leveraging or sharing resources.
Which of the following statements about simple organizational structures is not true?
Creativity and individualism are rare
In an interesting twist to the standoff that has been spooking world economics markets the past couple of week, the parliament of __________ voted to leave _______ and rejoin ________?
Crimea, Ukraine, Russia
Which of the following pairs of nations are on opposite ends of the political freedom scale? A) New Zealand and Chile B) China and Syria C) Japan and South Africa D) Cuba and Sweden
Cuba and Sweden
3 components
D
Int social contract
D
Which of the following best describes the concept of purchasing power parity (PPP)? A) In emerging markets, the ability to buy goods and services depends on the influx of FDI from international MNEs. B) The fluctuation in exchange rates disrupts international trade because the value of goods and services is inconsistent. C) In the future, a world currency will create equality in the global marketplace and eliminate disparity. D) Eventually, the exchange rate of two currencies will be equalized and the same goods will have the same price in two countries.
D) Eventually, the exchange rate of two currencies will be equalized and the same goods will have the same price in two countries.
As a customer, you are more likely to get quicker response time from a ___________ organization.
Decentralized
Advantage of Vertical Integration?
Decreased Expenses and increased efficiency
What are the two fundamental foundations of the course?
Focus on firms Firms primary motive is profit maximization
In Industries that Have Fragmentation Characteristics which Strategies Work Best?
Focus strategies
If a an insurer offers a wide range of specialized coverages, but offers them only to municipalities, it is following what strategy?
Focused differentiation strategy
A firm is considering a large price cut on its leading product as a way to gain market share. One executive strongly disagrees with the price cut. He observes that they are in the same marketplace as their rivals and do not have any competitive advantages in their cost structure. If they cut prices, their competitors will likely do the same. The end result is that everyone will make less money. These arguments are an example of ________________.
Forbearance
Early Majority
Forms the leading wave or edge of the mass market They are practical and generally understand the value of new technology They weigh the benefits of adopting new products against the costs, and wait to enter the market until they are confident they will benefit
__________ is/was characterized by multinational enterprises essentially making small copies of themselves in a few key countries around the world.
Globalization 2.0
CSR Triple Bottom Line
Goal: Excellence in the economic, environmental, and social performance dimensions
What is Another way to Consolidate a Fragmented Market?
Horizontal megers
With Harvest Strategy What is the Company Doing?
It is accepting cash flow in exchange for market share
The innovation dilemma known as seeds versus weeds refers to _____________.
None of the above
Company boundary before outsourcing
R&D > Production> Marketing & Sales> Customer Service
In purchasing power parity terms, which nation has the highest per-capita GDP? A) Brazil B) China C) Turkey D) South Korea
South Korea
Effective short-term objectives should ______________ and _____________.
Specific and measurable
Firm strategy, structure, and supporting industries:
The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry.
Which of the following is not an advantage of a strategic business unit (SBU) type of organizational structure?
The corporate office is more removed from the individual divisions
Rivalry Among Existing Firms
The fifth force that drives competition is reflected in price wars, aggressive advertising campaigns, and increased emphasis on customer service.
Decline Industry
The size of the total market begins to sharing
The ultimate goal of decentralized decision making is to put authority in the hands of
Those persons closest and most knowledgable about the situation
Opportunities under SWOT can be categorized as?
Those that "can" or those that "should" be pursued
Pricing Strategy Types
Tit-for-tat strategy
How can management use the Five Forces Model as part of analysis of its task environment?
To better understand companies position in the industry and the increased understanding will allow management to construct strategies that will assist in building a competitive advantage for the firm
Which of the following countries is considered primarily socialist? A) Germany B) Canada C) Venezuela D) Libya
Venezuela
Coca-Cola, Ford Motor Company, H. J. Heinz, Nike, and Procter and Gamble are working together to develop plant-based plastics. Each company brings its own competency to the table. This collaboration is an example of a _____________.
Virtual organization
1) It must develop a business model and strategy for each business unit or division in every industry in which it competes. 2) It must develop a higher-level business-level model that justifies its entry into these businesses.
When a company decides to expand into new industries, it must construct a business model at two levels:
quiz question ?
critical mass
Morals
individualist what is good and bad to you
Lack of trust is a problem that often plagues and sometimes dooms ______
non-equity alliances
Simple structure
organizational structure where employees tend to be generalists and jacks-of-all-trades
divestiture
selling a division or part of an organization
good strategy execution requires
team effort
Executive leadership
the directing of activities toward the accomplishment of corporate objectives
Liquidation
the termination of the firm
The Nike "Swoosh" is an example of a(n) ________.
trademark
Considering one's instincts is a good practice when resolving ethical dilemmas.
true
retrenchment
when an organization regroups through cost and asset reduction to reverse declining sales and profits. Turnaround or reorganizational strategy. Designed to fortify their basic distinctive competence
intuition
while strategy formulation is often much more of science than an art, besides the facts what do companies often have to rely on in making their strategic decisions?
All of the following are typical characteristics of family conglomerates except ________. A) highly diversified B) wholly owned or controlled by the government C) known in South Korea as chaebols D) easier access to capital than most firms
wholly owned or controlled by the government
Define Mission Statement
A broad expression of entity's goals
Define Cost Leadership
A business level strategy through which a company seeks cost efficiencies in all operational areas. The focus is on the lowering Cost of Production. Does not mean you *will* charge the lowest price, but that you *have the ability*. (Flat Organization)
Under prevailing legislation, firms that bribe foreign parties to secure business can be fined ________.
$2 million
Advanced economies account for what percentage of the world population? A) 14% B) 42% C) 61% D) 82%
14%
There are several ways to improve the performance of an acquired company.
1) Replace top managers of the acquired company with a more aggressive top management team. 2) Sell off expensive assets and terminate managers and employees to reduce the cost structure. 3) The new management team works to devise new strategies to improve performance of the operations of the acquired company. 4) Offer bonuses to motivate managers and employees. 5) Set challenging goals at all levels (stretch goals).
Guidelines for successful acquisition:
1) Target identification and pre-acquisition screening 2) Bidding strategy 3) Integration 4) Learning from experience
What is a sustained competitive advantage?
A benefit which current and potential competitors are unable to duplicate.
common practices companies dedicated to staffing jobs with most capable ppl
1. effort on screening and evaluating job applicants- skills, energy, initiative, judgement, aptitude and personality 2. training programs continuous 3. challenging, interesting, skill stretching assignments 4. rotating people 5. Stimulate and engaged work environment 6. employees can challenge existing ways of doing things, their views and opinions count 7.promotions salary increases, performance bonuses, stock options, and fringe benefits 8. coaching avg up and weeding out underperformers
Heightened focus on strategy-critical activities yield 3 benefits
1. improves chance for outclassing rivals in performance and turning competence into a distinctive competence 2. streamlining of internal ops that flows from outsourcing-> flattens org structure, decrease beauracracy, speed decision making,and shorten response time 3. Partnerships add to amount of capabilities
Action agenda for executing strategy
1. staff the org with managers and employees for executing strategy 2. build the org capabilities required for successful strategy execution 3.create a strategy- supportive org structure 4.allocate sufficient resources- budgetary and other 5. institute policies and procedures that help execution 6. adopt best practices and business processes that drive continuous improvement 7. install info and operating systems that enable personnnel to carry out strategic roles 8. Tie rewards and incentives direct to achievement of strategic and fina targets 9. Instill a corporate culture that promotes good strategy execution 10. Exercise strong leadership to propel strategy forward
two reasons a strategy should be ethical
1. unethical strategy is morally wrong and reflects badly on character of company personnel 2. ethical strategy can be good business and serve the self-interest of shareholders
Structure Design, Control System, Organizational Culture
3 Elements of Organizational Design
The success rate of mergers and acquisitions is roughly____?
30%
The GDP per capita of Country A is less than that of the United States. Which of the following reflects the GDP per capita of Country A? A) $49,700 B) $36,500 C) $48, 900 D) $50,300
36,500
If the GDP per capita of Country A is adjusted for purchasing power parity (PPP), the country's revised GDP is higher than that of the United States. Which of the following could be the GDP of Country A, adjusted for PPP? A) $46,500 B) $39,700 C) $49,300 D) $47,000
49,300
On average, approximately what percentage of corporate ventures reaches profitability within six years?
50%
Dynamic capability
A
Ethical Relativism
A
Ethical Universalism
A
Good Sttrategy
A
Price Strategies
Because innovators and the early majority are relatively few in number and are not particularly price sensitive, companies serving them typically pursue a focus model, produce small quantities of a product, and price high To serve the rapidly growing mass-market, large-scale mass production may be critical to ensure that a high-quality product can be reliably produced at a low price point
Why do Most Embryonic Industries Emerge?
Because of a technological innovation creates a new product opportunity
Why is Demand for Products of an Embryonic Industry Initially Limited?
Because the limited performance and poor quality of the first products customer unfamiliarity with what the new product can do for them Poorly developed distirbution channels to get the product to customers A lack of complementary products that might increase the value of the product for customers High production costs because of small volumes of production
unrelated diversification
Because there are no exchanges or linkages among divisions, ________ ___________ is the easiest and cheapest strategy to manage. -An example of ____________ ____________ in a business could be a toy manufacturer that is also manufacturing industrial wiring for the construction industry.
Choosing a Capacity-Control Strategy
Each company individually must try to preempt its rivals and seive the initiative The companies must collectively find indirect means of coordinating with each other so that they are all aware of the mutual effects of their actions
Elements of Economic Environment
Economic Stability and Monetary Policies Exchange Rate Volatility and GDP Risk to Economic Growth Laws and Regulation
An insurer is evaluating a countries average personal income, disposable income, and other demographic factors in making a strategic decision. What key area of global expansion evaluation is this?
Economic considerations
4 functional Level strategies
Efficiency Quality Innovation Customer responsiveness
Product Proliferation
Means that large companies in an industry have a product in each market segment (or niche) If a new niche develops, the leader gets a first-mover advantage, but soon thereafter, all the other companies catch up Allos the development of stable industry competition based on product differntiation, not price The competitive battle is over a product's perceive uniqueness, quality, features and performance, not over its price
A(n) _______________ organization is better suited for successfully implementing a cost-leadership strategy.
Mechanistic
Big recent news for iPad users was the announcement that:
Microsoft will release its Office Suite for iPads.
In the insurance industry, reinsurers are a constitute a major what to primary insurers according to the five forces models?
Suppliers
True (research indicates that organizations that use strategic-management concepts are more profitable and successful than those that do not)
T/F: Strategic management often allows firms to reap financial benefits
The Problem of Excess Capacity Often Derives from Where?
Technological developments
7
Widely known for a while the perfect number of people that a boss should overlook.
Which of the following will most likely be the result of an increased number of middle-class households in emerging markets? A) a vital market economy B) a decrease in GDP C) urbanization decline D) multi-income families
a vital market economy
quiz question
a) Internal development
In acquisitions, value generated usually goes to ________?
acquirees
A company's environmental sustainability strategy
consists of its deliberate actions to protect the environment provide for the longevity of natural resources maintain ecological support systems for future generations and guard against ultimate endangerment of the planet
strategy-formulation framework
consists of three stages, the input stage, the matching stage and the decision stage
Explicit knowledge
knowledge that can be easily articulated and communicated
Tacit knowledge
knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporation's culture
____ generally happen between companies of similar sizes
merger
resource-based view (RBV)
proponents of this view contend that organizational performance will primarily be determined by internal resources that can be grouped into three all-encompassing categories: physical resources, human resources, and organizational resources
aggressive quadrant
upper right on SPACE. Organization is in position to use internal strengths to take advantage of external opportunities, overcome internal weaknesses, and avoid external threats. Use: Integration, market penetration, market development, product development, and/or diversification
opportunity
a major favorable situation in a firm's environment
What elements do insurer mission statements often include?
Financial strengths, customer service and integrity
Define Turnaround Strategy
A corporate-level strategy through which a company rebuilds organizational resources to return to profitable levels
Define Harvest Strategy
A corporate-level strategy through which a company seeks to gain short-term profits while phasing out a product line or exiting a market
Backwards Vertical Integration
A company pursuing this strategy expands it operations backwards into an industry that produces inputs for the company's products.
Define Focused Differentiation Strategy
A business-level strategy through which a company focuses on one group of customers and offers unique or customized products that permit it to charge a higher price than that of the competition
Vertical integration
can be achieved by taking over a function previously provided by a supplier or by a distributor
SPACE Matrix
strategic position and action evaluation matrix
Experience curve
suggests that unit production costs decline by some fixed percentage each time the total accumulated volume of production in units double
Industry matrix
summarizes the key success factors within a particular industry
The practice of meeting humanity's needs without harming future generations is known as
sustainability
An effective legal system is characterized by which of the following? A) ineffectual government restrictions B) systematically enforced laws and regulations C) political involvement in business transactions D) state-mandated judiciary organizations
systematically enforced laws and regulations
Nontariff trade barriers have increased in popularity in part because they ________. A) generate profits for foreign firms B) can be concealed from the WTO C) are easy for governments to enforce D) reduce smuggling along borders
can be concealed from the WTO
Firms use foreign trade zones in order to ________. A) stimulate local economic growth and development B) take advantage of favorable customs regulations C) create employment opportunities for locals D) meet quota demands established by the government
take advantage of favorable customs regulations
slow mover (also called fast follower or late mover)
can be effective when a firm can easily copy or imitate the lead firm's products or services; can leapfrog a first mover's products with improved second-generation products
Every action a company takes
can be interpreted as a statement of what it stands for
An individual from a country with a low degree of political risk might most likely be from which of the following? A) Venezuela B) Canada C) Zimbabwe D) Iraq
canada
grow and build
cells I, II or IV in the internal-external matrix, intensive (market penetration, market development and product development) or integrative (backwards, forwards or horizontal) strategies can be most appropriate for these divisions
hold and maintain
cells III, V, VII in an internal-external matrix; market penetration and product development are two commonly employed strategies for these types of divisions
harvest or divest
cells VI, VIII, or IX in an internal-external matrix; get rid of this area of the company
isolating mechanisms
characteristics that make resources difficult to imitate; in the RBV context these are physically unique resources, path-dependent resources, casual ambiguity, and economic deterrence
29) Which of the following nations is the largest emerging market? A) China B) Russia C) Brazil D) India
china
outsourcing the performance of selevted value chain activities enables a company to heighten strategic focus and
concentrate on performing the value chain activites that are at the core of its strategy, where it can create UNIQUE value
Which of the following terms is used to refer to a government entity's request for bids from suppliers? A) quotes B) estimates C) tenders D) microloans
tenders
planning mode
the strategic formality associated with large firms that operate under a comprehensive, formal planning system
Competitive strategy
consists of either competing on the basis of lower cost or differentiation
Which of the following protects books and software from unauthorized use?
copyright
Economic development is hindered by widespread corruption.
true
Government agencies, institutions, and public officials influence the manner in which foreign firms conduct business.
true
Some would argue the abilty of kim Jong Un and his predecessors to keep the people of North Korea under their control, even in the most challenging times, is no small extent the reqult of the Korean people's deep-seeded desire for stability, formal rules, and clear-cut understanding of what is expected of them. It should be no surprise, then that Korea scored highest in Hofstede's _________ dimension of national culture
uncertainty avoidance
Strategic reasons for undertaking a corporate venture do not include _____________.
undertaking a corporate venture to strengthen the competitive position, enter into new markets, expand capabilities by learning and acquiring new knowledge, and build the base of resources and experience of the corporation.
mission statement
declaration of the business' reason for being, asks the question, what is our business?
The merger between American Airlines and US Airways, combined with earlier mergers between Southwest and AirTran and Delta and Northwest Airlines ________ in the industry overall
decreased competitive intensity
or chain of command,
defines each manager's relative authority.
In the 1990s, DuPont used its knowledge of plastics to develop biodegradable plastic products. This is an example of _____________.
defining its innovation efforts within the context of its "strategic envelope."
stakeholder activism
demands placed on a global firm by the stakeholders in the environments in which it operates
Nations having the poorest infrastructures and lowest personal incomes are called ________. A) developed countries B) newly industrialized countries C) emerging markets D) developing countries
developing countries
Which of the following economies is typically characterized by stagnant productivity? A) advanced economy B) transition economy C) developing economy D) emerging markets
developing economy
An ethical relativist would most likely argue that ethical truths are ________. A) consistent in application B) different from group to group C) based on ancient principles D) absolute across societies
different from group to group
Due care
duty to have adequate regard for another
Although not everybody agrees, adherents to the ________________ believe that the success or failure of a company is primarily determined by the relative strength of its top management team.
upper-echelons theory
conservative quadrant
upper-left of SPACE. Staying close to firm's basic competencies and not taking excessive risks. Market penetration, market development, product development, and related diversification strategies.
strengths-opportunities strategies
use a firm's internal strengths to be in apposition in which internal strengths can be used to take advantage of external trends and events
strengths-threats strategies
use a firm's strengths to avoid or reduce the impact of external threats
A firm that focuses on job creation in its local market is pursuing which of the following types of sustainability interests?
economic
In the Enron movie, the traders were told that "a good trader finds arbitrage opportunities" with arbitrage being defined as any opportunity that offers extraordinary profits. As such, they were expected to focus primarily on the _____________ responsibilities of Corporate Social Responsibility.
economic
Milton Friedman would approve of companies adhering to the ___________ level of the Corporate Social Responsibility Pyramid.
economic
South Korea has become a global leader in which of the following industries? A) textiles B) automobiles C) pharmaceuticals D) electronics
electronics
Task environment
elements or groups that directly affect a corporation and, in turn, are affected by it
Issues priority matrix
used to identify and analyze developments in the external environment
Corporate Social Responsibility includes all the following except:
environmental responsibility
Wal-Mart is able to build its supply chain into a competitive advantage in no small part because of the supply software it willingly shared with its suppliers, creating a retail link that seamlessly and instantly shares point-of-sale data with manufacturers. This investment in providing its partners supply chain and communication software would be best described as __________
equity alliance
Prior to full integration through merger or acquisition, firms frequently engage in _____________ and __________ as stepping stones
equity alliances, joint ventures
Hostage taking
essentially a means of guaranteeing that each partner will keep its side of the bargain.
