Shared Flashcard Set

Details

Global Strategy
Midterm
314
Business
Undergraduate 3
11/09/2009

Additional Business Flashcards

 


 

Cards

Term
MNE
Definition
A firm that engages in FDI by directly controlling and managing value-adding activities in other countries
Term
FDI
Definition
A firms direct investment in production and/or service activities abroad
Term
Triad
Definition
Three primary regions of developed economies: North America, Europe and Japan
Term
Emerging Economies
Definition
A label that describes fast growing developing economies since the 1990's
Term
BRIC
Definition
Brazil, Russia, India and China
Term
Base of the Pyramid
Definition
The vast majority of humanity, about four billion people, who make less than $2,000 a year
Term
Strategic Management
Definition
A way of managing the firm from a strategic, "big picture" perspective
Term
Strategy as Plan
Definition
A perspective that suggests that strategy is most fundamentally embodied in explicit, rigorous formal planning
Term
Strategy as Action
Definition
A perspective that suggests that strategy is most fundamentally reflected by firms pattern of actions
Term
Intended Strategy
Definition
A strategy that is deliberately planned for
Term
Emerging Strategy
Definition
A strategy based on the outcome of a stream of smaller decisions from the "bottom up"
Term
Strategy as Integration
Definition
A perspective that suggests that strategy is neither solely about plan nor action and that strategy integrates elements of both schools of thought
Term
Strategy
Definition
A firm's theory about how to successfully compete
Term
Strategy Formulation
Definition
The crafting of a firm's strategy
Term
Strategy Implementation
Definition
The actions undertaken to carry out a firm's strategy
Term
SWOT Analysis
Definition
A strategic analysis of a firm's internal Strengths and Weaknesses, and the Opportunities and Threats in the environment
Term
Replication
Definition
Repeated testing of theory under a variety of conditions to establish its applicable boundaries
Term
Strategy Tripod
Definition
A framework that suggests the strategy as a discipline has three "legs" or key perspectives: industry-, resource-, and institution-based views
Term
Global Strategy
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
Term
Globalization
Definition
The close integration of countries and peoples around the world
Term
Semiglobalization
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
Term
Nongovernmental Organization
Definition
Organization advocating causes such as the environment, human rights, and consumer rights that are not affiliated with government
Term
Four fundamental questions in Strategy
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
Term
Industry
Definition
A group of firms producing products that are similar to each other
Term
Perfect Competition
Definition
A competitive situation in which price is set by the "market" all firms are price takers, and entries and exits are relatively easy
Term
Industrial Organization Economics
Definition
A branch of economics that seeks to better understand how firms in an industry compete and then how to regulate them
Term
Structure
Definition
Structural attributes of an industry such as the costs of entry/exit
Term
Conduct
Definition
Firm actions such as product differentiation
Term
Performance
Definition
The results of firm conduct
Term
Structure-Conduct-Performance Model
Definition
An industrial organization economics model that suggests industry structure determines firm conduct which in turn determines performance
Term
Monopoly
Definition
A situation whereby only on firm provides the goods and/or services for an industry
Term
Oligopoly
Definition
A situation whereby a few firms control an industry
Term
Duopoly
Definition
A special case of oligopoly that has two players
Term
Five Forces Framework
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
Term
Dominance
Definition
A situation whereby the market leader has a very large market share
Term
Incumbents
Definition
Current members of an industry that compete against each other
Term
Entry Barriers
Definition
The industry structures that increase the costs of entry
Term
Scale-Based Advantages
Definition
Advantages derived from economies of scale (the more a firm produces some products, the lower the unit costs become)
Term
Economies of Scale
Definition
Reduction in per unit costs by increasing the scale of production
Term
Non-Scale-Based Advantages
Definition
Low-cost advantages that are not derived from the economies of scale
Term
Product Proliferation
Definition
Efforts to fill product space in a manner that leaves little "unmet demand" for potential entrants
Term
Product Differentiation
Definition
The uniqueness of products that customers value
Term
Network Externalities
Definition
The value a user derives from a product increases with the number of other users of the same product
Term
Excess Capacity
Definition
Additional production capacity currently underutilized or not utilized
Term
Bargaining Power of Suppliers
