Exam 3 Flashcards
What is a multinational enterprise (MNE)?
A company that deploys the resources and capabilities in procurement, production, and distribution of goods in at least two areas
Explain the three different stages of globalization
- 0 - 1900-1941
- 0 - 1945-2000
- 0 - 2000 -
What are the advantages to going global?
Gain access to a larger market
Gain new compenticies
lower cost inputs
What are the disadvantages to going global?
liability of foreigness
loss of intellectual property
loss of reputation
What is liability of foreignness?
working in a unfamiliar cultural or economic environment
can result in additional costs
Describe the CAGE framework
Cultural - lack of connective culture causing lack of trust
Administrative - absence of trading bloc or political hostility, lack of common currency
Geographic - different climates and timezone, inaccessibility of borders and waterways
Economic - different consumer incomes, different costs and quality of life
Name examples of political and admin barriers
Tariffs
Trade quotas
FDI restrictions
What is the globalization hypothesis?
The assumption that consumer needs and preferences are converging and becoming homogenous
What is local responsiveness?
The need to tailor product and service offerings to local consumer preferences and host country requirements
What is the integration-responsiveness framework?
Strategy framework that juxtaposes the pressures an MNE faces for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally.
What is international strategy?
Strategy that involves leveraging core competencies in domestic and foreign markets by selling the same products or services
What is a multi-domestic strategy?
Strategy pursued by MNEs that utilizes local responsiveness to make a foreign entity seem domestic
What is the global standardization strategy?
Strategy attempting to reap economies of scale and location by pursuing a global division of labor based on wherever best of class capabilities reside at the lowest cost
What is the transnational strategy?
strategy that attempts to combine the benefits of a localization strategy (high local responsiveness) with those of a global standardization strategy (lowest cost position attainable)
What is the death of distance hypothesis?
The assumption that distance will not lead to competitive advantage because firms are now able to source inputs globally
What are factor conditions?
Describe a country’s endowments in terms of natural, human, capital, and other resources
What are the building blocks of organizational structure?`
specialization, hierarchy, formalization, and centralization`
What is specialization?
the extent to which a task is divided into seperate jobs `
What is formalization?
codified rules and procedures within an org
What are the drawbacks to functional structure?
Lack of communication between divisions
can’t effectively address a higher level of diversification
What is M form?
organizational structure that consists of several SBUs each with its own profit and loss responsibility
What is matrix structure?
combines the organizational structure with the M form
What are disadvantages to the matrix structure?
creates additional organizational complexity performance appraisals more difficult increases admin costs employees have trouble reconciling goals multiple supervisors
What is the network structure?
allows the firm to connect centers of excellence, whatever their global location
firm benefits from communities of practice
What are the benefits of being publically traded?
Limited liabiity for investors
Transferability of investor ownership
legal personality
separation of legal ownership and management control
What is adverse selection?
IDK how to describe this but Prof Boring says its like in the home loan crisis when someone took out a home equity for a house that was more than they could afford
What is a leveraged buyout?
When a single investor or company leverages their assets to buy shares of a company to take it private
What is a poison pill?
Defensive provisions to deter hostile takeover by making the hostile firm less attractive
