intro Flashcards
what are the types of business activities
- Innovation
2.Operation
3.Marketing
4.Finance and Accounting
5.Human resource management
what are 2 levels of approach organisation’s structure and sub-systems
- Systems Approach
2.Contingency approach
What is the focus of Systems Approach
It focuses on organisation’s internal aspects, neglecting varying backgrounds.
What is the focus of Contingency approach
It focuses on organisation’s adaptation to its external environment, emphasising the impact of environmental changes on design and management style.
What are cross-boarder economic activities
Various types of economic interactions and transactions that take place between individuals, businesses, and governments across different countries. These activities involve the movement of goods, services, capital, and resources across national borders.
What is foreign direct investment and how is it connected to cross-boarder economic activities
Foreign Direct Investment (FDI) is when a company from one country makes lasting investment in a business in another country. It’s a deeper involvement than just buying and selling across borders. Cross-border economic activities can involve various transactions between countries, but they might not include this level of long-term ownership and influence. FDI is like a more serious and committed form of cross-border business engagement.
What are the 4 levels in which types of business activity are shaped in context which they operate
1.Strategical level
2.Organisational level
3.Environmental level
4.Business in context level
what are MNEs
MNEs = multinational enterprises. These are firms engaging in foreign direct investment
what are emerging economies
Countries that are in the process of becoming more advanced economically. These nations are moving from being less developed to more developed, experiencing growth and improvements
what are BRIC countries
These are Brazil, Russia, India and China - 4 largest emerging markets, housing over 80% of the world’s population but contributing only 26% to global GDP.
what is GDP
Gross Domestic product - sum of value added by resident firms operating in economy
what is GNP
Gross national product = GDP + income from non-resident sources abroad
what is GNI
Gross national income, conceptually similar to GNP
what is PPP
Purchasing Power parity - equal amount of goods and services different currencies can purchase.
what are two views that determine success and failure of firms around the world?
- Intsitution-based view
2.Resource-based view
what is institution-based view about
It is about how a firm’s international performance is shaped by various formal and informal rules (culture,norms,values) across countries, emphasising the external environment of the firm.
what is resource-based view about
It is about its unique internal resources and capabilities, concentration on the internal environment.
what does liability of outsidership mean
It is disadvantage of outsiders (foreign companies) over insiders (domestic companies), caused by lack of familiarity.
Why Globalisation is causing fear of developing countries?
It causes fear due to competition and potential cultural erosion by MNEs,issues like job losses, wage pressure, environmental concerns
Who are cosmopolitans
people who embrace cultural diversity and see professional and personal opportunities of globalisation
what are institutions
Formal and informal rules of the game
what are Institutional Frameworks
formal and informal institutions (rules) guiding individual and form behaviour.
what are some types of formal institutions
Laws, regulations
what are informal institutions
rules which are not formalised but do exist, like norms and values
what is potential of opportunistic behaviour and how it can be reduced
It means taking advantage of another person’s trust for selfish reasons. It can be reduced via institutional frameworks (formal and informal institutions)
What is institutional transition
changing of institutions over time
what are pillars
key elements that support the structure of a business
what are 3 kinds of pillars and what do they mean
- Regulatory pillar(power of government, formal institutions)
- Normative pillar (how values of other players influence behaviour of focal firms)
3.Cognitive pillar (internal assumptions of how the world works that guide individual)
what are focal firms
main companies that play a key role in an industry
what is political system
system of rules of the game on how a country in governed politically
what are types of political systems
1.Democracy
2.Authoritarianism
what is the concept of democracy
governments gain legitimacy through elections by citizens
what are variations of democracy and what is the meaning of each
- Proportional representation - all votes are added up and seats are allocated proportionally
- Direct - voters directly choose president with executive power
- Indirect - voters elect their representatives in parliament
what is the concept of Authoritarianism
concentrated power in one person or a small elite
what are 3 reasons why political systems influence stability of rules and the potential for business to face risks.
- They determine who sets the rules
- Determine how and where companies may influence legislative processes (the ways governments create and decide on new rules) through lobbying (mostly legal) or corruption (mostly illegal).
