final 2 international business

  1. favoriable condition
    •     -political stable nations   
    •  -free market system 
    •    -no dramatic upsurge in inflation or private sector
  2. Unfavorable Condition
    •  -politically unstable developing nations 
    •    -speculative financial bubbles have led to excess borrowing  
    •    -mixed or command economies 
  3. Scales of Entry
    • -strategic commitments: a decision that has a long term impact and is difficult to reverse   
    •  -large scale entry  
    • -all eggs in one basket 
  4. Scales of Entry PRO
    • commitment of significant resources,
    • easier to attract customers (will remain in market),
    • may cause rivals to rethink market entry
  5. Scales of Entry CONS
    •  fewer resources to commit elsewhere,
    • strategic inflexibility 
  6. Strategic Commitments
    small scale entry
  7. Strategic Commitments PROS
    time to learn about the market, limits company exposure
  8. Strategic Commitments CONS
    may be difficult to build market share, difficult to capture first mover advantages 
  9. licensing
    agreement where licensor grants rights to intangible property to another entity for a specified period of time in return for royalties
  10. licensing ADVANTAGES
    •   -reduces development cost and risks of establishing foreign enterprise             
    •      -lack capital venture             
    •      -unfamiliar or politically volatile market       
    •   -overcomes restrictive investment barriers 
  11. licensing DISADVANTAGES
      -lack of control           -creating a competitor 
  12. wholly owned subsidiaries: greenfield and acquisition
    •  -advantages       
    •   -no risk of losing technical technical competence to a competitor        
    •   -tight control of operations       
    •   -realize learning curve and location economies 
    •    -disadvantage       
    •   -bear full coat and risk
    •      -most sought out way of entering a market
  13.  franchising
    franchisers sells intangible property and insist on rules for operating business 
  14. franchising ADVANTAGES
    •  -advantages     
    •          -reduces costs and risk of establishing enterprise               -relatively easy to set up business
  15. Franchising Disadvantages
    •  -may prohibit movement of profits from one country to support operations in another country         
    •      -semi-vertical relationship: Control by franchisor 
  16. Where to Manufacture 
    •    -country factors   
    •  -technological factors   
    •  -production factors 
    •    -locating manufactoring facilities
  17. Country Factors
    • -Political economy     -culture     -relative factor costs 
    •    -formal and informal trade barriers     -rules regarding FDI
  18. technological factors
     -fixed costs     -mass customization      -minimum efficient scale          -mass consumption     -low cost and product customization     -flexiable manufactoring (lean production)
  19. Product factors and location strategies
     -2 product features, effect location decisions     -value to weight ratio     -product services universal needs
  20. two strategies for locating manufacturing facilities
      -concentration     -decentralization 
  21. Make or Buy Decision
       -would you chose centralization     -trade offs low productions cost     -speialized investments, doesn't have      -doesnt have bother use asset     -doesnt have another use 
  22. MAKE

      -propriety product technology production          -facilitating specialized investments      -lower costs     -improved scheduling          -no supply chain 
  23. BUY
       -strategic flexiablity      -lower costs     -offsets -> business of practices
  24. PUSH
      -industrial or complex products          -short distribution          -few print or electronic media available
  25. PULL
    •    -long distribution channels           -consumer goods   
    •       -sufficient print and electronic media available 
  26. Determents of Demand Elasticity 
    •    -income level and competitive conditions determine elasticity   
    •  -price elasticity tend to be greater in countries with low income levels   
    •  -price elasticity tends t be greater in countries where there are many competitors      
  27. Four Strateigies to profit from global market 
    • global/standardization
    • locialzation/mutli domestic
    • transnational strategy
    • international  
  28. Global/Standardization strategy
    • -standardize products  
    •         -best use of the experience curve and of location economics       
    •   -utilize product standardization     
    •     -no need for local responsiveness       
    •   -centralization of the operation integration and coordination          -not good if local responsiveness demand is high 
  29. Localization/ Multi-domestic strategy
    • -opposite of 1, very distinctive from one another     
    •     -must take each market with different strategies 
    •         -maximize local responsiveness       
    •   -customize the product and marketing strategy to national demand     
    •     -all value creation activities performed in each national market 
  30. Transnational Strategy
    •           -combination of 1 and 2 
    •         -cant do it a the same time, but you can do it     
    •     -core competences can develop in any of the firms worldwide operations   
    •       -flow of skills and product offerings occurs throughout the firm not only at home to foreign subsidiary (global learning)       
    •   -makes sense where pressure with both low cost pressure and local responsiness
  31. International Strategy
     -doomed to fail          -sell and market product as one would at home 
Card Set
final 2 international business