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The Strategy of International Business Terms in this set (40)Firms can choose among various strategies to compete in foreign markets. An international firm faces more complex challenges and almost limitless opportunities in foreign markets compared to the domestic ones. The challenges come from the need for cost reductions by standardizing the product and utilizing the economies of scale, "pressures for cost reductions," and from the need for local responsiveness by modifying its products to the local tastes and preferences, "pressures for local responsiveness." Thus, to compete successfully, the firm could use one of the four basic strategies (an international strategy, a localization strategy, a global standardization strategy, and a transnational strategy) or some combinations of them. A leading market analyst suggests that Samsung could return its lost market share along with attaining greater competitive advantage in the industry and creating value by using these two basic strategies identified by a well-known strategy scholar Michael Porter. A. Differentiation and low cost A. Differentiation and low cost Samsung's ability to increase its profitability and gain back some of the recently lost market shares is constrained by ___________________. A. the diversification B. the imperative of localization Xiaomi, a new Chinese firm producing cheaper and better budget smartphones, was able to overtake Samsung in the market share in China by reaching 14% versus 12% held by Samsung according to video. This recent Xiaomi's success indicates that most likely Xiaomi performs its value creation activity in the optimal location for that activity. In other words, by pursuing such a strategy of locating its value creation activity where it can take place most effectively, Xiaomi is most likely to realize A. core competence. B. location economies Samsung can increase its market share by spreading fixed costs over even larger volumes to lower its costs, which is referred to as A. economies of scale. A. economies of scale A smartphone industry has intense pressures for cost reduction because consumers Check All That Apply: D. face low switching costs Based on the information in the video, Samsung has been and will be in the future most likely to pursue a _________________strategy, because it has to respond to strong pressures for local responsiveness and strong cost pressures. A. transnational A. transnational Your firm has been a leader in several lines of fast-moving consumer goods. The firm has been following a localization strategy. Your products have been distributed in a number of foreign markets and regions, and they are distinct enough in local markets to respond to national tastes and preferences. Competition, however, has become more intense, with many competitors using lower cost structures to undercut your prices and still satisfy your customers. The firm must decide what kind of strategy it needs to follow to meet the demands of the local markets as well as the increased competitive pressures on cost. Pressures for local responsiveness may make it difficult to ______________________________. A. compete effectively in more than one international
market C. leverage skills and products associated with a firm's core competencies from one country to another __________________________is the most appropriate strategy when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense. A. International strategy C. Localization strategy ___________________________ is the most appropriate strategy when the firm simultaneously faces strong pressures for both cost reductions and local responsiveness. A. Transnational strategy A. Transnational strategy A firm facing low pressures for local responsiveness and few pressures to contain costs might best pursue a(n) _______________________. A. international strategy A. international strategy Markets are dynamic, and any firm will face competition. In time, international and localization strategies tend to become less viable, and managers need to ________________________________. A. revitalize their original strategies with more intense focus to avoid spreading energies too thinly B. orientate their companies toward either a global standardization or transnational strategy All of the following are examples of primary activities except A. Logistics A. Logistics When different stages of a value chain are dispersed to those locations around the world where value added is maximized or where the costs of value creation are minimized, _____ is (are) created. A. Experience effects D. A global web Pressures for local responsiveness come from all of the following except A. Excess capacity A. Excess capacity When pressures are high for local responsiveness, but low for cost reductions, a _______ makes sense. A. Global standardization strategy D. Localization strategy Differentiation Value creation through increasing product attractiveness Lowering cost Value creation through lowering production costs Efficiency frontier Graph that shows all of the possible positions a firm can adopt regarding adding value or lowering cost Primary Activities Firm activities that add value directly by creating or supporting the product including R+D, production, marketing, sales, and customer service Support Actvities Firm activities that allow primary activities to occur including HR, IT, logistics, and other infrastructure Organization Structure
The totality of a firm's organization including formal org structure, control systems and incentives, org culture, process, and people Organizational Structure (3 parts) 1. Formal division into subunits (divisions) Strategic Fit Strategy chosen must make sense given the market conditions to attain superior performance and earn high return on capital Core Competencies Skills within the firm that competitors cannot easily match or imitate Location Economies Cost advantages from performing a value creation activity at the optimal location for that activity Global Web When different stages of value chain are dispersed to those locations around the globe where value added is maximized or where costs of value creation are minimized Experience Effects Systematic production cost reductions that occur over the life of a product - Reducing cost of value creation Subsidiary Skills Skill developed in a foreign sub and transferred to other entities within the MNC Competitive Pressures (2) 1. Pressure for cost reduction Pressure for cost reduction greatest when (4) 1. Commodity goods that fill universal needs Pressure for Local Responsiveness come from (4) 1. Differences in consumer tastes and preferences Globalization Strategy Focuses on increasing profitability/profit growth by reaping the cost reductions that came from economies of scale, learning effects, and location economies with goal of low-cost strategy on a global scale Globalization Strategy makes sense when: There is strong pressure for cost reduction but low demand for local responsiveness Localization Strategy Increasing profitability by customizing the firm's goods and services so that they provide a good match to tastes and preferences in different national markets Localization strategy make sense when: There is high pressure for local customization but cost pressures are not too intense International Strategy Taking products first produced for their domestic market and selling them internationally with only minimal local customization International strategy makes sense when: there are low cost pressures and low pressures for local responsiveness Transnational Strategy Attempting to simultaneously achieve low costs through location economies, economies of scale, and learning effects while also differentiating product offerings across geographic markets to account for local differences and fostering multidirectional flows of skills between different subsidiaries in the firm's global network of operations Transnational strategy makes sense when: There are both high cost pressures and high pressure for local responsiveness Strategic Alliances Cooperative agreements between potential or actual competitors in form of Joint Ventures or Short-term Contractual Agreements Sets found in the same folderMNGT 375 Chapter 1748 terms Mary_Cowles5 MNGT 375 Chapter 122 terms Mary_Cowles5 MNGT 375 Chapters 2 and 336 terms Mary_Cowles5 MNGT 375 Chapter 428 terms Mary_Cowles5 Other sets by this creatorACCT 410 Exam 2 Review125 terms Mary_Cowles5 ACCT 410 - Homework 430 terms Mary_Cowles5 ACCT 410 - Homework 330 terms Mary_Cowles5 ACCT 410 - Homework 220 terms Mary_Cowles5 Other Quizlet setspermit40 terms gada_ali6 questions i keep getting wrong94 terms paulachihuahua CLO 10155 terms pmandel17 Lifeguarding and the Law23 terms vincenzo_emmanuel Which strategy makes sense when the firm faces strong pressures for cost reductions and demands for local responsiveness are minimal?A global standardization strategy makes most sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal.
What are the 4 types of international strategies?Multinational corporations choose from among four basic international strategies: (1) international (2) multi-domestic, (3) global, and (4) transnational. These strategies vary depending on two pressures; 1) on emphasizing low cost and efficiency and 2) responding to the local culture and needs.
What is cost pressures and pressures for local responsiveness?– pressures for cost reductions – pressures to be locally responsive • These pressures place conflicting demands on the firm. pressures are intense, and simultaneously, so are pressures for local responsiveness.
What is transnational strategy example?Transnational Strategy
Such a firm tries to balance the desire for efficiency with the need to adjust to local preferences within various countries. For example, large fast-food chains such as McDonald's and KFC rely on the same brand names and the same core menu items around the world.
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Which strategy is make sense when there are low cost pressures and low pressures for local responsiveness?
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