Term
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Definition
| A firm that engages in FDI by directly controlling and managing value-adding activities in other countries |
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Term
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Definition
| A firms direct investment in production and/or service activities abroad |
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Term
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Definition
| Three primary regions of developed economies: North America, Europe and Japan |
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Term
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Definition
| A label that describes fast growing developing economies since the 1990's |
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Term
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Definition
| Brazil, Russia, India and China |
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Term
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Definition
| The vast majority of humanity, about four billion people, who make less than $2,000 a year |
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Term
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Definition
| A way of managing the firm from a strategic, "big picture" perspective |
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Term
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Definition
| A perspective that suggests that strategy is most fundamentally embodied in explicit, rigorous formal planning |
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Term
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Definition
| A perspective that suggests that strategy is most fundamentally reflected by firms pattern of actions |
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Term
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Definition
| A strategy that is deliberately planned for |
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Term
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Definition
| A strategy based on the outcome of a stream of smaller decisions from the "bottom up" |
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Term
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Definition
| A perspective that suggests that strategy is neither solely about plan nor action and that strategy integrates elements of both schools of thought |
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Term
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Definition
| A firm's theory about how to successfully compete |
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Term
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Definition
| The crafting of a firm's strategy |
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Term
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Definition
| The actions undertaken to carry out a firm's strategy |
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Term
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Definition
| A strategic analysis of a firm's internal Strengths and Weaknesses, and the Opportunities and Threats in the environment |
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Term
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Definition
| Repeated testing of theory under a variety of conditions to establish its applicable boundaries |
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Term
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Definition
| A framework that suggests the strategy as a discipline has three "legs" or key perspectives: industry-, resource-, and institution-based views |
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Term
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Definition
1) Strategy of firms around the globe
2) A particular form of international strategy, characterized by the production and distribution of standardized products and services on a worldwide basis |
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Term
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Definition
| The close integration of countries and peoples around the world |
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Term
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Definition
| A perspective that suggests that barriers to market integration at borders are high but not high enough to completely insulate countries from each other |
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Term
| Nongovernmental Organization |
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Definition
| Organization advocating causes such as the environment, human rights, and consumer rights that are not affiliated with government |
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Term
| Four fundamental questions in Strategy |
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Definition
1) Why do firms differ
2) How do firms behave
3) What determines the scope of the firm
4) What determines the success and the failure of firms around the globe |
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Term
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Definition
| A group of firms producing products that are similar to each other |
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Term
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Definition
| A competitive situation in which price is set by the "market" all firms are price takers, and entries and exits are relatively easy |
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Term
| Industrial Organization Economics |
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Definition
| A branch of economics that seeks to better understand how firms in an industry compete and then how to regulate them |
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Term
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Definition
| Structural attributes of an industry such as the costs of entry/exit |
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Term
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Definition
| Firm actions such as product differentiation |
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Term
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Definition
| The results of firm conduct |
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Term
| Structure-Conduct-Performance Model |
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Definition
| An industrial organization economics model that suggests industry structure determines firm conduct which in turn determines performance |
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Term
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Definition
| A situation whereby only on firm provides the goods and/or services for an industry |
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Term
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Definition
| A situation whereby a few firms control an industry |
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Term
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Definition
| A special case of oligopoly that has two players |
