Exam prep Flashcards
What is the process of international business models?
- Understand how the international environment is affecting the firm.
- Determining how the firm creates value for its customers at home.
- Determining how the firm can innovate its business model to create value internationally.
What are the 5 parts of value creation?
- Value proposition
- Value creation
- Value delivery
- Value capture
- Value allocation
What are the 5 Ps in strategy?
- Plan
- Ploy
- Pattern
- Position
- Perspective
What is the plan in the 5 Ps of strategy and which framework is used for it?
A logical plan for doing something. The framework is the SWOT model.
What is the ploy in the 5 Ps of strategy and which frameworks are used for it?
The ploy is a plan that is intended to confuse or mislead competitors.
Not all plans are ploys, but all ploys are plans.
The frameworks are Market signal, scenario planning, and game theory.
What is the pattern in the 5 Ps of strategy and which frameworks are used for it?
A strategy emerging from organizational behavior.
Framework: Core competencies (VRIO).
What is the position in the 5 Ps of strategy and which frameworks are used for it?
strategy as a position in the market.
Frameworks: Porter’s 5 sources and the generic strategies.
What is perspective in the 5 Ps of strategy and which frameworks are used for it?
Culture shapes organizational behavior, thus it’s a strategy as organizational configurations.
Frameworks: Organizational structure, Resource-based view, VRIO, core competencies, dynamic competencies.
Describe the OLI framework
O = ownership (competitive advantage against foreign competitors)
L = Location (Something to gain from going abroad)
I = Internalizing (Something to gain from doing it yourself abroad)
If no ownership advantage = Stay domestic.
If no location advantage = export
If no internalizing advantage = contractual agreements
If internalizing advantage = Wholly owned FDI.
What are the two equity-based market entry modes?
- Joint venture
- Wholly owned subsidiaries
What are the 3 types of joint ventures
- Mintority joint venture
- 50/50 joint venture
- Majority joint venture
What are the 3 types of wholly owned subsidiaries?
- Greenfield FDI
- Acquisition
- Other
What is a non-market strategy?
Strategic actions in non-market such as NGOs, governments, media, regulators, etc.
This is not important for the exam. It’s only important to understand that these non-market actors are affecting the firm in the same way as the institutions.
Name and describe the 2 institutional theories under the umbrella of institutional economies.
- New institutional theory: Looks at institutional voids and the quality of institutions. It’s at the country level.
- Institutional analysis: Looks at coordination, principles of collective actions, and global commons. It has the local communities as a perspective of analysis.
What is the one institutional theory under the umbrella of strategy?
Institutional-based view: Looks at the entrepreneurial response to institutional context and the drivers of strategy in international business. It has the country-to-firm-level perspective of analysis.
What is the 3 institutional theory under the umbrella of political science?
- Historical institutionalism: Focuses on path dependencies, state capacity, and power asymmetries. Its country is focused on the scope.
- Comparative capitalism: It focuses on LME vs. CME, state capitalism, institutional layering, and national advantage configurations. It’s country and regional in scope.
- Rational choice / positive theory: It looks at the micro-foundations, equilibria, and maximum preferences. Its level of analysis is electoral.
What is institutional void?
The absence of intermediaries in a market.
What is a conglomerate?
One firm owns multiple other independent firms.
What is a business group?
A group of dependent firms.
What is a family firm?
A firm that is controlled by multiple family members. Often more long-term oriented.
What are the 4 EMNE strategies?
- Spring-board
- Linkage-leverage-learning
- Ownership advantage logic
- Institutional arbitrage logic
What is the springboard theory?
That a firm from an emerging market acquires resources abroad to become more competitive against competitors at home and abroad. Also to reduce variability to institutions at home.
What is the linkage-leverage-learning theory?
Linkage: Link to firms that have advantages that the firm wants.
Leverage: Leverage links to get to resources externally.
Learning: Acquiring knowledge or creating a flow of knowledge from partner to EMNE.
What is the ownership advantage logic?
EMNEs have ownership advantages before going abroad.
What is the institutional arbitrage logic?
Exit view: Go abroad to escape the institutional void at home.
Exploitation view: Is used to institutional void, thus exploiting that experience in other countries to win the competition.
What is a State-Owned Enterprise (SOE)?
A company where the state owns more than 10% of the shares.
What is a State-Owned Holding Company (SOHC)?
A state-owned holding company that holds other firms.
What is a Sovereign Wealth Fund (SWF)?
A country-owned fund (state-owned)
Describe the Integration-Responsiveness framework
Lookes at the degree of local responsiveness and global integration.
Low integration and low responsiveness: International strategy.
High integration and low responsiveness: Global strategy.
Low integration and high responsiveness: Multi-domestic strategy.
High integration and high responsiveness: Transnational strategy.
What is an international strategy (IR framework)?
Export strategy. Subsidiaries are pure sales channels. Example: Some wine houses in France.
What is a global strategy (IR framework)?
A centralized operation focused on reducing costs and maximizing efficiency through standardized products worldwide. Example: Pfizer.
