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IB Terms
| Question | Answer |
|---|---|
| Strategy | 12 the actions that managers take to attain the goals of the firm |
| Profitability | 12 the rate of return that the firm makes on its invested capital (ROIC), calculated by dividing net profits by total invested capital |
| Profit Growth | 12 measured by the percentage increase in net profits over time |
| Ways to increase profitability | 12 Create more value |
| Value creation | 12 measured by the difference between V and C |
| A company creates value by | 12 converting inputs that cost C into a product on which consumers place a value of V |
| Efficiency Frontier | 12 convex shape because of diminishing returns |
| 3 Things to Maximize Profitability | 12 1 Pick position on efficiency frontier that there is enough demand to support that choice 2. Configure its internal operations, such as manufacturing, marketing... so they support position 3. Make sure that the firm has the right organization structure |
| Operations | 12 the different value creation activities a firm undertakes |
| Primary Activities | 12 design, creation, and delivery of the product; its marketing; and its support and after-sale service |
| Core Competence | 12 the skills within the firm that competitors cannot easily match or imitate |
| Location economies | 12 Economies that arise from performing a value creation activity in the optimal location, wherever in the world. |
| Global Web | 12 Value creation activities, with different stages of value chain being dispersed locations around globe with value max and cost min |
| Experience Curve | 12 Systematic reductions in production costs that have been observed to occur over the life of a product |
| Learning Effects | 12 cost savings that come from learning by doing |
| Economies of Scale | 12 the reductions in unit cost achieved by producing a large volume of a product |
| Universal Needs | 12 exists when the tastes and preferences of consumers in different nations are similar if not identical. |
| 2 Pressures | 12 Cost Reduction and Local Responsiveness |
| 4 Local Responsiveness | 12 Differences in Customer Tastes and Preferences,Dif in Infrastructure and Traditional Practices, Dif in Distribution Channels, Host Government Demands |
| Global Standardization Strategy | 12 focus on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies |
| Global Standardization Strategy Location | 12 High CR - Low LR |
| International Strategy Location | 12 Low CR - Low LR |
| Transnational Strategy Location | 12 High CR - High LR |
| Localization Strategy Location | 12 Low CR - High LR |
| Localization Strategy | 12 focuses on increasing profitability by customizing the firm's goods or services so that they provide a good match to tastes and preferences in diff national markets |
| Transnational Strategy | 12 exploit experience-based cost and location economies, transfer core competencies with the firm, and pay attention to local responsiveness; try differentiate product offering |
| International Strategy | 12 Taking products first produced for their domestic market and selling them internationally with only minimal local customization |
| Production | 16 The activities involved in creating a product |
| Logistics | 16 activity that controls the transmission of physical materials through the value chain, from procurement through production and into distribution. |
| Total Quality Management (TQM) | 16 management philosophy that takes as its central focus the need to improve the quality of a company's products and services |
| Six Sigma | 16 statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company |
| ISO 9000 | 16 Focus management attention on the need to improve the quality of products and processes |
| Minimum Efficient Scale | 16 level of output at which most plant-level scale economies are exhausted |
| Flexible Manufacturing Technology AKA | 16 Lean Production |
| Lean Production or Flex Man Tech | 16 designed to reduce setup times for complex equipment, increase the utilization of individual machines through better scheduling, and improve quality control at all stages of the manufacturing process |
| Mass Customization | 16 the ability of companies to use flexible manufacturing technology to reconcile two goals that were once thought to be incompatible - low cost and product customization |
| Flexible Machine Cells | 16 another common flexible manufacturing technology; grouping of various types of machinery, a common materials handler, and centralized cell controller |
| Global Learning | 16 the idea that valuable knowledge does not reside just in a firm's domestic operations |
| Make-or-Buy Decisions | 16 decisions about whether they should perform a certain value creation activity themselves or outsource it to another entity |
| Specialized Asset | 16 as asset whose value is contingent upon a particular relationship persisting |
| Advantages of Buy | 16 Strategic Flexibility, Lower Costs, Offsets |
| Just-in-Time (JIT) | 16 Economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process and not before |
| Marketing Mix | 17 set of choices the firm offers to its targeted market |
