The Strategy of International Business

These flashcards cover key concepts from international business strategies, focusing on strategies for profitability and competitive advantages in global markets.

Global Strategy

A strategy that encompasses actions taken by firms to compete in international markets, focusing on profitability and market expansion.

Profitability

The rate of return a firm makes on its invested capital, indicating the firm's financial success.

Profit Growth

The percentage increase in net profits over time, reflecting a firm's capacity to expand its profits.

Value Creation

The measurement of the difference between a firm's costs of production and the perceived value by consumers, determining the price the firm can charge.

Porter’s Strategies

Michael Porter identified two main strategies for firms: low cost and differentiation as approaches to compete in the market.

Efficiency Frontier

A graphical representation showing all possible positions a firm can take regarding adding value and minimizing costs.

Location Economies

Cost advantages that firms realize by relocating value-creation activities to the most advantageous locations.

Experience Effects

Systematic reductions in production costs achieved through experience and increased cumulative output.

Transnational Strategy

A strategy aiming to achieve low costs while differentiating product offerings in response to local market demands.

Localization Strategy

A strategy that customizes products or services to fit the tastes and preferences of different national markets.

Global Standardization Strategy

A strategy focusing on realizing cost savings through economies of scale and minimizing local adaptation.

Cost Pressures

Factors requiring firms to lower the costs of value creation, often more intense in industries with commodity-type products.

Pressures for Local Responsiveness

Factors influencing the need to adjust products and services to match local conditions and preferences.

Value Chain

A model outlining the full range of activities that businesses engage in to bring a product or service to market.

Subsidiary Skills

Valuable skills that can be developed in foreign subsidiaries and leveraged across a firm's global network.

Competitive Advantage

The advantage that a firm has over its competitors, enabling it to generate greater sales or margins.

Core Competencies

Unique strengths or abilities that provide a firm with a competitive advantage in its industry.