Definition
The ability of suppliers to raise prices and/or reduces the quality of goods and services
Term
Forward Integration
Definition
Acquiring and owning downstream assets
Term
Backward Integration
Definition
Acquiring and owning upstream assets
Term
Substitutes
Definition
Products of different industries that satisfy customer needs currently met by the focal industry
Term
Industry Positioning
Definition
Ways to position a firm within an industry in order to minimize the threats presented by the five forces
Term
Generic Strategies
Definition
Strategies intended to strengthen the focal firm's position relative to the five forces including: Cost leadership, differentiation and focus
Term
Cost Leadership
Definition
A competitive strategy that centers on competing on low cost and prices
Term
Differentiation
Definition
A strategy that focuses on how to deliver products that customers perceive as valuable and different
Term
Focus
Definition
A strategy that serves the needs of a particular segment or niche of an industry
Term
Complementors
Definition
A firm that sells products that add value to the products of a focal industry. ALSO THE SIXTH FORCE.
Term
Flexible Manufacturing Technology
Definition
Modern manufacturing technology that enables firms to produce differentiated products at low costs
Term
Mass Customization
Definition
Mass produced but customized products
Term
Strategic Groups
Definition
Groups of firms within a broad industry
Term
Mobility Barriers
Definition
Within-industry difference that inhibits the movement between strategic groups
Term
Resource-Based View
Definition
A leading perspective of strategy which suggests that differences in firm performance are most fundamentally driven by differences in firm resources and capabilities
Term
Resources
Definition
The tangible and intangible assets a firm uses to choose and implement its strategies
Term
Capabilities
Definition
The tangible and intangible assets a firm uses to choose and implement its strategies
Term
Tangible Resources and Capabilities
Definition
Assets that are observable and more easily quantified. Financial, Physical, Technological, Organizational
Term
Intangible Resources and Capabilities
Definition
Hard to observe and difficult to codify resources and capabilities. Human, Innovation, Reputation
Term
Value Chain
Definition
Goods and services produced through a chain of vertical activities that add value
Term
Benchmarking
Definition
Examination as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors
Term
Commoditization
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
Term
Outsourcing
Definition
Turning over all or part of an activity to an outside supplier to improve the performance of the focal firm
Term
Offshoring
Definition
International/Foreign outsourcing
Term
Inshoring
Definition
Domestic outsourcing
Term
Captive Sourcing
Definition
Setting up subsidiaries to perform in house work in foreign location. Conceptually identical to FDI
Term
VRIO Framework
Definition
A resource based framework that focuses on the value, rarity, imitability, and organizational aspects of resources and capabilities
Term
Causal Ambiguity
Definition
The difficulty of identifying the causal determinants of successful firm performance
Term
Complementary Assets
Definition
Numerous noncore assets that complement and support the value adding activities of core assets
Term
Social Complexity
Definition
The socially complex ways of organizing typical of many firms
Term
Hypercompetition
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
Term
Institution Based View
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
Term
Institution
Definition
Humanly devised constraints that structure human interaction, "rules of the game"
Term
Institutional Framework
Definition
A framework of formal and informal institutions governing individual and firm behavior
Term
Formal Institutions
Definition
Institutions represented by laws, regulations and rules (Regulatory)
Term
Regulatory Pillar
Definition
How formal rules, laws and regulations influence the behavior of individuals and firms
Term
Informal Institutions
Definition
Institutions represented by norms, cultures, and ethics (normative and cognitive)
Term
Normative Pillar
Definition
How the values, beliefs, and norms of other relevant players influence the behavior of individuals and firms
Term
Norm
Definition
The prevailing practice of relevant players that affect the focal individuals and firms
Term
Cognitive Pillar
Definition
The internalized, taken for granted values and beliefs that guide individual and firm behavior
Term
Transaction Costs
Definition
Costs associated with economic transaction or more broadly, costs of doing business
Term
Opportunism
Definition
Self-interest seeking with guile
Term
Relational Contracting
Definition
Contracting based on informal relationships
Term
Informal, Relationship-Based, Personalized Exchange
Definition
A way of economic exchange based on informal relationships among transaction parties. AKA relational contracting.
