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what are drivers of globalization?
- 1. Market factors
- 2. Cost Factors
- 3. Enviormental Factors
- 4. Competitve factors
- The reasons why globalization has emreged
Market factors (Globalization Drivers)
Similarities in market demand come from populations all around that have similar education, spending habits allow them to be treated as one market
Cost Factors (Globalization Drivers)
Avoidingos inefficienesand duplication of effort, making sur ethe market is large enouh to support the firm
Enviromental Factors ( Globalization Drivers)
technological advances, the falling of government and fiscal barriers.
Competitive Factors (Globalization Factors)
global strategies are ofen necessary to prevent competitors from gathering an undue advantage, can be used to thwart the growth of potential competitors.
- The reasons for why firms want to go Global.
- Examples are: Profit adcantage, unique products, technological advantages, exclusive information, tax benifit, economies of scale
- why companies have to move overseas
- Examples: Competitive pressures, overproduction, delining domestic sales, excess capactiy, saturated domestic markets, proximity to customers and ports
- (Changes of pressures in the domestic ecnomy)
The desire and drive on the part of management to act on an idea and to support in the long run.
The Most important and critical factor to sucess in international business
Global strategy Formulation
- Step 1. Assessment and ajustment of core strategy
- Step 2. Formulation of global stategy
- Step 3. Development of Global Porgram
Assessment and ajustment of core strategy (step one of the Global strategy formulation)
- Market/Competitive analysis and internal Anaylsis
Formulation of Global Strategy (step two of the global formulation strategy)
- Choice of competitive strategy
- Choice of target markets
Delelopment if Global Program
- Product offering
- Marketing Program
- Value-added activities
- Competitive Position
Competitive Strategy Analysis
- Three choices of strategy
- 1. Cost Leadership
- 2. Differefntiation
- 3. Focus
Cost leadership strategy
A pricing tactic where a company offers an identical product or service at a lower cost than the competition
Takes advantage of the companys' real or precieved uniquneness on elements such as design of after sales service
A deliberate concentration on a single industry segment
- The collection and analysis af data originally collected to serve another pupose rather than the specific objectices of the firm.
- This is obtainable from government source, international organizations, and others.
- Tariff information
- U.S. export/ Import data
- Nontariff measures
- Foreign Export/Import data
- Data on government trade policy
- Local laws and regulations
- Size of market
- Local standards and specifications
- Distribution system
- Competitive activity
- First there is Qualitative and quantitative information
- ways to obtain information
- Personal Interviews
- Focus groups
- Obervation Reseach
- Survey Reseach
face to face reseach method, the objective of which is to obatin in depth information from a knowledgable individual
A research method in which representatives of a proposed target audiences contribute to market reseach by participating in an unstructured discussion.
A research method in which the subject's activity and behavior are watched
A reseach method involving the use of questionaires delievered in person by mail, telephone, or online, to obtain statistically valid quantifiable information
Most costly type of research,a method capable of determining the effects of a variable in a situation
- Enviromental scanning
- Delphi studies
- Scenario analysis
Enviromental Scanning (ongoing research option)
- Obtaining ongoing data about a country
- political, social ad economic issues
A research tool using a group of participants with experitse in the area of concern to predict and rank major future developments
The identification of crucial variables and the analysis of the effects of their variations on business conditions
Global Program development
- 4 key decisions
- 1. Degree of standardization
- 2. Marketing program
- 3. value adding activities
- 4. Competitive strategy
Dergree of standardization (Global program development)
while globalization involves some level of standardization it requires customization too, the company must hwich one to focus on and to what degree
Marketing Program (Global program development)
- Informatlity for stategic elements (positioning)
- And formality of tactical elements (distribution)
also called glocalization a term coined to describe the networked global organization approach to an organizational structure.
Value adding activities
cost reductions by pooling production or other activities or exploting factor costs of capabilities. not duplicating activities
- defending a companies competitive strategy abroad and at home
- Cross-subsidization the use of resources acculated in one part of the world to fight a competitive battle in another.
Global market entry strategies
- Exporting and importing
Exporting and Importing (Global market entry strategies)
Exporting and importing directly allows the company to have a competitive advantage and expand more rapidly. better control over international activities.
Export management companies-Domestic firms that specialize in preforming international business services as commission reps or as distributors
International Agent- a rep or intermediary for the frm that works to develop business and sales strategies and that develops contacts
International Distributor- a rep or intermediary for the form that purchases products from the form, take titles, and aussumes the selling risk
Tradong Companies a company that acts as an intermediary for multiple companies in sich areas as import-export, countertrade, investing, and manufacturing
Export trading company- allows businesses to band together to export and offer export services, must follow antitrust provisions
International Licensing (Global Market entry strategies)
Lincesing- the method through which one form allows another to produce or package its product or use its intellectual property in exchange for compensation
Royalty- the compensation paid by one form to another under a licensing agreement
Trademark Lincesing- the licensing of instanly reconizable logos, names, or images for use on unrelated products such as gifts toys or clothing
International Francising (Global Market entry Strategies)
Francising- a form of licnesing that allows a distributor or retailer exclusive rights to sell a product or service in a specified area
a term for collaboration amoung firm often similar to joint ventures but not necessarily involving joint capital investment
the firm sells its expertise in running a company whil avoiding the risk or benefits of ownership
A specailized form of management contract between a customer and an organization to provide a complete operational system together with the skills needed for unassisted maintenance and operation.
Frmal particpatio of two or more campanies in an entirprise to achieve a ommon goal
A partnership among multiple companies in the same industry usually with the aim of conducting costly reseach and development work. the costs and results are shared among participating companies.