Globalization and Firms

41. With the garter of an example discuss the char effecteristics of inter in intractableization. worldwideisation refers to a fundamental shift in the demesne economy in which subject field economies ar no longer relatively self-contained entities. Instead, soils argon moving toward an interdependent orbicular economic musical arrangement. Within this new-fangled ball-shaped economy, an Ameri pot efficacy drive to hold up in a car designed in Ger umpteen that was assembled in Mexico by DaimlerChrysler from fates do in the U. S. and Japan that were fabricated from Korean steel and Malaysian rubber.A conjunction does non nominate to be the size of these multinational giants to facilitate, and gather from, the globalization of grocery stores. 42. Define globalization and discuss it has changed the wrinkleation environment? Globalization has created numerous opportunities for dutyes to expand their revenues by foodstuffing around the world while at the s ame time reducing their be by producing in nations where labor and otherwise inputs argon cheap. However, globalization has as well as produced new threats for companies in the bound of increased contention. 41.equality and cable a virgin democracy and a representative democracy. Which type of democracy is to a greater extent(prenominal) honey oil today? Why? The pure rebound of democracy is found on a belief that citizens should be outright involved in decision making. In secern, in a representative democracy, citizens periodic al togethery elect individuals to represent them. The elected individuals sour a establishment and contract decisions on behalf of the electorate. Beca character a pure democracy is aery in advanced societies with tens or hundreds of millions of people, representative democracies be far more car park in todays world. 2. Explain the differences among common law and civil law forms by the snuggle of individually to burn law. Contracts drafted infra a common law manikin ply to be very luxuriant with all contingencies spelled out. In contrast, contracts in a civil law system tend to be much shorter and less precise because umteen of the issues typically c all oered in a common law contract be already c everywhereed in civil law. 43. What be state- birthed companies? Why do they exist? Why do they commonly perform poorly? A state-owned company is a company that is owned by a nations authorities.After World War II, many loving democratic establishments nationalized private companies that were to be act upon for the public uncorrupted sooner than private profit. Great Britain, for example, nationalized so many companies that by the end of the 1970s, state-owned monopolies existed in telecommunications, electricity, gas, coal, and some(prenominal) other industries. However, because state-run companies such as the ones that existed in Great Britain ar protected from competition by their monopoly stupefy and guaranteed financial support, they establish inefficient. 1. Compare and contrast folk charges and mores. Folkways are the affair conventions of everyday life. Generally, folkways are actions of little honourable signifi behindce. Folkways include rituals and symbolic behavior. In contrast, mores are norms that are seen as central to the surgery of a alliance and to its social life. Mores pee-pee much greater signifi laughingstockce than folkways. consortly, violating mores john bring serious retri scarcelyion. 42. What is the difference amidst a circle system and a cast system?A caste system is a closed system of stratification in which social position is determined by the family into which a mortal is born, and change in that position is commonly non possible during an individuals lifetime. The caste system is the most primed(p) form of social stratification. A caste frequently involves a specific occupation. In contrast, a variety system is a less rigid form o f social stratification in which social mobility is possible through an individuals personal achievements and/or luck. 43.Discuss why the stratification of a society is definitive to line. The stratification of a society is significant if it affects the operation of business organizations. In a state wish Great Britain for example, the relative escape of class mobility and the differences amidst classes has resulted in hostility mingled with middle-class omnibuss and their working-class employees. This hostility and the resulting lack of cooperation can make it more effortful for dissipateds to establish a competitive emolument in the global economy. While the decease ii decades has seen a eduction in the recite of industrial disputes in Britain, in that location are signs that class consciousness whitethorn be reemerging in China. 44. break the quaternary belongingss of gardening as set by Geert Hofstede. Geert Hofstede identified four dimensions that he cla imed summarized the differences between disparate cultures. consort to Hofstede, the power distance dimension focused on how a society deals with the fact that people are odds-on in physical and intellectual capabilities. The encourage dimension identified by Hofstede, individuation vs. collectivism, focused on the kind between the individual and his/her fellows.Hofstedes third dimension, uncertainty avoidance, deliberate the extent to which different cultures socialize their members into evaluate ambiguous situations and tolerating uncertainty. Finally, Hofstedes fourth dimension, masculinity vs. femininity, examined the consanguinity between gender and work roles. 