Strategic Management/ Business Policy Joe Mahoney

Questions About Global Competition What is an international strategy? What is the value of global strategies? Why are some countries more competitive than others in global competition? How do companies diversify internationally? How do you organize a global company?

International Strategy An international strategy refers to the selling of products and markets outside a firm’s domestic market.

Value of Global Strategies Gain Access to New Customers for Current Products or Services Disneyland Tokyo, EuroDisney Gain Access to Low-Cost Factors of Production Achieving global economies of scale in the automobile industry Leverage Core Competencies E.g., Honda developing and leveraging its competencies in producing motors for motorcycles, automobiles, snow blowers and lawn mowers.

Value of Global Strategies “Stretching” to Develop New Core Competencies E.g., Pepsi Restaurants trying to develop new skills in upscale casual dining. Managing Corporate Risk As global capital markets become more efficient over time, the benefit provided by this corporate strategy diminishes.

Corporate-level International Strategies Global Strategy Products are standardized across national markets Emphasizes economies of scale Lacks responsiveness to local markets Requires resource sharing and coordination across borders

Corporate-level International Strategies Multi-Domestic Strategy Decentralized strategy Products and services tailored to local markets Focus on competition in each market Prominent strategy among European firms due to broad variety of cultures and markets in Europe

Corporate-level International Strategies Transnational Strategy Seeks to achieve both global efficiency and local responsiveness Difficult to achieve because of simultaneous requirements for strong central control and coordination to achieve efficiency and local flexibility and decentralization to achieve local market responsiveness.

Advantages And Disadvantages of the International Strategies

How Should We Enter A Foreign Country?

Cooperative Strategies Strategic alliances are partnerships between firms whereby their resources, capabilities, and core competencies are combined to pursue mutual interests in designing, manufacturing, or distributing goods or services.

Types of Corporate-Level Strategic Alliances Diversifying Alliances e.g., Samsung Group joins with Nissan to build new automobiles Synergistic Alliances e.g., Sony shares development with many small firms Franchising e.g., McDonald’s or Century 21

Cooperative Strategies Franchising is an alternative to diversification that is considered a cooperative strategy based on a contractual relationship.

Cooperative Strategies A network strategy is the alliance-related actions taken by a group of interrelated and comparable firms to serve the common interests of all partners.