Term
Arm's-Length Transactions
Definition
Transactions in which parties keep a distance
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.
Term
Institutional Transitions
Definition
Fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect organizations as players
Term
Firm Strategy, Structure and Rivalry
Definition
How industry structure and firm strategy interact to affect interfirm rivalry
Term
Factor Endowments
Definition
The endowments of production factors such as land, water, and people in one country
Term
Related and Supporting Industries
Definition
Industries that are related to and/or support the focal industry
Term
Domestic Demand
Definition
Demand for products and services within a domestic economy
Term
Culture
Definition
The collective programing of the mind that distinguishes the members of one group or category of people from another
Term
Power Distance
Definition
The degree of social inequality
Term
Individualism
Definition
The perspective that the identity of an individual is most fundamentally based on his or her own individual attributes
Term
Collectivism
Definition
The perspective that the identity of an individual is most fundamentally based on the identity of his or her collective group
Term
Masculinity
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
Term
Femininity
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.
Term
Uncertainty Avoidance
Definition
The extent to which members in different cultures accept ambiguous situations and tolerate uncertainty
Term
Long Term Orientation
Definition
A perspective that emphasizes perseverance and savings for future betterment
Term
Ethics
Definition
The norms, principles, and standards of conduct governing individual and firm behavior
Term
Code of Conduct/Ethics
Definition
Written policies and standards for corporate conduct and ethics
Term
Ethical Relativism
Definition
The relative thinking that ethical standards vary significantly around the world and that there are no universally agreed upon ethical and unethical behaviors
Term
Ethical Imperialism
Definition
The imperialistic thinking that one's own ethical standards should be applied universally around the world
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
Term
Corruption
Definition
The abuse of public power for private benefit usually in the form of bribery
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
Term
In-Group
Definition
Individuals and firms regarded as part of "us"
Term
Out-Group
Definition
Individuals and firms not regarded as part of "us"
Term
Cultural Distance
Definition
The difference between two cultures along some identifiable dimensions
Term
Institutional Distance
Definition
The extent of similarity or dissimilarity between the regulatory, normative and cognitive institutions of two countries
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
Value Chain
Term
According to the text, what are the three leading perspectives on strategy?
Definition
industry-based competition, firm-specific resources & capabilities, & institutional conditions & transitions
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
Term
The so-called “sixth force” to supplement the five forces model, as endorsed by Andrew Grove, is ________________.
Definition
Complementors
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
Term
Local Responsiveness
Definition
The necessity to be responsive to different customer preferences around the world
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
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
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
Term
Centers of Excellence
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
Term
Worldwide Mandate
Definition
The charter to be responsible for one MNE function throughout the world
Term
Transnational Strategy
Definition
An MNE strategy which endeavors to be cost efficient, locally responsive, and learning driven simultaneously.
