Global_Strategy - Firm Strategy Global Business Strategy...

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Global Business Strategy Firm Strategy - Allocation of scarce resources to attain goal of the enterprise, which is typically maximization of long-term pro±t - Thinking beyond operational issues is important for leadership. However, the details are important too. - The group project is your chance to demonstrate your ability to think strategically and to put an adequate plan in place. Value creation - Pro±t determined by: - The amount of value customers place on ±rm’s goods or services (V) - Firm’s cost of production (C) - Consumer surplus occurs when price charged by a ±rm on a good or service is less than value placed on it by a customer - Firm creates pro±t by increasing value or lowering cost - Two basic strategies to create value and attain competitive advantage according to Porter: - Low cost - Differentiation strategy Firm as a value chain Where does value come from? Any ±rm is composed of a series of distinct value creating activities
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Advantages of global expansion - Location economies - Cost economies from experience effects - Leveraging core competencies - Leveraging subsidiary skills - BUT - ProFtability is constrained by product customization and the “imperative of localization.” - Complications arise due to transportation costs, trade barriers, political and economic risks Location economies - Realized by performing a value creation activity in an optimal location anywhere around the globe - Often arise due to differences in factor costs and endowments - Can lower costs of value creation to enable low cost strategy
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This note was uploaded on 12/11/2011 for the course INTBUS 200 taught by Professor Tuli during the Fall '11 term at Wisconsin.

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Global_Strategy - Firm Strategy Global Business Strategy...

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