Strategy in the Global Environment

1
Strategy in the Global Environment
2
Preview

• Profiting From Global Expansion
• Pressures for Cost Reductions and Local
  Responsiveness
• Strategic Choice
• The Choice of Entry Mode
• Global Strategic Alliances
• Making Strategic Alliances Work

3
Profiting From Global Expansion

• Transferring Distinctive Competencies
• Realizing Location Economies
• Lower Costs
• Differentiation and Premium Pricing
• Moving Down the Experience Curve
• Global Expansion and Business Level Strategy

4
Pressures for Cost Reduction and Local
Responsiveness

• Pressures for Cost Reductions
• Pressures for Local Responsiveness

5
Figure 8.1 Pressures for Cost Reduction and
Local Responsiveness
High
Cost Pressures
Low
Low
High
Pressures for Local Responsiveness
6
Figure 8.1 Pressures for Cost Reduction and
Local Responsiveness
High
CompanyA
Cost Pressures
Low
Low
High
Pressures for Local Responsiveness
7
Figure 8.1 Pressures for Cost Reduction and
Local Responsiveness
High
CompanyA
Cost Pressures
Company B
Low
Low
High
Pressures for Local Responsiveness
8
Figure 8.1 Pressures for Cost Reduction and
Local Responsiveness
High
CompanyA
Company C
Cost Pressures
Company B
Low
Low
High
Pressures for Local Responsiveness
9
Pressures for Cost Reduction and Local
Responsiveness (Continued)

• Pressures for Cost Reductions
• Pressures for Local Responsiveness
• Differences in Consumer Tastes and Preferences
• Differences in Infrastructure and Traditional
  Practices
• Differences in Distribution Channels
• Host Government Demands
• Implications

10
Strategic Choice

• International Strategy
• Multidomestic Strategy
• Global Strategy
• Transnational Strategy

11
Figure 8.2 Four Basic Strategies
High
Cost Pressures
Low
Low
High
Pressures for Local Responsiveness
12
Figure 8.2 Four Basic Strategies
High
Cost Pressures
Low
Low
High
Pressures for Local Responsiveness
13
Figure 8.2 Four Basic Strategies
High
Cost Pressures
International Strategy
Low
Low
High
Pressures for Local Responsiveness
14
Figure 8.2 Four Basic Strategies
High
Global Strategy
Cost Pressures
International Strategy
Low
Low
High
Pressures for Local Responsiveness
15
Figure 8.2 Four Basic Strategies
High
Trans- national Strategy
Global Strategy
Cost Pressures
Multi- domestic Strategy
International Strategy
Low
Low
High
Pressures for Local Responsiveness
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Figure 8.3 Cost Pressures and Pressures for
Local Responsiveness Facing Caterpillar
High
Caterpillar, Inc.
Cost Pressures
Low
Low
High
Pressures for Local Responsiveness
17
Table 8.1 Advantages and Disadvan-tages of
Different Global Strategies
Continued . . .
18
Table 8.1 Advantages and Disadvantages of
Different Global Strategies (Continued)
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The Choice of Entry Mode

• Exporting
• Licensing
• Franchising
• Joint Ventures
• Wholly Owned Subsidiaries
• Choosing Among Entry Modes
• Advantages and Disadvantages (Table 8.2)

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Table 8.2 Advantages and Disadvan-tages of
Different Entry Modes
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Table 8.2 Advantages and Disadvantages of
Different Entry Modes (Continued)
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The Choice of Entry Mode (Continued)

• Choosing Among Entry Modes
• Advantages and Disadvantages (Table 8.2)

• Distinctive Competencies and Entry Mode
• Pressures for Cost Reduction and Entry Mode

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Global Strategic Alliances

• Advantages

24
Global Strategic Alliances

• Advantages
• Disadvantages

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Making Strategic Alliances Work

• Partner Selection

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Making Strategic Alliances Work (Continued)
Characteristics of a Good Partner

• Helps Firm Achieve Its Strategic Goals
• Shares Firms Vision for the Purpose of the
  Alliance
• Unlikely to Opportunistically Exploit the
  Alliance for Its Own Ends

27
Making Strategic Alliances Work (Continued)

• Partner Selection

• Alliance Structure

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Figure 8.4 Structuring Alliances to Reduce
Opportunism
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Figure 8.4 Structuring Alliances to Reduce
Opportunism
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Figure 8.4 Structuring Alliances to Reduce
Opportunism
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Figure 8.4 Structuring Alliances to Reduce
Opportunism
32
Figure 8.4 Structuring Alliances to Reduce
Opportunism
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Making Strategic Alliances Work (Continued)

• Partner Selection
• Alliance Structure

• Managing theAlliance

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Summary

• PROFITING FROM GLOBAL EXPANSION

• PRESSURES FOR COST REDUCTIONS AND LOCAL
  RESPONSIVENESS
• STRATEGIC CHOICE
• THE CHOICE OF ENTRY MODE
• GLOBAL STRATEGIC ALLIANCES
• MAKING STRATEGIC ALLIANCES WORK