Strategy in International Firms

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Questions and Answers

Strategy is _____.

  • a quality of executive management that provides inspirational guidance and motivation to personnel, leading the firm to a better future
  • the procurement of selected value-chain activities, including production of intermediate goods or finished products, from independent suppliers
  • a planned set of actions that managers employ to make the best use of the firm's resources and core competencies to gain competitive advantage (correct)
  • the pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt

When developing strategies, managers start by _____.

  • deciding which customers to target
  • configuring and coordinating the firm's activities around the world
  • analyzing the particular opportunities and challenges that confront the firm
  • examining the firm's specific strengths and weaknesses (correct)

Which of the following activities would be considered last by a manager while developing strategies?

  • deciding how best to contend with competitors (correct)
  • analyzing the particular opportunities for the firm
  • examining the firm's specific strengths and weaknesses
  • analyzing the particular challenges that confront the firm

______ refers to lowering the cost of the firm's operations and activities on a global scale.

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

Firms that want to become globally competitive must seek simultaneously three strategic objectives - efficiency, flexibility, and learning.

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

Efficiency refers to emphasizing consensus-based decision making and problem solving, in which managers readily share their knowledge.

<p>False (B)</p> Signup and view all the answers

During the recent global recession, efficiency and flexibility became particularly important to the success of multinational firms.

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

Describe the three strategic objectives for creating a competitive advantage in international business as proposed by Bartlett and Ghoshal. Provide an example to illustrate each objective.

<p>The three strategic objectives are efficiency, flexibility, and learning. Efficiency refers to lowering the costs of the firm's operations and activities on a global scale. For example, a company like Toyota may concentrate its manufacturing activities in a few key locations around the world to gain economies of scale and reduce production costs. Flexibility refers to the firm's ability to manage diverse country-specific risks and opportunities. For example, a firm might opt to use contract manufacturing in one country while directly investing in another country to take advantage of different local conditions. Learning refers to the ability to learn from international exposure and exploit that learning on a worldwide basis. For example, Procter &amp; Gamble's research center in Belgium helped the company develop a unique capability in water-softening technology after observing the specific needs of European customers.</p> Signup and view all the answers

How can a firm's strategy make the best use of the firm's resources? How does a firm's decision to have a centralized versus a decentralized organizational structure affect its strategy?

<p>A firm's strategy should leverage its resources in a way that creates a competitive advantage in the marketplace. Firms can use their resources efficiently to target customers, define product lines, and position themselves against competitors. Centralization provides greater control but can limit adaptability, while decentralization encourages local responsiveness but can lead to inconsistencies in strategy. The appropriate organizational structure depends on the specific needs of the firm and the international markets it serves.</p> Signup and view all the answers

Managers who exemplify an open-minded attitude and who appreciate cultural diversity are described as applying a global _____.

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

GramTech Solutions is a software development firm based in the United States. The firm's CEO, David Ghaster, wants to open an outlet in India. Being a visionary leader, he would _____.

<p>require managers to acquire an openness to, and awareness of, culture in India (B)</p> Signup and view all the answers

Which of the following is the most critical asset of any organization?

<p>human capital (C)</p> Signup and view all the answers

Organizational culture is _____.

<p>the pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt (A)</p> Signup and view all the answers

Companies that proactively build a global organizational culture will _____.

<p>maintain a global perspective in all major initiatives (A)</p> Signup and view all the answers

The managerial routines, behaviors, and mechanisms that allow a firm to function as intended are known as _____.

<p>organizational processes (D)</p> Signup and view all the answers

Which of the following is a characteristic of a global team?

<p>culturally diverse (B)</p> Signup and view all the answers

Which of the following is true about global teams?

<p>To develop global strategies, the team should include culturally diverse managers whose business activities span the globe. (A)</p> Signup and view all the answers

A culturally diverse team would _____.

<p>create a global view inside the firm while remaining in touch with local realities (C)</p> Signup and view all the answers

Which of the following is characteristic of a global industry?

<p>A small number of major players compete head-on in multiple markets. (B)</p> Signup and view all the answers

Strategic global teams identify or implement initiatives that enhance the long-term direction of the firm in its global industry.

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

Global IT infrastructure and tools such as intranets, the Internet, and electronic data interchange ensure that distant parts of the global network share knowledge and learn from each other.

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

A multidomestic industry is one in which competition takes place on a regional or worldwide basis.