3.Influence how frequently rules of game are changing, a source of political risk (political changes that negatively impact firms).
what are 4 types of economic systems
- Pure market economy
- Pure commanded economy
- Liberal market economy (LME)
- Coordinated market economy (CME)
what does Pure market economy mean
‘invisible hand’ of market forces, with private ownership of production, freedom in contracts, limited government intervention, as seen in USA and Canada.
what does Pure commanded economy mean
government owns and controls all factors of production and plans supply, demand, pricing.
what does Liberal market economy (LME) mean
same as pure market economy but has a bit more of government control.
what does Coordinated market economy (CME) mean
nice coworking between businesses, workers, government, businesses engaged in employee education. it’s like everyone in the team is playing their part, working together, and planning for the future (France, Germany).
what is civil law
legal tradition that uses comprehensive statutes to form legal judgments. It is written in books of law.
what is Common law
originated in England, legal tradition that is shaped by precedents from previous judicial decisions.
what is Case law
law that has been created by precedents of cases in court.
what are property rights
legal right to use economic property and get income from it.
what are intellectual property rights
ownership of intellectual property (patents, copyrights, trademarks).
what is corporate governance
set of rules that guides how a company is run and how decisions are made
what does convergence mean and what it suggests
Convergence means different things coming together or becoming similar. It suggests that countries and firms are becoming more alike economically, politically, and culturally due to globalisation.
what is limitation of convergence
transfer of effective practices may be limited by cultural diversity.
what are implications of convergence for managers
- Businesses operate worldwide, saving costs through large-scale production.
2.Managers and employees can work in different parts of the company globally.
3 Ideas and methods can be shared and applied across different cultural settings.
what is diversity
different historical developments or path dependency, leading to variations in national cultures
Institutional approach
examines diversity as a product of economic and political systems.
what is culture
all socially transmitted human activity, like norms, values, beliefs, influencing behaviour and institutions. In a business context, knowledge about different cultures fosters cross-border trade, investment, exchange of cultural ideas.
what are 3 levels of culture and what do they include
- Visible culture (artefacts, goods, institutions)
- Deeper level culture (beliefs of right and bad)
- Deepest level culture (basic assumptions that allow members of that culture to solve problems without thought)
in which 3 ways does culture integrate with business
- Socialisation (influences people’s behaviour in social settings, including work)
- Organisation (Businesses, like societies, have their own specific cultures that are transmitted to their members. This means that companies develop a unique set of values, beliefs, and practices that shape the work environment)
- Cultural analysis (Companies use cultural analysis to tailor their products, services, and strategies to align with the cultural preferences of their target audience)
are culture and nationality the same thing
No. Some countries contain two or more cultural groups.
what are 6 levels where cultural differences can be seen by Geert Hofstede
- Broad cultural differences between countries
2.Regional differences
3.Cultural differences between genders
4.Differences between generations
5.Differences in social class
6.Different organisational cultures
what are High context cultures
societies where people rely on non-verbal hints, shared experiences, and contextual factors to convey and interpret messages. Agreements in these cultures are made at a slow pace through negotiation and are maintained with trust. (Latin America, Japan)
what are low context cultures
cultures in which the message of communication is the most important, carries clear meaning. Negotiations are quicker, maintained with legally binding contracts.
what are Hofstede’s 6 dimensions of cultural variables
- Power distance
- Idividualism vs collectivism
- Uncertainty avoidance
- Masculinity vs Femininity
- Long vs short term orientation
- Indulgence vs restraint
what is Power distance
extent to which members of a society accept that power is distributed unequally. In high power distance cultures there is greater dependence on bosses.
what is individualism vs collectivism
high scores on this variable - individualistic society (US, UK); low scores - collectivistic society (Mexico, India).
what is uncertainty avoidance
extent to which person is comfortable with uncertainty. High uncertainty avoidance - individual is risk-averse (Japan, Switzerland)
what is masculinity vs femininity
masculine societies focus on achievement, assertiveness, different gender roles (Japan, USA, Germany). Feminine societies focus on quality of life, care for others, equality between sexes (Scandinavia, Holland).
what is Long vs short term orientation
long term oriented cultures focus on future, value perseverance and saving (Japan, Singapore, Hong Kong)
what is indulgence vs restraint
highly restrained cultures are East Asia, Eastern Europe, Muslim countries, since they focus on repression of individual desires.
