MGCR382 > Exam > Flashcards

Exam Flashcards

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1
Q

strategy

A

plan of action which determines long-term goals, allocation of resources, and is centered around differentiation to create value

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2
Q

Pricing

A

below WTP but above product costs and breakeven point

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3
Q

higher WTP

A

higher pricing possibilities

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4
Q

WTS

A

lowest amount you can sell for to cover costs

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5
Q

aim of business strategy and effect on pricing

A

lower WTS and increase WTP

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6
Q

how to raise WTP

A

improved quality, introducing complimentary products, strong popularity

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7
Q

how to lower WTS

A

attractive working conditions and high pay

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8
Q

levels of strategy

A

corporate, business, operational

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9
Q

corporate level strategy

A

top management decision about overall big picture and long term goals, CREATING VALUE

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10
Q

business level strategy

A

specific plan of action regarding improvement of market position and gain COMPETITIVE ADVANTAGE

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11
Q

operational level strategy

A

day-to-day plans and execution for shorter term goals

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12
Q

paths for diversification

A

different industries, geographies, within-industry diversification (multiple product lines)

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13
Q

globalization

A

integrated world economy, made of globalization of markets and globalization of products

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14
Q

globalization of markets

A

merging distinct markets internationally to one global market e.g. McDonald’s

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15
Q

globalization of production

A

sourcing good globally for cost and quality advantages e.g. Apple and component sourcing

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16
Q

drivers of globalization

A

tech change (containerization), trade liberalization, global institutes, global competition

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17
Q

why go abroad?

A

expand market size, location economies, greater cost economies, ROI

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18
Q

support for globalization

A

expansion of economic and job growth, increased consumer choice, lower prices, innovation and collaboration, increased policies

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19
Q

critiques of globalization

A

job loss in developed economies, environmental degradation (resourcing), cultural homogenization and diminishment, income inequality and ethical issues

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20
Q

challenges to international business

A

cultural differences, system differences, coordination of efficiency and responsiveness, ethics, FDI caps, law, time zones, currency conversion

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21
Q

strategies for going abroad (DDD)

A

deployment, development, deepening

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22
Q

deployment

A

replicating competitive advantage in home country, create value by aggregating demand, homogenous needs with standard products and similar costs e.g. IKEA

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23
Q

development

A

identifying potential capabilities in different areas, integrated competitive advantage

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24
Q

deepening

A

widen advantage without changing business strategy, adjust to local tastes and decrease costs through different production locations to aggregate demand e.g. offshoring

