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168 Cards in this Set
- Front
- Back
- 3rd side (hint)
Strategy |
Refers to the actions that managers take to attain the goals of the firm |
Attain goals for firm |
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Profitability |
Is the rate of return the firm makes on its invested capital |
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Profit growth |
Is the percentage increase in net profits over time |
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To increase profitability and profit growth firms can? |
Add value, lower-cost, sell more in existing markets, expand internationally |
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Managers can increase the rate at which the firms profit grow over time by? |
Pursuing strategies to sell more products in existing markets or by pursuing strategies to enter a new markets |
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Expanding internationally can help managers boost? |
The profitability and increase the rate of profit growth overtime |
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Front (Term) |
Determines enterprise value |
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To increase profitability farms need to create more |
Value |
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Using a differentiation strategy |
Adding value to a product so that costumers I willing to pay more for it |
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Using a low-cost strategy |
Lowering cost |
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What does Michael Porter argue ? |
He argues that firms need to choose either differentiation or low-cost,
and then configure internal operations to support the choice |
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To maximize long run return on invested capital firms must? |
pick a viable position on that efficiency frontier,
configure internal operations to support that position,
have the right organization structure in place to execute the strategy |
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Convex curve |
Is what economics referred to as an efficiency frontier. The efficiency frontier shows all of the different positions that a firm can adopt with regard to adding value to the product and low-cost assuming that it's internal operations are configured efficiently to support a particular position. The efficiency frontier has a convex shape because of diminishing returns. Diminishing returns imply that one firm already has significant value built into its product offering increasing value by relatively small amount requires significant additional cost |
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How are a firm's operations configured? |
A firm's operations are likely a value chain composed of a series of distinct value creation activities, such as,
production marketing materials management human resources and information systems And the firm infrastructure |
All of these activities must be managed effectively and be consistent with the firm strategy))int |
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Value creation activities can be categorized as primary activities and support activities |
Primary activities covers production marketing and sales and customer service.
Support activities covers information system logistics human resources |
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Value creation activities can be categorized as primary activities and support activities |
Primary activities covers production marketing and sales and customer service. Support activities covers information system logistics human resources |
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Primary activities |
The classical managerial functions of the firm |
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Support activities |
Functions that provide input which allow the primary activities to occur |
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Support activities |
Functions that provide input which allow the primary activities to occur |
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Profit margins |
The difference between total revenues generated 📦📦 and total cost 💵💴 |
📦📦💲💲 |
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How can firms increase profits through international expansion? |
International firms can expand their market (sell in international markets)and realize location economies |
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How can firms increase profits through international expansion? |
International firms can expand their market (sell in international markets)and realize location economies |
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How can firms leverage their products and competencies ? |
Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold |
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How can firms increase profits through international expansion? |
International firms can expand their market (sell in international markets)and realize location economies |
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How confirms leverage their products and competencies ? |
Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold |
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What is core competencies ? |
Skills within the firm that competitors cannot easily match or imitate |
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How confirms increase profits through international expansion? |
International firms can expand their market (sell in international markets)and realize location economies |
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How confirms leverage their products and competencies ? |
Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold |
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What is core competencies ? |
Skills within the firm that competitors cannot easily match or imitate |
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Why are location economies important? |
Because location economies are in different parts of the world creating a global web of value creation activities. |
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How confirms increase profits through international expansion? |
By expanding their market selling in international markets)and realize location economies |
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How confirms leverage their products and competencies ? |
Firms can increase growth by selling goods or services developed at home internationally.... The success of firms that expand internationally depends on the firms core competencies and goods or services sold |
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What is core competencies ? |
Skills within the firm that competitors cannot easily match or imitate |
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Why are location economies important? |
Because location economies are in different parts of the world creating a global web of value creation activities |
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What types of competitive pressures exist in the global marketplace? |
The pressures limit the ability of firms to realize location economies and experience affects leverage products and transfer skills within the firm |
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When are pressures for local responsiveness greatest? |
Difference in consumers taste and preferences,
difference in traditional practices and infrastructure |
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Example of management focus |
MTV networks global strategy, 1981 the network has expand to reach some 330 million customers to spread across 140 countries. Consumers prefer to see their own local supermarkets to maintain that cultural atmosphere |
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Which strategy should a firm choose? |
There are four basic strategies to compete in international markets. The appropriateness of each strategy depends on the pressure for cost, reduction, and local responsiveness in the industry. |
Global standardization strategy, transitional strategy, international strategy, Localization strategy, |
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The international strategy |
Takes products first produced for the domestic market and sells them internationally with only minimal local customization |
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The international strategy |
Takes products first produced for the domestic market and sells them internationally with only minimal local customization |
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Global standardization strategy |
Increase profitability and profit growth by reaping the cost reduction from economies of scale, learning affects, and location economies.