what are 7 culture dimensions by Fons Trompeanaars
1.Universalism (rules,laws) vs particularism (flexible with rules)
2.Specific(separates personal work&life) vs diffuse cultures (overlaps)
3.Achievement(values status) vs ascription cultures (values gender, age)
4.Individualism vs communitarianism (group goals)
5.Affective (open emotions) vs neutral culture (calm&restrait)
6.Time as sequence (punctuality) vs time as synchronisation (flexibility)
7.Inner-directed (personal beliefs) vs outer directed (societal expectations)
what are 9 dimensions of culture that operate societies and organisational levels (GLOBE):
1.Power distance
2.Uncertainty avoidance
3.Collectivism (collective action, collective rewards)
4.In-group collectivism (focus on valuing being members of a group)
5.Gender egalitarianism - extent of equal treatment between genders
6.Assertiveness and competitive attitude
7.Future orientation(consideration of future actions)
8.Performance orientation, (consideration of results and outcomes)
9.Humane orientation (altruism)
what 2 dimensions of cultural variation are identified by World Values Survey
1.Traditional (religion & traditional family value) vs secular rational (less attention to these ones)
2.Survival (traditional gender roles) vs self-expressions (individual freedom)
what are the difficulties in using culture as a variable
-When culture is used as a variable, its defined in generalised terms
-Attempt to link culture to economic performance is often highly selective and ignores contradictory evidence
-Use of culture as a variable may treat the phenomenon as an isolated example
-Cultural comparisons are often made from the perspective of one culture only, the culture of the researcher
-Our bias towards culture may influence the analysis
-Cultures change over time, so analyses that used culture as variable may be dated.
what are 2 components of organisational goals
- Mission statement
- Detailed objectives
what is organisational structure
grouping of activity and people to effectively achieve goals, with the vision describing the organisation’s future aspirations.
what are multidivisional companies
companies with number of business units which each focus on different types of business activity, each producing their own profit.
what are 5 types of organisational structure of multidivisional companies
- Functional structure
- Multidivisional structure
- Holding company structure
- Project teams
- Matrix organisation
what is functional structure, pros and cons of it
What it is: Jobs are grouped by function (like marketing or finance).
Good for: Clear roles and responsibilities.
Not so good for: Coordination issues and may not focus on customers.
what is multidivisional structure, pros and cons of it
Multidivisional Structure:
What it is: Organized around divisions or business units, often based on products or geographic regions.
Good for: Encouraging entrepreneurship.
Not so good for: Accounting can be tricky, and control might get complicated.
what is Holding Company structure, pros and cons of it
What it is: company exists to own and control other companies (does not produce goods or services)
Good for: protects its subsidiary companies
Not so good for: Similar challenges as multidivisional structures.
what are Project teams, pros and cons of them
What it is: Teams for specific projects, dealing directly with customers.
Good for: Adapting to fast changes.
Not so good for: Can be costly, and uncertainty after projects end.
what is matrix organisation, pros and cons of it
What it is: Mixes functional and project structures.
Good for: Flexibility and direct customer interaction.
Not so good for: Can be a bit messy with duplication and scheduling issues.
what is downsizing
breaking down of large organisations into smaller units with a smaller number of employees.
what is delayering
when the number of levels of management is reduced.
what are 7 types of firm’s flexibility
- Numerical flexibility
- Functional flexibility
- Financial flexibility
- Temporal flexibility
- Geographical flexibility
- Organisational flexibility
- Cognitive flexibility
what is Numerical flexibility
ability of an organisation to meet changes in demand by rapidly changing the number of employees
what is Functional flexibility
when employees are flexible enough to perform a range of jobs and switch between them as needed
what is Financial flexibility
having the ability to adjust money plans based on what’s happening. It’s about having different money tools and plans so that you can make smart investments, and stay strong even when things get tough.
what is Temporal flexibility
ability to adapt to change in timetable of work and the introduction of shift work.
what is Geographical flexibility
incorporates transnational teams and more mobile workers.
what is Organisational flexibility
extent to which the structure and systems can change
what is Cognitive flexibility
changing the mindset of the workplace
what are 4 types of ownership
- Sole proprietorship
- Partnership
- Limited companies
- Public sector organisations
what is sole proprietorship; pros and cons of it
What it is: One person owns and runs the business.
