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Ch8 - The Management of Strategy(Concepts and Cases Part II...

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1 The Management of Strategy (Concepts and Cases) Part II: Strategic Actions: Strategy Formulation Chapter 8: International Strategy
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2 The Strategic Management Process
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3 Chapter 8: International Strategy (IS) Overview: Eight content areas Traditional vs. emerging motives Four major benefits of International Strategies (IS) Four factors as basis for international business strategy Three international corporate-level strategies Environmental trends affecting IS Five alternative modes for entering international markets Effects of international diversification on returns & innovation 2 major risks of international diversification
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4 Shanghai Automotive Industry Corp (SAIC): Reaching for Global Markets One of China’s oldest automotive companies and among top three auto companies in China Goal: Become one of the world’s top 10 auto companies Of note, as all major auto co.s compete in US market Produces autos, tractors, motorcycles, trucks and is also involved with car leasing and financing Successful joint ventures (JV) with GM and VW Owns 51% of Korean automaker SsangYong, IP right to Rover SAIC learned much from partnerships and with licensed technology launched own branded vehicles
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5 Introduction Many firms choose direct investment in assets over indirect investment Provides better protection for assets
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6 Opportunities and Outcomes of International Strategy
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7 Chapter 8: International Strategy (IS) Overview: Eight content areas Traditional vs. emerging motives Four major benefits of International Strategies (IS) Four factors as basis for international business strategy Three international corporate-level strategies Environmental trends affecting IS Five alternative modes for entering international markets Effects of international diversification on returns & innovation 2 major risks of international diversification
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8 Identifying International Opportunities: Incentives to Use an International Strategy (IS) International Strategy (IS): firm sells its goods or services outside the domestic market Reasons for an IS International markets yield potential new opportunities International diversification: innovation occurs in home- country market, especially in an advanced economy, and demand for product develops in other countries, so exports provided by domestic organization Multinational strategy: Secure need resources Other motives exist (i.e., pressure for global integration, borderless demand for globally branded products)
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9 Identifying International Opportunities: Incentives to Use an International Strategy (IS) (Cont’d) Four primary reasons 1. Increased market size Domestic market may lack the size to support efficient scale manufacturing facilities 2. Return on Investment (ROI) Large investment projects may require global markets to justify the capital outlays Weak patent protection in some countries implies that firms should expand overseas rapidly in order to preempt imitators
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