IB 3101- Midterm Exam Guide - Comprehensive Notes for the exam ( 25 pages long!)

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Published on 13 Oct 2017
School
Temple University
Department
International Business Admn
Course
IB 3101
Temple
IB 3101
MIDTERM EXAM
STUDY GUIDE
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Week 9 Chapter 12 Strategy of International Business
Strategy
Actions that managers take to attain the goals of the firm
o Profitability
Is the rate of return the firm makes on its invested capital
Reduce costs
Add value and raise prices
o Profit growth
Is the percentage increase in net profits over time
Sell more in existing markets
Enter new markets
Value Created = price consumer is willing to pay (value to consumer) cost of
production
Cost Leadership Strategy
Minimize costs
Ex. Micron
Differentiation Strategy
Competitive advantage by having unique features
Ex. Rolex, McDonald’s, PWC
Primary Activities
Involves creating the product, marketing and delivering the product to
buyers, and providing support and after-sale service to the buyers of the
product
o R&d
o Production
o Marketing
o Sales
o Customer service
o Design
Support Activities
Provides the inputs that allow the primary activities of production and
marketing to occur
o Information systems
o Logistics
o HR
Organization architecture
The totality of a firm’s organization - formal organizational structure, control
systems and incentives, organizational culture, processes, and people
Organizational structure
The formal division of the organization into subunits
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The location of decision-making responsibilities within that structure
The establishment of integrating mechanisms to coordinate the activities of
subunits including cross functional teams and or pan-regional committees
Implementing Strategy
Controls
o The metrics used to measure the performance of subunits and make
judgments about how well the subunits are run
Incentives
o The devices used to reward appropriate managerial behavior
Processes
o The manner in which decisions are made and work is performed
Organizational culture
o The norms and value systems that are shared among the employees
People
o Employees and the strategy used to recruit, compensate, and retain
those individuals
Most important is ensuring strategic fit!!
International Expansion
1. Expand their market
a. Leverage products and competencies
b. Entering markets where competitors lack similar competencies
2. Realize location economies
a. Disperse value creation activities to optimal locations global web
3. Realize greater cost economies from experience effects
a. Exploiting experience curve effects
b. Serve an expanded global market from a central location
c. Based off decrease in costs during product lifecycle
d. Typically happens when production takes place in a single location
e. A product’s production costs decline by some quantity about each
time cumulative output doubles
f. Learning effects
i. Cost savings that come from learning by doing
ii. Labor productivity
4. Leverage skills developed in foreign operations
a. Earn a greater return
b. Transfer valuable skills within the organization
c. Recognize that valuable skills can be developed anywhere within the
firm’s global network not just at the corporate center
d. Use incentive systems to encourage local employees to acquire new
skills
e. Develop a process to identify when new skills have been created
f. Act as facilitators to transfer valuable skills within the firm
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Document Summary

Week 9 chapter 12 strategy of international business. Strategy: actions that managers take to attain the goals of the firm, profitability. Is the rate of return the firm makes on its invested capital: reduce costs, add value and raise prices, profit growth. Is the percentage increase in net profits over time: sell more in existing markets, enter new markets. Value created = price consumer is willing to pay (value to consumer) cost of production. Micron: competitive advantage by having unique features. Involves creating the product, marketing and delivering the product to buyers, and providing support and after-sale service to the buyers of the product: r&d, production, marketing, sales, customer service, design. Support activities: provides the inputs that allow the primary activities of production and marketing to occur, information systems, logistics, hr. Organization architecture: the totality of a firm"s organization - formal organizational structure, control systems and incentives, organizational culture, processes, and people.