Dezember 1 Flashcards

Question

Overview International Strategies which industry is where *Grafik*

Answer 1

In the business world we experience specific or diffuse personalities through context. ‒ **Low contex**t is suitable for factual information, exchange of data, clarification or summarizing,… _--\> most meaning by specific words expressed_ ‒ **High context** is suitable for discussions and debates, reaching agreements and understanding,… _--\> not all meaning via language_

Answer 2

**1.** - Rise of emerging markets - growing middle-class household --\> growing income there **2.** - US and EU are soucing many products they consume from low-cost manufacturing locations (china, india, mexico) **3.** - advances of information, transportation - decline of trade barriers - free markets

Answer 3

+ More jobs + economic development / growing prosperity (Wohlstand) + Technology and knowledge transfer ----------------------- - disruptive effects in national economies - natural environment - human right violated abroad - job losses at home

Answer 4

- distinguishes between temporal and local pattern **temporal pattern:** first gain expericence in home market --\> afterwards start exporting **local pattern:** first venture into makrets that are physical closest ---------------------------------- **1. domestic focus** **2. pre-export stage** **3. experimental involvement** (regular exports, management becomes favourable vor internationalization) **4. active involvement** (money and time dedicated by the management) **5. Commited involvement** (FDI and M&A, Internationalization --\> Key Part)

Answer 5

- the better the relationsships, the more successful international business - business ecosystem important _Difference to the Upsala Model:_ - not gradually progressing in nature - no mention about physical distance / countries to enter **- relationships are everything in the process** - business environment as a web of relationships

Answer 6

- begin to **export within two years** - tend to **export min. 1/4 of total production** - the **world is the marketplace** from the outset - often emerge as a result of significant breaktrough in process or **technology** - **cutting edge technology / unique idea /** new way of doing business

Answer 7

- **EM companies** use internationalization to overcome their late-comer disadvantages - expansion to compensate their competitive weaknesses - main for of internationalization is **with acquisiton / M&A of foreign companies** - sth **home government support** for going international - sth willingness of **global players to share/sell strategic resources**

Answer 8

‒ **International mind-set and cosmopolitan values**: Visionary leaders are open minded, committed to internationalization, and ready to adapt to other cultures. ‒ **Willingness to commit resources**: It takes more time to become profitable in foreign than domes-tic markets. Visionary leaders commit to them and allocate resources and empower structures and processes. ‒ **Strategic vision:** Visionary leaders communicate what the firm wants to be in the future and how it will get there. This picture of the firm in the future is a central rallying point of all plans, employ-ees, and employee actions. ‒ **Willingness to invest human assets**: Visionary leaders must nurture the most critical assets of any organization – human capital. Many big companies have their own company-specific «education system», where new employees go to.

Answer 9

Threat of new entrants, Threat of substitutes, Bargaining power of customers, Bargaining power of suppliers, Competitive rivalry

Answer 10

international strategy / home replication strategy / ethnocentric strategy

Answer 11

Global Strategy / Standardized / Geocentric Strategy

Answer 12

Multinational Strategy / Multidomestic Strategy / Localization Strategy / Polycentric strategy

Answer 13

Transnational/Regiocentric Strategy

Answer 14

**Export Mode:** Low control, low risk, high flexibility **Contractual Mode** Licensing, Franchising, Other **Intermediate Mode** Shared Control, Shared risk, split ownerhip **Hierachial Mode** FDI (wholly owned subsidiary), high contral, high risk, low flexibility

Answer 15

**Export Advantages** + lower cost (not establishing manufacturing in host country) + economies of scale by manufacturing in a centralized location and exporting to other markets **Disadvantages** - high transport cost - tariff barriers - indirect export can be risky (local agent) - exporting not appropriate if the firm can realize location economies otherwise

Answer 16

**Advantages** + the firm **avoids development costs and risks** associated with opening a foreign market (no capital re-quired to enter a market) + suitable in politically volatile foreign markets +the firm avoids barriers to investment + firm can capitalize on applications of own intellectual property (technology etc.) without developing those applications itself **Disadvantages** ‒ the firm **does not have the tight control** required for realizing experience curve and location economies ‒ **Difficult coordination** of strategic moves across countries ‒ Risk of know-how theft and competitive advantage loss

