07 BUS 444 Chap 7

4 afghanistan cpi score 15 7 20 potentialrisksof

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Unformatted text preview: tries are Somalia (CPI Score: 1.0) Myanmar (CPI Score: 1.3) Iraq (CPI Score: 1.3) Haiti (CPI Score: 1.4) Afghanistan (CPI Score: 1.5) 7-20 Potential Risks of International Expansion • Currency risks Currency exchange fluctuations Appreciation of the U.S. dollar 7-21 Potential Risks of International Expansion • Management risks Culture Customs Language Income levels Customer preferences Distribution system 7-22 Outsourcing • Outsourcing occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house. 7-23 Offshoring • Offshoring takes place when a firm decides to shift an activity that they were previously performing in a domestic location to a foreign location. 7-24 Two Opposing Pressures: Reducing Costs and Adapting to Local Markets • Strategies that favor global products and brands Should standardize all of a firm’s products for all of their worldwide markets Should reduce a firm’s overall costs by spreading investments over a larger market 7-25 Two Opposing Pressures: Reducing Costs and Adapting to Local Markets Three assumptions 1. Customer needs and interests worldwide are becoming more homogeneous 2. People are willing to sacrifice product preferences for lower prices at high quality 3. Economies of scale in production and marketing can be achieved through supplying global markets 7-26 Two Opposing Pressures: Reducing Costs and Adapting to Local Markets Assumptions may not always be true • Product markets vary widely between nations • In many product and service markets, there appears to be a growing interest in multiple product features, quality and service 7-27 Two Opposing Pressures: Reducing Costs and Adapting to Local Markets • Technology permits flexible production • Cost of production may not be critical to product cost • Firm’s strategy should not be product-driven 7-28 Opposing Pressures and Four Strategies 7-29 International Strategy • An...
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