Final Exam Study Guide

Question 1

What are the opportunities and risks when firms diversify abroad

Answer 1

• 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

Question 2

What are the factor and demand conditions affecting a nations competitiveness?

Answer 2

• Factor condition: nations position in factors of production
• Demand condition: nature of home-market demand

Question 3

What are demand conditions

Answer 3

demands that customers place on an industry for goods and services

Question 4

Examples of demand conditions

Answer 4

• 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

Question 5

What do related and supporting industries do?

Answer 5

• enable firms to manage inputs more effectively
• allow joint efforts among firms
• create the probability that new entrants will enter the market

Question 6

Rivalry is intense in nations with conditions of:

Answer 6

• strong consumer demand
• strong supplier bases
• high new entrant potential from related industries

Question 7

What within a company does competitive rivalry increase efficiency in

Answer 7

• development within the home country
• marketing within the home country
• distribution of products and services within the home country

Question 8

what does domestic rivalry force firms to do more quickly?

Answer 8

• innovate
• find new sources of competitive advantage

Question 9

What does domestic rivalry force firms to do?

Answer 9

To look beyond national boarders for new markets

Question 10

What is a companies motivation for international expansion?

Answer 10

• 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

Question 11

potential risks of international expansion

Answer 11

• political and economic risk

Question 12

Examples of political and economic risk

Answer 12

• social unrest
• military turmoil
• demonstrations
• violent conflicts and terrorism
• laws and their enforcement

Question 13

What are the Internation corruption perceptions index (CPI)

Answer 13

reveals them most corrupt countries in the world

Question 14

What are the CPI measures

Answer 14

• 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

Question 15

What are the potential risks of international expansion

Answer 15

currency and management risks

Question 16

What are currency risks

Answer 16

• currency exchange fluctuations
• appreciation of the U.S. dollar

Question 17

What are management risks

Answer 17

• culture
• customs
• language
• income levels
• customer preferences
• distribution systems

Question 18

What should strategies that favor global products and brands do?

Answer 18

• standardize all of firms products for all worldwide markets
• spread investments over a large market to reduce cost

Question 19

What 3 assumptions are strategies that favor global products and brands based on

Answer 19

• 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

Question 20

What are the advantages of global strategy

Answer 20

• larger production plants
• efficient logistics and distribution networks
• supports high levels of investment in R&D
• standard level of quality throughout the world

Question 21

Global strategy

Answer 21

• centralixed competitive strategy controlled by corporate office
• emphasizes economies of scale

Question 22

disadvantages to global strategy

Answer 22

• higher transportation and tariff fees
• Activity is isolated from targeted markets
• the rest of the firm becomes dependent on that geography isolated location

Question 23

What is a multi-domestic strategy

Answer 23

• differentiating products and services by adapt to the wants and needs of the local markets
• authority is more decentralized

Question 24

What are risks of multi-domestic strategy

Answer 24

• increased cost structure
• potential problems with local adaptations
• finding optimal degree of local adaptation is difficult

Question 25

What are the entry modes of international expansion

Answer 25

• exponent, licensing, franchising, strategic alliance, joint venture, wholly owned subsidiary

Question 26

What is transnational strategy

Answer 26

optimization of tradeoffs associated with efficiency, local adaptation and learning

Question 27

What is the significance of sustainability and strategy

Answer 27

companies that achieve better growth and profitability than peers while improving sustainability and ESG outgrow their peers and exceed them in shareholder returns

Question 28

What is a sustainable business strategy

Answer 28

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

Question 29

What is the sustainability strategy framework based on?

Answer 29

• temporal orientation
• locus of action

Question 30

What is temporal orientation?

Answer 30

present (today) v.s. future (tomorrow)
- dealing with the pressures of the moment v.s. addressing future (emerging) opportunities and challenges

Question 31

What is locus of action?

Answer 31

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

Question 32

What is the sustainable value triangle

Answer 32

Economic benefits, environmental sustainability, social benefits

Question 33

What are the drivers of sustainable value?

Answer 33

• pollution prevention
• product stewardship
• clean technology
• sustainability vision

Question 34

pollution prevention

Answer 34

reduction in pollution, consumption & waste leads to cost and risk reduction

Question 35

Product stewardship

Answer 35

involvement in civil society, transparency, and connectivity helps build corporate reputation and legitimacy

Question 36

clean technology

Answer 36

Accelerating innovation and repositioning through disruption, clean tech, and shrinking footprints

Question 37

Sustainability vision

Answer 37

crystallizing a companys development path through aviation of population, poverty and inequity

Question 38

What was Walmarts international expansion like?

Answer 38

• had a competitive advantage in US retail
• international expansion began in Canada
• est Walmex in mexico
• expanded to other central and south american countries

Question 39

Where did walmart fail?

Answer 39

Germany

Question 40

Why did Walmart fail in Germany?

Answer 40

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

Question 41

What was Walmarts problems in Brazil?

Answer 41

• brazilian consumers are used to frequent sales oppose to Walmart everyday low prices