<p>False (B)</p> Signup and view all the answers

Contrast the strategies of multidomestic industries and global industries. Why is there a difference in strategies between the two industries? Provide an example for illustration.

<p>Multidomestic industries focus on adapting products and services to meet the specific needs of each country. For example, a fast-food chain might offer different menu items in different markets to cater to local tastes and preferences. Global industries, on the other hand, aim for efficiency and integration across markets, often with a standardized product or service offered worldwide. For example, automobile companies typically design their cars for global markets with minimal adjustments to local regulations or preferences. The difference stems from the scale and nature of competition. Multidomestic industries tend to have a greater emphasis on local responsiveness, while global industries prioritize scale economies and standardization.</p> Signup and view all the answers

Describe four traits that characterize visionary leaders, and explain why these traits are especially necessary for a firm that operates within a global matrix structure.

<p>Visionary leaders are characterized by an international mindset, a willingness to commit resources, a strong strategic vision, and a commitment to investing in human capital. They understand the importance of diversity and cultural sensitivity, are willing to invest in international ventures, have a clear idea of the company's future direction, and prioritize employee development. These traits are essential for leading organizations with a global matrix structure because they enable the leadership to balance global integration with local responsiveness, manage complex interdependencies across different departments and regions, and create a unified vision and culture across a diverse and dispersed workforce.</p> Signup and view all the answers

Firms that emphasize global integration make and sell _____.

<p>products that require minimal adaptation (A)</p> Signup and view all the answers

Managing a firm's value-chain activities on a country-by-country basis to address diverse opportunities and risks is known as _____.

<p>local responsiveness (B)</p> Signup and view all the answers

Coordinating the international value-chain activities of a firm across multiple countries to achieve maximum efficiency is known as _____.

<p>global integration (C)</p> Signup and view all the answers

Which of the following would exert pressure on a firm to become locally responsive?

<p>the need to cater to local customer needs (B)</p> Signup and view all the answers

Marketing the same product worldwide is most appropriate for the ______ industry.

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

Global integration is a plan of action that accounts for competition on a country-by-country basis.

<p>False (B)</p> Signup and view all the answers

Due to the competition involved in global industries, marketing strategies are determined by the unique needs and regulations of each nation.

<p>False (B)</p> Signup and view all the answers

Sourcing inputs from large-scale, centralized suppliers allows firms to obtain economies of scale, more consistent quality, lower costs, and generally more efficient operations.

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

Firms undertake global integration to seek cost reduction through scale economies.

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

A company can be compelled to be locally responsive in individual countries to provide uniform services to global customers.

<p>False (B)</p> Signup and view all the answers

What is the integration-responsiveness framework? Describe the two main components of the framework.

<p>The integration-responsiveness framework suggests that companies operating internationally face two key pressures: integration and responsiveness. Integration refers to the need for efficiency, standardization, and coordination across different markets. Responsiveness involves adapting products and services to meet the unique needs of local customers. The framework helps companies understand these pressures and develop strategies that balance efficiency with local adaptation.</p> Signup and view all the answers

Describe four factors that might persuade a firm to become locally responsive in a nation where it conducts business.

<p>Four factors that can influence a company's decision to become locally responsive include: catering to local customer needs, accommodating differences in distribution channels, responding to local competition, and adapting to cultural differences. These factors highlight the importance of understanding the unique needs and preferences of consumers, the local market dynamics, and the competitive landscape in each country. Local responsiveness is crucial for companies that aim to build strong relationships with customers and achieve long-term success in each market.</p> Signup and view all the answers

In the ______ strategy, a firm views international business as separate from, and secondary to, its domestic business.

<p>home replication (D)</p> Signup and view all the answers

Which of the following is true about foreign units of a company using a multidomestic strategy?

<p>They are autonomous and operate independently. (A)</p> Signup and view all the answers

Which of the following characterizes a multidomestic strategy?

<p>Subsidiary managers adapt products and services to meet local needs. (D)</p> Signup and view all the answers

Which of the following is a disadvantage of a multidomestic strategy?

<p>inefficient manufacturing (D)</p> Signup and view all the answers

A ______ strategy is characterized by substantial control over country operations by headquarters in order to increase efficiency and integration.

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

Which of the following is a characteristic of a transnational strategy to internationalization?

<p>local responsiveness with central control (C)</p> Signup and view all the answers

The home replication strategy is often employed as a means of extending a product's life cycle in a foreign market and to replicate home-market success.

