Study Guide for International Business Essay

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EXAM III: Suggested Study Guide1
Chapter 13 - Global Strategy
• Understand how companies can increase profitability and profit growth.
• What are the different types of strategic positions a company can take (low cost, differentiation, niche). Understand the efficiency curve and the importance of aligning internal operations to strategic positioning.
• How does the firm as a value chain help companies in reaching their strategic positioning? Understand both primary and support activities.
• What is the potential role of global expansion in strategy (i.e. transferring core competencies, location advantages, economies of scale, etc.)?
• What are the two major tensions/pressure felt by multinationals and the four corresponding strategies?
• Know how a company would achieve each strategy (customizing, standardizing and so forth).

Chapter 14 - Organization
• What do we mean by organizational structure versus control, processes, and incentives?
• What is vertical and horizontal differentiation?
• Understand the benefits to centralization and decentralization of decision-making and where decisions should be made with each type of strategy.
• Why is organizational structure important and which organizational structures best fit the different MNE strategies?
• What is the typical organizational structure pattern that U.S. companies have followed?
• What other mechanisms are used for control and integration in an MNE (management networks, contact, liaison roles, teams, organizational culture, control systems)?
• Understand the relationship between strategies, levels of interdependence, performance ambiguity, and cost of control.

Chapter 15 - Entering Foreign Markets & Exporting
• What are the different strategic decisions regarding entry into a country: which countries, how many (diversification vs. concentration), advantages and disadvantages of being the first mover, and mode of entry...
• Understand the definitions, advantages, and disadvantages of each mode of entry: Exporting, Turnkey Projects, Licensing, Franchising, Joint venture, Wholly owned subsidiary
• What is the difference between Greenfield ventures versus acquisitions (pros and cons of each) o Why do acquisitions seem to have such a high rate of failure
• What are key issues (tied to the MNC strategies) that affect the mode of entry decision (technology, control, know how).
• Strategic alliances: pros and cons, why do they seem to have a high percentage of failure, how to manage alliances and protect core competencies (what are some ideas on structuring alliances to reduce opportunism)
• Exporting: o What are the typical pitfalls made by new exporting companies? o How do we compare to other countries in terms of assistance in exporting? o What are the different routes an exporter can use and specifically what is an Export Management company? o What are the different payments options and each party’s preference (understand the importance of the letter of credit done by the bank and that the draft which can be sold to the bank if a company wants to get paid earlier than the time noted on the draft)?

Chapter 8 – Foreign Direct Investment
• What do we mean by FDI (how do we differentiate it from other investments)?
• What are the major patterns of change in FDI in the world economy?
 Why the shift towards mergers/acquisitions?
 Why the shift towards services?
• What are the motivations for FDI (Know the framework that includes: tariffs/transportation costs – to rule out exporting and internalization theory – to rule out licensing), location specific advantages, strategic behavior, product life cycle, etc.
• What are the different political ideologies that countries hold with relation to FDI how does this affect their attitude/policies towards FDI
• What are the advantages and disadvantages of FDI as perceived by both the home country and the host country?
• How do home and host countries affect outward/inward FDI?…