Bài giảng Crafting & Executing Strategy - Chapter 7 Strategies for competing in international markets

CHAPTER 7STRATEGIES FOR COMPETING IN INTERNATIONAL MARKETSStudent VersionMcGraw-Hill/IrwinCopyright đ2012 The McGraw-Hill Companies, Inc.To exploit core competenciesTo spread business risk across a wider market baseTo gain access to new customersTo achieve lower costs and economies of scaleTo access resources and capabilities in foreign marketsWHY COMPANIES DECIDE TO ENTER FOREIGN MARKETSWHY COMPETING ACROSS NATIONAL BORDERS MAKES STRATEGY MAKING MORE COMPLEX1.Industry competitiveness factors that vary from country to country2.Location-based advantages for certain countries3.Differences in government policies and economic conditions4.Currency exchange rate risks5.Differences in cultural, demographic, and market conditionsPolitical and Economic RisksPolitical RisksStem from instability or weaknesses in national governments and hostility to foreign business.Economic RisksStem from the stability of a country’s monetary system, economic and regulatory policies, lack of property rights protections, and risks due to exchange rate fluctuation.The Risks of Adverse Exchange Rate ShiftsEffects of Exchange Rate Shifts:Exporters experience a rising demand for their goods whenever their currency grows weaker relative to the importing country’s currency.Exporters experience a falling demand for their goods whenever their currency grows stronger relative to the importing country’s currency.Cross-Country Differences in Demographic,Cultural, and Market ConditionsTo pursue a strategy of offering a mostly standardized product worldwide.To customize offerings in each country market to match the tastes and preferences of local buyersKey Strategic ConsiderationsTHE CONCEPTS OF MULTIDOMESTIC COMPETITION AND GLOBAL COMPETITIONMultidomestic CompetitionExists when competition in each country market is localized and not closely connected to competition in other country markets.Global CompetitionExists when competitive conditions and prices are strongly linked across many different national markets.STRATEGIC OPTIONS FOR ENTERINGAND COMPETING IN INTERNATIONAL MARKETSMaintain a national (one-country) production base and export goods to foreign markets.License foreign firms to produce and distribute the firm’s products abroad.Employ an overseas franchising strategy.Establish a wholly-owned subsidiary by either acquiring a foreign company or through a “greenfield” venture.Form strategic alliances or joint ventures with foreign companies.COMPETING INTERNATIONALLY: THE THREE MAIN STRATEGIC APPROACHESMultidomestic StrategyGlobalStrategyTransnational StrategyCompeting InternationallyTHE QUEST FOR COMPETITIVE ADVANTAGE IN THE INTERNATIONAL ARENAUse international location to lower cost or differentiate productShare resources, competencies, and capabilitiesGain cross-border coordination benefitsBuild Competitive Advantage in International MarketsUsing Location to Build Competitive AdvantageTo pursue a strategy of offering a mostly standardized product worldwide.To customize offerings in each country market to match the tastes and preferences of local buyersKey LocationIssuesPROFIT SANCTUARIES AND CROSS-BORDER STRATEGIC MOVESProfit SanctuariesAre country markets (or geographic regions) in which a firm derives substantial profits because of its protected market position or its competitive advantage.Cross-Market SubsidizationIs the diversion of resources and profits from one market to support competitive offensives in another different market.Dumping as a StrategyDumpingSelling goods in foreign markets at prices that are either below normal home market prices or below the full costs per unit.Why A Firm Engages in Dumping:To reduce or avoid the high fixed costs of idle production capacity.To use below-cost pricing to gain market share and drive weak firms from the market.STRATEGIES FOR COMPETING IN THE MARKETS OF DEVELOPING COUNTRIESPrepare to compete on the basis of low price.Prepare to modify the firm’s business model or strategy to accommodate local circumstances.Avoid developing markets where it is too costly to accommodate local circumstances.Try to change the local market to better match the way the firm does business elsewhere.DEFENDING AGAINST GLOBAL GIANTS: STRATEGIES FOR LOCAL COMPANIES IN DEVELOPING COUNTRIESDevelop a business model that exploits shortcomings in local distribution networks or infrastructure.Utilize knowledge of local customer needs and preferences to create customized products or services.Take advantage of aspects of the local workforce with which large multinational firms may be unfamiliar.Use local acquisition and rapid-growth strategies to defend against expansion-minded internationals.Transfer the firm’s expertise to cross-border markets.