Business Strategy

1. Global Business Strategy
MSM7040 Business in a Global Economy

3. Porter’s Diamond
Competitive nations create
competitive business
Factor conditions or endowments –
the cost and quality of factors of
production
Local demand conditions –
sophisticated home buyers with high
expectations
Related and supporting industries –
spill over effects from clusters of
business
Intensity of rivalry – competition
drives efficiency, quality and
innovation

4. Porter’s Diamond
Using this framework:
Helps identify location of global
rivals
Identification of the best places to
locate productive activities
Identification of how tough it might
be to enter certain national markets
Helps identify the basis of success on
national market and how that will
need to be transferred to new
(international) market

5. Strategic Choice
Two pressures;
• Pressures for cost reduction
• Mass produce standardised product
• Outsourcing
• Pressures to be locally responsive
• Differences in consumer tastes and
preferences
• Differences in infrastructure and traditional
practices
• Differences in distribution channels
• Host government demands

7. Global Standardization Strategy
- Economies of scale
- Location economies
- Little customization
- Duplication of functions
- e.g. Intel and semi-conductors

8. Localisation Strategy
- Profitability through customization and difference
- e.g. Ford Motor Company

9. Transnational Strategy
- Leverage global skills and competencies
- e.g. Caterpillar

10. International Strategy
- e.g. Proctor and Gamble

11. Conclusions
Over time strategy might need to change, especially in local markets