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21download_doc-11.php - J370Session10...

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J370 Session 10 International Diversification Class Session #10 – Thursday, October 1 Dr. Siri A. Terjesen  The Strategic Management Process Types of Corporate Diversification Where can I get institutional data?  Economist Intelligence Unit (EIU) World Bank United Nations DP IMF US Department of Commerce OECD Euromonitor  What are the advantages and disadvantages of international diversification?  Globalization: trend toward a more integrated and interdependent world economy Benefits of international expansion: greater returns on existing skills and competencies, reduced  financial risk Disadvantages of international expansion: markets differ in ways that cannot be anticipated, lost  flexibility and responsiveness to shifting customer tastes, increased coordination and control  costs Table 8.1: Top 25 Firms in the World by Market Value, November 2007  Fun Exercise… add up your total…  Exercise: Where have you been?  Note the total number and names of the countries you have visited. Sum the relevant regional  totals What are the implications of each profile for your career? Would you like to personally change your profile? What would it take to make that change?  How can competitive advantage be increased through international expansion?  Economies of scale: unit cost reductions achieved by producing products at the most efficient  volume Economies of scope: result from spreading activities across multiple products or businesses Factor endowments: resources that firms can draw on in a given country to produce goods and  services  Factor Endowments  Factor conditions: basic (e.g. natural resources) and advanced (e.g. communication,  transportation infrastructure, skilled labor force)
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Firm strategy, structure, rivalry (competitive environment in a particular location) Demand conditions (size, structure, needs of company’s home market) Related and supporting industries (e.g. suppliers, distributors, complements)  Figure 8.1: Determinants of National Advantage  Factor Endowments: Factor conditions  What are factor conditions?
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