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SMMCG9[CS-3] Global Strategy - Coggle Diagram
SMMC
G9
[CS-3] Global Strategy
Group Members
Anna
Phoebe
Pete
Adiyasa Gao
Fion
Levi
Jerry
Globalization
Foreign Market Entry Part 1
Foreign Market Entry Part 2
National Origins of Competitive Advantage
MNE Strategies
key tension
Simultaneously face pressures for cost reduction
Reduce their costs of operating
Using scale economies and operating
Lower costs by standardizing internationally as much as possible
Not customizing to individual countries
Type of MNE strategy
International Strategy
Home-based core competency
Same products / services
Foreign / domestic markets
Example
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No products differentiation
No Low cost structure
Localization Strategy
Maximize local responsiveness
ā multi-domestic strategy
Example
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Global Strategy
Maximize economic profits
Achieve economic scale / cost leadership
Example
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Transnational Strategy
Localization Strategy + Global Strategy
Value chain : Forward Integration / Backward Integration
Example
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Localization strategy
The opposite of a global strategy
Often in consumer products or heavily regulated industries
Face very significant pressures to respond to local needs
Empowering their local country managers
Transnational strategy
Cost pressures and pressures to be locally responsive
Lower-cost through their multinational organization
Matrix structure
Managers simultaneously report to their local country
idea
Quickly move around knowledge within the company
How to lower the cost
Responsive to local needs at all times
Challenging
Go international
customize and localized in some ways
Manage an international portfolio of businesses
countries are different
It is driven by
Intangibles
Human Capital
Technology
Industry that heavily dependent on
Germany and Japan for automobiles
Japan and South Korea for consumer electronics
USA and India for movies
How to analyze and predict that?
Michael Porter
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Barriers or Challenges
Requires companies to deal with new laws and regulations,and sometimes entirely different legal systems
Often trade and investment barriers that make it difficult to operate abroad
Many institutional differences between countries which go beyond even the laws and regulations
Differences in culture and language and in dealing with a different currency can be another significant challenge
Foreign company is likely to be viewed in any country as being, well, foreign
Generate its own animosity and political and popular backlash against the company
Netflix
Challenges in expanding Canada
Difficult to adjust to Canada's bilingual laws and to deal with the different currency
First exhausted many easier growth opportunities in the US market
More costly to do business
Culture
Socioeconomic realities
Sheer geographic distance
Economic
Political
Currency considerations
Companies Internationalize
Entry mode a firm chooses may depend on its ability to cope with the liabilities of foreignness
Too much risk or too much liability, the firm may decide to take a low-risk approach like exporting or licensing
Company may choose to form an alliance or joint venture
Help manage the risks and knowledge gaps
Stages model of internationalization
Expand within their home market and then expand into nearby or similar markets
Should preferably use lower-risk entry modes early on
Had the opportunity to learn about foreign markets, should multinationals expand into distant and dissimilar markets and use higher risk entry modes to enter them
EX. Flower growing and export company
The drivers of recent globalization have included significant improvements in communication
Particularly through the Internet and significant International flows of talent and entrepreneurs
Flower exporting client primarily took orders over email
Global firms has been a combination of local country specific advantages and supportive government policies
Why do firms go international?
Leverage company's advantage
Develop new capabilities
Leverage core capabilities
Reduce risk
Access larger market
Better and lower cost-factors
Reduce business risk
How to enter foreign markets
Strategic Alliance
Active coordination with local partner
Gore and Association
International Joint Venture
Owned independent company contributed resources
Starbucks in India
Licensing / Fanchising
Contract with local partner
McDonald
Wholly-owned subsidary
Established 100% owned unit in a foreign country
Brownfeild
Acquire fixed assets and reuse
Aquisition
Buy a local comapny
Greenfield
Built from scratch
Export
Sales into foreign markets
Direct export by customer
Online shopping
Indirect export
Company's order via agent
Notices when do foreign market entry
Country
Policy
It may regulate company's entry.
Can I trust the local people?
A good strategic alliance can help company create more value.
Cost and benefits
How much efforts shall I put in?
Can these efforts turn into enough profits for company?
Shifting Focus
Specific priorities of individual companies on the international stage
iRobot
Robotic home cleaning systems, Roomba and Braava
Clothing Fashion Industries
Nike and Levi's
over 50% of sales
International markets
Globalization in the procurement of supplies
Low manufacturing cost overseas
Reasons to become Inernational Firms
Access larger market
OECD countries & emerging markets (China and India)
Access better low-cost factors
Labor
Natural resources
Technology
Logistics
Reduce risks
Leverage new capabilities
Advantages
Doing IT development in India
Learning from foreign country operations
Leverage core capabilities
International markets
Meaning
A process of closer integration and exchange between countries and peoples worldwide
Economic globalization focus
Trade
Investment Flows
Movement of labor
Multinational firms
Causes of Globalization
Advanced Telecommunications
Reduced transportation costs
Falling trade and investment barriers
Growth of MNEs and FDI
Multinational Enterprises(MNEs)
Conduct operations in at least two countries
Procurement
Production
Foreign Direct Investment (FDI)
Investment in "Productive" activities abroad
Contrast with foreign portfoolio inestments (FPI)