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a company’s competitive strategy deals with

management’s game plan for competing successfully — the specific efforts to please customers,offensive and defensive moves to counter the maneuvers of rivals, the reactions and responses to whatever market conditions prevail at the moment and the initiatives undertaken to improve the company’s market positions

the objective of competitive strategy is to

knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences

a company achieves competitive advantage whenever

it has some type of edge over rivals in attracting customers and coping with competitive forces

a company can be said to have competitive advantage if

it has some type of edge over rivals in attracting customers and coping with competitive forces

while there are many routs to competitive advantage, they all involve

delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match match

the biggest and most important differences among the competitive strategies of different companies boil down to

whether a company’s target is broad or narrow and whether the company is pursuing a competitive advantage linked to low cost or differentiation

which of the following are the five generic types of competitive strategy?

low-cost provider, broad differentiation, best-cost provider strategy, focused low-cost provider strategy

the generic types of competitive strategies include

low-cost provider, broad differentiation, best-cost provider, focused low-cost and focused differentiation

which one of the following generic types of competitive strategy is typically the best strategy for a company to employ?

there is no such thing as a "best" competitive strategy; a company’s "best" strategy is always one that is customized to fit both industry and competitive conditions and the company’s own resources and competitive capabilities

a low-cost leader’s basis for competitive advantage is

meaningful lower overall costs than competitors

how valuable a low-cost leader’s cost advantage is depends on

whether it is easy or inexpensive for rivals to copy the low-cost leader’s methods or otherwise match its low costs

a low-cost leader can translate its low-cost advantage over rivals into superior profit performance by

either using its low-cost edge to underprice competitors and attract price sensitive buyers in large enough numbers to increase total profits or refraining from price-cutting and using the low-cost advantage to earn a bigger profit margin on each unit sold

the major revenues for achieving a cost advantage over rivals include

revamping the firm’s value chain to eliminate or bypass some cost-producing activities and/or out-managing rivals in the efficiency with which value chain activities are performed

a competitive strategy of striving to be the low-cost provider is particularly attractive when

buyers are large and have significant power to bargain down prices; buyers use the product in much the same ways; and buyers have low switching costs

which of the following are actions that a company can take to do a better job than rivals of performing value chain activities more cost-effectively?

striving to capture all available economies of scale and learning/experience curve effects, trying to operate facilities at full capacity, adopting labor-saving operating methods and improving supply chain efficiency

which of the following are the ways that a company can achieve a cost advantage by revamping its value chain?

cutting out distributors and dealers by selling direct to customers, replacing certain value chain activities with faster and cheaper online technology, relocating facilities so as to curb the need for shipping and handling activities and streamlining operations by eliminating low value-added or unnecessary work steps and activities

to succeed with a low-cost provider strategy, company managers have to

do 2 things: (1) do a better job than rivals of pursuing cost savings throughout the value chain and (2) be proactive in revamping the firm’s overall value chain to eliminate low value-added activities and bypass "nonessential" cost-producing activities

achieving a cost advantage over rivals entails

out-managing rivals in performing value chain activities cost-effectively and finding creative ways to cut cost-producing activities out of the value chain

the best evidence that a company is the industry’s low-cost provider is that

is has lower overall per unit costs for its product/service than other competitors in the industry

a company pursuing a low-cost leadership strategy must generally

have acceptable quality products that incorporate a good basic design with few frills and offer a limited number of models/styles to select from

being the overall low-cost provider in an industry has the attractive advantage of

putting a firms in position to compete offensively on the basis of low price, win the business of price sensitive customers, set the floor on market price and defend against price war conditions should they arise

a competitive strategy to be the low-cost provider in an industry works well when

price competition among rival sellers is especially vigorous, there are few ways to achieve product differentiation that have value to buyers, buyers incur low costs in switching their purchases from one seller/brand to another, industry newcomers use low introductory prices to attract buyers and build a customer base

a competitive strategy predicated on low-cost leadership tends to work best when

price competition is especially vigorous and the offerings of rival firms are essentially identical, standardized, commodity-like products

in which of the following circumstances is a strategy to be the industry’s overall low-cost provider NOT particularly well matched to the market situation?