41. Compare and contrast import quotas and military volunteer merchandise restraints. An import quota is a direct limit on the quantity of some good that may be imported int o a outlandish. The restriction is normally implemented by issuing import licenses to a group of individuals or pissed offs.In cont rast, a voluntary exportation restraint (VER) is a quota impose by the exporting country, typically at the request of the importing countrys regime. Foreign producers prevail to VERs because they fear more damaging punitory tariffs or import quotas might keep abreast if they do non. Both import quotas and VERs benefit domestic producers, but hurt consumers through higher prices. 42. What are the political efforts for g overnments to interject in markets? There are a number of political reasons why governments deputize in markets. The most common reason for intervention is to protect jobs and industries.Governments may likewise intervene to protect national security, to be punitive retaliatory actions, to protect consumers or to protect human rights, and to further opposed policy objectives. 43. Discuss the economic reasons for government intervention in markets. The economic reasons for government interaction take undergone a reincarnation in recent times as more economi sts support economic reasons for intervention. The oldest argument for intervention is the infant industry argument. strategicalalal portion out policy is the other important reason prone for economic government intervention in markets. 44.What is strategic trade policy? Provide an example. Strategic trade policy suggests that in industries where the existence of potent scale economies implies that the world entrust profitably support only a few immobiles, countries may predominate in the export of certain overlaps exclusively because they had devoteds that were able to puzzle first-mover wagess. Boeings dominance in the aerospace industry has been attributed to these types of factors. According to strategic trade policy, a government can help raise national incomes if it can ensure that the firms that gain first-mover vantages in such industries are omestic rather distant. Further, the surmisal suggests that it might pay governments to intervene in an industry if i t helps domestic firms overcome the barriers to founding created by hostile firms that pack already reaped first-mover advantages. 45. Explain how trade barriers affect a firms outline. There are four primary(prenominal) ways trade barriers affect a firms strategy. First, tariffs raise the terms of exporting, putting the firm at a competitive disadvantage. Second, quotas may limit a firms aptitude to serve up a country from outside of that country.Third, to aline to topical anesthetic content regulations, a firm may have to locate more output signal activities in a featuren market than it would otherwise. Finally, the threat of antidumping actions limits the firms ability to use aggressive pricing to gain market share in a country. 41. What is a greenfield enthronisation? How does it compare to an acquisition? Which form of FDI is a firm more promising to choose? Explain your answer. FDI can name the form of a greenfield investment in a new facility or an acquisition of or a amalgamation with an existing local firm.Research shows that most FDI takes the form of mergers and acquisitions rather than greenfield investments. Mergers and acquisitions are more familiar for three reasons. First, mergers and acquisitions are quicker to save than greenfield investments. Second, orthogonal firms are acquired because those firms have of import strategic assets. Third, firms make acquisitions because they believe they can increase the faculty of the acquired firm by transferring capital, technology, or management skills. 42. Compare and contrast the advantages of foreign direct investment over exporting and licensing.A firm bequeath regard foreign direct investment over exporting as an gate strategy when transportation make ups or trade barriers make exporting unattractive. Furthermore, the firm will favor foreign direct investment over licensing (or franchising) when it wishes to maintain look into over its technological know-how, or over its t rading trading operations and business strategy, or when the firms capabilities are simply non amenable to licensing, as may often be the case. 43. Discuss the various(a) political ideologies and their impact on foreign direct investment.The radical hitch writers advocate that the multinational try (MNE) is an instrument of imperialistic domination. The ease market view argues that foreign harvest-tideion should be distributed among countries according to the opening of comparative advantage. The pragmatic nationalist view is that FDI has both benefits and lives. The radical view has a dogmatic radical stance that is remote to all inward FDI. The free market view is at the other peak and based on noninterventionist principle of free market economics. Between these ii extremes is an draw near called pragmatic nationalism. 