Employee Motivation Resource Allocation

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1-1 Doç.Dr Doç.Dr.Mustafa KILIÇ Mustafa KILIÇ HACETTEPE HACETTEPE UNIVERS VERSITY The The Faculty Faculty of of Economics Economics & & Administrative Administrative Sciences Sciences Dept Dept.of .of Business Business Administration Administration Tel: 0 312 297 87 00 Tel: 0 312 297 87 00-01 01 Fax: 0 312 299 20 55 Fax: 0 312 299 20 55 Fax: 0 312 299 20 55 Fax: 0 312 299 20 55 e-mail mail: : [email protected] [email protected]

Transcript of Employee Motivation Resource Allocation

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Doç.DrDoç.Dr..Mustafa KILIÇMustafa KILIÇHACETTEPE HACETTEPE UUNNIIVERSVERSIITTYY

TheThe FacultyFaculty of of EconomicsEconomics & & AdministrativeAdministrative SciencesSciences

DeptDept.of .of BusinessBusiness AdministrationAdministration

Tel: 0 312 297 87 00Tel: 0 312 297 87 00--0101

Fax: 0 312 299 20 55Fax: 0 312 299 20 55Fax: 0 312 299 20 55Fax: 0 312 299 20 55

ee--mailmail: : [email protected]@hacettepe.edu.tr

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Strategic ManagementStrategic Management, , ConceptsConcepts, 11th Ed., 11th Ed.

FredFred R. DAVIDR. DAVIDFredFred R. DAVIDR. DAVID

www.www.prenhallprenhall.com/.com/daviddavid

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WHY DO SOME FIRMS SUCCEED WHILE OTHERS

FAIL?

Copyright 1998 by Houghton Mifflin Company. All rights reserved.

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Thinking Strategically:

The Three Big Strategic Questions

1. Where are we now -- what is our situation?

2. Where do we want to go?– Business(es) we want to be in and – Business(es) we want to be in and

market positions we want to stake out– Buyer needs and groups we

want to serve– Outcomes we want to achieve

3. How will we get there?

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Strategic Management DefinedStrategic Management Defined

Art and science of formulating, Art and science of formulating, Art and science of formulating, Art and science of formulating, implementing, and evaluating crossimplementing, and evaluating crossimplementing, and evaluating crossimplementing, and evaluating cross----implementing, and evaluating crossimplementing, and evaluating crossimplementing, and evaluating crossimplementing, and evaluating cross----functional decisions that enable an functional decisions that enable an functional decisions that enable an functional decisions that enable an organization to achieve its organization to achieve its organization to achieve its organization to achieve its objectives.objectives.objectives.objectives.

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Strategic Management

In essence, the In essence, the strategic planstrategic planstrategic planstrategic planstrategic planstrategic planstrategic planstrategic plan is a is a In essence, the In essence, the strategic planstrategic planstrategic planstrategic planstrategic planstrategic planstrategic planstrategic plan is a is a

company’s company’s game plangame plangame plangame plangame plangame plangame plangame plan..

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Strategic Management achieves a firm’s success through integration --

Management MarketingManagement

MIS

Production/OperationsFinance/Accounting

Marketing

Research & Development

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Key Terms & Key Terms & Process Process of of StrategicStrategic--Management Management

Strategy Formulation 22

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Strategy Implementation

Strategy Evaluation

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Vision & Mission

Strategy Formulation

External Opportunities & Threats

Internal Strengths & Weaknesses

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Long-Term Objectives

Alternative Strategies

Strategy Selection

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Issues in Strategy Formulation

�New Business opportunities�Businesses to abandon�Allocation of resources�Expansion or diversificationdiversification�International markets�Mergers or joint ventures�Avoidance of hostile takeover

geri

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Strategy Implementation

Annual Objectives

Policies

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Employee Motivation

Resource Allocation

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Strategy Implementation

Action Stage of Strategic Management –

�Most difficult stage�Mobilization of �Mobilization of employees & managers�Interpersonal skills critical�Consensus on goal pursuit

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Strategy Evaluation

Internal Review

External Review

Performance Metrics

Corrective Actions

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Strategy Evaluation

Final Stage of Strategic Management

�Subject to future modification�Today’s success no �Today’s success no guarantee of future success�New & different problems�Complacency leads to demise

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Integrating Intuition and Integrating Intuition and

AnalysisAnalysis

The The strategic management processstrategic management processattempts to organize quantitative attempts to organize quantitative

and qualitative information under and qualitative information under

conditions of uncertainty.conditions of uncertainty.

