Вы находитесь на странице: 1из 15

Internation

al Strategy:
Creating
Value in
Global
Markets
chapter 7

Copyright 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education

International Strategy
7-2

Globalization has to do with the rise of


market capitalization around the world:

International exchanges have increased


Trade

in goods & services


Exchange of money, information, & ideas

Laws, rules, norms, values, and ideas are


growing more similar across countries

Challenges include balancing between


emerging markets & developed markets

How to meet the needs of customers at


very different income levels

7-3

Factors Affecting a Nations


Competitiveness

Michael Porters diamond of national


advantage explains why some nations
and their industries outperform others:

Factor endowments
Demand conditions
Related and supporting industries
Firm strategy, structure, & rivalry

International Expansion:
Motivations
7-4

A company decides to become a


multinational firm in order to:

Increase market size


Attain

Take advantage of arbitrage


opportunities
In

economies of scale

every stage of the value chain

Enhance a products growth potential


Reinvigorating

the product life cycle

International Expansion:
Motivations
7-5

A company decides to become a


multinational firm in order to:

Optimize the location of value chain activity


To

enhance performance

To

reduce cost

To

reduce risk

Explore reverse innovation


Design

& manufacture products locally

Export

no-frills products to developed markets

International Expansion:
Risks
7-6

Multinational firms also encounter risks:

Political risk due to social unrest, military


turmoil, demonstrations, terrorism, absence
of the rule of law can lead to
Destruction
Disruption

of property

of operations

Non-payment
Arbitrary

for goods and services

government decisions

Economic risk due to piracy and


counterfeiting

International Expansion:
Risks
7-7

Multinational firms also encounter risks:

Currency risk due to fluctuations in the local


currencys exchange rate
Affects

cost of production or net profit

Management risk due to culture, customs,


language, income level, customer
preferences, distribution systems
Could

lead to the need for local adaptation of


apparently standard products

International Expansion:
Managing Risks

7-8

Managing political risk through

Market diversification
Developing stakeholder coalitions
Wooing key influencers
Putting key stakeholders on their boards

Managing economic risk through global


dispersion of value chains

Outsourcing
Offshoring

International Strategies:
7-9

Opposing Pressures

Exhibit 7.4 Opposing Pressures and Four Strategies

International Strategy
7-10

An international strategy requires


diffusion & adaptation of the parent
companys knowledge & expertise to foreign
markets.
The primary goal is worldwide exploitation of
the parent firms knowledge & capabilities.

All sources of core competencies are


centralized.
Pressure for both local adaptation & low costs
are rather low

Global Strategy
7-11

A global strategy implies a firm is


interested in lowering costs:

Competitive strategy is centralized &


controlled by the corporate office
Products are standardized, operations
centralized, producing economies of scale
Worldwide volume supports R&D
Theres a standard level of quality worldwide
Pressure for reducing cost is high; pressure
for adaptation to local markets is weak

Multidomestic Strategy
7-12

A multidomestic strategy puts


emphasis on differentiating products &
services to adapt to local markets

Decisions are decentralized


Products & services are tailored to local use
Consider

language, culture, income levels,


customer preferences, distribution systems

Markets can expand rapidly


Prices are differentiated by market
Pressure for local adaptation is high;
pressure for lowering costs is low

Transnational Strategy
7-13

A transnational strategy seeks global


competitiveness via trade-offs:

Efficiency versus local adaptation versus


organizational learning
Assets & capabilities are disbursed according
to the most beneficial location for a specific
activity; some value chain activities are
centralized, some are decentralized.
Economies

of scale, increased knowledge flows

Pressures for both local adaptation and


lowering costs are high

International Strategies:
Global or Regional?

7-14

It may be unwise for companies to rush


into full-scale globalization
Regionalization may be more
reasonable

Distance still matters


Commonalities of language, culture,
economics, legal & political systems, and
infrastructure all make a difference
Trading blocs and free trade zones ease
trade restrictions, taxes, & tariffs

International Strategies:
7-15

Entry Modes

Exhibit 7.9 Entry Modes for International Expansion