Firms can grow profitably in the international arena by entering new markets whe

Question

Firms can grow profitably in the international arena by entering new markets where indigenous competitors have inadequate skills and products. Firms can also add value to products by realizing cost savings, with new opportunities to do so when operations are global and extensive. Managers need to understand the complex relationship between profitability and profit growth when making strategic decisions, especially about pricing Expanding globally allows firms to increase their profitability and rate of profit growth at a pace not available to enterprises that operate only domestically. These opportunities come from expanding markets, realizing cost savings though dispersing production and reducing the cost of value creation, and realizing skills that develop in subsidiaries. The ability of a firm to realize these profits is constrained by the need to customize its products and marketing and business strategies. Managers need to understand the ideas behind the actions they will take. Roll over the items on the left to read a description. Match the correct idea and action listed on the left to each of the categories of expansion, profitability or growth found in the chart. global web economies of scale Idea Activity Firm capacity optimal locations labor productivity Location economies leverage/replicate skills in subsidiaries ost reductions in start ups openness and incentives core competence Fixed and variable cost

Explanation / Answer

Idea Activity

Firm Capacity    Global Web    Labor Productivity

Location Economies Optimal Locations Economies of Scale

Cost Reduction in Start-ups Core Competence Openness and Incentives

Fixed and Variable Cost Leverage/Replicate Skills in Subsidiaries

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