IB exam 2
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. What would you like to do?
Inc. located in Cleveland, Ohio makes fireworks that are sold globally. This is a very competitive industry with most
production taking place in low-cost locations.
Which of the following strategic and operating decisions is this company
likely to deploy?
production and/or global outsourcing
of the above.
makes mobile phones, computers, tablets, etc. that are desired by customers
around the world. Which of the following
functions would Apple be most likely to outsource?
of the above
& Young, a global accounting firm, has a large network of global
subsidiaries that cater to local firms and to multinational subsidiaries. Which of the following strategic and
operating decisions is this company LEAST likely to deploy?
is not likely to deploy any of the above
or False. Boeing is more likely to use
shorter distribution channels than the family-owned Virginia based potato chip
maker, Route 11 Chips.
What is human resource management?
- activities an organization carries out to use its human resources effectively, including:
- human resource strategy
is international HRM important to the success
of the firm?
- is executed through
- are the linchpin to the firm’s
- organization architecture
- success in international business requires that HRM policies be congruent with
- the firm’s strategy
types of staffing policy?
- ethnocentric approach
- polycentric approach
- geocentric approach
How can firms reduce the rate of expatriate failure?
- failure rates can be reduced through better selection procedures
traits that predict expatriate success
- self orientation
- perceptual ability
How can firms use management development
as a strategic tool?
- development programs increase the skill levels of managers through:
•The rotation of managers through jobs
firms pay executives in different countries according to the prevailing
standards in each country, or should it equalize pay on a global basis?
- using a geocentric policy that want to develop an international cadre of
- managers must pay executives the same salary regardless of their country of
compensation packages include(5)
- foreign service premium
- of various types
should firms approach labor relations?
- HR function should try to promote harmony in relationships between the firm and
- local labor.
aspects of global marketing and R&D can
be performed so they
reduce the costs of value
value by better serving
- aspects of the marketing
- mix (the
- choices the firm offers to its targeted market):
- be adapted to fit best with a firm’s global strategy
it necessary to localize the marketing mix?
- •Most experts
- believe that while there is a trend towards global markets, cultural and
- economic differences among nations limit any trend toward global consumer tastes
- and preferences
- distinct groups of consumers whose purchasing behavior differs from others in
- important ways
does a country’s level of economic development influence marketing?
- in highly developed countries tend to demand a lot of extra performance
- attributes in their
How do differences in product and technical standards impact marketing decisions?
- differences in product and tech. standards force firms to customize the
- marketing mix
do distribution systems differ between countries?
- main differences between distribution systems are:
what distribution strategy should a firm choose?
should a firm communicate the attributes
of its product to prospective customers?
- Firms need to consider how to use the
- following communications channels in different markets:
advertising makes sense when
- has significant economic advantages
- segments are global
advertising isn’t appropriate when:
- differences among nations are significant
- differences in advertising regulations block the implementation of
- standardized advertising
should a firm price its product
in foreign markets
- price controls
a firm charge the same price everywhere,
or price its product on a market- by-market
- can maximize profits through price discrimination -
- charging consumers
- in different countries different prices for the same product
price discrimination to work
- firm must be able to keep national markets separate
- elasticities of demand must exist in different countries
should a firm configure its marketing
- versus customization is not an all or nothing concept
- •Most firms
- standardize some things and customize others
- about what to standardize and what to customize should be made after exploring
- the costs and benefits of each option
should a firm locate R&D?
- R&D is needed to adapt global products to local markets, it should be
- located where the needs for localization are greatest.
- R&D is for new product development, it should be located where:
Where should production activities be located?
- deciding where to locate production facilities, firms must consider:
When does it make sense to concentrate production at a few choice locations?
- Concentrated production makes sense
- costs are substantial
- minimum efficient scale of production is high
- manufacturing technologies are available (so one facility can make a lot of
- different stuff)
- Concentrated production doesn’t
- make sense when:
- fixed costs and the minimum efficient scale of production are relatively low
- flexible manufacturing technologies are not
product factors impact location decisions:
- value to weight ratio
- whether the product serves universal needs
There are two basic strategies for
locating manufacturing facilities
- them in the optimal location and serving the world market from there
- them in various regional or national locations that are close to major markets
hidden costs associated with foreign
Does the rationale for establishing a foreign production facility change?
- strategic role of foreign factories and the strategic advantage of a particular
- location can change over time
- factory initially established to make a standard product to serve a local
- market, or to take advantage of low cost inputs, can evolve into a facility
- with advanced design capabilities
- governmental regulations
- change and/or countries upgrade their factors of production the strategic
- advantage of a particular location can change
advantages of make decisions
- investments in highly specialized assets
- proprietary technology
- the scheduling of adjacent processes
advantages of buy decisions
- the firm greater flexibility
- help drive down the firm's cost structure
How can a just-in-time inventory process
help a firm?
- economizes on inventory holding costs by
- having materials arrive at a manufacturing plant just in time to enter the
- production process.
What is the role of information technology in supply chain management?
- the tracking of inputs
- the firm to optimize its production schedule
- the firm and its suppliers to communicate in real time
- the flow of paperwork between a firm and its suppliers
What do firms that want to export need
- wishing to export must:
- export opportunities
- a host of unanticipated problems associated with doing business in a foreign
- familiar with the mechanics of export and import financing
- where to get financing and export credit insurance
- how to deal with foreign exchange
are the benefits of exporting?
