MAN 5721 Strategy and Business Policy - Study Guid Terms

Strategic Leaders

Individuals who direct and oversee firm activities and set the firm's agenda

Imprinting

The tendency of organizations to take on the attributes of their leaders

Managerial Discretion

A manager's latitude of action, which varies by environment, organization, and person

Heterogeneous TMT

A top management team whose members have diverse backgrounds, expertise, and knowledge

Homogeneous TMT

A top management team whose members have similar backgrounds, expertise, and knowledge

Power (Leadership)

The ability to exert one's will despite resistance

CEO Duality

When a CEO also chairs the firm's board of directors

Human Capital

The knowledge and skills of a firm's workforce, treated as a resource requiring investment

Social Capital

Relationships inside and outside the firm that help it achieve its goals

Organizational Culture

The ideologies, symbols, norms, and values that guide how a firm conducts business

ASA Model

The idea that attraction, selection, and attrition of employees make a culture more cohesive over time

Internal Labor Market

Filling leadership vacancies by promoting a firm's existing managers

External Labor Market

Filling leadership vacancies by hiring managers from outside the firm

Corporate Governance

Mechanisms used to manage relationships between a firm and its stakeholders

Agency Relationship

Shareholders (principals) hire managers (agents) to make decisions on their behalf

Opportunism

Pursuing self-interest with guile or malicious intent

Ownership Concentration

When fewer entities own larger portions of a firm

Large Block Shareholders

Entities that own at least 5% of a firm, also called beneficial owners

Shareholder Activism

Owners organizing to force changes in a firm's behavior or policies

Staggered Board

A board structure that limits how many members can be replaced in a given year

Board of Directors

Agents elected by shareholders to counsel, legitimize, provide resources, and monitor the firm

Insiders (Board)

Board members who are also high-level managers of the firm

Related Outsiders

Board members who are non-employees but have relationships with the firm

Lead Director

A board member who organizes the board and convenes meetings without the CEO present

Executive Compensation

Salary, bonuses, stock, options, deferred pay, and non-monetary rewards for executives

Market for Corporate Control

The market in which organizations purchase control of undervalued corporations

Golden Parachute

Contractual severance pay guaranteed to dismissed executives

Poison Pill

A takeover defense that hurts shareholders in order to deter an acquisition

Greenmail

Using firm resources to repurchase acquired shares in order to prevent a takeover

Entrepreneurship

The identification, evaluation, and exploitation of opportunities

Entrepreneurial Opportunities

Situations where new or modified products or services can satisfy unmet needs

Invention

Creating or developing a new product, process, or service

Innovation

Creating commercial viability from an invention

Imitation

The adoption of an innovation by other firms, sometimes with slight changes

Incremental Innovation

Small changes to a firm's current product lines or service offerings

Radical Innovation

A rare, significant technological breakthrough

Entrepreneurial Orientation

A firm's autonomy, proactiveness, aggressiveness, innovativeness, and risk taking

Born Global Firms

Firms that internationalize very early, facing an added liability of foreignness

Liability of Newness

A new firm's lack of legitimacy in its market

Liability of Smallness

A new firm's resource constraints due to its size

Business Angel

An individual who invests personal money in a firm in exchange for equity

Venture Capitalist

An individual or firm that invests others' money in a firm in exchange for equity

Initial Public Offering

When a firm offers tradable shares to external market investors for the first time

Underpricing (IPO)

When an IPO's share price rises on its first day of trading

Liability of Market Newness

The tendency of newly public firms to underperform the market for a time

Organizational Structure

Specifies a firm's reporting relationships, procedures, controls, authority, and decision making

Strategic Controls

Subjective criteria focused on communication, counsel, execution, and improvement

Financial Controls

Objective criteria tied to budgets, accounting metrics, and market-based measures

Specialization (Structure)

The number and types of jobs within a firm

Centralization

The locus of decision-making authority within a firm

Formalization

The degree to which rules and work procedures are prescribed

Simple Structure

An organizational structure led directly by an owner-manager and staff

Functional Structure

A structure headed by a CEO with executives over separate functional areas

Multidivisional Structure

A structure organized into divisions that operate as separate profit centers

Cooperative M-Form

An M-Form structure that prioritizes resource sharing across related divisions

Competitive M-Form

An M-Form structure with independent divisions and little resource sharing

Geographic Area Structure

An international structure with divisions organized by country or region

Product Divisional Structure

An international structure with divisions organized by product market

Combination Structure

An international (matrix) structure organized by both geography and product

Centralized Network Structure

A network of firms coordinated by a strategic center firm

Decentralized Network Structure

A network of firms with no central authority, coordinated voluntarily

Subprime Loan

A loan to a borrower who would not qualify for a traditional loan, priced above prime rate

Adjustable Rate Mortgage

A mortgage with a low introductory rate that adjusts over time

Liar Loan

A mortgage that requires no proof of the borrower's income or assets

Glass-Steagall Act

A law separating consumer and investment banking, repealed before the 2008 crisis

Community Reinvestment Act

A law that encouraged banks to extend more loans to low-income borrowers

Moral Hazard

When incentives to behave unethically exceed the disincentives

Adverse Selection

When a type of transaction attracts the least attractive, riskiest partners

Political Ideology

Interconnected attitudes, beliefs, and values about the proper role of government

Political Polarization

Separation into groups based on political ideology, with fewer shared positions over time

Affective Polarization

In-group favoritism and out-group animosity based on ideology

Social Contract

The security individuals expect in exchange for their investments in skills and work

Political Duopoly

A two-party system in which parties are near parity in membership and resources

Hastert Rule

An informal rule that can hinder bipartisan cooperation in Congress

Firestorm (Political)

A rapid escalation of backlash that can damage a firm's strategy or performance

Friends of Angelo's

Countrywide's VIP loan program that offered discounted terms to politically connected people

Employee Value Proposition

A system of what an organization offers employees in exchange for their work

Material Offerings (EVP)

Compensation, office space, flexibility, and other tangible job elements

Growth and Development (EVP)

Opportunities for employees to acquire new skills and advance

Connection and Community (EVP)

The sense of belonging and relationships employees experience at work

Meaning and Purpose (EVP)

An organization's aspirational reason for existing

Keeper Test

A manager's test of whether they would fight to keep an employee who was thinking of leaving

Context, Not Control

A management philosophy of setting strategy and information rather than dictating actions

Highly Aligned, Loosely Coupled

A teamwork model with shared goals but minimal cross-team approval

Brilliant Jerk

A talented employee whose behavior harms teamwork; not tolerated at Netflix