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1 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright STRATEGIES FOR COMPETING IN GLOBALIZING MARKETS CHAPTER 6
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“You do not choose to become global. The market chooses for you; it forces your hand.” Alain Gomez “Quote” © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright “... there’s no purely domestic industry anymore.” Robert Pelosky and Morgan Stanley
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3 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Chapter Outline Why Companies Expand into Foreign Markets Cross-Country Differences Strategy Options for Entering and Competing in Foreign Markets Pursuing Competitive Advantage by Competing Multinationally Profit Sanctuaries, Cross-Market Subsidization, and Global Offensives Strategic Alliances and Joint Ventures with Foreign Partners Competing in Emerging Foreign Markets Strategies for Local Companies in Emerging Markets
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4 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Why is the World Economy Globalizing? Define global economy. What conditions make it possible to have a global economy? What are some of the market differences a firm could consider when pursuing a foreign market? What are some possible advantages of foreign markets?
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5 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Strategy Options for International Markets What are some possible modes of entry for international expansion? Which of the modes of entry does not require operations in other countries? Which of the modes of entry is the most costly? Which of the modes of entry allows firms to share risks?
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6 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Strategy Options for International Markets Which of the modes of entry may lead to a loss of technology? Which of the modes of entry is associated with high transportation costs? Which of the modes of entry is associated with less product customization?
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7 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Types of International Competition What are two types of international competition? Which of the two types of international competition looks at each country as an independent market? Which type of competition would have the same rivals competing in different countries? Which type of competition views national leadership as important? Name an industry that has competition based upon multi-country competition? Global?
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8 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Types of International Strategy Which international strategy would likely have a firm offering standardized products across national markets? Which strategy would likely be best suited for competition where there are a variety of cultures and different preferences in the international markets? Which international strategy would likely involve decentralized decisions at the individual countries?
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9 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Competitive Strategy Principle A global strategy works best in markets that are globally competitive or beginning to globalize! A multi-country strategy is appropriate for industries where multi-country competition dominates!
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10 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Types of International Strategy Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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11 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Pursuing Competitive Advantage How can a multi-country strategy be used to gain a competitive advantage? How can a global strategy be used to achieve competitive advantage?
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