Social Values, Law & Politics, Demographics, Technology
Components of the Macro Environment
Managers keeping track of societal changes. Example: McDonald’s has a fruit and yogurt parfait because society wants healthy options.
Law & Politics
You must comply with the law or you change the law if you’re an executive. Example: If you owned a bank, the branch offices of that bank must only be located near the head bank. Now, banks are widely spread because of lobbyists changing it.
Data levels and how to use that data. Example: How many 13 year olds are there in Mexico, and what is their disposable income for candy.
You planning ahead in reference to the public’s willingness to accept technology. Example: Giving electric to homes in the 1940’s.
Rivals, Substitutes, Suppliers, New Entrants, Buyers
Components of Managing the Competitive Environment
Groups & individuals who affect & are affected by the organization and its output.
Makes contribution because of an inducement.
Cooperative Action, Independent Action, Moving to a Different Environment
Strategies for you managing the environment.
Contracting, Cooptation, and Coalition
Three subdivisions of Cooperative Action
Legal Agreement between two parties. Example: Penn State and Pepsi signed a deal to have Pepsi as the main supplier.
Absorbing new elements into the organization to avoid a threat. Example: Organization have student reps to have input in order to avoid conflict.
Joining forces for a common purpose. Example: Smith & Wesson for NRA
Competitive Aggression, Competitive Pacification, Public Relations, Voluntary action, Legal Action, Political Action
Six subdivisions of Independent Action
Exploiting a distinctive threat.
Decide to work with someone because you know you can’t beat them.
Establishing and maintaining a public image
Engage in public service. Example: PSU and THON
Protecting your rights. Example: Can’t put the Nike symbol on clothing without their permission.
Lobbying is an example of this.
Domain Selection, Diversification, Mergers & Acquisitions, Divestiture
Four subdivisions of Moving to a Different Environment
Entering industries where you have an advantage, “you choose where you play”
Investing in different types of products and services, branching out.
Mergers & Acquisitions
Merging and joining forces. Example: Barnes and Noble should have bought Amazon when they had the chance.
Sell off; if something is not doing well, close it.
Competitors, Substitutes, Barriers to Entry, and Branch Loyalty
Four things that influence Environmental Attractiveness
Structured method for analyzing the organization’s internal environment in order to identify strengths and weaknesses AND analyzing the organization’s external environment in order to identify opportunities and threats.
Strengths, Weaknesses, Opportunities, and Threats
Components of SWOT
Star, Question Mark, Cash Cow, Dog
Going for Left to Right, Top to Bottom, name the four components of the BCG Matrix.
Concentration, Vertical Integration, Concentric Diversification, Conglomerate Diversification
Four types of Corporate Strategy Alternatives
an organization operates a single business and competes in a single industry (laser dot). Example: CVS, Rite Aid
an organization enters one or more businesses that are necessary for manufacturing or distributing its own products (upward arrows) Example: Exxon Mobil
an organization adds new businesses that produce related products or are involved in related markets and activities, distinctive confidence (ripples). Example: Proctor & Gamble
an organization adds new businesses that produce unrelated products or are involved in unrelated markets and activities. Example: GE
Lobbying, PAC’s, Strategic Retreat, Coalition Building, Stonewalling
Five strategies for managing the Political Environment
Paying resources to influence legislation (local an international)
Political Action Committee
Backing off when you know you can’t win
NAFTA, EU, APEC
Three spheres of economic influence under the World Trade Organization (125 countries)
Includes US, Mexico, Canada. Has the largest amount of $ that crosses the boarders.
European countries that dish out upscale goods
Asia Pacific Economic Compact that accounts for more than 60% of the world’s manufacturing.
