Dezember 1 Flashcards
The Value Chain:
Name the 4 Support Activities
- Firm Infrastructure
- Human Resource Management
- Technology Development
- Procurement
The Value Chain:
Name some Primary Activites (5)
- Inbound Logistics
- Operations
- Outbound Logistics
- Sales / Marketing
- Services
What are some activities of the Marketing Department?
- Perform market analysis
- Translate company strategy into country specific product mix
- select target customer segments
- define distribution channels for each country
- define pricing
- establish promotion
- steering sales
The Challenges in international Marketing?
Tariff Barriers
Administrative Policies
Considerable Diversities
Political Environment and Instability
Place Constraints
Variations in Exchange Rates
Norms and Ethics Challenges
Terrorism and Racism
Other Difficulties
The Challenges in international Sales?
Customization
Translation
Social Selling
Cross-cultural Issues
Localization of Communication
Partnering
Customer Services
Stichworte dazu:
- responsible for interacting with the customer
- inquiries, complaints, orders
- help desk, reception, contact centers
- provided before, during, after the purchase
- create customer-loyality / lead to re-ordering
After Sales Services
(8)
Sales guarantees
Warranties
Spare parts management
Repair services
Installation
Updating
Upgrading
Trainings
The Challenges in international customer service?
Language /Culture
Time differences
Responsiveness
Knowledge about the situation of the customer
Knowledge about the product
Cross-boarder cooperation Challenges?
Clear contracts with clarity about legal situation and financial framework conditions
Knowledge of the culture of the other countries
Knowledge of the natural conditions in the other countries
Agreed organizations and well defined contact persons
Agreements on communication, reports and documents
Agreements on dealing with disruptions, problems and conflicts
Real support from management
Committed and qualified managers and employees
4 Risk in International Business
Grafik Übersicht
Risk Management
4 Steps
Grafik
Risk Mangement
4 Steps Explanation
- Identify all risks
-
Analyze all identified riks
- probability
- damage potential - Take measures to reduce impact
- riks prevention
- risk provision - continous risk control
Risks in global value chains
- financial or credit constraints
- rapid shifts in global production locations
- changes in laws, tariffs or taxes
- shocks based on interconnections
Intellectual Property
• Your subsidiaries need access to IP to produce for you
• Not all nations look at IP the same way
• Therefore your company needs a clear concept on how to deal
with IP
• Create different layers
• Give select access on a “as needed” bases
Structure follows strategy. Which organizational structure is most suitable efor the implementation of these international strategies:
- Multidomestic Strategy
- International Strategy
- Transnational Strategy
- Global Standardization Strategy
- Multidomestic Strategy –> Global Area Structure
- International Strategy –> International division
- Transnational Strategy –> Global Matrix structure
- Global Standardization Strategy –> Global functional (product) structure
Location Econocmies
an example
Citibank decides to open a call center in Mumbai, India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers’ calls. Citibank is exploiting location economies by running a call center in India.
Currency Risk
Name the three types of currency exposure
- transaction
- translation
- economic
Key participants of the global
monetary and financial system
- International organization level
- national government level
- national infrastructure level
- firm level
The Rule of Law
What are the two problems with weak rule of law?
Economic acitivity suffers and uncertainty increases with weak rule of law
Porters Diamond:
What is the main message?
Countries should be _exporting products from industries where
all four components of the diamond are favorable_, while
importing where the components are not favorable
A nation can enhance its national competitiveness by exporting
from indu s t ries w h e re al l f o u r c o m po n en t s of t h e P o r t e r s
diamon d a re fa v o rable, w h ile importing where the components
are not favorable.
Comparative Advantage:
Superior features of a country that provide it with unique benefits in global competition.
–> location-specific advantage
Competitive Advantage:
Assets or competentices of a firm that are difficult for competitors to imitate.
