Business Courses Review
1.1 Management in Organizations
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
1–2
2.4 An Integrative Framework of Management Perspectives
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
2–3
3.1 The Organization and Its Environments
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
3–4
3.2 McDonald’s General Environment
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
3–5
3.3 McDonald’s Task Environment
Regulators
• Food and Drug
Administration
• Securities and
Exchange
Commission
• Environmental
Protection
Agency
Competitors
• Burger King
• Wendy’s
• Subway
• Dairy Queen
McDonald’s
Strategic Partners
• Wal-Mart
• Disney
• Foreign partners
Customers
• Individual
consumers
• Institutional
customers
Suppliers
• Coca-Cola
• Wholesale food
processors
• Packaging
manufacturers
Internal environment
Task environment
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
3–6
Porter’s Five Competitive Forces
• Threat of new entrants
– Extent to and ease with which competitors can enter market.
• Competitive rivalry
– The nature of the competitive relationship between firms in an industry.
• Threat of substitute products
– Extent to which alternative products/services may replace the need for
existing products/services.
• Power of buyers
– Extent to which buyers influence the suppliers of goods and services.
• Power of suppliers
– Extent to which suppliers have the ability to influence buyers of their goods
and services.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
3–7
4.5 Approaches to Social Responsibility
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
4–8
Social Responsibility Approaches
• Obstructionist Stance
– Do as little as possible (ex. – PCA).
• Defensive Stance
– Do only what is legally required and nothing more (ex. – tobacco
companies).
• Accommodative Stance
– Meet legal and ethical obligations and go beyond that in selected
cases.
• Proactive Stance
– Organization views itself as a citizen and proactively seeks
opportunities to contribute to society (ex. – McDonald’s).
4–9
4.4 Arguments for and Against Social Responsibility
4–10
4.6 How Business and the Government Influence Each Other
4–11
The Meaning of International Business
• Domestic Business
– acquires all of its resources and sells all of its products or services
within a single country.
• International Business
– is based in a single country yet acquires a meaningful share of its
resources and/or revenues from other countries.
• Multinational Business
– transcends national boundaries and buys raw materials, borrows
money, and manufactures and sells its products in a world-wide
marketplace.
• Global Business
– transcends national boundaries and is not committed to a single home
country.
5–12
Managing the Process of Globalization
• Importing and Exporting
 Exporting – creating a product in the firm’s domestic marketplace and
selling the same product internationally.
 Importing – bringing a product created in another country into the
firm’s domestic marketplace.
• Licensing
 A contractual arrangement where a firm allows another firm to use its
brand name, trademark, technology, patents, copyrights, or other
assets in return for royalties (fees).
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
5–13
Managing the Process of Globalization
• Strategic Alliance – where two or more firms jointly
cooperate for mutual gain
 Joint Venture – a type of strategic alliance where the firms share
ownership of a new enterprise.
• Direct Investment – where a firm headquartered in one
country builds or purchases facilities or subsidiaries in
another country.
 Maquiladoras – light assembly plants built in Mexico near the U.S.
border – owned by major corporations, exploit tax breaks given by
the Mexican government to employ workers at low wages to
encourage foreign direct investment.
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
5–14
5.4aIndividual Differences Across Cultures
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
5–15
5.4bIndividual Differences Across Cultures
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
5–16
5.4c Individual Differences Across Cultures
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
5–17
7.1 The Planning Process
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
7–18
Kinds of Organizational Plans (Con’t)
• Strategic Plans – general plans outlining decisions
of resource allocation, priorities, and action steps
necessary to reach strategic goals
• Tactical Plans – tactical plans provide an outline
for how to accomplish objectives, rather than
deciding what need to be done
• Operational Plans – detail how specific task are to
be accomplished
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
7–19
Strategic Alternatives
Corporate-level strategy
Market A
Market B
Business-level strategy
Business-level strategy
Functional-level strategy
Functional-level strategy
Operations-level strategy
Operations-level strategy
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–20
Types of Strategic Alternatives
• Corporate-Level Strategy
– The set of strategic alternatives that an
organization chooses from as it manages its
operations simultaneously across several
industries and several markets.
• Business-Level Strategy
– The set of strategic alternatives that an
organization chooses from as it conducts business
in a particular industry or a particular market.
