The strategic management process involves four major functions: strategy formulation, strategy evaluation, strategy implementation, and the control of operations. These functions include a wide range of activities, beginning with an environmental analysis of external and internal conditions and the evaluation of organizational strengths and weakness.
• Strategy formulation - Identification of the company’s basic mission, such as what is the firm’s business? What is the reason for existence? What it will do in the future?
• Strategy evaluation - Identify the opportunity and threat by evaluating the external and internal conditions.In corporate strategy, Johnson and Scholes present a model in which strategic options are evaluated against three key success criteria:
- Suitability (would it work?)- Feasibility (can it be made to work?)- Acceptability (will they work it?)
• Strategy implementation – different cultural backgrounds and Political and Economic environment should be taken into account.
• control of operation
1 用心用情 服务社会 自信考试 诚信做人 2. five dimensions through which comparisons of cultures are possible.
Culture: Culture can be described as a set of rules, norms, and values which is often
subconscious
but
influences
our
perception,
judgments
and
feelings.According to the Hofstede’s Cultural Dimensions Theory, there are tfive dimensions of cultures: Power distance, Individualism versus collectivism, Masculinity versus femininity, Uncertainty avoidance, Long-term versus short-term orientation.
3. Give example and explain why the culture in host countries may influence the costs of business activities.
The host culture can influence the costs of business actibities by the following aspects:
Language. Religion. Etiquette(礼节). Substance（物质）. Aesthetic（审美）. Education. Hierarchy（阶层）.
4. The relationship between globalization and regional economic integration.
(1) There are many differences between globalization and regional economic integration:- Globalization relies mainly on scientific and technological progress, transnational economic, capital and markets, as well as the promotion of market mechanism，which is dominated by market mechanism. Meanwhile,
2 用心用情 服务社会 自信考试 诚信做人 regional economic integration aims to regional economic coordination, balance and orderly development of the objective. - Globalization unites the world through the market mechanism, but regionalization unites the world through the negotiation and agreement between the governments.- In the state of global free market, it is difficult to avoid the risk; while in the state of regionalization, risk can get controlled and eliminated.
(2)Regional economic integration is the only way to achieve
economic globalization.
(3)Regional economic integration is a second best option.
(4)BUT the impediment to globalization stem from regional economic integration is more evident.
(5) globalization and REI would come to the same end, although they are contradicted.
5. The major achievements of European economic integration.
A growth in economic power It is the largest economy in the world by nominal GDP and the second largest trade bloc economy in the world by PPP valuation of GDP. It is also the largest exporter , and largest importer of goods and services
3 用心用情 服务社会 自信考试 诚信做人 Single market build in 1992 Free movement of goods、persons、services、capital
Common agricultural policy. The CAP was created in 1957 under the Treaty of Rome and started operating in 1962. The EEC member countries have transferred some of their law-making authority to the EU in certain policy areas.
Monetary union 16 EU countries have introduced the euro as their sole currency. The creation of a European single currency became an official objective of the EU in 1969. With the advent of the Maastricht Treaty in 1993 , member states were legally bound to start the monetary union no later than 1 January 1999.
Budget The European Union has established a common budget system.
Competition The EEC operates a competition policy intended to ensure undistorted competition within the single market. The Commission as the competition regulator for the single market is responsible for antitrust issues, approving mergers, breaking up cartels, working for economic liberalization and preventing state aid.
6. Please discuss the drivers and characteristics of globalization.
Globalization means an increasingly interconnected world, as a result of very rapid increases in telecommunications and computer-based technologies and products, a dramatic expansion in cross-border financial flows and within
4 用心用情 服务社会 自信考试 诚信做人 countries has emerged.Two macro factors underlie the trend toward greater globalization. The first is the decline in barriers to the free flow of goods,services,and capital that has occurred since the end of world war two.The second factor is technological change, particularly the dramatic developments in recent years in communication,information processing, and transportation technologies.
(1)There are five broad groups of industry globalization drivers as below:
Market Drivers、Technological driver、Cost drivers、Political Drivers、Competitive Drivers
(2)The characteristics of globalization can be reflected from the following aspects:
Trade liberalization、Financial liberalization、Production integration
7. What may be the motivations of Merger and Acquisition and what cautions should be taken in A&M?
Motivation for mergers and acquisition:
(1)Synergy motivations is created from economies of integrating a target and acquiring a company; the amount by which the value of the combined firm exceeds the sum value of the two individual firms.
