EXPLAIN THE DIFFERENT CONCEPT

1. Global Sourcing: Global sourcing refers to seeking goods and services beyond one’s
borders, i.e., from the global market. It is a procurement strategy in which companies try
to find the most cost-efficient place globally for manufacturing goods. According to
purchasing and procurement professionals, companies should be able to source both
inside and outside their national borders. Most companies choose a global sourcing
strategy because costs are lower abroad.

2. Counter Trade: Countertrade is a reciprocal form of international trade in which goods

or services are exchanged for other goods or services rather than for hard currency. This
type of international trade is more common in developing countries with limited foreign
exchange or credit facilities.

3. Purchasing Power Parity (PPP): Purchase power parity (PPP) is an economic theory
that allows for the comparison of the purchasing power of various world currencies to
one another. It is the theoretical exchange rate at which you can buy the same amount of
goods and services with another currency.

4. Emerging Markets: Emerging markets is a term that refers to an economy that

experiences considerable economic growth and possesses some, but not all,
characteristics of a developed economy. Emerging markets are countries that are
transitioning from the “developing” phase to the “developed” phase.

5. Geographic Scope: Geographic scope is the coverage that computers have within a
certain geographic area. It is also how far the computer along with its network can reach
geographically.

6. Multi-domestic Strategy: A multidomestic strategy is an international marketing

approach that chooses to focus advertising and commercial efforts on the needs of a local
market rather than taking a more universal or global approach.

7. Risk Management Enterprise: Enterprise risk management (ERM) is a methodology

that looks at risk management strategically from the perspective of the entire firm or
organization. It is a top-down strategy that aims to identify, assess, and prepare for
potential losses, dangers, hazards, and other potentials for harm that may interfere with an
organization's operations and objectives and/or lead to losses.
8. Entrepreneurial Organization: An organization that places innovation and opportunism
at its heart in order to produce economic or social value.

9. PESTEL Analysis: PESTEL Analysis is a strategic framework used to evaluate the

external environment of a business by breaking down the opportunities and risks into
Political, Economic, Social, Technological, Environmental, and Legal factors.
a) Political Factors- you are looking at how government policy and actions
intervene in the economy and other factors that can affect a business. These
include the following: Tax Policy, Trade Restrictions, Tariffs, and Bureaucracy.
b) Economic Factors- take into account the various aspects of the economy, and
how the outlook on each area could impact your business. These economic
indicators are usually measured and reported by Central Banks and other
Government Agencies. They include the following: Economic Growth Rates,
Interest Rates, Exchange Rates, Inflation, and Unemployment Rates
c) Social Factors- related to the cultural and demographic trends of society. Social
norms and pressures are key to determining consumer behavior. Factors to be
considered are the following: Cultural Aspects & Perceptions, Health
Consciousness, Populations Growth Rates, Age Distribution, and Career Attitudes
d) Technological Factors- linked to innovation in the industry, as well as innovation
in the overall economy. Not being up to date with the latest trends of a particular
industry can be extremely harmful to operations. Technological factors include
the following: R&D Activity, Automation, Technological Incentives, and The
Rate of change in technology
e) Environmental Factors- concern the ecological impacts on business. As weather
extremes become more common, businesses need to plan how to adapt to these
changes. Key environmental factors include the following: Weather Conditions,
Temperature, Climate Change, Pollution, Natural disasters (tsunami, tornadoes,
etc.)
f) Legal Factors- pertain to any legal forces that define what a business can or
cannot do. Legal factors include the following: Industry Regulation, Licenses &
Permits, Labor Laws, and Intellectual Property