Term
International Division
Definition
A structure typically set up when firms initially expand abroad often engaging in a home replication strategy
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
Term
Country Manager
Definition
The business leader in charge of a specific country for an MNE
Term
Global Product Division
Definition
An organizational structure which assigns global responsibilities to each product division
Term
Global Matrix
Definition
An organizational structure often used to alleviate the disadvantages associated with both geographic area and product division structures, especially using transnational strategies
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
Term
Knowledge Management
Definition
The structures, processes, and systems that actively develop, leverage, and transfer knowledge
Term
Explicit Knowledge
Definition
Knowledge that is codifiable
Term
Tacit Knowledge
Definition
Knowledge that is not codifiableG
Term
Global Virtual Teams
Definition
Teams whose members are physically
Term
Absorptive Capacity
Definition
The ability to absorb new knowledge by recognizing the value of new information, assimilating it, and applying it
Term
Social Capital
Definition
The informal benefits individuals and organizations derive from their social structures and networks
Term
Micro-Macro Link
Definition
Micro, informal interpersonal relationships among managers of various units may greatly facilitate macro, interorganizational cooperation among various units
Term
Subsidiary Initiative
Definition
The proactive and deliberate pursuit of new business opportunities by and MNE's subsidiary to expand its scope of responsibility
Term
Global Account Structure
Definition
A customer focused structure that supplies customers in a coordinated and consistent way across various countries
Term
Solutions Based Structure
Definition
An MNE organization structure which caters to the needs of providing solutions for customer's problems
Term
CSR
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
Term
Stakeholder
Definition
Any group or individual who can affect or is affected by the achievement of the organizations objectives
Term
Global Sustainability
Definition
The ability to meet the needs of the present without compromising the ability of future generations to meet their needs
Term
Primary Stakeholder Groups
Definition
Constituents on which the firm relies for its continuous survival and prosperity
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)
Term
Triple Bottom Line
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
Term
Reactive Strategy
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
Term
Defensive Strategy
Definition
A strategy that is defensive in nature. Firms admit responsibility, but often fight it
Term
Accommodative Strategy
Definition
A strategy that tries to accommodate CSR considerations into decision making
Term
Codes of Conduct
Definition
A set of written policies and standards for corporate conduct and ethics
Term
Proactive Strategy
Definition
A strategy that focuses on proactive engagement in CSR.
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
Term
SME's
Definition
Firms with less than 500 employees
Term
Entrepreneurship
Definition
The identification and exploitation of previously unexplored opportunities
Term
Entrepreneurs
Definition
Individuals who identify and explore previously unexplored opportunities
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
Term
Liability of Newness
Definition
The inherent disadvantage that entrepreneurial firms experience as new entrants
Term
Strong Ties
Definition
More durable, reliable, and trustworthy relationships cultivated over a long period of time
Term
Weak Ties
Definition
Relationships that are characterized by infrequent interaction and low intimacy
Term
Routes of Harvest and Exit
Definition
-Selling equity stake
-Selling the business
-Merging with another firm
-Considering and IPO
-Declaring bankruptcy
Term
IPO
Definition
The first round of public trading of company stock
Term
Born Global
Definition
Start up companies that attempt to do business abroad from inception
Term
Entering Foreign Markets
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
Term
Stage Models
Definition
Models which suggest firms internationalize by going through predictable stages from simple steps to complex operations
Term
Serial Entrepreneurs
Definition
People who start, grow, and sell several businesses throughout their careers
Term
Liability of Foreignness
Definition
The inherent disadvantage foreign firms experience in host countries because of their nonnative status
Term
Dissemination Risks
Definition
The risks associated the unauthorized diffusion of firm-specific assets
Term
Obsolescing Bargain
Definition
The deals struck by MNE's and host governments, which change their requirements after the entry of MNE's
Term
Expropriation
Definition
Confiscation of foreign assets invested in one country
