Ib

Front 1

Re-shoring

Back 1

Bringing functions previously offshored back to the home country

· Canbe done to decrease costs, respond more quickly to customers, control quality,etc.

Front 2

Outsourcing

Back 2

when a firm externalizes (that is, contracts out toanother firm) certain functions

Front 3

Off-shoring

Back 3

- shifting certain functions to another country.

typically done to save on costs butalso can be to avoid labour unions, pollution regulations, etc.…

· It’sa good thing for Canada when the US offshores here.

· R&Dis done for the US in developing Asia, mostly.

Front 4

Vertical integration

Back 4

When a firm owns parts of its value chain.

(De-verticalization (or externalization) isbreaking up the value chain through outsourcing).

Front 5

Industry cluster

Back 5

are geographically bound agglomerations of firms in one or more industries.

1. Commoninfrastructure: airports,roads, pipelines, etc.…

2.Commonsupplier base: close toequipment vendors, etc.…

3.Commonpool of trained labour:skilled workers, engineers, etc.….

4.Knowledge“spill-overs”: learningfrom neighbours through conversation, hiring their employees, etc…

Front 6

Value chain

Back 6

Is a set of interlinked activities leading to delivery of goods and service to a customer

Product design --> Production --> Outbound logistics --> Marketing --> Sales --> Post sale service.

Front 7

Transnational firm/strategy

Back 7

A firm that pursues high responsiveness and high integration strategy.

ex: ZARA

·“Menu”approach to maximize both integration and responsiveness (portfolio of products-> short skirt, medium skirt, long skirt all in the same style and material,different length sent to different locations).·

Theyidentify unique resources and learning opportunities that each market canprovide, by doing a lot of research.

Foreign subsidiaries are contributors. Managersat each location send feedback to HQ and are autonomous. They give insight andinformation

Front 8

Global firm/strategy

Back 8

A firms that pursues low responsiveness and high integration strategy.

ex: TESCO IN CHINA

· Targetuniversal needs (necessities that don’t have much variation, such as toilettepaper).

Don’t need to be responsive.

Findcommonalities between home base and entry target.

Foreignsubsidiaries are “copy and paste” versions of each other.

Front 9

Multi-domestic firm/strategy

Back 9

A firm that pursues high responsiveness and low integration strategy.

·Differentiateproducts for distinct tastes, because local tastes are very different from thatof the home base.

· Subsidiariesare highly autonomous.

· Useda lot for household products and foods.

Ex: branded packaged goods,retail banking, etc.… ->need to be responsive to regulations in different areas.

Front 10

International firm/strategy

Back 10

A firm that pursues low responsiveness low integration strategy.

Ex: Canada Goose

· Leveragecore capabilities globally.

·Productwith some global appeal.

·Mightgive up a lot of local responsibilities, by partnering, franchising, etc.…Outsource the whole retail experience in other countries.

Front 11

Responsiveness (Adaptation)

Back 11

a strategy that seeks to improve local effectiveness by 1) adapting productand process and 2) decentralizing control.

Front 12

Integration (Agglomeration

Back 12

a strategy that seek to improve efficiency by 1) standardizing productand process and 2) centralizing control over decision-making.

Front 13

Wholly-owned subsidiary

Back 13

having an ownership control over a venture located in another country

Front 14

Joint venture

Back 14

a business arrangement in which two (or more) parties co-invest(contribute equity) in a new venture,

Front 15

Management contact

Back 15

a contractual agreement in which a firm has operation control overanother firm’s assets.

Front 16

Franchise

Back 16

a contractual agreement in which a franchise uses a firm’s businessmodel for a period of time.

Front 17

Leasing

Back 17

a contractual agreement in which a lessee(user) pays the owner for the use of an asset.

Front 18

Intellectualproperty (IP) theft

Back 18

Use of someone’s IPwithout its owner’s permission and/or without compensating the owner.

Front 19

Diversification(geographic)

Back 19

Spreading operationsacross multiple countries in order to reduce risk.

Front 20

Politicalrisk

Back 20

a risk to a firm’sprofitability or sustainability due to political decisions or events in acountry.

