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141 Cards in this Set

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What is Globalization?

Linkages or interconnections between nations.

- Barriers (physical, political, etc...) separating different regions are reduced or removed leading to exchanges in goods, services, $, people




What are some pro's of globalization?

-New markets


- Wider selection for suppliers


- Lower prices


- Less costly labour


- Removal of barriers = liberalization


- Cheaper locations for investment

What are some con's of globalization?

- Vulnerable to foreign markets


- Removes protection from domestic producers

Where are the 4 "economic blocs?"

Western Europe, NAFTA (North America), Japan, China

What are the 3 main Economic & Financial indicators of Globalization?

1. International trade in goods/services


2. Transfer of $ capital from country to country (foreign investment)


3. Movement of people across borders

What is Foreign Indirect Investment?

FII - Purchasing financial assets from another country (ex. migrant remittances - sending $ to home countries)

What is Foreign Direct Investment?

FDI - Firm establishes, acquires, or increases production facilities in foreign countries

What are the 2 types of MNC investments?

1. Greenfield Investment: Establishment of new production facilities


2. Brownfield Investment: Purchase or acquisition of already existing production facilities

What factors does globalization influence?

Culture, media, diet, education, world of work, sport, religion, health, crime, ....

What are some Political/Regulatory facilitators of globalization?

- Free Trade Areas (FTA): No tariffs or quotas from other members of area

- Customs Union (CU): FTA & members agree to levy common tariffs on imports from non-member


-Common Market: CU and free movement of good, services, capital, labour




-Regional Trade Areas (RTA): Set up by gov to help increase economic & political interlinkage by signing treaties




-Export Processing Zones (EPZ): MNCs can invest, produce, trade under good conditions in poorer countries





What are some other facilitators of globalization?

Technology and Economic

What are some barriers of globalization?

- Gov regulation


- Tariffs & subsidies


- Foreign aid


- Technical standards


- Controls on capital


- Public procurement


- Border/Immigrant control


- Protection of intellectual property rights

What are the 3 Cross-Border Transactions?

- International Trade


- International Portfolio (Indirect) Investment


- Foreign Direct Investment (FDI)

What is international trade?

Exchange of products and services across national borders, typically through importing and exporting

What is international portfolio (indirect) investment?

Passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns

What is foreign direct investment (FDI)?

A firm invests directly in production or other facilities over which it has effective control (multinational enterprises)

What is a multinational corporation (MNC)?

A firm that engages in foreign direct investment in at least one working affiliate (ie. a factory or branch office) in another country

How is multinationality defined?

- Some suggest it should require operations in a min of 5-6 countries


- Some argue that multinationality should require that the firm be a certain size


- Enormous problems creating the above restrictions

How does Held (1999) define globalization?

The widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual.

- Countries become more interconnected & interdependent



What is semi-globalization?

Both forces of globalization and localization are taking place at the same time.


- This tension is the fundamental source of uncertainty in international business, as the world is neither completely globalized nor completely localized.


- A way that a company adapts to its environment (ex. McD selling no beef in India)

What are the Globalization Drivers?

Technological, Economic, Political/Regulatory Factors, and Global Competition

Describe Technological Factors as a Global Driver

- Improvement in communications


- Reduction in transport costs


- Fast development of internet and cheaper technology

Describe Economic Factors as a Global Driver

- See market potential


- Economies of scale/Limited (small) domestic market


- Differing country costs/Access to natural resources


- Convergences of consumer needs

Describe Political/Regulatory Factors as a Global Driver

- Government incentives such as export processing zone (ex. EPZ)


- Reduction of barriers to movement of goods, service, capital, and people

Describe Global Competition as a Global Driver

- Companies take action to match competitors' moves


- Companies look for less competitive markets (BRICS)


- Market presence necessary to execute global strategies

What are the Forces of Localization?

CAGE Distance!


Cultural (different languages, ethnicities, religions, values, norms, tastes/preferences)


Administrative (differences in corruption, legal rules, political risk & instability, government policies, accounting practices, currency)


Geographical (Physical distance, time zone, climate, size of country)


Economic (Differences in consumer incomes, costs, and human & natural resources)

Are companies that are more alike more or less likely to trade more together?

