International Business

are industries marked by continuous streams of branded product innovations. They opt for differentiation, creating value by generating customer insights, developing innovative products, designing high-profile marketing programs and moving products to market quickly.

is the set of linked activities the company performs to design, produce, market, distribute and support product

1. Primary activities: that design, make, sell and deliver the product.
2. Support activities: that implements primary activities

Primary Activities:

• Product Design
• Operations
• Outbound Logistics
• Marketing
• Service

Support Activities

• Maerials & Equipments
• Firm Infrastructure
• Human Resources
• Systems & Solutions

Distributing value activities around the world is --> configuration
Linking value activities --> coordination

Concentration: performing all value-chain activities in one part of the world
Dispersed: performing different value-chain activities in different locations

--> Companies want to exploit LOCATION ECONOMIES

- Business environment
- Innovation context
- Resource costs
- Logistics
- Digitization
- Scale economies

Costs vary among countries due to wage rates, worker productivity, resource availability and fiscal and monetary policies
The demography of labor influences location economics and thus configuration choices
Digitization: influences location economics by creating new sources of competencies
Economies of Scale: a firm doubles its output yet its total cost less than double due to efficiency gains

Specifies how value activities transact with each other

-Operational obstacles
-Core competency
-Subsidiary networks

A core competency can emerge from various activities including:
-Product development
-Employee productivity
-Manufacturing expertise
-Marketing imagination
-Executive leadership

the process of combining differentiated parts into a standardized whole

the process of disaggregating a standardized whole into differentiated parts (consumer divergence)

-Difficult to acquire
-Difficult to save
-Scarcity

relates the global and local pressures that influence an MNE’s strategy

The IR grid helps managers map strategy given prevailing pressures for standardization and adaptation in their particular industry

• An international strategy transfers core competencies to foreign markets where local rivals lack an alternative and industry conditions impose low pressures for global integration and national responsiveness.
• A multidomestic strategy emphasizes responsiveness to the unique circumstances that prevail in a country's market.
• A global strategy drives performance by making standardised products that are marketed with minimum adaptation to local conditions
• A transnational strategy simuiltaneously leverages core competencies worldwide, reduces costs by exploiting location economics, and adapts, subject to efficiency standards, to local conditions.
• The company implementing a transnational strategy aims not to work harder or work smarter than competitors but rather work differently based on diffusing the lessons it has learned and the knowledge it has earned throughout its worldwide operations.

Companies need to:

• Determine the order of country entry
• Set the rate of resource allocation among countries

When choosing geographical sites, a company must decide

• Where to sell
• Where to produce

Scanning examination of most or all countries broadly and narrow them down to the most promising one, it is not so costly and fast.

after scanning managers need to compare feasibility and desirability of each. They need to go to location to do so, so it is more costly.

the more time and money companies invest in examining an alternative, the more likely they are to accept it, regardless of its merits

are divided into sales expansion and resource aquisiition

Examining economic and demographic variables:
- Obsolescence and leapfrogging of producst
- Prices
- Income elasticity
- Substitution
- Income inequality
- Cultural factors and taste
- Existence of trading blocs
Risks:
- Political risk
- Analyzing opinions
- Examining social and economic conditions
- Exchange-rate changes
- Mobility of funds
- Competitive risk

managers take lower returns if that means that their assets are liquid and easy to move

- Located nearby
- Share the same language
- Have market conditions similar to those in their home country

MNEs have a lower survival rate than local companies for many years after they begin operations

a situation where managers purposely crowd a market to prevent competitors from gaining advantages there that they can use to improve their competitive position elsewhere

by expanding to a market first before any competition, and then receiving the best location, supplier etc

strategy for exploiting temporary innovative advantages. Where company moves first to those countries where local competitors are most likely to catch up to the innovative advantage

• Inability to collect and analyze data
• Purposefully misleading data
• Exclusion of nonmarket and illegal activity

1. Governmental resources may limit accurate data collection
2. Governments may purposely publish misleading information
3. Respondents may give false information to data collectors
4. Official data may include only legal and reported market activities
5. Poor methodology may be used

- Differences in definitions and base years
- Distortions in currency conversions

- Individualized reports
- Specialized studies
- Service companies
- Government agencies
- Trade associations

Two common tools to analyze findings are grids and matrcies

tools that
- May depict acceptable or unacceptable conditions
- Rank countries by important variables

clearly show opportunity and risk relationship.
With an opportunity-risk matrix a company can
- Decide on indicators and weight them
- Evaluate each country on the weighted indicators

- Going first to countries with characteristics similar to those of their home countries
- Having experiences intermediaries handle operations for them
- Operating in formats requiring commitment of fewer resources abroad
- Moving initially to one or a few rather than many foreign countries

--> DIVERSIFICATION: go to many fast and then build up slowly in each
--> CONCENTRATION: go to one or few and build fast before going to others
--> A hybrid of the two

Reinvestment decisions: a company may have to make new commitments to maintain competitiveness abroad

Harvesting: when companies reduce commitment in some countries because those countries have poorer performance prospects than others (divesting)