Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

1.introduction to global strategy


Published on

Published in: Education
  • Have you ever used the help of ⇒ ⇐? They can help you with any type of writing - from personal statement to research paper. Due to this service you'll save your time and get an essay without plagiarism.
    Are you sure you want to  Yes  No
    Your message goes here
  • I think you need a perfect and 100% unique academic essays papers have a look once this site i hope you will get valuable papers, ⇒ ⇐
    Are you sure you want to  Yes  No
    Your message goes here
  • Follow the link, new dating source: ♥♥♥ ♥♥♥
    Are you sure you want to  Yes  No
    Your message goes here
  • Dating for everyone is here: ❶❶❶ ❶❶❶
    Are you sure you want to  Yes  No
    Your message goes here

1.introduction to global strategy

  1. 1. Module 1The Strategy of International Business 11-1
  2. 2. Learning Objectives To evaluate industry structure, firm strategy, and value creation To profile the features and functions of the value chain 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 11-2
  3. 3. IntroductionThe Role of Strategy in International Business 11-3
  4. 4. Industry StructureLearning Objective 1:To evaluate industry structure, firmstrategy, and value creation 11-4
  5. 5. Industry Structure Industry structure involves the relationships among  Suppliers of inputs  Buyers of outputs  Substitute products  Potential new entrants  Rivalry among competing firms 11-5
  6. 6. Industry Change Industry structure changes because of  Competitor moves  Government policies  Shifting preferences  Technological developments 11-6
  7. 7. Industry Structure, Strategy, and Value The industry organization (IO) paradigm  presumes that markets demonstrate perfect competition where no firm or industry consistently outperforms others The power of innovative executives  bright executives exploit market imperfections to outperform rivals Strategy’s hallmarks  Value  Strategy 11-7
  8. 8. Creating Value Value  the measure of a firm’s capability of selling what it makes for more than the costs incurred to make it Create value using  A cost leadership strategy  make products for a lower cost than competitors  A differentiation strategy  make products for which consumers are willing to pay a premium price 11-8
  9. 9. The Firm as a Value ChainLearning Objective 2:To profile the features and functions of thevalue chain 11-9
  10. 10. The Firm as a Value Chain The value chain  the set of linked activities the company performs to design, produce, market, distribute, and support a product The value chain consists of  Primary activities  design, make, sell, and deliver the product  Support activities  implement primary activities  Profit Margin (Value = TR-TC)  Value Chain Orientation  Upstream and Downstream Activities 11-10
  11. 11. The Firm as a Value Chain Primary and Support Activities 11-11
  12. 12. The Firm as a Value Chain Primary and Support Activities of the Value Chain 11-12
  13. 13. Managing the Value ChainLearning Objective 3:To assess how managers configure andcoordinate a value chain 11-13
  14. 14. Managing the Value Chain Configuration  distributing value chain activities around the world  concentrated  putting all value chain activities in one location  dispersed  performing different value chain activities in different locations  location economies 11-14
  15. 15. Managing the Value Chain When configuring the value, consider  The business environment  Innovation context  Resource costs  Logistics  Digitization  Scale economies  Cluster effects  Customer needs 11-15
  16. 16. Managing the Value Chain Coordination  linking the value chain activities Factors that influence coordination  Operational obstacles  National cultures  Core competencies (Learning Effects & Experience Curve)  special outlook, skill, capability, or technology that runs through the firm’s operations, threading disconnected activities into an integrated value chain  Subsidiary networks  social networks 11-16
  17. 17. Change and the Value Chain The configuration and coordination of a value chain responds to changes in customers, competitors, industries, and environments  Even a well configured and coordinated value chain can become obsolete  So, designing and delivering a strategy should be an ongoing process 11-17
  18. 18. Global Integration vs. Local ResponsivenessLearning Objective 4:To explain global integration and localresponsiveness 11-18
  19. 19. Global Integration vs. Local Responsiveness Firms face two conflicting pressures: Pressures for global integration  the process of combining differentiated parts into a standardized whole  maximize efficiency Pressures for local responsiveness  the process of disaggregating a standardized whole into differentiated parts  optimize effectiveness 11-19
  20. 20. Pressures for Global Integration Drivers of global integration  The globalization of markets  Technology helps standardize consumer preferences  Global products have become popular  allows for standardization of product design  The efficiency gains of standardization  Location, scale, and learning effects  WTO supports global standards 11-20
  21. 21. Pressures for Local Responsiveness Pressure for local responsiveness is driven by  Consumer divergence  cultural predisposition  historical legacy  nationalism  Host government policies  fiscal, monetary, and business regulations 11-21
  22. 22. When Pressures Interact Integration/Responsiveness (I/R) Grid 11-22
  23. 23. Types of StrategyLearning Objective 5:To profile the types of strategies firms usein international business 11-23
  24. 24. Types of StrategyCharacteristics of the Strategy Type Used by MNEs 11-24
  25. 25. International Strategy International strategy  leverage a company’s core competencies into foreign markets  critical elements of the value chain are centralized at headquarters The strategy works well when  the firm has core competencies that foreign rivals lack  there is low pressure for global integration  there is low pressure for local responsiveness 11-25
  26. 26. Multidomestic Strategy Multidomestic strategy  emphasizes responsiveness to the unique circumstances that prevail in a country’s market  value added activities are adapted to local markets The strategy works well when  there is high pressure for local responsiveness  there is low pressure for global integration 11-26
  27. 27. Global Strategy Global strategy  make standardized products that are marketed with little adaptation to local conditions  exploit location economies and capture scale economies The strategy works well when  the MNE is the cost leader  there is low pressure for local responsiveness  there is high pressure for global integration 11-27
  28. 28. Transnational Strategy Transnational strategy simultaneously leverages core competencies worldwide, reduces costs by exploiting location economics, and adapts to local conditions The strategy works well when  global learning and knowledge flows are emphasized  there is high pressure for local responsiveness  there is high pressure for global integration 11-28