Part I Flashcards
What is an LSE?
Large Scaled Enterprise. Has more than 250 employees.
What is an SME?
Small and medium-sized enterprise. Fewer than 50 employees = small, fewer than 250 = medium
Many resources. LSE of SME?
LSE
Internationalization of resources. LSE of SME?
LSE
Coordination of: personnel, financing, market knowledge. LSE of SME?
LSE
Limited resources. LSE of SME?
SME
Externalization of resources. LSE of SME?
SME
Deliberate strategy formation. LSE of SME?
LSE
Adaptive decision-making mode in small incremental steps. LSE of SME?
LSE
What is adaptive decision-making?
Shows how decision makers balance effort and accuracy considerations and predicts which strategy a person will use in a given situation.
What is deliberate strategy formation?
A strategy that is carefully planned and controlled by the organization
Emergent strategy formation. LSE or SME?
SME
Entrepreneurial decision-making. LSE or SME?
SME
Owner/manager is directly and personally involved and dominant in all decision-making. LSE or SME?
SME
What is an emergent strategy formation
An emergent strategy is one that arises from unplanned actions and initiatives from within an organization.
Formal/hierarchical. LSE or SME?
LSE
Independent of one person. LSE or SME?
LSE
Informal. LSE or SME?
SME
Owner has the power/charisma to inspire and control organization. LSE or SME?
SME
Mainly risk-averse. LSE or SME?
LSE
Focuses on long-term opportunities. LSE or SME?
LSE
Sometimes risk-taking, sometimes risk-averse. LSE or SME?
SME
Focus on short-term opportunities. LSE or SME?
SME
Takes advantage of economies of scale and economies of scope. LSE:
Yes
Takes advantage of economies of scale and economies of scope. SME:
Only limited
Use of advanced techniques: databases, external consultancy, internet. LSE or SME?
LSE
Information gathering in an informal and inexpensive way: internal resources, face-to-face communication. LSE or SME?
SME
Intended strategy:
Planned strategy
Emergent strategy
Not-planned strategy
Economies of scale:
Accumulated volume in production, resulting in lower cost price per unit.
Economies of scope:
Reusing a resource from one business/country in additional businesses or countries.
Globalization
Reflects the trend of firms buying, developing, producing and selling products and services in most countries and regions of the world.
Internationalization
Doing business in many countries of the world, but often limited to a certain region.
(Nine strategic windows) Industry globalism:
Degree of industry globalism depends on the international competition structure within an industry
(Nine strategic windows) Global:
Many interdependencies between markets, customers and suppliers and the industry is dominated by a few large, powerful players
(Nine strategic windows) Local:
Represents multi-domestic market environment, where markets exist independently of one another
(Nine strategic windows) Preparedness for internationalization:
Dependent on the firm’s ability to carry out strategies in the international market place
(Nine strategic windows) Mature:
Well-prepared company
(Nine strategic windows) Immature:
Not well-prepared company
Three steps of Incremental change and strategic drift:
- Incremental change of company (according to environmental change)
- Strategic Drift (company is drifting away from the environmental change)
- Transformational change or ‘death’.
(EPRG Framework) Ethnocentric:
Home country is superior and the needs of the home country are most relevant. Controls are highly centralized, organization & technology will be the same as in the home country.
(EPRG Framework) Polycentric:
Multidomestic, each country is unique and should therefore be targeted in a different way. Recognizes different conditions and tries to adapt to this. Control is decentralized.
(EPRG Framework) Regiocentric:
World consists of regions. Firm tries to integrate and coordinate its marketing program within regions, but not across them.
(EPRG Framework) Geocentric:
Global. The world gets smaller and smaller. Firm may offer global product concepts, but with local adaption (think global, act local)
Global marketing:
Firm’s commitment to coordinate its marketing activities across national boundaries in order to find and satisfy global customer needs better than the competition
The three steps of global marketing:
- Develop global marketing strategy
- Exploit the knowledge of the headquarters through world-wide diffusion and adaptations
- Transfer knowledge and ‘best practices’ from its markets and use them in other markets
Glocalization:
The development and selling of products or services of products or services intended for the global market, but adapted to suit local culture and behavior (think global act global)
Global integration:
Recognizing the similarities between international markets and integrating them into the overall global strategy
Major drivers for shift toward global integration:
Removal of trade barriers, global accounts or customers, relationship management, standardized worldwide technology, worldwide markets, global village, worldwide communication.