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

When using a multidomestic strategy, products and services are carefully adapted to suit the unique needs of each country.

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

Global strategy is an approach to internationalization in which headquarters delegates considerable autonomy to each country manager, allowing him or her to operate independently and pursue local responsiveness.

<p>False (B)</p> Signup and view all the answers

In a multidomestic strategy, there is maximum pressure on headquarters staff because there is little incentive for decision making by individual managers.

<p>False (B)</p> Signup and view all the answers

With a global strategy, headquarters seeks substantial control over its country operations in order to minimize redundancy and achieve maximum efficiency, learning, and integration worldwide.

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

By standardizing international operations as much as possible, yet being adaptable to the needs of local markets, a firm is utilizing a transnational strategy of globalization.

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

Explain the benefits of a multidomestic strategy to firm internationalization. What are some of the disadvantages to this approach?

<p>The multidomestic strategy provides a number of advantages, including the ability to customize products and services to meet local market needs, reduced pressure on headquarters staff due to decentralized operations, and a simpler implementation process with fewer resources needed for internationalization. However, it also has some disadvantages, including the potential for inconsistencies in quality and branding, a lack of economies of scale due to the duplication of efforts, and the potential for knowledge-sharing gaps between subsidiaries. This approach can also lead to higher production costs and less efficient operations compared to global integration strategies. In summary, multidomestic strategies work best for businesses with products that can be easily customized for local markets, but they may not be the most effective approach for more standardized products or businesses with a desire to achieve economies of scale.</p> Signup and view all the answers

Discuss the advantages and implementation of a transnational strategy, and explain why this strategy is closely associated with a global matrix structure.

<p>A transnational strategy combines the strengths of global integration and local responsiveness. It seeks to achieve efficiency through standardization and cost reduction across markets, while adapting to local needs and preferences. This approach is ideal for companies operating in complex, dynamic global environments. The transnational strategy can be implemented by centralizing some functions, such as sourcing and manufacturing, while decentralizing others, such as marketing and customer service. It also requires a strong emphasis on communication and coordination between headquarters and subsidiaries. The global matrix structure is well-suited for transnational strategies because it allows for shared responsibility and decision-making between different departments and regions, enabling a dynamic and flexible approach to managing global operations. This structure fosters collaboration, innovation, and learning across the organization, promoting a global perspective while adapting to local needs. This approach to implementation is essential for companies seeking to achieve sustainable success in a globalized world.</p> Signup and view all the answers

In establishing a firm's organizational structure, a fundamental issue is _____.

<p>how much decision-making responsibility the firm should retain at headquarters (C)</p> Signup and view all the answers

Which of the following gives headquarters considerable authority and control over the firm's activities worldwide?

<p>centralized approach (D)</p> Signup and view all the answers

In which of the following are substantial autonomy and decision making authority delegated to a firm's subsidiaries around the world?

<p>decentralized approach (D)</p> Signup and view all the answers

A firm's headquarters is the primary contributor to _____.

<p>capital planning (B)</p> Signup and view all the answers

A firm's subsidiary is the primary contributor to _____.

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

Discuss the factors relevant to a firm's decision to centralize or decentralize foreign operations.

<p>Factors affecting the decision to centralize or decentralize foreign operations include the nature of the product, the competitive landscape, the size and strategic importance of the foreign operations, and the risk involved. For example, headquarters may be more involved in developing new products or entering new markets, while subsidiaries may handle marketing decisions due to their local expertise. Overall, the decision to centralize or decentralize depends on a company's specific circumstances and its overall strategy for global operations. However, trends toward increasing globalization and integration often favor more centralized structures.</p> Signup and view all the answers

Which of the following organizational arrangements for foreign operations is most closely associated with home replication strategy?

<p>export department (A)</p> Signup and view all the answers

International division managers usually oversee _____.

<p>distributor relationships (B)</p> Signup and view all the answers

Which of the following is an advantage of an international division structure?

<p>It allows concentration and development of international expertise. (C)</p> Signup and view all the answers

Which of the following is a disadvantage of a geographic area structure?

<p>geographic area managers' lack of global orientation for developing and managing products (C)</p> Signup and view all the answers

An advantage to firms that use a product structure arrangement is that _____.

<p>individual product lines are coordinated and managed globally (A)</p> Signup and view all the answers

An export department rarely requires much organizational structure until export sales reach a critical point.