5 用心用情 服务社会 自信考试 诚信做人 (2)Value Creation Motivations
- Economies of Scale: Reducing capacity, spreading fixed costs, geographic synergies
- Economies of Scope: Combination of two activities reduces costs
- Complementary Strengths: Combining the different relative strengths of the two firms creates a firm with both strengths that are complementary to one another.
- Efficiency Increases: New management team will be more efficient and add more value than what the target now has; the combined firm can make use of unused production/sales/marketing channel capacity.
- Financing Synergy: Reduced cash flow variability, increase in debt capacity, reduction in average issuing costs, fewer information problems.
- Tax Benefits Make better use of tax deductions and credits
- Strategic Realignments: Permits new strategies that were not feasible for prior to the acquisition because of the acquisition of new management skills, connections to markets or people, and new products/services.
(3)Managerial Motivations
6 用心用情 服务社会 自信考试 诚信做人 - Increased firm size Managers are often more highly rewarded financially for building a bigger business
- Reduced firm risk through diversification M&As can be used to diversify the company and reduce volatility (risk) that might concern managers.
Cautions to take:
1.Evaluate the attractiveness and potential profits of target firm’s industry.2.Don’t violate the law of the country where target firm exist.3.Pay attention to the capital structure and make sure the full control of the merged company.4.Try to mitigate the host country's national consciousness and overcome the cultural differences within the enterprise.5.The transaction risk would bring a large sum of loss because of the fluctuating macro-environment.
8. Why do more and more MNCs establish strategic alliances with other firms?
Strategic alliances refer to cooperative agreements between potential or actual competitors.Firms ally themselves with potential or actual competitors for various strategic purposes.
First,strategic alliances may facilitate entry into a foreign market.Through the strategic alliance,MNCs can expand the market space to achieve scale economy in the wider market range.
7 用心用情 服务社会 自信考试 诚信做人 Second,strategic alliances allow firms to share the fixed costs and associated risks of developing new products or processes.
Third,an alliance is a way to bring together complementary skills and assets that neither company could easily develop on its own.It helps MNCs promote the learning ability of organization, develop core competitiveness, and strengthen the long-term competitive advantage.
Fourth,it can make sense to form an alliance that will help the firm establish technological standards for the industry.Once a kind of technology turns to an industry standard, it can get huge network monopoly earnings,help the firm achieve market leading position and market manipulation of power that will benefit the firm.
9. Please argue for the importance or/and unimportance of “strategy”.
Strategy is a set of action that managers adopt to help the company achieve its goal. A clear strategy can help companies participate in the competition more effectively in competitive international market; It can also help to coordinate activities of all different departments in the company to complete the whole goal by most efficient way. (1) strategy can make the enterprise achieve their strategic objectives in a planned way Strategic goal shows the direction level that the enterprise want to obtain in a certain period of the production and business operation activities. According to their strategic thought, strategy helps enterprises achieve the expected target in their development direction and
8 用心用情 服务社会 自信考试 诚信做人 path.Under the consideration of the changes in the external environment and the characteristics of the enterprise,each enterprise should puts forward the principle of its own special style to promote the development of the enterprise.
(2) strategy can make enterprise management decision scientific and systematic Correct decisions can lead to good economic effect and promote the development of the enterprise.Through the strategy formulation, implementation, evaluation and control, enterprise management decision is scientific and systematic, then establishs a complete organism to adapt to the enterprise changes in the external environment.
(3) strategy can make effective use of resources to achieve the optimal objective Based on fully research of internal conditions and external environment of enterprise, strategy must balance effective configuration of both internal business resources and external environment resources in order to seek the long-term development of the enterprise and the optimization of system target.
(4) strategy can enhance the competitive ability of enterprises in the market Through the information feedback system and the analysis of the enterprise internal and external environment,enterprises can adjust strategy to improve capability in time. Strategy helps to keep the enterprise dynamic adaptability to the environment and relative stability, so as to improve the enterprise permanence competitive ability.
9 用心用情 服务社会 自信考试 诚信做人 In short,strategy is very important for enterprises' management.
10. Discuss the merits and demerits of core competence strategy and diversification strategy.
Core competence: The knowledge and skills integrated(整合) Within an organization, especially about how to coordinate a variety of production skills and to integrate knowledge and skills of different technologies.
