Chapter 10 - Global Strategy: Competing around the world

  1. A decision framework based on the relative distance between home and a foreigh target country along four dimensions: cultural distance, administrative and political distance, geographic distance, and economic distance
    CAGE Distance framework
  2. Cultural disparity between an internationally expanding firm's home country and its targeted host country
    Cultural distance
  3. An assumption that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs gobally
    Death-of-distance hypothesis
  4. A firm's investments in value chain activities abroad
    Foreign direct investment (FDI)
  5. Strategy attempting to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost
    Global-standardization strategy
  6. Part of a firm's corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world
    Global strategy
  7. The process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reduction in transportation costs
  8. Assumption that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous
    Globalization hypothesis
  9. Strategy framework that juxtaposes the pressures of MNE faces for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally: international strategy, global standardization strategy, and transnational strategy
    Integration-responsiveness framework
  10. Strategy that involves leveraging home-based core competencies by selling the same products or services in bothe domestic and foreign markets; advantageous when the MNE faces low pressure for both local responsiveness and cost reductions
    International strategy
  11. Additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances
    Liability of foreignness
  12. The need to tailor product and service offerings to fit local consumer preferences and host-country requirements; generally entail high costs
    Local responsiveness
  13. Benefits from locating value chain activities in the world's optimal geographies for a specific activity, wherever that may be
    Location economies
  14. Strategy pursued by MNEs that attempts to maximize local responsiveness, with the intent that local consumers will perceive them to be domestic companies; the strategy arises out of the combination of high pressure for local responsiveness and low pressure for cost
    Multidomestic strategy
  15. A company that deploys resources and capabilities in the procurement, production, and distribution of good and services in at least two countries
    Multinational enterprise (MNE)
  16. The collective mental and emotional "programming of the mind" that differentiates human groups
    National culture
  17. Strategy that attempts to combine the benefits of localization strategy (high local responsiveness) with those of a global standardization strategy (lowest cost position attainable)
    Transnational strategy
  18. How globalized do MNE's typically tend to be
    50% globalized receiving the majority of their revenues from countries other than their home country
  19. Product, service and capital markets are more globalized than labor markets. The level of everyday activities is roughly 10-25% integrated and thus
  20. Globalization is made possible by what 4 factors
    • Falling trade and investment barriersAdvanced telecommunications
    • Reduced transportation costs
    • Importance of MNEs and FDIs
  21. What are some reasons you would want to go global
    • Gain access to a larger market
    • Gain access to low cost input factors
    • Develop new competencies
  22. What are some disadvantages of expanding internationally
    • Liability of foreignness
    • Loss of reputation
    • Loss of intellectual property
  23. What four dimensions does the CAGE Distance Framework talk about
    • Cultural distance
    • Administrative and political distance
    • Geographic distance
    • Economic distance
  24. What four dimension of culture emerged from Hofstede's national culture research
    • Power distance
    • Individualism
    • Masculinity-femininity
    • Uncertainty avoidance
    • Long-term orientation
  25. Ways of entering a foreign market that would yield low investments but also low level of control
    • Exporting
    • Licensing
    • Franchising
  26. Ways of entering a foreign market that would yield high investments and high level of control
    • Joint venture
    • Acquisition
    • Greenfield operations
  27. Porter's diamond of national competitive advantage
    Image Upload 2
  28. Most of the costs and risk invovled in expanding beyond the domestic market are created by
  29. Even in a more globalized world, the basis for a competitive advantage is often
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Chapter 10 - Global Strategy: Competing around the world