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Published byDamian Morris Modified over 9 years ago
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BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY Strategy content includes the strategic options available to companies –multinational companies use many of the same strategies as domestic companies
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COMPETITIVE ADVANTAGE AND GENERIC STRATEGIES Competitive advantage –When a company can out match its rivals in attracting and maintaining its targeted customers
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Competitive advantage and generic strategies, continued Generic strategies –basic ways to keep and achieve competitive advantage
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DIFFERENTIATION Providing superior value to customers
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LOW COST Produce or deliver products or services equal to those of competitors WHILE –producing or delivering products or services more efficiently than competitors
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SOURCES OF PROFIT FOR LOW COST AND DIFFERENTIATION Differentiation –customers often pay a higher price for extra value Low cost –additional profits come from cost savings
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EXHIBIT 5.1 COSTS, PRICES, & PROFITS FOR DIFFERENTIATION AND LOW COST STRATEGIES
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COMPETITIVE SCOPE How broadly a firm targets its products or services
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EXHIBIT 5.2 PORTER’S GENERIC STRATEGIES
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THE VALUE CHAIN 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)
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COMPONENTS OF THE VALUE CHAIN Primary activities Support activities Upstream and downstream
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SOURCES OF COMPETITIVE ADVANTAGE Distinctive competencies Resources Capabilities
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SUSTAINABLE COMPETITIVE ADVANTAGE Firm capabilities that are: –valuable –rare –difficult to imitate –nonsubsitutable
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LOW COST LABOR Most imitated sources of lower costs in the international market Quickly copied by competitors
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COMPETITIVE STRATEGIES IN INTERNATIONAL MARKETS Offensive Defensive
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COUNTERPARRY Fends off a competitor's attack in one country by attacking them in another country –a popular strategy for multinationals –e.g., Kodak versus Fuji
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CORPORATE STRATEGY How companies choose their mixtures of different businesses Contrasts with business level strategy Diversification –related –unrelated
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MULTINATIONAL DIVERSIFICATION A quick way to gain a market presence Coordinate and use resources from any location Establishes global brand names Cross subsidization
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Exhibit 5.5 shows a Selection of Diversified Multinationals With Their Major Lines of Businesses
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STRATEGY FORMULATION: TRADITIONAL APPROACHES
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STRATEGY FORMULATION The process by which managers select the strategy to be used by their company
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ANALYSIS TECHNIQUES Help managers understand –company's competitive position in the industry –opportunities and threats faced by their company –company's strengths and weaknesses
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INDUSTRY EFFECTS ON STRATEGY SELECTION Market size Ease of entry and exit Whether there are economies of scale in production Driving forces of change Nature of competition in industry
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EXAMPLE KEY SUCCESS FACTORS Innovative technology Broad product line Distribution channel effectiveness Price advantages Promotion effectiveness
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Superior physical facilities Experience of firm in business Cost position for raw materials Example key success factors, continued
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FORMULATING THE BEST STRATEGIES Know the industry and KSFs Understand and anticipate your competitors' strategies
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COMPETITOR ANALYSIS A competitor analysis develops profiles of your competitors' strategies and objectives
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FOUR STEPS For major competitors, assess: (1) Strategic intent (2) Current and anticipated generic strategies (3) Current and anticipated offensive and defensive competitive strategies (4) Current positions
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KEY POINTS FOR MULTINATIONAL MANAGEMENT Use a country by country competitive analysis Plan distinct competitive strategies by competitors and countries See exhibit 5.6 for examples
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COMPANY SITUATION ANALYSIS The most common tool: the SWOT –strengths –weaknesses –opportunities –threats
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KEY POINT FOR MULTINATIONAL MANAGEMENT The SWOT analysis for the MNC is more complex Each country provides its own operating environment A country-by-country SWOT is probably most prudent
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CORPORATE STRATEGY SELECTION Deciding which businesses in the portfolio are targets for growth and investment and which are targets for divestment or harvesting
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ASSESSING A CORPORATE BUSINESS PORTFOLIO The basic tool: matrix analyses The most popular is the growth- share matrix of the Boston Consulting Group (BCG)
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THE BCG GROWTH- SHARE MATRIX Based on the industry growth rate the relative market share –stars –dogs –cash cows –problem children
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MATRIX ANALYSES FOR THE DIVERSIFIED MULTINATIONAL COMPANY The portfolio assessment becomes more complex Portfolio analyses must be conducted for each business in each country or region of operation
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EXHIBIT 5.7 THE BCG GROWTH SHARE MATRIX FOR A DIVERSIFIED MULTINATIONAL COMPANY
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CONCLUSIONS Few managers will work in industries not touched by global competition All managers need to understand the application of strategic management to the international arena
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