International Strategic Management

Front 1

International strategic management has evolved by four factors:

Back 1

1. Political factors
2. Technological factors
3. Social factors
4. Competitive factors

Front 2

Verbeke distinguished between three types of advantages that a firm can have which create an FSA

Back 2

1. Resources
2. Routines
3. Recombination skills

Front 3

Why do wrong firms internationalise and right firms fail to internationalise? Two main reasons:

Back 3

1. Bounded rationality
2. Bounded reliablility

Front 4

Absolute (cost) advantage

Back 4

The ability of one party to produce more of a good or service than competitors, using the same amount of resources

Front 5

Comparative advantage

Back 5

Lower marginal and opportunity costs

Front 6

Heckscher-Ohlin model

Back 6

Suggests that coutnries will tend to export products that use their abundant and cheap factors of production and will import products that use the country's scarce factors

Front 7

The Uppsala model; four steps:

Back 7

1. Gain experience of their domestic market
2. Begin to operate in a nearby market and then slowly penetrate far away markets
3. Choose to enter markets through export
4. After several years, etablish wholly owned or majority owned operations

Front 8

Key features of the Uppsala model

Back 8

1. Distance can mean one of two things
2. Commitments should be increases slowly
3. Commitments are reversible

Front 9

The Born Global Concept is a type of firm with one of the following names

Back 9

1. Leap-frog firm
2. International new ventures
3. High tech start-ups
4. Innate exporters
5. International entrepreneurs

Front 10

Two dimensions determining what kind of firm it is (Born Global Concept)

Back 10

1. Increasing number of activities coordinated across countries
2. Increasing number of countries involved

Front 11

Filling in the Born Global Concept matrix

Back 11

1. Export/import start-ups (low, low)
2. Multinational trader (low, high)
3. Geographically focused start-ups (high, low)
4. Global start-ups (high, high)

Front 12

The Cluster Model

Back 12

Suggests that a firm should internationalize to destinations with the necessary supplier, competitor, networks, to improve the efficiency of the firm's operations

Front 13

Assessing country attractiveness; Country risk analysis:

Back 13

1. Political risk
2. Economic risk
3. Operational risk
4. Competitive risk

Front 14

Assessing country attractiveness: Market opportunities

Back 14

1. Market size
2. Market growth
3. Quality of demand

Front 15

Assessing country attractiveness: Industry opportunities

Back 15

1. Quality of the competitive climate
2. Resource endowments
3. Government incentives

Front 16

Transaction cost economics (TCE) suggests that:

Back 16

- Activities are internalised when the (transaction) cost of internalisation are lower than the costs of outsourcing
- Activities are out-sourced when the (transaction) cost of out-sourcing are lower than the cost of internalising

Front 17

The level of additional transaction costs incurres depend on three critical factors:

Back 17

1. Asset specificity
2. Uncertainty/complexity
3. Frequency

Front 18

Agency theory:

Back 18

Agency cost arise from the seperation of ownership-and-control = principal-agent problem

Front 19

Principal-agent problems arise when:

Back 19

1. The principal pays the agent for perfeorming certain acts that are useful to the principal and costly to the agent
2. There are elements of the performance that are difficult (or costly) for the principal to observe

Front 20

Agency cost increases in any contact with:

Back 20

1. Information assymetry
2. Uncertainty
3. Risk

Front 21

Agency costs can be solved by:

Back 21

1. Fully specify all contracts
2. Monitor all agents of the firm

Front 22

Foreign distributor

Back 22

Firm sets up contract with local distributor

Front 23

Strategic alliance allows a firm to:

Back 23

1. Share risk and costs
2. Benefit from the parner firm's complementary recourses
3. allow for the development of capabilities to deliver products and services valued by the market
4. provide access to scarce resources

Front 24

Two factors influencing the ease of transferring FSAs:

Back 24

1. Mobility
2. Embeddedness (tacit of explicit)

Front 25

Alliances are preferred when:

Back 25

1. Each firm needs only a subset of FSAs
2. With M&A it would be hard to dispose the unusable FSAs

Front 26

Merger and acquisition when:

Back 26

1. The firm want full and direct control over the foreign market
2. FSA risk
3. Cost for M&A are lower than for FD or alliance

Front 27

Problems with M&A

Back 27

1. Cost of integration are underestimated
2. Expected benefits from the deal are overestimated