Incremental Innovation vs. CSR
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Questions and Answers

What type of strategy is characterized by a centralized control and aligns with a Functional Structure?

  • Multinational Strategy
  • Transnational Strategy
  • International Strategy
  • Global Strategy (correct)

Which strategy relies on a Matrix Structure to balance local responsiveness with global coordination?

  • Multinational Strategy
  • Global Strategy
  • International Strategy
  • Transnational Strategy (correct)

Which of the following strategies is most likely to involve decentralized decision-making at the local level?

  • Global Strategy
  • International Strategy
  • Multinational Strategy (correct)
  • Transnational Strategy

How does a Global Strategy primarily approach product offerings?

<p>By employing the same competitive approach in all countries (C)</p> Signup and view all the answers

What is the primary focus of a Localization Strategy in multinational companies?

<p>Varying product offerings based on local preferences (B)</p> Signup and view all the answers

Which companies are cited as examples of utilizing a Transnational Strategy?

<p>McDonald’s, KFC, and Starbucks (C)</p> Signup and view all the answers

Which strategy allows for different competitive approaches in various countries to meet diverse market conditions?

<p>Multinational Strategy (D)</p> Signup and view all the answers

Which structure is typically associated with the Localization Strategy?

<p>Divisional Structure (A)</p> Signup and view all the answers

What is a major drawback of philanthropic CSR?

<p>It fails to leverage the company's strengths for real change. (B)</p> Signup and view all the answers

Which company exemplifies the International Strategy in international business?

<p>McKinsey &amp; Company (D)</p> Signup and view all the answers

Why might international strategies be less effective in markets with cultural differences?

<p>They require adaptation to local preferences. (A)</p> Signup and view all the answers

How does CSV differ fundamentally from philanthropic CSR?

<p>CSV aligns with a company's long term objectives. (B)</p> Signup and view all the answers

What method did Starbucks employ to enhance its supply chain and profitability?

<p>Training farmers on high-quality coffee bean cultivation. (C)</p> Signup and view all the answers

What is a characteristic feature of companies using an International Strategy?

<p>Standardized operations across global offices. (A)</p> Signup and view all the answers

Which of the following best describes philanthropic CSR?

<p>Short-term solutions that do not create lasting value. (D)</p> Signup and view all the answers

What pressure do companies face when employing an International Strategy?

<p>Minimal pressure for local responsiveness. (C)</p> Signup and view all the answers

What is a key characteristic of the Product-Team Structure?

<p>Centralizes decision-making around product lines (A)</p> Signup and view all the answers

When should a firm consider adopting a Matrix Structure?

<p>When operating in a complex global environment (A)</p> Signup and view all the answers

What do global strategies in consumer electronics benefit from?

<p>Universal standards in technology (C)</p> Signup and view all the answers

What defines the organizational structure in a company?

<p>The assignment of employees to specific tasks and roles (B)</p> Signup and view all the answers

What is a primary reason incumbent firms prefer incremental innovation?

<p>It helps them maintain their established knowledge base. (A)</p> Signup and view all the answers

Which strategy places emphasis on global efficiency, cost control, and product uniformity?

<p>Global Standardization Strategy (C)</p> Signup and view all the answers

What is a primary motivation for using the Product-Team Structure?

<p>To speed up product development and ensure innovation (C)</p> Signup and view all the answers

How does incremental innovation affect entry barriers for new firms?

<p>It raises entry barriers for new firms. (B)</p> Signup and view all the answers

Which of the following is a strategic reason for firms to pursue incremental innovation?

<p>To avoid obsolescence of their value network. (D)</p> Signup and view all the answers

Which of the following is NOT a characteristic of the Matrix Structure?

<p>Aligns solely with product-based strategies (B)</p> Signup and view all the answers

Which of the following best describes a company pursuing a Transnational Strategy?

<p>Combine global operations with local responsiveness (B)</p> Signup and view all the answers

What is a major difference between incumbent and newcomer firms regarding innovation?

<p>Incumbent firms face restrictions from existing networks. (A)</p> Signup and view all the answers

Which organization's structure tends to favor incremental innovation?

<p>Established firms with rigid processes. (A)</p> Signup and view all the answers

What economic incentive do incumbent firms have regarding incremental innovation?

<p>To protect their market position and profits. (B)</p> Signup and view all the answers

How does radical innovation impact an incumbent firm's position?

<p>It jeopardizes their existing network relations. (A)</p> Signup and view all the answers

How did Amgen achieve a competitive advantage in the pharmaceutical industry?

<p>By utilizing genetic engineering for new drugs. (D)</p> Signup and view all the answers

Flashcards

Incremental Innovation

A gradual improvement on existing products or services using established technologies, targeting existing markets.

Radical Innovation

Introducing entirely new technologies, products, and markets, often disrupting existing industries.

Incumbent Firms

Established companies already operating within a specific industry.

Newcomer Firms

Companies entering a new market, potentially challenging established players.

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Strategic Reasons for Incremental Innovation

Established firms favor incremental innovation to maintain their position within existing networks of suppliers, buyers, and complementors.

