Final Exam Flashcards

Question

what are the pressures to localise?

Answer 1

The degree to which companies need to tailor their products or services to satisfy local market demands: – Unique consumer preferences resulting from cultural or national differences. – Localised business development to counter aggressive local competition. – Government regulation (eg pricing, advertising, HRM practices)

Answer 2

* International Strategy – A basic strategy in industries with relatively low pressures for global integration and local responsiveness, often involving the export of specialised products or services developed in a firm’s home market. * Global Strategy – Goals and directions are set out on a worldwide basis to maximise efficiencies with little customisation of products or services across markets. * Multi-domestic Strategy – Goals are developed and implemented independently for specific countries because of a high need for local responsiveness. * Transnational Strategy – A firm moves key activities to wherever they can be carried out best while still adapting to local product or service preferences.

Answer 3

1. cost leadership 2. differentiation 3. integrated cost leadership/differentiation 4. focused cost leadership 5. focused differentiation

Answer 4

– An integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors * lowest competitive price * features acceptable to many customers * relatively standardised products

Answer 5

* An integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them – Non-standardised products for customers who value differentiated features more than they value low cost – The success of a firm’s differentiation strategy depends on its ability to continuously and consistently upgrade the differentiated features – Ability to charge premium prices

Answer 6

* An integrated set of actions designed to produce or deliver goods or services that serve the needs of a particular competitive segment (or niche) – Focused cost leadership strategy – Focused differentiation strategy * Firms can serve a particular segment of an industry more effectively than industry-wide competitors – Competitor firms may overlook small niches – The firm lacks resources needed to compete in the broader market

Answer 7

– An appropriate choice for firms possessing the core competencies to produce somewhat differentiated products at relatively low prices – A firm that successfully uses the integrated cost leadership/differentiation strategy must be able to: – readily adapt to external environmental changes – concentrate simultaneously on two sources of competitive advantage: cost and differentiation – Build competence and flexibility in several value chain activities

Answer 8

* Workspecialisation * Departmentalisation * Chain of command * Span of control * Centralisation * Formalisation

Answer 9

* Emergent form – attracting interest and experimentation * Generally involve external entities, e.g. – Strategic partners – Outsourced functions – Contractors

Answer 10

- Clashes among divisions, subsidiaries, or individuals over territories or customers - Duplication of administrative or personnel services, sales offices, account executives - An increase in overseas customer service complaints - A shift in operational scope - Conflict between overseas and domestic staff - Centralization leads to excessive and, thus, misused or misunderstood data - Unclear reporting relationships

Answer 11

Factors in the selection of a market entry method: – The firm’s objectives for foreign markets. – The business environment in specific foreign countries targeted for entry. – The firm’s technical, managerial, financial capabilities and resources. – The competitive context in targeted foreign markets. – Attributes of products or services for targeted markets. – The risk–reward equation associated with entering a particular foreign market.

Answer 12

***Degree of Control*** How much “say” an entry mode offers over strategic and operational decisions. ***Resource Commitment*** The resources required to pursue a particular entry mode. ***Dissemination Risk*** The risks of having proprietary technology or expertise fall into the hands of a foreign partner. ***Systematic Risk*** The economic and political risks present in foreign markets.

Answer 13

 Exporting  Licensing  Franchising  Contract manufacturing  Turnkey operations  Management contracts  International joint ventures (IJVs)  Wholly owned subsidiaries

Answer 14

**Exporting ** advantages: Low risk, No long-term assets, Easy market access and exit critical success factors: Low risk, No long-term assets, Easy market access and exit **licensing** advantages: No asset ownership risk, Fast market access, Avoids regulations and tariffs sucess factors: Quality and trustworthiness of licensee, Transferability of IP, Host-country royalty limits **franchising** advantages: Little investment or risk, Fast market access, Small business expansion success factors: Quality control of franchisee and franchise operations

Answer 15

1. takes for as written agreement, oral agreement or implied agreement 2. in which a person (the franchisor) grants to another person (the franchisee) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor; and 3. under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol 4. under which, before starting or continuing the business, the franchisee must pay or agree to pay to the franchisor or an associate of the franchisor an amount including,

Answer 16

1. Detailed compensation and bonus structures for selling products. 2. Centralised bookkeeping and record-keeping computer operations. 3. Assistance conducting ‘opportunity’ meetings. 4. Comprehensive advertising and promotional programs. 5. Schemes for appointment of distributors, direct distributors, district directors, regional directors or zone directors. 6. Rights to screen and approve promotional materials. 7. Prohibitions on repackaging of products. 8. Suggestions for retail prices charged for products. 9. Division of states into marketing areas. 10. Establishment of sales quotas.