when buyer have widely varying needs and special requirements and the prices of substitute products are relatively high

a strategy to be the industry’s overall low-cost provider tends to be more appealing than a differentiation or best-cost or focus/market niche strategy when

the offerings of rival firms are essentially identical, standardized, commodity-like products

which of the following circumstances is a low-cost leadership strategy likely to be particularly successful?

when the industry’s product is a standardized commodity, when buyers are looking for a good-to-excellent product at a bargain price, when entry barrier are low and substitute products are making strong market inroads and when buyers are price sensitive and the industry is plagued with frequent price wars

which one of the following is NOT one of the pitfalls of a low-cost provider strategy?

trying to set the industry’s price ceiling

the essence of a broad differentiation strategy is to

be unique in ways that are valuable and appealing to wide range of buyers

a company attempting to be successful with a broad differentiation strategy has to

study buyer needs and behavior carefully to learn what buyers consider important, what they think has value and what they are willing to pay for

successful differentiation allows a firm to

command a premium price for its product and/or increase unit sales and/or gain buyer loyalty to its brand

a company that succeeds in differentiating its product offering from those of its rivals can

avoid having to compete on the basis of simply a low price, charge a price premium for its products, increase unit sales and gain buyer loyalty to its brand

a broad differentiation strategy improves profitability when

unit sales increase and the extra price the product commands exceeds the added costs of achieving the differentiation

using a broad differentiation strategy to produce an attractive competitive advantage is least likely to be based on

undercutting the prices being charged by rivals

opportunities to differentiate a company’s product offering

can exist in activities all along an industry’s value chain

easy-to-copy differentiating features

cannot produce sustainable competitive advantage

the most appealing approaches to differentiation are

those that are hard or expensive for rivals to duplicate and that also have considerable buyer appel

perceived value and signaling value are often an important part of a successful differentiation strategy because

buyers seldom will pay for value they don’t perceive, no matter how real the value of the differentiating extras may be

a differentiation-based competitive advantage

often hinges on incorporating features that (1) raise the performance of the product (2) lower the buyer’s overall costs of using the company’s product (3) enhance buyer satisfaction in intangible or non-economic ways

what are the 4 basic routes to achieving a differentiation-based competitive advantage?

delivering value to customers via competencies and competitive capabilities and competitive capabilities that rivals don’t have or can’t afford to match, incorporating features that raise product performance, incorporating product attributes and user features that lower the buyer’s overall costs of using the company’s product and incorporating features that enhance buyer satisfaction in intangible or non-economic ways

broad differentiation strategies are well-suited for market circumstances where

there are many ways to differentiate the product or service and many buyers perceive these differences as having value

broad differentiation strategies generally work best in market circumstances where

buyer needs and preferences are too diverse to be fully satisfied by a standardized product

a broad differentiation strategy works best in situations where

technological change is fast-paced and competition revolves around rapidly evolving product features

the pitfalls of a differentiation strategy include

trying to differentiate on the basis of attributes or features that are easily copied, choosing to differentiate on the basis of attributes that buyers do not perceive as valuable or worth paying for, trying to charge too high a price premium for the differentiating features and being timid and not striving to open up meaningful gaps in quality or performance or service or other attractive differentiating attributes

which of the following is NOT one of the pitfalls of pursuing a differentiation strategy?

trying to STRONGLY differentiate the company’s product from those rivals rather than be content with WEAK product differentiation

a company achieves best-cost provider status by

incorporating attractive or upscale attributes into its product offering at a lower cost than rivals

a firm pursuing a best-cost provider strategy

seeks to deliver value to buyers by satisfying their expectations on key quality/service/features/performance attributes and beating their expectations on price

best-cost provider strategies

aim at giving customers more value for the money

the competitive objective of a best-cost provider strategy is to

meet or exceed buyer expectations on key quality/service/features/performance attributes and beat their expectations on price–thereby achieving a value-based competitive advantage

for a best-cost provider strategy to be successful, a company must have

resource strengths and competitive capabilities that allow it to incorporate upscale attributes at lower costs than rivals whose products have similar upscale attributes

target market of a best-cost provider is

value-conscious buyers

best-cost provider strategies are appealing in those market situations where

diverse buyer preferences make product differentiation the norm and where many buyers are sensitive to both price and value

the big danger or risk of a best-cost provider strategy is

that low-cost leaders will be able to steal away some customers on the basis of a lower price and high-end differentiators will be able to steal away customers with the appeal of better product attributes

