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International Strategy

International Strategy. BUSI 7130/7136 Chris Shook, Ph.D. AGENDA. Lecture BRL Hardy. Drivers of Globalization. Increased similarity of lifestyles Global communications Fast communication Pressures to reduce costs. Motivators. Increase Market Size Achieve Acceptable ROI

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International Strategy

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  1. International Strategy BUSI 7130/7136 Chris Shook, Ph.D.

  2. AGENDA • Lecture • BRL Hardy

  3. Drivers of Globalization • Increased similarity of lifestyles • Global communications • Fast communication • Pressures to reduce costs

  4. Motivators • Increase Market Size • Achieve Acceptable ROI • Achieve Economies of Scale • Achieve Location Advantage

  5. Choice of Entry Mode • Exporting • Licensing • Franchising • Joint Ventures • Acquisition of Wholly-Owned Subsidiary • Development of Wholly-Owned Subsidiary

  6. Porter’s Determinants of National Advantage Home country of origin is crucial to International success Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel

  7. Porter’s Determinants of National Advantage Demand Conditions Factor Conditions Basic Factors - Land, labor Size and Nature of Home Country’s Demand Advanced Factors - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Home country of origin is crucial to International success

  8. Porter’s Determinants of National Advantage Related & Supporting Industries - Japanese cameras & copiers - Italian shoes & leather Factor Conditions Basic Factors Demand Conditions - Land, labor Advanced Factors - Highly educated workers - Digital communications Size and Nature of Home Country’s Demand Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Home country of origin is crucial to International success

  9. Porter’s Determinants of National Advantage Related & Supporting Industries - Japanese cameras & copiers - Italian shoes & leather Factor Conditions Basic Factors Demand Conditions - Land, labor Advanced Factors Size and Nature of Home Country’s Demand - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Home country of origin is crucial to International success Firm Strategy, Structure & Rivalry Intense rivalry fosters industry competition

  10. Advice from Porter • Create pressures for innovation • Seek out competitors as motivators • Establish early warning systems • Improve national diamond • Welcome rivalry • Globalize to tap selectively into sources of other nations • Locate home base to support competitive advantage

  11. International Corporate Strategy Corporate-Level International Strategies Multi-Domestic Strategy Three Corporate Strategies Global Strategy Transnational Strategy

  12. International Corporate Strategy When is each strategy appropriate? High Need for Global Integration Low Low High Need for Local Market Responsiveness

  13. International Corporate Strategy When is each strategy appropriate? High Need for Global Integration Low Low High Need for Local Market Responsiveness

  14. International Corporate Strategy When is each strategy appropriate? High Need for Global Integration Low Low High Need for Local Market Responsiveness

  15. International Corporate Strategy When is each strategy appropriate? High Need for Global Integration Low Low High Need for Local Market Responsiveness

  16. International Corporate Strategy When is each strategy appropriate? High Need for Global Integration Low Low High Need for Local Market Responsiveness

  17. International Corporate Strategy When is each strategy appropriate? High Need for Global Integration Low Low High Need for Local Market Responsiveness

  18. International Corporate Strategy When is each strategy appropriate? High Need for Global Integration Low Low High Need for Local Market Responsiveness

  19. Do you REALLY have a global strategy? • Global strategy • cross subsidization of national market share battles in pursuit of global brand and distribution positions

  20. Do you REALLY have a global strategy? • Why? • Loose bricks • Necessity of understanding competitor’s strategic intent • Labor and scale advantages are not sustainable • Domestic competitors are NEVER safe

  21. Do you REALLY have a global strategy? • Implications • Broader corporate concept of a product line • Don’t allocate resources by SBUs • Don’t allocate resources by country

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