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168 Cards in this Set

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Strategy

Refers to the actions that managers take to attain the goals of the firm

Attain goals for firm

Profitability

Is the rate of return the firm makes on its invested capital

Profit growth

Is the percentage increase in net profits over time

To increase profitability and profit growth firms can?

Add value, lower-cost, sell more in existing markets, expand internationally

Managers can increase the rate at which the firms profit grow over time by?

Pursuing strategies to sell more products in existing markets or by pursuing strategies to enter a new markets

Expanding internationally can help managers boost?

The profitability and increase the rate of profit growth overtime

Front (Term)

Determines enterprise value

To increase profitability farms need to create more

Value

Using a differentiation strategy

Adding value to a product so that costumers I willing to pay more for it

Using a low-cost strategy

Lowering cost

What does Michael Porter argue ?

He argues that firms need to choose either differentiation or low-cost,



and then configure internal operations to support the choice

To maximize long run return on invested capital firms must?

pick a viable position on that efficiency frontier,



configure internal operations to support that position,



have the right organization structure in place to execute the strategy

Convex curve

Is what economics referred to as an efficiency frontier.


The efficiency frontier shows all of the different positions that a firm can adopt with regard to adding value to the product and low-cost assuming that it's internal operations are configured efficiently to support a particular position.


The efficiency frontier has a convex shape because of diminishing returns. Diminishing returns imply that one firm already has significant value built into its product offering increasing value by relatively small amount requires significant additional cost

How are a firm's operations configured?

A firm's operations are likely a value chain composed of a series of distinct value creation activities, such as,



production marketing materials management human resources and


information systems


And


the firm infrastructure

All of these activities must be managed effectively and be consistent with the firm strategy))int

Value creation activities can be categorized as primary activities and support activities

Primary activities covers production marketing and sales and customer service.



Support activities covers information system logistics human resources

Value creation activities can be categorized as primary activities and support activities

Primary activities covers production marketing and sales and customer service.


Support activities covers information system logistics human resources

Primary activities

The classical managerial functions of the firm

Support activities

Functions that provide input which allow the primary activities to occur

Support activities

Functions that provide input which allow the primary activities to occur

Profit margins

The difference between total revenues generated 📦📦 and total cost 💵💴

📦📦💲💲

How can firms increase profits through international expansion?

International firms can expand their market (sell in international markets)and realize location economies

How can firms increase profits through international expansion?

International firms can expand their market (sell in international markets)and realize location economies

How can firms leverage their products and competencies ?

Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold

How can firms increase profits through international expansion?

International firms can expand their market (sell in international markets)and realize location economies

How confirms leverage their products and competencies ?

Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold

What is core competencies ?

Skills within the firm that competitors cannot easily match or imitate

How confirms increase profits through international expansion?

International firms can expand their market (sell in international markets)and realize location economies

How confirms leverage their products and competencies ?

Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold

What is core competencies ?

Skills within the firm that competitors cannot easily match or imitate

Why are location economies important?

Because location economies are in different parts of the world creating a global web of value creation activities.

How confirms increase profits through international expansion?

By expanding their market selling in international markets)and realize location economies

How confirms leverage their products and competencies ?

Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold

What is core competencies ?

Skills within the firm that competitors cannot easily match or imitate

Why are location economies important?

Because location economies are in different parts of the world creating a global web of value creation activities

What types of competitive pressures exist in the global marketplace?

The pressures limit the ability of firms to realize location economies and experience affects leverage products and transfer skills within the firm

When are pressures for local responsiveness greatest?

Difference in consumers taste and preferences,



difference in traditional practices and infrastructure

Example of management focus

MTV networks global strategy, 1981 the network has expand to reach some 330 million customers to spread across 140 countries. Consumers prefer to see their own local supermarkets to maintain that cultural atmosphere

Which strategy should a firm choose?

There are four basic strategies to compete in international markets. The appropriateness of each strategy depends on the pressure for cost, reduction, and local responsiveness in the industry.

