Chapter 8 - Strategy in the Global Environment Flashcards
What are the four attributes for National Competitive Advantages?
i) factor endowments
ii) local demand conditions
iii) related and supporting industries
iv) firm strategy, structure, and rivalry
Define Factor endowments
Nation’s position in factors of production necessary to compete in an industry
Define Local demand conditions
Nature of home demand for the industry’s product or service
Define Related and supporting industries
Presence or absence in the nation of supplier and related industries that are internationally competitive
Define Firm strategy, structure, and rivalry
Conditions in the nation governing how companies are created, organized, and managerd
Nature of domestic rivalry
Define Multinational company
A company doing business in two or more national markets
Define Location economies
Economic benefits that arise from performing a value creation activity in an optimal location
What two concepts complicate the process of realizing location economies?
i) transportation costs
ii) trade barriers
What are the two pressures for internationalization?
i) Pressures for cost reduction
ii) Pressures for local responsiveness
What are the four global startegy?
i) global standardization strategy
ii) localization startegy
iii) transnational strategy
iv) international startegy
Define Global standardization strategy
Business model based on pursuing a low-cost strategy on a global scale
Most appropriate when:
- high pressures for cost reduction
- low pressures for local responsiveness
Define Localization startegy
Focuses on increasing profitability by customizing a company’s goods to provide a favorable match to preferences in difference national markets
Most appropriate when:
- low pressures for cost reduction
- high pressures for local responsiveness
Define Transnational strategy
It simultaneously achieve low costs and differentiates
Most appropriate when:
- high pressures for cost reduction
- high pressures for local responsiveness
Define International startegy
Occurs when
- companies establish manufatcuring and marketing functions in each major country they do business in
- local customization is limited in scope
Most appropriate when:
- low pressures for cost reduction
- low pressures for local responsiveness
What are the five types of entry modes?
i) exporting
ii) licensing
iii) franchising
iv) joint venture
v) wholly owned subsidiary