Pros: Simple, full control.
Cons: Limited resources, personal liability.
what is Partnership
What it is: Two or more people own and manage the business.
Pros: More resources, shared responsibility.
Cons: Shared profits, potential conflicts.
what are Limited companies
What it is: Business is a separate legal entity.
Pros: Limited liability, more resources.
Cons: Complex setup, more regulations.
what are Public Sector Organisations
What it is: Owned by the government.
Pros: Public service focus.
Cons: Bureaucracy, less profit-driven.
what is Agency problem and why it happens
What it is: A challenge when the owners of a company (shareholders) and the managers (those who run the company) have different interests.
Why it happens: Because the owners and managers are not the same people, and they might not always want the same things for the company.
what does Separation of Ownership and Control mean and why it matters
What it means: The people who own the company (shareholders) are not always the same people who run it (managers).
Why it matters: This separation can lead to conflicts of interest because the owners might want one thing (like more profit), and the managers might want another (like job security or perks).
what does Mutual Commitment and Interests mean and why it matters
What it means: It’s hard to make sure that both owners and managers are committed to the same goals and have the same interests.
Why it matters: If they’re not aligned, it can affect how well the company does.
What is the way to solve Agency problem
Share-based payments can reduce Agency problem
What it is: Giving managers a share in the company (shares or stock options) as part of their pay.
Why it helps: This makes managers part-owners, so their interests are more in line with the owners. If the company does well, both owners and managers benefit.
what are types of public owned institution
- Industries fully owned by the state
- State Majority shareholder companies
- Services to the population
- Government Departments
what are Industries fully owned by the state + example
What it is: Businesses completely owned and controlled by the government.
Example: National railways or postal services owned by the government.
What are State Majority shareholder companies + example
What it is: Businesses where the government owns more than half of the shares, so it has control.
Example: Government holding a majority of shares in a national airline.
What are Services to the population + example
What it is: Government-run services for the public, like health and education.
Example: Public hospitals, state-run schools.
What are government departments + example
What it is: different sections that work for government at national and local levels.
Example: police, hospitals.
What are problems with public sector organisation
- Goals lack definition and often conflict
- The extent to which the public sector’s goal is to operate in the public interest is questionable
3.Decision-making is slow and complex - Rigid procedures in the public sector reduce manager’s autonomy and reduce motivation.
what is privatisation
transferring ownership and control of government-owned assets to private individuals and companies.
what are benefits of privatisation
- Increases competition, productivity growth
- Increased focus on customer care and service levels
- More flexible pay arrangements can be used which motivates staff
4.More people are given the opportunity to own shares
5.Public sector deficit for the state will reduce
what are 3 characteristics of small business
- Having small market share
- Being owner managed
- Being independent of any larger concern
what are 2 reasons for growing number of small business
-Economy is shifting from manufacturing to services, which smaller firms tend do dominate
-Development of technology and its consequently reducing price allow small businesses to function independently.
what are 3 types of small businesses
- Lifestyle firm
- Growth firm
- Family firm
what is lifestyle firm
The purpose of lifestyle firms isn’t growth, but an opportunity for individual work for themselves. (Local hairdresser)
what is growth firm
entrepreneurial business with the purpose of creating innovative products and achieving rapid growth. (Microsoft, Bill Gates)
what is Family firm
established by family members, the smallest one, but more productive and have more flexible decision making.
what are benefits of small firms for owners
They can gain wealth, local influence, and pass on the business to family.
benefits of small business for economic growth
They fill market gaps, promote innovation, and don’t threaten inflation.
benefits of small business for job creation
Small businesses create many jobs.
They contribute to a large workforce.
benefits of small business for consumers
Fill market gaps, provide specialised products, and offer a personal touch.
What is organisational culture and what it is made by
What it is: How everyone in a company thinks and acts together.
Made by: History, products, tech, strategy, employees, management, and national cultures.
What is corporate culture and what it is made by
What it is: Culture made by leaders to follow a strategy.
