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14 Cards in this Set
- Front
- Back
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Define globalization |
Globalization involves closer integration and exchange between different countries and peoples worldwide, made by factors such as falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs |
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Define a multinational enterprise |
A multinational enterprise deploys resources and capabilities to procure, produce, and distribute goods and services in at least two countries |
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Define a foreign direct investment |
Foreign direct investment denotes a firm's investments in value chain activities abroad |
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Explain why companies compete abroad |
Firms compete internationally to gain access to a larger market, gain access to low-cost input factors, and develop new competencies |
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What are the disadvantages of competing abroad? |
Firms must overcome the liability of foreignness, as local wages and costs of living increase, low cost location location advantage evaporates, constant cost pressure forces MNEs to chase lowest cost locations |
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Which countries do MNEs targer for FDI? |
MNEs consider national institutions and national culture |
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How do MNEs enter foreign markets? |
Exporting, strategic alliances, joint ventures, and subsidiaries |
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What are the four strategies that MNEs can pursue when competing globally? |
International, localization, global-standardization, and transnational |
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What is an "international" globalization strategy? |
Leverage home-based core competencies into foreign markets, usually through exporting |
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What is a "localization" globalization strategy? |
Maximize local responsiveness in the face of low pressure for cost reductions. Often costly and inefficient due to duplication |
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What is a "global standardization" globalization strategy? |
Reap economies of scale by pursuing global division of labor based on best-of-class capabilities reside at the lowest cost |
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What is a "transnational" globalization strategy? |
Compromise between localization and global-standardization, but is very difficult to to implement |
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Explain why certain industries are more competitive in specific nations |
National competitive advantage is created rather than inherited, caused by: factor conditions, demand conditions, competitive intensity in a focal industry, related and supporting industries |
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Evaluate the relationship between location in a regional cluster and firm-level competitive advantage |
Competitive advantage is still often local, |
