Term
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Definition
The rise of market capitalism around the world.
1. The increase in international exchange, including trade in goods and services.
2. The growing similarity of laws, rules, norms, values, and ideas across countries. |
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Term
| Diamond of National Advantage Components |
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Definition
Factor Endowments: A nation's position in factors of production (skilled labor, infrastructure).
Demand Conditions: The nature of home-market demand for the industry's product/service.
Related/Supporting Industries: The presence or absence in the nation of supplier industries and other related industries that are internationally competitive.
Firm strategy, structure, and rivalry: The conditions int he nation governing how companies are created, organized, and managed, as well as the nature of domestic rivalry. |
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Term
| Advantages of International Expansion |
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Definition
Increase the size of potential markets
Achieving economies of scale
Take advantage of arbitrage opportunities
Extending a product's life cycle
Optimizing physical location for every activity in value chain (performance enhancement, cost/risk reduction)
Exploring possibilities for reverse innovation |
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Term
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Definition
| An opportunity to profit by buying and selling the same good in different markets. (buying something from where it is cheap and selling it somewhere where it commands a higher price) |
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Term
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Definition
| New products developed by developed country multinational firms for emerging markets that have adequate functionality at a low cost. |
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Term
| Risks of International Expansion |
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Definition
Political/Economic Risks
Currency Risks
Management Risks |
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Term
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Definition
| Potential threat to a firm's operations in a country due to ineffectiveness of the domestic political system. |
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Term
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Definition
| A characteristic of legal systems where behavior is governed by rules that are uniformly enforced. |
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Term
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Definition
| Potential threat to a firm's operations in a country due to economic policies and conditions, including property rights laws and enforcement of those laws. |
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Term
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Definition
| Potential threat to a firm's operations in a country due to fluctuations in the local currency's exchange rate. |
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Term
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Definition
| Challenges associated with responding to the inevitable differences that exist across countries such as customs, culture, language, customer preferences, and distribution systems. |
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Term
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Definition
| Using other firms to perform value-creating activities that were previously performed in-house. |
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Term
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Definition
| Shifting a value-creating activity from a domestic location to a foreign location. |
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Term
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Definition
| A strategy based on firms' diffusion and adaptation of the parent companies' knowledge and expertise to foreign markets, used in industries where the pressures for both local adaptation and lowering costs are low. |
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Term
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Definition
| A strategy based on firm's centralization and control by the corporate office, with the primary emphasis on controlling costs, and used in industries where the pressure for local adaptation is low and the pressure for lowering costs is high. |
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Term
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Definition
| A strategy based on firms' differentiating their products and services to adapt to local markets, used in industries where the pressure for local adaptation is high and the pressure for lowering costs is low. |
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Term
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Definition
| A strategy based on firms' optimizing the tradeoffs associated with efficiency, local adaptation, and learning, used in industries where the pressures for both local adaptation and lowering costs are high. |
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Term
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Definition
| Increasing international exchange of goods, services, money, people, ideas, and information; and the increasing similarity of culture, laws, rules, and norms within a region. |
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Term
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Definition
| Groups of countries agreeing to increase trade between them by lowering trade barriers. |
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Term
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Definition
| Producing goods in one country to sell to residents of another country. |
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Term
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Definition
| A contractual arrangement in which a company receives a royalty or fee in exchange for the right to use its trademark, patent, trade secret, or other valuable intellectual property. |
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Term
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Definition
| A contractual arrangement in which a company receives a royalty or fee in exchange for the right to use its intellectual property. |
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Term
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Definition
| A business in which a multinational company owns 100 percent of the stock. |
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Term
| Opposing Forces in Global Markets |
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Definition
Cost Reduction
Adaptation to Local Markets |
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Term
| Entry Modes of International Expansion |
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Definition
Exporting
Licensing and Franchising
Strategic Alliances and Joint Ventures
Wholly Owned Subsidiaries |
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Term
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Definition
| The creation of new value by an existing organization or new venture that involves the assumption or risk. |
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Term
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Definition
The process of determining which venture ideas are promising business opportunities.
