SOM EXAM 2 SLIDES

Management is

Getting work done through others. management is not about doing everything yourself, but about coordinating people, resources, and processes to achieve shared goals.

Two pillars of management

efficiency: Doing things right — using resources wisely, minimizing

waste, and maximizing output with the inputs available.

effectiveness: Doing the right things — making sound decisions and

implementing them successfully to achieve organizational

goals.

Efficient: the means

optimal resource usage, low waste goals. Use resources wisely and in the cost-effective way

Effectiveness: the ends

Goal is high attainment. Making the right decisions and

successfully implementing them.

Four things managers must do

planning, leading, organizing, controlling

planning (management)

setting goals and charting best course of action to achieve them

Organizing (management)

arranging tasks, people, resources, so everyone knows their roles

leading (management)

motivating and influencing people to achieve organizational goals

controlling (management)

monitoring performance and taking corrective action to stay on track

Three levels and the four functions of how managers allocate time

First-level managers, middle managers, top managers

organizing, planning, controlling, leading

First-level managers

spend most of time leading (51%), directly supervising and motivating frontline employees day-to-day

Middle Managers

Balance all four functions, with a strong focus on organizing (33%) and coordinating between top and frontline levels

Top Managers

Devote the most time to organizing (36%) and planning (28%) — setting strategy and structure for the whole organization.

Three levels of planning

operational, tactical, strategic

operational planning 1-52 wks

Supervisory managers direct the daily tasks of nonmanagerial personnel. Focus is on execution, schedules, and immediate problem-solving.

Tactical Planning 6 to 24 Months

Middle managers implement top management's policies and plans. They coordinate activities and supervise frontline managers to ensure alignment.

Strategic Planning 1 to 5 Years

Senior leaders make long-term decisions about the overall direction of

the organization, responding to market forces and shaping competitive position

Leaders

Leaders focus on motivating and empowering people. They inspire

commitment, articulate a vision, and create an environment where

individuals want to perform at their best.

• Set direction and inspire purpose

• Build trust and psychological safety

• Focus on people and culture

Managers

Managers direct and organize people to accomplish specific objectives. They establish systems, allocate resources, and ensure tasks are completed efficiently and on time.

• Assign tasks and set expectations

• Monitor performance and results

• Focus on processes and systems

Foundational approaches to leadership

autocratic, participative, free-rein

Autocratic Leadership

Leaders make decisions without consulting others. Most effective

when employees need clear direction, are learning a new skill, or when speed is critical.

Participative (Democratic) leadership

Leaders involve employees in decision-making. Improves job

satisfaction and buy-in, though it may slow decision speed in complex

situations.

Free-Rein (Laissez-Faire)

Leaders set objectives but let teams decide the means to achieve them. Works best with highly skilled, self-directed professionals who thrive with autonomy.

Transactional leadership

Focuses on creating a smooth-running organization by motivating employees to meet performance goals. Managers clarify roles, set targets, and provide rewards or corrective action based on results. Best for stable, process-driven environments where clear expectations drive performance

Transformational Leadership

Focuses on inspiring long-term vision, creativity, and exceptional performance. Transformational leaders cultivate high levels of commitment and loyalty, enabling significant organizational change and innovation. Best in dynamic environments requiring adaptation and growth.

Strategic Framework

Mission statement: who are we and what we value

vision statement: what we want to become

strategy: how we will achieve our vision

goals and objectives: how we gauge our degree of success

Planning basis

mission and vision statements

Mission statement

Identifies the goods or services the organization provides and the reasons for providing them. It answers the foundational question: Why does this organization exist? A strong mission guides daily decisions and keeps the organization anchored to its core purpose. "why do we exist?"

Vision statement

Describes the company's long-term

aspiration — what the organization wants to become. It outlines a world view that attracts and aligns employees, customers, and partners around a shared future. A compelling vision inspires action beyond routine performance. "where are we going"

SWOT

strengths, weaknesses, opportunities, threats

globalization

communication: Digital networks and the internet have collapsed distances, enabling

real-time exchange of information across continents.

trade & investment: Cross-border flows of goods, services, and capital have created a

deeply integrated global marketplace

migration: The movement of people across borders transfers skills, cultures, and labor, reshaping societies worldwide.

the global economy

reflects the increasing interaction of the world's economies as a single, unified market — rather than a collection of separate, independent markets. As national borders become less of a barrier to commerce, economic activity is now organized and measured on a worldwide scale.

Multinational Corporations & Multinational Management

Multinational Corporations

Large firms that manufacture and market products across many different countries, operating under a unified global strategy while adapting to local conditions.

