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scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
CHAPTER 8
STRATEGY IN THE GLOBAL ENVIRONMENT
LEARNING
OBJECTIVES
the
process
of
globalizaBon
and
how
it
impacts
a
company’s

strategy
the
moBves
for
expanding
internaBonally
the
different
strategies
that
companies
use
to
compete
in
the
global
market
place
the
pros
and
cons
of
different
modes
for

entering
foreign
markets
2
GLOBALIZATION
OF
PRODUCTION
AND
MARKETS
of
producBon
and
markets
as
companies
took
advantage
of
lower
barriers

to
internaBonal
trade
and
investment
markets
started
merging
into
one
global
marketplace
are
finding
home
markets
inundated
by
foreign
compeBtors
to
maximize
efficiency,

quality,
customer
responsiveness,
and
innovaBve
ability
3
FIGURE
8.1
-‐
NATIONAL
COMPETITIVE
ADVANTAGE
4
ATTRIBUTES
THAT

DETERMINE
THE
NATIONAL
COMPETITIVE
ADVANTAGE
IN
A
GLOBAL
MARKET
5
Factor
endowments
Local demand
conditions
Related and
supporting
industries
Firm strategy,
structure, and
rivalry
REALIZING

COST
ECONOMIES
FROM
GLOBAL
VOLUME
company
can
realize
cost
savings
from
economies
of
scale
by:
the
fixed
costs
and
seng
up
producBon
faciliBes
over
its
global
sales
volume

a
global
market,
a
company
uBlizes
its
producBon
faciliBes
more
intensively
down
the
cost
of
key
inputs
with
suppliers
its
sales
volume
more
rapidly
6

LOCATION
ECONOMIES
benefits
that
arise
from
performing
a
value
creaBon
acBvity
in
an
opBmal
locaBon
a
company:
a
low-‐cost
posiBon

differenBate
its
product
offering
gain
compeBBve
advantage
over
rivals
who
base
all
their
value
creaBon
acBviBes
at
a
single
locaBon
7
LEVERAGING
THE

SKILLS
OF
GLOBAL
SUBSIDIARIES
must:
that
valuable
skills
can
arise
anywhere
within
a
firm’s
global
network
an
incenBve
system
that
encourages
local
employees
to
acquire
new

competencies
a
process
for
idenBfying
valuable
new
skills
created
in
a
subsidiary
transfer
valuable
skills
within
the
firm
8
FIGURE

8.2
-‐
PRESSURES
FOR
COST
REDUCTIONS
AND
LOCAL
RESPONSIVENESS
9
FIGURE
8.3
-‐
FOUR
BASIC
STRATEGIES
10

FIGURE
8.4
-‐
CHANGES
OVER
TIME
11
THE
CHOICE
OF
ENTRY
MODE
12
Exporting Licensing Franchising
Joint venture
Wholly
owned
subsidiary

TABLE
8.1
-‐
THE
ADVANTAGES
AND
DISADVANTAGES
OF
DIFFERENT
ENTRY
MODES
13
TABLE
8.1
-‐
THE
ADVANTAGES
AND
DISADVANTAGES
OF
DIFFERENT

ENTRY
MODES
14
PRESSURES
FOR
COST
REDUCTION
AND
ENTRY
MODE
pursuing
global
or
transnaBonal
strategies
prefer
establishing
a
wholly
owned
subsidiary

as:
gives
them
Bght
control
over
markeBng
to
coordinate
a
globally
dispersed
value
chain
gives
them
Bght
control
over
a
local
operaBon
use
of
profits
generated
in

one
market
to
improve
compeBBve
posiBon
in
another
15
GLOBAL
STRATEGIC
ALLIANCES
agreements
between
companies
from
different
countries
that
are
actual
or

potenBal
compeBtors
entry
into
a
foreign
market
firms
to
share
the
costs
of
developing
new
products
or
processes
16

GLOBAL
STRATEGIC
ALLIANCES
together
skills
and
assets
that
cannot
be
developed
alone
p
establish
technological
standards
for
the
industry
that
will
benefit
the
firm
-‐

Give
compeBtors
a
low-‐cost
route
to
new
technology
and
markets
of
an
alliance
depends
on:
selecBon
17
GLOBAL
STRATEGIC
ALLIANCES

-‐
Ensure
alliance
agreement
guards
against
the
risk
of
opportunism
by
a
partner
Seeking
one’s
own
self-‐interest,
through
guile
anaging
the
alliance
-‐
Building
relaBonal
capital

capital
-‐
Interpersonal
relaBonships
between
the
firms’
managers
18
CHAPTER 7
STRATEGY AND TECHNOLOGY
LEARNING
OBJECTIVES

the
tendency
toward
standardiza?on
in
many
high-‐technology
markets
the
strategies
that
firms
can
use
to
establish
their
technology
as
the
standard
in
a
market
2

