Global Business Strategies Quiz

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Questions and Answers

What is a primary reason that companies engage in cooperation strategies like joint ventures?

To increase individual competition

To enhance product pricing

To share high research and development costs (correct)

To limit innovation exposure

What distinguishes a joint venture from licensing?

Licensing requires a legal contract but joint ventures do not.

A joint venture involves shared ownership of a new entity. (correct)

Licensing involves creating a new company together.

Joint ventures are only for manufacturing, while licensing covers all areas.

What is a characteristic included in a licensing agreement?

Agreement on trade secrets management (correct)

Shared legal entity creation

Joint investment in R&D projects

Equity stake in the licensor's business

Which of the following is NOT a typical example of franchising?

Google Signup and view all the answers

In a franchising arrangement, what does the franchiser receive in exchange for their rights?

Franchise fee Signup and view all the answers

Which factor does NOT influence the cost in the context of international pricing?

Marketing strategies Signup and view all the answers

What is a primary reason for companies to consider reshoring?

Home market conditions and customer requirements Signup and view all the answers

Which of the following is a benefit of offshoring to low-cost countries?

Enhanced core business focus Signup and view all the answers

How can exchange rates impact international pricing?

They can make imported goods significantly more expensive. Signup and view all the answers

When comparing products internationally, what is a key factor that affects consumers' perceptions?

Cultural and local factors Signup and view all the answers

What does glocalisation mean in a business context?

Combining local and global considerations in business practices Signup and view all the answers

What is the main purpose of shrinkflation in business?

To keep prices the same while reducing the product size Signup and view all the answers

What is the DESTEP analysis used for?

To analyze external factors affecting a business Signup and view all the answers

Which company is Volvo currently a part of?

GEELY Signup and view all the answers

What is the unique selling proposition (USP) in business?

A unique feature that differentiates a product from competitors Signup and view all the answers

What is a key challenge when managing physical distribution in foreign markets?

Selecting foreign country intermediaries Signup and view all the answers

Which mode of transportation is best suited for bulky goods over long distances?

Rail Signup and view all the answers

Why is physical distribution management more complex on an international scale compared to domestic distribution?

Increased distance and new logistical variables Signup and view all the answers

What is a primary use of pipelines in transportation?

Moving oil, gas, and chemicals Signup and view all the answers

Which trend is impacting modern transportation and logistics?

Increased size of containerships Signup and view all the answers

What must be considered in packaging for international distribution?

Climate and geographical factors Signup and view all the answers

Which payment method places the most risk on the buyer in international trade?

Ex-works (EXW) Signup and view all the answers

What is a common characteristic of air transportation?

Ideal for high-value, low bulk items Signup and view all the answers

What is the primary characteristic of a global strategy?

Standardization of products across markets Signup and view all the answers

Which strategy aims to maximize local responsiveness while benefiting from global integration?

Transnational strategy Signup and view all the answers

What is a crucial feature of a multidomestic strategy?

Diverse product adaptations in different markets Signup and view all the answers

Which of the following best describes an international strategy?

Involves minimal need for local adaptation Signup and view all the answers

In the McKinsey 7S framework, which of the following is classified as 'hardware'?

Systems Signup and view all the answers

Which market expansion strategy involves simultaneous entry into all markets?

Simultaneous strategy Signup and view all the answers

In the context of country/market selection for an SME, which method is described as passive?

Opportunity identification Signup and view all the answers

What defines a 'born global' company?

A startup that actively seeks international markets from inception Signup and view all the answers

What does the Global Innovation Index (GII) measure?

Countries' innovation capabilities Signup and view all the answers

What is the primary goal of knock-out screening in market selection for MNEs?

To eliminate unsuitable markets systematically Signup and view all the answers

What is a significant benefit of international marketing?

Access to new technologies and raw materials Signup and view all the answers

Which characteristic is typical of Multinational Enterprises (MNEs)?

Integrated network of manufacturing plants Signup and view all the answers

What demographic group is also referred to as PANKs?

Professional Aunts No Kids Signup and view all the answers

What factor significantly influences consumer behavior among the silver generation?

High levels of disposable income Signup and view all the answers

What habit is common among the silver generation regarding social media?

Favors Facebook as their favorite platform Signup and view all the answers

Which of the following is NOT a characteristic of traditional low-income economies?

High level of innovation Signup and view all the answers

Which statement is true about developed industrial economies?

They have high unemployment rates due to automation. Signup and view all the answers

What is a major advantage of developing economies?

Technological progress and growth Signup and view all the answers

What role does UNCTAD primarily fulfill?

Facilitating cooperation and sustainable trade Signup and view all the answers

Which is a characteristic common to transitional resource-exporting economies?

Dependence on natural resources Signup and view all the answers

What is one impact of family structure on consumer behavior?

Influence on decision processes Signup and view all the answers

What marketing trend is associated with Gen Z consumers?

Social consciousness and responsibility Signup and view all the answers

How does the aging population affect market dynamics?

Increased disposable income and consumer influence Signup and view all the answers

Which of the following is a misconception about traditional low-income economies?

