bus int
An expatriate's total compensation package can be as much as ______ times what he or she would cost the firm in a home-country posting. 3 5 10 7
3
Profit Growth
Amount net profits increase over time
A firm considering foreign expansion must make three basic decisions. Which of the following is not one of those three? On what scale should it consider entering? Are product lines wide and deep enough with sufficient inventories? When should markets be entered? Which markets to enter?
Are product lines wide and deep enough with sufficient inventories?
An often-overlooked element in the training and development of expatriate managers is how to prepare them for reentry-repatriation. Research and practice show: A. skills and experience in the expatriate assignment are highly valued and actively cultivated by the organization. B. good repatriation training should be handled at the functional level to capture the essential skills. C. the majority of returning expatriates didn't know what their positions would be when they returned. D. expatriates generally return to their old jobs or a similar position.
C. the majority of returning expatriates didn't know what their positions would be when they returned.
There is a trend toward the _______ of international labor relations
Centralization
Which of the following is not considered part of an organization's architecture? Incentives People Communications infrastructure Organizational structure
Communications infrastructure
The arguments for _________________ production at a few choice locations are strong when fixed costs are substantial, the minimum efficient scale of production is high, and flexible technologies are not available.
Concentrating
Pressures to be locally responsive arise from differences in
Consumer tastes and preferences Host government demands Infrastructure and traditional practices Distribution channels
A firm's performance appraisal systems are considered an important part of the firm's _________________ element, which is a central component of its organizational architecture.
Control
Which of the following is not one of the challenges small to medium-sized businesses face in exporting? Identifying foreign market opportunities Developing the added production capacity to support exporting Learning the mechanics of export and import financing Addressing the problems of currencies that are not freely convertible
Developing the added production capacity to support exporting
2 most effective strategies to increasing profits
Differentiation Low cost
First Mover Advantage
Establish strong brand name, build sales vol/ride experience curve early, switching costs
4 Ways International firms can increase profits through global expantion
Expand the market Realize location economies Realize Greater cost economies from experience effects Dispersion of Skills
Profit Growth increases through
Expanding in existing market & Expanding Internationally
A polycentric staffing policy can lead to cultural myopia, the firm's failure to understand host-country cultural differences that require different approaches to marketing and management.
F
Firms pursuing a global standardization strategy attempt to create value by transferring core competencies from home to foreign subsidiaries.
F
Historically, most outsourcing decisions have involved the production of service activities.
F
In competitive global markets, pressures for cost reduction can be particularly intense in industries that produce service-type products.
F
Processes are the manner in which decisions are made and work is performed within an organization, and the processes include the location of decision-making responsibilities.
F
Source effects and country of origin effects always have a negative impact on the firm.
F
Total quality management is a philosophy and approach that grew out of Six Sigma.
F
What has made the IASB effective is its ability to enforce its international accounting standards.
F
Firms use ________________ to circumvent host-country restrictions on remittance of funds and for tax advantages.
Fronting Loans
When a firm focuses on cost reductions through a variety of efforts including economies of scale, with little customization of products, the firm uses which kind of strategy?
Global standardization
Success of firms deciding to expand internationally depends on:
Goods and services sold by company (match) Firms core competencies
To make it easier for headquarters management to compare the performance of subsidiaries throughout the world, subsidiaries usually submit statements in the "corporate currency," which is generally:
Home Currency
Secondary Activities
Human Resources Information systems Logistics
These two strategies usually grow into Global Standardization or Transnational
International, Local customization
Small-scale entry
Learn while restricting exposure, adapt to market, learn regulation/politics
4 basic strategies firms use to compete in global markets
Localization International Global Standardization Transnational
Argues firms must choose between low costs and differenciation
Michael Porter
Organizational Architecture includes:
Organizational structure Control systems and incentives Processes, organizational culture, and people
A _________________ is the most common method by which firms transfer funds from foreign subsidiaries to the parent company, though there is great variability depending on tax regulations, for exchange risk, etc.
