International Business Quiz 4

Front 1

Strategy

Back 1

Actions that managers take to attain the goals of the firm

Front 2

Profitability

Back 2

A rate of return concept

Front 3

Profit growth

Back 3

Percentage increase in net profits over time

Front 4

Value creation

Back 4

Performing activities that increase the value of goods or services to customers. Difference between the firm's production cost and quality perceived by customers

Front 5

Strategic positioning (porter)

Back 5

A firm should be explicit about its choice of strategic emphasis with regard to value creation and low cost. All about strategy

Front 6

How to gain competitive advantage

Back 6

The strategy, operations, and organization of the firm must all be consistent with each other

Front 7

Core competence

Back 7

Skills within the firm that competitors cannot easily match or imitate. Bedrock of a firm's competitive advantage

Front 8

Location economies

Back 8

Can lower the costs of value creation and help the firm achieve a low-cost position. Can enable a firm to differentiate its product offering from its competition.

Front 9

Location economies are?

Back 9

Economies that arise from performing a value creation activity in the optimal location for that activity

Front 10

Global web

Back 10

When different stages of the value chain are dispersed to those locations around the globe where value added is maximized or where the costs of value are minimized. Raising perceived value and lowering cost.

Front 11

Caveats

Back 11

Transportation costs and trade barriers

Front 12

Experience curve

Back 12

Systematic reductions in production costs that occur over the life of a product

Front 13

Learning effects

Back 13

Cost savings that come from learning by doing.

Front 14

Economies of scale

Back 14

Reductions in unit cost achieved by producing a large volume of a product

Front 15

Leveraging the skills created within subsidiaries and applying them to other operations within the firm's global network may create

Back 15

Value

Front 16

Pressures for cost reductions

Back 16

-require a from go try to lower the costs of value creation

-greater in industries producing commodity-type products

-also in industries where competitors are based in low cost locations, persistent excess capacity, consumers are powerful and face low switching costs

Front 17

Universal needs

Back 17

When the tastes and preferences of consumers in different nations are similar if not identical

Front 18

Pressures for local responsiveness

Back 18

Differences in customer tastes and preferences. Differences in infrastructure and traditional practices. Differences in distribution channels and host government demands. Rise of regionalism

Front 19

Choosing a strategy

Back 19

The need to customize the product to local conditions may work against the implementation of a global standardization strategy

Front 20

Global standardization strategy

Back 20

Goal is to pursue low-cost strategy on global scale. Few favorable locations for production, marketing, etc. Avoids customization. Makes the most sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal

Front 21

Localization strategy

Back 21

Focuses on increasing profitability by customizing the firm's goods or services so that they provide a good match to tastes and preferences in different national markets

Front 22

Transnational strategy

Back 22

Plans to exploit experience-based and location economies, transfer core competencies within the firm, and pay attention to local responsiveness. Must focus on leveraging subsidiary skills.

Front 23

International strategy

Back 23

Tries to create value by transferring core competencies to foreign markets where indigenous competitors lack those competencies

Front 24

Organizational architecture

Back 24

Totality of a firm's organization, including formal organizational structure, control systems and incentives, processes, and people

Front 25

Organizational structure

Back 25

Determined by the formal division into subunits, the location of decision making, and the coordination of activities of subunits

Front 26

Control systems

Back 26

Metrics used to measure performance of subunits

Front 27

Processes

Back 27

Manner in which decisions are made and work is performed

Front 28

Organizational culture

Back 28

Norms and values shared by employees

Front 29

People

Back 29

Part of the organizational architecture that includes strategy to recruit, compensate, and retain employees

Front 30

Vertical differentiation

Back 30

Centralization and decentralization of decision-making responsibilities

Front 31

Horizontal differentiation

Back 31

Division of the firm into subunits

Front 32

Integrating mechanisms

Back 32

Mechanisms for achieving coordination between subunits within an organization

Front 33

Functional structure

Back 33

Functions reflecting the firm's value creation activities

Front 34

Product divisional structure

Back 34

Each division is responsible for a distinct product line

Front 35

International division

Back 35

Responsible for a firm's international activities. Organized by geography. Typically replicates structure in home market.