a company’s biggest vulnerability in employing a best-cost provider strategy is

getting squeezed between the strategies of firms employing low-cost provider strategies and high-end differentiation strategies

focused strategies keyed either to low-cost or differentiation are especially appropriate for situations where

the market is composed of distinctly different buyer groups who have different needs or use the product in different ways

what sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is

their concentrated attention on serving the needs of buyers in a narrow piece of the overall market

the chief difference between a low-cost leader strategy and a focused low-cost strategy is

the size of the buyer group that a company is trying to appeal to

the production emphasis of a company pursuing a broad differentiation strategy usually involves

efforts to build-in whatever differentiating features that buyers are willing to pay for and striving for product superiority

the marketing emphasis of a company pursuing a broad differentiation strategy usually is to

tout differentiating features and charge a premium price that more than covers the extra costs of differentiating features; communicate the attractive features of a budget-priced product offering that fits niche members’ expectations

the keys to sustaining a broad differentiation strategy are

to stress constant innovation to stay ahead of imitative rivals and to concentrate on a few differentiating features

one of the big dangers in crafting a competitive strategy is that managers, torn between the pros and cons of the various generic strategies, will opt for

a "stuck-in-the-middle" strategy

the reasons why a company opts to expand outside its home market include

gaining access to new customers for the company’s products/services, spreading its business risk across a wider market base, achieving lower costs and enhancing the company’s competitiveness and a desire to capitalize on its core competencies and capabilities

which of the following are typical reasons for companies to expand into the markets of foreign countries?

to gain to new customers, to achieve lower costs and enhance the firm’s competitiveness, to capitalize on company competencies and capabilities and to spread business risk across a wider geographic market base

what is NOT a reason why a company decides to enter foreign markets?

to build the profit sanctuaries necessary to wage guerilla offensives against global challengers endeavoring to invade its home market

a company is said to be an international competitor when

it competes in a select few foreign markets

a company is said to be a global competitor when

it sells its products in 50-100 or more and is expanding its operations into additional country markets annually

one of the biggest strategic challenges to competing in the international arena include

whether to offer a mostly standardized product worldwide or whether to customize the company’s offerings in each different country market to more precisely match the tastes and preferences of local buyers

competing in the markets of foreign countries entails detailing with such factors as

fluctuating exchange rates, country-to-country variations in host government restrictions and requirements and country-to-country variations in cultural, demographic and market conditions important country-to-country differences in consumer buying habits and buyer tastes and preferences whether to customize the company’s offerings in each different country market or whether to offer a mostly standardized product worldwide the fact that product designs suitable for one country are sometimes inappropriate in another

one important concern a company has in trying to compete successfully in foreign markets is

how it can gain competitive advantage based on where it locates its various value chain activities

a U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign markets

becomes more competitive in foreign markets when the U.S. dollar declines in values against the currencies of the countries to which it is exporting

a European manufacturer that exports goods made at its European plants to the U.S

becomes more competitive in the U.S. market when the euro declines in value against the U.S. dollar

one of the big risks of competing in foreign markets is

the extent to which the advantage of manufacturing goods in a particular country can be wiped out when fluctuating exchange rates result in that country’s currency growing stronger relative to the currencies of the countries where the output is being sold

the advantages of manufacturing goods in a particular country and exporting them to foreign markets

are weakened when that country’s currency grows stronger relative to the currencies of the countries where the output is being sold

which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country’s currency grows weaker relative to the currencies of the countries that the goods are being exported to; fluctuating exchange rates pose significant risks to a company’s competitiveness in foreign markets

the defining characteristics of multi-country competition is

a market situation where there’s considerable cross-country variation in market conditions and in the companies that are contending for leadership–with the result that the market contest among rivals in one country is not closely connected to the market contests in other countries

the defining characteristic of global competition is

a market situation where competitive conditions across national markets are linked strongly enough to form a true international or world market and where leading competitors compete head to head in many different countries

multi-country competition refers to situations where

each country market is self-contained 3/4 competition in one national market is independent of competition in other national markets and, as a consequence, there is strictly speaking no "international market" or "world market"

multi-country competition is best characterized as a situation where

there is no international or global market, just a collection of mostly self-contained country markets

the characteristics of a world market where global competition prevails include

a market situation where competitive conditions across national markets are linked strongly enough to form a true international or world market and where leading competitors typically compete head to head in many different countries

in global competition

the markets in various countries are part of the world market and competitive conditions across country markets are strongly linked

the generic strategic options for competing in foreign markets include

global low-cost, global differentiation, global best-cost and global focus strategies maintaining a national (one-country) production base and exporting goods to foreign markets licensing foreign firms to produce and distribute one’s products or to use the company’s technology

what are the generic strategy options for competing in the markets of the foreign countries?

