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by Economies of scale: the reductions in unit cost achieved
by producing a large volume of a product
by Strategic Significance of the Strategic Significance of the Experience Curve
The firm that moves down the experience curve most rapidly has a cost advantage over its competitors
► Serving the global market from a single location helps to establish low cost strategy
► Aim to rapidly build up sales, aggressive marketing strategies and get firstmover advantages.
► ► The strategic significance of the experience curve is clear; moving down the experience curve allows a firm to reduce its cost of creating value and increase its profitability
Fig. 12.4, 5th edition LEVERAGING SUBSIDIARY LEVERAGING SUBSIDIARY Subsidiary Skills:
SKILLS Unique skills and •Value created by identifying skills and ideas often applying it to a firm’s global network of developed in foreign subsidiaries.
operations. Some Challenges:
EXAMPLE: Unilever is •Managers must create an divided into environment where incentives are geographical basis given to take necessary risks and with subsidiaries in each country for a reward them
particular business. Managers must accept that good •
These subsidiaries ideas can come from anywhere in share product information and the firm
market ideas with •Need a process to identify new other subsidiaries.
Other examples: idea
sharing at Hewlett
•Need to facilitate transfer of new Packard; skills within the firm
McDonald’s Cost Pressures and Pressures for Cost Pressures and Pressures for Local Responsiveness ►Firms that compete in the global marketplace typically face two types of competitive pressure Pressures for cost
reductions Pressures to be locally
responsive PRESSURES TO BUILDING AN PRESSURES TO BUILDING AN INTERNATIONAL STRATEGY ► PRESSURES FOR COST REDUCTIONS ► Intense i...
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This document was uploaded on 02/26/2014.
- Spring '13