logging in or signing up ch08 aSGuest9890 Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 631 Category: Education License: All Rights Reserved Like it (0) Dislike it (1) Added: January 10, 2009 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript Chapter 8Strategy in the Global Environment : Copyright © 2001 Houghton Mifflin Company. All rights reserved. Chapter 8Strategy in the Global Environment Profiting From Global Expansion : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-2 Profiting From Global Expansion Earning high returns from transferring distinctive competencies to foreign markets. Realizing location economies Using lower-cost locations reduces overall costs and fosters product differentiation for premium pricing. Moving down the experience curve Larger global markets = more accumulated volume. Global expansion and business-level strategies Linked by cost reductions and value creation. Pressures for Cost Reduction and Local Responsiveness : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-3 Pressures for Cost Reduction and Local Responsiveness Pressures for cost reductions Global competitors seek to minimize unit costs through location economies and attain low-cost competitor status. In commodity-type product industries, intense price competition predominates strategic concerns. Pressures for local responsiveness arise from: Differences in local consumer tastes and preferences. Differences in infrastructure and traditional practices. Differences in distribution channels among countries. Host government economic and political demands. Pressures for Cost Reduction and Local Responsiveness : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-4 Pressures for Cost Reduction and Local Responsiveness FIGURE 8.1 Strategic Choice : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-5 Strategic Choice International strategy Create value by transferring skills and products abroad. Multidomestic strategy Maximize local responsiveness by customizing products and marketing strategy for local markets. Global strategy Pursue low-cost status, offer standardized global products. Transnational strategy Use global learning to achieve low-cost status, differentiation, and local responsiveness simultaneously. Four Basic Strategies : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-6 Four Basic Strategies FIGURE 8.2 Cost Pressures and Pressures for Local Responsiveness Facing Caterpillar : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-7 Cost Pressures and Pressures for Local Responsiveness Facing Caterpillar FIGURE 8.3 The Advantages and Disadvantages of Different Strategies for Competing Globally : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-8 The Advantages and Disadvantages of Different Strategies for Competing Globally TABLE 8.1 Basic Entry Decisions : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-9 Basic Entry Decisions Which foreign markets? Politically and financially stable Developed and developing nations Free market systems Timing of entry Pioneering costs versus first-mover advantages. Scale of entry and strategic commitments Scale of entry affects the nature of competition in the national market. Implications of risks and benefits must be weighed carefully. The Choice of Entry Mode : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-10 The Choice of Entry Mode Exporting Licensing Franchising Joint Ventures Wholly Owned Subsidiaries Distinctive Competencies and Entry Mode Pressures for Cost Reduction and Entry Mode The Advantages and Disadvantages of Different Entry Modes : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-11 The Advantages and Disadvantages of Different Entry Modes TABLE 8.2 Global Strategic Alliances : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-12 Global Strategic Alliances Advantages Facilitate entry into foreign markets. Enable partners to share fixed costs and risks associated with new products and processes. Facilitate transfer of complementary skills between companies. Help establish technological standards. Disadvantages Risk of giving away technological know-how. Risk of opening local market access to foreign alliance partner. Risk of not getting anything in return. Making Strategic Alliances Work : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-13 Making Strategic Alliances Work Partner selection when done well: Helps the firm achieve its strategic goals. Results in a commonly shared vision for the alliance. Reduces opportunistic behaviors by the partners. Structuring Alliances to Reduce Opportunism : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-14 Structuring Alliances to Reduce Opportunism FIGURE 8.4 Managing the Alliance : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-15 Managing the Alliance Maximizing the benefits of an alliance: Develop a sensitivity to cultural differences. Build interpersonal relationships and networks among managers from different companies. Learn from alliance partners and put the knowledge to use in the organization. You do not have the permission to view this presentation. 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ch08 aSGuest9890 Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 631 Category: Education License: All Rights Reserved Like it (0) Dislike it (1) Added: January 10, 2009 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript Chapter 8Strategy in the Global Environment : Copyright © 2001 Houghton Mifflin Company. All rights reserved. Chapter 8Strategy in the Global Environment Profiting From Global Expansion : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-2 Profiting From Global Expansion Earning high returns from transferring distinctive competencies to foreign markets. Realizing location economies Using lower-cost locations reduces overall costs and fosters product differentiation for premium pricing. Moving down the experience curve Larger global markets = more accumulated volume. Global expansion and business-level strategies Linked by cost reductions and value creation. Pressures for Cost Reduction and Local Responsiveness : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-3 Pressures for Cost Reduction and Local Responsiveness Pressures for cost reductions Global competitors seek to minimize unit costs through location economies and attain low-cost competitor status. In commodity-type product industries, intense price competition predominates strategic concerns. Pressures for local responsiveness arise from: Differences in local consumer tastes and preferences. Differences in infrastructure and traditional practices. Differences in distribution channels among countries. Host government economic and political demands. Pressures for Cost Reduction and Local Responsiveness : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-4 Pressures for Cost Reduction and Local Responsiveness FIGURE 8.1 Strategic Choice : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-5 Strategic Choice International strategy Create value by transferring skills and products abroad. Multidomestic strategy Maximize local responsiveness by customizing products and marketing strategy for local markets. Global strategy Pursue low-cost status, offer standardized global products. Transnational strategy Use global learning to achieve low-cost status, differentiation, and local responsiveness simultaneously. Four Basic Strategies : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-6 Four Basic Strategies FIGURE 8.2 Cost Pressures and Pressures for Local Responsiveness Facing Caterpillar : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-7 Cost Pressures and Pressures for Local Responsiveness Facing Caterpillar FIGURE 8.3 The Advantages and Disadvantages of Different Strategies for Competing Globally : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-8 The Advantages and Disadvantages of Different Strategies for Competing Globally TABLE 8.1 Basic Entry Decisions : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-9 Basic Entry Decisions Which foreign markets? Politically and financially stable Developed and developing nations Free market systems Timing of entry Pioneering costs versus first-mover advantages. Scale of entry and strategic commitments Scale of entry affects the nature of competition in the national market. Implications of risks and benefits must be weighed carefully. The Choice of Entry Mode : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-10 The Choice of Entry Mode Exporting Licensing Franchising Joint Ventures Wholly Owned Subsidiaries Distinctive Competencies and Entry Mode Pressures for Cost Reduction and Entry Mode The Advantages and Disadvantages of Different Entry Modes : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-11 The Advantages and Disadvantages of Different Entry Modes TABLE 8.2 Global Strategic Alliances : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-12 Global Strategic Alliances Advantages Facilitate entry into foreign markets. Enable partners to share fixed costs and risks associated with new products and processes. Facilitate transfer of complementary skills between companies. Help establish technological standards. Disadvantages Risk of giving away technological know-how. Risk of opening local market access to foreign alliance partner. Risk of not getting anything in return. Making Strategic Alliances Work : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-13 Making Strategic Alliances Work Partner selection when done well: Helps the firm achieve its strategic goals. Results in a commonly shared vision for the alliance. Reduces opportunistic behaviors by the partners. Structuring Alliances to Reduce Opportunism : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-14 Structuring Alliances to Reduce Opportunism FIGURE 8.4 Managing the Alliance : Copyright © 2001 Houghton Mifflin Company. All rights reserved. 8-15 Managing the Alliance Maximizing the benefits of an alliance: Develop a sensitivity to cultural differences. Build interpersonal relationships and networks among managers from different companies. Learn from alliance partners and put the knowledge to use in the organization.