Exam 3 Chapters 11 - 16 Flashcards
List and describe the 4 dimensions of complexity that relate to global leadership.
(1) multiplicity (the geometric growth in the volume and nature of issues that must be dealt with by global leaders)
(2) interdependence (although dispersed geographically, the different units of the company are systematically linked to each other rather than being isolated and are increasingly dependent on external organizations)
(3) ambiguity (the challenge of dealing with information that lacks clarity and incorporates both quantitative and qualitative dimensions, hindering the understanding of cause-and-effect relationships)
(4) dynamism (the international system itself is constantly changing).
List the 6 competencies needed of global leaders. (on final exam)
• Adaptability across cultures.
- Capability to develop individuals from and across diverse cultures.
- Global strategic thinking.
- Ability to establish business in new markets.
- Capability for building global teams.
- Competency in interacting with local political interests.
Describe the GLED model of leadership.
This model includes antecedents for the development of global leaders and their expertise, divided among four categories: individual characteristics, cultural exposure, global education, and project novelty.
The level of global leadership expertise is hypothesized as being determined collectively by four dependent variables: cognitive processes, global knowledge, intercultural competence, and global organizing expertise.
The model asserts that the relationship between outcome measures and antecedents will be mediated by a transformational process. This transformational process is comprised of the set of experiences, interpersonal encounters, decisions, and challenges related to the global leader’s expertise, and this process is asserted to be the primary cause of the different levels of global leadership expertise that are observed among leaders with global responsibilities.
Describe the “Right Stuff” model.
This model (Figure 11.4) is focused on an outcome of developing global leaders that have the “right stuff” in terms of what they have learned and what they are able to do as leaders.
Producing leaders with the right stuff is the result of interaction and partnership between the leader and the organization.
The basic talent of the candidates being developed, combined with their developmental experiences and the context in which these experiences occur (and the developmental mechanisms that are employed—the policies and procedures used to ensure that the right people are channeled into the right experiences), will help to produce the right stuff in terms of the global leader’s skills and capability.
List 5 ways global teams different from traditional teams.
- Multiple locations for work
- Multiple national cultures in multiple geographies
- Multiple dissimilar economic, political, and social conditions.
- Native and non-native speakers, several work languages.
- Work across multiple time zones.
Define team norms
Team norms are defined as “legitimate, shared standards against which the appropriateness of behavior can be evaluated.” Team norms greatly influence the dynamics of the team, especially in two areas, cooperation and consideration.
• Cooperation is a critical issue with global teams, especially for those that are not co-located (where team members are not located in the same place).
• By consideration, we mean sensitivity to others. In some of the literature, this area of norms has been described as political correctness, but without the possibly negative associations.
Define social loafing.
Social loafing is the tendency of some people to put forth less effort when they are members of a group. A combination of individual and group rewards is seen by many researchers as a good approach to resolving this issue.
Describe how culture can influence change. (on final exam)
These aspects of culture include cultural traits related to tolerance of ambiguity, power distance, attitude toward planning, communication styles, flexibility, and other cultural attributes that play out in the change process.
Cultures that are characterized by high tolerance of ambiguity—that is, cultures that have low uncertainty avoidance— are likely to be more change-friendly.
Define Country screening
• Uses countries as the relevant unit of analysis.
Define Segment screening
• Is based on a subnational analysis of groups of consumers.
List and describe the 6 steps in market screening by county. (on final exam)
• Basic Need Potential
• Financial and Economic Forces – Trends in inflation, currency exchange rates and interest rates.
o Market Factors - they tend to correlate highly with the market demand for a given product.
o Trend Analysis – When the historical growth rates of either the pertinent economic variables or the imports of a product are known, future growth can be forecast by means of trend analysis.
o Cluster Analysis - divides objects (market areas, individuals, customers, and other variables) into groups so that the variables within each group are similar.
o Periodic Updating - most companies can enter a market in stages, perhaps in this sequence: exporting, establishment of a foreign sales company, local assembly, and, finally, local manufacturing
• Political and Legal Forces
o Entry Barriers –
o Profit Remittance Barriers –
o Policy Stability –
• Sociocultural Forces
• Competitive Forces
In this screening, the analyst examines markets on the basis of such elements of the competitive forces as:
o The number, size, and financial strength of the competitors.
o Their market shares.
o Their marketing strategies.
o The apparent effectiveness of their promotional programs.
o The quality levels of their product lines.
o The source of their products—imported or locally produced.
o Their pricing policies.
o The levels of their after-sales service.
o Their distribution channels.
o Their coverage of the market. (Could market segmentation produce niches that are currently poorly served?)
• Selection of New Markets - While much can be accomplished through analysis, there is no substitute for personal visits to markets that appear to have the best potential. An executive of the firm or a team of company representatives should visit those countries that still appear to be good prospects.
Define trade mission
When government trade specialists perceive an overseas market opportunity for an industry, they may organize a trade mission. The purpose is to send a group of executives from firms in the industry to a country or group of countries to learn firsthand about the market, meet important customers face-to-face, and make contacts with people interested in representing their products.
Describe potential problems in researching local markets.
When a firm’s research personnel have had no experience in the country, management should probably hire a local research group to do the work.
• Cultural Problems - If the researchers are from one culture and are working in another, they may encounter some cultural problems. When they are not proficient in the local language or dialect, the research instrument or the respondents’ answers must be translated.
• Technical Difficulties
List and describe the 5 main criteria for identifying and assessing market segments.
- Definable. We should be able to identify and measure segments. The more we rely not on socioeconomic indicators but on lifestyle differences, the more difficult this becomes, but the more accurate the resulting analysis is likely to be.
- Large. Segments should be large enough to be worth the effort needed to serve a segment. Of course, as we get closer to flexible manufacturing, the need to find large segments is beginning to recede. Further, the segments should have the potential for growth in the future.
