MGMT 449 Final - Chapter 07

Flashcards covering key concepts from the International Strategy lecture.

What does globalization refer to?

The rise of market capitalization around the world and the increase in international exchanges, including trade in goods and services.

What are the four elements of Michael Porter's diamond of national advantage?

Factor endowments, demand conditions, related and supporting industries, firm strategy, structure, and rivalry.

What are factor endowments in terms of a nation’s competitiveness?

Factors of production such as land, capital, and labor that must be industry and firm specific.

Why are demand conditions important for a nation's competitiveness?

Demanding consumers drive firms to meet high standards, upgrade products, and innovate.

What role do related and supporting industries play in a nation’s competitiveness?

They enable firms to manage inputs effectively, reduce costs, and promote innovation and collaboration.

What is a potential benefit of becoming a multinational firm?

Increase size of potential markets and attain economies of scale.

What are some risks faced by multinational firms?

Political risk, economic risk, currency risk, and management risk.

How can multinational firms manage economic risks?

By global dispersion of value chains through outsourcing and offshoring.

What is the main focus of a global strategy?

Lowering costs through centralized competitive strategy and standardized products.

What distinguishes a multidomestic strategy?

It emphasizes local adaptation of products and services and decentralizes decision-making.

What is a transnational strategy?

It seeks global competitiveness through trade-offs between efficiency and local adaptation.

What factors should companies consider before rushing into globalization?

Distance, language, culture, economic systems, and trading blocs.

What are the four entry modes for international market expansion?

Exporting, licensing or franchising, strategic alliances or joint ventures, and wholly-owned subsidiaries.