Payment of Dividends
First Mover disadvantages
Pioneering costs, Promoting costs/educating consumers
Factors a firm considers before choosing mode of entry
Political risks Economic risks Trade barriers Transportation costs Firm strategy Costs
Favorable markets
Politically stable, low inflation, free markets, low private sector debt, new product
Unfavorable markets
Politically unstable, high debt & borrowing, mixed or command economies
Transnational
Pressure on cost: High Pressure on local responsiveness: High accomplish low costs which differentiating products
Global standardization
Pressure on cost: High Pressure on local responsiveness: Low Economies of scale, location and learning economies
Localization
Pressure on cost: Low Pressure on local responsiveness: High customized products to match local taste
International
Pressure on cost: Low Pressure on local responsiveness: Low Initially produced domestically then exported. Uses low cost facilities in other nations
_________________________ arise from national differences in consumer tastes and preferences, infrastructure, accepted business practices, distribution channels, and host-government demands.
Pressures for local responsiveness
Enterprise Valuation includes:
Profitability and Profit growth
Primary activities
R&D Production Marketing and Sales Customer Service
Profitability
Rate of return a firm makes on invested caiptal
A firm's strategy can be defined as the actions that managers take to maximize the goals of the firm for its owner subject to the very important constraint that this is done in a legal, ethical, and socially responsible manner.
T
Accounting standards define what useful information is, and auditing standards specify the technical process by which an independent person gathers evidence for determining if financial accounts conform to standards and if they are reliable.
T
Although there is evidence that tastes and preferences are becoming more cosmopolitan, the global culture suggested by Theodore Levitt and convergence theory is still a long way off.
T
An ethnocentric staffing policy is one in which all key management positions are filled by parent-country nationals.
T
Capital budgeting is the technique financial managers use to try to quantify the benefits, costs, and risks of an investment.
T
Establishing a strong brand name and preempting rivals is a key first-mover advantage.
T
Evaluation of managers running subsidiaries should consider how hostile or benign the country's environment is for that business.
T
Failure rates for American expatriates sent to developing countries run as high as 70 percent.
T
Firms that pursue a transnational strategy are trying to simultaneously achieve low costs through location economies, economies of scale, and learning effects.
T
For the novice exporter, it makes sense to initially focus on one or two markets.
T
Foreign production facilities have taken on much greater strategic roles because of the improved communications and education levels of the countries' populations.
T
In order to realize all major plant-level scale economies, a plant must operate at the minimum efficient scale of output.
T
Market segments that transcend national borders encourage international businesses to pursue global strategies.
T
The Ex-Im Bank is an independent agency of the U.S. government that provides financing aid that facilitates exports, imports, and the exchange of commodities between the U.S. and other countries.
T
The great strength of a knowledge network is that it can be used as a nonbureaucratic conduit for knowledge flows within a multinational organization.
T
The need for coordination is greatest in transnational firms.
T
The skills within a firm that competitors cannot easily match or imitate are the firm's core competencies.
T
Using a greenfield strategy means building a wholly owned subsidiary in another country from the ground up.
T
_____ provides coverage against commercial risks and political risks to American firms doing business in foreign markets.
The Foreign Credit Insurance Association
Value creation is
The Value minus the cost
Which of the following is not one of the advantages of acquisitions? They are relatively quick to execute. They do not require a significant amount of headquarters involvement. They are less risky than a greenfield investment. They may preempt competitors.
They do not require a significant amount of headquarters involvement.
A firm's ____________ is measured by the difference between the value of a product or service to the average customer and the cost of production per unit.
Value Creation
Profitability can be increased through
Value creation & Reducing costs
three dimensions of organizational structure
Vertical, Horizontal, and integrated
decisions a firm makes to expand internationally
Which markets to enter When to enter these markets and on what scale which entry mode to use
Value can be created by
adding more features
Production and logistics can have particular importance for the international business by being able to accommodate demands for local responsiveness and ___________________.
being able to respond quickly to shifts in customer demand
Export management companies:
can help firms launch their own export departments or accept continuing responsibility for exporting operations.