- Accessible. If we literally cannot reach our target segment for either promotional or distribution purposes, we will be unsuccessful.
- Actionable. If we cannot bring components of marketing programs (the 4 Ps of product, promotion, place, and price) to bear, we may not be successful. For example, in Mexico, the price of tortillas was formerly controlled by the government. Therefore, competition on the price variable was impossible. Foreigners could not penetrate the Mexican market for the standard tortilla by offering a lower price.
- Capturable. Although we would love to discover market segments whose needs are completely unmet, in many cases these market segments are already being served. Nonetheless, we may still be able to compete. Where segments are completely “captured” by the competition, however, our task is much more difficult.
List 4 benefits to exporting.
- To satisfy a host government’s requirement that the local subsidiary have exports.
- To remain price competitive in the home market.
- To test foreign markets and foreign competition inexpensively.
- To meet actual or prospective customer requests for the firm to export.
Explain the difference between direct and indirect exporting.
• Indirect exporting is simpler than direct exporting because it requires neither special expertise nor large cash outlays by the company producing the product. Instead, the work of exporting the product is done by other home country-based companies, which can
a) sell for the manufacturer
b) buy for their overseas customers
c) buy and sell for their own accounts
d) purchase on behalf of foreign middlemen or users.
• To engage in direct exporting, the export business is handled by someone within the firm. The simplest arrangement is to give someone, often the sales manager, the responsibility for developing the export business. Domestic employees may handle the billing, credit, and shipping initially, and if the business expands, a separate export department may be set up.
Define each of the following: Manufacturers’ agents
Manufacturers’ agents are residents of the country or region in which they are conducting business for the firm. They represent various noncompeting foreign suppliers, and they take orders in those firms’ names. Manufacturers’ agents usually work on a commission basis, pay their own expenses, and do not assume any financial responsibility. They often stock the products of some of their suppliers, thus combining the functions of agent and wholesale distributor.
Define each of the following: Distributors
Distributors, or wholesale importers, are independent merchants that buy for their own account. They import and stock for resale. Distributors are usually specialists in a particular field, such as farm equipment or pharmaceuticals. They may be given exclusive representation and, in return, agree not to handle competing brands. Distributors may buy through manufacturers’ agents when the exporter employs them, or they may send their orders directly to the exporting firm. Instead of hiring manufacturers’ agents, exporters may employ their own salespeople to cover the territory and assist the distributors.
Define each of the following: Trading Companies
Trading companies are relatively unknown in the United States but are extremely important importers in other parts of the world. In a number of African nations, trading companies not only are the principal importers of goods ranging from consumer products to capital equipment, but also export such raw materials as ore, palm oil, and coffee. In addition, they operate department stores, grocery stores, and agencies for automobiles and farm machinery.
Describe each of the following: Licensing
Licensing
By means of a licensing agreement, one firm (the licensor) will grant to another firm (the licensee) the right to use any kind of expertise, such as manufacturing processes (patented or unpatented), marketing procedures, and trademarks for one or more of the licensor’s products.
Describe each of the following: Franchising
Franchising
Franchising permits the franchisee to sell products or services under a highly publicized brand name and a well-proven set of procedures with a carefully developed and controlled marketing strategy.
Describe each of the following: Management contract
Management contract
The management contract is an arrangement under which a company provides managerial know-how in some or all functional areas to another party for a fee that typically ranges from 2 to 5 percent of sales. International companies make such contracts with
• firms in which they have no ownership (e.g., Hilton Hotel provides management for nonowned overseas hotels that use the Hilton name, and Delta provides management assistance to foreign airlines)
• joint venture partners
• wholly owned subsidiaries.
• The last arrangement is made solely for the purpose of allowing the parent to siphon off some of the subsidiary’s profits. This becomes extremely important when, as in many foreign exchange– poor nations, the parent firm is limited in the amount of profits it can repatriate.
Describe each of the following: Contract manufacturing
Contract manufacturing
International firms employ contract manufacturing in two ways.
• One way is as a means of entering a foreign market without investing in plant facilities. The firm contracts with a local manufacturer to produce products for it according to its specifications. The firm’s sales organization markets the products under its own brand.
• The second way is to subcontract assembly work or the production of parts to independent companies overseas.
List 2 advantages and 1 disadvantage of joint ventures.
• Advantages:
o Reduced Risk and Competition or Increased Scale Economies - Sometimes, forming a joint venture can allow the partners to avoid making expensive and time-consuming investments of their own, while simultaneously helping to avoid dangerous competition with another company.
o Government Regulations for Local Participation - When the government of a host country requires that companies have some local participation, foreign firms must engage in joint ventures with local owners to do business in that country. In some situations, however, a foreign firm will seek local partners even when there is no local requirement to do so.
o Strong Nationalism - Strong nationalistic sentiment may cause the foreign firm to try to lose its identity by joining with local investors.
o Expertise, Tax, and Other Benefits - Other factors that influence companies to enter joint ventures are the ability to acquire expertise that is lacking, the special tax benefits some governments extend to companies with local partners, and the need for additional capital and experienced personnel.
• Disadvantages:
o Lack of full control over the joint venture is the reason many companies resist making such arrangements. They feel that they must have tight control of their foreign subsidiaries to obtain an efficient allocation of investments and production and to maintain a coordinated marketing plan worldwide.
Describe the US Foreign Commercial Service
The USCS has commercial officers working in more than 100 U.S. domestic locations and around 80 countries who can provide background information on foreign companies and assist in finding foreign representatives, conducting market research, and identifying trade and investment opportunities for American firms. The district offices also conduct export workshops and keep businesspeople informed about domestic and overseas trade events that offer potential for promoting American products.
