Podcast
Questions and Answers
What is a key difference in strategy formation between SMEs and LSEs?
What is a key difference in strategy formation between SMEs and LSEs?
- SMEs focus on local markets, while LSEs focus on global markets
- SMEs adopt deliberate approaches, while LSEs adopt entrepreneurial approaches (correct)
- SMEs adopt entrepreneurial approaches, while LSEs adopt deliberate approaches
- SMEs focus on economies of scope, while LSEs focus on economies of scale
What is a benefit of economies of scale in global business strategy?
What is a benefit of economies of scale in global business strategy?
- Increasing fixed costs per unit
- Reducing operating costs per unit and spreading fixed costs over a larger volume (correct)
- Decreasing purchasing power over suppliers
- Reducing market share in a specific region
What is a result of building a global presence in terms of economy of scale?
What is a result of building a global presence in terms of economy of scale?
- Decreasing efficiency in production
- Reducing production capacity and asset base
- Increasing production capacity and asset base (correct)
- Maintaining the same production capacity and asset base
What is an advantage of a larger scale of operations in global business strategy?
What is an advantage of a larger scale of operations in global business strategy?
What is a requirement for building centres of excellence according to the text?
What is a requirement for building centres of excellence according to the text?
What is an effect of accumulating volume in production and sales?
What is an effect of accumulating volume in production and sales?
What is a benefit of pooling global purchasing power?
What is a benefit of pooling global purchasing power?
What is a key concept related to economies of scale in global business strategy?
What is a key concept related to economies of scale in global business strategy?
What is the primary characteristic of an ethnocentric management orientation?
What is the primary characteristic of an ethnocentric management orientation?
Which management orientation is most likely to lead to a 'staying at home' strategy?
Which management orientation is most likely to lead to a 'staying at home' strategy?
What is a characteristic of a regiocentric management orientation?
What is a characteristic of a regiocentric management orientation?
Under which circumstance might 'staying at home' be considered the better strategic option?
Under which circumstance might 'staying at home' be considered the better strategic option?
What is a characteristic of a geocentric management orientation?
What is a characteristic of a geocentric management orientation?
What is a consequence of an ethnocentric management orientation on international business operations?
What is a consequence of an ethnocentric management orientation on international business operations?
What is a characteristic of a polycentric management orientation?
What is a characteristic of a polycentric management orientation?
What is a strategic option for firms besides expanding into foreign markets?
What is a strategic option for firms besides expanding into foreign markets?
What is the primary reason why global integration is considered an imperative in marketing?
What is the primary reason why global integration is considered an imperative in marketing?
What is a key difference between small-medium sized enterprises (SMEs) and large-scale enterprises (LSEs) in terms of strategy formation?
What is a key difference between small-medium sized enterprises (SMEs) and large-scale enterprises (LSEs) in terms of strategy formation?
Which of the following is a characteristic that distinguishes SMEs from LSEs in terms of resources?
Which of the following is a characteristic that distinguishes SMEs from LSEs in terms of resources?
What is a major difference between SMEs and LSEs in terms of risk taking?
What is a major difference between SMEs and LSEs in terms of risk taking?
How do SMEs and LSEs differ in terms of economies of scale and scope?
How do SMEs and LSEs differ in terms of economies of scale and scope?
What is a key difference between SMEs and LSEs in terms of use of information sources?
What is a key difference between SMEs and LSEs in terms of use of information sources?
Which of the following is a characteristic of global marketing?
Which of the following is a characteristic of global marketing?
What is the primary difference between deliberate strategy formation and emergent strategy in the context of LSEs?
What is the primary difference between deliberate strategy formation and emergent strategy in the context of LSEs?
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
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Description
Explore the converged managerial orientations in SMEs and LSEs, with SMEs adopting more deliberate approaches and LSEs becoming more entrepreneurial.
