Mgt 4335- Gobalization

Question 1

T-What is globalization meant?

Answer 1

Increase in international exchange, including trade in goods and services as well as exchange of money, ideas, and information.
The growing similarity of laws, rules, norms, values, and ideas across countires

Question 2

TT-What are there 5 reasons to expand outside of home market?

Answer 2

New Customers
Lower Costs
Exploit Core Competencies
Resources and Capabilities
Spread Business Risk

Question 3

T-What are 4 categories to consider a business global?

Answer 3

1. Economic: startup cost, competition.
2. Political: legal-buys, performing to product district.
3. Cultural: skills.
4. Physical: cost, weather, natural resources.

Question 4

TT-What is Porter’s Diamond of National Advantage?

Answer 4

Firm strategy, structure and rivalry.
Related and supporting industries.
Demand conditions.
Factor conditions.

Question 5

T-What is Factor Endowments meant?

Answer 5

The nation’s position in factors of production (availability quality, and cost of raw materials and other factors including: labor, technical capital, natural resources).

Question 6

T-What is demand conditions meant?

Answer 6

The nature of home market demand for the industry’s product or service (size of market, growth potential, nature of buyers’ needs/wants).

Question 7

T-What are related and supporting industries meant?

Answer 7

The presence, absence, and quality in the nation of supplier industries and other related industries that supply services, support, or technology.

Question 8

TT-What are firm strategy, structure, and Rivalry meant?

Answer 8

The conditions in the nation governing how companies are created, organized, and managed.

Question 9

T-What are strategic options for entering/competing in international markets ?

Answer 9

1. Export strategies: easiest, minimal capital needed; limit exposure for foreign market, using foreign whole sale.
2. Licensing strategies: value technical knowledge appealing brand or a unique product - avoid commitment of resources; royalties, start up costs, licensing technology or trademark, loss of control.
3. Franchising: service/retail firms transfers risk to franchisee. Franchiser - pays for training, recruiting, supporting monitoring.
4. Foreign subsidiary: Home company takes all resp. for value chain activities in foreign country “all in”.
5. Alliance/Joint venture-most popular.

Question 10

T-What are 7 reasons this is a popular way to enter foreign markets?

Answer 10

1. Foreign partner has familiar with doing business.
2. Helps capture economies of scale in pro/market.
3. Fill gaps in technical expertise.
4. Share distribution networks.
5. Cross boarder allies .
6. Relationship with govt officials/regulations.
7. Gain agreements on technological standards.
   Negative: knowledge is less valuable, cultural barriers, communication, transaction costs.

Question 11

T-What are advantages of globalization ?

Answer 11

Social/cultural: acceptance-less likely to go war with a country we do business with; increased concern for ethical business practices; trade agreements; economic
prospective.
Economic: Revenue/market share competition; extending product life cycle; optimize location of value chain activities; reverse innovation; adequate products for emerging markets.

Question 12

T-What are disadvantages of globalization ?

Answer 12

Social/Culture: Exploitation; Americanization; Disneyfication; losing cultural differences; capitalism-free flow of money; success = money.
Economic:
Risks:
1. Financial risk - economic risk - economic policies conditions - property rights/laws.
2. Management risk - jobs decisions to more jobs, management of/in foreign markets.
3. Politicial risk - risks involved with political system rule of law.
4. Currency risk - Foreign exchange of funds.
5. Counterfeiling - selling of trademark goods without consent of trademark owner.

Question 13

T-How do we achieve competitive advantage in global markets ?

Answer 13

Two opposing pressures faced by firms:
Cost pressures: how critical is it to keep costs low?
Responsiveness pressures: how much pressure is there to respond/adapt on a localized basis?

Question 14

T-What are 4 approaches to doing business?

Answer 14

1. International strategy: a strategy based on firms’diffusion and adaption of the parent companies’ knowledge and expertise to foreign markets, used in industries where the pressures for both local adaptation and lowering costs are low.
2. Global strategy: a strategy based on firm’s centralization and control by the corporate office, wither the primary emphasis on controlling costs, and used in industries where the pressure for local adaptation is low and how to pressure for lowering costs is high.
3. Multidomestic strategy: a strategy based on firms’ differentiating their products and services to adapt to local markets, used in industries where the pressures for lowering costs is low.
4. Transnational strategy: a strategy based on firms’ optimizing the trade-offs associated with efficiency, local adaptation, and learning, used in industries where the pressures for both local adaptation and lowering costs are high.