Global standardization strategy, transitional strategy, international strategy, Localization strategy,

The international strategy

Takes products first produced for the domestic market and sells them internationally with only minimal local customization

The international strategy

Takes products first produced for the domestic market and sells them internationally with only minimal local customization

Global standardization strategy

Increase profitability and profit growth by reaping the cost reduction from economies of scale, learning affects, and location economies.



The goal is to pursue a low-cost strategy on the global scale.

The international strategy

Takes products first produced for the domestic market and sells them internationally with only minimal local customization

Global standardization strategy

Increase profitability and profit growth by reaping the cost reduction from economies of scale, learning affects, and location economies.



The goal is to pursue a low-cost strategy on the global scale.

Localization strategy

Increase profitability by customizing goods or services so that they match taste and preferences in different national markets

The international strategy

Takes products first produced for the domestic market and sells them internationally with only minimal local customization

Global standardization strategy

Increase profitability and profit growth by reaping the cost reduction from economies of scale, learning affects, and location economies.



The goal is to pursue a low-cost strategy on the global scale.

Localization strategy

Increase profitability by customizing goods or services so that they match taste and preferences and different national markets

Transitional strategy


tries to simultaneously achieve low-cost through a location economies, economies of scale and learning effects


Management focus that evolution of strategy at Proctor and Gamble. Throughout the expansion the company maintains all product development at its Cincinnati, Ohio headquarters while manufacturing. Procter & Gamble shifted its strategy in 1990 closing several foreign locations and moving to a more regional approach to global market

As competitors emerge which two strategies become less viable?

International strategy and localization strategy

What is organizational structure?

The formal division of organization into subunits,



the location of decision-making responsibilities,



establishment of intra-grading mechanism

What is organizational structure?

The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism

What is organizational architecture?

Control system and incentives

What is organizational structure?

The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism

What is organizational architecture?

Control system and incentives

Control systems

The metrics use to measure performance of subunits

What is organizational structure?

The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism

What is organizational architecture?

Control system and incentives

Control systems

The metrics use to measure performance of subunits

Incentives

The device is used to reward managerial behavior

What is organizational structure?

The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism

What is organizational architecture?

Control system and incentives

Control systems

The metrics use to measure performance of subunits

Incentives

The device is used to reward managerial behavior

Processes and organizational structure

Processes is how decisions are made and work is performed within the organization



Organizational culture is norms and values that are shared among the employees of an organization

What is organizational structure?

The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism

What is organizational architecture?

Control system and incentives

Control systems

The metrics use to measure performance of subunits

Incentives

The device is used to reward managerial behavior

Processes and organizational structure

Processes is how decisions are made and work is performed within the organization



Organizational culture is norms and values that are shared among the employees of an organization

Vertical differentiation

The location of decision-making responsibilities within a structure

What is organizational structure?

The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism

What is organizational architecture?

Control system and incentives

Control systems

The metrics use to measure performance of subunits

Incentives

The device used to reward managerial behavior

Processes and organizational structure

Processes is how decisions are made and work is performed within the organization



Organizational culture is norms and values that are shared among the employees of an organization

Vertical differentiation and why is it important?

The location of decision-making responsibilities within a structure. Vertical differentiation determines where decision-making power is concentrated

Horizontal differentiation.Why is it important?

The formal division of the organization into subunits. Firms may switch to a product divisional structure

What happens when firms expand globally?

When firms expand internationally they often group all of their international activities into an international division

Overtime manufacturing may ship to foreign markets

What is an international divisional structure?

Headquarters, domestic division general manager, domestic division countries

Management focus: international division at Walmart explores Walmarts organizational architecture. When Walmart initial expanded into international markets it establish an international division overtime this structure prove to be problematic and was abandoned


World wide area structure

Favored by firms with low degree of diverse of vacation and a domestic structure based on function : divides the world into autonomous geographic areas, can result in fragmentation of organization, facilities local responsiveness

What is an international divisional structure?