Among the arguments for centralization are that it can facilitate coordination, it can help ensure decisions are consistent with company objectives, and ______________________.
centralization can avoid duplication of efforts
Although almost all organizations suffer from inertia and resistance to change, the complexity and global spread of many multinationals make it particularly difficult for them to ______________________.
change their strategy and architecture to match new organizational realities
cost reductions pressures are the greatest when
commodities serve universal need consumers are powerful and face low switching costs major competitors are located in low cost areas persistent excess supply
Competitive pressures international firms for
cost reductions locally responsive
Vertical differentiation
defines where decision making power is located Centralized vs. Decentralized
After deciding to move production back to the United States, some international business have found they should have looked beyond pay rates and paid closer attention to _________________________ before deciding whether to outsource activities to foreign locations.
employee productivity
Centralization
facilitates coordination, ensures decisions match goals, avoids duplication and allows managers to institute organizational change
The _____________ of value creation activities is characterized by different stages of the value chain being dispersed to those locations around the globe where perceived value is maximized or where the costs of creation are minimized.
global web
Currency depreciation can transform a country from a _____ to a ______.
high cost manufacturing location; low cost manufacturing location
One way to coordinate units of a firm is through centralization, but if the units are large, diverse or geographically dispersed, the firm may instead use formal and informal __________________.
integrating mechanisms
The ________________________ has caused problems for investors trying to identify a firm's net worth and for international businesses trying to assess the financial positions of customers, suppliers and competitors.
lack of comparability among national accounting and auditing standards
____most important element of firm followed by ____
people, incentives
Although capital budgeting seems straightforward, the international firm's use will be complicated by the connection between cash flows to the parent and the source of financing, the distinctions between cash flows to the project and cash flows to the parent, and _______________________________. A. the use of different calendars which can alter decisions about timing of investments and returns B. political and economic risks, including foreign exchange risk, which can change the value of a foreign investment C. differences in accounting conventions D. concerns about how profits will be returned to the parent
political and economic risks, including foreign exchange risk, which can change the value of a foreign investment
Efficiency Froteir
represents maximum efficiency between differentiation and low cost strategies
Once a factory has been established and skills have been accumulating, managers of an international business should:
resist the temptation to relocate because an underlying variable like wage rate might rise.
Four factors a firm must consider in selecting an appropriate distribution strategy are:
retail concentration, channel length, channel exclusivity, and channel quality.
Two conditions are necessary for profitable price discrimination:
separate national markets and different price elasticities of demand.
Dispersion of skill is
taking advantage of skills developed abroad and transferring them somewhere else in firm
In today's world, competition is as much about _________________ as anything else, and its "creative destruction" makes it critical that firms stay on the leading edge to succeed.
technological innovation
Location economies are:
the economies achieved by performing value creation activities in the optimal location, transportation costs, and trade barriers permitting.
When marketers in an international business are segmenting markets in foreign countries, they must be aware of two major issues: the differences between countries in the structure of market segments and ___________.
the existence of segments that transcend national borders
The systematic reduction in production costs that have been observed to occur over the life of a product is called:
the experience curve.
For a firm to be successful, the firm's strategy must be consistent with the environment in which the firm operates and __________________.
the firm's organization architecture must be consistent with its strategy
Joint ventures share disadvantages with other forms of entry, including potential loss of proprietary technology and know-how and the inability to realize experience curve or location economies. One distinct disadvantage is that:
the shared ownership agreement can lead to conflicts for control among the investing firms.
Superior enterprise profitability requires that three conditions be fulfilled: the firm's organizational architecture must be internally consistent, the organizational architecture must match or fit the strategy of the firm, and ________________________.
the strategy and architecture of the firm must make sense given the competitive conditions in the market
When there are many competitors: Elasticity?
there will be a high elasticity of demand.
A product's value-to-weight ratio affects ____________ costs, and it is a major product factor in considering where to locate production facilities.
transportation
