MGMT 320 Test 2 (Toma)

globalization

the trend of the world economy toward becoming a more interdependent system

global village

shrinking of time and space as air travel and electronic media has made it easier for ppl around the world to communicate

e-commerce

buying and selling of products or services

global economy

economies of the world that interact with one another as 1 market

an advantage of one big world market

foreign firms create revenue in the U.S. by building plants here

negatives of one big world market

outsourcing of jobs

mergers

when big companies come together to become even bigger and dominate their field

mini firms

small companies that can get started more easily and maneuver faster for change

multinational CORPoration (enterprise)

business firm with operations in several countries ; Chase

multinational ORGanization

nonprofit org with operations in several countries; Red Cross

we exist in a

global economy

GATT

general agreement on trades and tariffs; reduces tariffs and trade barriers

WTO

world trade org; designed to monitor and enforce trade agreements

the answer to everything that involves international business always depends on

the differences in the external business environment

3 RESULTS of globalization

-rise of global village & e-commerce

-world becomes one market instead of many

-rise of both megafirms and internet enabled minirfirms worldwide

international mgmt

mgmt that oversees the conduct of operations in or with organizations in foreign countries; can be through multinational corps or organizations

geocentric managers

accepts cultural differences and uses what is most effective

ethnocentric managers

"we know best"; their native culture is superior

polycentric managers

"they know best"; home offices leave native offices alone

why international business ?

access to finance capital

-avoid tariffs and import quotas

-low labor costs

-new markets

-availability of supplies

how companies expand internationally

global outsourcing

-import, export, countertrade

-licensing and franchising

-joint ventures

-wholly owned subsidiaries

outsourcing

using suppliers outside the company to provide goods and services

offshoring

defined as using suppliers outside the U.S. to provide labor, goods and services

importing

a company buys goods outside the country and resells them domestically

exporting

a company produces goods domestically and sells them outside the country

licensing

you have to pay a fee but the founding company doesn't get a profit like a franchise

a joint venture is also called a

strategic alliance that you share risks with another company when starting a new enterprise together

NAFTA

purpose is to reduce internal trade barriers

trade flows through the path of

least trade barriers

economic union

to harmonize policies of running the economy

SMART goals

specific, measurable, attainable, results-oriented( support org's vision), has targets (deadlines)

what is the purpose of a MBO

to motivate, not control subordinates

MBOs are

management by objectives and has a 4 step process -managers & employees jointly set objectives for employees

-managers develop action plans

-both parties periodically review the employees performance

-manager makes a performance appraisal and rewards the employee according to results

what is the managerial hierarchy *ODDI*

-top managers: organizational

-which becomes divisional

-which translates to departmental

-and ends in individual objectives set by each employee

planning has two steps which include

-make the plan and carrying out the plan

controlling has two steps which include

controlling the direction by comparing results with the plan and by taking corrective action in two ways

**correct deviations in the plan being carried out

** by improving future plans

planning

setting goals and determining how to achieve them

4 benefits of planning

-helps check progress

-helps coordinate activities

-helps you think ahead

-helps you cope with uncertainty (plan for unpleasant contingencies)

prospectors

create their own opportunities

analyzers

let other take the risks of innovating and then imitate

reactors

make adjustments when they are FORCED to

a mission statement asks

what is our reason for being?

vision statement asks

what do we want to become

3 types of planing for 3 levels of mgmt

strategic: top managers

tactical: middle managers

-operational/functional: 1st line managers

strategic

they determine what the org's long term goals should be for the next 5 years

tactical

determine what contributions their department handles for 1 year

operational/functional

determine how to accomplish specific tasks with available resources within the next 1-52 weeks

standing plans

plans developed for activities that occur repeatedly over a period of time

standing plans consist of these 3 things

policies, procedures, and rules

policies

outline the general response to a designated problem or situation

procedures

outlines the response to particular problems or circumstances

rules

designates specific required action

single-use plans

plans developed for activities that are not likely to be repeated in the future

single use plans consist of

programs and projects

programs are

encompass a range of projects or activities

projects

plan of less scope and complexity than a program

plans are ________ but planning is _______

useless, indispensable

strategic planning requires

implementation and control

the strategic planning process includes

vision, mission, goals/objectives, plans

plans have a greater chance of being completed if the _____ technique is used

SMART

business plan

document that outlines a proposed firm's goals, the strategy for achieving them, & the standards for the measuring success

4 steps to a strategy

-define strategy and strategic mgmt

-explain why strategic planning is important

-describe the 3 key principles that underlie strategic positioning

-discuss strategic mgmt in large vs small firms

strategy

large scale action plan that sets the direction for an organization

strategic mgmt

process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals

why should organizations adopt strategic planning

-provide direction and momentum

-encourage new ideas and

-develop a sustainable competitive advantage***

grand strategy

assesses the current performance and then how the organizations mission is to be accomplished

3 common grand strategies

growth-expansion

stability-little to no change

defensive-reduction of efforts

SWOT analysis

strengths, weaknesses, opportunities and threats

strengths & weaknesses

inside matters

opportunities and threats

outside matters

porter's 5 competitive forces

-threats of new entrants

-bargaining power of suppliers

-power of buyers

-threats of substitute products or services

-rivalry among competitors

porter's 4 competitive strategies

-cost leadership

-differentiation

-cost focus

-focused differentiation

cost leadership

keep cost below that of competitors; wide market

differentiation

offer unique products or services; wide market

cost focus

keep cost low and target narrow market

focused differentiation

offer unique products to a narrow market

always consider differences in _____ when dealing internationally

culture

in order from low risk to high risk, what is the order of reasons companies expand internationally?

global outsourcing, importing/exporting/countertrading, licensing and franchising, joint ventures, wholly owned subsidiaries

licensing is usually used by ______ while franchising is used by _____

companies, service companies

wholly owned subsidiaries

foreign subsidiary that is totally owned and controlled by an organization

free trade

the movement of goods and services among nations without political or economic obstruction

3 barriers to trade or exert protectionism

tariffs, import quotas, embargoes

trade protectionism

the use of government regulations to limit the import of goods/services

quotas are designed to prevent

dumping: driving prices down of a domestic product

3 FACTORS of globalization

technological advances

-trends toward REI

-trends toward reduction of trade barriers

decision

a choice

decision making

the process of choosing alternative courses action

rational : classical: 4 steps

-identify the problem

-think of alternatives

-evaluate alternatives and choose solution

-implement and evaluate the solution chosen

opportunities

situations that present possibilities for exceeding existing goals

diagnosis

analyzing the underlying causes

farsighted managers

look past problems to find solutions