Chapter 8Strategy in the Global Environment.ppt

Chapter 8Strategy in the Global Environment 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 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 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 Cost Pressures and Pressures for Local Responsiveness Facing Caterpillar The Advantages and Disadvantages of Different Strategies for Competing Globally 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. Impli