Multinational Management

Organizations increasingly adopt management structures that coordinate teams, operations, and ownership across international boundaries — blending global efficiency with local responsiveness.

positive effects of globalization

economic growth/jobs: Expanded free trade opens new markets, stimulates competition, and creates employment opportunities — both in developed and developing economies.

knowledge/information sharing: Nations can freely exchange scientific research, technological innovations, and best practices, accelerating progress across all sectors.

environmental cooperation: Global challenges such as climate change and resource depletion require

multinational solutions — globalization facilitates the alliances needed to address them.

greater diversity/ market access: Companies gain access to a worldwide consumer base. Societies benefit from

diverse cultures, products, services, and ideas that enrich everyday life.

poverty reduction: Foreign investment and trade create jobs in developing nations, providing income and helping populations escape cycles of poverty.

negative effects of globalization

outsourcing & job loss: Manufacturing and service jobs are permanently relocated overseas, leaving domestic workers displaced without equivalent replacement employment

Wealth Inequality: The gains from globalization have

disproportionately benefited corporations and high-skilled workers, widening income and wealth disparities

both within and between nations.

Tax Avoidance & Wage Pressure: Corporations exploit international tax havens, reducing public revenues.

Workers face wage cuts when employers threaten to export jobs to lower-cost regions.

Labor & Social Risks: Child labor exploitation, immigration-driven wage suppression, intellectual property theft, and growing government deficits in nations with strong social safety nets are persistent concerns.

absolute advantage

A country holds an absolute advantage when it can produce more of a given product with the same amount of inputs than any other nation. For example, Brazil's climate enables it to produce coffee more efficiently than most countries in the world

who is the best producer?

Comparative Advantage

A country holds a comparative advantage when it produces certain goods or services more cheaply or efficiently relative to other goods it could produce — and exports those. Even if a nation could produce everything, it benefits by specializing in what it does best and trading for the rest.

what product do we produce best?

Why and How Countries Conduct International Trade

No country is self-sufficient: Every nation depends on others for goods or resources it cannot produce domestically — from energy to electronics to agricultural products

unequal natural resources: Some nations hold abundant

reserves of oil, minerals, fertile land, or rare materials that others urgently need and are willing to purchase

technological advantages: Advanced economies develop innovations — in medicine, manufacturing,

software, or engineering — that less technologically developed countries seek to acquire.

Balance of trade and payments

trade: A nation's trade position is measured by comparing the value of what it exports against what it imports. This relationship

payments: Measures all financial transactions between a country and the rest of the world — including trade in goods, services, investment income, and financial transfers.

trade surplus: Occurs when a country's total export value exceeds its total import value

trade deficit: Unfavorable balance of trade. Occurs when a country's total import value exceeds its total export value.

Imports in the USA

computers, telephones, cars, crude petroleum, office machine parts

Exports in the USA

crude petroleum, aircraft parts, refined petroleum, gold, petroleum gas

organizations facilitating international trade

World Trade Organization (WTO)

World Bank

International Monetary Fund (IMF)

World Trade Organization (WTO) (international trade)

164 member countries, monitors and enforces international trade agreements. It provides a forum for negotiating

trade rules and resolving disputes between nations, helping to reduce tariffs and prevent unfair trade

practices.

World Bank (international trade)

Provides low-interest loans to developing nations to fund improvements in health, education, transportation, and telecommunications. The World Bank has also played a key role in assessing and financing recovery from major natural disasters

International Monetary Fund (IMF) (international trade)

Works to smooth the flow of money among nations. The IMF acts as a last-resort lender, extending short- term loans to countries experiencing an unfavorable balance of payments or financial crises, helping maintain global monetary stability.

Conditions impacting international business

cross-cultural differences, infrastructure, currency shifts, political systems, political risk, trade protectionism

Infrastructure: foundation of development

roads, ports, telecommunications, and energy systems — is one of the most reliable indicators of its economic development. Businesses entering new markets must assess infrastructure quality carefully, as it directly affects logistics, supply chains, and operational costs

developed countries

- High level of economic development; citizens enjoy generally high average incomes

• Home to headquarters of most major international

organizations

• Attract large amounts of foreign direct investment

• Advanced infrastructure supports efficient business

operation

developing/ less developed countries

• Lower economic development and generally lower average citizen incomes

• Includes most countries in Africa, Asia, and Latin America — as well as China, India, Brazil, and Nigeria

• Some, like China and India, are experiencing extremely rapid growth

• Infrastructure gaps create both challenges and investment opportunities

adjusting to other countries governments and laws

democratic and totalitarian political systems

Democratic Political Systems

Rely on free elections and representative assemblies. Citizens participate in shaping policy, and businesses benefit from greater

transparency, rule of law, and institutional stability. Examples include the U.S., Germany, and Japan.

