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analytical frameworks-global business strategy

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  • 1. Analytical Frameworks of Global Strategy07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 1 nrvmba,email:1966patel@gmail.com
  • 2. First key framework The global competitive strategy “Star Analysis”• Will use in our case discussions and in our case analysis• The “Star Analysis” provides a way to organize our thoughts and knowledge about geography and international business• The “Star Analysis” provides information for the international business manager to develop a competitive strategy07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 2 nrvmba,email:1966patel@gmail.c
  • 3. Global Competitive StrategyThe international business firm’s competitive advantage depends on five major drivers:• Home country• Supplier countries• Customer countries• Partner countries• Competitor countries07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 3 nrvmba,email:1966patel@gmail.c
  • 4. The global competitivestrategy star Home country Supplier Customer countries countries International business Partner Competitor countries countries 07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 4 nrvmba,email:1966patel@gmail.c
  • 5. The international business “Star Analysis” Gather country Information needed Star data from to design Analysis global mosaic competitive strategy07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 5 nrvmba,email:1966patel@gmail.c
  • 6. Global Competitive StrategyHome country features – headquarters• Company globalization – Launching pad• Company history and culture• Managers’ background• Brand nationality• Corporate governance• Home market• Political, legal, regulatory climate07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 6 nrvmba,email:1966patel@gmail.c
  • 7. Global Competitive StrategySupplier country features – production and procurement• Worker wages and productivity• Technology• Finance capital• Factor supplies• Supplier firms• Political, legal, regulatory climate• Operating costs/risks07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 7 nrvmba,email:1966patel@gmail.c
  • 8. Global Competitive StrategyCustomer country features – distribution and sales• Customer preferences• Elasticity of demand• Income per capita and income distribution• Customer knowledge• Distribution infrastructure• Society and culture• Political, legal and regulatory climate07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 8 nrvmba,email:1966patel@gmail.c
  • 9. Global Competitive StrategyPartner countries – Demand-side and supply-side complements• Complementary products• Complementary technology• Complementary capabilities• Market knowledge• Political, legal, regulatory climate07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 9 nrvmba,email:1966patel@gmail.c
  • 10. Global Competitive StrategyCompetitor countries• Home, supplier, customer, and partner countries of competitors• Global and local competitors• Customer and supplier bypass competition• Political, legal and regulatory climate – trade agreements, home-country policies07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 10 nrvmba,email:1966patel@gmail.c
  • 11. Second key framework: Global added value• Global value created by global business: Gains from trade minus Costs of trade• Global added value is competitive advantage of a global business• Global competitive strategy is means to create and capture global added value07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 11 nrvmba,email:1966patel@gmail.c
  • 12. Global added valueFive major gains from trade:• Preference for product variety and production economies of scale• Comparative advantage: Productivity and wages• Comparative availability of factors of production• Differences in preferences and endowments• 07/05/12 03:47 AM Differences in innovation and technology By Dr.Rajesh Patel,Director, 12 nrvmba,email:1966patel@gmail.c
  • 13. International business profits from gains from trade: • Best target countries to serve customers • Best countries to deal with suppliers and partners • Best combination of international transactions07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 13 nrvmba,email:1966patel@gmail.c
  • 14. Costs of trade• Global business cannot just maximize gains from trade• Must adjust strategy to optimize gains minus costs• Adjust to sticky borders07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 14 nrvmba,email:1966patel@gmail.c
  • 15. Global business creates valueU.S. multinational corporations home countryadded value (contribution to GDP) $ 2 tr.U.S. multinational corporations’ foreign affiliatesadded value to host country $ 0.7 tr. Total $ 2.7 tr.bea.gov international economic accounts07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 15 nrvmba,email:1966patel@gmail.c
  • 16. Third key framework“G5” competitive strategies:• Global platform strategy• Global network strategy• Global intermediary strategy• Global entrepreneur strategy• Global investment strategy07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 16 nrvmba,email:1966patel@gmail.c
  • 17. Global Competitive Strategy• Location, location, location – key role of geography• Where to produce and find suppliers?• Where to target customer markets?• Where to find best partners• Where are competitors coming from, serving and seeking suppliersGlobal competitive strategy – integrate economic and geographic forces for competitive advantage07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 17 nrvmba,email:1966patel@gmail.c
  • 18. Thank you!07/05/12 03:47 AM By Dr.Rajesh Patel,Director, 18 nrvmba,email:1966patel@gmail.c