Chapter 08 Flashcards
Strategy
The steps and actions that company leadership pursues to accomplish firm objectives.
Value creation
The process of offering products or services that customers want and are willing to pay for.
Value chain
The linked set of primary and supporting activities used to produce products or services.
Problems caused by failure to plan
An inability to accurately predict developments in foreign markets and to adapt to them.
Poor use of resources invested abroad resulting from bad market entry decisions.
Underestimating the resources needed to effectively compete in foreign markets.
Failing to anticipate operational challenges in foreign environments.
Questions an international strategy must answer
What products or services will be sold abroad?
Where and how will services be delivered or products made?
What resources are necessary for international competition and how will they be acquired?
How will competitors be outperformed
Basic Strategic Concepts for International Competition
Differentiating, cost leadership, niche strategy
differentiating
Providing unique or superior products to customers
cost leadership
Providing cheaper products or more efficient services than competitors
Niche strategy
Focusing on a more specific line of products or services relative to competitors
Building the Value Chain: Making Choices and Developing Competencies
core competencies: Skills or abilities that are difficult for competing firms to imitate
Distinctive competencies: Skills or abilities that help firms to outperform competitors
Location economies: Places where value chain activities can be performed most cheaply and efficiently
How do nations become competitive
Theory of National Competitive Advantage
Explains how nations become competitive and why they produce firms that are very successful in specific industries.
Argues that four national and firm-specific characteristics work in combination to shape the context in which nations, and the firms based there, compete to gain advantage.
Figure 8.3 Location Factors that Help Explain International Competitive Advantage
The Context for Firm Strategy and Rivalry
Demand Conditions
Related and Supporting Industries
Factor Conditions
Industry Pressures for Global Integration and Local Responsiveness
Pressure for Local Responsiveness
The degree to which firms in specific industries have to tailor their products or services to satisfy local market demands.
Pressure for Global Integration
The degree to which firms in specific industries need to integrate and coordinate all of their value chain activities on a worldwide basis to achieve global efficiencies and better respond to competitive threats
International strategy options
International Strategy
A basic strategy in industries with relatively low pressures for global integration and local responsiveness, often involving the export of specialized products or services developed in a firm’s home market.
Multidomestic Strategy
Goals are developed and implemented independently for specific countries because of a high need for local responsiveness.
Global Strategy
Goals and directions are set out on a worldwide basis to maximize efficiencies with little customization of products or services across markets.
Transnational Strategy
A firm moves key activities to wherever they can be carried out best while still adapting to local product or service preferences.
Regional Strategy
Involves giving managers in a particular geographic area the freedom to make decisions, set goals, and respond to customers’ needs.
strategies examples
Multidomestic Strategy
Industry examples: Commercial banking,
certain food products
Regional Strategy
Industry examples:
Automobiles, some
consumer electronics
Transnational Strategy
Industry examples:
Pharmaceuticals, some
personal care products
Global Strategy
Industry examples:
Passenger aircraft,
computer chips
International Strategy
Industry examples:
Specialized industrial
equipment, some software
winning big
Born Global Firms
Entrepreneurial start-up companies that try to immediately participate in international business.
Transnational Entrepreneurs
People who have migrated from their home countries to other places and launched new businesses that use the knowledge they have gained and the connections they have between both countries
process of developing international strategy
- create corporate mission
- conduct a swot analysis
- Evaluate alternatives, set goals
- Develop implementation plans
- Create control and evaluate framework
process of developing international strategy
Mission Statement
A statement that summarizes key values and an overall organization purpose.
Organizational Requirements for Globalization
A corporate structure capable of supporting the chosen strategy (structure follows strategy).
Effective and efficient management processes.
Qualified and capable human resources.
A corporate culture that supports the strategy.
SWOT analysis
A tool used to diagnose internal strengths and weaknesses and external opportunities and threats.
Environmental Scanning
A process in which information about the internal and external situation facing the firm is collected and evaluated.
Internal Resource Audit
The internal side of a SWOT analysis that involves identifying key business success factors
Identifying Distinctive Strengths
Identifying Distinctive Strengths
Can the strength help the firm exploit opportunities or avoid threats?
Is the strength rare/unique, or do competitors have similar “value-added” capabilities?
Is the strength difficult or expensive for competitors to duplicate?
Can the firm take advantage of the competitive potential of strengths?
organizational requirements for succesful international strat
Corporate features that must be considered:
Corporate structure: the way the firm organizes its strategic units and their reporting relationships
Management processes: the planning, budgeting, coordination, and performance appraisal activities and systems used to run the firm
Human resources: people staffing the firm worldwide
Corporate culture: expectations, values, beliefs, and unwritten rules guiding employee behavior in the firm.