Answer 17

**Advantages** + it **avoids the costs and risks** of opening up a foreign market + build **quickly a global presence** + the franchisor can **avoid tariffs and restrictions on foreign investment** **Disadvantages** ‒ geographic distance of the firm from franchisees can make it **difficult to detect poor qualit**y and thus brand and reputation damage ‒ it bears the risk of **creating a future competitor** ‒ it inhibits the firm's ability to take profits out of one country to support competitive attacks in another

Answer 18

**Advantages** + benefit from a **local partner's knowledg**e of local conditions, culture, language, political systems, and business systems + costs and risks are **shared** + satisfy political considerations for market entry **Disadvantages** ‒ **risk of giving control** of its technology to its partner ‒ firm **may not have the tight control** to realize experience curve or location economies ‒ can lead to **conflicts and battles for control** if goals/objectives differ or change over time

Answer 19

**Advantages** + less time consuming and quicker to execute, **immediate grab of market share** when acquiring established company + Preempt competitors in rapidly globalizing markets (deregulation + liberalization) + less risky compared to greenfield, bank on existing goodwill of the acquired company **Disadvantages** ‒ **complex task** involving bankers, lawyers, M&A specialists ‒ **restrictions** on foreign acquisitions in host countries

Answer 20

**Advantages** + **reduce the risk of losing contro**l over core competencies (technological advantage) + give a firm the **tight control over operations** in different countries that is necessary for engaging in global strategic coordination + may be required in order to realize **location and experience curve economies** + less risky than acquisitions + less potential for unpleasant surprises **Disadvantages** ‒ **Most costly** entry strategy: the firm bears the **full cost and risk** of setting up international operations ‒ **Slower to establish and to disinvest** ‒ Preemption by more aggressive global competitor and losing potential market share

Answer 21

- core competencies - pressure for cost reductions - localization pressure - product characteristic - target market characteristics

Answer 22

‒ Technological know-how: avoid licensing and JV to minimize risk of theft, go for wholly owned company. ‒ Management know-how: brands must be well protected combination of franchising and master subsidiaries (wholly owned or JV) to control franchisees

Answer 23

‒ The greater the pressures for cost reductions, the more likely combination of export and wholly owned companies. ‒ Firms pursuing global standardization and transnational strategies tend to prefer wholly owned subsidiaries.

Answer 24

Licensing, franchising, joint ventures, mergers and acquisitions as well as exports are **lower cost entry modes** that **allow for high local responsiveness**

Answer 25

‒ Export: if the cost of transport is bearable, i.e. if it does not make the product too expensive in the target market ‒ Other than export: Products with low value/weight ratio (tires) are expensive for long distance shipment. ‒ Wholly owned subsidiary: if perishable goods, importance of quick delivery (just-in-time automobile production), goods with high weight = high cost of transportation (cement), complex product (industrial machinery with significant technical support.

Answer 26

‒ Export: if liberalized and deregulated markets ‒ Franchising/Licensing: in unstable and unknown markets ‒ Joint-Venture: in case of export or foreign direct investment restrictions ‒ Wholly owned subsidiary: to circumvent trade barriers, e.g. high tariffs, quotas regarding local production ratios in the target market and disad-vantageous legal requirements in the home market

Answer 27

- form of government - political stability - domestic & foreign policies - role/strenght of public companies - role of state (esp. military) - level of security (terrorism) - political restrictions on import/export

Answer 28

- economic/business system - competitiveness - stage of development - economic stability - GDP/GNP (incl. per capita) - trade (import/exports) - levels of FDI - purchasing power - international financial standing - fiscal policies (taxes)

Answer 29

- Demographics - Societal trends - cultural distance to home culture - differences in individual cultural dimentsion (x vs. y) etc etc

Answer 30

- availability of appropriately qualified local skills - level of technology - technology transfer risik / opportunity - available infrastructure - level of (ecological) environment protection technology