Answer 17

A contract manufacturer is a manufacturer that contracts with a firm for components or products. It is a form of outsourcing. A contract manufacturer performing packaging operations is called copacker or a contract packager. advantages: Limited cost and risk Short-term commitment success factors: Reliability and quality of local contractor Operational control and human rights issues

Answer 18

Turnkey operations refer to a type of project or business arrangement where a company or contractor is hired to design, build, and fully equip a facility or infrastructure, ready for immediate use. Once the project is completed, it is handed over ("turned over") to the client, who can "turn the key" and begin operations without any additional setup or installation. advantages: Revenue from skills and technology where FDI is restricted success factors: Reliable infrastructure Sufficient local supplies and labor Repatriable profits Reliability of any govt. partner

Answer 19

Management contracts are an international market entry strategy where a company (the contractor) provides management expertise or operational services to a foreign company (the client) for a specified period, without the contractor owning any equity in the foreign business. advantages/ sucess factors : Low-risk access to further strategies success factors: Low-risk access to further strategies

Answer 20

A joint venture (JV) is two or more companies from different countries come together to create a new, jointly owned business entity. Each partner contributes resources such as capital, technology, and expertise, while sharing the profits, losses, and control of the venture. advantages; Insider access to markets Share costs and risk Leverage partner’s skill base, technology, local contacts success factors: Strategic fit and complementarity of partner, markets, products Ability to protect technology Competitive advantage Ability to share control Cultural adaptability of partners

Answer 21

A wholly owned subsidiary is when a company (the parent company) establishes a fully owned business operation in a foreign country. The parent company maintains 100% control over the subsidiary, owning all the equity and managing its operations directly. advantages: Realise all revenues and control Global economies of scale Strategic coordination Protect technology and skill base Acquisition provides rapid entry into established market critical success factors: Ability to access and control economic, political and currency risk. Ability to get local acceptance Repatriation of profits?

Answer 22

distances between countries that companies should address when crafting international strategies. It may also be used to understand patterns of trade, capital, information, and people flows 1. cultural distance 2. administartive distance 3. geographical distance 4. economic distance

Answer 23

Cultural distance matters most when... – Products have high linguistic content (e.g. TV programmes) – Products matter to cultural / national identity (e.g. food) – Products vary in terms of size / standards (e.g. cars) – Products carry country-specific quality standards (e.g. wine)

Answer 24

* Governments will have highest involvement in industries that: – Produce staple goods – Produce ‘entitlement’ goods – Exploit natural resources – Are large employers or large government suppliers – Are national ‘champions’ – Vital to national security – Subject to high sunk costs

Answer 25

* Geography plays a more important role when – Product has a low value-to-weight ratio – Products are fragile or perishable – Local supervision and operational requirements are high

Answer 26

* Economic differences have the biggest impact when: – Nature of demand varies with income level – Economies of standardisation or scale are limited – Labour and other factor cost differences are important – Distribution or business systems are different – Companies need to be responsive and agile

Answer 27

* Make differences visible * Understand the liability of ‘foreignness’ * Assess natural ownership and compare foreign competitors * Compare markets * Discount by distance

Answer 28

* Complex, adaptive systems for doing business in the context of a society * Affected by – Economy – Culture – Societal experiences – World markets – Technology change

Answer 29

* Rationale – Why people work * Identity – Individualist or collectivist *Authority – Power distance

Answer 30

* Capital – Sources and allocation of money * Human capital – Identification and development of talent, labour market * Social capital – Trust in people or systems

Answer 31

* Ownership – Holding assets and controlling their use * Networks – Relationships between entities * Management – Approach and style

Answer 32

* Material logics (economic realities) – Factor endowments – Technology – Input costs * Ideational logics (new ideas) – External ideas, norms, values, attitudes, systems

Answer 33

* Migration waves * History * Dominant internal influences – Chinese civilisation – Taoism, Confucianism * External influences – British, French, Dutch, Portuguese, Spanish, American – Islam, Christianity

Answer 34

* The Object – People from Western cultures tend to focus on analysis * facts, categorisation, individuals, motives, perspectives etc * The Field – People from many other cultures tend to focus on synthesis * the relationships between these things and their environment

