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SMMCG4 [LN-11] -Corporate Strategy: Geographical Expansion, Need for…
SMMC
G4
[LN-11] -Corporate Strategy: Geographical Expansion
National Competitive Advantage: Porter’s Diamond
Firm Strategy, Structure, and Rivalry
The structure of domestic enterprises can influence the characteristics of a country.
Related and Supporting Industries
The integration and innovation of upstream and downstream sectors result in excellent external effects for both the nation and individual enterprises, including spill-over effect.
Demand Conditions
A high demand in the domestic market can cultivate high standards in businesses.
Chance
Unforeseeable transformations
Factor Conditions
Including human resources, natural resources, knowledge resources, and so on.
Basic factors of production: climate and geography
Advanced factors of production: human resources and knowledge economy.
Countries need to continually invest and update to increase competitiveness.
Government
Providing business resources and environments, as well as engaging in procurement, expanding infrastructure, developing natural resources, or establishing regulations to restrict or incentivize, can positively influence businesses.
A Comprehensive Model of Foreign Market Entries
When to enter
first mover
developing proprietary, technological leadership, and preempting scarce assets
late mover
benefit from first mover investments, experience, and inflexibility
How to enter
commitment and experience
large-scale entries
strength: benefit from a strategic commitment
weakness: limited strategic flexibility and potential huge losses
small-scale entries
strength: focus on accumlating experience'''learning by doing''
weakness: a lack of strong strategic commitment and diffculties in building market share
Where to enter
abundance of strong market demand and customers willing to pay
economies of scale and abundance of low-cost factors
posession of natural resources and related transport and communication infrastructure
abundance of innovative individuals, firms, and universities
Multinational Strategies and Structures
Global Strategy-Structure Relationships
Transnational
Global
International
Multidomestic
Low
Low
Knowledge Management in Four Types of Multinational Enterprises
Transnational
Global
Multidomestic
Home Replication
Moderate
Independance
Low
Moderate
High
The Integration-Responsiveness Framework
Transnational strategy (global matrix)
Multidomestic strategy(geographic area）
high
Global strategy (global product division)
Home replication( international division)
Low
low
High
Pressure for local responsiveness
Country vs. Culture
Difference
Country Difference
(1) Political System
(2) Economic System
(3) Legal System
(4) Economic Development
(5) Deregulation & Privatization
Culture Difference
Values
Norms
Social Structures
Ethnic Beliefs
Power Disparities
Going Global :globe_with_meridians:
Why Going Global :question:
Transferring Core Competence (inside-out) :leftwards_arrow_with_hook:
(1) Exploiting and leveraging distinct competencies to foreign markets where indigenous competitors lack similar skills and products.
Tesla Entering the Chinese Electric Vehicle Market
:blue_car:
Tesla leverages its advantages in electric vehicle technology and branding to fill the gap in the high-end electric vehicle market in China.
Realizing Location Economies (outside-in) :arrow_right_hook:
(1) Certain countries have a comparative advantages in the production of certain products, if trade barriers and transportation costs permitting.
Nike's Footwear Production in Vietnam
:athletic_shoe:
(2) Placing a value creation activity in its optimal location may help lower its cost or enable its differentiation.
BMW’s R&D Center in Germany
:car:
Realizing Experience Curve Economies (as a whole) :arrows_counterclockwise:
(1) Economy of scale and learning effects reduce cost of production (or specialized equipment or personnel), by selling the product worldwide over a larger volume.
Amazon’s Global Sales
:shopping_trolley:
(2) Pricing aggressively so demand will expand rapidly.
Xiaomi in the Global Smartphone Market :iphone:
Xiaomi attracts a large number of consumers by offering high-quality smartphones at prices lower than mainstream brands.
Strategic Choice on Globalization :pencil2:
Local Responsiveness :star:
(Demand)
(1) Differences in consumer tastes & preferences, infrastructure & traditional practices, distribution channels, competitive conditions, and host government demand & policies.
McDonald's Adaptation Strategies
:smiley:
(2) Being local responsive tends to raise costs.
Starbucks' Localization Strategy in Global Markets
:coffee:
Starbucks adjusts its products and operational strategies to meet the local needs of various markets, leading to increased costs.
Cost Reduction :money_with_wings:
(Supply)
(1) Price competition is particularly intense for commodity/standard products where there is persistent excess capacity and consumer’s switching cost is low, facilitated by liberalization of barriers on globalization.
Price Competition in the Smartphone Industry :iphone:
The smartphone market is another highly standardized industry facing intense price competition, exacerbated by globalization.
Example
Boeing 787 Dreamliner
International Sales as % of Total
These examples demonstrate the
importance of geographical expansion for increasing revenue, market share, and production efficiency
, helping to develop effective internationalization strategies. :star:
Lifetime Revenues - Blockbuster Movies
Choice of Entry Mode
Commitment and Control
Franchising- Franchiser sells intangible property & insists franchisee follow rules on doing business.
Joint Ventures- Two or more firms create a new entity, sharing control and profits.
Licensing- Granting a foreign company the right to produce and sell a product in exchange for a fee. Often involves patented technology.
Wholly-Owned Subsidiaries- parent company owns 100% of subsidiary’s stock
Exporting- most use to begin expansion but later switch to another mode.
Advantages & Disadvantages of Entry Modes
Review
Geographical Expansion 區域擴張
Global
Regional
Organic Growth 有機式成長
Increase production capacity and output more products or services.
example：Apple Inc. releases a new generation of iPhone every once in a while.
Vertical Integration 垂直整合
Expanding business development vertically through mergers and acquisitions or by establishing upstream or downstream capabilities.
Backward Integration 後向整合
Integration of industries in one's own upstream business sector
Forward Integration 前向整合
Integration of industries downstream of one's own enterprise
Merger & Acquisition 併購
Merger：The merger of two (or more) companies of similar scale to form a single company.
Acquisition：A company acquires the stocks or assets of another company and gains control over that company.
Product Diversification 多角化
The process in which a company enters a new industry outside of its core or primary industry, produces and sells new products, and earns profits.
un-related
related
example：Soft drink company expands into the tea beverage market.
Strategic Alliance 策略聯盟
Two or more independent enterprises, following the principle of mutual benefit and focusing on long-term cooperation.
High-speed rail BOT project：The Taiwan High Speed Rail Consortium is a joint venture of seven major domestic and foreign enterprises.
The strategy for enterprises to expand their business activities in new geographical areas.
Need for coordination
High
Bureaucratic costs
High
G4
110402015 葉宜婷
110212066 方俐錂
110402016 曾于倫
109402043 蔡羿萱
109402012 江雅甄
pressures for local responsiveness
Example
