Concept Software Systems Essay Example | Topics and Well Written Essays - 2750 words - 1

Concept Software Systems - Essay Example According to the paper the hardcopy of the email was left in a common work area and by chance was read by David. The dilemma is what David should do, because of his knowledge of the matter. Although several unethical situations develop, it is the issue of the confidential email’s contents that is the main problem that calls for a resolution. David is a principled young man raised with strong moral values and a propensity to stand for what is right. However, adverse action on his part may earn him the ire of his superiors and peers and may cost him his job. Furthermore, the manner by which he came upon the email brings to question the validity of his future action on the matter. This report will present the case analysis and discussion of Concept Software Solutions (CSS), which deals with the application of ethical principles and practices in the context of information technology and electronic communication. Based on the theory of utilitarianism which commands the greatest good for the greatest number, workers should be ensured proper working hours, otherwise this situation is reduced to exploitation for the sake of gain of the employer. However, if in a particular jurisdiction a limited number of hours per day is assured the worker by law, then the theory that applies is the Social Contract theory, because the terms of the social contract (which is the law) is enforceable by the government. Â  Angela's chatting online is unethical. Based on the Kantian theory, it is immaterial what Angela wants to do; what should govern is what she ought to do. Implicit in her employment contract is Angela's duty to work for the good of her employer within working time a nd place. Viewed this way, she is also bound by the Social contract theory, because her employment contract has the force of law. She may not use the time and resources according to her own whims.

Term “integrity” Essay Example for Free

Term â€Å"integrity† Essay Integrity It is necessary to outline that the term â€Å"integrity† is considered polysemantic meaning it is provided with lots of meanings. Integrity is the most important terms used in virtue ethics, for example. Integrity is used in the scientific and technological fields. Therefore, this term is often puzzling and perplexing. Sometimes people use integrity as a synonym to â€Å"moral† trying to distinguish that person is acting with integrity. However, researchers noted that people of integrity may act immorally, even if they are unaware of their immoral actions. Thus it is necessary to say that a person may be of integrity even if he holds importantly mistaken perspectives on ethics and morality. Firstly, integrity is defined a quality of a person’s character. Then people thinking of integrity of wilderness region or ecosystem, art forms, computerized database, etc. Integrity is applied mostly to the objects and it suggests purity, intactness and wholeness of an object. These meanings are often applied to people. Speaking about regions, integrity means that a region isn’t corrupted by side-effects of development and its advance. Region of integrity suggests wilderness and uncorrupted or virgin. In computer science, integrity means that computer database is able to maintain power and resist to errors, integrity of defense systems suggests that system isn’t breached. In music, for example, musical work has integrity if its musical structure is provided with completeness which is coordinated and has related music ideas. Simply saying integrity in music means that music piece is whole, intact and pure. Integrity is found in many aspects of human’s life. For example, there are ideas of intellectual, professional and artistic integrity. Nevertheless, integrity has found its application mostly in philosophy meaning human’s general character. As it is noted â€Å"philosophers have been particularly concerned to understand what it is for a person to exhibit integrity throughout life†. In philosophy, when a person acts with integrity on a particular occasion it means that integrity is explained as broader feature of person’ character. There is a claim that person should possess integrity. Ordinary discourse about integrity involves two fundamental intuitions: first, that integrity is primarily a formal relation one has to oneself, or between parts or aspects of ones self; and second, that integrity is connected in an important way to acting morally, in other words, there are some substantive or normative constraints on what it is to act with integrity. How these two intuitions can be incorporated into a consistent theory of integrity is not obvious, and most accounts of integrity tend to focus on one of these intuitions to the detriment of the other. Integrity is a matter of persons integrating various parts of their personality into a harmonious, intact whole. Understood in this way, the integrity of persons is analogous to the integrity of things: integrity is primarily a matter of keeping the self intact and uncorrupted. A related approach to integrity is to think of it primarily in terms of a persons holding steadfastly true to their commitments, rather than ordering and endorsing desires. â€Å"Commitment† is used as a broad umbrella term covering many different kinds of intentions, promises, convictions and relationships of trust and expectation. One may be, and usually is, committed in many different ways to many different kinds of thing: people, institutions, traditions, causes, ideals, principles, projects, and so on. The self-integration and identity views of integrity see it as primarily a personal virtue: a quality defined by a persons care of the self. Persons of integrity treat their own endorsements as ones that matter, or ought to matter, to fellow deliberators. Calhouns account of integrity promises to explain why it is that the fanatic lacks integrity. It seems intuitively very plausible to distinguish between fanatical zeal and integrity, but the self-integration and identity views of integrity threaten to make the fanatic a paradigm case of a person of integrity. References Graham, Jody L. (2001). Does Integrity Require Moral Goodness? Ratio 14, 2, 234-251. Harcourt, Edward (1998). Integrity, Practical Deliberation and Utilitarianism. Philosophical Quarterly, 48, 189-198. Herbert, Mark R. (2002). Integrity, Identity and Fanaticism. Contemporary Philosophy 24, 25-29.

