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Strategic Management > 8 - Internationalisation strategy > Flashcards

8 - Internationalisation strategy Flashcards

1
Q

there are 4 patterns of internationalization

A
  1. trading industries
  2. global industries
  3. sheltered industries
  4. multi-domestic industries
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2
Q

characteristics of Trading industries

A
  • high international trade
  • low FDI

these industries are: military hardware, mining, agriculture

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3
Q

characteristics of Global industries

A
  • high international trade
  • high FDI

these industries are: cars, oil, semiconductors, consumer electronics

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4
Q

characteristics of Sheltered industries

A
  • low international trade
  • low FDI
    these industries are: railroads, hairdressing, laundries/dry cleaning, milk
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5
Q

characteristics of Multi-domestic industries

A
  • low international trade
  • high FDI

these industries are: packaged groceries, investment banking, hotels, consulting

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6
Q

what are the factors for globalization

A
  1. structure of the supply

2. market accesibility

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7
Q

what is the structure of the supply dependent on?

A

on:
1. competitive structure
2. degree of domestic specialization

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8
Q

what is the market accesibility dependent on?

A

on:
1. entry barriers to a country
2. similarity of demand

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9
Q

what can competitive structure depend on

A

number of competitors
&
size of competitors

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10
Q

what can degree of domestic specialization be

A

widespread & specialized

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11
Q

what can entry barriers be

A

open & closed

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12
Q

what can the similarity of demand be

A

homogenous & heterogenous

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13
Q

theory of comparative advantage

A

a country has a relative efficiency (comparative) advantage in those products that make intensive use of resources that are abundant within that country

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14
Q

when exchange rates are well-behaved

A

comparative advantage translates into competitive advantage

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15
Q

ALTERNATIVE STRATEGIES FOR INTERNATIONAL COMPETITION: factors that determine how a firm competes on the international stage

A
  1. pressure to lower costs

2. pressure for local adaptation

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16
Q

how to achieve lower costs (alternative strategy of international competition)

A
  • geographic location where the use of key production factors is cheaper
  • the aim being to standardise the products
17
Q

pressure for local adaptation (alternative strategy of international competition)

A
  • different strategies for each country
  • making the necessary changes in human resources, the features of products, marketing…
  • additional expenditure
18
Q

the interaction between the pressure to lower costs and the pressure for local adaptation gives rise to three international competitive strategies

A
  1. global strategy
  2. transnational strategy
  3. multi-domestic strategy
19
Q

basic features of global strategy

A
  1. emphasis on lowering costs
  2. economies of scale through standardised products
  3. headquarters → coordination and integration across value chain activities in the various countries
  4. transferring the skills of headquarters or of each domestic business units to all other locations
20
Q

benefits of global strategy

A
  • cost benefits of scale & replication
  • serving global customers
  • exploiting national resources
  • learning benefits
  • competing strategically
21
Q

on cost benefits of scale & replication (global. strategy)

A

accessing global scale economies in purchasing, manufacturing, product development, marketing. replicating knowledge assets

22
Q

on serving global customers (global strategy)

A

multinational companies may prefer suppliers that can serve their global needs

23
Q

on exploiting national resources (global strategy)

A

the international firm can access better or cheaper natural, human and technological resources

24
Q

on learning benefits (global strategy)

A

global strategy alows you to access & integrate knowledge from multiple locations

25
on competing strategically (global strategy)
exploiting global strength to win local wars
26
basic features of multi-domestic strategy
- emphasis is on differentiating its product or service to adapt to local market - the firm needs to consider: language & cultural differences, level of income, customers' preferences, advertising, distribution channels & local legislation - decisions are made on a decentralized basis in domestic business units
27
basic features of transnational strategy
- it tries to balance the efficiency of the global strategy with the local adaptation of multi-domestic strategy - flexibility by capitalizing on communications & knowledge flows throughout the organization - the aim for each individual business to think globally, act locally
28
in Ghemawat's CAGE framework what is CAGE
Cultural distance Administrative & political distance Geographical distance Economic differences
29
key strategic questions for choosing modes of overseas market entry
1. Is the firm’s competitive advantage based on firm-specific or country-specific resources? 2. Is the product tradable and what are the barriers to trade? 3. Does the firm possess the full range of resources and capabilities needed to establish a competitive advantage in the overseas market? 4. Can the firm directly appropriate the returns to its resources? 5. What transaction costs are involved?
30
strategic alliances
are collaborative arrangements between firms
31
International alliances
are strategic alliances involving partners from different countries
32
International joint ventures
are where partners from different counties form a new, jointly-owned company
33
Main motivation for international alliances & joint ventures is
multinationals desire access to: market knowledge & distribution capabilities of local companies local partner desires access to: technology, brands & product development of the multinational
34
international location of production - 3 major factors
- NATIONAL RESOURCE CONDITIONS: What are the major resources which the product requires? Where are these available at low cost? - FIRM-SPECIFIC ADVANTAGES: to what extent is the company’s competitive advantage based upon firm-specific resources and capabilities, and are these transferable? - TRADABILITY ISSUES: Can the product be transported at economic cost? If not, or if trade restrictions exist, then production must be close to the market

Strategic Management (9 decks)

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