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Term
|
Definition
A framework governing the competitiveness of an industry proposed by Michael Porter. The five forces are (1) the intensity of rivalry among competitors
(2)the threat of potential entry
(3) the bargaining power of suppliers
(4) the bargaining power of buyers
(5) the threat of substitutes |
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Term
|
Definition
| A situation whereby the market leader has a very large market share |
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Term
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Definition
| Current members of an industry that compete against each other |
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Term
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Definition
| The industry structures that increase the costs of entry |
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Term
|
Definition
| Advantages derived from economies of scale (the more a firm produces some products, the lower the unit costs become) |
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Term
|
Definition
| Reduction in per unit costs by increasing the scale of production |
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Term
| Non-Scale-Based Advantages |
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Definition
| Low-cost advantages that are not derived from the economies of scale |
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Term
|
Definition
| Efforts to fill product space in a manner that leaves little "unmet demand" for potential entrants |
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Term
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Definition
| The uniqueness of products that customers value |
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Term
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Definition
| The value a user derives from a product increases with the number of other users of the same product |
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Term
|
Definition
| Additional production capacity currently underutilized or not utilized |
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Term
| Bargaining Power of Suppliers |
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Definition
| The ability of suppliers to raise prices and/or reduces the quality of goods and services |
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Term
|
Definition
| Acquiring and owning downstream assets |
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Term
|
Definition
| Acquiring and owning upstream assets |
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Term
|
Definition
| Products of different industries that satisfy customer needs currently met by the focal industry |
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Term
|
Definition
| Ways to position a firm within an industry in order to minimize the threats presented by the five forces |
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Term
|
Definition
| Strategies intended to strengthen the focal firm's position relative to the five forces including: Cost leadership, differentiation and focus |
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Term
|
Definition
| A competitive strategy that centers on competing on low cost and prices |
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Term
|
Definition
| A strategy that focuses on how to deliver products that customers perceive as valuable and different |
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Term
|
Definition
| A strategy that serves the needs of a particular segment or niche of an industry |
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Term
|
Definition
| A firm that sells products that add value to the products of a focal industry. ALSO THE SIXTH FORCE. |
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Term
| Flexible Manufacturing Technology |
|
Definition
| Modern manufacturing technology that enables firms to produce differentiated products at low costs |
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Term
|
Definition
| Mass produced but customized products |
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Term
|
Definition
| Groups of firms within a broad industry |
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Term
|
Definition
| Within-industry difference that inhibits the movement between strategic groups |
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Term
|
Definition
| A leading perspective of strategy which suggests that differences in firm performance are most fundamentally driven by differences in firm resources and capabilities |
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Term
|
Definition
| The tangible and intangible assets a firm uses to choose and implement its strategies |
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Term
|
Definition
| The tangible and intangible assets a firm uses to choose and implement its strategies |
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Term
| Tangible Resources and Capabilities |
|
Definition
| Assets that are observable and more easily quantified. Financial, Physical, Technological, Organizational |
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Term
| Intangible Resources and Capabilities |
|
Definition
| Hard to observe and difficult to codify resources and capabilities. Human, Innovation, Reputation |
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Term
|
Definition
| Goods and services produced through a chain of vertical activities that add value |
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Term
|
Definition
| Examination as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors |
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Term
|
Definition
| A process of market competition through which unique products that command high prices and high margins generally lose their ability to do so- these products thus become commodities |
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Term
|
Definition
| Turning over all or part of an activity to an outside supplier to improve the performance of the focal firm |
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Term
|
Definition
| International/Foreign outsourcing |
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Term
|
Definition
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Term
|
Definition
| Setting up subsidiaries to perform in house work in foreign location. Conceptually identical to FDI |
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Term
|
Definition
| A resource based framework that focuses on the value, rarity, imitability, and organizational aspects of resources and capabilities |
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Term
|
Definition
| The difficulty of identifying the causal determinants of successful firm performance |
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Term
|
Definition
| Numerous noncore assets that complement and support the value adding activities of core assets |
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Term
|
Definition
| The socially complex ways of organizing typical of many firms |
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Term
|
Definition
