Post on 01-Nov-2014
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Brahmanti Prameswari 0806432341Emi Listika Zen 0806432581Pelly Sianova 0806433464
Thinking GloballyCHAPTER 8
Strategic Management:Logic and ActionHuff, Floyd, Sherman, Terjesen
Globalization
globalize | ‘glõbè‚lïz |verb
develop or be developed so as to make possible international influence or operation.
International DiversificationAdvantages Disadvantages
Earn greater returns on their existing skills and competencies
Market differ in way cannot always be anticipated
Reduce financial risk Reduce the effectiveness of corporate management
Strengthening bargain power The loss of flexibility and responsiveness to shifting consumer tastes
Determinants of National Advantage (M.E.Porter)
Firm strategy,structure, and
rivalry
Related and supporting industries
Demand conditions
Factor condition
International Strategy
Global Strategy
Transnational Strategy
InternasionalStrategy
MultidimensionalStrategy
Com
petit
ive
Forc
es fo
r Lo
w C
ost
Competitive Forces for Local Responsiveness
International Strategy
Global Strategy
Transnational Strategy
InternasionalStrategy
MultidimensionalStrategy
Com
petit
ive
Forc
es fo
r Lo
w C
ost
Competitive Forces for Local Responsiveness
Utilize domestic resources and capabilities and expand sales and operation across more than one country boundries
International Strategy
Global Strategy
Transnational Strategy
InternasionalStrategy
MultidimensionalStrategy
Com
petit
ive
Forc
es fo
r Lo
w C
ost
Competitive Forces for Local Responsiveness
Develop products, services, and experiences that respond to national differences
International Strategy
Global Strategy
Transnational Strategy
InternasionalStrategy
MultidimensionalStrategy
Com
petit
ive
Forc
es fo
r Lo
w C
ost
Competitive Forces for Local Responsiveness
Integrate operations to achieve cost and differentiationadvantages in multiple economist
International Strategy
Global Strategy
Transnational Strategy
InternasionalStrategy
MultidimensionalStrategy
Com
petit
ive
Forc
es fo
r Lo
w C
ost
Competitive Forces for Local Responsiveness
Emphasizes responsiveness to local needs and global efficiencies simultaneously
International Entry Mode
Export
Level of Risk
& Required
Investment
Potential for Return & Level of Control
LicensingFranchising
Joint Venture
GreenfieldHIGH
LOWLOW HIGH
International Entry ModeENTRY MODE ADVANTAGES DISADVANTAGES
Exporting • require little international experience
• require small level of financial investment
• high transportation costs & tariffs
Licence low risk (little financial investment) • low profit return
• loses some control over the use of its product or processes
Franchise • fast & relatively easy method for firm to leverage brand name dan strandardized system internationally.
• lower strat-up cost & access to proven business model
• less severe than other forms of licensing
• an inexpensive way to exploiting foreign market opportunity
• potential loss of control over brand & product quality (damaging reputation)
Joint Venture • shared ownership reduces the financial investment and risk involved in developing new market.
• benefit from skill of other partner.
• create new competitor
• may have different (opposing) goals at the start
• objective of partner often change over time
Wholly Owned Subsidiary = Greenfield Venture
• acquiring firm can move very quickly into major market
• complete control over strategic decisions
• often better profit potential.
• complex, often costly, time consuming
• high risk
• different corporate value and approaches (high turnover of talented employees)
Cross-Cultural Differences
Political Risks realted to instability in national governments & to war, both civil & international (terrorist activities)
Economic Risks related to likelihood of the government management of the economy will affect the country ‘s business environment such as currency fluctuations, change in inflation rate
Country Cluster (G. Hofstede & M. Bond)
ARABBahrain, Oman, UAE, Saudi Arabia, Kuwait, Abu-Dhabi
NEAR EASTERNTurkey, Iran, Greece
FAR EASTERNMalaysia, Philippines, Singapore, Taiwan, South Vietnam, Indonesia
LATIN AMERICAArgentina, Venezuela, Chile, Peru, Mexico, Colombia
LATIN EUROPEANFrance, Belguim, Italy, Spain
ANGLOAustralia, South Africa, Canada, NZ, UK, USA, Ireland
NORDICFinland, Norway, Denmark, Sweden
GERMANICAustria, Germany, Switzerland
INDEPENDENTBrazil, Japan, India, Israel
IDENTIFY INTERNATIONAL OPPORTUNITIES
EXPLORE RESOURCES AND CAPABILITIES
USE CORE COMPETENCE
International strategies
Models of entry
STRATEGIC COMPETITIVENESS OUTCOMES
• International business-level strategy
• Multidomestic strategy
• Global strategy
• Transnationaal strategy
• Exporting
• Licensing
• Franchice
• Joint Venture
• New wholly owned subsidiary
Better performance
Innovation
• Exploit economies of scale
• Exploit economies of scope
• Exploit national differences
Political Risks
Economic Risks
Redraw of International Strategy, Source: Michael A. Hitt, et al, Strategic Management: Competitiveness and Globalization, 4th edition, South-Western Pub, 2008
Thank You!!now you may ask questions