Answer 35

* Meaning – Firms exist to keep people employed – Almost “tribal” loyalty * Order – Banks are there to provide capital to industry – Permanent employment – Trust - interpersonal and institutional * Co-ordination – Large business groups – keiretsu - A keiretsu is a set of companies with interlocking business relationships and shareholdings that dominated the Japanese economy in the second half of the 20th century – Privately owned small to medium firms 14

Answer 36

* Meaning – Cardinal Confucian relationships * Order – Command economy – Increasing private enterprise since 1978 * Co-ordination – Increasing autonomy in State Owned Enterprises (SOE) – Stock market – Hong Kong special economic zone – One country, two systems

Answer 37

- Cultural Influence: Confucian values shape the business system, emphasizing a sense of duty and a strong work ethic. - Work Hours: South Koreans have the second-longest working hours in the OECD. - Trust: Low institutional trust; interpersonal relationships are more significant in business interactions. - Labor Market: Distinction between regular and non-regular employees is prominent. - Chaebols: Large business groups dominate export industries. - SMEs: Around 87% of South Koreans are employed by small to medium enterprises. Government - Role: Reduced government control in the economy since the 1980s.

Answer 38

* The process of gathering information and forecasting relevant trends, competitive actions, and other factors that will affect operations in geographic areas and business sectors of potential interest. * Includes – External * Information about the society in which a business operates * Information about competitors and the competitive environment * Information about consumer trends – Internal * Information about internal resources and capabilities

Answer 39

managements perception or representation of task and general environments

Answer 40

*The external environment of a business is constantly changing (regulatory, competitive, social, economic, etc.) * The resources available to a business are constantly changing (financial, technological, etc.) * Good businesses must adapt to,or influence, their environments - failure to do this can lead to the demise of the organisation * Scanning allows organisations to identify opportunities and gain first-mover advantage * Scanning allows organisations to identify impending threats and mitigate against them

Answer 41

The most common mistake people make is to collect a lot of possibly useful and possibly relevant information, present it in some sort of list or table, make no real attempt to analyse what it all means for the business, and then ignore it anyway when making plans.

Answer 42

* Conventional methods: – Market research * focus groups – Desk research * Government statistics * Industry statistics * Industry studies * Some alternative methods: * Correlation / regression analyses * Scenario building

Answer 43

* Drivers (factors that influence trends) – Rapid developments in ICT, artificial intelligence – Environmental degradation – Demographic changes – Conflicts / deteriorating geopolitical situations * Trends – Increased security legislation, IP legislation, privacy legislation, etc. – Sustainability initiatives * Reducing carbon footprints (lower energy usage, recycling, etc) – Personalisation of products and services – Reframing trade relationships, nationalism, etc. Trends can give rise to potential threats and opportunities

Answer 44

* General Environment – PESTEL * Industry – Porter’s Five Forces * Threats from competition, suppliers, customers, new entrants, substitute products * Task environment – Customers, suppliers, competitors, labour market, regulators, pressure groups, etc.

Answer 45

- products or services - markets - channel - timeliness

Answer 46

* Financial * Competitors – Existing and potential * Regulators * Pressure groups * New products

Answer 47

– Financial, physical & technological resources – Human resources – Business systems – Business relationships

Answer 48

Environment – Political (regulators) – Economic – Social – Technological – Legal – Environmental – Competitors – Suppliers – Customers – New entrants – Substitute products The Business – Money – People – Systems – Relationships

Answer 49

* Likelihood x Impact = Exposure * Assessment made for each risk factor * For example...High risk = 3, Moderate risk = 2, Low risk = 1

Answer 50

**Industry:** – A group of firms producing products (goods and/or services) that are similar to each other **Theories of industry competition** – Perfect competition (rarely observed) * Smith(1776)–invisiblehandofthemarketsetsprices – Innovation and Imitation equilibrium – Industrial organisation (IO) economics model * Industry environment determines structure * Industry structure determines strategy and firm performance (below, at, or above average) * Known as the structure-conduct-performance (SCP) model

Answer 51

– Basic factors (natural resources, labour, etc.) – Advanced factors (digital communications systems, highly educated workforces, etc.) – Generalised factors - required by all org’s (roads / highways, access to capital, etc.) – Specialised factors that are most valuable in specific uses (e.g. skilled port workers who specialise in the handling of bulk chemicals) * Nations with both advanced and specialised factors are likely to nurture new firms that become strong global competitors. * Ironically, nations often develop advanced and specialised factors because they lack critical resources (e.g. South Korea, Japan)

Answer 52

– Nature and size of buyers’ needs in the home market for an industry’s products & services. – Size of this segment can create demand sufficient to justify the construction of scale-efficient facilities.

