Strategy: can be defined as the actions that managers must take to attain the goals of the firm – For most firms, the main goal is to maximise the value of the firm for its owners

How is value created? The way to increase profitability is through creating more value
– The amount of value a firm creates is measured by the difference
between its costs of production and the value that consumers
perceive in its products

Importance of strategic positioning • It is important for a firm to be explicit about its choice of
strategic emphasis with regard to value creation

Configuration of firm operations • Any firm’s operations can be seen as a value chain composed of a series of
distinct value creating activities
The

Global expansion, profitability, and profit
growth (cont.)
• Expanding the market
– Firms can increase growth by selling goods or services developed at
home internationally

The success of firms that expand internationally depends on:

The goods or services they sell
– Returns are likely to be greater if local firms in the nation a company enters lack
comparable products
Their core competencies - skills within the firm that competitors cannot
easily match or imitate
– Core competencies enable firms to reduce the costs of value creation and/or to
create perceived value so that premium pricing is possible

• Location economies – Economies that arise from performing a value creation activity in the
optimal location for that activity, wherever in the world that might be

• Experience effects – The experience curve refers to the systematic reductions in
production costs that occur over the life of a product

• Leveraging subsidiary skills – Leveraging the skills created within foreign subsidiaries and applying them
to other operations within the firm’s global network may create value