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international strategy
one through which the firm sells its good or services outside of its domestic market; diversified geographically; compete in numerous countries or regions
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multidomestic strategy
an international strategy in which strategic & operating decisions are decentralized to the strategic bus. units in individual countries/regions for the purpose of allowing each unit the opportunity to tailor products to the local market; for broad variety of customers, markets, & cultures
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global strategy
an international strategy in which a firm's home office determines the strategies bus. units (centralized decision-making) are to use in each country/region; customer assumed to have similar needs & differences between markets insignificant
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transnational strategy
an international strategy in which the firm seeks to achieve both global efficiency & local responsiveness; combines multidomestic & global strategies; requires flexible coordination & building a shared vision & individual commitment through an integrated network
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liability of foreignness
a set of costs associated with various issues firms face when entering foreign markets; including unfamiliar operating environments, economic, administrative, geographic, & cultural differences, and the challenges of coordination over distances
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exporting
an entry mode through which firms send products it produces in its domestic market to international markets; used initially in many firms; high transportation costs & may encounter high import tariffs; avoid expense of establishing operations in host countries
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licensing
an entry mode in which an agreement is formed that allows a foreign company to purchase the right to manufacture & sell a firm's products w/i a host country's market or a set of host countries' markets; licensor normally paid royalty on each unit produced & sold
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strategic alliances
an entry mode in which a firm collaborates with another company in a different setting; firms share risks & resources; facilitate in developing and learning new capabilities & possibly core competencies that may contribute to the firm's strategic competitiveness
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franchising
entry mode where 1 party grants another party the right to use its trademark and certain bus. systems & processes to produce & market a good/service according to certain specifications; restrictive licensing & alliance, economies of scale w/o capital investment, brand recognition customer loyalty w/o intellectual property transfer
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cross-border acquisition
an entry mode through which a firm from 1 country buys a stake in or purchases all of the firm located in another country; provide rapid access to new markets (quickest of all entry modes); can be very costly, usually require complex & costly negotiations
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greenfield venture
an entry mode through which a firm invest directly in another country or market by establishing a new wholly owned subsidiary; most costly, achieves greatest degree of control (over tech, mktg, & distribution= protects intellectual property), potentially most profitable if successful
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political risks
denote the probability of disruption of the operations of multinational enterprises by political forces or events whether they occur in host countries, home country, or result from changes in the international environment; ex. political & gov't instability and global military engagements
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economic risk
include fundamental weaknesses in a country/region's economy w/ the potential to cause adverse effects on firms' efforts to successfully implement their international strategies; increased trend of counterfeit products & lack of global policing of them=protect intellectual property
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international diversification strategy
one through which a firm expands the sales of its goods & services across the borders of global regions & countries into a potentially large # of geographic locations or markets in order to sell their products
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organizational structure
specifies the firm's formal reporting relationships, procedures, controls, and authority & decision-making processes; develop one that effectively support's the firm's strategy & it will facilitate effective use of it
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structural stablitiy
provides the capacity the firm requires to consistently and predictably manage its daily work routines
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structural flexibility
provides the opportunity to explore competitive possbilities & then allocate resources to activities that will shape the competitive advantages the firm will need to be successful in the future (expliot current ones while developing new ones)
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organizational controls
those that guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable; provide clear insights on behaviors that enhance firm performance
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strategic controls
largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages; concerned w/ examining the fit between what the firm might do & what it can do
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financial controls
largely objective criteria used to measure the firm's performance against previously established quantitative standards; ex. ROI, ROA, EVA; emphasized to evaluate performance of firms using the unrelated diversification strategy
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simple structure
one in which the owner-manager makes all major decisions & monitors all activities while the staff serves as an extension of the manager's supervisory authority; difficult to maintain as the firm grows in size & complexity
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functional structure
consists of a CEO & a limited corporate staff, with functional line managers in dominant organizational areas such as production, accounting, marketing, R&D, engineering, & HR; allows for functional specialization
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multidivisional (M-form) structure
