Final Exam, Strategic Mgmt Flashcards
(41 cards)
Benefits of International Markets
access new markets, access lower-cost inputs (cheaper raw materials), develop new competencies
Disadvantages of International Markets
liability of foreignness (unfamiliar cultural and economic environment, coordinating across geographic distances), loss of reputation (safety standards may not be enforceable, local governments may be corrupt), loss of intellectual property (Microsoft in China)
Exporting vs. Licensing
you have no control of your goods when you just export them, but when you license them, there are contracts involved and standards must be met; it is also cheaper than to spend more money on a subsidiary acquisition and move all ops there
CAGE Distance Framework
Distance is he main cost and risk of expansion. (C)ultural, (A)dministrative and political, (G)eographic, and (E)conomic; this framework guides MNC decisions on which countries to enter
Global Standardization Strategy
low cost/low-local responsiveness; ex. IKEA, they are the same in every country, but need to be cost effective everywhere they are sold
Transnational Strategy
low cost/high local responsiveness: “think globally, act globally”, best practices, ideas, and innovations are used everywhere; ex. Proctor & Gamble
Multidomestic Strategy
high cost/high local responsiveness; local consumers ideally perceive products as local; ex. Milo is Colombian Nesquik, owned by Nestle
International Strategy
when a company sells the same products or services in both domestic and foreign markets
outsourcing
a company hires a third-party to perform tasks, handle operations or provide services for the company
Organizational Design
the process of creating, implementing, monitoring, and modifying the structures, processes, and procedures of an organization; structure (formal), culture (informal)
Organizational struture
determines how efforts of individuals and teams are orchestrated and how resources are distributed
Building Blocks of Organizational Structure
specialization, formalization, centralization, hierarchy
Mechanistic Organization
much specialization and formalization, tall hierarchies, centralized decision making; ex. Chik-Fil-A
Organic Organization
little specialization and formalization, flatter organizational structure, decentralized decision making (Google is an example)
Simple Structure
for smaller firms, low organizational complexity, not sophisticated, founders usually make all decisions and run day to day operations
Functional Structure
employees are grouped into functional areas, based on domain expertise, often correspond to distinct stages in the value chain, leaders of functional areas report to CEO
Multidivisional Structure
used as a firm diversifies products and geography, each strategic business unit has a profit and loss (P&L) responsibility, operated independently, led by a unique CEO who is responsible for SBU strategy and operations (ex. Mars Wrigley)
M Form (Cooperative Multidivisional Form
(related) centralized thinking, integrated at corporate HQ, co-opetition among separate business units (SBUs) internally; ex. Mars NL wants to beat Mars France; (unrelated) decentralized thinking, low level of integration, competition among SBUs for resources
Matrix Structure
you may report to the CEO of your company, but also the general manager of your area, so (me) could report to Anton Vincent, but also to Jack Tabbers; carries domain expertise, economies of scale, efficient processing of information, leverages M-form benefits, decentralized focus, responsiveness is higher
Economies of scale
when Gerald sold too many watches in Hey Arnold! Economies of scale refers to the phenomenon where the average costs per unit of output decrease with the increase in the scale or magnitude of the output being produced by a firm; example, Walmart buying in bulk to reduce cost per individual unit purchased
Organizational inertia
It is the inability of a company to change its resource investment pattern, while routine inflexibility is the lack of change in organizational processes and procedures for using invested resources.
Corporate Governance
the mechanisms to direct and control an enterprise, ensure that it pursues strategic goals successfully and legally, offers checks and balances and addresses the principal agent problem (sometimes)
Principal Agent Problem
a conflict in priorities between the owner of an asset and the person to whom control of the asset has been delegated; ex. a CEO does not always know what a salesman is doing, they assume they are selling, but how do they know? Corporate Governance attempts to solve this
Board of Directors
center of corporate governance, represent interests of shareholders, tasked with providing oversight
