FINAL

Question 1

what is the DDD framework

Answer 1

1- Deployment
2- Development
3- Deepening

Question 2

What is the AAA framework

Answer 2

1- Arbitrage
2- Aggregation
3- Adaptation

Question 3

Explain Deployment (4)

Answer 3

1- Replication of competitive advantage from home country
2- Create value by aggregating demand
3- Target similar segments
4- standardization of services/ products

Question 4

Explain Development (4)

Answer 4

1- Identifying where potential new capabilities resides
2- Integrated competitive advantage (combine strengths from multiple countries)
3- Knowledge Arbitrage (apply what you know from a place to another)
4- locations should be different enough

Question 5

Explain Deepening (4)

Answer 5

1- Widen competitive advantage, without changing primary business strategy
2-Increase willingness to pay by adjusting to local tastes
3- Decreasing costs by aggregation of demand
4- Being internationally dispersed for stakeholders

Question 6

How do you compare the 3-A and 3-D frameworks of IB strategy?

Answer 6

AAA: why a firm goes global
DDD: how a firm goes global

Question 7

What are the challenges in new markets (2)

Answer 7

1- Liability of being a foreigner
2- Paradox of being consistent

Question 8

Examples of liabilities of being a foreigner (6)

Answer 8

1. Local laws favor domestic firms
2. Import/ Export costs
3. Cultural differences
4. Caps on foreign investment
5. Separate time zones can be a liability
6. Different contract structures

Question 9

Examples of paradox of being consistent (5)

Answer 9

1. Need for market adaptation
2. Loss of internal consistency
3. Dilution of competitive advantage
4. complex decision-making
5. risk of strategic management

Question 10

what is economies of scale

Answer 10

Reduction of average cost per unit as output rises

Question 11

What is economie of scope

Answer 11

When a compant can produce more than ome product together more cheaply than producing each one separately

Question 12

What are the 3 basic entry decisions questions to ask

Answer 12

1. which markets to enter
2. when to enter those markets
3. on what scale

Question 13

what are the first-mover advantages (4)

Answer 13

1. build strong brand name
2. capture demand
3. build sales volume
4. create switching costs

Question 14

What are the first-mover disadvantages (4)

Answer 14

1. Devote effort, time and expense
2. Costs of business failure
3. Costs of promoting and establishing a product offering (costs of educating customers)
4. Education of customers

Question 15

What are the six modes of entry (place them in level of commitment)

Answer 15

1. Exporting
2. Turnkey Projects
3. Licensing
4. Franchising
5. Joint Ventures
6. Wholly Owned Subsidiaries

Question 16

what are the 2 advantages of exporting

Answer 16

1. No establishments costs
2. Experience curve and location economies

Question 17

what are the 2 disadvantages of exporting

Answer 17

1. high transport costs
2. Tariff barriers

Question 18

what is the advantage of turnkey projects

Answer 18

less risky than conventional FDI

Question 19

what are the 3 disadvantages of turnkey projects

Answer 19

1. No long-term interest in foreign country
2. May accidentally create a competitor
3. May sell competitive advantage to potential/actual competitors

Question 20

what are the 3 advantages of licensing

Answer 20

1. No development costs and risks
2. No barriers to investment
3. Good use of existing intellectual property

Question 21

what are the 3 disadvantages of licensing

Answer 21

1. No control over manufacturing, marketing, and strategy (NO economies)
2. Limits a firm’s ability to coordinate strategic moves
3. A firm can lose control over its technology by licensing it

Question 22

what are the 2 advantages of franchising

Answer 22

1. Firm experiences lower costs and risks
2. Helps build a global presence quickly

Question 23

what are the 3 disadvantages of franchising

Answer 23

1. May inhibit the firm’s ability to take profits out of one country to support competitive attacks in another
2. Quality control
3. Set up subsidiaries

Question 24

what are the 3 advantages of joint ventures

Answer 24

1. Local partner’s knowledge of the host country’s competitive conditions, culture, language, political systems, and business
2. Shared costs and risks
3. Political considerations

Question 25

what are the 3 disadvantages of joint ventures

Answer 25

1. Loss of technology control 2. Lack of control over subsidiaries 3. Can lead to conflicts and battles for control between the investing firms

Question 26

what are the 4 advantages of wholly owned subsidiaries

Answer 26

1. Reduces risk of losing control over technology 2. Can tightly control operating in different countries 3. Location and experience curve economies 4. 100% share of profits

Question 27

what are the 2 disadvantages of wholly owned subsidiaries

Answer 27

1. Bear full cost and risk of establishing new market 2. Can be problems associated with acquisitions

Question 28

2 ways of creating a wholly owned subsidiaries

Answer 28

1. Greenfield ventures 2. Acquisitions

Question 29

what are the 3 advantages of acquisitions

Answer 29

1. Quick to execute 2. May help prevent competitors 3. May be less risky than greenfield ventures

Question 30

what is the disadvantage of acquisitions

Answer 30

Often produce disappointing results (overpaying, culture clashes)

Question 31

what is the advantage of greenfield ventures

Answer 31

Gives much greater ability to build subsidiary company the way it wants

Question 32

What are the 3 disadvantages of greenfield ventures

Answer 32

1. Slower to establish 2. Risky, but less risky than acquisitions 3. takeover of global competitors

Question 33

What are the 4 advantages of strategic alliances

Answer 33

1. May facilitate entry into a foreign market 2. Allow firms to share the fixed costs 3. Brings together complementary skills and assets 4. May help the firm establish technological standards for the industry that will benefit the firm

Question 34

What is a disadvantage of strategic alliances

Answer 34

May give competitors a low-cost route to new technology and markets

Question 35

6 challenges of exporting

Answer 35

1. voluminous paperwork 2. complex formalities 3. potential delays and errors 4. time and costs 5. documentary compliance 6. border compliance

Question 36

explain how the exporter and importer make a deal with the help of a 3rd party

Answer 36

see schema

Question 37

What is the letter of credit

Answer 37

guarantee from a bank that says it will pay the exporter on behalf of the importer

Question 38

what is the draft (bill of exchange)

Answer 38

written order from the exporter to importer to pay a specific amount at a certain time

Question 39

what is a bill of lading

Answer 39

legal document issued by a shipping company to the exporter

Question 40

what are the 3 purposes of the bill of lading

Answer 40

1. receipt of goods 2. contract of carriage 3. document of title

Question 41

what are the types of countertrade

Answer 41

1. Barter 2. Counter purchase 3. Offset 4. Switch trading 5. Compensation or buybacks

Question 42

What are the 3 pros of countertrade

Answer 42

1. way of financing an export deal when other means are not available 2. may be required by government of a country to which a firm is exporting to 3. can be a strategic marketing weapon

Question 43

What are the 2 cons of countertrade

Answer 43

1. Firms would normally prefer to be paid in hard currency 2. May involve the exchange of unusable or poor-quality goods