The goal is to pursue a low-cost strategy on the global scale. |
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The international strategy |
Takes products first produced for the domestic market and sells them internationally with only minimal local customization |
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Global standardization strategy |
Increase profitability and profit growth by reaping the cost reduction from economies of scale, learning affects, and location economies.
The goal is to pursue a low-cost strategy on the global scale. |
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Localization strategy |
Increase profitability by customizing goods or services so that they match taste and preferences in different national markets |
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The international strategy |
Takes products first produced for the domestic market and sells them internationally with only minimal local customization |
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Global standardization strategy |
Increase profitability and profit growth by reaping the cost reduction from economies of scale, learning affects, and location economies.
The goal is to pursue a low-cost strategy on the global scale. |
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Localization strategy |
Increase profitability by customizing goods or services so that they match taste and preferences and different national markets |
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Transitional strategy
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tries to simultaneously achieve low-cost through a location economies, economies of scale and learning effects
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Management focus that evolution of strategy at Proctor and Gamble. Throughout the expansion the company maintains all product development at its Cincinnati, Ohio headquarters while manufacturing. Procter & Gamble shifted its strategy in 1990 closing several foreign locations and moving to a more regional approach to global market |
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As competitors emerge which two strategies become less viable? |
International strategy and localization strategy |
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What is organizational structure? |
The formal division of organization into subunits,
the location of decision-making responsibilities,
establishment of intra-grading mechanism |
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What is organizational structure? |
The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism |
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What is organizational architecture? |
Control system and incentives |
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What is organizational structure? |
The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism |
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What is organizational architecture? |
Control system and incentives |
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Control systems |
The metrics use to measure performance of subunits |
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What is organizational structure? |
The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism |
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What is organizational architecture? |
Control system and incentives |
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Control systems |
The metrics use to measure performance of subunits |
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Incentives |
The device is used to reward managerial behavior |
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What is organizational structure? |
The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism |
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What is organizational architecture? |
Control system and incentives |
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Control systems |
The metrics use to measure performance of subunits |
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Incentives |
The device is used to reward managerial behavior |
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Processes and organizational structure |
Processes is how decisions are made and work is performed within the organization
Organizational culture is norms and values that are shared among the employees of an organization |
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What is organizational structure? |
The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism |
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What is organizational architecture? |
Control system and incentives |
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Control systems |
The metrics use to measure performance of subunits |
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Incentives |
The device is used to reward managerial behavior |
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Processes and organizational structure |
Processes is how decisions are made and work is performed within the organization
Organizational culture is norms and values that are shared among the employees of an organization |
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Vertical differentiation |
The location of decision-making responsibilities within a structure |
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What is organizational structure? |
The formal division of organization into subunits, the location of decision-making responsibilities, establishment of intra-grading mechanism |
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What is organizational architecture? |
Control system and incentives |
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Control systems |
The metrics use to measure performance of subunits |
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Incentives |
The device used to reward managerial behavior |
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Processes and organizational structure |
Processes is how decisions are made and work is performed within the organization
Organizational culture is norms and values that are shared among the employees of an organization |
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Vertical differentiation and why is it important? |
The location of decision-making responsibilities within a structure. Vertical differentiation determines where decision-making power is concentrated |
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Horizontal differentiation.Why is it important? |
The formal division of the organization into subunits. Firms may switch to a product divisional structure |
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What happens when firms expand globally? |
When firms expand internationally they often group all of their international activities into an international division |
Overtime manufacturing may ship to foreign markets |
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What is an international divisional structure? |
Headquarters, domestic division general manager, domestic division countries |
Management focus: international division at Walmart explores Walmarts organizational architecture. When Walmart initial expanded into international markets it establish an international division overtime this structure prove to be problematic and was abandoned |
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World wide area structure |
Favored by firms with low degree of diverse of vacation and a domestic structure based on function : divides the world into autonomous geographic areas, can result in fragmentation of organization, facilities local responsiveness |
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What is an international divisional structure? |
Headquarters, domestic division general manager, domestic division countries |
Management focus: international division at Walmart explores Walmarts organizational architecture. When Walmart initial expanded into international markets it establish an international division overtime this structure prove to be problematic and was abandoned |
