MGMT 466 Exam 3 - FLASHCARDS - Chapter 8
What is a strategy through which the firm sells its goods or services outside its domestic market?
International strategy
What is a strategy through which a firm expands the production and/or sales of its goods and/or services across the borders of global regions and countries into a potentially large number of geographic locations or markets?
International diversification strategy
True or false: the resources a firm possesses provide limits to a firm’s international diversification and provide a basis for achieving competitive advantage in the countries in which the firm expands?
true
What is the next important decision once a firm has decided to pursue an international diversification strategy or increase the geographic diversity of its current strategy through entering new countries?
the selection of new countries to enter
What is a set of costs associated with various issues firms face when entering foreign markets?
Liability of foreigness?
What are the costs associated with liability of foreigness?
• Unfamiliar operating environments
• Economic, administrative, and cultural differences
• The challenges of coordination over distances
What are the four types of distances associated with liability of foreignness (CAGE framework)?
- Cultural
- Administrative and political
- Geographic
- Economic
What is the cultural distance associated with liability of foreigness?
religion, social norms, language
What is the political distance associated with liability of foreigness?
laws, policies, treaties
What is the geographic distance associated with liability of foreigness?
size, transportation, communication, cost of these
What is the economic distance associated with liability of foreigness?
disposable income, information, knowledge etc. Impacts level of adaptation
What type of international strategies are considered at the corporate level?
– Multidomestic
– Global
– Transnational
What type of generic strategies are considered at the business level?
• Cost leadership
• Differentiation
• Focused cost leadership
• Focused differentiation
• Integrated cost leadership/differentiation
What two demensions do the corporate international strategies vary based on?
- The need for global integration
- The need for local responsiveness
What is a strategy where strategic and operating decisions are decentralized?
Multi domestic strategy
What strategy tailors products to the local market?
Multi domestic strategy
What strategy focuses on competition within each country?
Multi domestic strategy
True or false: in a multi domestic strategy, the differences between the markets is significant?
true
What strategy is where a firm’s home office determines the strategies that business units are to use in each country or region?
Global strategy
True or false: global strategies develop economies of scale?
true
What strategy assumes customers throughout the world have similar needs?
Global strategy
What strategy has standardization of products across country boundaries?
Global strategy
What strategy has innovations developed at the corporate level, or in one market, and apply them to other markets?
Global strategy
True or false: a global strategy requires efficient operations—resource-sharing, greater coordination, and cooperation?
true
What is an international strategy through which the firm seeks to achieve both global efficiency and local responsiveness?
Transnational strategy
What integrates characteristics of both multidomestic and global strategies?
Transnational strategy
What does a transnational strategy require in order to be implemented?
Requires “flexible coordination”—building a shared vision and individual commitment through an integrated network—in order to be implemented
True or false: a transnational strategy Is difficult to use because of its conflicting goals?
true
Can a transnational strategy produce higher performance than multidomestic or global strategies if implemented effectively?
Yes
Why is it becoming increasingly necessary to successfully compete in international markets?
- Increased competition. Pressure on cost reduction
- Pressure to differentiate
True or false: global efficiencies are a source of competitive advantage?
true
True or false: multinational flexibility is a source of competitive advantage?
true
True or false: worldwide learning is a source of competitive advantage?
true
What are the five ways firms can enter international markets?
- Exporting
- Licensing
- Strategic alliances
- Acquisitions
- New wholly owned subsidiaries
What mode of entry is high cost but low control?
Exporting
What mode of entry has quick access to new markets, high costs, complex negotiations, and problems of merging with domestic operations?
Acquisitions
What mode of entry has low risk, low cost, little control, and low returns?
Licensing or franchising
What mode of entry has shared costs, shared resources, shared risks, and shared problems of integration?
Strategic alliances
What mode of entry is complex, costly, time consuming, high risk, and has maximum control?
New wholly owned subsidaries
True or false: A firm’s success in carrying out an international strategy depends on its success in identifying the best countries to enter?
true
True or false: A firm’s success in carrying out an international strategy depends on selection and implementation of appropriate corporate-level and business-level international strategies?
true
True or false: A firm’s success in carrying out an international strategy depends on optimal selection of a mode (or modes) of entry?
true
Do many factors that are not under a firm’s direct control, have a dramatic effect on the success of an international strategy?
Yes
How can firms mitigate anticipated risks?
Through careful analysis of the business, political, and cultural environments
True or false: firms should do what they can to mitigate anticipated risks through careful analysis of the business, political, and cultural environments?
true
True or false: International diversification should be related positively to a firm’s performance as measured by the returns it earns on its investments?
true
Do some multinational firms enjoy high performance from international diversification and some experience low performance?
Yes
True or false: Firms need to be careful in making decisions about where to expand and how to manage an internationally diversified portfolio of businesses?
true
Does it become increasingly difficult to effectively implement, manage, and control a firm’s international operations when there are increases in geographic diversity?
Yes
What is the only way for individual nations and individual firms to sustain a competitive advantage?
To upgrade it continually through innovation
Why does international diversification facilitate innovation in a firm?
− Provides a larger market to gain greater and faster returns from investments in innovation.
− Exposes the firm to new products and processes.
− This enables the firm to integrate this knowledge into its operations, allowing further innovation to be developed.
− Can generate the resources necessary to sustain large-scale R&D.