| A way of competition centered on dynamic maneuvering intended to unleash a series of small, unpredictable but powerful, actions to erode the rival's competitive advantage |
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Term
|
Definition
| A leading perspective of strategy that argues that in addition to industry and firm level conditions, firms also need to take into account wider influences from sources such as the state and society when crafting strategy |
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Term
|
Definition
| Humanly devised constraints that structure human interaction, "rules of the game" |
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Term
|
Definition
| A framework of formal and informal institutions governing individual and firm behavior |
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Term
|
Definition
| Institutions represented by laws, regulations and rules (Regulatory) |
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Term
|
Definition
| How formal rules, laws and regulations influence the behavior of individuals and firms |
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Term
|
Definition
| Institutions represented by norms, cultures, and ethics (normative and cognitive) |
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Term
|
Definition
| How the values, beliefs, and norms of other relevant players influence the behavior of individuals and firms |
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Term
|
Definition
| The prevailing practice of relevant players that affect the focal individuals and firms |
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Term
|
Definition
| The internalized, taken for granted values and beliefs that guide individual and firm behavior |
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Term
|
Definition
| Costs associated with economic transaction or more broadly, costs of doing business |
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Term
|
Definition
| Self-interest seeking with guile |
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Term
|
Definition
| Contracting based on informal relationships |
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Term
| Informal, Relationship-Based, Personalized Exchange |
|
Definition
| A way of economic exchange based on informal relationships among transaction parties. AKA relational contracting. |
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Term
| Arm's-Length Transactions |
|
Definition
| Transactions in which parties keep a distance |
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Term
| Formal, Rule-Based, Impersonal Exchange |
|
Definition
| A way of economic exchange based on formal transactions in which parties keep a distance. AKA arm's length transactions. |
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Term
| Institutional Transitions |
|
Definition
| Fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect organizations as players |
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Term
| Firm Strategy, Structure and Rivalry |
|
Definition
| How industry structure and firm strategy interact to affect interfirm rivalry |
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Term
|
Definition
| The endowments of production factors such as land, water, and people in one country |
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Term
| Related and Supporting Industries |
|
Definition
| Industries that are related to and/or support the focal industry |
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Term
|
Definition
| Demand for products and services within a domestic economy |
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Term
|
Definition
| The collective programing of the mind that distinguishes the members of one group or category of people from another |
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Term
|
Definition
| The degree of social inequality |
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Term
|
Definition
| The perspective that the identity of an individual is most fundamentally based on his or her own individual attributes |
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Term
|
Definition
| The perspective that the identity of an individual is most fundamentally based on the identity of his or her collective group |
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Term
|
Definition
| A relatively strong form of societal-level sex role differentiation whereby men tend to have occupations that reward assertiveness and women tend to work in caring professions |
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Term
|
Definition
| A relatively weak form of societal-level sex role differentiation whereby more women occupy positions that reward assertiveness and more men work in caring professions. |
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Term
|
Definition
| The extent to which members in different cultures accept ambiguous situations and tolerate uncertainty |
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Term
|
Definition
| A perspective that emphasizes perseverance and savings for future betterment |
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Term
|
Definition
| The norms, principles, and standards of conduct governing individual and firm behavior |
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Term
|
Definition
| Written policies and standards for corporate conduct and ethics |
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Term
|
Definition
| The relative thinking that ethical standards vary significantly around the world and that there are no universally agreed upon ethical and unethical behaviors |
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Term
|
Definition
| The imperialistic thinking that one's own ethical standards should be applied universally around the world |
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Term
| Middle of the Road Approaches to Managing Ethics (3) |
|
Definition
1) Respect for human dignity and basic rights
2) Respect for local traditions
3) Respect for institutional context |
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Term
|
Definition
| The abuse of public power for private benefit usually in the form of bribery |
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|
Term
| Strategic Responses to Ethical Challenges (4) |
|
Definition
1) Reactive: Deny responsibility, do less than what is required
2) Defensive: Admit responsibility but fight it, do least that's required
3) Accommodative: Accept responsibility, do all that is required
4) Proactive: Anticipate responsibility, do more than is required |
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Term
|
Definition
| Individuals and firms regarded as part of "us" |
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Term
|
Definition
| Individuals and firms not regarded as part of "us" |
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Term
|
Definition
| The difference between two cultures along some identifiable dimensions |
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Term
|
Definition
| The extent of similarity or dissimilarity between the regulatory, normative and cognitive institutions of two countries |
