Pearce 14e IM Ch 05.doc - Chapter 05 The Global Environment...

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Chapter 05 - The Global Environment Chapter 5 The Global Environment Chapter Summary To understand the strategic planning options available to a corporation, its managers need to recognize that different types of industry-based competition exist. Specifically, they must identify the position of their industry along the global versus multidomestic continuum and then consider the implications of that position for their firm. The differences between global and multidomestic industries about the location and coordination of functional corporate activities necessitate the differences in strategic emphasis. As an industry becomes global, managers of firms within that industry must increase the coordination and concentration of functional activities. As a starting point for global expansion, the firm’s mission statement needs to be reviewed and revised. As global operations fundamentally alter the direction and strategic capabilities of a firm, its mission statement, if originally developed from a domestic perspective, must be globalized. Lastly, movement of a firm toward globalization often follows a systematic pattern of development. Commonly, businesses begin their foreign nation involvements progressively through niche market exporting, license-contract manufacturing, franchising, joint ventures, foreign branching, and foreign subsidiaries. Learning Objectives 1. Explain the importance of a company’s decision to globalize. 2. Describe the four main strategic orientations of global firms. 3. Understand the complexity of the global environment and the control problems that are faced by global firms. 4. Discuss major issues in global strategic planning, including the differences for multinational and global firms. 5. Describe the market requirements and product characteristics in global competition. 6. Evaluate the competitive strategies for firms in foreign markets, including niche market exporting, licensing and contract manufacturing, franchising, joint ventures, foreign branching, private equity, and wholly owned subsidiaries. Lecture Outline I. Globalization A. Globalization refers to the strategy of approaching worldwide markets with standardized products. 1. Such markets are most commonly created by end consumers that prefer lower- priced, standardized products over high-priced, customized products and by global corporations that use their worldwide operations to compete in local markets. 5-1
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Chapter 05 - The Global Environment 2. Global corporations headquartered in one country with subsidiaries in other countries experience difficulties that are understandably associated with operating in several distinctly different competitive arenas. B. Awareness of the strategic opportunities faced by global corporations and of the threats posed to them is important to planners in almost every domestic U.S. industry.
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