The merits of core competence strategy:
1) Be better to concentrate all the enterprise’s resource, which serves for the specific objective2)Objectives are focused on specific markets, so that the company could invest some technology, market, consumers and competitors of the core products in a more effective method3) Core competence is inimitability. Core competence has became a source of sustainable competitive advantage. because of its core competence, the enterprises can survive from the fierce competition.4)The strategy is clear; effectiveness of business is more convenient to calculate and it is easier to control the strategy management.
The demerits of core competence strategy:
1)When consumers’ preference has changed, the company couldn’t gather enough resource to gain these new markets, because all the resource is spent in the specific objective, and the company is hard to transfer these resources to new
10 服务社会 用心用情 自信考试 诚信做人 fields2)The competitors enter the enterprise’s specific objective market, and they take better strategy than the enterprise’s core competence strategy3)With upgrade of the core product, cost of production increases, which leads to the weakness of the core competence strategy’s merits
Diversification strategy
The merits of diversification strategy:
1)The enterprise could transfer the exclusive skills, production skills and technology from one operating to another2)The enterprise could combine different operating businesses, which reduces the cost 3)The enterprise could take advantage of the precious brand in new operating businesses4)The enterprise could implement the value chain activities related to building valuable competence
The demerits of diversification strategy:
1)When the company decides to enter new field, it always faces vast risk of related operating2)As the company distributes the limited resources to different operating businesses, it is difficult for the company to deal with conflict between multiple objectives and limited resources3)If the enterprise makes a mortal mistake in one of operating businesses and could not disinvestment from that, the mistake might lead the company to jeopardize
11 服务社会 用心用情 自信考试 诚信做人 11. Compare the different characteristics of multidomestic strategy and global strategy.
1）Multidomestic strategy is subject to low cost pressures, but need to adapt locally.Example: GM with respect to European operations. By contrary, Global strategy is subject to high cost pressures and little necessity to adapt locally (standardize)Example: Semi-conductor industry: Intel and Motorola.
2）When you come to talk about Multidomestic strategy, its Strategy and operating decisions are decentralized to strategic business units (SBU) in each country. But in global strategy, Decisions regarding business-level strategies are centralized in the home office. In a word, global strategy requires more centralized decision-making than multidomestic strategy does.
3）Products and services in multidomestic strategy are tailored to local markets, while in global strategy Products are standardized across national markets.
4）Business units in one country in multidomestic strategy are independent of each other, while in global strategy, the Strategic business units (SBU) are assumed to be interdependent.
5）Multidomestic strategy assumes markets differ by country or regions, and focus on competition in each market; Global strategy emphasizes economies of scale and often lacks responsiveness to local markets.
12 服务社会 用心用情 自信考试 诚信做人 6）Multidomestic strategy is a kind of prominent strategy among European firms due to broad variety of cultures and markets in Europe, but Global strategy still requires resource sharing, coordination across borders (which makes it difficult to manage), and more centralized decision-making than multidomestic strategy does.
12. What are the international business risks and how to manage these risks?
Many risks in business have to be considered so that entrepreneurs could prolong their lives in the business arena. Factors such as national laws, political situations, international treaties as well as globalization should be taken in consideration since they could directly affect international business transactions in one way or another.
The risks of doing business are determined by a number of political, economic, and legal factors:Political risk is the likelihood that political forces will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise. Economic risk is the likelihood that economic mismanagement will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise. Legal risk is the likelihood that a trading partner will opportunistically break a contract or expropriate property rights.
To reduce the risk of government intervention, the international firm needs to
13 服务社会 用心用情 自信考试 诚信做人 demonstrate that it is considered with the host country's society and that it considers itself an integral part of the host country,rather than simply an exploitative foreign corporation.Ways of doing this include intensive local hiring and training practices,better pay,contribution to charity and useful investments for the society.Another action that can be taken by corporations to protect against political risk is the close monitoring of political development.Firms can also take out insurance, like OPIC(海外私人投资公司）, to cover losses due to political and economic risk.
At the same time,Foreign Exchange Risk is a major international business risk.It includes transaction exposure,accounting exposure and operation exposure. A firm that insures itself against foreign exchange risk is hedging.Firms can hedge their risk by entering into forward contracts to purchase the necessary currency and lock in the exchange rate, but this will also raise costs.They can also use a leading and lagging（提前错后支付）,parallel loan（平行贷款）or currency swap（货币兑换）to lessen their risk.