Answer 53

– National firms can develop competitive advantage when industries that provide materials or components that support the primary industry – E.g. in Italy, the national pride of the country’s designers has spawned strong industries in sports cars, fashion apparel and furniture.

Answer 54

– Patterns of firm strategy, structure, and competitive rivalry among firms in an industry vary between nations: For example: – In Japan and Germany, there is a predominance of engineers in top management. In the USA, top management is dominated by finance specialists -> strategic focus is quite different. – In the USA, competition among computer manufacturers and software producers has favoured the development of these industries. – In Japan, intense domestic competition gives rise to high quality goods, rapid process improvement and product development, and well developed advanced factors.

Answer 55

* enforcing product standards * influencing rivalry by regulation and antitrust (anti-competition) laws * impacting on the availability of highly educated workers and advanced transportation infrastructure.  Porter’s four attributes, government policy and chance work as a reinforcing system, complementing each other and creating in combination the conditions appropriate for competitive advantage.

Answer 56

– Developed from the SCP model in 1980 by Michael Porter – A key proposition: * The firm’s performance depends on the degree of competitiveness of the five forces within an industry * The stronger and more competitive these forces are, the less likely the firm is able to earn above-average return, and vice versa * Not all industries are equal in terms of their potential profitability * The task for strategists is to assess the opportunities (O) and threats (T) underlying each competitive force affecting an industry, and then estimate the likely profit potential of the industry * The challenge is to stake out a position that is strong and defensible relative to the five forces

Answer 57

* Numbers of competitors (concentration) * Relative size of competitors (balance) * Industry growth rate * Fixed costs vs variable costs * Product differentiation * Buyers switching costs * Diversity of competitors * Exit barriers

Answer 58

* Number of buyers relative to sellers * Product differentiation * Switching costs to use other products * Buyer’s profit margins * Buyer’s use of multiple sources * Buyer’s threat of backward integration * Seller’s threat of forward integration * Importance of product to the buyer * Buyer’s volume

Answer 59

Typical actions indicative of intense rivalry include: – Price wars – Proliferation of new products – High-cost (to the firm) competitive actions

Answer 60

* Supplier concentration * Availability of substitute inputs * Importance of supplier input to buyer * Supplier’s product differentiation * Importance of industry to suppliers * Buyer’s switching costs to other inputs * Supplier’s threat of forward integration * Buyer’s threat of backward integration

Answer 61

1. Barriers to entry – Government policies – Capital requirements – Access to distribution channels – Economies of scale – Product differentiation 2. Incumbent’s defense of market share 3. Industry growth rate

Answer 62

* Complete or partial substitute * Relative price of substitute * Relative quality of substitute * Switching costs to buyer

Answer 63

* One way to reduce the threats posed by the competitive forces * Horizontal (lateral) integration – Acquire similar businesses * Vertical integration – Acquire firms involved in other steps of the value chain * Forward integration – later steps * Backward integration – earlier steps

Answer 64

* For strategic practice, the industry-based view provides: – A systematic foundation for industry analysis and competitor analysis, to which a more detailed examination can be added – A set of answers to the four fundamental questions in strategy – An argument that industry-specific conditions play an important role in determining firm performance

Answer 65

* Resources – Assets of a firm * Capabilities – Activities that the firm can undertake * Core competencies – Activities that the firm can perform as well as, or better than its competitors

Answer 66

* Different resources are required at different stages along the “Value Chain” – The functional activities within the firm that create value in the goods and services produced * Components of the Value Chain – Primary activities * Are directly associated with the development, production, and distribution of goods and services – Support activities * Assist in the accomplishment of primary activities

Answer 67

*** Value:** do the resources and capabilities add value? – Necessary for a competitive advantage – Perception of the customer *** Rarity:** how rare are the valuable resources and capabilities? – Valuable, but common, not an advantage – Valuable and rare can lead to temporary advantage – If everyone has it, you can’t make money from it *** Imitability** – Easier to imitate tangible resources/capabilities than intangible ones – Why is imitation so difficult? * Hard to acquire in a short time what competitors have developed over a long time * Events earlier in time affect future events * Difficult to identify causal determinants of performance − Valuable, rare, but imitable resources/capabilities -> temporary advantage − Only valuable, rare and hard-to-imitate resources/capabilities -> sustained competitive advantage *** Organisation** – How is a firm organised to develop and leverage the full potential of its resources and capabilities? * Using complementary assets effectively * Managing social complexity effectively – Invisible relationships can add value & make imitation more difficult

