Bài giảng International Business - Chapter 13 The Strategy of International Business

International Business 9e By Charles W.L. HillMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 13The Strategy of International BusinessWhat Is Strategy?A firm’s strategy refers to the actions that managers take to attain the goals of the firmFirms need to pursue strategies that increase profitability and profit growthFirms can add valuelower costssell more in existing marketsexpand internationallyWhat Is Strategy?Determinants of Enterprise ValueHow Is Value Created?The firm’s value creation is the difference between V and C a firm has high profits when it creates more value for its customers and does so at a lower cost Profits can be increased by Using a differentiation strategy Using a low cost strategy To maximize long run return on invested capital firms pick a viable position on the efficiency frontier, configure internal operations to support that position, have the right organization structure in place to execute the strategyHow Is Value Created?Value CreationHow Are A Firm’s Operations Configured?A firm’s operations are like a value chain composed of distinct value creation activitiesPrimary activities R&Dproductionmarketing and salescustomer serviceSupport activitiesinformation systemslogisticshuman resourcesHow Are A Firm’s Operations Configured?The Value ChainHow Can Firms Increase Profits Through International Expansion?International firms canExpand their market Realize location economies Realize greater cost economies from experience effects Earn a greater return How Can Firms Leverage Their Products And Competencies?The success of firms that expand internationally depends on the goods or services soldthe firm’s core competenciesCore competencies allow firms to reduce the costs of value creation and/or to create perceived value so that premium pricing is possibleWhy Are Location Economies Important?By achieving location economies, firms canlower the costs of value creation and achieve a low cost positiondifferentiate their product offeringFirms that take advantage of location economies in different parts of the world, create a global web of value creation activitiesWhy Are Experience Effects Important?The experience curve - the systematic reductions in production costs that occur over the life of a productby moving down the experience curve, firms reduce the cost of creating valueLearning effects - cost savings that come from learning by doingEconomies of scale - the reductions in unit cost achieved by producing a large volume of a productWhat Competitive Pressures Exist In The Global Marketplace?Firms that compete in global markets face two conflicting types of competitive pressureslimit the ability of firms to realize location economies and experience effects, leverage products, and transfer skills within the firmPressures for cost reductions force the firm to lower unit costsPressures to be locally responsive require the firm to adapt its product to meet local demands in each market, but raise costsWhen Are Pressures Greatest?Pressures for cost reductions are greatestFor firms producing products that fill universal needs When major competitors are in low cost locationsWhere there is persistent excess capacityWhere consumers are powerful and face low switching costsPressures for local responsiveness arise fromDifferences in consumer tastes and preferencesDifferences in traditional practices and infrastructureDifferences in distribution channelsHost government demandsWhich Strategy Should A Firm Choose?There are four basic strategies to compete in international marketsthe appropriateness of each strategy depends on the pressures for cost reduction and local responsiveness in the industry Global standardizationLocalizationTransnationalInternationalHow Does Strategy Evolve?An international strategy may not be viable in the long termto survive, firms may need to shift to a global standardization strategy or a transnational strategy in advance of competitorsLocalization may give a firm a competitive edge, but if the firm is simultaneously facing aggressive competitors, the company will also have to reduce its cost structureswould require a shift toward a transnational strategyHow Does Strategy Evolve?Changes in Strategy over Time