Exam 2 Flashcards
Based on terms in Exam 2 study guide 1-34 = Chapter 5, 35-51 = Chapter 7, 52-72 = Chapter 11, 73-88 = Chapter 12 (88 cards)
1
Q
Strategy
A
the central and comprehensive set of choices a firm makes to carry out its core competencies to achieve its goals
2
Q
What is strategy?
A
-“main thing” a firm is trying to do and how it goes about doing it
-what business it wants to be in
-how the firm will compete in the market
-how the firm will get customers and clients
3
Q
What are the two general strategies?
A
Differentiation
Low Cost
4
Q
Differentiation
A
providing a SUPERIOR quality product or service, but at a HIGHER price
5
Q
Low Cost
A
providing a GOOD ENOUGH product or service, but at a LOWER price
6
Q
Focus Strategy
A
applying a differentiation or low-cost strategy to a narrow market
7
Q
Value Chain
A
all activities a firm uses to
-design
-produce
-market
-deliver
-support
its products and services
8
Q
Primary Activities
A
creation, marketing, and selling of products and services
9
Q
Support Activities
A
“behind the scenes” services
-accounting
-human resource management
-legal services
-technology
10
Q
Upstream
A
-research and design
-strategy
-getting raw supplies
11
Q
Downstream
A
-manufacturing of the product
-distributing the product
-service and repair of products and services
-dealing with dissatisfied customers
12
Q
Outsourcing
A
third parties performing an activity in the value chain (usually a downstream activity)
13
Q
Offshoring
A
outsourcing to a foreign country
14
Q
Who is a leading country in performing outsourcing activities?
A
Philippines
15
Q
Distinctive Competencies
A
strengths anywhere in the value chain that allow firms to outperform rivals (quality, price, innovation, customer service)
16
Q
What are the two sources of distinctive competencies?
A
resources
capabilities
17
Q
Resources
A
something a firm has at the input stage
18
Q
Examples of Resources
A
-buildings
-land
-equipment
-intellectual property
-capital
-employees
19
Q
Capabilities
A
ability a firm has to use its resources wisely and effectively
20
Q
Sustainable strategies
A
strategies not easily neutralized by competitors
21
Q
Resources and capabilities can be:
A
-valuable
-rare
-difficult to imitate
-non-substitutable
22
Q
Firms can either use
A
offensive strategies
defensive strategies
23
Q
Offensive Strategies
A
-aggressive
-directly attract rivals to gain market share
24
Q
Defensive Strategies
A
-respond to competitors
-beat back competitors
25
Diversification
a way to spread risks by owning multiple businesses or offering multiple product lines
26
Related Diversification
start or acquire businesses very similar to core business
27
Unrelated Diversification
start or acquire businesses very different from core business
28
Strategy Formulation
process by which managers select which strategy to pursue
29
Tools to help with strategy formulation
-Porter’s Five Forces Model
-Assess Key Success Factors
-SWOT Analysis
-Boston Consulting Group (BCG) Matrix
-Complete a Competitor Analysis
30
Porter’s Five Forces Model
1. competition degree among existing industry competitors
2. threat of new entrants
3. buyer bargaining power
4. supplier bargaining power
5. substitute threats
31
Key Success Factors
important characteristics of a company or its product that lead to success in an industry
-innovative technology
-quality product
-broad product line
-effective distribution channels
-quality human resources
-price advantages
-superior physical facilities
-design and research and design quality
-intellectual property
32
SWOT Analysis
Strengths - internal, distinctive capabilities, resources, skills, or advantages
Weaknesses - internal, competitive disadvantages of a firm compared to competitors
Opportunities - external, favorable conditions in the firm’s external environment
Threats - unfavorable conditions in the external environment
33
BCG Matrix
Stars
Cash Cows
Question Marks
Dogs
34
Competitor Analysis
1. identify the basic strategic intent of competitiors
2. identify generic strategies used and anticipated to be used by competitors
3. identify offensive and defensive competitive states used or to be used by competitors
4. assess the current positions of competitors
35
Small Business
defined differently around the world, the backbone of most all countries’ economies
36
Small Business Classifications
-some countries classify a small business as having less than 500 employees
-most think that small businesses have less than 100 employees
37
Small businesses employ __ in most countries.
around 50 percent of the population
38
Small Businesses make up __ in most countries.
