• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

Card Range To Study

through

image

Play button

image

Play button

image

Progress

1/51

Click to flip

Use LEFT and RIGHT arrow keys to navigate between flashcards;

Use UP and DOWN arrow keys to flip the card;

H to show hint;

A reads text to speech;

51 Cards in this Set

  • Front
  • Back
Advantages from Internationalization
CONELEARN Framework

Cost Advantages-EOS, better access to inputs, applying existing competencies to new market, more power over suppliers

Network Benefits-More value if more people use product, make product global standard (phone, Facebook)

Learning Opportunities-access to new ideas, new customers demand innovation, locate near competitors to learn from them, locate near cluster
Stage model of internationalization for small firms
1. Passive exporting
2. Export management (through intermed.)
3. Export department
4. Sales branches
5. Production abroad
6. Creation of MNE

Very slow process overall
Born Global Firms and their characteristics
A lot of small tech companies that start off in many markets

Global vision must exist since inception

Internationally experienced management

Unique intangible asset is present

Use niche strategy to avoid head to head comp.

Close coordination to facilitate global learning
Factors influecning whether a firm should go abroad
Technology factors-how much must product be changed for new market, network effects?

Strategic Factors-how competition will respond, does firm have to go abroad to maintain customers, must operate abroad to defend domestic position, international sales hurt domestic?

Managerial factors-does management have global experience, how committed is firm to international

Financial factors-how much will it cost, opportunity cost of international, how much capital can firm commit

Operational factors-is best personnel abroad, how much in person selling is needed, how is present production capacity being used?
Sources of First Mover Advantage
Technological leadership-capture key patents, moving down learning curve

Tying up suppliers or resources

Influencing customer perceptions

Creating switching costs
First Mover Disadvantages
High initial costs which may outweigh gains

Followers learn from pioneers mistakes

New firms may have new processes and tech and first firm is stuck in ways
Strategies for Market Entry
Onslaught-direct attack, take major market share forcing rival to retreat (Wal Mart)

Contest-Focus on highly entrenched arenas where incumbent has less clout (Google and cable TV v. Verizon)

Guerilla-Focus on highly attractive arenas where defender has clout but target underserved segments where defender has lower reactiveness (Zipcar)

Feint-Divert defender's attention by pretending to attack elsewhere (Phillip Morris)

Gambit-Sacrifice non essential market, when defender goes in instigator goes after target (IBM sacrificing PC business to go into services)
CAGE Framework
The more two countries differ across CAGE dimensions, more riskier market is

Cultural Distance

Administrative-institutional

Geographic

Economic
Cluster
Geographic Concentration of inter-connected organizations

Arise due to local institutions or local conditions (unusual demand conditions, presence of key suppliers)
How Clusters Add Value and Increase Competitiveness
Reduce transaction costs by providing intermediaries to overcome institutional voids

Forced excellence through comp.

Drive innovation

Raise productivity

Coordinating with local companies build cluster reputation, joint marketing

Access to information and tech
How Clusters Die
Cluster's assets may become irrelevant

Out of touch with global customer needs

Internal rigidities-unions, cartels

No innovation or new tech.
How FDI helps/hurts incumbent firms
Incumbent learns from new entrants

Foreign firm builds local infrastructure

Competition effects-locals have to become more efficient

Crowding out
Case for Targeting BOP Markets
1. 65% of world population

2. Rising Middle Class eager for consumer products

3. Little existing brand loyalty

4. Aggregate buying power of community can be high

5. Poor do buy luxury goods

6. Poor pay "poverty premium" so company can gain market share with lower priced goods

7. Poor are becoming easier to service (most in large cities, telecom growth)

8. Demand for low priced, high quality goods (Unilver)
Why hard to Target BOP
Difficult to build core competencies

Strategy in one market not same for another

New offerings in BOP may tarnish brand image

Tough to manage many low margin, low value transactions

Hard to understand what market really wants

Tough to form local relationships

Marketing challenges-have to build new market for product, packaging
How local firms can compete when MNE enters market
Lobby for gov. protection

Partner with MNE

Exit Industry

Use first mover advantage to lock in key suppliers

Concentrate on consumers who remain loyal to traditional products

Restructure around specific links in value chain where local assets are valuable

Supply complementary products of MNEs
Advantages of Local BOP Firms when MNE Enters
Understand local needs

Distinctive products that appeal to local tastes

Distribution networks

Relationships with suppliers and customers
Times Issues in Culture
Expectations of promptness

In US time is money, must be prompt

Other cultures relationships and social obligations more important
Neutrality and Affectivity
Emotionally Neutral-don't reveal what you are thinking

Affective-reveal thoughts verbally and emotions are transparent
Dimensions of Culture (Non-Hofstede)
Expectations of promptness-some cultures promptness important, others social obligations more important

Neutrality v. affectivity-neutral cultures don't express what they are thinking and affective people reveal thoughts verbally

Consistency of relationships-superficial cultures roles change based on situation but in deep cultures role is consistent

High context v. low context languages-Low context communication is direct and clear but in high context words can have many different meanings and vary by situation
Communicating with Non Natives
Use common words with common meanings

Strictly follow grammar rules

Speak with clear breaks

Avoid idioms

Test communication success
Negotiation Steps
1. Preparation
2. Build relationship
3. Exchange information and first offer
4. Persuasion
5. Concessions
6. Agreement
Preparing for Negotiation
Determine other party's interests

Determine ultimate goal of negotiation (sign contract or build relationship)

What is other parties' conception of process (want win-win?, settle on big picture first?, how negotiators were selected?)

