123456

studied byStudied by 1 person
0.0(0)
get a hint
hint

build-borrow-or-buy framework

1 / 139

encourage image

There's no tags or description

Looks like no one added any tags here yet for you.

140 Terms

1

build-borrow-or-buy framework

How firms achieve growth

New cards
2

Build

internal organic growth through development

New cards
3

Borrow

external growth through a contract/strategic alliance

New cards
4

Buy

External growth through acquiring new resources, capabilities, and competencies

New cards
5

Resource bundle

When acquiring a firm, you buy this and it forms the basis of a competitive advantage

New cards
6

relevancy, tradability, closeness, integration

Main Issues in the Build-Borrow-or-Buy Framework

New cards
7

Relevant

Internal resources are _________ -They are similar to those the firm needs to develop. -They are superior to those of competitors in the targeted area

New cards
8

Develop internally

If the firm's internal resources are highly relevant, what should the firm do?

New cards
9

Borrowed

If a resource is highly tradable, then it should be ______

New cards
10

Strategic alliance, through an equity alliance or joint venture

If a resource is not highly tradeable, then it should be _______

New cards
11

Equity alliances and joint ventures

Moderate closeness is achieved through ______ & ______ and enables resource borrowing

New cards
12

Mergers and acquisitions

are the most costly, complex, and difficult to reverse strategic option. This implies that only if extreme closeness to the resource partner is necessary to understand and obtain its underlying knowledge

New cards
13

low relevancy, low tradability, and high need for closeness

3 conditions needed when integrating the target firm through Mergers and Acquisitions

New cards
14

Strategic Alliance

a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services

New cards
15

Strengthen Competitive Position

Why do firms enter Strategic Alliances to *change industry structure to the firm's favor *influence industry standards

New cards
16

real-options perspective

approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time

New cards
17

co-opetition strategy

cooperation by competitors to achieve a strategic objective

New cards
18

Strategic Alliances

What can help influence industry standards?

New cards
19

non-equity alliance

Partnership based on contracts between firms. The most frequent forms are supply agreements, distribution agreements, and licensing agreements.

New cards
20

equity alliance

One partner takes partial ownership in the other

New cards
21

joint venture

a standalone organization created and jointly owned by two or more parent companies

New cards
22

Non equity, joint venture

The most frequent alliance type is ____ and the least frequent is _____

New cards
23

Post-Formation Alliance Management

To create VRIO resource combinations: Build capability through repeated experiences over time repeated alliance exposure improves learning

New cards
24

Merger

the joining of two independent companies to form a combined entity

New cards
25

acquisition

the purchase of a company by another company

New cards
26

takeover

An acquisition in which the target firm did not solicit the acquiring firm's bid for outright ownership.

New cards
27

Benefits of M&A's

Reduction in competitive intensity, lower costs and increased differentation

New cards
28

Access to new markets and distribution channels & Access to new capabilities and competencies

2 other reasons for M&A's

New cards
29

Synergies

when assets are worth more when used in conjunction with each other than when they are used separately

New cards
30

managerial hubris

a form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary

New cards
31

Destory

Deals, on average are more likely to create or destroy value?

New cards
32

50%

How many M&As fail? %

New cards
33

Overpayment

Reason why M&As fail, Ineffective due diligence may result in paying an excessive premium for the target company. Managerial hubris exacerbates this problem

New cards
34

The winner's curse

The most optimistic bidder usually over-estimates the true value of the firm

New cards
35

To grow firms must:

-Possess VRIO resources, capabilities, and/or core competencies. -Leverage existing resources often in conjunction with partners and build new ones.

New cards
36

Strategic alliances, M&As

Are the key tools strategists use to grow and compete sustainably

New cards
37

Globalization

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

New cards
38

Global Strategy

Part of a firm's corporate strategy to: •Gain and sustain a competitive advantage. •Compete against foreign and domestic companies.

New cards
39

Foreign Direct Investment

Investments in value chain activities abroad

New cards
40

Multinational Enterprise (MNE)

Deploys resources and capabilities in the procurement, production, and distribution in at least two countries

New cards
41

Globalization 1.0 (1900-1941)

-Sales, operations, and some procurement -Strategy flowed from HQ to international sites

New cards
42

Globalization 2.0 (1945-2000)

-To reconstruct damage from the war -Focus on European countries, Japan, and Australia -Greater local-responsiveness -HQ set goals, international sites influenced tactics

New cards
43

Globalization 3.0 (2000-present)

  • Business function locations are based on costs, capabilities, and PESTEL factors

  • Companies can operate 24/7, 365 days a year

New cards
44

10-25% total

The world is only semi-globalized, by what %?