13. How can a firm use international capital markets?
The international capital markets gathers different borrowers and lenders in the domestic capital market of each country, whose growth has created opportunities for international business that wish to borrow and/or invest money. On the borrow side, by using the international capital markets,firms can often borrow funds at a lower cost than is possible in a purely domestic capital market. When a firm cannot acquire the fund in domestic capital market, it can turn to the
14 服务社会 用心用情 自信考试 诚信做人 foreign ones in the international capital markets, and obtain the opportunity which seems impossible within the domestic capital market. If domestic capital competition is too fierce, expand monetary supply still can make those enterprises which are small but full of potential benefit from it. At the same time, expand monetary supply can decrease the cost of loans, because just like other commodities, monetary has the price itself. According to Market demand and supply mechanism, the more supply of capital,the lower interest rate. This conclusion holds no matter what form of borrowing a firm uses——equity, bonds,or cash loans.The lower cost of capital on the international markets reflects their greater liquidity and the general absence of government regulation. Balanced against this, however, is the foreign exchange risk associated this borrowing in a foreign currency.
On the investment side, international capital market broaden new avenues for enterprise financing. The growth of the international markets is providing opportunities for firms to diversify their investment to limit risk. By holding a diverse portfolio of stocks and bonds in different nations, whose price changes independently, the firm can reduce total risk to a lower level than that can be achieved in a purely domestic setting. Once again, however, foreign exchange risk is a complicating factor. This means that, while enterprises make full use of the advantage of international capital market, they must strengthen the management of foreign exchange risk.Firms must balance the foreign exchange risk associated with borrowing in foreign currencies against the costs savings that may exist.
14. Describe the new trends of MNCs strategy and structure and explain
15 服务社会 用心用情 自信考试 诚信做人 the reasons.
[flat(cost↓efficiency↑), flexible(sensible to market), network( IT to innovation + management]
∵enterprise competition environment change and organization skills development needs,
∴multinational companies have reinforced the organization structure, it presents a Flattening , flexibility and the trend of the network.
1.Flattening traditional : a pyramid structure, present : Flattening
To reducing the management level and cut the excess of employees to set up a contracted structure. For improve the efficiency of the organization skills.
∵Through this way, the enterprise delegates to employees, stimulate staff motivation, staff training independent work and coordination ability, which established a new type of service relationship.
2. flexibility Be sensible to the modern market demand, try to use organizational structure to adapt to the modern high flexible production technology.
3. network management structure: economic globalization + international Internet
16 服务社会 用心用情 自信考试 诚信做人 Use the IT skill to achieve resource management and information exchange. Emphasize IT helps to improve efficiency and get win-win innovation. It helps to manage subsidiaries all around the world.
15. How to select and manage the strategic alliance partners?
Selection = conduct researches on potential alliance candidates.
1) collect information
2) gather data from informed third parties ( firms，investment bankers，former employees)
3) Try to get to know possible
4) face-to-face meetings
Alliance Structure
Once a partner has been selected, the alliance should be structured: to make it difficult to transfer technology not meant to be transferred;with contractual safeguards written into the alliance agreement to guard against the risk of opportunism by a partner;to allow for skills and technology swaps with equitable gains ;to minimize the risk of opportunism by an alliance partner.
Management
17 服务社会 用心用情 自信考试 诚信做人 1) sensible to cultural differences + building trust
2) interpersonal relationships (relational capital)
3) learn from its alliance partner (partner`s strengths and weaknesses + technology )
16. Why do more MNCs establish strategic alliances with domestic firms and firms from abroad?
1. definition cooperative agreements between potential or actual competitors.
2. 1) facilitate entry into a foreign market.Many fast-growth technology companies use strategic alliances to benefit from more-established channels of distribution, marketing, or brand reputation of bigger, better-known players. They can achieve geographic expansion, cost reduction, manufacturing, and other goalsthrough the strategic alliance. What`s more, they can achieve scale economy in the wider market range.
2) share the fixed costs and risks of developing new products. Gain access to a partner's resources (markets, technologies, capital and people). So as to save time and boost productivity, leading to grow more efficiently. They can concentrate on innovation and their core business.
3) bring together unique skills and assets (hard to develop by its
18 服务社会 用心用情 自信考试 诚信做人 own).promote the learning ability of organization, develop core competitiveness, and strengthen the long-term competitive advantage.