12 Ways of How to Assess International Market Attractiveness
12 Stats of where to put business: Population, total GNP, Per capita GNP, Economic Stability, Legal system, Geographic Proximity, Trade Barriers, Transportation, Consumer Behavior, Competition, Political stability, cultural access
Multinational, International, Transnational, Global
4 Worldwide Strategy Organization Models
Several subsidiaries operate as stand-alone units in multiple countries (autonomy) Example: Shell
Use existing capabilities to expand into foreign markets (strong technology) Example: Xerox
Specialized facilities permit local responsiveness, complex coordination mechanisms provide global integration. Transcend, will tailor to what the customer wants. Example: Caterpillar
Views the world as a single market, operations are centrally controlled. Example: McDonalds
Exporting, Licensing & Franchising, Joint Venture, Wholly Owned Subsidiary
Four Modes of Entry
“Build it here, ship it there.” Advantages: economies of scale, control of money, consistent with Global strategy (one product). Disadvantages: Tariff barriers (taxes) and transportation costs, some products cannot be exported
Licensing & Franchising
Build a product or provide a service. Advantages: Lower operating costs, lower political risk. Disadvantages: Loss of control, threats to quality, lower margins.
Have partners there (not 50/50). Advantages: Local knowledge, shared cost and risk, may be the only option. Disadvantages: Potential conflict between parties, political risk, shared profits.
Wholly Owned Subsidiary
You build 100%. Advantages: All control, all profits. Disadvantages: Highest cost, highest risk.
Host Country nationals, Expatriates, Third Country nationals
Three types of Worldwide Managers
Host country nationals
Natives of the subsidiary where an overseas subsidiary is located. Example: Siemens in the U.S.
Parent-company nationals who are sent to work at a foreign subsidiary. Example: Owner from Germany
Natives of a country other than the home or host country. Example: Siemens sends a Brit to the U.S.
Power Distance, Uncertainty Avoidance, Collectivism vs. Individualism, Masculinity and femininity.
Four areas of Hofstede
Distance between the top and bottom
Knowing something vs. being ambiguous
Collectivism vs. Individualism
To work in a group or not
Masculinity vs. Femininity
Material things, deadlines vs. Relationships, harmony
Horizontal Differentiation (Differentiation)
The way tasks are broken up. Example: Undergrad experience includes entrance to major, language, general educations, etc.
Vertical Differentiation (Integration)
Putting everything together so that it makes sense. Example: Need a certain amount of entrance to major, language, and general educations to graduate; you can’t just randomly pick.
Triangle that has many levels. Example: PSU
Triangle that has few levels. Example: Car Wash
Top management (executive), worries five years ahead. Example: dean or president
Middle Management, worries about a year in advance. Example: Director, department head.
Line management, worry about daily, weekly, monthly. Examples: Supervisors, employees
Functional, Product, Geographic, Matrix, Project Team, Collegial
Four Types of Organizational Structure
Grouping organizational units according to technical/professional specialty. Most common in terms of number of organizations.
Grouping organizational units according to product or service.
Grouping organizational units by geographic location
An organization characterized by dual reporting relationships, in which some persons report to two supervisors. Ex. Have 2, 3, or 4 bosses
Interdisciplinary specialists assigned to long-term project.
Non-pyramidal form, co-equal partners (ONLY ONE NOT IN PYRAMID FORM)
Labor Intensive, Capital Intensive, Continuous Process
Three Forms of Basic Technology
Labor Intensive Technology
Needs alot of humans. The triangle is completely shaded.
Capital Intensive Technology
Needs equipment and is all about mass production. The triangle is a house because the equipment has replaced the people
“the thing itself”. The triangle is diamond shaped because the equipment and the process itself has replaced the people.
Mechanistic Work Style
Highly formal, limited participation, dependent on supervisor, talk about “boss”, centralization. Status comes from how much power you have.
Organic Work Style
Informal, High Participation, Less dependent on supervisor, talk about “teams”, decentralization. Status comes from knowledge, what you contribute.
Original Definition of Entrepreneurship
Formally defined as the buying, selling, and bringing together of the factors of production.
Modern Definition of Entrepreneurship
Entrepreneurship is a propensity to identify business opportunities and to take action to exploit those opportunities.
Traits and personality characteristics of the Entrepreneurial Personality
A series of steps and procedures, an action approach.
External Locus of Control
Attribute outcomes to factors outside themselves
Internal Locus of Control
Attribute outcomes to factors within themselves
Bad idea, Mortality, Delegation, Funding, Planning&Control,
The concept of using entrepreneurial thinking within the complexity and bureaucracy of a large organization.