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International Business - Coggle Diagram

- - - - visible (behaviour), invisible (perceptions, attitudes, values and beliefs)
        
        conceptual ladder (6). values - parents, beliefs - peers and heroes, attitudes - relationships, opinions - experience, knowledge - experience, behaviour - reality
    - - provides a point of reference
        -assumed similarity between people
        -values, language races
      - we vs. them
      - sub-cultures some are transitional -ethnic groups -race -class
      - behavioural and demographic characteristics that affect business
      - culture is continuously developing (by choice or by imposition). -language -religion -ascribed (born into) vs. acquired members -closed vs. open society
      - implications:
        -advertising (NC will have an impact on how you're advertising, on what you're advertising, sometimes some sorts of images might not be allowed)
        -use of images
        -use of language
        -use of symbols
        -consumer purchase behaviour
        -marketing
    - - high-context culture:
        -long-lasting relationships
        -exploiting context
        -spoken agreement
        -insider and outsider clearly distinguished
        -cultural patterns ingrained: slow changes
        -Asia, Latin America, Middle East
        -what is said and how or where it is said are significant
        High-context cultures are about values and traditions, there is long relationship, importance of non-verbal signs, facial expressions, body language. They tend to be non-confrontational and more indirect; rejection is to be interpreted from none explicit communication
      - low-context culture:
        -shorter relationships
        -less dependant on context
        -written agreement
        -insider and outsider less clearly distinguished
        -cultural patterns change faster
        -USA, Germany
        -what is said is more important than how or where it is said
        In low context cultures, they tend to make many shallower short-term relationships and they require explicit communication, very direct, confrontational, more individualistic
      - implicit communication refers to all nonverbal elements such as choice of words, gestures, tone, sentence, construction, immediacy of information and enrichment in message
    - - criticism (4)
        -one company approach (can you generalise from IBM?
        Do 6 dimensions really explain all aspects of national culture
        -what other aspects are important now (e.g. sustainability)
        -can a survey really tell you how people feel -is the 'nation' the best unit tot measure? Are they homogeneous?
        -is the study still relevant? or is it out-dated? (2010)
      - cultural dimensions
        
        high vs. low power distance (PDI)
        
        high PDI - hierarchy. boss: sole decision-maker, conflict solver, unchallenged, employee: executer, obedient and acceptant
        
        low PDI - consolidation. consolidation, challenge within reason mediator
        
        individualism vs. collectivism (IDV). Austria > Croatia
        
        individualism -self-made man, independent, 'one against the world'
        
        collectivism -group protection -part of community -strong relationship
        
        masculinity vs. femininity (MAS). Germany > mascul. Canada
        
        masculinity -achievement -heroism -assertions -material rewards for success *competitive society
        
        femininity -cooperation -modesty -caring for wear - quality of life *consensus
        
        uncertainty avoidance index (UAI). society's tolerance for uncertainty and ambiguity
        -do people feel comfortable in unstructured situations
        -low: acceptance of innovative ideas and eccentric behaviour
        Brazil> US, more open towards unstructured situations
        
        Long vs. short-term orientations (LTO). Germany>USA
        
        short-term orientation.
        -immediate gratification
        -present/past more important than future
        -tradition
        
        long-term orientation -future focus -delay short-term material goals -persistance -perseverance
        
        indulgence vs. restraint (IND). Mexico>France. added in 2010
        
        indulgence - free gratification of basic and human drives related to enjoying life and having fun
        -perceived life control
        -optimism
        -extrovert
        -friends are important
        
        restraint - suppresses gratification of needs and regulates it by strict social norms
        -less life control
        -pessimism
        -introvert
        -friends are less important (facebook society)
    - - -a slowdown in overseas markets -increased domestic and international competition -cultural differences - low brand awareness -a lack of localisation/understanding (products, communication) -low touchpoint relevancy (lacking connectivity with the Chinese consumer smartphone drive lifestyle)
- - - - was developed when the wealth was measured in gold and silver and it was believed to be fixed
      - a positive balance of trade improves a country's well-being economically
      - governments should encourage exports and stifle imports to accumulate wealth. self-sufficiency leads to protectionism
      - Adam Smith didn't believe that because exports of one country are imports of another
    - - to increase a nation's economic well-being, nations should specialise in the production of g&s they can produce more efficiently than anyone else
    - - free trade, specialisation, win-won game
      - socialisation - when an individual focuses on producing one thing or performing one part of a task
      - it is beneficial for 2 countries to trade even if one has absolute advantage in the production of both/all products. It is relative efficiency that matters
- - - - of first mover -marketing, -international business, -technology
    - - ownership-specific advantage -refers to proprietary advantages: tangibles (patented techn., brand names, product designs etc) or intangibles -includes strenghts in coordination and operations like management know-hows, EOS etc. -with owndership-speicific advantage, they have the potential to expand to foreign countries
      - location-specific advantage. may include future endowments like natural resources or factors of production, demand conditions etc as indicated in the diamond model
        
        natural resources, labour cost, demand conditions, culture, high-skilled labour, trade barriers restricting imports
        
        the nature of these factors make certain countries more attractive
      - internalisation advantage (cost of making and enforcing contracts, buyer uncertainty, need for control, opportunistic behaviour, negotiating price (due to limited supply in the market)
        
        transactional costs (seeking and finding the partner, negotiating the price) of an arm-length relationship, higher than managing the activity within the MNC;s boundaries
        
        control derived from internalising foreign-based manufacturing, distribution or other value chain activities
  - - - a function of international trade whereby g&s produced in one country are shipped to another country for future sale or trade
      - most common entry mode, often used by firms to sell their surplus
      - is considered as a potential source of extra sales or extra revenue, which makes foreign markets as an extension of home country operations --> provides EOS
      - remember the diagram of direct and indirect sales
        
        the more intermediaries in the business, the less market knowledge the company will have --> costs and loss of control
    - - licensing - an arrangement in which the owner of intellectual property grants another firm to use that property for a specified period of time in exchange for royalties or other compensations
        