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Term
| Propositions Underpinning an Institution Based View of Strategy |
|
Definition
1) Managers and firms rationally pursue their interests and make strategic choices within formal and informal institutional constraints
2) In situations where formal constraints fail, informal constraints will play a larger role |
|
|
Term
| The stream of activities from upstream to downstream that add value is known as the ___________. |
|
Definition
|
|
Term
| According to the text, what are the three leading perspectives on strategy? |
|
Definition
| industry-based competition, firm-specific resources & capabilities, & institutional conditions & transitions |
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|
Term
| High initial costs per economic transaction, due to the high costs of formal institutions, is characteristic of what institutional mode for governing relationships? |
|
Definition
| formal, rule-based, impersonal exchange with third-party enforcement |
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|
Term
| The so-called “sixth force” to supplement the five forces model, as endorsed by Andrew Grove, is ________________. |
|
Definition
|
|
Term
| Integration Responsiveness Network |
|
Definition
| A framework of MNE management on how to simultaneously deal with two sets of pressures for global integration and local responsiveness |
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Term
|
Definition
| The necessity to be responsive to different customer preferences around the world |
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|
Term
| Home Replication Strategy |
|
Definition
| A strategy which emphasizes the international replication of home country based competencies such as production scales, distribution efficiencies, and brand power |
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Term
| Localization/Multidomestic Strategy |
|
Definition
| An MNE strategy which focuses on a number of foreign countries/regions, each of which is regarded as a standalone local market worthy of significant attention and adaption |
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Term
| Global Standardization Strategy |
|
Definition
| An MNE strategy that relies on the development of standardized products worldwide to reap the maximum benefits from low cost advantages |
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Term
|
Definition
| MNE subsidiaries explicitly recognized as as source of important capabilities, with the intention that these capabilities be leverages by and/or disseminated to other subsidiaries |
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Term
|
Definition
| The charter to be responsible for one MNE function throughout the world |
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Term
|
Definition
| An MNE strategy which endeavors to be cost efficient, locally responsive, and learning driven simultaneously. |
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Term
|
Definition
| A structure typically set up when firms initially expand abroad often engaging in a home replication strategy |
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|
Term
| Geographic Area Structure |
|
Definition
| An organizational structure which organizes the MNE according to different countries and regions and is the most appropriate structure for a multidomestic strategy |
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Term
|
Definition
| The business leader in charge of a specific country for an MNE |
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Term
|
Definition
| An organizational structure which assigns global responsibilities to each product division |
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Term
|
Definition
| An organizational structure often used to alleviate the disadvantages associated with both geographic area and product division structures, especially using transnational strategies |
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|
Term
| Reciprocal Relationship Between Strategy and Structure (3) |
|
Definition
1) Strategy drives structure
2) Relationship is not one way
3) Strategies and structures are not static |
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Term
|
Definition
| The structures, processes, and systems that actively develop, leverage, and transfer knowledge |
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Term
|
Definition
| Knowledge that is codifiable |
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Term
|
Definition
| Knowledge that is not codifiableG |
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Term
|
Definition
| Teams whose members are physically |
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Term
|
Definition
| The ability to absorb new knowledge by recognizing the value of new information, assimilating it, and applying it |
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Term
|
Definition
| The informal benefits individuals and organizations derive from their social structures and networks |
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Term
|
Definition
| Micro, informal interpersonal relationships among managers of various units may greatly facilitate macro, interorganizational cooperation among various units |
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Term
|
Definition
| The proactive and deliberate pursuit of new business opportunities by and MNE's subsidiary to expand its scope of responsibility |
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Term
|
Definition
| A customer focused structure that supplies customers in a coordinated and consistent way across various countries |
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|
Term
| Solutions Based Structure |
|
Definition
| An MNE organization structure which caters to the needs of providing solutions for customer's problems |
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Term
|
Definition
| The social responsibility of corporations. It pertains to considerations of, and response to, issues beyond the narrow economic, technical, and legal requirements of he firm to accomplish social benefits along with the traditional economic gains that the firm seeks |
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Term
|
Definition
| Any group or individual who can affect or is affected by the achievement of the organizations objectives |
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Term
|
Definition
| The ability to meet the needs of the present without compromising the ability of future generations to meet their needs |
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|
Term
| Primary Stakeholder Groups |
|
Definition
| Constituents on which the firm relies for its continuous survival and prosperity |
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|
Term
| Secondary Stakeholder Groups |
|
Definition
| Stakeholders who influence or affect, or are influenced or affected by, the corporation, but they are not engaged in transactions with the corporation and are not essential for its survival (Ex Greenpeace) |
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Term
|
Definition
| A performance yardstick consisting of economic, social, and environmental performance |
