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Lecture Final Notes - Week 8 October 26 Global Business...

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Week 8: October 26 Global Business Strategy 1. Firm Strategy All aspects, focus on details 2. Value Creation Cost you pass on to consumers (find more consumers) within market, you could minimize cost/convince that product is higher value o Low cost, win by margin o Differentiation (than other competitors) 3. Firm as a value chain A lot of firms looing to IT Try to add value to product o Customer service with BOP (clothing store) Looking outside of US, work with Fedex to sell 3 day international shipping Packaged cost Logistics issue, is it advancing ability to add value? 4. Advantages of global expansion Once you start adding value 5. Location Economies About comparative advantage, but not just cost o Big Firm Example: BMW Innovation Network Network of Location economy for innovation (cost is increasing) Production Network, lower cost, can take advantage of labor 6. Experience effects: learning effects Experience curve: firms want to take advantage globally, get ahead of competitors and ride down cost curve. Learning- learn by doing, start up phase of new product o Example: organic light displays Step up from LEDS Uses chemicals, brighter, much less power Large firms have advantages -> employ specialize talents 7. Leveraging core competencies What you do well that others will have a hard time copying o US, costs are higher (disadvantages) o Around the world, US represents quality o Leverage those relationships long term
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Starbucks, has it lost core? Or is it so strong that anything will do because of quality (instant packets of their coffee) 8. Leveraging Subsidiary skills Marriot video clip o Suppliers as a source/partnership o Information from employees o Setting up organization as feedback, encourage people to talk, take more initiative to think differently 9. Pressures for cost reductions Firms are faced with low switching costs for consumers o Loyalty Firms with forward thinking able to make things still with low cost o Charge more with innovation Steel example (making it cool to have stainless steel appliances) Commodity products -> differentiate 10. Pressures for local responsiveness Apple -> localize to sell to global markets Design in other markets might have to change IKEA o US is super-sized nation Furniture looked really small in US homes o Colors: wanted more uniform look, couldn’t “see” it as a set o Income: foreign currency Making it in Europe (higher costs), and money was worth more than their currency 11. Four Basic Strategies Every firm wants international strategy o Sell for what they want o Fewer competitors around the world Most companies have global standard or transnational Local: you have to tailor your approach, localized for each country o McDonalds: localization (tailors to each nation with food and products) Week 9: October 31 1. First-mover disadvantages: pioneering costs Pioneering costs o Builds infrastructure (not the actual physical one, like the system) o
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