The document discusses developing a global strategy for a business. It covers measuring performance, creating an operating strategy using competitive advantages, and formulating overall corporate goals. It also discusses strategic business units that have similar characteristics to justify strategy development. There are three strategic business unit frameworks: broad-line global competition, global focus, and national focus. Additionally, the document outlines sources of competitive advantage and Porter's generic strategies of cost leadership, differentiation, and focus. It concludes with a discussion of control in multinational enterprises.

1. Developing a Global
Strategy
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Measurement and evaluation of performance
e.g market share, cost and profit targets for divisions, personnel evaluation
Creation of operating strategy using competitive advantages
The four generic strategies, functional area targets
Formulation of overall corporate goals
Firm’s goal?
Three aspects of Overall Corporate
Strategy

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Competitive Advantage
Is a firm’s ability to transform
inputs into goods and
services at a maximum profit
on a sustained basis, better
than competitor.

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Strategic Business Units
Are group of products, divisions
or other company activities that
have sufficiently similar
characteristics to justify their
assignment to a single group for
strategy development.

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Strategic Business Unit Framework
• Compete worldwide with a full
range of products in an industry;
have a competitive presence in all
market segments. This strategy
requires either a low-cost
leadership through scale economies
or differentiated product lines, but
also implies pervasive global
integration.
Broad-line
global
competition

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Strategic Business Unit Framework
• Compete with select product lines in
global markets. Global brands are
critical for differentiation, but markets
are selective. For example, Merck &
Company is comparable to Bayer in
both size and product range, but Merck
tends to focus on pharmaceuticals for
institutional markets.
Global
Focus

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Strategic Business Unit Framework
• Concentrate in specific national
markets and defend these markets
through differentiation or
comparable cost advantages. The
point is to raise entry barriers and
protect particular markets by being
entrenched ahead of competitors
National
Focus

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Protected Niche
This strategy aims specifically at obtaining
government protection, either through support of the
firm against competitors or through government
purchase of the firm’s product or service.
Job creation, long-term purchase contract with a
government

10. SOURCES OF COMPETITIVE ADVANTAGE
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1. Efficiency
2. Strategic
5. Reputation
3. Risk
4. Learning

11. The Nature of Competitive Advantage
in Global Industries
1. Cost Drivers
•Location of Strategic Resources
•Differences in country cost
•Potential for economies of scale
- Research and Development
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12. The Nature of Competitive Advantage
in Global Industries
2. Customer Drivers
• Common customer needs favor globalization-needs
define by local tastes, culture, etc.
• Global Channels require a globally coordinated
marketing program
• Transferable marketing-brand names and
advertising require little local adaptation
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13. The Nature of Competitive Advantage
in Global Industries
3. Competitive Drivers
• Global competitors: The existence of many global
competitors indicates that an industry is ripe for
globalization. Global competitors will have a cost
advantage over local competitors.
• When competitors begin leveraging their global
positions through cross-subsidization, an industry is
ripe for globalization.
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14. The Nature of Competitive Advantage
in Global Industries
4. Government Drivers
•Trade Policies
•Technical Standards
•Regulations
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15. Porter’s Generic Strategies
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• Low cost producer in an industry for a given level of
quality.
• To earn higher profits or to gain market share.
Cost
Leadership
Strategy
• Calls for the development of a product or service that
offers unique attributes that are valued by customers
and that customers perceive to be better than or
different from the products of the competition.
Differentiation
Strategy

16. Porter’s Generic Strategies
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•Concentrates on a
narrow segment and
within that segment
attempts to achieve
either a cost advantage
or differentiation.
Focus
Strategy

17. Control in Multinational Enterprise
The firm
must
create a
control
structure
The basic intent of controls is to have managers define
goals clearly, observe weathered those goals are being
achieved
Financial
reporting &
managerial
reporting
Personnel
evaluation
Government
relations
Dealing with
rivals
Strategic
variety-
strategic
flexibility
basis for
thinking
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MUCHAS GRACIAS!!!