Principles of MGMT Final Flashcards
Resources
The assets, capabilities, processes, employee time, information, and knowledge used by an organization to:
− Improve its effectiveness and efficiency
− Create and sustain competitive advantage
Competitive advantage
Providing greater value for customers than competitors can
Sustainable competitive advantage
A competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate
Resources that contribute to competitive advantage
− Valuable resource: improve efficiency and effectiveness
− Rare resource: not possessed by many competing firms
− Imperfectly imitable resource: impossible for
other firms to duplicate
− Nonsubstitutable resource: produces value or competitive advantage and has no equivalent substitutes or replacements
Competitive innertia
A reluctance to change strategies or competitive practices that have been successful in the past
Strategic dissonance
A discrepancy between a company’s intended strategy and the strategic actions managers take when implementing that strategy
Business that suffered from strategic drift
Kodak: Failed to respond to rapid development
Nokia: Failed to respond to smartphone technology
SWOT
An assessment of the strengths and weaknesses in an organization’s internal environment and the opportunities and threats in its external environment
Distinctive competence
What a company can make, do, or perform better than its competitors
Shadow-strategy task force
A committee within a company that analyzes the company’s own weaknesses to determine how competitors could exploit them for competitive advantage
Six Sigma
A set of quality-control tools that businesses can use to eliminate effects and improve processes to help boost their profits
Core capabilities
The internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs
Strategic group
A group of companies within an industry against which top managers compare, evaluate, and benchmark strategic threats and opportunities
Core firms
The central companies in a strategic group
Secondary firms
The firms in a strategic group that follow strategies related to but somewhat different from those of the core firms
Core capabilities of an esports company
▪ Establishing a presence in the esports world
▪ Determining gaming platforms to support
▪ Enlisting various individual players and coaches
▪ Arranging competitions and sponsorships
Strategic reference points
The strategic targets managers use to measure whether a firm has developed the core competencies it needs to achieve a sustainable competitive advantage
Corporate-level strategy
The overall organizational strategy that addresses the question “What business or businesses are we in or should we be in?”
Diversification
A strategy for reducing risk by buying a variety of items so that the failure of one stock or one business does not doom the entire portfolio
Portfolio strategy
A corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines
BCG Matrix
A portfolio strategy developed by the Boston Consulting Group that categorizes a corporation’s businesses by growth rate and relative market share and helps managers decide how to invest corporate funds
Strategy approaches
Classical
Is based on achieving sustainable competitive advantage by positioning a firm optimally in an attractive market.
Strategy approaches
Visionary
Empowers a firm to create an industry with some degree of predictability by seeing an opportunity and pursuing it single-mindedly
Strategy approaches
Adaptive
Rests on the idea of serial temporary advantage.
Strategy approaches
Shaping
Mold or reshape an industry by influencing the development of a market in its favor through coordination with other players
Strategy approaches
Renewal
Refreshes the viability and competitiveness of a firm when it is operating in a harsh environment
BCG Matrix
Cash Cow
(high market share/low growth rate) - Studio Entertainment and consumer products are both mature segments but still earn high revenues
BCG Matrix
Star
(high market share/high growth rate) - media networks and theme parks (although COVID-19 may present a shift for theme parks)
BCG Matrix
Question mark
(low market share/high growth rate) - Internet marketing has potential when looking at streaming considerations for future growth
BCG Matrix
Dog
(low market share/low growth rate): interactive/digital games are a segment the company either needs to retrench or invest to turn into cash cows
Grand Strategy
A broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use
Growth Strategy
A strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business
− Grow externally through merger or acquisition
− Grow internally through expanding exiting business or creating and growing new businesses
Stability strategy
A strategy that focuses on improving the way in which the company sells the same products or services to the same customers
Retrenchment strategy
A strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business
− by making significant cost reductions by laying off employees; closing poorly performing stores, offices, or manufacturing plants
− by closing or selling entire lines of products or services
Recovery
The strategic actions taken after retrenchment to return to a growth strategy
Cost leadership
Producing a product or service of acceptable quality at consistently lower production costs than competitors can, so that the firm can offer the product or service at the lowest price in the industry
Defenders
Companies using an adaptive strategy aimed at defending strategic positions by
− seeking moderate, steady growth
− offering a limited range of high-quality products and services to a well-defined set of customers
Prospectors
Companies using an adaptive strategy that seeks fast growth by
− searching for new market opportunities
− encouraging risk taking
− being the first to bring innovative new products to market
Analyzers
Companies using an adaptive strategy that seeks to minimize risk and maximize profits by following or imitating the proven successes of prospectors
Reactors
Companies that do not follow a consistent adaptive strategy but instead react to changes in the external environment after they occur
Organizational motivation
The successful implementation of creative ideas in organizations
Technology Cycle
A cycle that begins with the birth of a new technology and ends when the technology reaches its limits and is replaced by a newer, substantially better technology
Technological innovation
Product innovation
The introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses
Technological innovation
Process innovation
The implementation of a new or significantly improved production or delivery method
Non-technological innovation
Marketing innovation
The implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing
Non-technological innovation
Organisational innovation
The implementation of a new organizational method in the firm’s business practices, workplace organization or external relations
Organizations apply process innovation to…
- Decrease cost units of production or delivery
- To reduce the cost per product produces
- To increase the number of products produced
- To increase the quality and efficiency of the process
S-curve pattern of innovation
A pattern of technological innovation characterized by slow initial progress, then rapid progress, and then slow progress again as a technology matures and reaches its limits
S-curve pattern of innovation - Slope
− Steep slope indicates that small amounts of effort will result in significant increases in performance
− Flat slope indicates that increased effort will bring small improvements in performance
Innovation Streams
Patterns of innovation over time that can create sustainable competitive advantage
Innovation Streams Phases
Technological discontinuity
Performance or functional breakthrough created by a scientific advance or a unique combination of existing technologies
Innovation Streams Phases
Discontinuous Change
Phase of technology cycle characterized by
▪ Technological substitution: the purchase of new technologies to replace older ones
▪ Design competition: competition between old and new technologies to establish a new technological standard or dominant design
Dominant design
Discontinuous change is followed by mergence of a dominant design. A new technological design/process that becomes the accepted market standard.
1. Indicates which companies will prosper and which will face technological lockout
2. Signals shift from experimentation and competition to incremental change
Components of creative Work Environment
- Supervisory encouragement
- Work Group encouragement
- Freedom
- Lack of organizational impediments
- Challenging work
- Organizational encouragment
Experiential approach to innovation
An approach to innovation that assumes a highly uncertain environment and uses intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding.
− Design iteration
− Testing
− Milestones
− Multifunctional teams
− Powerful leaders
Experiential - Design iteration
A cycle of repetition in which a company tests a prototype of a new product or service, improves on that design, and then builds and tests the improved prototype
Compression approach to innovation
An approach that assumes that incremental innovation can be planned using a series of steps and that compressing those steps can speed innovation.
− Helps avoid unnecessary steps
− Enables developers to sequence steps in the right order to avoid wasted time and delays between steps
− Reduces misunderstandings and improves coordination
Generational change
Change based on incremental improvements to a dominant technological design such that the improved technology is fully backward compatible with the older technology.