4) establish technological standards for the industry. Once technology → industry standard= get huge network monopoly earnings, help the firm achieve market leading position
17. Organizational structure has three dimensions:
1. Vertical differentiation - the location of decision-making responsibilities within a structure
2. Horizontal differentiation - the formal division of the organization into sub-units
3. The establishment of integrating mechanisms - the mechanisms for coordinating sub-units
18. What factors should be taken into account when firms select foreign entry modes?
②macro-environment. Good : political stability, liberal investment policy, high national income and the stable exchange rate= take investment patterns
③Geography and social cultural environment. a. the distance between domestic and the target countries is far= contract models or investment mode. For
19 服务社会 用心用情 自信考试 诚信做人 saving the cost of the long-distance transportation b. social culture is different = export mode or contract models. For avoid the culture clashes .Materials, labor, capital market, infrastructure, etc) easily acquired and prices. c. production elements and the prices are low, infrastructure is perfect = investment or export mode.
①The size and competition structure of the market
c. market structure : extensive market competition degree : higher=the export model
b. competition structure : monopoly type,= contract models or investment patterns For: enough ability and strength to compete against the enterprise in local.a. market size : in large scale / great market potential,= using investment patterns to enter the market, Or export mode and contract models, For: the efficient use of the enterprise resources.
⑦Enterprise resources and input factor.
a. If enterprise has abundant resources in management, capital, technology, process, and sales,
the enterprise has more choice in choosing entry mode.
b. If the enterprise has sufficient resource,it can take export mode and
20 服务社会 用心用情 自信考试 诚信做人 contract models. After the enterprise gain international marketing experience, it can change their mode to direct investment mode.
⑥Core competitiveness of the enterprise. As to core competitiveness, the enterprise can be divided into two kinds: the technological competitiveness and management skill.
b. the technological competitiveness. Avoid : licensing agreements and joint venture. For reduce the possibility of technology out of control.
c.management skill.take the franchise and set up subsidiaries method. For protect their brand
⑤Enterprise products factors.
a. Labor-intensive and resource-intensive products :choose the country with rich natural resources as production base= take the investment mode. For save the middle export costs.
c. the product post-sale service demand : higher= take contract models or investment patterns.
19. Discuss the positive and negative effects of outward FDI on home country.
Outflows of FDI are the flows of FDI out of a country
21 服务社会 用心用情 自信考试 诚信做人 There are four main benefits of inward FDI for a host country:
1. resource transfer effects - FDI can make a positive contribution to a host economy by supplying capital, technology, and management resources that would otherwise not be available
2. employment effects - FDI can bring jobs to a host country that would otherwise not be created there
3. balance of payments effects - a country’s balance-of-payments account is a record of a country’s payments to and receipts from other countries.
4. effects on competition and economic growth - FDI in the form of greenfield investment increases the level of competition in a market, driving down prices and improving the welfare of consumers.
Inward FDI has three main costs:
1. the possible adverse effects of FDI on competition within the host nation
2. adverse effects on the balance of payments
3. the perceived loss of national sovereignty and autonomy
Inflows of FDI are the flows of FDI into a country
22 服务社会 用心用情 自信考试 诚信做人 The benefits of FDI for the home country include:
1.the effect on the capital account of the home country’s balance of payments from the inward flow of foreign earnings
2. the employment effects that arise from outward FDI
3. the gains from learning valuable skills from foreign markets that can subsequently be transferred back to the home country
1. The home country’s balance of payments can suffer:from the initial capital outflow required to finance the FDI; if the purpose of the FDI is to serve the home market from a low cost labor location; If the FDI is a substitute for direct exports.
2. Employment may also be negatively affected if the FDI is a substitute for domestic production.
20. What threats and opportunities does your firm face of the formation of NAFTA? what strategies?
1. threats [ profit + market share + shut out ]
1.1 profits↓ ∵competitive environment↑ → price↓.
1.2 market share↓ ∵ trade transfer.( Mexico and Canada ) → financial problem( income↓)
23 服务社会 用心用情 自信考试 诚信做人 1.3 being shut out of the single market ∵ “trade fortress”
2. Opportunity [ new market + scale effect ]
2.1 new market(Mexico and Canada) → income↑
2.2 scale effect (∴centralizing production where the mix of factor costs and skills is optimal.)
3. Implementation-Wholly Owned Subsidiaries.(100% of the stock)
= setting up a new operation \\ acquiring an established firm
3.1 Benefits [risk + control + curve economies ]
1) risk of losing control over core competencies↓
2) tight control over operations in different for global strategic coordination
3) realize location and experience curve economies
3.3 Drawbacks [ cost & risk ] Operational cost and risk↑
3.4 Conclusion necessary to set a branch
21. Explain the different levels of regional economic integration and use
24 服务社会 用心用情 自信考试 诚信做人 examples to show how regional economic integration will impact international business.
1. agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, factors of production between each other.
2. ①free trade area :eliminates barriers but determine own trade policies [ NAFTA]② customs union + common trade policy③ common market + the free movement of the factors of production ④economic union+ common economic policy⑤political union + the central regulatory authority
3.Opportunities[trade & investment +new markets + scale effect + Link + political cooperation]；Threats[ competitive environment + a risk of shut out + limit company`s ability]
Discuss the evolution of European union and its implication to the international business.
1. Evolution Of The European Union. Reason [the devastation of two world wars+ desire for a peace + world’s stage];European Coal and Steel Community→removing barriers of coal, iron, steel;European Economic Community at the Treaty of Rome→a common market
2. EU`s implication
25 服务社会 用心用情 自信考试 诚信做人 Management1) The Treaty of Rome- creation of a common market.= internal trade barriers ↓ + common external tariff ↑ + obstacles to the free movement of goods, services and factors of production.↓
2) EU political structure = example for regional integration.
3) The single European act. Push industrial reorganization + realize scale economies
2.2 Economic 1) Euro establishment= savings↑ competition↑ →production costs &prices↓＝highly liquid capital market↑ 2) International Trade aspect
a. Internal trade- less restrictive (laws and regulations)- protects from unfair competition tactics - economic power ↑
b. Global trade- compete with superpowers (USA) & increasing power( China) - hold an important position in world trade. - provide a fairer platform for international trade.
2.3 Opportunities
1) new markets 2) scale economic
2.4 Threats competitive environment↑a risk of being shut out↑limit the ability of firms
26 服务社会 用心用情 自信考试 诚信做人 22. Please discuss the pros and cons of “Euro”.p186
1.Benefits:
1.1 savings from handle one currency1.2 competition↑→prices↓.∵easier to compare prices and shop around1.3 production costs↓ profit margins↑= long-run gains in the economic efficiency1.4 the development of liquid pan-European capital market.↑→the cost of capital↓ + investment efficiency↑1.5 the range of investment options↑ (individuals + institutions)→ diversify their risk→cost of capital↓→ efficiency↑
2.Costs 2.1control over the monetary policy.↓2.2 not an optimal currency area→cost much to cope with the strains (feasible to adopt a single currency and use a single exchange rate as an macro-economic policy)
What factors may influence the decision of outsourcing ?
1.definition : [ Make or Buy – production – complex]
Outsourcing Production: Make-or-Buy Decisions。Make-or-buy decisions are important factors in many firms' manufacturing strategies. And firms face make-or-buy decisions as they choose which activities to outsource and which to keep in-house；Make-or-buy decisions involving international markets are more complex than those involving domestic markets
27 服务社会 用心用情 自信考试 诚信做人 2. The Advantages of Make [ invest – product – cost – technology ]
2.1 huge investments in highly specialized assets - when manufacturing a component requires substantial investments in specialized assets, company may choose to …
2.2 facilitate the scheduling of production process- production in-house can make planning, coordination, and scheduling of each processes easier.
2.3 lower costs - more efficient at production = continue manufacturing a product in-house
2.4 protect technological proprietary - a firm might prefer to make component parts that contain proprietary technology in-house → maintain control over the technology
3.The Advantages Of Buy [flexibility + cost(lack incentive + set price) + order]
3.1 gives greater flexibility= switching orders between suppliers as circumstances dictate
∵ changes in exchange rates and trade barriers influence product supply
3.2 drive down the cost structure avoid:[control (lack incentive + set price) ]
28 服务社会 用心用情 自信考试 诚信做人 -the challenges involved with controlling the additional subunits that are associated with vertical integration
-the lack of incentive associated with internal suppliers
- the difficulties with setting appropriate transfer prices
3.3 capture orders from international customers- from suppliers’ countries
4. Factors important to decide whether outsource or not. [ country + tech ( fixed + flexibility + scale) + product(ratio + needs) ]
4.1 country [resource] - locations where economic, political, and cultural conditions, including relative factor costs, can benefit the performance
4.2 technological
The type of manufacturing technology: [ fixed + flexibility + scale ]
1)The level of fixed costs: 3)The flexibility of the technology:2)The minimum efficient scale:
4.3 product [ ratio + needs ]
1)the product's value-to-weight ratio:2)whether the product serves universal needs:
29 服务社会 用心用情
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