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–21
8.1 SWOT Analysis
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–22
SWOT Analysis and Strategy
• Evaluating Organizational Strengths
– Organizational strengths
• are skills and abilities enabling an organization to conceive of and implement
strategies.
– Competitive parity exists when a large number of competing firms are able to
implement the same strategy
– Common organizational strengths
• are organizational capabilities possessed by numerous competing firms.
– Distinctive competencies
• are unique to one firm or a small subset of competitors, are useful for competitive
advantage and superior performance.
– Imitation of distinctive competencies
• Strategic imitation is the process of duplicating another firm’s distinctive
competencies
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–23
SWOT Analysis and Strategy (cont’d)
• Evaluating Organizational Strengths (cont’d)
– Sustained competitive advantage
• occurs when a distinctive competence cannot be easily
duplicated.
• is what remains after all attempts at strategic imitations cease.
– Strategic imitation of a distinctive competence is difficult
when:
• The competitive advantage is based on unique historical
circumstances.
• it is difficult for competitors to understand its nature or
character.
• The competitive advantage is based on a complex phenomenon
(e.g., organizational culture).
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–24
SWOT Analysis and Strategy (cont’d)
• Evaluating Organizational Weaknesses
– Organizational weaknesses
• Skills and capabilities that do not enable an organization to
choose and implement strategies that support its mission.
– Weaknesses can be overcome by:
• investments to obtain the strengths needed.
• modification of the organization’s mission so it can be
accomplished with the current workforce.
– Competitive disadvantage
• occurs when an organization fails to implement strategies being
implemented by competitors.
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–25
SWOT Analysis and Strategy (cont’d)
• Evaluating an Organization’s Opportunities and
Threats
– Organizational opportunities
• are areas in the organization’s environment that may
generate high performance.
– Organizational threats
• are areas in the organization’s environment that make it
difficult for the organization to achieve high performance.
– Opportunities and threats can be evaluated using
Porter’s Five Forces model
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–26
Formulating Business-Level Strategies
• Porter’s Generic Strategies
– Differentiation strategy
• An organization seeks to distinguish itself from competitors
through the quality of its products or services.
– Overall cost leadership strategy
• An organization attempts to gain competitive advantage by
reducing its costs below the costs of competing firms.
– Focus strategy
• An organization concentrates on a specific regional market,
product line, or group of buyers.
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–27
Implementing Porter’s Generic Strategies
• Differentiation
– Marketing and sales emphasize high-quality, high-value image of the
organization’s products or services.
• Overall Cost Leadership
– Marketing and sales focus on simple product attributes and how these
product attributes meet customer needs in a low-cost and effective
manner.
• Focus
– Either differentiation or cost leadership, depending on which one is
the proper basis for competing in or for a specific market segment,
product category, or group buyers.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–28
8.2
The Miles and Snow Typology
Strategy Type
Definition
Examples
Prospector
Is innovative and growth oriented,
searches for new markets and new growth
opportunities, encourages risk taking
Amazon.com
3M
Rubbermaid
Defender
Protects current markets, maintains stable
growth, serves current customers
BIC
eBay
Mrs. Fields
Analyzer
Maintains current markets and current
customer satisfaction with moderate
emphasis on innovation
DuPont
IBM
Yahoo!
Reactor
No clear strategy, reacts to changes in the
environment, drifts with events
International Harvester
(now doing business as Navistar)
Joseph Schlitz Brewing Co.
Kmart
Montgomery Ward
(no longer in business)
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–29
8.2 The Product Life Cycle
High
Stages
Growth
Maturity
Decline
Sales Volume
Introduction
Low
Time
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
8–30
Corporate-Level Strategies
Strategic Choices
Single-product
strategy
(simplicity)
Related
diversification
(synergy)
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
Unrelated
diversification
(risk/return)
8–31
Becoming a Diversified Firm
Diversification Alternatives
Development of
new products
Vertical integration
Merger with
another firm
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
Acquisition of
another firm
8–32
Emphasizing Distinctive Competencies
• Identifying Niches in Established Markets
– Niches represent a market segment currently
unexploited in a market where several large firms
compete.
– Niches offer a competitive advantage to small
businesses.
• Identifying New Markets
– Using the transfer of an existing product/service to
explore a new market.