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

Geographic area structure is an organizational design in which management and control are decentralized to the level of individual geographic regions.

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

What is a quality of executive management that provides motivational guidance towards a better future for the company?

<p>A quality of executive management that provides inspirational guidance and motivation to personnel, leading the firm to a better future (C)</p> Signup and view all the answers

What is the first step a manager should take when developing strategies?

<p>Examining the firm's specific strengths and weaknesses (A)</p> Signup and view all the answers

What is the term used for lowering the cost of a firm's operations and activities on a global scale?

<p>Efficiency (C)</p> Signup and view all the answers

To become globally competitive, firms must seek three strategic objectives: efficiency, flexibility, and learning.

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

Efficiency emphasizes consensus-based decision making and problem solving, where knowledge is readily shared.

<p>False (B)</p> Signup and view all the answers

During the 2008 global recession, efficiency and flexibility became crucial to the success of multinational firms.

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

Name three strategic objectives for creating a competitive advantage in international business, as proposed by Bartlett and Ghoshal.

<p>Efficiency, flexibility, and learning</p> Signup and view all the answers

How can a firm's strategy utilize its resources effectively?

<p>Employing a set of actions that managers utilize to optimize the firm's resources (B)</p> Signup and view all the answers

A firm can choose between centralizing or decentralizing power. What does a decentralized approach mean for international firms?

<p>Subsidiaries have substantial autonomy and decision-making authority (C)</p> Signup and view all the answers

What quality distinguishes a manager who applies a global mindset?

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

What action should GramTech Solutions' CEO take after deciding to expand to India?

<p>Encourage managers to understand Indian culture (A)</p> Signup and view all the answers

Which of the following is considered the most critical asset of any organization?

<p>Human capital (A)</p> Signup and view all the answers

What is organizational culture?

<p>The pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt (A)</p> Signup and view all the answers

What strategic action should companies proactively undertake to establish a global organizational culture?

<p>Maintain a global perspective in all major initiatives (D)</p> Signup and view all the answers

What are the managerial routines, behaviors, and mechanisms that govern a firm's operations?

<p>Organizational processes (B)</p> Signup and view all the answers

What is a key characteristic of a global team?

<p>Culturally diverse (B)</p> Signup and view all the answers

What is true about global teams?

<p>Includes culturally diverse managers to develop global strategies (C)</p> Signup and view all the answers

What would be a characteristic of a culturally diverse team?

<p>Create a global view while understanding local realities (A)</p> Signup and view all the answers

Which of the following characterizes a global industry?

<p>A small number of major players compete across markets (B)</p> Signup and view all the answers

Strategic global teams focus on long-term direction of the business.

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

Global IT infrastructure and tools like intranets, the internet, and electronic data exchange facilitate knowledge sharing within a global network.

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

Multidomestic industries are defined by competition that occurs on a regional or worldwide basis.

<p>False (B)</p> Signup and view all the answers

What is the difference between multidomestic and global industries, and give an example of each?

<p>Multidomestic industries are characterized by a country-by-country approach to competition, adapting their products to the unique local needs and preferences. An example is the food and beverage industry. Global industries, such as aerospace or automobiles, compete on a global scale with a smaller number of large companies. The need for standardization and efficiency is greater in these industries.</p> Signup and view all the answers

What are the four traits that characterize visionary leaders, and why are those traits crucial in a firm with a global matrix structure?

<p>Visionary leaders are characterized by:</p> <ol> <li>International mind-set and cosmopolitan values: they are open to diversity and adaptable to other cultures.</li> <li>Willingness to commit resources: willing to invest resources and time for long-term success.</li> <li>Strategic vision: clear vision for the future of the company.</li> <li>Willingness to invest in human assets: invest in employees and develop their talent. These traits are essential for global success in firms with a global matrix, as they navigate intricate global operations and navigate complex cross-cultural dynamics.</li> </ol> Signup and view all the answers

What is the practice of managing a firm's value-chain activities on a country-by-country basis to address diverse opportunities and risks?

<p>Local responsiveness (B)</p> Signup and view all the answers

What is the practice of coordinating the international value-chain activities across different countries to achieve maximum efficiency?

<p>Global integration (D)</p> Signup and view all the answers

Which of the following would make a firm more likely to adopt a locally responsive strategy?

