Chapitre 13

Question 1

what is the strategy and the goal of a firm

Answer 1

strategies are actions that managers take
to attain the goals of the firm.

Goal is to maximize the value of the firm by increasing:
* Profitability is the rate of return a firm makes
on its invested capital. (ROI)
* Profit growth measures percentage increase in
net profits over time.

Question 2

what is Value Creation (v)

Answer 2

• Measured by difference between a firm’s costs of
  production and the quality that consumers perceive in
  its products.
• The more value customers place on a firm’s
  products, the higher the price the firm can charge
  for those products.
• Measured by the difference between V (value) and
  C (cost).

Question 3

2 strategies for value creation

Answer 3

-low cost (reduce cost)
-differentiation (increase value perceived)

Question 4

what is and how to do Strategic Positioning (firm strategy)

Answer 4

it is to choose a place on the Efficiency frontier which shows all positions a firm can adopt regarding adding value to the product and low cost.

how;
A firm should be explicit about choice of
strategic emphasis regarding value creation
(differentiation) and low cost.
* A firm should configure its internal operations to
support that strategic emphasis.

Question 5

To maximize profitability (explain how to proprely use effecient frontier) firm must:

Answer 5

1. Pick a position on the efficiency frontier that is viable
   because there is enough demand to support that choice.
2. Configure its internal operations, such as manufacturing,
   marketing, logistics, information systems, human resources,
   etc. so that they support that position.
3. Make sure firm has the right organization structure in
   place to execute its strategy.
   Strategy, operations, and organization of firm must all
   be consistent with each other if it is to attain a competitive
   advantage and garner superior profitability.

Question 6

explaine this concept: The Firm as a Value Chain

Answer 6

Operations is a Value Chain composed of
Value creation activities:
* Production.
* Marketing and sales.
* Materials management.
* R&D.
* Human resources.
* Information systems.
* Infrastructure.

Question 7

what is Primary Activities + examples

Answer 7

activities included in operation :
1. Design, creation, and delivery of the
product.
2. Marketing, support, and after-sale service.
3. R&D is concerned with design of products and
production processes.
4. Production is concerned with the creation of a
good or service.
* Marketing and sales can increase perceived
value of a product and discover customer needs.
* Service activity provides after-sale service and
support.

Question 8

How does R&D, marketing, production, after sales service support strategic positioning of the firm? specific example for each

Answer 8

r&d: increase v (innovation to meet needs of cust.) reduce cost; innovation reducing cost
marketing; increase v (advertizing, visibility)
production: increase v (better quality/low defects) and reduce cost (coordination)
after sales: increase v (increase confidence)

Question 9

Support Activities: what it is + exemples

Answer 9

Provide inputs that allow the primary activities to
occur.
* Information systems can alter efficiency and
effectiveness with which a firm manages its other value
creation activities.
* Logistics controls transmission of physical materials
through the value chain.
* Human resources ensures company has the right mix of
skilled people; ensures adequate training, motivation,
and compensation.
* Infrastructure includes organization structure, control
systems, and culture of the firm.

Question 10

advantage of going international

Answer 10

increase profitability and growth by:

i. Expand potential size of market for domestic
products.
ii. Realize location economies.
iii. Realize greater cost economies from
experience effects.
iv. Earn a greater return-on-investment by LEVERAGING SUBSIDIARY SKILLS

Question 11

how to expand the market on what competencies is it based

Answer 11

Taking goods or services developed at home and
selling them internationally.
Also based on core competencies …

Question 12

what are core competencies

Answer 12

skills within the firm that competitors cannot match or imitate

• That Can exist in any of firm’s value-creation
  activities.
• Are bedrock of a firm’s competitive advantage.
• Successful firms transfer core competencies to
  foreign markets where indigenous competitors lack
  comparable competencies.

Question 13

LOCATION ECONOMIES

Answer 13

• Economies that arise from performing a value
  creation activity in the optimal location for that
  activity.
  -specific for each activity
• Can lower costs of value creation and help the firm
  achieve a low-cost position.
• Can enable a firm to differentiate its product
  offering from those of competitors.

Question 14

Creating a Global Web:

Answer 14

• When different stages of the value chain are
  dispersed to locations around the globe where
  value added is maximized or costs of value are
  minimized.
• Should create a competitive advantage.
• Should be able to better differentiate product offering
  (thereby raising perceived value, V) and lower cost
  structure (C) than a single-location competitor.

Question 15

Caveats of location economies

Answer 15

• Transportation costs, trade barriers, plus political and
  economic risk complicate the benefits of location
  economies.

Question 16

EXPERIENCE EFFECTS/curve

Answer 16

The Experience curve—systematic reductions in
production costs that have been observed to occur
over the life of a product.

Question 17

2 explanation for the experience curve:

Answer 17

A. Learning Effects:
* Labor productivity and management efficiency.
B. Economies of Scale:
* Lowers a firm’s unit costs and increases its
profitability.
* May not be possible unless firm serves global
markets.
* Bargaining power with the firm’s suppliers
increases.

Question 18

Strategic Significance / application of Experience
Curve:

Answer 18

• Moving down the experience curve allows a firm to
  reduce its cost of creating value and increase
  its profitability.
• Rapid movement down experience curve
  increases cost advantage.
• Firm that serves a global market from a single location
  can build accumulated volume more quickly.
• An established low-cost position can act as barrier
  to new competition

Question 19

LEVERAGING SUBSIDIARY SKILLS

Answer 19

• In mature multinationals, development of valuable
  skills can occur in foreign subsidiaries.
• Leveraging skills created within subsidiaries and
  applying them to other operations within the firm’s
  global network may create value.

