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MAN4720 EXAM 2 NOTES (1)
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MAN4720 EXAM 2 NOTESChapter 8 - CORRECT ANSWER-.
International Strategy Advantages: - CORRECT ANSWER-Market Size
Resources and capabilities
Scale and scope economies
Innovation
Value Chain
Market Size - CORRECT ANSWER-no country has more than 20% of the world's
population; only two countries have at least 5%.
Resources and capabilities - CORRECT ANSWER-Increasingly distributed globally
Return on investment: larger markets can justify larger capital outlays
EX: Billions to sell drug, might as well sell international to make up for costs
Scale and scope economies: - CORRECT ANSWER-firms have access to larger and
more diverse markets
Innovation - CORRECT ANSWER-Internalization provides incentives and
opportunities (e.g., learning) to innovate
Value Chain - CORRECT ANSWER-Place activities in the most optimal locations
Location advantages: benefits of operating in a certain place (e.g., labor costs and
skills, customers, tax favors, etc)
TEST QUESTION: Relationship between company innovation and
internationalization is positive - CORRECT ANSWER-TEST QUESTION:
Relationship between company innovation and internationalization is positive
Determinants of National Advantage (Porter's Diamond) - CORRECT
ANSWER-Factors of production
Demand conditions
Related and Supporting industries
Firm strategy, structure, and rivalry
factors of production - CORRECT ANSWER-Inputs needed to compete (e.g., natural
resources, capital, infrastructure, labor, etc)
Demand conditions - CORRECT ANSWER-the nature and size of home-market
buyers' needs for the industry's products/services
EX: Germans take their cars seriously, that's why they can go abroad (German
Autos). Italian fashion, etc.
, Related and Supporting industries: - CORRECT ANSWER-Groups of firms that
provide support services, facilities, supplies, etc.
Firm strategy, structure, and rivalry: - CORRECT ANSWER-patterns of competition
and organization the home market
EX: Easier for US to enter Canadian market than it is for Canada to enter US
because of structure
Conditions in firms' home markets that provide advantages in foreign markets. These
conditions are interrelated. TEST Q - CORRECT ANSWER-Conditions in firms'
home markets that provide advantages in foreign markets. These conditions are
interrelated. TEST Q
This framework refers to the home market in which the company succeeds. TEST Q
- CORRECT ANSWER-This framework refers to the home market in which the
company succeeds. TEST Q
Generic International Strategies - CORRECT ANSWER-multi domestic, global,
transnational
Multi-domestic: - CORRECT ANSWER-Tailoring products/services to local markets
Decisions are decentralized to business units in each country
Business units are relatively independent of each other
More likely when markets or customers differ substantially by country
Primary focus is on competing in each market individually
Global: - CORRECT ANSWER-Standardizing products/services across local markets
Decisions are centralized in the home office
Business units in various countries might be interdependent
More likely when customer preferences are similar across countries
Primary focus is sharing resources and coordinating across borders (e.g.,
emphasizes efficiency and economies of scale and scope)
Transnational: - CORRECT ANSWER-Pursuing attributes of the multidomestic and
global strategies simultaneously (can be ideal but is hard to implement)
Regionalization
Few firms have worldwide operations; most international firms pay more attention to
their home regions - CORRECT ANSWER-Facilitated by regional trade agreements
(e.g., APEX, EU and NAFTA)
Reduces the complexity of internalization
Reduces some risks (due to geographic proximity); increases others (exposures)
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