Strategic factor
external and internal elements that will determine the future of the corporation
All of the following are potential sources of value creation for related diversifiers except:
facilitating investments in specialized assets
A company's code of ethics is a cure for all of its ethical dilemmas.
false
Common law originated in Rome and can be found in France, Germany, and Latin America.
false
Ethical dilemmas are similar to legal questions in that there are clear-cut right and wrong behaviors in every international business situation.
false
Expropriation is the term used to describe a host-country government seizing the assets of a foreign corporation and providing no compensation in return.
false
Foreign direct investment is high in developing economies despite the bureaucratic difficulties that many firms face.
false
Governments intervene in international trade and investments in order to protect the interests of foreign investment firms.
false
In emerging markets, foreign firms benefit from the large number of well-qualified business partners available for networking and marketing purposes.
false
In resolving ethical dilemmas, the opinions of individuals involved are more important than the facts of the situation.
false
Intellectual property rights developed in one country are guaranteed throughout the world.
false
Like most legal systems, Islamic law evolves with changing times to better meet the needs of Islamic society.
false
Multinational businesses typically develop several codes of ethics, each designed to guide their companies in different situations.
false
Nations with economies based on agriculture and textile manufacturing generate more economic revenue than nations dependent on high-tech industries.
false
Per-capita GDP adjusted for purchasing power parity provides a less accurate estimate of an emerging market's potential than the per-capita GDP adjusted for market exchange rates.
false
Practicing sustainability typically increases production costs but has the benefit of smoothing out relations with foreign governments.
false
Products assembled in foreign trade zones are subject to reduced duties and taxes.
false
the most important consideration is to
fill key managerial slots with smart people who are clear thinkers, good a figuring out what needs to be done, skilled in managing people and accomplished in delivering good results
profit center,
financial controls can be applied to each business on the basis of profitability.
Determining the internal strengths and weaknesses involves consideration of what type of assets of a company?
financial, physical, human, and organizational assets
Functional level strategies
focus on the effectiveness of a company's operations.
Societal environment
forces that do not directly touch on the short-run activities of the organization that can influence its long-run decisions, i.e. economic, technological, political-legal, sociocultural
Law
formal codes that permit or forbid certain behaviors and may or may not enforce ethics or morality
Recently, both Coke and Pepsi decided to purchase the American bottling companies that mixed and distributed their respective brands. This move, which was a reversal of years of strategy, would best be described as _____________________.
forward integration
Totalitarian states are characterized by all of the following except ________. A) dictator-led state political party B) state-supported religious ideology C) state-regulated public behavior D) free flow of information in the mass media
free flow of information in the mass media
One result of the recently-approved merger between American Airline and US Airways should be_______
gaining a window into new technologies
forward integration
gaining ownership or increased control over distributors or retailers
According to Ghemawat's Distance framework, the greatest "distance" between the US and the UK would be __________
geographic
When using the four-step framework for making ethical decisions, which step involves investigating which individuals have a stake in the outcome? A) get the facts B) implement a decision C) evaluate alternatives D) recognize the ethical problem
get the facts
Franchising
give rights to another company to open a retail store using the firm's name and operating system
Dogs
have low market share and do not have the potential to bring in much profits
K-Mart's acquisition of Sears is considered?
horizontal integration
friendly merger
if the acquisition is desired by both firms, it is termed what
functional structure (Departmental, unitary, U-forms)
is organized into functional departments with departmental managers who report to CEO and small corp staff.
Diversification
is the process of entering new industries, distinct from a company's core or original industry, to make new kinds of products that can be sold profitable. A company usually does this when they are generating a lot of cash and they don;t really have a good way to spend it.
As societal values have evolved, it is likely that today's _________ responsibilities were yesterday's _________ responsibilities.
legal, ethical
All of the following are typical characteristics of emerging markets except ________. A) low inward foreign direct investment B) rapid industrialization C) moderate competition D) rapidly declining trade barriers
low inward foreign direct investment
strategy execution is therefore a critical
managerial endeavor
Stars
market leaders that are typically at the peak of the product life cycle and are able to generate enough cash to maintain their high share of the market and usually contribute to the company's profits
Intensive strategies
market penetration, market development, and product development are what types of strategies?
All of the following are typical characteristics of advanced economies except ________ A) democratic governments B) capitalist economies C) medium trade volume D) few trade restrictions
medium trade volume
Daimler-Chrysler and AOL-Time Warner are examples of _________ that went horribly wrong
mergers
A business code of ethics functions as which of the following? A) mission statement B) moral compass C) strategic plan D) map of goals and objectives
moral compass
acquisition
occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.
merger
occurs when two organizations of about equal size unite to form one enterprise
Multinational corporations are constantly attempting to balance forces _________
of cost reduction and responsiveness
39) Which of the following would most likely be considered an appropriate action for a multinational company in meeting its global corporate social responsibility obligations? A) lowering production costs for specific manufactured items B) improving the efficiency of assembly line operations C) developing a strategic plan to enter an emerging market D) offering jobs to assist local workers in rising out of poverty
offering jobs to assist local workers in rising out of poverty
Best-value cost leadership strategy
offers products to wide range of customers at best price-value on market
Outsourcing certain value-added activities with foreign suppliers is known as ________.
offshoring
Global industry
operates worldwide, making only small adjustments for country-specific circumstances
Functional structure
organizational structure where employees tend to be specialists in the business functions that are important to the industry, such as manufacturing, marketing, finance, and human resources
Competitors
organizations that offer same, similar, or substitutable products or services in the business area in which a particular company operates
Dave knew that if he wanted to keep his very competitive sales position and possibly earn the end-of-year bonus he was counting on to fund his Cancun getaway, he would have to meet the ambitious annual sales goals set by upper management. As such, the goals would be considered ____________ by Dave's company.
output controls
An organization is more likely to get effective oversight of top management with ___________________ directors than with ______________________ directors.
outside, inside
Vulcan, Inc. an American aggregates company and the Mexican real estate company Grupo ICA created and jointly owned the limestone mining company CALICA, which Vulcan eventually acquired in January of 2001 once Grupo ICA refused to share the additional costs of new ships CALICA needed to deliver the limestone . Vulcan was concerned with ________ in this arrangement.
partner commitment
When Time, Inc. and Warner Brothers Studio first merged there was a great deal of concern given their vast differences in corporate values. Time being a conservative publisher and Warner a hard-partying movie studio. Somehow the companies managed to stay together and overcome their ________ issues
partner compatibility
A ________ is a right granted to the inventor of a product or process that excludes others from making, using, or selling the invention.
patent
internal audit
performing this requires gathering, assimilating, and evaluating information about the firm's operations
Flat Structure
-Small hierarchy with minimal bosses -has fewer levels of authority relative to a company's size. -
Mechanistic organizations function best in ______________.
predictable environments
Define Differentiation Strategy
A business-level strategy through which a company develops products or services that are distinct and for which customers will pay a (higher price than that of the competition)
Strategic Alliance
A cooperative strategy in which firms combine some of their resources and capabilities to create a competitive advantage on a worldwide basis
Mission
purpose or reason for the organization's existence
According to the BCG matrix, a "question mark" refers to an organization or subunit that has __________.
A low relative market share in a high-growth market.
Real options analysis is most appropriate when _____________.
A small investment up front can be followed by a series of subsequent investments
________________ is/are the most visible part of an organization's culture.
Artifacts
major drivers
B
Which of the following is a frequent problem in national customs agencies? A) a shortage of customs agents in airports B) inconsistent product classification C) arbitrary tariffs and duties D) customs agents who fail to understand contemporary trade issues
B) inconsistent product classification
Ethical principles
C
What are the 3 parts to the strategic management process?
Commitments Decisions Actions
Three Business level strategies listed
Cost leadership, Differentiation, Focus
strategic planning
refers only to strategy formulation
Research findings suggest that the _______________ level of diversification offers the highest level of performance.
related
The fact that Rogers' Chocolates carries out its production function in Canada instead of the US makes its a Multinational Enterprise
False
A cultural and language barrier difference is considered under what key area of evaluation for global expansion?
Market analysis
Financial reasons for undertaking internal corporate venturing include _____________.
Obtaining above average returns
Company boundary After outsourcing
R&D > Production (outsourced) > Marketing & Sales> Customer Service (outsourced)
product development
seeking increased sales by improving/modifying present products/services
Why do Industries Start to Decline?
Technological change Social trends Demographic shifts
Network structure
The arrangement linking a number of independent orgs involved in some common undertaking
Bargaining Power of Suppliers
The fourth force of the Five forces model driving competition - Supplier power in the Five Forces Model is high when buyers have few choices from whom to buy, and low when their choices are many.
Define Cost Leadership
The positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can so that the firm can offer the product or service at the lowest price in the industry.
Related and supporting industries:
The presence or absence in a nation of supplier industries and related industries that are internationally competitive.
Franchising
This entry mode basically a specialized form of licensing in which the __________'er not only sells intangible property to the franchisee but also insists that the franchisee agree to abide by strict rules on how to do business. -The advantages of ____________ are similar to those of licensing. However, _____________ may inhibit the firm's ability to take profits out of one country to support competitive attacks in another.
Joint Ventures
This entry mode has a have a number of advantages. 1) A company may feel that it can benefit from a local partner's knowledge of a host country's competitive conditions, culture, language, political system, and business system. 2) When the development costs and risk of opening up a foreign market are high, a company might gain by sharing these costs and risks with a local partner. -The disadvantages include giving up control of technology and losing tight control over subsidiaries.
Exporting
This entry mode has two distinct advantages: 1) It avoids the cost of establishing manufacturing operations in the host country. 2) It may be consistent with scale economies and local economies. -By manufacturing the product in a centralized location and then exporting it to other national markets, the company may be able to realize substantial economies of scale from global sales.
International licensing
This entry mode is an arrangement whereby a foreign licensee purchases the rights to produce a company's product in the licensee's country for a negotiated fee.
wholly-owned subsidiary
This entry mode is when a parent company owns 100% of the subsidiary's stock. There are three advantages to this entry mode: 1) It reduces the company's risk of losing control. 2) It gives a company the kind of tight control over operations in different countries that it needs if it is going to engage in global strategic coordination. 3) It may be the best choice if a company wants to realize location and scale economies.
localization strategy
This global strategy focuses on increasing profitability by customizing the company's goods or services so that the goods provide a favorable match to preferences in different national markets. The downside of this strategy is that it involves some duplication of functions and smaller production runs.
Transnational Strategy
This global strategy trys to develop a business model that simultaneously: -achieves low costs. -differentiates the product offering across geographic markets. -fosters a flow of skills between different subsidiaries in the company's global network of operations.
Four topics that provide a basic understanding of why and how insurers engage in global expansion?
Trends in global expansion Strategic reasons for global expansion Global market considerations Approaches to global expansion
GoodCookie is a donut company that serves the greater Nashville Metropolitan market. The company has found success by selling a limited variety of donuts to a loyal customer base within roughly 25 miles of LP Field. If you were called upon to organize GoodCookie's 50 employees, you would best choose the _______________ structure as the company's most effective option.
simple
SWOT analysis
simplest way to conduct environmental scanning; describe the particular strategic factors for a specific company
Political Risk Defined
Uncertainties faced by companies doing business in foreign countries that arise from the actions of host-country governments
Steps Used to Achieve a Leadership Position Include
Using aggressive pricing Marketing to build market share Acquiring established competitors to consolidate the industry Raising the stakes for other competitors
Hypercompetition
situation in which there is a lot of very strong competition between companies, markets are changing very quickly, and it is easy to enter a new market, so that it is not possible for one company to keep a competitive advantage for a long time
Learning organization
skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights
organizational capabilities
skills (the ability and ways of combining assets, people, and processes) that a company uses to transform its inputs into outputs
Which of the following is an effect of administrative and bureaucratic procedures? A) generates government revenue B) slows down the import of products C) blocks the entry of imported products D) reduces the quantity of available goods
slows down the import of products
A firm that avoids using sweatshops is pursuing which of the following types of sustainability interests?
social
CSR strategies and environmental sustainability strategies
social benefits and fulfill customer need in a superior fashion can lead to competitive advantage Corporate social agendas that address only social issues may help boost a company's rep for corporate citizenship but are unlikely to improve its competitive strength in the market place
Commonality
some kind of skill or attribute, which, when it is shared or used by two or more business units: allows both businesses to operate more effectively and efficiently, and create more value for customers. To increase profitability, the competencies transferred must involve value-chain activities that gives the business unit competitive advantage in the future.
Triggering event
something that acts as a stimulus for a change in strategy
____________ is an excellent tool for managing the bounded rationality problem faced by most top managers
span of control
"Division of labor" is another way to say ___________________.
specialization
Decline Mode Strategies
When a company is operating in a market where demand for products/services is declining. It can use these strategies: • Bankruptcy • Liquidation • Harvest Strategy • Turnaround Strategy • Divestiture Strategy
When is Harvest Strategy the Best Choice?
When a company wishes to exit a declining industry and optimize cash flow in the process
No-change strategy
a decision to do nothing new; a choice to continue current operations and policies for the foreseeable future
divestiture strategy
a grand strategy that involves the sale of a firm or a major unit of a firm as a going concern
weakness
a limitation or deficiency in one or more resources or competencies relative to competitors that impedes a firm's effective performance
Brand
a name given to a company's product which identifies that item in the mind of the consumer
Procedure
a system of sequential steps or techniques that describe in detail how a particular task or job is to be done
Bob's Nutty Fudge Company was having trouble securing its required supply of high-quality walnuts. After much thought, the company decided to backward integrate and acquire Larry's Custom Nuts and its Crush-o-Matic 2000, a machine designed to crack and chop nuts in the ideal size and shape for high-quality fudge. While this will no doubt increase the overall efficiency of Bob fudge operations, it also increases the company's opportunity costs because of:
specialized assets
Trend Analysis
an analysis that identifies patterns in past losses and then projects these patterns into the future
Industry analysis
an in-depth examination of key factors within a corporation's task environment
Organizational structure
assigns employees to specific value creation tasks and roles and specifies how these tasks and roles are to work together.
Hostile takeovers are most likely during ______
strategic alliances
__________ occurs when business acquires suppliers.
backwards integration
When making decisions regarding ethical business actions, managers should do which of the following? A) focus predominantly on whether the actions uphold accepted standards of fairness B) focus mainly on the company's obligations to produce profits for its shareholders C) place the highest emphasis on the company's ability to benefit the common good D) balance their obligation to shareholders with contributions to the public good
balance their obligation to shareholders with contributions to the public good
the grand strategy matrix
based on two evaluative dimensions: competitive position and market (industry) growth
All of the following are ways that firms can benefit from a foreign market's political and legal systems except ________. A) tax holidays B) subsidies C) legal protection D) cash incentives
) legal protection
transfer pricing
-Competition among divisions may lead to battles over _______ ________, that is, establishing the fair or "competitive" price of a resource or skill developed in one division that is to be transferred and sold to other divisions that require it. -a profit allocation method used to attribute a multinational corporation's net profit (or loss) before tax to countries where it does business. -Because each division has its own set of value chain functions, functional resources are DUPLICATED across divisions; thus, multidivisional structures are expensive to operate. For example, R&D and marketing are especially costly. - this is seen as an inefficiancy
information distortion
-If too much emphasis is placed on each division's individual profitability, divisional managers may engage in ___________ ___________, that is, they manipulate the facts they supply to corporate managers to hide declining divisional profits, or use strategies that give only short-term benefits. -When divisions compete against themselves for scarce resources, this rivalry makes it difficult—or impossible—to obtain the gains from transferring, sharing, or leveraging distinctive competencies.
Strategic outsourcing
-The decision to allow one or more of a company's value-chain activities or functions to be performed by independent specialist companies that focus all of their skills and knowledge on just one kind of activity. -"Focusing on a few aspects of your business and hiring somebody else to do the other aspects of your business where you are not skilled" -It is better to hire somebody who is highly skilled than to try to learn to do it yourself.
Wrong reasons for Diversification
-The strategy would allow a company to obtain the benefits of risk pooling. -When a company's core business is in trouble, some think diversification will rescue it and lead to long-term growth and profitability.
Disadvantages of entering a joint venture:
-While it allows companies to share the risks and costs of developing a new business, it also requires that they share in the profits if they succeed. -If one partner's skills are more important than the other partner's skills, the partner with more valuable skills will have to "give away" profits to the other party because of the 50/50 agreement. -Problems can arise if the partners' business models conflict. -A company runs the risk of giving away important company-specific knowledge to its partner.