New cards
45

Advantages of going global

-gain access to a larger market -gain access to low-cost input factors -develop new competencies

New cards
46

Gain access to a larger market

Helps MNEs with economies of scale and scope

New cards
47

Gain Access to Low-Cost Input Factors

  • helps MNEs that pursue a low-cost leadership strategy

  • examples of low-cost raw materials:

  • lumber, iron ore, oil, and coal

-Was a key driver of globalizaiton 1.0 and 2. *during globalization 3.0, firms benefit from lower labor costs in manufacturing and services

New cards
48

Develop New Competencies

-helps MNEs that pursue a differentiation strategy

  • foreign direct investments provide access to: *communities of learning: often contained in specific geographic regions *location economies: benefits from locating value chain activities in optimal geographies

New cards
49

Disadvantages of Going Global

-liability of foreignness -loss of reputation -loss of intellectual property

New cards
50

Liability of Foreignness

-Unfamiliar cultural environment -Unfamiliar economic environment

New cards
51

Loss of Reputation

  • one of the most valuable resources that firm may possess

  • innovation reputation

  • can be due to low wages, long hours, and poor working and living conditions overseas

  • local government may be corrupt -minimum safety standards may not be enforceable

New cards
52

Loss of Intellectual Property

It can be difficult to protect IP in foreign markets. •Particularly software, movies, and music and copyrights

New cards
53

CAGE distance framework

  • Guides MNE decisions on which countries to enter Greater distance= more difficult to expand internationally

New cards
54

cultural, administrative, geographic, economic

What does CAGE stand for?

New cards
55

Culture Distance

Disparity between a firm's home and host country, specifically social norms and morals, beliefs, and values.

New cards
56

Administrative & Political Distance

Captured in factors such as: -Shared monetary or political associations -Political hostilities -Weak or strong legal and financial institutions Ex. Countries in EU have low distance here

New cards
57

Geographic Distance

  • does not imply only physical distance

  • includes the following attributes: *physical size (canada vs. singapore)

  • whitin-country distances to its borders *the countrys topography *time zones *whether the countries are contiguous to one another *access to waterways and the ocean

New cards
58

Economic Distance

-Wealth and per capita income of consumers -Wealthy countries tend to engage in more cross-border trade

New cards
59

Power distance

degree to which the less powerful members of a society accept and expect that power is distributed unequally

New cards
60

Individualism

preference for a loosely-knit social framework in which individuals are expected to take care of only themselves and their immediate families

New cards
61

Masculinity-feminity

preference in society for achievement, heroism, assertiveness and material rewards for success versus cooperation, caring, modest societies

New cards
62

Uncertainty avoidance

degree to which the members of a society feel uncomfortable with uncertainty and ambiguity

New cards
63

Long-term orientation

degree to which members of society focus on future challenges versus current challenges

New cards
64

Indulgence

degree to which society allows relatively free gratification of basic and natural human drives related to enjoying life and having fun

New cards
65

Contract-Based Approach (Exporting)

Least risky way of investment and control

New cards
66

wholly owned subsidiary (Acquisition, Greenfield)

Most risky way of investment and control

New cards
67

Exporting

Involves using domestic plants as a production base for exporting to foreign markets, excellent initial strategy to pursue international sales

New cards
68

Franchising and licensing

Often used when. firm has valuable resources but does not wish to commit their own resource to enter foreign markets

New cards
69

Joint Ventures & Equity Alliances

2 alliances that help with foreign companies to -Enter a foreign market -Strengthen a firm's competitiveness in world markets

New cards
70

Greenfield investment

A form of foreign direct investment where a company establishes operations in another country by constructing new facilities from scratch

New cards
71

Cost Reductions vs. Local Responsiveness

Two opposing forces in global competition: •_: key competitive weapon. •_: tailoring to specific preferences.

