Factors Affecting The Business Function

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1. Completive advantage says that certain aspects of the business function should take place in the part of the world where the factors are cheapest and are most efficient. Without restrictions, many companies will be based out of the country with the best established set of factor endowment; “the amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing”. However, as less restrictions encourages international growth, some companies that already have the most favorable factor endowments may choose to remain where they are. This is not to say that they will remain where they are forever. We saw in previous scenarios such as the automotive industry in India, that a “hub” can evolve and…show more content…
This means the price of the product is the number one factor in the firm’s strategy. This is why these firms could be recognized in Firm A. These firms are not required to differentiate their products offering and marketing strategy from country to country to accommodate demands and national differences. These firms serve universal needs, which exist when the taste and preference of consumers in different nations are similar if not identical. 3. A localization strategy makes sense when the pressures for local responsiveness are high. This situation is common when there are significant differences in consumer tastes and preferences, infrastructure and traditional practices, and when the host government demands require local customization. The restaurant industry often faces pressure for local responsiveness. Also, a global standardization strategy makes sense when pressures for cost reductions are high and when local responsiveness pressures are low. The semiconductor industry and the bulk chemical industry are some of the examples of industries where the global standardization strategy is more common. 4. a. Prior to the 1980s, P&G historically developed new products in Cincinnati and then relied on semiautonomous foreign subsidiaries to manufacture, market, and distribute those products and different nations. In many cases, foreign subsidiaries had their own production facilities and tailored the packaging, brand-name, and marketing message to local
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