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Integrating Intuition and Integrating Intuition and

AnalysisAnalysis

Intuition based on:Intuition based on:

–– Past experiencesPast experiences

–– JudgmentJudgment–– JudgmentJudgment

–– FeelingsFeelings

Useful for decision makingUseful for decision making

–– Conditions of great uncertaintyConditions of great uncertainty

–– Conditions with little precedentConditions with little precedent

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Integrating Intuition and Integrating Intuition and

AnalysisAnalysis

Intuition and judgmentIntuition and judgment

–– Management at all levelsManagement at all levels

–– Analyses are influencedAnalyses are influenced–– Analyses are influencedAnalyses are influenced

Analytical thinking and intuitive Analytical thinking and intuitive

thinkingthinking

–– Complement each otherComplement each other

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Involve Management at all levels

Intuition & Judgment

Integrating Intuition & Analysis

Involve Management at all levels

Influence all Analyses

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Analytical Thinking

Integrating Intuition & Analysis

Intuitive Thinking

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Adaptation to ChangeAdaptation to Change

Organizations must monitor eventsOrganizations must monitor events

–– OnOn--going processgoing process–– OnOn--going processgoing process

–– Internal and external eventsInternal and external events

–– Timely changesTimely changes

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Rate & magnitude of change Rate & magnitude of change increasing dramaticallyincreasing dramatically

Adapting to Change

Globalization 1Globalization 1

Demographics

Technology 2

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Effective AdaptationEffective Adaptation

Adapting to Change

Requires long-term focus

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•• What kind of business should What kind of business should What kind of business should What kind of business should What kind of business should What kind of business should What kind of business should What kind of business should we become?we become?we become?we become?we become?we become?we become?we become?

•• Are we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fields

Adapting to Change – Key Strategic Management Questions

•• Are we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fieldsAre we in the right fields•• Are there new competitorsAre there new competitorsAre there new competitorsAre there new competitorsAre there new competitorsAre there new competitorsAre there new competitorsAre there new competitors•• What strategies should we What strategies should we What strategies should we What strategies should we What strategies should we What strategies should we What strategies should we What strategies should we

pursue?pursue?pursue?pursue?pursue?pursue?pursue?pursue?•• How are our customers How are our customers How are our customers How are our customers How are our customers How are our customers How are our customers How are our customers

changing?changing?changing?changing?changing?changing?changing?changing?

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Strategic Management is Gaining and Maintaining Competitive Advantage

Key TermsKey Terms

“Anything that a firm does “Anything that a firm does especially well compared to especially well compared to rival firms”rival firms”

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1. 1. Adapting to change in external Adapting to change in external trends, internal capabilities and trends, internal capabilities and resourcesresources (I/O)(I/O)

Achieving Sustained Competitive Advantage

2. 2. Effectively formulating, Effectively formulating, implementing & evaluating strategiesimplementing & evaluating strategies(RBV)(RBV)

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StrategistsStrategistsStrategistsStrategistsStrategistsStrategistsStrategistsStrategists

•• Usually found in high levels of management Usually found in high levels of management (CEO)(CEO)

��Help organization gather, analyze, and Help organization gather, analyze, and

Key TermsKey Terms

��Help organization gather, analyze, and Help organization gather, analyze, and

organize informationorganize information

��Track industry and competitive trendsTrack industry and competitive trends

��Develop forecasting modelDevelop forecasting model

��Evaluate corporate and divisional Evaluate corporate and divisional

performanceperformance

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Key TermsKey Terms

Various Job Titles:

Strategists – Firm’s success/failure

•Chief Executive Officer (CEO)•Chief Strategy Officer (CSO)•President•Owner•Board Chair•Executive Director

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Key TermsKey Terms

Vision StatementVision Statement

––What do we want to become?What do we want to become?––What do we want to become?What do we want to become?