The process of discovering and evaluating changes in the business environment, such as a new technology, sociocultural trends, or shifts in consumer demand, that can be exploited. |
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Term
| Qualities for a Viable Opportunity |
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Definition
Attractive (must be market demand)
Achievable (practical and physically possible)
Durable (worthwhile window of opportunity)
Value Creating (potentially profitable) |
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Term
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Definition
| Private individuals who provide equity investments for seed capital during the early stages of a new venture. |
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Term
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Definition
| Companies organized to place their investors' funds in lucrative business opportunities |
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Term
| Entrepreneurial Resources |
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Definition
Financial resources
Human capital
Social capital
Government resources (i.e. programs that support new venture development and growth) |
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Term
| Entrepreneurial Leadership |
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Definition
| Leadership appropriate for new ventures that requires courage, belief in ones convictions, and the energy to work hard even in difficult circumstances; and embody vision, dedication, and drive, and commit to excellence. |
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Term
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Definition
| A strategy that enables a skilled and dedicated entrepreneur, with a viable opportunity and access to sufficient resources, to successfully launch a new venture. |
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Term
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Definition
| A firm's entry into an industry with a radical new product or highly innovative service that changes the way business is conducted. |
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Term
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Definition
| A firm's entry into an industry with products or services that capitalize on proven market successes and that usually has a strong marketing orientation. |
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Term
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Definition
| A firm's entry into an industry by offering a product or service that is somewhat new and sufficiently different to create value for customers by capitalizing on current market trends. |
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Term
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Definition
| Intense rivalry, involving actions and responses, among similar competitors vying for the same customers in a marketplace. |
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Term
| Reasons for Competitive Action |
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Definition
Improve market position
Capitalize on growing demand
Expand production capacity
Provide an innovative new solution
Obtain first mover advantages |
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Term
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Definition
| Acts that might provoke competitors to react, such as new market entry, price cutting, imitating successful products, and expanding production capacity. |
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Term
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Definition
| A firm's awareness of its closest competitors and the kinds of competitive actions they might be planning. |
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Term
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Definition
| The extent to which competitors are vying for the same customers in the same markets. |
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Term
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Definition
| The extent to which rivals draw from the same types of strategic resources. |
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Term
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Definition
| Major commitments of distinctive and specific resources to strategic initiatives. |
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Term
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Definition
| Refinements or extensions of strategies usually involving minor resource commitments. |
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Term
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Definition
| Degree of concentration of a firm's business in a particular industry. |
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Term
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Definition
| A firm's choice of not reacting to a rival's new competitive action. |
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Term
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Definition
| A firm's strategy of both cooperating and competing with rival firms. |
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Term
| Factors for Successful Launch of New Ventures |
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Definition
Entrepreneurial opportunity
Resources to pursue the opportunity
Entrepreneur willing and able to undertake the venture |
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Term
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Definition
| The process of monitoring and correcting a firm's strategy and performance. |
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Term
| Traditional Approach to Strategic Control |
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Definition
1. Strategy formulation, goals set by top management
2. Strategy implentation
3. Performance measured against goals |
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Term
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Definition
| A method of organizational control in which a firm gathers and analyzes information from the internal and external environment in order to obtain the best fit between the organization's goals and strategies and the strategic environment. |
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Term
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Definition
| A method of organizational control in which a firm influences the actions of employess through culture, rewards, and boundaries. |
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Term
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Definition
| A system of shared values and beliefs that shape a company's people, organizational structures, and control systems to produce behavioral norms. |
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Term
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Definition
| Policies that specify who gets rewarded and why. |
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Term
| Boundaries and Constraints |
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Definition
| Rules that specify behaviors that are acceptable and unacceptable. |
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Term
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Definition
The relationship among various participants in determining the direction and performance of corporations. The primary participants are:
Shareholders
Management
Board of Directors
Consistent relationship between effective corporate governance and financial performance. |
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Term
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Definition
| A mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party. |
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Term
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Definition
| A theory of the relationship between principals and their agents, with emphasis on two problems: (1) the conflicting goals of principals and agents, along with the difficulty of principals to monitor the agents, and (2) the different attitudes and preferences toward risk of principals and agents. |
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Term
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Definition
| A group that has fiduciary (trust) duty to ensure that the company is run consistently with the long-term interests of the owners, or shareholders, of a corporation and that acts as an intermediary between the shareholders and management. |
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Term
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Definition
| Actions by large shareholders to protect their interests when they feel that managerial actions of a corporation diverge from shareholder value maximization. |
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Term
| External Governance Control Mechanisms |
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Definition
| Methods that ensure that managerial actions lead to shareholder value maximization and do not harm other stakeholder groups that are outside the control of the corporate governance system. |