CSR strategy has following elements
-actions to promote workforce diversity -actions to support philanthropy, participate in comm. service and better the quality of life worldwide -actions to protect and sustain environment -actions to enhanve employee well-being and make the company a great place to work -actions to ensure the company operates honorably and ethically
intangible or less visible costs
-customer defections -loss of rep. -lost employee morale and higher degree of cynicism -higher employee turnover -higher recruiting costs -adverse effects on employee participation -costs of complying with often harsher govt regs
Structuring the work effort to promote strategy execution
-decide what value chain activity to perform internally and which to outsource -align the org structure with strategy -decide how to centralize authority and delegate down line of command -facilitate collaboration with external partners/strategic allies
unethical business behaviors three main drivers
-faulty oversight, enabling the unscrupulous pursuit of personal gain and self-interest -heavy pressures on company managers to meet or beat short-term performance targets -a company culture that puts profitability and business performance ahead of ethical behavior
Multidivisional Structure
-financial controls can be applied to each business on the basis of profitability -Allows corporate Management to focus on strategy and not the operations of each business. -Typically large companies
visible costs
-government fines and penalties -civil penalties arising from class-action laysuits and other litigation aimed at punishing the company for its offense and the harm done to others -the costs to shareholders in the form of a lower stock price (and possibly lower dividends)
Good business reasons why companies should devote time and resources to social responsibility initiatives, environmental sustainability, and good corporate citizenship
-increased buyer patronage -reduces risk of rep damaging incidents -lower costs and enhance employee recruiting and workforce retention -opps for revenue enhancement -in the best long-term interest of shareholders
internal Admin Costs
-legal and investigative costs incurred by company -cost of providing remedial edu. and ethics training to company personnel -costs of taking corrective actions -admin. costs associated with ensuring future compliance
Accessing capabilities through collaborative partnerships
-outsource the function requiring the capabilities to a key supplier etc -collaborate with a firm that has complementary resources and capabilities in the joint venture, strategic alliance or other type of partnership to achieve a shared objective -engage in partnership to learn how the partner does things internalizing it methods and acquire its capabilities
Identify the four steps of the strategic control process of strategy evaluation that allow management to gauge progress?
1) Establish Standards 2) Create & apply measurements 3) Compare actual results to standards 4) Evaluate and implement corrective actions if goals are not met
Four attributes of a country-specific environment that have an important impact on companies located within that nation:
1) Factors endowment 2) Local demand conditions: The nature of home demand for the industry's product or service. 3) Related and supporting industries: 4) Firm strategy, structure, and supporting industries:
Disadvantages of Vertical Integration
1) It can raise costs if, over time, a company makes mistakes. 2) Company-owned suppliers to not have to compete with independent, outside suppliers for orders, thus they have less incentive to look for ways to reduce operating costs or improve component quality. 3)When technology is changing fast, _______ _________ locks a company into an old, inefficient technology and prevents it from changing to a new one that would strengthen its business model. 4) If the demand for a company's product wildly fluctuates and is unpredictable, the firm may find itself burdened with warehouses full of component parts it no longer needs, which is a major drain on profitability. 5) When demand is unpredictable, vertical integration makes it hard to manage volume flow.
Drawbacks of licensing
1) It does not give a company the tight control over manufacturing, marketing, and strategic functions in foreign countries that it needs to have in order to realize scale and location economies. 2) __________ severely restricts a company's ability to coordinate strategy in use profits from one country to support competitive attacks in another. 3) By __________ its technology, a company can quickly lose control over its technology.
Disadvantages of a wholly owned subsidiary
1) It is the most costly method of serving a foreign market. 2) The parent must bear all the costs and risks of setting up overseas. 3) There are problems in trying to "marry" divergent corporate cultures, and these problems may more than offset the benefits.
Acquisitions may fail for the following reasons:
1) Management problems 2) Overestimating the potential economic benefits 3) Acquisitions tend to be expensive (no profit increases) 4) Poor screening results in not seeing major problems
Reasons for high failure rate (33% to 60%) of internal new ventures include:
1) Market entry on too small a scale. 2) Poor commercialization of the new-venture product. 3) Poor corporate management of the new venture division.
Companies that compete in global marketplace typically face two types of competitive pressures:
1) Pressures for cost reductions. 2 )Pressures to be locally responsive.
Steps taken to ensure good science ends with good, commercially viable products when dealing with Internal New Ventures.
1) Put research in the hands of skilled managers. 2) Encourage managers to work with R&D scientists. 3) Foster a close link between R&D and marketing.
Disadvantages of Global Strategic Alliances
1) _________ _________ _________ give competitors a low-cost route to new technology and markets. 2) Over a long term, the results is to "hollow out" U.S. firms, leaving them with no competitive advantage in the global marketplace. -The success of an alliance seems to be the function of three factors: partner selection, alliance structure, and the manner in which the alliance is managed.
Drawbacks of Exporting
1) ___________ from the company's home base may not be appropriate if there are lower-cost locations for manufacturing the product abroad. 2) High transportation costs can make __________ uneconomical. 3) Tariff barriers or the threat of tariff barriers can make ___________ uneconomical. 4) There is no guarantee that a local agent will act in the ___________'s best interest.
How much money is estimated to be lost in trading opportunities every year due to trade barriers? A) $1 billion B) $10 billion C) $100 billion D) $200 billion
100 billion
Focused Cost Leadership Strategy
A business-level strategy through which a company focuses on one group of customers and offers a low-price product or service
How is strategy implementation and evaluation intertwined?
A company cannot achieve its goals if its strategies are not implemented effectively, because of this there must be a way to measure the effectiveness
Preempt Rivals
A company must forecast a large increase in demand in the product market and then move rapidly to establish large-scale operations that will be able to satisfy the predicted demand
inefficient
A company that forms a strategic alliance with an independent component supplier runs the risk that its alliance might become __________ over time.
Subsidiary
A company that is completely controlled by another company
Define Divesture Strategy
A corporate-level strategy through which a company sells off a portion of an operation, business or division or profit center that is not performing well
Consolidating a Fragmented Industry Through Value Innovation
A key to understanding this process is ot recognize that in each case, the value innovator defines value differently than established companies and finds a way to offer that value that lowers costs through the creation of scale economies
Reasons for Fragmentation
A lack of scale economies may mean that there are few, if any, cost advantages to large size Brand loyalty in the industry may primarily be local The lack of scale economies and national brand loyalty implies low entry barriers
Five Forces Model
A method of evaluating the external environment in which a company operates. Involves assessing five forces that drive competition: threat of new entrants, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers, and rivalry among existing firms
Define Swot Analysis
A method of evaluating the internal and external environments by assessing an organization's Internal strengths and weaknesses and its external opportunities and threats
Factors endowment:
A nation's position in factors of production such as skilled labor or the infra-structure necessary to compete in a given industry.
Joint Venture Defined
A specific type of strategic alliance in which companies share ownership, responsibilities, and management of a foreign venture
Which one of the following offers a low-risk approach to quickly entering a new market?
A strategic Alliance
To be successful, the differentiation business-level strategy must
Accurately determine customers' preferences to develop products perceived as distinctive
When does a firm achieve strategic competitiveness?
Achieved when a firm successfully formulates and implements a value-creating strategy
equifinality
Achieving similar results using different means or paths. May be possible to generate new alternatives that give equal results but with greater potential for gaining commitment
Which of the following statements about action plans is true?
Action plans must be specific so that managers will have a clear understanding of the resource requirements
Franchisees Must do What?
Adhere to some strict rules that require them to adopt the same basic business model and operate in a certain way
Which of the following is not an advantage of collaborating with strategic partners in order to innovate?
Advantages: obtaining skills and new knowledge from outside sources. Making firms identify their own
One of the pitfalls of real options analysis is that managers may have an incentive and know-how to game the system and back-solve a formula to get a proposal approved. This can give rise to _____________.
Agency problem
differentiation strategies
Aimed at producing products and services considered unique industry wide and directed at consumers who are relatively price-insensitive
After 15 teams created 128 different phones, Chris Galvin, former CEO of Motorola, recently eliminated the autonomous teams being used to develop new wireless phones. This was necessary because such teams _____________.
All of the above
Organizations generally tend to become internally focused when faced with ______________ and _____________.
All of the above (faces external pressures, resource scarcity, and declining performance)
Advantage Related Diversification
Allows companies to gain economies of scope by sharing resources, such as the same distribution system or research and development facilities. EX: Leverages fixed expenses resulting in lower unit cost
1) It should be FLEXIBLE enough to allow managers to respond as necessary to unexpected events. 2) It should provide ACCURATE INFORMATION, thus giving a true picture of organization performance. 3) It should supply managers with the information in a TIMELY MANNER because making decisions on the basis of outdated information is a recipe for failure.
An effective strategic control system should have the following three characteristics:
1) Top managers should delegate authority to middle- and first-level managers. 2) Allowing managers in bottom layers to implement strategies is motivating and accountability increases.
An important way to reduce the problems associated with too-tall hierarchies and reduce bureaucratic costs is to decentralize authority.
Define Multidivisional Structure
An organizational structure in which divisions are organized into separate profit centers. (Suitable for a diversified company)
The strategy formulation phase of the strategic management process involves the following?
Analyzing the external and internal environments Development of long-term strategies and organizational goals Determination strategy at different organizational levels
Complexity
Are products that are viewed by consumers as being complex and difficult to master will diffuse more slowly than products that are easy to master
Late Majority
Are the customers who purchase a new technology or product only when it is obvious the technology has great utility and is here to stay As a customer group they tend to be older and more behaviorally conservative set of customers They are familiar with technology that was round when they were younger, but are often unfamiliar with the advantages of new technology Can be a bit nervous about buying new technology, but they will do so once they see large numbers of people adopting it and getting value out of it Adopt new technology when they feel they will be left out if they do not do the same
Laggards
Are the last group of customers to enter the market They are people who are inherently conservative and unappreciative of the uses of new technology They refuse to adopt new products even when the benefits are obvious, or unless they are forced to do so by circumstances
Early Adapters
Are the second group of customers to enter the market They understand that the technology may have important future applications and are willing to experiment with it to see if they can pioneer new uses for the technology Are often people who envision how the technology may be used in the future, and they try to be the first profit from its use Enter the market in the embryonic stage of the life cycle
financial objectives
Associated with growth in revenues, earnings, higher dividends, larger profit margins, greater ROI, higher EPS, rising stock price, cash flow, etc.
Individuals with highly innovative DNA traits have the ability to connect seemingly unrelated questions, problems, and ideas from different fields that allows them the opportunity to creatively see opportunities others miss. This is referred to as _____________.
Associating
41) Which of the following countries has the highest degree of economic freedom? A) Australia B) China C) Brazil D) Venezuela
Australia
How do Companies Dispose of Excess Capacity?
By cutting pricess
How can Companies Promoting New Products Take Advantage of Viral Diffusing?
By identifying and aggressively courting opinion leaders in a particular market - the customers whose views command respect
How can Managers Overcome Barriers to Adoption
By making their products less complex and intimidating, and easy to use, and by showcasing their relative advantage over prior technology
How can Price Leadership Stabilize Industry Relationships?
By preventing head-to-head competition and raising the level of profitability within an industry
In the Enron movie we watched last week, the resignation of _____________ was a surprise to everyone and was the catalyst for the final fall of the company.
CEO Jeff Skilling
Which of the following types of organizations would wield the greatest power over a firm attempting to do business in Canada? A) Canada's Ministry of Foreign Affairs B) World Trade Organization C) North American Free Trade Area D) Organization for Economic Cooperation and Development
Canada's Ministry of Foreign Affairs
A firm is hired by an entertainment company to investigate piracy of its entertainment software in countries abroad. The firm develops a list of countries to investigate based with estimated piracy levels of 90% or higher. Which of the following is most likely on the firm's list? A) India B) Russia C) China D) Mexico
China
Coordinate with Rivals as a Capacity-Control Strategy
Collusion on the timing of new investments is illegal under antitrust law Tacit coordination is practiced in many industries as companies attempt to understand and forecast one another's competitive moves Companies use market signaling to secure coordination A coordination strategy reduces the risks associated with investment in the industry
If a firm outsources some parts of its value chain in order to reduce costs and increase quality and at the same time engages in multiple alliances to penetrate new markets, this is a example of a firm using a ______________ of organizational types.
Combination
A global start-up faces many management challenges including _____________.
Communication and coordination, success = internalize few activities and outsource the rest
Competitive Chasm Co
Companies do not or cannot develop the right business model They fall into the chasm and go out of business
Shakeout Stage
Companies have learned how important it is to analyze each other's business model and strategies, their actions are likely to stimulate a competitive response from industry rivals
How might Companies use Price Signaling?
Companies may use price signaling to announce that they will vigorously respond to hostile competitive moves that threaten them
What does Excess Capacity Result From
Companies within an industry simultaneously responding to favorable conditions They all invest in new plants to be able to take advantage of the predicted upsurge in demand
Which of the following makes it more difficult for companies to implement global CSR measures? A) The UN Convention on the Rights of the Child defines specific standards for global CSR. B) Most international companies agree on the importance of improving access to quality education. C) Company stakeholders often have conflicting expectations regarding business accountability. D) Solutions to social and environmental problems are typically clear cut for headquarter managers.
Company stakeholders often have conflicting expectations regarding business accountability
An import license can best be defined by which of the following? A) an expensive requirement for new importing firms B) a government fee to facilitate import processing C) a complicated system of establishing quotas D) a costly government permit to import goods
D) a costly government permit to import goods
According to the text, which of the following is not one of the methods companies can use to enhance their competitive position via innovativeness?
Departing from existing technologies to develop products and practices that go beyond the current state of the art
Boston Consulting Group Matrix
Designed to enhance a multidivisional firm's efforts to formulate strategies. BCG is a private management consulting firm based in Boston
What is a crucial component and the first consideration of strategy implementation?
Designing the structure of the organization
In a typical corporation, which of the following factors does not determine how entrepreneurial projects will be pursued?
Determinants: corporate culture, leadership, structural features that guide and constrain action
Which of the following is a disadvantage of a functional type of organizational structure?
Differences in functional orientation may impede communication and coordination
Insurers that offer special programs for commercial or homeowners insurance are examples of what type of business level strategy?
Differentiation Strategy
Disadvantages of Unrelated Diversification
Diminishing economies of scope, Additional cost of running divergent businesses, a loss of synergy among business
What are several ways an insurers competitiveness is increased through global expansion?
Economies of scale and efficiencies are gained that allow a company to compete better domestically. Technology and strategic resources gained allow for quick expansion into additional foreign markets. Also, expansion to remain competitive in a specialty market is desirable.
Which of the following is not a dilemma faced by corporations trying to manage the innovation process?
Emphasizing marketing over management innovations
According to the text, firms that want to enhance their entrepreneurial position by being competitively aggressive should _____________.
Enter markets with drastically low prices
Competitive Factors within an Industry
Entry into an industry economic recession Age of a company's physical assets is the source of the problem
An international human rights organization recommends that its member countries review their human rights policies on a periodic basis to ensure that their governments are upholding ethical standards for the treatment of prisoners. Which of the following represents the most effective reasoning in support of the organization's recommendation? A) Ethical policies and practices tend to remain consistent within the same country over time. B) Nations should only enforce ethical standards that have been approved by other nations. C) Nations should enforce those ethical standards that have been adopted in other nations. D) Ethical standards change over time, so national policies should be updated as necessary.
Ethical standards change over time, so national policies should be updated as necessary.
Fill in the banks
Existing Competence combined with Existing Industry "What is the opportunity to improve our position in existing industries and better leverage our existing competencies?"
White spaces
Existing Competence combined with New industry "What new product or services could we create by creatively redeploying or recombining our current competencies?"
What two parts make up the strategic intent and mission?
External environment Internal environment
Which of the following best explains why a family conglomerate (FC) might pose a challenge to firms trying to enter emerging markets? A) FCs have superior knowledge in manufacturing and distribution. B) FCs pay no tariffs in exchange for providing employment opportunities. C) FC owners often hold positions of power within national governments. D) FCs may control large market shares in several industries within a nation.
FCs may control large market shares in several industries within a nation.
Which of the following is NOT a disadvantage of the barrier-free form of organization?
FEWER INTERNAL BARRIERS MEANS FEWER POLITICAL ISSUES TO DEAL WITH.
Elements of Market Analysis
Financial Requirements, Return on Capital Entry and Withdrawal Difficulty Competition or Competitive Advantage Distribution Channels
Three organizational controls that may be used to monitor goals?
Financial controls Operational or Process controls Human or Behavior controls
Which of the following is a typical complaint of host-country competitors against foreign firms? A) Foreign firms burden the host-country with infrastructure requirements. B) Foreign firms do not have to obey host-country laws and regulations. C) Foreign firms receive financial support from host-country governments. D) Foreign firms lure local workers away from host-country businesses.
Foreign firms receive financial support from host-country governments.
integration strategies
Forward integration, backward integration and horizontal integration are what types of strategies
Where does Demand for Embryonic Products Come From?
From a small set of technologically savvy customers willing and able to tolerate, and even enjoy, the imperfections in their new pruchase
As discussed the first night of class, the predominance of the ________________ organizational structure in business (and reflected in the typical structure of business schools) led to the creation of capstone business classes and eventually the field of Strategic Management.
Functional
A matrix organizational structure is characterized by a combination of the ______________ and _____________.
Functional and divisional structures
Some combination of Efficiency, Quality, Customer Responsiveness, and innovation must be incorporated into what level strategy to pursue either cost leadership or differentiation strategy at the business level?
Functional-level Strategy
Supports the corporate level strategy and business level strategy and has a time frame of one year?
Functional-level strategy
Virtual organizations ______________ whereas modular organizations _____________.
GIVE UP PART OF THEIR STRATEGIC CONTROL, RETAIN FULL STRATEGIC CONTROL."
What are stakeholders?
Groups who are affected by a firm's performance and who have claims on its performance
Leadership Strategy Aims at What?
Growing in a declining industry by icking up the market share of companies that are leaving the industry
The selling of office buildings while phasing out an unprofitable line of insurance in decline mode is what type of corporate strategy
Harvest strategy Example
Centralized decision making
Highly centralized org where top execs retain authority for most strategic and operating decisions Advantage: tight control by manager, reduce potential for conflicting decisions, Disadvantages: hierarchical command can make large orgs sluggish in responding to changing market conditions, bureaucracy , no encouraged responsibility on low level managers and employees
Tools and techniques used to achieve effective coordination and integration of key activities in an organization include all of the following except _____________.
Horizontal diversification
What does SWOT analysis typically enable executives to determine?
How receptive the market would be to its products and services and its competitive position in the market
Forward vertical integration.
