24 Questions
What is a key difference in strategy formation between SMEs and LSEs?
SMEs adopt deliberate approaches, while LSEs adopt entrepreneurial approaches
What is a benefit of economies of scale in global business strategy?
Reducing operating costs per unit and spreading fixed costs over a larger volume
What is a result of building a global presence in terms of economy of scale?
Increasing production capacity and asset base
What is an advantage of a larger scale of operations in global business strategy?
Increased opportunity to build centres of excellence
What is a requirement for building centres of excellence according to the text?
Critical mass of talent in one location
What is an effect of accumulating volume in production and sales?
Decreased cost price per unit
What is a benefit of pooling global purchasing power?
Concentrated negotiating power over suppliers
What is a key concept related to economies of scale in global business strategy?
Experience curve effects
What is the primary characteristic of an ethnocentric management orientation?
It sees similarities in foreign countries
Which management orientation is most likely to lead to a 'staying at home' strategy?
Ethnocentric
What is a characteristic of a regiocentric management orientation?
It is ethnocentric or polycentric in its view of the rest of the world
Under which circumstance might 'staying at home' be considered the better strategic option?
With a weak position in the home market
What is a characteristic of a geocentric management orientation?
It has a world view, seeing similarities and differences in home and host countries
What is a consequence of an ethnocentric management orientation on international business operations?
The company is likely to stay at home
What is a characteristic of a polycentric management orientation?
Each host country is unique
What is a strategic option for firms besides expanding into foreign markets?
Staying at home
What is the primary reason why global integration is considered an imperative in marketing?
To adapt to changing market conditions and customer needs
What is a key difference between small-medium sized enterprises (SMEs) and large-scale enterprises (LSEs) in terms of strategy formation?
SMEs rely more on emergent strategy, while LSEs rely on deliberate strategy formation
Which of the following is a characteristic that distinguishes SMEs from LSEs in terms of resources?
SMEs have more limited resources
What is a major difference between SMEs and LSEs in terms of risk taking?
SMEs are more likely to take calculated risks
How do SMEs and LSEs differ in terms of economies of scale and scope?
LSEs have a larger economy of scale and scope
What is a key difference between SMEs and LSEs in terms of use of information sources?
LSEs have more advanced information systems
Which of the following is a characteristic of global marketing?
It involves a standardized approach to marketing globally
What is the primary difference between deliberate strategy formation and emergent strategy in the context of LSEs?
Deliberate strategy formation is more planned, while emergent strategy is more adaptive
Study Notes
SME and LSE Strategy Formation
- SMEs tend to have more deliberate approaches, while LSEs tend to have more entrepreneurial and Strategic Business Unit (SBU) approaches.
- The managerial orientations in SMEs and LSEs are expected to converge in the future.
Economies of Scale
- Accumulated volume in production and sales leads to lower cost price per unit due to experience curve effects and increased efficiency in production.
- Building a global presence automatically expands a firm's scale of operations, giving it larger production capacity and a larger asset base.
- Benefits of economies of scale include:
- Reducing operating costs per unit and spreading fixed costs over larger volume due to experience curve effects.
- Pooling global purchasing gives the opportunity to concentrate global purchasing power over suppliers.
- A larger scale gives the global player the opportunity to build centers of excellence for development of specific technologies or products.
Differences between SME and LSE
- Major differences between SME and LSE include:
- Resources
- Formation of strategy/decision-making processes
- Organization
- Risk taking
- Flexibility
- Economies of scale and scope
- Use of information sources
LSE: Deliberate Strategy Formation
- In reality, the observable output of an activity is often a result of the mix between the intended (planned) strategy and the emergent (not planned) strategy.
Management Orientations
- Ethnocentric: Home country is superior, sees similarities in foreign countries
- Polycentric: Each host country is unique, sees differences in foreign countries
- Regiocentric: Sees similarities in a world region; is ethnocentric or polycentric in its view of the rest of the world
- Geocentric: World view, sees similarities and differences in home and host countries
Explore the converged managerial orientations in SMEs and LSEs, with SMEs adopting more deliberate approaches and LSEs becoming more entrepreneurial.
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