The Strategic Rationale For Outsourcing Decisions

The Strategic Rationale For Outsourcing Decisions By reviewing the relative and risks of making or buying, firms can persuade their expertise and resources for improved profitability. Combining two strategic approaches accurately permit managers to coordinate their companies skills and resources efficiently beyond levels obtainable with other strategies. 1- Concentrate companys possessed resources on its core competencies through which the company can achieve definable incomparability and offer unique value for customers. (Quinn, and Doorley, 1990) 2- Outsourcing strategically other activities of the companies consisting of many conventionally believed primary to a company which are neither special capabilities the firm nor affect critical strategic requirements. (Quinn, 1992) Substantial gains can be achieved from effective combining of the two approaches. Directors leverage their firms resources in four manners. First, they expand returns on in-house resources by focusing investments and energies on the enterprises best jobs. Secondly, if core competencies are well-developed a company can supply astounding barriers for present and forthcoming competitors that look for entering into the companys areas of interest, thus assisting and shielding the strategic advantages of market share. Third, conceivably the utmost leverage of all is the full deployment of external contractors, investments, innovations, and specialized professional capabilities that would be unaffordable or even not possible to replicate internally Fourth, in rapidly shifting marketplaces and technological circumstances, this cooperative strategy reduces risks, shortens discovery and manufacturing cycle times, decrease investments, and generates better responsiveness to customer needs. (Quinn and Hillmer 1995) Earning sustainable competitive advantage through Outsourcing Managers can combine core competency concepts and strategic outsourcing for maximum effectiveness. Managers can analytically select and develop the core competencies that will provide the firms uniqueness, competitive advantage, and basis of value creation for the future. Core competency strategies The basic ideas behind core competencies and strategic outsourcing have been well supported by research extending over a twenty-year period.[4] In 1974, Rumelt noted that neither of the then-favored strategies unrelated diversification or vertical integration yielded consistently high returns.[5] Since then, other carefully structured research has indicated the effectiveness of disaggregation strategies in many industries.[6] Noting the failures of many conglomerates in the 1960s and 1970s, both financial theorists and investors began to support more focused company concepts. Generally this meant sticking to your knitting by cutting back to fewer product lines. Unfortunately, this also meant a concomitant increase in the systematic risk these narrower markets represented. However, some analysts noticed that many highly successful Japanese and American companies had very wide product lines, yet were neither conglomerates nor truly vertically integrated.[7] Japanese companies, like Sony, Mitsubishi, Matsushita, or Yamaha, had extremely diverse product offerings, as did 3M or Hewlett-Packard in the United States. Yet they were not conglomerates in the normal sense. They were termed related conglomerates, redeploying certain key skills from market to market.[8] At the same time, these companies also contracted out significant support activities. Although frequently considered vertically integrated, the Japanese auto Industry, for example, was structured around mother companies that primarily performed design and assembly, with a number of Independent suppliers and alliance partners without ownership bonds to the mother companies feeding into them.[9] Many other Japanese hi-tech companies, particularly the more Innovative ones like Sony and Honda, used comparable strategies leveraging a few core skills against multiple markets through extensive outsourcing. The term core competency strategies was later used to describe these and other less diversified strategies developed around a central set of corporate skills.[10] However, there has been little theory or consistency in the literature about what core really means. Consequently, many executives have been understandably confused about the topic. They need not be if they think in terms of the specific skills the company has or must have to create unique value for customers. However, their analyses must go well beyond looking at traditional product or functional strategies to the fundamentals of what the company can do better than anyone else.[11] For example, after some difficult times, it was easy enough for a beer company like Fosters to decide that it should not be in the finance, forest products, and pastoral businesses into which it had diversified. It has now divested these peripheral businesses and is concentrating on beer. However, even within this concept, Fosters true competencies are in brewing and marketing beer. Many of its distribution, transportation, and can production activities, for example, might actually be more effectively contracted out. Within individual functions like production, Fosters could further extend its competitive advantage by outsourcing selected activities such as maintenance or computing where it has no unique capabilities. The essence of core competencies What then is really core? And [emailprotected] The concept requires that managers think much more carefully about which of the firms activities really do or could create unique value and which activities managers could more effectively buy externally. Careful study of both successful and unsuccessful corporate examples suggests that effective core competencies are: 1. Skill or knowledge sets, not products or functions. Executives need to look beyond the companys products to the intellectual skills or management systems that actually create a maintainable competitive edge. Products, even those with valuable legal protection, can be too easily back-engineered, duplicated, or replaced by substitutes. Nor is a competency typically one of the traditional functions such as production, engineering sales, or finance, around which organizations were formed in the past. Instead, competencies tend to be sets of skills that cut across traditional functions. This interaction allows the organization consistently to perform an activity better than functional competitors and continually to Improve on the activity as markets, technology, and competition evolve. Competencies thus involve activities such as product or service design, technology creation, customer service, or logistics that tend to be based on knowledge rather than on ownership of assets or intellectual property per se. Knowledge-based activities generate most of the value in services and manufacturing. In services, which account for 79 percent of all jobs and 76 percent of all value-added in the United States, intellectual inputs create virtually all of the value-added. Banking, financial services, advertising, consulting, accounting, retailing, wholesaling, education, entertainment, communications, and health care are clear examples. In manufacturing, knowledge-based activities like RD, product design, process design, logistics, marketing research, marketing, advertising, distribution, and customer service @ also dominate the value-added chain of most companies (see Exhibit 1). 2. Flexible, long-term platforms capable of adaptation or evolution. Too many companies try to focus on the narrow areas where they currently excel, usually on some product-oriented skills. The real challenge is to consciously build dominating skills in areas that the customer will continue to value over time, as Motorola is doing with Its focus on superior quality, portable communications. The uniqueness of Toys R Us lies in its powerful information and distribution systems for toys, and that of State Street Boston in its advanced information and management systems for large custodial accounts. Problems occur when managers choose to concentrate too narrowly on products (as computer companies did on hardware) or too inflexibly on formats and skills that no longer match customer needs (as FotoMat and numerous department stores did). Flexible skill sets and constant, conscious reassessment of trends are hallmarks of successful core competency strategies. 3. Limited in number. Most companies target two or three (not one and rarely more than five) activities in the value chain most critical to future success. For example, 3M concentrates on four critical technologies in great depth and supports these with a peerless innovation system. As work becomes more complex, and the opportunities to excel in many detailed activities proliferate, managers find they cannot be best at every activity in the value chain. As they go beyond three to five activities or skill sets, they are unable to match the performance of their more focused competitors or suppliers. Each skill set requires intensity and management dedication that cannot tolerate dilution. It is hard to imagine Microsofts top managers taking their enthusiasm and skills in software into, say, chip design or even large-scale training in software usage. And if they did, what would be the cost of their loss of attention on software development? 4. Unique sources of leverage in the value chain. Effective strategies seek out places where there are market imperfections or knowledge gaps that the company is uniquely qualified to fill and where investments in intellectual resources can be highly leveraged. Raychem and Intel concentrate on depth in design and on highly specialized test-feedback systems supporting carefully selected knowledge-based products not on volume production of standardized products to jump over the experience curve advantages of their larger competitors. Morgan Stanley, through its TAPS system, and Bear Stearns, through its integrated bond-trading programs, have developed in-depth knowledge bases creating unique intellectual advantages and profitability in their highly competitive markets. 5. Areas where the company can dominate. Companies consistently make more money than their competitors only if they can perform some activities which are important to customers more effectively than anyone else. True focus in strategy means the capacity to bring more power to bear on a selected sector than any competitor can. Once, this meant owning and managing all the elements in the value chain supporting a specific product or service in a selected market position. Today, however, some outside supplier, by specializing in the specific skills and technologies underlying a single element in the value chain, can become more proficient at that activity than virtually any company spreading its efforts over the whole value chain. In essence, each company is in competition with all potential suppliers of each activity in its value chain. Hence, it must benchmark its selected core competencies against all other potential suppliers of that activity and continue to build these core capabilities until it is demonstrably best. Thus the basic nature of strategic analysis changes from an industry analysis perspective to a horizontal analysis of capabilities across all potential providers of an activity, regardless of which industry the provider might be in (see Exhibit 1). 