MGMT 320 Toma Exam 2

Global management

expanding domestic business in foreign markets

Existing in a global economy

every country is interested in economic health and wealth, and to achieve it countries' economies are becoming interconnected like a chain

Geo-politics

(concepts of power)

main source of power - military

maintained by - economy

Geo-economies

(concepts of power)

main source of power - economy

maintained by - military

Geo-politics

leads to political domination, death, and destruction

Geo-economies

leads to economic wellbeing

International business

the conduct of business activities across national borders

Multinational country

MNC

1. Exports of goods and services

2. Imports of goods or services

3. Investments

What are the types of international business activities? (3)

Direct investments

buying stocks and bonds to own, control, and manage a company

Portfolio investments

buying stocks and bonds to not own, control, or manage a company

1. Production - you do not have to produce domestically

2. Marketing - you sell to nearby markets to lower the costs of warehousing and distribution

What is the globalization of production and marketing? (2)

Nationalism

the opposite of globalization

1. Transportation

2. Information technologies

What are the factors that led to the beginning of globalization? (2)

Regional Economic Intergration

REI

the reduction of trade restrictions

the trend towards regional economic integration is the trend towards

General Agreements on Tariffs and Trades

GATT

World Trade Organization

WTO

1. Allows the company to expand its markets and increase its sales and profits

2. Higher level of risks (safety and money exchange)

What is the company perspective on globalization? (2)

A country being friendly to foreign direct investments will accelerate its rate of economic development

What is the host country (economic) perspective of globalization? (1)

1. Global outsourcing

2. Importing, exporting, and countertrading

3. Licensing and franchising

4. Joint ventures

5. Wholly owned subsidiaries

What are the methods of involvement in international business? (5)

Outsourcing

using suppliers outside the company to provide goods and services

Global outsourcing (offshoring)

using suppliers outside the United States to provide labor, goods, or services

Importing

when a company buys goods outside the country and resells them domestically

Exporting

a company produces goods domestically and sells them outside the country

Countertrading

bartering of goods for goods

Licensing (manufacturing companies)

a company allows a foreign company to pay it a fee to make or distribute the first company's product or services

Franchising (retail companies)

a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.

Wholly owned subsidiary

a foreign subsidiary that is totally owned and controlled by an organization

Greenfield venture

a foreign subsidiary that the owning corporation has built from scratch

because of different external business environment forces

Why do companies expand to become international?

1. Apply the domestic system as is (Mickey's appearance is left as is in Japan)

2. Discard and reformulate the domestic system (Mickey bows to children in Japan instead of hugging them)

3. Adapt the domestic system (in Japan, a hamburger patty will be smaller with hotter spices and served with rice instead of fries)

How do business expand to become international? (3)

1. Language

2. Interpersonal space

3. Communication

4. Time orientation

5. Religion

6. Law and political stability

What are the external business forces in other cultures? (6)

Monochromatic time

a preference for doin one thing at a time

Polychromatic time

a preference for doing more than one thing at a time

Expropriation

a government's seizure of a domestic or foreign company's assets

1. FTA (free trade area) - NAFTA

2. CU (customs union)

3. CM (common market)

4. EU (economic union) - European Union

5. PU (political union) - USA

What are the levels of regional economic integration? (5)

to reduce and abolish internal trade barriers

What is the goal of a free trade area? (1)

1. to reduce and abolish internal trade barriers

2. uniform external trade barriers (for non-members)

3. facilitate the flow of employment and capital

4. harmonize all policies to administer economies

What are the goals of an economic union? (4)

the WTO was formed after it absorbed GATT

What is the relation between the WTO and GATT?

1. IMF (International Monetary Fund)

2. World Bank

What are some other organizations that reduce trade barriers? (2)

International Monetary Fund

ensures a standard, well working monetary system

International Monetary Fund

IMF

Diversity

the degree of difference among the members of a work group in terms of personality, internal dimensions, external dimensions, and organizational dimensions

1. Personality

2. Internal dimensions (primary)

3. External dimensions (secondary)

4. Organizational dimensions

What are the types of diversity? (4)

Personality

at the center of the diversity wheel

personality is defined as the stable physical and mental characteristics responsible for a person's identity.