        E.g. patents, trademarks, copyrights
        
        Micky Mouse or Marvel. A new waterproof treatments of products. Top licensors: The Walt Disney, Meredith Corporation, Authentic Brands Group. E.g. Luxottica (Italian Brand, a licensee of many other brands have signed CA with D7G, Prada, Chanel, Versace
      - franchising - an agreement in which the firm allows another firm the right to use an entire business system in exchange for fees, royalties or other compensations.
        
        the benefit is that it allows international expansion at a significantly lower costs
        
        drawback is the risk of creating a future competitor, poor quality, qontrol etc.
        
        misguided to launch franchise stores in the middle east, ted baker to expand in India with Aditya Birla
    - - types of FDI
        
        greenfield investtment
        
        firms invest to build a new manufacturing, marketing or administrative facility
        
        E.g. H&M group chooses to build their new brand &other stories in-house by greenfield investment. Better control of the operations and they won't need to commit substantial upfront investment as compared to merger and acquisition
        
        merger & acquisition
        
        acquisition: direct investment to purchase an existing company or facility
        
        reasons for acquisition: -to get not only labour and management, but also an existing organisation with experience coordinating functions: PD and the subsequent marketing of the developed product -to get brand identifications and access to distribution
        
        E.g. LVMH acquired Rimowa and Tiffany --> will be given expertise, the personnel, distribution, marketing and the whole package, much quicker to enter the industry
        
        merger: special type of acquisition in which 2 firms join to form a new larger company
        
        they are very rare
      - nature of ownership
        
        wholly owned subsidiary is a company whose common stock is 100% owned by the parent company
        
        more ownership - more control
        
        joint venture - a business arrangement in which 2 or more parties agree to pool their resources for the purpose of accomplishing a specific task
        
        when subsidiaries has more to do with marketing and sales, they may need in-depth market knowledge, they will often find local counterparts to collaborate
        
        E.g. Inditex set up a joint venture with Tata group in India to. help expand their markets. E.g. Furla established joint venture with Fung Capital Asia in China to help manage the sales and distribution. They hope that local counterparts can provide the knowledge to the customers, to the distribution, to the retails that the parent company doesn't have
- - - - skimming strategy. charging high prices for a new product, progressively lowering the prices. still profitable even if one item is produced, exclusive, targeting, limited amount of of people
      - penetration strategy. low prices to induce a max number of consumers
      - cot-plus strategy. pricing at a desired margin over cost
      - psychological
        
        prestige pricing: high prices to convey quality and exclusivity
        
        odd-even pricing: low or high price points in certain endings: £1.99
      - target pricing. starts with determining the price at which a product must be sold to meet a specific profit margin
    - - government interventions
        
        laws and regulations affect pricing in countries (min and max prices, WTO permits countries to establish restrictions against any import entry at a price below cost)
      - export price escalations. seemingly exportable goods may turn out to be non-competitive (cost+. strategy_
      - economic instability: currency fluctuations
      - pricing cues: sales signs, odd-number pricing, the purchase context and price bundling and rebates
      - ultra-fast fashion
  - - - employment practices: -job creation -fair living wage -safety health-related issues
      - environmental regulations e..g pollution
      - social responsibility. idea that businesses should take the social benefits into account when making decisions
  - - - ethnocentric perspective (familiar, lota, leakage, demoralise, discourage)
      - polycentric (better equipped adapt to differences, closer, needs and preferences, cheaper, showd respect, potential disengagement)
      - geocentric. not tied to a specific country, seek the best people regardless of nationality, lateral knowledge flow, challenge to find that talent and keep it
- - - - international strategy. aim to leverage core competencies, home-replication strategy, opportunity to extend PLC, generate additional sales for domestic product lines. when target markets are similar to the home ones, decisions are made in HQ, subsidiaries dont take much initiatives, early stage of internationalisation
      - multi-domestic strategy. pressure for local responsiveness>global integration. foreign subsidiaries are allowed to respond, equipped with wide organisational functions, decentralised decision-making can be made locally to increase timeliness, subsidiaries have the autonomy and resources to adapt their practices to local circumstances, greater flexibility at a cost of efficiency, substantial duplication of resources, cost ineffective, difficult to coordinate, might be competing, reluctancy to share
      - global standardisation strategy. maximise integration to be cost-competitive, centralised control, little differences between countries, sell common product, targeted for a world market, achieve outmost efficiency to be competitive in cost, high quality, low cost, success on product design and rigorous. coordination of the global value chain, little decision-making authority is delegated to local levels unless it is related to the improv of efficiency. e.g. LVMH and H&M
      - transnational strategy. cost-efficient and locally responsive. standardise where feasible, adapt where appropriate, facilitated by global learning and. knowledge transfer, leverage specialised knowledge and promote worldwide learning. foreign subsidiaries are encouraged to learn and innovate from their dealing with local counterparts, acknowledged sharing platform within MNC, subsidiaries are independent, HQ effective, strong relationship. E.g. Ikea