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MGMT 370 Study Guide Exam 2

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MGMT 370 Study Guide Exam 2 MGMT 370

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This 7 page Study Guide was uploaded by ANM Notetaker on Tuesday March 1, 2016. The Study Guide belongs to MGMT 370 at Iowa State University taught by Professor Smith in Winter 2016. Since its upload, it has received 209 views. For similar materials see MANAGEMENT OF ORGANIZATIONS in Business at Iowa State University.

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Date Created: 03/01/16
MGMT  370  Exam  2:       CHAPTER  5       Global  business  (globalization):   A  strategy  in  which  organizations  treat  the  entire  world  or  major  regions  of  it  as  the   domain  for  conducting  business     International  Business:   The  buying,  selling,  and  trading  of  goods  and  services  across  national  boundaries.     Cartel:   A  group  of  firms  or  nations  that  agree  to  act  as  a  monopoly  and  not  compete  with   each  other.     Webb-­‐Pomerene  Export   Foreign  Corrupt  Practices   U.K  Bribery  Act   Trade  Act   Act  (FCPA)   Allows  selected  American   Outaws  direct  payoffs  to   All  organizations  with   firms  desiring   and  bribes  of  foreign   business  operations  in  the   international  trade  to  form   governments  or  business   United  Kingdom  can  be   monopolies  in  order  to   officials  by  American   held  liable  for  bribery,   compete  with  foreign   companies   even  if  the  bribery  did  not   cartels   occur  within  the  United   Kingdom     Import  tariff:   A  tax  levied  by  a  nation  on  goods  bought  outside  its  borders  and  imported  into  the   country.     Exchange  Controls:   Restrictions  on  the  amount  of  a  particular  currency  that  may  be  ought  or  sold.     Quota:   The  maximum  number  of  units  of  a  particular  product  that  may  be  imported  into  a   country     Embargo:  The  suspension  of  trade  in  a  particular  product  by  the  government.     Dumping:   Occurs  when  a  country  or  business  firm  sells  products  at  less  then  what  it  costs  to   produce  them     GDP:   The  market  value  of  a  nation’s  total  output  of  goods  and  services  for  a  given  period       Infrastructure:  The  physical  facilities  that  support  its  economic  activities,  such  as   railroads,  highways,  ports,  airfields,  utilities  and  power  plants,  schools,  hospitals,   communication  system  and  commercial  distribution  system     Exchange  rate:  the  ratio  at  which  one  nation’s  currency  can  be  exchanged  for   another  nation’s  currency  for  gold.         World  Trade     International   Organization  of   Organization     World  Bank   Monetary  Fund   Economic   (WTO)   (IMF)   Cooperation  and   Development  (OECD)   A  global  association   Formally  known  as   Oversee  the   An  international   of  member  countries   the  International   international   economic   that  promotes  free   Bank  for   monetary  system   organization   trade   Reconstruction  and   and  help  ensure   comprised  of  30   Development   stable  currencies  and   countries  that  accept     exchange  rates   basic  principles  of   -­‐  loan  money  to   throughout  the   free-­‐market   underdeveloped  and   world   economies  and   developing  countries   representative   democracy;     -­‐Promotes  policies  to   improve  the  well-­‐ being  of  consumers   and  societies  across   the  world       Exporting:  the  sale  of  goods  and  services  to  foreign  markets     Importing:  the  purchase  of  goods  and  services  from  a  foreign  source.     Countertrade  agreements:  exporting  that  involves  bartering  products  for  other   products  instead  of  for  currency.     Trading  company:  Acquires  foods  in  one  country  and  sells  them  to  buyers  in   another  country     Licensing:    A  trade  arrangement  in  which  company  allows  other  company  to  use  its   name,  patents,  brands  and  etc  for  exchange  for  a  fee  or  royalty.     Franchising:  a  form  of  licensing  which  company  agrees  to  provide  a  franchisee  a   name,  logo  and  etc  in  return  for  a  financial  commitment  and  the  agreement  to   conduct  business  in  accordance  with  the  franchiser’s  standard  of  operations.     