Mission StatementMission Statement

––What is our business?What is our business?

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Key Terms

Opportunities and Threats (External)

��Largely beyond the control of a Largely beyond the control of a single organizationsingle organization

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Opportunities & Threats Opportunities & Threats Opportunities & Threats Opportunities & Threats Opportunities & Threats Opportunities & Threats Opportunities & Threats Opportunities & Threats (External) (External) (External) (External) (External) (External) (External) (External)

Key Terms

Analysis of Trends:

• Economic

• Social

• Cultural

• Demographic/Environmental

• Political, Legal, Governmental

• Technological

• Competitors

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Key Terms Opportunities & Threats

Environmental Scanning (Industry Analysis)

–– Process of conducting research and Process of conducting research and gathering and assimilating external gathering and assimilating external informationinformation

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Basic Basic Basic Basic Basic Basic Basic Basic PrinciplePrinciplePrinciplePrinciplePrinciplePrinciplePrinciplePrinciple of Strategic of Strategic of Strategic of Strategic of Strategic of Strategic of Strategic of Strategic ManagementManagementManagementManagementManagementManagementManagementManagement

Key Terms Opportunities & Threats

Take advantage of External Opportunities

Strategy Formulation

External Opportunities

Avoid/minimize impact ofExternal Threats

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Key Terms

Strengths & Weaknesses (Internal)

��Controllable activities Controllable activities Controllable activities Controllable activities Controllable activities Controllable activities Controllable activities Controllable activities performed especially well or performed especially well or performed especially well or performed especially well or performed especially well or performed especially well or performed especially well or performed especially well or poorlypoorlypoorlypoorlypoorlypoorlypoorlypoorly

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Strengths & Weaknesses Strengths & Weaknesses Strengths & Weaknesses Strengths & Weaknesses Strengths & Weaknesses Strengths & Weaknesses Strengths & Weaknesses Strengths & Weaknesses (Internal) (Internal) (Internal) (Internal) (Internal) (Internal) (Internal) (Internal)

Key Terms

Typically located in functional areas of the firm

• Management

• Marketing• Marketing

• Finance/Accounting

• Production/Operations

• Research & Development

• Computer Information Systems

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Assessing the Internal Assessing the Internal Assessing the Internal Assessing the Internal Assessing the Internal Assessing the Internal Assessing the Internal Assessing the Internal EnvironmentEnvironmentEnvironmentEnvironmentEnvironmentEnvironmentEnvironmentEnvironment

Key Terms Strengths & Weaknesses

Financial Ratios

Internal Factors

Performance Metrics

Industry Averages

Survey Data

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Key Terms

Long-term Objectives

��MissionMission--driven pursuit of specified driven pursuit of specified results more than one year outresults more than one year out

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LongLongLongLongLongLongLongLong--------term Objectivesterm Objectivesterm Objectivesterm Objectivesterm Objectivesterm Objectivesterm Objectivesterm Objectives•• Results to be achieved in pursuing the organization’s Results to be achieved in pursuing the organization’s

mission. Time frame is beyond one year.mission. Time frame is beyond one year.

Key Terms

Essential for ensuring the firm’s success

• Provide direction

• Aid in evaluation• Aid in evaluation

• Create synergy

• Focus coordination

• Basis for planning, motivating, and controlling

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Key Terms

Strategies:

Potential actions that require top management Potential actions that require top management decisions and large amounts of firm’s decisions and large amounts of firm’s resourcesresources

��Means by which longMeans by which long--term term objectives are achievedobjectives are achieved

resourcesresources

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StrategiesStrategiesStrategiesStrategiesStrategiesStrategiesStrategiesStrategies

