Chap012 - Chapter 12 The Strategy of International Business...

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Chapter The Strategy of International Business 12
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Case: Global strategy at MTV networks Established in 1987 & owned by Viacom Majority of its 2 million viewers outside the United States Unsuccessful at a single Americanized program strategy across Europe Successful when program content was localized 70 % of video content is now local in most markets MTV uses expatriates to transfer the “genetic code” but later uses local employees to understand viewers Ratings increased by more than 700% in India in 1996 & advertising revenues by 60 % in Europe
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Strategy: actions that managers must take to attain the goals of the firm Main goal usually to maximize long-term profit (П) Profitability defined by return on sales or return on equity
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Value creation Profit determined by : The amount of value customers place on firm’s goods or services (V) Firm’s cost of production (C) Consumer surplus occurs when price charged by a firm on a good or service is less than value placed on it by a customer Value creation = V-C Two basic strategies to create value and attain competitive advantage according to Porter: Low cost Differentiation strategy
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Value creation Fig 12.1
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Strategic positioning Fig12.2
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Firm as a value chain Any firm is composed of a series of distinct value creating activities Primary activities Production Service Support Activities Materials management or logistics Human resource Information systems Company infrastructure
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Firm as a value chain Fig 12.3
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Strategy in international business Strategy is concerned with identifying and taking actions that will lower costs of value creation and/or differentiate the firm’s product offering through superior design, quality service, functionality, etc.
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Advantages of global expansion Location economies Cost economies from experience effects Leveraging core competencies Leveraging subsidiary skills Profitability is constrained by product customization and the “imperative of localization”.
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This note was uploaded on 09/08/2011 for the course MGNT 3650 taught by Professor Grimes during the Spring '11 term at Georgia Southwestern.

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Chap012 - Chapter 12 The Strategy of International Business...

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