The Strategy of International Business

These flashcards cover key concepts from the lecture on international business strategy, including definitions, strategies, and factors influencing firms' global operations.

What is a global strategy in international business?

A global strategy refers to actions firms take to maximize profitability and achieve competitive advantage by expanding operations into international markets.

What are location economies?

Location economies arise from performing value creation activities in the optimal location for those activities, which can lower costs and help achieve a low-cost position.

What are the two primary strategies identified by Porter for value creation?

Porter's two strategies for value creation are low cost and differentiation.

What is the primary goal of a firm’s strategy according to the lecture?

The primary goal of a firm's strategy is to maximize the value of the firm for its owners and shareholders.

What does the experience curve refer to?

The experience curve refers to systematic reductions in production costs that occur over the life of a product.

Describe the transnational strategy.

A transnational strategy aims to achieve low costs while differentiating product offerings to account for local differences, fostering skills flow between subsidiaries.

What is the difference between globalization and localization strategies?

Globalization strategies focus on standardizing products for global markets, while localization strategies customize products to fit local tastes and preferences.

What pressures influence a firm's choice of strategy in the global marketplace?

Pressures for cost reductions and pressures for local responsiveness influence a firm's choice of strategy.

What is the role of core competencies in global expansion?

Core competencies allow firms to successfully transfer skills and capabilities to foreign markets, where competitors may lack comparable abilities.

How do firms achieve profitability and profit growth through international expansion?

Firms achieve profitability and profit growth by entering new markets, lowering costs through location economies, exploiting experience curve effects, and transferring valuable skills between subsidiaries.