Market responsiveness:
Responding to each market’s needs and wants:
- Cultural differences
- Regionalism/protectionism
- Deglobalization
Artificial Intelligence:
Use of machine learning in combination with human creativity to create a more engaging customer experience on an individual level, in order to attract, engage and retain customer’s interest and business
Internationalization motives:
The fundamental reasons - proactive and reactive - for internationalization
The four main motives to internationalize:
- Market-seeking
- Efficiency-seeking
- Resource-seeking
- Strategic asset-seeking
What is market-seeking?
Companies go abroad to find new customers
What is efficiency-seeking?
Companies go abroad to lower the costs associated with performing economic activities and/or with the aim of rationalizing their existing operations
What is resource-seeking?
Companies venture abroad to access resources that are not readily available at home or that can be obtained at a lower cost abroad
What is strategic asset-seeking?
Companies go abroad to obtain strategic assets, which may be critical to their long-term strategy but that are not available at home.
Proactive motives (6):
- Profit and growth goals
- Managerial urge
- Technology competence/unique product
- Foreign market opportunities/market information
- Economies of scale
- Tax benefits
Reactive motives (6):
- Competitive pressures
- Domestic market: small and saturated
- Overproduction/excess capacity
- Unsolicited foreign orders
- Extend sales of seasonal products
- Proximity to international customers/psychological distance
Managerial urge:
Manager’s commitment and motivation that reflect the desire and enthusiasm to drive internationalization forward.
Internationalization triggers
Internal or external events taking place to initiate internationalization
Internal triggers (3):
- Perceptive management
- Specific internal event
- Importing as inward internationalization
External triggers (5):
- Market demand
- Network partners
- Competing firms
- Trade associations and other outside experts
- Financing
Perceptive management:
Perceptive managers gain early awareness of developing opportunities in overseas markets and become knowledgeable about markets
Importing as inward internationalization:
Direct relationship between inward and outward internationalization in the way that effective inward activities can determine the success of outward activities
Inward/outward internationalization:
Imports (inwards) as a preceding activity for the later market entries (outward) in foreign markets
Market demand:
Growing international markets can cause demand for products of some companies to grow, pushing the makers of the products into internationalization.
Network partners:
Access to external network partners may encourage the company to use this as a key source of knowledge in triggering the internationalization process
Trade associations and other outside experts:
Formal and informal meetings among managers from different firms at business meetings, export agents, governments, chambers of commerce, banks
Financing:
Financial resources are required to fund international activities, need to raise necessary funds through grants, debt and or equity financing
Name barriers that hinder internationalization initiation (8):
- Insufficient finances
- Insufficient market knowledge
- Lack of foreign market connections
- Lack of export commitment
- Lack of capital to finance expansion into foreign markets
- Lack of productive capacity to dedicate to foreign markets
- Management emphasis on developing domestic markets
- Cost escalation due to high export manufacturing, distribution and financing expenditures
Name a few general market risks that hinder the further process of internationalization (3):
- Comparative market distance
- Adaptation to foreign markets
- Competition from other foreign markets\
Adapting products and services to new local conditions
Name a few commercial market risks that hinder the further process of internationalization (3):
- Exchange rate fluctuations when contracts are made
- Failure of export customers to pay due to contract dispute, bankruptcy, refusal
- Difficulties in obtaining export financing
Name a few political market risks that hinder the further process of internationalization (4):
- Foreign government restrictions & import restrictions
- National export policy
- Foreign exchange controls
- Complexity of trade documentation
De-internationalization:
A process, determined by internal and external factors, where the multi-national company shifts to a strategic configuration that has a lower international presence
Porter’s five forces model:
The state of competition and profit potential in an industry depends on five basic competitive forces: new entrants, suppliers, buyers, substitutes and market competitors
Market myopia:
The failure of a company to define its organization purpose from a broad consume orientation
The sharing economy:
A business model in which customers are able to make short-term rentals of assets owned by service providers, typically through an online marketplace.