|
|
Term
| Social Issue Participation |
|
Definition
| Firm's participation in social causes not directly related to managing primary stakeholders |
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Term
|
Definition
| A strategy that is passive about CSR. Firms do not act in the absence of disasters and outcries. When problems arise denial is the first line of defense |
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|
Term
|
Definition
| A strategy that is defensive in nature. Firms admit responsibility, but often fight it |
|
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Term
|
Definition
| A strategy that tries to accommodate CSR considerations into decision making |
|
|
Term
|
Definition
| A set of written policies and standards for corporate conduct and ethics |
|
|
Term
|
Definition
| A strategy that focuses on proactive engagement in CSR. |
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|
Term
| Stakeholder View of the Firm |
|
Definition
-Urges companies to pursue more balanced triple bottom line consisting of economic, social, and environmental performance
-Despite defense of free market school (shareholder capitalism) CSR is becoming a more central part of strategy |
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Term
|
Definition
| Firms with less than 500 employees |
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|
Term
|
Definition
| The identification and exploitation of previously unexplored opportunities |
|
|
Term
|
Definition
| Individuals who identify and explore previously unexplored opportunities |
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|
Term
| International Entrepreneurship |
|
Definition
| A combination of innovative, proactive, and risk seeking behavior that crosses national borders and is intended to create wealth in organizations |
|
|
Term
| Five Entrepreneurial Stages |
|
Definition
1) Growth
2) Innovation
3) Network
4) Financing/Governance
5) Harvest/Exit |
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|
Term
|
Definition
| The inherent disadvantage that entrepreneurial firms experience as new entrants |
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Term
|
Definition
| More durable, reliable, and trustworthy relationships cultivated over a long period of time |
|
|
Term
|
Definition
| Relationships that are characterized by infrequent interaction and low intimacy |
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|
Term
| Routes of Harvest and Exit |
|
Definition
-Selling equity stake
-Selling the business
-Merging with another firm
-Considering and IPO
-Declaring bankruptcy |
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|
Term
|
Definition
| The first round of public trading of company stock |
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Term
|
Definition
| Start up companies that attempt to do business abroad from inception |
|
|
Term
|
Definition
-Direct exports
-Franchising/Licensing
-FDI |
|
|
Term
| Staying in Domestic Markets |
|
Definition
-Indirect exports
-Supplier of foreign firms
-Franchisee/Licensee of foreign brands
-Alliance partner of FDI
-Harvest and Exit |
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|
Term
|
Definition
| Models which suggest firms internationalize by going through predictable stages from simple steps to complex operations |
|
|
Term
|
Definition
| People who start, grow, and sell several businesses throughout their careers |
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Term
|
Definition
| The inherent disadvantage foreign firms experience in host countries because of their nonnative status |
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Term
|
Definition
| The risks associated the unauthorized diffusion of firm-specific assets |
|
|
Term
|
Definition
| The deals struck by MNE's and host governments, which change their requirements after the entry of MNE's |
|
|
Term
|
Definition
| Confiscation of foreign assets invested in one country |
|
|
Term
|
Definition
| Irrevocable costs occurred and investments made |
|
|
Term
|
Definition
| Barriers blocking international trade |
|
|
Term
|
Definition
|
|
Term
|
Definition
| Trade and investment barriers which do not entail tariffs |
|
|
Term
| Local Content Requirements |
|
Definition
| Government requirements that certain products be subject to higher import tariffs and taxes unless a given percentage of their value is produced domestically |
|
|
Term
|
Definition
| Risks stemming from exposure to unfavorable movements of the currencies |
|
|
Term
|
Definition
| Making bets on currency movements by committing to stable currencies |
|
|
Term
|
Definition
| Spreading out activities in a number of countries in different currency zones to offset the currency losses in certain regions through the gains in other regions |
|
|
Term
| Location Specific Advantages |
|
Definition
| Advantages associated with operating in a specific location |
|
|
Term
|
Definition
| Clustering economic activities in certain locations |
|
|
Term
|
Definition
| Firms entering foreign markets in search of natural resources |
|
|
Term
|
Definition
| Firms going after the most lucrative markets for their products and services- Seafood in Japan |
|
|
Term
|
Definition
| Firms going after certain locations in search of efficiency gains- Manufacturing in China |
|
|
Term
|
Definition
| Firms targeting countries and regions renowned for generating world class- IT Silicon Valley |
|
|
Term
|
Definition
| The difference between two cultures along some identifiable dimensions |
|
|
Term
|
Definition
| The extent of similarity of dissimilarity between the regulatory, normative, and cognitive institutions of two countries |
|
|
Term
|
Definition
-Tech leadership
-Preemption of scarce resources
-Establishment of entry barriers for late movers
-Avoidance of clash with dominant firms at home
-Relationships with key stakeholders |
|
|
Term
|
Definition
-Free ride on first mover
-Resolution of tech and market uncertainty
-First mover's difficulty to adapt to market changes |
|
|
Term
|
Definition
| The amount of resources committed to foreign market entry |
|
|
Term
| Non-Equity Modes of Entry |
|
Definition
| Exports and Contractual Agreements |
|
|
Term
|
Definition
| JVs and Wholly Owned Subsidiaries |
|
|
Term
|
Definition
| Advantage associated with directly owning assets overseas, which is one of the three key advantages of being a MNE |
|
|
Term
| Advantages of being and MNE through FDI |
|
Definition
-ownership advantages
-location advantages
-internationalization advantages |
|
|
Term
|
Definition
| The process of replacing a market relationship with a single multinational organization spanning both countries |
|
|
Term
| Internationalization Advantage |
|
Definition
| Reduces cross boarder transaction costs and increases efficiencies |
|
|
Term
|
Definition
| Directly selling products made in the home country to customers in other countries |
|
|
Term
|
Definition
| Exporting directly through domestic based export intermediaries |
|
|
Term
| Licensing/Franchising Agreements |
|
Definition
| Agreements according to which the licensor/franchiser sells the rights to intellectual property, such as patents and know how, to the licensee/franchisee for a royalty fee |