Headquarters, domestic division general manager, domestic division countries

Management focus: international division at Walmart explores Walmarts organizational architecture. When Walmart initial expanded into international markets it establish an international division overtime this structure prove to be problematic and was abandoned


World wide area structure

Favored by firms with low degree of diverse of vacation and a domestic structure based on function : divides the world into autonomous geographic areas, can result in fragmentation of organization, facilities local responsiveness

Global matrix structure

Tries to minimize the limitations of the world wide area structure and the worldwide product divisional structure



Example explores the organization architecture at Dow Chemical despite having difficulties when it was initially implemented the company relied on matrix structure when the company change in strategy and structure has changed as well (The rise in the fall of Joe chemicals matrix structure)

Allows for differentiation along to dimensions product division and geographic areas

Out put controls and cultural controls?

Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics



Cultural controls: exist when employees buy into the norms of value system of the firm

Out put controls and cultural controls?

Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics



Cultural controls: exist when employees buy into the norms of value system of the firm

What are incentive systems?

Devices used to reward behavior, usually closely tied to performance metrics use for output control, varies depending on employee

Out put controls and cultural controls?

Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics



Cultural controls: exist when employees buy into the norms of value system of the firm

What are incentive systems?

Devices used to reward behavior, usually closely tied to performance metrics use for output control, varies depending on employee

What is the link between control, instinctive, and strategy?

Interdependence, performance ambiguity, the cost of control

Out put controls and cultural controls?

Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics



Cultural controls: exist when employees buy into the norms of value system of the firm

What are incentive systems?

Devices used to reward behavior, usually closely tied to performance metrics use for output control, varies depending on employee

What is the link between control, instinctive, and strategy?

Interdependence, performance ambiguity, the cost of control

Organizational culture

The values and norms employees are encouraged to follow evolves from founders an important leaders, national social cultural

Organizations can be difficult to change because of

They existing distribution of power and influence, the current culture, institutional constraints

Organizations can be difficult to change because of

They existing distribution of power and influence, the current culture, institutional constraints

What is the link between strategy and architecture?

Firms pursuing a localization strategy focus on local responsiveness



Firms pursuing an international strategy create value by transferring core competencies from home to foreign subsidiaries



Firms pursuing a global standardization strategy focus on the realize Asian of the location and experience per economy



Berms pursuing a trans national strategy focuses on the simultaneously attaining location and experience current economies, local responsiveness, and global learning

Foreign owned operations (FDI)

Maybe established either as start ups Greenfield ventures or via accusation



May take the form of wholly-owned subsidiaries or joint ventures

Non-equity

Types of foreign operations include licensing and other construction will forms of business ventures

Reasons why foreign production maybe preferable to exporting

Production cost is cheaper a broader than at home,



domestic capacity is insufficient,



government restrict or prevent the importation of foreign products and



customers prefer products originating from a particular foreign country

Reasons why foreign production maybe preferable to exporting

Production cost is cheaper a broader than at home,



domestic capacity is insufficient,



government restrict or prevent the importation of foreign products and



customers prefer products originating from a particular foreign country

Advantages of foreign direct investment accusations may include:

Existing faculties, existing labor force, knowledgeable local management, access to local financing, immediate cash flow

Managing foreign arrangements

The cost and other consequences of evolving to different modes operations at various locations



The proven ability as a potential partners

International channel distribution alternatives

Shows some of the possible channel distribution selection of channel . The seller must have an organization to deal with channel members needed to move goods between countries. Of course the process is not always practical or cost-effective

Indirect selling/export?

Selling products to Independent third-party intermediary

Indirect sally export management companies (EMC)

A firm that either ask as a manufacture agent or buys merchandise from manufacturers for international distribution



EMC generally operates on a contractual basis, provide exclusive we presentation in a while to find foreign territory and acts as the export arm that manufacture

Export trading company (ETC)

A large, independent broker whose primary purpose is to match suppliers to foreign customers for a fee



Operates primarily on the basis of demand

Based in the US and are exempt from antitrust provision to allow them to be better penetrate foreign markets by collaborating with other US firms

A distributor

A merchant who purchases goods from manufacture and stocks, services, and resell them to retailer at a profit