Term
Sunk Costs
Definition
Irrevocable costs occurred and investments made
Term
Trade Barriers
Definition
Barriers blocking international trade
Term
Tariff Barriers
Definition
Taxes levied on imports
Term
Nontariff Barriers
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
Currency Risks
Definition
Risks stemming from exposure to unfavorable movements of the currencies
Term
Speculation
Definition
Making bets on currency movements by committing to stable currencies
Term
Hedging
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
Agglomeration
Definition
Clustering economic activities in certain locations
Term
Natural Resource Seeking
Definition
Firms entering foreign markets in search of natural resources
Term
Market Seeking
Definition
Firms going after the most lucrative markets for their products and services- Seafood in Japan
Term
Efficiency Seeking
Definition
Firms going after certain locations in search of efficiency gains- Manufacturing in China
Term
Innovation Seeking
Definition
Firms targeting countries and regions renowned for generating world class- IT Silicon Valley
Term
Cultural Distance
Definition
The difference between two cultures along some identifiable dimensions
Term
Institutional Distance
Definition
The extent of similarity of dissimilarity between the regulatory, normative, and cognitive institutions of two countries
Term
First Mover Advantages
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
Late Mover Advantages
Definition
-Free ride on first mover
-Resolution of tech and market uncertainty
-First mover's difficulty to adapt to market changes
Term
Scale of entry
Definition
The amount of resources committed to foreign market entry
Term
Non-Equity Modes of Entry
Definition
Exports and Contractual Agreements
Term
Equity Modes of Entry
Definition
JVs and Wholly Owned Subsidiaries
Term
Ownership Advantage
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
Internationalization
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
Direct Exports
Definition
Directly selling products made in the home country to customers in other countries
Term
Indirect Exports
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
Turnkey Projects
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
R&D Contracts
Definition
Outsourcing agreements in R&D between firms
Term
Co-Marketing
Definition
Agreements among a number of firms to jointly market their products and services
Term
Equity Modes
Definition
Modes of foreign market entry which involves the use of equity
Term
JV
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
Greenfield Operations
Definition
Building factories and offices from scratch
Term
Acquisition
Definition
The transfer of control of assets, operations, and management from one firm to another
Term
Country of Origin Effect
Definition
The positive or negative perception of firms and products from a certain country
Term
Strategic Alliances
Definition
Voluntary agreements between firms involving exchanging, sharing, or co-developing of products, technologies, or services
Term
Contractual Alliances
Definition
Alliances which are based on contracts and which do not involve the sharing of equity
Term
Equity-Based Alliances
Definition
Strategic alliances which involve the use of equity
Term
Cross-Shareholding
Definition
Both partners invest in each other to become cross-shareholders
Term
Strategic Investment
Definition
One partner invests in another as a strategic investor
Term
Strategic Networks
Definition
Strategic alliances formed by multiple firms to compete against other such groups and against traditional single firms
Term
Constellations
Definition
Multipartner strategic alliances
Term
Horizontal Alliances
Definition
Strategic alliances formed by competitors
Term
Upstream Vertical Alliances
Definition
Alliances with firms on the supply side
Term
Downstream Vertical Alliances
Definition
Alliances with firms in distribution
Term
Real Option
Definition
An option investment in real operations as opposed to financial capital
Term
Advantages of Strategic Alliances
Definition
-Reduce costs, risks, uncertainties
-Gain access to complementary assets
-Opportunities to learn from partners
-Possibilities to use alliances and networks as real options
Term
Disadvantages of Strategic Alliances
Definition
-Choosing wrong partners
-Costs of negotiation and coordination
-Possibility of partner opportunism
-Risk of helping nurture competitors
Term
Learning Race
Definition
A race in which alliance partners aim to outrun each other by learning the "tricks" form the other side as fast as possible
Term
Relational Capabilities
Definition
The capabilities to successfully manage interfirm relationships
Term
Partner Rarity
Definition
The difficulty to locate partners with certain desirable attributes
Term
Network Centrality
Definition
The extent to which a firm's position is pivotal with respect to others in the inter-firm network
Term
Learning by Doing
