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BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY PowerPoint Presentation
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BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY

BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY

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BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY

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  1. BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY • Strategy content includes the strategic options available to companies • Multinational companies use many of the same strategies as domestic companies

  2. COMPETITIVE ADVANTAGE AND GENERIC STRATEGIES • Competitive advantage • When a company can out match its rivals in attracting and maintaining its targeted customers

  3. Generic strategies • Basic ways to keep and achieve competitive advantage

  4. DIFFERENTIATION • Find ways to provide superior value to customers

  5. LOW COST • Produce or deliver products or services equal to those of their competitors • Produce or deliver products or services more efficiently than the competition

  6. HOW DO LOW COST AND DIFFERENTIATION FIRMS MAKE MONEY? • Differentiation • People will often pay a higher price for extra value • Low cost • Additional profits from cost savings

  7. EXHIBIT 4.1 COSTS, PRICES, & PROFITS FOR DIFFERENTIATION AND LOW COST STRATEGIES

  8. COMPETITIVE SCOPE • How broadly a firm targets its products or services

  9. EXHIBIT 4.2 PORTER’S GENERIC STRATEGIES

  10. THE VALUE CHAIN • Michael porter uses the term value chain to represent all the activities that a firm uses ".. To design, produce, market, deliver, and support its product" (Porter 1985: 36)

  11. EXHIBIT 4-3 THE VALUE CHAIN

  12. COMPONENTS OF THE VALUE CHAIN • Primary activities • Support activities • Upstream and downstream

  13. COMPETITIVE STRATEGIES IN INTERNATIONAL MARKETS • Offensive • Defensive

  14. COUNTERPARRY • A popular strategy for multinationals • Fends off a competitor's attack in one country by attacking them in another country • E.G. Kodak versus Fuji

  15. SUSTAINING COMPETITIVE ADVANTAGE • Sustainable means that strategies are not easily neutralized, copied, or attacked by competitors

  16. LOW COST LABOR • Most imitated sources of lower costs in the international market • Quickly copied by competitors

  17. CORPORATE STRATEGY • Contrasts with business level strategy • How companies choose their mixtures of different businesses • Diversification • Related • Unrelated

  18. MULTINATIONAL DIVERSIFICATION • A quick way to gain a market presence • Coordinate and use resources from any location • Establishes global brand names • Cross subsidization

  19. Exhibit 4-4 Shows a Selection of Diversified Multinationals With Their Major Lines of Businesses

  20. STRATEGY FORMULATION TECHNIQUES: TRADITIONAL APPROACHES

  21. STRATEGY FORMULATION • The process by which managers select the strategy to be used by their company

  22. ANALYSIS TECHNIQUES • Help Managers Understand • A company's competitive position in the industry • Opportunities and threats faced by their company • Company's strengths and weaknesses

  23. INDUSTRY EFFECTS ON STRATEGY SELECTION • Market size • Ease of entry and exit • Whether there are economies of scale in production • Driving forces of change • Nature of competition in industry

  24. EXAMPLE KEY SUCCESS FACTORS • Innovative technology • Broad product line • Distribution channel effectiveness • Price advantages • Promotion effectiveness

  25. Superior physical facilities • Experience of firm in business • Cost position for raw materials

  26. FORMULATING THE BEST STRATEGIES • Know the industry and KSFs • Understand and anticipate your competitors' strategies

  27. THE COMPETITIVE ANALYSIS • A competitive analysis develops profiles of your competitors' strategies and objectives

  28. FOUR STEPS For competitors and assess: (1) Strategic intent (2) Current and anticipated generic strategies (3) Current and anticipated offensive and defensive competitive strategies (4) Current positions

  29. KEY POINTS FOR MULTINATIONAL MANAGEMENT • Use a country by country competitive analysis • Plan distinct competitive strategies by competitors and countries • See exhibit 4-5 for examples

  30. COMPANY SITUATION ANALYSIS • The most common tool: the SWOT • Strengths • Weaknesses • Opportunities • Threats

  31. KEY POINT FOR MULTINATIONAL MANAGEMENT • The SWOT analysis for the MNC is more complex • Each country provides its own operating environment • A country-by-country SWOT is probably most prudent

  32. CORPORATE STRATEGY SELECTION • Deciding which businesses in the portfolio are targets for growth and investment and which are targets for divestment or harvesting

  33. ASSESSING A CORPORATE BUSINESS PORTFOLIO • The basic tool: matrix analyses • The most popular is the growth-share matrix of the Boston consulting group (BCG)

  34. THE BCG GROWTH-SHARE MATRIX • Based on the industry growth rate the relative market share • Stars • Dogs • Cash cows • Problem children

  35. MATRIX ANALYSES FOR THE DIVERSIFIED MULTINATIONAL COMPANY • The portfolio assessment becomes more complex • Portfolio analyses must be conducted for each business in each country or region of operation

  36. EXHIBIT 4.6 THE BCG GROWTH SHARE MATRIX FOR A DIVERSIFIED MULTINATIONAL COMPANY

  37. CONCLUSIONS • Few students will work in industries not touched by global competition • All managers need to understand the application of strategic management to the international arena