Trade more - Bell curve (complete localization - semi-globalization - complete globalization)

What is the implication for MNCs?

The constant challenge of managing the tension between global integration and local responsiveness

What was the Coca Cola Internalization?

Coke first moved abroad in 1902


-1929 in 76 countries


- Supplier to military during WWII and built 63 bottling plants around the world


- "Multilocal" approach: Local operations more or less independent (Coke's role was to support the global network)

What did Roberto Goizueta (1981-97) say in Exploiting Similarities?

- As US growth slowed, focused on rest of the world for growth opportunities


- Believed that endless scale economies would concentrate market share in Coke's hands


- Belief in Statelessness


- Expanded from 160 countries to 200 countries


- Centralized and standardized operations: one-size-fits-all

What was Goizueta's belief in statelessness?

- Declared Coke to be a global company that happens to be headquartered in US


- Removed international and domestic labels


- Embedded US division in international division

How did Goizueta centralize and standardize operations?

- Consolidated divisions


- Consumer research, creative services, TV commercials, and most promotions put under Coke's internal ad agency


- Created "anchor bottlers" that would operate in multiple countries



What did Douglas Daft (2000-04) discuss in Succumbing to Differences?

- New strategy to "think local, act local"


- Moved decision making closer to local markets


- No more global advertising - all local


- Coke was unprepared for transition

Why does Daft say Coke was unprepared for transition?

- Growth sagged from 5.2% to 3.8%


- Much of top talent left the company


- Quality suffered even more than scale economies

What does Neville Isdell (2004-08) discuss in Managing Similarities and Differences?

- Rebuilt headquarters capabilities and recentralized elements of marketing, particularly bigger, more universal advertising theme


- Focused on innovation and learned from overseas operation (eg Japan) about how to become less Coke driven elsewhere


- Stateless is out: recognizing the distinctive features and challenges of the home region


- More nuanced resource-allocation decisions


- Centralization and standardization have been moderated: focused more on variety

What was the key message from the Coca Cola case?

International companies need to find the right mix of global and local through their operations (ie. Coke's happiness message = brand architecture yet is communicated differently in each country to fit their needs)

What are the 3 steps in Defining Markets?

1. Decide goods/services to include


2. Identify other firms competing in market


3. Indicate geographical area of competing firms

What is Cross Elasticity of Demand (used for step 1 in Defining Markets)

Measures customer response when 1 firm changes its price (ex. increase in price (1) = decrease in demand (1) and increase in demand (2); decrease in price (2)) -> Increase cross-elasticity of demand for alternatives




Indicates competitors in the same industry

How do companies identify other firms competing in the market?

- Difficult to utilize in practice (good in theory as info to cross calculate often difficult to find)


- Look for members of industries that follow suit of competitors


- "Sub-industries" (ie. Fiat vs. Rolls Royce)


- Diversified firms (sells large range of good that could be classified to many industries and may put firm @ competitive advantage)


- Vertically integrated firms

What is a vertically integrated firm?

A firm that operates at several stages of production (ex. Shell - Drills oil, refines oil, sells oil - operates in 3 different industries)

How do firms indicate geographical area of competing firms?

Similar firms may/may not be competitors based on distance


- Firms may intentionally keep industries apart (ex. car producers in West Europe)


- Geographical boundaries and increase in price in 1 area (ex. Increase in price in cars in Germany may attract demand from cars from Italy)

What are the important market structures to note?

- Monopoly


- Natural Monopoly


- Perfectly Competitive Market


- Monopolistic Competition


- Oligopolistic Markets

What is a monopoly?

1 firm that dominates a market (usually protected from competition from high barriers of entry)


- Control market & can set prices to extract max. profit since consumers have no close alternative


- ex. BC Ferries


What is a natural monopoly?

- High fixed costs


- Need to produce on large scale relevant to size of market to generate sufficient revenue to cover fixed costs


- ex. Gas, water, electricity, telephone networks

What are perfectly competitive markets?

