Lecture 4

Question 1

Theory of integration responsiveness

Answer 1

A tool for understanding what organisational form, at the industry level, is the best given the relative importance of the globalisation and localisation force.

Question 2

Global strategy

Answer 2

Global forces, internationalise mainly for cost comptitiveness

Question 3

Transnational strategy

Answer 3

Global and local forces, internationalise to exploit location economies and leverage core competencies

Question 4

International strategy

Answer 4

No strong forces, transferring FSAs to locations where local rivals cant compete

Question 5

Multi-domestic strategy

Answer 5

Local forces, internationalise to markets where firms’ products can be locally customised

Question 6

How should we manage our subsidiaries? 6 models

Answer 6

• Global functional model
• Geographic model
• Single-matrix model
• Multi-business global product division model
• Multi-business geographic model
• Multi-business matrix model

Question 7

Corporate governance

Answer 7

System by which businesses are controlled

Question 8

There are two ways to ensure managers act in the owner’s interests

Answer 8

• Incentive alignment (carrots)

- Monitoring (sticks)

Question 9

Incentive alignments

Answer 9

• Cash bonus
• Share plans
• Stock options
• Temporary contracts

Question 10

Monitoring

Answer 10

• Internal monitoring (by shareholders, non-executive directors, two-tier board system)
• External monitoring (Auditing firms, stock analysts, debt providers)
• Competition based monitoring (in the product market, the managerial labour market, stock market and market for corporate control)