Introduction to Management Exam 2 University of Iowa

What are the forces for internalization?

Modern communication technology

Air travel

Corporate globalism

Internalization Process

Stage 1: Exporting

Manufacture products and ship them abroad

Stage 2: Cooperative contracts

Franchising/Licensing

Stage 3: Strategic alliances

Companies combine resources/technology to share costs and split profits

Stage 4: Wholly owned affiliates

OR Global new ventures**

Two different types of cooperative contracts

Licensing and franchising

What was the problem at Mustang Jeans?

-Trying to sell jeans in a foreign country

-Doesn't understand importance in building a relationship

-Not understanding cultural differences

High vs. Low Context Cultures

High: nonverbal and situational messages convey meaning

-Relationship more important than terms

-Emphasize developing interpersonal relationships

-(Asia, Europe, South America)

Low: words convey primary meaning

-Nonverbal messages are secondary

-The terms of the deal are more important than building a business relationship

-Straightforward, concise, and efficient

-United States

What are Hofstede's dimensions?

Long-term vs. Short-term orientation

-How far into the future are people thinking vs living in the now, enjoying the present

Uncertainty avoidance

-To what extent are people okay with uncertainty vs prioritizing security/safety

Masculinity vs. Femininity

-To what extent does a country value assertiveness vs building relationships, nurturing others

Individualism vs. Collectivism

-Expect individuals to achieve on their own vs with their group

Power distance

-People in society willing to accept hierarchies or distributions

Definition of tariff and non-tariff trade barriers

Tariff- a direct tax on imported goods

Nontariff- barriers non tax methods of increasing the cost or reducing the volume of imported goods

Why do managers need to know about tariffs and trade?

Free-trade agreements create new business opportunities and also intensify competition, and addressing that competition is a manager's job

Characteristics of an attractive foreign business climate

1. Growing markets

-purchasing power

-foreign competitors

2. Choosing an Office/Manufacturing Location

-Qualitative factors

-Quantitative factors

3. Minimizing Political Risk

-Political uncertainty

-Policy uncertainty

How do you prepare for an international assignment?

(involves an expatriate-someone who lives and works outside his or her native country)

-Language and Cross-Cultural Training

-Spouse, Family, and Dual-Career Issues

What is a mongrel? Why is it a good thing?

A person comfortable in multiple countries

-it pawns creativity, nourishes the human spirit, spurs economic growth, empowers nations

-avoids barriers

-diversity is good

What makes an effective mission statement?

It must stretch and challenge the organization, yet be achievable

Options for getting into business

-Family-owned

-Starting new

-Buy existing (under appreciated, easiest)

-Buy franchise

Ways to get funding

Equity

-Investors give you money, but owns a % of those profits

Debt

-Borrow money, but have to pay creditor back (with interest)

Awards from competitions

Types of ownership (and differences between them)

Proprietorship/Partnership

-A business that legally has no separate existence from its owner

Corporation

-Creates a business as a separate entity than the owners

-A lot of taxes

-Government covers debts

Subchapter S-Corporation

-Limited Liability Company (LLC)

-Separate legal entities

-Business only is liable for debt

-Profits that they earn are not taxed

-Taxed only 1 time

-Over 95% of ownerships are these**

Main differences:

How/when earnings are taxed

Liability for debts

Key ideas behind 'burn your business plan'

-Doesn't take a huge business plan to convince someone

-Don't spend so much time writing a plan, instead, actually do it

Investors are rather interested in...

-Great oral presentation

-Compelling written story

-Effective website

-Hard-hitting financial projections

How to make a plan that works

1. set goals

2. develop commitment

3. develop effective action plans

4. track progress toward goal achievement

5. maintain flexibility

Types of plans, procedures, and rules

Strategic plans

-Overall company plans that clarify how the company will serve customers and position itself against competitors over the next two to five years

Tactical plans

-Plans created and implemented by middle managers that direct behavior, efforts, and attention over the next six months to two years

Operational plans

-Day-to-day plans, developed and implemented by lower-level managers, for producing or delivering the organization's products and services over a thirty-day to six-month period

-Single-use plans (one time)

-Standing plans (repeatedly used)

-Budgeting

Steps in rational decision making

1. Define the problem

2. Identify decision criteria

3. Weigh the Criteria

4. Generate Alternative Course of Action

5. Evaluate Each Alternative

6. Compute the Optimal Decision

What is the Nominal Group Technique?

A decision-making method that begins and ends by having group members quietly write down and evaluate ideas to be shared with the group

-Quietly write down ideas, share them, rank them

What is the Delphi Technique?

A decision-making technique in which group members do not meet face-to-face but respond in writing to questions posed by the group leader

-Online so people are more willing to do it

What you do must be to create a sustainable competitive advantage?

-Valuable

-Rare

-Imperfectly Imitated

-Non-substitutable

What is a SWOT analysis?

an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment

Explain the BCG matrix

A portfolio strategy that managers use to categorize their corporation's businesses by growth rate and relative market share

Stars: a company with a large share of a fast-growing market (the corporation must invest substantially in it)

Question marks: a company with a small share of a fast-growing market (may eventually become stars, riskier than investing in stars)

Cash Cows: a company with a large share of a slow-growing market (highly profitable)

Dogs: a company with a small share of a slow-growing market (often not profitable)

What is the portfolio strategy?

A corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines

What are the 4 industry strategies?

1. Cost leadership (broad target)

2. Cost focus (narrow target)

3. Differentiation (broad target)

4. Focused differentiation (narrow target)

What are the firm-level strategies?