- Large # of firms enter/leave


- No individual in control


- No differentiation in goods (products seen as identical)


- Price set by forces of supply & demand


- Buyers & sellers know market conditions


- Profit levels enough to keep firms alive (any above profit eroded by competition)

In reality, are markets typically perfectly or imperfectly competitive?

Imperfect:


- Costly to enter markets


- Dominated by small # who set prices/differentiate products/earn high profits/buyers & sellers have gaps in market knowledge

What is monopolistic competition?

- Large # of firms


- No barriers of entry


- Small degree of product differentiation


- ex. Corner store (large # of outlets, ease of entry, different locations)

What is an oligopolistic market?

- Markets with few firms, high barrier entry, and able to exercise control over market


- Product differentiation between competitors through branding, advertising, design, ... (ex. Apple products (iPad/iPod/iMac) can charge increased price and not lose custom)


- Firms actions could affect rivals' sales/market share/profits and provoke reaction


- Mostly contains manufacturing and service industries

What is competition with cartel?

A firm that secretly aims to control competition throughout market to set common prices or divide by geographical region

What is Market Power?

Increased concentration levels usually = decreased intensity competition


- Perfect Competition: Power equally distributed = level of market concentration decreased


- Monopoly: 1 firm = 100% of competition


- Oligopoly: Levels of concentration increased (fewer firms dominate)

How can we measure market competition?

- Concentration Radio (CR)


- Herfindahl-Hirschmann Index (HHI)

What is CR?

Taking share of largest firms in sales or output


- Add sums of CR (ex. CR3 = 3 largest: 25.2+11.9+6.9= 44(CR3))

What is HHI?

Calculated by summing squares of individual market shares of larger firms


- More accurate than CR because it includes all firms


- HHI > 100 = level of concentration with adverse effects on competition (esp. with high entry barriers and market position faces little innovation)

How else can concentration levels be affected?

By geographical focus of information


- Can be increased in 1 geographical location and fragmented in another

What is Porter's 5 Forces Model?

Identifies and evaluates main threats to firms in external industry


1. Rivalry Among Existing Competitors


2. Threat of New Entrants


3. Threat of Substitution Products or Services


4. Bargaining Power of Suppliers


5. Bargaining Power of Buyers

What are some characteristics of rivalry?

- Horizontal Merger


- Vertical Merger


- Intensity


- Avoiding competition through price leadership

What is a horizontal merger?

- Firms at the same stage of production boost market share, reduce competition


- Facilitate movement into new geographical markets (ex. KLM merge with Air France)

What is a vertical merger?

- Firms move closer to suppliers of raw materials, guarantee supplies or materials or distribution

What does rivalry intensity depend on?

- # of competing firms


- Relative size of firms


- Market growth rate


- Extent of product differentiation


- Importance of fixed costs


- Ability to supply (production capacity/expansion of firms)

What is price leadership?

Results from implicit understanding within industry


One firm raise price and others follow suit


1. Dominant Price Leadership (Biggest firm changes price and others follow)


2. Barometric (Firms of similar size and identity or price leader changes from 1 period to another)

What are some traits of new entrants?

- Attracted to industries by prospects of increasing profits and growth


- Current firms with decreasing profit but now sees potential for increase in profit


- Excess Capacity/Declining Demand/Established firms freezing new entrants by controlling supply of materials & distribution through vertical integration of long term contracts

What are the Barriers of Entry?

1. Absolute cost barriers


2. Incumbency advantages independent of size


3. Excess capacity (declining demand)


4. Reaction of established firms


5. Extent of vertical integration (or long-term contracts with suppliers or customers) - supply chain


6. Legal barriers/restrictive government policy


7. Fixed costs

What is strategy?

Creating a unique and valuable position with a different set of activities and creating fit among these activities


- Not about steps company takes

What are the 3 generic competitive strategies?

