Business Strategy Ch.10

Power-distance dimension

Dimension of culture that focuses on how a society deals with inequality among people in terms of physical intellectual capabilities.

Masculinity-femininity dimension

Dimension of culture that focuses on the relationship between genders and its relation to an individual's role at work and in society.

Individualism dimension

Dimension of culture that focuses on the relationship between individuals in a society, particularly the relationship between individual and collective pursuits.

Transnational Strategy

Strategy that attempts to combine the benefits of a localization strategy. Sometimes called, glocalization.

Porter's Framework

1. Factor conditions 2. Demand conditions 3. Competitive intensity in a focal industry 4. Related and supporting industries/complementors

Reasons firms expand abroad:

1. Gain access to a larger market 2. Gain access to low-cost input factors 3. Develop new competencies

High pressure for cost reductions

1. International Strategy 2. Localization Strategy 3. Global-Standardization Strategy 4. Transnational Strategy

Level factors

1. National institutions 2. National culture

Multinational enterprise

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

Foreign direct investment

A firm's investments in value-chain activities abroad.

Global strategy

A firm's strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world.

Relational cluster

A group of interconnected companies and institutions in a specific industry, located near each other geographically.

Knowledge spillover

A type of positive externality that is regionally constrained.

Liability of foreignness

Additional costs of doing business in an unfamiliar cultural and economic environment.

Globalization hypothesis

Assumption that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogeneous.

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 source inputs globally.

Location economies

Benefits from locating value-chain activities in the world's optimal geographies for a specific activity.

Cultural distance

Cultural disparity between and internationally expanding firm's home country and its targeted host country.

Uncertainty-avoidance dimension

Dimension of culture that focuses on societal differences in tolerance toward ambiguity and uncertainty.

Globalization

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

Global-Standardization Strategy

Strategy attempting to reap significant economies of scale and location economies by pursing a global division of labor.

Integration responsiveness framework

Strategy framework that juxtaposes that pressures an MNE faces for cost reductions and local responsiveness to derive four different strategies.

Localization Strategy

Strategy pursued by MNE's that attempts to maximize local responsiveness, with the intent that local consumers will perceive.

International Strategy

Strategy that involves leveraging home-based core competencies by selling the same products or services in both domestic and foreign markets.

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 cost.

National competitive advantage

World leadership in specific industries.