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What are the four main international business strategies?
What are the four main international business strategies?
Firms need to choose either differentiation or low cost, and configure internal operations to support the choice. This concept is known as strategic ____________.
Firms need to choose either differentiation or low cost, and configure internal operations to support the choice. This concept is known as strategic ____________.
positioning
Define profitability in the context of international business.
Define profitability in the context of international business.
Profitability refers to the rate of return the firms make on invested capital.
Match the following value chain activities with their descriptions:
Match the following value chain activities with their descriptions:
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What does 'Strategy' refer to?
What does 'Strategy' refer to?
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What are the four main international business strategies?
What are the four main international business strategies?
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Which company follows the International Strategy approach?
Which company follows the International Strategy approach?
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Define 'Profit Growth.'
Define 'Profit Growth.'
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Strategic Positioning: Firms need to choose either differentiation or ______ cost.
Strategic Positioning: Firms need to choose either differentiation or ______ cost.
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Match the Value Chain Activities with their descriptions:
Match the Value Chain Activities with their descriptions:
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Study Notes
International Business Strategy
- International business strategies refer to the different approaches companies take when expanding operations globally.
- There are four main international business strategies: International, Multi-Domestic, Global, and Transnational.
International Strategy
- Focuses on a single point of operation in the home market and exports standardized products/services with little adaptation.
- Allows for a recognizable global brand and consolidated operations, but less local responsiveness.
- Examples: Red Bull, Victoria's Secret.
Multi-Domestic Strategy
- Adapts products/services to local market preferences in each country, rather than offering a standardized global offering.
- Allows for high local responsiveness, but less global integration.
- Prioritizes customization over efficiency.
- Examples: Netflix, Heinz.
Global Strategy
- Sacrifices local responsiveness in favor of cost efficiencies and economies of scale by offering largely standardized products/services globally.
- Examples: Microsoft, Procter & Gamble, Intel.
Transnational Strategy
- Balances global integration and local responsiveness, offering standardized core products/services while adapting to local markets.
- Examples: McDonald's, Nike, KFC.
Choosing an International Strategy
- Depends on the company's goals of balancing cost efficiencies and local adaptation.
- Many companies start with an international strategy and evolve to a more complex model as they gain experience and resources.
Increasing Profitability and Profit Growth
- Firms need to pursue strategies that increase profitability and profit growth.
- Profitability: rate of return on invested capital.
- Profit growth: percentage increase in profits over time.
- Ways to increase profitability and profit growth:
- Add value
- Lower cost
- Sell more in existing markets
- Expand internationally
Strategic Positioning
- Firms need to choose either differentiation or low-cost, and configure internal operations to support the choice.
- Differentiation strategies focus on providing unique, valuable products/services that command a premium price.
- Low-cost strategies aim to be the industry's lowest-cost provider through operational efficiency, high productivity, and economies of scale.
Configured Operations
- A firm's operations are like a value chain composed of a series of distinct value creation activities.
Value Chain Activities
1. Production
- Includes manufacturing, assembly, testing, packaging, and other physical production processes.
- Aims to create products efficiently and with high quality.
2. Marketing
- Encompasses market research, advertising, sales, and customer service.
- Helps create value by understanding customer needs and effectively communicating the product's benefits.
3. Materials Management
- Includes procurement, logistics, inventory management, and distribution.
- Aims to ensure the right materials are available at the right time and place to support production.
4. Research & Development (R&D)
- Involves new product design, process engineering, and technical services.
- Helps create value through innovation and continuous improvement.
5. Human Resources (HR)
- Includes recruiting, training, compensation, and employee relations.
- Helps create value by attracting, developing, and retaining the right talent.
6. Information Systems
- Encompasses data processing, information management, and technology infrastructure.
- Helps create value by enabling efficient operations and effective decision-making.
International Business Strategy
- International business strategies refer to the different approaches companies take when expanding operations globally.
- There are four main international business strategies: International, Multi-Domestic, Global, and Transnational.
International Strategy
- Focuses on a single point of operation in the home market and exports standardized products/services with little adaptation.
- Allows for a recognizable global brand and consolidated operations, but less local responsiveness.
- Examples: Red Bull, Victoria's Secret.
Multi-Domestic Strategy
- Adapts products/services to local market preferences in each country, rather than offering a standardized global offering.
- Allows for high local responsiveness, but less global integration.
- Prioritizes customization over efficiency.
- Examples: Netflix, Heinz.
Global Strategy
- Sacrifices local responsiveness in favor of cost efficiencies and economies of scale by offering largely standardized products/services globally.
- Examples: Microsoft, Procter & Gamble, Intel.
Transnational Strategy
- Balances global integration and local responsiveness, offering standardized core products/services while adapting to local markets.
- Examples: McDonald's, Nike, KFC.
Choosing an International Strategy
- Depends on the company's goals of balancing cost efficiencies and local adaptation.
- Many companies start with an international strategy and evolve to a more complex model as they gain experience and resources.
Increasing Profitability and Profit Growth
- Firms need to pursue strategies that increase profitability and profit growth.
- Profitability: rate of return on invested capital.
- Profit growth: percentage increase in profits over time.
- Ways to increase profitability and profit growth:
- Add value
- Lower cost
- Sell more in existing markets
- Expand internationally
Strategic Positioning
- Firms need to choose either differentiation or low-cost, and configure internal operations to support the choice.
- Differentiation strategies focus on providing unique, valuable products/services that command a premium price.
- Low-cost strategies aim to be the industry's lowest-cost provider through operational efficiency, high productivity, and economies of scale.
Configured Operations
- A firm's operations are like a value chain composed of a series of distinct value creation activities.
Value Chain Activities
1. Production
- Includes manufacturing, assembly, testing, packaging, and other physical production processes.
- Aims to create products efficiently and with high quality.
2. Marketing
- Encompasses market research, advertising, sales, and customer service.
- Helps create value by understanding customer needs and effectively communicating the product's benefits.
3. Materials Management
- Includes procurement, logistics, inventory management, and distribution.
- Aims to ensure the right materials are available at the right time and place to support production.
4. Research & Development (R&D)
- Involves new product design, process engineering, and technical services.
- Helps create value through innovation and continuous improvement.
5. Human Resources (HR)
- Includes recruiting, training, compensation, and employee relations.
- Helps create value by attracting, developing, and retaining the right talent.
6. Information Systems
- Encompasses data processing, information management, and technology infrastructure.
- Helps create value by enabling efficient operations and effective decision-making.
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Description
This quiz covers the strategy and structure of international business, including the four main approaches companies can take when expanding globally.
