E2, Ch 10 Cont.

Question 1

joint ventures and equity alliances with foreign companies are a way to _____ _ ______ _____, or strengthen a firm’s ____________ in world markets.

Answer 1

enter a foreign market
competitiveness

Question 2

advantage and disadvantage of joint ventures or equity alliances

Answer 2

• fills technical expertise gaps
• potential for different motives/conflicting objectives

Question 3

wholly owned subsidiary/greenfield

Answer 3

form of FDI; company est. operations elsewhere by constructing new facilities from scratch

Question 4

advantages to wholly owned subsidiaries (2)

Answer 4

• complete operational and strategic control
• especially useful with proprietary technology

Question 5

disadvantages to wholly owned subsidiaries (2)

Answer 5

• slow, expensive, complicated
• may experience political/regulatory pressure

Question 6

2 opposing forces in global competition:

Answer 6

• cost reductions (key competitive weapon)
• local responsiveness (tailoring to specific preferences)

Question 7

globalization hypothesis

Answer 7

consumer needs and preferences are converging

Question 8

integration responsiveness framework

Answer 8

used to classify global strategies into 4 types:
1. global-standardization
2. transnational
3. international
4. multi-domestic

Question 9

international global strategy

Answer 9

sells the same products/services in both domestic and foreign markets
(ex. Harley Davidson)

Question 10

multi-domestic global strategy

Answer 10

tries to maximize local responsiveness; hopes local customers will perceive their products as local ones
includes duplication of key business functions across countries
(ex. wasabi kitkat)

Question 11

global-standardization strategy

Answer 11

attempts to reap economies of scale through global division of labor where capabilities are at lowest cost
(ex. Apple selling standardized products around the world)

Question 12

transnational global strategy

Answer 12

combines high local responsiveness and low-cost positioning
“think globally but act locally”
(ex. Unilever produces marmite in Australia but mayonnaise in the US)

Question 13

Porter’s Diamond Framework

Answer 13

helps explain why some nations outperform others in certain industries based on 4 factors:
1. factor conditions
2. related/supporting industries
3. demand conditions
4. rivalry

Question 14

Porter’s Diamond Framework: Factor Conditions

Answer 14

a country’s natural, human, other resources

Question 15

Porter’s Diamond Framework: Demand Conditions

Answer 15

nature of home-market demand for industry’s product

Question 16

Porter’s Diamond Framework: Competitive Intensity

Answer 16

highly competitive environments stimulate firms to outperform others
(ex. German car companies)

Question 17

Porter’s Diamond Framework: Related and Supporting Industries

Answer 17

strong leadership fosters world-class competitors in downstream industry
(ex. Switzerland’s strong chemicals industry makes it a hub for pharmaceuticals)

Question 18

benefits of International Strategy (3)

Answer 18

• leverage home-based core competencies
• utilize economies of scale
• low cost implementation through exporting/franchising/licensing

Question 19

risks of International Strategy (3)

Answer 19

• limited local responsiveness
• exchange rates
• IP can be expropriated

Question 20

benefits of Multi-Domestic Strategy (2)

Answer 20

• highest possible local responsiveness
• reduced exchange rate exposure

Question 21

risks of Multi-Domestic Strategy (3)

Answer 21

• duplication of units is expensive
• little economies of scale
• little learning across regions

Question 22

benefits of Global-Standardization Strategy (3)

Answer 22

• reduced labor cost
• economies of scale
• standardized operations

Question 23

risks of Global-Standardization Strategy (3)

Answer 23

• no local responsiveness
• exchange rate exposure
• risk of wage changes

Question 24

benefits of Transnational Strategy (3)

Answer 24

• reduced labor costs
• economies of scale
• learning

Question 25

risk of Transnational Strategy (3)

Answer 25

- global matrix structure is costly and difficult to imitate -- high failure rate - exchange rate exposuree