–> firm-specific advantage
–> ownership-specific advantage
National competitive Advantage:
When a nation has an abundance (häufigkeit) of comparative advantages in a given industry, and the firms in that industry collectively have abundant competitive advantages.
comparative advantage of the nation + competitive advantage of the firms
= national competitive advantage in that particular industry
Explain
Globalization
Globalization refers to the gradual integration and growing of
national economies, driven by factors such as falling trade
barriers, market liberalization or technological progress.
Overview
International Strategies
which industry is where
Grafik
The four archetype of strategies
mit versch. Namen
Grafik
The four archetype of strategies and the structure to be successfull
Grafik
Low Context
vs. High context
Which is better for what?
In the business world we experience specific or diffuse personalities through context.
‒ Low context is suitable for factual information, exchange of data, clarification or summarizing,…
–> most meaning by specific words expressed
‒ High context is suitable for discussions and debates, reaching agreements and understanding,…
–> not all meaning via language
International Trade
There are three main reasons why trade growth has long outpaced GDP growth:
1.
- Rise of emerging markets
- growing middle-class household –> growing income there
2.
- US and EU are soucing many products they consume from low-cost manufacturing locations (china, india, mexico)
3.
- advances of information, transportation
- decline of trade barriers
- free markets
Consequences of globalization
Vor/Nachteile
+ More jobs
+ economic development / growing prosperity (Wohlstand)
+ Technology and knowledge transfer
- disruptive effects in national economies
- natural environment
- human right violated abroad
- job losses at home
Uppsala Model
Internationalization as a step-by-step process
explain
- distinguishes between temporal and local pattern
temporal pattern: first gain expericence in home market –> afterwards start exporting
local pattern: first venture into makrets that are physical closest
1. domestic focus
2. pre-export stage
3. experimental involvement (regular exports, management becomes favourable vor internationalization)
4. active involvement
(money and time dedicated by the management)
5. Commited involvement
(FDI and M&A, Internationalization –> Key Part)
Network Model
–> Internationalization as network-building
and its differences to the Upsala Model
- the better the relationsships, the more successful international business
- business ecosystem important
Difference to the Upsala Model:
- not gradually progressing in nature
- no mention about physical distance / countries to enter
- relationships are everything in the process
- business environment as a web of relationships
Born Global Model
–> Internationalzation from the onset (beginn) of a firms foundation
- begin to export within two years
- tend to export min. 1/4 of total production
- the world is the marketplace from the outset
- often emerge as a result of significant breaktrough in process or technology
- cutting edge technology / unique idea / new way of doing business
Springboard Model
–> Internationalization of emerging market companies
- EM companies use internationalization to overcome their late-comer disadvantages
- expansion to compensate their competitive weaknesses
- main for of internationalization is with acquisiton / M&A of foreign companies
- sth home government support for going international
- sth willingness of global players to share/sell strategic resources
Four major traits (Eigenschaften)
of senior management, that provides inspirational guidance an motivation to personnel:
‒ International mind-set and cosmopolitan values: Visionary leaders are open minded, committed to internationalization, and ready to adapt to other cultures.
‒ Willingness to commit resources: It takes more time to become profitable in foreign than domes-tic markets. Visionary leaders commit to them and allocate resources and empower structures and processes.
‒ Strategic vision: Visionary leaders communicate what the firm wants to be in the future and how it will get there. This picture of the firm in the future is a central rallying point of all plans, employ-ees, and employee actions.
‒ Willingness to invest human assets: Visionary leaders must nurture the most critical assets of any organization – human capital. Many big companies have their own company-specific «education system», where new employees go to.
