chapter 13: strategy of international business Flashcards
what does superior performance require
managers to plan for the opportunities and threats in the global business environment
what is a strategy
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
what is the vision of a company
is the idealization of what the company wants to be. it expresses in board terms its ultimate goal
what is the mission of a company
the multinational’s mission defines its business, its objectives, and its approach to achieve them
rhetoric to reality
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.
different ways managers make sense of strategy
- 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
what firms’ conduct refer to?
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
what does the MNE’s strategy do
organizes its resources accumulation, capability development, and core competencies development
resources are either tangible or intangible
they are inputs into an MNE production process. A capability is the capacity for resources to perform an activity in an integrated manner
name the 9 functional orientations
DDDMMMPRS
decision making design distribution management information systems manufacturing marketing product technology research and development strategic visioning
what does the firm’s value measure
its capability of selling what it makes for more than the costs incurred in making it
what is the cost leadership strategy
aims to make a product at a given level of quality for a cost below its competitors’
what do make MNEs rethink cost imperative
-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.
name 3 risks of this strategy
- disruptive technologies change efficiency standards
- customer’s needs change
- cheaper, better products from rivals
characteristics of the differentation strategy
- 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
risk of the differention strategy (4)
- 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
the integrated cost leadership vs differentation strategy
- 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”
value chain analysis helps manager to understand….
the potential and performance of resources and capabilities, thereby clarifying cost structures and value creation
what is the value chain is set for
- linked activities the company performs to design, make, market, disitribute and support a product
a value chain disaggregates firm into
- primary activities that design, make sell and deliver the product
- support activities that implement the primary activities
value-chain analysis helps…
managers evaluate their cost structure and identify the activities through which they can create value
managers can either concentrate or disperse value activities
location advantages
location econimics influence an MNE’s decision to concentrate or dispersion value activities
what are economies of scale
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
experience and learning effects. name 7 factors that influence the configuration of a value-chain include
- business environment
- digitalization
- economies of scale
- innovation context
- logistics
- resource costs
- robotics
the risk of configuration choices
managers rely on scenario planning to anticipate reconfiguring the value chain to changes in customers, industries, institutions and environments
What is global integration
- 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
potential for standardization
the convergence of national markets, standardization of business and efficiency imperative push MNEs to integrate activities
characteristics of consumer preferences
differences in local consumers’ preferences endure due to cultural predisposition, historical legacy and latent nationalism
What increases standardization, in turn, supports concentrating value chains
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.
what does the corporate-level strategy determine
the actions an MNE takes to gain a competitive advantage by selecting and managing its business across a group of nations
what is the international strategy
- 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
advantages of international strategy
this strategy works well when an MNE’s product or processes speak to a universal customer preference
limitations of the international strategy
headquarters’ confidence in the superior competitiveness of its competencies discourages local adaptation
what is the localization strategy
encourages decentralized decision-making so that local subsidiaries can adjust value activities to local circumstances
advantages of the localization strategy
speaks to the unique features of consumer references, market situations and environmental context found in a national market
limitations of the localization strategy
by encouraging operational overlap, increases overhead expenses
what is the global strategy
a global strategy champions worldwide standardization of value activities money has three inalienable features: - difficult to acquire - transient - scarce
advantages of the global strategy
exploits economics of scale, learning effects and location economies in order to translate resources and capabilities into core competences
limitations of the global strategy
standardization drives improving the efficiency effort, which, in turn, supports charging lower prices while still earning profits
what is the transantional strategy
targets the efficiency of global integration the effectiveness of local responsiveness and the systematic diffusion of innovations
advantages of the transnational strategy
reconciles global integration and local responsiveness in ways that levrage the MNE’s core competency throughout worldwide operations
limitations of the transnational strategy
it is difficult to implement in practice, given the challenges of complicated agendas, high costs, and cognitive limits
