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Flashcards in The Strategy of International Business Deck (15)
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1

strategy

refers to the actions that managers take to attain the goals of the firm

2

Profitability

is the rate of return the firm makes on its invested capital
- add value
- lower costs

3

profit growth

is the percentage increase in net profits over time
- sell more in existing markets
- expand internationally

4

value creation

- difference between price that the firm can charge for that product and cost of production

5

strategies (2)

differentiation and low cost

6

How can firms increase profits through international expansion?: (4)

1. expand their market
2. realize location economies
3. realize greater cost economies from experience effects
4. leverage skills developed and transfer them

7

core competencies

skills within the firm that competitors cannot easily match or imitate

8

Location economy

are economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be

9

Experience Curve

reductions in production costs that occurs over the life of a product

10

Learning Effects

- cost savings that come from learning by doing

11

Economies of scale

reductions in unit cost achieved by producing a large volume of a product

12

Two competitive Pressures

- Pressures for cost reductions
- Pressures to be locally responsive

13

Pressures for cost reductions are greatest: (4)

- industries with universal needs products
- major competitors are based in low cost locations
- persistent excess capacity
- consumers are powerful

14

Pressures for local responsiveness arise from: (4)

- differences in consumer tastes and preferences
- differences in traditional practices and infrastructure
- differences in distribution channels
- host government demands

15

Four Basic Strategies:

1. Global Standardization
2. Localization
3. Transnational
4. International