LEARNING
OBJECTIVES
the
cost
structure
of
many
high-‐
technology
firms,
and
ar?culate
the
strategic
implica?ons
of
this
structure
the
nature
of
technological
paradigm

shiMs
and
their
implica?ons
for
enterprise
strategy
3
TECHNICAL
STANDARDS
AND
FORMAT
WARS
• Set of technical specifications that producers adhere
to when making the product, or a component of it
Technical standards
• Battles to control the source of differentiation, and the
value that such differentiation can create for the
customer

Format wars
• Common set of features or design characteristics
Dominant design
4
BENEFITS
OF
STANDARDS
compa?bility
between
products
and
their
complements
confusion
in
the
minds
of
consumers

produc?on
costs
and
risks
associated
with
supplying
complementary
products
to
low-‐cost
and
differen?a?on
advantages
for
individual
companies
raise
the
level
of
industry
profitability
5

ESTABLISHMENT
OF
STANDARDS
emerge
in
an
industry
when
the
benefits
of
establishing
are
recognized
standards
are
set
by
coopera?on
among
businesses,

through
the
medium
of
an
industry
associa?on
the
government
sets
standards
they
fall
into
the
public
domain
domain:
Any
company
can
freely
incorporate
the
knowledge
and
technology
upon

which
the
standard
is
based
into
its
products
6
NETWORK
EFFECTS,
POSITIVE
FEEDBACK,
AND
LOCKOUT
twork
effects:
Network
of
complementary
products
as
a

primary
determinant
of
the
demand
for
an
industry’s
product
feedback
loops
-‐
Increase
in
demand
for
a
technology
that
triggers
an
increase
in
demand
for
products
that
support
it

standards
get
locked
out
as
consumers
are
unwilling
to
bear
the
switching
costs
7
STRATEGIES
FOR
WINNING
A
FORMAT
WAR

network
effects
work
in
one’s
favor
and
against
compe?tors
the
installed
base
for
the
standard
as
rapidly
as
possible
a
supply
of
complements
killer
applica?ons

applica7ons:
Applica?ons
or
uses
of
a
new
technology
or
product
so
compelling
that
customers
adopt
them
in
droves,
killing
compe?ng
formats
8
STRATEGIES
FOR

WINNING
A
FORMAT
WAR
aggressive
pricing
and
marke?ng
and
blade
strategy:
Pricing
the
product
low
to
s?mulate
demand,
and
pricing
complements
high
with
compe?tors
the

format
9
FIGURE
7.5
-‐
COST
STRUCTURES
IN
HIGH-‐TECHNOLOGY
INDUSTRIES
10
FIRST
MOVER
that

pioneers
a
par?cular
product
category
or
feature
by
being
first
to
offer
it
to
the
market
of
a
revolu?onary
product
results
in
a
monopoly
posi?on
-‐mover
advantage
-‐
Pioneering
new

technologies
and
products
that
lead
to
slowing
the
rate
of
imita?on
-‐mover
disadvantages:
Compe??ve
disadvantages
associated
with
being
first
11
STRATEGIES
FOR

EXPLOITING
FIRST-‐
MOVER
ADVANTAGES
and
market
the
innova?on
and
market
the
innova?on
jointly
with
other
companies
a
strategic
alliance
or
joint
venture
the
innova?on
to
others
and

allow
them
to
develop
the
market
12
FACTORS
TO
CONSIDER
WHEN
SELECTING
A
STRATEGY
13
Complementary
assets
Height of
barriers to
imitation

Capable
competitors
TABLE
7.1
-‐
STRATEGIES
FOR
PROFITING
FROM
INNOVATION
14
TECHNOLOGICAL
PARADIGM
SHIFT
in
new

technologies
that:
lu?onize
the
structure
of
the
industry
alter
the
nature
of
compe??on
companies
to
adopt
new
strategies
for
survival
in
an
industry
when:
technology
is

approaching
or
is
at
its
natural
limit
disrup?ve
technology
has
entered
the
marketplace
and
is
invading
the
main
market
15
FIGURE
7.7

-‐
THE
TECHNOLOGY
S-‐
CURVE
16
FIGURE
7.8
-‐
ESTABLISHED
AND
SUCCESSOR
TECHNOLOGIES
17
FIGURE
7.9
-‐

SWARM
OF
SUCCESSOR
TECHNOLOGIES
18
STRATEGIC
IMPLICATIONS
FOR
ESTABLISHED
COMPANIES
aware
of
how
disrup?ve
technologies
can
revolu?onize
markets
is
a
valuable
strategic

asset
in
new
technologies
that
may
become
disrup?ve
technologies
an
autonomous
opera?ng
division
solely
for
the
disrup?ve
technology
19

STRATEGIC
IMPLICATIONS
FOR
NEW
ENTRANTS
not
face
pressures
to
con?nue
the
exis?ng
out-‐of-‐date
business
model
not
have
to
worry
about
established:
base
with
suppliers

and
distributors
focus
their
energies
on
the
opportuni?es
offered
by
the
new
disrup?ve
technology
decide
whether
to
partner
with
an
established
company
or
go
solo
20