Introduction: trade strategy

Exporting : product outflow



Importing : product inflow

Introduction: trade strategy

Exporting : product outflow



Importing : product inflow

Strategic factors affecting the choice of exporting as a mode entry include :

The ownership advantages of the firm, the location advantages of the market, the international experience of the firm, it's fit with the overall strategy of the firm

Stages of export development : firms tend to move through three phases export development

Pre-engagement : companies selling goods and services solely in the domestic market



Initial exporting : companies that do sporadic, marginal exporting



Advance exporting : companies become regular exporters

And export business plan

Executive summary, business history, market research, market decision, legal decision, Manufacturing and operations, personnel strategy, financial decision, implementation schedule

And export business plan

Executive summary,


business history,


market research,


market decision,


legal decision,


Manufacturing and operations, personnel strategy,


financial decision, implementation schedule

Foreign fright forwarder

And international trade specialist who assist in the delivery of goods from producer to customer

Foreign fright forwarder

And international trade specialist who assist in the delivery of goods from producer to customer

Export documentation

A pro forma invoice,


a commercial invoice,


bill of leading,


a consoler invoice,


A certificate of origin,


a shipper export declaration, export packing list

Letter of credit

A guarantee from importers bank but it will act on behalf of the importer and pay the exporter for the merchandise it's all relevant documents specified in the letter of credit or presented

What is a time draft?

Written order instructing the importer or his agent, that importers bank, to pay the amount specified on its face on a certain date

Advantages of importer

Decreased cost and increase competitiveness and profitability, secure a sensual inputs and products

The role of custom agencies

Government bureaus charged with collecting duties and ensuring that the trade restrictions are enforced and procedures adhere to...

Born global

Companies tend to make exporting a primary goal on the time of their inception

Types of industrial importers


Those that opportunistically look for any product around the world that will generate a positive cash flow



Those a look to for sourcing as a means to minimize product cost



Those that use for in sourcing as part of the global supply chain strategy

Types of industrial importers


Those that opportunistically look for any product around the world that will generate a positive cash flow



Those a look to for sourcing as a means to minimize product cost



Those that use for in sourcing as part of the global supply chain strategy

Import broker

is a certified Specialist what chains required government permission and other clearances for forwarding the necessary

Marketing mix (The choice is the firm offers to his target market) is comprised of

Product attributes, distribution strategy, communication strategy, and pricing strategy

Production orientation

Emphasizes production variables such as efficiency, quality, and/ or capacity



{used internationally for selling commodities and passive exports for serving foreign market }

Distribution strategy

The means the firm chooses for delivering the product to the consumers.



How a product is delivered depends on the firms markets entry strategy

Distribution : For each country

Each country has its own national distribution system that is historically intertwined with its cultural, economic, and legal environments.



Factors that influence the distribution of consumers


Citizens attitudes towards their own retailer


The abilities to pay retail workers


Retailers trust in their employee


Restriction on the size of stores and their hours of operation

Retail concentration : concentrated or fragmented

Concentrated : common in developed countries, contributing factors - increase in car ownership, number of households with refrigerators and freezers, and two income household



Fragmented system : uneven or mountainous terrain, contributing factors : great population density with large number of urban center

Channel Length

The number of intermediaries between the producer and the consumer

Short channel and Long Length

Short channel : When the producer sells directly to the consumer



Long channel : When the producers sells through an import agent, a wholesaler and retailer

How many layers you have an distribution channel?

US standard is 3 layers



Concentrated 2 to 3 layer



Fragmented 8 to 10 layers


Sales orientation

Assumes that global customers are reasonably similar and that the same product can be sold at home and abroad

Customer orientation

Stresses sensitivity to customer needs, identifying and serving the needs of the customer

Strategic marketing orientation

Commits to continuously serving foreign markets and to making incremental adaptations to satisfy local customers

Societal marketing orientation

Requires that activities be conducted in a way that preserves or enhances that well being of all stakeholders


Address the environmental, health, social, and work related problems that arise in foreign operation

Packaging Component

Price


Quality


Packages


Styling


Trademark


Brand name

Marketing segmentation

Identifying distinct group of consumers whose purchasing behavior differs from others in important ways

Markets can be segmented by

Geography


Demography


Socio-cultural factor


Psychological factor

How do product attributes influence marketing strategy ?

