CH 7: Stratgies for global companies Flashcards Preview

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Flashcards in CH 7: Stratgies for global companies Deck (9)
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1
Q

Why expand to international markets?

A
  1. Follow rivals
  2. Faltering domestic demand
  3. further exploit core competencies
  4. Gain access to resources and capabilities
  5. Spread business risk
2
Q

The differences faced when entering a new market

A
  1. Adjustments to local buyer tastes
  2. Differences in market growth potential
  3. Differences in the intensity of local competition
3
Q

How markets demographic differ from country to another?

A
  1. Taste and preferences
  2. Purchasing power
  3. Buying habits
  4. Distribution channel emphasis
  5. Demands for localized products
  6. The strength of local competitive rivalry
4
Q

Strategic options for entering foreign markets:

A
  1. Maintain a national production base, and export
  2. License foreign firms to produce and distribute products abroad
  3. Employ a franchising strategy
  4. Establish a subsidiary
  5. Rely on strategic alliances or joint ventures with foreign partners.
5
Q

Advantages and disadvantages of exporting strategy:

A

Advantages:

  1. Conservative way to test international waters
  2. Minimize both risk and capital investment req.
  3. More control maintained

Disadvantages: (firm is vulnerable when)

  1. Manufacturing costs are higher in home country than in foreign country
  2. High product transportation costs
  3. Rapid changes in exchange rates
6
Q

Advantages and disadvantages of licensing strategies:

A

Advantages: (Best when)

  1. Has valuable technical know-how or patent but no resources to go to foreign markets
  2. Avoid risk of committing resources
  3. Generate income from royalties

Disadvantage:
1. Difficulty in maintaining control over the use of technical know-how.

7
Q

Advantages and disadvantages of franchising strategies:

A

(best for services and retailing enterprises)
Advantages:
1. Franchisee bears many of the costs and risks of doing business
2. Franchisor has to expend only the resources to recruit, train, and support franchisees

Disadvantages:

  1. Maintaining quality control
  2. Allowing franchisees discretion in adapting product offerings to local tastes and expectations
8
Q

Pitfalls to the success of alliances:

A
  1. Language and cultural barriers
  2. Diversity in ethical standards
  3. Development of trust, coordination, and effective communications
  4. Interpersonal conflicts between mangers
  5. Over-dependence on foreign partners
9
Q

Options for tailoring a company’s international strategy:

A
  1. Multi-domestic strategy (think local, act local)
  2. Trans-national strategy (think global, act local)
  3. Global strategy (think global, act global)