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57 Cards in this Set
- Front
- Back
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Post-industrial countries characterized by high per-capita income, highly competitive industries, and well-developed commercial infrastructure.
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Advanced Economies
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Low-income countries characterized by limited industrailization and stagnant economies.
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Developing Economies
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Subset of former developing economies that have achieved substantial industrialization, modernization, and rapid economic growth since the 1980s.
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Emerging Markets
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What percent of the world GDP do emerging markets account for? What percentage of exports do they represent?
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40% GDP
30% Exports |
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In the mid-2000s, what was the average annual GDP growth rate of emerging markets?
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Nearly 7%
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What do emerging markets benefit from?
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-Low cost labor
-Knowledge workers -Government support -Low-cost capital -Powerful, highly networked conglomerates |
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What are some challenges and benefits that come with a Rapidly Developing Economy (RDE)?
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Benefits
-Rapidly growing markets, some of which are very large. -Low-cost resources Challenges -Difficult operating environments at home produce some highly capable companies. -They are training grounds for competing with global incumbents |
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What are six strategic globalization patterns of the new global challengers from Emerging Markets?
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1.Taking RDE brands global
2.Turning RDE engineering into global innovation. 3.Assuming global category leadership. 4.Monetizing RDE natural resources 5.Rolling out new business models to mulitple markets. 6.Acquiring natural resources. |
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Economic prosperity varies within emerging markets-what is usually the two sets of economies?
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those in urban areas (more develpoed economic infrastructure)
Those in rural areas (less discretionary income) |
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Transition economies
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=privatization of former state enterprises- since 1989 after transition from centrally planned economies into liberalized markets.
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Opportunities for Foreign Firms in China
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-Ample opportunities for firms marketing techonogies and environmental protection equipment.
-Foreign firms can profit from China's low-cost labor and growing affluence -250 million "middle-class" residents |
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What makes emerging markets attractive?
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Emerging markets are attractive as
1. Target Markets 2. Manufacturing bases 3. Sourcing destinations |
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What are three practical approaches firms employ in assessing market potential of individual countries?
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-per-capita income
-size of middle-class -a mix of market potential indicators |
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What are other ways market potential can be assessed?
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Market potential may be assessed with aggregate country data, such as gross national income (GNI) or per capita GDP, expressed in terms of a reference currency, such as the U.S. dollar.
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In relying on per capita GDP for comparison of different countries, what should be used in place of market exchange rates?
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Purchasing Power Parity exchange rates
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What does PPP adjustment provide?
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Purchasing Power Parity adjustment provides a more realistic indicator of purchasing power of consumers in emerging and developing economies.
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What does PPP adjusted per capita GDP more accurately represent?
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The amount of products that consumers can buy in a given country, using their own currency and consistent with their own standard of living.
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What is the Big Mac Index?
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The Big Mac Index is another way to illustrate the PPP concept. It is available at globalEDGE and developed by the Economist.
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What is The Economist's Big Mac index based on?
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The index is based on the theory of PPP, according to which exchange rates should adjust to equalise the price of a basket
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What does the middle class represent?
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The proportion of people in between the wealthy and the poor, has economic independence and consume many discretionary items, including electronics, furniture, automobiles, recreation, and education.
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What serves as signals of a dynamic market economy in emerging markets?
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The size and growth rate of the middle class.
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What do demographic trends indicate about the coming two decades?
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The proportion of middle-class households in emerging markets will become much bigger, with enormous spending power.
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What is the Emerging Market Potential Index (EMPI)?
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The EMPI combines factors that provide firms with a realistic measure of export market potential.
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What are the factors used in the EMPI?
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Market size, Market Growth Rate, Market Intensity, Market Consumption Capacity, Commercial Infrastructure, Economic Freedom, Market Receptivity, and Country Risk.
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What are the challenges of doing business in emerging markets?
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-The absence of reliable government authorities adds to business costs, increases risks, and reduces managers ability to forecase business conditions.
-Political instability is associated with corruption and weak legal frame works that discourage investment. -Weak intellectual property protection. -Partner availability and Qualifications -Dominance of family conglomerates. |
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What are some managerial strategies for entering into an emerging market?
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-Partner with governments or state-owned enterprises
-Partner with local dominant players -Partner with local distributors -Be more innovative to develop products suitable for emerging markets. |
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What is strategy?
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A plan of action that channels an organization's resources so that it can effectively differentiate itself from competitors and accomplish unique and viable goals.
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What basis do you develop strategies on?
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-The organizations strengths and weaknesses relative to the competition and assessing opportunities.
-Which customers to target, what product lines to offer, and with which firms to compete. |
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What is strategy in an international context?
