Management 471 chapter 10 definitions
multinational enterprise
a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries
CAGE distance framework
a decision framework based on the relative distance between home and a foreign target country along four dimensions: cultural distance, administrative and political distance, geographic distance, geographic distance, and economic distance
foreign direct investment
a firm's investments in value chain activities abroad
liability of foreignness
additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances
globalization hypothesis
assumption that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous
death-of-distance hypothesis
assumption that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to sources inputs globally
location economies
benefits from locating value chain activities in the world's optimal geographies for a specific activity, wherever that may be
cultural distance
cultural disparity between an internationally expanding firm's home country and its targeted host country
global strategy
part of a firm's corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world
global-standardization strategy
strategy attempting to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost
integration-responsiveness framework
strategy framework that juxtaposes the pressures an MNE faces for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally: international strategy, multi domestic strategy, global-standardization strategy, and transnational strategy
multidomestic strategy
strategy pursued by MNEs that attempts to maximize local responsiveness, with the intent that local consumers will perceive them to be domestic companies the strategy arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions
transnational strategy
strategy that attempts to combine the benefits of a localization strategy with those of a global-standardization strategy
international strategy
strategy that involves leveraging home-based core competencies by selling the same products or services in both domestic and foreign markets; advantageous when the MNE faces low pressures for both local responsiveness and cost reductions
national culture
the collective mental and emotional "programming of the mind" that differentiates human groups
local responsiveness
the need to tailor product and service offerings to fit local consumer preferences and host-country requirements; generally entails higher costs
globalization
the process of closer integration and exchange between countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs
national competitive advantage
world leadership in specific industries