Chapter 11 - The Strategy of International Business The Strategy of International Business Chapter Outline OPENING CASE: Avon Products INTRODUCTION STRATEGY AND THE FIRM Value Creation Strategic Positioning Operations: The Firm as a Value Chain Organization: The Implementation of Strategy In Sum: Strategic Fit GLOBAL EXPANSION, PROFITABILITY, AND PROFIT GROWTH Expanding the Market: Leveraging Products and Competencies Location Economies Experience Effects Leveraging Subsidiary Skills Summary COST PRESSURES AND PRESSURES FOR LOCAL RESPONSIVENESS Pressures for Cost Reductions Pressures for Local Responsiveness Management Focus: Local Responsiveness at MTV Networks CHOOSING A STRATEGY Global Standardization Strategy Management Focus: Vodafone in Japan Localization Strategy Transnational Strategy International Strategy The Evolution of Strategy Management Focus: Evolution of Strategy at Procter & Gamble 11-1
Chapter 11 - The Strategy of International Business STRATEGIC ALLIANCES The Advantages of Strategic Alliances Management Focus: Cisco and Fujitsu The Disadvantages of Strategic Alliances Making Alliances Work SUMMARY CRITICAL THINKING AND DISCUSSION QUESTIONS CLOSING CASE: The Evolving Strategy at IBM Learning Objectives 1. Explain the concept of strategy. 2. Recognize how firms can profit by expanding globally. 3. Understand how pressures for cost reductions and pressures for local responsiveness influence strategic choice. 4. Identify the different strategies for competing globally and their pros and cons. 5. Explain the pros and cons of using strategic alliances to support global strategies. Chapter Summary This chapter focuses on the strategies that firms use to compete in foreign markets. At the outset, the chapter reviews the reasons that firms engage in international commerce, which range from earning a greater return from distinctive skills to realizing location economies by dispersing particular value creation activities to locations where they can be performed most efficiently. A major portion of the chapter is dedicated to the pressures that international firm's face for cost reductions and local responsiveness. These pressures place conflicting demands on firms. On the one hand, cost reductions are best achieved through product standardization and economies of scale. On the other hand, pressures for local responsiveness require firms to modify their products to suit local demands. The chapter also discusses the four basic strategies that firms utilize to compete in international markets. These strategies include a global standardization strategy, a localization strategy, a transnational strategy, and an international strategy. The advantages and disadvantages of each of these strategies are discussed. The chapter concludes with a discussion of international strategic alliances.
- Winter '14
- Business, Globalization, Procter & Gamble