1. Cost Leadership (ex. Walmart)


2. Differentiation (ex. Apple products)


3. Focus (ie. Cost focus/Differentiation focus)


- Big industries or niche markets




Difficult to be both cost leadership and differentiation

What are the two other forces in Porter's 5 Forces Model to consider?

- Complementary Products (ex. printer & ink)


- Government policies

When is competition the most intense?

1. Lots of competing firms


2. Firms of similar size/market share


3. Market slowly growing


4. Product differentiation is low


5. Exit barriers are high

Threat of Substitutes

In different industries but provide similar goods/services (ie. train vs. plane travel; music downloads vs. CDs)


- Can eliminate other substitutes if powerful enough


- Switch based on cost-efficiency/ease of accessibility/sub provides superior performance over other options

When is a supplier more powerful?

-Few suppliers & many buyers


-Doesn't rely on buyer for revenue too heavily


-Differentiated products sold


-Buyers face high switching cost in changing suppliers


-Supplier can credibly threaten to integrate forward into the buyer's industry

When is a buyer more powerful?

-Many suppliers & few buyers


-Suppliers depend heavily on buyers for revenue


-Suppliers sell undifferentiated products


-Buyers facing few switching cost in changing suppliers


-Buyers can credibly threaten to integrate background to supplier's industry

Is Walmart a successful company?

Sure is!




To gain more power is could get rid of wholesalers and have many manufacturers

What is Walmart's business strategy?

-"Everyday low prices"


- Reputation


- 2.2 million employees (largest)

What is Walmart's competitive advantage?

- Operational effectiveness (IT, Distribution/Logistics/Supply chain management)


- Bargaining power over suppliers


- Skills (eg. supply chain management)


- Leadership


- Store location: Small town/Rural areas


- Culture/HR Management


- Reputation

How can companies build barriers to imitation?

- Develop unique sources of competitive advantage that is difficult to imitate


- Plan to be low-cost (easy). Difficulty is constructing ways of lowering costs that can withstand imitation


- Importance of creating fit among different set of activities

What does PESTLE stand for and when is it best used?

External Environmental Analysis


-Political


-Economic/Financial


-Socio-Cultural


-Technological


-Legal


-Ecological

What are Walmart's primary competitive advantages in the US?

-Distribution/logistics


-Bargaining power (size/scale)


-Reputation


-IT


-Skill/Leadership


-Store location


-Organizational culture

What are reasons for FDI?

-Market access


-Lower production costs


-Natural resources & other assets


-Competition (eg. globalization of competitors)


-Want higher degree of control


-Decreases production cost

What to consider when entering a new foreign market?

Evaluate options with PESTLE (external), CAGE (distance), Porter's 5 Forces (industry), SWOT Analysis (internal & external)

What are the advantages of being a first-mover?

-Ability to preempt rivals and capture demand by establishing a strong brand name (reputation effects)


-Ability to build sales volume and make huge profits


-Ability of early entrants to create switching costs

What are the disadvantages of being a first-mover?

-Pioneering costs are costs that an early entrant has to bear


-Possibility that regulations, technology, and consumer needs may change


-Free-rider effects

What are the modes of market entry?

-Direct/Indirect Entry


-Licensing


-Franchising


-Joint Venture


-Wholly Owned Subsidiary

What is licensing?

A firm grants permission for another to use its assets (eg. to produce its products, use its production processes, or its brand name)

What is franchising?

A firm (franchisor) grants the right to an independent individual or firm (franchisee) to market a company's goods or services within a certain territory or location in a prescribed manner (eg. McD's, Subway, Domino's)

What is a joint venture?

A contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking. All parties agree to share in the profits and losses of the enterprise



What is a wholly owned subsidiary?

Company completely owns a subsidiary

How to choose the appropriate mode of entry?

-Export vs. Produce locally


-The extent of ownership control over activities that will be performed locally in the target market (when to choose alliance-based entry vs full ownership?)

What happened in the Toys R Us Case?

- Toys R Us bought directly from suppliers


- Similar to Walmart case (cultural differences)


- Invest a lot in info tech


- Cost-Leadership


- Occupy 20% ($5.5 billion) - Global player successful

Why was Keiretsu a problem?