If a company pursues this strategy forward into an industry that uses, distributes, or sells the company's product.
The S-shaped Growth Curve
Illustrates how different groups of customers with different needs enter the market over time
related diversification
In _________ ____________, the gains from pursuing this multibusiness model are derived from the transfer, sharing, and leveraging of R&D knowledge, industry information, customer bases, and so on, across divisions.
The ChangingNature of Market Demand
In most product markets, the changing needs of customers lead to the S-shaped growth curve
Strategic Implication: crossing the Chasm
In order to cross the chasm successfully, managers must correctly identify the customer needs of the first wave of early majority users - the leading edge of the sales market Then they must adjust their business models by developing new strategies to needs of the early majority
Threat of Substitute Products or Services
In the Five Forces Model is high when there are many alternatives to a product or service and low when there are few alternatives from which to choose.
Holdup
In the context of outsourcing, _________ refers to the risk that a company will become too dependent upon the specialist provider of an outsourced activity and that the specialist will use this fact to raise prices beyond some previously agreed-upon rate. -A company that is not careful could suffer loss of important competitive information when it outsources an activity.
Which of the following is considered to be an advantage of a matrix structure?
Increased responsiveness to the market
_________ is much more likely to agree with Milton Friedman's take on corporate social responsibility than ________________.
India, China
Computer software counterfeiting is especially prevalent in which of the following emerging markets? A) Mexico B) Japan C) Bolivia D) Indonesia
Indonesia
Market Share of Different Customer Segments
Innovators - 1% Early adopters - 5% Early Majority - 24% Late Majority - 45% Laggards - 24%
The Product Development Strategies Required for Success are Different as a Market Develops Over Time
Innovators and early adopters are technologically sophisticated customers willing to tolerate the limitations of the product The early majority, however, values ease of use and reliability Companies competing in an embronic market typically pay more attention to increasing the performance of a product than to its ease of use and reliability Those competing in a mass market need to make sure that the product is reliable and easy to use
Why are Pioneering Companies often Unable to Create a Business Model that Allows them to be Successful Over Time and Remain as Market Leaders?
Innovators and early adopters have very different customer needs from the early majority
Alignment of these components allow an organization to create a sustainable competitive advantage?
Internal resources of organization and external factors
Strategic Commitments
Investments that signal an incumbent's long-term commitment to a market, or a segment of that market Involve raising the perceived costs of entering a market, thereby reducing the likelihood of entry
Limit Price Strategy
Involves charging a price that is lower than that required to maximize profits in the short run, but is above the cost structure of potential entrants May be used to deter entry when incumbent companies in an industry enjoy economies of scale
Product Proliferation
Involves incumbent companies attemtping to forestall entry by making sure that every niche or segment in the marketplace is well served The strategy of filling the niches
Chaining
Involves opening additional locations that adhere to the same basic formulate, and that the company owns
An individual from a country with a high degree of political risk might most likely be from which of the following? A) Canada B) Singapore C) Iraq D) Japan
Iraq
Growth Industry
Is an industry in which first-time demand is rapidly expanding as many ew customers enter the market
Embryonic Industry
Is an industry that is just beginning to develop Are typically populated by a large number of small companies
Mature Industry
Is dominated by a small number of large companies The large companies often determine the nature of competition in the industry Companies have learned the meaning of competitive interdependence
Horizontal Mergers
Is merging with or acquiring competitors, combing them together into a single larger enterprise that is able to realize scale economies and build a more compelling national brand
Relative Advantage
Is the degree to which a new product is perceived as better at satisfying customer needs than the product is supersedes
Non-Price Competition
Is the use of product differentiation strategies to deter potential entrants and manage rivalry
Market Penetration
Is when a company concentrates on expanding market share in its existing product markets Involves heavy advertising to promote a build product differentiation
Tit-for-Tat Strategy
Is when a company does exactly what its rivals do By consistently pursuing this strategy over time, a company sends a clear signal to its rivals that it will mirror Is a useful way of shaping pricing behavior in an industry
Niche Strategy
Is when a company focuses on pockets of demand that are declining more slowly than the industry as a whole to maintain profitability
Harvest Strategy
Is when a company reduces to a minimum the assets it employs in a business to reduce its cost structure and extract or milk maximum profits from its investment Optimizes cash flow
Market Development
Is when a company searches for new market segments for a company's existing products to increase sales Want to capitalize on the brand name it has developed in one market segment by locating new market segments in which to compete In this way, a company can leverage the product differentiation advantages of its brand name
Price Leadership
Is when one company assumes the responsibility for determining the pricing strategy that maximizes industry profitability
Saturation Point
Is where the most customers have already purchased the product for the first time and demand is increasingly limited to replacement demand
What does Product Differentiation Allow?
It allows industry rivals to compete for market share by offering products with different or superior features or by applying different marketing techniques
Which of the following is true of a business code of ethics? A) It guides employee behavior in all situations. B) It guides employee behavior in some, but not all, situations. C) It is usually a poor guide for employee behavior. D) It is a cure-all for ethical dilemmas.
It guides employee behavior in all situations.
How is the Transition Between the Embryonic Market and the Mass Market?
It is not a smooth, seamless one It represents a competitive chasm or gulf that companies must gross
One of the following statements about innovativeness is not true. Which is it?
It refers to making decisions and taking risks without certain knowledge of probably outcomes
What does a Harvest Strategy Require
It requires the company to halt all new investments in capital equipment, advertising, research and development and so forth The inevitable result is that the company will lose market share, but because it is no longer investing in the business, initially is positive cash flow will increase
What is the resource-based model of superior returns?
It suggest that above-average returns for any firm are largely determined by characteristics inside the firm. The resource-based view focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitage.
The Speed at which a Market Develops can be Measured by What?
Its growth rate
All of the following are examples of global sourcing except ________. A) Mexican autoworkers manufacture generators in Mexico for General Motors B) Japanese workers are employed at a Toyota plant in central Japan C) Microsoft employs skilled workers in India for computer programming D) Massachusetts General Hospital employs doctors in the Philippines to read x-rays
Japanese workers are employed at a Toyota plant in central Japan
Name specific type of strategic alliance in which two existing companies collaborate to form a third, independent company?
Joint venture
Tall Structure
Large hierarchy with many bosses -has many levels of authority relative to the company's size. -More problems that are encountered are usually encountered with this type of structure. 1) It can take a long time for decisions from top managers to reach lower management and reverse problems with feedback. 2) There is a higher chance for distortion of commands.
What are strategies?
Large scale action plans for interacting with the environment in order to achieve long-term goals.
When a Market is Rapidly Growing and the Popularity of a New Product Increases or Spreads in a Way that is Analogous to a Viral Model of Infection, a Related Issue Arises
Lead adopters in a market become infected or enthused with the product Lead adoptersinfect other peopel by telling others about the advantages of products After observing the benefits of the product, these people also adopt and use the product
Strategies to Deal with a Declining Industry
Leadership strategy Niche strategy harvest strategy Divestment strategy
Which of the following is NOT a strategic risk of outsourcing?
Loss of non-vital functions
If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has company branches abroad?
Lower profits, because foreign profits will be reduced when measured in dollars
According to the study by OReilly and Tushman, effective ambidextrous structures had all of the following attributes except _____________.
Managerial efforts were highly focused on revenue enhancement
According to Pitney Bowes ______ acquisitions are preferable to ___________ acquisitions
Many small, one big
What key area of evaluation for global expansion does financial and requirements, including capital and surplus, fall under?
Market analysis
Three key areas for an insurer to evaluate in making a strategic decision about expansion into a global market
Market analysis Economic Considerations Political risks
Non-Price Competitive Strategies
Market penetration Product development Market development Product proliferation
Unity of command is a military principle that says that an individual should answer to only one boss at any given time. The ____________ organizational structure purposely violates the unity of command principle.
Matrix
Which of the following best summarizes the argument in favor of microfinance? A) Microfinance ultimately leads to greater tax revenues for national governments. B) Microfinance don't need to be paid back in the event the borrower goes bankrupt. C) Microfinance allows the underprivileged to create businesses and improve their lives. D) Microfinance alleviates the pressure on MNEs to support developing economies.
Microfinance allows the underprivileged to create businesses and improve their lives.
What type of organization is defined as a central hub surrounded by networks of outside suppliers and specialists?
Modular
Mexico eliminated nearly all tariffs on product imports from the United States as a result of which of the following? A) FDI B) WTO C) GATT D) NAFTA
NAFTA
Premier plus 10
New Competence combined with Existing industry "What new competencies will we need to build to protect and extend our franchise in current industries?"
Mega-opportunities
New Competence combined with New Industry "What new competencies will we need to build to participate in the most exciting industries of the future?"
Under swot analysis opportunities might be presented in what way?
New Markets, possible acquisitions targets, reduction in competition.
Under Swot Analysis Opportunities might be presented in what way?
New competitors, and increase in competition levels, economic downturns, or changes in customer preferences
Factors that Accelerate Customer Demand
New product's relative advantage Complexity Compatibility Trialability Observability
42) Which of the following countries has the least amount of economic freedom? A) South Korea B) Mexico C) North Korea D) Botswana
North Korea
Each of the following nations enjoyed success as a result of export-led development except ________. A) North Korea B) Hong Kong C) Taiwan D) Thailand
North Korea
Which of the following countries is considered a mixed economy? A) Norway B) Russia C) United States D) India
Norway
When does a firm achieve a sustained competitive advantage?
Occurs when a firm develops a strategy that competitors are not simultaneously implementing.
Cost Leadership Strategy
Offering Low-Priced Products to customers -combined with- Offering Products to Many kinds of customers
Focused Cost Leadership Strategy
Offering Low-Priced Products to customers -combined with- Offering Products to only One group of customers
Differentiation strategy
Offering Unique or Distinctive Products to Customers -combined with- Offering Products to Many kinds of customers
Focused Differentiation Strategy
Offering Unique or Distinctive Products to Customers---combined with- Offering Products to only One group of customers
This method of global expansion requires the most capital other than other methods of enter a foreign market, such as joint venture?
Operating a subsidiary in foreign country
A premium auditing department, striving to achieve a functional-level strategy, might use a pre-audit screening as what type of level strategy?
Operational-level strategy
What level strategy involves daily business processes and work flows, and is implemented at the department level?
Operational-level strategy
Define Functional Structure
Organizational structure that defines departments by what services they contribute to the organization's overall mission. (Suitable for single- business company) EX: Insurance Company
What is the name of the practice that many modular organization use to grow?
Outsourcing
What advantages does outsourcing not provide an organization?
Outsourcing provides accessing best in class goods and services enabling rapid expansion with relatively low capital investment and focusing scarce resources on core competencies
Threat of New Entrants
Part of Five Forces Model threat (risk) is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market
_________________ represents the most integrated alliance along the Make-or-Buy Continuum.
Performing activities in-house
Business Level Strategy
Pertains to each business unit or product line. Supports the corporate level strategy to be competitive, and to respond to changes in the external environment. "How do we compete?" Tactical Strategy
Which of the following helps explain why India was once characterized by high country risk? A) Taxes and financial incentives benefit Indian businesses over foreign firms. B) Indian business leaders distrust most European corporations. C) Political leaders enacted laws targeted against foreign firms. D) Indian leaders fear the modern influences of American firms.
Political leaders enacted laws targeted against foreign firms.
Serious concerns including kidnapping and ransom, terrorism, civil unrest, acts of war, revolution and changes in government are examples of what type of global expansion strategic decision making factor.
Political risk
What type of risk is being assessed when consultants are brought in to provide country reports or risk assessment of a countries governmental affairs?
Political risk
Which of the following is an advantage of a functional type of organizational structure?
Pooling of Specialists Enhances Coordination and control
Strategies to Manage Rivarly
Price signaling Price leadership Non-price competition Capacity control
best-value focus strategy
Producing products or services that fulfill needs to small groups of consumers focused differentiation, niche group with higher prices but loaded features
low-cost focus strategy
Producing products or services that fulfill needs to small groups of consumers niche group at lowest price
Whereas ______________ are willing to violate procedures and operate outside normal channels, ______________ gather hard data and develop a strong case for why a project should be killed.
Product champions; exit champions
What are the 3 stakeholders?
Product market (primary customers & suppliers) Organizational (employees; managers; non-managers) Capital market (stock market/investors; debt suppliers/banks)
What is one requirement of cost leadership strategy to avoid increased expenses and erosion of cost leadership advantages.
Products and Services must be fairly standardized, Cost leaders don't tend to be first movers in the industry
Which of the following explains why per-capita GDP converted at market exchange rates inaccurately depicts the potential of an emerging market? A) The market exchange rate does not take into consideration distribution and production costs for each nation. B) Products and services in emerging markets are priced significantly lower than they are in advanced economies. C) The per-capita GDP converted using PPP exchange rates provides a precise measure of consumer buying potential. D) Products manufactured in emerging markets are priced less than products that are imported outside of an economic bloc.
Products and services in emerging markets are priced significantly lower than they are in advanced economies.
What objectives are achieved by the allowance of expansion into foreign markets?
Provides greater stability during economic downturns and diversification of risk.
question marks
Quadrant 1 of BCG. Low relative market share position but compete in high growth industry. Cash needs are high, cash generation is low. Must decide to strengthen or sell
stars
Quadrant II of BCG. Best long-run opportunity. High relative market share and high industry growth rate. Should get substantial investment to maintain or strengthen position. Integration, market penetration, market development and product development strategies should be used
cash cows
Quadrant III in BCG. High relative market share position and compete in low-growth industry. Generate cash in excess of needs. Should be managed to hold position for as long as possible. "yesterday's stars." Product development and diversification strategies
dogs
Quadrant IV of BCG. Low relative market share and compete in slow industry. Weak position, often liquidated, divested or trimmed through retrenchment. Retrenchment may be best because they can often bounce back afterward
Creative intelligence involves the ability to see patterns in data, integrating data, and making insights. Which of the following are the four patterns of action managers should take in order to develop more creative and higher potential innovations?
Questioning, observing, experimenting, and networking
cooperative arrangements
R & D partnerships, cross-distribution agreements, cross-licensing agreements, cross-manufacturing agreements, joint-bidding consortia
What has been the impact of social democracy on international business relations in some European countries? A) Regulations have forced foreign firms to invest elsewhere. B) Politically conscious foreign firms invest in socialist nations. C) Low income tax rates have encouraged an influx of FDI. D) Political stability decreases the country risk of socialist nations.
Regulations have forced foreign firms to invest elsewhere.
The executive team of a primary insurer decides to become a third-party administrator of claims. This is an example of which type of corporate-level strategy?
Related diversification
Strategic business unit (SBU) structures are best suited for corporations pursuing _____________, whereas holding company structures are best suited for companies with ______________ strategies.
Related diversification; unrelated diversification
Operational Level Strategy
Relates to departments narrowly defined day to day activities. Operational strategies include workflows and production processes or Work progress strategy
What are above-average returns?
Returns in excess of what an investor expects to earn from other investments with similar risk
What is the primary reason that insurers look to global expansion?
Revenue growth
Strategic Reasons for Global Expansion
Revenue growth Financial stability Building global competitiveness
In response to Russia's annexation of the Crimean Peninsula last week:
Russia was suspended from the G8.
McGrath and Keil researched the types of human resource management practices that effective firms use to capture value from their innovation efforts. Which of the following is not one of their findings?
Separate the performance of individuals from the performance of the innovation. Otherwise, strong players
Missiion and Value Statement
Serves as a focal point for the organizations management and board of directors through the strategic management process?
Growth Mode Generic Corporate Level Strategies
Single business Vertical integration Diversification
Technological Developments
Sometimes new low-cost technology can create an issue because all companies invest in it simultaneously to prevent being left behind Excess capacity occurs because the new technology can produce more than the old Technology is often introduced in large increments, which generates overcapacity
What does the Intensity of Competition in a Declining Industry Depend On?
Speed of decline Height of exit barriers Level of fixed costs Commodity nature of product
input stage
Stage 1 of the Strategy Formulation framework. Input info from EFE, IFE matrix, and CPM. Quantify subjectivity
Approaches to Global Expansion listed
Strategic alliance-Joint Venture-Merger-Subsidiary
An approach to global market expansion that can provide low risk to entering a new market and brings together separate areas of expertise?
Strategic alliances
The strategic management process allows a firm to achieve 3 things. What are they?
Strategic competitiveness Sustained competitive advantage Above-average returns
According to Alfred Chandler and most other Strategy scholars, structure must always follow or reflect ________________________:
Strategy
Identify three interdependent stages of the strategic management process?
Strategy Formulation-Creating a Plan Strategy Implementation-Putting the plan into action Strategy Evaluation-Monitoring the results to determine whether the plan works as envisioned
The relationship between strategy and structure can be best described as _____________.
Strategy and structure influence eachother
Generally speaking, discussions of the relationship between strategy and structure strongly imply that _____________.
Structure Follows strategy
True (besides helping a firm to avoid financial demise, strategic management offers other tangible benefits such as an enhanced awareness of external threats, an improved understanding of competitions' strategies, increased employee productivity, reduced resistance to change and a clearer understanding of performance-reward relationships)
T/F: strategic management offers firms non-financial benefits as well as financial benefits
The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors except _____________.
THE FAILURE OF U.S. AUDIT FIRMS TO FOLLOW INTERNATIONALLY ACCEPTED ACCOUNTING STANDARDS.
Southwest Airlines began its no frills, no meals strategy in the late 1960s as a direct assault on the major carriers of the day. What type of competitive action does this represent?
Tactical
According to author, Jeffrey Pfeffer, which of the following is not an advantage of teams?
Teams interact so closely and therefore coordination and integration becomes unnecessary
Efforts to decentralize decision making and give company personnel some leeway in conducting ops must be
Tempered with the need to maintain adequate control and cross unit coordination
What is the Drawback of the Divestment Strategy?
