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Chapter 13: The Strategy of International Business (Pressure for Cost…
Chapter 13: The Strategy of International Business
Pressure for Cost Reduction
Force firms to lower unit costs
Industries producing common products that fill universal needs
Major competitors are based in low cost locations
There is persistent excess capacity
Consumers are powerful and face low switching costs
Pressure to be Locally Responsive
Force firms to adapt its product to adapt to local demands in each market
Differences in consumer tastes and preferences
Differences in traditional practices and infrastrcture
Differences in distribution channels
Host government demands
4 Basic Strategies
Global Standardisation
Pressure for cost reduction: HIGH
Pressure for local responsiveness: LOW
Localisation
Pressure for cost reduction: LOW
Pressure for local responsiveness: HIGH
Transnational
Pressure for cost reduction: HIGH
Pressure for local responsiveness: HIGH
International
Pressure for cost reduction: LOW
Pressure for local responsiveness: LOW