Welcome To The Presentation
STRATEGIES FOR COMPETING IN GLOBALIZING MARKETS
Why is the World Economy Globalizing?
Previously closed national economies are opening
up their markets to foreign companies
Importance of geographic distance is shrinking
due to the Internet
Growth-minded companies are racing to stake out
positions in the markets of more and more countries
What is the Motivation for Competing Internationally? Gain access to new customers Obtain access to valuable natural resources
Help achieve lower costs
Capitalize on resource strengths and competencies
Spread business risk across wider market base
Cross-Country Differences in Cultural, Demographic, and Market Conditions
Cultures and lifestyles differ among countries Differences in market demographics Variations in manufacturing and distribution
costs
Fluctuating exchange rates Differences in host government trade policies
Two Primary Patterns of International Competition
Multi-country
Competition Global Competition
Characteristics of Multi-Country Competition
Each country market is self-contained Competition in one country market is
independent of competition in other country markets Rivals competing in one country market differ from set of rivals competing in another country market Rivals strive for national market leadership No international market, just a collection of country markets
Characteristics of Global Competition
Competitive conditions across country markets are
strongly linked together Many of same rivals compete in many of the same country markets Rivals strive for worldwide leadership A true international market exists A firms competitive position in one country is affected by its position in other countries Competitive advantage (or disadvantage) is based on a firms world-wide operations and overall global standing
Strategy Options for International Markets
Exporting Licensing Franchising Global strategy based on
Low cost Differentiation Best-cost Focusing
Strategic alliances or joint ventures
Export Strategies
Involves using domestic plants as a production base for
exporting to foreign markets Advantages Minimizes both risk and capital requirements Conservative way to test international waters Minimizes direct investments in foreign countries An export strategy is vulnerable when Manufacturing costs in home country are higher than in foreign countries where rivals have plants High shipping costs are involved
Licensing Strategies
Licensing makes sense when a firm
Has valuable technical know-how or a patented
product but does not have international capabilities or resources to enter foreign markets Desires to avoid risks of competing in the markets which Are unfamiliar Present economic uncertainty Are politically volatile Disadvantage Risk of providing valuable technical know-how to foreign firms and losing some control over its use
Franchising Strategies
Often is better suited to global expansion efforts
of service and retailing enterprises
Advantages Franchisee bears most of costs and risks of
establishing foreign locations
Franchisor has to expend only the resources
to recruit, train, and support franchisees
Disadvantage
Maintaining cross-country quality control
Global Strategy
Competitive Strategy Principle
A multi-country strategy is One where a company varies its product offering & competitive approach from country to country to meet buyer preference
Think Local, Act Local
A global strategy is one where a Company employs the same basic competitive approach in all countries where it operates
Think Global, Act Global
Pursuing Competitive Advantage
Three ways to gain competitive advantage
1. Locating activities among nations to lower costs or achieve greater product differentiation 2. Efficient/effective transfer of competitively valuable competencies and capabilities from domestic to foreign markets 3. Coordinating dispersed activities in ways a domestic-only competitor cannot
Cooperative agreements / strategic alliances
Cooperative agreements / strategic alliances with
foreign companies are a means to
Enter a foreign market or Strengthen a firms competitiveness in world markets
Purpose of alliances
Joint research efforts Technology-sharing Joint use of production or distribution facilities
Marketing / promoting one anothers products
Benefits of Strategic Alliances
Gain scale economies in production and/or
marketing
Fill gaps in technical expertise or knowledge of
local markets
Share distribution facilities and dealer networks
Direct combined competitive energies toward
defeating mutual rivals
Pitfalls of Strategic Alliances
Becoming too dependent on another firm for essential
expertise over the long-term
Different motives and conflicting objectives Time consuming; slows decision-making
Language and cultural barriers
Mistrust when collaborating in competitively sensitive
areas
Clash of egos and company cultures
THANK YOU.!!!!!!
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