CH 9 Flashcards
The process of monitoring and correcting a firm’s strategy and performance
Strategic Control
A sequential method of organizational control in which
1) strategies are formulated and top management sets goals
2) Strategies are implemented
3) Performance is measured against the predetermined goal set
Traditional Approach to Strategic Control
A method of organizational control in which a firm influences the actions of employees through culture, rewards, and boundaries
Behavioral control
A method of organizational control in which a firm gathers and analyzes information from the internal and external environment
Informational Control
Q. Top managers at ABC company meet every Friday to review daily operational reports and YTD data. This is an example of:
Strategy Formulation
A system of shared values and beliefs that shape the company’s people, organizational structures, and control systems to produce behavioral norms
Organizational Culture
Policies that specify who gets rewarded and why
Reward System
Rules that specify behaviors that are acceptable and unacceptable
Boundaries and Constraint
Q. Rules and regulations, rather than culture or rewards, would probably be used for which type of company?
Manufacturing
The relationship among various participants in determining the direction and performance of corporations
Corporate Governance
A mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party
Corporation
A theory of the relationship between principals and their agents, with emphasis on the problems of conflicting goals and different atittudes
Agency Theory
A group that has a fiduciary duty to ensure that the company is run efficiently with long term interests in mind
Board of Directors
Actions by large shareholders to protect their interests when they feel that managerial actions of a corporation converge from shareholder value maximization
Shareholder Activism
Methods that ensure that management actions lead to shareholder value and do not harm other stakeholder groups
External Governance Control Mechanisms
An external control mechanism in which shareholders dissatisfied with the firm’s management sells their shares
Market for Corporate Control
The risk to management of the firm being acquired by a hostile raider
Takeover Constraint
Conflicts between two classes of principals
Principal - Principal Conflict
Activities that enrich the controlling shareholders at the expense of the minority shareholders
Expropriation of Minority Shareholders
A set of firms that are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action
Business Groups