Definition
A way of learning not by reading books but by engaging in hands on activities
Term
Strong Ties Advantages
Definition
-Exchange of finer-grained higher quality information
-Informal social control mechanism
Term
Weak Ties Advantages
Definition
-Less costly
-Excel at connecting with distant others possessing unique and novel info for strategic actions
Term
Exploitation
Definition
Actions captured by terms such as refinement, choice, production, efficiency, selection, and execution
Term
Exploration
Definition
Actions captured by terms such as search, variation, risk taking, experimentation, play, flexibility, discovery, and innovation
Term
Corporate Divorces
Definition
-Initiation
-Going public
-Uncoupling
-Aftermath
Term
Alliance Performance
Definition
-Equity
-Learning and experience
-Nationality
-Relational Capabilities
Term
Alliances
Definition
-Resource interdependence- low
-Ratio of soft to hard assets- High
-Source of value creation- Combining complementary resources
-Level of uncertainty- High
Term
Acquisitions
Definition
-Resource interdependence- High
-Ratio of soft to hard assets- Low
-Source of value creation- Eliminating redundant resources
-Level of uncertainty- Low
Term
Competitive Dynamics
Definition
Actions and responses undertaken by competing firms
Term
Competitor Analysis
Definition
The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' responses
Term
Multimarket Competition
Definition
Firms engage the same rivals in multiple markets
Term
Mutual Forbearance
Definition
Multimarket firms respect their rivals' spheres of influence in certain markets and their rivals reciprocate, leading to tacit collusion
Term
Collusion
Definition
Collective attempts between competing firms to reduce competition
Term
Cartel
Definition
An entity that engages in output and price fixing, involving multiple competitors. AKA a trust.
Term
Antitrust Laws
Definition
Laws that attempt to curtail anticompetitive business practices such as cartels and trusts
Term
Game Theory
Definition
A theory which focuses on competitive and cooperative interaction
Term
Prisoners Dilemma
Definition
Getting caught and who if anyone confesses
Term
Concentration Ratio
Definition
The percentage of total industry sales accounted for by the top four, eight or twenty firms
Term
High Possibility of Collusion
Definition
-Few firms/High concentration
-Existence of industry price leader
-Homogeneous products
-High entry barriers
-High market commonality
Term
Low Possibility of Collusion
Definition
-Many firms/Low concentration
-No price leader
-Heterogeneous products
-Low entry barriers
-No mutual forbearance
Term
Price Leader
Definition
A firm that has a dominant market share and sets "acceptable" prices and margins in an industry
Term
Capacity to Punish
Definition
Having sufficient resources to deter and combat defection
Term
Market Commonality
Definition
The degree that two competitors' markets overlap
Term
Cross-Market Retaliation
Definition
Retaliation in other markets when one market is attacked by rivals
Term
Resource Similarity
Definition
The extent to which a given competitor possesses strategic endowments comparable to those of the focal firm
Term
Competition Policy
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
Term
Collusive Price Setting
Definition
Monopolists or collusion parties setting prices at a level higher than the competitive level
Term
Predatory Pricing
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
Term
Extraterritoriality
Definition
The reach of one country's laws to another countries
Term
Dumping
Definition
An exporter selling below cost abroad and planning to raise prices after eliminating local rivals
Term
Antidumping Laws
Definition
Laws that punish foreign companies that engage in dumping in a domestic market
Term
Attack
Definition
An initial set of actions to gain competitive advantage
Term
Counterattack
Definition
A set of actions in response to attacks
Term
Thrust
Definition
The classic frontal attack with brute force
Term
Feint
Definition
A firm's attack on a focal arena important to a competitor, but not the attacker's true target area
Term
Gambit
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
Term
Signaling
Definition
-Fat cat strategy
-Non aggression strategy
-Open signal for truce
-Enlisting help of governments
Term
Defender
Definition
A strategy that leverages local assets in areas which MNE's are weak
Term
Extender
Definition
A strategy that centers on leveraging home grown competencies abroad by expanding into similar markets
Term
Dodger
Definition
A strategy that centers on cooperating through JV's with MNEs and/or selloffs to MNE's
Term
Contender
Definition
A strategy that centers on rapid learning and then expanding overseas
Term
Corporate Governance
Definition
The relationship among various participants in determining the direction and performance of corporations. Owners, managers and board of directors
Term
