Chp12

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Chp12

  1. 1. Chp 12:The strategy of International Business
  2. 2. Figure 12.1:Determinants of Enterprise Value Profitability(#) Enterprise Valuation
  3. 3. Figure 12.1:Determinants of Enterprise Value Reduce cost Profitability(#) Enterprise Valuation
  4. 4. Figure 12.1:Determinants of Enterprise Value Reduce cost Profitability(#) Add value and Raise Prices Enterprise Valuation
  5. 5. Figure 12.1:Determinants of Enterprise Value Reduce cost Profitability(#) Add value and Raise Prices Enterprise Valuation Profit Growth(%)
  6. 6. Figure 12.1:Determinants of Enterprise Value Reduce cost Profitability(#) Add value and Raise Prices Enterprise Valuation Sell More in Existing Markets Profit Growth(%)
  7. 7. Figure 12.1:Determinants of Enterprise Value Reduce cost Profitability(#) Add value and Raise Prices Enterprise Valuation Sell More in Existing Markets Profit Growth(%) Enter New Market
  8. 8. “Manager can increase the profitability of the firm by pursuing strategies that lower costs or by pursing strategies that add value to the firm’s products, either of which enables the firm raise prices.”
  9. 9. The way to increase the profitability of a firm is to create more value!!!
  10. 10. The way to increase the profitability of a firm is to create more value!!!
  11. 11. Figure 12.1:Determinants of Enterprise Value Reduce cost Profitability(#) Add value and Raise Prices Enterprise Valuation Sell More in Existing Markets Profit Growth(%) Enter New Market
  12. 12. The price a firm charges for a good or service is typically less than the value the customer places on that good or service, called consumer surplus
  13. 13. The consumer surplus is the amount that consumers benefit by being able to purchase a product for a price that is less than they would be willing to pay. The producer surplus is the amount that producers benefit by selling at a market price mechanism that is higher than they would be willing to sell for.
  14. 14. Figure 12.2 Value Creation V=Value of Product to an average consumer V-P P=Price per unit V-C C=Cost of production P-C per unit V-P=Consumer surplus C per unit P-C=Profit per unit sold V-C=Value created per unit
  15. 15. Company can create more value (V-C) either by lowering production costs, C, or by making the product more attractive through superior design, styling, functionality, features, reliability, after sales service. So that consumers place a greater value on it (V increased) and, consequently, are willing to pay a higher price (P increase).
  16. 16. Value increases Price increase
  17. 17. Low cost strategy-A firm has high profits when it creates more value for is customers and does so at a lower cost. Differentiation strategy-a strategy that focuses primarily on increasing the attractiveness of a production.
  18. 18. Four seasons Starwood Marriott International
  19. 19. Figure 12.3 Strategic Choice in The international Hotel Industry Efficiency Frontier Increased value/differentiation (V) Four season Marriot Starwood Strategic Choice in This Area not Viable in International Hotel Industry Low cost(C)
  20. 20. To maximize profitability a) Pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support the choice. b) configure its internal operations to support position (manufacturing, marketing, logistics, information system, human resources). c) make sure that the firm has the right organization structure in place to execute its strategy.
  21. 21. Operations: The firm as a value • Primary Activities • Support Activities *To implement its strategy efficiently and position itself on the efficiency frontier, it must manage these activities effectively and in a manner that is consistent with it strategy.
  22. 22. Primary Activities
  23. 23. R&D Primary Activities
  24. 24. R&D Production Primary Activities
  25. 25. Marketing and R&D Production Sales Primary Activities
  26. 26. Figure 12.4:The value Chain Support Activities Company Infrastructure Information System Human Resource Logistics Marketing and Customer R&D Production Sales Service Primary Activities
  27. 27. te r r in P P H
  28. 28. Assignment Jan 12,2009 Explain The Value Chain by using MNC and submit to me by email before mid-night(GMT+07:00)