an export strategy a global strategy a multi-country strategy a franchising strategy

using domestic plants as a production base for exporting goods to selected foreign country markets

can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets

that advantages of using an export strategy is to build a customer base in foreign markets inlcude

minimizing risk and capital requirements

the advantages using a licensing strategy to participate in foreign markets include

being able to leverage the company’s technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain or otherwise risky

the advantages of using a franchising strategy to pursue opportunities in foreign markets include

having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train and support foreign franchisees

when a company operates in the markets of 2 or more different countries, its foremost strategic issues is

whether to vary the company’s competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries

a "think local, act local" multi-country type of strategy

becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions and market conditions

the strength of a "think local, act local" multi-country strategy is that

it matches a company’s competitive approach to prevailing market and competitive conditions in each country market, country by country

"think local, act local" strategy works particularly well when

host governments enact regulations requiring hat products sold locally meet strictly-defined manufacturing specifications or performance standards there are significant country-to-country differences in customer preferences and buying habits diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country there are significant country-to-country differences in distribution channels and marketing methods

when is the the "think local, act local" strategy highly questionable?

when a company’s strategic intent is global market leadership and it is striving to build a single-uniform competitive advantage worldwide

the drawbacks of a localized multi-country strategy include

hindering transfer of a company’s competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates

"think local, act local" multi-country strategy entails

giving local managers considerable strategy-making latitude and often producing different product versions for different countries

which of the following is the most unlikely element of a localized multi-country strategy?

selling direct to buyers to avoid having to establish networks of wholesale/retail dealers in each country market

"think global, act global" approach to crafting a global strategy involves

pursuing the same basic competitive strategy theme in all countries where the firm does business selling much the same products under the same brand names everywhere and expanding into most, if not at all, nations where there is significant buyer demand integrating and coordinating the company’s strategic moves worldwide utilizing the same competitive capabilities, distribution channels and marketing approaches worldwide

what is a most unlikely element of "think global, act global" approach to crafting a global strategy?

scattering plants across many countries, with each plant producing product versions for local area markets

"think global, act global" approach to strategy making is preferable to a "think local, act local" approach when

country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy

the essential difference between a "think global, act global" and a "think local, act local" approach to strategy making is that

the "think global, act global" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions

in expanding outside its domestic market, one way a company can strive to gain competitive advantage is by

dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and by working to efficiently transfer competitively valuable competencies from its domestic operations to its operations in foreign markets

what is NOT one of the ways a company can strive to gain competitive advantage by expanding into foreign markets?

by competing in both developed and emerging country markets and/or by selling direct to foreign buyers via company’s Web site

to use location to build competitive advantage, a company that operates multinationally or globally must

consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities

in competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations when

there are significant scale of economies in performing an activity the costs of manufacturing or other activities are significantly lower in some geographic locations than in others when there is a steep learning or experience curve associated with performing an activity in a single location certain locations have superior resources, allow better coordination or related activities or offer other valuable advantages

the classic or most pervasive reason why a multinational or global competitor chooses to locate an activity in a particular country is

low cost

dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous

when high transportation costs make it expensive to operate from central locations whenever buyer-related activities are best performed in locations close to buyers if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations when it is desirable to hedge against (1) the risks of fluctuating exchange rates (2) supply interruptions (3) adverse political developments

when is it NOT ADVANTAGEOUS for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage?