Answer 31

- Importance of environmental protection in society - existance and enforcement of environmental protection laws - sophistication of available envirionmental protection technology

Answer 32

- Legal System - Prevalance international laws . protectional laws - tax laws - role of contracts - protection of intellectual property - tarrifs and non-tariffs trade barriers

Answer 33

--\> positioning the offering simalarly worldwide + reduces international marketing costs

Answer 34

**Standartization:** ‒ Cost reduction (economies of scale in design, sourcing, manufacturing, and marketing) ‒ Improved planning and control ‒ Ability to portray a consistent image and build global brands **Adaption:** ‒ Meet needs of customers more precisely ‒ Enjoy unique appeal ‒ Comply with government regulations ‒ Achieve greater success in combating customer resistance

Answer 35

**Standartization:** ‒ Similar market segments exist across countries ‒ Customers seek similar features - Products have universal specifications ‒ Business customers have converging expectations **Adaption:** ‒ National preference ‒ Law and regulations ‒ Living standards and economic conditions ‒ National infrastructure --\> it's a balancing act, its not a either-or decision

Answer 36

‒ Products richly **connected to the local cultural** context _Example: Tea or coffee_ ‒ Products closely related to the **local geography** _Example: Cheese_ ‒ Products with high **language content** _Example: Songs, films, novels_ ‒ Products consumed since **childhood** _Example: Breakfast habits_ ‒ Products involving a **relationship with others** _Example: Services (food, hospitality)_

Answer 37

‒ High, conspicuous visibility (sichtbarkeit) such as consumer electronics and jeans ‒ Status symbols, such as cars and jewellery ‒ Widespread appeal, due to innovative features that seem to fit everyone’s lifestyle, such as mobile phones, credit cards, and cosmetics ‒ Close identification with a particular country, such as Levi’s (U.S. style) and IKEA furniture (Scandinavian style)

Answer 38

‒ **Nature of the market**. Local purchasing power and distribution infrastructure are big factors. ‒ **Nature of the product or industry**. A specialized or highly advanced product, or an industry with few competitors, may necessitate charging a higher price. ‒ **Type of distribution system**. Channels are complex in some countries, which pushes prices up. ‒ **Location of the production facility**. Locating manufacturing near customers or in countries with low-cost labour facilitates lower prices.

Answer 39

- Country restricts MNE to take out profit out of the country - take money out of a high corporate tax country

Answer 40

1) **Aggressively cut prices** in countries and regions targeted by gray market brokers. 2) **Hinder the flow of products** into markets where gray market brokers procure the product. 3) **Design products with exclusive features** that strongly appeal to customers. 4) **Publicize** the limitations of gray market channels.

Answer 41

\> **Critical elements** of value chain stay **centralized at home** (R&D, procurement, production) \> Generally no adaptation to foreign markets, products are marketed through intermediaries

Answer 42

\> Value Chain is flexibly organized according to needs of different national markets **Critical elements** are **positioned in the local market** (production, procurement, marketing)

Answer 43

Works if we have a very local market (like food, beverages, accommodation,...) with different water qualities in every country/region. Localization strategies work with the local recourses, they blend with the market, they use the local resources/ factories... (e.g. Coca Cola, Nestlé).

Answer 44

\> Concentration of **critical value chain activities** (R&D, production and marketing) in **headquarters** or in the few most favourable locations, **central control over operations**

Answer 45

\> Scale economies through sourcing from **reduced numbers of global suppliers**, concentrate manufacturing in few locations \> Production, marketing and other value chain activities on a global scale

Answer 46

Transnational Strategy (Regiocentric)

Answer 47

 Avoiding human rights abuses  Eliminating child labor  Avoiding workplace discrimination  Guarding against corruption

Answer 48

**Transaction:** Affects ongoing **contractual transactions**. The exchange rate risk associated with the time delay between entering into a **contract** ant settling it. **Economic Exposure:** Results from exchange-rate fluctuations that affect the **pricing of products** **and inputs** and the value of foreign investments. Exchange rate fluctuations help or hurt sales by making the firm’s products relatively more or less expensive for foreign buyers.