4. Describe the situations when licensing is non a good option for a firm. Licensing is not a good option in three situations. First, licensing is hazardous in high technology industries where protecting firm-specific expertise is very important. Second, licensing is not attractive in global oligopolies where tight control is necessary so that firms have the ability to launch coordinated attacks against global competitors. Finally, in industries where intense appeal pressures postulate that MNEs maintain tight control over foreign operations, licensing is not the best option. 46.Discuss Michael porters beers recital of value creation and competitive advantage. According to Michael Porter, low cost and differentiation are two basic strategies for creating value and attaining a competitive advantage in an industry. Porter argues that those firms that create superior value will achieve superior positiveness. Porter notes that it is not necessary for a firm to have the lowest cost coordinate or create the most valuable crossroad rather it is only important that the kerfuffle between value and the cost of crosswayion be greater than that of competitors. 7. Discuss strategic positioning. How does strategic positioning relate to the efficiency frontier? The efficiency frontier shows all of the different positions that a firm can adopt with regard to adding value to the product and low cost assuming that its internal operations are configured efficiently to support a particular position. It is important that managers decide where a firm should be positioned with regard to value and cost, configure operations accordingly, and manage them efficiently to ensure the firm is operating on the efficiency frontier. 8. Describe the benefits of global elaborateness for firms. Global expansion allows firm to capture many opportunities not open to firms that remain focused stringently on the domestic market. Firms that operate globally have the luck to sell their product in a much bigger marketplace. Location economies can be complete through global expansion by dispersing value creation activities to the opt imal stance in the world. International expansion allows a firm to realize greater cost economies from baffle effects.Finally, global expansion provides firms with the opportunity to earn a greater snuff it by leveraging any skills authentic in foreign operations and transferring them within the organization. 49. What are the two types of competitive pressures that firms competing in the global marketplace face? How do firms respond to these pressures? Firms that deal in the global marketplace typically face two types of competitive pressure that affect their ability to realize location economies and experience effects, to leverage products and transfer competencies and skills within the enterprise.They face pressures for cost reductions and pressures to be locally antiphonal. These competitive pressures place conflicting claims on a firm. Responding to pressures for cost reductions requires that a firm try to understate its unit be. Responding to pressures to be locally r esponsive requires that a firm divide its product offering and marketing strategy from country to country in an effort to let in the diverse demands arising from national differences in consumer tastes and preferences, business practices, distribution channels, competitive conditions, and government policies. 50.What are the four basic strategies that firms use to compete in international markets? Under what conditions is each strategy most get hold of? The four basic strategies that firms use to compete in international markets are the international strategy, the global standardization strategy, the repair strategy, and the transnational strategy. The international strategy is most appropriate when at that place is low pressure for local reactivity and low pressure for cost reduction. When there is high pressure for cost reduction, but low pressure for local reactivity the global standardization strategy makes sense.A localization strategy is appropriate when pressure for l ocal responsiveness is high, but pressure for cost reduction is low. Finally, when pressure for both cost reduction and local responsiveness is high, the transnational strategy is best. 52. What are the three challenges cerebrate to strategy and structure that firms mustiness reach out if they are to achieve superior profitability? Superior enterprise profitability requires that firms perform three conditions. First, the different elements of a firms organisational architecture must be internally consistent.Second, the organizational architecture of the firm must be consistent with its strategy. Third, the strategy and the structure must not only be consistent with each other, they must also be consistent with the competitive conditions familiar in the marketplace. 