when a company has competitively superior patented technology that it can license to foreign partners

the competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include

being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs or differing trade restrictions being in better position to choose where and how to challenge rivals shortening delivery times to customers by having geographically scattered distribution facilities locating buyer-related activities close to buyers

transferring core competencies and resource strengths from one country market to another is

a good way for companies to leverage their resource strengths and competitive capabilities and grow sales and profits in the process

profit sancturies

are country markets where a company earns substantial profits because it has a strong or protected market position

a nation becomes a company’s profit sanctuary when

the company earns a substantial portion of its total profits from sales in that nation due either to its strong or protected competitive position

cross-market subsidization refers to

supporting competitive offensives in one market with resources and profits diverted from operations in other country markets

cross-market subsidization is a particularly powerful competitive weapon when used by

a global or multinational firm with multiple profit sanctuaries that is waging a strategic offensive against a domestic-only competitor

a purely domestic company is vulnerable to strategic offensives waged by a

of the multinational competitor’s cross-market subsidization capabilities

strategic alliances, joint ventures and cooperative agreements between domestic and foreign forms are a potentially fruitful means for the partners to

enter additional country markets and compete on a more global scale while still preserving their independence gain better access to scale economies in production and/or marketing fill competitively important gaps in their technical expertise or knowledge of local markets share distribution facilities and dealer networks, thus mutually strengthening their access to buyers

strategic alliances between domestic and foreign firms are more effective

in helping establish a new beachhead of opportunity than in achieving competitive advantage

what is NOT one of the problems and risks of strategic alliances between domestic and foreign firms?

making it harder to pursue a multi-country strategy as compared to a global strategy

companies racing for global market leadership

generally have to consider establishing competitive positions in the markets of emerging countries

the basic strategy options for local companies in competing against global challengers include

transferring expertise and capabilities to cross-border markets, relying on home-field advantages, contending on a more global level and dodging rivals by shifting to a new business model or a defendable market niche

if industry pressures for globalization are WEAK, the best strategy options for a local company in competing against global challengers include

transferring company’s expertise and capabilities to cross-border markets and relying on home-field advantages

if industry pressures for globalization are STRONG, the best strategy options for a local company in competing against global challengers include

moving to enter foreign markets and beginning to contend on a more globalized basis or else dodging rivals by shifting to a new business model or a defendable market niche

business ethics concerns

The application of general ethical principles and standards to the actions and decisions of companies and the behavior of company personnel

ethical principles in business

are not materially different from ethical principles in general

notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical

Are present in all societies, organizations and individuals; some of the most important concepts of what is right and what is wrong (being truthful, integrity of character, not cheating or stealing, treating people with dignity and respect) resonate with people of most cultures and religions and are thus universal

The contentions that (1) many of the same standards of what’s ethical and what’s unethical resonate with peoples of most societies regardless of local traditions and cultural norms and (2) to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances are defining beliefs of

the school of ethical universalism

The contention that since different societies and cultures have divergent values and standards of right and wrong it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores rather than according to a single set of ethical standards

defines what is meant by "ethical relativism"

The contention that ethical standards should be governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions and shared values that further prescribe what constitutes ethically permissible behavior and what does not are the basic principles of

integrated social contracts theory

The school of ethical universalism holds that

Some concepts of what is right and what is wrong resonate with peoples of most societies regardless of local traditions and cultural norms—hence common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances

According to the school of ethical universalism,

To the extent there is common moral agreement about right and wrong actions and behaviors across multiple cultures and countries, there exists a set of universal ethical standards to which all societies, all companies and all individuals can be held accountable

If one concurs with the school of ethical universalism, then one believes that

Many basic moral standards travel well across cultures and countries and really do not vary significantly according to local cultural beliefs, social mores, religious convictions and/or the circumstances of the situation

The strength of the beliefs underlying ethical universalism is that

It draws upon the collective views of multiple societies and cultures to put some clear boundaries on what constitutes ethical business behavior and what constitutes unethical business behavior no matter what country market or culture a company or its personnel are operating in

The school of ethical relativism holds that

When there are cross-country or cross-cultural differences in what is deemed fair or unfair, what constitutes proper regard for human rights and what is considered ethical or unethical in business situations, it is appropriate for local moral standards to take precedence over what the ethical standards may be elsewhere

According to the school of ethical relativism,

There are important occasions when local cultural norms and the circumstances of the situation determine whether certain behaviors are right or wrong

A belief in ethical relativism leads to the conclusion that

Whether the use of underage labor and the payment of bribes/kickbacks should be deemed ethical or unethical depends on the moral standards, values, beliefs, convictions and business norms that prevail in particular cultures, societies, countries or circumstances

Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel

Quickly find themselves on a slippery slope with no higher order moral compass if they operate in countries where ethical standards vary considerably from country to country

According to the ethical relativism school of thinking,

There can be no one-size-fits-all set of authentic ethical norms against which to gauge the conduct of company personnel

Paying bribes and kickbacks to grease business transactions

Is one of the thorniest ethical problems that multinational companies face because paying bribes is normal and customary in some countries and ethically or legally forbidden in others

Multinational companies that forbid the payment of bribes and kickbacks in their codes of ethical conduct and that are serious about enforcing this prohibition

Still have considerable difficulty in preventing the payments of bribes and kickbacks when such payments are entrenched as normal and customary in locations where they do business

According to integrated social contracts theory, the ethical standards a company should try to uphold

Are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions and shared values that further prescribe what constitutes ethically permissible behavior and what does not—but universal norms always take precedence over local ethical norms

Integrated social contracts theory maintains that

Universal ethical norms always take precedence over local ethical norms

3 categories of managers that stand out with regard to the beliefs and commitments they have to ethical and moral principles in business affairs are:

moral managers, amoral managers and immoral managers

moral managers

are ethically principled see themselves as stewards of ethical behavior and believe it is important to exercise ethical leadership pursue success within the letter and spirit of what is considered ethical and legal view what is legal as the ethical minimum and have habit of operating at well above what the law requires

an immoral manager is one who

has no regard for so-called ethical standards in business and pays no attention to ethical principles in making decisions and conducting the company’s business–an immoral manager is driven by greed and self-gain and won’t hesitate to violate ethical principles if it is in his/her best interest to do so

an unintentionally amoral manager is one who

holds firmly to the view that anything goes, so long as actions and behaviors are not clearly ruled out by prevailing legal and regulatory requirements

The best available evidence indicates that the average manager in the whole

Ethically amoral most of the time but may slip into a moral or immoral mode based on a variety of impinging factors and circumstances

By some accounts, the population of managers is said to be

Distributed among moral, immoral and amoral managers in a bell-shaped curve, with immoral managers and moral managers occupying the two tails of the curve and amoral managers, especially the intentionally amoral managers, occupying the broad middle ground

Based on data from the Global Corruption Report sponsored by Transparency International,

Corruption among public officials and in business transactions is widespread across the world

the consequences of pursuing a strategy which has unethical or shady components include

sharp drops in the stock prices of companies found to be engaging in unethical behavior frequently devastating hits to the company’s reputation incurring potentially large fines for companies found to have engaged in unethical behavior a potential of criminal indictments and jail sentences for company executives

One of the biggest reasons for company managers to craft ethical strategies is

The scandals, fines, hits to a company’s reputation and consequences for executives that come from C. Being put in the public limelight for unethical behavior

The major drivers of unethical managerial behavior include

Ethically corrupt corporate cultures and overzealous or obsessive pursuit of wealth accumulation, power, status and other selfish interests

unethical managerial behavior tends to be driven by such factors as

the pervasiveness of immoral and amoral businesspeople overzealous pursuit of personal gain, wealth and other selfish interests a company culture that puts the profitability and good business performance ahead of ethical behavior heavy pressures on company managers to meet or beat earnings targets

The stance a company takes in dealing with or managing ethical conduct at any given point in time can take such basic forms as

The unconcerned or non-issue approach, the damage control approach, the compliance approach and the ethical culture approach

The unconcerned or non-issue approach to dealing with or managing ethical conduct

Is prevalent at companies whose executives ascribe to the view that trying to enforce ethical standards above and beyond what is legally required is a non-issue because businesses are entitled to conduct their affairs in whatever manner they wish so long as they comply with the letter of what is legally required

The damage control approach to dealing with or managing ethical conduct

Is favored at companies whose managers are wary of scandal and adverse public relations fallout that could cost them their jobs or tarnish their careers

The compliance approach to dealing with or managing ethical conduct

Is favored at companies whose managers (1) lean toward being somewhat amoral but recognize the value of having ethically upstanding reputations or (2) are moral and see strong compliance methods as the best way to impose and enforce ethical rules and high ethical standards