Answer 68

*** Tangible** – Resources and capabilities that are observable and easily quantified – Broadly organised in three categories: * Financial * Physical * Technological *** Intangible** – Resources and capabilities not easily observed or difficult (or impossible) to quantify – Examples include: * Human * Innovation * Relationships

Answer 69

- The capacity to attract investors, fund growth or survive business shocks measure: **Liquidity ratios:** eg Current ratio (current assets/current liabilities) – 2:1 is a reasonable benchmark **Gearing ratios:** eg Debt to equity ratio (total debt/shareholders’ equity) – acceptable benchmarks vary greatly across industries, and trend or capacity to sustain a ration over time may be better ways to assess this ratio **Profitability ratios:** eg Return on Assets (Net income/Average total assets x 100) – should be better than the risk free rate of return **Valuation ratios:** eg Price to earnings ratio (share price/earnings per share) – again, varies greatly, but a benchmark around 15 may be appropriate

Answer 70

- Ownership or control of buildings, equipment, patents, stockpiles of raw materials measure: - Market value of asset - Age of asset - Condition of asset

Answer 71

- Expertise and engagement of key employees, associates, sub- contractors or affiliates measure: - Education, technical or professional qualifications, or experience Employee turnover - Industrial dispute history - Compensation packages relative to competitors - Safety history - Training budget - Innovation profile

Answer 72

- Reputation, recognition and standing with key stakeholders measure: - Brand recognition - Repeat custom - Consistency of financial performance - Capacity to charge a price premium - Extent of relationship “network”

Answer 73

- Planning/Organising/Leading/ Controlling - Consists of Financial management, Leadership, Management of partnerships and relationships measure: - Analysis of planned to outcome gaps

Answer 74

Capacity to generate new products and services measure: - Basic research expertise - New ideas per employee - Percentage of new ideas selected for funding - Revenue generated divided by implementation cost of new ideas - Percentage of revenue generated by new ideas

Answer 75

**product/service design: ** - Market acceptability of new products or services - measures by positive responses on blogs **marketing** - capacity to bring new products or services to the market - measures by sales trends **sales & distribution:** - the logistics of getting the product or service to customers in a way that meets their expectations - measured by quality and effectiveness of customer service

Answer 76

* Things that an organisation can do better than, or at least as well as competitors * Capabilities that are – Valuable to customers – Rare – Not easily Imitable – Exploited effectively by the organisation

Answer 77

− “Humanly devised constraints that structure human interaction” (North, 1993) − “Regulatory, normative, and cognitive structures and activities that provide stability and meaning to social behavior” (Scott, 2014)

Answer 78

**General Agreement on Tariffs and Trade (GATT)**  An international treaty that committed signatories to lowering barriers to the free flow of goods across national borders; predecessor to the WTO. **World Trade Organization (WTO)**  Responsible for policing the world trading system and ensuring that nations adhere to the rules established in WTO treaties. Some 164 nations accounting for 97% of world trade are WTO members. **International Monetary Fund (IMF)**  Created to maintain order in the international monetary system.

Answer 79

**World Bank **(International Bank for Reconstruction and Development)  Set up to promote economic development **United Nations (UN)**  Maintains international peace and security  Develops friendly relations among nations  Cooperates in solving international problems and promotes respect for human rights  Acts as a centre for harmonising the actions of nations

Answer 80

Institutional framework - formal and informal institutions governing individual and firm behavior - supported by three pillars (regulative, normative, cultural-cognitive) − Formal institutions - laws, regulations, rules - supported by the regulatory pillar (the coercive power of governments) − Informal institutions - norms, cultures and ethics - supported by the normative and cognitive pillars

Answer 81

– Relational contracting - informal, relationship-based, personalised exchanges, or – Arm‘s length transaction - formal, rule-based, impersonal exchange with third party enforcement

Answer 82

* The relationship between strategic choices and institutional frameworks can be critical * Porter’s “diamond” model explains competitive advantage of globally leading industries in different countries, but has been criticised for ignoring history and institutions * Strategic choices are selected within and constrained by institutional frameworks in developed economies * Striking differences between institutions in developed and emerging economies has pushed the institution-based view to the forefront

Answer 83

* Managers and firms rationally pursue their interests and make choices within the formal and informal constraints in a given institutional framework. * While formal and informal constraints combine to govern firm behavior, in situations where formal constraints are unclear or fail, informal constraints will play a larger role in reducing uncertainty to managers and firms.