They are highly innovative. Signup and view all the answers

Study Notes

Introduction

6 transport methods: ships, trains, planes, trucks, cloud, pipelines
Cost increases often lead to shrinking products (shrinkflation) to maintain prices
Unique selling propositions (USPs) should be retained while improving the product
Companies grow internationally through mergers and acquisitions (M&A)
Volvo (safety), Jaguar, Land Rover, Range Rover, and Aston Martin were acquired by Ford
Ford sold these companies at a later time due to financial hardships
Volvo is now part of GEELY (China)
Polestar (electric car company) was created in China to capture the electric car market
Fika (coffee break culture) is important to Swedish culture
Hofstede's cultural dimensions relate to power distance, individualism vs collectivism, masculinity vs femininity, uncertainty avoidance, long-term vs short-term orientations, indulgence vs restraint
Glocalisation is combining local and global business practices (example of McDonalds)

Part 1 Analysis (Demographic)

Glocalisation is considering local needs alongside global standards
Examples of this include iPhones, Chanel perfumes, and locally tailored Toyota cars.
DESTEP analysis considers demographic, economic, socio-cultural, technological, environmental, and political factors

Part 1 Analysis (Economic Factor)

Economies are classified by their level of economic development and GDP
Traditional low-income agrarian economies (e.g., Ethiopia) have limited external factors, low income but good social community
Transitional resource-exporting economies (like Congo, Brazil, and Qatar) benefit from extractive industries but suffer volatility and inequality
Developing economies (parts of Asia, South America, and BRICS) experience industrial growth, foreign investment, and urbanisation but face environmental concerns
Developed economies (like Germany, US, and Japan) are strong and innovative but face growing unemployment and pollution issues
Post-industrial, knowledge-driven economies are increasingly important

Part 1 Analysis (Socio-Cultural)

Social factors (social conditions, religion, and material needs) influence cultures
Culture impacts customer behaviour and varies across regions (east/west differences)
Cultures comprise values (standards of behaviour), beliefs, and customs
Cultural differences create challenges for marketers (ex: food tasting, different gestures)

Part 1 Analysis (Technology)

VUCA (volatility, uncertainty, complexity, and ambiguity) summarizes the technological landscape's impact on businesses.
Production processes use robotics, automation, and advanced materials
Businesses rely on renewable energy sources, like 3D printing and seaweed
Mobility is influenced by shared, self-driving vehicle technologies and electrification
Health and healthcare use apps, 3D printing, and AI for diagnosis.
Communication is advanced with big data technology, the internet of things, blockchains, cryptocurrency, and the metaverse.
Artificial intelligence, augmented reality, and quantum computing are future technologies having significant impact

Part 1 Analysis (Ecological)

SDG (Sustainable Development Goals) guide resource sustainability
Corporate sustainability reporting is mandated for large companies
Businesses are held accountable for their environmental impact
Greenwashing occurs when companies inaccurately market their products as eco-friendly.

Part 1 Analysis (Political)

Politics involve local, international, and domestic laws
The CE (Conformité Européenne) mark signifies compliance with safety, health, and environmental standards for products
Countries have regulatory frameworks governing operations and transactions, like operational restrictions and discriminatory restrictions.

Part 2 Strategy (SME & MNE)

SMEs (Small and Medium Enterprises) and MNEs (Multinational Enterprises) use different strategies.
EU businesses are small (over 99%) with less than 250 employees
SMEs often focus on local markets; there are 2 different stimuluses (reactive and proactive)
Global expansion needs consideration of adverse market conditions, domestic inventory limits, availability of international operations capacity, currency exchange risk, and the importance of market exposure
Strategies often include exporting, niche marketing, e-commerce, collaboration with multinationals, and market expansion

Part 2 Strategy (Entry)

Entry strategies depend on factors (objectives, competitors, financial resources, skills) and the nature of competition
Indirect exporting is simpler but lower control while direct exporting is risky but more control
Several exporting choices include agents, distributors, brokers, trading companies, and piggybacking on larger companies to introduce products globally
Other entry strategies include wholly owned subsidiaries, allowing complete control and brand consistency locally but expensive

Part 2 Strategy (Product)

Customer-centric strategies focus on product benefits, characteristics, and support services.
International products can be standardized (consistent across cultures) or adapted to local needs
Factors like market characteristics, cultural considerations, regulations, and product liability influence decisions
Several options exist when planning product strategies, including keeping the existing product, adjusting the product, introducing new features, creating a new product, eliminating a product, or relaunching one

Part 2 Strategy (Logistics)

The cost of distribution increases with distance due to things like increased distances, new variables like transport, documentation and packaging, and a growing market complexity.
Transportation options include air, sea, rail, trucking, pipelines, and cloud technology
Companies must consider selecting external or internal partners who are able to deal with complex distribution structures
Export-sales contracts (incoterms) detail all tasks, risks and costs involved

Part 2 Strategy (Communication)

Communicating with stakeholders (consumers, suppliers, authorities) is crucial for international success
Communication methods should take into account cultural differences and localization
Internal marketing involves clarifying mission, values and procedure
External marketing involves using PR, corporate identity and CRM (Customer Relationship Management)

Part 3 Implementation Pricing

Pricing strategies are adaptable and need market research because the price is a flexible element of the marketing mix
International pricing involves complexity due to a range of factors, including currency fluctuations, various customer tastes, local competitions and taxation
Pricing often is based on cost, competitor analysis, and customer perception.

Part 3 Implementation Logistics

International logistics require careful preparation and an understanding of the different steps involved.
Intermediaries should be carefully selected to ensure reliable processes.
Different modes of transportation require unique considerations.

Part 3 Implementation (Currency & Payment)

Currency and exchange rates are important considerations in international transactions as those rates fluctuate over time
Banks make available multiple kinds of payment instruments for managing exchange risk
Consideration needs to be given to each party's respective strengths because payment terms are necessary

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Description

Test your knowledge on various transport methods, shrinkflation, unique selling propositions, and the effects of mergers and acquisitions in international business. Explore cultural dimensions and the concept of glocalisation in the context of global companies like Ford and McDonald's.