6. Elements important to customers in the long run. At least one of the firms core competencies should normally relate directly to understanding and serving its customers that is, the right half of the value chain in Exhibit 1. Hi-tech companies with the worlds best state-of-the-art technology often fail when they ignore this caveat. On the other hand, Merck matches its superb basic research with a prescription drug marketing knowhow that is equally outstanding. By aggressively analyzing its customers, value chains, a company can often identify where it can specialize and provide an activity at lower cost or more effectively to the customer. Such analyses have created whole new Industries, like the specialized mortgage broker, syndication, secondary market, transaction-processing, escrow, title search, and insurance businesses that have now taken over these risks and functions for banks and have disaggregated the entire mortgage industry. 7. Embedded in the organizations systems. Maintainable competencies cannot depend on one or two talented stars such as Steven Jobs and Stephen Wozniak at Apple or Herbert Boyer and Arthur D. Riggs at Genentech whose departure could destroy a companys success. Instead, the firm must convert these competencies into a corporate reputation or culture that outlives the stars. Especially when a strategy is heavily dependent on creativity, personal dedication, and initiative or on attracting top-flight professionals, core competencies must be captured within the companys systems broadly defined to include its values, organization structures, and management systems. Such competencies might include recruiting (McKinsey, Goldman Sachs), training (McDonalds, Disney), marketing Procter Gamble, Hallmark), innovation (Sony, 3M), motivation systems (ServiceMaster), or control of remote and diverse operating sites within a common framework and philosophy (Exxon, CRA, Inc.). These systems are often at the heart of consistent superior performance; in many cases, a firms systems become its core competencies.(12) Preeminence: The key strategic barrier For Its selected core competencies, the company must ensure that it maintains absolute preeminence. It may also need to surround these core competencies with defensive positions, both upstream and downstream. In some cases, it may have to perform some activities where it is not best-in-world, just to keep existing or potential competitors from learning, taking over, eroding, or bypassing elements of its special competencies. In fact, managers should consciously develop these core competencies to block competitors strategically and avoid outsourcing them or giving suppliers access to the critical knowledge bases or skills that underpin them. Honda, for example, does all its engine RD in-house and makes all the critical parts for its small motor design core competency in closely controlled facilities in Japan. It will consider outsourcing any other noncritical elements in its products, but builds a careful strategic block around this most essential element for all its businesses.(13) Most important, as a companys preeminence in selected fields grows, its knowledge-based core competencies become ever harder to overtake. Knowledge bases tend to grow exponentially in value with Investment and experience. Intellectual leadership tends to attract the most talented people, who then work on and solve the most interesting problems. The combination in turn creates higher returns and attracts the next round of outstanding talent. In addition to the examples we have already cited, organizations as diverse as Bechtel, ATT Bell Labs, Microsoft, Boeing, Intel, Merck, Genentech, McKinsey, Arthur Andersen, Sony, Nike, Nintendo, Bankers T rust, and Mayo Clinic have found this to be true. Some executives regard core activities as those the company is continuously engaged in, while peripheral activities are those that are intermittent and therefore can be outsourced. From a strategic outsourcing viewpoint, however, core competencies are the activities that offer long-term competitive advantage and thus must be rigidly controlled and protected. Peripheral activities are those not critical to the companys competitive edge. Strategic outsourcing If supplier markets were totally reliable and efficient, rational companies would outsource everything except those special activities in which they could achieve a unique competitive edge, that is, their core competencies. Unfortunately, most supplier markets are, imperfect and do entails some risks for both buyer and seller with respect to price, quality, time, or other key dimensions. Moreover, outsourcing entails unique transaction costs searching, contracting, controlling, and recontracting that at times may exceed the transaction costs of having the activity directly under managements in-house control. To address these difficulties, managers must answer three key questions about any activity considered for outsourcing. First, what is the potential for obtaining competitive advantage in this activity, taking account of transaction costs? Second, what is the potential vulnerability that could arise from market failure if the activity is outsourced? Conceptually, these two factors ca n be arrayed In a simple matrix (see Exhibit 2). Third, what can we do to alleviate our vulnerability by structuring arrangements with suppliers to afford appropriate controls yet provide for necessary flexibilities in demand? The two extremes in exhibit 2 are relatively straightforward. When the potential for both competitive edge and strategic vulnerability is high, the company needs a high degree of control, usually entailing production internally or through joint ownership arrangements or tight long-term contracts (explicit or implicity). Marksk Spencer, for example, is famous for its network of tied suppliers, which create the unique brands and styles that underpin the retailers value reputation. Spot suppliers would be too unreliable and unlikely to meet the demanding standards that are Marks Spencers unique consumer franchise. Hence, close control of product quality, design, technology, and equipment through contracts and even financial support is essential. The opposite case is perhaps office cleaning, where little competitive edge is usually possible and there is an active and deep market of supplier firms. In between, there is a continuous range of activities requiring different degrees of control and strategic flexibility. At each Intervening point, the question is not just whether to make or buy, but how to implement a desired balance between independence and incentives for the supplier versus control and security for the buyer. Most companies will benefit by extending outsourcing first in less critical areas, or in parts of activities, like payroll, rather than all of accounting. As they gain experience, they may increase profit opportunities greatly by outsourcing more critical activities to noncompeting firms that can perform them more effectively independence and incentl,v In a few cases, more complex alliances with competitors may be essential to garner specialized skills that cannot be obtained in other ways. At each level, the company must isolate and rigorously control strategically critical relationships between its suppliers and its customers. Competitive edge The key strategic issue in insourcing versus outsourcing is whether a company can achieve a maintainable competitive edge by performing an activity internally usually cheaper, better, in a more timely fashion, or with some unique capability on a continuing basis. If one or more of these dimensions is critical to the customer and if the company can perform that function uniquely well, the activity should be kept in-house. Many companies unfortunately assume that because they have historically performed an activity internally, or because it seems integral to their business, the activity should be insourced. However, on closer investigation and with careful benchmarking, a companys internal capabilities may turn out to be significantly below those of best-in-world suppliers. Ford Motor Company, for example, found that many of its Internal suppliers quality practices and costs were nowhere near those of external suppliers when it began its famous best in class worldwide benchmarking studies on 400 subassemblies for the new Taurus-Sable line. A New York bank with extensive worldwide operations Investigated why its Federal Express costs were soaring and found that its Internal mall department took two days more than Federal Express to get a letter or package from the third floor to the fortieth floor of Its building. In interviews about benchmarking with top operating managers in both service and manufacturing companies, we frequently encountered some paraphrase of We thought we were the best in the world at many activities. But when we benchmarked against the best external suppliers, we found we were not even up to the worst of the benchmarking cases. Transaction costs In all calculations, analysts must include internal transaction costs as well as those associated with external sourcing. If the company is to produce the item or service internally on a long-term basis, it must back up its decision with continuing RD, personnel development, and infrastructure investments that at least match those of the best external supplier; otherwise, it will lose its competitive edge over time. Managers often tend to overlook such backup costs, as well as the losses from laggard innovation and unresponsiveness of internal groups that know they have a guaranteed market. Finally, there are the headquarters and support costs of constantly managing the insourced activity. One of the great gains of outsourcing is the decrease in executive time spent managing peripheral activities freeing top management to focus more on the core of Its business. Various studies have shown that when these internal transaction costs are thoroughly analyzed, they can be extremely high.