That its success depends upon the ability of the company to spot industry decline before it becomes detrimental, and to sell while the company's assets are still valued by others
In a meeting of its senior management, a cigarette company reviews its plans to expand into several emerging markets. One executive suggests that targeting these markets may raise potential CSR concerns. Other attendees at the meeting dismiss the idea. Which of the following is the most effective response the executive could give to support his point regarding CSR concerns? A) Women are an untapped group of potential cigarette consumers in emerging markets. B) The GDPs of target countries may suffer from the burden of increased health care costs. C) Cigarette sales have declined in many of the advanced economies in recent years. D) Advertising that portrays smoking as "hip" will be most likely to appeal to young consumers.
The GDPs of target countries may suffer from the burden of increased health care costs.
What is the industrial organization (I/O) model?
The I/O model suggests that above-average returns for any firm are largely determined by characteristics outside the firm. The I/O model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm
This approach to global expansion presents the highest degree of business, political, and economic risk?
The acquisition of, or formation of a subsidiary which allows for direct ownership and control of foreign assets.
What are the assumptions of the I/O Model?
The external environment is assumed to impose pressures and constraints that determine the strategies that result in above avg. returns Firms competing within a particular industry/segment of an industry are assumed to control similar strategically relevant resources and thus pursue similar strategies. Resources used to implement strategies are highly mobile across firms. As such any resource differences that arise are short lived. Organizational decision makers are rational profit maximizes that always act in the firms best interests.
Franchising Advantages
The franchisee puts up some or all of the capital to establish his or her operation Because franchisees are the owners of their operations, and because they often put up capital, they have a strong incentive to make sure that their operations are run as efficiently and effectively as possible, which is good for the franchisor Because franchisees are themselves entrepreneurs, who own their own businesses, they have an incentive to improve the efficiency and effectiveness of their operations by developing new offerings and/or processes
What Idea does a Divestment Strategy Rest On?
The idea that a company can recover most of its investment in an underperforming business by selling it early, before the industry has entered into a steep decline
Height of Exit Barriers
The intensity of competition is greater in declining industries in which exit barriers are high
Level of Fixed Costs
The intensity of competition is greater in declining industries in which fixed costs are high
Speed of Decline
The intensity of competition is greater in industries in which decline is rapid
organizational slack
The multidivisional structure allows top managers to identify divisions with problems, called ________________ (unproductive use of functional resources), that would otherwise go unnoticed.
Why are New Strategies Often Required to Strengthen a Company's Business Model as a Market Develops Over Time?
The product development strategies required for success are different as a market develops over time Distribution strategies Price strategies
Task Environment
The set of forces and conditions that originate with suppliers, distributors, customers, and competitors and affect an organization's ability to obtain inputs and dispose of its outputs because they influence managers on a daily basis.
Distinctive competencies
The skills a company has learned from running their own business. They need to: -Consider how those competencies might be leveraged to create opportunities in new industries -Compare existing competencies versus new competencies that would need to be developed - Compare existing industries in which a company competes versus new industries
A Company's Ability to Choose the Price Option that Leads to Superior Performance is A function of
The strength of demand for a product The intensity of competition between rivals
Bargaining Powers of Buyers
The third force of the Five Forces Model - When buyers have significant power, they can increase competition within and industry and demand lower prices,
Industries that have ben Consolidated through Value Innovation
The transforming company often starts with a single location, or just a few locations The key is to get the strategy right at the first few locations and then expand as rapidly as possible to build a national brand and ralize scale economies before rivals move into the market If this is done right, the value innovator can build formidable barriers to new entry by establishing strong brand loyalty and enjoying the scale economies that come from large size (often, these scale economies are associated with purchasing power)
Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been found to be _____________.
The way team members treat each other
Which of the following is the underlying principle of socialism? A) The welfare of individuals far outweighs the welfare of society. B) The well-being of the group supersedes the well-being of individuals. C) The rights of individuals should be balanced with societal needs. D) The state should protect itself from individual and group interests.
The well-being of the group supersedes the well-being of individuals.
Effective ambidextrous organizations have alignment, which means that _____________.
There is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated
Functional structures are usually found in organizations where _____________.
There is high volume production
Which of the following is not a disadvantage of a divisional type of organizational structure?
There is separation of strategic and operating control
Intensity of Competition Implication
There may be pockets of demand in an industry in which demand is declining more slowly than in the industry as a whole - or where demand is not declining at all
Franchising Disadvantages
There may not be the same tight control that can be achieved through a chaining strategy , some authority is being delegated to the franchisee In a franchising system the franchisee captures some of the economic profit from a successful operation Because franchisees are small relative to the founding enterprise, they may face a higher cost of capital, which raises system costs and lower profitability
International Strategy
This Global strategy centralizes product development, but manufactures and markets globally Works best if there is: -Low cost pressure -Low pressure for local responsiveness -A universal need product -No significant competitors
Lower
To respond to pressures to lower costs, a firm must try to ______ the costs of value creation.
What is the Best Option in a Divestment Strategy?
To sell to a company that is pursuing a leadership strategy in the industry
In Mature Industries, Business-Level Strategy Revolves Around
Understanding how established companies collectively attempt to moderate the intensity of industry competition in order to preserve both company and industry profitability
A company with strong structure and control mechanisms will most likely succeed at what type of diversification?
Unrelated Diversification
When does an Industry Move from the Embryonic Stage to the Growth Stage?
When a mass market starts to develop for its product
When does Excess Capacity Exists?
When companies collectively produce too much output
When do Mass Markets Emerge?
When ongoing technological progress makes a product easier to use, and increases its value for the average customer Complemntary products are developed that also increase its value Companies in the industry work to find ways to reduce the costs of producing the new products so they can lower their prices and stimulate high demand
When does a Harvest Strategy Make Most Sense?
When the company foresees a steep decline and intense future competition, or when it lacks strengths relative to remaining pockets of demand in the industry
When does a Leadership Strategy Make Most Sense?
When the company has distinctive strengths that allow it to capture market share in a declining industry The speed of decline and the intensity of competition in the declining industry are moderate
When is Divestment Strategy Appropriate?
When the company has few strengths relative to whatever pockets of demand are likely to remain in the industry and when the competition in the declining industry is likely to be intense
When does the Niche Strategy Make Sense?
When the company has some unique strengths relative to those niches in which demand remains relatively strong
vertical disintegration
When the disadvantages of vertical integration are so great that vertical integration reduces profitability.
When do the Highest Market Demand and Industry Profits Arise?
When the early and late majority groups enter the market
What Customer Group Signifies the Beginning of the Growth Stage?
When the early majority enter the market
When do the Late Majority Enter the Market?
When the mass market reaches a critical mass, with about 30% of the potential market penetrated
The lack of scale economies and national brand loyalty implies low entry barriers
When this is the case, a steady stream of new entrants may keep the industry fragmented
A virtual organization may be most appropriate for firms _____________.
Whose strategies require merging technologies or for firms exploiting
-The company would be able to offer an extended range of outdoor products which could all be packaged together, distributed to retailers, and marketed and sold to customers; thus, a substantial savings in purchasing, distribution, and marketing. -By purchasing Timberland, sales in overseas markets would increase and also increase the brand recognition of its other primary brands
Why would the merger of two very different companies result in so much more value being created?
If an international firm has a multidomestic strategy and a relatively high level of product diversity, the best choice for its organizational structure is ______________ structure.
Worldwide matrix
If an international firm has a global strategy and a relatively low level of product diversity, the best choice for its organizational structure is ______________ structure.
Worldwide product division
Full integration
You own everything along the value chain. You get better control over quality and delivery time. Every aspect is under one management. You own supplier, manufacturer, distributors. Disadvantages: -If you own everything and the economy crashes you can't just cut off you suppliers you have to continue to pay those costs. -You may waste money because you have less bargaining leverage with yourself
adaptive culture
____________ is one that is innovative and that encourages and rewards middle- and lower-level managers for taking initiative. Successful companies have values promoting a bias for action.
Restructuring
_____________ a company involves two steps: 1) Streamlining the hierarchy of authority and reducing the number of levels in the hierarchy to a minimum. 2) Reducing the number of employees to lower operating costs. "euphemism for downsizing"
keiretsu
a Japanese consortia of businesses that is coordinated by a large trading company to gain a strategic advantage
chaebol
a Korean consortia financed through government banking groups to gain a strategic advantage
credible commitment
a believable commitment or pledge to support the development of a long-term relationship between companies.
Policy
a broad guideline for decision making that links the formulation of strategy with its implementation
core competence
a capability or skill that a firm emphasizes and excels in doing while in pursuit of its overall mission
The rules of origin requirement can best be defined as which of the following? A) a voluntary quota in which a firm agrees to limit some exports B) a formal permission must be obtained to import specific goods C) a certain amount of production must occur within an economic bloc D) a set number of exports must originate from either a bloc or a region
a certain amount of production must occur within an economic bloc
business model
a clear understanding of how the firm will generate profits and the strategic actions it must take to succeed over the long term
minimum chain of command principle
a company should choose the hierarchy with the fewest levels of authority necessary.
Business model
a company's method for making money in the current business environment
company creed
a company's statement of its philosophy
product life cycle
a concept that describes a product's sales, profitability, and competencies that are key drivers of the success of that product as it moves through a sequence of stages from development, introduction to growth, maturity, decline, and eventual removal from a market
Behavior control
a control through the establishment of a comprehensive system of rules and procedures to direct the actions or behavior of divisions, functions, and individuals.
Joint venture
a cooperative business activity, formed by two or more separate organizations for strategic purposes, that creates an independent business entity and allocates ownership, operational responsibilities, and financial risks and rewards to each member, while preserving their separate identity
Unrelated diversification
a corporate-level strategy based on a multibusiness model with a goal to increase profitability through: -the use of general organizational competencies, and -increasing the performance of ALL the company's business units.
Related diversification
a corporate-level strategy that is based on the goal of establishing a business unit in a new industry that is RELATED to a company's existing business units by: -Some form of commonality or linkage between value-chain functions of the existing and new business units.
Capabilities
a corporation's ability to exploit its resources
Competency
a cross-functional integration and coordination of capabilities
Multidivisional structure (divisional, M-forms)
a decentralized structure consisting of a set of op divisions organized along business, product , customer group, or geo lines, and a central corp headquarters that allocates resources, provides support functions and monitors divisional activities
mission statement
a declaration of attitude and outlook, usually broad in scope
Strategic vision
a description of what the company is capable of becoming (usually stated in mission and vision statements)
Full integration
a firm internally makes 100% of its key supplies and completely controls its distributors
sustained competitive advantage
a firm must strive to achieve this by continually adapting to changes in external trends and events and internal capabilities, competencies, and resources; and by effectively formulating, implementing and evaluating strategies that capitalize upon those factors
white knight
a firm that agrees to acquire another firm when the other is facing a hostile takeover from a different company
intangible assets
a firm's assets that you cannot touch or see but that are very often critical in creating competitive advantage: brand names, company reputation, organizational morale, technical knowledge, patents and trademarks, and accumulated experience within an organization
distinctive competencies
a firm's strengths that cannot be easily match or imitated by competitors are called what?
Competitive intelligence
a formal program of gathering information on a company's competitors
liquidation
a grand strategy that involves the sale of the assets of the business for their salvage value
product development
a grand strategy that involves the substantial modification of existing products that can be marketed to current customers
innovation
a grand strategy that seeks to reap the premium margins associated with creation and customer acceptance of a new product or service
Product life cycle
a graph showing time plotted against the monetary sales of a product as it moves from introduction through growth and maturity to decline
Industry
a group of firms that produces a similar product or service
board of directors
a group of individuals who are elected by the ownership of a corporation to have oversight and guidance over management and who look out for shareholders' interests
Despite employing every strategy that it could think of to maintain its independence, Schmo, Ltd. a small peanut brittle manufacturer was ultimately acquired by the major candy manufacturer Kabosh, Inc. This transaction would be best described as________
a hostile take-over
Value chain
a linked set of value-creating activities that begin with basic raw materials coming from suppliers, ending with distributors getting the final goods in the hands of the ultimate consumer
Cost leadership
a lower-cost competitive strategy that aims at the broad mass market
Taper integration
a mix of vertical integration and market exchange. You own in-house suppliers and distributors but you you can buy cheaper supplies if the market is cheaper than you costs.
Vertical integration
a more expensive strategy to manage than unrelated diversification because sequential resource flows from one division to the next must be coordinated. -The way to distribute authority between corporate and divisional managers must be carefully considered in vertically integrated companies. -To facilitate communication among divisions, corporate managers create teams composed of both corporate and divisional managers.
value chain
a perspective in which business is seen as a chain of activities that transforms inputs into outputs that customers value
in devising an action agenda for executing strategy, the place for managers to start is with
a probing assessment of what the organization must do differently to carry out the strategy successfully
Strategy implementation
a process by which strategies and policies are put into action through the development of programs, budgets, and procedures
The Research triangle Park located between Raleigh, Durham and Chapel Hill in NC is best described as __________
a regional cluster
strength
a resource advantage relative to competitors and the needs of the markets a firm serves or expects to serve
Organizational design skills
a result of a manager's ability to create a structure, culture, and control systems. -Effective organizational structure and controls create incentives that encourage business unit managers to maximize efficiency and effectiveness of their units. -Good ____________ _______ helps prevent missing out on profitable new opportunities.
agency theory
a set of ideas on organizational control based on the belief that the separation of the ownership from management creates the potential for the wishes of owners to be ignored
Program
a statement of the activities or steps needed to accomplish a single-use plan
vision statement
a statement that presents a firm's strategic intent designed to focus the energies and resources of the company on achieving a desirable future
military heritage
a strong what underlies the study of strategic management? using such terms as objectives, mission, strengths, and weaknesses were first used on the battlefield
Strategic Alliance
a substitute for vertical integration because it creates a relatively stable long-term partnership that allows both companies to obtain the same kinds of benefits that result from vertical integration.
Output control
a system in which strategic managers estimate or forecast appropriate performance goals for each division.
unrelated diversification
adding new, unrelated products or services
in many industries adding to a company's talent base and building intellectual capital are more important to good strategy thean
additional investments in capital projects
Differentiation
aimed at the broad mass market and involves the creation of a product or service that is perceived throughout its industry as unique
Which of the following accurately describes the preferred strategy for the Boston Consulting Group's business opportunities?
all of the above
To determine the competitive advantages of nations, Porter suggested studying all of the following factors except __________
all of the above should be studied
Pitney Bowes' recommendation to "get a business sponsor" for acquisitions as a means to improve the probability of success is most consistent with the ____ concept
alliance champion
Tariff-based trade barriers can benefit young domestic-based companies by ________. A) allowing them time to expand and become competitive B) providing them with government subsidies C) instigating the growth of a solid infrastructure D) generating domestic and international sales
allowing them time to expand and become competitive
Product bundling
allows a company to expand the range of products it produces to provide customers a complete package of related products.
strategic management
allows an organization to be more proactive that reactive in shaping its own future; it allows an organization to initiate and influence (rather than just respond to) activities--and thus to exert control over its own destiny
external factor evaluation (EFE) matrix
allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological and competitive information
mission statement
also called a creed statement, a statement of purpose, a statement of philosophy, a statement of beliefs, a statement of business principles, or a statement "defining our business", it reveals what an organization wants to be and whom it wants to serve
staffing
also called personnel management or human resource management, includes activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees, as well as managing union relations
adverse selection
an agency problem caused by the limited ability of stockholders to precisely determine the competencies and priorities of executives at the time they are hired
moral hazard problems
an agency problem that occurs because owners have limited access to company information, making executives free to pursue their own interests
value chain analysis
an analysis that attempts to understand how a business creates customer value by examining the contributions of different activities within the business to that value
Conglomerate structure
an assemblage of legally independent firms operating under one corporate umbrella but controlled through the subsidiaries' board of directors
Propitious niche
an extremely favorable niche; so well suited to the firm's internal and external environment that other corporations are not likely to challenge or dislodge it
open-mindedness
an important guideline for effective strategic management is what? a willingness and eagerness to consider new information, new viewpoints, new ideas and new possibilities is essential, all organizational members must have a spirit of inquiry and learning
SWOT Matrix
an important matching tool that helps managers develop four types of strategies: strengths-opportunities, strengths-threats, weaknesses-threats, and weaknesses opportunities
global industry
an industry in which competition crosses national borders on a worldwide basis
multi-domestic industry
an industry in which competition is segmented from country to country
Entry barrier
an obstruction that makes it difficult for a company to enter an industry
Organizational learning theory
an organization adjusts defensively to a changing environment and uses knowledge offensively to improve the fit between itself and its environment
Benchmarking
analytical tool used to determine whether a firm's value chain activities are competitive compared to rivals. Determining "best practices"
competitive advantage
anything that a firm does especially well compared to rival firms, when a firm can do something that rival firms cannot do, or owns something that rival firms desire, that can represent what?
Substitute product
appears to be different but can satisfy the same need as another product
Categorical imperatives
approach to resolve ethical dilemmas. i.e. the "Golden Rule" and "never treat another human being as a means but an end."
internal strengths and weaknesses
are an organization's controllable activities that are preformed especially well or poorly, they arise in the management, marketing, finance/accounting, production/operations, research and development, and management information systems activities of a business
strategies
are the means by which long-term objectives will be achieved, may include geographic expansion, diversification, acquisition product development, market penetration, retrenchment, divestiture, liquidation and joint ventures
Sustainable business practices
are those that meet the needs of the present without compromising the ability to meet the needs of the future
Economies of scope
arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation synergies. -Companies can more effectively pool, share, and utilize expensive resources or capabilities. -Sharing resources or capabilities across business units lowers a companies cost structure compared to companies that operate in only one industry.