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Economic Reasons for Incremental Innovation

Established firms prioritize incremental innovation to protect their dominant position, maintain high entry barriers, and maximize profits.

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Organizational Reasons for Incremental Innovation

Established firms tend to favor incremental innovation as it reinforces their existing organizational structure and processes.

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Why Newcomers Favor Radical Innovation

New firms lack established structures and networks, allowing them to pursue radical innovation and potentially disrupt established markets.

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International Strategy

A centralized approach focusing on transferring core competencies globally, often using a functional structure.

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Transnational Strategy

A 'think global, act local' strategy balancing global coordination with local responsiveness, often using a matrix structure.

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Multinational Strategy

A 'think local, act local' approach, tailoring products and strategies to specific markets, often using a divisional structure.

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Global Strategy

A 'think global, act global' strategy with standardized products, global brands, and strong headquarters control.

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Functional Structure

A structure organizing departments based on functions like marketing, finance, and operations.

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Matrix Structure

A structure combining functional and divisional teams, allowing for both specialization and coordination.

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Divisional Structure

A structure organizing units based on products, regions, or customer segments.

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What are the key differences between international and transnational strategies?

International strategy focuses on centralized control and global competency transfer, while transnational strategy balances global coordination with local responsiveness.

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Philanthropic CSR

A type of corporate social responsibility that involves donating to charities or causes. This approach focuses on short-term solutions and lacks alignment with long-term business objectives.

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CSV (Creating Shared Value)

A business strategy that focuses on addressing social and environmental issues that are directly related to a company's business model. It aims to create long-term value for both society and the company.

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Starbucks Case

Starbucks implemented a CSV strategy by training its coffee farmers on growing high-quality beans. This improved both the quality of their coffee supply and the welfare of the farming communities, creating shared value.

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International Strategy: Local Responsiveness

A low pressure for this means the company can effectively use a standardized product or service across different countries.

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International Strategy: Cost Reduction

A low pressure for this means the company can focus on efficiency and standardization without needing to adapt significantly to local costs or regulations.

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International Strategy: Example

McKinsey & Company uses an international strategy, centralizing control from its headquarters and implementing standardized consulting practices globally.

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International Strategy: Adaptation

This strategy typically involves minimal adaptation to local markets, focusing on transferring core competencies globally.

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Product-Team Structure

An organizational structure that groups employees around specific product lines, focusing on global development, manufacturing, and marketing for efficiency and consistency.

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Global Standardization Strategy

A business strategy prioritizing efficiency, cost control, and product uniformity across global markets. Companies using this strategy typically focus on standardized products and services with minimal customization.

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When to use a Product-Team Structure?

Companies focused on specific global products or lines seeking consistency, innovation, and speed in their operations. They typically have less complex global operations and utilize a Global Standardization Strategy.

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When to use a Matrix Structure?

Companies operating in complex global environments requiring both centralized control and local responsiveness. They balance multiple demands, such as product specialization and regional adaption, using a Transnational Strategy.

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Organizational Structure

The framework outlining how employees are assigned to tasks and roles within a company, defining the collaboration and coordination of these roles within the organization.

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Study Notes

Incremental Innovation

  • Incremental innovation builds on existing knowledge, improving existing products/services.
  • Targeted at existing markets using existing technologies.
  • Strategic reasons: Incumbents are part of established networks (suppliers, buyers, complementors), impacting decision-making. Radically innovative approaches disrupt these networks. Newcomers can freely innovate without these concerns.
  • Economic reasons: Incumbents have incentives to protect market share using incremental innovation to maintain high entry barriers. Radical innovation threatens market dominance. New companies use radical innovation to overcome these barriers.
  • Organizational reasons: Incumbent firms favor incremental innovation to fit established organizational structures. New entrants may not have these existing structures.

CSR vs. CSV

  • Philanthropic CSR (donating to charity) lacks a long-term business/social vision.
  • It's not aligned with the company's long-term objectives or activities.

IB Strategies and Organization Structures

  • International Strategy: Centralized control at headquarters, transferring core competencies to foreign markets with minimal adaptation. Suitable for markets with low local responsiveness needs and low cost pressure.
  • Transnational Strategy: A blend of global and multidomestic approaches. Adapting to local needs while maintaining global consistency.
  • Multinational (Localization) Strategy: Varying products/services to match local conditions and preferences. Decentralised decision making.
  • Global Strategy: Standardized products/services globally, with strong headquarters control. Suitable for markets with low responsiveness needs and high cost pressures.

Organizational Structures

  • Product-Team Structure: Decision-making around product lines instead of geographical locations. Focuses on global product development, manufacturing, and marketing. Used when global consistency is essential.
  • Matrix Structure: Overlays functional or product structures with geographical divisions. Suitable for complex, demanding global environments requiring both coordination and local responsiveness. Used in transnational strategies.
  • Functional Structure: Simple structure with department specialization. General manager in charge of each department. Common foundation for various setups.

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Description

Explore the nuances between incremental innovation and corporate social responsibility (CSR). This quiz delves into the strategic, economic, and organizational factors that influence these approaches and their impact on long-term business objectives. Test your understanding of how existing firms innovate compared to new entrants.

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