Chapters 11-17 "Global Business Today"
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| Floating Exchange Rate | show 🗑
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| show | Currency value is fixed relative to a reference currency (usually pegged to a more valuable or stable currency).
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| show | Avoid economic collapse that occurred between the two world wars through (1) Discipline (2) Flexibility
(Organized the Brentwood Agreement, which got rid of the gold standard.)
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| show | The purchase of securities in one market for immediate resale in another to profit from a price discrepancy.
Ex: I buy an iphone here and sell in Brasil where its expensive.
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| Chapter 12: The Strategy of International Business | show 🗑
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| show | Measured by the differene between its cost of production and the value the consumers perceive in its products.
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| The more value a consumer places on a firms product... | show 🗑
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| show | Strategy, Operations, and Organization of the Firm
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| show | (1) Primary Activities-R&D, Production, Marketing/Sales, Customer service.
(2) Support Activities- Information Systems, Logistics, HR, IT, Back office (anything that provides inputs that allow primary activities to occur)
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| show | The values and norms shared among an organization's employees. It is important to recruit and hire people that are in line with the org. culture, which is in line with the strategy, to be able to maximize profitability.
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| show | Firm skills competitors cannot easily match or imitate.
Ex: Dell can customize on a massive scale, while delivering faster than anyone else.
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| Location Economies | show 🗑
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| Global Web | show 🗑
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| show | Cost advantages associated with large-scale production. The spreading of fixed cost over more units, reducing cost/unit produced. This also gives a firm more bargaining power with its suppliers
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| show | (1) Pressure for Cost Reductions
(2) Pressure to be Locally Responsive
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| Local Responsiveness tends to...? | show 🗑
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| show | ...products are standardized (this conflicts with local responsiveness, which leads companies to adapt to each country in a different way, instead of standardizing all products.)
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| Chart on Pg 353, balancing cost reduction and local responsiveness: | show 🗑
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| Low pressure for cost reduction Low pressure for local responsiveness (Ex: P&G, Microsoft) | show 🗑
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| show | Global Standardization Strategy: Firm focus on increasing profitability and growth my reaping cost reduction that comes with economies of scale, learning effects, and location economies. (Industrial goods markets, Intel, Texas Instrument, Motorola)
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| Low pressure for cost reduction High pressure for local responsiveness | show 🗑
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| High pressure for cost reduction High pressure for local responsiveness (EX: Caterpillar) | show 🗑
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| Which two strategies may not be viable in the long-term, and why? | show 🗑
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| Strategic Alliance | show 🗑
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| Advantages of Strategic Alliances | show 🗑
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| show | Can create an environment where it gives competitors a low-cost route to new tech and markets, essentially stealing. One co. gains more than the other.
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| Chapter 13: Entering Foreign Markets | show 🗑
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| Basic Entry Decisions (3) | show 🗑
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| show | Size of market
Present wealth
likely future wealth (economic growth rates)
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| show | ...more attractive to invest in.
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| show | ...economically advanced countries, politically stable ones, and democratic ones. (as opposed to higher risk in less developed/pol unstable countries).
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| show | If they can offer a product not readily available in local market, and is suitable to the consumer, that country will be attractive to move into.
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| show | First Mover- pro: preempt rivals/capture demand, build sales volume. Con: high cost (pioneer cost) of first entrant.
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| show | Large scale= high cost and rapid entry, long-term impact that's hard to reverse, huge cost may lead to limitations in entering other markets.
Leads to impression that they will be there for the long-term, which is good.
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| Entry Modes | show 🗑
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| show | 1. Avoids substantial cost of establishing manufacturing ops in host country.
2. May help firm achieve experience curve and location economies. Also economies of scale if manufactured in centralized location
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| Exporting Disadvantages | show 🗑
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| show | A project in which a firm agrees to set up an operating plant for a foreign client and hand over the key when it's fully operational.
