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InternationalBusiness
Environments&Operations15e,GlobalEditionDaniels●Radebaugh●Sullivan11-1Chapter12TheStrategyofInternationalBusinessCopyright?2021PearsonEducationLtd.11-2LearningObjectivesEvaluateindustrystructure,firmstrategy,andvaluecreationProfilethefeatures,functions,configuration,andcoordinationofthevaluechainDescribehowandwhycompanieschoosetoclusterinclosegeographicproximityDescribehowrobotsinspecificandautomationingeneralchangehowmanagersinterpretthevaluechainCopyright?2021PearsonEducationLtd.11-3LearningObjectivesDiscusshowtheindustrychangeaffectstheeffectivenessofavaluechainCompareandcontrastthestrengthsanddrawbacksofarealityversusvirtualityindesigningthevaluechainExplaintheideasofglobalintegrationandlocalresponsivenessProfilethetypesofstrategiesusedbyMNEsCopyright?2021PearsonEducationLtd.11-4IntroductionTheRoleofStrategyinInternationalBusinessCopyright?2021PearsonEducationLtd.11-5IndustryStructure LearningObjective: Evaluateindustrystructure,firmstrategy,andvaluecreationCopyright?2021PearsonEducationLtd.11-6IndustryStructureIndustrystructureinvolvestherelationshipsamongSuppliersofinputsBuyersofoutputsSubstituteproductsPotentialnewentrantsRivalryamongcompetingfirmsCopyright?2021PearsonEducationLtd.11-7IndustryChangeIndustrystructurechangesbecauseofCompetitormovesGovernmentpoliciesShiftingpreferencesTechnologicaldevelopmentsCopyright?2021PearsonEducationLtd.11-8IndustryStructure,
Strategy,andValueTheindustryorganization(IO)paradigmpresumesthatmarketsdemonstrateperfectcompetitionwherenofirmorindustryconsistentlyoutperformsothersThepowerofinnovativeexecutivesbrightexecutivesexploitmarketimperfectionstooutperformrivalsStrategy’shallmarksValueStrategyCopyright?2021PearsonEducationLtd.11-9CreatingValueValuethemeasureofafirm’scapabilityofsellingwhatitmakesformorethanthecostsincurredtomakeitCreatevalueusingAcostleadershipstrategymakeproductsforalowercostthancompetitorsAdifferentiationstrategymakeproductsforwhichconsumersarewillingtopayapremiumpriceCopyright?2021PearsonEducationLtd.11-10TheFirmasaValueChain LearningObjective: ProfilethefeaturesandfunctionsofthevaluechainCopyright?2021PearsonEducationLtd.11-11TheFirmasaValueChainThevaluechain
thesetoflinkedactivitiesthecompanyperformstodesign,produce,market,distribute,andsupportaproductThevaluechainconsistsofPrimaryactivities
design,make,sell,anddelivertheproductSupportactivities
implementprimaryactivitiesCopyright?2021PearsonEducationLtd.11-12TheFirmasaValueChainPrimaryandSupportActivitiesCopyright?2021PearsonEducationLtd.11-13TheFirmasaValueChainPrimaryandSupportActivitiesoftheValueChainCopyright?2021PearsonEducationLtd.11-14ManagingtheValueChainConfigurationdistributingvaluechainactivitiesaroundtheworldconcentrated
puttingallvaluechainactivitiesinonelocationdispersed
performingdifferentvaluechainactivitiesindifferentlocationslocationeconomiesCopyright?2021PearsonEducationLtd.11-15ManagingtheValueChainWhenconfiguringthevalue,considerWheretogoBusinessenvironmentalqualityInnovationcontextEconomiesofscaleLaborcostsLogisticsDigitizationCopyright?2021PearsonEducationLtd.11-16ManagingtheValueChainCoordinationlinkingthevaluechainactivitiesFactorsthatinfluencecoordinationOperationalobstaclesCorecompetencies
specialoutlook,skill,capability,ortechnologythatrunsthroughthefirm’soperations,threadingdisconnectedactivitiesintoanintegratedvaluechainSubsidiarynetworkssocialnetworksCopyright?2021PearsonEducationLtd.11-17ChangeandtheValueChainTheconfigurationandcoordinationofavaluechainrespondstochangesincustomers,competitors,industries,andenvironmentsEvenawellconfiguredandcoordinatedvaluechaincanbecomeobsoleteSo,designinganddeliveringastrategyshouldbeanongoingprocess
Copyright?2021PearsonEducationLtd.11-18GlobalIntegrationvs.
LocalResponsiveness
LearningObjective:
ExplaintheideasofglobalintegrationandlocalresponsivenessCopyright?2021PearsonEducationLtd.11-19GlobalIntegrationvs.
LocalResponsivenessFirmsfacetwoconflictingpressures:PressuresforglobalintegrationtheprocessofcombiningdifferentiatedpartsintoastandardizedwholemaximizeefficiencyPressuresforlocalresponsivenesstheprocessofdisaggregatingastandardizedwholeintodifferentiatedpartsoptimizeeffectivenessCopyright?2021PearsonEducationLtd.11-20PressuresforGlobalIntegrationDriversofglobalintegrationTheglobalizationofmarketsTechnologyhelpsstandardizeconsumerpreferencesGlobalproductshavebecomepopularallowsforstandardizationofproductdesignTheefficiencygainsofstandardizationLocation,scale,andlearningeffectsWTOsupportsglobalstandardsCopyright?2021PearsonEducationLtd.11-21PressuresforLocalResponsivenessPressureforlocalresponsivenessisdrivenbyConsumerdivergenceculturalpredispositionhistoricallegacynationalismHostgovernmentpoliciesfiscal,monetary,andbusinessregulationsCopyright?2021PearsonEducationLtd.11-22WhenPressuresInteractIntegration-ResponsivenessGrid:ByIndustryCopyright?2021PearsonEducationLtd.11-23TypesofStrategy LearningObjective: ProfilethetypesofstrategiesfirmsusedbyMNEsCopyright?2021PearsonEducationLtd.11-24TypesofStrategyCharacteristicsoftheStrategyTypeUsedbyMNEs
Copyright?2021PearsonEducationLtd.11-25InternationalStrategyInternationalstrategyleverageacompany’scorecompetenciesintoforeignmarketscriticalelementsofthevaluechainarecentralizedatheadquartersThestrategyworkswellwhenthefirmhascorecompetenciesthatforeignrivalslackthereislowpressureforglobalintegrationthereislowpressureforlocalresponsivenessCopyright?2021PearsonEducationLtd.11-26MultidomesticStrategyMultidomesticstrategyemphasizesresponsivenesstotheuniquecircumstancesthatprevailinacountry’smarketvalueaddedactivitiesareadaptedtolocalmarketsThestrategyworkswellwhenthereishighpressureforlocalresponsivenessthereislowpressureforglobalintegration
Copyright?2021PearsonEducationLtd.11-27GlobalStrategyGlobalstrategymakestandardizedproductsthataremarketedwithlittleadaptationtolocalconditionsexploitlocationeconomiesandcapturescaleeconomiesThestrategyworkswellwhentheMNEisthecostleaderthereislowpressureforlocalresponsivenessthereishighpressureforglobalintegrationCopyright?202
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