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Managing Global Expansion: A Conceptual Framework

Managing Global Expansion: A Conceptual Framework. Strategic Management Summer, 2001. Reasons for Global Expansion. Growth Imperative Efficiency Imperative Knowledge Imperative Globalization of Customers Globalization of Competitors. Conceptual Framework.

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Managing Global Expansion: A Conceptual Framework

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  1. Managing Global Expansion: A Conceptual Framework Strategic Management Summer, 2001

  2. Reasons for Global Expansion • Growth Imperative • Efficiency Imperative • Knowledge Imperative • Globalization of Customers • Globalization of Competitors

  3. Conceptual Framework • Choice of Product Line to Launch Globalization • What Factors Make Some Markets More Favorable than Other Markets? • Entry Mode Considerations • How to Transplant the Corporate DNA • Winning the Local Battle • Speed of Global Expansion

  4. Choice of Products • Develop Capabilities • Learn about foreign markets • Learn how to manage people in foreign locations • Learn how to manage foreign subsidiaries • Required Degree of Local Adaptation • Expected Payoffs from Globalization

  5. Choice of Strategic Markets • Strategic Importance of Market • Market Potential • Current market size • Growth expectations • Learning Potential • Presence of sophisticated and demanding customers • Pace at which relevant technologies are evolving • Ability to Exploit Market • Height of Entry Barriers • Intensity of Competition (Rivalry)

  6. Mode of Entry • Export or Produce Locally • Size of local market • Shipping and tariff costs • Need for local customization • Local content requirements • Complete Ownership Versus Alliances • Physical, linguistic and cultural distance • Need for operational integration • Risk of asymmetric learning • Availability of capital • Government regulations

  7. Mode of Entry • Entry Through Local Production • Greenfield Venture Versus Acquisition • Speed of entry • Extent of local competition • Post-merger integration • Uniqueness of corporate culture • Impact of entry on industry structure and competition

  8. Transplanting Corporate DNA • Core Elements of Business Model • Clarifying and Defining the Core Beliefs and Practices • Transplanting Core Beliefs and Practices to the New Subsidiary • Embedding Core Beliefs and Practices • Visible commitment from parent • Deepening education/re-education process • Demonstrate connection with success

  9. Winning the Local Battle • Winning Host Country Customers • Understand uniqueness of local market • Adapt business practices • Winning Against Host Country Competitors • Acquire dominant competitor • Acquire weak local competitor • Enter poorly defended niche • Engage in a frontal attack • Managing Relationships with Host-Country Government • Don’t ignore local government and other stakeholders

  10. Speed of Global Expansion • Ease of Replicating your Recipe for Success • Importance of Economies of Scale • First mover advantages • Management Capacity to Manage • Ability to leverage management experience • Goal is Directed Opportunism

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