Tariffs which are ad valorem are ________. A) based on the weight or size of the imported product B) assessed as a percentage of the imported product's value C) intended to provide a steady flow of income for the government D) levied on specific imported and exported products
assessed as a percentage of the imported product's value
Forward integration
assuming a function previously provided by a distributor
Backward integration
assuming a function previously provided by a supplier
In organizing for use of an Global-Standardization strategy, a company would locate its R&D efforts ___, while its production would be located __________.
at home, wherever is cheapest
Operations or Process Control Techniques
average case load per adjuster, production process, file turnover rates for individual adjusters
Common law can best be described as a system ________. A) designed from political and legislative regulations B) derived from religious texts and systems C) developed and recorded in a systematic manner D) based on legal interpretations of judges
based on legal interpretations of judges
nonprofit organizations
basically just like for-profit companies except for two major differences: they do not pay taxes, they do not have shareholders to provide capital
Based on our discussion in class on Wednesday, it is clear that the __________________ of top managers is an important consideration in determining how best to structure an organization.
bounded rationality
Two common forms of a focused approach to corporate entrepreneurship include ______________ and _____________.
business incubators and new venture groups.
Conglomerates
business organizations that operate in many diverse industries., alternate definition: Major corporation that owns smaller companies in unrelated industries
In India, estimated losses from copyright piracy are greatest in which of the following industries? A) entertainment software B) records and music C) books D) business software
business software
organizational culture
can be defined as "a pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration, and that has worked well enough to be considered valid and to be taught to new members as the correct way to perceive, think and feel"
objectives
can be defined as specific results that a organization seeks to achieve in pursuing its basic mission, they are essential for organizational success because they state direction; aid in evaluation; create synergy; reveal priorities; focus coordination; and provide a basis for effective planning, organizing and motivating and controlling activities
motivating
can be defined as the process of influencing people to accomplish specific objectives, explains why some people work hard and others do not
breakeven point
can be defined as the quantity of units that a firm must sell in order for its total revenues to equal its total costs
marketing
can be describes as the process of defining, anticipating, creating, and fulfilling customers' needs and wants for products and services
Which of the following countries has the highest level of piracy in records and music? A) China B) Malaysia C) India D) Brazil
china
Companies pursuing a related diversification strategy are best served by a structure that promotes __________ among SBU's, while unrelated diversifiers should encourage inter-SBU ____________.
co-opetition, competition
A(n) _____________________ specifies how an organization expects its employees to behave while on the job
code of conduct
Legal precedents and past practices are characteristic of which legal system? A) common B) religious C) socialist D) civil
common
Which of the following standards for examing ethical dilemmas reflects the view that actions should be based on the welfare of the entire community or nation? A) rights approach B) utilitarian approach C) common good approach D) virtue approach
common good approach
Strategy
comprehensive master plan that states how the corporation will achieve its mission and objectives
functions of finance/accounting
comprise three decisions the investment decision, the financing decision, and the dividend decision
quantitative strategic planning matrix
comprises stage 3 of the strategy-formulation analytical framework; it is designed to determine the relative attractiveness of feasible alternative actions
organizational structure
comprises the formal and informal arrangements of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is adminstered
All of the following characterize the Grameen Bank except ________. A) over 2,500 branch banks B) provides small loans C) started in India in 1974 D) concept of the Gates Foundation
concept of the Gates Foundation
dividend decision
concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock
Which of the following is the least adversarial method of resolving a contractual dispute? A) trial B) arbitration C) litigation D) conciliation
conciliation
simple structure (line-and-staff, flat)
consists of a central executive who handles all major decisions and oversees all ops with help of small staff. also called line-and-staff or flat
Non-equity alliances are based on _________ between firms
contracts
strategic alliances
contractual partnerships because the companies involved do not take an equity position in one another
Global strategic alliances
cooperative agreements between companies from different countries that are actual or potential competitors. The advantages of entering a _________ _____ _____ are: 1) _______ ___ ____ with competitors may facilitate entry into a foreign market. 2) ________ ___ ____ allow firms to share the fixed costs of developing new products or processes. 3) An __ ____ ___ is a way to bring together complementary skills and assets that neither company could develop on its own (including setting technological standards).
Distinctive competencies
core competencies that are superior to those of the competition
Microsoft works with elementary and middle schools in economically depressed areas providing technology and education to underprivileged children with an eye towards increasing and improving their future employee base. This program would best be described as:
corporate citizenship
An emerging market's lack of transparency may suggest which of the following? A) accountability B) bureaucracy C) corruption D) expertise
corruption
the abuse of power to achieve illegitimate personal gain
corruption
The process of reproducing assets without compensating those who originally created them is known as
counterfeiting
Which of the following is occasionally used to offset subsidies? A) prohibitive tariffs B) investment incentives C) countervailing duties D) antidumping duties
countervailing duties
A company's potential loss of profitability caused by a nation's political or legal setting is known by which of the following terms? A) commercial risk B) currency risk C) cross-cultural risk D) country risk
country risk
Which of the following countries would be least likely to experience rampant corruption? A) a country with minimal laws against corruption B) a country that widely publicizes its financial accounting C) a country run by a military dicatorship, with no elected leaders D) a country with high trade barriers and limited regional commerce
country that widely publicizes its financial accounting
The Chinese government's policy of requiring foreign firms to enter the Chinese market via joint ventures is intended to ________. A) limit the amount of FDI B) create jobs for Chinese workers C) protect China's national security D) stimulate foreign investment
create jobs for Chinese workers
Core competencies
crosses divisional boundaries, is widespread within the corporation, and is something that the corporation can do exceedingly well
All of the following are country risks in international business except ________. A) government bureaucracy B) inadequate law enforcement C) government mismanagement D) currency exchange rate
currency exchange rate
nine components of an effective mission statement
customers, products or services, markets, technology, concern for survival, growth and profitability, philosophy, self-concept, concern for public image, and concern for employees
) Which of the following is the term for checkpoints at the ports of entry in each country where government officials inspect imported products and levy tariffs? A) domestic lines B) customs C) quotas D) duties
customs
Which form of government is characterized by private property rights and limited government? A) autocratic B) democratic C) socialist D) totalitarian
democratic
balanced scorecard
derives its name from the perceived need of firms to "balance" financial measures that are oftentimes used exclusively in strategy evaluation and control with nonfinancial measures such as product quality and customer service
Corporate strategy
describes a company's overall direction in terms of its general attitude toward growth and the management of its various businesses and product lines
Sarbanes-Oxley Act
designed to protect shareholders from excesses and failed oversight that occurred at firms like Enron, Tyco, etc. For example, using independent auditors and having the corporation;s financial information certified by both the CEO and CFO
short-term objectives
desired results that provide specific guidance for action during a period of one year or less
financing decision
determines best capital structure for firm and includes examining ways firm can raise capital
The innovation dilemma known as building capabilities versus collaborating refers to _____________.
developing innovation skills internally versus partnering with qualified outsiders.
Strategy formulation
development of long-range plans for the effective management of environmental opportunities and threats, in light of corporate strengths and weaknesses
Which of the following trends supports improving economic conditions in Africa? A) direct investment from abroad B) high unemployment C) a decline in Botswana's diamond trade D) the substantial infrastructure for landline telephones
direct investment from abroad
______________ could be another name for synergy.
diversification premium
Strategic business units
divisions or groups of divisions composed of independent product-market segments that are given primary responsibility and authority for the management of their own functional areas
The purpose of protectionism is to protect ________. A) domestic industries from foreign competitors B) foreign firms from domestic competition C) domestic exports from high production costs D) foreign and domestic firms from labor unions
domestic industries from foreign competitors
In the __________ diversification, 70-90% of revenues come from a single business within a firm:
dominant business
Consolidated industry
dominated by a few large firms, each of which struggles to differentiate its products from those of the competition
Business strategy
emphasizes improvement of the competitive position of a corporation's products or services in the specific industry or market segment served by that business unit
Low Cost Leadership Strategy
emphasizes producing standardized products at a low per-unit cost for price-sensitive consumers.
Turnaround strategy
emphasizes the improvement of operational efficiency and is probably most appropriate when a corporation's problems are pervasive but not yet critical
For a public stock company, ___________ represent(s) the lowest level of the hierarchy of authority.
employees
Whistle-blowers
employees who report illegal or unethical behavior on the part of others
A manager who wished to learn about country risk in a host country would most likely consult which of the following? A) analysis records of competitor firms B) employees working in the host country C) host country nationals working abroad D) employees working in the parent country
employees working in the host country
Codes of conduct based on ethical relativism can be
ethically dangerous for multinational companies by creating a maze of conflicting ethical standards
Moral principles and values governing behavior regarding right and wrong are known as
ethics
benchmarking
evaluating the sustainability of advantages against key competitors; comparing the way a company performs a specific activity with a competitor or other company doing the same thing
nonprofit organizations
examples include: religious facilities, educational institutions, medical organizations, and governmental agencies and departments
Define Vertical Integration a Corporate Level Strategy
exists when a company produces its own inputs such as insurer printing own policy (backward integration) or owns its own source of output distribution channel like direct sales unit (forward integration)
In determining a mode of entry into an international market, the method that requires the least investment, but also offers the least amount of control is ____________
exporting
Which of the following entry strategies do most firms use if high tariffs are not an issue? A) FDI B) licensing C) joint ventures D) exporting
exporting
Increased traffic congestion and road wear near Nashville's new Music City center would be considered __________ associated with the management of the new facility.
externalities
Which of the following terms is used to refer to the application of home-country laws to conduct outside of national borders? A) anti-boycott regulations B) extraterritoriality C) transparency D) international contracts
extraterritoriality
operating environment
factors in the immediate competitive situation that affect a firm's success in acquiring needed resources
Economies of Scale
factors that cause a producer's average cost per unit to fall as output rises
A countervailing duty slows the import of products or services and hinders the investment activities of firms.
false
Americans consider the business executive to be among the most ethical professions. T/F?
false
Soon after gaining independence from Britain, India adopted a model of free trade and opened its markets to international trade and investment.
false
Standards of ethical behavior are universal worldwide.
false
The protection of intellectual property rights is guaranteed and enforceable in nearly every country in the world.
false
To ensure they are upholding ethical standards, international firms should focus exclusively on obeying the laws of their host countries
false
global standardization strategy
focusing on pursuing a single low-cost strategy on a global scale.
For years, Connie Tarner had been making her signature drill bits by hand and from memory. As demand for her product grew, so too did the number of people she had to employ to help grow her company. Connie also realized that she needed to provide new employees with detailed instructions and procedures in how to fashion the drill bits so that production could continue even when she was out of the shop. Eventually, the oral instructions became written standard procedures. In providing those SOP's, Connie increased the ____________ of her organizational structure.
formalization
__________ occurs when business acquires customers.
forward integration
After years of struggling to get additional grocery store shelf space to show off its many flavors, Haagen-Dazs decided to open its own ice cream shops to augment its grocery store presence. This decision to pursue both distribution channels simultaneously would best be described as:
forward taper integration
__________________ is the most commonly used organizational structure.
functional
Nations that initiate strategic policies for the development of high value-adding industries often do all of the following except ________. A) subsidize investments in high-tech industries B) invest in the public education system C) encourage citizens to save money D) fund large-scale public works projects
fund large-scale public works projects
generic strategies
fundamental philosophical options for the design of strategies; a core idea about how a firm can best compete in the marketplace
Some argue that because of technology and other factors, the differences between different countries' consumer preference and needs are decreasing and will eventually disappear altogether. As such, these folks adhere to the ________
globalization hypothesis
Which of the following best explains the growth of family conglomerates in emerging markets? A) domestic investment B) foreign investment C) competitive market D) government protection
government protection
Which of the following is an element of socialism often found in democratic societies? A) government subsidies for foreign firms B) government sponsored businesses C) government regulation of the public sector D) government control of information technology
government regulation of the public sector
Firms are most often prevented from doing business in developing economies by ________. A) small pools of labor B) government regulations C) regional integration D) terrorism and war
government regulations
In attempting to enter the Chinese market, Tressel Tattoos, Inc. quickly realized that it could not find an existing host country factory that met its quality and security needs. Consequently, it was determined that TITI would have to build its Chinese production facility from scratch. This approach is expensive and risky, and is generally referred to as _________
greenfield operations
Virtual teams
groups of geographical and/or organizationally dispersed coworkers that are assembled using a combination of telecommunications and information technologies to accomplish an organizational task
Which of the following terms is used to refer to the worldwide classification system used to determine a product's tariff? A) harmonized tariff B) protective tariff C) revenue tariff D) specific tariff
harmonized tariff
An organizational chart best reflects a company's _____________________.
hierarchy
Which of the following is often a result of protectionist policies? A) higher prices of domestic goods B) lower prices of domestic goods C) shortage of domestic goods D) surplus of domestic goods
higher prices of domestic goods
All of the following characterize emerging markets except ________. A) highly developed industry B) high trade volume C) expanding middle class D) improved living conditions
highly developed industry
Multinational corporation
holds operations in more than one country
School of Ethical Relativisim
holds that different religious beliefs, customs, and behavioral norm as across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong. These differing standards mean that whether business-related actions are right or wrong depends on the prevailing local ethical standards
School of Ethical Universalism:
holds that the most fundamental conceptions of right and wrong are universal and apply to members of all societies
Reduction in competitive intensity is one of the advantages of ___________
horizontal integration
Competitive Profile Matrix (CPM)
identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position
When Bulgaria and Romania joined the EU they improved their economies because they had to do which of the following? A) attain additional government subsidies B) modify their political infrastructure C) implement EU monetary and trade policies D) compete for business against large EU nations
implement EU monetary and trade policies
strategy formulation
includes developing a vision and mission, identifying an organization's external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue
selling
includes many marketing activities, such as advertising, sales promotion, publicity, personal selling, sales force management, customer relations, and dealer relations
Natural environment
includes physical resources, wildlife, and climate that are an inherent part of existence on Earth
Each of the following is helpful for reducing corruption except ________. A) consistently enforced anticorruption laws B) governments committed to above-the-board practices C) highly transparent accounting systems D) independence from the global economy
independence from the global economy
Of Hofstede's cultural dimension, the US scored highest on ____________
individualism
stakeholders
influential people who are vitally interested in the actions of the business
Which of the following terms is used to refer to unofficial economic transactions?
informal economy
45) Which of the following is a benefit to foreign firms that form alliances with local companies in emerging markets? A) protection against bribery B) more rapid customs clearance C) information about the local market D) strategies for exporting goods
information about the local market
Strategic leaders play three different roles: interpersonal, decisional, and __________.
informational
The Index of Economic Freedom uses all of the following criteria in its assessment except ________. A) rule of law B) infrastructure C) level of trade barriers D) level of business regulation
infrastructure
Each of the following represents a core CSR value except ________ A) eliminating child labor B) guarding against corruption C) protecting the environment D) inhibiting labor unions
inhibiting labor unions
Distribution Strategies
innovators and early adopters are typically reached through specialized distribution channels and products are often sold by word of mouth Reaching the early majority requires mass-market distribution channels and mass-media advertising campaigns that require a different set of marketing and sales strategies
Once a new strategy has been developed, Matrix, Inc.'s first step in implementation is the development of a budget that will set the financial parameters for decisions that will be made. According to Rothaermel, this budget represents a form of _______________.
input control
Soft Market
insurer competition is high, coverage is widely available, premiums & profits decrease. high combined ratio
Organizational analysis
internal scanning; identifying and developing an organization's resources and competencies
SWOT analysis
internal strengths and weaknesses of a firm, and the environmental opportunities and threats facing that firm; a technique through which managers create a quick overview of a company's strategic situation
market development
introducing present products or services into new geographic area
A political system includes each of the following except ________. A) lobbying groups B) trade unions C) legislative bodies D) investment banks
investment banks
Joint ventures
involve two or more companies agreeing to pool their resources to create new businesses. -It frequently becomes the most appropriate method to enter a new industry because it allows a company to share the risks and costs associated with establishing a business unit in the new industry with another company. -This approach is most appropriate when the companies share complementary skills or distinctive companies because this increases the probability of a joint venture's success.
business process outsourcing
involves companies taking over the functional operations such as human resources, information systems payroll, accounting, customer service, and even marketing of other firms
Product bundling
involves offering customers the opportunity to purchase a range of products at a single combined price.
Transferring competencies
involves taking a distinctive competency developed by a new business unit in one industry and implanting it in a business unit operating in another industry. Using their skills in a industry where they don;t have to learn a lot of knew skills. -Leveraging competencies means a new business is being CREATED. -___________ competencies involves the sharing of competencies between two existing businesses.
Business ethics:
involves the application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel 3 types) universalism, relativism, social contract theory
Fragmented Industry
is one composed of a large number of small- and medium-sized companies
Putting together a talented management team with the right mix of experiences, skills, and abilities to get things done
is one of the first steps to take in launching the strategy-executing process
Specialized asset
is one that is designed to perform a specific task and whose value significantly reduced in its next-best use.
empowerment
is the act of strengthening employees' sense of effectiveness by encouraging them to participate in decision making and to exercise initiative and imagination, and rewarding them for doing so
Organizational culture
is the specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders. -the specific collection of values and norms shared by people and groups in an organization.
short-termism
is the tendency for managers to focus excessively on short-term performance objectives at the expense of longer-term strategic objectives. It has negative implications for the likelihood of ethical lapses as well as company performance in the longer run
Cross-selling
is when a company takes advantage of, or "leverages," its established relationship with customers by way of acquiring additional product lines or categories that it can sell to customers. ___________ provides a "total solution" and satisfies all of a customer's specific needs.
The GE Matrix represents an improvement over the BCG matrix because:
it allows a much richer, more detailed definition of industry attractiveness.