<p>Meeting local customer needs (D)</p> Signup and view all the answers

Which industry would benefit most from marketing the same product globally?

<p>Electronics (C)</p> Signup and view all the answers

Global integration accounts for competition on a country-by-country basis.

<p>False (B)</p> Signup and view all the answers

Marketing strategies in global industries are determined by the unique needs and regulations of each nation.

<p>False (B)</p> Signup and view all the answers

Sourcing inputs from large-scale, centralized suppliers allows firms to achieve economies of scale, improved quality, and reduced costs.

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

Global integration is pursued by companies to achieve cost reductions through economies of scale.

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

To provide uniform services to global customers, firms are compelled to be locally responsive in individual countries.

<p>False (B)</p> Signup and view all the answers

Explain the integration-responsiveness framework and its two main components.

<p>The integration-responsiveness framework explores the tension between the need for global integration and local responsiveness in international business. Global integration focuses on achieving efficiency and standardization across different markets to maximize value and economies of scale. Local responsiveness emphasizes adapting products and services to meet the specific needs of each country, ensuring greater market penetration.</p> Signup and view all the answers

Explain four factors that might influence a firm to become locally responsive.

<p>The following four factors can influence a firm's decision to adopt a locally responsive strategy:</p> <ol> <li>Cater to local customer needs: different markets have different preferences and needs, requiring product adaptation.</li> <li>Accommodate differences in distribution channels: channels vary across countries, leading to variations in product availability and marketing.</li> <li>Respond to local competition: firms may need to adapt their offerings to outdo local competitors.</li> <li>Adjust to cultural differences: cultural variations influence product design, marketing, and overall business practices.</li> </ol> Signup and view all the answers

Which strategy views international business as separate from and secondary to domestic business?

<p>Home replication (A)</p> Signup and view all the answers

What is true about foreign units in a company that adopts a multidomestic strategy?

<p>Autonomous and operate independently (C)</p> Signup and view all the answers

What characterizes a multidomestic strategy?

<p>Subsidiary managers adapt products to meet local needs (C)</p> Signup and view all the answers

What is a disadvantage of a multidomestic strategy?

<p>Inefficient manufacturing (D)</p> Signup and view all the answers

Which strategy is characterized by significant control over country operations by headquarters to achieve efficiency and integration?

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

Which of the following is a characteristic of a transnational strategy?

<p>Local responsiveness with central control (B)</p> Signup and view all the answers

The home replication strategy is used to expand a product's life cycle in foreign markets and replicate domestic success.

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

Multidomestic strategies carefully adapt products and services to meet each country's unique needs.

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

In a global strategy, headquarters delegates significant autonomy to country managers, allowing independent operation and local responsiveness.

<p>False (B)</p> Signup and view all the answers

In a multidomestic strategy, there is significant pressure on headquarters staff due to limited decision-making autonomy for managers.

<p>False (B)</p> Signup and view all the answers

Global strategies aim to minimize redundancy and maximize efficiency, learning, and integration across different operations.

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

By standardizing operations and adapting to local needs, a transnational strategy seeks to achieve globalization.

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

What are the benefits and disadvantages of a multidomestic strategy for internationalization?

<p>Benefits of a multidomestic strategy include: adapting products to local markets, minimizing pressure on headquarters staff, and having an easier path to internationalization for firms with limited experience. Disadvantages include: potential lack of a common vision, duplication of efforts, and challenges in developing a unified competitive advantage. It can also lead to inefficient manufacturing and high operating costs.</p> Signup and view all the answers

Explain the advantages of a transnational strategy and why it is closely associated with a global matrix structure.

<p>A transnational strategy combines global integration with local responsiveness, offering a balance between efficiency and adaptation. Its advantages include exploiting scale economies, optimizing local responsiveness, facilitating global learning, coordinating competitive moves globally, and empowering managers to make strategic decisions. The global matrix structure, where employees report to both product and geographic area managers, is closely associated with the transnational approach, as it allows for both global coordination and local responsiveness, reflecting the essence of the strategy.</p> Signup and view all the answers

Which of the following is a fundamental issue in establishing a firm's organizational structure?

<p>Determining decision-making responsibility (D)</p> Signup and view all the answers

Which of the following gives headquarters significant authority and control over operations?

<p>Centralized approach (B)</p> Signup and view all the answers

In which of the following are subsidiaries given substantial autonomy and decision-making authority?