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Term
| Market for Corporate Control |
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Definition
| An external control mechanism in which shareholders dissatisfied with a firm's management sell their shares. |
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Term
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Definition
| The risk to management of the firm being acquired by a hostile raider. |
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Term
| Principal-Principal Conflicts |
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Definition
| Conflicts between two classes of principals--controling shareholders and minority shareholders--within the context of a corporate governance system. |
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Term
| Expropriation (taking out of owner's hands) of Minority Shareholders |
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Definition
| Activities that enrich the controlling shareholders at the expense of the minorty shareholders. |
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Term
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Definition
| A set of firms that, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action. |
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Term
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Definition
| The formalized patterns of interactions that link a firm's tasks, technologies, and people. |
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Term
| Simple Organizational Structure |
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Definition
| An organizational form in which the owner-manager makes most of the decisions and controls activities, and the staff serves as an extension of the top executive. |
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Term
| Functional Organizational Structure |
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Definition
| An organizational form in which the major functiosn of the firm, such as production, marketing, R&D, and accounting, are grouped internally. |
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Term
| Divisional Organizational Structure |
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Definition
An organizational form in which products, projects, or product markets are grouped internally.
Develops out of a functional organization after a firm expands into related products and services. |
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Term
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Definition
| An organizational form in which products, projects, or product market divisions are grouped into homogeneous units. |
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Term
| Holding Company Structure |
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Definition
| An organizational form that is a variation of the divisional organizational structure in which the divisions have a high degree of autonomy both from other divisions and from corporate headquarters. |
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Term
| Matrix Organizational Structure |
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Definition
| An organizational form in which there are multiple lines of authority and some individuals report to at least two managers. |
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Term
| International Division Structure |
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Definition
| An organizational form in which international operations are in a separate, autonomous division. Most domestic operations are kept in other parts of the organization. |
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Term
| Geographic-Area Division Structure |
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Definition
| A type of divisional organizational structure in which operations in geographical regions are grouped internally. |
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Term
| Worldwide Matrix Structure |
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Definition
| A type of matrix organizational structure that has one line of authority for geographic-area divisions and another line of authority for worldwinde product divisions. |
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Term
| Worldwide Functional Structure |
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Definition
| A functional structure in which all departments have worldwide responsibilities. |
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Term
| Worldwide Product Division Structure |
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Definition
| A product division structure in which all divisions have worldwide responsibilities. |
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Term
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Definition
| A business organization that, from inception, seeks to derive significant advantage from the use of resources and the sale of outputs in multiple countries. |
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Term
| Boundaryless Organizational Designs |
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Definition
| Organizations in which the boundaries, including vertical, horizontal, external, and geographic boundaries, are permeable. |
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Term
| Barrier-Free Organization |
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Definition
| An organizational design in which firms bridge real differences in culture, function, and goals to find common ground that facilitates information sharing and other forms of cooperative behavior. |
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Term
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Definition
| An organization in which nonvital functions are outsourced, which uses the knowledge and expertise of outside suppliers while retaining strategic control. |
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Term
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Definition
| A continually evolving network of independent companies that are linked together to share skills, costs, and access to one another's markets. |
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Term
| Horizontal Organizational Structures |
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Definition
| Organizational forms that group similar or related business units under common management controla nd facilitate sharing resources and infrastructures to exploit synergies among operating unitsa nd help to create a sense of common purpose. |
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Term
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Definition
| Managers' exploration of new opportunitites and adjustment to volatile markets in order to avoid complacency. |
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Term
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Definition
| Managers' clear sense of how value is being created in the short term and how activities are integrated and properly coordinated. |
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Term
| Ambidextrous Organizational Designs |
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Definition
| Organizational designs that attempt to simultaneously pursue modest, incremental innovations as well as more dramatic, breakthrough innovations. |
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Term
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Definition
| The process of transforming organizations from what they are to what the leader would have them become. |
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Term
| Interdependent Leadership Activities |
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Definition
Setting a direction
Designing the organization
Nurturing a culture dedicated to excellence and ethical behavior |
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Term
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Definition
| A strategic leadership activity of strategy analysis and strategy formulation. |
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Term
| Designing the Organization |
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Definition
| A strategic leadership activity of building structures, teams, systems, and organizational processes that facilitate the implementation of the leader's vision and strategies. |
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Term
| Excellent and Ethical Organizational Culture |
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Definition
| An organizational culture focused on core competencies and high ethical standards. |
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Term
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Definition
| A process of reconciling opposing thoughts by generating new alternatives and creative solutions rather than rejecting one thought in favor of another. |
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Term
| Process of Integrative Thinking |
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Definition
Salience: What features of the decision do you consider relevant and important?