Answer 84

* Institutions are a function of the culture * The culture of a society comprises the shared values, understandings, assumptions, and goals that are learned from earlier generations, imposed by present members of a society, and passed on to succeeding generations.

Answer 85

**Individualism v collectivism** – degree to which individual goals are valued over group goals **Power distance** – extent to which unequal power distribution is accepted **Uncertainty avoidance** − degree to which ambiguity is tolerated **Masculinity v femininity** − achievement (assertiveness, competitiveness, materialism) v nurturing **Long term v short term orientation** − Degree to which the society focusses on planning and thrift **Indulgence v restraint** − Degree to which people’s desires are restrained by social norms

Answer 86

* Identity – Unique individual or a group member? * Hierarchy – Are people born equal or with a rank? * Role – Warrior or carer? * Novelty – Are unfamiliar things dangerous or interesting? * Time – Live for today or build for tomorrow?

Answer 87

**Context** – Background information (other than what is said or written) that helps one understand and perceive others. **High-Context versus Low-Context Cultures** – High-context cultures put great weight on background information whereas low-context cultures view it as extraneous. – High-context cultures * Feelings and thoughts are not explicitly expressed * The listener has to read between the lines and interpret meaning – Low-context cultures * Feelings and thoughts are expressed in words, and information is more readily available

Answer 88

* From the institution-based view, ethics falls under the Normative and Cultural-Cognitive Pillars * Ethics: Norms, principles, and standards of conduct that govern individual and firm behavior * All agree - ethics can make or break a firm * Value of an ethical reputation is magnified during crisis

Answer 89

* Ethical theories fall into two categories – Teleology (consequence) – Deontology (moral duty) * Managing Ethics Overseas – What is ethical in one country may be unethical or illegal in other countries * Two perspectives on dealing with ethical dilemmas overseas: – Ethical relativism - “when in Rome, do as the Romans do” – Ethical imperialism - absolute belief that “there is only one set of Ethics, and we have it!”

Answer 90

* The ethical concept that moral behaviour produces the greatest good for the greatest number. * Using simple economic costs and benefits to help make decisions.

Answer 91

* The ethical concept that acts are moral when they promote the individual’s best long-term interests, which ultimately leads to greater good * Often perceived as gratifying immediate self-interest * Promotes behaviour towards others that fits standards of behaviour that people want shown towards themselves

Answer 92

* The ethical concept that moral decisions are those that best maintain the rights of those people affected by them * People have fundamental rights and liberties that cannot be taken away such as: – The right to free consent – The right to freedom of speech

Answer 93

* The ethical concept that moral decisions must be based on standards of equity, fairness and impartiality * Concepts of: – Distributive justice: Different treatment of people not be based on arbitrary characteristics – Procedural justice: Requires rules be administered fairly – Compensatory justice: Compensation for the cost of their injuries by the party responsible

Answer 94

* The performance of business activities that direct the flow of goods & services from producers to consumers * getting the right G & S’ to the right people at the right place, time and price with the right communication and promotion * human activity directed at satisfying needs and wants through exchange processes

Answer 95

* Services... – are variable – are intangible – are perishable – are inseparable from the provider – often involve the customer as an integral part of the provision of the service

Answer 96

1. promotion - communicating value 2. product - creating value 3. place - delivering value 4. price - capturing value

Answer 97

1. people - All persons who play a part in the service delivery & influence buyers’ behaviour * People who provide cues to the customer regarding the nature/value of the service 2. physical evidence * The environment in which the service is offered * Tangible representations of value: * Brochures * Premisedesign/features * Brandname,logo,etc 3. process * The procedures, mechanisms and flow of activities by which the service is delivered * Service process can be complex and time consuming * Standardising processes is important

Answer 98

* Meeting the Competition – no real advantage * Beating the Competition – short term advantage * Countering the Competition – long term advantage

Answer 99

* To have a competitive advantage an offering must be: – of value to the customer – better than most other competitors’ offerings – difficult to copy

Answer 100

* A perceived cost is any expected negative outcome of a proposed exchange perceived by a target customer. * Consumers balance expected benefit with expected cost to them. * What is pricing objective? – Profit maximisation? – Usage maximisation? – Full cost recovery?