Key Terms

Some Examples

• Geographic expansion

• Diversification• Diversification

• Acquisition

• Market penetration

• Retrenchment

• Liquidation

• Joint venture

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Key Terms

Annual Objectives

��ShortShort--term milestones that firms must term milestones that firms must achieve to attain longachieve to attain long--term objectivesterm objectives

��Represent the basis for allocating resourcesRepresent the basis for allocating resources

�� Established at corporate, divisional, and functional Established at corporate, divisional, and functional

levelslevels

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Stated in terms of accomplishments Stated in terms of accomplishments

for:for:

Annual Objectives

Key Terms

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for:for:��managementmanagement

�� marketingmarketing

�� finance/accountingfinance/accounting

�� production/operationsproduction/operations

�� research and developmentresearch and development

�� information systems accomplishmentsinformation systems accomplishments

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•• Important in strategy implementation as the Important in strategy implementation as the means by which annual objectives will be means by which annual objectives will be achievedachieved

Key Terms

Policies21

��Guide to decision making and address repetitive Guide to decision making and address repetitive

situationssituations

��Established at corporate, divisional, or functional Established at corporate, divisional, or functional

levelslevels

��Allow consistency & coordination within and Allow consistency & coordination within and

between organizational departmentsbetween organizational departments

1-43Comprehensive Strategic Management ModelComprehensive Strategic Management Model

Vision &

ExternalAudit

Chapter 3

Long-TermObjectives

Generate,Evaluate,Select

Strategies

ImplementStrategies:Mgmt Issues

ImplementStrategies:Marketing,Fin/Acct,

Measure &Evaluate

Performance

&Mission

Statements

Chapter 2

InternalAudit

Chapter 4

Chapter 5

Strategies

Chapter 6 Chapter 7

Fin/Acct,R&D, CIS

Chapter 8 Chapter 9

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Strategic Management Model

Strategic Management Process

��Dynamic & ContinuousDynamic & Continuous

��More formal in larger organizationsMore formal in larger organizations

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1. Identify Existing 1. Identify Existing 1. Identify Existing 1. Identify Existing 1. Identify Existing 1. Identify Existing 1. Identify Existing 1. Identify Existing ----------------

Strategic Management Model

• Vision

• Mission

• Objectives

• Strategies

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2.2.2.2.2.2.2.2. Audit external environmentAudit external environmentAudit external environmentAudit external environmentAudit external environmentAudit external environmentAudit external environmentAudit external environment

3.3.3.3.3.3.3.3. Audit internal environmentAudit internal environmentAudit internal environmentAudit internal environmentAudit internal environmentAudit internal environmentAudit internal environmentAudit internal environment

4.4.4.4.4.4.4.4. Establish longEstablish longEstablish longEstablish longEstablish longEstablish longEstablish longEstablish long--------term objectivesterm objectivesterm objectivesterm objectivesterm objectivesterm objectivesterm objectivesterm objectives

Strategic Management Model

4.4.4.4.4.4.4.4. Establish longEstablish longEstablish longEstablish longEstablish longEstablish longEstablish longEstablish long--------term objectivesterm objectivesterm objectivesterm objectivesterm objectivesterm objectivesterm objectivesterm objectives

5.5.5.5.5.5.5.5. Generate, evaluate & select Generate, evaluate & select Generate, evaluate & select Generate, evaluate & select Generate, evaluate & select Generate, evaluate & select Generate, evaluate & select Generate, evaluate & select strategiesstrategiesstrategiesstrategiesstrategiesstrategiesstrategiesstrategies

6.6.6.6.6.6.6.6. Implement selected strategiesImplement selected strategiesImplement selected strategiesImplement selected strategiesImplement selected strategiesImplement selected strategiesImplement selected strategiesImplement selected strategies

7.7.7.7.7.7.7.7. Measure & evaluate performanceMeasure & evaluate performanceMeasure & evaluate performanceMeasure & evaluate performanceMeasure & evaluate performanceMeasure & evaluate performanceMeasure & evaluate performanceMeasure & evaluate performance

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•• Proactive vs. ReactiveProactive vs. Reactive