Something Toys R Us couldn't change (Nintendo - wholesalers - mom-pop stores)

What is a transnational mindset?

-Evaluate both forces for localization and globalization and know how to respond to and leverage these forces


-Understand what exactly its "core" beliefs and practices are




-When to/not to change

What are the key lessons from the Toys R Us case?

- Cultural vs legal differences


- Understand bigger picture (5 forces model)


- Know how to manage leverages


- Trans-national company


- Entry-timing important (US & Japan getting better relationship ~1991 Soviet Union broke up)

What are Ghemawat's AAA Strategies for Responding to Country Differences?

Adaptation


Aggregation


Arbitrage




Complete localization and Complete globalization on either side (L/R)

What are Adaptation Strategies?

Adjusting to differences across countries




(ex. McD's no beef in India)

What are Aggregation Strategies?

Overcoming some differences among countries by grouping them based on similarities (geog, cultural, historical, ect...) so that within-group differences are minimal compared with between-group differences




Can provide standardization for economies of scale

What are Arbitrage Strategies?

Exploiting selected differences across countries instead of treating them all as constraints (leveraged differences)

What does culture encompass?

-Values (moral/religious beliefs)


-Norms (rules of behaviour)


-Sanctions (to enforce the norms)


-Language


-Diet


-Dress


-Institutions (transmit the norms and values)

What are Hofstede's 5 Cultural Dimensions?

1. Individualism vs. Collectivism (degree individuals are integrated into groups)


2. Power Distance (extent to which less powerful members of orgs and institutions accept and expect that power is distributed unequally)


3. Uncertainty Avoidance (extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations)


4. Masculinity vs. Femininity (competition and assertiveness vs. cooperation and human relationships)


5. Long Term Orientation (fostering of virtues oriented towards future rewards ie. perseverance and thrift)

What are some factors of a universalist culture?

Rule based


- Focus is more on rules than relationships


- Legal contracts are readily drawn up


- A trustworthy person is the one who honors his or her word or contract


- There is only one truth or reality, which has been agreed to


- A deal is a deal


(ex. USA, Canada, Australia, Nordic countries)

What are some factors of a particularist culture?

Relationship Based


- Focus is more on relationships than rules


- Legal contracts are readily modified


- A trust worthy person is the one who honours changing circumstances


- There are several perspectives on reality relative to each participant


- Relationships evolve


(ex. Latin America, East Asia)

What are some examples of hypernorms (core human values) and what is the golden rule attached to them?

Ex. culture, sexual orientation, safety, honesty,...




Golden Rule: Ethics of reciprocity - treat others as you would like others to treat yourself

What AAA strategies did KFC use when moving to China?

- Arbitrage: Country curious about American culture


- Adaptation: More spacious stores, menu items, 90% franchisee


- First mover advantage (1987)

How do you describe Levendary positioning and organizational culture?

- Focused on customer service/high quality food


- Quick casual restaurant (multi-unit, high price (care about high quality ingredients))


- Target white collar professionals


- Health oriented


- Welcoming/homey environment


- Change local menus to a certain extent


- Innovative

Do you think China is a strategically important market for Levendary?

Yes, it is important for Levendary.


- Niche market (growth opportunity)


- Domestic market steadily beginning to stop growth (hence need to go to a new market)


- Youth will pay premium for foreign food in China

Is Chen the right person for the job? What should Foster do about him?

Chen:


- Go-getter/entrepreneurial/local real estate knowledge


- Well connected in local Chinese market (knows in's & out's)


- Bi-Cultural (MBA from Stanford)


- Had free-reign




Foster should put a few restraints on what Chen can/cannot do in the foreign subsidiary, and not fire him since he is a valuable asset to the company

What is decentralization?

Granting subsidiaries a high degree of autonomy

What is centralization?

Tight controls with strategic decision making at headquarters

Is Coca Cola more decentralized or centralized (same brand throughout markets, only difference is artificial sweetener and packaging)

More centralized, but not entirely so.