Conducting business in an ethical fashion is not only morally right
it is a companys enlightened self-interest
SPACE matrix
it is a four-quadrant framework indicates whether aggressive, conservative, defensive or competitive strategies are most appropriate for a given organization
strategic planning
it is an involved, intricate and complex process that takes an organization into uncharted territory, it does not provide a ready-to-use prescription for success; instead, it takes the organization through a journey and offers a framework for addressing questions and solving problems
mission statement
it should define what the organization is and what the organization aspires to be, be limited enough to exclude some ventures and broad enough to allow for creative growth, distinguish a given organization form all others, serve as a framework for evaluating both current and prospective activities, and be stated in terms sufficiently clear to be widely understood throughout the organization
My company has decided to expand internationally and would like a moderate amount of both control and required investment. The most appropriate approach we could take to accomplish this would be ____________
joint venture
Vulcan Inc. an American aggregates company and the Mexican real estate company Grupo ICA created and jointly owed the limestone mining company CALICA, which Vulcan eventually acquired in January of 2001, CALICA was founded as a _______?
joint venture
moral rights approach
judging the appropriateness of a particular action based on a goal to maintain the fundamental rights and privileges of individuals and groups
Public firms have all of the following characteristics except:
lack of external oversight
Sarbanes-Oxley Act of 2002
law that revised and strengthened auditing and accounting standards
In order for a company reap the benefits of stakeholder impact analysis, managers need to pay particular attention to stakeholders' power, urgency and ____________________.
legitimacy
Dealing with foreign cultures, economic environments and greater distances are all part of the _____ that plagues all businesses that choose to pursue markets across borders
liability of foreignness
A command economy can be characterized by all of the following except ________. A) a totalitarian based environment B) limited government intervention C) state-driven industrial development D) extensive bureaucratic system
limited government intervention
Repatriation laws affect MNEs that earn profits in foreign countries by A) enforcing strict stipulations on cross-border transactions and joint ventures B) limiting the amount of net income and dividends that can be transferred to the home-country headquarters C) restricting the amount of money that can be re-invested into the foreign facility D) imposing restrictions on the distribution of products from the foreign facility
limiting the amount of net income and dividends that can be transferred to the home-country headquarters
Many firms have successfully lowered trade and investment barriers by ________. A) entering joint ventures with competitors B) petitioning the World Trade Organization C) lobbying foreign and domestic governments D) obtaining advice from customs attorneys
lobbying foreign and domestic governments
If my company believes that the product we offer will have to be significantly altered for each international market we enter in order to make it attractive/useful to potential customers, we would be better off adopting a _________ strategy
localization
Many American companies will locate customer service centers in India because of the highly educated, English speaking, and relatively cheap workforce. In doing so, they are seeking _____________
location economies
The _____________ dimension of national culture was added to Hofstede's original four as a result of insights offered by Asian researchers; a reflection some suggest of the original study's Western culture bias
long term orientation
Strategic alliances
long-term agreements between two or more companies to jointly develop new products or processes that benefit all companies concerned. They can make quality better and they can make reliability better "a Win-Win relationship"
Which of the following characteristics best equip new emerging market MNEs to compete against MNEs that have long-term experience in the global market? A) brand recognition, large market share, and skilled workers B) low-cost labor, family conglomerates, and government support C) market research, customer service, and brand loyalty D) government funding, high wages, and value-chain diversification
low-cost labor, family conglomerates, and government support
30) Which of the following is one of the reasons that emerging markets act as manufacturing bases for global MNEs? A) minimal trade restrictions B) low-wage, skilled labor pool C) well-developed infrastructure D) strong intellectual property laws
low-wage, skilled labor pool
Deciding which activities to outsource can lead to these advantages
lower costs, heightened focus, less internal beauracracy, speedier decision making and better arsenal of org capabilities
defensive quadrant
lower-left of SPACE. Firm should focus on rectifying internal weaknesses and avoiding external threats. Retrenchment, divestiture, liquidation, and related diversification strategies
competitive quadrant
lower-right of SPACE. Integration, penetration, market development & product development strategies
The stakeholders of a company include all of the following except ________. A) loyal customers of the company's main competitor B) members of the company's board of directors C) the company's CEO and senior managers D) individuals who are company shareholders
loyal customers of the company's main competitor
shareholders suffer major damage when a company's unethical behavior's is discovered
making amends for unethical business conduct is costly and it takes years to rehabilitate a tarnished company rep
Managers examine these areas when looking for organizational strength?
managerial expertise, available product lines, Skill levels and competencies of staff, current strategies, customer loyalty, Growth levels, Organizational structure, Distribution Channels
Ed Option has been CEO of J-Mart for the past seven years, during which the company consistently underperformed after he devised and executed a disastrous acquisition of competitor Stears. While the numbers for the fiscal year just ended indicate that J-Mart is falling further behind competition, Mr. Option insists that his plan will eventually turn the company's fortunes around and that he shouldn't be replaced. Given the evidence, Mr. Option's high opinion of himself is a reflection of __________
managerial hubris
The ban on cigarette advertisements in France falls under which of the following categories? A) environmental laws B) product and liability laws C) foreign investment laws D) marketing and distribution laws
marketing and distribution laws
A company with relatively scarce human resources might consider a ______________ structure as a means to maximize the productivity of those resources.
matrix
Which of the following is an example of an environmental sustainability interest? A) providing employees educational opportunities B) developing public works in a community C) optimizing diversity in hiring D) minimizing pollutants in manufacturing
minimizing pollutants in manufacturing
In non-equity alliances, the _____type of alliance, firms tend to share rather than _________.
most common, explicit, tacit
The related and unrelated diversification associated with the mature stage of the organizational life cycle usually results in a _________________ structure.
multidivisional
Building new competencies and capabilities is a
multistage process that occurs over a period of months and years
United States laws limit foreign investments that might affect which of the following areas? A) immigration reform B) labor negotiations C) national security D) rate of inflation
national security
The most effective way to change an organization's culture is through:
new leadership
Question marks
new products with the potential for success, but they need a lot of cash for development
Fragmented industry
no firm has large market share, and each firm serves only a small piece of the total market in competition with others
A government policy that impedes trade through means other than explicit taxes is known as a ________. A) quota B) tariff C) price restriction D) nontariff trade barrier
nontariff trade barrier
All of the following occurred as a result of the Smoot-Hawley Tariff Act except ________. A) bank closures B) record high tariffs C) normal trade relations D) fewer farm exports
normal trade relations
leveraged buyout
occurs when a corporation's shareholders are bought by the company's management and other private investors using borrowed funds
acquisition
occurs when a large organization purchases (acquires) a smaller firm, or vice versa
self-dealing
occurs when managers take advantage of their position to further their own private interests rather than those of the firm
rivalry among competing firms
one of the five forces of porter's five-forces model; this is usually the most powerful of the five competitive forces, the strategies pursued by one firm can be successful only to the extent that they provide competitive advantage over the strategies pursued by rival firms
Which of the following is an example of a corporate human rights violation? A) operating a factory that pollutes the air B) selling a defective product C) operating a sweatshop factory D) failing to make foreign tax payments
operating a sweatshop factory
Knowledgeable, engaged employees are a company's best source of creative ideas for the nuts-and-botls operating improvements that lead to
operating excellence
Hierarchy of authority,
or chain of command, defines each manager's relative authority.
A(n) _______________ organization is better suited for successfully implementing a differentiation strategy.
organic
Divisional structure
organizational structure where employees tend to be functional specialists organized according to product/market distinctions
Country risk is also referred to as which of the following? A) political risk B) multilateral risk C) government risk D) legal factor risk
political risk
What is the primary ethical concern regarding the import of products from poor countries? A) poor nations face higher tariffs than developed nations B) nations lacking economic freedom cannot afford to export C) emerging nations lack the revenue to pay high tariffs D) impoverished countries face more import regulations
poor nations face higher tariffs than developed nations
joint venture
popular strategy. When 2 or more companies form temporary partnership to capitalize on an opportunity. Shared equity. Good for globalizing
Emerging markets are important in international business and trade due to their high representative percentage in which of the following categories?
population
Internal-external matrix
positions an organization's various divisions in a nine-cell display, it is similar to the BCG matrix in that both tools involve plotting organization divisions in a schematic diagram; this is why they are both called "portfolio matrices," also the size of each circle represents the percentage sales contribution of each division, and pie slices reveal the percentage profit contribution of each division in both the BCG and this matrix
The US has the greatest disparity in pay between top managers and the lowest level workers. This would be a particularly difficult situation for German managers to deal with because that country scores lowest in Hofstede's _________ national culture dimension
power distance
policies
predetermined decisions that substitute for managerial discretion in repetitive decision making
The practice of giving managers stock in the companies they manage as part of their compensation is intended to overcome:
principal-agent problems
Evaluation and control
process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance
Which of the following is a method used by some manufacturers to avoid paying high tariffs? A) produce a small number of high-quality items B) produce a large number of less expensive items C) employ low-cost workers in the export location D) ship products to fewer international locations
produce a small number of high-quality items
Social responsibility
proposes that a private corporation has responsibilities to society that extend beyond making a profit
Advocates of government intervention in international trade argue that blocking imports will ________. A) reduce manufacturing and distribution costs B) protect home-country employment opportunities C) encourage manufacturers to outsource jobs D) limit intellectual property theft
protect home-country employment opportunities
) Import substitution failed during the 1950s in Latin America because ________. A) products manufactured domestically were not of the same quality as imports B) protected enterprises required constant subsidizing and never competed globally C) high quotas and tariffs did not generate enough revenue to support the government D) local manufacturing firms required parts and labor from other nations
protected enterprises required constant subsidizing and never competed globally
Tariffs helped Japan rise from poverty after World War II by ________. A) subsidizing automobile and shipbuilding firms B) encouraging the development of importing firms C) increasing revenue for national strategic policies D) protecting the nation's infant industries
protecting the nation's infant industries
Strategic audit
provides a checklist of questions, by area or issue, that enables a systematic analysis to be made of various corporate functions and activities
Transformational leader
provides change and movement in an organization by providing a vision for that change
vision statement
provides the foundation for developing a comprehensive mission statement, this should be established first and foremost, it should be short, preferably one sentence, and as many managers as possible should have input into developing it
A quantitative restriction on specific imports for a set period of time is known by which of the following terms? A) tariff B) quota C) investment barrier D) country risk
quota
Which of the following is a nontariff trade barrier? A) import duty B) franchise tax C) quota D) export duty
quota
management information systems
receives raw maternal from both the external and internal evaluation of an organization; it gathers data about marketing, finance, production and personnel matters internally and social, cultural, demographic, environmental, economic, political governmental, legal, technological, and competitive factors externally; data is integrated to support managerial decision making
When applying the four-step framework for making ethical decisions, which step should managers take first? A) evaluate alternatives B) get the facts C) recognize the ethical problem D) implement a decision
recognize the ethical problem
Retrenchment strategies
reduce the company's level of activities
Which of the following is a benefit to a foreign firm collaborating with a family conglomerate in an emerging market? A) reduced capital requirements B) improved taxation status C) protected intellectual property D) limited counterfeiting risks
reduced capital requirements
Boycotts and protests have the potential to harm businesses by A) preventing businesses from shipping their products to foreign markets B) reducing sales and requiring additional public relations activity C) destroying the ability of a firm to carry on normal business operations D) raising concerns about a firm's foreign operations by initiating lawsuits
reducing sales and requiring additional public relations activity
external opportunities and threats
refer to economic social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization in the future
first mover advantages
refer tot he benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms
corporate social responsibility
refers to a companys duty to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity, be a good steward of the environment, and actively work to better the quality of the life in the local communities where it operates and in society at large
Which of the following is not a typical principal function of a political system A) regulate private sector investments B) establish stability based on laws C) provide protection from external threats D) govern the allocation of valued resources
regulate private sector investments
In response to the shift in buyer health consciousness, Coke and Pepsi expanded their beverage offerings to capture orange juice, bottled water, and sports drinks to prevent the loss of their current customers to these substitutes. This is an example of _________________.
related diversification
Wal-Mart's successful leveraging of its distribution core competency across the retail, grocery, and pharmaceutical industries represents ____________ corporate-level strategy:
related diversification
diversification strategies
related diversification and unrelated diversification are what types of strategies
Because Wal-Mart only expands into new industries where its superiority in distribution provides it with a sustainable competitive advantage, Wal-Mart's diversification strategy would be classified as:
related-constrained
The Middle East is an example of a region primarily ruled by which of the following legal systems? A) religious B) socialist C) civil D) common
religious
strategy implementation
requires a firm to establish annual objectives, devise policies motivate employees, and allocate resources so that formulated strategies can be executed
internal audit
requires gathering and assimilating information about the firm's management, marketing, finance/accounting, production/operations, research and development (R&D), and management information systems operations
Which of the following is an example of a government procurement policy? A) requiring airline carriers to offer reduced rates for government travel B) imposing additional import taxes on non-domestic made products C) offering tax breaks to manufacturers that purchase domestic components D) requiring government cars be purchased from domestic automakers
requiring government cars be purchased from domestic automakers
The U.S. Securities and Exchange Act encourages business transactions by A) protecting public companies from government scrutiny B) evaluating the inner-workings of privately owned firms C) requiring public companies to disclose their financial status D) shielding investors from bankruptcy and excessive taxation
requiring public companies to disclose their financial status
discretionary responsibilities
responsibilities voluntarily assumed by a business, such as public relations, good citizenship, and full corporate responsbility
defensive strategies
retrenchment, divestiture, and liquidation are what types of strategies
Which of the following standards for examing ethical dilemmas reflects the view that actions should protect and respect the human dignity of everyone involved? A) fairness approach B) virtue approach C) utilitarian approach D) rights approach
rights approach
Which of the following terms is used to refer to the existence of a legal system based on clear rules and fair enforcement? A) civil law B) socialist law C) culture of law D) rule of law
rule of law
Human or Behavior Control Techniques
rules, policies, and procedures the provide operating guidelines
Which of the following is the term for a process used by managers to assess potential risks and threats to a firm? A) scanning B) Sarbanes reform C) conciliation D) arbitration
scanning
market penetration
seeking Increased market share for present products/services in present markets through greater marketing efforts. Can be used alone or in combo with others
backward integration
seeking increased control or ownership of suppliers. When suppliers are unreliable, costly, can't meet needs.
horizontal integration
seeking ownership or control over competitors
The reasons analyst recommendations are often more optimistic than warranted by an objective analysis of the facts include all of the following except that _____________.
sell" recommendations generate lower commissions than buy recommendations
liquidation
selling all of a company's assets, in parts, for their tangible worth. Recognition of defeat and usually emotionally difficult. Thousands of small businesses do so annually
Common features of a dispersed approach to corporate entrepreneurship include all of the following except _____________.
semi-autonomous new venture groups
Strategic management
set of managerial decisions and actions that determines the long-run performance of a corporation
Vice President Sherron Watkins is generally considered the whistleblower that brought down Enron. This is not entirely accurate because:
she never notified anyone outside of Enron
functional tactics
short-term, narrow scoped plans that detail the "means" or activities that a company will use to achieve short-term objectives
objectives
should be quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable, and congruent among organizational units, should also be associated with a timeline
Code of ethics
specifies how an organization expects its employees to behave while on the job
President Obama recently made a nationally televised speech in which he apologized for the poor performance of the Healthcare.gov website in particular and the rollout of the Affordable Healthcare Act in general. In giving the American people a detailed explanation of how the government (dis)functioned in this particular episode, the President was fulfilling the _____________ role of strategic leadership.
spokesperson
How to build an organization capable of strategy execution
staffing the org-> strong mgmt and recruiting and retain employees Key Resource capabilities -> develop a set suited to current strategy, update them as external conditions change, train and retrain to maintain knowledge and skills based capabilities Structure org and work effort-> good org arrangements, lines of authority and reporting relationships established decide how much authority to delegate for decisions
A(n) ________________ is anyone who affects, or is affected by a particular company's actions.
stakeholder
For a public stock company, ___________ represent(s) the highest level of the hierarchy of authority.
state charter
Budget
statement of a corporation's programs in terms of dollars
One way that corporations attempt to align the interests of the shareholders and the managers is through the use of ____________.
stock options
An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?
strategic business unit structure
The greatest fear of those who originally opposed NAFTA was that American manufacturing jobs would be transferred to countries with much lower labor costs. For the most part, these fears were realized as many American companies had products manufactured in Mexico, China, India and other developing countries. This processing of having the production stage of the value chain accomplished by another company outside of the U.S. is best defined as:
strategic outsourcing
superior strategy execution capabilities are the only source of sustainable competitive advantage when
strategies are easy for rivals to copy
corporate, divisional or strategic business unit and functional
strategy formulation, implementation and evaluation activities occur at what three hierarchical levels in a large organization?
Internal environment
strengths and weaknesses that are within the organization itself and are not usually within the short-run control of top management
Acronym for Swot Analysis
strengths, weakness, opportunities, threats
local ethical standards
take precedence over what the ethical standards may be in a company's home market
Leveraging competencies
taking a distinctive competency developed by a business in one industry and then using it to create a new business unit or division of a different industry. -______________ competencies means a new business is being CREATED. -Transferring competencies involves the sharing of competencies between two existing businesses.