Front 21

Enforcement(or lack of it)

Back 21

Use of social sanctions or coercive force to compelobedience to a rule-of-the-game. Forexample, the state uses a threat of coercion to enforce laws

Front 22

Laws

Back 22

Rules-of-the-game that are enforced by thestate.

Front 23

Rules-of-the-game

Back 23

Normative codes that guide, control, or change the behaviour of agentswith decision-making capacities. Maybeformal or informal.

Front 24

Culturalchange

Back 24

Change in a group’s(country’s) culture over time, sometimes occurs as a result of contact withanother culture

Front 25

Culture

Back 25

is learned, shared by a group, includes norms, values, beliefs,behaviors, and artefacts.

Front 26

Geographicdistance (CAGE)

Back 26

Distance betweencountries with respect to ease of transportation and communication.

Front 27

Economicdistance (CAGE)

Back 27

Distance betweencountries with respect to economic development, purchasing power and wages.

Front 28

Administrativedistance(CAGE)

Back 28

Distance betweencountries with respect to laws and rules-of-the-game.

Front 29

Culturaldistance(CAGE)

Back 29

Distance betweencountries with respect to cultures, tastes, values.

Front 30

First-moveradvantage

Back 30

A competitiveadvantage a firm derives from being the first to enter a market.

Front 31

Bargaining power

Back 31

Cost advantages that afirm can obtain due to its ability to negotiate with its exchange partners(customers, distributors, etc.)

Front 32

Economies of scale

Back 32

Cost advantaged that afirm can obtains due to its sales volume.

This means that the cost per unitdeclines because fixed costs are spread over more units.

Front 33

Differentiating

(as a reason for internationalization)

Back 33

To pursueinternationalization in order to increase willingness to pay.

Front 34

Reducing risk

(as a reason for internationalization)

Back 34

A firm might seek to internationalize in order to reduce its exposure to risk in one country

i.e.through geographic diversification.

sources of risk:

DemandVolatility – the demandfor goods can rapidly change ·

SupplyVolatility – a possiblelack in supply caused by a natural disaster or something.

Operationalrisk – might not be ableto operate the machinery or handle the operations·

Foreignexchange risk – a changein the exchange rate can cause a gain or loss.

Politicalrisk – regulations andlaws may pose a problem.

Front 35

Seeking resources

(as a reason for internationalization)

Back 35

A firm might seek tointernationalize in order to acquire access to unique or low-cost resources itneeds to operate.

-RAW MATERIALS, SUPPLIERS,

Front 36

Seeking markets

(as a reason for internationalization)

Back 36

A firm might seek tointernationalize in order to reach new customers and expand its sales volume.

Front 37

When we "in house"

Back 37

We can make quick adjustments to the products, develop and preservecapabilities, and retain total control.

We also ensure quality, retain IP control, and have political pressurefrom the home gouv.

Front 38

When we "outsource"

Back 38

We are allowing ourselves to focus on core competencies, employspecialties, and benefit from the industries best.

We also lower labour costs, obtain scarce resources, and gain incentivesfrom other ‘host’ gouv.

Front 39

Individualism

Back 39

Individualism a cultural orientation that values individualrights and outcomes over collective’s rights and outcomes

Front 40

collectivism

Back 40

a cultural orientation that values collectiverights and outcomes over individual’s rights and outcomes

Front 41

Power Distance

Back 41

High power distance implies that individuals are willing toaccept decision-making by more powerful members and donot expect to participate in consensual decision-making

Lower power distance implies that individuals expect toparticipate in consensual decision-making and are not willingto accept decision-making

its about how comfortable you are with a hierarchy

Front 42

Uncertainty Avoidance

Back 42

Degree you will avoid uncertainty

High uncertainty avoidance implies that individuals have lowtolerance for risk and ambiguity

Low uncertainty avoidance implies that individuals have hightolerance for risk and ambiguity

Front 43

HR Responsiveness

Back 43

adopt local system and fit local values

Front 44

HR Integration

Back 44

Adopt a system that has proven to work and implement it wherever you go.

you already have a good way to motivate workers or figuring out a competitive advantage. you dont want to re-invent the the wheel over and over again if it already works for you.

