Final Exam Study Guide Flashcards
What are the opportunities and risks when firms diversify abroad
- trade across nations will exceed trade within nations
- rise of market capitalism around the world
- transfer of money form rich to poor countries
- poor education levels in many countries
- failure to manage broader economic factors in some countries
What are the factor and demand conditions affecting a nations competitiveness?
- Factor condition: nations position in factors of production
- Demand condition: nature of home-market demand
What are demand conditions
demands that customers place on an industry for goods and services
Examples of demand conditions
- demanding consumers push firms to move ahead of companies from other nations
- demanding customers drive firms in a country to meet high standards, upgrade existing products and services, create innovative products and services
What do related and supporting industries do?
- enable firms to manage inputs more effectively
- allow joint efforts among firms
- create the probability that new entrants will enter the market
Rivalry is intense in nations with conditions of:
- strong consumer demand
- strong supplier bases
- high new entrant potential from related industries
What within a company does competitive rivalry increase efficiency in
- development within the home country
- marketing within the home country
- distribution of products and services within the home country
what does domestic rivalry force firms to do more quickly?
- innovate
- find new sources of competitive advantage
What does domestic rivalry force firms to do?
To look beyond national boarders for new markets
What is a companies motivation for international expansion?
- increase the size of potential markets
- attain economies of scale
- reducing the costs of R&D and operating costs
- extend the life cycle of a product
- optimize the physical location for every activity in its value chain
potential risks of international expansion
- political and economic risk
Examples of political and economic risk
- social unrest
- military turmoil
- demonstrations
- violent conflicts and terrorism
- laws and their enforcement
What are the Internation corruption perceptions index (CPI)
reveals them most corrupt countries in the world
What are the CPI measures
- bribery
-diversions of public funds - officials using their public office for private gain without facing consequences
- ability of governments to contain corruption in the public sector
- excessive red tape
- nepotisim in civil services
What are the potential risks of international expansion
currency and management risks
What are currency risks
- currency exchange fluctuations
- appreciation of the U.S. dollar
What are management risks
- culture
- customs
- language
- income levels
- customer preferences
- distribution systems
What should strategies that favor global products and brands do?
- standardize all of firms products for all worldwide markets
- spread investments over a large market to reduce cost
What 3 assumptions are strategies that favor global products and brands based on
- customers needs and interests worldwide are becoming more homogenous
- people prefer higher quality at lower prices
- economies of scale in production and marketing can be achieved though supplying global markets
What are the advantages of global strategy
- larger production plants
- efficient logistics and distribution networks
- supports high levels of investment in R&D
- standard level of quality throughout the world
Global strategy
- centralixed competitive strategy controlled by corporate office
- emphasizes economies of scale
disadvantages to global strategy
- higher transportation and tariff fees
- Activity is isolated from targeted markets
- the rest of the firm becomes dependent on that geography isolated location
What is a multi-domestic strategy
- differentiating products and services by adapt to the wants and needs of the local markets
- authority is more decentralized
What are risks of multi-domestic strategy
- increased cost structure
- potential problems with local adaptations
- finding optimal degree of local adaptation is difficult
What are the entry modes of international expansion
- exponent, licensing, franchising, strategic alliance, joint venture, wholly owned subsidiary
What is transnational strategy
optimization of tradeoffs associated with efficiency, local adaptation and learning
What is the significance of sustainability and strategy
companies that achieve better growth and profitability than peers while improving sustainability and ESG outgrow their peers and exceed them in shareholder returns
What is a sustainable business strategy
business strategy that incorporates economic, social and environmental factors into and orgs policies, practices, and processes to create long-term benefits for the org and its employees while being mindful of conserving and protecting resources
What is the sustainability strategy framework based on?
- temporal orientation
- locus of action
What is temporal orientation?
present (today) v.s. future (tomorrow)
- dealing with the pressures of the moment v.s. addressing future (emerging) opportunities and challenges
What is locus of action?
internal orientation v.s. external orientation
- whether someone believes the outcomes of their actions are primarily determined by their own efforts
- concern to maximize self interest v.s. concern to optimize collective (stakeholders) interests
What is the sustainable value triangle
Economic benefits, environmental sustainability, social benefits
What are the drivers of sustainable value?
- pollution prevention
- product stewardship
- clean technology
- sustainability vision
pollution prevention
reduction in pollution, consumption & waste leads to cost and risk reduction
Product stewardship
involvement in civil society, transparency, and connectivity helps build corporate reputation and legitimacy
clean technology
Accelerating innovation and repositioning through disruption, clean tech, and shrinking footprints
Sustainability vision
crystallizing a companys development path through aviation of population, poverty and inequity
What was Walmarts international expansion like?
- had a competitive advantage in US retail
- international expansion began in Canada
- est Walmex in mexico
- expanded to other central and south american countries
Where did walmart fail?
Germany
Why did Walmart fail in Germany?
5 companies are in control of most of the market
Walmart was unable to establish a superior position and did not fully understand the german market
What was Walmarts problems in Brazil?
- brazilian consumers are used to frequent sales oppose to Walmart everyday low prices
