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Global Strategy Concepts

Global Strategy Concepts - Global Strategy Geographic...

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MOR 492 Global Strategy Global Strategy: Geographic Expansion Across Borders
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Introduction: What is Global Introduction: What is Global Strategy About? Strategy About? 2 MOR 492 Global Strategy MOR 492 Global Strategy The The Better Off Test Better Off Test for Global for Global Strategy Strategy To justify presence in more than one country, a corporation must create value (Q(R-C)*TIME) from its activities in the new market/country Leveraging/replicating something from the home market in the new country Exploiting/accessing something in the new market that is value in the home market Replication (scope/scale economies ( Demand-side )) Replicating a proven business model in new markets Arbitrage (Exploiting the comparative advantage of other economy ( Supply-side ) Labor, raw materials, natural resources, etc. Source: Collis & Siegel, 2006
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Introduction: What is Global Introduction: What is Global Strategy About? Strategy About? 3 MOR 492 Global Strategy MOR 492 Global Strategy The The Ownership Test Ownership Test for Global for Global Strategy Strategy Why does the firm have to become a “Multinational Enterprise”? Why can’t the firm license, export, contract, import? The answer lies in identifying the market failures that prevent efficient arms-length contracting Absence of preconditions for contracting; the rule of law, mutual trust in business relationships, effective contract enforcement Essentially the same conditions which cause domestic markets to fail, are also relevant across geographic boundaries Source: Collis & Siegel, 2006
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Introduction: What is Global Introduction: What is Global Strategy About? Strategy About? 4 MOR 492 Global Strategy MOR 492 Global Strategy What is different about Global What is different about Global Strategy?
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