What are the porters 5 forces
Threat of new entrants,
Threat of substitutes,
Bargaining power of customers,
Bargaining power of suppliers,
Competitive rivalry
International Strategy
all possible names:
international strategy / home replication strategy / ethnocentric strategy
Global Strategy
all possible names
Global Strategy / Standardized / Geocentric Strategy
Localization Strategy Strategy
all possible names
Multinational Strategy / Multidomestic Strategy / Localization Strategy / Polycentric strategy
Transnational Strategy
all possible names
Transnational/Regiocentric Strategy
Entry Model Scale
Export Mode
Contractual Mode
Intermediate Mode
Hierachial Mode
explain this 4 modes (risk/control)
Export Mode:
Low control, low risk, high flexibility
Contractual Mode
Licensing, Franchising, Other
Intermediate Mode
Shared Control, Shared risk, split ownerhip
Hierachial Mode
FDI (wholly owned subsidiary), high contral, high risk, low flexibility
Exports
Advantages / Disadvanteges
Export Advantages
+ lower cost (not establishing manufacturing in host country)
+ economies of scale by manufacturing in a centralized location and exporting to other markets
Disadvantages
- high transport cost
- tariff barriers
- indirect export can be risky (local agent)
- exporting not appropriate if the firm can realize location economies otherwise
Licensing
Advantages / Disadvantages
Advantages
+ the firm avoids development costs and risks associated with opening a foreign market (no capital re-quired to enter a market)
+ suitable in politically volatile foreign markets
+the firm avoids barriers to investment
+ firm can capitalize on applications of own intellectual property (technology etc.) without developing those applications itself
Disadvantages
‒ the firm does not have the tight control required for realizing experience curve and location economies
‒ Difficult coordination of strategic moves across countries
‒ Risk of know-how theft and competitive advantage loss
Franchising
Advantages / Disadvantages
Advantages
+ it avoids the costs and risks of opening up a foreign market
+ build quickly a global presence
+ the franchisor can avoid tariffs and restrictions on foreign investment
Disadvantages
‒ geographic distance of the firm from franchisees can make it difficult to detect poor quality and thus brand and reputation damage
‒ it bears the risk of creating a future competitor
‒ it inhibits the firm’s ability to take profits out of one country to support competitive attacks in another
Joint Venture
Advantages / Disadvantages
Advantages
+ benefit from a local partner’s knowledge of local conditions, culture, language, political systems, and business systems
+ costs and risks are shared
+ satisfy political considerations for market entry
Disadvantages
‒ risk of giving control of its technology to its partner
‒ firm may not have the tight control to realize experience curve or location economies
‒ can lead to conflicts and battles for control if goals/objectives differ or change over time
M&A
Advantages / Disadvantages
Advantages
+ less time consuming and quicker to execute, immediate grab of market share when acquiring established company
+ Preempt competitors in rapidly globalizing markets (deregulation + liberalization)
+ less risky compared to greenfield, bank on existing goodwill of the acquired company
Disadvantages
‒ complex task involving bankers, lawyers, M&A specialists
‒ restrictions on foreign acquisitions in host countries
FDI
Advantages / Disadvantages
Advantages
+ reduce the risk of losing control over core competencies (technological advantage)
+ give a firm the tight control over operations in different countries that is necessary for engaging in global strategic coordination
+ may be required in order to realize location and experience curve economies
+ less risky than acquisitions
+ less potential for unpleasant surprises
Disadvantages
‒ Most costly entry strategy: the firm bears the full cost and risk of setting up international operations
‒ Slower to establish and to disinvest
‒ Preemption by more aggressive global competitor and losing potential market share
The 5 Factors
influencing the selection of entry mode
- core competencies
- pressure for cost reductions
- localization pressure
- product characteristic
- target market characteristics
Companies who pursue which strategies prefere wholly owned subsidiaries (FDI)
Factors Influencing the Selection of Entry Mode
Core Competencies (1/5)
‒ Technological know-how: avoid licensing and JV to minimize risk of theft, go for wholly owned company.
‒ Management know-how: brands must be well protected combination of franchising and master subsidiaries (wholly owned or JV) to control franchisees
Factors Influencing the Selection of Entry Mode
Pressures for cost reductions (2/5)
‒ The greater the pressures for cost reductions, the more likely combination of export and wholly owned companies.
‒ Firms pursuing global standardization and transnational strategies tend to prefer wholly owned subsidiaries.
