Global Strategy Flashcards
What is the integration-responsiveness framework? List the strategies
a framework outlining cost reductions vs local responsiveness for:
- international strategy
- multidomestic strategy
- global standardization strategy
- transnational strategy
what is value creation?
the difference between a firm’s costs of production and the quality that consumers perceive in its products:
= VALUE - COST
What is the dilemma (also paradox) between cost reductions and local responsiveness?
MNEs enter global markets with the intention to reduce operation cost, however, tailor product and service offerings to fit local consumer preferences raise costs
if you had a graph with “pressure for local responsiveness” on the x axis and “cost reductions on the y axis”, how would you position the 4 basic global strategies?
bottom left (low local responsiveness and cost reductions) = international strategy
top left (low local responsiveness and high cost reduction) = global standardization strategy
bottom right (low cost reduction and high responsiveness) = localization strategy
top right (high cost reduction and high responsiveness) = transnational strategy
describe the “international strategy” (low cost reduction and low responsiveness)
the international strategy involves taking products first produced for their domestic market and selling them internationally with only minimal local customization. Tends to centralize R&D at home** but establish manufacturing and marketing functions in each major country**
describe the “localization strategy / multi-domestic approach”
(low cost reduction, high local responsiveness)
the firm adapts to substantial differences across nations with regard to consumer tastes and preferences. This type of customization limits the ability of the firm to capture the cost reductions associated with mass producing a standardized product for global consumption
describe the “global standardization strategy”
(high cost reduction, low responsiveness)
low cost strategy, no customization, one size fits all (boing airplane example)
describe the “transnational strategy”
(high cost reductions, high responsiveness)
this is a flexible approach: standardize where feasible, adapt where appropriate (barbie example)