What is a multi-domestic strategy (IR framework)?
A decentralized operation focused on tailoring products to local needs. Example: Nestle.
What is a transnational strategy (IR framework)?
A global integrated and local responsive strategy. Standardize in upstream activities and adapt in downstream activities. Example: Unilever.
What are the 5 organizational structures and describe each of them?
- Home base: Local R&D and manufacturing in the home country.
- Portfolio: Regional operation that reports to the HQ in the home country.
- Hub: Regional based that provides shared resources and services to country operation.
- Platform: A global strategy by reducing basic products and platforms offered. Example: Toyota.
- Mandate: Give subsidiaries a mandate to perform certain roles for the entire organization.
Describe the competitor analysis and interfirm rivalry model (CAIR).
The degree of resource similarities and market commonalities.
Market commonalities make the firms want to compete. The resource similarities enable the firms to compete.
What are the 3 drivers of competition?
- Awareness: Recognize the move of the competitor.
- Motivation: Are motivated to respond to the action. They have an incentive.
- Capability: Nature and flexibility of resources enables them to respond to the move.
Describes Porter’s 5 forces model
In the middle: Rivalry among competitors.
On the sides: Bargaining power from suppliers, bargaining power from buyers, the threat of new entrants, the treat of substitutes.
Describe the generic strategy model.
Scope (split in broad and narrow) and competitive advantage (cost and differentiation) on each axis.
The four strategies are cost focused, differentiation-focused, differentiation, and cost leadership.
Describe the elaborated multimarket framework.
Look in notes for drawing.
Consists of focal firm A and competitor firm B, market 1, market 2, ownership and information flow, cultural distance, diversity, and som barriers in each market.
If the ownership and information flow increase in a market, the firm can respond faster.
If the cultural distance decreases, the firm can respond faster.
If the diversity decreases, the firm can respond faster.
If the barriers decreased, the firm can respond faster.
If firms can respond faster, competition increases.
What are the 4 roles of subsidiaries and describe each of them?
- Implementer: Single country. The goal is to earn a bit at a low cost.
- Contributor: use subsidiary skills in the rest of the organization.
- Strategic leader: Partner with the HQ on strategy. Important market.
- Black hole: Important market but local competitors are better.
What is the structural holes theory?
The drawing of A, B, C, D, and E. Some positions in the structures are better than others. E connected the others.
What is the Swedish Network Approach?
It looks a the economic success and the degree of closure of the network.
It says that trust creates decreased transaction costs.
It’s all about finding the right balance of embeddedness between the firms.
It looks at four different types of embeddedness:
1. Cognative
2. Political
3. Structural
4. Cultural
What is the traditional view?
A clear separation between the firm and the environment
What is the network view?
The company depends on the environment as subsidiaries and the company HQ are embedded in the environment.
What is the resource and capability (VRIO) framework?
V = Valuable
R = Rare
I = Imitatable
O = Organized
No V = competitive disadvantage
No R = Competitive parity
No I = Temporary competitive advantage
No O = Unused competitive advantage
Yes to all = sustained competitive advantage.
What are the 5 stages in the global value chain internalization process?
- Engage in domestic purchasing
- Engage in international purchasing as needed.
- International purchasing as part of the sourcing strategy.
- Integrated global sourcing strategy across locations.
- Integrated global sourcing with other functional groups.
What are the 5 types of governance of the value chain?
- Market = Low explicit coordination or power asymmetry.
- Modular: A turn-key supplier in the middle. Slightly more explicit coordination or power asymmetry.
- Relational: A relational supplier in between the lead firm and the customers. Slightly more explicit coordination or power asymmetry.
- Captive: Lead form to captive suppliers, which leads to customers. More explicit coordination or power asymmetry.
- Hierarchy: Lead the firm all the way through. Most explicit coordination or power asymmetry.
What are transaction costs?
The cost of doing business within or between firms.
- Bounded rationality
- Opportunism
- Asset specificity
- Uncertainties
What 4 elements do transaction costs consist of?
- Bounded rationality: Information asymmetry.
- Opportunism: Self-interest behavior.
- Asset specificity: Assets are specific to particular companies.
- Uncertainties: Unknown activities.
What is the resource-based view?
Focuses on the resources and capabilities of the firm. Are they valuable, rare, inimitable, and integrated into the organization (VRIO)?
It is about levering existing resources and capabilities to gain a sustainable competitive advantage.
What are the 3 types of resources?
Physical, human and organizational capital
What are dynamic capabilities?
The firm’s ability to integrate, build, and reconfigure internal and external competencies to address changing environments.
Dynamic: Capability to renew competencies
Capability: The ability to perform against competitors.
It’s based on:
1. Process. the way things are done.
2. Position: Current specific assets.
3. Path Strategic alternatives available to the firm.
What are dynamic difficulties?
Some assets and competencies are not transferable, thus they have to be built by the firm.
What are core competencies?
Those competencies make a disproportional contribution to the value provided to the end customer.
