Chapter 11 Flashcards
Strategic Alliances
cooperative agreements between potential or actual competitors.
SME - small or medium sized company
SMEs are companies that have fewer than 500 employees (in Canada or US) or 250 employees (Europe).
These companies have global strategies that sometimes differ from their larger counterparts.
Strategy
A firm’s strategy can be defined as the actions that managers take to attain the goals of the firm.
Profitability
could be measured in a number of ways, but for consistency, we define it as the rate of return that the firm makes on its invested capital (ROI) - calculated by dividing net profits of the firm by total invested capital.
Profit Growth
measured by the % increase in net profits over time. In general, higher profitability and higher rate of profit growth will increase the value of an enterprise and thus the returns garnered by owners and stakeholders.
Value Creation
The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.
Global Standardization Strategy
a firm focuses on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects and location economies.
Localization Strategy
focuses on increasing profitability by customizing the firm’s goods or services so that they provide a good match to tastes and preferences in different national or regional markets.
Transnational Strategy
Firms pursuing this are trying to simultaneously achieve low costs through location economies, economies of scale, and learning effects; differentiate their product offering across geographic markets to account for local difference; and foster a multidirectional flow of skills between different subsidiaries in the firm’s global network of operations.
International Strategy
taking products first produced for their domestic market and selling them internationally with only minimal local customization.