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-Formulate a strong international vision.
-Allocate scarce resources on a worldwide basis. -Participate in major markets. -Implement global partnerships -Engage in global competitive moves. -Configure value-adding activities on a global scale. |
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What are the three purposes of Global Strategy?
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Efficiency, Flexibility, and Learning
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Describe efficiency
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Lower the cost of operations and activities
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Describe Flexibility
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Tap local resources and opportunities to help keep the firm and its products unique
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Describe learning
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Add to its proprietary technology, brand name and management capabilities by internalizing knowledge gained from international ventures.
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What is a multi-domestic industry?
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Industries in which competition takes place on a country-by-country basis.
-In such industries, each country tends to have a unique set of cometitiors. |
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What is a global industry?
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Competition is on a regional or worldwide scale.
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What are these global industries characterized by?
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The existence of a handful of major players that compete head on in multiple markets.
*Formulating and implementing strategy is more critical for global industries than multi-domestic industries. |
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What are some examples of global industries?
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Aerospace, automobiles, telecommunications, metals, computers, chemicals, and industrial equipment.
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What two basic strategic needs does the Integration-Responsiveness Framework summarize?
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-to integrate vaule chain activities globally and
-to create products and processes that are responsive to local market needs. |
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What is Global Integration?
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Refers to coordination of the firm's value-chain activities across countries to achieve worldwide efficiency, synergy, and cross-fertilization in order to take maximum advantage of similarities across countries.
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What are some pressures for global integration?
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-Economies of scale
-Capitalize on converging consumer trends and universal needs -Uniform service to global customers -Global sourcing of raw materials, components, energy, and labor. -Global competitors -Availability of media that reaches customers in mulitple markets. |
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What is Local Responsiveness?
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Refers to meeting the specific needs of buyers in individual countries.
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What does local responsiveness require?
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It requires a firm to adapt to customer needs, the competitive environment, and the distribution structure.
-Local managers enjoy substantial freedom to adjust the firm's practices to suit distinctive local conditions. |
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What are some pressures for local responsiveness?
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-Unique resources and capabilities available to the firm.
-Diversity of local customers needs. - Differences in distribution channels. -Local competition -Cultural differences -Host government requirements and regulations |
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What are the four strategies emerging from the IR framework?
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1.Home replication strategy
2.Multi-domestic strategy 3.Global Strategy 4.Transnational strategy |
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What is organizational structure?
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Refers to the reporting relationships inside the firm- "the boxes and lines"- that specify the linkages among people, functions, and processes that allow the firm to carry out is operations.
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What is the fundamental issue of organizational structure?
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How much decision making responsibility the firm should retain at headquarters and how much it should delegate to foreign subsidaires and affiliates. This is the choice between centralization and decentralization.
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What fits best with a centralized structure?
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home replication or global strategy
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What fits best with a decentralized structure?
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multidomestic strategy
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What is a matrix structure?
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It combines centralized and decentralized aspects with the transnational strategy.
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How do you instill collaborative working relationships between headquarters and Subsidiaries?
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-Encouraging local managers to identify with broad, corporate objectives and make their best efforts.
-Visiting subsidiaries to instill corporate values and priorities. -Rotating employees within the corporate network to develop mulitiple perspectives -Encouraging country managers to interact and share experiences with each other through regional meetings -Establishing financial incentives and penalties to promote compliance with headquarters goals. |
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What are some alternative organizational arrangements?
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The export department, with the internantional division as a variant.
The decentralized structure involves geographic area division The centralized structure invlove either product or functional division A global matrix structure blends the geographic, product, and functional structures although this is complex and difficult to achieve. |
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What exactly is a global matrix structure?
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An arrangement that blends the geographic area, product, and functional structures in an attempt to leverage the benefits of a purely global strategy and maximize global organizational learning, while remaining responsive to local needs.
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What does a global matrix structure attempt to do?
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It is an attempt to capture the benefits of the geographic area, product, and functional organization structures simultaneously, while minimizing their shortcomings.
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What is the global matrix structure most closly associated with?
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The transnational strategy
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What does a firm need to do to implement the matrix approach?
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The firm develops a dual reporting system in which, an employee in a foreign subsidary may report on an equal basis to two managers" the local subsidary general manager and a corporate product division manager.
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What must truly global companies manage to achieve?
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-Visionary leadership
-Global strategy -Appropriate organizational structure -strong organizational culture -dynamic organizational processes |
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What must at a minimum, manangers do to achieve a truly global organization?
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1. Exercise visionary leadership
2. Formulate a strategy 3. Cultivate an organizational culture 4. Build the necessary organizational structure 5. refine and implement organizational processes. |