Internal dimensions (primary)

at the second level of the diversity wheel

it is those human differences that exert power and have a sustained effect throughout our lives

1. Gender

2. Race

3. Ethnicity

4. Race

5. Sexual orientation

6. Physical abilitites

What are the internal dimensions (primary) of a person? (6)

External dimensions (secondary)

at the third level of the diversity wheel

it includes elements of choice

they consist of the personal characteristics that people acquire, discard, or modify throughout their lives

1. Educational background

2. Marital status

3. Parental status

4. Religion

5. Income

6. Geographic location

7. Work experience

8. Recreational habits

9. Appearance

10. Personal habits

What are the external dimensions (secondary) of a person? (10)

Organizational dimensions

at the last level of the diversity wheel

1. Management status

2. Union affiliation

3. Work location

4. Seniority

5. Work content

6. Division or department

What are the organizational dimensions of a person? (6)

1. Age: more older people in the workforce

2. Gender: more women working

3. Race and ethnicity: more people of color in the workforce

4. Sexual orientation: LGBTQ people become more visible

5. People with differing physical and mental abilities

6. Educational levels: mismatches between education and workforce needs

What are the trends in work-force diversity? (6)

Glass ceiling

the metaphor for an invisible barrier preventing women and minorities from being promotes to top executive jobs

Tokenism

the practice of doing something symbolic to prevent criticism and give the appearance that people are being treated fairly

Transgender

a term for people whose sense of their gender differs from what is expected based on the sex characteristics with which they are born

Americans with Disabilities Act (ADA)

prohibited discrimination against people with disability and requires organizations to reasonably accommodate and individual's disabilities

Underemployed

working at jobs that require less education than a college graduate has

1. Stereotypes and prejudices

2. Fear of discrimination against majority group members

3. Resistance to diversity program priorities

4. A negative diversity climate

5. Lack of support for family demands

6. A hostile work environment for diverse employees

What are the barriers to diversity? (6)

Ethnocentrism

the belief that your native country, culture, language, abilities, or behavior is superior to those of another culture

Diversity climate

represents employees' perceptions about the extent to which an organization supports diversity

Psychological safety

reflects the extent to which people feel free to express their ideas and beliefs without fear of negative consequences

1. Power in diversity

2. Ethnocentricity - get rid of it

3. Refit

What is included in diversity training? (3)

1. Recognize

2. Respect

3. Refit

What are the 3 R's? (3)

Problem

a difficulty that inhibits the achievement of goals

Decision

a choice made from among available alternatives

Problem-solving and decision-making

defining the problem, evaluating decisions, and deciding which decision to implement

Creative

What type of process is decision making? (1)

Output

a decision

Maximization

the absolute best decision

Optimization

the relative best decision

Satisficing

a good enough decision

1. Knowledge

2. Information

3. Assumptions

4. Experiences

5. Intuition

6. Ethics and social responsibility

What are the types of inputs? (6)

Certainty

the decision-maker has complete knowledge of the outcomes of each alternative with definite certainty

Risk

the decision-maker can produce a reasonable probability estimate of the outcome of every alternative

Lower management will be the most certain

Upper management will be the least certain

Who will be the most certain when decision-making, who will be the least?

Value orientation

the extent to which a person focuses on either task and technical concerns or people and social concerns when making decision making

1. Directive

2. Analytical

3. Conceptual

4. Behavioral

What are the decision-making styles? (4)

Directive style

action-oriented decision makers who focus on facts - people with this style show a low tolerance for ambiguity and are oriented toward task and technical concerns in decision making

Analytical style

careful decision makers who like lots of information and alternative choices - people with this style have a much higher tolerance for ambiguity and respond well to new or uncertain situations

Conceptual style

decision makers who rely on intuition and have long-term perspective - people with this style have a high tolerance for ambiguity and tend to focus on the people or social aspects of a work situation

Behavioral style

the most people-oriented decision makers - people with this style and the most people-oriented of the four styles

Risk propensity

the extent to which a person is comfortable with higher degrees of risk

Cognitive dissonance

the extent to which a person experiences mental discomfort in the course of making important decisions

Time pressures

mistakes caused by quick decision making

Social realities

mistakes caused by some social pressure

Availability bais

the use of information readily available from memory to make judgements

Representative bias

the tendency to generalize from a small sample or a single event

Confirmation bias

occurs when people seek information to support their point of view and discount data that does no support it

Sunk-cost bias

occurs when managers add up all the money that they or others have already spent on a project and conclude it is too costly to simply abandon it, even when information exists supporting a change in course

Anchoring and adjustment bias

the tendency to make decisions based on an inttitial figure

Overconfidence bias

the bias in which people's subjective confidence in their decision making is greater than their objective accuracy

Hindsight bias

the tendency of people to view events as more predictable than they really are; even though in fact it really was not

Framing bias

the tendency of decision makers to be influenced by the way a situation or problem is presented to them

Escalation of commitment bias

whereby decision makers increase their commitment to a project despite negative information on it

Categorical thinking bias

the tendency of decision makers to classify people or information based on observed or inferred characteristics

1. Feasible

2. Satisficing

3. Affordable

What does FSA stand for? (3)

Feasible

doable

Affordable

if the solution goes wrong will you still be in business

1. Strategic plan

2. Implementation

3. Control

What are the stages of strategic planning in order? (3)