Factors Influencing the Selection of Entry Mode
Localization pressure (3/5)
Licensing, franchising, joint ventures, mergers and acquisitions as well as exports are lower cost entry modes that allow for high local responsiveness
Factors Influencing the Selection of Entry Mode
Product characteristics (4/5)
‒ Export: if the cost of transport is bearable, i.e. if it does not make the product too expensive in the target market
‒ Other than export: Products with low value/weight ratio (tires) are expensive for long distance shipment.
‒ Wholly owned subsidiary: if perishable goods, importance of quick delivery (just-in-time automobile production), goods with high weight = high cost of transportation (cement), complex product (industrial machinery with significant technical support.
Factors Influencing the Selection of Entry Mode
Target market characteristics (5/5)
‒ Export: if liberalized and deregulated markets
‒ Franchising/Licensing: in unstable and unknown markets
‒ Joint-Venture: in case of export or foreign direct investment restrictions
‒ Wholly owned subsidiary: to circumvent trade barriers, e.g. high tariffs, quotas regarding local production ratios in the target market and disad-vantageous legal requirements in the home market
PESTEL
Political Environment
- form of government
- political stability
- domestic & foreign policies
- role/strenght of public companies
- role of state (esp. military)
- level of security (terrorism)
- political restrictions on import/export
PESTEL
Economic Environment
- economic/business system
- competitiveness
- stage of development
- economic stability
- GDP/GNP (incl. per capita)
- trade (import/exports)
- levels of FDI
- purchasing power
- international financial standing
- fiscal policies (taxes)
PESTEL
Socio-Cultural Envirionment
- Demographics
- Societal trends
- cultural distance to home culture
- differences in individual cultural dimentsion
(x vs. y) etc etc
PESTEL
Technological Environment
- availability of appropriately qualified local skills
- level of technology
- technology transfer risik / opportunity
- available infrastructure
- level of (ecological) environment protection technology
PESTEL
Ecological Environment
- Importance of environmental protection in society
- existance and enforcement of environmental protection laws
- sophistication of available envirionmental protection technology
PESTEL
Legal Environment
- Legal System
- Prevalance international laws
. protectional laws
- tax laws
- role of contracts
- protection of intellectual property
- tarrifs and non-tariffs trade barriers
Marketing:
Global Positioning Strategy
explain and advantage
–> positioning the offering simalarly worldwide
+ reduces international marketing costs
Marketing
Standartization vs. Adaption
Name the Advantages of both Marketing Strategies
Standartization:
‒ Cost reduction (economies of scale in design, sourcing, manufacturing, and marketing)
‒ Improved planning and control
‒ Ability to portray a consistent image and build global brands
Adaption:
‒ Meet needs of customers more precisely
‒ Enjoy unique appeal
‒ Comply with government regulations
‒ Achieve greater success in combating customer resistance
Marketing
Standartization vs. Adaption
When to use which strategy?
Standartization:
‒ Similar market segments exist across countries
‒ Customers seek similar features
- Products have universal specifications
‒ Business customers have converging expectations
Adaption:
‒ National preference
‒ Law and regulations
‒ Living standards and economic conditions
‒ National infrastructure
–> it’s a balancing act, its not a either-or decision
Marketing
Cultural Influences on Consumption
Some products are very «culture bound»:
(5 examples)
‒ Products richly connected to the local cultural context
Example: Tea or coffee
‒ Products closely related to the local geography
Example: Cheese
‒ Products with high language content
Example: Songs, films, novels
‒ Products consumed since childhood
Example: Breakfast habits
‒ Products involving a relationship with others
Example: Services (food, hospitality)
Marketing:
The most successful brands tend to have several of the following characteristics (4 examples)
‒ High, conspicuous visibility (sichtbarkeit) such as
consumer electronics and jeans
‒ Status symbols, such as cars and jewellery
‒ Widespread appeal, due to innovative features that seem to fit everyone’s lifestyle, such as mobile phones, credit cards, and cosmetics
‒ Close identification with a particular country, such as Levi’s (U.S. style) and IKEA furniture (Scandinavian style)
Marketing
Factors that Affect International Pricing
4
‒ Nature of the market. Local purchasing power and distribution infrastructure are big factors.
