unit 9 - strategic methods

• What is globalisation?

  Expansion of business into new countries
• Why do companies produce abroad?

  To maintain competitive advantage and reduce costs
• What is offshoring?

  Moving production overseas
• What is reshoring?

  Returning production to the original country
• What are potential cost reductions from offshoring?

  Lower wages and less regulation
• What ethical issues are associated with offshoring?

  Poor working conditions and health standards
• Why are businesses considering reshoring?

  Due to ethical issues and job creation
• What real costs might businesses face from offshoring?

  Product recalls and volatile raw material prices
• What are the four ways a business can operate abroad according to Bartlett and Ghoshal’s Model?

  • Multinational: local management in each country
  • Global: centralized operations
  • International: centralized with learning and sharing
  • Transnational: a mix of multinational and international
• What factors determine the choice of operational model for a business abroad?

  Management style, structure, and culture
• What is the role of overseas operations in a multinational business?

  Exploiting local opportunities and strategies
• How does knowledge development differ in multinational and transnational businesses?

  Multinational develops knowledge locally, transnational shares it worldwide
• What impact does international development have on HR policies?

  Policies may differ, causing inconsistencies
• How does international expansion affect finance costs?

  Initial costs increase but may lower over time
• What marketing challenge do businesses face when expanding internationally?

  Different customer bases require unique strategies
• How can operational processes differ in international markets?

  Some countries may require leaner operations
• What is a common business objective related to growth?

  Maximizing profit
• What is retrenchment in a business context?

  Cutting back on operations
• What are some methods of retrenchment?

  Reduction of staff and closing divisions
• What is Greiner's Growth Model focused on?

  Challenges of growth in businesses
• What crisis occurs during the direction phase of Greiner's model?

  Crisis of leadership
• What is vertical integration?

  Combining businesses at different production stages
• What is horizontal integration?

  Combining businesses at the same production stage
• What is conglomerate integration?

  Combining firms in unrelated markets
• What is franchising?

  Granting rights to supply products or services
• What impact does growth have on HR regarding job security?

  Employees seek assurance of growth permanence
• How does retrenchment affect HR practices?

  Increased job insecurity and morale issues
• What are economies of scale?

  Reduction of unit cost through increased production
• What are the benefits of economies of scale?

  Ability to invest in technology and bulk purchasing
• What is the experience curve?

  Unit cost decreases as production increases
• What is synergy in business growth?

  Combined value greater than individual businesses
• What is overtrading?

  Engaging in more business than can be supported
• What functional areas are strained during rapid growth or retrenchment?

  HR, finance, operations management, marketing
• What is a key factor in managing international businesses?

  Adapting to local markets
• Why is it important to adapt to local markets?

  Different consumer preferences exist across countries
• What must businesses comply with when operating internationally?

  Local regulations and legal systems
• How do cultural differences impact international business?

  They affect marketing and branding strategies
• What is necessary for local distribution in international business?

  Supply chain adaptation
• What is a major pressure on firms in international business?

  Global competition
• What is an advantage of economies of scale?

  Producing in bulk reduces costs