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MGMT 466 - Ch 8
International Strategy
20
Management
Undergraduate 4
10/16/2009

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Term
international strategy
Definition
a __ is a strategy through which the firms sells its g&s outside its domestic market
Term
1. to take advantage of new opportunities 2. to secure needed resources 3. return on investment 4. economies of scale and learning 5. location advantages
Definition
5 benefits of international strategy
Term
international business level strategy
Definition
each business must develop a competitive strategy focused on its own domestic market. as a firm continues its growth into multiple international locations, the country of origin is less important for competitive advantage.
Term
1. multidomestic strategy 2. global strategy 3. transnational strategy
Definition
3 types of international corporate level strategy
Term
multidomestic strategy
Definition
a __ is an international strategy in which strategic and operating decisions are decentralized to the strategic business unit in each country so as to allow that unit to tailor products to the local market. HIGH local responsiveness, LOW global integration. doesn't utilize economies of scale (can be more costly), more uncertainty.
Term
global strategy
Definition
a __ is an international strategy through which the firm offers standardized products across country markets, with competitive strategy being dictated by the home office. econ of scale, less risk. HIGH global integration, LOW local responsiveness.
Term
transnational strategy
Definition
a __ is an international strategy through which the firm seeks to achieve both global efficiency and local responsiveness.
Term
liability of foreignness
Definition
9/11 and iraq war are explanations for concerns that global strategies are not as prevalent as they once were and still difficult to implement (even with the internet)
Term
regionalization
Definition
because a firm's location can affect its strategic competitiveness, it must decide whether to compete in all or many global markets, or to focus on a particular region or regions.
Term
1. exporting 2. licensing 3. strategic alliances 4. acquisitions 5. new wholly owned subsidiary (greenfield venture)
Definition
5 types of international entry modes
Term
exporting
Definition
__ is an entry mode where a firm sends its goods to other countries. requires no expense other than marketing and distributing. transportation and tariffs costs, loss of control over marketing/distribution, are both disadvantages. small businesses more likely to use this. firms usually only enter neighboring countries using this mode. currency exchange is the biggest issue for small firms. good for early market development.
Term
licensing
Definition
__is an entry mode that is increasingly common for small firms. this allows a foreign company to purchase the right to manufacture and sell the firm's products within a host country or set of countries. company is paid a royalty on each unit produced and sold. this is the least costly form of international expansion. gives firm little control over manufacture and marketing. provides for least potential returns. also, international firm may learn the technology and produce a similar product. good for early market development.
Term
strategic alliances
Definition
__ has become a more popular entry mode recently. allows firms to share risks and resources. firms create new core competencies. each partner brings knowledge or resources. conflict/incompatibilities can end this. good for early market development.
Term
acquisitions
Definition
__ mode of entry can be expensive and require a lot of debt. legal and regulatory requirements of other country may block this. integration may be difficult because of cultural differences (not desirable if country risk high)
Term
greenfield venture
Definition
the establishment of a new wholly owned subsidiary is referred to as a __. affords maximum control to the firm and has the most potential to provide AAR. expatriate staff are preferred where close contacts with end customers are required. (not desirable if country risk high). preferable if intellectual property rights in the emerging economy are not well protected, the number of firms is growing fast, and the need for global integration is high
Term
international diversification
Definition
__ is a strategy through which a firm expands the sales of its g&s across the borders of global regions and countries into different geographic locations or markets. returns decrease initially but increase quickly as firms learn to manage international expansion. poor returns in a domestic market may spur this.
Term
international diversification and innovation
Definition
international diversification provides the potential for firms to achieve greater returns on their __ and reduces the substantial risks of R&D investments.
Term
1. political risk 2. economic risk
Definition
2 complexities/risks of entering international markets
Term
political risk
Definition
__ are risks related to instability in national governments and to war, both civil and international
Term
economic risk (interdependent with political risk)
Definition
__ is risk related to overall economy. protection of intellectual rights, security risk posed by terrorists. foremost risks are differences and fluctuations in the value of different currencies.
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