07 BUS 444 Chap 7

07 BUS 444 Chap 7 - International Strategy Creating Value...

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International Strategy: Creating Value in Global Markets Chapter Seven
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Learning Objectives After reading this chapter, you should have a good understanding of: LO1 The importance of international expansion as a viable diversification strategy. LO2 The sources of national advantage, that is, why an industry in a given country is more (or less) successful than the same industry in another country. LO3 The motivations (or benefits) and the risks associated with international expansion, including the emerging trend for greater offshoring and outsourcing activity. 7-2
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Learning Objectives (cont.) LO4 The two opposing forces—cost reduction and adaptation to local markets—that firms face when entering international markets. LO5 The advantages and disadvantages associated with each of the four basic strategies: international, global, multi- domestic, and transnational. LO6 The difference between regional companies and truly global companies. LO7 The four basic types of entry strategies and the relative benefits and risks associated with each of them. 7-3
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The Global Economy: A Brief Overview Globalization the increase in international exchange, including trade in goods and services as well as exchange of money, information, ideas, and information. the growing similarity of laws, rules, norms, values, and ideas across countries. 7-4
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The Global Economy: A Brief Overview The economies of East Asia have attained rapid growth Income in Latin America grew by only 6 percent in the past two decades Average incomes in sub- Saharan Africa and the old Eastern European bloc have actually declined 7-5
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Factors Affecting a Nation’s Competitiveness Factor endowments The nation’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry. Demand conditions The nature of home-market demand for the industry’s product or service. 7-6
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Factors Affecting a Nation’s Competitiveness (cont.) Related and supporting industries The presence or absence in the nation of supplier industries and other related industries that are internationally competitive.
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07 BUS 444 Chap 7 - International Strategy Creating Value...

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