When strong: Clear values from leaders, shared by everyone, strengthened by rituals, networks, and heroes.
what is joint venture+example
What it is: Sharing a business with companies from different places.
Example: Working together to run a factory or project abroad.
what is Foreign Portfolio Investment (FPI) + example
What it is: Investing in foreign stocks and bonds without managing them directly.
Example: Buying shares in companies in another country.
what is Horizontal FDI + example
What it is: Doing the same kind of business in a different country.
Example: Opening a restaurant in another country that’s similar to the ones in your home country.
what is Vertical FDI + example
What it is: when a company from one country gets involved in different stages of making a product, from start to finish. (stages take place in foreign countries)
Example: If the company owns not only the stores where they sell toys (retail), but also the factories where the toys are made (production), and even the places where they get the materials to make the toys (raw materials) (these all are in different countries)
what is FDI flow?
the amount of foreign direct investments moving in a given period in a certain direction
FDI can be a)… (moving into country) or b)… (moving out of country)
a) inbound
b) outbound
what is FDI stock
total value of foreign-owned firms operating in a country
what are 3 advantages of investing abroad directly? (OLI)
- Ownership
- Location
- Internalisation
what is the advantage of ownership in OLI paradigm
Bringing special things from your company to another country for a competitive edge.
Example: Using unique skills or resources to do well in a foreign market.
what is the advantage of Location in Old paradigm
Being in the right place for good business, like a special market or resource-rich area. Agglomeration is when many businesses decide to set up shop in the same area. This can be good for them because they can share resources, find skilled workers easily, and reach customers more conveniently.
what is the advantage of Internalisation
advantages of organising activities within a multinational firm rather than using a market transaction. (market transactions bring transaction costs).
what are knowledge spillovers
knowledge of one firm transferred to another one.
what are pros of FDI
- Learning new things and technology
- consumers get new products and lower prices
- suppliers get new orders
4.new job and training opportunity for workers - governments will get extra taxes
what are cons of FDI
- face more competition and might loose out
- traditional local producers might disappear
- suppliers only benefit if the multinational company buys locally
- governments have to give subsidies for multinational companies to set up
what is the purpose of Integration-Responsiveness Framework
purpose: Helps decide how a multinational company integrates itself in different countries.
what is the balancing art of Integration-Responsiveness Framework
Balancing Act: Deals with the tension between integrating global operations and responding to local needs.
what are 4 strategies of Integration-Responsiveness
- Home Replication strategy
- Localisation strategy
- Global Standardisation Strategy
4.Transnational Strategy
tell about Home Replication strategy
What It Does: Copies what works well in the home country to other places.
Challenge: Might miss what’s unique or preferred in local markets.
tell about localisation strategy
Building on Home Strengths: Adapts home strategies to local market conditions.
Example: McDonald’s offers different menus in various countries.
tell about Global Standardisation Strategy
Aiming for Worldwide Uniformity: Tries to have consistent products/services globally for cost benefits.
Example: Coca-Cola maintaining a standardised product globally.
Downside: Might not respond well to unique local preferences.
tell about Transnational Strategy
Best of Both Worlds: Tries to be efficient globally while also adapting locally.
Example: A car company designing cars centrally but adjusting features for local markets.
Challenge: It’s tricky to balance both global efficiency and local customization.
how does knowledge generation happen and why it matters
How It Happens: People interact within a subsidiary, and the subsidiary interacts with other units in the MNE or with local organisations.
Why It Matters: Capabilities crucial for MNEs’ success are often rooted in knowledge.
what is knowledge management
Structures, processes, and systems actively developing and transferring knowledge.
what are two types of knowledge and what each of them mean
1.Explicit Knowledge: Can be written down and transferred easily (like manuals).
2.Tacit Knowledge: Requires hands-on practice, not easily codifiable.
what are communities of practice (COP)
it is where knowledge happens: Most knowledge is created when groups of people do similar tasks, called Communities of Practice (CoP).
what are 2 challenges for COP in MNEs
1.Language and Culture: COPs are trickier in MNEs with many locations, languages, and cultures.
2.Face-to-Face or Virtual: CoPs can happen face-to-face or online, making it more complex in multinational setups
what is knowledge governance and what is the challenge of it:
It’s about how big companies organise, share, and use knowledge.
