Exam 2 Notes MGMT I II External and Internal Environment a Components of Microenvironment i Social values ii Law and politics iii Demographics iv Technology v Economy b Components of Competitive Environment i Substitutes ii Rivals iii Suppliers iv Buyers v New entrants c Stakeholders i Groups and individuals who affect and are affected by the organizations and its output 1 You can be a stakeholder whether you know it or not 2 Inducement What they feel or reason for doing something a EX hate that company tests on bunnies 3 Contribution What changes are made in the organization because of the inducement a Help change a policy b EX company works to change policies about animal testing Strategies for Influencing the Environment a Cooperative action i Contracting 1 Legal agreement ii Cooptation 1 Appoint to membership of a committee or another body by invitation iii Coalition 1 Enemies or rivals join forces to do something together b Independent Action i Competitive Aggression 1 Independently tell the market what the company is best at ii Competitive Pacification 1 You know you cannot surpass another company so you back off iii Public Relations 1 Advertising for what you do in voluntary action iv Voluntary Action 1 The discretionary portion of the corporate social responsibility pyramid v Legal Action 1 Independently protect a brand vi Political Action 1 Government related c Moving to a different environment i Domain selection III IV V VI VII 1 You choose where you play ii Diversification 1 Bring a uniqueness to your products iii Mergers and Acquisitions 1 Buying other companies at the right times iv Divestiture 1 Get rid of a company that is doing poorly Environmental Attractiveness a Competitors b Substitutes c Capital requirements d Brand loyalty Strategy a SWOT analysis i Internal Evaluation 1 Evaluate Strengths and Weaknesses ii External Evaluation 1 Evaluate Opportunities and Threats The BGC Matrix Boston Consulting Group a Star i High market growth ii Strong relative position b Cash Cow i Low market growth ii Strong relative position c Question Mark i High market growth ii Weak relative position d Dog i Low market growth ii Weak relative position Corporate Strategy Alternatives a Concentration i An organization operates as a single business and competes in a single industry b Vertical Integration Strategy i An organization Enters one or more businesses that are necessary for manufacturing or distributing its own products c Concentric Diversification Strategy i An organization adds new businesses that produce related products or are involved in related market activities 1 Ripples d Conglomerate Diversification Strategy i An organization adds new businesses that produce unrelated products or are involved in unrelated market activities Strategies for Managing the Political Environment a Lobbying b PAC s VIII IX X i Political action committee c Strategic Retreat i Stop talking about what went wrong d Coalition Building i temporary alliance or partnering of groups in order to achieve a common purpose or to engage in joint activity e Stonewalling i No response Structure a Key Concepts in Organization Structure i The way tasks are broken up ii Horizontal Differential 1 Flat 2 Few levels of MGMT iii Vertical Differentiation 1 Tall 2 Many levels of MGMT iv Hierarchical Form 1 Pyramidal hierarchy a Strategic i Works on far out long term goals b Tactical i Middle manager 1 Changes the way short term tasks are done to achieve long term goals c Operational i Deals with short term tasks Span of Control a Number of persons who report to a manger Types of Organization Structure a Functional i Grouping organizations units according to technical professional specialty 1 Positive a Specialization 2 Negative a Lose product focus b Product i Grouping organization units according to product or service c Geographic Structure i Grouping organization units by geographic location d Matrix Organizations i An organization characterized by dual reporting relationships in which some persons report to two supervisors e Project Team i Interdisciplinary specialists assigned to a long term project f Collegial Structure i Non pyramidal form co equal partners XI 1 Positive a Reaction time b Flexibility c Customer satisfaction 2 Negative a High credentials of membership Application of Structure Functional Product Geographic Matrix Project Collegial Environment Stable Turbulence Goals Fixed programmable Evolving non programmable Technology Known I XII XIII Developing Environmental Suprasystems in decreasing order of importance a Strategy b International c Structure d Culture e Entrepreneurship Internal Management a Spheres of Economic Influence i NAFTA North American Free Trade Agreement 1 USA MEX CAN ii European Union iii Asian Pacific Economic Combine Assessing International Market Attractiveness a Population b Total GNP c Per capital GNP d Economic Stability e Legal System f Geographic proximity g Trade barriers h Transportation i Consumer behavior j Competition k Political stability l Cultural access m Additional Conditions that would support rapid expansion into foreign markets i Probability of losing a technological advantage XIV XV XVI ii Time sensitive current advantage iii Opportunity to team with best partner The Market Place a Worldwide marketplace strategy has been based on two factors i Worldwide integration 1 EX McDonald s ii Local Responsiveness 1 EX The Tavern Restaurant Organization Models i Multinational 1 Low Pressure for global integration 2 High pressure for local responsiveness 3 Several subsidies operating as stand alone business units in multiple countries 4 Subsidies implies Multinational 5 EX Big oil companies ii International 1 Low pressure for global integration 2 Low pressure for local responsiveness 3 Uses existing capabilities to expand into foreign markets 4 Weakest of the four 5 EX Xerox iii Transitional 1 High pressure for global integration 2 High pressure for local responsiveness 3 Specialized facilities permit local responsiveness 4 Complex coordination mechanisms provide global integration 5 Hardest to be in 6 EX Caterpillar company iv Global 1 High pressure for global integration 2 Low pressure for local responsiveness 3 Views the world as a single market 4 Operations are centrally controlled 5 EX McDonald s Modes of Entry a Exporting Make it here sell it there i Positives 1 Economies of scale 2 Control 3 Consistent with pure global strategy ii Negatives 1 Tariff barriers 2