New cards
72

integration-responsiveness framework

Used to classify global strategies into four types: -International Strategy -Multidomestic Strategy -Global-Standardization Strategy -Transnational Strategy

New cards
73

International Strategy

Sells the same products or services in both domestic and foreign markets Ex. Harley Davidson in China

New cards
74

Multidomestic Strategy

-Used to try and maximize local responsiveness -MNEs hope that local consumers will perceive their products or services as local ones Ex. Kit Kat adapts different products for different markets according to consumer preferences

New cards
75

Global-Standardization Strategy

Attempts to reap significant: -Economies of scale & location economies -Through global division of labor where capabilities are at the lowest cost Ex. Apple sells the same product everywhere, and produces it in China where labor costs are the lowest

New cards
76

Transnational Strategy

strategy that attempts to combine the benefits of a localization strategy (high local responsiveness) with those of a global-standardization strategy (lowest-cost position attainable) Ex. Unilever focuses on different brands for different regions but has one corporate identity

New cards
77

Porter's Diamond Framework

It helps explain why some nations outperform others in certain industries

New cards
78

Factor Conditions

a country's endowments in terms of natural, human, and other resources, "home grown resouces"

New cards
79

Demand Conditions

the nature of home-market demand for the industry's product or service Ex. Denmark is known for environmental awareness, leads the world in water pollution control

New cards
80

Competitive Intensity

Highly competitive environments tend to stimulate firms to outperform others. Example: Fierce competition for German car companies helped prepare them for global competition

New cards
81

Related and Supporting Industry

Leadership in related and supporting industries fosters world-class competitors in downstream industry. Example: Switzerland's strong chemicals industry allowed it to grow into a hub for pharmaceuticals

New cards
82

Create and destroy value

What can innovation do to value?

New cards
83

idea, invention, innovation, imitation

Four I's

New cards
84

Idea

Abstract concepts or research findings

New cards
85

Invention

the transformation of an idea into a new product or process, or the modification and recombination of existing ones

New cards
86

Innovation

the commercialization of an invention

New cards
87

Imitation

copying a successful innovation

New cards
88

Entrepreneurship

The process by which change agents (entrepreneurs) undertake economic risk to innovate.

New cards
89

The industry Lifecycle

introduction, growth, shakeout, maturity, decline

New cards
90

Introduction Stage

-Core competency: research and development. -Necessary to create a product category that will attract customers -Barriers are high

New cards
91

Growth Stage

-Demand increases rapidly -Product service standards emerge

New cards
92

Product innovation

new or recombined aspects embodied in new products

New cards
93

Process innovation

New ways to produce a product

New cards
94

Shakeout Stage

-The rate of growth declines. -Firms begin to intensely compete. -Price is an important competitive weapon.

New cards
95

Maturity Stage

-Only a few large firms remain. -Demand: replacement or repeat purchases -Market has reached maximum size. -Industry growth is zero or negative Ex. Domestic airline industry

New cards
96

Decline Stage

Demand falls rapidly. •Innovation efforts cease. •If a breakthrough emerges, it leads to a new industry or resets the life cycle. •Strong pressure on prices. Ex. Tobacco Industry, DVD rentals

New cards
97

Crossing-the-Chasm Framework

shows how each stage of the industry life cycle is dominated by a different customer group

New cards
98

Technology Enthusiats

-Enter the market during the introductory stage. -Smallest market segment, 2.5% of the total market potential. -Proactively pursue new technology. -Enjoy using beta versions. Tinker with product

New cards
99

Early Adopters

-Enter the market during the growth stage. -Demand is driven by imagination and creativity.

New cards
100

early majority

-Enter the market during the shakeout stage -This group is key to catching the growth wave.

New cards

Explore top notes

note Note
studied byStudied by 160 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 17 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 265 people
Updated ... ago
4.1 Stars(7)
note Note
studied byStudied by 11 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 6 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 2 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 19 people
Updated ... ago
5.0 Stars(3)
note Note
studied byStudied by 1806 people
Updated ... ago
4.7 Stars(11)

Explore top flashcards

flashcards Flashcard126 terms
studied byStudied by 2 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard28 terms
studied byStudied by 5 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard24 terms
studied byStudied by 20 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard97 terms
studied byStudied by 42 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard32 terms
studied byStudied by 5 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard23 terms
studied byStudied by 2 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard335 terms
studied byStudied by 11 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard240 terms
studied byStudied by 161 people
Updated ... ago
4.5 Stars(2)