International and Global Strategies

8/8/2019 International and Global Strategies

1/23

International and GlobalInternational and Global

StrategiesStrategies

Chapter 13Chapter 13


2/23

International vs. GlobalInternational vs. Global

International carrying out businessInternational carrying out businessacross national bordersacross national borders

GlobalGlobal Customer needs are similar internationallyCustomer needs are similar internationally

Compete in globalized industriesCompete in globalized industries

Locate value-adding activities in places world-Locate value-adding activities in places world-wide where the greatest competitivewide where the greatest competitive

advantage can be madeadvantage can be made Integrate and coordinate internationalIntegrate and coordinate international

activities between countriesactivities between countries


3/23

Porter and MultidomesticityPorter and Multidomesticity

According to Porter, a company is:According to Porter, a company is: MultidomesticMultidomestic if competition in eachif competition in each

nation is independentnation is independent GlobalGlobal if the competition is globalif the competition is global


4/23

Yips FrameworkYips Framework

The extent and degree of globalizationThe extent and degree of globalizationdepends on 4 driversdepends on 4 drivers Market driversMarket drivers

Cost driversCost drivers Government driversGovernment drivers Competitive driversCompetitive drivers

Each driver should be analyzed for theEach driver should be analyzed for the

industryindustry andand marketmarket under considerationunder consideration Helps determine which features of aHelps determine which features of astrategy are global, and which are locallystrategy are global, and which are locallyadaptedadapted


5/23

Yips FrameworkYips Framework

Industry and Market

Globalization

Market drivers

Cost drivers

Competitive drivers

Government

drivers


6/23

Summary of Globalization DriversSummary of Globalization Drivers

Market driversMarket drivers

common customer needscommon customer needs global customersglobal customers

global distribution channelsglobal distribution channels

transferable marketingtransferable marketingtechniquestechniques

a presence in lead countriesa presence in lead countries

Cost driversCost drivers

global scale economiesglobal scale economies

steep experience curvesteep experience curve

sourcing efficienciessourcing efficiencies

favorable logisticsfavorable logistics

differences in country costsdifferences in country costs

high product developmenthigh product developmentcostscosts

rapidly changing technologyrapidly changing technology

Government driversGovernment drivers

favorable trade policiesfavorable trade policies compatible technicalcompatible technicalstandardsstandards

common marketingcommon marketingregulationsregulations

government ownedgovernment owned

Competitive driversCompetitive drivers

high exports and importshigh exports and imports competitors from differentcompetitors from differentcontinentscontinents

interdependence of countriesinterdependence of countries

competitors globalizedcompetitors globalized


7/23

Basis of Global Strategies: 2Basis of Global Strategies: 2

ModelsModels

PortersPorters

YipsYips


8/23

Porters Global GenericPorters Global Generic

StrategiesStrategies

Global cost leadershipGlobal cost leadership

Global differentiationGlobal differentiation

Global segmentationGlobal segmentation

Protected marketsProtected markets

National responsivenessNational responsiveness


9/23

Global Cost LeadershipGlobal Cost Leadership

Strategy focuses on being the lowestStrategy focuses on being the lowestcost producer of a product globallycost producer of a product globally

Takes advantage of globalTakes advantage of globaleconomies of scale and high volumeeconomies of scale and high volume

sales world-widesales world-wide


10/23

Global DifferentiationGlobal Differentiation

Create a superior product or changeCreate a superior product or changecustomer perception of the productcustomer perception of the product

in order to raise price on a globalin order to raise price on a globalscalescale

Often the basis of this strategy is aOften the basis of this strategy is a

strong brand namestrong brand name


11/23

Global SegmentationGlobal Segmentation

Global version of a focused strategyGlobal version of a focused strategy

Can be either be global costCan be either be global cost

leadership or global differentiationleadership or global differentiation

Targets a single segment on aTargets a single segment on aworldwide basisworldwide basis