  29. 29. Quiz 1 and Mid-term exam Number Name Surname Quiz 1(7.5%) Mid-term(30%) Total(37.5%) 1 Ms.Sarinrat Woranit 1.5 15 16.5 2 Mr.Kaitisak Nithitheerakant 2 20.5 22.5 3 Ms.Mutita Jantrikun 3.5 22 25.5 4 Ms.Suphattra Maya 6.5 26 32.5 5 Mr.Sivakorn Thavonwan 1 25 26 6 Ms.Paphawarin Suwannarach 4.25 21.5 25.75 7 Ms.Wanchanok Yapan 1.25 11 12.25 8 Mr.Kriangkrai Siangwong 1 8.5 9.5 9 Mr.Benno Vollmann 4.5 26 30.5 10 Mr.Bartos Majda 7 28 35 11 Ms.Padhanan Bussapakes 4 22.5 26.5 12 Mr.Phumasit Patcharaviphakkij 1 3.5 4.5 13 Ms.Wariya Chupinitsakulwong 1 8 9 14 Ms.Prapaporn Khumprasert 1 12.5 13.5 15 Ms.Atchara Sairat 2 6.5 8.5 16 Ms.Chayanee Thongyam 1 7 8 17 Ms.Bunyanuch Siriwattanapornkul 2.5 21.5 24 18 Ms.Thanattha Somboon 2.25 11.5 13.75 19 Ms.Wunlaya Mungcharoen 4.25 17.5 21.75 20 Ms.Puttiporn Kittikot 2 8.5 10.5 21 Ms.Supitchaya Asawa-ananta 6.75 27 33.75 22 Ms.Yaowanart Kongrod 2.75 7 9.75 23 Ms.Ratima Khrueawongnoi 1.5 22.5 24 24 Ms.Nawarat Prommi 1 1 2 25 Ms.Puntarika Hongpanich 3 22 25 Mean 18.82 *Those student who have score less than 10% Max 35 (Red and Green color) need to see me after class Min 2
  30. 30. Figure 12.4:The value Chain Support Activities Company Infrastructure Information System Human Resource Logistics Marketing and Customer R&D Production Sales Service Primary Activities
  31. 31. Figure 12.5 B The experience Curve Unit cost A Cumulative Output
  32. 32. Figure 12.5 B The experience Curve Unit cost A Cumulative Output
  33. 33. Figure 12.5 B The experience Curve Unit cost A Cumulative Output
  34. 34. Figure 12.5 B The experience Curve Unit cost A Cumulative Output
  35. 35. Figure 12.5 B The experience Curve Unit cost A Cumulative Output
  36. 36. Figure 12.6: Pressure for cost Reductions and Local Responsiveness High Pressures for Cost Reduction Low Low High Pressures for Local Responsiveness
  37. 37. Figure 12.6: Pressure for cost Reductions and Local Responsiveness High Pressures for Cost Reduction Firm A Low Low High Pressures for Local Responsiveness
  38. 38. Figure 12.6: Pressure for cost Reductions and Local Responsiveness High Pressures for Cost Reduction Firm A Firm B Low Low High Pressures for Local Responsiveness
  39. 39. Figure 12.6: Pressure for cost Reductions and Local Responsiveness High Pressures for Cost Reduction Firm A Firm C Firm B Low Low High Pressures for Local Responsiveness
  40. 40. Figure 12.6: Pressure for cost Reductions and Local Responsiveness High Pressures for Cost Reduction Firm A Firm C Firm B Low Low High Pressures for Local Responsiveness
  41. 41. Figure 12.7: Four basic Strategies High Pressures for Cost Reduction Low Low High Pressures for Local Responsiveness
  42. 42. Figure 12.7: Four basic Strategies High Pressures for Cost Reduction Global Standardization Strategy Low Low High Pressures for Local Responsiveness
  43. 43. Figure 12.7: Four basic Strategies High Pressures for Cost Reduction Global Standardization Strategy Localization Strategy Low Low High Pressures for Local Responsiveness
  44. 44. Figure 12.7: Four basic Strategies High Pressures for Cost Reduction Global Standardization Strategy International Localization Strategy Strategy Low Low High Pressures for Local Responsiveness
  45. 45. Figure 12.7: Four basic Strategies High Pressures for Cost Reduction Global Transactional Standardization Strategy Strategy International Localization Strategy Strategy Low Low High Pressures for Local Responsiveness
  46. 46. Figure 12.8: Four basic Strategies High Pressures for Cost Reduction Global Standardization Transactional Strategy Strategy International Localization Strategy Strategy Low Low High Pressures for Local Responsiveness
  47. 47. Figure 12.8: Four basic Strategies High Pressures for Cost Reduction Global Standardization Transactional Strategy Strategy International Localization Strategy Strategy Low Low High Pressures for Local Responsiveness As competitions emerge these strategies become less viable
  48. 48. Figure 12.8: Four basic Strategies High Pressures for Cost Reduction Global Standardization Transactional Strategy Strategy International Localization Strategy Strategy Low Low High Pressures for Local Responsiveness As competitions emerge these strategies become less viable
  49. 49. Figure 12.8: Four basic Strategies High Pressures for Cost Reduction Global Standardization Transactional Strategy Strategy International Localization Strategy Strategy Low Low High Pressures for Local Responsiveness As competitions emerge these strategies become less viable

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