consists of a coporate office & operating divisions, each operating division representing a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers
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cooperative form
an M-form structure in which horizontal integration is used to bring about interdivisional collaboration; related-constrained strategy; matrix org. may evolve; rewards are subjective & tend to emphasize overall corporate performance plus divisional performance
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matrix organization
an organizational structure in which there is a dual structure combining both functional specialization and business product or project specialization
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strategic business unit (SBU) form
an M-form structure consisting of 3 levels: corporate headquarters, SBUs (each is a profit center), & SBU divisions; related-link strategy; financial & strategic controls (help heads evaluate their division's performance) important; difficult to implement
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competitive form
an M-form structure characterized by complete independence among the firm's divisions which compete for corporate resources; unrelated diversification strategy; no divisional cooperation= flexibility & motivates effort; want to allocate internal capital efficiently; create value by restructuring, buying, & selling businesses
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worldwide geographic area structure
emphasizes national interests & facilitates the firm's efforts to satisfy local differences; multidomestic strategy; little coordination & integration, informal communication; most effective form of cooperation; unable to creat global efficiency/ worldwide economies of scale
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worldwide product divisional structure
decision-making authority is centralized in the worldwide division headquarters to coordinate & integrate decisions and actions among divisional business units; global strategy; success= develop economies of scale & scope globally
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combination structure
one that draws characteristics & mechanisms from both the worldwide geographic area and the worldwide product divisional structure; transnational strategy; aim to achieve local responsiveness & global efficiency; employees accountable to more than 1 manager= difficult to be loyal to them all
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strategic network
a group of firms that has been formed to create value by participating in multiple cooperative arrangements; can be a source of competitive advantage when its operations create value that is difficult for competitors to duplicate & that members can't create by themselves
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strategic center firm
the 1 around which the network's cooperative relationships revolve; at the core or center of the strategic network (foundation for its structure); manages who does what, technology, & complex cooperative interactions among partners ;encourages sharing, ensures all prosper;
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strategic leadership
the ability to anticipate, envision, maintain flexibility, & empower others to create strategic change as necessary; means of planning & implementing strategies; must learn how to effectively influence human behavior, thoughts & feelings often in uncertain environments; be able to attract & manage human capital (most critical)
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top managment team
one composed of the key individuals who are responsible for selecting and implementing the firm's strategies; guard against CEO becoming arrogant, overconfident, feeling invincibile, & making poor strategic decisions
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heterogeneous top management team
one composed of individuals with different functional backgrounds, experience, gender, & education; leads to more alternatives & perspectives=better strategic decisions=produce higher firm performance
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internal managerial labor market
one that consists of a firm's opportunities for mangerial positions (career path alternatives) & the qualified employees within that firm; helps to build valuable firm-specific knowledge; lower turnover among exisiting personnel; sustains high performance
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external managerial labor market
the collection of managerial career opportunities & the qualified people who are external to the organization in which the opportunities exist; brings fresh insights, may energize the firm w/ innovative new ideas
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determining strategic direction
involves specifying the vision & strategy to achieve this vision over time; framed around (conditions=opportunities & threats) expected to be faced by the firm in the next 3-5 years; core ideology & an envisioned future
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competitive agility
an ability to act in a variety of competitively relevant ways
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competitive speed
an ability to act quickly when facing environmental & competitive pressures
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dynamic capability
to continuously develop current competencies and build new ones to outperform rivals
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human capital
refers to the knowledge and skills of a firm's entire workforce; core competencies are developed and used through this resource; develop & retain good ppl; invest to make sure they're happy, motivated, & successful; training
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social capital
involves relationships inside & outside the firm that help the firm accomplish tasks & create value for customers & shareholders; gov't & community; cooperation, trust; connections=more access to resources & capabilities leads to flexibility
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organizational culture
consists of a complex set of ideologies, symbols, & core values that are shared throughout the firm & influence the way business is conducted; helps regulate & control employee's behavior; effective communication & problem solving
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balanced scorecard
a framework firms can use to verify that they have established both strategic & financial controls to assess their performance; find balance between them to attain desired level of firm performance; evaluate effectiveness of their use
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