|
|
Term
|
Definition
| Projects in which clients pay contractors to design and construct new facilities and train personnel |
|
|
Term
| Build-Operate-Transfer Agreements |
|
Definition
| A special kind of turnkey project in which contractors first build facilities, then operate them for a period of time, and then transfer them back to clients. Have longer duration than turnkey projects |
|
|
Term
|
Definition
| Outsourcing agreements in R&D between firms |
|
|
Term
|
Definition
| Agreements among a number of firms to jointly market their products and services |
|
|
Term
|
Definition
| Modes of foreign market entry which involves the use of equity |
|
|
Term
|
Definition
| A corporate child that is a new entity given birth and jointly owned by two or more parent companies |
|
|
Term
| Wholly Owned Subsidiaries |
|
Definition
| Subsidiaries located in foreign countries which are entirely owned by the MNE |
|
|
Term
|
Definition
| Building factories and offices from scratch |
|
|
Term
|
Definition
| The transfer of control of assets, operations, and management from one firm to another |
|
|
Term
|
Definition
| The positive or negative perception of firms and products from a certain country |
|
|
Term
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Definition
| Voluntary agreements between firms involving exchanging, sharing, or co-developing of products, technologies, or services |
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Definition
| Alliances which are based on contracts and which do not involve the sharing of equity |
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Definition
| Strategic alliances which involve the use of equity |
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Definition
| Both partners invest in each other to become cross-shareholders |
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Definition
| One partner invests in another as a strategic investor |
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Definition
| Strategic alliances formed by multiple firms to compete against other such groups and against traditional single firms |
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Definition
| Multipartner strategic alliances |
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Definition
| Strategic alliances formed by competitors |
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Term
| Upstream Vertical Alliances |
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Definition
| Alliances with firms on the supply side |
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Term
| Downstream Vertical Alliances |
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Definition
| Alliances with firms in distribution |
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Term
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Definition
| An option investment in real operations as opposed to financial capital |
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Term
| Advantages of Strategic Alliances |
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Definition
-Reduce costs, risks, uncertainties
-Gain access to complementary assets
-Opportunities to learn from partners
-Possibilities to use alliances and networks as real options |
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Term
| Disadvantages of Strategic Alliances |
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Definition
-Choosing wrong partners
-Costs of negotiation and coordination
-Possibility of partner opportunism
-Risk of helping nurture competitors |
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Term
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Definition
| A race in which alliance partners aim to outrun each other by learning the "tricks" form the other side as fast as possible |
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Definition
| The capabilities to successfully manage interfirm relationships |
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Definition
| The difficulty to locate partners with certain desirable attributes |
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Definition
| The extent to which a firm's position is pivotal with respect to others in the inter-firm network |
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Definition
| A way of learning not by reading books but by engaging in hands on activities |
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Definition
-Exchange of finer-grained higher quality information
-Informal social control mechanism |
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Term
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Definition
-Less costly
-Excel at connecting with distant others possessing unique and novel info for strategic actions |
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Term
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Definition
| Actions captured by terms such as refinement, choice, production, efficiency, selection, and execution |
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Term
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Definition
| Actions captured by terms such as search, variation, risk taking, experimentation, play, flexibility, discovery, and innovation |
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Term
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Definition
-Initiation
-Going public
-Uncoupling
-Aftermath |
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Term
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Definition
-Equity
-Learning and experience
-Nationality
-Relational Capabilities |
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Term
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Definition
-Resource interdependence- low
-Ratio of soft to hard assets- High
-Source of value creation- Combining complementary resources
-Level of uncertainty- High |
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Term
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Definition
-Resource interdependence- High
-Ratio of soft to hard assets- Low
-Source of value creation- Eliminating redundant resources
-Level of uncertainty- Low |
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Term
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Definition
| Actions and responses undertaken by competing firms |
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Definition
| The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' responses |
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Term
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Definition
| Firms engage the same rivals in multiple markets |
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Term
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Definition
| Multimarket firms respect their rivals' spheres of influence in certain markets and their rivals reciprocate, leading to tacit collusion |
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Definition
| Collective attempts between competing firms to reduce competition |
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Definition
| An entity that engages in output and price fixing, involving multiple competitors. AKA a trust. |
