MG2005 Flashcards
WEEK 1-5
why and how international management and the study of organizations matter
- help understand the evolution of international organization.
- the driving forces of globalization
- variations within and between countries and ownership typers
This knowledge is helpful because - allows to adapt top chaning markets dynamics
- effectively manage international opperations
- understand cultural differences
what are the driving forces in globalization
-technology break throughs
- changes in international competition
- organization change
- the rise and fall of empires
- the growth of super star firms
what is globalization
it is the increasing interconnectedness and integration of economies, cultures and societies worldwide through technology, communication , migration and tradewha
what are winners and what are losers in the global economy
Winners are those who adapt and thrive in response to the opportunities and challenges brought about by globalization, such as increased trade, technological advancements, and interconnected markets.
Losers, on the other hand, are those who struggle or fall behind because they fail to adapt to these changes, potentially losing out on opportunities for growth, competitiveness, and prosperity.
what is the agency theory
A theoretical framework that examines the relationships between principals (owners) and the agents (managers) in organizations.
What are the main assumptions of the agency theory
- owners seek profit maximazation
- managers may have conflicting interest and behave in a self- interested manner
- information asymmetry + moral hazards
- monitor managers to make sure their
actions align with the owners interests
what is the transaction cost theory
theory that analyzes the costs associated with transactions between firms such as :
- negotiating contracts
- monitoring performance
- opportunistic behaviour
what are the agency theory common criticims
- oversimplification of the principal-agent relationship
- focus on short term financial gains
- neglect stakeholder interests
- failure to account for non-financial motivations
explain oversimplification of the principal-agent relationship
the theory does this by primarly focusing on the aligment of interests between owners and managers, while ignoring the broader complexities of organizational dynamics. Factors like market positioning, innovation, strategic capabiliteis
explain - focus on short term financial gain
by having a short terms focus on gains instead of a long term focus on long -term sustainability and ethical considerations, managers will prioritize immediate profits over the organizations long-term viability and ethical behavior.
explain - neglect stakeholder interests
by overlooking their interest (employes, customers, the community) the theory may fail to consider the broader impact of managerial decisions on various stakeholders and societal welfare
- failure to account for non-financial motivations
managers are driven by things like job satisfaction, reputation and personal values not money, which can affect their decisions and their actions in a company.
what is the resource based view
here the firm emphasis on the significance of the firm’s unique resources and capabilities in achieving sustainable competitive advantages.
what is the resource based view focus
find unique, rare and hard to imitate resource and capabilities that will help them maintain a competitive edge in the market
RBV highlights the importance of
dynamic capabilities, core competencies,
what is dynamic capabilites
the firms ability to seize, sense and transform resources and capabilites to use it to adapt to the changing environment of the marker
what are core competencies
refers to the unique resources and capabilities that the firm has which make them different to others.
advantage of RBV
help the firm, with their unique resources and capabilities, to achieving a sustainable competitive advantages.
disadvantage of RBV
may not account for other factors such as: market dynamics, cultural differences, regulatory environments
advantages of transaction cost approach
emphasises the importance of minimizing transactional cost in decision making proceses by considering factors like:
- asset specificity
- bounded rationality
- uncertainty
- opportunism
disadvantage of transaction cost approach
may not focus on other factors like:
- cultural differences
- market dyanmics
- technological advancements
- political risks
why do countries trade with each other
- comparative advantage
- risk diversification
- access to resources
- economies of scale
why do MNEs exist
- to control trade and market imperfections.
- They do this by applying specific advantages in foreign markets, which allow them to have better control over their operations and resources (include advance techonlogies, access to capital or economies of scale)
what is a generic strategy
an general approach that a company takes in order to gain a competitive advantage
porter strategy which companies focus on :
cost advantage and differentation
what is cost advantage
offers product at a lower cost than competitors to attract price sensitive customers and potentially higher profit margins.
how do they implement cost advantage?
- steamline operations
- minimize production cost to offer products at a lower cost
- optimize the value chain
what is differentiation?
it offers unique features and attributes that set the companies product and services apart from competitors
how do they implement differentiation
- product innovation
- superior quality
- exceptinal customer service
- brading strategies
what are other alternative strategies for maintaining an international presence
- transnational strategy
- international strategy
- global standardisation strategy
- transnational strategy
thinks globally act locally approach, where centralised value chain activities are spread globally to mitigate fixed cost and risks
centralizing activities can help reduce fixed costs and risks because it lets companies:
- Save money by using resources more efficiently.
- Spread out risks so if one area has a problem, it doesn’t affect everything.
- Keep things consistent and easier to manage, which lowers the chance of mistakes and problems.
- Make decisions faster and better, which helps them adapt to changes and avoid risks more effectively.
what is international strategy
focuses on local adaptations, emphazing decentralized decision-making and tailored competitive efforts to meet local market demands