Contract  Manufacturing:  Occurs  when  a  company  hires  a  foreign  company  to   produce  specifies  volume  of  the  firm’s  product  to  specification;  the  final  product   carries  the  domestic  firm’s  name.     Joint  Venture;  when  a  company  that  wants  to  do  business  in  another  country  finds   a  local  partner.     Strategic  Alliance:  A  partnership  formed  to  create  competitive  advantage  on  a   worldwide  basis.     Direct  investment:  the  purchase  of  overseas  production  and  marketing  facilities;  a   company  may  control  the  facilities  outright.     Outsourcing:  involves  transferring  manufacturing  or  other  functions  to  countries   where  labors  are  less  expensive.       Multinational  Corporation   North  American  Free   European  Union  (EU)   Trade  Agreements   (NAFTA)   A  corporation  such  as   Eliminating  tariffs  ad   An  economic  and  political   IBM,  Nestle  that  operates   trade  restrictions  on   union  of  28  member   on  a  worldwide  scale.   agricultural  and   nations  that  is  located   manufactured  products   primarily  in  Europe.   among  the  three  countries     Association  of  Southeast  Asian  Nations   Southern  Common  Market  (Mercosur)   (ASEAN)   Comprised  of  then  Southeast  Asian    A  political  agreement  among  Bolivia,   countries  with  the  goal  to  promote   Argentina,  Brazil,  Venezuela,  Uruguay   economic  growth  and  overall  progress  in   and  Paraguay     the  area  via  trade  and  security     Self  reference  criterion:  an  unconscious  referencing  to  the  way  things  are  done  in   one’s  own  culture  and  experiences  in  making  global  business  decisions.           CHAPTER  6     Plan:  a  set  of  activities  intended  to  achieve  goals,  whether  for  an  entire   organization,  department  or  an  individual     Mission:    a  definition  of  an  organization’s  fundamental  purpose  and  its  basic   philosophy     Mission  statement:  a  formal  written  declaration  of  the  organization’s  mission.     Goal:  the  final  result  that  a  firm  wishes  to  achieve.     Strategic  plans:  plans  that  are  intended  to  achieve  strategic  goals:     Tactic  plans:  plans  that  are  designed  to  achieve  tactical  goals:     Operational  plans:  plans  that  are  intended  to  achieve  operational  goals     Distinctive  competence:  what  a  firm  does  well  relative  to  its  competitors.     SWOT:  the  evaluation  of  the  organizations  internal  strengths  and  weaknesses  and   opportunities  and  threats  associate  with  the  business  external  environment.     Corporate  strategy:  the  scope  and  resource  deployment  components  of  strategy   for  the  enterprise  as  a  whole     Business-­‐level  strategy:  the  area  of  responsibility  usually  assigned  to  divisional   level  managers.     Diversification:  a  strategy  of  acquiring  or  developing  other  businesses  that  must   ultimately  be  justified  by  its  ability  to  build  stockholder  wealth.     Related  diversification:  a  firm’s  acquisition  of  a  business  that  has  some  connection   with  the  company’s  existing  business     Unrelated  diversification:  the  action  of  diversifying  into  any  business  that  is   potentially  profitable  of  the  organization     Conglomerates:  firms  that  pursue  unrelated  diversification  strategies.     Divestment:  a  strategy  if  selling  off  business  that  the  company  no  longer  wishes  to   maintain.     Strategic  business  unit:  a  separate  division  within  a  company  that  has  its  won   mission,  goals,  strategy  and  competitors:     Portfolio  analysis;  a  technique  allowing  for  managers  to  visualize  their  businesses   as  a  set  or  portfolio  using  certain  common  criteria  such  as  growth  potential     Stars:  those  businesses  that  have  high  markets  shares  and  operate  industries   experiencing  major  growth.     Question  marks:  those  business  that  are  viewed  positively  in  the  sense  that  they   are  located  in  attractive  markets,  but  there  is  a  questions  as  to  their  ability  to   compete  given  low  market  shares     Cash  cows:  those  businesses  that  tend  to  generate  excess  cash  over  what  is  needed   due  to  high  market  shares  in  a  slow  growing  market.     