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25
paradox of being consistent - maintaining specific models
firms with greatest advantage in home market are most likely to fail during international expansion: need to adapt to national level without losing consistency and competitive advantage
26
economies of scope
leveraging resources for subadditivity of costs and revenue
27
subadditivity of costs
lower average costs by sharing resources and technology, producing in bulk
28
subadditivity of revenue
increasing revenue by making complimentary products or diversifying lines for new customers
29
goal of company strategy
maximize value of firm for owners and shareholders
30
determinants of value
profitability and profit growth
31
profitability creation
reduced costs, added value, raised prices
32
profit growth creation
sell more in existing markets, enter new markets
33
porter's strategy of creating value
low cost and differentiation - align strategy, operations, and firm organization
34
core competence
skills of a firm that competitors cannot easily match or imitate, source of competitive advantage
35
location economies
performing activities in optimal locations to lower costs
36
global web
different stages of value chain in dispersed locations
37
experience curve
reduction in production costs over product life due to learning effects and economies of scale
38
effects of experience curve
labor productivity and management efficiency, lowered costs and increased bargaining power
39
leveraging subsidiary skills
recognize skill, establish incentive, create process to identify new skills, act as facilitators
40
conflicting competitive pressures
cost reduction, local responsiveness
41
cost reductive strategy
mass production and outsourcing to meet universal needs e.g. global standardization
42
locally responsive strategies
based on different distribution channels, government demands, infrastructure e.g. localization
43
global standardization strategy
low-cost strategy by standardizing product and using aggressive pricing - universal needs
44
localization strategy
customization to different markets to add value, increasing costs
45
transnational strategy
leveraging subsidiary skills to differentiate product across locations and foster multidirectional flow of skills
46
international strategy
selling with minimal customization to serve universal needs - no competitors, tight control
47
entry decisions
market size, spending power, costs and risks, value based on suitability and competition
48
first mover advantages
strong brand name before rivals, capture demand, build sales volume, create switching costs tieing customers to products
49
AAA triangle - global strategies
adaptation, aggregation, arbitrage: can only focus on 1-2 but will never have all three
50
aggregation
standardizing operations - good for cross-border groupings
51
adaptation
customizing processes and offerings to local needs - good for country-centred organizations
52
arbitrage
exploiting differences - good for vertical organizations
53
first mover advantages
brand recognition and loyalty, sales volume, experience curve, switching costs
54
first mover disadvantages
learning the game (time consuming), business failure potential, educating customers, pioneering costs, regulations
55
why go large-scale?
influence competition and maximize exposure, leverage first mover advantages
56
why go small-scale?
learning opportunities and less risk
57
decisions of a firm
which market, when, scale
58
modes of entry
exporting, turnkey projects, licensing, franchising, joint ventures, wholly owned subsidiaries
59
advantages of exporting
no establishment costs, experience curve and location economies, low commitment
60
disadvantages of exporting
manufacturing abroad may be more cost effective, high transport costs, tariff barriers, divided loyalties
61
turnkey projects
contractor manages project for foreign client - best when FDI is limited
62
advantages of turnkey projects
less risky than FDI, management knowledge
63
disadvantages of turnkey projects
no long-term interest, can create competitors, sell competitive advantage
64
advantages of licensing
no development costs, no barriers to investment, good use of intellectual properly
65
disadvantages of licensing
no economies (control), limit strategy and tech
66
advantages of franchising
low costs and risks, quick global presence
67
disadvantages of franchising
subsidiaries, quality control, profit usage across countries
68
advantages of joint ventures
local partner resources, shared costs and risks, political consideration
69
disadvantages of joint ventures
loss of control, conflict between firms
70
tech based core competencies are best for which entry mode?
wholly owned subsidiaries, licensing
71
management based core competencies are best for which entry mode?
joint ventures
72
advantages of wholly owned subsidiaries
control, location and experience curve economies, profit
73
disadvantages of wholly owned subsidiaries
risk and costs, aggressive competitors, slow
74
cons of acquisitions
risk of overpaying and culture clashes, typically unsuccessful
75
pros of acquisitions
quick, less risky, can pre-empt competitors
76
when is an acquisition optimal?
entering market with well-established enterprises and global competition
77
when is a greenfield venture optimal?
no competitors, competitive advantage based on transfer of knowledge and abilities
78
advantages of greenfield ventures
building subsidiary company
79
disadvantages of greenfield ventures
slow, risk, pre-emption by competitors
80
hubris hypothesis
overpaying in acquisition due to overestimation of value
81
advantages of strategic alliances
share costs, complementary skills and assets, establishing standards
82
disadvantages of strategic alliances
provision of tech and market access
83
how to manage alliances for success
building trust and managing cultural differences, specific agreements, quick action and communication
84
why do large firms export?
proactivity, setting the change
85
why do small firms export?
reactivity due to unfamiliar environments
86
export and import financing
letter of credit, draft/bill of exchange, bill of lading
87
letter of credit
issued by bank (trustworthy), importer pays fee -> mitigates mistrust between foreign partners
88
draft/bill of exchange
used to affect payment and settle trade transactions -> payment at certain times
89
types of drafts
sight draft and time draft
90
slight draft
payable on presentation to drawee
91
time draft
delayed payment permissable
92
bill of lading
receipt, contract, document of title for transporting merchandise
93
countertrade
Alternative to international sale when conventional payment is difficult/costly
94
types of countertrade
barter, counter purchase, offset, switch trading, compensation/buybacks
95
advantantages of countertrade
possible government requirement, strategic marketing weapon
96
disadvantages of countertrade
hard currency is preferred, goods may be poor quality
97
who is countertrade models ideal for?
Good for LARGE MNC with contacts
98
counter purchase
reciprocal buying agreement
99
offset
discount
100
switch trading
third party
101
buyback
factory output as partial payment
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