Concentrated Ownership Control
Definition
Ownership and control rights concentrated in the hands of the owners
Term
Diffused Ownership
Definition
An ownership pattern involving numerous small shareholders, none of which has a dominant level of control
Term
Separation of Ownership and Control
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
Term
State Owned Enterprises
Definition
A firm owned and controlled by the state
Term
Top Management Team
Definition
The team consisting of the highest level of executives of a firm led by the CEO
Term
Agency Relationship
Definition
Relationship between principles and agents
Term
Principals
Definition
Persons to whom authority is delegated
Term
Agents
Definition
Persons such as managers to whom authority is delegated
Term
Agency Costs
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
Term
Information Asymmetries
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
Term
Principal-Principal Conflicts
Definition
Conflicts of interests between controlling shareholders and minority shareholders
Term
Expropriation
Definition
Activities that enrich controlling shareholders at the expense of minority shareholders
Term
Tunneling
Definition
Activities of managers from the controlling family of a corporation to divert resources from the firm for personal or family use
Term
Related Transactions
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
Term
Inside Directors
Definition
Directors serving on corporate boards who are also full time managers of these companies
Term
Outside Directors
Definition
Non management members of the board
Term
CEO Duality
Definition
When the board is lead by the CEO who doubles as chairman
Term
Interlocking Directorate
Definition
A situation whereby two or more firms share one director affiliated with one firm who serves on multiple boards
Term
Pros of Outside Directors
Definition
-More independent from management
-More capable of monitoring and controlling managers
-Good at financial control
Term
Cons of Outside Directors
Definition
-Independence may be illusionary
-Affiliated outside directors may have family or professional relationships with the firm or management
-Not good at strategic control
Term
Pros of Inside Directors
Definition
-First hand knowledge about the firm
-Good at strategic control
Term
Cons of Inside Directors
Definition
-Non CEO inside directors may not be able to control and challenge CEO
Term
Voice Based Mechanisms
Definition
Corporate governance mechanisms which focus on shareholders willingness to work with managers, usually through the board of directors by voicing their concers
Term
Exit Based Mechanisms
Definition
Corporate governance mechanisms which focus on exit, indicating that shareholders no longer have patience and are wiling to exit by selling their shares
Term
Leveraged Buyout
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
Term
Shareholder Capitalism
Definition
A view of capitalism which suggests that the most fundamental purpose for firms to exist is to serve the economic interests of shareholders
Term
Managerial Human Capital
Definition
The skills and abilities acquired by top managers
Term
Foreign Portfolio Investment
Definition
Foreigners purchase of stocks and bonds in one country. Do not directly manage operations
Term
Stewardship Theory
Definition
A theory which suggests that managers should be regarded as stewards of owner's interests
Term
Cross-Listing
Definition
Firms list their shares on foreign stock exchanges
Term
Board of Directors
Definition
-Control
-Service
-Resource Acquisition
Term
Product Diversification
Definition
Entries into new product markets and/or business activities that are related to a firms existing market and/or activities
Term
Operational synergy
Definition
Synergy derived by have joint shared activities, personnel, and technologies
Term
Scale Economies
Definition
Reductions in per unit costs by increasing the scale of production
Term
Product-Unrelated Diversification
Definition
Entries into industries that have no obvious product related connections to the firm's current lines of business
Term
Conglomerates
Definition
Product-unrelated diversifiers
Term
Anchored Replicators
Definition
Companies that seek to replicate a set of activities in related industries in a small number of countries anchored by the home country
Term
Multinational Replicators
Definition
Firms which engage in product-related diversification on one hand and far-flung multinational expansion on the other
Term
Far-Flung Conglomerate
Definition
Conglomerate firms which pursue both extensive product-unrelated diversification and extensive geographic diversification
Term
Classic Conglomerate
Definition
Companies that engage in product-unrelated diversification within a small set of countries centered on the home country
Term
Primary Ways of Restructuring
Definition
1) Downsizing
2) Downscoping (divestitures and spinoffs)
Supporting users have an ad free experience!