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SMMCG10[CS-3] Global Strategy, G10 members, From outsourcing to full…

- - - - Labor, natural resources, technology, logistics
    - - (OECD countries, emerging market)
    - - Location specific-advantages
  - - - Sale into foreign markets
        
        Directly
        
        Via local agent
    - - Jointly own an independent company
        
        Contributed resources
        
        Manage and share profits jointly
      - Foreign firms: technology or business capabilities
      - Local firms: home market related capabilities
    - - With local partner
        
        more active coordination
        
        Broader scope of joint activities
        
        Ex: R&D, Marketing
    - - 100% owned unit in foreign country
        
        Brownfield
        
        Acquire fixed assets and reuse resources
        
        Acquisition
        
        Buy a local company&integrate
        
        Greenfield
        
        Build the unit from the ground-up
    - - Contract with local partner
        
        Transfer intangible (Technology, knowhow, etc.)
        
        Monitor performance
    - - Wholly-owned subsidiary↹joint venture↹Strategic Alliance↹Licensing↹Exporting
  - - - Def: More costly to doing business abroad
      - EX: Geographical distance, cultural and socio-economic unfamiliarity, etc.
    - - Choose entry mode based on ability to cope with risks
      - "Stages model"
        
        Expand into similar/small markets
        
        Choose lower risk entry mode
        
        Over time, learn and try into a distant market with higher risk entry mode
      - "Born global firms"
        
        Overcoming foreign entry risks
        
        Global talent and entrepreneurs
        
        Internet
        
        Local advantages in resources and knowledge
        
        Government policies overcoming barriers
- - - - Japan
      - South Korea
    - - USA
      - India
    - - Japan
      - Germany
    - - Israel
      - India
      - USA
  - - - Made by Michael Porter in 1990
      - Connect to Five Force Model
      - Used for explaining why certain industry in a country is more competitive
    - - Power of Buyers
    - - Price Rivalry or Competitive Rivalry
    - - Power of Suppliers
    - - Sixth Force
    - - Potential implications for managers
        
        Identifying a potential source of future competition
      - Understand the company's competitive advantage
        
        Compete with foreign competitors
      - Help companies appreciate globally competitive clusters form
        
        Bind together with partners and local governments
- - - - consumers will perceive them to be domestic companies
      - maximize the local responsiveness via a multi-domestic strategy
      - customize their product offerings in their international markets
    - - global standardization
        
        cost leadership
        
        driving down costs
        
        economies of scale
    - - using home-based core competencies
      - selling the same product and service in both domestic and foreign markets
    - - exchange rate exposure
      - combining product differentiation
      - the global matrix structure can be very costly
- - - - GDP has grown from 22% to 50% since 1960s
      - FDI has grown rapidly since 1970s
      - The cost of sea freight has fallen by 80% since 1940
      - Air transportation costs have also fallen by nearly 90%.
      - The costs of telecommunications has plummeted
      - Reduction in trade and investment barriers
        
        WTO was born in 1994