Study Guides (238,486)
Canada (115,176)
Commerce (450)
COMM 374 (1)

COMM 374 Theory Test Review Notes

11 Pages
Unlock Document

Queen's University
COMM 374
Susan Bartholomew

COMM 374 Theory Test Prep Class 2: Drivers of International Expansion and the Challenge of Distance Drivers of International Expansion - Knowledge/Technology Drivers - Ex. Technological Advantage, A need to gain more local and regional market knowledge - Competitive Drivers - Ex. Strong competition from S.E Asian firms - Efficiency and Cost Drivers - Ex. Low labor and land costs, producing on a global scale - Market Growth Drivers - Ex. Saturated Market, Strong growth in domestic consumption and export - Globalization of Customers - Ex. Downstream customers have increasingly located production bases to S.E Asia - Resource Drivers - Ex. Plenty of labor (and less costly) in Thailand - Government Drivers - Ex. Home Government (Export insurance guarantee allows export of French equipment at favourable financing rate) Host Government (Tax-free position for non-Japanese foreign direct investors for 5 years CAGE Framework of Distance -C ultural Distance - Ex. Different languages, ethnicities, religions and social norms -A dministrative or Political Distance - Ex. Absence of colonial ties, absence of shared monetary association, political unfriendliness, and institutional weakness COMM 374 Theory Test Prep -G eographic Distance - Ex. Actual geographic distance, physical remoteness, lack of sea or river access, size of country, weak transportation links, climate differences -E conomic Distance - Ex. Differences in consumer incomes, differences in costs and quality of; natural resource, financial resources, human resources, infrastructure, and information or knowledge Class 3: National Competitive Advantage Determinants of National Competitive Advantage - Firm Strategy, Structure and Rivalry - Ex. Strong R&D investment, vertically integrated, high standards - Factor Conditions - Ex. Highly skilled laborers, little space - Demand Conditions - Ex. High need for accuracy, value on miniaturization - Related and Supporting Industries - Ex. Products or services that are similar in nature to the host product - Government - Ex. Legalization of products, R&D Investment - Culture - Ex. Hierarchy, Value of handwriting-etiquette - Strategically Tapping Other Countries’ Advantages - Ex. Joint Ventures with successful host country firms - WHY IS THIS USEFUL TO FIRM STRATEGY? - Helps firms understand the advantages they can draw from home nation - Helps firms understand the sources of advantage competitors might draw from theirs - Helps firms understand which activities to perform at home base and which in other countries COMM 374 Theory Test Prep Clusters - Examples of Clusters for Firms - Government Research & Policy Institutes - Suppliers - Universities & Colleges - Firms in related and supporting industries - HOW DO CLUSTERS DRIVE COMPETITIVENESS? - Increased productivity of firms in area - increased pace of innovation - Stimulates creation of new businesses - Provides a firm greater scale and scope without losing flexibility - Mechanisms for Transferring Knowledge between Academia and Industry - Recruitment - Labour Mobility - Internships - Licensing - Joint University-firm research projects - Spin-Off Firms - Creation of spin-off firms can be stimulated by: - Technology transfer units of universities and research institutes - Natural market forces (Entrepreneurial scientists coupled with vibrant venture capital markets) Class 4: Industry Structure & Global Competition - Globalization of an Industry: - Industry structure and competitive dynamics can completely change – often in a few years - New entrants can usually change ‘the rules of the game’ more easily than established players - Formulating a strategic response to changing industry: - Aligning the positions of different stakeholders is key - For individual players, need to accept change and think outside the box COMM 374 Theory Test Prep - Ex. Global competition and strategic importance of new markets such as China and Japan places adaptability and flexibility at the forefront of key competencies of successful players - Management Instincts - Understanding of the firm’s history, size, experience, culture - Firm’s past international experience - Individual experience, knowledge and preferences - Gut instincts Class 5: International Market Selection -Key Lessons from Genicon Case - The type of data considered profoundly influences the perceived attractiveness of a foreign market - Considering a range of types of data is vital in analyzing international market attractiveness - Important to consider within country variance especially in large, diverse countries such as China and India, and target strategy accordingly -Determinants of a Market’s Strategic Importance: Strategic importance of a market is determined by: 1. Market potential and market attractiveness: • based on market size and growth but also qualitative elements like ease of doing business etc.; 2. Learning potential • Presence of sophisticated customers, strong competitors, active R&D cluster; rapid technological development, etc.; (recall Porter’s arguments!) COMM 374 Theory Test Prep -Firm’s Ability to Exploit the Market: A firm’s ability to exploit the market is determined by: • 1. Height of entry barriers – i.e. ability to exploit market increases as regulatory constraints and CAGE distance decrease (recall Ghemawat’s arguments!); – Firm’s own local-specific knowledge; 2. Intensity of local competition -A Framework for Selection of Markets: High Phased-in Entry; (narrow or regional focus Rapid Entry to start; or, Strategic beachhead first) importance of market Ignore for now Opportunistic Low entry Low Firm’s ability High to exploit market COMM 374 Theory Test Prep Class 7: Modes of Foreign Market Entry - Modes of Foreign Market Entry (How?) Decision 1: Export vs. Local Production? Decision 2: Degree of Ownership Control over Activities in Foreign Market:  Franchise? Licensing Agreement?  Manufacturing Contract?  Joint Venture?  Wholly owned subsidiary?  Merger /acquisition?  Greenfield subsidiary? - Issues to consider in decision to produce locally or export - Size of market and potential for scale economies - Shipping and tariff costs - Degree of customization required - Degree of local content requirements - JV vs. Wholly-owned Subsidiary – Issues to Consider: - Firm experience in region - CAGE distance between home and host cou
More Less

Related notes for COMM 374

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.