ISDS CH 2 Notecards Flashcards
globalization
increased economic integration and interdependence of countries
what does globalization cause?
orgs to hastily extend their distribution channels and supply chains globally; innovative strategies where firms compete not just with their own expertise but with talent in the entire global chain
6 reasons domestic business operations decide to change to some form of international operation
1) improve the supply chain
2) reduce costs and exchange rate risk
3) improve operations
4) understand markets
5) improve products
6) attract and retain global talents
Cultural and ethical issues with globalization
what one country’s culture deems acceptable may be considered unacceptable or illegal in another
definition of mission:
purpose or rationale for an organization’s existence
what does a mission do
provides boundaries and focus for organizations and the concept around which the firm can rally; functional area (major disciplines required by the firm)
definition of strategy:
how an organization expects to achieve its missions and goals
Firms achieve missions in 3 conceptual ways:
1) differentiation
2) cost leadership
3) response
competitive advantage:
creation of a unique advantage over competitors
differentiation (type of competitive advantage):
distinguishing the offerings of an organization in a way that the customer perceives as adding value; going beyond both physical characteristics and service attributes
experience differentiation:
engaging a customer with a product through imaginative use of the 5 senses so the customer “experiences” the product
low cost leadership:
achieving maximum value, as perceived by the customer
competing on response:
set of values related to rapid, flexible and reliable performance
resources view:
method managers use to evaluate the resources at their disposal and manage/ alter them to achieve competitive advantage
value- chain analysis:
a way to identify those elements in the product/ service chain that uniquely add value
5 forces model:
method of analyzing the 5 forces in the competitive market
5 forces in the competitive market:
immediate rivals, potential entrants, customers, suppliers and substitute products
SWOT analysis:
method of determining internal strengths and weaknesses and external opportunities and threats; idea is to maximize opportunities and minimize threats in the environment while maximizing the advantage of theory’s strengths and minimize weaknesses
Events of SWOT analysis
1) analyze the environment
2) determine the corporate mission
3) form a strategy
key success factors (KSFs):
activities/ factors that are key to achieving competitive advantage
core competencies:
set of skills, talents and capabilities in which a firm is particularly strong
outsourcing:
transferring a firm’s activities that have traditionally been internal to external supplies
Expansion is accelerating due to 3 global trends
1) increase tech expertise
2) more reliable and cheaper transportation
3) rapid development and deployment of advantage in telecommunication and computers
theory of comparative advantage:
theory which which states that countries benefit from specializing in (and exporting) goods and services in which they have a relative disadvantage
risks of outsourcing
half of all outsourcing agreements fail because of inadequate planning and analysis planning and analysis; financing, people skills and availability, general business environment
Other issues of outsourcing
1) decreased employment levels
2) changes in facility requirements
3) potential adjustments to quality control systems and manufacturing processes
4) expanded logistics issues, including insurance, tariffs customs and timing
Potential advantages of outsourcing
-cost savings
- gaining outside expertise that comes with specialization
- improving operations and service
- maintaining focus on core competencies
- accessing outside technology
Potential disadvantages of outsourcing
- increased logistics and inventory costs
- loss of control (quality, delivery, etc.)
- potential creation of future competition
- negative impact on employees
- risks may not manifest themselves for years
factor-rating method:
provides an objective way to evaluate outsource providers
international business:
firm that engages in cross- border transactions
multinational corporations (MNC):
firm that has extensive involvement in international business, owning/ controlling facilities in more than one country
