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SMMC_G1[CS-3]_Global Strategy, Group member - Coggle Diagram
SMMC_G1[CS-3]_Global Strategy
[3] National Origins of Competitive Advantage
National competitive advantages
Porter's Diamond model
explains national competitive advantages in particular industries
Demand conditions
specific characteristics (and high expectations) of demand in a firm's domestic market
connected to five force model
Factor conditions
national, human, other resources and supportive infrastructure and institution
Competitive intensity in focal industry
highly competitive environments tend to stimulate firms to outperform others
Related and supporting industries
leadership in related and supporting industries fosters world-class competitors in the downstream industry
Implications for global strategy
identifying potential sources of competition
understanding your own competitive advantages relative to foreign competitors
tapping into foreign country advantages (location decisions)
co-creating a supportive ecosystem (cluster)
fixed country-specific factors (location, raw materials)
intangibles (human capital, technology) which is open access to worldwide
exp: Germany and Japan for automobiles, or the USA and India for movies
[4] MNE Strategies
KEY TENSION
Local responsiveness
Grow market share if tailor offerings to local customer and host-country
Cost reduction
Reduce operating costs by using scale and deploying resources
Four types
Localization strategy
Maximize local responsiveness via a multi-domestic strategy
Customers will perceive them to be domestic companies
EX : Nestle customized product offering in international markets
Global strategy
Example: Lenovo's R & D in Beijing, Shanghai, and Raleigh; production center in Mexico, India, and China
Economies of scale and location economies
Pursuing a global division of labor based on best-of-class capabilities reside at the lowest cost
International strategy
Leveraging home-based core competencies
Selling same products/services in domestic/foreign market
EX : Selling Starbucks coffee internaionally
Transnational strategy
Combination of localization strategy(responsiveness)with global strategy(low cost position)
EX
German multimedia conglomerate
Bertelsmann; Haier in appliances
ABB in engineering products and services
Benefit of four types
Localization strategy
highest-possible local responsiveness
reduced exchange-rate exposure
Global strategy
location economies
economies of scale
International strategy
franchising
exporting or licensing
low-cost implementation
leveraging core competence
economic of scale
Transnational strategy
combine benefits of localization and creating a global matrix structure
economies of sale, location, and learning
Risk of four types
International strategy
no or limited local responsiveness
highly affected by exchange rate
IP embedded in product or service could be expropriated
Localization strategy
high cost of implementation
little or no scale economies of scale
no learning across different region
higher risk of IP expropriation
Global strategy
no local responsiveness
no product differentiation
exchange rate exposure
risk of IP expropriation
"Race to the bottom" as wages increase
Transnational strategy
costly and difficulty to implement
leading to highly failure rate
some exchange rate exposure
higher risk or IP expropriation
Conclusion
stages model of internationalization and born global
Porter‘s Diamond model of national competitive advantage
foreign market entry mode choices
Four MNE strategic choices in the global market place
Global strategy is essential in an era of globalization
[2] Foreign Market Entry
Difficulties
Business cost
barriers
trade
investment
challenge
institutional differences
culture
language
currency
generate animosity
popular backlash
liability of foreignness
ex. Netflix
into Canada
challenges
currency
bilingual laws
advantages
few trade / investment barriers
Why to entry foreign market?
reduce overall business risk
leverage core capabilities
access better or lower-cost factors
labor
natural resources
technology
knowledge
talent
logistics
develop new capabilities
location-specific advantage
learning
access a larger market
OECD countries
emerging markets
China
India
Five market entry modes
strategic alliance
broader scope of joint activities
R&D
marketing
active coordination
exporting
sale into foreign markets
export via an agent
direct exports
joint venture
contributed resources
money and others
manage jointly, share in profits
jointly-owned independent company
wholly-owned subsidiary
100% owned unit in a foreign country
types
greenfield
build the unit from scratch
brownfield
acquire fixed assets and reuse
acquisition
buy a local company and integrate
licensing or franchising
transfer intangibles
know-how
IP
brands
patented technology
monitor performance
contract with a local partner
comparison
down
higher ownership & control
up
reduced risk & costs & returns
How to internationalize
liabilities of foreignness
affect
market entry mode
too risk / liability
take low-risk
export
license
local presence
ex. manufacture locally
reduce cost
form alliance
joint venture with local firm
help manage
risks
knowledge gaps
conquer liabilities of foreignness
form wholly owned subsidiaries
stages model of internationalization
expand
from home market
to nearby / similar markets
entry mode
first lower risk only
after learn
higher-risk
born global firms
key to success
local country specific advantages
globalization
improve in communication
the Internet
international flows
talent
entrepreneurs
supportive government policies
How to solve
different legal systems
deal with new laws / regulations
new capabilities
[1] Globalization
Definition
the process of closer integration and exchange between countries and peoples worldwide
economic dimension of globalization
international trade and investment flows, movement of labor, and cross-border integration
Causes:technological improvements
advanced communication and transportation
reduce transportation cost
sea freight
air transport
the reduction in trade investment barriers
negotiations and treaties ex: GATT
Growth of MNEs and FDI
Multinational enterprises
companies that operate in two or more countries
Foreign direct investment
foreign portfolio investment :red_cross:
investment, buying stocks or bonds, or putting money in a fixed deposit or bank account.
investment in actual productive assets
[0] Introduction
[1] Globalization
[2] Foreign market entry
[3] National Origins of Competitive Advantage
[4] MNE Strategies
Group member
國企三 郭儀中 Eva
國企三 姜依伶 Elain
國企三 吳育修 Amy
國企三 葉冬婷 Teresa
國企三 王煒絢 Sharon
國企三 羅修銓 Chuan