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Week 12 – Final Exam Review

Week 12 – Final Exam Review. Date and time: April 11 th : 2pm – 5pm Make sure you arrive by 1:40am Make sure you sit with your section Location: Sections Q and W and X Rexall Centre. Week 12 – Final Exam Review. Exam format:

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Week 12 – Final Exam Review

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  1. Week 12 – Final Exam Review • Date and time: • April 11th : 2pm – 5pm • Make sure you arrive by 1:40am • Make sure you sit with your section • Location: • Sections Q and W and X • Rexall Centre

  2. Week 12 – Final Exam Review • Exam format: • Closed book: no notes, no dictionaries, no phones or electronic devices of any kind • 3 hours • 3 case questions (50 marks) • 2-5 short answer questions (25-30 marks) • 20-25 multiple choice questions (20-25 marks) • Covers all the post-midterm material • Textbook chapters 6, 7, part of 8, 9 and 10 • 60% of final grade

  3. The Industry Lifecycle (Chapter 3) • The Competitive Context • Industry Lifecycle Stages • Emergence • Growth • Maturity • Decline • Characteristics and key success factors and strategies for each stage • You should be able to identify the stage of an industry lifecycle based on an article or case or give examples of industries and their lifecycle stage • Textbook chapter 3 (pp. 43-56) (Case: Beer brewing)

  4. Industry Lifecycle Main drivers of industry evolution: • Demand growth • Creation and diffusion of technology and knowledge Industry Sales Introduction Growth Maturity Decline Time

  5. Globalization (Chapter 6) • What is it? • Integration of markets and economies • Free flow of goods/services, capital and labour • Multinational Corporations • Benefits / threats • International trade • Mercantilism / protectionism • Tariffs, quotas, subsidies (see handout on tariffs) • What are the problems with protectionism? • Trade Agreements and International bodies • GATT, WTO, IMF, World Bank… • Regional Trading Blocs (EU, APEC, ASEAN) • NAFTA • Objectives • Impact on trade, employment and business; on Canadian culture; on competitiveness…

  6. Benefits – Threats of MNCs

  7. Trade Protectionism and Tariffs • What are the problems with trade protectionism? [Opposite of Globalization] • Trade retaliation • Increased costs to consumers • Limits competitiveness of domestic firms • How tariffs affect the economy handout: • Impact on exporting country: • Lower production, job losses, economic decline… • Impact on importing country: • Less competition for domestic firms, rising sales, prices, employment, spending, government revenues… • Increased costs to consumers, less spending on other industries, economic decline, costs of imposing + collecting tariffs, possible costs of retaliation and trade wars…

  8. Impact of NAFTA NAFTA Culture Business Consumers Trade Employment

  9. Chap. 6 Textbook Case Discussion • Amazon in Canada p. 138 • Why is this about Globalization/Protectionism? • Foreign ownership restrictions are protectionist measures and counter to globalization i.e. they prevent the free flow of $$... • Potential risks/benefits? • + More competition = better prices, selection, innovation… • - Foreign competition and greater control by large foreign firms = fewer jobs in Canada? Canadian culture will be lost…

  10. The Ethics of Globalization (Chapter 8: 188-195) • How to ensure that developing countries benefit from free trade & globalization? • Allow time for their domestic industries to adapt to multinational competition – don’t remove trade barriers too quickly! • Remove tariffs and subsidies protecting industries in developed countries too – free trade must be fair • Ensure governments in developing countries provide a social safety net to its needy citizens

  11. The Role of Government (Chapter 7) • Taxation: Revenue – Restrictive Taxes • Crown Corporations • Why do we have them? • What are the benefits and disadvantages of crown corps? • Which sectors of the economy should be controlled by the Government and which should be left to the private sector? • Health Care • Education • Military/Defense/Law & Order/Corrections • Retail distribution of beverage alcohol (i.e. LCBO)

  12. The Role of Government (Chapter 7) • Regulation • Modify Behavior – Imperfect Competition – Public Interest • Bailouts and Subsidies • See Exhibit 7.6 p. 156 • Which activities should the government subsidize and why? • Should the government bail out large corporations that are failing? Why? • Government Subsidies in a Global Context