10. CAGE Analysis: to compare a possible target market to a company’s home market on
the dimensions of culture, administration, geography, and economy. CAGE analysis
yields insights in the key differences between home and target markets and allows
companies to assess the desirability of that market.
1. Culture. Generally, cultural differences between two countries reduce their
economic exchange. Culture refers to a people’s norms, common beliefs, and practices.
Cultural distance refers to differences based in language, norms, national or ethnic
identity, levels of trust, tolerance, respect for entrepreneurship and social networks, or
other country-specific qualities.
 2. Administration. Bilateral trade flows show that administratively similar
countries trade much more with each other. Administrative distance refers to historical
governmental ties, such as those between India and the United Kingdom. This makes
sense; they have the same sorts of laws, regulations, institutions, and policies.
Membership in the same trading block is also a key similarity. Conversely, the greater the
administrative differences between nations, the more difficult the trading relationship—
whether at the national or corporate level. It can also refer simply to the level and nature
of government involvement in one industry versus another. Farming, for instance, is
subsidized in many countries, and this creates similar conditions.

3. Geography. This is perhaps the most obvious difference between countries.

Generally, as distance goes up, trade goes down, since distance usually increases the cost
of transportation. Geographic differences also include time zones, access to ocean ports,
shared borders, topography, and climate.

4. Economics. Economic distance refers to differences in demographic and

socioeconomic conditions. The most obvious economic difference between countries is
size (as compared by gross domestic product, or GDP). Another is per capita income.
This distance is likely to have the greatest effect when (1) the nature of demand varies
with income level, (2) economies of scale are limited, (3) cost differences are significant,
(4) the distribution or business systems are different, or (5) organizations have to be
highly responsive to their customers’ concerns. Disassembling a company’s economy
reveals other differences, such as labor costs, capital costs, human capital (e.g., education
or skills), land value, cheap natural resources, transportation networks, communication
infrastructure, and access to capital.
References:
 https://bit.ly/3GHlmdR
 http://bitly.ws/osrn
 http://bitly.ws/osrC
 http://bitly.ws/osrM
 https://www.answers.com/Q/Definition_of_geographic_scope
 https://www.globalnegotiator.com/international-trade/dictionary/multidomestic-
strategy/
 https://www.investopedia.com/terms/e/enterprise-risk-management.asp
 http://bitly.ws/ossw
 https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/
 http://bitly.ws/osue
 https://opentext.wsu.edu/mktg360/chapter/1-8-the-globalization-debate/
IDENTIFY THE DIFFERENT COUNTRIES THAT CAN BE CATEGORIZED TO
FOLLOWING WORLD ECONOMIES. JUSTIFY YOUR ANSWER WHY YOU
PLACED THE COUNTRY TO THE SPECIFIED CATEGORY.
 DEVELOPING WORLD DEVELOPED WORLD EMERGING MARKET

Seychelles Norway Romania

Trinidad and Tobago Ireland Bulgaria

Albania Switzerland The Czech Republic

Cuba Iceland Hungary

Iran Hongkong Slovenia

 A developing country is generally defined as one with a low level of industrial and/or
economic development, which leads directly or indirectly to social, political, economic,
and environmental challenges that significantly impede quality of life in that country.
Also known as low-income, underdeveloped countries, and/or middle-income countries
—a reference to their stunted economies—developing countries are less industrially
advanced than countries classified as high-income or developed countries. The most
challenged among them are often given the sub-classification of least developed
countries.
 A developed country is a sovereign state with a mature economy and technologically
advanced infrastructure compared to other nations. Several factors determine whether or
not a country is developed, such as its political stability, gross domestic product (GDP),
level of industrialization, social welfare programs, infrastructure, and the freedoms its
citizens enjoy. In essence, developed economies, also known as advanced economies, are
characterized as postindustrial countries—typically with a high per capita income,
competitive industries, transparent legal and regulatory environments, and well-
developed commercial infrastructure. Developed countries also tend to have high human
development index (HDI) rankings—long life expectancies, high-quality health care,
equal access to education, and high incomes. In addition, these countries often have
democratically elected governments.
 An emerging country is one whose economy is not yet fully developed yet either was in
the recent past or very likely will be in the near future. Emerging countries are also
known as emerging economies because the emphasis is on their economic development.
References:
 https://worldpopulationreview.com/country-rankings/developing-countries
 https://worldpopulationreview.com/country-rankings/developed-countries
 https://worldpopulationreview.com/country-rankings/emerging-countries

