Developing a global strategy

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  • "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".strategy is about shaping the future
  • 1.EX. TRANSPORTATION BUSINESS, INFORMATION SERVICES, OR CHEMICAL PRODUCTION2.BROAD LINE COMPETITION, GLOBAL FOCUS, NATIONAL FOCUS, & PROTECTED NICHE3.MAINTAIN CONTROL-MEASUREMENT & EALUATION OF FINANCIAL DECISION, PRODUCTION STRATEGIES,PERSONNEL RELATION-TRUST
  • Economies of scale from access to more customer & markets, Exploit another country’s resources- low labor cost, raw materials, extend the product life cycleFirst mover advantage and only provider, transfer priceDiversify macroeconomic risk( bus.cycles not perfectly correlated among countries; div operational risk-labor prob. Wars,earthquakMainly focused on techno-economic optimationCrossover customers between markets-reputation & brand identification
  • Cross-subsidizatioN
  • Cross-subsidizatio
  • Cost leadership- risk if other firms will offer lower product costDifferentiation – risk is by imitation
  • The needs of the group
  • Strategic flexibility
  • Developing a global strategy

    1. 1. Developing a Global Strategy INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 1
    2. 2. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 2
    3. 3. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 3 Measurement and evaluation of performance e.g market share, cost and profit targets for divisions, personnel evaluation Creation of operating strategy using competitive advantages The four generic strategies, functional area targets Formulation of overall corporate goals Firm’s goal? Three aspects of Overall Corporate Strategy
    4. 4. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 4 Competitive Advantage Is a firm’s ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitor.
    5. 5. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 5 Strategic Business Units Are group of products, divisions or other company activities that have sufficiently similar characteristics to justify their assignment to a single group for strategy development.
    6. 6. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 6 Strategic Business Unit Framework • Compete worldwide with a full range of products in an industry; have a competitive presence in all market segments. This strategy requires either a low-cost leadership through scale economies or differentiated product lines, but also implies pervasive global integration. Broad-line global competition
    7. 7. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 7 Strategic Business Unit Framework • Compete with select product lines in global markets. Global brands are critical for differentiation, but markets are selective. For example, Merck & Company is comparable to Bayer in both size and product range, but Merck tends to focus on pharmaceuticals for institutional markets. Global Focus
    8. 8. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 8 Strategic Business Unit Framework • Concentrate in specific national markets and defend these markets through differentiation or comparable cost advantages. The point is to raise entry barriers and protect particular markets by being entrenched ahead of competitors National Focus
    9. 9. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 9 Protected Niche This strategy aims specifically at obtaining government protection, either through support of the firm against competitors or through government purchase of the firm’s product or service. Job creation, long-term purchase contract with a government
    10. 10. SOURCES OF COMPETITIVE ADVANTAGE INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 10 1. Efficiency 2. Strategic 5. Reputation 3. Risk 4. Learning
    11. 11. The Nature of Competitive Advantage in Global Industries 1. Cost Drivers •Location of Strategic Resources •Differences in country cost •Potential for economies of scale - Research and Development INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 11
    12. 12. The Nature of Competitive Advantage in Global Industries 2. Customer Drivers • Common customer needs favor globalization-needs define by local tastes, culture, etc. • Global Channels require a globally coordinated marketing program • Transferable marketing-brand names and advertising require little local adaptation INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 12
    13. 13. The Nature of Competitive Advantage in Global Industries 3. Competitive Drivers • Global competitors: The existence of many global competitors indicates that an industry is ripe for globalization. Global competitors will have a cost advantage over local competitors. • When competitors begin leveraging their global positions through cross-subsidization, an industry is ripe for globalization. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 13
    14. 14. The Nature of Competitive Advantage in Global Industries 4. Government Drivers •Trade Policies •Technical Standards •Regulations INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 14
    15. 15. Porter’s Generic Strategies INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 15 • Low cost producer in an industry for a given level of quality. • To earn higher profits or to gain market share. Cost Leadership Strategy • Calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. Differentiation Strategy
    16. 16. Porter’s Generic Strategies INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 16 •Concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. Focus Strategy
    17. 17. Control in Multinational Enterprise The firm must create a control structure The basic intent of controls is to have managers define goals clearly, observe weathered those goals are being achieved Financial reporting & managerial reporting Personnel evaluation Government relations Dealing with rivals Strategic variety- strategic flexibility basis for thinking INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 17
    18. 18. INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY 18 MUCHAS GRACIAS!!!

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