(14) Since it is easier to identify the explicit transaction costs of dealing with external suppliers, these generally tend to be included in analyses. Harder-to-identify internal transaction costs, however, are often not included, thus biasing results. Vulnerability When there are many suppliers with adequate but not dominating scale) and mature market standards and terms, a potential buyer is unlikely to be more efficient than the best available supplier. If, on the other hand, there is not sufficient depth in the market, overly powerful suppliers can hold the company ransom. Conversely, if the number of suppliers is limited or individual suppliers are too weak, they may be unable to supply innovative products or services as well as a much larger buyer could by performing the activity in-house. While the activity or product might not be one of its core competencies, the company might nevertheless benefit by producing internally rather than undertaking the training, investment, and codesign expenses necessary to bring weak suppliers up to needed performance levels. Another form of vulnerability is the lack of information available in the marketplace or from individual suppliers., for example, a supplier may secretly expect labor disruptions or raw material problems, but hide these concerns until it is too late for the customer to go elsewhere. A related problem occurs when a supplier has unique information capabilities: for example, large wholesalers or retailers, market research firms, software companies, or legal specialists may have information or fact-gathering systems that would be impossible for the buyer or any other single supplier to reproduce efficiently. Such suppliers may be able to charge what are essentially monopoly prices, but purchasing from them could still be less costly than reproducing the service Internally. In other cases, there may be many capable suppliers (for example, in RD or software), but the costs of adequately monitoring progress on the suppliers, premises might make outsourcing prohibitive. Sometimes the whole structure of information in an industry will militate for or against outsourcing. Computing, for example, was largely kept in-house in Its early years because the information available to a buyer of computing services and Its ability to make judgments about such services were very different for the buying company (which knew very little) than for the supplier (which had excellent information). Many buyers lacked the competency either to assess or to monitor sellers, and feared loss of vital information. A company can outsource computing more easily today, in part because buyers, computer, technical management, and software knowhow are sufficient to make informed judgments about external suppliers. In addition to information anomalies, Stuckey and White note three types of asset specificity that commonly create market imperfections, calling for controlled sourcing solutions rather than relying on efficient markets.(15) These are: (1) site specificity, where sellers have located costly fixed assets in close proximity to the buyer, thus minimizing transport and inventory costs for a single supplier; (2) technical specificity, where one or both parties must invest in equipment that can be used only by the parties in conjunction with each other and has low value, in alternative uses; and (3) human capital specificity, where employees must develop in-depth skills that are specific to a particular buyer or customer relationship. Stuckey and White explain the outsourcing implications of information and specificity problems in the case of a bauxite mine and an alumina refiner. Refineries are usually located close to mines because of the high cost of transporting bauxite, relative to Its value. Refineries in turn are tuned to process the narrow set of physical properties associated with the particular mines bauxite. Different and highly specialized skills and assets are needed for refining versus mining. Access to Information further compounds problems., if an independent mine expects a strike, it is unlikely to share that information with its customers, unless there are strong incentives. As a result, the aluminum industry has moved toward vertical integration or strong bilateral joint ventures, as opposed to open outsourcing of bauxite supplies despite the apparent presence of a commodity product and many suppliers and sellers. In this case, issues of both competitive advantage and potential market failure dictate a higher degree of sourcing control. Degree of source control In deciding on a sourcing strategy for a particular segment of their business, managers have a wide range of control options the Exhibits 3 and 4 for the most basic). Where there is high potential both for vulnerability and for competitive edge, tight control is indicated (as in the bauxite case). At the opposite end is, say, office cleaning. Between these extremes are opportunities for developing special incentives or more complex oversight contracts to balance intermediate levels of vulnerability against more moderate prospects for competitive edge. Nikes multi-tier strategy offers an interesting example (see boxed insert on page 62). The practice and law of strategic alliances are rapidly developing new ways to deal with common control issues by establishing specified procedures that permit direct involvement in limited stages of a partners activities, without incurring either ownership arrangements or the loss of control inherent ln arms-length transactions. Flexibility versus control Within this framework, there is a constant tradeoff between flexibility and control. One of the main purposes of outsourcing is to have the supplier assume certain classes of investment and risk, such as demand variability. To optimize costs, the buying company may want to maintain its internal capacity at re atively constant levels despite highly fluctuating sales demands. Under these circumstances, it needs a surge strategy. McDonalds, for example, with $8billion in sales and 10.1 percent growth per year, needs to call in part-time and casual workers to handle extensive daily variations yet also be able to select its future permanent or managerial personnel from these people. IBM has had the opposite problem, since its core demand has been declining, the company has had to lay off employees. Yet it needs surge capacity for: (1) quick access to some former employees, basic skills; (2) available production capacity without the costs of supporting facilities full time; and (3) the ability to exploit strong outside parties specialized capabilities through temporary consortia for example, in applications software, microprocessors, network development, or factory automation. Strategically, McDonalds has created a pool of people available on call options, while IBM through spinouts of factories with baseload commitments to IBM, guaranteed consulting employment for key people, flexible joint venturts, and strategic alliances has created put options to handle surge needs as it downsizes and tries to turn around its business. There is a full spectrum of outsourcing arrangements, depending on the companys control and flexibility needs (see Exhibit 4). The issue is less whether to make or buy an activity than it is how to structure internal versus external sourcing on an optimal basis. Companies are outsourcing much more of what used to be considered either integral elements of their value chains or necessary staff activities. Because of greater complexity, higher specialization, and new technological capabilities, outside suppliers can now perform many such activities at lower cost and with higher value-added than a fully integrated company can. In some cases, new production technologies have moved manufacturing economies of scale toward the supplier. In others, service technologies have lowered transaction costs substantially, making it possible to specify, transport, store, and coordinate inputs from external sources so inexpensively that the balance of benefits has shifted from insourcing to outsourcing. In certain specialized niches, outside companies have grown to such size and sophistication that they have developed economies of scale, scope, and knowledge intensity so formidable that neither smaller nor more integrated producers can effectively compete with them (for example, ADP Services in payroll, and ServiceMaster in maintenance). To the extent that knowledge of a specific activity is more important than knowledge of the end product itself, specialized suppliers can often produce higher value-added at lower cost for that activity than almost any integrated company. Strategic benefits versus risks Too often companies look at outsourcing as a means to lower only short-term direct costs. However, through strategic outsourcing, companies can lower their long-term capital investments and leverage their key competencies significantly, as Apple and Nike have done. They can also force many types of risk and unwanted management problems onto suppliers. Gallo, the largest producer and distributor of wines in the United States, outsources most of its grapes, pushing the risks of weather, land prices, and labor problems onto its suppliers. Argyle Diamonds, one of the worlds largest diamond producers, outsources virtually all aspects of its operation except the crucial steps of separation and sorting of diamonds. It contracts all its huge earth-moving operations (to avoid capital and labor risks), its housing and food services for workers (to avoid confrontations on nonoperating issues), and much of its distribution (to De Beers to protect prices, to finance inventories, and to avoid the complications of worldwide distribution). By outsourcing to best-in-class suppliers in each case, it further ensures the quality and image of its operations. Important strategic benefits Strategically, outsourcing can provide the buyer with greater flexibility, especially in the purchase of rapidly developing new technologies, fashion goods, or the myriad components of complex systems. It reduces the companys design-cycle t

The Validity of Cognitive Dissonance Theory Essay examples -- communic

Description of Theory The term dissonance refers to when one cognitive element is inconsistent with another cognitive element according to the lecture notes of Professor Soreno. Cognitive elements can be categorized in four groups called beliefs, attitudes, values, and perceptions of behavior. Beliefs can be defined as a perception that something exists or not. This perception can range from a central or peripheral type of belief. The more central a belief is, the harder it is to change that belief. An attitude describes the positive or negative feelings we have toward people, things, or ideas. Values are beliefs that are so important to a person, that they practically guide a person’s life. There are two types of values, instrumental and terminal. Perceptions of behavior simply refer to the interpretation of actions by another. For example, when someone waves at a person, in America, it is often perceived as a friendly gesture. When two of these cognitive elements are incongruent, it leads to diss onance, which can very in intensity. People often experience dissonance on a daily basis, but because it is so minute, it is not bothersome. The Cognitive Dissonance theory deals with these small occurrences, but for the sake of understanding, extreme examples help to explain the theory in better detail. According to Festinger, all of the cognitive elements held the same value in producing cognitive dissonance, but some scholars have challenged his theory. In the book, The Handbook of Motivation Science, the authors claim that attitude cognitive element holds a heavier value over the other elements by saying it can change the behavior of a person. They quote, â€Å"In experimental tests of the theory, knowledge about recent behavior is usua... ...s communication studies continue, there will be more tests and conclusions on the Cognitive Dissonance theory that will reveal more about human communication. After all, learning how we communicate with each other is how we are able to grow as a society. References Harmon-Jones, E. (2008). Cognitive Dissonance Theory. In J. Shah, W. Gardener, & V. Gardener, Handbook of Motivational Science (pp. 71-83). New York City: The Guilford Press. Helwig-Larson, M., & Collins, B. (1997, April 1). A Social Psychological Perspective on the Role of Knowledge about AIDS in AIDS Prevention. Current Directions in Psychological Science , Vol. 6 (No. 2). Lepper, M. R., & Greene, D. (1975). Turning Play into Work: Effects of Adult Surveillance and Extrinsic Rewards on Children's Intrinsic Motivation. Journal ol Personality and Social Psychology , Vol. 31, 479-486.