Causality: Recognize the causal relationships between the features, related to one another.
Architecture: Arrange a sequence of decisions that will lead to a specific outcome.
Resolution: A selection is made. |
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Term
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Definition
Characteristics of individuals and organizations that prevent a leader from transforming an organization.
1. Vested Interests in the Status Quo
2. Systemic Barriers
3. Behavioral Barriers
4. Political Barriers
5. Personal Time Constraints |
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Term
| Vested Interest in the Status Quo |
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Definition
| A barrier to change that stems from people's risk aversion. |
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Term
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Definition
| Barriers to change that stem from an organizational design that impedes the proper flow and evaluation of information. |
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Term
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Definition
| Barriers to change associated with the tendency for managers to look at issues from a biased or limited perspectie based on their prior education and experience. |
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Term
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Definition
| Barriers to change related to conflicts arising from power relationships. |
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Term
| Personal Time Constraints |
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Definition
| A barrier to change that stems from people's not having sufficient time for strategic thinking and reflection. |
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Term
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Definition
| A leader's ability to get things done in a way he or she wants them to be done. |
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Term
| Organizational Bases of Power |
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Definition
| A formal management position that is the basis of a leader's power. |
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Term
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Definition
| A leader's personality characteristics and behavior that are the basis of the leader's power. |
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Term
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Definition
| An individual's capacity for recognizing his or her own emotions and those of others, including the five components of self-awareness, self-regulation, motiviation, empathy, and social skills. |
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Term
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Definition
| The ability to recognize and understand your moods, emotions, and drives, as well as their effect on others. |
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Term
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Definition
| The ability to control or redirect disruptive impulses and moods; to think before acting. |
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Term
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Definition
| A passion to work for reasons that go beyond money or status; to pursue goals with energy and persistence. |
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Term
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Definition
| The ability to understand the emotional makeup of other people; treating people according to their emotional reactions. |
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Term
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Definition
| Proficiency in managing relationships and building networks. |
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Term
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Definition
Organizations that create a proactive, creative approach to the unknown, characterized by...
1. inspiring and motivational people with a mission and purpose
2. empowering employees
3. accumulating and sharing internal knowledge
4. gathering and integrating external information
5. challenging the status quo and enabling creativity. |
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Term
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Definition
| Managers seeking out best examples of a particular practice as part of an ongoing effort to improve the corresponding practice in their own organization. |
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Term
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Definition
| Benchmarking where th eexamples are drawn from competitors in the industry. |
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Term
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Definition
| Benchmarking where the examples are drawn from any organization, even those outside the industry. |
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Term
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Definition
| A system of right and wrong that assists individuals in deciding when an act is moral or immoral and/or socially desirable or not. |
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Term
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Definition
| The values, attitudes, and behavioral patterns that define an organization's operating culture and that determine what an organization holds as acceptable behavior. |
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Term
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Definition
| The practices that firms use to promote an ethical business culture, including ethical role models, corporate credos and codes of conduct, ethically-based reward and evaluation systems, and consistently enforced ethical policies and procedures. |
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Term
| Compliance-Based Ethics Programs |
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Definition
| Programs for building ethical organizations that have the goal of preventing, detecting, and punishing legal violations. |
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Term
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Definition
| A statement of the beliefs typically held by managers in a corporation. |
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Term
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Definition
| The use of new knowledge to transform organizational processes or create commercially viable products and services. |
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Term
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Definition
| Efforts to create product designs and applications of technology to develop new products for end users. |
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Term
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Definition
| Efforts to improve the efficiency of organizational processes, especially manufacturing systems and operations. |
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Term
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Definition
| An innovation that fundamentally changes existing practices. |
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Term
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Definition
| An innovation that enhances existing practices or makes small improvements in products and processes. |
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Term
