Ch.1/13 International Strategies

Question 1

What are the three stages in Vernon’s Product Life Cycle Theory?

Answer 1

1. New Product Stage
2. Maturing Product Stage
3. Standardized Product Stage

Question 2

What is the standard product life cycle?

Answer 2

0. Product Development
1. Introduction
2. Growth
3. Maturity
4. Decline

Question 3

What are the four elements of Porter’s Theory of National Competitive Advantage?

Answer 3

1. Factor Conditions (ex. education, infrastructure)
2. Demand Conditions (emphasis on sophisticated demanding customers)
3. Related and Supporting Industries (Cluster of rivals, suppliers, supporting industries such as Silicon Valley)
4. Firm Strategy, Structure, and Rivalry (Domestic rivalry helps firms become competitive)
   - Chance and Government

Question 4

Name external influences on an international business.

Answer 4

• Industry structure and drivers
• Competitive dynamics
• Economic conditions
• Political, legal, and regulatory environment
• Technology standards and trends
• Cultural orientations
• Customer expectations

Question 5

Name the steps of the strategy process.

Answer 5

1. Management vision
2. Strategy
3. Value Creation
4. Firm Performance

Question 6

Define a business strategy.

Answer 6

A set of integrated, purposeful choices made for the future in the face of uncertainty to create and capture value.

Question 7

A strategy does what?

Answer 7

Aligns internal resources and activities to succeed in the external environment

Question 8

Strategy relies on what?

Answer 8

Coherent choices. Integrated fit requires commitment to a consistent set of trade-offs to produce clear alignment with what is offered to the world

Question 9

Explain the dynamic between strategy and choices.

Answer 9

Strategy fails without clear choices, we must say no to some options so we can say yes to those that align with the vision

Question 10

Why are strategies used?

Answer 10

To chart the course to a vision & purpose. Strategy sets the direction to achieve a future vision, an achievable destination, aligned with purpose and defines a plan with tools to reach the destination

Question 11

Name the three types of obstacles.

Answer 11

1. Known Knowns
2. Known Unknowns
3. Unknown Unknowns

Question 12

Provide an example of known knowns and how to respond.

Answer 12

Ex: Bad weather diverts a flight, follow the checklist.
Scenario thinking: Prepare with training, Assess situation, Execute

Question 13

Provide an example of Known Unknowns and how to respond.

Answer 13

Ex: Smartphone crashes, perform a diagnostic.
Diagnostic thinking: Sort options, Test Variables, Respond

Question 14

Provide an example of Unknown Unknowns and how to respond.

Answer 14

Ex: Exploring a new territory and remaining agile.
Strategic thinking: Broad observation, Creative thinking, Iterative adjustments

Question 15

Define value creation.

Answer 15

The measure of a firm’s capability of selling what it makes for more than the costs incurred to make it

Question 16

Name the five business level strategies.

Answer 16

1. Cost leadership
2. Differentiation
3. Focused Differentiation
4. Focused Cost Leadership
5. Integrated Cost Leadership/Differentiation

Question 17

Describe a cost leadership strategy.

Answer 17

An integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors.
Traits:
1. Relatively standardized products
2. Features broadly acceptable to many customers
3. Lowest competitive price
Required cost saving actions
- Building efficient scale facilities
- Tightly controlling production costs and overhead
- Minimizing costs of sales, R&D, and service
- Building efficient manufacturing facilities
- Monitoring costs of activities provided by outsiders
- Simplifying production processes

Question 18

Describe a differentiation strategy.

Answer 18

An integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them.
Traits:
1. Focus on non-standardized products
2. Appropriate when customers value differentiated features more than they value low cost

Question 19

Define a focus strategy.

Answer 19

An integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment.

Question 20

Name the two types of focused strategies.

Answer 20

1. Focused cost leadership strategy
2. Focused differentiation strategy

Question 21

To implement a focus strategy firms must be able able to do what?

Answer 21

Complete various primary and support activities in a competitively superior manner in order to develop and sustain a competitive advantage and earn above-average returns

Question 22

What factors drive focused strategies?

Answer 22

• Large firms may overlook small niches
• A firm may lack the resources needed to compete in the broader market
• A firm is able to serve a narrow market segment more effectively than can its larger industry-wide competitors
• Focusing allows the firm to direct its resources to certain value chain activities to build competitive advantage

Question 23

Firms that use a successful integrated cost leadership/differentiation strategy are better positioned to do what?

Answer 23

• Adapt quickly to environmental changes
• Learn new skills and technologies more quickly
• Effectively leverage its core competencies while competing against its rivals

Question 24

What core commitment is necessary for an effective integrated cost leadership strategy?

Answer 24

Commitment to strategic flexibility is necessary for implementation of integrated cost leadership/differentiation strategy. This means:
- Flexible manufacturing systems (FMS)
- Information networks (CRM)
- Total quality management (TQM) systems