Dogs:  businesses  that  have  only  minimal  profit  or  losses  due  to  their  low  market   shares  in  slow  growing  economy.     Cost  leadership:  a  business  level  strategy  aimed  at  achieving  the  overall  lowest   cost  structure  in  the  industry.     Differentiation:  a  business  strategy  in  which  the  strategic  business  unit  offers  a   unique  service  to  a  customer  at  a  premium  price     Focus:  a  business  strategy  in  which  the  business  concentrates  on  one  part  or   segment  of  the  market  and  tries  to  meet  the  demands  of  that  segment     Product  life  cycle:  the  cycle  of  birth,  growth,  maturity  and  decline  of  a  product.     Birth:  initial  stage  of  a  product  life  cycle     Growth:  dramatic  increases  in  the  product’s  market  share     Maturity:  product’s  market  share  either  slow  or  no  growth     Decline:  a  decrease  in  the  product’s  market  share.     Contingency  plans:  alternate  courses  of  action  to  be  undertaken  if  certain   organizational  or  environmental  conditions  change.       CHAPTER  7     Decision:  a  choice  made  from  alternative  courses  of  action     Problem:  difference  between  desired  situation  and  actual  situation     Programmed  decisions:  decisions  made  in  response  to  situations  that  are  routine,   structured  and  fairly  repetitive     Non-­‐programmed  decision:  decisions  made  in  response  to  situations  that  are   unique  or  of  major  consequence  to  the  organization.     Certainty:  the  condition  that  exists  when  decision  makers  are  fully  informed  about   a  problem,  and  its  respective  outcomes.     Risk:  the  condition  that  exists  when  decision  makers  must  rely  on  incomplete  yet   reliable  information     Uncertainty:  the  condition  that  exists  when  little  or  no  factual  information  is   available  about  a  problem,  its  alternative  solutions  and  its  respective  outcomes.       Classical  model:   Administrative  model:   Political  Model:     -­‐A    prescriptive  approach   -­‐  A  descriptive  approach   -­‐  Based  on  the  idea  that   (managers  are  logical,   recognizing  that  people  do   certain  individuals  or   rational  individuals  who   not  always  make  decisions   groups  will  be  able  to   make  decisions  that  are  n   with  logic  and  rationality,   influence  others  to   the  best  interest)  that   that  outlines  how   achieve  their  goals   outlines  how  managers   managers  actually  do     should  make  decisions.   make  decisions:  also     known  as  the   organizational,   neoclassical  or  behavioral   model.       Decision  styles:  determines  from  patterns  among  an  individual’s  predispositions   such  as  which  situations  to  avoid,  what  kind  of  jobs  an  individual  enjoys,  which   things  he  or  she  dislikes,  how  an  individual  communicates,  how  an  individual   approaches  problems  and  how  he  or  she  makes  decisions.     Intuition:  the  immediate  comprehension  that  something  is  the  case,  seemingly   without  the  use  of  any  reasoning  process  conscious  analysis.     Framing:  the  tendency  to  view  positively  presented  information  favorably  and   negatively  presented  information  unfavorably.     Escalation  of  commitment:  the  tendency  to  persist  with  a  failing  course  of  action.     Risk  propensity:  a  person’s  willingness  to  take  risks  when  making  decision.     Escalation  of  commitment:  the  tendency  to  persist  with    a  failing  course  of  action.     Nominal  group  technique:  a  process  that  involves  the  use  of  a  highly  structured   meeting  agenda  and  restricts  discussion  or  interpersonal  communication  during  the   decision  making  process.     Devil’s  advocate:  when  a  member  of  the  team  argues  for  an  alternative  position;   can  be  helpful  in  avoiding  groupthink  because  it  encourages  team  members  to   carefully  consider  alternative  courses  of  action.  


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