Totalitarian Political Systems

Ruled by a dictator, a single party, or a privileged group such as a

ruling family or military junta. These systems tend to offer less legal

protection for foreign businesses and can change policies unpredictably. Examples include North Korea and historical examples across multiple continents

Political risk: instability and expropriation

probability that political changes or instability in a country will cause the loss of a company's assets or significantly impair its foreign operations. Smart global companies assess political risk before committing capital to a new market — and continuously monitor it thereafter.

political instability risk

Refers to sudden or ongoing disruptions to a country's governing

order, including riots, civil disorders, coups, or armed conflict. Instability can disrupt supply chains, endanger personnel, damage

facilities, and make contracts unenforceable.

political expropriation risk

occurs when a government seizes the assets of a domestic or foreign company — sometimes with compensation, sometimes without. Venezuela, Bolivia, and Ecuador have all passed laws limiting foreign investors' rights to natural resources, serving as cautionary examples for energy and mining companies.

Highest in resource rich countries w/nationalist or socialist govs

Trade protectionism: shielding domestic industries

to protect domestic industries from foreign competition and preserve jobs, governments sometimes restrict international trade through a

practice known

tariffs, import quotas, embargo

tariffs (trade protection)

A tax levied on imported goods. Revenue tariffs raise government

income, while protective tariffs make foreign goods more expensive to give domestic producers a price advantage.

import quotas (trade protection)

Limit the quantity of a product that can be imported within a given period. Quotas help prevent dumping — when a foreign company sells products abroad below the cost of production to undercut local competitors.

Embargo (trade protection)

A complete ban on the import or export of certain products or all trade with a specific country. Embargoes are the most extreme form of protectionism, often imposed for political or national security reasons.

how companies enter foreign markets

importing and exporting (lowest risk)

franchising and foreign licensing & global outsourcing (moderate risk)

joint ventures & foreign subsidiaries (high risk)

Importing and exporting (low risk)

buying and selling goods across borders

franchising and foreign liscensing (moderate risk)

granting rights to operate under a brand

global outsourcing (moderate risk)

contracting foreign firms for services or production

joint ventures (high risk)

partnering with local firms

foreign subsidaries (high risk)

establishing fully owned operations abroad

entrepreneurship

process of taking calculated risks to create a product or service that fills a genuine customer need or opportunity in the marketplace. It is the engine behind innovation, job creation, and economic growth

entrepreneurs

are individuals who identify new opportunities for a product or service and willingly invest their time, energy, and money to build a business around that vision — often before anyone else sees its potential.

entrepreneurship values

process: not a single act — it is an ongoing series of

decisions, experiments, and adjustments over time.

creating value: Every entrepreneurial venture must deliver something

meaningful to customers — solving a problem, saving time, or improving lives

unique combos: Success often comes from combining existing resources — people, technology, capital — in a new and creative way.

opportunity: Entrepreneurs act on gaps in the market, unmet needs, or

emerging trends before others do.

Entrepreneurial Process

identify & qualify a need

quantify the market opportunity

translate opportunity into a solution

start or grow the firm

phase 1 - opportunity discovery

may occur either spontaneously or as a result of deliberate effort and structured exploration. The goal of this phase is to surface raw ideas and potential gaps in the market before filtering or refining them. Every great business starts with a moment of discover

creative thinking, brainstorming, problem solving, structured techniques

better solution instead of a new one strategies

many of the most successful startups simply improved on what already existed

cross-market adaptation, reduce cost, spin off a feature, bundle and combine, fill service gaps

how do ideas arrive?

prior experience, social networks, cognitive factors, creativity

phase 2 - opportunity formation

raw opportunities are molded into viable business ventures. This phase requires rigorous evaluation and structured planning. Filtering ideas early saves time and capital.

feasibility analysis, market testing, operations & logistics planning

feasibility analysis (phase 2)

Evaluate market size, competition, technical requirements, and financial viability. Ask: Is this opportunity real, accessible, and worth pursuing?

market testing (phase 2)

Validate demand through surveys, prototype testing, landing pages, or pilot programs. Real customer feedback eliminates costly assumptions.

Operations & Logistics Planning (phase 2)

Map out how the product or service will be built, delivered, and scaled. Define key resources, partners, supply chain, and cost structure.

what it takes to be an entrepreneur?

critical thinking, problem solving, creativity & innovation, time & energy management, personal & professional selling

These are not fixed traits but learnable competencies

the business plan

a foundational document that outlines a proposed firm's

goals, the methods for achieving them, and the standards for measuring success. Whether you're launching a startup or seeking investment, a well-crafted business plan is your first essential tool.

importance of a business plan

Secure financing — lenders and investors require it before committing capital

Think through details — forces clarity on strategy, operations, and risk

What Investors Look For

• Consumer needs your business will meet

• How the business will operate day-to-day

• Key components, functions, and team structure

• Projected revenues and expenses

Key questions answered by the business plan

What's the basic idea behind my business?

What kind of industry am I entering, and how is my idea different?

How will I market to consumers?

What qualifies me to run this business?

How will I finance this business?

When will a potential return on the investment be realized?

Who is the potential competition?

The pitch deck

problem, solution, differentiation, market, competition, investment ask

keep it under 15 slides, clear, visual