Why Do You Think This Strategy Became Less Viable in the 1990’s?

Chapter 12 – The Strategy of International Business Key Points of the chapter Strategy – is the actions managers take to attain the goals of the business (usually to maximize value for the shareholders/stakeholders). Value Chain – The operations of the firm compose the value chain which are the series of value creating activities that occur to create value. These actions include sales, production, IT, accounting etc. These activities are divided into support and primary activities. Primary Activities – Design, creation and delivery of the product. They are: 1. R&D 2. Production 3. Marketing 4. Sales Support Activities – Inputs that allow the primary activities to occur 1. Information Systems 2. Logistics 3. Human Resources Global Expansion Practices 1. Expand the market for your domestic products by selling internationally (Export) †¢ Requires a company to tap into their core competencies 2. Move production to the most efficient countries to realize location economies †¢ Some countries have a comparative advantage of production †¢ Transportation costs and trade barriers must not be an issue †¢ Location Economies is the value created by finding the most competitive place to produce product, therefore adding value i. Competitive can mean cheapest or best †¢ Creates a global value web as opposed to a value chain 3. Serve expanded markets from a single location, while recovering experience effects †¢ Experience curve: Systematic reductions in production costs that occur over the life of a product i. A products production costs decline each time the cumulative output doubles †¢ Learning Effects – Costs savings through learning by doing †¢ Economies of Scale – Reduce costs by creating a large volume of product, the larger your market, the more opportunity for this you receive. 4. Learn from foreign operations to increase your value Mature multinationals who already have operations in foreign markets can learn from their operations in order to create value for those specific customers. Pressures for Cost Reduction Managers can be forced to create value by reducing costs. This can be done through: †¢ Mass-produce a standard product †¢ Outsource certain functions †¢ Tends to occur in highly commoditized products (Chemicals, sugar, gas, steel) Pressures for local Responsiveness Arise because of: †¢ Difference in consumer tastes and preferences †¢ Infrastructure †¢ Accepted Business practices Distribution channels – May require a change in marketing strategy †¢ Host government demands International Expansion Strategies Global Expansion Strategy Focus †¢ Reaping cost reduction benefits through: †¢ Economies of Scale †¢ Learning effects †¢ Locations economies †¢ Low Cost on a Global Scale Method †¢ R&D, Production and Marketing activities are concentrated in a few favorable locations †¢ Try not to customize their products/marketing strategy †¢ Use aggressive pricing When to use it †¢ Strong pressures for cost reductions †¢ Minimal demand for localization Localization Strategy Focus †¢ Increase profitability by customizing goods to match tastes and preferences in international markets Method †¢ Increase the value of the product in the local market †¢ Duplication of functions †¢ Smaller production runs †¢ Still need to be as efficient as possible When to use it †¢ When cost pressures are not high †¢ When local tastes differ dramatically †¢ When you have fewer competitors Transnational Strategy Focus †¢ Multidirectional transfer of core competencies and skills †¢ Leveraging subsidy skills Try to achieve low costs through location economies, economies of scale and learning effects while differentiating their products for the local market. †¢ Very difficult to accomplish Method †¢ Redesign products to use the same components and produce them in one location †¢ Use assembly plants in key markets to assemble the more market specific final product When to use it †¢ When cu stomization and cost reduction pressures are high †¢ When managers have to balance the divergent pressures International Strategy Focus †¢ Taking products from your local country and without much customization, selling them in other markets. Method †¢ Centralize product development functions †¢ Tend to establish manufacturing and marketing functions in each major country or geographic region in which they do business. †¢ Increases costs but there are no cost pressures so that isn’t an issue †¢ May decide to do some minor customization of the marketing strategy When to use it †¢ Low cost pressures †¢ Low need for local responsiveness †¢ Selling products that serve universal needs †¢ Do not have many competitors Chapter Questions Q2: What are the risks that Wal-Mart Faces when entering other retail markets? How can the risks be mitigated? Economic Risks/Exposure Likelihood that economic mismanagement will cause drastic changes in a country’s business environment that hurt the profit and other goals of a particular business enterprise. †¢ Increase in inflation can hurt profits †¢ Recession †¢ Loss of confidence in the market and loans Legal Risks If Wal-Mart decides to enter a market where the legal system fails to provide adequate safeguards in the case of contract violations or to protect property rights they are opening themselves up to legal risks. Could affect the ability to participate in long term contracts and joint ventures Cross Cultural Literacy Risk: As experienced in this case, Wal-Mart suffered from cross cultural illiteracy, where they were ill informed about the practices of another culture which caused them to make bad decisions. Mitigation Strategy: Wal-Mart needs an adaptation strategy, which allows them to negotiate properly for the market, know the appropriate pay systems, set up the right organization, etc. They can do this by hiring local citizens, or a consultant. Transaction Exposure Risk: Extent to which foreign exchange values affect the income from individual transactions. Translation Exposure Risk: Impact of currency exchange rates on the reported financial statements. Mitigation Strategy: Lead strategy where you collect the foreign receivables early. Lag strategy, involves delaying payables if the currency is expected to appreciate. Political Risks Depending on where Wal-Mart is choosing to expand to, political forces that ould cause a drastic change in the country’s business environment could adversely affect the profit and other goals of a business enterprise. †¢ Strikes †¢ Demonstrations †¢ Terrorism †¢ Violent Conflict †¢ Enactment of unfavorable business laws CT 5 – Reread the management focus on the evolution of strategy at Procter and Gamble, then answer these questions: a) What strategy was P&G pursuing when it first entered foreign markets in the period up until the early 1990s? b) Why do you think this strategy became less viable in 1990s. In the pre-1990’s era P&G found their international expansion through the use of a localization strategy. They did develop many of their products in Cincinnati, but they relied on their semi-autonomous subsidiaries to manufacture, market and customize many of their products for the local markets their served. This model started to show signs of strain when many of the trade barriers that existed, specifically between European countries were lifted. This created an increase in competition, and for P&G exposed their now unnecessary duplication of assets and processes. Also the creation of the â€Å"big box† retailers (such as Wal-Mart and Tesco) were causing the competitive factors driven by purchasing power to put pressures on lowering P&G’s prices even further. Due to the increase in competition and the changing market conditions P&G closed some of their local plants and asked their subsidiaries to exploit as much economies of scale as possible in their production lines. They also asked their local centers to create and use global brands whenever possible to try and reduce marketing costs. While these cost avings were effective, they were still not enough and P&G then reorganized the company to be a pure Transnational Strategy, with more control occurring in the regional centers than ever before and using as little local responsiveness as possible to reach their customers so they could compete on price as much as possible. The benefits of the transnational strategy include: †¢ Cost reduction †¢ Reducing duplication of ass ets †¢ Creating global brands †¢ Manufacturing in places that have a comparative advantage in the production of that product †¢ Increase market share