<p>Decentralized approach (B)</p> Signup and view all the answers

Headquarters are primarily responsible for which of the following?

<p>Capital planning (D)</p> Signup and view all the answers

Subsidiaries are primarily responsible for which of the following?

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

Discuss the factors that influence a firm's decision on centralizing or decentralizing foreign operations.

<p>The decision to centralize or decentralize foreign operations depends on factors such as product nature, competition, size and strategic importance of operations. For example, riskier decisions, new product development, or entering new markets tend to be centralized. Subsidiaries, especially those with more local knowledge, may be empowered to handle decisions with less risk. Other factors include the nature of the product and its local needs. If the product requires significant customization, decentralization may be better to adapt to local needs. However, if the product is standardized, a centralized approach can streamline operations.</p> Signup and view all the answers

Which organizational arrangement for foreign operations is closely associated with the home replication strategy?

<p>Export department (B)</p> Signup and view all the answers

What do international division managers typically oversee?

<p>Distributor relationships (B)</p> Signup and view all the answers

What is an advantage of an international division structure?

<p>Develops international expertise (A)</p> Signup and view all the answers

What is a disadvantage of a geographic area structure?

<p>Lack of global orientation by managers (B)</p> Signup and view all the answers

What is an advantage of a product structure?

<p>Manages products globally (B)</p> Signup and view all the answers

An export department typically requires significant organizational structure until sales reach a critical point.

<p>False (B)</p> Signup and view all the answers

Geographic area structure decentralizes management and control to the level of individual geographic regions.

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

Flashcards

Strategy

A planned set of actions managers use to best leverage resources & core competencies for competitive advantage.

Developing Strategies

Starts with analyzing firm's strengths and weaknesses and then evaluating market opportunities/challenges.

Efficiency in Strategy

Lowering costs through global operations and activities.

Flexibility in Strategy

Adaptability to manage diverse country-specific risks/opportunities.

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Learning in Strategy

Gaining knowledge from international exposure and using it worldwide.

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Strategic Objectives

Efficiency, flexibility, and learning are crucial.

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Efficiency

Lowering costs in global operations.

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Flexibility

Adapting to diverse risks/opportunities.

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Learning in International Business

Gaining knowledge from international experiences.

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Competitive Advantage

A firm's ability to outperform rivals by leveraging its strengths and adapting to challenges.

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What is Strategy?

A planned set of actions that managers use to make the best use of a company's resources and skills to gain an advantage over competitors.

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Where do managers start when making a strategy?

Managers first analyze the firm's strengths and weaknesses.

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What is the last step in developing a strategy?

Deciding how to deal with competitors.

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What is Efficiency in Strategy?

Reducing the cost of a company's operations and activities across the world.

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What is Flexibility in Strategy?

A company's ability to adapt to different risks and opportunities in different countries.

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What is Learning in Strategy?

Using knowledge gained from international experiences to improve the company worldwide.

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What are the three key strategic objectives?

Efficiency, Flexibility, and Learning are crucial for a company to be successful internationally.

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Why are Efficiency and Flexibility vital during tough times?

During economic downturns, efficiency (saving money) and flexibility (adjusting quickly) are even more important for companies.

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How does a company use its resources strategically?

Companies use their resources and core skills or strengths to create a strategy that helps them win over competitors.

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What's the effect of centralized vs. decentralized organization structures on strategy?

Centralized structures (decisions made at the top) lead to more consistent strategies, while decentralized ones (decisions made lower down) allow for more flexibility and local adaptation.

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Strategy in Business

A planned set of actions managers take to use the company's resources and skills effectively to gain an edge over competitors.

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First Step in Strategy Development

Analyzing the company's strengths and weaknesses. This helps understand what the company is good at and where it needs to improve.

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Analyzing Market Opportunities

Evaluating favorable situations in the market that the company can benefit from. This might include new products, market segments, or changing customer needs.

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Last Step in Strategy Development

Deciding how to deal with competitors. This involves understanding their strengths, weaknesses, and what they might do.

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Efficiency in International Business

Lowering the costs of a company's operations and activities across the world. This means finding ways to be more cost-effective in different countries.

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Flexibility in Global Strategy

A company's ability to adapt to different risks and opportunities in different countries. This means being agile and responsive to changing conditions.

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Learning from International Experience

Using knowledge gained from working in different countries to improve the company worldwide. This can involve new skills, ideas, or insights.

