International and Global Strategies

International and Global Strategies : 

International and Global Strategies Chapter 13

International vs. Global : 

International vs. Global International – carrying out business across national borders Global Customer needs are similar internationally Compete in globalized industries Locate value-adding activities in places world-wide where the greatest competitive advantage can be made Integrate and coordinate international activities between countries

Porter and Multidomesticity : 

Porter and Multidomesticity According to Porter, a company is: Multidomestic if competition in each nation is independent Global if the competition is global

Yip’s Framework : 

Yip’s Framework The extent and degree of globalization depends on 4 drivers Market drivers Cost drivers Government drivers Competitive drivers Each driver should be analyzed for the industry and market under consideration Helps determine which features of a strategy are global, and which are locally adapted

Yip’s Framework : 

Yip’s Framework Industry and Market Globalization Market drivers Cost drivers Competitive drivers Government drivers

Summary of Globalization Drivers : 

Summary of Globalization Drivers

Basis of Global Strategies: 2 Models : 

Basis of Global Strategies: 2 Models Porter’s Yip’s

Porter’s Global Generic Strategies : 

Porter’s Global Generic Strategies Global cost leadership Global differentiation Global segmentation Protected markets National responsiveness

Global Cost Leadership : 

Global Cost Leadership Strategy focuses on being the lowest cost producer of a product globally Takes advantage of global economies of scale and high volume sales world-wide

Global Differentiation : 

Global Differentiation Create a superior product or change customer perception of the product in order to raise price on a global scale Often the basis of this strategy is a strong brand name

Global Segmentation : 

Global Segmentation Global version of a focused strategy Can be either be global cost leadership or global differentiation Targets a single segment on a worldwide basis

Protected Markets : 

Protected Markets Focusing on competing in countries where that particular government protects or favors the business

National Responsiveness : 

National Responsiveness Focuses on adapting strategy to each local market

Porter’s Global Strategy: Configuration of the Value Chain : 

Porter’s Global Strategy: Configuration of the Value Chain According to Porter, global competitive advantage depends on configuring and coordinating activities in a unique way worldwide Includes both Configuration of value adding activities Coordination of value adding activities

Configuration and Coordination of Value Adding Activities : 

Configuration and Coordination of Value Adding Activities High Low Coordination of Activities Configuration of Activities Geographically dispersed Geographically concentrated

Yip’s Total Global Strategy : 

Yip’s Total Global Strategy First Step: Analysis using Yip’s Framework Then: 3 Stages in developing total global strategy Developing a core strategy Internationalizing the core strategy Globalizing the international strategy

Developing a Core Strategy : 

Developing a Core Strategy Based on developing core competences and a generic or hybrid strategy

Internationalizing the Core Strategy : 

Internationalizing the Core Strategy Take the core competences and generic or hybrid strategy global Coordinate and configure value chain in countries where cost and competitive advantages can be achieved

Globalizing the International Strategy : 

Globalizing the International Strategy Based on coordinating and integrating core competences and generic or hybrid strategy globally Decide which parts will be standardized and which will be locally adapted

3 Key Decisions in Yip’s Total Global Strategy : 

3 Key Decisions in Yip’s Total Global Strategy Where to go first Where to locate value adding activities Which market development strategies to use

Where to go first : 

Where to go first Decisions are based on: Size of market Economic factors Cultural factors Political factors Technological factors

Where to locate value adding activities : 

Where to locate value adding activities Decision based on: Wage and skill levels Availability of materials Infrastructure

Market Development Methods : 

Market Development Methods Internal Direct exporting Overseas production External International alliances or joint ventures International mergers and acquisitions