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When the tastes and preferences of consumers in different nations are similar if not identical, such as for bulk chemicals, steel, sugar, etc.
Universal needs
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A company that does business in two or more national markets
Multinational company
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How do companies go about entering foreign markets?
- Exporting
- Licensing
- Joint venture with foreign company
- Setting up wholly own subsidiary
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A strategy that combines elements of both localization and global standardization and leverages good ideas across nations
Transnational strategy
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A nation's position in factors of production such as skilled labor or the infrastructure to compete in a given industry
Factor endowments
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The nature of home demand for the industry's product of service
Local demand conditions
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The presence or absence in a nation of supplier industries and related industries that are internationally competitive
Competitiveness of related and supporting industries
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The conditions in the nation governing how companies are created, organized, and managed and the nature of domestic rivalry
Intensity of rivalry
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Economic benefits that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be
Location economies
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Requires that a company try to minimize its unit cost
Pressures for cost reduction
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Requires that a company differentiate its product offering and marketing strategy from country to county in an effort to accommodate the diverse demands arising from national differences in consumer tastes and preferences, business practices, distribution channels, competitive conditions, and government policies
Pressures to be locally responsive
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Focuses on increasing profitability by reaping the cost reductions that come from economies of scale and location economies
Global standardization strategy
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Focuses on increasing profitability by customizing the company's goods or services so that they provide a good match to tastes and preferences in different national markets
- Localization strategy
- Focuses on trying to develop business models that simultaneously achieve low costs, differentiate the product offerings across geographic markets, and foster a flow of skills between different subsidiaries in the companies global networks of operations
- Transnational strategies
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Cooperative agreements between companies from different countries that are actual or potential competitors
Global strategic alliances
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Self-interest seeking with guile
Opportunism
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Interpersonal relationship between the firms' managers
Relationship capital
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Two or more companies have an equity stake
Formal joint venture
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Two companies may agree to cooperate on a particular problem (such as developing a new product)
Short-term contractual agreement
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