Challenges: Keeping knowledge, sharing it, transferring it, and using it effectively are the key challenges.
what are challenges for knowledge in MNEs
1.Knowledge Retention: Keep knowledge even when employees leave or there’s a risk of knowledge leaking.
2.Knowledge Sharing: Ensure everyone is willing to share, and the way knowledge is shared works well.
3.Knowledge Utilisation: Make sure subsidiaries can use the knowledge effectively.
what are 2 Subsidiary Mandates
Global Mandates: Some big companies create centres with global roles, allowing subsidiaries to pursue new opportunities on their own.
Autonomy Challenge: Subsidiaries can do their own things, but it might make it hard to coordinate and benefit from being a big organisation.
what is management
Follet and Stewart see it as “getting things done through other people.” Watson relates it to organising for long-term organisational survival. Child and Watson define it as an elite team, an economic resource, an authority system, and a group of tasks serving functions.
what are sources of legitimacy for managers
Manager’s legitimacy comes from legal recognition, and various powers (position, reward, charisma, political, expertise). Employee acceptance is crucial.
what are challenges for managers
lacking leadership skills, losing power due to organisational changes, and stakeholder opposition to decisions
what are typical tasks for managers
forecasting, planning, commanding, organising, coordinating, communicating, and contracting.
what are 4 modules of management
- Rational Goal modules
- Internal Process Models
3.Bureaucracy Model (Max Weber)
4.Fayol’s Principles of Management
tell about Rational Goal module
Frederick Taylor’s scientific approach to achieve pre-established goals through efficiency, division of roles, training, financial incentives, and selecting the best candidates.
tell about Internal Process Models
Rely on rationalism and scientific methods, incorporating ideas from Weber and Fayol
tell about Bureaucracy Model (Max Weber)
Solves organisational problems through strict procedures, division of labour, formal structure, and rational methods
tell about Fayol’s Principles of Management
Introduced principles like division of work, authority, discipline, unity of command, unity of plan, subordination of individual interest, remuneration, centralization, scalar chain, order, equity, initiative, esprit de corps(team building), and stability of tenure.
tell about Human Relations modules
origins: Developed in the early 20th century, emphasising stability and personal relationships.Influencers: Mary Parker Follett stressed team-building, and Elton Mayo’s Hawthorne studies highlighted leadership, communication, and work groups.
tell about Motivation models
Evolved from human relations models, concentrating on individual achievement.
Example: Abraham Maslow’s hierarchy of needs theory.
tell about Open systems models
Acknowledges management within both external and internal contexts.
tell about Responsive Management models
Recognizes the changing modern world, suggesting adaptability and flexibility in management.
what is critique of Management Models
issues: Criticisms include Taylorism’s inhumanity, Hawthorne studies’ defective methodology, and doubts about the substance of modern theories.Debate: Some argue management science is a pseudo-science, suggesting managers gain skills through experience, not science.
what does Trait and Skills theory say
Traits: Personal characteristics define leaders (e.g., ambition, honesty).
Skills: skills include technical, conceptual, and human relations skills.
tell about Transactional Leadership
Focuses on tasks, rewards, and punishment. Effective in stable environments.
tell about Transformational Leadership
Inspires change, encourages subordinates to embrace the leader’s vision. Effective in dynamic environments.
tell about Charismatic Leadership
Leaders inspire followers with their personality
tell me about Ethical Leadership
leader guides and influences others while prioritizing ethical principles and value
tell what is strategy
determination of long-term run goals and objectives of an enterprise, adoption of courses of action and the allocation of resources necessary for carrying out these goals
what are 3 types of strategy
- Corporate strategy
- Business strategy
- Functional strategy
tell me about Corporate strategy
overarching strategy guiding all activities and the organisation as a whole. Goal is to direct and add value to the whole organisation.
tell me about Business strategy
focused on specific product and market within an organisation and can apply to a single strategic business unit (SBU)
tell me about Functional strategy
supports the corporate and business strategies by directing business activities
what does Strategic process mean
method used to form a strategy. Methodology incorporates scientific and rational analysis and more subjective and political considerations.
what are 5 approaches to form a strategy
- Rational
- Flexible
- Creative
- Behavioural
- Incremental
tell me about rational approach (contingency theory)
Logical, systematic, and analytical.
process:Involves thorough analysis, data-driven decision-making, and goal-oriented planning.
tell me about flexible approach
Adaptive, responsive to changes, and open to adjustments.