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World wide area structure |
Favored by firms with low degree of diverse of vacation and a domestic structure based on function : divides the world into autonomous geographic areas, can result in fragmentation of organization, facilities local responsiveness |
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Global matrix structure |
Tries to minimize the limitations of the world wide area structure and the worldwide product divisional structure
Example explores the organization architecture at Dow Chemical despite having difficulties when it was initially implemented the company relied on matrix structure when the company change in strategy and structure has changed as well (The rise in the fall of Joe chemicals matrix structure) |
Allows for differentiation along to dimensions product division and geographic areas |
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Out put controls and cultural controls? |
Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics
Cultural controls: exist when employees buy into the norms of value system of the firm |
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Out put controls and cultural controls? |
Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics
Cultural controls: exist when employees buy into the norms of value system of the firm |
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What are incentive systems? |
Devices used to reward behavior, usually closely tied to performance metrics use for output control, varies depending on employee |
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Out put controls and cultural controls? |
Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics
Cultural controls: exist when employees buy into the norms of value system of the firm |
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What are incentive systems? |
Devices used to reward behavior, usually closely tied to performance metrics use for output control, varies depending on employee |
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What is the link between control, instinctive, and strategy? |
Interdependence, performance ambiguity, the cost of control |
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Out put controls and cultural controls? |
Output controls : Setting goals for subunits to achieve and expressing these goals in terms of objective performance metrics
Cultural controls: exist when employees buy into the norms of value system of the firm |
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What are incentive systems? |
Devices used to reward behavior, usually closely tied to performance metrics use for output control, varies depending on employee |
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What is the link between control, instinctive, and strategy? |
Interdependence, performance ambiguity, the cost of control |
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Organizational culture |
The values and norms employees are encouraged to follow evolves from founders an important leaders, national social cultural |
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Organizations can be difficult to change because of |
They existing distribution of power and influence, the current culture, institutional constraints |
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Organizations can be difficult to change because of |
They existing distribution of power and influence, the current culture, institutional constraints |
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What is the link between strategy and architecture? |
Firms pursuing a localization strategy focus on local responsiveness
Firms pursuing an international strategy create value by transferring core competencies from home to foreign subsidiaries
Firms pursuing a global standardization strategy focus on the realize Asian of the location and experience per economy
Berms pursuing a trans national strategy focuses on the simultaneously attaining location and experience current economies, local responsiveness, and global learning |
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Foreign owned operations (FDI) |
Maybe established either as start ups Greenfield ventures or via accusation
May take the form of wholly-owned subsidiaries or joint ventures |
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Non-equity |
Types of foreign operations include licensing and other construction will forms of business ventures |
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Reasons why foreign production maybe preferable to exporting |
Production cost is cheaper a broader than at home,
domestic capacity is insufficient,
government restrict or prevent the importation of foreign products and
customers prefer products originating from a particular foreign country |
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Reasons why foreign production maybe preferable to exporting |
Production cost is cheaper a broader than at home,
domestic capacity is insufficient,
government restrict or prevent the importation of foreign products and
customers prefer products originating from a particular foreign country |
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Advantages of foreign direct investment accusations may include: |
Existing faculties, existing labor force, knowledgeable local management, access to local financing, immediate cash flow |
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Managing foreign arrangements |
The cost and other consequences of evolving to different modes operations at various locations
The proven ability as a potential partners |
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International channel distribution alternatives |
Shows some of the possible channel distribution selection of channel . The seller must have an organization to deal with channel members needed to move goods between countries. Of course the process is not always practical or cost-effective |
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Indirect selling/export? |
Selling products to Independent third-party intermediary |
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Indirect sally export management companies (EMC) |
A firm that either ask as a manufacture agent or buys merchandise from manufacturers for international distribution
EMC generally operates on a contractual basis, provide exclusive we presentation in a while to find foreign territory and acts as the export arm that manufacture |
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Export trading company (ETC) |
A large, independent broker whose primary purpose is to match suppliers to foreign customers for a fee
Operates primarily on the basis of demand |
Based in the US and are exempt from antitrust provision to allow them to be better penetrate foreign markets by collaborating with other US firms |
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A distributor |
A merchant who purchases goods from manufacture and stocks, services, and resell them to retailer at a profit |
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Introduction: trade strategy |
Exporting : product outflow
Importing : product inflow |
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Introduction: trade strategy |
Exporting : product outflow
Importing : product inflow |
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Strategic factors affecting the choice of exporting as a mode entry include : |
The ownership advantages of the firm, the location advantages of the market, the international experience of the firm, it's fit with the overall strategy of the firm |
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Stages of export development : firms tend to move through three phases export development |
Pre-engagement : companies selling goods and services solely in the domestic market
Initial exporting : companies that do sporadic, marginal exporting
Advance exporting : companies become regular exporters |
