Exam 8: Global Strategy

Although leaders in Russia have tried to reassure potential investors about their property rights, political risks in the form of weak laws and commonplace government corruption make firms leery of investing in Russia.

All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT

Location advantages are influenced by costs of production, access to natural resources and critical supplies, as well as the needs of customers, but not culture.

A large domestic market can provide the country's industries a chance at dominating the world market because

International strategy refers to a(an)

One of the primary reasons for failure of cross-border strategic alliances is

Fluctuation in the value of different currencies is a major economic risk associated with international diversification.

A global corporate-level strategy emphasizes

Increasingly, customers worldwide are demanding emphasis on local requirements and companies are needing efficiency as global competition increases. This has triggered an increase in the number of firms using the ____ strategy.

A major advantage of multidomestic strategies is the ability to customize for the specific market, although this sacrifices economies of scale.

Case Scenario 1: Blast Furnace, Inc., (BFI) Blast Furnace, Inc., (BFI) provides customized development of automated rich-media applications, and scalable solutions that allow media and entertainment companies, as well as enterprises and government organizations, to deploy, manage and distribute video content on IP-based networks. The company was founded in 1997 and went public in 2004; its stock trades on the NASDAQ under the ticker BLST. While providing solutions to a variety of firms and industries in North America, BFI has experienced its fastest growth with the security products that it designs and sells to the U.S. government and U.S. government agencies. This growth is based on its propriety VUE software, which is a complete identification solution for capturing, analyzing, and managing multi-biometric information. Proprietary analysis algorithms aggregate and cross-compare multiple biometrics to increase accuracy and lessen dependence on single identification techniques. Additionally, specialized encoding techniques reduce file size and increase analysis and response times. VUE supports a wide range of applications ranging from ID issuance and verification to gated entry screening for border patrol, airports, government buildings, and corporations. Essentially, VUE is able to sift through massive amounts of digitized multimedia files to create a unified ID dossier of an individual and then identify those individuals rapidly anywhere in the data. Such a capability is of great interest to security organizations, particularly since the World Trade Center bombing, because it allows the user to identify suspects within minutes on a real-time basis anywhere digitized media is being created (like that created by the hidden and visible surveillance cameras in airline terminals, banks, ATMs, and other public locations). Once a suspect is entered into the system, the software is capable of scanning all data sources automatically and without stop. For two years, BFI has had this market to itself but now two new entrants, a Belgian start-up and the subsidiary of a Finnish telecom firm, are staking out positions in large non-U.S. markets like Europe and Asia. BFI's management fears that if it limits its efforts to North America, then these aggressive competitors may eventually develop strongholds in other markets from which they can launch successful attacks on BFI's home turf. -(Refer to Case Scenario 1) If BFI engages in international diversification, it can expect that its returns decrease initially but then increase quickly as it learns how to manage under conditions of greater geographic diversity.

International associations such as the European Union, the Organization of American States, and the North American Free Trade Association encourage regionalization of competition rather than globalization.

Asahi Group Holdings Ltd. of Japan is an example of a firm that seeks to become one of the top 10 food and beverage companies via international diversification.

When a firm INITIALLY becomes internationally diversified, its returns

Research suggests that wholly-owned subsidiaries and expatriate staff are inappropriate for service industries because those industries require close contact with customers, high levels of professional skills, specialized know-how, and customization.

Discuss the three international corporate-level strategies. On what factors are these strategies based?

Effectively implementing the ________ international corporate-level strategy often produces higher performance than does implementing either the _______ or _________ strategies.

A licensing agreement

Research suggests that the performance of the global strategy in enhanced if it deploys in areas where regional integration across countries is occurring.

In addition to the four basic dimensions of Porter's "diamond" model, ____ may also contribute to the success or failure of firms.