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

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

4. u Generic strategies – Basic ways to keep and achieve competitive advantage

5. DIFFERENTIATION u Find ways to provide superior value to customers

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

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

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

10. COMPETITIVE SCOPE u How broadly a firm targets its products or services

11. EXHIBIT 4.2 PORTER’S GENERIC STRATEGIES

13. THE VALUE CHAIN u 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)

14. EXHIBIT 4-3 THE VALUE CHAIN

15. COMPONENTS OF THE VALUE CHAIN u Primary activities u Support activities u Upstream and downstream

16. COMPETITIVE STRATEGIES IN INTERNATIONAL MARKETS u Offensive u Defensive

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

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

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

20. CORPORATE STRATEGY u Contrasts with business level strategy u How companies choose their mixtures of different businesses u Diversification – Related – Unrelated

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

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

24. STRATEGY FORMULATION TECHNIQUES: TRADITIONAL APPROACHES

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

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

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

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

29. u Superior physical facilities u Experience of firm in business u Cost position for raw materials

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

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

32. 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

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

34. COMPANY SITUATION ANALYSIS u The most common tool: the SWOT – Strengths – Weaknesses – Opportunities – Threats

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

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

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

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

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

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

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