2eIM-LN-Chapter7 - Section 6 C hapter Lecture Notes for...

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389 Section 6 Lecture Notes for Chapter 7 Chapter 7 Strategies for Competing in International Markets Chapter Seven focuses on strategic options for expanding beyond domestic boundaries and competing in the markets of either a few or a great many countries. The chapter will introduce a number of core concepts including multicountry competition, global competition, profi t sanctuaries and cross cultural differences in cultural, demographic, and market conditions. Chapter Seven includes sections on strategy options for entering and competing in foreign markets, the importance of locating operations in the most advantageous countries, and the special circumstances of competing in such emerging markets as China, India, and Brazil, Russia and Eastern Europe. Lecture Outline I. Why Companies Expand Into Foreign Markets 1. A company may opt to expand outside its domestic market for any of four major reasons: a. To gain access to new customers – Expanding into foreign markets offers potential for increased revenues, profi ts, and long-term growth and becomes an especially attractive option when a company’s home markets are mature. b. To achieve lower costs and enhance the fi rm’s competitiveness – Many companies are driven to sell in more than one country because domestic sales volume is not large enough to fully capture manufacturing economies of scale or learning curve effects and thereby substantially improve the fi rm’s cost-competitiveness. c. To capitalize on its core competencies – A company may be able to leverage its competencies and capabilities into a position of competitive advantage in foreign markets as well as just domestic markets. d. To spread its business risk across a wider market base – A company spreads business risk by operating in a number of different foreign countries rather than depending entirely on operations in its domestic market. II. Factors that Shape Strategy Choices in Foreign Markets A. Cross-Country Differences In Cultural, Demographic, and Market Conditions 1. Regardless of a company’s motivation for expanding outside its domestic markets, the strategies it uses to compete in foreign markets must be situation driven. 2. Cultural, demographic, and market conditions vary signifi cantly among the countries of the world. Cultures and lifestyles are the most obvious areas in which countries differ; market demographics are close behind. 389
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Section 6 Instructor’s Manual for Essentials of Strategic Management 390 3. Market growth varies from country to country. In emerging markets, market growth potential is far higher than in the more mature economies. 4. One of the biggest concerns of companies competing in foreign markets is whether to customize their offerings in each different country market to match the tastes and preferences of local buyers or whether to offer a mostly standardized product worldwide. 5.
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This note was uploaded on 10/28/2011 for the course BUSINESS 205 taught by Professor Lewis during the Spring '11 term at AIB College of Business.

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2eIM-LN-Chapter7 - Section 6 C hapter Lecture Notes for...

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