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Lecture/seminar/reading content notes > Business - Lecture/seminar notes > Flashcards

Business - Lecture/seminar notes Flashcards

(From slides/readings)

1
Q

Reasons for business expansion…

-> Week 6 Seminar <-

A
  • push factors: domestic saturation and fierce domestic competition;
  • pull factors: extending product life cycle, increasing sales and profits

Tamousiuniene & Duksaite (2009) - Their opinion

Push factors - Reasons AGAINST business expansion
Pull factors - Reasons FOR business expansion

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2
Q

Things to consider for business expansion…

-> Week 6 Seminar <-

A
  • Disposable incomes
  • Exchange rates
  • Geographic proximity
  • Skills, labour and cost of production
  • Infrastructure
  • Trade bloc location
  • Government incentives
  • Ease of doing business
  • Natural resources and return on investment
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3
Q

Horizontal mergers and examples…

-> Week 6 Seminar <-

A

-

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4
Q

Examples of horizontal mergers…

A

2012: Facebook and Instagram
- both operated in the same industry (social network)
- Facebook sought to strengthen its position in the social sharing space
- acquisition of Instagram as an opportunity to grow its market share, reduce competition, and gain access to new audiences
2017: The Walt Disney Company and 21st Century Fox
- both companies produced and distributed films and television series
- each company owned 30% stake in Hulu (online streaming)

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5
Q

Issues faced by potential horizontal mergers…

-> Week 6 seminar <-

A
  • Cultural integration difficulties
  • Different management styles
  • Inability to achieve synergies
  • Might create a monopolistic market
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6
Q

Vertical Mergers (Integration)…

-> Week 6 seminar <-

A
  • A verticalmerger is one in which a company on one level of a supply chain buys a company on another.
  • An example is the merger of a firm to another whose inputs include the goods produced by the former.
  • Examples involve -> (Nov 2015) Apple buys Star Wars motion-capture company Faceshift
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7
Q

What are the issues faced in a ‘vertical’ merger?

-> Week 6 seminar <-

A
  • Cost of executing the merger
  • Reduced flexibility
  • Loss of focus
  • Clash of cultures
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8
Q

Conglomerate…

-> Week 6 seminar <-

A
  • A conglomerate is a corporation made up of different, independent businesses.
  • In a conglomerate, one company owns a controlling stake of other smaller companies that conduct business separately.
  • The parent company can cut back the risks from being in a single market by becoming a conglomerate.
    Sometimes conglomerates can become too large to be efficient, at which time they have to divest some of their businesses.
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9
Q

Example of a conglomerate…

-> Week 6 seminar <-

A
  • Berkshire Hathaway Inc
  • One of the largest conglomerates in the world
  • Formed through years of M&A’s
    Industries: utilities, retail goods, transportation, insurance, financial services
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10
Q

Process of M&A…

-> Week 6 seminar <-

A
  1. Developing strategy
  2. Identifying targets
  3. Information exchange
  4. Valuation and synergies
  5. Offer and negotiation
  6. Due diligence
  7. Purchase agreement
  8. Deal closure and integration
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11
Q

A big example of a successful merger…

-> Week 6 seminar <-

A
  • Disney & Pixar
    Benefits for Disney:
  • Better animation and technical things in department
  • Modernise Disney with computer animated characters
    Risks:
  • Very expensive agreement at $7.4bn
  • Could dilute Disney’s earnings.
    Possible conflict of interest between Disney and Apple
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12
Q

Some reasons for mergers & acquisitions…

-> Week 6 seminar <-

A
  • Market considerations
  • Distribution economies
  • Diversification
  • Manufacturing advantages
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13
Q

Define ethics…

Week 8 seminar - MNCs, Business Ethics & 
Corporate Social Responsibility (CSR)

A

Can be defined as an individual’s personal beliefs about whether a decision, behaviour, or action is right or wrong

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14
Q

Define business ethics…

Week 8 seminar - MNCs, Business Ethics & 
Corporate Social Responsibility (CSR)

A

The capacity to consider values in the business decision making process -> and how these values and decisions affect various stakeholders

(Examples involve reliability, trust, relations, behaviour,morality etc)

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15
Q

VW Primary Stakeholders…

Week 8 seminar - MNCs, Business Ethics & 
Corporate Social Responsibility (CSR)

A
  • Customers
  • Employees
  • Dealers
  • Shareholders
  • The environment

(Other stakeholders include courts and governments)

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16
Q

VW emission scandal impact…

(2015)

Week 8 seminar - MNCs, Business Ethics & *Corporate Social Responsibility (CSR)

A
  • VW lost $16.9bn
  • According to the Guardian, sales dropped by 20% in the first 3 mnths
  • According to Forbes, cost of scandal for VW could be up to $34.5bn

(VW addressed scandal late adn perhaps were reluctant to do this)

17
Q

IKEA, Loreal and ethics…

Week 8 seminar - MNCs, Business Ethics & Corporate Social Responsibility (CSR)

A
  • When IKEA relocated to KSA, they could not advertise with women, which conflicted with their ethics
  • When Loreal wanted to relocate to China, they had to test products with animals, but Loreal were against this -> For testing cosmetics

(Due to KSA law!)

