Exam 13: The Strategy of International Business

As competition intensifies,global standardization strategies and transnational strategies tend to become less viable,and managers need to orientate their companies toward either an international strategy or a localization strategy.

The amount of value a firm creates is measured by the difference between its costs of production and the price that it charges for its products.

The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer.This is because:

In a multinational enterprise,skills are always generated at the headquarters location and are then dispersed to the rest of the organization.

When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized,companies create:

Economies that arise from performing a value creation activity in the optimal location are known as location economies.

Two types of competitive pressure that affect the ability of multinational enterprises to compete in the global marketplace are pressure for cost reductions and pressure for local responsiveness.

What is strategy? How does strategy relate to a firm's profitability?

What are learning effects? When are learning effects most significant?

Which of the following is an example of a primary activity in a firm's value chain?

What is a core competence? Why is it essential to the success of the firm?

A firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a(n)_____ strategy.

Consider a transnational strategy.Why would a firm choose this strategic alternative? What are the disadvantages of this strategy?

How can a firm increase its profitability?

The success of many multinational corporations is based not just upon the goods or services that they sell in foreign nations,but also upon the core competencies that underlie the development,production,and marketing of those goods or services.

Discuss Michael Porter's interpretation of value creation and competitive advantage.

What is the difference between profitability and profit growth?

How can firms successfully leverage the skills developed at the subsidiary level?

Support activities include the design,creation,and delivery of a product.

A firm's strategy can be defined as the actions that managers take to attain the goals of the firm.