Different systems could also generate conflict among employees because may create inequality

Front 45

Centralization

Back 45

degree to which high-level managers make strategicdecisions and delegate them to lower levels forimplementation

(how concentrated decision making is. either at the bottom or the top)

• Gives top-level managers the means to bring aboutorganizational change

• Avoids duplication of activities

• Ex: In global firms HQ centralizes control overoperations

EX: in ZARA case there is a lot of centralization at the top

Front 46

Decentralization

Back 46

degree to which lower-level managers make and implement strategic decisions

• Motivational research favours decentralization

• Permits greater flexibility & responsiveness• More challenging to coordinate

• Ex. In multi-domestic firms the control is given tolocal managers and managers have a lot of autonomy. it is the local managers that make the decisions in order to gain responsiveness since they are the ones that can observe.

Front 47

Organizational Structure

Back 47

The formal arrangement of roles, responsibilities, andrelationships in the firm.

how roles and responsibilities are allocated in an organization

Front 48

Functional Structure

(cost leadership company strategy)

Back 48

- Structured by Inputs (layers of the product)

- Good for standardized products

-Good for Operational Efficiency

- Cost leadership (company strategy)

Front 49

Divisional Structure or PRODUCT

(differentiation strategy)

APPLE

Back 49

- Structured by Outputs

-Products are differentiated

-Flexibility

- IPAD, IMAC, Iwatch, etc.

Front 50

Geographic Division

Back 50

-No dominant Market

-Similarities between products

- Differences between regions

The more different the countries are from one another the more likely you are to take a geographic structure

Front 51

Matrix Structure

Back 51

Triple matrix by poles (geography),businesses, functions

Front 52

Stakeholder

Back 52

Any entity that could be affected by a firms actions:

Ex: Investors, Customers, Employees, Suppliers, Communities, Public and Governments, Competitors, Unions

you can never satisfy all your stakeholders

Front 53

Industry Standard

Back 53

Rules governing specific aspects of behaviour that emanatefrom private sector actors

Front 54

Value Chain

Back 54

Is a set of interlinked activities leading to delivery of goodsand service to a customer

-Research and Development

-Product design

- Production

- Outbound logistics

- Marketing

- Sales

- Post-sale service

Front 55

Outbound logistics

Back 55

delivery to where it is intended to be sold or worked on more

Front 56

INTERNALIZE

(When you want to OWN parts of your value chain)

Back 56

1• Transactions are frequent

2• Search and information costs are high

3• Policing and enforcement costs are high

4• Asset specificity (“hostages”) is high

Front 57

Factors that help you decide where to locate your value chain

Back 57

1.Proximity to markets

2.Government policy

3.Country advantage (Porter diamond)

3. Locational economies (clusters)

Front 58

Offshoring

Back 58

shifting certain functions to another country.

Just has to do with geography. Has nothing to do with ownership

ex: OFFSHORE R&D centres

at home:

1. ensure quality

2. rentain control over IP

3.Political pressures from home gout

Offshore:

1.Lower labour costs

2. Obtain scarce resources

3.Incentives from host gouts

Front 59

Reshoring

Back 59

Bringing back operations

Front 60

Clusters

Back 60

are geographically bound agglomerations of firms in one ormore industries

• Also known as:

Location economies

Agglomeration economies

Local innovation systems

Industry clusters

ex: MTL is a cluster of arts and culture, aerospace and pharmaceuticals

Front 61

BENEFITS FROM CLUSTERS

Back 61

1. Common infrastructure (airports, roads, pipelines)

2. Common supplier base (equipment vendors) 3. Common pool of trained labor (skilled workers, engineers)

3. Knowledge “spill-overs” – learning from neighbours

Front 62

Vertical Integration

Back 62

an arrangement in which a supplychain is owned by the firm (the opposite is externalizationor de-verticalization)

Front 63

Contract Manufacturing

Back 63

an arrangement in which a firmhires another firm (contract manufacturer) to assemble(and possibly source) a product based on a design or aformula

ex: FOXCONN manufactures 40% of worlds consumer electronics