International Business Management - Chapter 12

Instructor: Dr. Thao Kim Nguyen

Profit Growth The percentage increase in net profits over time

Value Creation Performing activities that increase the value of goods or services to
consumers

Operations The various value creation activities a firm undertakes

Organization The totality of a firm's organization, including formal organizational

Architecture structure, control systems and incentives, organizational culture,
processes, and people

Organizational The three-part structure of an organization, including its formal

Structure division into subunits such as product divisions, its location of
decision-making, responsibilities within that structure, and the
establishment of integrating mechanisms to coordinate the
activities of all subunits

Controls The metrics used to measure the performance of subunits and

make judgements about how well managers are running those
subunits

Incentives The devices used to reward appropriate managerial behavior

Processes The manner in which decisions are made and work is performed
within any organization

Organizational Culture The values and norms shared among an organization's employees

People The employees of the organization, the strategy used to recruit,

compensate, and retain those individuals and the type of people
that they are in terms of their skills, values, and orientation

Core Competence Firm skills that competitors cannot easily match or imitate

Location Economies Cost advantages from performing a value creation activity at the
optimal location for that activity

Global Web When different stages of value chain are dispersed to those
locations around the globe where value added is maximized or
where costs of value creation are minimized

Experience Curve Systematic production cost reductions that occur over the life of a
product

Learning Effects Cost savings from learning by doing

1
Economies of Scale Cost advantages associated with large-scale production

Universal Needs Needs that are the same all over the world, such as steel, bulk
chemicals, and industrial electronics

Global Standardization A firm focuses on increasing profitability and profit growth by

Strategy reaping the cost reductions that come from economies of scale,
learning effects, and location economies

Localization Strategy Increasing profitability by customizing the firm's goods and services
so that they provide a good match to tastes and preferences in
different national markets

Transnational Strategy Attempt to simultaneously achieve low costs through location

economies, economies of scale, and learning effects while also
differentiating product offerings across geographic markets to
account for local differences and fostering multidirectional flows of
skills between different subsidiaries in the firm's global network of
operations

International Strategy Trying to create value by transferring core competencies to foreign

markets where indigenous competitors lack those compentencies