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And export business plan |
Executive summary, business history, market research, market decision, legal decision, Manufacturing and operations, personnel strategy, financial decision, implementation schedule |
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And export business plan |
Executive summary, business history, market research, market decision, legal decision, Manufacturing and operations, personnel strategy, financial decision, implementation schedule |
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Foreign fright forwarder |
And international trade specialist who assist in the delivery of goods from producer to customer |
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Foreign fright forwarder |
And international trade specialist who assist in the delivery of goods from producer to customer |
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Export documentation |
A pro forma invoice, a commercial invoice, bill of leading, a consoler invoice, A certificate of origin, a shipper export declaration, export packing list |
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Letter of credit |
A guarantee from importers bank but it will act on behalf of the importer and pay the exporter for the merchandise it's all relevant documents specified in the letter of credit or presented |
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What is a time draft? |
Written order instructing the importer or his agent, that importers bank, to pay the amount specified on its face on a certain date |
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Advantages of importer |
Decreased cost and increase competitiveness and profitability, secure a sensual inputs and products |
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The role of custom agencies |
Government bureaus charged with collecting duties and ensuring that the trade restrictions are enforced and procedures adhere to... |
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Born global |
Companies tend to make exporting a primary goal on the time of their inception |
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Types of industrial importers |
Those that opportunistically look for any product around the world that will generate a positive cash flow
Those a look to for sourcing as a means to minimize product cost
Those that use for in sourcing as part of the global supply chain strategy |
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Types of industrial importers |
Those that opportunistically look for any product around the world that will generate a positive cash flow
Those a look to for sourcing as a means to minimize product cost
Those that use for in sourcing as part of the global supply chain strategy |
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Import broker |
is a certified Specialist what chains required government permission and other clearances for forwarding the necessary |
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Marketing mix (The choice is the firm offers to his target market) is comprised of |
Product attributes, distribution strategy, communication strategy, and pricing strategy |
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Production orientation |
Emphasizes production variables such as efficiency, quality, and/ or capacity
{used internationally for selling commodities and passive exports for serving foreign market } |
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Distribution strategy |
The means the firm chooses for delivering the product to the consumers.
How a product is delivered depends on the firms markets entry strategy |
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Distribution : For each country |
Each country has its own national distribution system that is historically intertwined with its cultural, economic, and legal environments.
Factors that influence the distribution of consumers Citizens attitudes towards their own retailer The abilities to pay retail workers Retailers trust in their employee Restriction on the size of stores and their hours of operation |
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Retail concentration : concentrated or fragmented |
Concentrated : common in developed countries, contributing factors - increase in car ownership, number of households with refrigerators and freezers, and two income household
Fragmented system : uneven or mountainous terrain, contributing factors : great population density with large number of urban center |
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Channel Length |
The number of intermediaries between the producer and the consumer |
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Short channel and Long Length |
Short channel : When the producer sells directly to the consumer
Long channel : When the producers sells through an import agent, a wholesaler and retailer |
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How many layers you have an distribution channel? |
US standard is 3 layers
Concentrated 2 to 3 layer
Fragmented 8 to 10 layers
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Sales orientation |
Assumes that global customers are reasonably similar and that the same product can be sold at home and abroad |
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Customer orientation |
Stresses sensitivity to customer needs, identifying and serving the needs of the customer |
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Strategic marketing orientation |
Commits to continuously serving foreign markets and to making incremental adaptations to satisfy local customers |
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Societal marketing orientation |
Requires that activities be conducted in a way that preserves or enhances that well being of all stakeholders
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Address the environmental, health, social, and work related problems that arise in foreign operation |
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Packaging Component |
Price Quality Packages Styling Trademark Brand name |
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Marketing segmentation |
Identifying distinct group of consumers whose purchasing behavior differs from others in important ways |
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Markets can be segmented by |
Geography Demography Socio-cultural factor Psychological factor |
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How do product attributes influence marketing strategy ? |
Level of economic development
Product and technical standards |
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Consumers behavior is influenced by |
Economic Development
Consumers in highly developed countries tend to demand extra performance attributes in their products
Price is not a factor due to high income level
Consumers in less developed countries value basic features as more important
Price is a factor due to lower income level |
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Channel quality |
The expertise, competencies, and the skills of established retailers and I nation, and their ability to sell and support the products of an international business |
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Which distribution strategy should a firm choose? Ch18 |
The optimal strategy depends on the relative cost and benefits of each alternative
When prices important a shorter channel is better
• no such thing as optimal distribution, doesn't exist deal with each market separately companies have to deal with quality of wholesalers and distributors in the marketplace |
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Communication channels available to affirm include |
Direct selling
Sales promotion
Direct marketing
Advertisement |
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Cultural barriers |
It can be difficult to communicate messages across cultures. A message that means one thing and one country may mean something quite different and another.
