MGO 403 Chapter 7

MGO 403 Chapter 7 - J ian M in Li October 13, 2010 MGO 403...

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Jian Min Li October 13, 2010 MGO 403 Professor Sima Fortsch Chapter 7 4. There are four basic strategies – international, global, multidomestic, and transnational. What are the advantages and disadvantages associated with each? An international strategy is based on diffusion and adaptation of the parent company’s knowledge and expertise to foreign markets. The advantage of international expansion is the companies can sell more products to more market. They can take advantage of arbitrage and extending the product life cycle. They can also lower the manufacturing cost. However, the companies will face and have to handle some risks while they are using international strategy, such as political and economical risks, currency risks, and management risks. An global strategy based on firms’ centralization and control by the corporate office, with the primary emphasis on controlling costs, and used in industries where the pressure for local adaptation is low and the pressure for lowering costs is high. A global strategy has a few advantages, which are innovation can be transferred more easily to other locations, and it can enable a firm to create a standard level of quality throughout the world. However, some risks
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associated with a global strategy, which are “double-edged sword” and isolating the activity from the targeted markets. A multidomestic strategy based on firms’ differentiating their products and
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MGO 403 Chapter 7 - J ian M in Li October 13, 2010 MGO 403...

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