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Definition
| Laws that attempt to curtail anticompetitive business practices such as cartels and trusts |
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Definition
| A theory which focuses on competitive and cooperative interaction |
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Term
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Definition
| Getting caught and who if anyone confesses |
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Term
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Definition
| The percentage of total industry sales accounted for by the top four, eight or twenty firms |
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Term
| High Possibility of Collusion |
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Definition
-Few firms/High concentration
-Existence of industry price leader
-Homogeneous products
-High entry barriers
-High market commonality |
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Term
| Low Possibility of Collusion |
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Definition
-Many firms/Low concentration
-No price leader
-Heterogeneous products
-Low entry barriers
-No mutual forbearance |
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Term
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Definition
| A firm that has a dominant market share and sets "acceptable" prices and margins in an industry |
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Term
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Definition
| Having sufficient resources to deter and combat defection |
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Term
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Definition
| The degree that two competitors' markets overlap |
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Definition
| Retaliation in other markets when one market is attacked by rivals |
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Term
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Definition
| The extent to which a given competitor possesses strategic endowments comparable to those of the focal firm |
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Term
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Definition
| Policy governing the rules of the game in competition, which determine the institutional mix of competition and cooperation that gives rise to the market system |
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Term
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Definition
| Monopolists or collusion parties setting prices at a level higher than the competitive level |
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Term
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Definition
1) Setting prices below costs in the short run to destroy rivals
2) Intending to raise prices to cover losses in the long run after eliminating competition |
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Definition
| The reach of one country's laws to another countries |
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Definition
| An exporter selling below cost abroad and planning to raise prices after eliminating local rivals |
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Definition
| Laws that punish foreign companies that engage in dumping in a domestic market |
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Definition
| An initial set of actions to gain competitive advantage |
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Definition
| A set of actions in response to attacks |
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Definition
| The classic frontal attack with brute force |
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Term
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Definition
| A firm's attack on a focal arena important to a competitor, but not the attacker's true target area |
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Term
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Definition
| A firm's withdrawal from a low-value market to attract rival firms to divert resources into the low value market so that the original withdrawing firm can capture a high-value market |
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Term
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Definition
-Fat cat strategy
-Non aggression strategy
-Open signal for truce
-Enlisting help of governments |
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Definition
| A strategy that leverages local assets in areas which MNE's are weak |
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Definition
| A strategy that centers on leveraging home grown competencies abroad by expanding into similar markets |
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Definition
| A strategy that centers on cooperating through JV's with MNEs and/or selloffs to MNE's |
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Term
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Definition
| A strategy that centers on rapid learning and then expanding overseas |
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Term
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Definition
| The relationship among various participants in determining the direction and performance of corporations. Owners, managers and board of directors |
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Term
| Concentrated Ownership Control |
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Definition
| Ownership and control rights concentrated in the hands of the owners |
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Term
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Definition
| An ownership pattern involving numerous small shareholders, none of which has a dominant level of control |
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Term
| Separation of Ownership and Control |
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Definition
| The dispersal of ownership among many small shareholders, control of the firm is largely concentrated in the hands of salaried professional managers who own |
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Term
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Definition
| A firm owned and controlled by the state |
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Term
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Definition
| The team consisting of the highest level of executives of a firm led by the CEO |
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Term
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Definition
| Relationship between principles and agents |
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Term
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Definition
| Persons to whom authority is delegated |
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Term
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Definition
| Persons such as managers to whom authority is delegated |
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Term
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Definition
The costs associated with principal agent relationships.