Firms need to develop cross cultural literacy and use local input when developing marketing messages |
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Noise levels |
That amount of other messages competing for potential consumers attention
• in developing countries noise levels tend to be lower |
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Push and pull strategy |
Push strategy is direct marketing techniques designated to create immediate demand, emphasizing personal selling
• strategy is better for industrial products and complex products, distribution channels are usually shorter, a few prints or electronic media are available
Pull strategy is mass media advertising, and direct marketing techniques designated to create final demand, sales promotion and advertising
• A pull strategy is better for consumers good products, distribution channels are longer, electronic media are available to carry The marketing message |
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Pricing strategy firm should use? |
Firms need to consider:
Price discrimination
Strategic pricing
Regulations that affect pricing decision
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Pricing strategy firm should use? |
Firms need to consider:
Prices discrimination
Strategic pricing
Regulations that affect pricing decision
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Price discrimination |
Occurs when firms charge consumers in different countries different prices for the same product.
• countries must have different price elasticity of demand |
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Price elasticity of demand |
A measure of the responsiveness of demand for product changes in price
• demand is elastic when a small change in price produces a large change in demand
• demand is inelastic when a large change in price produces only a small change in demand |
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Predatory pricing |
Use profit gained in one more could to support aggressive pricing designated to drive competitors out in another market |
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Multi point pricing |
A firms pricing strategy in one market may have an impact on arrivals pricing strategy in another market |
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Multi point pricing |
A firms pricing strategy in one market may have an impact on arrivals pricing strategy in another market |
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Experience current pricing |
Price low worldwide an attempt to build global sales volume as rapidly as possible, even if this means taking large losses initially |
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How confirms build global R & D capabilities? |
To adequately commercialize new technologies, firms need to integrate our R&D and marketing |
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The rate of new product development is greater in countries where? |
More money to spend on basic and applied research and development
Demand is strong
Consumers are affluent
Competition is intense |
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Firms need clothes links between R&D and ? |
Marketing and manufacturing |
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Competition policy |
Most industrialized nations have regulations designated to promote competition and restrict monopoly practices |
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Competition policy |
Most industrialized nations have regulations designated to promote competition and restrict monopoly practices |
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Anti-dumping regulations |
Occurs when a firm sells a product for price is less than the cost of producing
Anti-dumping rules set of floor under export prices and limit a firm's ability to pursue strategic pricing |
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Human resource management (HRM) |
Refers to the activities in organization carries out to use its human resource affectively
Activities include : determining the firm human resources strategy,
staffing,
performance evaluation,
management development,
compensation,
and labor relations |
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Who is responsible for aspects of organizational architecture? As in people, culture, instinctive and control |
Human resources |
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Who is responsible for aspects of organizational architecture? As in people, culture, instinctive and control |
Human resources |
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Staffing policy |
Concerned with the selection of employees for particular job. This involves selecting individuals who have the skills required to do the particular job. |
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Ethnocentric staffing policy |
Is one in which all key management positions are filled by parent country nationals |
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Polycentric staffing policy |
Requires host country nationals to be recruited to manage subsidiaries, while parent control national occupy key positions at corporate headquarters |
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Firms success requires HRM to be |
Congruent with a firm strategy and with formal and informal structure and control |
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