3. Global Expansion, Profitability, and Profit Growth (Keyboard Navigable Alternate Version) (1) Firm capacity (2) Location econumies Q. 50303 (3) Cost Roduction in startyp (5) Capturing 3 using saw skdls Profitability, and profit Growth 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. Select the correct category of expansion, profitability, or growth for the ideas and actions listed below. 1. Economies of scale come from spreading fixed costs over large volumes, servicing large markets, and working with global sources of supply. (Click to select) (4) 2. Core competencies enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible. (Click to select) 3. Managers must have a way to identify new and good ideas and skills and provide incentives to share and experiment with these ideas. (Click to select) 5 4. Managers must assess transportation costs, trade barriers, and political and economic risks to determine the best location for each value creation activity. 2. Core competencies enable a firm premium pricing is possible. 3. Managers must have a way to iden ideas. 5. Over time, labor learns the most efficient way to perform particular tasks by repetition. (Click to select) (5) 6. The way to recoup development costs and achieve leverage with suppliers is to expand into global markets, as domestic markets may not produce sufficient volumes. (Click to select) 7. Mature multinational enterprises have been successful, but skills to lower costs of production and enhance perceived value may come from other locations. (Click to select) 8. The firm will benefit by basing each value creation activity it performs at that location where economic, political, and cultural conditions are most conducive. (Click to select) 9. When a task is complex and involves more steps, there is more that can be learned, and each time a step is performed more efficiently, costs will be decreased. (Click to select) (4) 10. The skills may exist in developing, producing, and marketing goods and services beyond the original goods and services. It can also mean extending the business model. (Click to select)