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Question		Answer
Global advantages start learning		1. Global Scale; 2. Global sourcing; 3. Global knowledge management; 4. Global operations; 5. Risk diversification
Global scale start learning		reduces costs in production, product development and marketing; Economies of scale; buy in bulk, cheaper capital, production efficiencies, reduction in both logistics and promotion costs
Economies of scale start learning		reduction in unit cost is achieved by increasing the volume of production
Global sourcing start learning		provides access to wider range of inputs
Global knowledge management start learning		enhances innovation; taps into clusters; centres of excellence
centres of excellence start learning		specialised centres for innovation that serve the entire MNE
Global operations start learning		allows to better service global customers
Risk diversification start learning		reduces the corporate risk profile; more flexible when in need of shifting the focus during the pandemic i.e.
Global strategy - Ghemawat's AAA's start learning		Aggregation; Adaptation; Arbitrage
Aggregation - general definition start learning		synergies across borders, integration above national level; i.e. shipping
Adaptation - general definition start learning		adapting products and services to local markets; sometimes it may jeopardise the aggregation efforts, Heineken
Arbitrage - general definition start learning		you can buy low in one market and sell high in other market
Minimize adaptation - example start learning		Heineken; the beer doesn't change, but the way they market it does; Marketing differs, but the product remains the same
Externalize adaptation start learning		rely on external parties to make local adaptations; i.e. fast food
Modularise adaptation start learning		cars are produced on a global demand, but some markets allow adaptation for the local markets
Arbitrage types start learning		Capital - exploit differences in capital; Labor - exploit differences in labor or specialist human capital; Resource arbitrage - exploit variations in geology, climate; Institutional - exploit differences in institutional environment
Cross-border acquisitions start learning		process of one company gaining control over another firm from another country by purchasing all or most of its shares
Types of Cross-border acquisitions start learning		Mergers; Acquisitions; Partial acquisitions
Mergers start learning		mergers of equals - two entities have equal ownership over merged company; statutory mergers - one entity takes control over the second one (Daimler&Chrysler)
Acquisitions start learning		increase equity stake to majority; full acquisition
Partial acquisitions start learning		minority stake without strategic control; majority stake with strategic control
Acquisition motives start learning		Synergistic; Hubris; Managerial
Synergistic motives start learning		leverage superior organisational; enhance market power; reduce costs by eliminating duplicate units and exploiting scale economies; access complementary resources; tax avoidance
Hubris motives start learning		managers' overconfidence in their own capabilities
Managerial motives start learning		self-interest; prestige; CEO narcissism; extreme self-admiration
Challenges for all M&A's - Pre-acquisition phase start learning		managers overestimate their ability to create value; inadequate due diligence; poor strategic fit
Challenges for cross-border M&A's - Pre-acquisition phase start learning		Lack of familiarity with foreign cultures, business systems; Nationalistic concern against foreign takeover
Challenges for all M&A's - post-acquisition phase start learning		Poor organisational fit; failure to address multiple stakeholder groups' concerns
Challenges for cross-border M&A's - post-acquisition phase start learning		Clashes of organisational cultures compounded by clashes of national cultures; Nationalistic concerns against foreign takeovers
Global key accounts start learning		global clients
Aggregation - branches start learning		Consumer electronics, machine tools, aircraft
Adaptation - branches start learning		food, media, retailing
Arbitrage - branches start learning		mining, oil&gas, agriculture
overseas listing start learning		raising capital by listing on a stock exchange abroad
carve-out acquisitions start learning		acquisition of parts of another company that previously were not clearly organisational units
due diligence start learning		the assessment of the target firm's financial status, resources and strategic fit
strategic alliances start learning		collaboration between independent firms using equity modes, non-equity contractual agreements or both
Business Unit Joint Venture start learning		Joint venture in which existing business units from two firms are merged
Research&Develoment Joint Venture start learning		JV's aiming to develop next generation technologies
Operational collaboration start learning		a form of strategic alliance e that includes collaboration in operations, marketing or distribution; common in airline industry
input foreclosure start learning		practice of vertically integrated firm to cut off a competitor from key suppliers
output foreclosure start learning		practice of vertically integrated firm to cut off a competition from key customers

IB - Module 9

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