Process: Emphasises flexibility and the ability to shift in response to evolving circumstances.
tell me about creative approach
Innovative, non-conventional, and seeks novel solutions.
Process: Encourages out-of-the-box thinking, brainstorming, and idea generation.
tell me about behavioural approach
People-centric, focuses on organisational culture, and employee behaviour.
Process: Considers how individuals and groups within the organisation influence strategy.
tell me about incremental approach
Gradual, step-by-step adjustments, and continuous improvement.
Process: Involves making small, manageable changes over time to enhance efficiency.
what are 2 aspects of the environment that influence strategy
General Environment:
What It Is: The big picture that affects all businesses in an area.
Examples: How the economy is doing, the job market, and other things that impact every business.
Immediate Competitive Environment:
What It Is: The specific factors that affect each business differently.
Examples: Things that make one company stand out from another, like their unique strengths or weaknesses.
tell which 5 element does Porter’s forces model for identifying immediate competitive environment include
- Threat of new entrants
- Threat of substitute products
- Bargaining power of suppliers
- Bargaining power of customers
- Competitive rivalry
what Is threat of new entrants
ease with which new business can establish itself in the same product market that the focal business is already in
what is Threat of substitute products
risk that alternative products or services could meet the same needs as the existing ones, thereby posing a competitive challenge to a business.
what is bargaining power of suppliers
What It Is: How much control the companies that provide materials or services (suppliers) have over the businesses they sell to (retailers).
Example: If there are only a few suppliers for a key ingredient a company needs, those suppliers have more power to negotiate prices and terms.
what is bargaining power of customers
What It Means: How much say customers have in a deal.
If there are many alternatives available to customers or if they can easily switch to another product or service, they have higher bargaining power. This might make companies more flexible in meeting customer demands.
what is competitive rivalry
firms compete for optimal positions in the market
what are 5 organisational elements interacting with process of strategy formulation
GOSSC
Goals - set targets for the organisation.
Ownership - dependent on owners and level strategic organisations are made in the organisation.
Structure - follows strategy.
Size - influences strategy formulation, since in large organisations the process is more complex.
Culture - promote management values and hence their strategy.
what does Resource-Based View (RBV) posit
collecting unique and valuable tools for your business
“Having special tools that others don’t have and use them smartly is the key to being the best and staying the best in the business world.”
what are 4 fundamental resource elements
- Physical capital
- Human Capital
- Organisational capital
- Financial capital
what is physical capital
definition: tangible assets
Competitive Edge: Unique physical assets can differentiate a firm’s offerings in the market.Example: Apple’s iconic product design and strong brand contribute to its competitive advantage.
what is human capital
definition: collective experience, skills, and talents of the workforce.
Competitive Edge: A skilled and motivated workforce can drive innovation, efficiency, and overall organisational excellence.
Example: Google’s emphasis on hiring top talent and fostering a creative work environment.
what is organisational capital
organisational structure and relationships within and outside the firm.
Competitive Edge: Efficient internal processes, strong relationships with stakeholders, and a well-designed organisational structure enhance competitiveness.
what is financial capital
definition: Encompasses the firm’s capacity to raise, generate, utilise, and manage funds.
Competitive Edge: Financial strength provides flexibility, enabling strategic investments, research, and development.
Example: Amazon’s ability to continually invest in new ventures and technologies due to its robust financial position.
tell me about VRIO framework is used for, about its key elements
powerful tool for evaluating a firm’s competitive advantage stemming from its resources
key dimensions:
1. Value
2. Rarity
3.Imitability
4. Organisation
what does Value mean in VRIO
definition: value created for customers through activities linked to the firm’s resources.
Significance: Resources must contribute meaningfully to customers.
Example: Apple’s innovative design and user-friendly interfaces add substantial value for customers.
what does Rarity mean in VRIO
definition: The possession of elements and qualities that are rare and not widely held by other companies.
Significance: Competitive advantage is heightened when a firm owns unique resources not easily accessible by competitors.
