chapter 13: strategy of international business

Question 1

what does superior performance require

Answer 1

managers to plan for the opportunities and threats in the global business environment

Question 2

what is a strategy

Answer 2

an integrated and coordinated set of commitments and actions that reflects the comapny’s present situation, identifies the direction it should go, and determines how it will get there

Question 3

what is the vision of a company

Answer 3

is the idealization of what the company wants to be. it expresses in board terms its ultimate goal

Question 4

what is the mission of a company

Answer 4

the multinational’s mission defines its business, its objectives, and its approach to achieve them

Question 5

rhetoric to reality

Answer 5

translating the MNE’s vision and mission into relevant programs and realistic performance standards is hard. the company must have aligned vision and mission statements internationally.

Question 6

different ways managers make sense of strategy

Answer 6

• Sensemaking is collaborative process to promote a shared understanding
• The idea if industry structure represents the interdependent relationships among:
• Suppliers of inputs
• Buyer of outputs
• Substitute Products
• Potential new entrants
• Rivalry among competing firms

Question 7

what firms’ conduct refer to?

Answer 7

to the choices a company makes regarding research, manufacturing, marketing, distribution and how its influence its profitability

some firms find ways to exploit market imperfections to sustain success in spite of industry conditions

Question 8

what does the MNE’s strategy do

Answer 8

organizes its resources accumulation, capability development, and core competencies development

Question 9

resources are either tangible or intangible

Answer 9

they are inputs into an MNE production process. A capability is the capacity for resources to perform an activity in an integrated manner

Question 10

name the 9 functional orientations

DDDMMMPRS

Answer 10

decision making
design
distribution
management information systems
manufacturing
marketing
product technology
research and development 
strategic visioning

Question 11

what does the firm’s value measure

Answer 11

its capability of selling what it makes for more than the costs incurred in making it

Question 12

what is the cost leadership strategy

Answer 12

aims to make a product at a given level of quality for a cost below its competitors’

Question 13

what do make MNEs rethink cost imperative

Answer 13

-The features of emerging markets, notably the appearance of new companies looking to expand internationally, the influence of the tens of millions of consumers who are experiencing rising incomes, and the emergence of the Base of the Pyramid, all indicate changing customer needs.

Question 14

name 3 risks of this strategy

Answer 14

• disruptive technologies change efficiency standards
• customer’s needs change
• cheaper, better products from rivals

Question 15

characteristics of the differentation strategy

Answer 15

• champions developing products that customer value and that rivals find hard to match or copy
• products are differentiated on a variety of tangible and intangible dimensions

Question 16

risk of the differention strategy (4)

Answer 16

• customer’s expectations change
• customers no longer see sufficient value to justify the price premium
• a rival introduces a newer cooler higher-performing alternative
• counterfeits that oofer a cheaper imitation

Question 17

the integrated cost leadership vs differentation strategy

Answer 17

• The differentiation strategy calls for continual innovation, whereas cost leadership champions sustainable efficiency. The integrated cost leadership/differentiation strategy aims to do both: provide customers with relatively lower-cost products that also have differentiated features
• Risks of the integrated cost leadership/ differentiation strategy
  • The integrated cost leadership/differentiation strategy provides customers with relatively lower-cost products that also have differentiated features
  • The key threat to the integrated cost leadership/differentiation strategy is getting “caught in the middle”

Question 18

value chain analysis helps manager to understand….

Answer 18

the potential and performance of resources and capabilities, thereby clarifying cost structures and value creation

Question 19

what is the value chain is set for

Answer 19

• linked activities the company performs to design, make, market, disitribute and support a product

Question 20

a value chain disaggregates firm into

Answer 20

• primary activities that design, make sell and deliver the product
• support activities that implement the primary activities

Question 21

value-chain analysis helps…

Answer 21

managers evaluate their cost structure and identify the activities through which they can create value

managers can either concentrate or disperse value activities

Question 22

location advantages

Answer 22

location econimics influence an MNE’s decision to concentrate or dispersion value activities

Question 23

what are economies of scale

Answer 23

Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods.

labor costs and productivity are key elements of an MNE’s strategy

Question 24

experience and learning effects. name 7 factors that influence the configuration of a value-chain include

Answer 24

• business environment
• digitalization
• economies of scale
• innovation context
• logistics
• resource costs
• robotics

Question 25

the risk of configuration choices

Answer 25

managers rely on scenario planning to anticipate reconfiguring the value chain to changes in customers, industries, institutions and environments

Question 26

What is global integration

Answer 26

• standardizes worldwide activities to maximize efficiency whereas national responsiveness adapts local activities to optimize effectiveness and combines differentiated parts into a standardized whole
• combines differentiated parts into standardized whole. local responsiveness disaggregates the standardized whole into differentiated parts

Question 27

potential for standardization

Answer 27

the convergence of national markets, standardization of business and efficiency imperative push MNEs to integrate activities

Question 28

characteristics of consumer preferences

Answer 28

differences in local consumers’ preferences endure due to cultural predisposition, historical legacy and latent nationalism

Question 29

What increases standardization, in turn, supports concentrating value chains

Answer 29

Trends such as movements in national markets toward reward regional trade agreements and cross-national integration of capital markets by standardizing key aspects of the global market, support the standardization of products and process.

Question 30

what does the corporate-level strategy determine

Answer 30

the actions an MNE takes to gain a competitive advantage by selecting and managing its business across a group of nations

Question 31

what is the international strategy

Answer 31

• it transfers a company’s resources, capabilities, and core competencies into foreign markets where they do not exist or do exist but are less efficiently made or less effectively delivered

Question 32

advantages of international strategy

Answer 32

this strategy works well when an MNE’s product or processes speak to a universal customer preference

Question 33

limitations of the international strategy

Answer 33

headquarters’ confidence in the superior competitiveness of its competencies discourages local adaptation

Question 34

what is the localization strategy

Answer 34

encourages decentralized decision-making so that local subsidiaries can adjust value activities to local circumstances

Question 35

advantages of the localization strategy

Answer 35

speaks to the unique features of consumer references, market situations and environmental context found in a national market

Question 36

limitations of the localization strategy

Answer 36

by encouraging operational overlap, increases overhead expenses

Question 37

what is the global strategy

Answer 37

a global strategy champions worldwide standardization of value activities 
money has three inalienable features:
 - difficult to acquire 
 - transient
 - scarce

Question 38

advantages of the global strategy

Answer 38

exploits economics of scale, learning effects and location economies in order to translate resources and capabilities into core competences

Question 39

limitations of the global strategy

Answer 39

standardization drives improving the efficiency effort, which, in turn, supports charging lower prices while still earning profits

Question 40

what is the transantional strategy

Answer 40

targets the efficiency of global integration the effectiveness of local responsiveness and the systematic diffusion of innovations

Question 41

advantages of the transnational strategy

Answer 41

reconciles global integration and local responsiveness in ways that levrage the MNE’s core competency throughout worldwide operations

Question 42

limitations of the transnational strategy

Answer 42

it is difficult to implement in practice, given the challenges of complicated agendas, high costs, and cognitive limits