the set of mechanisms used to manage they relationship among stakeholders, and to determine and control the strategic direction and performance of organizations

??

corporate governance

firms ___ are treated as key stakeholders because they are the firms legal oweners

??

shareholders

Shareholder value is reflected in _____

??

the prices of stock

Two key issues family owned businesses face as they begin to grow

??

1. may not have access to all needed skills to manage the growing firm and maximize its returns

2. may need outside capital

relationships between business owners and decision making specialist hired to manage principals operations and maximize returns on investment

??

agency relationships

seeking self interest

??

managerial opportunism

What are two manager benefits that product diversification can result in that owners don't enjoy

??

1. increase in size of firm

2. firm portfolio diversification which can reduce top executives employment risk

resources remaining after a firm has invested in all projects that have positive net present values within its current businesses

??

firms free cash flow

What is the difference in free cash flow to managers and stakeholders

??

managers- means diversify

stakeholders - means distribution as dividends

What costs are included under Agency costs

(4)

??

1. incentive costs

2. monitoring costs

3. enforcement costs

4. individual financial losses

Who are considered Large Block Shareholders

??

shareholders owning a concentration of atleast 5% of a corporations issued shares

financial institutions such as stock mutual funds and pension funds that control large block positions

??

institutional owners

a group of shareholder elected individuals whos primary responsibility is to act in the owners interests by formally monitoring and controlling the corporations top level executives

??

board of directors

Three Director classifications

??

1. insider

2. related outsider

3. outsider

historically the BOD is dominated by ___ managers

??

inside

governance mechanism that seeks to align the interests of top managers and owners through salaries, bonuses, long term incentive compensation, such as stock rewards and stock options

??

executive compensation

external governance mechanism consisting of a set of potential owners seeking to acquire undervalued firms and earn above average returns on their investments

??

market for corporate control

When does the market for corporate control become effective

??

when a firms internal controls fail

what are the major activity for managerial defense tactics

??

Hostile takeovers

What is the trend in other countries regarding corporate governance

??

uniform governance structures are evolving moving closer to the U.S. corporate governance model

Which group of stakeholders are the most important served by the board of directors

??

capital market stakeholders (shareholders)

board member who is a source of info of a companies day to day operations is a ___ director

??

inside

Ownership concentration is determined by what two things?

the number of stockholders and the percentage of share they own

a takeover defense wherein perfered stock in the merged firm is offered to shareholders at a highly attractice rate of exchange

??

poison pill

an agency relationship exists when one party delegates ____ to a second party

??

decision making responsibility

repurchase of stock that have been acquired by the aggressor at a premium in exchange for an agreement that the aggressor will no longer target the company for takeover

??

greenmail

specifies the firms formal reporting relationships, procedures, controls, authority, and decision making processes

??

structure

____ says work that needs to be done and how to do it

??

structure

who was the pioneer that found organizations change their structures when inefficiencies force them to do so

??

Alfred Chandler

guide the use of strategy, indicate how to compare actual results with expected results and suggest corrective actions to take when the difference is unacceptable

??

organizational controls

largely subjective criteria intended to verify that the firm is using appropriate strategiesfor the conditions in the external environment and the companies competitive advantages

??

strategic controls

objective criteria use to measure firms performance against previously established quantitative standards

??

financial controls

a firm using a simple structure tends to be ____

??

small

ceo and limited number of corporate staff make all decisions, with funcitonal line managers in dominant organizational areas

??

functional strategy

one of the greatest discoveries of the 21st century

??

multidivisional (m-form) structure

3 structural characteristics that drive different forms of organizational structures

??

1. specialization

2. centralization

3. formalization

cost leadership strategy matches the ___ Structure

??

functional

the differentiation strategy matches the ____ structure

??

functional

3 forms of structure for the integrated cost leadership/differentiation strategy

??

1. cooperative

2. SBU

3. Competitive

organizational structure using horiztonal integration to bring about interdivisional cooperation

??

cooperative structure

what strategy matches cooperative structure

??

related constrained strategy

what strategy matches the SBU structure

??

related linked strategy

firms that share fewer resources/assets amoung their businesses concentrating on the transfer of knowledge and competencies among the businesses

??

related linked strategy

multidivisional organization structure with three levels to support the implementation diversificiation strategy

??

SBU form

the competitive structure matches what strategy

??

unrelated diversification

organizational structure in which the firms divisions are completely independent

??

competitive form

three primary international strategies

??

1. worldwide geographic area strategy

2. worldwide product divisional strategy

3. combination to implement transnational strategy

intl strategy in which strategic and operating decisions are decentralized to the SBU in each country to allow units to taylor products to local markets

??

multi domestic strategy

organizational structure emphasizing national interest and facilitates efforts to satisfy local or cultural differences

??

worldwide geographic area 

intl strategy whereby firm offers standardizes products across country markets with the competitive strategy being dictated by the home office

??

global strategy

organizational structure with centralized decision making authority in the WW division headquaters to coordinate and integrate decisions and actions among divisional business units

??

worldwide product divisional structure

international structure that emphasizes economies of scale

??

ww product divisional structure

international strategy through which the firm seeks to achieve both global efficiency and local responsivness; usually implemented through global matrix structure and hybrid global design

??

transnational strategy

building a shared vision and invidiual commitment through an integrated network

??

flexible coordination

org structure in which characterisitics and mechanisms are drawn from both the worldwide geographic area and product divisional structure

??

combination structure

the controls most important in the ___ strategy are financial controls

??

unrelated diversified

3 benefits of multidivisional structure

??

1. facilitation of comparison between division

2. more accurate monitoring of performance of each business

3. stimulating managers of poorly performing divisions to look for ways to improve performance