53. Discuss the relationship between a firms control systems and a firms inducement system. Why is this relationship important? The relationships between a firms control systems and incentive systems is a close one. Control systems are the rhythmic pattern used to measure the performance of subunits and make judgments about how well managers are running game those subunits.Incentives are the devices used to reward appropriate managerial behavior. The relationship between these two areas is important because incentives are very closely tied to performance metrics. For example, the incentives of a manager in charge of a national operating subsidiary company might be linked to the performance of that company. Specifically, he/she might receive a bonus if her subsidiary exceeds its performance targets. 54. Discuss the location of decision-making in a firm that is following a transnational strategy. Decision-making in a firm pursuing a transnational strategy is complex.The ingest to realize location and experience sophisticate economies requires some centralized control over global production centers. Yet, the need for local responsiveness requires the decentralization of many operating decisi ons, particularly those for marketing, to foreign subsidiaries. decentralisation of decision-making is also needed to allow subsidiaries the freedom to gravel their own skills and competenciesa extremity that is necessary for the global education component of the transnational strategy. 55. Discuss the sources of inactivity in organizations. Is it easy to make organizational changes?Organizations are severe to change. Within most organizations are strong inactivity forces. These forces come from a number of sources. One source of inertia is the existing distribution of power and stoop within an organization. Managers who are not quick-witted with the changes are likely to resist and delay the process. A second source of inertia is the existing culture. Since value systems reflect late held beliefs, they can be very rocky to change. A third source of inertia derives from senior managers preconceptions about the appropriate business model or paradigm.Managers may not recogn ize the value in a given business model that has been boffo in the past. Finally, institutional constraints may act as a source of inertia. In some cases, local content rules or regulations pertaining to layoffs can make it difficult for firms to adopt the most effective strategy and architecture. 45. What are first-mover advantages? Discuss the advantages associated with them. First-mover advantages are the advantages frequently associated with submission a market early. One first-mover advantage is the ability to preempt rivals and capture demand by establishing a strong inciter name.A second advantage is the ability to grade sales volume in that country and ride down the experience curve ahead of rivals, giving the early catechumen a cost advantage over subsequently fledglings. A third advantage is the ability of early fledglings to create electrical switch costs that tie customers into their products or services. such(prenominal) switching costs make it difficult for lat er starting motors to win business. 46. Explain the relationship between first-mover disadvantages and pioneering costs. When a firm enters a market prior to other international businesses, it can have first-mover disadvantages.These disadvantages may give rise to pioneering costs, costs that an early entrant has to bear that a later entrant can avoid. Pioneering costs arise when the business syste m in a foreign country is so different from that in a firms home market that the enterprise has to devote considerable effort, time, and expense to seting the rules of the game. Pioneering costs also include the costs of promoting and establishing a product offering. Finally, an early entrant may be put at a disadvantage, relative to a later entrant, if regulations change in a way that diminishes the value of the early entrants investments. 7. Discuss bartlett and Ghoshals perspective on how firms from developing countries should approach international expansion. Bartlett and Ghoshal s uggest that companies based in developing countries should use the entry of foreign multinationals as an opportunity to learn from these competitors by benchmarking their operations and performance against them. They argue that the local company might be able to find ways to differentiate itself from foreign companies by focusing on market niches that the multinational ignores or is uneffective to serve effectively if it has a like global roduct offering. Then, the firm from the developing nation may then be in a position to pursue its own international expansion strategy. 48. Discuss strategic alliances. How successful are they? Why do firms form strategic alliances? The term strategic alliance refers to cooperative agreements between capability or actual competitors. Strategic alliances run the range from formal joint ventures, in which two or more firms have equity stakes, to short-term contractual arrangements, in which two companies agree to cooperate on a particular task.Fi rms enter into strategic alliances for four main reasons. First, strategic alliances may facilitate entry into a foreign market. Second, strategic alliances allow firms to share the fixed costs of developing new products or processes. Third, strategic alliances allow firms to bring together complementary skills and assets that neither company could develop easily on its own. Fourth, strategic alliances can help firms establish technological standards for an industry.