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Terms in this set (39)
Four Methods used to determine the monetary value of a companyThe Net Worth Method The Net Income Method Price-Earnings Ration Method Outstanding Shares MethodThe Net Worth MethodTotal Shareholders' Equity (SE) - (Goodwill + intangibles)The Net Income MethodNet Income x FivePrice-Earnings Ratio Method(Stock Price/EPS) x NIOutstanding Shares Method# of shares outstanding x stock priceMarket Capan estimation of the value of a business that is obtained by multiplying the number of shares outstanding by the current price of a shareInitial Public Offering (IPO)The first public offering of a corporation's stockManagement Information System (MIS)May be the most important factor in differentiating successful from unsuccessful firmsBalanced ScorecardA strategy evaluation and control technique Derives its name from the perceived need of firms to "balance" financial measures that are oftentimes used exclusively in strategy evaluation and control with non-financial measures such as product quality and customer serviceContingency PlansAlternative plans that can be put into effect if certain key events do not occur as expectedAuditingA systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria and communicating the results to interested usersShould Be Guidelines for the Strategic Planning Process to be EffectiveA people process more than a paper process A learning process for all managers and employees Words supported by numbers rather than numbers supported by words Simple and nonroutine Vary assignments, team memberships, meeting formats, and even the planning calendar Challenge the assumptions underlying the current corporate strategy Welcome bad news Continually strengthen the "good ethics is good business" policyShould Not Guidelines for the Strategic Planning Process to be EffectiveBe a bureaucratic mechanism Become ritualistic, stilted, or orchestrated Be too formal, predictable, or rigid Contain jargon or arcane planning language Be a formal system for control Disregard qualitative information Be controlled by technicians Do not pursue too many strategies at onceBusiness EthicsPrinciples of conduct within organizations that guide decision making and behaviorSocial ResponsibilityRefers to actions an organization takes beyond what is legally required to protect or enhance the well-being of living thingsSustainabilityRefers to the extent that an organization's operations and actions protect, mend, and preserve rather than harm or destroy the natural environmentCode of Business EthicsA key ingredient for establishing an ethics culture is to develop thisWhistle-BlowingEmployees reporting any unethical violations they discover or see in the firmWorkplace RomanceAn intimate relationship between two consenting employeesSexual HarassmentUnwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of sexual natureEnvironmentSurroundings in which an organization operates, including air, water, land, natural resources, flora, fauna, humans, and their interrelationISO 14000A series of voluntary standards in the environmental field Concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environment performanceGlobalizationA process of doing business worldwide, so strategic decisions are made based on global profitability of the firm rather than just domestic considerationsGlobal StrategyIncludes designing, producing, and marketing products with global needs in mind, instead of considering individual countries alone Integrates actions against competitors into a worldwide planInternational Firms or Multinational CorporationsOrganizations that conduct business operations across national boardersPotential Advantages to initiating, continuing, or expanding international operationsFirms can gain new customers for their products Foreign operations can absorb excess capacity, reduct unit cost, and spread economic risks over a wider number of markets Foreign operations can allow firms to establish low-cost production facilities in locations close to raw materials or cheap labor Competitors in foreign markets may not exist , or competition may be less intense than in domestic markets Foreign operations may result in reduced tariffs, lower taxes, and favorable political treatment Joint ventures can enable firms to learn the technology, culture, and business practices of other people and to make contacts with potential customers, suppliers, creditors, and distributors in foreign countries Economies of scale can be achieved from operation in global rather than solely domestic markets A firm's power and prestige in domestic markets may be significantly enhanced if the firm competes globallyDisadvantages of initiating, continuing, or expanding business across national boardersForeign operations could be seized by nationalistic factions Firms confront different and often little understood social, cultural, demographic, environmental, political, governmental, legal, technological, economic, and competitive forces when doing business internationally Weaknesses of competitors in foreign lands are ofter overestimated, and strengths are often underestimated Language, culture, and value systems differ among countries, which can create barriers to communication and problems managing people Gaining an understanding of regional organizations such as the European Economic Community, the Latin American Free Trade Area, the International Bank for Reconstruction and Development, and the International Finance Corporation is difficult but is often required in doing business internationally Dealing with two or more monetary systems can complicate international business operationsProtectionismCountries imposing tariffs, taxes, and regulations on firms outside the country to favor their own companies and peopleInversionWhenever a U.S. firm acquires a foreign firm and adopts that firm's lower tax rate or establishes a holding company in a foreign country and adopts that firm's lower tax rate