Answer 101

* Cost-oriented (take into account all costs and add a mark up) * Competition-oriented (going rate) * Demand-oriented (where demand is such that a premium or a discount can be applied) * Other strategies include: * Promotional pricing * Market disincentivisation * Social equity

Answer 102

* For an exchange to take place, organisations must make direct or indirect contact with customers. * For services, this means making the service available where and when the customer can utilise it. * Organisation’s task is to create time and place utility for the customer. * A distribution channel is a conduit for bringing organisation and customer together at some place and time in order to facilitate a transaction

Answer 103

* Specific buildings - (office, store, showroom, etc.) * Salesforce * Independent intermediaries – e.g. distribution agencies * Telephone contact * Advertising media * Direct mail / messaging

Answer 104

* Organisation has to decide how much time and place utility to offer as part of its marketing mix * Direct vs indirect marketing * Length and breadth of channel structure (nbr of levels between org and customer) * Allocation of functions - who handles the channel flows i.e. information, goods, money * Co-ordination and control of channel members

Answer 105

* Since 1960s, assumption was that globalisation would lead to converging needs and tastes, and that marketing could be standardised to save on costs. * More recently, researchers have argued that markets are actually becoming more diverse. * More local products and brands now stand alongside global products and brands. * Generally, standardisation (of marketing programs) is most feasible among nations which are economically alike. * Why do needs and tastes continue to diverge? - because culture, to a large degree, ensures it. * e.g. Europe’s single market and common currency were supposed to lead to homogenisation in food, clothes and TV programs - reality is quite different. * Cultural values  stability. Convergence of economic systems and incomes, but not values. * Increased discretionary income  freedom to express according to own, specific value patterns.

Answer 106

– Marketers united by a wish for change (new trends mean new business). – Most MNCs are from US or UK, or have Anglo-American management (highly individualistic). Implies universalism – they often only see similarities, not differences. – Proponents of cultural differences do not have much empirical evidence to refer to. – Cultural values are difficult to vocalise. Cross-cultural studies which can be applied to marketing are few and far between.

Answer 107

* Mineral water consumption is higher in countries with high UAI. * Internet usage - nbr of ISPs per 10,000 population correlates significantly with high IDV, low PDI and low UAI * Cars - people in countries with high UAI prefer to buy brand new cars. * Education, science and leisure pursuits (quality of life) strongly correlate with a low MAS.

Answer 108

1. construct - are we studying the same phenomena in brazil, india and britain 2. scalar - do the scores on consumers in the US, Argentina and japan have the same meaning 3. measurement - are the phenomena in france, singapore and south africa measured in the same way 4. sampling - are the samples used in hong kong, china and romania equivalent

Answer 109

* Global marketing emphasises four major activities: – cost efficiencies resulting from reduced duplication of efforts – opportunities to transfer products, brands, and ideas across subsidiaries in different countries – emergence of global customers such as global teens, hipsters, global elite, etc. – better links between national marketing infrastructures, which paves the way for a global marketing infrastructure that results in better management and reduced costs

Answer 110

* the process of identifying specific segments - country groups or individual consumer groups across countries - with homogeneous attributes who are likely to exhibit similar buying behavior. * Important because: – different products are in different stages of the product life cycle at any given time – the internet allows product information to be disseminated very rapidly and in unequal proportions across different countries – Target segments (should have measurability, size, accessibility, actionability, growth potential)

Answer 111

* Traditional bases for segmentation: – demographics – psychographics / culture – geography * Some emerging bases: – product diffusion patterns – response elasticities

Answer 112

* Niche markets will almost always require additional information * For some niche markets national measures will be less relevant than market segment measures

Answer 113

1. Attract an effective workforce - HRM planning - Job analysis - Forecasting - Recruiting - Selecting 2. maintain an effective workforce * Wage and salary * Benefits * Labour relations * Separations 3. develop an effective workforce * Training * Development * Appraisal

Answer 114

- a wider variety of external variables that must be taken into account when making decisions - having to manage a wider and more diversde mix of employees in the workforce - a larger portfolio of human resource activities and functions - more direct exposure to international risk issues

Answer 115

**Ethnocentric staffing approach** – key managerial positions filled with people from headquarters – ie, parent-country nationals (PCNs). **Polycentric staffing approach** – local managers – host-country nationals (HCNs) – are hired to fill key positions in their own country. **Geocentric (global) staffing approach** – the best managers are recruited from within or outside of the company, regardless of nationality – i.e. third-country nationals.