by beating your competitors prices Risks †¢ Very difficult to implement & manage †¢ Organizational Structures have to be very complex and it can lead to o Performance ambiguity o Confusion over corporate goals o Culture issues †¢ High coordination needs that are both formal and informal Chapter 13 – The Organization of International Business Key Points of the Chapter Organizational Architecture: the totality of a firm’s organization, organizational culture and people. These three areas must be addressed for a company to be successful in the global market place. The architecture must match the strategy of the firm. Organizational structure: Formal division of the organization, the location of the decision making (centralize vs. decentralized) and the establishment of intergrating mechanisms to coordinate the activities of subunits. Control Systems are metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits. Incentives are the divides used to reward appropriate managerial behavior. Incentrives are very closely tied to performance metrics. Processes are the manner in which decisions are made and work is performed within the organization. Organizational Culture refers to the norms and values systems that the employees of an organization share. Organizations are societies of individuals who come together to perform collective tasks. [pic] Organizational Structure 1) Vertical Differentiation – location of decision making a) Centralized – When the decisions are made by upper management Pros: †¢ Can facilitate coordination †¢ Ensure decisions are consistent with organizational objectives †¢ Give top level manager the means to bring about changes (authority) †¢ Avoid duplication of activities ) Decentralized – Local managers make the decisions †¢ Top management can become overburdened when decision making authority is centralized, which can result in poor decisions. †¢ Motivational research favors decentralization, people are more likely to give more to their jobs when they have a greater degree of individual freedom and control over their work. †¢ More rapid response †¢ Can result in better decisions because the people with the best information are the ones making the decisions. †¢ Can increase control, making the management more autonomous and therefore accountable. Frequently it makes sense to centralize some decisions and to decentralize others, depending on the type of decisions and the firm’s strategy. 2) Horizontal Differentiation – formal organization structure Decision is made on functions, type of business or geographical area. †¢ International Division – When a single division runs all the international activities. Facilitates the international strategy. †¢ Worldwide area structure – World is divided into geographic areas, each division has its own value creation activities. Facilitates local responsiveness. Difficult to transfer core competencies. Worldwide product divisional structure – Each division has its own value creation activities organized around the products they produce. Headquarters retain responsibility for the overall strategic development and financial control. Gives opportunities to consolidate the value chain creation of different subunits. Can require a lack of local respon siveness. †¢ Global Matrix Structure – Tries to solve the issue Bartlett and Ghoshal have argued where a company needs to be price competitive and locally responsive by creating a matrix where decisions are made by both product and regional managers. It is very difficult to pull off a global matrix structure as it creates conflict for the employees having two bosses with two different goals. In light of these problems many firms that pursue a transnational strategy have tried to build flexible matrix structures based on enterprisewide management knowledge networks and a shared dual culture. 3) Integrating Mechanism – mechanisms for coordinating subunits †¢ The need for integrating mechanisms changes with the strategy, the company is using: Lowest – Localization strategy Highest – Global and Transnational †¢ Very important in firms trying to transfer core competencies between units †¢ Very important in firms trying to recover economies of scale and learning experience with a web like value â€Å"chain† Questions CT2 – Discuss the statement â€Å"An understanding of the causes and consequences of performance ambiguity is central to issue of organizational design in multinational firms. † Performance Ambiguity exists when the causes of a subunit’s poor performance are not clear. This is not uncommon when a subunit’s performance is partly dependent on the performance of other subunits; when there is high interdependence between different subunits. In firms not pursuing a localization strategy, certain degrees of performance ambiguity are going to exist. In an international strategy, integration is required to facilitate the transfer of core competencies and skills. The success of a foreign operation is partly dependent on the quality of the competencies transferred from the home country, therefore these firms must design an organizational strategy with enough integrating mechanisms to achieve this. In firms pursuing a global standardization strategy they need to recover location and experience curve economies, making many of the firms processes interdependent. This will require even greater controls and integrating mechanisms and make the decisions more complex and the decision tradeoffs more substantial (i. e. save money on this product or spend money to make it easy to sell the product). Firms with the highest level of performance ambiguity are transnational firms. The multidirectional transfer of competencies requires significant interdependence and lots of join decision making, making the performance ambiguity very high. This means the control costs are going to be highest in transnational firms and that many of the costs recovered by the transnational strategy are lost to creating the expensive control systems that must exist to facilitate the strategy. Another byproduct of this strategy is that global and transnational firms need to do more than use only output controls of objective performance metrics such as profits, productivity and market share in order to control their subsidiaries. These firms must look into cultural controls, encouraging managers to want to assume he norms and value systems and use those values to solve problems between the interdependent units and avoid finger pointing based on the output results. CT5 – If a firm is changing its strategy from an international to a transnational strategy what are the most important challenges it is likely to face in implementing this change? How can the firm overcome these challenges? While becoming a multinational firm does not require a strategy change, in order to compete in the global economy and be the best at what you do, organizational change may become a requirement. First the company must decide their strategy and then they must develop an appropriate organizational structure to complement those goals. A transnational strategy focuses on the simultaneous attainment of location and experience curve economies, local responsiveness and global learning. This firm may want to look into a matrix structure where managers from regional and product areas come together to make decisions that will benefit both points of view. They need to implement control systems that will allow them to work with their globally dispersed value chain and to transfer core competencies and therefore will likely be more culturally driven then output driven. Decisions should be made at both a centralized and decentralized level depending on what the company needs to transfer between units and what specifically about the product needs to be locally responsive (e. . branding/marketing). There needs to be a mix of informal and formal integrating mechanisms which can be found in the decision matrix and via informal networking tools (e. g. Twitter). Finally there needs to be strong culture cultivation to keep all the units on the same page which can be accomplished by a strong leadership with good vision and a willingness to participate in the dissemination of that vision. According to the text the three basic principals for performing organizational change include: 1) Unfreeze the corporation through shock therapy Incremental changes are not necessarily enough †¢ People can easily reject or avoid incremental change †¢ In this case the announcement of a dramatically different structural organization to facilitate the new goals †¢ Senior managers must lead the way in the changes and the unfreezing process 2) Move the org to a new state through proactive change in the architecture †¢ Reassigning the responsibilities in the new organization †¢ Changing the control systems to be less output based and more culturally based †¢ Letting people go who are unwilling to change †¢ The changes must be done quickly Involving the employees from the beginning will get their buy in and will makes the changes better received. 