Business Policy II Midterm Flashcards
Chapter 1
CAGE Framework /4 provide one example of each?
- Cultural Distance: Religious Beliefs and Norms
- Administrative/Political Beliefs: Government policies
- Geographic Distance: Physical distance
- Economic Distance: Consumer income
What are the 3 M’s to become an MNE?
Motivations, Means, Mentality
What are the two types of Motivations
- Traditional (70’s)
- Emerging (80’s onwards
List two Traditional Motivations
- Resource Seeking: Securing supplies or Cost factors
- Market seeking: Filling our capacity or exploiting economies of scale
List 2 Emerging motivations
- Competitive Positioning: to help pre-empt others
- Global Scanning: Find emerging trends and new tech/skills
3 Means/Prerequisites of becoming an MNE /3
- Location Advantage
- Ownership/strategic advantage
- Org Capabilities
the Processes of going MNE /3
- Classic Internalization process:
- internet integration
- Strength of Global Entrepreneur
Classic internalization process
Definition: incremental process of increasing commitment and understanding the foreign market
EASY WAY(Internet)
1. Control over foreign activities
2. Amount of resources committed to foreign maket
Global Entrepreneur Checklist /5 (DPASO)
- Sees distance as an opportunity
- Clear global purpose
- Strikes alliances when weak
- Manages good supply chains
- Establish multinational orgs from the outset
Entry-Modes for MNEs /3 Provide 2 examples of each
- Export: Indirect or Direct
- Investment: joint Venture or Acquisition
- Contractual: License or Franchise
Types of MNE Mentalities /4
- International Mentality (Coordinated Federation)
- Multinational Mentality (Decentralized)
- Global Mentality (Centralized Hub)
- Transnational Mentality (Integrated Network)
Give an example of a company with a Multinational mentality.
McDonalds or Coca Cola
Give an example of a company with a Global mentality.
Ikea
Give an example of a company with a Transnational mentality.
Amazon, Apple
Chapter 2
What are the conflicts from external environments that are pushing companies to become MNEs?
- Cross-border integration & coordination
- National differentiation & responsiveness
- Worldwide innovation and learning
Cross-Border integration & Coordination Forces /4 (EFGL)
- Economies of Scale/Scope
- Factor Costs
- Expanding Spiral of Globalization
- Increasing liberalized environment for Trade
4 different forces influencing National Differentiation & Responsiveness (CIGL)
- Cultural Differences: Preferences
- National Infrastructure: Local standards and distribution Channels
- Government Demands: National Laws
- Local Competitors Success: Appealing to Nationalism
Types of Political Risk Analysis & Management /3
- Passage of Laws
- Strengths of Political Leaders
- Rise of Popular Movement
4 ways MNE can manage Political Risk
- Recruit local partenrs
- Limit R&D aborad to avoid IP infringement
- Insurance
- Diversifying their FDI
4 Forces of Worldwide Innovation and Learning (PIEC)
- Shortening Product Life-Cycles
- Increased costs of R&D
- Emergence of global tech standards
- competitors’ ability to develop and diffuse innovation globally
Responses for Worldwide Innovation and Learning in Global Industries
- Global Industries: Economic forces for globalization
Sources of Conflict for MNE /3 (Motivators, objectives and measures)
- Motivators: Strategic viability & Operational viability (Profit)
- Objectives: Freedom to integrate & move resources freely across borders
- Measures: Profit & ROI
Sources of Conflict for host country /3 (Motivators, objectives and measures)
- Motivators: National independence
- Objectives: Protect national sovereignty
- Measures: Social cost/benefit
Sources of Power for MNE /4
- No investment or exit option
- Ability to align with national priorities
- Home country support
- Position in global economy
Sources. of Power Host Government /3
- Legislative power
- Market Power
- Shift in power after investment
4-Step Political Risk Framework (UAMR)
- Understand: What is my org’s political risk appetite?
- Analyze: Gaining info
- Mitigate: How can we reduce exposure?
- Respond: Are we reacting effectively?
What are the 3 Core Competitive Competencies (GWN)
- Global efficiency
- Worldwide Innovation & Learning
- National Responsiveness
What is Multinational Flexibility?
Ability to exploit opportunities and manage risks due to diversity and local preferences
3 Requirements of Multinational Flexibility (ssu)
- Scanning global environment
- Selecting most attractive markets
- Understanding and managing risk
3 components to build worldwide learning (CLD)
- Capture Strategic Benefits
- Leverage Internal Variety
- Develop a worldwide learning system to help innovation
The means on how to deliver strategic objectives /3 (NSS)
- National Differences
- Scale Economies
- Scope Economies
Types of National Differences
- Labour costs
- Emergence of a large middle class