Front 36

Worldwide area structure

Back 36

Business organizational structure under which the world is divided into areas. Favored by firm's with a low degree of diversification

Front 37

Worldwide product divisional structure

Back 37

Based on product divisions that have worldwide responsibility. Helps overcome coordination problems.

Front 38

Global matrix structure

Back 38

Horizontal differentiation proceeds along two dimensions: product divisions and geographic area. Dual decision making.

Front 39

Need for coordination

Back 39

-Lowest in firms pursuing a localization strategy.

-higher in international companies

-higher in global companies

-highest in transnational companies

Front 40

Formal integrating mechanisms

Back 40

The greater the need for coordination, the more complex the formal integrating mechanisms need to be.

Front 41

Knowledge network

Back 41

Network for transmitting information within an organization that is based on informal contacts between managers within an enterprise and on distributed information systems

Front 42

Personal control

Back 42

Achieving control by personal contact with subordinates

Front 43

Bureaucratic control

Back 43

Achieved through a system of rules and procedures that directs the actions of subunits

Front 44

Output control

Back 44

Setting goals for subunits to achieve and expressing those goals in terms of relatively objective performance metrics such as profitability, productivity, growth, market share, and quality

Front 45

Performance ambiguity

Back 45

Often occurs when the causes of good or bad performance are not clearly identifiable

Front 46

Transnational strategy

Back 46

Focus on the simultaneous attainment of location and experience curve economies, local responsiveness, and global learning

Front 47

Pioneering costs

Back 47

Costs that an early entrant has to bear that a later entrant can avoid

Front 48

Exporting advantages

Back 48

Avoids the often substantial cost of establishing manufacturing operations in host country. May help firm achieve experience curve and location economies

Front 49

Exporting disadvantages

Back 49

May not be appropriate if lower-cost locations of manufacturing the product can be found abroad. Tariff barriers can be a problem as well as high transportation costs

Front 50

Turnkey project

Back 50

A project in which a firm agrees to set up an operating plant for a foreign client and hand over the "key" when the plant is fully operational

Front 51

Licensing agreement

Back 51

Licensor grants the rights to intangible property to another entity for a specific period, and in return, the licensor receives a royalty fee from the licensee.

Front 52

Franchising

Back 52

Specialized form of licensing in which the franchisor not only sells a trademark to the franchisee, but also insists that the franchisee agree to abide by strict rules as to how it does business.

Front 53

Joint venture

Back 53

Cooperative undertaking between two or more firms

Front 54

Wholly owned subsidiary

Back 54

A firm that owns 100% of the stock

Front 55

Pros and cons of acquisitions

Back 55

Quick. May help preempt competitors. Less risky than greenfield. Often produce disappointing results. Overpaying. Culture clash. Inadequate screening. Reducing the risks of failure

Front 56

Pros and cons of greenfield venture

Back 56

Gives the firm a greater ability to build the kind of subsidiary company that it wants. Slower to establish. Risky, but less than acquisitions.

Front 57

Choose a acquisition when

Back 57

The firm is seeking to enter a market where there are already well established enterprises. When global competitors are also interested in establishing a presence.

Front 58

Choose a greenfield venture when

Back 58

There are no incumbent competitors to be acquired. The competitive advantage of the firm is based on the transfer of organizationally embedded competencies, skills, routines, and culture

Front 59

Advantages of strategic alliances

Back 59

May facilitate entry into a foreign market. Allow firms to share fixed costs. Brings together skills. May help establish technological standards

Front 60

Disadvantages of strategic alliances

Back 60

May give competitors a low-cost route to new technology and markets.

Front 61

Alliance structure

Back 61

Reduce the risk of giving away too much to partner. Use contractual safeguards. Agree to swap skills. Extract a significant credible commitment in advance from partner.

Front 62

Managing the alliance

Back 62

Sensitivity to cultural differences. Build trust. Build relational capital. Learn from the partner and apply the knowledge within ones own organization.