The ethical culture approach to dealing with or managing ethical conduct

Is favored at companies where top managers are very concerned about gaining employee buy-in to the company’s ethical standards, business principles and corporate values and see the company’s code of ethics and/or its statement of corporate values as integral to the company’s identity and ways of operating

One of the big difficulties and challenges that a company encounters in using the "damage control" approach to dealing with or managing ethics-related issues and ethics conduct is

Credibility problems with stakeholders and susceptibility to ethical scandal

One of the big difficulties and challenges that a company encounters in using the "compliance" approach to dealing with or managing ethics-related issues and ethics conduct is

A proliferation of ethical rules and guidelines and an environment where employees come to rely on the existing rules for moral guidance—a condition that fosters a mentality of what is not forbidden is allowed

One of the big difficulties or challenges that a company encounters in using the "ethical culture" approach to dealing with or managing ethics-related issues and ethics conduct is

Relying too heavily on peer pressures and cultural norms to enforce the espoused ethical standards and underutilizing compliance enforcement procedures

A company that is concerned about the recent raft of corporate scandals and aggressive enforcement of anticorruption legislation (such as the Sarbanes-Oxley Act of 2002) might well be inclined to shift it’s a approach to dealing with or managing ethics-related issues and ethics conduct

From a "damage control" or an "unconcerned/nonissue" approach to a "compliance" approach

A company’s strategy needs to be ethical because

A strategy that is unethical in whole or in part is morally wrong and reflects badly on the character of the company personnel involved

The notion of social responsibility as it applies to businesses concerns

A company’s duty to operate in an honorable manner, provide good working conditions for employees, be a good steward of the environment and actively work to better the quality of life in the local communities where it operates and in society at large

Which of the following should be on a company’s menu of actions to consider in crafting a strategy of social responsibility?

actions to ensure that the company’s strategy is ethical and that ethical principles will be observed in operating the business how much and what kinds of resources it will allocate to charitable contributions, community service endeavors, various worthy causes and helping the disadvantaged actions to protect or enhance the environment, including both those environmental problems stemming from the company’s own business activities and those problems outside the company’s immediate sphere of operations actions to create a work environment that enhances the quality of life for employees and makes the company a great place to work

The moral case for why businesses should act in a socially responsible manner

Boils down to "it’s the right thing to do"—ordinary decency, civic-mindedness and concern for the well-being of society should be expected of any business

The business case for why companies should act in a socially responsible manner includes such reasons as

it generates internal benefits it reduces the risk of reputation-damaging incidents it is in the best interest of the shareholders it can lead to increased buyer patronage

Which one of the following is false as concerns the merits of why acting in a socially responsible manner is "good business"?

Acting in a socially responsible manner nearly always results in higher profits and a higher stock price for shareholders

In judging how far a company should go in pursuing social responsibility initiatives, it is fair to say that

There is no simple or widely accepted standard for judging when a company has or has not gone far enough in fulfilling its citizenship responsibilities

Perhaps the most surefire way to enlist a genuine commitment to corporate social responsibility initiatives is to

Link the achievement of social performance targets to executive compensation

dumping

selling goods in foreign markets at prices that are: (1) well below prices at which it normally sells in its home market (2) well below its full cost per unit

key factors that distinguish one strategy from another

whether a company’s market target is broad or narrow whether the company is pursuing a competitive advantage linked to lowers costs or differentiation

cost driver

factor that has a strong influence on a company’s costs

uniqueness driver

factor that can have a strong differentiating effect

ethical relativism

"one size fits all"

school of ethical universalism

right and wrong are universal

school of ethical realitism

multiple sets of standards concerning what is ethically right and wrong

integrated social contracts theory

collective views of multiple societies

the ethics code litmus test

whether a company’s code of ethics is cosmetic is the extent to which it is embraced in crafting strategy and in operating the business day to day

the moral case for an ethical strategy

because a strategy that is unethical is morally wrong and reflects badly on the character on the firm’s personnel

the business case for an ethical strategy

because an ethical strategy can be both good business and serve the self-interest of shareholders

corporate social responsibility (CSR)

a company’s duty to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity,be a good steward of the environment and actively work to better the quality of life in the local community where it operates and society at large

sustainable business practices

those that meet the needs of the present without compromising the ability to meet the needs of the future