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Three Key Strategic Objectives

Efficiency, Flexibility, and Learning are crucial for a company to be successful internationally. They work together to achieve greater competitiveness.

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Why Efficiency and Flexibility Matter During Recessions

During economic downturns, efficiency (saving money) and flexibility (adjusting quickly) are even more important for companies. They help survive and adapt.

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Centralized vs. Decentralized Organizational Structures

Centralized structures (decisions made at the top) lead to more consistent strategies, while decentralized ones (decisions made lower down) allow for more flexibility and local adaptation.

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Leveraging Resources Strategically

Companies use their resources and core skills or strengths to create a strategy that helps them win over competitors.

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Importance of Understanding Competitors

To win, companies need to understand their competitors' strengths, weaknesses, and potential moves. This helps them strategize effectively.

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Global Supply Chains

The interconnected network of suppliers, manufacturers, and distributors that produce and deliver a product or service around the world.

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How a Firm's Strategy Utilizes Resources

A firm's strategy directs how it uses its resources (people, money, technology) to achieve its goals and gain a competitive edge.

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Impact of Organizational Structure on Strategy

A firm's organizational structure (centralized or decentralized) influences how it makes decisions and implements strategy. This can affect its flexibility and efficiency.

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What is a Global Strategy?

A plan that guides a company's actions in multiple countries, considering international factors like cultural differences, economic conditions, and political risks.

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Why Companies Expand Internationally?

Companies go global to access new markets, lower costs, acquire new resources, and gain competitive advantage.

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Challenges of International Business

Companies face challenges when operating globally, including cultural differences, language barriers, political risks, and economic volatility.

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Key Considerations for International Expansion

Companies need to consider factors like the local market, regulatory environment, and competition before expanding internationally.

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Types of International Strategies

Companies can choose different strategies for international expansion, such as exporting, foreign direct investment, or joint ventures.

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International Operations and Value Chain

Companies organize their activities (research, manufacturing, marketing) across different countries to optimize costs, efficiency, and responsiveness.

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Managing Global Risks

Companies face political instability, economic fluctuations, and currency risks when operating globally. They need strategies to manage these.

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Adapting to Local Markets

Companies need to tailor their products, marketing, and business practices to meet the specific needs and preferences of local customers.

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Building International Partnerships

Companies often form partnerships with local firms to access markets, resources, and expertise. This can be through joint ventures, alliances, or acquisitions.

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Benefits of International Collaboration

Collaboration with local partners can help companies navigate cultural differences, reduce risks, and enhance their understanding of the local market.

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Study Notes

Strategy and Organization in International Firms

  • Strategy is a planned set of actions to effectively use resources and core competencies for competitive advantage.
  • Managers begin developing strategies by analyzing the firm's strengths, weaknesses, opportunities, and threats (SWOT).
  • Global firms must consider international opportunities and challenges.
  • Efficiency, flexibility, and learning are crucial strategic objectives.
  • Efficiency focuses on reducing costs globally.
  • Flexibility refers to adapting to diverse country needs and risks.
  • Learning involves gaining knowledge and capabilities from international exposure.

Strategic Objectives for International Business

  • Firms need to build efficient global supply chains.
  • Managing diverse country-specific risks and opportunities is a necessary global flexibility skill.
  • Learning from global exposure is essential to gain unique advantages.

Firm Strategy and Organizational Structure

  • Strategy and organization relate: Managers must choose how to best use firm resources.
  • Centralized structure: Headquarters maintains decision-making power.
  • Decentralized structure: Lower-level managers have greater autonomy.
  • Global integration: Focuses on efficiency and economies of scale worldwide.
  • Local responsiveness: Adaptability required for diverse local conditions

Global Organizational Structure

  • Global matrix: Combining global and local responsiveness to leverage efficiency benefits.
  • Transnational strategy: Combines integration and responsiveness to succeed in a complex global marketplace.

Types of Strategies

  • Multidomestic strategy: Products/services adapted to local markets (country-by-country).
  • Global strategy: Standardized products/services across countries to exploit economies of scale.
  • Transnational strategy: Combines the strengths of multidomestic and global strategies.

Internationalization and Organizational Culture

  • Companies should build global organizational cultures to avoid communication problems.
  • Global firms should have employees with an open mind, tolerance for diverse cultures, and willingness to commit resources.
  • Global organizational cultures promote ethical conduct.

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