06 - hapter 6: Designing Organizations for the...

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hapter 6: Designing Organizations for the International Environment En tering the Global Arena - Motivations for Global Expansion o Economic, technological and competitive forces push a domestic force to a global one o Economies of Scale Global presence expands operations, so it can realize economics of scale New technology and production methods increase large-volume production, reducing cost per unit (large volume demand comes from beyond the domestic borders as well as volume discounts from suppliers) o Economies of Scope Score: number and variety of products and services a company offers, as well as the variety of regions, countries, markets it serves Having presence in multiple countries give marketing power synergy, be global for your global customers Market power; knowledge of cultural, social, economic of different customers allowing more specialized products and services to meet those needs o Low-cost Production Opportunity to obtain raw materials and other resources for a low cost Other countries offer cheaper land, electricity and water or be closer to major customers and suppliers - Stages of International Development o Domestic Domestically oriented but aware of global environment with initial foreign involvement Domestic structure (functional or divisional) with export department Moderate market potential (mostly domestic) o International Export-oriented with multidomestic (company deals with each country individually) attitude
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hapter 6: Designing Organizations for the International Environment Concern with international competitive positioning, still a domestic structure but international division replaces the export department (specialist deals with sales, services, warehousing abroad) Multiple countries are the potential market o Multinational Extensive experience in a few international markets with marketing and R&D facilities in several foreign countries Large % of revenues come from outside the country Explosion (stage of development) occurs as international operations take off, with multiple business units around the world with suppliers, manufacturers and distributors o Global (stateless corporation) Transcends any single country, subsidiaries are interlinked to the point where competitive position in one country significantly influences activities in other countries Entire world is the marketplace with complex structures (international matrix, transnational model) - Global Expansion through International Strategic Alliances (Chapter 4 for more insight) o Joint venture: Shares development and production costs and penetrating new markets, can be with customers or competitors. Advantage in knowledge of local markets. o
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This note was uploaded on 12/08/2011 for the course BUS 272 taught by Professor Echo during the Spring '11 term at Simon Fraser.

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06 - hapter 6: Designing Organizations for the...

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