What are reasons that domestic companies often have an advantage over global companies quizlet?
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Get faster at matching terms Terms in this set (22)Competing in international markets allows companies to (1) gain access to new customers, Strategy making is more complex for five reasons (1) different countries have homecountry advantages in different industries; Diamond of National Competitive Advantage framework The strategies of firms that expand internationally are usually grounded in homecountry advantages concerning: There are five strategic options for entering foreign markets. These
include: A company must choose among three alternative approaches for competing internationally: (1) a multidomestic strategy or think-local, act-local approach to crafting international strategy; When to use Multidomestic approach? A "think-local, act-local," or multidomestic, strategy is appropriate for industries or companies that must vary their product offerings and competitive approaches from country to country in order to accommodate different buyer preferences and market conditions. When to use Global approach? The "think-global, act-global" approach (or global strategy) works best when there are substantial cost benefits to be gained from taking a standardized and globally integrated approach and little need for local responsiveness. When to use Transnational approach? A transnational approach (think global, act local) is called for when there is a high need for local responsiveness as well as substantial benefits from taking a globally integrated approach. In this approach, a company strives to employ the same basic competitive strategy in all markets but still customize its product offering and some aspect of its operations to fit local market circumstances. There are three general ways in which a firm can gain competitive advantage (or offset domestic disadvantages) in international markets. 1. One way involves locating various value chain activities among nations in a manner that lowers costs or achieves greater product differentiation. Profit sanctuaries are country markets in which a company derives substantial profits because of its strong or protected market position. 1. They are a source of financial strength for mounting strategic offensives in selected country markets or for making defensive moves that can ward off mutually destructive competitive battles. For companies with at least one profit sanctuary, having a presence in a rival's key markets can be enough to deter the rival from making aggressive attacks. Companies racing for global leadership have to consider competing in developing markets like the BRIC countries, Brazil, Russia, India, and China—countries where the business risks are considerable but the opportunities for growth are huge. To succeed in these markets, companies often have to: (1) compete on the basis of low price, Profitability is unlikely to come quickly or easily in developing markets, typically because of the investments needed to alter buying habits and tastes, the increased political and economic risk, and/or the need for infrastructure upgrades. And there may be times when a company should simply stay away from certain developing markets until conditions for entry are better suited to its business model and strategy. Local companies in developing-country markets can seek to compete against large multinational companies by: (1) developing business models that exploit shortcomings in local distribution networks or infrastructure, Two types of Investment Risks are: 1. Political risks stem from instability or
weakness in national governments and hostility to foreign businesses. Multidomestic strategy: A multidomestic strategt is one in which a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions. It is a think-local, act local type of international strategy, facilitated by decision making decentralized to the local level. Global strategy A global strategy is one in which a company employs the same basic competitive approach in all countries where it operates, sells much the same products everywhere, strive to build global brands, and coordinates its actions worldwide with strong headquarters control. It represents a think-global, act-global approach. Transnational strategy A transnational strategy is a think-global, act-local approach that incorporates elements of both multidomestic and global strategies. Multidomestic Pros and Cons Pros: Cons: Transnational Pros and Cons Pros: Cons: Global Pros and Cons Pros: Cons: Profit sanctuaries Profit sanctuaries are country markets that provide a company with substantial profits because of a strong or protected market position. Cross-market subsidization Cross-market subsidization is a supporting competitive offensives in one market with resources and profits diverted from operations in another market -- Can be a powerful competitive weapon. Mutual Restraint When the same companies compete against one another in multiple geographic markets the threat of cross-border counter-attacks may be enough to deter aggressive competitive moves and encourage mutual restraint among international rivals. Sets with similar termsChapter 714 terms UglyDog20 Chapter 7 Quiz20 terms britneytuttle CH 731 terms cgarcia504 Strategic Management - Ch 745 terms glenda_wise1 Other sets by this creatorStrategy Chapter 1211 terms Qiaoran_Li Strategy 115 terms Qiaoran_Li Strategy Chapter 1010 terms Qiaoran_Li Evidence For Atomic Theory9 terms Qiaoran_Li Verified questionsQUESTION Talk with four people you know from different places or in different ways. Ask them about their interests (hobbies or what they like to do in their spare time). After you have spoken with each person, identify the role each plays in society and in their work or school group. Verified answer
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QUESTION Distinguish among beta (or market) risk, within-firm (or corporate) risk, and stand-alone risk for a project being considered for inclusion in the capital budget. Verified answer Other Quizlet setsAccount Management Framework13 terms breweli Chapter 8: International Strategy23 terms averyccamp Management Final119 terms maggie116 Session 22 Global Management II30 terms oslo91 Related questionsQUESTION true or false: Expropriation involves the forced transfer of assets from a company to the government without compensation. 2 answers QUESTION Key differences between the domestic and international HRM function 2 answers QUESTION product that has a high product market growth and low relative market share 5 answers QUESTION product costs, warehouse costs, opportunity costs 3 answers What is the major advantage of a multidomestic strategy quizlet?A major advantage of multidomestic strategies is the ability to customize for the specific market, although this sacrifices economies of scale.
What are reasons that companies expand into foreign markets?If going global has been in your business plans for some time, here's 8 reasons to start preparing for international expansion in 2020.. INCREASE REVENUE POTENTIAL. ... . ENTRY TO NEW MARKETS. ... . NEW CUSTOMER BASE. ... . EXPANSION ALLOWS YOU TO DIVERSIFY. ... . GREATER ACCESS TO TALENT. ... . GAIN COMPETITIVE ADVANTAGE. ... . IMPROVE YOUR COMPANY'S REPUTATION.. What are drawbacks of a multidomestic strategy quizlet?What are drawbacks of a multidomestic strategy? -It can raise production and distribution costs. -It won't help a company build a single international competitive advantage. too much dependence on a foreign partner.
What is a benefit of using a global strategy quizlet?The global strategy advantage is that it can create more standardized products globally across the markets as well as it can create economies of scale. It also has an advantage that it can launch innovative. campaigns and products across the markets as well Large multinationals particularly use this strategy.
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