Bài giảng Strategic Management - Chapter 7: International Strategy: Creating Value in Global Markets

International Strategy: Creating Value in Global Marketschapter 7International StrategyGlobalization has to do with the rise of market capitalization around the world:International exchanges have increasedTrade in goods & servicesExchange of money, information, & ideasLaws, rules, norms, values, and ideas are growing more similar across countriesChallenges include balancing between emerging markets & developed marketsHow to meet the needs of customers at very different income levels7-*Factors Affecting a Nation’s CompetitivenessMichael Porter’s diamond of national advantage explains why some nations and their industries outperform others:Factor endowmentsDemand conditionsRelated and supporting industriesFirm strategy, structure, & rivalry7-*International Expansion: MotivationsA company decides to become a multinational firm in order to:Increase market sizeAttain economies of scaleTake advantage of arbitrage opportunitiesIn every stage of the value chainEnhance a product’s growth potentialReinvigorating the product life cycle7-*International Expansion: MotivationsA company decides to become a multinational firm in order to:Optimize the location of value chain activityTo enhance performanceTo reduce costTo reduce riskExplore reverse innovationDesign & manufacture products locallyExport no-frills products to developed markets7-*International Expansion: RisksMultinational firms also encounter risks:Political risk due to social unrest, military turmoil, demonstrations, terrorism, absence of the rule of law can lead toDestruction of propertyDisruption of operationsNon-payment for goods and servicesArbitrary government decisionsEconomic risk due to piracy and counterfeiting7-*International Expansion: RisksMultinational firms also encounter risks:Currency risk due to fluctuations in the local currency’s exchange rateAffects cost of production or net profitManagement risk due to culture, customs, language, income level, customer preferences, distribution systemsCould lead to the need for local adaptation of apparently standard products7-*International Expansion: Managing RisksManaging political risk throughMarket diversificationDeveloping stakeholder coalitionsWooing key influencersPutting key stakeholders on their boardsManaging economic risk through global dispersion of value chainsOutsourcingOffshoring7-*International Strategies: Opposing Pressures7-*Exhibit 7.4 Opposing Pressures and Four StrategiesInternational StrategyAn international strategy requires diffusion & adaptation of the parent company’s knowledge & expertise to foreign markets.The primary goal is worldwide exploitation of the parent firm’s knowledge & capabilities.All sources of core competencies are centralized.Pressure for both local adaptation & low costs are rather low7-*Global StrategyA global strategy implies a firm is interested in lowering costs:Competitive strategy is centralized & controlled by the corporate officeProducts are standardized, operations centralized, producing economies of scaleWorldwide volume supports R&DThere’s a standard level of quality worldwidePressure for reducing cost is high; pressure for adaptation to local markets is weak7-*Multidomestic StrategyA multidomestic strategy puts emphasis on differentiating products & services to adapt to local marketsDecisions are decentralizedProducts & services are tailored to local useConsider language, culture, income levels, customer preferences, distribution systemsMarkets can expand rapidlyPrices are differentiated by marketPressure for local adaptation is high; pressure for lowering costs is low7-*Transnational StrategyA transnational strategy seeks global competitiveness via trade-offs:Efficiency versus local adaptation versus organizational learningAssets & 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 flowsPressures for both local adaptation and lowering costs are high7-*International Strategies:Global or Regional?It may be unwise for companies to rush into full-scale globalizationRegionalization may be more reasonableDistance still mattersCommonalities of language, culture, economics, legal & political systems, and infrastructure all make a differenceTrading blocs and free trade zones ease trade restrictions, taxes, & tariffs7-*International Strategies:Entry Modes7-*Exhibit 7.9 Entry Modes for International Expansion