DIFFERENTIATE AND EXPLAIN THE FOLLOWING CONCEPTS

1. Corporate Strategy & Business Strategy:
  The main difference between Business Strategy and Corporate Strategy is that
business strategy includes decisions related to product choice, competition in the
market, the satisfaction of the customer, etc.
 However, corporate strategy has decisions that are more concerned with
fulfilling the expectations of stakeholders. This strategy is more focused on the
aim of a business.
Comparison Table Between Business Strategy and Corporate Strategy (in Tabular Form)

Parameter of
Business Strategy Corporate Strategy
Comparison

This strategy is concerned with A corporate strategy helps a business to

ameliorating the overall operate the whole organization. This
Meaning
performance of the organization by strategy focuses on stakeholders
helping it to achieve specific goals. meeting their requirements.

Formed by Middle level management Top level management

Business strategy copes with a Corporate strategy deals with the

Copes with particular unit or division of a operations of the whole business
business. organization.

It’s a long term strategy with

Duration It is a short term strategy.
an ultimate goal for the business.

It is focused on competing with the It is responsible for elevating profits

Aim
other products in the market. and making the company grow faster.

2. Strategic Planning Process & Strategic Formulation Process:

 The distinction is that strategy formulation is the process of deciding on new
strategies, whereas strategic planning is the process of deciding how to
implement the strategies.
 In the strategy formulation process, management arrives at the goals of the
organization and creates the main strategies for achieving those goals. The
strategic planning process then takes the goals and strategies as given and
develops programs that will carry out the strategies and achieve the goals
efficiently and effectively.
 The decision by an industrial goods manufacturer to diversify into consumer
goods is a strategy formulation, a strategic decision, after which a number of
implementation issues have to be resolved: whether to diversify through
acquisition or through organic growth, what product lines to emphasize, whether
to make or to buy, which marketing channels to use the document that describes
how the strategic decision is to be implemented is the strategic plan.
3. International Strategy and the Local Environment:
 International strategy is a business plan or strategy created by a company to do
its business in international markets. An international strategy requires analyzing
the international market, studying resources, defining goals, understanding market
dynamics & develop offerings. International strategy for a company looking to
grow is a continuous process.
 Local environment is an international refereed journal which focuses on local
environmental and sustainability policy, politics and action. It is a forum for the
examination, evaluation and discussion of the environmental, social and economic
policies and strategies which will be needed in the move towards sustainable
development at local, national and global levels.

4. Coexistence Approach and the Structural Separation Approach:

 The Coexistence Approach is a firm may seek to develop a new business around
some valuable process or technological breakthrough. With the coexistence
approach, the new venture activities are conducted within an existing business or
business unit. Typically, an executive or group of executives will champion the
innovation, and the process will proceed when the business concept has been
tentatively validated and many of the major uncertainties resolved or reduced.
 The second form of organizational intrapreneurship, in which the firm sets up an
internal new-venture division, is actually a structural solution to these same
problems. In many ways, this division acts like a venture-capitalist or business
incubator, working to provide expertise and resources and to impart structure and
process in developing the new opportunity. In this case, too, the opportunity may
revolve around some proprietary process, product, or technological breakthrough.
 The advantage of the structural approach is the system for investing in a team
that’s assigned specifically to the creation of new ventures. If the system is
managed properly, these divisions can function like the best venture-capitalist
operations—that is, they can be cost conscious while still encouraging risk taking,
experimentation, and novel, market-oriented solutions. Even this approach,
however, falls far short of creating a win-win situation. A new-venture division—
and for that matter, new venturing in any form—is a form of diversification, with
the firm betting that it has the resources and capabilities to do something new.

