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by: Maudie Herzog


Maudie Herzog
GPA 3.72

David Cavazos

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David Cavazos
Study Guide
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This 7 page Study Guide was uploaded by Maudie Herzog on Saturday September 26, 2015. The Study Guide belongs to MGT 340 at James Madison University taught by David Cavazos in Fall. Since its upload, it has received 48 views. For similar materials see /class/214173/mgt-340-james-madison-university in Business, management at James Madison University.

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Date Created: 09/26/15
MGT 340 Exam 2 Study Guide Chapter 5 Firm Strategy a firm set of choices aimed on achieving objectives 1 Arenas What business to be in Be specific as possible 2 Vehicles Market presence 3 DIfferentiators How will the firm WIN over the customers 4 Sequencing Pace of decision making Example Harley Davidson 1 Heavy weight motorcycles under HD and Bruell brands 2 Strategic alliance with Porsche US manufacturing exporting 3 High end luxurious products nostalgia 4 Increases rate of production less than demand Competitive Advantage outmatch rivals in attracting and maintaining its targeted customers Generic Strategies basic ways to domestic and multinational companies keep a competitive advantage 1 Differentiation focus on developing features OTHER than cost specialized components or services develop customer loyalty a BMW provides customers with high quality and high performance sport cars 2 Low Cost produces or delivers products or services equal to those oftheir competitors focus on efficiency and factor costs rather than quality 3 Combination mix of both elements some operations focus on efficiency and cost while others focus on customer satisfaction Value Chain Michael Porter Allows firms to 0 Assess cost levels of varying activities 0 Identify strengths and weaknesses 0 Make strategic decisions based on these strengths and weaknesses 0 Given a weakness in the value chain firm has 2 choices 0 Get better 0 Have another firm handle it outsource Outsourcing firms typically use outsourcing for HR manufacturing and marketing 0 Advantages 0 Firms can focus on strengths 0 Gain capability of outsourced firm 0 Reduces risk and gains flexibility o Disadvantages 0 Loss offirms capabilities 0 Loss of control over operations 0 Certain kinds offlexibility are lost 0 Costs can be high Competitive Strategies strategic moves multinational companies use to defeat competitors 1 Offensive Competitive Strategies a Direct attacks capture market share such as price cutting adding new features or going after poorly serves markets b End run offensives seeking unoccupied markets ignored countries c Preemptive Competitive Strategies being first to obtain a particular advantageous position gt getting best suppliers or raw material buying the best locations getting the best customers d Acquisitions could be most effective gt buying out a competitor May include benefits such as improving geographical coverage 2 Defensive Strategies a Attempts to reduce risks of being attacked convincing firms to seek another target i May sign exclusive contracts with best suppliers ii Introduce new models to match competitors low prices iii Diversification b Diversification i Related Diversification companies acquire businesses that are similar in some way to their core business ii Unrelated Diversification firms acquire businesses in ANY industry main concern is whether the business represents a good financial investment 3 Counter Parry fending off a competitors attack in one country by attacking in another country Strategy Formulation Traditional Approaches 0 Strategy Formulation process by which managers select the strategies used by their companies 0 Popular analysis techniques include I Competitive dynamics of the industry I Companies competitive position in the industry I Opportunities and threats faced by the company I Company s strengths and weaknesses 1 Industry and Competitive Analysis a Porter s Five Forces Model technique that can help a multinational firm understand the major forces at work in the industry 39 Degree of existing competition in the industry ll Threat of new entrants iii Bargaining power of buyers iv Bargaining power of suppliers v Threat of substitutes vi Existence of complimentary products Managers must understand their industry well to formulate good strategies Must understand economic characteristics of industries and driving forces i Market size easy of entry opportunities for economies of scale d Competitor Analysis profiles of companies strategies and objectives four steps PIT i Identify strategic intent of competitors ii Identify current and anticipated generic strategies iii Identify defensive competitive strategies iv Assess current positions of employees 2 Company Situation Analysis SWOT a Strengths distinctive capability resource or skill b J 39 I quotquot quot 39 0 compared to competitors c Opportunities favorable conditions in the environment d Threats unfavorable conditions in the environment 3 Corporate Strategy Selection a Major issue is which business to invest in and which to divest b Basic tool is a MATRIX ANALYSES i Most popular is the Growth Shared Matrix BCG Organizations Alike Globalization and Convergence 0 Convergence increasing similarity of management practices 0 Most apparent with transnational firms 0 Multinational firms competing in the same industry tend to have similar structures and strategies regardless ofthe location of the company s headquarters Chapter 6 Multinational Strategies Dealing with the Globallocal Dilemma o Local responsiveness solution customize to country or region differences 0 Global Integration Solution conduct business similarly throughout the world 0 Global local dilemma choice between a local responsiveness or global approach to a multinational s strategies 1 Multi domestic Strategy company offers products or services to attract customers by closely satisfying their cultural needs and expectations a Emphasizing local responsiveness issues costs more to produce need to charge higher prices to recoup b Form of the differentiation strategy 2 Transnational Strategy gives two goals top priority seeking location advantages and gaining economic efficiencies from operating worldwide a Location advantages dispersing value chain activities anywhere in the world where they can be done the best and the most efficient Global platform country location where a firm can better perform their value chain activities c With Upstream location advantages find cheap sources of high quality raw material research and innovation seek low cost financing anywhere d Comparative advantage advantages of nations