��Initiate and influence activities Initiate and influence activities

�� Helps shape firm’s own futureHelps shape firm’s own future

Benefits of Strategic Benefits of Strategic

ManagementManagement

�� Helps shape firm’s own futureHelps shape firm’s own future

•• Principal BenefitPrincipal Benefit

��Formulate better strategiesFormulate better strategies

�� Systematic, logical, and rational approachSystematic, logical, and rational approach

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Benefits of Strategic Management

Financial Benefits

• Improvement in sales• Improvement in sales

• Improvement in profitability

• Productivity improvement

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Benefits of Strategic Management

Non-Financial Benefits

• Improved understanding of competitors strategies• Improved understanding of competitors strategies

• Enhanced awareness of threats

• Reduced resistance to change

• Enhanced problem-prevention capabilities

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•• Poor reward structuresPoor reward structures

•• FireFire--fightingfighting

•• Waste of timeWaste of time

Why Some Firms Do Why Some Firms Do NoNo

Strategic PlanningStrategic Planning

•• Waste of timeWaste of time

•• Too expensiveToo expensive

•• LazinessLaziness

•• Content with successContent with success

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•• Fear of failureFear of failure

•• OverconfidenceOverconfidence

•• Prior bad experiencePrior bad experience

Why Some Firms Do Why Some Firms Do NoNo

Strategic Planning (Cont’d)Strategic Planning (Cont’d)

•• Prior bad experiencePrior bad experience

•• SelfSelf--interestinterest

•• Fear of the unknownFear of the unknown

•• SuspicionSuspicion

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•• Using to gain control over decisions & Using to gain control over decisions &

resourcesresources

•• Doing only to satisfy regulatory requirementsDoing only to satisfy regulatory requirements

•• Moving hastily from mission to strategy Moving hastily from mission to strategy

Pitfalls to Avoid in Strategic Pitfalls to Avoid in Strategic PlanningPlanning

•• Moving hastily from mission to strategy Moving hastily from mission to strategy

formulationformulation

•• Failing to communicate to employeesFailing to communicate to employees

•• Intuitive decisions that conflict with formal Intuitive decisions that conflict with formal

planplan

•• Top management not supportive of processTop management not supportive of process

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•• Failing to use as standard for Failing to use as standard for performance measurementperformance measurement

•• Delegating to a “planner” vs. involvement Delegating to a “planner” vs. involvement of managersof managers

Pitfalls to Avoid in Strategic Pitfalls to Avoid in Strategic Planning Planning (Cont’d)(Cont’d)

of managersof managers

•• Failing to involve key personnelFailing to involve key personnel

•• Failing to create collaborative Failing to create collaborative environmentenvironment

•• Formality that stifles creativity and Formality that stifles creativity and flexibilityflexibility

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Defined:Defined:

Principles of conduct within organizations that Principles of conduct within organizations that guide decision making and behaviorguide decision making and behavior

Business Ethics & Strategic Business Ethics & Strategic

PlanningPlanning

•• Good business ethics is a prerequisite for Good business ethics is a prerequisite for

good strategic managementgood strategic management

•• Good ethics is just good business!Good ethics is just good business!

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•• Strategists responsible for high Strategists responsible for high ethical principlesethical principles

•• All strategic processes have ethical All strategic processes have ethical ramificationsramifications

Business Ethics & Strategic Business Ethics & Strategic

Planning (Cont’d)Planning (Cont’d)

ramificationsramifications

•• Formal codes of ethics are in place Formal codes of ethics are in place for many businessesfor many businesses

•• Internet privacy emerging as ethical Internet privacy emerging as ethical issue of immense proportionsissue of immense proportions

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Business actions Business actions alwaysalways unethical include:unethical include:

•• Misleading advertisingMisleading advertising

•• Misleading labelingMisleading labeling

Business Ethics & Strategic Business Ethics & Strategic

Planning (Cont’d)Planning (Cont’d)

•• Misleading labelingMisleading labeling

•• Environmental harmEnvironmental harm

•• Poor product or service safetyPoor product or service safety

•• Padding expense accountsPadding expense accounts

•• Insider tradingInsider trading

•• Dumping flawed products on foreign marketsDumping flawed products on foreign markets