Which of the following is considered a major driver of market globalization? A) tariff reductions B) government subsidies C) countervailing duties D) prohibitive tariffs
tariff reductions
strategic manager
the CEO is the most visible one, but any manager who has responsibility for a unit or division, responsible for profit and loss outcomes, or direct authority over a major piece of the business is one of these
Which of the following is a policy platform for companies committed to sustainability and CSR? A) the Organization for Economic Cooperation and Development B) the United Nations Global Compact C) the International Economic Development Council D) the Global Competitiveness Report
the United Nations Global Compact
Lower cost strategy
the ability of a company or a business unit to design, produce, and market a comparable product more efficiently than its competitors
Differentiation strategy
the ability of a company to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service
Transferability
the ability of competitors to gather the resources and capabilities necessary to support a competitive challenge
Replicability
the ability of competitors to use duplicated resources and capabilities to imitate the other firm's success
governance
the act of oversight and direction is referred to as what
primary activities
the activities in a firm of those involved in the physical creation of the product, marketing and transfer to the buyer, and after-sale support
support activities
the activities in a firm that assist the firm as a whole by providing infrastructure or inputs that allow the primary activities to take place on an ongoing basis
feedback
the analysis of post-implementation results that can be used to enhance future decision making
Capital budgeting
the analyzing and ranking of possible investments in fixed assets such as land, buildings, and equipment in terms of the additional outlays and additional receipts that will result from each investment
Strategic Management
the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
SPACE matrix
the axes of this matrix represent two internal dimensions: financial position and competitive position; and two external dimensions: stability position and industry position
resource-based view (RBV)
the basic premise of this is that the mix, type, amount, and nature of a firm's internal resources should be considered first and foremost in devising strategies that can lead to sustainable competitive advantage
assumptions
the best present estimates of the impact of major external factors, over which the manger has little if any control, but which may exert a significant impact on performance or the ability to achieve desired results
Executive compensation has been a controversial topic in the United States, where CEO pay sometimes dwarfs that of the common worker by a factor of 200. The responsibility for this disparity falls to ___________, who determine executive compensation.
the board of directors
Corporate culture
the collection of beliefs, expectations, and values learned and shared by a corporation's members and transmitted from one generation of employees to another
Synergy
the concept that two businesses will generate more profits together than they could separately
barriers to entry
the conditions that a firm must satisfy to enter an industry
Ethics
the consensually accepted standards of behavior for an occupation, a trade, or a profession
agency costs
the cost of agency problems and the cost of actions taken to minimize them
Bureaucratic costs
the costs associated with solving the transaction difficulties that arise between a company's business unit and between the business unit and corporate headquarters, as the company attempts to obtain the benefits from transferring, sharing, and leveraging competencies. -The greater the number of business units, the more difficult it is for corporate managers to remain informed about each business.
According to _________, the fact that Chinese labor is among the cheapest in the world does not alone guarantee it a competitive advantage on the international stage
the death-of-distance hypothesis
Environmental uncertainty
the degree of complexity plus the degree of change that exists in an organization's external environment
Horizontal integration
the degree to which a firm operates in multiple geographic locations at the same point on an industry's value chain
formality
the degree to which participation, responsibility, authority, and discretion in decision making are specified in strategic management
Personal control
the desire to shape and influence the behavior of a person in a FACE-TO-FACE interaction in the pursuit of a company's goals.
economic responsibilities
the duty of managers, as agents of the company owners, to maximize stockholder wealth
Performance
the end results of activities; includes the actual outcomes of the strategic management process
customer analysis
the examination and evaluation of consumer needs, desires and wants--involves administers customer surveys, analyzing consumer information, evaluating market positioning strategies, developing customer profiles and determining optimal market segmentation strategies
product differentiation
the extent to which customers perceive differences among products and services
The litmus test of whether a company's code of ethics is cosmetic is
the extent to which it is embrace in crafting strategy and in operating the business day to day
resource similarity
the extent to which the type and amount of a firm's internal resources are comparable to a rivals
external environment
the factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes
legal responsibilities
the firm's obligations to comply with the laws that regulate business activities
process
the flow of information through interrelated stages of analysis toward the achievement of an aim
Supply chain management
the forming of networks for sourcing raw materials, manufacturing products or creating services, storing and distributing goods, and delivering them to customers and consumers
industry environment
the general conditions for competition that influence all businesses that provide similar products and services
Some argue that Communism in China will fail for the same reason that it did in Russia. With the increase in communication and travel, and the exposure to Western culture and lifestyles inherent therein, the values of the Chinese people are expected to evolve to reflect those of the rest of the world and the cultural difference that separated China and enabled Communism will soon be a thing of the past. people who hold this view are clearly believers in ________
the globalization hypothesis
The higher the public profile of a company or its brand
the greater the scrutiny of its activities and the higher the potential for it to become a target for pressure group action
corporate social responsibility
the idea that business has a duty to serve society in general as well as the financial interest of stockholders
In a strategic alliance, the firm that accomplishes its goals more quickly has the greatest incentive to end the alliance. This is a reflection of ________
the learning race
grand strategies
the means by which objectives are achieved; a master long-term plan that provides basic direction for major actions for achieving long-term business objectives
ethics
the moral principles that reflect society's beliefs about the actions of an individual or group that are right and wrong
tangible assets
the most easily identified assets, often found on a firm's balance sheet; they include production facilities, raw materials, financial resources, real estate, and computers
market commonality
the number and significance of markets that a firm competes in with rivals
the best companies make a point of recruiting and retaining talented employees
the objective is to make the entire workforce a competitive asset
planning
the process by which one determines whether to attempt a task, works out the most effective way of reaching desired objectives and prepares to overcome unexpected difficulties with adequate resources
Horizontal integration
the process of acquiring or merging with industry competitors to achieve the competitive advantages that arise from a large size and scope of operation.
environmental scanning
the process of conducting research and gathering and assimilating external information, otherwise known as industry analysis
organizational design
the process of deciding how a company should create, use, and combine organizational structure control systems, and culture to be successful.
Internal new venturing
the process of transferring resources to and creating a new business unit or division in a new industry. A company may use ________ __________ to enter a newly emerging or embryonic industry. -slow process -Developing new products within a company starting a new type of business inside of an existing company
Which of the following entry methods is especially appealing to foreign firms entering the markets of transition economies? A) joint ventures with local businesses B) the purchase of former state enterprises C) collaborative ventures within blocs D) exporting and importing products
the purchase of former state enterprises
stage 2
the purpose of each (this stage) matching tool is to generate feasible alternative strategies, not to select or determine which strategies are best
organizing
the purpose of this is to achieve a coordinated effort by defining task and authority relationships, means determining who does what and who reports to whom
external audit
the purpose of this is to develop a finite list of opportunities that could benefit a firm and threats that should be avoided
Which of the following is a rationale for governments imposing offensive trade and investment barriers? A) the protection of domestic industries B) the promotion of national security C) the pursuit of public policy objectives D) the support of special interests
the pursuit of public policy objectives
technological forecasting
the quasi-science of anticipating environmental and competitive changes, and estimating their importance to an organization's operations
Imitability
the rate at which a firm's underlying resources, capabilities, or core competencies can be duplicated by others
Durability
the rate at which a firm's underlying resources, capabilities, or core competencies depreciate or become obsolete
Adherents to ___________ believe that strategic alliances frequently hold critical resources and capabilities that individual firms may not be able to match
the relational view of competitive advantage
Corporate governance
the relationship among the board of directors, top management, and shareholders in determining the direction and performance of the corporation
ecology
the relationships among human beings and other living things and the air, soil, and water that supports them
Purchasing power parity tells us ________. A) what a unit of local currency can buy in its home country B) the value of goods and services that can be purchased with one unit of a country's currency C) the relative ability of two countries' currencies to buy the same basket of goods in those two countries D) what a currency can actually buy in real terms
the relative ability of two countries' currencies to buy the same basket of goods in those two countries
director of competitive analysis
the responsibilities of this person include planning, collecting date, and analyzing data, facilitating the process of gathering and analyzing data, disseminating intelligence on a timely basis, researching special issues, and recognizing what information is important and who needs to know
General organizational competencies
the result of the skills of a company's top managers and functional experts.
long-term objectives
the results that an organization seeks to achieve over a multiyear period
economies of scale
the savings that companies achieve because of increased volume
strategic management
the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company's objectives
Boston Consulting Group Growth-Share Matrix
the simplest way to portray a corporation's portfolio of investments; consists of stars, cash cows, question marks, dogs
adaptive mode
the strategic formality associated with medium-sized firms that emphasize the incremental modification of existing competitive approaches
ethical responsibilities
the strategic managers' notion of right and proper business behavior
globalization
the strategy of pursuing opportunities anywhere in the world that enable a firm to optimize its business functions in the countries in which it operates
dynamic
the term that characterizes the constantly changing conditions that affect interrelated and interdependent strategic activities
competitive intelligence program
the three basic objectives of this are to provide a general understanding of an industry and its competitors; to identify areas in which competitors are vulnerable and to assess the impact strategic actions would have on competitors; and to identify potential moves that a competitor might make that would endanger a firm's position in the market
company mission
the unique purpose that sets a company apart from others of its type and identifies the scope of its operations in product, market, and technology terms
Environmental sustainability
the use of business practices to reduce a company's impact upon the natural, physical environment
General Environment
the wide-ranging global, economic, technological, sociocultural, demographic, political, and legal forces that affect an organization and its task environment
mission statement
these are "enduring statements of purpose that distinguish one business from other similar firms, it identifies the scope of a firm's operations from other similar firms," it address the basic question that faces all strategists: "what is our business?"
forecasts
these are educated assumptions about future trends and events
annual objectives
these are short term milestones that organizations much achieve to reach long-term objectives
policies
these are the means by which annual objectives will be achieved, include guidelines, rules and procedures established to support efforts to achieve stated objectives, they are guides to decision making and address repetitive or recurring situations
external forces
these can be divided into five broad categories: economic forces; social, cultural, demographic, and natural environment forces; political, governmental, and legal forces; technological forces; and competitive forces
functions of management
these consist of five basic activities: planning, organizing, motivating, staffing, and controlling
research and development
these expenditures are directed at developing new products before competitors do, at improving product quality, or at improving manufacturing processes to reduce costs
strategist
these people help an organization gather, analyze and organize information, they track industry and competitive trends, develop forecasting models and scenario analyses, evaluate corporate and divisional performance, spot emerging market opportunities, identify business threats and develop creative plans
key external factors
these should be important to achieving long-term and annual objectives; measurable; applicable to all competing firms; and hierarchical in the sense that some will pertain to the overall company and others will be more narrowly focuses on functional or divisional areas
Parallel source policies
they enter into long-term contracts with two suppliers for the same component.
Which of the following statements about skunkworks is false?
they refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas.
vision statement
this answers the question "what do we want to become?" and is the first step in strategic planning, preceding even development of a mission statement
industrial organization (I/O)
this approach to competitive advantage advocates that external (industry) factors are more important than internal factors in a firm for achieving competitive advantage
Resource-based view (RBV)
this approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage
cost/benefit analysis
this involves assessing the costs, benefits, and risks associated with marketing decisions; three steps to perform this are: compute the total costs associated with a decision, estimate the total benefits from that decision, compare the total costs with the total benefits
Porter's Five-Forces Model
this is a widely used approach for developing strategies in many industries; the nature of competiveness in a given industry can be viewed as a composite of five forces: rivalry among competing firms; potential entry of new competitors; potential development of substitute products; bargaining power of suppliers; and bargaining power of consumers
linear regression
this is based on the assumption that the future will be just like the past
IE Matrix
this is based on two key dimensions: the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis
production/operation function
this of a business consists of all those activities that transform inputs into goods and services
Internal Factor Evaluation Matrix
this tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas
Outsourcing
this will reduce costs when the price that must be paid to a specialist is less than it would cost a company internally.
pollution
threats to life-supporting ecology caused principally by human activities in an industrial society
empirical indicators
three characteristics of resources: rare, hard to imitate, or not easily substitutable; enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage
Cooperative strategy
to gain competitive advantage within an industry by working with other firms
external audit
to perform this, a company first must gather competitive intelligence and information about economic, social, cultural, demographic, environmental, political, governmental, legal and technological trends--this information is found by monitoring various sources of information such as newspapers and magazines
Portfolio analysis
top management views its product lines and business units as a series of investments from which it expects a profitable return
The three major types of current political systems are ________. A) totalitarianism, socialism, and democracy B) socialism, democracy, and monarchy C) totalitarianism, liberalism, and fascism D) democracy, republicanism, and oligarchy
totalitarianism, socialism, and democracy
strategic control
tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments
_______________ costs are those costs specifically associated with the decision to make in-house instead of buy in the market.
transaction
Acme, Inc. was exploring the possibility of outsourcing its distribution processes to FED-UP, a well-respected delivery company. After adding up the lawyers' fees for setting up the deal and the headaches involved in monitoring FED-UP's adherence to it, Acme decided it made more sense to continue doing distribution themselves. Acme's decision to internalize its distribution was likely the result of:
transaction costs
Large Multi national enterprises that operate in numerous international markets often face pressures to be bot cost efficient and responsive. In order to respond simultaneously to these apparently opposing forces, many of the corporations adopt the _________ strategy.
transactional
privatization of state-owned industries
transition economies
Of the four global strategies, ________ is the most difficult to execute effectively
transnational
A foreign firm's entry strategy, operations, and performance are often dictated by foreign investment laws.
true
An economy is categorized as advanced, developing, or emerging based on per capita income and level of economic development.
true
Average tariffs have declined over time.
true
By investing in the modernization of emerging and developing markets, advanced economy MNEs can develop long-term profit-generating opportunities.
true
CSR practices improve employee perceptions of a company, thereby reducing turnover.
true
Corporate managers must adhere to the laws of the country in which they do business.
true
Embargoes are a policy tool used to forbid trade with particular countries.
true
Emerging markets, such as Brazil, serve as manufacturing bases for MNEs seeking low-wage labor for mining, manufacturing, and assembly operations.
true
Employees working in foreign nations are used by firms to evaluate the political and cultural environment for any potential risks or threats which might harm the firm and its international interests.
true
Failure to adopt CSR behaviors can have have highly detrimental effects on a company.
true
Family conglomerates in the areas of construction, banking and manufacturing frequently dominate emerging market economies.
true
Governments in developing economies often mismanage revenue and expenditures, which leads to additional economic issues.
true
In order to determine the potential of an emerging market, firms should consider a nation's income distribution, unemployment rate, and rate of urbanization.
true
In order to support domestic steel manufacturers, the U.S. Government has intervened by imposing anti-dumping duties on the import of less expensive steel.
true
Manufacturers and sellers face legal penalties and lawsuits due to product safety and liability laws that ensure accountability for damage, injury, or death from defective products.
true
Maquiladoras along the northern Mexico border enable foreign firms to take advantage of low-cost labor, government incentives, and favorable taxes.
true
Market forces and free trade are encouraged in democracies and are supported by legal systems that apply fair and equal treatment to all citizens.
true
Most democracies also include elements of socialism.
true
Outsourcing enables foreign firms to increase efficiency and obtain competitive advantages.
true
Research shows that corporate executives throughout the world uphold both profitability and social responsibility as business values.
true
Some governments impose trade barriers on specific products and services if the import poses a threat to the national culture.
true
Stifled by inefficient state-run industries following the establishment of a communist government in 1949, China is now a leading exporter of manufactured goods.
true
The Chinese yuan is significantly undervalued, at 49 percent below its fair-value benchmark with the dollar.
true
The European Union impacts international trade and business because of its ability to enact and enforce laws and regulations.
true
The connections and knowledge held by family conglomerates makes them useful to foreign firms trying to enter emerging markets.
true
The five approaches to analyzing ethical dilemmas often lead to similar solutions.
true
The import tariffs on clothing and shoes into the United States often exceed 20 percent, which results in billions of dollars a year for the U.S. government.
true
The lack of confidence held by foreign investors in Russia stems from the nation's unstable political conditions and its favoritism towards local firms.
true
The most advanced companies monitor their suppliers to ensure that their suppliers use sustainable practices.
true
The transition economies of China and Russia have attracted FDI because of privatization.
true
Trade and investment restrictions are often supported by special interest groups.
true
U.S. tariffs on imported steel in the early 2000s inadvertently increased production costs for firms that use steel, such as Ford, Whirlpool, and General Electric.
true
New entrant
typically bring new capacity, a desire to gain market share, and substantial resources
A person who is high in ______ would probably prefer to work on salary rather than commission
uncertainty avoidance
Economies of scale
units costs are reduced by making large numbers of the same product
An individual who believes in ethical normativism views ethical truths as ________. A) universal B) constantly changing C) dependent on societal norms D) superior in certain countries
universal
According to integrated social contracts theory
universal ethical principles based on the collective views of multiple societies form a "social contract" that all individuals and orgs have a duty to observe in all situations. Within the boundaries of this social contact, local cultures or groups can specify what additional actions may or may not be ethically permisable
In the United States, what prison term can be assessed for managers who bribe foreign parties to secure or retain business?
up to five years
Which of the following would most likely be considered a sustainable business practice? A) reducing the overall tax liability of a corporation B) developing a patented process to produce steel C) using solar energy to power manufacturing plants D) enforcing mandatory drug testing among employees
using solar energy to power manufacturing plants
Which of the following standards for examining ethical dilemmas reflects the view that the best ethical action is one that provides the greatest balance of good over harm? A) common good approach B) utilitarian approach C) virtue approach D) fairness approach
utilitarian approach
Key success factor
variables that can significantly affect the overall competitive positions of companies within any particular industry
Firms involved in ___________________ are primarily concerned with financial considerations of cash flow or risk reduction
vertical diversification
When using the four-step framework for making ethical decisions, which approach to evaluating actions is being used by a manager who questions whether an action embodies character strengths he values? A) rights approach B) virtue approach C) common good approach D) utilitarian approach
virtue approach
vision statement
what do we want to become?
communication
what is a key to successful strategic management?
Ethics
what society as a group thinks what is right and wrong, via laws etc
hostile takeover
when a merger or acquisition is not desired by both parties, it can be called
regiocentric orientation
when a parent company blends its own predisposition with those of its international units to develop region-sensitive strategies
geocentric orientation
when an international firm adopts a systems approach to strategic decision making that emphasizes global integration
A copyright is granted for ________ but not for ________.
works of art; manufacturing processes