| 4 Elements of Mix | 17 Product Attributes, Distribution Strategy, Communication Strategy, and Pricing Strategy |
| Market Segmentation | 17 refers to identifying distinct groups of consumers whose purchasing behavior differs from others in important ways. |
| Concentrated Retail System | 17 few retailers supply most of the market |
| Fragmented Retail System | 17 one in which there are many retailers, no one of which has a major share of the market |
| Channel Length | 17 the number of intermediaries between the producer and the consumer |
| Exclusive Distribution Channel | 17 one that is difficult for outsiders to access |
| Channel Quality | 17 the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products on international businesses |
| Source Effects | 17 occur when the receiver of the message evaluates it on the basis of status or image of the sender |
| Country of Origin Effects | 17 the extent to which the place of manufacturing influences product evaluations |
| Noise | 17 the other messages competing for a potential consumer’s attention; varies across countries |
| Push Strategy | 17 emphasizes personal selling rather than mass media advertising in the promotional mix |
| Pull Strategy | 17 depends more on mass media advertising to communicate the marketing message to potential consumers |
| Price Elasticity of Demand | 17 measure of the responsiveness of demand for a product to change in price |
| Elastic | 17 a small change in price produces a large change in demand |
| Inelastic | 17 large change in price produces only a small change in demand |
| Strategic Pricing | 17 3 aspects: predatory pricing, multipoint pricing, and experience curve pricing |
| Predatory Pricing | 17 use of price as a competitive weapon to drive weaker competitors out of a national market |
| Multipoint Pricing | 17 a firm’s pricing strategy in one market may have an impact on its rivals’ pricing strategy in another market |
| Experience Curve Pricing | 17 on an international scale will price low worldwide in attempting to build global sales volume as rapidly as possible, even if this means taking large losses initially |
| International Monetary System | 10 the institutional arrangements that govern exchange rates |
| Floating Exchange Rate | 10 Foreign exchange market determines the relative value of a currency |
| Pegged Exchange Rate | 10 the value of the currency is fixed relative to a reference currency, then the exchange rate between that currency and other currencies is determined by reference currency rates |
| Dirty Float | 10 The value determined by market b/c central bank of country intervene in the foreign exchange to try to maintain the value of its currency if depreciates too rapidly |
| Fixed Exchange Rates | 10 values of set of currencies are fixed against each other at some mutually agreed on exchange rate |
| European Monetary System (EMS) | 10 EU system designed to create a zone of monetary stability in Europe, control inflation, and coordinate exchange rates policies of EU countries |
| Gold Standard | 10 the practice of pegging currencies to gold and guaranteeing convertibility |
| Gold par Value | 10 the amount of a currency needed to purchase one ounce of gold |
| Balance-of-Trade Equilibrium | 10 the income its residents earn from exports is equal to the money its residents pay to other countries for imports |
| Managed-Float System | 10 the frequency of government intervention in the foreign exchange market |
| Currency Board | 10 country commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate |
| Currency Crisis | 10 occurs when a speculative attack on the exchange value results in sharp depreciation of value or forces authorities to expend large volumes of international currency reserves and sharply increase interest rates |
| Banking Crisis | 10 a loss of confidence in the banking system that leads to a run on banks, as individuals and companies withdraw their deposits |
| Foreign Debt Crisis | 10 a situation in which a country cannot service its foreign debt obligations, whether private-sector or government debt |
| 3 Crisis’ Macro Causes | 10 high relative price inflation rates, a widening current account deficit, excessive expansion of domestic borrowing, and asset price inflation. |
| Human Resource Management | 18 the activities an organization carries out to use its human resources effectively |
| Expatriate Manager | 18 a citizen of one country who is working abroad in one of the firm’s subsidiaries |
| Staffing Policy | 18 concerned with the selection of employees for particular jobs |
| Corporate Culture | 18 the organization’s norms and value systems |
| Ethnocentric Staffing Policy | 18 one in which all key management positions are filled by parent country nationals |
| Polycentric Staffing Policy | 18 requires host-country nationals to be recruited to manage subsidiaries, while parent-country nationals occupy key positions at corporate headquarters |
| Geocentric Staffing Policy | 18 seeks the best people for key jobs throughout the organization, regardless of nationality |
| Expatriate Failure | 18 the premature return of an expatriate manager to his or her home country |
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