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Nature of Global Nature of Global CompetitionCompetition

•• Companies conduct business across Companies conduct business across

bordersborders

�� International or multinational corporationsInternational or multinational corporations

�� Parent company Parent company �� Parent company Parent company

�� Host countryHost country

•• Strategy implementation more difficultStrategy implementation more difficult

��Cultural differencesCultural differences

�� Norms, values, work ethicsNorms, values, work ethics

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Advantages of International Advantages of International

OperationsOperations

•• Absorb excess capacityAbsorb excess capacity

•• Reduce unit costsReduce unit costs

•• LowLow--cost production facilitiescost production facilities

•• Lower labor costsLower labor costs

•• Competition less intenseCompetition less intense

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Advantages of International Advantages of International

Operations (Cont’d)Operations (Cont’d)

•• Reduced tariffs, lower taxesReduced tariffs, lower taxes•• Reduced tariffs, lower taxesReduced tariffs, lower taxes

•• Favorable political climateFavorable political climate

•• Economies of scaleEconomies of scale

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Communication difficulties between Communication difficulties between parent and subsidiariesparent and subsidiaries

•• Based on cultural, political, social, Based on cultural, political, social, language, demographic, and language, demographic, and

Disadvantages of International Disadvantages of International

OperationsOperations

language, demographic, and language, demographic, and competitive forcescompetitive forces

ForeignForeign--based competitors based competitors

•• Strengths underestimatedStrengths underestimated

•• Weaknesses overestimatedWeaknesses overestimated

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Key Terms & ConceptsKey Terms & Concepts

•• Annual objectivesAnnual objectives

•• Business ethicsBusiness ethics

•• Code of ethicsCode of ethics

•• EE--commercecommerce

•• EmpowermentEmpowerment

•• Internal strengthsInternal strengths

•• Internal weaknessesInternal weaknesses

•• IntuitionIntuition

•• LongLong--term objectivesterm objectives

•• Mission statementsMission statements•• EmpowermentEmpowerment

•• Environmental Environmental

scanningscanning

•• External External

opportunitiesopportunities

•• External threatsExternal threats

•• Mission statementsMission statements

•• PoliciesPolicies

•• Strategic Strategic

managementmanagement

•• StrategicStrategic--

management modelmanagement model

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Key Terms & Concepts Key Terms & Concepts

(Cont’d)(Cont’d)

•• StrategicStrategic--

management processmanagement process

•• StrategiesStrategies

•• StrategistsStrategists

•• Strategy evaluationStrategy evaluation

•• Vision statementVision statement

•• VisionVision

•• Host country Host country

•• International firmsInternational firms

•• LongLong--range planning range planning •• Strategy evaluationStrategy evaluation

•• Strategy formulationStrategy formulation

•• Strategy Strategy

implementationimplementation

•• LobbyingLobbying

•• LongLong--range planning range planning

•• Multinational Multinational

corporationcorporation

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•• GlobalizationGlobalizationGlobalizationGlobalizationGlobalizationGlobalizationGlobalizationGlobalization

–– Trend toward greater Trend toward greater interdependenceinterdependence

among national institutions and economies.among national institutions and economies.

I.I.I.I.I.I.I.I. Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:I.I.I.I.I.I.I.I. Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:Globalization of Markets:

•• Refers to Convergence in buyer Refers to Convergence in buyer

preferences in markets around the world. preferences in markets around the world.

II.II.II.II.II.II.II.II. Globalization of Production:Globalization of Production:Globalization of Production:Globalization of Production:Globalization of Production:Globalization of Production:Globalization of Production:Globalization of Production:

•• Refers to the dispersal of production Refers to the dispersal of production

activities to locations around the world activities to locations around the world

that are lowthat are low--cost or highcost or high--quality quality

producers of a particular good.producers of a particular good.

