Chapter 2: Understanding the International Context: Responding to Conflicting Environmental Forces

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Chapter 2: Understanding the International Context: Responding to Conflicting Environmental Forces by Mind Map: Chapter 2: Understanding the International Context: Responding to Conflicting Environmental Forces

1. Forces for Global Integration and Coordination

1.1. Economies of Scale

1.2. Economies of Scope

1.3. Factor Costs

1.4. Liberalization of World Trade

1.5. Global Competitors as Change Agents

1.5.1. Global Chess/ Cross-subsidizaition of markets

2. Forces for Local Differentiation and Responsiveness

2.1. Cultural Differences

2.2. Government Demands

2.2.1. Love-Hate Relationship

2.2.1.1. Love

2.2.1.1.1. MNE gives host government funds, technology and expertise

2.2.1.1.2. Government is key to local market and resources for MNE

2.2.1.2. Hate

2.2.1.2.1. MNE wants

2.2.1.2.2. Host Government wants

2.2.2. New Trend

2.2.2.1. Cash-rich governments like China invest in foreign resources through government owned companies

2.3. Growing Pressures for Localization

2.3.1. Despite Globalization, people still have different demands in different countries

2.3.2. Advantage for company that is sensitive and responsive to local requirements

2.3.3. Centralization to achieve economies of scale often not cost effective

2.3.3.1. Costs higher than initially expected!

3. Forces for Worldwide Innovation and Learning

3.1. Advantage for companies that can acquire and use information and expertise around the globe most efficiently and produce innovations on a worldwide basis

3.2. Newest trends might emerge in Japan or Italy, companies need to broaden their focus outside their home market

4. Responding to the Diverse Forces Simultaneously

4.1. Global Industries

4.1.1. Economic Forces of Globalization are dominant

4.1.2. Capitalize on highly centralized, scale-intensive manufacturing and R&D operations and use them in worldwide exports of standardized products

4.2. Multinational Industries

4.2.1. Multiple national industry structure

4.2.2. Exploits the differences between cultures by having strong and resourceful national subsidiaries

4.3. International Industries

4.3.1. Innovate and exploit the life cycle of your products by transferring new found technology to overseas

4.3.2. Innovate and create new product in home market and then distribute it to foreign affiliates

4.4. Transnational Industry

4.4.1. Global, Multinational and International traits are needed