IAF605 week 8 the strategy of international business


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IAF605 week 8 the strategy of international business

  1. 1. IAF 605 - International Business Management The Strategy of International Business Week 8
  2. 2. Agenda midterm exam results and discussion Chapter 11 – The Strategy of International Business
  3. 3. Midterm Average (/45) Average Lowest (%) Highest (%) 35 77% 51% 91% 100% 90% 80% 70% 60% 50% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
  4. 4. Chapter Objectives To identify how managers develop strategy To examine industry structure, firm strategy, and value creation To profile the features and functions of the value-chain framework To assess how managers configure and coordinate a value chain To explain global integration and local responsiveness To profile the types of strategies firms use in international business
  5. 5. The Role of Strategy in International Business (p395)
  6. 6. Industry, Strategy, And Firm Performance Strategy expresses management’s ideas on how to best: attract customers operate efficiently compete effectively create value
  7. 7. Industry Organization (IO) Paradigm (theoretical framework) forces that have the greatest impact on a multinational enterprise’s strategy: immediate industry and competitive environment Industry • no individual affects price or Organization quantities (IO) • perfect info available to everyone paradigm • few, if any, barriers to exit presumes • full mobility of resources • perfect knowledge among firms and perfect buyers competition:
  8. 8. What about imperfect competition? performance of a firm is a function of its market conduct, which in turn is determined by the structure of its industry) few large sellers, barriers to entry, passive buyers many firms had outstanding performance (GE, Toyota...) Image source: http://img5.allocine.fr/acmedia/rsz/434/x/x/x/medias/nmedia/18/62/87/05/18954210.jpg
  9. 9. Industry Structure: Five Forces Model (p398) firms in other industries offering substitute products suppliers of raw rivalry materials, among buyers components or other resources competing inputs sellers potential new entrants
  10. 10. Competitors’ moves Government policies Changes in economics Shifting buyer preferences Technological developments Rate of market growth
  11. 11. Competitor’s Moves
  12. 12. Government Policies
  13. 13. Change in Economics
  14. 14. Shifting Buyer Preferences Source: http://flickr.com/photos/shapeshift/352593346
  15. 15. Technological Developments Source: toyota.com
  16. 16. Rate of Market Growth
  17. 17. Reminder July 27th: group assignment due
  18. 18. Strategy and Value Strategy helps managers assess the company’s present situation, Value is the identify the measure of a direction the firm’s ability company should go, to sell what and determine how it makes for more than the company will the cost it get there. incurred to make it
  19. 19. Firms create value either through a low-cost leadership strategy or a strategy. Can both be done at the same time?
  20. 20. The Firm As Value Chain How the company will design, make, move, and sell products; how it will find efficiencies …how it will in doing co-ordinate the decisions so… in one part of the business with those made in other parts
  21. 21. What Is a Value Chain? The value chain lets managers deconstruct the general idea of “create value” into a step-by-step system. Product Operations Outbound Marketing Service Design Logistics
  22. 22. Dimensions of The Value Chain Primary activities - create and deliver the product. Support activities - aid the individuals and groups engaged in primary activities.
  23. 23. Primary and Support Activities (See Tables 11.2 and 11.3) Outbound Product Design Operations Marketing Service Logistics Materials and Firm Human Systems & Equipment Infrastructure Resources Solutions
  24. 24. Managing the Value Chain Configuration Coordination • Way that managers • Way that managers arrange the activities connect the activities of the value chain – of the value chain. concentrated to • Devising a way to dispersed coordinate value chain • Firms pay close activities must be in attention to location ways that leverage a economies when firm’s core configuring their value competencies chain
  25. 25. Technology and Coordination
  26. 26. The Risk of Strategy crea- tivity
  27. 27. Pressures for Global Integration vs. Local Responsiveness global integration local responsiveness managers, competencies, industries, or environments - companies rethink and reset their value activities
  28. 28. Two Drivers of Global Integration globalization of markets efficiency gains of • $...hard to acquire, difficult standardization to save and scarce
  29. 29. Pressures for Local Responsiveness host- government policies consumer divergence Source: AP Photo/Lefteris Pitarakis
  30. 30. Integration-Responsiveness (IR) Grid (I): Industry Types (p421)
  31. 31. Exercise substitute products Use the five fundamental forces model to analyze one of the industries listed in the integration-responsiveness rivalry grid (page 421). suppliers among buyers competing sellers Does the pressure for local responsiveness and/or global integration impact the five forces in the industry you potential selected? new entrants
  32. 32. Integration-Responsiveness (IR) Grid (II): Strategy Types
  33. 33. Homework if you were not satisfied with your mid-term exam mark, determine what needs to change in preparation for the next exam review Chapter 11 read Chapter 12 Case: Burger King Beefs Up Global Operations (page 465)