– Creating new industries/products/services.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
10–33
First Mover Advantages
• First-Mover Advantage
– Exploiting an opportunity before any other firm
does.
• Why first-mover advantage is not taken by
larger firms:
– Decisions are slowed by organizational hierarchy.
– Size of the assets at risk makes large firms overly
cautious.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
10–34
Structure of Entrepreneurial
Organizations
• Starting the New Business
– Buying an Existing Business
• Business has a proven ability to draw customers and make a
profit (the business is a going concern).
• Networks (e.g., customers and suppliers) are established.
• Negative: New owners inherit any existing problems.
– Starting from Scratch
• Avoids problems associated with previous owners.
• Freedom to choose suppliers, equipment, location, and workers.
• Negative: More business risk and uncertainty.
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in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
10–35
Franchising (cont’d)
• Disadvantages
– Start-up fees to purchase
franchise.
– Limitations of franchise
(market area, product,
customers).
– Loss of independence
due to imposed
operational controls of
franchiser.
• Advantages
– Reduced financial risk of
new business success
through experience
provided by franchiser.
– Training, financial, and
management support by
franchiser.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
10–36
Enforcing The Law
The EEOC
• Title VII
• The Civil Rights Act
• The Equal Pay Act
• Age Discrimination Act
• Americans with Disabilities Act
Office of Federal
Contract Compliance
Executive Order 11246
Federal Courts
EEO laws
State Courts and Human
Rights Agencies
May be required first step for filing Federal
claims, also violations of state laws
3-37
The Vocabulary of Job Analysis
• Job specification: a written explanation of the knowledge,
skills, abilities, traits, and other characteristics (KSAOs)
necessary for effective performance on a given job
• Tasks: Coordinated and aggregated series of work elements
used to produce an output
• Position: the responsibilities and duties performed by an
individual. There are as many positions in an organization as
there are employees
• Job: group of positions that are similar in their duties, such as
computer programmer
• Job family: group of jobs that have similar duties
6-38
Work-Family Balance and Job Design
Work-family tension is
driven by changing
workforce demographics
1. Women and single
parents entering the
workforce
2. Dual-career couples
Some organizations
meet employees’ needs
through flexible work
arrangements
1. Job sharing
2. Flextime
3. Telecommuting
3. The aging population
6-39
Work-Family Balance and Job Design
• The success of job sharing depends on:
– Identifying jobs that can be shared
– Understanding employees’ individual sharing style
– Matching “partners” who have complementary
scheduling needs and skills
• With flextime, employees can choose when to
be at the office
– 5 days/8 hours
– 4 days/10 hours
– Arrive later on Monday, leave earlier on Friday
6-40
Work-Family Balance and Job Design
 Telecommuting allows
employees to work
at home part- or full-time
– Communication is through phone,
fax, computer
– Often resisted by managers who
fear loss of control and subordinate
accessibility
6-41
Fixed and Variable Costs
• Fixed costs – incurred regardless of volume of
product produced
• Variable costs – costs incurred depend upon
the number of units produced
Fixed and Variable Costs
Fixed Costs
Variable Costs
Selling Price
Units Sold
Revenues
Fixed Costs
Variable Costs
Profit
0
10
$20,000
$500 per unit
$1,000 per unit
20
30
40
50
60
70
80
$0 $10,000 $20,000
$20,000 $20,000 $20,000
$0
$5,000 $10,000
-$20,000 -$15,000 -$10,000
$30,000
$20,000
$15,000
-$5,000
$40,000
$20,000
$20,000
$0
$50,000
$20,000
$25,000
$5,000
$60,000
$20,000
$30,000
$10,000
$70,000
$20,000
$35,000
$15,000
$80,000
$20,000
$40,000
$20,000
90
100
110
120
$90,000 $100,000 $110,000 $120,000
$20,000 $20,000 $20,000 $20,000
$45,000 $50,000 $55,000 $60,000
$25,000 $30,000 $35,000 $40,000
Fixed and Variable Costs
$140,000
$120,000
$100,000
$80,000
Revenues
$60,000
Fixed Costs
Variable Costs
$40,000
Profit
$20,000
$0
1
-$20,000
-$40,000
2
3
4
5
6
7
8
9
10
11
12
13