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

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Competitive Forces for Local Responsiveness

International Strategy

Global Strategy

Transnational Strategy

InternasionalStrategy

MultidimensionalStrategy

Com

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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

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Forc

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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

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w C

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Competitive Forces for Local Responsiveness

Integrate operations to achieve cost and differentiationadvantages in multiple economist

International Strategy

Global Strategy

Transnational Strategy

InternasionalStrategy

MultidimensionalStrategy

Com

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Forc

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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

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