12/23

Protected MarketsProtected Markets

Focusing on competing in countriesFocusing on competing in countrieswhere that particular governmentwhere that particular government

protects or favors the businessprotects or favors the business


13/23

National ResponsivenessNational Responsiveness

Focuses on adapting strategy to eachFocuses on adapting strategy to eachlocal marketlocal market


14/23

Porters Global Strategy:Porters Global Strategy:

Configuration of the ValueConfiguration of the Value

ChainChain According to Porter,According to Porter, globalglobal

competitive advantagecompetitive advantage dependsdepends

on configuring and coordinatingon configuring and coordinatingactivities in a unique way worldwideactivities in a unique way worldwide

Includes bothIncludes both

Configuration of value adding activitiesConfiguration of value adding activities Coordination of value adding activitiesCoordination of value adding activities


15/23

Configuration and CoordinationConfiguration and Coordination

of Value Adding Activitiesof Value Adding Activities

High degree ofHigh degree ofdispersal of activitiesdispersal of activities

High degree ofHigh degree ofcoordination ofcoordination ofactivitiesactivities

Purest global strategyPurest global strategy

Country centeredCountry centeredstrategy forstrategy forcompanies withcompanies withseveral nationalseveral nationalsubsidiaries, eachsubsidiaries, each

operating in only oneoperating in only one

Strategy based onStrategy based onexporting of productexporting of productwith decentralizedwith decentralizedmarketing in eachmarketing in eachhost countryhost country

High

Low

Co

ordinationofAc

tivities

Configuration of Activities

Geographically dispersed Geographically concentrated


16/23

Yips Total Global StrategyYips Total Global Strategy

First Step: Analysis using YipsFirst Step: Analysis using YipsFrameworkFramework

Then: 3 Stages in developing totalThen: 3 Stages in developing totalglobal strategyglobal strategy

Developing a core strategyDeveloping a core strategy

Internationalizing the core strategyInternationalizing the core strategy Globalizing the international strategyGlobalizing the international strategy


17/23

Developing a Core StrategyDeveloping a Core Strategy

Based on developing coreBased on developing corecompetences and a generic or hybridcompetences and a generic or hybrid

strategystrategy


18/23

Internationalizing the CoreInternationalizing the Core

StrategyStrategy

Take the core competences andTake the core competences andgeneric or hybrid strategy globalgeneric or hybrid strategy global

Coordinate and configure value chainCoordinate and configure value chainin countries where cost andin countries where cost and

competitive advantages can becompetitive advantages can be

achievedachieved


19/23

Globalizing the InternationalGlobalizing the International

StrategyStrategy

Based on coordinating andBased on coordinating andintegrating core competences andintegrating core competences and

generic or hybrid strategy globallygeneric or hybrid strategy globally Decide which parts will beDecide which parts will be

standardized and which will bestandardized and which will be

locally adaptedlocally adapted


20/23

3 Key Decisions in Yips Total3 Key Decisions in Yips Total

Global StrategyGlobal Strategy

Where to go firstWhere to go first

Where to locate value addingWhere to locate value adding

activitiesactivities Which market developmentWhich market development

strategies to usestrategies to use


21/23

Where to go firstWhere to go first

Decisions are based on:Decisions are based on: Size of marketSize of market

Economic factorsEconomic factors Cultural factorsCultural factors

Political factorsPolitical factors

Technological factorsTechnological factors


22/23

Where to locate value addingWhere to locate value adding

activitiesactivities

Decision based on:Decision based on: Wage and skill levelsWage and skill levels

Availability of materialsAvailability of materials InfrastructureInfrastructure


23/23

Market DevelopmentMarket Development

MethodsMethods InternalInternal

Direct exportingDirect exporting

Overseas productionOverseas production

ExternalExternal International alliances or joint venturesInternational alliances or joint ventures

International mergers and acquisitionsInternational mergers and acquisitions

International and Global Strategies

Documents

Transcript of International and Global Strategies