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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
Q

on competing strategically (global strategy)

A

exploiting global strength to win local wars

26
Q

basic features of multi-domestic strategy

A
  • 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
Q

basic features of transnational strategy

A
  • 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
Q

in Ghemawat’s CAGE framework what is CAGE

A

Cultural distance
Administrative & political distance
Geographical distance
Economic differences

29
Q

key strategic questions for choosing modes of overseas market entry

A
  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
Q

strategic alliances

A

are collaborative arrangements between firms

31
Q

International alliances

A

are strategic alliances involving partners from different countries

32
Q

International joint ventures

A

are where partners from different counties form a new, jointly-owned company

33
Q

Main motivation for international alliances & joint ventures is

A

multinationals desire access to: market knowledge & distribution capabilities of local companies

local partner desires access to: technology, brands & product development of the multinational

34
Q

international location of production - 3 major factors

A
  • 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

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