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25 Cards in this Set
- Front
- Back
3 trends toward globalization implications
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industries are becoming global in scope
shift from national to global markets steady decline in barriers to cross border trade and investment |
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porters diamond 4
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factor endowments or conditions
local demand conditions competitiveness of related and supporting industries intensity of rivalry |
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factor endowments or conditions
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the cost and quality of factors of production
basic factors: land, labor, capital, and raw material advanced factors: technological, managerial, infrastructure |
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local demand conditions
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home demand plays an important role in the impetus for upgrading competitive advantage
companies are most sensitive to the needs of their closest customers |
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intensity of rivalry
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different nations characterized by different management ideologoies
strong association between vigorous domestic rivalry and the creation and persistence of competitive advantage in an industry |
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expanding the market by leveraging products
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taking goods or services developed at home and selling them internationally
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location economies
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economic benefits from performing a value creation activity in the optimal location
leveraging the skills of global subsidiaries applying these skills to other operations withing firm's global network |
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pressures for cost reductions
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greatest in commodity products
differentiation is difficult low cost location competitors consumers are powerful - low switching costs excess capacity |
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pressure for local responsiveness
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differences in customer tastes and preferences
differences in infrastructure and traditional practices differences in distribution channels host government demands being locally responsive tends to raise costs |
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standard globalization strategy
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reaping the cost reductions that come from economies of scale and location economies
business model based on pursuing a low cost strategy on a global scale strong pressures for cost reduction and the demand for local responsiveness is minimal |
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localization strategy
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customizing the companys goods or services so that they provide a good match to tastes and preferences in different national markets
substantial differences across nations with regard to consumer tastes and preferences and where cost pressures are not too intense |
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transnational strategy
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difficult to pursue due to its conflicting demands
simultaneously: achieves low costs, differentiates across markets, fosters a flow of skills between subsidiaries |
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international strategy
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mulitnational companies that sell products that serve universal needs (little differentiation) and do not face significant competitors (low cost)
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basic entry decisions
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which overseas markets to enter (where)
timing of entry (when) scale of entry (how) |
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first-mover advantages and disadvantages
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adv - preempt and build share
dis - pioneering costs |
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exporting
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most manufacturing companies begin their global expansion as exporters and later switch
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licensing
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a foreign licensee buys the right to produce a company's product for a negotiated fee
most of the oversees capital |
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franchising
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specialized form of licensing
sells intangible property, insists to follow strict rules as to how it does business |
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joint ventures
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typically 50/50 - very favored
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wholly owned subsidiaries
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parent company owns 100% of subsidiaries stock - setup or acquire
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global strategic alliances
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cooperative agreements between companies from different countries that are actual or potential competitors
range from short term to formal joint ventures |
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global strategic alliance advantages
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facilitate entry into a foreign market
share fixed costs and associated risks bring together complementary skills and assets set technological standards for its industry |
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global strategic alliances disadvantages
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give competitors a low cost route to gain new technology and market access
alliances can end up giving away technology with very little gained in return |
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partner selection
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a good partner
shares the frims vision unlikely to exploit conduct research |
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success for strategic alliances 3
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partner selection
alliance structure manner in which alliance is managed |