International Business

Front 1

Integration Responsiveness Framework

Back 1

balance firms seek to achieve between global integration and local responsiveness

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Global Integration

Back 2

Integrating value-chain activities globally to achieve worldwide efficiency

Front 3

Local Responsiveness

Back 3

addressing diverse opportunities on a country-by-country basis; maximizing sales and market share by being responsive to local market needs

Front 4

Home Replication Strategy

Back 4

-Weak pressures for global integration and local responsiveness
-Most common multidomestic industries
-Separate domestic and international business
-Expansion abroad is an opportunity to develop sales for domestic product lines
-International business just extends the life of the domestic product
-Little interest in foreign markets

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Multidomestic Strategy

Back 5

-Strong pressures for local responsiveness and weak pressures for global integration
-Responsive to individual markets
-Most common in multidomestic industries
-Foreign markets run by local managers in response to local needs
-Products adapted to suit the needs and wants of individual buyers
-Managers are often Host Country Nationals

Front 6

Global Strategy

Back 6

-Strong pressures for global integration and wk pressures for local responsiveness
-Most common in global industries
-Standardization across products, marketing, and company practices
-Central coordination and control of international operations
-World as one large marketplace

Front 7

Transnational Strategy

Back 7

-Strong pressures for global integration and local responsiveness
-Most common in global industries
-Very challenging to implement
-Responsive to local needs while retaining central control of operations
-Combine advantages of global and multidomestic strategies
-Standardize & Adapt

Front 8

Pressures for Global Integration

Back 8

-Seek cost reduction through scale economies
-Capitalize on converging consumer trends
-Provide uniform service to global customers
-Conduct global sourcing of raw materials, labor, etc.
-Monitor and respond to global competitors
-Take advantage of media that reaches buyers in multiple markets

Front 9

Pressures for Local Responsiveness

Back 9

-Leverage national endowments available to the firm
-Cater to local customer needs
-Accomodate differences in distribution channels
-Respond to local competition
-Adjust to cultural differences
-Meet host government requirements and regulations

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Expatriate

Back 10

an employee who works abroad for an extended period of time, usually years

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Repatriation

Back 11

return of the expatriate to their home country
- requires advanced preparation
- repatriate can experience "reverse culture shock" or career dispruptions

Front 12

Expatriate Reassignment Failure

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the premature return of an expatriate to its home country due to an inability to preform abroad
- Costly to the firm and to the expatriate themselves

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Parent Country National

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Citizen of the country where the MNE is headquartered
Staff with:
-to maintain strong control over foreign operations
-when knowledge sharing is desirable
-when foreign operations emphasize R&D and manufacturing (PCNs are more knowledgeable about upstream activities)

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Host Country National

Back 14

Citizen of the country where the affiliate of the MNE is located (host country)
Staff with:
-when country is distant in language or cultural
-when there is an emphasis on downstream activities (marketing, sales)
-when local connections are necessary
-when government requires a certain number of local personnel
-Cost is much less than PCNs

Front 15

Third Country National

Back 15

Citizen of a country other than the home or host country
Staff with:
-when management wants to create a global culture
-when unique perspectives are sought
-when managements wants to transfer knowledge
-when firm cannot afford to pay compensation for PCNs

Front 16

Performance Appraisal

Back 16

formal process for assembling how effectively employees perform their jobs
Setbacks:
-noncomparable outcomes- differences in variables (economic, political, cultural)
-incomplete information- separate by time and place
maturity of foreign operations: new subsidiaries are not on the same level as older ones

Front 17

Compensation of Personnel

Back 17

Varies internationally due to different rules and regulations
- Base renumeration: employee will receive salary equivalent to the one in their home country
- Benefits: health insurance, life insurance, unemployment insurance
- Allowance: payment given so employee can maintain the same standard of living as they did at home
- Incentives: bonuses giving to motivate the employee to go above and beyond

Front 18

Standardization

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Make marketing program elements uniform across similar products; target entire regions
Pursued when global market segments exist, products have universal specifications, and consumers seek similar features
Advantages: cut costs, improve planning and control, global branding

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Adaptation

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Modifying elements of the marketing strategy to fit individual needs in individual foreign markets
Pursued when market has differences in language, culture, regulations, economic conditions, and infrastructure and national preference
Advantages: meet customer needs more precisely, differentiate products, comply with government regulations, combat competitors

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Factors that affect International Pricing

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1. Nature of product or industry: a specialized product with added value can sell at a high price
2. Nature of the market: income level, demographics, climate, regulations all influence the price of product
3. Type of distribution system: export industries must charge higher b/c they have more costs
4. Location of production: production in countries with low cost labor can charge lower prices, transportation costs

Front 21

Gray Marketing

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legal importation of products by those other than authorized intermediaries
(Buy product in Canada, import to U.S., sell in U.S. for higher price)
Causes: large difference in pricing, exchange rate differences
Concerns: tarnished image of manufacturer, strained relations as distributor loses sales, disrupted company activity (forecasting)

Front 22

Transfer Pricing

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putting a price on the transfer of raw materials or finished products from one country to another, generally differs from market price
- Can help MNE shift profits out of a country with high income taxes; way to repatriate profits from a country

Front 23

Export Deparment

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division created to manage all exporting activities; created when export sales become a high percentage of total sales
- Most common with home replication strategy

Front 24

International Division Structure

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international operations has its own separate division; created when there is an increase in activities abroad
- Centralizes management, potential for competition between domestic and international units

Front 25

Geographic Area Structure

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divisions are separated by geographic area, decentralized
- local managers are responsible for operations within their own regions
- most common with multidomestic strategy
- balance between global integration and local adaption

Front 26

Product Structure

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organized by major product lines; centralized
-stand-alone profit centers

Front 27

Function Structure

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organized by functions such as production and marketing; centralized
-centralizes control and coordination

Front 28

Global Matrix Structure

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combines product, function, and geographic are structures
Simultaneously:
1. coordinates and controls international operations
2. respond to needs in individual countries
3. maximize interorganizational learning and knowledge sharing worldwide

-most common with transnational strategy