− supplier involvement
− shortening the time of individual steps
− overlapping steps
Organizational decline
A large decrease in organizational performance that occurs when companies don’t anticipate, recognize, neutralize, or adapt to the internal or external pressures that threaten their survival
Organizational decline
Stages
− Blinded: key managers fail to recognize the internal or external changes
− Inaction: recognition of problems fails to prompt managers to act
− Faulty action: management uses belt-tightening plans to cut costs, increase efficiency, and restore profits
− Crisis: either bankruptcy, dissolution, or restructuring becomes necessary
− Dissolution: company is dissolved because of failure to make needed changes
Resistance to change
Opposition to change resulting from self-interest, misunderstanding and distrust, and a general intolerance for change
Organizational change process proposed by Kurt Lewin
- Unfreezing: getting the people affected by change to believe that change is needed
- Change intervention: the process used to get workers and managers to change their behaviors and work practices
- Refreezing: supporting and reinforcing new changes so that they stick
Methods Used to Manage Resistance to Change
- Educate employees about the need for change
- Communicate change-related information to employees
- Encourage employee participation in planning and implementing change
- Allow employees to discuss and agree on who will do what after the change
- Offer significant managerial support
- Coercion: the use of formal power and authority to force others to change
Results-driven change
Change created quickly by focusing on the measurement and improvement of results
Agile change
Using daily standups, or “huddles,” to review the progress of multidisciplinary teams or “Scrums,” who break problems into small, clearly defined parts that team members work on in sprints
General Electric fast works
Quickly experimenting with new ideas to solve customer problems and learn from repeated tests and improvements
Organizational development
A philosophy and collection of planned change interventions designed to improve an organization’s long-term health and performance
Ki wo tsukau
It is the idea that a person will automatically take into consideration the people around them and accomodate to their needs as best they can.
Using a soft voice to not disturb your neighbours or people around you
General Steps for Organizational Development Interventions
- Entry
- Starup
- Assessment & feedback
- Action planning
- Intervention
- Evaluation
- Adoption
- Separation
Multinational corporation
A corporation that owns businesses in two or more countries
Direct foreign investment
A method of investment in which a company builds a new business or buys an existing business in a foreign country
Trade barriers
Government-imposed regulations that increase the cost and restrict the number of imported goods
Protectionism
A government’s use of trade barriers to shield domestic companies and their workers from foreign competition
Tariff
A direct tax on imported goods
Nontariff barriers
Nontax methods of increasing the cost or reducing the volume of imported goods
Quota
A limit on the number or volume of imported products
Voluntary export restrains
Voluntarily imposed limits on the number or volume of products exported to a particular country
Government import standard
A standard ostensibly establishes to protect health and safety of citizens but, in reality, is often used to restrict imports
Subsidies
Government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition
Customs classification
A classification assigned to imported products by government officials that affects the size of the tariff and the imposition of import quotas
Functions of World Trade Organization
- Administering WTO trade agreements
- Forum for trade negotiations
- Handling trade disputes
- Monitoring national trade policies
- Technical assistance and training for developing organizations
Free-Trade Agreements Matter
- Increase choices, competition, and purchasing power
- Create new businesses opportunities and intensify competition
Global consistency
When a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures
Local adaptation
Modifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies
Cooperative contract
Foreign business owner pays a company a fee for the right to conduct that business in his or her country
- Licensing
- Franchise
Joint venture
A strategic alliance in which two existing companies collaborate to form a third, independent company or engage in a clearly defined business activity
Wholly owned affiliates
Foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company
- Advantage: parent company receives all of profits and has control
- Disadvantage: expense of building new operations
Global new ventures
New companies that are founded with an active global strategy and have sales, employees, and financing in different countries. Easy transportation, low-cost communication technologies, and experienced businesspeople
Purchasing power
The relative cost of a standard set of goods and services in different countries
- Degree of global competition
- Determined by the number and quality of companies that already compete in a foreign market
Political uncertainty
The risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events
Policy uncertainty
The risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business
Strategies to Minimize Political Risk
- Avoidance: divesting or selling the business, postponing investment until risk shrinks
- Control: lobbying foreign governments or international trade agencies to change laws, regulations, or trade barriers
- Cooperation: using joint ventures and collaborative contracts
Hofstede’s cultural dimensions across countries
- Power distance: distribution
- Individualism: self-sufficiency
- Masculinity/femininity: assertive vs nurturing cultures
- Uncertainty avoidance: comfort level with unpredictable
- Short-term/long-term orientation: gratification
- Indulgence vs restrain: strictness of social norms
Expatriate
Someone who lives and works outside his or her native country. Language and cross-cultural training:
- Documentary training: identifying differences between cultures
- Cultural simulations: practice adapting to cultural differences
- Field simulation: placed in an ethnic neighborhood for 2-4 hours to talk to residents about cultural differences