Level of economic development



Product and technical standards

Consumers behavior is influenced by

Economic Development



Consumers in highly developed countries tend to demand extra performance attributes in their products



Price is not a factor due to high income level



Consumers in less developed countries value basic features as more important



Price is a factor due to lower income level

Channel quality

The expertise, competencies, and the skills of established retailers and I nation, and their ability to sell and support the products of an international business

Which distribution strategy should a firm choose? Ch18

The optimal strategy depends on the relative cost and benefits of each alternative



When prices important a shorter channel is better



no such thing as optimal distribution, doesn't exist deal with each market separately companies have to deal with quality of wholesalers and distributors in the marketplace

Communication channels available to affirm include

Direct selling



Sales promotion



Direct marketing



Advertisement

Cultural barriers

It can be difficult to communicate messages across cultures.


A message that means one thing and one country may mean something quite different and another.



Firms need to develop cross cultural literacy and use local input when developing marketing messages

Noise levels

That amount of other messages competing for potential consumers attention



in developing countries noise levels tend to be lower

Push and pull strategy

Push strategy is direct marketing techniques designated to create immediate demand, emphasizing personal selling



strategy is better for industrial products and complex products, distribution channels are usually shorter, a few prints or electronic media are available



Pull strategy is mass media advertising, and direct marketing techniques designated to create final demand, sales promotion and advertising



A pull strategy is better for consumers good products, distribution channels are longer, electronic media are available to carry The marketing message

Pricing strategy firm should use?

Firms need to consider:



Price discrimination



Strategic pricing



Regulations that affect pricing decision


Pricing strategy firm should use?

Firms need to consider:



Prices discrimination



Strategic pricing



Regulations that affect pricing decision


Price discrimination

Occurs when firms charge consumers in different countries different prices for the same product.



countries must have different price elasticity of demand

Price elasticity of demand

A measure of the responsiveness of demand for product changes in price



demand is elastic when a small change in price produces a large change in demand



demand is inelastic when a large change in price produces only a small change in demand

Predatory pricing

Use profit gained in one more could to support aggressive pricing designated to drive competitors out in another market

Multi point pricing

A firms pricing strategy in one market may have an impact on arrivals pricing strategy in another market

Multi point pricing

A firms pricing strategy in one market may have an impact on arrivals pricing strategy in another market

Experience current pricing

Price low worldwide an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially

How confirms build global R & D capabilities?

To adequately commercialize new technologies, firms need to integrate our R&D and marketing

The rate of new product development is greater in countries where?

More money to spend on basic and applied research and development



Demand is strong



Consumers are affluent



Competition is intense

Firms need clothes links between R&D and ?

Marketing and manufacturing

Competition policy

Most industrialized nations have regulations designated to promote competition and restrict monopoly practices

Competition policy

Most industrialized nations have regulations designated to promote competition and restrict monopoly practices

Anti-dumping regulations

Occurs when a firm sells a product for price is less than the cost of producing



Anti-dumping rules set of floor under export prices and limit a firm's ability to pursue strategic pricing

Human resource management (HRM)

Refers to the activities in organization carries out to use its human resource affectively



Activities include : determining the firm human resources strategy,



staffing,



performance evaluation,



management development,



compensation,



and labor relations

Who is responsible for aspects of organizational architecture? As in people, culture, instinctive and control

Human resources

Who is responsible for aspects of organizational architecture? As in people, culture, instinctive and control

Human resources

Staffing policy

Concerned with the selection of employees for particular job. This involves selecting individuals who have the skills required to do the particular job.

Ethnocentric staffing policy

Is one in which all key management positions are filled by parent country nationals

Polycentric staffing policy

Requires host country nationals to be recruited to manage subsidiaries, while parent control national occupy key positions at corporate headquarters

Firms success requires HRM to be

Congruent with a firm strategy and with formal and informal structure and control