3) Refreeze the org in its new state †¢ This step can take longer †¢ It requires culture es tablishment while the old one is dismantled †¢ Re-socialization of employee behaviors †¢ Hiring policies must change †¢ Control systems must be tested and be consistent with the new culture and ignore the old one †¢ The upper management must be diligent and not allow the old pressure to creep up Chapter 14 – Entry Strategy and Strategic Alliances Key Chapter Points Two Major Ideas: 1) The decision of which foreign markets to enter, when to enter them and on what scale 2) The choice of entry mode Which Market (Recap of chapter 2) The attractiveness of a country as a potential market depends on balancing the benefits, costs and risks associated with doing business in that country †¢ Long Run economic benefits of a function of size of the market, present wealth, likelihood of future wealth †¢ Future economic growth, which is a function of a free market system and the country’s capacity for wealth. †¢ Riskier in politically and economical ly unstable countries †¢ What kind of value the firm can create for consumers in that market Timing of Entry Early entry – when a firm enters a foreign market before others do First movers advantage †¢ Pre-empt rivals †¢ Gain market share †¢ Establish a strong brand Creating switching costs to tie your buyers to you †¢ Set the price so you can cut prices when competitors arrive First movers disadvantage †¢ Pioneering costs, from the foreign business system being so different that time and expense must be sacrificed to learn the ropes †¢ Business failure if the firm makes mistakes based on bad knowledge †¢ Promotion of a new product or idea Late Entry – When a firm enters a foreign market after other firms do †¢ Can watch what your competitors do, and learn from their mistakes †¢ Can ride the coattails of their marketing and promotion †¢ Don’t need to educate your customers Scale of entry †¢ Large scale Requires significant resource commitment which can lead to strategy commitments, where you can’t get out of the deal without suffering significant consequences o It does create a presence and instills belief that you are committed to your product and customers †¢ Small Scale o Allows a firm to learn the market without exposing the firm to risks o Way to gather information o Lack of commitment may make it harder to attract customers Entry Modes Exporting Advantages †¢ Avoids substantial costs of establish manufacturing operations in another country †¢ May help the firm achieve experience curve, location economies and economies of scale Disadvantages It may be cheaper to produce abroad †¢ High transportation costs on shipping could make it uneconomical to export †¢ Tariff barriers may prohibit your exporting, making it uneconomical, and the threat of tariff barriers can make it risky †¢ Delegates of the company that perform the sales, marketing, se rvice may work for other competitors and therefore will not have your best interests in mind Turnkey Projects – The contractor agrees to handle every detail of the project for a foreign clients, including the training of operational personnel. At the end the client is handed the â€Å"key† to a fully functional plant. Typically in complex production businesses. Advantages The know how is a valuable asset and you can earn returns on that knowledge †¢ Useful when FDI is limited †¢ Can be less risky than traditional FDI Disadvantages †¢ No long term interest in that country †¢ May create a competitor out of the creator of your factory †¢ Could be selling your comparative advantage Licensing – The licensor grants the rights to intangible property to another entity for a specified period, and in return, he licensor receives a royalty fee from the licensee. Advantages †¢ Licensee puts up most of the capital †¢ Good for firms lacking capital †¢ Prohibited from direct investment in a foreign market Disadvantages (3 serious ones) Does not give tight control over manufacturing, marketing, strategy, etc. that si required for realizing the experience curve and location economies. †¢ Limits a firms ability to share wealth amongst various divisions, and therefore limits a coordinated international strategy †¢ Giving away your comparative advantage Franchising – a specialized form of licensing in which the franchiser sells the IP, but also the franchisee needs to follow those specific rules the franchisor sets out. Advantages †¢ Firm is relieved of many of the costs and risks †¢ Good for firms lacking capital †¢ Good when you are prohibited from FDI in that country †¢ Allows you to build a global presence quickly Disadvantage Great for services, but perhaps not manufacturing †¢ Limits a firms ability to share wealth amongst various divisions, and therefore limits a coordina ted international strategy †¢ There are different definitions of quality, safety, etc. in different places making it difficult to maintain your image across other countries Joint Ventures – Establishing a firm that is jointly owned by two or more otherwise independent firms, it’s popular mode of entry into foreign markets. Advantages †¢ Get to benefit from the local firm’s knowledge of the host country culture, norms, language, political situation, etc. †¢ Provide the local knowhow to a new country †¢ Share the risks with another company Sometime political factors make it impossible not to partner with a local firm Disadvantages †¢ Risking giving away your comparative advantage to a potential competitor †¢ The firm doesn’t have tight control over local operations, making it difficult for companies needing to transfer a culture †¢ Shared ownership can lead to conflicts between the two corporations, which can be exacerbate d by the fact that the two firms are from different nations. Wholly Owned Subsidiary – The firm owns 100% of the stock in the project. Can be done through a Greenfield venture, where you build a factory from scratch or via acquisition of an existing enterprise. Advantages †¢ Protect your knowledge Tight control †¢ Required to gain experience and locations economies †¢ Can engage in global strategic behaviors Disadvantages †¢ High costs and risks †¢ Culture transfer can be difficult, especially in terms of an acquisition Chapter Questions Tesco Q2 – How does Tesco create value in its international operations? Tesco creates value by offering something that the market is lacking: a well run competitive grocery store. They enter emerging markets with growth potential and few competitors. They then acquire or partner with current enterprises in that country in order to ensure that the value they are creating will work for that particular consumer. Tesco researches their potential partners carefully, and they pick a solid chain with some stores and they build off of that known base. They bring to the table their core competencies, but they don’t remove the local managers who have the knowledge of the customer. Finally they have the capital and the retailing know-how to bring their moderately successful firms into a globally back force. This value is created out of successfully leveraging the joint venture strategy, where both firms bring something useful to the table and both are given the opportunity to be successful with their knowledge. Grocery stores are part service and part goods firms. Tesco’s strengths exist in both, but they are leveraging their service and management know-how transfer through the use of the joint venture. We know that value creation is measured by the difference between the converted inputs that create the cost of a product and how much the consumer is willing to pay for that product. More specifically in this case it is the amount consumers are willing to pay for the goods inside of the Tesco subsidiary. Porter states that it is important for the firm to decide where it wants to be strategically positioned in terms of cost effectiveness, and differentiation. Tesco wants to be a low cost provider of all the goods a consumer would purchase at a grocery store. They compete through their value chain by gaining purchasing power through