International Business Strategies

Flashcards covering key concepts related to international business strategies and modes of market entry.

Reasons for entering foreign markets

1. Access to new customers; 2. Lower costs via economies of scale; 3. Access to low-cost production inputs; 4. Exploit core competencies; 5. Access resources & capabilities.

Complexity in strategy-making

Cultural and consumer differences, regulatory and political challenges, economic and currency fluctuations.

Modes of entry into foreign markets

1. Exporting; 2. Licensing; 3. Franchising; 4. Joint Ventures; 5. Wholly Owned Subsidiaries.

Global Strategy

Emphasizes standardized products and operations worldwide for economies of scale.

Multidomestic Strategy

Tailors products and operations for local markets, prioritizing responsiveness.

Transnational Strategy

Balances global integration with local responsiveness, aiming for efficiency and customization.

Exporting

Selling domestically produced goods in foreign markets, requiring minimal investment but offering limited control.

Licensing

Granting foreign companies rights to produce/sell a firm's products for royalties, involving low risk but may limit profits.

Franchising

Allowing foreign entities to operate under a company’s brand, enabling rapid expansion with quality control challenges.

Joint Ventures

Partnering with a local firm to share resources, risks, and profits, leveraging local expertise.

Wholly Owned Subsidiaries

Fully owned operations in foreign markets with maximum control but high capital investment.

Offensive Strategies

Strategies aimed at expanding market share at rivals' expense through various competitive tactics.

Blue-ocean strategy

Creating a new market segment to capture new demand, avoiding competition.

First-mover advantages

Benefits gained by being the first to enter a market, such as brand loyalty and scale economies.

Late-mover advantages

Benefits that may accrue to companies that enter a market after initial pioneers, often with lower costs and less risk.

Horizontal scope

The range of product and service segments a firm serves within its market.

Vertical scope

The extent of engagement in activities across an industry's entire value chain.

Outsourcing

Contracting out certain value chain activities to outside specialists or allies for efficiency.

Strategic alliance

A formal agreement between companies to work collaboratively toward strategic objectives.

Joint venture

A type of strategic alliance where an independent entity is established and jointly owned.

Political risks

Instability in governments and hostility towards foreign businesses affecting operations.

Economic risks

Instability in monetary systems and regulatory policies impacting business environments.

Greenfield venture

Establishing an independent business operation from the ground up in a foreign market.

Multinational Enterprise (MNE)

A company that produces goods or services in multiple countries.

International strategy

A strategy to compete in two or more countries simultaneously.

Cross-market subsidization

Supporting competitive actions in one market with resources from another market.

Corporate venturing

Developing new businesses from established operations, also called corporate entrepreneurship.

Transaction costs

The costs associated with completing a business agreement beyond the deal price.

Synergy

Creating additional value through the combined performance of related business activities.

Strategic fit

Opportunities for sharing resources and capabilities across businesses in similar value chains.