‒ Nature of the product or industry. A specialized or highly advanced product, or an industry with few competitors, may necessitate charging a higher price.
‒ Type of distribution system. Channels are complex in some countries, which pushes prices up.
‒ Location of the production facility. Locating manufacturing near customers or in countries with low-cost labour facilitates lower prices.
Transfer pricing
Name to reasons for doing Transfer Pricing
- Country restricts MNE to take out profit out of the country
- take money out of a high corporate tax country
Strategies to Cope with Gray Markets
Managers can pursue at least four strategies to cope with gray market imports:
1) Aggressively cut prices in countries and regions targeted by gray market brokers.
2) Hinder the flow of products into markets where gray market brokers procure the product.
3) Design products with exclusive features that strongly appeal to customers.
4) Publicize the limitations of gray market channels.
International (Home Replication) Strategy
Cost pressure low / responsiveness low
Value Chain
> Critical elements of value chain stay centralized at home (R&D, procurement, production)
> Generally no adaptation to foreign markets, products are marketed through intermediaries
Localization (Multidomestic) Strategy
low cost pressure / high responsiveness
Value Chain
> Value Chain is flexibly organized according to needs of different national markets
Critical elements are positioned in the local market (production, procurement, marketing)
Localization (Multidomestic) Strategy
When does it works best / and which resources do they use?
Works if we have a very local market (like food, beverages, accommodation,…) with different water qualities in every country/region. Localization strategies work with the local recourses, they blend with the market, they use the local resources/ factories… (e.g. Coca Cola, Nestlé).
Global Standartization Strategy
High cost pressure/Low responsiveness
Value Chain
> Concentration of critical value chain activities (R&D, production and marketing) in headquarters or in the few most favourable locations,
central control over operations
Transnational Strategy (Regiocentric)
High Cost Pressure / High Responsivness
Value Chain
> Scale economies through sourcing from reduced numbers of global suppliers, concentrate manufacturing in few locations
> Production, marketing and other value chain activities on a global scale
«standardize where feasible; adapt where appropriate»
Which Strategy?
Transnational Strategy (Regiocentric)
CSR
Corporate Social Responsibility
Name 4 Values of CSR
Avoiding human rights abuses
Eliminating child labor
Avoiding workplace discrimination
Guarding against corruption
Currency Risk
Transaction vs. Economic Exposure
Transaction:
Affects ongoing contractual transactions. The exchange rate risk associated with the time delay between entering into a contract ant settling it.
Economic Exposure:
Results from exchange-rate fluctuations that affect the pricing of products and inputs and the value of foreign investments. Exchange rate fluctuations help or hurt sales by making the firm’s products
relatively more or less expensive for foreign buyers.
National Competitiveness
Whicht to Elements result in National Competitiveness?
Grafik
Firm specific advantage
other word?
competitive advantage
location specific advantage
other word
comparative advantage
India:
GST indirect Tax
GST is a type of value added tax and a proposed comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian central and state governments. Further, the Goods and Service Tax (GST) is considered to be one of the biggest reforms in India’s indirect tax structure since the economy began to be opened up twenty five years ago. In this article, we look at how GST differs from the current regimes and how it will work.
China
Explain
“Made in China 2025”
The strategy intends to increase the domestic market share of Chinese suppliers for «basic core components and important basic materials» to 70 percent by the year 2025. While Chinese high-tech companies enjoy massive state backing, their foreign competitors in China face a whole set of barriers to market access and obstacles to their business activities.
E.g. foreign companies will have a huge market to sell to – when producing in China –, but are not allowed to use their own brand when producing in China. Trade-off. At the same time, Chinese companies don’t face these restrictions when producing in other nations.
As a possible solution, other nations could also limit Chinese FDI to 49% at max. This is not the Swiss way of doing business (prefer open markets).
