Chapter 11

Question 1

Mean issues when choosing method of growth

Answer 1

may not have resources
business may have complemantary skills
speed required
retaining control
organisational culture
risk

Question 2

Axis on Lynch matrix

Answer 2

Company - In/external development
New location

Question 3

What is Lynch used for

Answer 3

possible expansion methods

Question 4

Lynch - internal development at home country

Answer 4

internal domestic development

Question 5

Lynch - Internal development abroad

Answer 5

Exporting
O/s office or manuf
MNC
Global

Question 6

Lynch - External development home country

Answer 6

JV
Merge
Acquisition
Alliance
Franchise/license

Question 7

Lynch - External development abroad

Answer 7

JV
Merge
Acquisition
Alliance
Franchise/license

Question 8

What kind of growth
expansion of size, profits and activities through using own resources and capabilities without taking over other firms

Answer 8

organic growth

Question 9

Benefits of organic growth

Answer 9

Developing new product = better understanding
genuine technological innovations
no suitable target for ace
financed from current resources
same style of management
hidden losses common in acquisitions
career develpment
cheaper
less risky

Question 10

Draw backs of organic growth

Answer 10

intensify competition
slow
not gain new knowledge and systems
lack EOscale/experience
Barriers to entry in new markets

Question 11

Reasons for international expansion
life cycle

Answer 11

home sales in mature or decline, may allow sales growth if expand abroad as products often in different stages

Question 12

Reasons for international expansion
Competition

Answer 12

Intense competition domestically - look overseas

Question 13

Reasons for international expansion
reduce dependence

Answer 13

reduce over dependence on single domestic market, increased geographic diversification can help spread risk

Question 14

Reasons for international expansion
Economies of scale

Answer 14

Large volume may be needed to cover high costs of plant, R&D etc to exploit EOS and experience

Question 15

Reasons for international expansion
variable quality

Answer 15

dispose discontinued products and seconds since these can be sold abroad without spoiling home market

Question 16

Reasons for international expansion
Finance

Answer 16

Development emerging markets
depreciation domestic currency
CT benefits
lowering import barriers

Question 17

Reasons for international expansion
familial

Answer 17

family or cultural connections

Question 18

Reasons for international expansion
aid agencies

Answer 18

countries benefit from aid often purchase goods they wound have money for

Question 19

Pro international expansion

Answer 19

Higher profit margin abroad
increase sales volume (reduce unit cost)
product lifecycle extended
level out seasonal fluctuation
dispose excess production abroad
spread risk
obsolescent products sold to International customers
prestige enhanced by global image

Question 20

Against international expansion

Answer 20

profits affected by external factors
adaptions to product needed diminish EOScale
Extending lifecycle not always cost effective
opportunity cost
anti-dumping duties

Question 21

Reasons for merger/acquisitoin

Answer 21

Marketing advantage
production advantage
finance and management
risk spreading
retain independence
overcome barriers to entry
outplay rivals