Example: Google’s proprietary search algorithms that contribute to the rarity of its search engine technology.
what does Imitability mean in VRIO
definition: The challenge or cost associated with copying the value and rarity elements.Significance: Competitive advantage is sustainable when resources are challenging or prohibitively costly for competitors to imitate.Example: Coca-Cola’s secret formula, a closely guarded trade secret, is difficult for competitors to replicate.
what does organisation mean in VRIO
definition: intangible aspects of organisational capital, like culture, that are challenging to define and replicate.Significance: The unique organisational attributes contribute to sustaining competitive advantage.Example: Southwest Airlines’ organisational culture emphasising employee satisfaction and customer service.
Porter’s Value Chain model breaks down a firm’s operations into a)… and b)… activities
a) primary activities
b) support activities
what are primary activities
fundamental steps involved in the creation, sale, and support of a product or service
what are support activities
These activities play a crucial role in enhancing the effectiveness and efficiency of primary activities.
what is portfolio alanalysis
strategic technique is relevant for firms operating in multiple markets or offering diverse products. Looking at all your investments to see which ones are making the most money. It helps you decide where to invest more and where to cut back.
what are 3 levels of business level strategies
- Competing through cost leadership (Striving to be the lowest-cost producer in the industry)
- competing through differentiation (Providing unique and appealing goods or services)
- Competing through focus (Concentrating on a niche product or market segment)
what are Ansoff’s corporate strategy matrix elements?
-Product penetration
-Product development
-Market development
-Diversification
what is diversification
changing of the nature of the business by increasing its portfolio of markets
what are two types of diversification
- related: when the new diversified business is related to the old one and can be classified into backward, forward and horizontal integration.
- unrelated: Management expands the business into a different product market.
what is Backward Integration
Firms integrate backward to have control over their source of raw materials.
what is Forward Integration
Integration forward occurs when firms aim to control the delivery of goods to the consumer
what is vertical integration
Involves combining both backward and forward integration strategies.
what is horizontal integration
Occurs when a firm acquires products to add to its existing portfolio.
what is Unrelated diversification
when management expands the business into a different product market
what is strategic fit
making sure two companies work well together when they team up or one buys the other.
what is ethics
study of morals and principles governing the rights and wrongs of human conduct.
what are 4 approaches to ethics
- Transcendental ethics (ethical absolutism) - where you maintain absolute concepts of right and wrong
- Utilitarianism - argues that action is morally right if it produces the greatest good for the largest number of people
- Ethical relativism (social ethics) - argues that ethical standards vary between contexts, like cultures.
- Tactical ethics - having certain ethical standards because they suit you.
what is business ethics
moral principles and values that guide the behavior and decision-making of organizations in the business world
what is CSR (Corporate Social Responsibility)
application of business ethics. Considers relationships between firm and its stakeholders, including employees, customers, community ect. Businesses are responsible for using these relationships morally and ethically.
Why business should be socially responsible, 2 reasons
Moral argument: business organisations have responsibility for the public good .
The business case: positive correlation between corporate responsibility and business performance.
3 Arguments that ethical business is good for business:
Ethical business gains favour with consumers
Positive CSR attracts media attention (advertising)
If goods are branded as ethical and socially responsible, it increases sales.
what is the primal concern CSR
sustainability - the ability to meet the needs of the present
what are two groups of stakeholders
Primary stakeholder groups - stakeholders on whom the firm relies for its continuous survival.
Secondary stakeholder groups - those who influence or are influenced by corporation, but aren’t essential for its survival.(NGOs)
what are two views on why it is important to care about stakeholders
- Instrumental view: treating stakeholders well can indirectly help the company make more money
- Normative view: says that companies should do the right thing because they have social responsibilities, even if it doesn’t directly make more profit
what is global CSR
multinational enterprises addressing environmental and labour standards.
what are 3 types of implication of CSR
-Defensive Strategy Actions:
Meeting it’s requirements with minimal enthusiasm.
Limited commitment to CSR causes.
-Accommodative Strategy Actions:
Gradual acknowledgment of CSR value.
Some top management support.
-Proactive Strategy Actions:
Going beyond obligations.
Anticipating and preparing for future responsibilities.
