Low uncertainty-avoidance and individualistic societies have more entrepreneurs.

Low uncertainty-avoidance and individualistic societies have more entrepreneurs.

- Lending institutions provide tiny loans ($50-$300) to entrepreneurs in developing countries that would lift them out of poverty.

Born Global-

For SME’s there are 3 modes for entering foreign markets:         

1.       Direct Exports- can be very complicated (How do you overcome lack of trust between exporters and importers?)

2.       Licensing/franchising-(licensing) usually used in manufacturing industries (franchising) usually used in the service industry. Requires little of the SMEs own money.

3.       Foreign direct investment- Most complex uses the most resources.

Cultural Distance- 

Most important consideration in international business.

- wholly owned subsidiary created by building new factories and offices from scratch

Collusion

- firms directly negotiating output and pricing and dividing markets

- entity that engages in output- and price-fixing involving multiple competitors

Few Firms, Industry Price leader, homogeneous products, high entry barriers, high market commonality.

3 types of attacks-

thrust - classic frontal attack with brute forces

feint - firm’s attack on a focal arena important to a competitor but not the attacker’s true target area

gambit - withdraw from a low-value market to attract rivals to divert resources into it and then to capture a high-value market

3 drivers for counterattacks-

Awareness - prerequisite for counterattack

Motivation - if the attacked market is of marginal value, managers may decide not to counterattack

Capabilities - strong capabilities needed to carry out counterattacks

Defender strategy - leveraging local assets in areas in which MNEs are weak

ability of a firm to expand in a competitor’s market if the competitor attacks in its original

equity-based alliances - strategic investment one partner invests in another (3 terms)

1.       cross-shareholding - both partners invest in each other

2.       Strategic Investment- one Firm invests in another as a strategic investor

3.       Joint Venture- A new corporate entity given birth and jointly owned by two or more parents companies.

- find mechanisms to avoid unwarranted escalation of conflicts, managers need to handle conflicts in a credible, responsible and controlled fashion.

integration-responsiveness framework - means by which MNEs primarily confront two sets of pressures:

Ø      cost reductions

Ø                      local responsiveness

unique consumer preferences and host country demands on cost reductions

relies on development and distribution of standardized products worldwide to reap maximum benefits from low-cost advantages

international division -

organizing according to different geographic areas (countries and regions)- CONS foreign subsidiary managers are not given sufficient voice relative to the heads of domestic divisions. Also by design the international division serves as a silo whose activities are not coordinated with the rest of the firm.

business leader of a specific geographic area or region-CONs- Although being locally responsive can be a virtue, it also encourages the fragmentation of the MNE into highly autonomous, hard to control fiefdoms.

treats each product division as a stand-alone entity with full worldwide—

as opposed to domestic— responsibilities. Cons Noticeable drawback is that local responsiveness suffers.

An organizational structure often used to alleviate the disadvantages associated with both geographic area an global product division structures, especially for MNEs adopting transnational structure..-cons- Some people have to report to two bosses.

MNEs appoint host country nationals as head managers of subsidaries abroad because they want a global standardization strategy that values globally coordinated and controlled actions.

1. Global citizens- favor buying global brands that signal prestige
2. Global dreamers- who cant afford but nevertheless admire, global brands
3. Antiglobals- skeptical about whether global brands deliver higher quality goods.
4. Global agnostics- most likely to lead antiglobalization demonstrations such as smashing McDonalds windows

Two Key elements to achieving alignment for supply chains:

1. Power
2. Trust

- such as taboos in advertising, equity limits in retail and 3pl sectors.

A philosophy or way of thinking that places the highest priority on the creation of superior customer value in the market place.

Problems with repatriation are:

1. Career Anxiety (what type of position will I have when I return)
2. Painful readjustments to workplaces.
3. Experience loss in status
4. Families find it hard to constantly adjust to new places

Expatriates must play important roles:

1. Strategist: enable headquarters to control subsidiaries but also facilitate the socialization process to bring subsidiaries into MNEs global orbit.
2. Daily manager: Run operations and build local capabilities. One of the reasons they are sent is due to lack of local management talent.
3. Ambassadors: representing headquarters interests they build relationships with host country stakeholders such as local managers and government officials. Expats are also ambassadors representing the interests of the subsidiaries when interacting with headquarters.
4. Trainers: self explanatory- train locals how to work

consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks

The market for corporate control- otherwise known as the takeover market or the mergers and acquisitions market. It is essentially an arena where different management teams contest for the control rights of corporate assets. As an external governance mechanism, the market for corporate control serves as a disciplining mechanism of last resort when internal governance mechanisms fail.

ability “to meet the needs of the present without compromising the ability of future generations to meet their needs”

economic, social, and environmental performance that simultaneously satisfies demands of all stakeholders

Owners- Provide capital, bear risks, and own the firm.

                Managers-Especially those on the top management team led by the CEO

The Board of Directors-An intermediary between owners and managers, the board of directors oversees and ratifies strategic decisions and evaluates, rewards, and if necessary penalizes top managers.

Being driven by three forces:  The rise of capitalism, the impact of globalization, and the global diffusion of “best practices.”  

The strategic response framework-

reactive strategy - response to relatively little or no support of top management to CSR causes

defensive strategy - focus on regulatory compliance with little involvement by top management

accommodative strategy - characterized by some support from top managers, who may increasingly view CSR is a worthwhile endeavor

proactive strategy - being responsible and endeavoring to do more than is required

Originated from concerns that MNE’s might engage in political activities against the national interests of the host country.  Case in  point is Chile, where ITT helped the CIA organize a coup.  Because of situations like this, many MNE codes require companies to obstain from intervention.  The host countries set these rules into place so that the companies would not interfere with their political activities.