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Forces Driving GlobalizationForces Driving Globalization•• There are two main forces spurring There are two main forces spurring

the globalization of markets and the globalization of markets and production:production:

1.1.1.1.1.1.1.1. Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And InvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestment

1.1.1.1.1.1.1.1. Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And Falling Barriers To Trade And InvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestmentInvestment�� Reducing barriers for trading purposesReducing barriers for trading purposes

2.2.2.2.2.2.2.2. Technological InnovationTechnological InnovationTechnological InnovationTechnological InnovationTechnological InnovationTechnological InnovationTechnological InnovationTechnological Innovation�� Making it easier, faster, and less costly to Making it easier, faster, and less costly to

move data, goods, people and equipment move data, goods, people and equipment due to advancements in information due to advancements in information technologytechnology

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Examples of Reduction inExamples of Reduction in

Trade BarriersTrade Barriers

•• General Agreement on Tariffs and TradeGeneral Agreement on Tariffs and TradeGeneral Agreement on Tariffs and TradeGeneral Agreement on Tariffs and TradeGeneral Agreement on Tariffs and TradeGeneral Agreement on Tariffs and TradeGeneral Agreement on Tariffs and TradeGeneral Agreement on Tariffs and Tradewww.gatt.orgwww.gatt.orgwww.gatt.orgwww.gatt.orgwww.gatt.orgwww.gatt.orgwww.gatt.orgwww.gatt.org

•• World Trade Organization (WTO)World Trade Organization (WTO)World Trade Organization (WTO)World Trade Organization (WTO)World Trade Organization (WTO)World Trade Organization (WTO)World Trade Organization (WTO)World Trade Organization (WTO)www.wto.orgwww.wto.orgwww.wto.orgwww.wto.orgwww.wto.orgwww.wto.orgwww.wto.orgwww.wto.org

•• North America Free Trade AgreementNorth America Free Trade AgreementNorth America Free Trade AgreementNorth America Free Trade AgreementNorth America Free Trade AgreementNorth America Free Trade AgreementNorth America Free Trade AgreementNorth America Free Trade Agreementwww.nafta.orgwww.nafta.orgwww.nafta.orgwww.nafta.orgwww.nafta.orgwww.nafta.orgwww.nafta.orgwww.nafta.org

•• European Union (EU)European Union (EU)European Union (EU)European Union (EU)European Union (EU)European Union (EU)European Union (EU)European Union (EU)europa.eu.inteuropa.eu.inteuropa.eu.inteuropa.eu.inteuropa.eu.inteuropa.eu.inteuropa.eu.inteuropa.eu.int

•• Asia Pacific Economic CooperationAsia Pacific Economic CooperationAsia Pacific Economic CooperationAsia Pacific Economic CooperationAsia Pacific Economic CooperationAsia Pacific Economic CooperationAsia Pacific Economic CooperationAsia Pacific Economic Cooperationwww.apec.orgwww.apec.orgwww.apec.orgwww.apec.orgwww.apec.orgwww.apec.orgwww.apec.orgwww.apec.org

•• BACKBACKBACKBACKBACKBACKBACKBACK

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Examples of Technological Examples of Technological

InnovationInnovation•• Internet, Intranet, and ExtranetInternet, Intranet, and Extranet

–– Use of World Wide Web, Private NetworksUse of World Wide Web, Private Networkson Internal company Web siteson Internal company Web sites internetinternet

•• Activities Occurring After The Production ProcessActivities Occurring After The Production Process–– To bypass intermediaries like wholesalers and To bypass intermediaries like wholesalers and –– To bypass intermediaries like wholesalers and To bypass intermediaries like wholesalers and

retailers, companies can enter global markets, cut retailers, companies can enter global markets, cut postproduction costs, and pass savings on to postproduction costs, and pass savings on to customers.customers.

•• Advancement in TechnologyAdvancement in Technology–– Advances in transportation methods are helping to Advances in transportation methods are helping to

globalize both markets and production activities. globalize both markets and production activities.

–– Advancements in the shipping industry are facilitating Advancements in the shipping industry are facilitating globalization by making shipping more efficient and globalization by making shipping more efficient and dependable.dependable. BackBack