Ch. 10

Question 1

Theme of Ch. 10 and what part of the AFI framework?

Answer 1

Global Strategy: Competing Around the World

Formulation!

Question 2

Def: Foreign Direct Investment

Answer 2

A firm’s investments in value chain activities abroad

Question 3

Def: Global Strategy

Answer 3

Part of a firm’s corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world – at home and abroad

Question 4

Def: Globalization

Answer 4

A process of closer integration and exchange between different countries and peoples worldwide, made possible by:

1. Falling trade and investment barriers
2. Advances in telecommunications
3. Reductions in transportation costs

Question 5

Def: Multinational Enterprises (MNEs)

Answer 5

A large company that deploys resources and capabilities across international boarders in the procurement, production, and distribution of goods and services in at least two countries
ex. Coca-Cola, Walmart, Boeing, etc.

Question 6

Globalization 1.0: 1900–1941

Answer 6

Sales, operations, and some procurement
Strategy flowed from HQ to international sites
Firms can benefit from going abroad to achieve low cost input factors

Question 7

Globalization 2.0: 1945–2000

Answer 7

To reconstruct damage from the war
Focus on European countries, Japan, and Australia
Greater local-responsiveness
HQ set goals, international sites influenced tactics
Firms can benefit from going abroad to achieve low cost input factors

Question 8

Globalization 3.0: 21st Century

Answer 8

Business function locations are based on costs, capabilities, and PESTEL factors
Companies can operate 24/7, 365 days a year
Firms benefit off of low labor costs in manufacturing and service

Question 9

Why would a company go global? (3)

Answer 9

1. Gain access to a larger market
2. Gain access to low cost input factors (pursue a low cost strategy, 1.0 and 2.0 models)
3. Develop new competencies

Question 10

Liabilities with going global

Answer 10

1. Liability of foreignness
2. Loss of Reputation
3. Loss of intellectual property

Question 11

Becoming a MNE provides an opportunity to reach: economies of scale or scope?

Answer 11

Becoming an MNE provides an opportunity to reach both economies of scale and economies of scope