Professional Documents
Culture Documents
Strategy in the
Global
Environment
borders
The shift to global markets has intensified
competitive rivalry in industries
Global markets created enormous
opportunities
Increasing
Profitability Through Globalization
The success of many multinational companies is
P&G
Microsoft
Volkswagen
Toyota
caveat
8-9
Competitive Pressures
Two main pressures:
Pressure for cost reduction
Pressure to be locally responsive
These pressures place conflicting demands
on a company
8 - 16
Cost Reductions
Cost reductions are common in:
Industries where price is the main competitive
weapon
Industries with universal need products
Universal Need: When consumer preference
is similar or identical in different nations
Companies may achieve cost reduction by
8 - 19
preferences
Differences in infrastructure and traditional
practices
Differences in distribution channels
Host government demands
8 - 20
Reading required
from text book
Choosing a Strategy
Basic four strategies:
Global Standardization Strategy
Localization Strategy
Transnational Strategy
International Strategy
8 - 23
8 - 25
Localization Strategy
Customizes goods or services to provide a
Localization Strategy
Localization strategy
Developing a business model that allows a
company to achieve maximum local
responsiveness
Makes sense when there are high pressures
for local responsiveness and low pressures for
cost reductions
Companies may become too decentralized
and lose the ability to transfer skills and
products
STRATEGY IN ACTION
(CLASS DISCUSSION)
Transnational Strategy
Attempts to achieve low-cost, differentiated
International Strategy
Centralizes product development, but
International strategy
Creating value by transferring competencies and
products to foreign markets where indigenous
competitors lack those competencies and products
Makes sense if a company has a valuable
competence that indigenous competitors in foreign
markets lack and if it faces weak pressure for local
responsiveness and cost reductions
8 - 33
8 - 39