Determine factors about individuals on other team (How are they motivated? Do they value protocol? What is risk taking propensity?)
Building Relationship in Negotiation
Some cultures need to build relationship first before negotiations occur

Countries with institutional voids relationships matter more than contract

Consensus based culture-focus on relationships over deals, time consuming
Information exchange and First offer
How far off target do you make first offer?
Persuasion and Negotiation Process
You can use promises, threats, recommendations, warnings, rewards, punishment, question etc.
Concessions and Final Agreement
Determine how specific final agreement must be

Is adherence to agreement expected or contingent?

Who has final decision making authority (person at table or someone else?)

Are there external players (regulators, political party, board?)
Hofstede's Dimensions of Culture
Individ/Collectivism

Power Distance

Masculinity/Femininity-passive or aggressive

Uncertainty Avoidance

Time Orientation-Future v. past orientation (US looks to future other cultures dwell on history and tradition)
Global, Transnational, and Multi-domestic Strategy
Global-High efficiency, low local responsiveness (need to produce at cheapest price)

Multidomestic-Low efficiency, high responsiveness

Transnational-High efficiency, high responsiveness

More and more firms shifting to transnational
Why Multidomestics become Transnationals?
Legal Issues-lower trade barriers, trade agreements

Technological Issues-new tech has high minimum efficient scale

Market Issues-growing similarities in tastes

Strategic Issues-Firms looking for ways to achieve standardization
Why Global to Transnational?
Legal-trade protection (antidumping)

Technology-flexible manufacturing allows for lower minimum efficient scale

Strategy-firms selling more localized services rather than standard product
Manufacturing in Transnationals
Flexible

Modular-produce standard parts and than customize assembly

Standardize for some markets and customize for those that are necessary
Categories of Organizational Culture
Hierarchy Culture-use of rules and predictability to achieve fast, reliable production (McDonalds)

Market Culture-Values competition, acvievment, and productivity

Clan Culture-stresses relationships, loyalty and teams

Adhocracy Culture-fosters entrepreneurial and risk taking behavior
How to build an org. culture
Hiring policies

Socialization practices

Termination/promotion policies

Leading by example

Speeches and stories
Strategy-Structure Fit
Firms strategy and must fit its organizational structure and culture

Decentralized decision making in multidomestic

Centralized in global

Integration among all subsidiaries in transnational
Why organizational change initiatives fail
No sense of urgency amongst employees

No powerful guiding force

Lack of clear vision

No short term wins

Victory declared too soon

Inconsistent with org. heritage
Advantages and Disadvantages of Strong Global Corporate Culture
Ads-common worldwide vision, easier to integrate subsidiaries, ensures fit between org culture, strategy, and structure worldwide

Dis-reduces diversity of opinions, costly and sometimes not needed, all org cultures do not match with all societal cultures
How MNE can develop global culture
Job Rotation

Send expats abroad

Bring local managers to HQ

Hire employees with desired values

Maintain communication amongst employees worldwide
Tacit v. Codified Knowledge
Tacit-Informal knowledge that is hard to communicate

Codified-easy to communicate via spoken word or numbers, easy to transmit to other countries
Absorptive Capacity
The ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends
How to transmit tacit knowledge globally
Travel

Employee Mobility

Geographically dispersed workers communicating regularly
Two Approaches to Managing Knowledge
Codification Approach-capture codified knowledge from many and writing it down or putting in IT system for dispersion

Personalization Approach-personal communication of tacit knowledge, many questions, more creative and innovative solutions
Which approach of knowledge to use?
Standardized product offering=codified

High quality or low cost approach?

Mature or innovative product?
Advantages of Geographically dispersed R&D
Can Go where there are inexpensive, skilled scientists

Go where sophisticaed customers are

Locate near rival R&D to capture knowledge

Locate where supporting industries are

Locate near your production facilities
Disadvantages of Geographically Dispersed R&D
Hard to manage global teams

Tough to transfer tacit knowledge internationally

Differences in institutional arrangements across countries (IP laws)
5 Ways to Tap World's Innovation Hot Spots
Focused Factory-Country focuses talent and resources on on a few well defined areas and a small community develops

Brute Force-Apply massive amounts of low cost labor in all areas of science and technology

Hollyworld-as more and more entrepreneurs gather in one place it becomes an attractive place for a like business (silicon valley)

Large Scale Ecosystem-some countries have created end to end innovation systems (schools, funding bodies etc)

Mix and match-combine above and existing corporate strategy
5 Reasons why it is imperative to go global
Globalization of customer-as customer goes abroad you have to follow (ad agency)

Globalization of competition-need to follow comp. abroad to not lose edge

Knowledge-no 2 countries alike so need to capture learning opportunity

Efficiency-need to accomplish EOS

Growth imperative-grow business to attract investors
Lessons from Wal Mart
Some institutional environments may not be conducive to a core competency

One international market can be learning opportunity for another

Firm's entry strategy depends on profile and competitive environment of country going into
Lessons from Jollibee
Must consider org. implications of expansion strategy

Learning can be a motivation to enter a market

Problems with over extension

Pioneering costs of being first mover

Staging grounds for important markets
Lessons from Nokia
BOP does not need out of date technology

Hard to understand consumer needs

High tech products becoming locally responsive through software even if hardware is standardized
Lessons from Phillips/Matsushita
Must be fit between firm strategy and structure

Strategic competencies can deteriorate into incompetencies as environment changes

Most firms fail when implementing structural changes

Admin. heritage constrains firm's efforts
Difference between conveying tacit knowledge across national borders than across geographic space
Communication impediments

Differences in taken for granted assumptions

Regulatory restrictions

Differences in suppliers