Strategy of intl business

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Strategy of intl business
2011-12-11 18:25:58

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  1. Four dimensions of distance
    • Culture: Different languages, ethnicities, social networks, religions and social norms
    • Administrative: Absence of shared monetary or political association, political hostility, government policies, institutional weaknesses
    • Geographic: Physical remoteness, lack of common border, size of country, weak transportation or communication links,differences in climates
    • Economic: Differences in consumer incomes, differences in costs and quality of natural, financial, human, knowledge resources
  2. Multinational (localization) strategy
    • Customized product 
    • Countries -- selected on their standalone potential
    • Units independent 
    • Low coordination; high dispersion
    • Few inter-subsidiary transfer
  3. Multinational (localization) strategy competitive advantage
    • Local responsiveness
    • Goodwill -- local government, customers
    • Lower costs -- avoiding shipping costs and tariffs
    • Lower coordination costs
    • Quick response to changing local market situation
  4. Factors facilitating a global standardization strategy
    • Increased economies of scale/scope
    • Decreased transportation costs
    • Lower communication costs
    • Reduced tariffs, quotas
    • Reduced non-tariff barriers
    • Trading blocks/Regional Integration
    • Compatible technical standards/Reduced adaptation costs Homogenization of product needs
    • Adoption of global strategy by competitors
  5. Global standardization Strategy
    • Central control over country operations
    • Central surveillance of resource allocation and performance
    • Standardized products
    • Extensive transshipments 
    • Cross-subsidization
  6. Global strategy competitive advantage
    •  Lower cost structure
    • »Economies of scale
    • »Less duplication of activities
    • »Lower inventories
    • Improved quality
    • Enhanced customer preference
    • Increased competitive leverage
    • Greater bargaining power
    • Quick response -- R&D concentration
  7. Forces against global strategy
    • Consumers demanding something “different”
    • Government demands 
    • Risks (economic, political, resource)
    • New manufacturing technology
    • Organizational limitations
    • Managerial resistance
  8. Transnational strategy
    •  Greater emphasis on differentiated products than in “pure” global industries
    • Greater demand for global efficiency and lower costs than in “pure” multinational industries
    • Greater sensitivity to governmental demands
    • Units coordinate activities with HQ and with one another
    • Units may adapt to special circumstances only they face
  9. Transnational strategy issues
    • Adapting to Local Market Differences
    • Exploiting Economies of Global Scale
    • Tapping Optimal Locations for Activities
    • Maximizing Knowledge transfers