©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 8 STRATEGY IN THE GLOBAL ENVIRONMENT ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. LEARNING OBJECTIVES § Understand the process of globalizaBon and how it impacts a company’s strategy § Discuss the moBves for expanding internaBonally § Review the different strategies that companies use to compete in the global market place § Explain the pros and cons of different modes for entering foreign markets 2 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GLOBALIZATION OF PRODUCTION AND MARKETS § GlobalizaBon of producBon and markets § Increased as companies took advantage of lower barriers to internaBonal trade and investment § NaBonal markets started merging into one global marketplace § ImplicaBons § Companies are finding home markets inundated by foreign compeBtors § CriBcal to maximize efficiency, quality, customer responsiveness, and innovaBve ability 3 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. FIGURE 8.1 -‐ NATIONAL COMPETITIVE ADVANTAGE 4 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. REALIZING COST ECONOMIES FROM GLOBAL VOLUME § A company can realize cost savings from economies of scale by: § Spreading the fixed costs and se\ng up producBon faciliBes over its global sales volume § Serving a global market, a company uBlizes its producBon faciliBes more intensively § Bargaining down the cost of key inputs with suppliers § Increasing its sales volume more rapidly 6 ©2015 Cengage Learning. All R.