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BADM > International Strategy > Flashcards

International Strategy Flashcards

1
Q

Changed Conditions fostering global competition

A
  • Declining Tariffs and Emergence of regional trading blocks.
  • homogenization of consumer tastes and lifestyles
  • Telecommunication technology
  • Transportation technology
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2
Q

Reasons for international activity

A
  • New markets
  • lower Costs
  • Raw materials access
  • Income stream Diversification
  • Strategic Market Protection.
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3
Q

Adding Value Through for International activity

A
  • Economies of scale
  • Experience curve
  • Core skills transfer
  • Value chain reconfiguration
  • Amortization of product Development Costs/capital investment
  • Window on Technology
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4
Q

Competitive Downside of Industry Globalization

A
  • Lower entry barriers Initially (Market extensions)
  • Lower industry Concentration
  • Increased Competitor Diversity
  • Increased Buyer Choice.

All serve to increase competitive Intensity and depress industry profitability.

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5
Q

International Strategic Approach

A
  • International Strategy
  • Multidomestic (Localization) Strategy
  • Global standardization Strategy
  • Transnational Strategy
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6
Q

International Strategy

A
  • Creating value by transferring competencies and products to foreign markets where indigenous competitors lack those competencies and products.
  • Makes sense if a company has a valuable competence that indigenous competitors in foreign markets lack and if it faces weak pressure for local responsiveness and cost reductions.
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7
Q

Multidomestic (Localization ) Strategy

A
  • Developing a business model that allows a company to achieve maximum local responsiveness.
  • Make sense when there are high pressures for local responsiveness and low pressures for cost reductions
  • Companies may become too decentralized and lose the ability to transfer skills and products.
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8
Q

Global Standardization strategy

A
  • Focusing on increasing profitability by reaping cost reductions that come experience curve effects and location economies; pursuing a low-cost strategy on a global scale.
  • Makes sense when there are strong pressures for cost reductions and demand for local responsiveness is minimal.
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9
Q

Transnational Strategy

A
  • Simultaneously seeking to lower costs, be locally responsive, and transfer competencies in a way consistent with global learning.
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10
Q

Basic Entry decisions

A
  • Which overseas markets to enter
  • Timing of entry
  • Scale of entry and strategic commitments
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11
Q

Assessment of long-run profit potential

A

A function of the size of the market, purchasing power of consumers, the likely future purchasing power of consumers

  • Balancing the benefits, costs, and risks associated with doing business in a country.
  • A function of economic development and political stability.
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12
Q

Integrations responsiveness grid.

A
  • Thee need for global integration
    If the market shows a need for each other
    If people uses the product or services in the same way in everywhere.

NEEd for local responsiveness

  • when government is on the way,
  • transportation is too expensive.

Depends on where a company is the approach will make sense.

Company like Nestle (see the book)

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13
Q

Timing Entry

A

First - mover advantages

First-mover disadvantages

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14
Q

Scale of entry and strategic commitments

A
  • Entering on a large scale is a strategic commitment, both positive and negative
  • Benefits and drawbacks of small-scale entry
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15
Q

The choice of Entry Mode

A
  • Exporting
  • Licensing
  • Franchising
  • Joint Ventures
  • Wholly-owned subsidiaries
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16
Q

Exporting

A
  • Many companies begin global expansion through exporting production
  • Exporting allows companies to bypass the cost of establishing manufacturing facilities
  • Exporting may be consistent with scale economies and location economies.
17
Q

Licensing

A
  • A licensee in a foreign country can purchase the rights to produce a product in their country
  • the cost of development is low, as well as the risk involved.
18
Q

Franchising

A
  • A specialized form of licensing where the franchiser sells intangible property (usually a brand or trademark)
  • The franchisee agrees to follow the strict rules and business plans of the company.
19
Q

Joint Venture

A
  • Separate corporations come together to form a new corporate entity
  • two or more companies have an ownership stake, but combine resources for mutual benefit.
  • sharing knowledge can be dangerous for the companies involved.
20
Q

Wholly owned subsidiaries

A
  • A parent company owns 100% of a smaller self-contained business unit.
  • This can be a very costly approach, since the parent company is responsible for all of the financing.
21
Q

Strategic Alliances

A

Advantages

  • Facilitate entry into a foreign market
  • share fixed costs and associated risks
  • bring together complementary skills and assets
  • set technological standards to the industry.

Disadvantages
- Give competitors a low-cost route to gain new technology and market access.

BADM (2 decks)

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