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| Turnkey projects Advantages | show 🗑
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| Turnkey Projects Disadvantages | show 🗑
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| show | 1. Low development cost and risk, you receive royalties from licensee's gain.
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| Licensing Disadvantages | show 🗑
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| Franchising Advantages | show 🗑
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| show | 1. Lack of control over quality
2. Inability to engage in global strategic coordination.
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| Joint Venture Advantages | show 🗑
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| Joint Venture Disadvantages | show 🗑
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| Wholly Owned Subsidiary Advantages | show 🗑
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| Wholly Owned Subsidiary Disadvantages | show 🗑
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| Tech companies would most likely enter a foreign market using this strategy. | show 🗑
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| To hedge corruption and loss of intellectual property, you should use the ___________ method to enter into a foreign market. | show 🗑
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| The risk of a local agent not doing a good job/not being reliable or trustworthy in what strategy? | show 🗑
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| show | Exporting
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| show | ....of tariffs and bureaucracy.
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| show | Avoid: licensing and joint ventures
Go with: wholly owned susidiary
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| Entry mode for companies whose core competency (competitive advantage) is Management Know-How: | show 🗑
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| show | ...the more likely a firm will want to pursue some combo of exporting and wholly owned subsidiaries.
Wholly owned preferred to joint venture because it gives company tight control.
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| show | ....wholly owned subsidiaries.
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| Greenfield venture vs acquisition | show 🗑
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| Export Management Companies | show 🗑
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| EMC's: two way of working with them: | show 🗑
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| Letter of Credit | show 🗑
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| Bill of Landing | show 🗑
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| Chapter 15: Global Production, Outsourcing, and Logistics | show 🗑
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| show | An international standard; certification process that requires certain quality standards must be met. Focus on quality improvement. Statistically-based philosophy. Process improvement. Efficiency.
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| show | 1. Production and logistics functions must be able to accommodate demands of local responsiveness (decentralize).
2. Production and logistics must respond quickly to shifts in consumer demand.
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| show | Decentralization, producing close to the market to be able to respond quickly.
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| show | Country factors-political economy, culture, location, trade barriers, rules, transp. costs, movements in exchange rate.
Tech factors-
Product factors- does it travel well (light), is it universal
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| When should you centralize production? | show 🗑
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| show | Differences in political economy, culture, factor costs=few
Trade barriers=substantial
Location externalities= not important
Exchange rate=volatile
Fixed tech cost= low
min efficiency scale=low
flexible manuf. tech=not available
Value-to-weight=low
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| When a product serves a universal need, you should _____. When it does not serve a universal need, _______. | show 🗑
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| show | Concrete. Concrete is very heavy, and the value is not that great. Since this means that transportation would be more costly, you should use a decentralized approach and have many cement factories near the different consumers.
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| show | Prescription pills: pills are very light-weight, but are of great value (expensive). This means that its cheap to transport it, since it's light, and should use to centralized approach, using one factory to produce and ship to local markets.
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| show | 1. Lowering cost
2. Facilitating specialized investment
3. Protecting proprietary product technology
4. Accumulating dynamic capabilities
5. Improving scheduling.
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| show | 1. Strategic flexibility
2. Lower costs
3. Offsets
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| Making a product in-house instead of outsourcing it is _______ _______. | show 🗑
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| show | The production of a variety of end products at a unit cost that could once be achieved only through mass production of a standardized output.
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| Lean Production is also known as ___ _____ ______. | show 🗑
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| Lean Production is designed to: (3) | show 🗑
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| Chapter 16: Global Marketing and R&D | show 🗑
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| show | Identifying groups of consumers whose purchasing behavior differs from others in important ways.
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| Markets can be segmented by: | show 🗑
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| show | 1. The difference between countries in the structure of market segments. (marketing mix has to appeal to specific segment.
2. The existence of segments that transcend national border (helping to do a more centralized, global strategy.
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| When deciding on product attributes, a firm should look at: | show 🗑
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| 4 main differences between distribution systems are: | show 🗑
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| show | Concentrated retail system: A few retailers supply most of the market
Fragmented retail system: many different suppliers, none with major market share.
