MGTA03 Final Exam Review.docx

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

MGTA03 – Final Exam Review 5.1 THE RISE OF INTERNATIONAL BUSINESS  The World Marketplace per capita income the average income per person of a country  High-income countries greater than $10,065 (e.g. Canada, U.S., Europe, Australia, South Korea)  Upper-middle-income countries between $3,255 and $10,065 (e.g. Czech, Greece, Hungary, etc.)  Low middle-income countries between $825 and $3255 (e.g. Colombia, Thailand, Guatemala)  Low-income countries less than $825 (i.e. developing countries) - North America: United States dominates the NA business region & Canada plays large role - Europe: Western dominated by Germany, UK, France, Italy  Ecommerce and technology; Eastern once communist now marketplace and producer (Hungary) - Asia-Pacific: automobile, electronics, and banking industries; ASEAN (Thai, Malay, Indonesia, Viet)  Forms of Competitive Advantage absolute advantage a nation’s ability to produce something more cheaply or better than any other country comparative advantage a nation’s ability to produce some products more cheaply or better than it can others (we can choose to specialize in) national competitive advantage a country will be inclined to engage in int’l trade when factor conditions, demand conditions, related and supporting industries, and strategies/structures/rivalries are favourable  Factor conditions are the factors of production: labour, capital, entrepreneurs, natural resources  Demand conditions reflect a large domestic consumer base that promotes strong demand for innovative products  Related and supporting industries strong local or regional suppliers and/or industrial customers  Strategies, structures, and rivalries refer to firms and industries that stress cost reduction, product quality, higher productivity, and innovative new products theory of competitive advantage: no country on earth can make everything quickly, cheaply, or well; the things you can make, make it & the things you can’t make, don’t make it international competitiveness ability of a country to generate more wealth than its competitors in markets  Import-Export Balances balance of trade the difference in value between a country’s total exports and its total imports balance of payments the difference between money flowing in to and out of a country as a result of trade and other transactions (includes: tourist spending, foreign aid-out, profit overseas-in, foreign business-out) Country Exports to Imports from United States $369.2 $258.4 EU 28.9 38.3 Japan 10.4 11.1 Other 44.9 78.9  Exchange Rates euro a common currency shared among most of the members of EU (excluding Denmark, Sweden, UK) - As CAD appreciates, we can buy more US products  strong: good for consumers, bad for business - As USD depreciates, they buy fewer Canadian products MGTA03 – Final Exam Review 5.2 BARRIERS TO INTERNATIONAL TRADE  Legal and Political Differences quota a restriction by one nation on the total number of products of a certain type that can be imported from another nation (i.e. a limit) embargo a gov’t order forbidding exportation and/or importation of a particular product subsidy a gov’t payment to help domestic business compete with foreign firms protectionism protecting domestic business at the expense of free market competition cartel any association of producers whose purpose is to control the supply and price of a given product  Free Trade Agreements EU agreement among major Western Europe nations to eliminate or make uniform most trade barriers affecting group members (e.g. Italy, Germany, France, UK); largest free marketplace; ¼ of global wealth NAFTA agreement to gradually eliminate tariffs and other trade barriers among US, Canada, and Mexico - FDI has increased in Canada & large trade surplus - U.S. imports & exports with Mexico have increased - Canada has become an exporting powerhouse; most trade intensive country in G8 PART TWO---The Business of Managing 6.2 SETTING GOALS AND FORMULATING STRATEGY goals objectives that a business hopes and plans to achieve  Setting Goals - Goal setting provides direction, guidance, and motivation for all managers - Goal setting helps firms allocate resources - Goal setting helps to define corporate culture - Goal setting helps managers assess performance mission statements an org’s statement of how it will achieve its purpose in the environment in which it conducts its business long-term goals goals set for extended periods of time, typically five years or more into the future intermediate goals goals set for a period of one to five years short-term goals goals set for the very near future, typically less than one year  Formulating Strategy strategy formulation creation of a broad program for defining and meeting an org’s goals strategy goals long-term goals derived directly from a firm’s mission statement strategic management model: (1) establish goals; (2) analyze the environment; (3) analyze the organization; (4) choose how to compete; (5) carry out the plan environmental analysis the process of scanning the environment for threats and opportunities - PEST analysis: Political, Economic, Social, Technological (over the next five years) - Porter 5 Forces analysis: assessing industry attractiveness & position of individual firms within an industry [Existing Competitors plus Potential Competitors, Substitute Products, Customers, Supplies] strategic plans plans that reflect decisions about resource allocations, company priorities, and steps needed to meet strategic goals tactical plans generally, short-range plans concerned with implementing specific aspects of a company’s strategic plans MGTA03 – Final Exam Review operational plans plans setting short-term targets for daily, weekly, or monthly performance corporate-level strategy identifies the various businesses that a company will be in, and how these businesses will relate to each other - concentration (strategy), growth (market penetration, product development, geographic expansion), integration (horizontal and vertical), diversification, investment reduction (to focus) business-level strategy identifies the ways a business will compete in its chosen line of products/services - cost leadership becoming the lowest cost leader in an industry - differentiation strategy seeks to be unique in industry along some dimension that is valued by buyers - focus strategy selecting a market segment and serving the customers in that market niche best functional strategy identify the basic courses of action that each dept. in the firm will pursue to attain goal 7.1 THE MANAGEMENT PROCESS planning concerned with determining what the business needs to do and the best way to achieve it - (1) goals are established for the org; (2) managers identify whether a gap exists between the company’s desire and actual position; (3) managers develop plans to achieve the desired objectives; (4) plans are implemented; (5) effectiveness of the plan is assessed organizing concerned with mobilizing the necessary resources to complete a particular task leading concerned with guiding and motivating employees to meet the firm’s objectives controlling concerned with monitoring the firm’s performance and, if necessary, aligning with firm’s goals 7.2 TYPES OF MANAGERS  Levels of Management senior responsible for a firm’s overall performance and effectiveness & for developing long-range plans middle responsible for implementing the decisions made by top managers first-line responsible for supervising the work of employees  Areas of Management - Marketing; getting products and services to buyers (development, pricing, promotion, distribution) - Finance; plan and oversee its financial resources (investments and accounting functions) - Operations; production control, inventory control, quality control (systems by which it creates g&s) - HR; provide assistance to other managers when hiring, training, evaluating employees & compensation - Info; designing and implementing various systems to gather, process, disseminate information 7.3 BASIC MANAGEMENT SKILLS technical skills associated with performing specialized tasks within a firm human relations skills understanding and getting along with people conceptual skills abilities to think in the abstract, diagnose and analyze different situations, and see beyond the present situation decision-making skills defining problems and selecting the best courses of actions - Define the problem, father facts, and identify alternative solutions - Evaluate each alternative and select the best one - Implement chosen alternative, periodically following up and evaluating the effectiveness of that choice time management skills the productive use of time (e.g. paperwork, phone, meetings, email) MGTA03 – Final Exam Review 8.2 THE BUILDING BLOCKS OF ORGANIZATIONAL STRUCTURE  Specialization job specializa
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