Lecture 1

Question 1

Strategy

Answer 1

An integrated and coordinated set of commitments and actions, designed to exploit core competencies and to gain competitive advantage

Question 2

International Strategic Management

Answer 2

Management planning process aimed at developing strategies to allow an organisation to expand abroad and compete internationally

Question 3

Business benefits of globalization

Answer 3

1. Cost benefits - Achieve economies of scope and scale
2. Revenue benefits
3. Learning benefits - transfer best practices
4. Arbitrage benefits - transfer resources from low-value locations to high-value locations

Question 4

Business costs of globalization

Answer 4

1. Loss of flexibility
2. Loss of proximity - global firm doesnt know its customers
3. Loss of quick response abilities

Question 5

Location bound FSA’s (examples)

Answer 5

1. Immobile resources
2. Deep knowledge of local marketing or local reputation
3. A unique way of working that is local
4. Recombination capability that is hard to transfer across borders

Question 6

Bounded rationality

Answer 6

The capacity of human-beings to formulate and solve complex problems is limited. Our decisions are bounded. The more complex the transaction, the higher the transaction costs which are needed to overcome this problem

Question 7

Bounded reliability

Answer 7

Human-beings are self-interested individuals.Faced with the decision to enrich oneself, or to enrich another, a rational individual will choose to enrich himself.

Question 8

4 Business models on how firms grow internationally

Answer 8

1. Domestic model (stay at home)
2. Export model (Export)
3. Multinational model (replicate operations abroad)
4. Global model (split supply chain across countries)

Question 9

3 Critical things we need to be aware of when globalizing

Answer 9

1. Liability of foreignnes
2. Localisation advantages
3. Location bound advantages

Question 10

Liability of foreignness

Answer 10

The set of costs based on a company’s particular unfamiliarity with the local market, with a lack of roots in the local environment

Question 11

Localisation advantage

Answer 11

Advantages that come when the firm chooses to focus on serving one market, rather than all markets.

• Loss of flexibility
• Loss of proximity
• Loss of quick response abilities