  13. Government Subsidies in a Global Context Maintaining domestic labour force Keeping a trade balance Protecting against unfair trade GOVERNMENT Nurturing young industries Subsidizing global business activity Encouraging FDI

  14. Current Trends and Issues • Should the Canadian government protect Canadian corporations from foreign ownership? (See Toronto Star Article handout) • Arguments For: • Core assets and industries should be protected • National security, cultural industries, servicing unprofitable and remote communities • Head offices in Canada will ensure that jobs, R&D, spending on suppliers and related services (law, consltg & acctg firms, IBs…) also remains • Arguments Against : • Corporations are driven by profit not nationalistic motives • Protected firms are less efficient, productive, innovative, competitive… and costs to consumers are likely increased • Violates spirit and letter of free trade laws and agreements and may invite retaliation

  15. Current Trends and Issues • Deregulation • Why? • More competition, lower prices, better service… • Deregulation in transportation and electricity industries (see textbook p.162) • Privatisation • Why? • Benefits and Challenges (see next slide) • Should the government privatize some crown corporations or sell government assets? Why or why not?

  16. The Benefits & Challenges of Privatization

  17. Chap. 7 Textbook Case Questions • Pratt and Whitney (p.171) • Should the Government continue to subsidize Pratt and Whitney? Why or why not? • No: see Corporate Welfare arguments p. 156 • Yes: see Guardian of Business in a Global Context ex. 7.4 on p. 156

  18. Strategic Management (Chapter 9) • The Five Forces Model • The VRIO Model • SWOT Analysis • Business-Level Strategies (3 Generic) • Cost Leadership • Differentiation • Focus • Corporate-Level Strategies (Diversification) • Types: Related – Unrelated – Vertical Integration • How: Internal – Mergers & Acquisition – Alliances

  19. Strategic Management (Chapter 9) • You should be able to analyze an industry according to the 5-forces model • Can you identify resources that are valuable, rare and difficult to imitate in a given firm? • Can you distinguishes the three generic strategies and apply them to a case with examples? • Can you recognize the different types of corporate diversification and methods? And provide examples?

  20. The Five-Forces Model

  21. The VRIO Model

  22. Chap. 9 Textbook Case Discussion • Starbucks – Tim Hortons p. 220 • 5 Forces analysis of coffee shop industry • VRIO of SBUX, THI • Type of business/corporate strategy pursued by the SBUX (geographic expansion) and THI (selling lattes…)

  23. Organizational Change and Learning (Chapter 10) • Forces for change • Types of organizational change • Developmental, transitional, transformational • Structural inertia, bureaucracies, cognitive scripts • Methods and strategies for managing change: • IBM: Who says elephants can’t dance? • 3M and Google’s encouraging exploration and innovation • Creating separate autonomous spin-offs

  24. Societal Economic Global Political Competitive Technological FORCES FOR CHANGE Organizational Structure Strategy People

  25. Organizational Change and Learning (Chapter 10) • Organizational learning • Single vs. double loop learning • Exploration vs. exploitation tradeoff

  26. Chap. 10 Textbook Case Questions • Netflix and Blockbuster p.246 • Forces driving change in movie rental industry • Technological, competitive, societal… • Why has Blockbuster not adapted to the new environment? • Inertia, bureaucracy, cognitive scripts… • Is Netflix a learning organization? • Yes, shift from mail order to online streaming

  27. Sample non-case questions • Explain the limitations of Porter’s five-forces model. Which other model helps to provide a more complete picture of a firm’s sources of competitive advantage? • Bombardier (the Canadian Aerospace firm) is seeking $500 million in government support to help finance the research and development for a new line of regional jets. Provide arguments in support of government subsidies in this case and arguments against.

  28. Exam Tips • Read the questions very carefully • Make sure you understand what theoretical concepts you need to draw on to answer • Explain the concept accurately if necessary • Use case facts or examples to illustrate the concepts – be specific. • ANSWER THE QUESTION!!! • The more in-depth and insightful your analysis, the better your grade • No point-form answers

  29. THE END I hope you learned something and had fun – I did! Best of luck for the final. Peter Modir pm@imperialglobal.net

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