Flashcards on Fundamentals of International Business

Fundamentals of International Business: A Comprehensive Guide

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What is externalization in the context of global strategy and what are its main advantages?

Using outside suppliers. Advantages: lower cost, access to specialists, greater flexibility.

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Global Strategy & Risk

39 cards

Card 1

Question: What is externalization in the context of global strategy and what are its main advantages?

Answer: Using outside suppliers. Advantages: lower cost, access to specialists, greater flexibility.

Card 2

Question: What decision is concerned with the geographic arrangement of a firm's activities?

Answer: Where activities should be located (keep at home vs. move abroad).

Card 3

Question: What are three advantages of keeping activities at home?

Answer: Better control, easier communication, and (implicit) proximity to headquarters.

Card 4

Question: What are three advantages of moving activities abroad?

Answer: Lower costs, access to talent, and proximity to customers.

Card 5

Question: What does configuration of value-adding activities mean? Give an example.

Answer: Where value chain activities are located. Example: design in Germany, manufacture in China, market in the U.S., customer service from India.

Card 6

Question: Define global sourcing and give its alternative names.

Answer: Obtaining products, services, or components from suppliers around the world. Also called global procurement, global purchasing, or importing.

Card 7

Question: List key characteristics of global sourcing.

Answer: Low control (buying from independent suppliers), contractual relationships, and often the first step in internationalization.

Card 8

Question: Give one example of a major company and its global sourcing practice.

Answer: Walmart: imports more than $30 billion annually from China (other examples include Apple ~70% production abroad; Gap >80% apparel from Asia; Nike subc

Card 9

Question: Name three reasons why global sourcing has grown.

Answer: Better technology (internet/telecom), lower trade barriers, and growth of emerging markets.

Card 10

Question: What is captive sourcing?

Answer: Sourcing from the firm's own foreign subsidiary so the activity remains internal.