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Strategy A View From the Top Chapter 8 – Global Strategy Formulation

Strategy A View From the Top Chapter 8 – Global Strategy Formulation . Larin Sanders Ivan Salazar Brian Davis . Clustering – Globalization and Industrial . Natural endowments Australia, United States Relative advantage Semiconductor industry Decentralized patterns GE, Whirlpool .

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Strategy A View From the Top Chapter 8 – Global Strategy Formulation

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  1. Strategy A View From the Top Chapter 8 – Global Strategy Formulation Larin Sanders Ivan Salazar Brian Davis

  2. Clustering – Globalization and Industrial • Natural endowments • Australia, United States • Relative advantage • Semiconductor industry • Decentralized patterns • GE, Whirlpool

  3. “National Diamond”Determinants of National Competitive Advantage Chance Firm Strategy, structure, and rivalry Factor Endowments Demand Conditions Related and Supporting Industries Government

  4. Industry Globalization Drivers Market Drivers Evolution of customer needs Global customers Global channels Transferability of marketing Economic Drivers Nature of industry Economies of scale/location Differences in country costs Industry Globalization Potential Competitive Drivers Interdependence between countries/regions Globalization of competitors Governmental Drivers Trade barriers Regulatory climate Technology/standards

  5. Global Strategy Formulation

  6. Global Strategy Formulation 5 Dimensions (1)Market Participation (2)Standardization/ Positioning (3)Activity Concentration (4)Coordination of decision making (5) Nonmarket factors

  7. Global Strategy Formulation Market Participation Few companies can afford to enter all markets open to them A global view of market opportunities requires a multidimensional perspective, in many industries we can distinguish between: Must Markets Vs. Nice-to-be in Markets Strategic Alliances have made vertical and horizontal integration less important Alliances boost contribution to fixed cost while expanding a company’s global reach

  8. Global Strategy Formulation Standardization/Positioning As globalization advances, many companies seek to standardize core products and services However, the idea of a fully identical standardized global product is a myth…Ex. Sony Adopting a more global market positioning is another form of standardization Example of these are Coca Cola, Disney World, Unilever, and IBM

  9. Global Strategy Formulation Global branding strategy matrix Global Mix- both the offer and the message are the same Global Offer-same offer but different positioning around the world Global Message- offer is different but the message is the same Global Change- both offer and message are adapted to local market circumstances

  10. Global Strategy Formulation Activity Concentration To enhance global competitiveness, companies continually look at 3 factors (1) which parts of the value-creation process they should do themselves and which to outsource (2)whether they can eliminate duplicate operations and reduce the number of manufacturing sites (3) whether they can relocate value-added activities to more cost effective locations Ex. Eli Lilly with R&D

  11. Global Strategy Formulation Coordination of Decision Making The degree to which decision making is coordinated on a global scale defines the extent to which globalization has been implemented. Leveraging regional cost differentials Sharing key resources Cross-subsidizing national battles for market share Pursuing global brand and distribution positions

  12. Global Strategy Formulation Nonmarket Dimensions Increasingly, success on a global level is influenced by nonmarket factors that are governed by (1) social, (2) political, and (3) legal arrangements. An effective global strategy addresses both elements; market dimensions and nonmarket dimensions

  13. Global Strategy Formulation Region/Country Analysis • Political and social systems • Openness • Product markets • Labor markets • Capital markets

  14. Global Strategy Formulation How Wal-Mart Went Global • Global Opportunity • Dedicated and committed workforce • Target Markets • Americas vs. European and Asian markets • Mode of Entry • Joint venture

  15. Global Strategy Formulation How Wal-Mart Went Global….cont • Global Transfer of Skills • Local Adaptation • Regulations and government policies • Local Competition • Acquiring a dominant player • Acquiring a weak player • Launching a frontal attack on the incumbent • Gains and Setbacks

  16. Global Strategy Formulation Global Strategy and Risk • Types of Risk • Political Risk • Global and country-specific risk • Macro and Micro political risk • Legal Risk • Foundations of a country’s legal system

  17. Global Strategy Formulation Global Strategy and Risk….cont • Financial/Economic Risk • Working conditions, infrastructure, technological innovation, economic development, etc. • Societal /Cultural Risk • Global Strategy • Exploiting similarities and differences

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