- Makes company follow a consistent framework that is standard across the world, however is more decentralized on the sweetener/packaging

What is represented on Jack Welch's Performance-Values Matrix?

How and when to let go of someone.


- Performance (high/low) rated vertically


- Value Match (low/high) rated horizontally




Low value match & low performance (low lefthand corner) = Let go




High performance & high value match (upper righthand corner) = Star




Other two areas = ? (need to analyze if it is a good decision to fire/keep)

What strategy should Levendary adopt to drive its sustainable development in China?

- Global integration (standardization) vs. local responsiveness (adaptation)


- The evolving role and responsibilities of China subsidiary (management team) in terms of changes in the nature of HQ-subsidiary relationships

What is an expatriate and what are the different types?

Ability to attract talent around the world can be a competitive advantage




Types:


- Company-assigned: long-term, short-term, international commuters


- Self-initiated: individuals who take their own initiatives to work and live in a foreign country

What are some advantages of sending expatriates overseas?

- Knows culture & products of company


- Relates easily and efficiently to corporate headquarters


- Has technical or business skills not available locally


- Does not put country ahead of company


- Fits company's need to develop future leaders with international experience



What are some disadvantages of sending expatriates overseas?

- High costs (company may pay for family & prospect's needs)


- High failure rates (eg. earlier withdrawal & underperformance)


- Prolonged start-up and wind-down time


- Short-sighted focus


- Difficulty in finding experienced managers willing to move


- "Out of sight, out of mind" concerns


- Re-entry problems

What are some expatriate selection criteria?

- Technical expertise and competence, past experience and track record, language ability


- Adaptability and flexibility (eg. cultural sensitivity and emotional intelligence, open-minded, willing to learn and adapt)


- Personal factors (eg. age, marital status, gender, health, personality)

What are the key issues for Effective International Assignments?

1. Selection


Send the right people for the right reason


2. Pre-departure


Provide cultural orientation and training (including expat's family)


3. On-site


Provide strong relocation support & strengthen the expat's ties to home


4. Repatriation


Offer well-designed repatriation plan & provide re-entry orientation (reverse culture shock)

What are the benefits of being an expatriate?

- Financial benefits


- Better quality of life


- Skill development (eg. cultural intelligence/adaptability)


- Career development


- International exposure (family)

What are the challenges of being an expatriate?

- Family (spouse) poor adjustment (ie. homesickness, in-group/out-group, high turnover rate)


- Language/communication barriers


- Cultural adaptation


- Reestablishing a social life (social network)


- Re-entry difficulty and reversed cultural shock

What support can you draw from being an expat?

- Career (eg. coaching, protection)


- Psychosocial (eg. friendship, emotional support)


- Cross-cultural transition (eg. cultual guidance, home linkage)

Why is the external environment rapidly changing?

- Accelerating rate of globalization


- IT revolution


- Increase in economic and political weight of countries (ex. China, India, Russia)


- International institutes (ex. WTD & EU) becoming increasingly important influences on global environment

What three factors are firms facing great difficulty with the external environment?

1. Monitoring


2. Analyzing


3. Responding to

What 2 factors contribute to the rapidly changing external environment for international businesses?

Complexity: Relates to increasing diversity of customers, rivals, and suppliers of socio-cultural, political, legal and tech elements confronting IB




Turbulence: Environment with rapid, unexpected change in contrast to stable environment (slow & predictable)

What do turbulence and complexity make it more difficult for firms to do?

- Predict demand


- Disorderly competition


- Shorten decision making time


- Increase risk of product obsolescence


- Forces to speed up innovation process

What are some opportunities of globalization?

- Enter new markets


- Take advantage of differences in costs and quality of labour


- Gain economies of scale


- Get access to raw materials

What are some threats of globalization?

Arise from:


- Financial risk (ie. inflation)


- Political risks (ie. terrorists)


- Natural disasters




- Some threats can be opportunities for some firms (ie. Hurricane Katrina = T for New Orleans but O for power generator firms)

What is the industry based view (IBV) in regards to strategy?

