MAN4720 FINAL concepts you should know - Dever Flashcards

MAN4720 FINAL concepts you should know - Dever Flashcards In a franchise know what is the most important competitive advantage for the local market The franchisor and its franchisees find ways to strengthen the core company's brand name, which is often the most important competitive advantage for franchisees operating in their local markets.Know the strategies involved in an international corporate level strategy

• Multidomestic Strategy - is an international strategy in

which strategic and operating decisions are decentralized to the strategic business units in individual countries or regions for the purpose of allowing each unit the opportunity to tailor products to the local market. With this strategy, the firm's need for local responsiveness is high while its need for global integration is low.2. Global Strategy - is an international strategy in which a firm's home office determines the strategies that business units are to use in each country or region. This strategy indicates that the firm has a high need for global integration and a low need for local responsiveness.3. Transnational Strategy - is an international strategy through which the firm seeks to achieve both global efficiency and local responsiveness. Realizing the twin goals of global integration and local responsiveness is difficult because global integration requires close global coordination while local responsiveness requires local flexibility.Know and understand the three types of restructurings strategies

The three types of restructuring strategies: downsizing,

downscoping, and leveraged buyouts.1. Downsizing is a reduction in the number of a firm's employees and, sometimes, in the number of its operating units; but, the composition of businesses in the company's portfolio may not change through downsizing.2. Downscoping refers to divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core businesses.Downscoping has a more positive effect on firm performance than does downsizing.3. A leveraged buyout (LBO) is a restructuring strategy whereby a party (typically a private equity firm) buys all of a firm's assets in order to take the firm private. Once a private equity firm completes this type of transaction, the target firm's company stock is no longer traded publicly.Understand balanced organizational controls Defined as the "formal, information-based ... procedures used by managers to maintain or alter patterns in organizational activities," controls help strategic leaders build credibility, demonstrate the value of strategies to the

firm's stakeholders, and promote and support strategic change.The challenge for strategic leaders is to balance the use of strategic and financial controls for the purpose of supporting efforts to improve the firm's performance.Understand the relationship between the CEO and the top management team as itpertains to power To guard against CEO overconfidence and the making of poor decisions, firms often use a top management team to make decisions required by the strategic management

process.

Standstill AgreementA contract between the target firm and the potential acquirer specifying that the acquirer will not purchase additional shares of the target firm for a specified period of time in exchange for a fee paid by the target firm.Know Peter Drucker and his thoughtsPeter Drucker argued that "innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual."Drucker suggested that innovation is "the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth."Entrepreneurship and the innovation resulting from it are critically important for all firms seeking strategic competitiveness and above-average returns.Understand the difference between international strategy and international corporate levelstrategies

• International Strategy - Is a strategy through which the

firm sells its goods or services outside its domestic market.2. International Corporate-Level Strategy - focuses on the scope of a firm's operations through geographic diversification. International corporate-level strategy is required when the firm operates in multiple industries that are located in multiple countries or regions (e.g., Southeast Asia or the European Union) and in which it sells multiple products.Understand why firms diversifyOne reason managers prefer more diversification compared to shareholders is the fact that it usually increases the size of a firm and size is positively related to executive compensation.Diversification also increases the complexity of managing a firm and its network of businesses, possibly requiring additional managerial pay because of this complexity. Increased product diversification provides an opportunity for top-level managers to increase their compensation.The second potential benefit is that product diversification and the resulting diversification of the firm's portfolio of businesses can reduce top-level managers' employment risk.Know and understand the three basic benefits derived from using international strategies

• Increased Market Size - Firms can expand the size of

their potential market-sometimes dramatically-by using an international strategy to establish stronger positions in markets outside their domestic market2. Economies of Scale and Learning - By expanding the number of markets in which they compete, firms may be able to enjoy economies of scale, particularly in manufacturing operations. More broadly, firms able to make continual process improvements enhance their ability to reduce costs while, hopefully, increasing the value their products create