MGMT 320 - Alfred Toma Exam 2

What are the two concepts of power in the world?

geo-politics and geoeconomics

what is geo-politics?

military is the main source of power, it is maintained by the economy

what is geoeconomics?

economy is the main source of power, it is maintained by the military which protects economic interests

Which gives better results, geo-politics or geoeconomics?

geo-economics gives much better results. geo-politics is short lived b/c depends on economy.

International business is...

complex. what you do in your home market is most likely different than what you would need to do in international market

what is the definition of international business?

conduct of business activities across national borders, in foreign markets

availability bias

the use of

what are the international business activies?

1. exports of products

2. imports of products

3. investments

- direct investment

- portfolio investment

what is a direct investment?

foreign company buys foreign asset in which they will directly be involved in management

what is a portfolio investment?

strictly want dividends not involved in management

what is the difference between a direct investment and a portfolio investment?

direct is directly involved in mgmt while portfolio is not

what is business globalization?

newer term. modern business and management is advised to evaluate foreign business as an opportunity for 1. customers and 2. resources

what are the factors of business globalization?

1. technological advances in transportation and IT

2. Trends towards Regional Economic Integration

3. Trend towards Reduction on Trade Barriers, tariffs and quotas.

GATT

General Agreement on Tariffs and Trade; international trade organization that encourages free trade by lowering tariffs and other trade restrictions. run by the WTO

How does trade flow?

through the path of trade barriers, least resistance

What are the benefits of business globalization from the company's perspective?

when conducted successfully, enables companies to expand markets and increase sales and profits, but at GREAT RISK. (an example of risk would be change in worth of dollar to peso currency)

What are the benefits of business globalization from the country's perspective?

FDI (foreign direct investment). to attract the FDI, countries must make themselves safe and friendly, so FDI will enter and increase economic development. (the best example is China, was poor 50 years ago, now has more GDP than US b/c they made themselves friendly and hospitable)

What are the drawbacks of business globalization?

job losses, potential threats to info security because data must be shared, possible loss of control over quality and standards, and risk of hidden or unanticipated costs

What are the different applications of business systems when going from your home market to a foreign market?

1. Apply as is. (minor changes)

2. discard and reformulate new

3. adapt (serious changes)

what mentality should management have when going into a foreign market?

geocentric: accepts differences and similarities between home and foreign practices, using whatever techniques are most effective

not polycentric or ethnocentric

NAFTA (North American Free Trade Agreement)

was a trading bloc consisting of the US, Canada, and Mexico to eliminate 99% of the tariffs and quotas among these countries, allowing for freer flow of goods, services, and capital in North America.

geocentric

accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective.

what is a tariff?

trade barrier in the form of a customs duty, or tax, levied mainly on imports

What is an import quota?

a trade barrier in the form of a limit on the numbers of a product that can be imported

what is dumping?

practice of a foreign company's exporting products abroad at a lower price than the price of the home market--or even below the costs of production--in order to drive down the price of the domestic product

What is a sanction?

trade prohibition on certain types of products, services, or technology to another country for specific reasons

What is an embargo?

a complete ban or prohibition of trade of one country with another

What is the EU (European Union)?

consists of 27 trading partners in Europe.

1. reduce & abolish internal trade barriers

2. adopt uniform external trade barriers

3. facilitate flow of labor & capital

4. harmonize policies and procedures

What is G-7?

Top democracy countries.

US, GB, Germany, France, Canada, Italy, Japan. under leadership of the US "west block"

What is BRICS?

Deep south, brazil, russia, india, china, South America

What is outsourcing? give an example

using suppliers outside the company to provide goods or services (airlines farm out a lot of aircraft maintenance to other companies)

what is global outsourcing? give example

using suppliers outside the US to provide labor, goods, or services. could be when foreign supplier has resources not available in the US, i.e. italian marble

What is importing? give example

a company buys goods outside the country and resells them domestically. i.e. LG televisions are made in south Korea

What is exporting? give example

company produces goods domestically and sells them outside the country. China is biggest in the world for this.

what is countertrading? give example.

bartering goods for goods. some goods become more valuable than the currency

what is licensing? give example

a company allows a foreign company to pay it a fee to make or distribute the first company's product or service. (LEGO has these agreements with characters from popular movies to create LEGO sets)

what is franchising? give example

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. i.e. Burger King, Pizza Hut

what is a joint venture? give example

also known as a strategic alliance with foreign company to share the risks and rewards of starting a new enterprise together in a foreign country. (American Airlines and Qantas for new routes to foreign coutnries)

what is a wholly owned subsidiary? give example

foreign subsidiary that is totally owned and controlled by an organization. (Mastercard purchased Nets, a Denmark-based electronic payments platform)

what is a greenfield venture?

a foreign subsidiary that the owning organization has built from scratch

what is the FTA?

free trade area, reduces and abolishes internal trade barriers (tariffs and quotas)

what is diversity?

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

what is diversity management?

the process of getting a heterogenous work group to perform as an integrated work team to its maximum potential in an equitable work environment

What are the three must conditions for a diversity training program to succeed?