1) sum of principals costs of monitoring and controlling agents
2) Agents costs of bonding
3) the residual loss because the interests of the principals and the agents do not align |
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Term
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Definition
| Asymmetric distribution of information between two sides. For example, in principal agent relationships, agents almost always know more about the property they manage than principals do |
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Term
| Principal-Principal Conflicts |
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Definition
| Conflicts of interests between controlling shareholders and minority shareholders |
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Term
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Definition
| Activities that enrich controlling shareholders at the expense of minority shareholders |
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Term
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Definition
| Activities of managers from the controlling family of a corporation to divert resources from the firm for personal or family use |
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Term
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Definition
| Controlling owners sell firm assets to another firm they own at below market prices or spin off the most profitable part of a public firm and merge it with another of their private firms |
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Term
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Definition
| Directors serving on corporate boards who are also full time managers of these companies |
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Term
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Definition
| Non management members of the board |
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Term
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Definition
| When the board is lead by the CEO who doubles as chairman |
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Term
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Definition
| A situation whereby two or more firms share one director affiliated with one firm who serves on multiple boards |
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Term
| Pros of Outside Directors |
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Definition
-More independent from management
-More capable of monitoring and controlling managers
-Good at financial control |
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Term
| Cons of Outside Directors |
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Definition
-Independence may be illusionary
-Affiliated outside directors may have family or professional relationships with the firm or management
-Not good at strategic control |
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Term
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Definition
-First hand knowledge about the firm
-Good at strategic control |
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Term
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Definition
| -Non CEO inside directors may not be able to control and challenge CEO |
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Term
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Definition
| Corporate governance mechanisms which focus on shareholders willingness to work with managers, usually through the board of directors by voicing their concers |
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Term
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Definition
| Corporate governance mechanisms which focus on exit, indicating that shareholders no longer have patience and are wiling to exit by selling their shares |
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Term
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Definition
| A means by which private investors, often in partnership with incumbent managers, issue bonds and use the cash raised to but the firms stock |
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Term
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Definition
| A view of capitalism which suggests that the most fundamental purpose for firms to exist is to serve the economic interests of shareholders |
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Definition
| The skills and abilities acquired by top managers |
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Term
| Foreign Portfolio Investment |
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Definition
| Foreigners purchase of stocks and bonds in one country. Do not directly manage operations |
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Term
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Definition
| A theory which suggests that managers should be regarded as stewards of owner's interests |
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Term
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Definition
| Firms list their shares on foreign stock exchanges |
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Term
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Definition
-Control
-Service
-Resource Acquisition |
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Term
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Definition
| Entries into new product markets and/or business activities that are related to a firms existing market and/or activities |
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Term
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Definition
| Synergy derived by have joint shared activities, personnel, and technologies |
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Term
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Definition
| Reductions in per unit costs by increasing the scale of production |
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Term
| Product-Unrelated Diversification |
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Definition
| Entries into industries that have no obvious product related connections to the firm's current lines of business |
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Term
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Definition
| Product-unrelated diversifiers |
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Term
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Definition
| Companies that seek to replicate a set of activities in related industries in a small number of countries anchored by the home country |
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Term
| Multinational Replicators |
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Definition
| Firms which engage in product-related diversification on one hand and far-flung multinational expansion on the other |
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Term
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Definition
| Conglomerate firms which pursue both extensive product-unrelated diversification and extensive geographic diversification |
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Term
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Definition
| Companies that engage in product-unrelated diversification within a small set of countries centered on the home country |
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Term
| Primary Ways of Restructuring |
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Definition
1) Downsizing
2) Downscoping (divestitures and spinoffs) |
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