Answer 116

* Job factors * Cultural empathy, flexibility and adaptability to cultural change * Spouses and dependents situation * Independence and self-reliance * Leadership ability * Language training * Age, experience and education * Motivation for a foreign assignment * Physical and emotional health

Answer 117

USA: * Spouse cannot adjust * Manager cannot adjust * Other family problems * Manager’s personal / emotional maturity * Manager’s inability to cope with additional responsibilities Japan * Manager’s inability to cope with additional responsibilities * Difficulties with new environment * Personal / emotional problems * Lack of technical competence * Spouse cannot adjust

Answer 118

*Selection based on headquarters criteria rather than assignment needs * Inadequate preparation, training ,and orientation prior to assignment * Alienation or lack of support fromheadquarters * Inability to adapt to local culture and working environment * Insufficient compensation and financial support * Poor programs for career support and repatriation

Answer 119

* State of disorientation and anxiety about not knowing how to behave in an unfamiliar culture * Caused by the trauma people experience in new and different cultures. They lose the familiar signs and cues that they had used to interact in daily life and must learn to cope with a vast array of new cultural cues and expectations.

Answer 120

* Honeymoon – positive attitudes and expectations, excitement, and a tourist feeling prevail * Irritation and hostility – crisis stage when cultural differences result in problems at work, at home, and in daily living * Gradual adjustment – period of recovery in which the “patient” gradually becomes able to understand and predict patterns of behavior, use the language, and deal with daily activities, and the family starts to accept their new life * Positive adjustment – stage at which the manager and family members grow to accept and appreciate local people and practices and are able to function effectively in two cultures

Answer 121

* The longer the duration of an offshore assignment, the expatriate has being reabsorbed into the home office. more difficulty the expatriate has being reabsorbed into the home office * The “out of sight, out of mind” syndrome * Organisational changes made during the time the individual was abroad may make one’s position redundant * Technological advances in the parent headquarters may render one’s existing skills and knowledge obsolete

Answer 122

* Repatriation Agreements * The firm tells the individual how long he or she will be overseas and promises to give the individual, on return, a job that is mutually acceptable

Answer 123

* A mentor program to monitor the expatriate’s career path while abroad and upon repatriation * The establishment of a special organisational unit for the purposes of career planning and continuing guidance for the expatriate * A system of supplying information and maintaining contacts with the expatriate so that he or she may continue to feel a part of the home organisation.

Answer 124

* The exit transition from the home country, the success of which will be determined largely by the quality of preparation the expatriate has received * The entry transition to the host country, in which successful acculturation (or early exit) will depend largely on monitoring and support * The entry transition back to the home country or to a new host country, in which the level of reverse culture shock and the ease of re-acculturation will depend on previous stages of preparation and support

Answer 125

* They focus on knowledge creation and global leadership development * They assign overseas posts to people whose technical skills are matched or exceeded by their cross-cultural abilities * They end expatriate assignments with a deliberate repatriation process

Answer 126

* Core Questions – Rely on a standardised set of policies, procedures and practices when managing and appraising employee feedback worldwide? – Rely on a dispersed set of systems aligned with local business and management practices in the places where it does business? – Use a blended performance appraisal and management approach to keep local practices intact?

Answer 127

* Need to consider – Fostering productivity – Supervision – Performance appraisal – Managing poor performance – Managing conduct * Additional level of complexity for international situation

Answer 128

* Evaluation Issues – The impact and influence of local cultural values and context on effective delivery of feedback. – Conflicts that occur when an implicit and informal culture meets an explicit and formal performance evaluation system

Answer 129

* Pay & taxation * Superannuation * Conditions * Illness and injury management * Should take into account cost of labour in a global market, and cost of living in specific assignment location

Answer 130

– Home rate/home currency – Local rate/local currency – Salary adjustments or promotions – home or local standard – Bonus – home or local currency, home or local standard – Stock options – Inducement payment/hardship premium – percentage of salary or lump sum payment, home/local currency – Currencyprotection – Global salary and performance structures

Answer 131

– Cost-of-living allowances – Housing standard – Education – Relocation – Perquisites – Home leave – Shipping and storage

Final Exam Flashcards

(157 cards)