international strategy
a strategy through which the firm sells its goods or services outside its domestic market.
multidomestic strategy
an international strategy in which strategic and operating decisions and decentralized to the strategic business unit in each country so as to allow that unit to tailor products to the local market.
global strategy
an international strategy through which the firm offers standardized products across country markets, with competitive strategy being dictated by the home office.
transnational strategy
an international strategy through which the firm seeks to achieve both global efficiency and local responsiveness.
greenfield venture
the establishment of a new wholly owned subsidiary. To enter into a new market without the help of another business who is already there.
international diversification
a strategy through which a firm expands the sales of its goods or services across borders of global regions and countries into different geographic locations or markets.
cooperative strategy
a strategy in which firms work together to achieve a shared objective.
strategic alliance
a cooperative strategy in which firms combine some of their resources and capabilities to create a competitive advantage.
joint venture
a strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage.
equity strategic alliance
an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage.
nonequity strategic alliance
an alliance in which two or more firms develop a contractual relationship to share some of their unique resources and capabilities to create a competitive advantage.
business-level cooperative strategy
a firm uses it to grow and improve its performance in individual product markets.
complementary strategic alliances
business-level alliances in which firms share some of their resources and capabilities in complementary ways to develop competitive advantages.
vertical complementary strategic alliances
firms share their resources and capabilities from different stages of the value chain to create a competitive advantage.
horizontal complementary strategic alliances
an alliance in which firms share some of their resources and capabilities from the same stage (or stages) of the value chain to create a competitive advantage.
corporate level cooperative strategy
firm uses it to help it diversify in terms of products offered or markets served, or both.
diversifying strategic alliances
a corporate-level cooperative strategy in which firms share some of their resources and capabilities to diversify into new product or market areas.
synergistic strategic alliance
a corporate-level cooperative strategy in which firms share some of their resources and capabilities to create economies of scope.
franchising
a corporate-level cooperative strategy in which a firm uses a franchise as a contractual relationship to describe and control the sharing of its resources and capabilities with partners.
cross-border strategic alliance
an international cooperative strategy in which firms with headquarters in different nations decide to combine some of their resources and capabilities to create a competitive advantage. * They have the potential to help firms use their resources and capab
network cooperative strategy
a cooperative strategy wherein several firms agree to form multiple partnerships to achieve shared objectives.
cloud computing
location-independent computing, where shared servers provide resources software, and data to computers and other devices on demand. Ex: Amazon.
tacit knowledge
unwritten, unspoken, and hidden vast storehouse of knowledge held by people - based on emotions/experiences/insights/intuition/observations.
corporate governance
the set of mechanisms used to manage the relationship among stakeholders and to determine and control the strategic direction and performance of organizations.
agency relationship
exists when one or more persons (the principal) hire another person or persons (the agent) as decision-making specialists to perform a service.
managerial opportunism
the seeking of self-interest with guile (i.e. cunning or deceit)
agency costs
are the sum of incentive costs, monitoring costs, enforcement costs, and individual financial losses incurred by principals because governance mechanisms cannot guarantee total compliance by the agent.
ownership concentration
both the number of large-block shareholders and the total percentage of shares they own define ownership concentration.
large-block shareholders
typically own at least 5 percent of a corporation's issued shares.
institutional owners
financial institutions such as stock mutual funds and pensions funds that control large-block shareholder positions.
board of directors
a group of elected individuals whose primary responsibility is to act in the owners' interests by formally monitoring and controlling the corporation's top-level managers.
executive compensation
a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentive compensation, such as stock awards and options.
market for corporate control
an external governance mechanism that becomes active when a firm's internal controls fail.
organizational structure
specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes.
organizational controls
guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable.
strategic controls
largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages.
financial controls
largely objective criteria used to measure the firm's performance against previously established quantitative standards.
simple structure
a structure in which the owner-manager makes all major decisions and monitors all activities while the staff serves as an extension of the manager's supervisory authority.
functional structure
consists of a chief executive officer and a limited corporate staff, with functional line managers in dominant organizational areas such as production, accounting, marketing, R&D, engineering, and human resources.
multidivisional (M-form) structure
consists of a corporate office and operating divisions, each operating division representing a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to divisio
cooperative form
is an M-form structure in which horizontal integration is used to bring about interdivisional cooperation.
strategic business unit (SBU) form
is an M-form consisting of three levels: corporate headquarters, strategic business units (SBUs), and SBU divisions.
competitive form
an M-form structure characterized by complete independence among the firm's division which compete for corporate resources.
worldwide geographic area structure
emphasizes national interests and facilitates the firm's efforts to satisfy local differences.
worldwide product divisional structure
decision-making authority is centralized in the worldwide division headquarters to coordinate and integrate decisions and actions among divisional business units.
combination structure
a structure drawing characteristics and mechanisms from both the worldwide geographic area structure and the worldwide product divisional structure.
strategic leadership
the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.
top management team
composed of the key individuals who are responsible for selecting and implementing the firm's strategies.
heterogenous top management team
composed of individuals with different functional backgrounds, experience, and education.
internal managerial labor market
consists of a firm's opportunities for managerial positions and the qualified employees within that firm.
external managerial labor market
the collection of managerial career opportunities and the qualified people who are external to the organization in which the opportunities exist.
determining strategic direction
involves specifying the image and character the firm seeks to develop over time.
human capital
refers to the knowledge and skills of a firm's entire workforce.
social capital
involves relationships inside and outside the firm that help the firm accomplish tasks and create value for customers and shareholders.
organized culture
consists of a complex set of ideologies, symbols, and core values that are shared throughout the firm and influence the way business is conducted.
balanced scorecard
a framework firms can use to verify that they have established both strategic and financial controls to assess their performance.
strategic entrepreneurship
taking entrepreneurial actions using a strategic perspective.
corporate entrepreneurship
the use or application of entrepreneurship within an established firm.
entrepreneurship
the process by which individuals, teams, or organizations identify and pursue entrepreneurial opportunities without being immediately constrained by the resources they currently control.
entrepreneurial opportunities
are conditions in which new goods or services can satisfy a need in the market.
invention
the act of creating or developing a new product or process.
innovation
the process of creating a commercial product from an invention.
imitation
the adoption of a similar innovation by different firms.
entrepreneurs
individuals, acting independently or as part of an organization, who perceive an entrepreneurial opportunity and then take risks to develop an innovation to exploit it.
entrepreneurial mind-set
values uncertainty in the marketplace and seeks to continuously identify opportunities with the potential to lead to important innovations.
international entrepreneurship
a process in which firms creatively discover and exploit opportunities that are outside their domestic markets in order to develop a competitive advantage.