Managment 405

• Increase size of potential markets

• economies of scale

• Taking advantage of arbitrage opportunities

• Extend PLC

• Optimize the physical location for every activity in its value chain

performace enhancer

cost reduction

9 Social unrest

9 Military turmoil

9 Demonstrations

9 Violent conflicts and terrorism

9 Laws and their enforcement

9 Currency exchange fluctuations

9 Appreciation of the U.S. dollar

9 Culture

9 Customs

9 Language

9 Income levels

9 Customer preferences

9 Distribution system

Outsourcing

9 occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house.

• Offshoring

9 takes place when a firm decides to shift an activity that they were previously performing in a domestic location to a foreign location.

• Strategies that favor global products and brands

9 Should standardize all of a firm’s products for all of their worldwide markets

9 Should reduce a firm’s overall costs by spreading investments over a larger market

1. Customer needs and interests worldwide are becoming more homogeneous

2. People are willing to sacrifice product preferences for lower prices at high quality

3. Economies of scale in production and marketing can be achieved through supplying global markets

1. Product markets vary widely between nations

2. In many product and service markets, there appears to be a growing interest in multiple product features, quality and service

• Technology permits flexible production

• Cost of production may not be critical to product cost

• Firm’s strategy should not be product-driven

• based on diffusion and adaptation of the parent company’s knowledge and expertise to foreign markets.

• primary goal is worldwide exploitation of the parent firm’s knowledge and capabilities

• Competitive strategy is centralized and controlled largely by corporate office

• Emphasizes economies of scale

• Emphasis is differentiating products and services to adapt to local markets

• Authority is more decentralized

• Optimization of tradeoffs associated with efficiency, local adaptation, and learning

• Firm’s assets and capabilities are dispersed according to the most beneficial location for a specific activity

9 the creation of new value by an existing organization or new venture that involves the assumption of risk.

9 Start-up ventures

9 Major corporations

9 Family-owned businesses

9 Non-profit organizations

9 Established institutions

• Current or past work experiences

• Hobbies that grow into businesses or lead to inventions

• Suggestions by friends or family

• Chance events

• Change

• Needs of existing customers

• Suggestions by suppliers

• Technological developments that lead to new advances

• Change

9 the process of becoming aware of a new business concept.

9 May be spontaneous and unexpected

9 May occur as the result of deliberate search for new venture projects or creative solutions to business problems

Attractive. The opportunity must be attractive in the marketplace; that is, there must be market demand for the new product or service

Achievable. The opportunity must be practical and physically possible

Durable. The opportunity must be attractive long enough for the development and deployment to be successful; that is, the window of opportunity must be open long enough for it to be worthwhile.

Value creating. The opportunity must be potentially profitable; that is, the benefitsmust surpass the cost of development by a significant margin.

• Human capital

• Social capital

• Government resources

9 Small Business Administration

9 Government contracting

9 State and local governments

9 the process of monitoring and correcting a firm’s strategy and performanceInformational, behavioral

Environment is stable and relatively simple

Goals and objectives can be measured with certainty

Little need for complex measures of performance

9 Scan and monitor external environment (general and industry)

9 Continuously monitor the internal environment

Focus on constantly changing information that has potential strategic importance.

1. The information is important enough to demand frequent and regular attention from all levels of the organization.
3. The data and information generated are best interpreted and discussed in face-to-face meetings.
5. The control system is a key catalyst for an ongoing debate about underlying data, assumptions, and action plans.

• (unwritten standards of acceptable behavior)

9 Dress

9 Ethical matters

9 The way an organization conducts its business

• Effective culture must be

9 Cultivated

9 Encouraged

9 Fertilized

9 Storytelling

9 Rallies or pep talks by top executives

9 Powerful means of influencing an organization’s culture

9 Focuses efforts on high-priority tasks

9 Motivates individual and collective task performance

9 Can be an effective motivator and control mechanism

9 the relationship among various participants in determining the direction and performance of corporations.

9 primary participants are the shareholders, the management, and the board of directors.”

9 methods that ensure that managerial actions lead to shareholder value maximization and do not harm other stakeholder groups and that are outside the control of the corporate governance system.

• Market for corporate control

• Auditors

• Banks and analysts

• Regulatory bodies

• Media and public activists

An organizational form in which the owner-manager makes most of the decisions and controls activities, and the staff serve as an extension of the top executive.

Simple structure is the oldest and most common organizational form:

Staff serve as an extension of the top executive’s personality

Highly informal

Coordination of tasks by direct supervision

Decision making is highly centralized

Little specialization of tasks, few rules and regulations, informal evaluation and reward system

• Advantages

9 Highly informal

9 Centralized decision making

9 Little specialization

• Disadvantages

9 Employees may not understand their responsibilities

9 May take advantage of lack of regulation

An organizational form in which the major functions of the firm, such as production, marketing, R&D, and accounting, are grouped internally.

9 Enhanced coordination and control

9 Centralized decision making

9 Enhanced organizational-level perspective

9 More efficient use of managerial and technical talent

9 Facilitated career paths and development in specialized areas

9 Impeded communication and coordination due to differences in values and orientations

9 May lead to short-term thinking (functions vs. organization as a whole)

9 Difficult to establish uniform performance standards

An organizational form in which products, projects, or product markets are grouped internally.

9 Also called multidivisional structure or M-Form

Organized around products, projects, or markets

Each division includes its own functional specialists typically organized into departments

Divisions are relatively autonomous and consist of products and services that are different from those of other divisions

Division executives help determine product-market and financial objectives

• Advantages(Divisional/Multidivisional)

9 Strategic business unit (SBU) structure

9 Separation of strategic and operating control

9 Quick response to important changes in external environment

9 Minimal problems of sharing resources across functional departments

9 Development of general management talent is enhanced

• Disadvantages(Divisional/Multidivisional)

9 Can be very expensive

9 Can be dysfunctional competition among divisions

9 Differences in image and quality may occur across divisions

9 Can focus on short-term performance

an organizational form in which there are multiple lines of authority and some individuals report to at least two managers.

• Advantages

9 Facilitates the use of specialized personnel, equipment and facilities

9 Provides professionals with a broader range of responsibility and experience

• Disadvantages

9 Can cause uncertainty and lead to intense power struggles

9 Working relationships become more complicated

9 Decisions may take longer

9 Create a proactive, creative approach to the unknown

9 Actively solicit the involvement of employees at all levels

9 Enable all employees to use their intelligence and apply their imagination

Power

9 a leader’s ability to get things done in a way he or she wants them to be done

Organizational bases of power

9 A formal management position that is the basis of a leader’s power.