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44 Cards in this Set
- Front
- Back
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Customize to country or regional differences
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Local-responsiveness solution
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Conduct business similarly throughout the world
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Global integration solution
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Choice between a local-responsiveness or global approach to a multinational’s strategies
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Global-local dilemma
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What are the four broad multinational strategies?
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-International
-Multidomestic -Regional -Transnational |
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selling global products and using similar marketing techniques worldwide
- A compromise approach - Limited adjustment in product offerings and marketing strategies - Upstream and support activities remain concentrated at home country |
International strategy
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• The company attempts to offer products or services that attract customers by closely satisfying their cultural needs and expectations
• Emphasizing local-responsiveness issues - Ex.: different packages, colors - Costs more to produce, need to charge higher prices to recoup - A form of the differentiation strategy - Not limited to large multinationals |
Multidomestic strategy
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Managing raw-material sourcing, production, marketing, and support activities within a particular region
- Another compromise strategy - Attempts to gain economic advantages from regional network - Attempts to gain local adaptation advantages from regional adaptation |
Regional strategy
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What two goals get top priority for transnational strategies?
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- Seeking location advantages
- Gaining economic efficiencies from operating worldwide |
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Dispersing value-chain activities anywhere in the world where they can be done best or cheapest
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Transnational Strategy
-Location advantages |
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Country location where a firm can better perform some of its value-chain activities
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Transnational strategy
-Global platform |
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With upstream location advantages, the transnational can:
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- Locate subunits near cheap sources of high-quality raw material
- Locate subunits near centers of research and innovation - Locate subunits near sources of high-quality or low-cost labor - Seek low-cost financing anywhere in the world - Share discoveries and innovations made in one part of the world with operations in other parts of the world |
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Conditions in a industry that favor transnational or international strategies
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Globalization drivers
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What are the four categories of global drivers?
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Markets, costs, governments, and competition
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• Are there common customer needs?
• Are there global customers? • Can you transfer marketing? |
Global Markets
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• Are there global economies of scale?
• Are there global sources of low-cost raw materials? • Are there cheaper sources of highly skilled labor? • Are product-development costs high? |
Costs
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• Do the targeted countries have favorable trade policies?
• Do the target countries have regulations that restrict operations? |
Governments
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• What strategies do your competitors use?
• What is the volume of imports and exports in the industry? |
The Competition
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The choice of how to enter each international market
Also what are the four strategies? |
Participation strategies:
-Exporting -Licensing -Strategic alliances -Foreign direct investment |
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Company that treats and fills overseas orders like domestic orders
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Passive exporter
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Uses intermediaries or go-between firms
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Indirect exporting
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What are the most common intermediaries for export strategies?
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Export Management Company (EMC) and Export Trading Company (ETC)
•Specialize in products, countries, or regions •Provide ready-made access to markets •Have networks of foreign distributors |
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Direct contact with customers in the foreign market
•More aggressive exporting strategy •Requires more contact with foreign companies •Uses foreign sales representatives, distributors, or retailers •May require branch offices in foreign countries |
Direct exporting
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Contractual agreement between a domestic licensor and a foreign licensee
•Licenser has valuable patent, know-how, or trademark •Foreign licensee pays royalties for use |
Licensing
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The franchisor grants the use of a whole business operation
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International franchising
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Production following the foreign companies’ specifications
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Contract manufacturing
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Multinational company makes a project fully operational before the foreign owner takes control
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Turnkey operation
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•Cooperative agreements between firms from different countries to participate in business activities
•May include any value-chain activity |
International strategic alliance
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Two or more firms from different countries have an equity position in a separate company
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Equity International Joint Venture
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Two or more firms from different countries agree to cooperate in any value-chain activity
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International Cooperative Alliance
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What are the two types of international strategic alliances?
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Equity International Joint Ventures and International Cooperative Alliance
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• Companies own and control directly a foreign operation
- Symbolizes the highest stage of internationalization |
Foreign Direct Investment
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Starting foreign operations from scratch
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Greenfield investments
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In formulating participation strategies, one must take into account what THREE issues?
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-Basic functions of each participation strategy
-Strategic considerations and intent of company -How best to support company’s multinational strategy |
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_________ is the easiest and cheapest participation strategy, although it may not always be the most profitable
•It is a way to begin to internationalize or t test new markets |
Exporting
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Does management need to control sales, customer credit, and sale of the product?
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• - If yes, choose direct exporting
• Does company have resources to manage export operations? • - If not, use indirect exporting |
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Does company have resources to design/execute international promotional activities?
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• - If not, use foreign intermediaries and indirect exporting
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• Does company have resources to support extensive international travel or possibly an expatriate sales
force? |
- If so, choose direct exporting
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The licensing decision is based on what three factors?
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-Characteristics of the products
•Best products are older or soon-to-be replaced -Characteristics of the target country •Situation in target country - Nature of the licensing company •Company may lack resources to go international |
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What are the disadvantages of licensing?
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•Gives up control
•May create new competitors •Often generates only low revenues •Opportunity costs (barriers to other participation strategies) |
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Motivations for Strategic Alliances- what are they?
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•Partner’s knowledge of the market
•Government requirements •To share risks •To share technology •Economies of scale •Low cost raw materials or labor |
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What are key considerations for alliances?
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•Could other participation strategies better satisfy strategic objectives?
•Does firm have management and capital resources to contribute? •Can partner benefit the company’s objectives? •What is expected payoffs? |
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What are the advantages of Foreign Direct Investment?
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- Greater control
- Lower costs of supplying host country - Avoid import quotas - Greater opportunity to adapt product to local markets - Better local image of the product |
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What are the disadvantages of Foreign Direct Investment?
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•Increased capital investment
•Increased investment of managerial and other resources •Greater exposure of the investment to political and financial risks |
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The selection of a ________ ________ depends on a complex array of factors, including the company’s multinational strategy, its strategic intent, and its need for control of its products
•Most multinational companies will choose a mixture of _________ _______ to fit different product or different businesses. |
Participation strategy
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