Question 20

how to LEVERAGe / transfer SUBSIDIARY SKILLS

Answer 20

Multinational enterprise managers must:
1. Recognize that valuable skills that lead to
competencies can arise anywhere within the firm’s
global network, not just at the corporate center.
2. Establish an incentive system that encourages
local employees to acquire new skills.
3. Have a process for identifying when valuable
new skills have been created in a subsidiary.
4. Act as facilitators, helping transfer valuable skills
within the firm.

Question 21

2 major pressure felt when going international

Answer 21

• Reduce your cost
• Be locally responsive (increase v in this market by differentiation)

Question 22

explaine PRESSURES FOR COST REDUCTIONS

Answer 22

Require a firm to try to lower the costs of value
creation.
Greater in industries producing commodities-
type products. (universal need product)
* Universal needs—when the tastes and preferences
of consumers in different nations are similar if not
identical. Examples: steel, sugar.
Also intense in industries where major
competitors are based in low-cost locations,
where there is persistent excess capacity, and where
consumers are powerful and face low switching costs

Question 23

from where come the pressur for local responsivness

Answer 23

1) Differences in Customer Tastes and Preferences:
* Customer demands for local customization are on the decline worldwide in some markets.
* Significant differences in consumer needs, wants, tastes still exist across cultures.

2) Host-Government Demands:
* Economic and political demands by host-country
governments.
* Threats of protectionism, economic nationalism,
and local content rules dictate that international
businesses manufacture locally.
- and adjustment to local regulation

3)Differences in Infrastructure and Traditional
Practices:
* May require the delegation of manufacturing and
production functions to foreign subsidiaries.
* Example: technical standards (110 V vs 240 V).
* Traditional practices also often vary across nations.

Question 24

what is Rise of Regionalism

Answer 24

• Tendency toward the convergence of tastes,
  preferences, infrastructure, distribution channels,
  and host-government demands with a
  broader region composed of two or more
  nations.
• Examples: European Union, North America, Latin
  America.
• Ability to standardize a product within a region
  allows for greater scale economies and lower costs.
  40

Question 25

what high local responsiveness may require

Answer 25

• Differences in Distribution Channels: May necessitate delegation of marketing functions
  to national subsidiaries. to adapt to culture

may require to produce locally to account to technical, preference and legal/gouvernmental difference

Question 26

what to do to choose a strategy?

Answer 26

1) identify if condition (adaptation for local responsiveness needs to be made),

2) make a cost benefit analysis to see if it is worth it to sacrifice standardization (to meet local resp.) to increase sells

3) factor in trade barriors

Question 27

GLOBAL STANDARDIZATION STRATEGY

Answer 27

• Looks to reap cost reductions that come from
  economies of scale, learning effects, location
  economies.
• Goal is to pursue low-cost strategy on global scale.
• Production, marketing, R&D, and supply chain
  activities are concentrated in a few favorable
  locations.
• Avoids customization.
• Makes sense when there are strong pressures for
  cost reductions and demands for local
  responsiveness are minimal.

Question 28

LOCALIZATION STRATEGY

Answer 28

Customizes goods or services so they are a good
match to tastes and preferences in different national
markets.
Most appropriate when:
* Substantial differences across nations
regarding consumer tastes and preferences.
* Cost pressures are not too intense.
Customization limits the ability to capture the cost
reductions associated with mass-producing a
standardized product for global consumption.

Question 29

TRANSNATIONAL STRATEGY

Answer 29

Achieve low costs, differentiate product offerings to
account for local differences, foster multidirectional
flow of skills between subsidiaries.
Makes most sense when demands for local
responsiveness are high but cost pressures are
moderate or low.
Places conflicting demands on the company:
* Differentiating product to respond to local demands
in different geographic markets raises costs, which
runs counter to goal of reducing costs.
* Complex and challenging to achieve.

Question 30

INTERNATIONAL STRATEGY

Answer 30

• Taking products developed for domestic market
  and selling them internationally with minimal
  local customization.
• For firms with low-cost pressures and low pressures
  for local responsiveness.
• Tend to centralize product development
  functions such as R&D at home but establish
  manufacturing and marketing functions in
  each major country or geographic region in
  which they do business.
• Resulting duplication may raise costs.

Question 31

how and why stategie might need to evolve

Answer 31

International strategy may not work long term.
* Over time, competitors will emerge.
* Firms may need to shift to global
standardization or transnational strategy in
advance of competitors.
Localization strategy may also face competitors and
have to shift to a transnational strategy.
International and localization strategies less viable as
competitors emerge.

needs to reduce cost to prevent competition

Question 32

what could have the biggest impact on int. strategy
hint: trump

Answer 32

change in trade policies

Question 33

how can changes in trade barrior affect strategy

Answer 33

Change in rules governing international trade and
investment can affect the viability of different
strategies.

reduced barriers
Over time, there has been progressive lowering of
barriers to cross-border trade and investment.
* Easier to realize location economies and global web
of productive activities; increased attractiveness of
global standardization strategy and transnational
strategy.

increased barriers to cross-border trade.
* More difficult to attain location economies; harder
to establish global web of productive activities.
* More challenging and less attractive to implement
global standardization strategy and transnational
strategy.
* Economic nationalism may make localization
strategy necessary, or a multiregional version of a
localization strategy.