Please enable JavaScript.
Coggle requires JavaScript to display documents.
SMMCG2[CS-3] Global Strategy, G2 (Kelly, Cindy, Elaine, Sarah, Emily Huang…
SMMC
G2
[CS-3] Global Strategy
Globalization
Definition
A process of closer integration and exchange between countries and people worldwide
Focus on
Economic globalization
2) Investment flows
3) Movement of labor across boarders
1) International trade
4) Cross-boarder integration of companies into multinational firms
Reason
1) Advance telecommunications
ex. Shipping&telecommunications
Cost decrease
3) Falling Trade and investment barriers
ex.US Tariffs
2) Reduced transportation cost
4) Growth of MNEs and FDI
MNEs
Conduct operation in at least two countries
Operate locally or domestically
Important driver
FDI
Investments in productive activities abroad
Foreign market entry strategies
Why
2) Access better or lower cost factors of production abroad
3) Reduce overall business risks
4) Leverage core capabilities
5) Develop new capabilities
Get location-specific advantages
ex, IT in India
Learn from foreign country operations
1) Access a larger market
ex: OCED,Emerging market
How (entry mode)
2) Licensing / Franchising
Contract with a local partner to transfer intangibles
Intangibles : patents, knowhow, brand, IP
3) Strategic alliance
Involve more active coordination
Potential to become key partner
4) Joint venture
Jointly owned and managed independent company by contributing resources and sharing profits
A foreign firms technology or business with local firm home market
ex.Sony Ericsson in phone handsets
5) Wholly-owned subsidiary
Establish a 100% owned unit in a foreign country
Greenfield
Brownfield
Higher ownership and control
Acquisition
1) Exporting
Sale into foreign market directly or indirectly
(via an agent)
Reduced risk,costs and returned
Challenges
3) Different institutions
4) Different culture and language
2) Trade and investment barrier
5) Currency
6) Animosity, politics, anti-foreign bias
1) Regulations
Liability
Overcome ways
Local advantages in resources and knowledge
Born global firms
Global communication networks (internet)
Government policies
Global flows of talent and entrepreneurs
Liability of foreignness is costly.
(The costs of doing business abroad)
3.Institutional voids & legal risks
Political biases&instability
Economic conditions and risks
Currency difference&risks
Geographic distance
Cultural and socio -economic unfamiliarity
ex.Netflix in Canada
Focus on
International activities of individual firms
National origins of competitive advantage
Intangibles create competitive advantages
Ex.human capital and technology
Diamond model
Connected to Porter's five forces
Demand condition → power of buyers
Competitive intensity in focal industry → rivalry
Factor condition → power of supplier
Potential implications
2) Understanding your own competitive advantages relative to foreign competitors
3) Tapping into foreign country advantages
1) Identifying potential sources of competition
4) Co-creating a supportive ecosystem
Complementarity
Related and supporting industry
The sixth force
MNE strategies
Strategic management of the entire multinational
May be simultaneously operating in multiple markets
Key tension
1) Cost reduction
Using scale and deploying common resources across global operations
ex：Tesla
2) Local responsiveness
High
ex.India McDonald's
Low
ex.Tesla Gigafactory
Types
2) Localization strategy
Low pressure for cost reductions, high pressure for local responsiveness
ex.Nestal
3) Global strategy
High pressure for cost reductions, low pressure for local responsiveness
ex.Lenovo's R&D
1) International strategy
Both low pressure for cost reductions and local responsiveness
ex.Starbuck
4) Transnational strategy
Combination of localization strategy and global strategy
Both high pressure for cost reductions and local responsiveness
G2
Kelly
Cindy
Elaine
Sarah
Emily Huang
Emily Wu