over other nations no longer existing for domestic firms 3 International Strategy selling global products while using similar marketing techniques worldwide 57 a Compromise approach limited adjustment in product offerings upstream and support activities remain at home country 4 Regional Strategy managing raw material sourcing production marketing activities within a particular region a Another compromise strategy attempts to gain economic advantages from regional network and also gain local adaptation advantages Formulation a Multinational Strategy 0 Globalization Drivers conditions in an industry that favor transnational or international strategies over multi local or regional strategies 0 Global Markets customer needs global customers transfer marketing 0 Costs global economies of scale Low cost raw materials 0 Governments favorable trade policies Regulations 0 Competition what strategies do competitors use Participation Strategies 1 Exporting a Easiest way to sell a product in international market b Passive exporter company that treats and fills overseas orders like domestic c Indirect Exporting uses go between firms i Export Management Company or Export Trading Company d Direct Exporting direct contact with investors in the foreign market i Requires branch offices in foreign companies sales reps etc 2 Licensing contractual agreement between a domestic licensor and a foreign license a Licensor has trademark 3 International Strategic Alliances cooperative agreement of firms from different companies to do business together a Motivations for strategic alliances include partner s knowledge government requirements share risks share technology low costs of raw materiallabor 4 Foreign Direct Investment companies own and control directly a foreign operation a Highest stage of internationalization Greenfield investments started foreign ops from scratch Most experienced firms choose FDI Advantages i Greater control ii Lower costs of supplying host country ii Greater opportunity to adapt product to local markets v Better local image of the product e Disadvantages i Increased capital investment 9957 ii Investment of managerial and other resources iii Greater exposure to political and financial risks Chapter 8 Organizational Design for Multinational Companies 0 0 0 0 0 0 0 Organizational Design How organizations structure subunits and coordination and control mechanisms to achieve strategic goals How to divide work among the org subunits How to coordinate and control the efforts of the units created Basic Functional Structure Departments perform separate business functions such as marketing or manufacturing gt Simplest of organizations gt Most smaller orgs have functional structures gt Works best for I Few products I Few locations I Few types of customers I A stable environment I Routine technology Basic Product Structure Departments or subunits based on different product groups gt Usually less efficient than the functional gt Allows a company to serve customer needs that vary by region or product gt Chosen when product or an area sufficiently require focused functional efforts on one type of product Basic Geographic structure departments or subunits based on geographic regions gt Usually less efficient than the functional gt Allows a company to serve customer needs that vary by region or product Hybrid structure mixes functional geographic and product units gt Product structure supports global products gt Geographic structure emphasizes local adaptation gt Multinationals often want both gt Front side has units based on Geography to provide a multidomestic or regional focus gt The backside has units based on product groups to capture global economies of scale in R amp D and in production NOTES gt When co goes international it seldom changes structure gt Licensing has little impact on domestic structure gt However when sales become more central structures need to be changes o 00 o 00 o 0 Export Dept Coordinates and controls a company s export operations s created when exporsts become significant Deals with international sales of products Foreign Subsidiaries Subunit ofthe multinational company that I located in another country gt Types of Foreign Subsidiaries I MiniReplica subsidiary smaller version of the parent company I Transnational subsidiary has no companywide form or function International Division gt Larger and has greater responsibilities compared to the export department gt Responsible for managing exports international sales and foreign subsidiaries gt Usual step after export department gt Deals with products gt Manages overseas sales force and manufacturing site gt Reasons to abandon the international division I Diverse products overwhelm capacities of multinational I Not close enough to local markets gt Options in dealing with shortcomings I Worldwide product structure gives product division responsibility to produce and sell their products throughout the world 0 Implements strategies that emphasize global products 0 Provides an efficient way to organize and centralize the production and sales of similar products I WorldWide Geographic structure has geographic units representing regions of the world 0 Prime reason is to implement a multidomestic or regional strategy 0 Organizational design with maximum geographic flexibility 0 Separate divisions for large market countries I Matrix Structure WW 0 Symmetrical organization with equal emphasis on 9 WW product groups gt Focus on finding global efficiencies 9 Regional geographical divisions gt Focuses on national responsiveness 0 Problems with matrix structure 9 Slow decision making process 9 Too bureaucratic 9 Too many meetings and too much conflict I Transnational network structure combines functional product and geographic subunits o Dispersed subunits o Specialized operations 0 Independent relationships I Metanational Structure develops extensive systems to encourage organizational learning and entrepreneurial activities 0 Extensive use of strategic alliances to gain knowledge for varied sources I Micro Multinational Company smaller orgs that take advantage ofthe Web to operate globally from day one International strategy standardized product mirror image across the globe Multi domestic each market is treated differently Transnational location advantages transnational structure kind of a mess Direct exporting sending tech support overseas to handle service Indirect exporting just sending and forgetting Chapter 9 International strategic Alliances design and management 1 Strategic Alliance Issues a Increasingly popular strategy to develop and expand into new markets b Very risky and unstable c Failure rate of 30 60 d Even profitable alliances can be torn by conflict


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