International Business Study Guide 3

International Business Study Guide 3 - Strategy: A planned...

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Strategy : A planned set of actions managers take to make the best use of the firm's resources and core competences to gain a competitive advantage When developing strategies, managers often use the SWOT analysis by examining the firm's strengths, weaknesses, opportunities, and threats. A firm trying to become a globally competitive enterprise should strive for three objectives. Efficiency : Lower the costs of a firm's operations and activities on a global scale Flexibility : Manage diverse country-specific risks and opportunities by tapping resources in individual countries and exploiting local opportunities Learning : Develop the firm's products, technologies, capabilities, and skills by internalizing knowledge gained from international ventures Most of the times, even successful firms succeed at only one or two of these objectives Integration-Responsiveness Framework : Summarizes the balance that firms seek to achieve between two basic strategic needs Emphasizing global integration is to maximize the efficiency of their value-chain activities on a worldwide scale Emphasizing local responsiveness (flexibility) is to maximize sales and market share by being highly responsive to local needs Pressures for Global Integration Seek cost reduction through economies of scale . Concentrating manufacturing in a few advantageous locations achieves economies of mass production Capitalize on converging consumer trends and universal needs . Companies like Nike, Dell, ING, and Coca-Cola offer products that appeal to customers everywhere Provide uniform service to global customers . Services are easiest to standardized when firms centralize their creation and delivery Conduct global sourcing of raw materials, components, energy and labor . Sourcing of inputs from large-scale, centralized suppliers provides economies of scale and consistent performance Monitor and respond to global competitors . Globally coordinating the firm's response to competitive threats is more efficient and effective. Take advantage of global media . Firms leverage the internet, cross-national TV, and other global media to advertise in many countries simultaneously Pressures for Local Responsiveness Leverage natural endowments available to the firm . Each country has specific national resources and other endowments that the foreign firm should access Cater to local customer needs . Businesses in multi-domestic industries should adapt products, services, and marketing to suit local customer needs Accommodate differences in distribution channels. Japan's distribution system for consumer goods is characterized mainly by small retailers Respond to local competition . To out-compete local rivals, successful firms devise offerings and practices that best meet local demands Adjust to cultural differences . For those products where cultural differences are important, the firm should adapt the product and marketing, especially when local competitors are numerous Meet host government requirements and regulations
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This note was uploaded on 04/02/2012 for the course BUSA 480 taught by Professor Heames during the Spring '12 term at WVU.

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International Business Study Guide 3 - Strategy: A planned...

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