Read chapter 7 and 8 and make a discussion with 250 words
with adding at least one resource, Also I post two discussions of
other students you need to reply to them with 200 words for
each one of them.
Resources
Read/review the following resources for this activity:
· Textbook: Chapter 7, 8
· File (PDF): Presentation (McGraw-Hill, 3e) – Chapter 7, 8 (in
Course Documents)
· Minimum of 1 reliable resource for initial post
Introduction
Any company that aspires to industry leadership in the
21st century must think in terms of global, not domestic, market
leadership. The world economy is globalizing at an accelerating
pace as ambitious, growth-minded companies race to build
stronger competitive positions in the markets of more and more
countries, as countries previously closed to foreign companies
open up their markets, and as countries export and import more
goods and services. Not only is it vital for leaders to be able to
execute strategy making practices in single-business enterprises,
but to ensure optimal globalization, they must be able to
implement strategy making in diversified enterprises. In this
discussion, you will have the opportunity to become more
familiar with the various strategies used to compete
domestically and internationally.
Initial Post Instructions
For your initial post, address the following:
· Review the five generic competitive strategies discussed in the
textbook and share the strategy you believe to be the most
effective at enhancing a company’s competitive advantages.
Explain why.
· Does the strategy depend upon the type of company and
industry? Why or why not?
Secondary Post Instructions

RespondbySaturday to at least two of your colleagues' postings
in one or more of the following ways:
· Share an insight from having read your colleague’s posting.
· Offer and support an opinion.
· Validate an idea with your own experience.
· Expand on your colleague’s posting.
Writing Requirements
· In addition to one initial post, respond to at least two peers.
· Initial Post Length: minimum of 250 words
· Secondary Post Length: minimum of 200 words per post
· Use APA format for in-text citations and list of references.
Post 1.
There are many strategies from which a company can choose to
expand internationally. These include maintaining a national
(one-country) production base and export goods to foreign
markets. License foreign firms to use the company’s technology
or to produce a distribute the business’s products, employ a
franchising strategy in foreign markets, rely upon acquisitions
or internal start-up ventures to enter foreign markets, and rely
on strategic alliances or joint ventures with foreign companies
as the primary vehicle for entering foreign markets. Before
going into a foreign market, a company must decide not only on
an appropriate entry strategy but also should consider the main
steps of the market entry framework. The benefits and risks
associated with each strategy are contingent on many factors,
including the type of product or service, the need for support,
and the foreign economic, political, business, and cultural
environment the exporter is seeking to penetrate. The best
strategy will depend on the firm’s level of resources and
commitment, and degree of risk it is willing to take on. The
strategy I believe that would produce the highest probability of
establishing a completive presence relies on strategic alliances
or joint ventures with foreign companies as the primary vehicle
for entering foreign markets. A Joint venture can bring positive
benefits to the foreign partner through their local partners

because local partners have better knowledge of the host
country's environment and business practices as well as
personal contacts with local suppliers, customers, banks and
government officials, management, production and marketing
skills, local prestige and other resources. A small company with
limited capital and workforce, and the need to reduce and share
risks may find a joint venture an ideal entry strategy in an
overseas market. By utilizing the management skills, experience
and knowledge of the foreign market by the local partner, a firm
significantly can reduce its learning curve and share its risks
with a partner that has a similar agenda.
Khanna, T. Palepu, K., Sinha, J. (June 2005) “Strategies That
Fit Emerging Markets” Harvard Business Review
Post 2
As evident from the textbook, there are five primary options
which companies can rely upon in their establishment of
competitive presence in foreign markets and these include;
export strategies, licensing strategies, franchising strategies,
acquisition and internal start-up strategies and collaborative
strategies. The export strategy is mainly used in the context
whereby domestic firms consider themselves as potential bases
for producing goods for exporting to the international
frameworks. Organizations which rely on this strategy can
compete with other foreign exporters. The licensing strategy
usually accords local organizations which have unique products
or unique technology the mandate to venture into international
scales. Franchising strategy is usually utilized by businesses
which have already proved that they can achieve rapid growth
and development as they seek to expand to the international
scales without utilizing large capital investment. The
acquisition strategy is viewed as a corporate action whereby a
company either purchases a part or the whole portion of another
firm's ownership and assets or controls them. The last strategy
is the collaborative strategy, and this involves two or more
organizations coming together, forming alliances, setting

objectives and creating joint ventures with the purpose of
establishing a strong global presence (Aaker & McLoughlin,
2010).Despite the fact that the collaborative strategy may be
faced with some setbacks emanating from conflicting interest as
well as objectives, it is my strong conviction that it remains as
the best option for companies to establish a competitive global
presence. Challenges which arise from differences in goals,
objectives, and vision can easily be settled down by the
companies coming together and setting their vision towards a
common objective. This should not even be a great challenge as
all the companies have the sole objective of achieving
competitiveness and merging leads to an aspect of unification.
The collaboration strategy ensures that the mergers elevate each
other's strengths, and also focus on ways of scraping their
weaknesses (Porter, 2013). Collaboration also creates flexibility
and a higher strength which is usually absent in independent
organizations.
Aaker, D. A., & McLoughlin, D. (2010). Strategic market
management: global perspectives. John Wiley & Sons.
Porter, M. E. (Ed.). (2013). Competition in global industries.
Harvard Business Press.

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