- benefits from exporting can be great--the rest
- of the world is a much larger market than the domestic market
What are the pitfalls facing exporters?
Common pitfalls for exporters include:
- understanding of competitive conditions
- lack of customization for local markets, poor distribution arrangements, bad
- promotional campaigns
- general underestimation of the differences and expertise required for foreign
- market penetration
- dealing with the tremendous paperwork and formalities involved
assistance can exporters get from export management companies?
- management companies -
- export specialists that act as the export marketing department or international
- department for client firms
- exporting operations for a firm with the understanding that the firm will take
- over operations after they are well established
- services with the understanding that the EMC will have continuing
- responsibility for selling the firm’s
What steps should exporters take to increase
their chances of success?
- hire an EMC to help identify opportunities and navigate paperwork and
- by focusing initially on just one or a few markets
- a foreign market on a fairly small scale in order to reduce the costs of any
- subsequent failures
can firms deal with the lack of trust that exists in export transactions?
- mechanisms for financing exports and imports have evolved in response to the
- lack of trust that exists in export transactions
How is payment actually made in an export transaction?
- a draft is an order written by an exporter instructing an importer, or an
- importer's agent, to pay a specified amount of money at a specified time
three purposes of bill of lading
- ØIt is
- a document of title
can exporters get financing help
- exporters can draw on two forms of government-backed assistance to help their
- export programs
- can get financing aid from the Export-Import Bank
- can get export credit insurance from the Foreign Credit Insurance Association
What alternatives do exporters have when conventional methods of payment are not
- can use countertrade when
- conventional means of payment are difficult, costly, or nonexistent
two types of countertrade
What are the pros and cons of countertrade?
- is a way for firms to finance an export deal when other means are not available
- that are unwilling to engage in countertrade
- may lose
- an export opportunity to a competitor that will
- may be required by the government of
- a country to which a firm is exporting goods or services
How can firms enter foreign markets?
- options include exports, licensing or franchising to host country firms, joint
- ventures with host country firms, or a wholly owned
- subsidiary in the host country
•The choice depends on:
- costs and trade barriers
- and economic risks
are the basic entry decisions for firms expanding internationally
- firm expanding internationally must decide:
- to enter them and on what scale
- How to
- enter them (the choice of entry mode
the ways firms can use to enter
- owned subsidiaries
Core competencies can involve:
a firm establish a wholly owned subsidiary in a country by building a subsidiary from
the ground up (greenfield strategy), or by acquiring an established enterprise in
the target market (acquisition
pon fit with firm’s global strategy
- firms to preempt their competitors
- be less risky than greenfield ventures
Why do acquisitions fail?
- firm overpays for the assets of the acquired firm
- is a clash between the cultures of the acquiring and acquired firm
- to realize synergies by integrating the operations of the acquired and
- acquiring entities run into roadblocks and take much longer than forecast
- is inadequate pre-acquisition screening
can firms reduce the problems associated with acquisitions?
- careful screening of the firm to be acquired
- •By moving rapidly once the firm is
- acquired to implement an integration plan
Why are greenfield ventures attractive?
- allow the firm to build the kind of subsidiary company
- that it wants
- greenfield ventures:
- risky because they have no proven track record
What actions can managers take to compete
more effectively in a global
Managers must consider:
- benefits of expanding into foreign markets
- strategies to pursue in foreign markets
- value of collaboration with global competitors
can firms increase profitability?
- creating value for the consumer
- •Value creation is measured by the difference between V
- (the price that the firm can charge for that product given competitive
- pressures) and C (the costs of producing that product)
- two basic strategies for creating value are:
that expand internationally can increase their profitability and profit growth
- markets where competitors lack similar competencies
- location economies
- experience curve effects
- valuable skills within the organization
for local responsiveness arise from:
- in consumer tastes and preferences
- in traditional practices and infrastructure
- in distribution channels
do the pressures for cost reductions and local responsiveness influence
a firm’s choice of strategy?
- use four basic strategies in global markets:
1. Global standardization
does a global standardization strategy make sense?
- A global
- standardization strategy focuses
- on increasing profitability and profit growth by reaping the cost reductions
- that come from economies of scale, learning effects, and location economies
the choice of strategy static?
- competition increases, international and localization strategies become less
- survive, firms may need to shift to a global standardization strategy or a
- transnational strategy in advance of competitors
are strategic alliances?
- agreements between potential or actual competitors
form a strategic alliance?
- alliances are attractive because they:
- •Facilitate entry into a foreign
- •Allow firms to share the fixed
- costs and risks of developing new products or processes
- •Bring together complementary skills
- and assets that neither partner could easily develop on its own
- •Can help establish technological
- standards for the industry that will benefit the firm
are the drawbacks of strategic alliances?
- alliances can give competitors low-cost routes to new technology and markets
- a firm is careful, it can give away more in a strategic alliance than it
How can firms increase the success of their alliances?
- international strategic alliances run into problems
- success of an alliance is a function of:
- The manner in which the alliance is managed
What would you like to do?
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