370 likes | 489 Views
Activities for Today. Attendance Goals for Today Exam 2 Review Sheet Chapter 7 Understanding Strategic Intent** Break CEP Strategic Alliance Strategies the Fit Emerging Markets** Homework Wednesday-Simulation – Round # 5 (before 11.59 p.m.). MQM485/Sp08/Class12.
E N D
Activities for Today • Attendance Goals for Today • Exam 2 Review Sheet • Chapter 7 • Understanding Strategic Intent** • Break • CEP • Strategic Alliance • Strategies the Fit Emerging Markets** • Homework • Wednesday-Simulation – Round # 5 (before 11.59 p.m.) MQM485/Sp08/Class12
Importance of Foreign Sales for US Firms 2006 Figures
Chapter Overview • Strategic advantages of international expansion • Global and multidomestic industries • Competitive pressures for international expansion • Global, multidomestic, and transnationalstrategies • International market entry modes
Advantages in Internationalization • Growth opportunity • Cheaper resources • Full capacity production • Pre-empt or match competitors’ similar intentions • Learning opportunity
Disadvantages in Internationalization • Complex • Impact on strategic decision-making • Potential hostility by foreign countries • Market failure, political unrest, and prolonged governmental instability
Two Sides of a Spectrum Customization Massification Global Multi-Domestic
A Global Industry: Footwear Source: Adapted from P. Lasserre, Global Strategic Management (New York: Palgrave Macmillan, 2003), 1.
A Multidomestic Industry: Personal Care Products Source: Adapted from P. Lasserre, Global Strategic Management (New York: Palgrave Macmillan, 2003), 1.
Competitive Pressures in the International Business Environment (II)
Strategies to Compete in the International Business Environment • Global strategy • Multi-domestic strategy • Transnational strategy
Global Strategy • Standard product for worldwide consumption • Competitive advantages • Location advantages • Coordination advantages
Multidomestic Strategy • Compete according to local needs • Competitive advantage • Customized product/service
Transnational Strategy • Combination type • Mixes multinational and global • Competitive advantage • Transfer information and experience
Entry Modes • Exporting • Licensing/franchising • Joint ventures/strategic alliances • Sole venture or wholly owned subsidiary
Strategic Intent – Hitt, Tyler, Hardee, & Park • Why is it important to understand Strategic Intent in the Global Marketplace? • What are various approaches offered by the authors’ to improve one’s understanding of global competitors?
U.S. AND JAPANESE FINANCIAL AND STRATEGIC OBJECTIVES Least Important Most Important
Perceptual Maps • Understand Competitors • GO beyond static analysis • National History • Managerial Values, Goals and Strategy • Understand Partners • How the specific alliance fits the partner’s strategy • Top Management Team -- What is their StrategicOrientation?
Perceptual Maps Understand Your Management Team - Country of Origin - Types and Amount of Experience - Analyze Past Strategic Decisions USE THE ABOVE TO GAIN SOME IDEA ABOUT STRATEGIC INTENT
Collaborate with Competitors-Hamel, Doz, Prahalad • What reasons are offered by Hamel, Doz and Prahalad to collaborate with competitors? • How can company build defenses so that its secrets may be expropriated by competitors?
Global Logic of Strategic Alliances • Uncertain world with dangerous opponents • Risk Reduction • Best not to go alone -- N0 Shame in that • Alliance means sharing control • Time, luck and money is always in short supply • Need not be permanent • Customer’s will not wait for you – to built in one market and move to other (cascade strategy) • Quality, Price, Design, Value
Why? • Fixed Costs Environment Vs. Variable Cost Environment • FCE: Focus towards maximizing contribution to fixed costs • VCE: Focus towards reducing variable cost like raw materials, wages, labor, etc. • The Dispersion of Technology • No one can master everything • Faster life cycle (nothing is proprietary for ever)
Collaborate with Competitors-Hamel, Doz, Prahalad • Cooperation becomes a low cost route for new competitors to gain technology and market access -- Yet the case for collaboration is higher than ever. • Collaboration should be looked at how long it lasted but at shifts in competitive strengths over time.
Collaborate with Competitors-Hamel, Doz, Prahalad Principles • Collaboration is competition in different form. • Harmony is not the most important measure of success. • Cooperation has limits. • Learning from partners is paramount.
Collaborate with Competitors-Hamel, Doz, Prahalad Competition for Competence • Competitive product not the same competitive organization. • Rethink the make or buy decision. • Watch out for deepening dependence. • Replenish core competencies.
Collaborate with Competitors-Hamel, Doz, Prahalad How to Build Defenses • Select the technology you want to share with competitors - type of skill company contributes. • Safeguard against unintended technologies. • Distinguish between technology and competence. • Limit the scope of formal agreement. • Employee Loyalty and self-discipline. • “Wall off” critical technologies. • Control the contact employees (e.g. engineers) • Don’t allow host firm to become the “Home Base”
Collaborate with Competitors-Hamel, Doz, Prahalad Enhance the Capacity to Learn • To learn-- “one must want to learn” • Senior management should convey the alliance is not just to share financial risk but also learn. • Once knowledge is acquired -- this should be diffused with the company. • Ability to Learn is Critical • Obsession from legal agreements to be better learners.
Collaborate with Competitors-Hamel, Doz, Prahalad Mutual Gain is Possible • Strategic Goals Converge while Competitive Goals Diverge. • Size and Market Power are modest. • They Believe They can Learn from One Another but Limit Access to Proprietary Skills.
Collaborate with Competitors-Hamel, Doz, Prahalad Why Collaborate? • Learning new technologies or skills are not devious. • “Strategic Intent” should direct commitment to learning. • Alliances should not become outsourcing arrangements. • Too much distrust and conflict will also kill any alliance.
Strategies that Fit Emerging Markets - Khanna, Palepu & Sinha • Briefly explain the various institutional differences in emerging markets that multinational companies need to recognize and work around
Strategies that Fit Emerging Markets - Khanna, Palepu & Sinha • Openness • Political and Social System • Capital Markets • Labor Markets • Product Markets