Answer 49

competitive advantage

Answer 50

comparative advantage

Answer 51

GST is a type of value added tax and a proposed comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian central and state governments. Further, the Goods and Service Tax (GST) is considered to be one of the biggest reforms in India’s indirect tax structure since the economy began to be opened up twenty five years ago. In this article, we look at how GST differs from the current regimes and how it will work.

Answer 52

The strategy intends to increase the domestic market share of Chinese suppliers for «basic core components and important basic materials» to 70 percent by the year 2025. While Chinese high-tech companies enjoy **massive state backing**, their foreign competitors in China face a whole set of barriers to market access and obstacles to their business activities. E.g. foreign companies will have a huge market to sell to – when producing in China –, but are not allowed to use their own brand when producing in China.  Trade-off. At the same time, Chinese companies don’t face these restrictions when producing in other nations. As a possible solution, other nations could also limit Chinese FDI to 49% at max. This is not the Swiss way of doing business (prefer open markets).

Answer 53

Global Product Division

Answer 54

Low cost and differentiation strategies

Answer 55

Increase in productivity, lowers rework and scrap costs, lower warranty costs

Answer 56

**Basic factors:** natural resources, climate, geographic location, demographics **Advanced or specialized factors**: Commu-nications, Skilled labour, research, tech-nology, education. Can be created

Answer 57

Focus firms with networks of suppliers and distributors and existence of government policies to foster the competitiveness of clusters

Answer 58

**‒ Continental legal system (civil law)** the judge bases their judgement on the law text. **‒ Anglo-American legal system (common law)** with reference cases (older rases). The judge to-day has to decide the same as the judge in the past.

Answer 59

It makes it easier to resolve contract disputes for firms involved in international trade and investment.

Answer 60

**Using synergies** to enlarge markets shares and supply the needs of customers **Technological advantages** knowledge-providers in a cluster such as universities that enable companies to develop new technologies as well as good R&D **Economies of scale** the bigger the cluster the cheaper the cost of production

Answer 61

- Real time supply chain as competitive advantage - controlling more of its manufacturing and supply chain than most of its competitors - growth trough diversification / vertical integration - 2 weeks cyle (spot the trend to the store), average 6 mth. in fashion - owns it supply chain, global distribution center "the CUBE" - zara does not have lots of excess inventory - 12 inventory turns p. y. (average 3-4) - flexible business model --\> store can be owned, franchised, or co-owned with partners - short term bets (easier to call correctly) - centralized order fullfillment - trucks deliver to EU / air freight to ship to others - real time supply --\> hard to imitate for competitors

Answer 62

1. IHRM is concerned with _HRM issues that cross national boundaries_ or are conducted in locations other than the home country headquarters 2. IHRM is concerned with the _relationships between the HRM activities of organizations and the foreign environments_ in which the organizations operate 3. _IHRM includes comparative HRM studies_; e.g. differences in how companies in Japan, Thailand, Austria and Switzerland plan for upgrading of employee skills and so on

Answer 63

1. **Companywide pay scales and policies** : all employees are paid the same rate as in the home office, regardless to where they are located 2. **Localized compensation strategy** : a pay banding system based on regions, such as South America, Europe, North America, Southeast Asia, etc. 3. **Balance sheet approach** : pay a similar base salary companywide or regionwide and offer expatriates an allowance based on specific market conditions in each country

Answer 64

1. Applied to all citizens _equally_. 2. Issued via recognized _government authorities_. 3. _Enforced_ _fairly and systematically_ by police forces and formally organized judicial bodies.

Answer 65

**Basic factors:** - geographic location - natural resources - demographic - climate **Advanced and specialized factors** - skilled labour - research technology - education, communication

Answer 66

This conditions in the nation governing **how companies are created, organized and managed** --\> the more localized the rivalry, the higher the competition --\> intense domestic rivalry improves the worldwide competitiveness of domestic firms

Answer 67

**Presence of suppliers and related industries within a nation that are internat. competitive provides benefits such as innovation, upgrading, information flow, shared technology development**

Dezember 1 Flashcards

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