Chap011 - Chapter 11 Chapter 11 The Strategy of...

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Unformatted text preview: Chapter 11 Chapter 11 The Strategy of International Business 11-2 Introduction Question: What actions can managers take to compete more effectively in a global economy? Managers must consider the benefits of expanding into foreign markets which strategies to pursue in foreign markets the value of collaboration with global competitors the advantages of strategic alliances 11-3 Strategy and the Firm Question: What is strategy? A firms strategy can be defined as the actions that managers take to attain the goals of the firm Typically, strategies focus on profitability and profit growth Profitability refers to the rate of return the firm makes on its invested capital Profit growth is the percentage increase in net profits over time 11-4 Strategy and the Firm Determinants of Enterprise Value 11-5 Value Creation Question: How do you increase the profitability of a firm? To increase profitability, value must be created for the consumer Value creation is measured by the difference between V (the price that the firm can charge for that product given competitive pressures) and C (the costs of producing that product) The two basic strategies for creating value are 1. differentiation 2. low cost 11-6 Strategic Positioning To maximize profitability, a firm must pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice configure its internal operations so that they support that position make sure that the firm has the right organization structure in place to execute its strategy So, a firms strategy, operations, and organization must all be consistent with each other in order to achieve a competitive advantage and superior profitability 11-7 Operations: The Firm as a Value Chain Firms are essentially value chains composed of a series of distinct value creation activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure Value creation activities can be categorized as 1. primary activities 2. support activities 11-8 Operations: The Firm as a Value Chain 1. Primary Activities involves creating the product, marketing and delivering the product to buyers, and providing support and after-sale service to the buyers of the product 2. Support Activities provides the inputs that allow the primary activities of production and marketing to occur 11-9 Operations: The Firm as a Value Chain The Value Chain 11-10 Organization: The Implementation of Strategy Organization architecture refers to the totality of a firms organization (formal organizational structure, control systems and incentives, organizational culture, processes, and people) Organizational structure refers to the formal division of the organization into subunits the location of decision-making responsibilities within that structure the establishment of integrating mechanisms...
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Chap011 - Chapter 11 Chapter 11 The Strategy of...

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