Chapter 6 Flashcards
Exporting
A workable entry strategy when firms lacks the resources to make a significant commitment to the market, wants to minimize political and economic risk or is unfamiliar with the country’s market requirements and cultural norms.
Contracting
A somewhat more involved and complex form of international market entry strategy and includes contractual entry modes: (1) Licensing and (2) management contracts
Licensing: An agreement where one firm permits another to use its intellectual property in exchange for royalties or some other form of payment. The property might include trademarks, patents, technology, know-how, or company name. in short licensing involves exporting intangible assets.
Management contract: The industrial firm assembles a package of skills that provides an tegrated service to the client. When equity participation, either full ownership or a joint venture, is not feasible or is not permitted by a foreign government, a management contract provides a way to participate in a venture. Management contracts have been used effectively in the service sector in areas such as computer service, hotel management, and food services.
Contract manufacturing
Involves sourcing a product from a producer located in a foreign country for sale there or in other countries. Here assistance might be required to ensure that the products meets the desired quality standards.
Strategic global alliance
A business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. This strategy works well for market entry or to shore up existing weaknesses and increase competitive strengths.
Joint Venture
A joint ownership arrangement to produce an/or market goods in a foreign market. In contrast to a strategic alliance, a joint venture creates a new firm.
Multi domestic Strategies
Permit individual subsidiaries to compete independently in their home-country markets. The multinational headquarters coordinates marketing policies and financial controls and may centralize R&D and some support activities.
Global Strategy
Seeks competitive advantage with strategic choices that are highly integrated across countries.
Multidomestic industries
Firms pursues separate strategies in each of their foreign markets – competition in each country is essentially independent of competition in other countries.
Global industry
Is one in which firm’s competitive position in one country is significantly influenced by its position in other countries.
Configuration
Focuses on where each activity is performed, including the number of activities.
Coordination
: Refers to how similar activities performed in various countries are coordinated or coupled with each other.
Home base:
For a business is the location where strategy is set, core product and process technology is created and maintained, and a critical mass of sophisticated production and services activities reside.