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| There is a tendency for greater retail concentration in ________ countries. | show 🗑
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| Channel Length | show 🗑
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| show | ...producer sells directly to consumer.
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| show | ...producers sell through an import agent, a wholesaler, and a retailer.
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| show | The degree to which the retail system is fragmented.
Fragmented: tend to promote wholesalers to serve retailers, which lengthens channels.
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| show | expensive
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| Countries with fragmented retail systems tend to have _______ distribution channels, sometimes with multiple layers. | show 🗑
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| Which types of countries tend to have more concentrated retail system channels? | show 🗑
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| A big factor that shortens channel length is some countries is... | show 🗑
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| show | A channel that outsiders find difficult to access. (Ex: It's hard for new firms to get shelf space at a supermarket.)
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| show | Japan
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| Channel Quality | show 🗑
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| show | 1. Retail Concentration
2. Channel Length
3. Channel Exclusivity
4. Channel Quality
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| show | Lower final cost to consumer, no markups my wholesalers. Use in concentrated retail areas.
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| show | Use in fragmented markets, it can allow more market access/share, that can lead to getting exclusive channels (long-term deals with import agents, for example).
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| Benchmarking: What is the best way for a company working in a foreign market to benchmark its progress? | show 🗑
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| The effectiveness of a firm's international communication can be jeopardized by three potential critical variables: | show 🗑
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| Noise is high in ____ countries, and _____ in developing countries. | show 🗑
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| Push strategy | show 🗑
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| show | Emphasizing mass media advertising as opposed to personal selling.
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| show | 1. Industrial products of complex new products
2. Distribution channels are SHORT
3. Few print or electronic media are available
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| show | 1. For consumer goods
2. Distribution channels are LONG
3. Sufficient print and electronic media are available to carry the marketing message.
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| show | 1. Product type and consumer sophistication
2. Channel Length
3. Media sophistication
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| Government's role in Antidumping | show 🗑
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| show | Most developed countries have regulation to encourage competition and restrict monopolies. Limiting prices a firm can charge in certain countries
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| show | The process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that company’s or entity’s power in the marketplace. (Corona buys their bottle supplier)
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| Horizontal Integration | show 🗑
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| show | Inability for spouse to adjust (main reason for failure in Europe).
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| The Ethnocentric Approach | show 🗑
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| Polycentric Approach | show 🗑
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| show | Seeks the best people for key jobs throughout the organization, regardless of nationality. Most attractive and popular today.
Pro-uses HR efficiently, builds strong culture and informal mgmt networks.
Con- expensive, immigration policy may limit it.
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| List of why USA expatriates fail (rated by importance): | show 🗑
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| List of why EUROPEAN expats fail: | show 🗑
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| Repatriation of Expats | show 🗑
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| show | Just because your marketing guy in your home market is doing amazing doesn't mean he will do well abroad.
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| show | the balance sheet approach.
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| Balance Sheet Approach | show 🗑
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| Article: "How to be a Truly Global Company" What are the three most important strategies for success? | show 🗑
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| show | Locally relevant brand building for consumers. Thing global, act local.
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| Article: "The Truth About Exports" What is the main theme of this article? | show 🗑
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| Myth #1: Low-income consumers spend little on material goods. | show 🗑
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| Myth #2: Low-income and subsistence-level consumers’ needs are simple. | show 🗑
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| Myth #3: Emerging consumers are overwhelmingly attracted to the lowest shelf prices. | show 🗑
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| show | Truth: Emerging consumers are satisfied with traditional retailers, and don’t necessarily aspire to shop in modern supermarkets.
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| show | Truth: Emerging consumers use credit to extend their purchasing power. (But they like to pay cash and don't want debt)
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| show | Truth: There are many meaningful subsegments of emerging consumers. Their differences, based on lifestyle and attitudes, have a significant impact on shopping behavior.
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