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Definition
| A firm-specific view of innovation that defines how a firm can create new knowledge and learn from an innovation initiative even if the project fails. |
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Term
| Corporate Entrepreneurship |
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Definition
| The creation of new value for a corporation, through investments that create either new sources of competitive advantage or renewal of the value proposition. |
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Term
| Focused Approaches to Corporate Entrepreneurship |
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Definition
| Corporate entrepreneurship in which the venturing entity is separated from the other ongoing operations of the firm. |
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Term
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Definition
| A group of individuals, or a division within a corporation, that identifies, evaluates, and cultivates venture opportunities. |
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Term
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Definition
| A corporate new venture group that supports and nurtures fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses. |
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Term
| Dispersed Approaches to Corporate Entrepreneurship |
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Definition
| Corporate entrepreneurship in which a dedication to the principles and policies of entrepreneurship is spread throughout the organization. |
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Term
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Definition
| Corporate culture in which change and renewal are a constant focus of attention. |
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Term
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Definition
| An individual working within a corporation who brings entrepreneurial ideas forward, identifies what kind of market exists for the product or service, finds resources to support the venture, and promotes the venture concept to upper management. |
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Term
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Definition
| An individual working within a corporation who is willing to question the viability of a venture project by demanding hard evidence of venture success and challenging the belief system that carries a venture forward. |
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Term
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Definition
Analysis of Investment steps, in which each step the investor has the option of:
a) investing additional funds to grow or accelerate,
b) delaying,
c) shrinking the scale of, or
d) abandoning the activity |
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Term
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Definition
| Problem with investment decisions in which managers scheme to have a project meet investment approval criteria, even through the investment may not enhance firm value. |
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Term
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Definition
| Biases, blind spots, and other human frailties that lead to poor managerial decisions. |
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Term
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Definition
| The tendency for managers to irrationally stick with an investment, even one that is broken down into a sequential series of decisions, when investment criteria are not being met. |
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Term
| Entrepreneurial Orientation |
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Definition
| The strategy-making practices that businesses use in identifying and launching new ventures, consisting of autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking. |
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Term
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Definition
| Independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion. |
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Term
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Definition
| A willingness to introduce novelty through experimentation and creative processes aimed at developing new products and services as well as new processes. |
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Term
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Definition
| A forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand. |
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Term
| Competitive Aggressiveness |
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Definition
| An intense effort to outperform industry rivals characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace. |
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Term
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Definition
Unity of Command: Person holding both CEO and and Chairman position allows higher efficiency in decision making; improved responsiveness.
Agency Theory: Separation of power provides for less conflict and avoids issues with someone having too much power. |
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Term
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Definition
| Companies must decide which ideas are most likely to bear fruit (the Seeds), and which ideas must be cast aside (the Weeds). |
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Term
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Definition
Skill: slips and lapses – when the action made is not what was intended
Rule: actions that match intentions but do not achieve their intended outcome due to incorrect application of a rule or inadequacy of the plan
Knowledge: actions which are intended but do not achieve the intended outcome due to knowledge deficits |
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Term
|
Definition
International
Global
Multidomestic
Transnational |
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Term
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Definition
| Where there are strong and positive cultures and rewards, employees tend to internalize the organization's strategies and objectives. |
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Term
| Mechanisms for Aligning Managerial Interests and Shareholder Interests |
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Definition
Committed/involved Board of Directors
Shareholder Activism
Effective managerial incentives and rewards
Market for Corporate Control
banks and analysts, regulators, media, public activists |
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Term
| Determining Structure of International Market |
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Definition
Type of international strategy
Product diversity
Extent to which a firm is dependent on foreign sales |
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Term
| Four Key Elements of an Ethical Organization |
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Definition
Role Models
Corporate Credos
Codes of Conduct
Reward and Evaluation Systems
Policies and Procedures |
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Term
Main Organizational Structures
(page 358) |
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Definition
Simple
Functional
Divisional
International |
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