expansion, and by leveraging their values skills in foreign markets. CT 5 – A small Canadian firm that has developed some valuable new medical products using its unique biotechnology know-how is trying to decide how best to serve the EU. Establishing a manufacturing firm outside of Canada is not outside of the firm’s reach, but it will be a stretch. Which of the following options would you recommend and why? a) Manufacture the product at home and let foreign sales agents handle the marketing. b) Manufacture the product at home and set up wholly own subsidiaries in Europe to handle marketing c) Enter into an alliance with a large European pharmaceutical firm. The product would be manuf in Europe y the 50/50 joint venture and marketed by the European firm. As stated in the text, if the firm’s core competency is the based on control over proprietary technological know-how, it should avoid licensing and joint-venture arrangements if possible to minimize the risks of losing control over that technology (option C). While the strategic alliance will allow for entry into the foreign market, I don’t feel that the EU is such a different type of market that it would be impossible to find someone in the US who they could hire to help them understand that market. The partnership can give competitors low cost access to the new technology and markets. Wholly owned subsidiaries for marketing would allow for the marketing to be owned by the firm and therefore reduce the risks associated with using the local sales agents that may serve their own interests in lieu of the firm’s. However, I suggest that the core competency of the firm is not their marketing skills, but rather their technological know-how. This means that they would be choosing to take on major risks and expenses in order to transfer a non core competency and therefore find themselves at risk of failure. Going back to the Lincoln electric case, we saw how selecting a mode of entry strategy on something other than your comparative can lead to significant issues. Exporting (option a) allows for the firm to realize location economies, experience curve economies while suffering from high transport costs, trade barriers and problems with local marketing agents. In this instance, the cost of shipping medical instruments is typically quite low, and the trade barriers between Canada and EU are nonexistent. However, they may find the local sales agents to be at odds with other competitors making it difficult to distribute the product. Despite this drawback however, I feel that the financial risks associated with option b and the dangers of losing their core competency in option c I would use the less risky option a. Chapter 15 – Exporting, Importing and Counter Trade Key Chapter Points Chapter Questions CT3 – An alternative to using letter of credit is export credit insurance. What are the advantages and disadvantages of using the credit insurance rather than a letter of credit for exporting: a) A luxury yacht from California to Canada b) Machine tools from New York to the Ukraine A letter of credit, abbreviated as L/C is: †¢ Issued by the bank at the request of the importer †¢ States the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents †¢ Charge a percentage to the importer as a fee for the service †¢ May require the importer to do some type of deposit †¢ It is a financial contract †¢ Allows for the banks to determine the creditworthiness of your trade partner, so no relationship must exist for the trade to take place Export Credit Insurance: Sometimes exporters who require a letter of credit from an importer will lose their business to another exporter who doesn’t require all the additional work †¢ Thus when the importer is in a str ong bargaining position and able to play competing suppliers against each other, an exporter may have to forgo a letter of credit. †¢ This exposes the exporter to risk †¢ The exporter can protect themselves against that risk through the us of exporter insurance †¢ The FCIA provides coverage against commercial and political risks. Losses due to commercial risk result from the buyers insolvency or payment default. a) Because the competition for selling this product is somewhat high I would expect the buyer to have more power than the seller and therefore I could see them asking the seller to forgo the letter of credit. If that is the case export credit insurance will be the likely route to manage the trade. However, if the seller can get the buyer to comply the letter of credit between the reputable Canadian bank and the US bank will be a good asset to leverage if possible. b) Because of the nature of the transaction, the letter of credit may be the best solution. This way the seller can insure that the buyer is credit worthy and the bank will take care of the relationship needs so the buyer and seller do not have to create a relationship. My only concern would be that of the Ukrainian bank and whether you can trust their banking system. It may be more prudent to use the exporter insurance again to guard against the ever present political and economic risks in that country. ———————– Structure Incentives & controls Processes Culture People

Celebrities in politics Essay

I will get straight to the point, I believe that when celebrities get involved in  politics they draw attention away from the actual political issues and campaigns at hand. Having film stars in politics for endorsements will definitely draw a crowds and more  importantly votes. Because people love and become inspired by the characters played by an individual and in the end they are in fact become blinded by who that individual really is. It is as if you give a dangerous person, or as I will refer to him as, â€Å"an evil dower† some candy. Now a politician by him self is an evil dower who does not have candy. Without the candy it is very hard for an evil dower to attract little children into a car but as soon a candy, or even better a child’s favorite candy is introduced, this when put into context being a favorite actor, that is all the child sees and is blinded to whomever posses the candy, thus getting into the car. This in essence is basically the reaction of an obsessed fan when celebrities become involved in politics. If you really want to dissect the purpose for celebrities in politics, or celebrity endorsements in general you are able to create six different categories, establishing credibility, attracting attention, associative benefits, psychographic connection, demographic connection and mass appeal. What does this all mean? Absolutely nothing! All the reasons why celebrities are brought into an election are reasons that should be irrelevant to the voters. Most celebrities have never actually done any social work, some of them are unaware of what’s going on, in the past some celebrities have actually debated the ideals of another individual that was in there own party without actually knowing it. Up to now I have only been referring to actors as being celebrities but if we look it up in the dictionary, a celebrity is simply a famous person, renown fame. Doesn’t that mean a politician could in fact also be a celebrity? Yes,  Julius Caesar, Napoleon Bonaparte, Abraham Lincoln ,where politicians and celebrities in there own respect and got there fame from battles they won, world changing events they where part of. The difference between them and a modern day actors is they became famous for the things they did, it was who they where not a mask. But on the contrary this could also work against a politition, for instance Bill Clinton, we don’t remember him for being the president who sent the most troops into war ever or getting the United States out of a 250 billion dollar debt, no, the first thing that comes to mind when you hear Bill Clinton is Monica Lewinski. I’m not saying he didn’t do a lot of good things for the county Im just saying that’s what he got the most publicity for. All this time wasted just because they wanted to know if he lied. This is how celebrity gets in the way of politics, instead of speculating about impeaching the president for getting a blow job they should have been using there resources to gather more intelligence about terrorist activity in the middle east. At this time the president was no longer a polition, he was a celebrity, another Paris Hilton, instead of a tape it was a dress. Let’s face it though, when it comes to celebrities and politics. Celebrities are simply more entertaining. Who would you rather see in an interview, Sonny Perdue (Governor or Georgia) or The Rock.