Strategic moves in direct competition: Attacks/responses in red ocean

Entrepreneurship: Movement into blue waters

What is the control process?

1. Set standard (goals)

2. Measure actual performance

3. Compare with standard

4. Identify deviations

5. Analyze deviations

6. Take corrective action

What are the characteristics of service provision?

Customers participate

Services are consumed immediately

Services are provided where and when the customer desires

Services tend to be labor intensive

Services are intangible

Quality in Service Provision (RATER)

Reliability (most important)

Assurance

Tangibles

Empathy

Responsiveness

What are the planning/control tools?

PERT Networks

-Illustrates what order things should be done, what things can be done simultaneously, how long they should take

Gantt Charts

-Illustrates same things as PERT, but in different ways

Order (top to bottom), simultaneous events (overlap), how long (horizontal bar)

What are the 3 types of control?

Feedforward control

-monitoring inputs

-anticipating and preventing events

Concurrent control

-monitoring processes

-adjusting ongoing activities

Feedback control

-monitoring products

-learning from past mistakes

What are the methods of control?

1. Bureaucratic (rules)

-Maximize efficiency and effectiveness, often do opposite

2. Objective (measures)

-Care more about the results than the process

3. Normative (values & beliefs)

-set standards that guide people's behavior

4. Concertive (shaped by groups)

5. Self

What are budgets, perf. reports, and variance analysis?

Budget: performance we expect to have, projected operating income

Perf. report: end of the year, measure actual performance

Variance: compare actual to budgeted performance (report-budget)

What are the 4 components of the balanced scorecard?

Goals, standards, measures, initiatives

What is the grand strategy?

a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use

What is economic added value and what are its components?

the amount by which company profits exceed the cost of capital in a given year

(profits= revenues - expenses - taxes)

What are technology cycles?

begins with the birth of a new technology and ends when that technology reaches its limits and dies as it is replaced by a newer, substantially better technology

What are experiential/compression innovation?

Experiential (Discontinuous)

-Uncertain environments

-Intuition, flexibility

-Goal: New product/service

Compression (Incremental)

-Certain environments

-Series of steps

-Goal: Faster/cheaper

Innovations can be experiential/compression, changes can be discontinuous/incremental**

Creative work environment components

Encouragement from organization, supervisor, work group

Challenge

Lack of impediments

Freedom

Expertise

Positive moods

Why people are resistant to change

Self-interest

Misunderstanding/distrust

General intolerance

Lewin's Organizational Change Model

Act like people are frozen, then you can unfreeze them to institute change, and freeze them again for a new pattern of behavior**

Unfreeze

-Driving forces overpower restraining forces

Change

-New restraining forces created to establish new status quo

Freeze

-Into their new pattern of behavior

What to do when employees resist

Unfreeze

-Share reasons

-Empathize

-Communicate

Change

-Explain

-Opportunities for feedback

-Offer security

-Educate

-Don't rush

Freeze

Errors managers make (what NOT to do when leading change)

-Not establishing a great enough sense of urgency

-Not creating a powerful enough coalition (partnership/union)

-Lacking a vision

-Under-communicating the vision by a factor of ten

-Not removing obstacles to the new vision

-Not systematically planning for and creating short-term wins

-Declaring victory too soon

-Not anchoring changes in the corporation's culture

What are the 3 types of organization development interventions?

Large-system interventions

-changes the character and performance of an organization, business unit, or department

Ex: Survey feedback

Small-group intervention

-focuses on assessing how a group functions and helping it work more effectively to accomplish its goals

Ex: Team building

Person-focused intervention

-intended to increase interpersonal effectiveness by helping people to become aware of their attitudes and behaviors and to acquire new skills and knowledge

Ex: Counseling/coaching/training

What are the basic departmentalization structures and benefits/drawbacks?

Functional

Benefit: Work is done by specialists

Drawback: Slows down decision making

Product

Benefit: High responsiveness

Drawback: High cost

Customer

Benefit: High responsiveness

Drawback: High cost

Geographic

Benefit: High responsiveness

Drawback: High cost

What are the 2 types of span of control?

Narrow: create "tall" organizations

-Can oversee what employees are doing

-Less freedom (autonomy)

-Salary cost higher

-Lower workload for managers

Wider: create "flat" organizations

-Not much oversight over all employees

-More freedom (autonomy)

-Salary cost lower

-Heavy workload for managers

What is the Logic of Contingency Design?

There is no single best design for all companies and situations

Burns & Stalker (1961)

-Must determine the degree of environmental uncertainty and adapt the organization and its subunits to that situation

Mechanistic vs. Organic Organizations

mechanistic: clear chain of command, vertical communication, centralized authority, low delegation, high specialization

organic: think broadly about who you report to, lateral communication, decentralized authority, high delegation, high generalization

What is the chain of command?

the vertical line of authority that clarifies who reports to whom throughout the organization

Line and staff authority

An organizational chart that shows the direct line of authority as well as staff who advise the line personnel

What is the delegation of authority? (and 3 transfers)

Managers can either complete tasks themselves, or they can choose to pass on some of their authority to subordinates

1. Responsibility

2. Authority

3. Accountability

Centralization vs. Decentralization

Centralization- the location of most authority at the upper levels of the organization

(managers make most decisions, even the relatively small ones)

Decentralization- the location of a significant amount of authority in the lower levels of the organization (workers are authorized to make decisions on their own)