CHAPTER 10 - Global Strategy: Competing Around the World

National culture, according to Geert Hofstede, can be defined as different groups' distinctive

"programming of the mind"

Pankaj Ghemawat introduced the

CAGE distance framework

What is true about economic distance?

Wealthy companies benefit from trade when their competitive advantage is based on economies of experience, scale, and scope, and that wealthy countries tend to trade with other wealthy countries.

Calculating cultural distance involves comparing the cultures of

a targeted host country and a firms home country

MNEs pursuing a __________ ocean strategy also tend to pursue a transnational strategy

blue

Pursuing international expansion can

enhance a firms competitive advantage

By making investments in value chain activities abroad, MNEs engage in

foreign direct investment (FDI)

attempt 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.

global-standardization strategy

is a process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs.

globalization

Mount Mountain is a manufacturer of outdoor gear and apparel. It uses American sizing and standards for its apparel and gear across all markets. Which strategy is Mount Mountain adhering to?

international

is essentially a strategy in which a company sells the same products or services in both domestic and foreign markets

international strategy

What are benefits of a transnational strategy

it harnesses economies of scale and promotes global learning and the diffusion of best practices and innovations

What best defines national competitive advantage?

it is the extent to which a country can compete in international markets

Firms located in regional clusters benefit from

knowledge spillover

A benefit of an international strategy is

leveraging core competencies

This liability consists of the additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances

liability of foreignness

benefits from locating value chain activities in optimal geographies for a specific activity, wherever that may be

location economies

On the downside, a __________ strategy is costly and inefficient because it requires the duplication of key business functions across multiple countries.

multidomestic

The integration-responsiveness framework suggests that companies facing high pressure for local responsiveness and low pressure for cost reduction should follow a(n) ___________ strategy.

multidomestic

attempt to maximize local responsiveness, hoping that local consumers will perceive their products or services as local ones.

multidomestic strateg

a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries.

multinational enterprise (MNE)

When multinationals draw on multiple innovation hubs that all have equal status, they pursue a

polycentric innovation strategy

In a global-standardization strategy, the main competitive element is

reduced cost

In the global economy, according to Porter, competitive advantages increasingly exist in ____________, such as Silicon Valley.

regional geographic clusters

What are the factors that help define administrative and political distances?

shared monetary associations, political hostilities, and the strength of financial institutions

A multinational enterprise would likely be motivated to pursue a global-standardization strategy in order to

take advantage of economies of scale and take advantage of location economies

What are among the primary considerations when determining the mode in which a firm enters a foreign market?

the desired level of control over foreign operations and the degree of investment

The goal of the WTO is

to help companies conduct their business across borders based on multinational treaties that are negotiated and signed by its 164 member nations.

attempt to combine the benefits of a localization strategy (high local responsiveness) with those of a global-standardization strategy (lowest-cost position attainable). This strategy arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions.

transnational strategy

CAGE is an acronym for different kinds of distance:

▪ Cultural. ▪ Administrative and political. ▪ Geographic. ▪ Economic.

Disadvantages to going global include

▪ Liability of foreignness. ▪ Loss of reputation. ▪ Loss of intellectual property.