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GMS 200 Pre-midterm notes .docx

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Global Management Studies
GMS 200
Horatio Morgan

GMS 200 Lecture 1  The Management process o Planning  Setting performance objectives and deciding how to achieve them o Controlling  Measuring performance and taking action to ensure desired results o Organizing  Arranging tasks, people and other resources to accomplish the work o Leading  Inspiring people to work hard to achieve high performance  What’s so special about global business> o Embracing the challenge of challenge o Fierce competition o Know your customers very well and anticipate their demands o Do what you do best  How are organizations getting ahead in this global business landscape? o Flexibility and speed: IT is definitely important, but enough o Talented workers are needed to drive innovation and support change.  Getting the most out of employees o Companies are now paying closer attention to talent (human capital) management:  Recruiting and retaining employees  Developing employees in accordance with business strategies  Performance management  Recognizing, rewarding and engaging employees  Succession management to orderly replace retiring managers  Challenges managers face today o A widely diverse workplace has benefits (?), but may also account for many of the challenges that managers face today:  Age difference alone can be a major challenge  How do manages integrate Generation Y workers (18 to 24) in a workplace dominated at the top by baby boomers who are approaching retirement?  Cultural differences o Managers are expected to organize the workplace in a way that gets the most out of workers and other available resources  This requires planning, leadership, and performance management (or control) o Managers are one-step ahead if they are able to recruit and retain the most capable workers o Management involves many responsibilities (i.e. planning, organizing, leadership and performance management/control) o Managers must develop several skills in orders to successfully undertake these responsibilities in a diverse workplace, coupled with a highly competitive global economy o KATZ essential managerial skills Lecture 2 – information and decision-making  How managers make decisions o Classical model  Structured problem  Clearly defined  Certain environment  Complete information  All alternatives and consequences known  Choose absolute best among alternatives  Rationality – acts in a perfect world o Behavioural model  Unstructured problem  Not clearly defined  Uncertain environment  Incomplete information  Not all alternatives and consequences known  Choose first “satisfactory” alternative  Bounded rationality- acts with cognitive limitations  People make decisions based on quick-and-dirty rules (mental heuristics: availability, representativeness, anchoring and adjustment)  Mental heuristics may be useful, but tend to yield biases conclusions  Other pitfalls: framing error, confirmation error, and Escalating Commitment Lecture 3 – global dimensions of management Ch. 3  Why do companies go abroad? o To access to new markets or customers o To establish connections with foreign suppliers of raw materials o To tap into cheaper funding sources o To take advantage of relatively low-wage unskilled labour  Common market entry strategies o Exporting (most common, least risky!):  Direct exporting- selling directly to foreign customers  Advantages – establish and maintain relationship with foreign customers; control pricing decisions  Disadvantages: may demand managerial time and significant financial commitment  Indirect exporting- selling foreign customers through an agent or distributor  Advantages: requires limited financial commitment and knowledge of foreign market  Disadvantages: no contact with foreign customers, smaller profit margin, lose opportunity to learn about foreign markets o Licensing  Licensing agreement: an international marketer (ie. Licensor) may permit another company to use intellectual capital (IP) such as trademarks in exchange for compensation in royalty fees  Royalty fees (ie 10% of sales) may reduce the profit margin of the licensee but yield several benefits:  Global trademark allows the company to quickly become international without having to spend considerable time& money in developing its own brand. o International joint ventures (IJVs)  Objectives: reliance- natural gas was in  due to the company’s inability to undertake exploration in deep –-> it lacked advanced technologies, technical skills; and lacked the capital needed to finance new investments  BP wanted to have a presence in the Indian market where energy demand is growing at 4-5% per year  IJV: capitalizes on the complementary resources and capabilities of the partners- local IJV partner (RELIANCE) strong connection with the Indian government+ large domestic customer bases; foreign JV partner (BP): capital, advanced technologies  Success indicator: production of natural gas under IJV; but natural gas production continued to after IJV  Problems: Indian bureaucracy- government is sluggish in approving the master plan & the scheduled BP investments. Reliance’s political ties are not making a difference here o Foreign direct investment (FDI):  Firm owns major assets and/or undertakes production abroad through subsidiaries  Foreign subsidiary may be either acquired (“brown field investment”) or newly established through greenfield investments  Parent company has ownership and control its overseas operations, but does so by committing a considerable amount of financial resources and managerial time to foreign markets
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