Emphasizes firm's performance was determined by micro/macro environment




- External analysis (Industry & EE) ~1980's

What is the resource based view (RBV) in regards to strategy?

Emphasis on internal analysis of resources & capabilities to recognize and exploit differences of firm




- Internal analysis (Resources & Capabilities) ~1990's

What is Post's "Extended Enterprise" strategic approach?

Stressed role of recognizing stakeholder relationships in managing wealth creation in today's complex extended enterprise


- Recognized that RBV and IBV ignored socio-political environment w/ stakeholder relationships (therefore, incorporated all 3 aspects)

What are the Extended Enterprise steps?

1. Identify macro-environmental issues


2. Assess urgency and likely occurrence of issues


3. Analyze impact on structure of industry


4. Identify relevant stakeholders


5. Identify most important by assessing impact on organization


6. Assess impact of issue on each of the stakeholders




*Steps help to identify importance of stakeholder

What are Kotler & Casoline's factors that cause chaos?

- Information revolution (ie. cloud technology)


- Disruptive technologies and innovations


- "Rise of rest" (rebalancing economic power in countries (ie. China, India))


- Hyper-competition (competitive advantage short lived)


- Sovereign wealth funds


- Environment (preserve scarce resources)


- Consumer & stakeholder empowerment from info revolution

What is a "born-global" firm?

Typically a small company with limited resources but a global vision (ie. High tech company with niche market focus)

What are the main reasons for FDI?

-Market Access


-Lower Production Costs


-Natural Resources

How do countries differ in attractiveness?

- Variations in economic environment


- Growth rates


- Political stability


- Disposable levels of income


- Available resources


- Government incentives


- Level of competition


- Risk of economic/political stability

What is the difference between market selection and site location?

Market Selection:


- Depends on market size, potential growth, competition, and general macro-environment




Site Location:


- Info on competitors, resources, infrastructure, any government incentives to collect

What are the World Economic Forum (WEF)'s 12 Pillars of Competitiveness?

1. Institutions


2. Infrastructure


3. Macroeconomy


4. Health & Primary Education


5. Higher Education & Training


6. Goods Market Efficiency


7. Labour Market Efficiency


8. Financial Market Sophistication


9. Technological Readiness


10. Market Size


11. Business Sophistication


12. Innovation

What are the 3 stages of development from WEF?

Under the Global Competitive Index




1. Factor Driven (Pillar 1-4: Basic Requirements)


2. Efficiency Driven (Pillar 5-10: Efficiency Enhancers)


3. Innovation Driven (Pillar 11-12: Innovation & Sophistication)

What is the process of assessing country attractiveness?

1. Initial screening


2. Assess general market/site potential (size, growth, quality)


3. Assess general business environment (PESTLE)


4. Product/service market assessment (5 Forces, more detailed analysis)


5. Production site assessment


6. Undertake risk assessment


7. Select market or site (consider: market potential, ease of business, potential risk)

What are the two views of global talent?

1. Differentiated approach


- Recognizing high-potential employees


2. Inclusive approach


- Address needs of employees at all levels (assess how best to leverage value each group of employees can bring to the campus)




They are not mutually exclusive!

What are the 6 principles of effective global talent management?

1. Alignment with Strategy


2. Internal Consistency


3. Cultural Embedded-ness


4. Management Involvement


5. Balance of Global & Local Needs


6. Employer Branding Through Differentiation



What does the principle "alignment with strategy" mean?

Meeting corporate strategy goals.

What does the principle "internal consistency" mean?

- Practices must fit with each other


- Alignments have synergy effect

What does the principle "cultural embedded-ness" mean?

Integrating core business values and principles into talent management processes (HR Management)- ex. hiring methods, leadership development, etc..

What does the principle "management involvement" mean?

Incorporate all levels of management (HR -> CEO)


- Recruitment, succession planning, leadership development

What does the principle "balance of global and local needs" mean?

Responding to local and foreign demands while having an overarching, coherent HR strategy

What does the principle "employer branding through differentiation" mean?

- Having a compelling value proposition


- Stressing corporate social responsibility