1. Power in Diversity

2. Ethnocentricity: GET RID OF IT

3. 3 R's: Practice it:

- Recognize

- Respect

- Refit: altering or adapting organizational procedures to fir a diverse workforce

what are internal dimensions of diversity?

human differences that exert a powerful, sustained effect throughout every stage of our lives: gender, age ethnicity, race, sexual orientation, and physical abilities

what are external dimensions of diversity?

include an element of choice; consist of personal characteristics that people acquire, discard, or modify throughout their lives: education, marital status, parental status, religion, income, location, work experience, recreational habits, appearance, and personal habits

What are the trends in workplace diversity?

more older people in workplace, more women working, more people of color working, LGBTQ ppl more visible, ppl w/ differing physical mental abilities

gender trend in the workforce diversity

women: want to be seen as equal contributor, and want men to understand family/work/life dynamic

men: want to be seen as a coworker not a harasser by women

age trend in workforce diversity

younger & older: each must understand what is expected by the other. both must show respect.

Race/ethnicity in workforce diversity

POC: want to be seen as an equal contributor

white: want their ethnicity to be acknowledged

sexual orientation in workforce diversity

LGBTQ: want to be seen as human being not sex-being, want people to understand that their physical and mental abilities differ and that they face challenges

physical/mental abilities in workforce diversity

P/M abilities: want others to think in terms of what they can don, not what they cannot do.

What are the barriers in Diversity?

1. Stereotypes and prejudices,

2. fear of discrimination against majority groups,

3. resistance to diversity program priorities,

4. a negative diversity climate,

5. lack of support for family demands

6. hostile work environment for diverse employees

ethnocentrism

the belief that your native country, culture, language, abilities, or behavior is superiors 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

what is a problem?

negative or positive in nature situation at work that requires managerial interference to resolve

What are the steps to the decision making process?

1. recognize and define the problem

2. set decision objective and criteria

3. develop and evaluate alternatives

4. make a decision

5. implement, evaluate, and control

What is a decision?

Choice among alternatives that could solve the problem

What are the inputs for Rational Problem solving and decision making process "bounded rationality"?

knowledge,

data/info,

experiences,

intuition,

assumption,

ethics and social responsibility

what are the five external factors on the rational problem solving and decision making process?

1. special characteristics of business problems

2. behavioral factors influencing decision-making

3. factors leading to "bounded rationality"

4. rational decision-making process

5. QM tools

What are the special characteristics of business problems?

lack of structure (do not know all factors at play & cannot quantify them all), decision-making under conditions of risk and un-certainty

What are the behavioral factors influencing decision-making?

values, personality: decision-making style, risk propensity (risk tolerance), dissonance potential (mental discomfort)

what are the factors leading to "bounded rationality"?

time pressures, social realities, psychological biases

analytical

high tolerance for ambiguity, and is task and technical oriented

conceptual

high tolerance for ambiguity, and is people and social oriented

directive

low tolerance for ambiguity and is task and technical oriented

behavioral

low tolerance for ambiguity, and is people and social concern oriented

what is tolerance for ambiguity?

the extent to which a person has a high need for structure or control in his or her life.

What are the decision making biases?

the availability bias: the use of information readily available from memory to make judgements

representativeness 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 support it

sunk-cost bias: occurs when managers add up all the money they or others have already spent on a project and conclude it is too costly to simply abandon it, even when information

anchoring and adjustment bias: the tendency to make decisions based on an initial 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

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 about it

categorical thinking bias: the tendency of decision makers to classify people or information based on observed or inferred characteristics.

Must and Want Criteria

have to meet "must criteria" to be analyzed as a "want criteria". used for important decisions

What are the advantages of group decision making?

greater pool of knowledge, different perspectives, intellectual stimulation, better understanding of decision rationale, deeper commitment to the decision

what are the disadvantages of group decision making?

few people dominate or intimidate,

groupthink: friendly, tightknit team members become unable to think outside the box due to peer pressure, rationalization, and an illusion of unanimity.

, satisficing, goal displacement

what is group think?

when team members are friendly and tight-knit but unable to think "outside the box".

symptoms include:

sense of invulnerability, rationalization, dominant members, illusion of unanimity and peer pressure, "The wisdom of crowds"

what are the characteristics of group decision making?

less efficient, size affects decision quality, may be too confident, knowledge counts

what is the strategic planning and strategic management process?

strategic plan -> implementation -> control

what is the strategic thinking process?

vision

where should we be headed

/ \

SP | mission | implement and control

where are we today as a company?

What is the strategic planning process?

vision -> mission -> goals & objectives -> PLAN

what is the strategic management organizational structure/ strategic management time horizons/ what organizational level(s)?

top management = strategic management/multiple year/ corporate, business (store)

middle management = tactical management/yearly/business (sbu), operations unit (store)

first level = operational or functional management/within the year/operations unit (store)

what is a vision?

what to become over the next 5 yrs. what do you want your company to look like

what is a mission?

what do we need to do to become our vision. gives purpose and direction

what is the difference between goals and objectives?

goals: long-term, broad & general

objectives: short-term, specific & detailed

What is the SMART model?

specific, measurable, achievable, results oriented, time specific

what is a plan?

documents of different types that outline in detail how goals/objectives are to be achieved.

strategic plans are used in what organizational level(s)?

corporate, business (sbu)

operational plans are used in what organizational level(s)?

strategy

overall game plan

tactics

specifics to implement the strategy

operations

detailed implemently doing of tactics

SBU Strategic Business Unit

a division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives

what is the difference between related and unrelated diversification?

related = in the same industry

unrelated = not in the same industry

what is market penetration?

current market with current products

what is market development?

current products to new market

what is product development?

new product, current market

what is diversification market?

new market, new product

What is a Star SBU?

high market growth rate, high market share

what is a cash cow?

low market growth rate, high market share

what is a dog?

low market growth rate, low market share