about 50 percent of GDP
39
Two ways to take a small business global
-Small Business Stage Model
-Global Start-up or Born Global
40
Small Business Stage Model
Start domestic and then become global in incremental ways
41
Stages of the Small Business Stage Model
1. Passive Exports
(fills international orders, but not aware of their international market and is not seeking exports)
2. Export Management
(seeks exports, might partner with a third party)
3. Export Department
(resources dedicated to increasing export sales, handles exporting in-house, must find a firm to help with distribution)
4. International Sales Branch or Department
(high international demand, sets up local sales office, must transfer managers or higher locally)
5. Production and Presence Abroad
(uses licensing, joint ventures, direct investment, has employees internationally)
6. Transnational
(small size does not prevent the firm from developing a global integrated network)
42
Global Start-up or Born Global
-intentionally starts out as a multinational company
-adopt a global culture from the start
-hire employees with international experience
-start developing a minimally viable product with global customers in mind
-rely on and understand the use of technology
43
Barriers for small businesses to become global
-limited financial resources (limited access to capital)
-limited human resources (not enough people with international experience)
-do not understand foreign markets
-more domestic-oriented
-do not want to take the risk
44
Advantages for small businesses to become global
-more agile
-can respond to opportunities faster
-less bureaucratic
45
Ways for small businesses to connect with potential customers
-export management companies
-consulting firms with foreign networks
-trade shows
-Government-sponsored assistance
-direct contact
46
Strategies to enter foreign markets for any size firm (big or small)
-exporting
-licensing
-joint ventures
-direct investment
47
Exporting
selling goods and services outside of the home country, may use an export management company (EMC) or export trading company (ETC) for access to establish foreign networks
48
Licensing
agreement where the domestic country (licensor) receives royalty payments for allowing another company (licensee) to sell licensor’s products, franchises are common
49
Joint Ventures
alliance between a domestic company and a foreign company to conduct business in a foreign country
50
Direct Investment
foreign office, facilities, and manufacturing plants that are 100% owned by a domestic company
51
Issues to consider when going global
-large multinational companies rely on small businesses for some of the work needed in foreign markets
-level of entrepreneurship in the country in which small business wants to expand
-many small businesses are family-owned, which may create different dynamics (good or bad)
52
Human Resources Management
deals with the overall relationship between employees and the organization they work for, "people side" of business
53
The major goals of HRM are both
managing and developing employees
54
Basic Human Resource Functions
-recruitment
-selection
-training and development
-performance appraisals
-compensation
-labor relations
55
Equal Employment Opportunity (EEO) laws apply to:
-all employees who work in the U.S. (regardless of citizenship)
-U.S. citizens who work outside of the U.S. for an American firm
56
Equal Employment Opportunity (EEO) laws do not apply to:
-non-U.S. citizens working for an American firm in a foreign country
-U.S. citizens working for a non-American firm in a foreign country
57
Expatriate
Americans working in a foreign country
58
Home Country Nationals
Expats who come from the parent firm’s home country
59
Host Country Nationals
Local workers who come from the host country where the Multinational Company unit is located
60
Third Country Nationals
employee from neither the home nor the host country
61
Flexpatriates
employees sent on frequent, but short-term international assignments
62
Due to technology and the pandemic, work is now more “__” and less “__”
“what I do”
“place where I do it”
63
Self-initiated Expatriates
employees who independently decide to move to another country to work
64
Digital Nomads
employees who can do their work virtually or remotely and are allowed to live anywhere they choose
65
The decision to use expatriates is
-serious and expensive decisions
-must be worth the time and trouble
66
Reasons for expat failure
-individual
-family
-cultural
-organizational
67
Expatriate Key Success Factors
-technical and managerial skills
-personality traits
-relational abilities
-cross-cultural, social, and emotional intelligence
-family considerations
-language ability
68
Expat Training
-language
-food, customs, religion
-laws and politics
-geography
-practical things of daily living
-money (currency and exchange rates)
69
Expat Compensation
must be attractive enough and take in certain factors like:
-local cost of living
-exchange rates
-housing
-taxes
-benefits (health insurance)
70
Balance Sheet Approach
compensation method that takes into account PPP (purchasing power) and ensures the expat is not worse off in the foreign country
71
Financial Incentives often offered by firms
-foreign service premium
-hardship allowance
-relocation expenses
-home leave allowances
72
International Human Resource Management Orientations (Approaches)
1. ethnocentric
(HRM practices follow those of the firm's home country)
2. regiocentric and polycentric
(HRM practices follow the region or country of where the firm is doing business abroad)
3. some combination of the above
73
HRM in the local context
Multinational Companies must select and implement HRM practices that meet the national context. Countries vary widely with regard to social institutions and national culture.
74
Resources that a MNC must be aware of in the country where they do business:
-all the human and physical resources available in a country
-quality of labor
-education level of potential employees
-availability of research and development
-infrastructure
-sources of energy
75
Recruitment Methods
-online (social media, company websites)
-internal job postings
-public and private personnel agencies
-universities
-personal recommendations
76
Forms of Recruitment
-U.S. favors open forms of recruitment based on merit
-many other countries favor "in groups" such as family or political connections
77
Selection
-gather information about a candidate
-determine those to be interviewed
-interview
-employment tests\
-reference checks
-offer
78
Factors in Selection
-The U.S. focuses on past achievements such as degrees, grades, and work experience. Many Americans practice “self-presentation” during interviews.
-Many places around the world focus on personality traits such as trustworthiness, ability to work on a team, and loyalty.
79
Training and Development
-types of educational backgrounds and levels of skills vary greatly worldwide
-some countries put significant financial resources into all levels of education
-Historically, the U.S. is in the middle of industrialized countries in spending on education and typically puts little money into vocational training
-more countries (including the U.S.) are starting to put more resources towards vocational training
80
World leader in putting resources into vocational training
Germany
81
Performance Appraisals
ways to evaluate how employees are doing in their jobs
82
Performance appraisals are the basis for
-raises
-promotions
-areas for growth
-discipline
-termination
83
World view on performance appraisals
-U.S., Canada, and Australia focus on individual performance
-many countries in other parts of the world focus on team results and not just the individual
84
Compensation
-deals with wages, benefits (like health insurance and retirement), and paid time off
-must know legal requirements including minimum wage
85
U.S. Compensation
-the U.S. has the greatest difference in CEO pay versus regular worker pay than most other parts of the world
-U.S. compensation and financial incentives tend to focus more on the individual than the group
86
GINI Coefficient
a way to measure income inequality
87
Labor Unions
-strength of unions in a country impacts all HR practices
-about 11.5% of U.S. employees belong to a union
-most recent growth has come from public sector unions (last 20 years)
88
National Labor Relations Act (1935)
-gave unions legal status in the U.S.
-signed by President Franklin Roosevelt
-established the framework of collective bargaining