5. Strategies for handling voids:

When a firm detects an institutional void, it has three choices for how to proceed in
regard to the potential target market: (1) adapt its business model, (2) change the
institutional context, or (3) stay away.
 For example, when McDonald’s tried to enter the Russian market, it found an
institutional void: a lack of local suppliers to provide the food products it needs.
Rather than abandoning market entry, McDonald’s decided to adapt its business
model. Instead of outsourcing supply-chain operations like it does in the United
States, McDonald’s worked with a joint-venture partner to fill the voids. It
imported cattle from Holland and russet potatoes from the United States, brought
in agricultural specialists from Canada and Europe to improve Russian farmers’
management practices, and lent money to farmers so that they could invest in
better seeds and equipment. As a result of establishing its own supply-chain and
management systems, McDonald’s controlled 80 percent of the Russian fast-food
market by 2010. The process, however, took fifteen years and $250 million in
investments.

 An example of the second approach to dealing with an institutional void—

changing the institutional context—is that used by the “Big Four” audit firms (i.e.,
Ernst & Young, KPMG, Deloitte Touche Tohmatsu, and
PricewaterhouseCoopers) when they entered Brazil. At the time, Brazil had a
fledgling audit services market. When the four firms set up branches in Brazil,
they raised financial reporting and auditing standards across the country, thus
bringing a dramatic improvement to the local market.

 Finally, the firm can choose the strategy of staying away from a market with
institutional voids. For example, The Home Depot’s value proposition (i.e., low
prices, great service, and good quality) requires institutions like reliable
transportation networks (to minimize inventory costs) and the practice of
employee stock ownership (which motivates workers to provide great service).
The Home Depot has decided to avoid countries with weak logistics systems and
poorly developed capital markets because the company would not be able to attain
the low cost–great service combination that is its hallmark.
 6. Level of Corporate Strategy in the International Operations:
The International corporate level strategy consists of three types of strategies which are
the multi-domestic, transnational and global strategy.
 A firm using a multi-domestic strategy does not focus on cost or efficiency but
emphasizes responsiveness to local requirements within each of its markets.
Rather than trying to force all of its American-made shows on viewers around the
globe, Netflix customizes the programming that is shown on its channels within
dozens of countries, including New Zealand, Portugal, Pakistan, and India.
Similarly, food company H. J. Heinz adapts its products to match local
preferences. Because some Indians will not eat garlic and onion, for example,
Heinz offers them a version of its signature ketchup that does not include these
two ingredients.
 A firm using a transnational strategy seeks a middle ground between a multi-
domestic strategy and a global strategy. Such a firm tries to balance the desire for
lower costs and efficiency with the need to adjust to local preferences within
various countries. For example, large fast-food chains such as McDonald’s and
Kentucky Fried Chicken (KFC) rely on the same brand names and the same core
menu items around the world. These firms make some concessions to local tastes
too. In France, for example, wine can be purchased at McDonald’s. This approach
makes sense for McDonald’s because wine is a central element of French diets.
 A firm using a global strategy sacrifices responsiveness to local requirements
within each of its markets in favor of emphasizing lower costs and better
efficiency. This strategy is the complete opposite of a multi-domestic strategy.
Some minor modifications to products and services may be made in various
markets, but a global strategy stresses the need to gain low costs and economies
of scale by offering essentially the same products or services in each market.
Microsoft, for example, offers the same software programs around the world but
adjusts the programs to match local languages.

References:
 http://bitly.ws/oswe
 http://bitly.ws/oswx
 https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/7476-
international-strategy.html
 https://saylordotorg.github.io/text_international-business/s15-05-from-
entrepreneurship-to-intra.html
 https://opentext.wsu.edu/mktg360/chapter/6-3-selecting-target-markets-and-target-
market-strategies/
 https://www.researchgate.net/journal/Local-Environment-1469-6711
 https://pressbooks.lib.vt.edu/strategicmanagement/chapter/9-4-types-of-
international-strategies/