Business Environment & Globalization

Business Environment and Globalization

• Barriers to entry are factors that prevent new firms from entering a market, such as high startup costs and government regulations
• Competitive environment constitutes the level of competition in a market, which includes direct and indirect competitors
• Culture encompasses the values, beliefs, and customs of a society influencing business operations
• Demographics are population characteristics like age, income, and education that affect market demand
• The external environment consists of external factors (political, economic, technological, social) impacting business
• Globalization refers to the expansion of businesses beyond domestic markets to international ones
• Individualism values personal achievement, contrasting with collectivism, which emphasizes group success in cultural dimensions
• A joint venture involves a partnership between two businesses to share risks and rewards
• Licensing allows a company to use a brand, patent, or product of another company in exchange for fees
• A wholly owned subsidiary is a foreign business entirely owned and controlled by a parent company
• A tech startup entering an industry with high research costs faces strong barriers to entry
• McDonald's adapts its menu in different countries to match local culture and demographics
• Nike forms a joint venture with a local manufacturer to expand into a new market

Decision-Making

• The decision-making process includes identifying the problem, gathering information, evaluating options, making a decision, and assessing the results
• Classical models assume logical, rational decisions, whereas administrative models acknowledge limitations and bounded rationality
• Bounded rationality means decision-makers cannot process all information due to limitations
• Creativity involves generating innovative solutions
• Decision biases are common errors in decision-making, such as confirmation bias and overconfidence
• A devil's advocate is assigned to challenge ideas to avoid groupthink
• Groupthink occurs when teams make poor decisions due to pressure for consensus
• Programmed decisions follow established procedures, while non-programmed decisions require creative solutions
• Satisficing involves settling for an acceptable solution instead of the best one
• A company suffering from groupthink may assign a devil's advocate to challenge assumptions
• Managers practicing bounded rationality focus on the most relevant data
• A CEO makes a non-programmed decision when launching a new product in an uncertain market

Strategic Planning

• Competitive environment includes understanding direct and indirect competition
• Contingency plans are backup plans for unexpected events
• Corporate-level strategy involves long-term, company-wide decisions like mergers or diversification
• Cost leadership strategy involves competing by offering lower prices, such as Walmart
• Differentiation strategy involves standing out through unique features, such as Apple
• Diversification involves expanding into new industries or product lines to reduce risk
• Functional-level strategy is department-level planning supporting corporate strategy
• A mission statement defines a company's purpose and goals
• SWOT analysis evaluates strengths, weaknesses, opportunities, and threats
• Porter's Five Forces model assesses industry competition (rivalry, new entrants, suppliers, buyers, substitutes)
• Tesla uses a differentiation strategy by offering innovative electric vehicles
• Starbucks' mission statement emphasizes sustainability and ethical sourcing
• A company facing new competitors performs a SWOT analysis to adjust its strategy

Competitive Advantage & Quality Management

• Competitive advantage is a unique strength (cost, quality, innovation) that sets a company apart
• CRM (Customer Relationship Management) manages customer data and interactions to improve loyalty
• Facilities layout refers to the arrangement of resources for efficient operations
• Innovation involves creating new products or processes to maintain a competitive edge
• JIT (Just-In-Time) is an inventory strategy where materials arrive exactly when needed
• A product development plan is a structured approach to launching new products
• Six Sigma is a quality control method to reduce defects and improve efficiency
• TQM (Total Quality Management) is a company-wide commitment to continuous quality improvement
• Amazon uses JIT to reduce inventory costs and speed up delivery
• Apple's competitive advantage comes from innovation and brand loyalty
• Toyota applies Six Sigma to improve manufacturing quality

Organizational Structure & Culture

• Decentralized authority means decision-making power is distributed rather than centralized
• The job characteristics model is a framework for designing jobs with motivation in mind (skill variety, autonomy, etc.)
• Job design involves structuring work to improve efficiency and employee satisfaction
• Job enlargement involves expanding the range of tasks in a job
• Job enrichment involves giving employees more responsibility and autonomy
• A matrix structure is an organizational design combining multiple structures (e.g., functional and project-based)
• An organic organization is a flexible and adaptable business structure
• Organizational culture encompasses the shared values and behaviors within a company
• Span of control refers to the number of employees a manager supervises
• A task force is a temporary team assembled to solve a specific problem
• Google's organic organization encourages flexibility and creativity
• A company in a fast-changing industry may use decentralized authority to make quick decisions
• A factory using job simplification may assign workers repetitive tasks to increase efficiency