18
Q

Benefits of business ethics…

Week 8 seminar - MNCs, Business Ethics & *Corporate Social Responsibility (CSR)

A
  • Improves brand reputation and competition
  • Improves adherance to organisation culture
  • Offers protection agaonst pre-empting or defending against lawsuits
19
Q

MNCs purposes and responsibilities…

Week 8 seminar - MNCs, Business Ethics & Corporate Social Responsibility (CSR)

A
  • Maximising shareholder value v Serving the broader ionterests of society
  • The Economist (2005/2008): “The CSR movement [has] won the battle of ideas… Clearly the CSR has arrived.”
  • The question now is not “Whether” but “How?” (or “How much?”)
    (Smith, 2003)
20
Q

Corporate Social Responsibility (CSR)…

(What it entails)

Week 8 seminar - MNCs, Business Ethics & Corporate Social Responsibility (CSR)

A
  • ‘The firm’s consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm.’ (Davis, 1973)
  • ‘Includes the economic, legal, ethical and philanthropic expectations placed on organisations by society at a given point in time.’ (Carroll & Buchholtz, 2009)
21
Q

CSR: Key Elements…

Week 8 seminar - MNCs, Business Ethics & Corporate Social Responsibility (CSR)

A
  • Businesses responsibilities may go beyond making profit and objectives of the like
  • They have wider responsilbilities like solving societal issues e.g. climate change
22
Q

For and against CSR views…

Week 8 seminar - MNCs, Business Ethics & Corporate Social Responsibility (CSR)

A

For:
- ‘It’s the right thing to do.’
- Focus on responsibility, obligation, accountability.
- Growing ‘conscious consumer’ & LOHAS (Lifestyles of Health and Sustainability) segments.
- Focus on cost reduction, risk management, opportunity, reputation.
Against:
- Business is an economic activity
- Managers do not have the know-how or the right to decide how to solve social and environmental issues.

23
Q

Surveillance capitalism…

Week 8 seminar - MNCs, Business Ethics & Corporate Social Responsibility (CSR)

A
  • ‘Surveillance Capitalism [commodification of personal data* for the purpose of making profits] is the manifestation of George Orwell’s prophesied ‘Memory Hole’ combined with the constant surveillance, storage and analysis of our thoughts and actions, with such minute precision, and artificial intelligence algorithmic analysis, that our future thoughts and actions can be predicted, and manipulated, for the concentration of power and wealth of the very few.’ (surveillancecapitalism.com)
24
Q

How can CSR be summarised…

( Shafiq (2011) )

(Week 8 seminar)

A
  • Obligation to society
  • Stakeholders’ involvement
  • Improving the quality of life
  • Economic development
  • Ethical business practice
  • Law abiding
25
Q

How do companies respond to social or environmental issues or demands?

(Week 8 seminar)

A
  • Reactive – denial, pass responsibility to others.
  • Defensive – doing the least required, superficial response, subterfuge.
  • Accommodative – doing what is demanded.
  • Proactive – going beyond expectations, anticipating future demand.
26
Q

What factors drive CSR in today’s market?

Week 8 seminar

A
  • Competitiveness: consumer demands, cost cutting, increased profits, differentiation.
  • Legitimacy: reputation, survival, conformity
  • Ethics: social and ecological responsibility
27
Q

Areas of Ethical and Social Responsibility Concerns for the MNC (Customers)…

Week 8 seminar

A
  • Product safety
    Should an MNC delete safety features to make a product more affordable for people in a poorer nation? (Health & Safety)
  • Fair price
    Should a sole supplier in a country take advantage of its monopoly?
  • Proper disclosure and information
    Should an MNC assume the cost of translating all its product information into another language?
28
Q

Areas of Ethical and Social Responsibility Concerns for the MNC (Stockholders)

Week 8 seminar

A
  • Fair return on investment
    -> If a product is banned because its unsafe in one country, should it be sold in countries where it is not banned to maintain profit margins?
    -> How much should CEOs be paid? Should shareholders ignore extremely generous severance packages?
  • Fair wages
    -> Should a company pay more than market wages when such wages result in people living in poverty? (What about exploitation of labour?)
  • Safe working conditions
    -> Should a company be responsible for working conditions of its suppliers?
29
Q

Areas of Ethical and Social Responsibility Concerns for the MNC (Employees)…

Week 8 seminar

A
  • Child labour
    Should an MNC use child labour if it is legal in the host country?
  • Discrimination by sex, race, colour, or creed
    Should a company assign a woman to a country where women are expected to remain separate from men in public?
  • Impact on local economies
    Should an MNC use transfer pricing and other internal accounting measures to reduce its actual tax base in a foreign country?
30
Q

Areas of Ethical and Social Responsibility Concerns for the MNC (Host Country)…

Week 8 seminar

A

Following local laws
- Should an MNC follow local laws that violate home-country laws against discrimination?
Impact on local social institutions
- Should an MNC require workers to work on religious holidays?
Environment protection
- Is an MNC obliged to control its hazardous waste to a degree higher than local laws require?
Should MNCs deplete natural resources in countries that are willing to let them do so?

31
Q
A

Lecture/seminar/reading content notes (10 decks)

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