Organigram:
Which of the following organizational structures suits best, if a company’s products share a common technology and competitive pressures push for a global strategy?
Global Product Division
Porter defines two specific strategies to create value through attaining competitive advantages, which two are they?
Low cost and differentiation strategies
Modulprüfung:
Improving the performance reliability in relation to the quality of the components of a product will lead to which one of these combinations of advantages?
Increase in productivity, lowers rework and scrap costs, lower warranty costs
Modulprüfung:
“Porter diamond”. The “Factor Conditions” are divided into two parts, which one are they?
Nations succeed in industries in which they are particularly good at creating and upgrading the necessary factors.
Basic factors: natural resources, climate, geographic location, demographics
Advanced or specialized factors: Commu-nications, Skilled labour, research, tech-nology, education. Can be created
Modulprüfung:
Porter diamond describes the factor of” related and supporting industries” and defines 2 key concepts around the clusters, which one are they?
Focus firms with networks of suppliers and distributors and existence of government policies to foster the competitiveness of clusters
Other names for
civil law and common law
‒ Continental legal system (civil law)
the judge bases their judgement on the law text.
‒ Anglo-American legal system (common law)
with reference cases (older rases). The judge to-day has to decide the same as the judge in the past.
Modulprüfung:
How does international law facilitate international trade and investment?
It makes it easier to resolve contract disputes for firms involved in international trade and investment.
Organization for
each International Strategy
Grafik
What are the main advantages for firms locating themselves in a cluster?
Using synergies to enlarge markets shares and supply the needs of customers
Technological advantages knowledge-providers in a cluster such as universities that enable companies to develop new technologies as well as good R&D
Economies of scale the bigger the cluster the cheaper the cost of production
Learnings from the Zara Case Study
- Real time supply chain as competitive advantage
- controlling more of its manufacturing and supply chain than most of its competitors
- growth trough diversification / vertical integration
- 2 weeks cyle (spot the trend to the store), average 6 mth. in fashion
- owns it supply chain, global distribution center “the CUBE”
- zara does not have lots of excess inventory
- 12 inventory turns p. y. (average 3-4)
- flexible business model –> store can be owned, franchised, or co-owned with partners
- short term bets (easier to call correctly)
- centralized order fullfillment
- trucks deliver to EU / air freight to ship to others
- real time supply –> hard to imitate for competitors
International
vs
Domestic HRM
1.
IHRM is concerned with HRM issues that cross
national boundaries or are conducted in
locations other than the home country
headquarters
2.
IHRM is concerned with the relationships
between the HRM activities of organizations
and the foreign environments in which the
organizations operate
3.
IHRM includes comparative HRM studies; e.g.
differences in how companies in Japan, Thailand,
Austria and Switzerland plan for upgrading of
employee skills and so on
International
Compensation
Strategies
Adapted from Cartland, 1993
1.
Companywide pay scales and policies : all
employees are paid the same rate as in the
home office, regardless to where they are
located
2.
Localized compensation strategy : a pay
banding system based on regions, such as
South America, Europe, North America,
Southeast Asia, etc.
3.
Balance sheet approach : pay a similar base
salary companywide or regionwide and offer
expatriates an allowance based on specific
market conditions in each country
Common in the advanced economies.
The legal system is (3)
- Applied to all citizens equally.
- Issued via recognized government authorities.
-
Enforced fairly and systematically by police forces and formally
organized judicial bodies.
Porters Diamond:
Factor Conditions
Name and explain the two Factors
Basic factors:
- geographic location
- natural resources
- demographic
- climate
Advanced and specialized factors
- skilled labour
- research technology
- education, communication
Porters Diamond:
Firms strategy, Structure and Rivalry
This conditions in the nation governing how companies are created, organized and managed
–> the more localized the rivalry, the higher the competition
–> intense domestic rivalry improves the worldwide competitiveness of domestic firms
Porters Diamond:
Related and supporting industries
Presence of suppliers and related industries within a nation that are internat. competitive provides benefits such as innovation, upgrading, information flow, shared technology development
