Developing a global strategy

INTERNATIONAL BUSINESS-DEVELOPING A GLOBAL STRATEGY

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Developing a Global Strategy

Presented by: Abner B Domingo

Professor: Mr. Paul Raymundo

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During the last half of the twentieth century, many barriers to the international trade fell and a wave of firms began pursuing global strategies to gain competitive advantage. However, some industries benefits more from globalization than do others, and some nations have a competitive advantage over other nations in certain industries. To create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition



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Measurement and evaluation of performance

e.g market share, cost and profit targets for divisions, personnel evaluation

Creation of operating strategy using competitive advantagesThe four generic strategies, functional area targets

Formulation of overall corporate goalsFirm’s goal?

Three aspects of Overall Corporate Strategy


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Competitive Advantage

Is a firm’s ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitor.


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Strategic Business Units

Are group of products, divisions or other company activities that

have sufficiently similar characteristics to justify their

assignment to a single group for strategy development.


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Strategic Business Unit Framework

• Compete worldwide with a full range of products in an industry; have a competitive presence in all market segments. This strategy requires either a low-cost leadership through scale economies or differentiated product lines, but also implies pervasive global integration.

Broad-line global

competition


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• Compete with select product lines in global markets. Global brands are critical for differentiation, but markets are selective. For example, Merck & Company is comparable to Bayer in both size and product range, but Merck tends to focus on pharmaceuticals for institutional markets.

Global Focus


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• Concentrate in specific national markets and defend these markets through differentiation or comparable cost advantages. The point is to raise entry barriers and protect particular markets by being entrenched ahead of competitors

National Focus


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Protected Niche

This strategy aims specifically at obtaining government protection, either through support of the firm against competitors or through government purchase of the firm’s product or service.

Job creation, long-term purchase contract with a government


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SOURCES OF COMPETITIVE ADVANTAGE

1. Efficiency

2. Strategic

5. Reputation

3. Risk

4. Learning


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The Nature of Competitive Advantage in Global Industries

1. Cost Drivers• Location of Strategic Resources• Differences in country cost• Potential for economies of scale

- Research and Development


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2. Customer Drivers• Common customer needs favor globalization-needs

define by local tastes, culture, etc.• Global Channels require a globally coordinated

marketing program• Transferable marketing-brand names and

advertising require little local adaptation


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3. Competitive Drivers• Global competitors: The existence of many global

competitors indicates that an industry is ripe for globalization. Global competitors will have a cost advantage over local competitors.

• When competitors begin leveraging their global positions through cross-subsidization, an industry is ripe for globalization.


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4. Government Drivers• Trade Policies• Technical Standards• Regulations


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Porter’s Generic Strategies

• Low cost producer in an industry for a given level of quality.

• To earn higher profits or to gain market share.

Cost Leadership

Strategy

• Calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition.

Differentiation Strategy


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Porter’s Generic Strategies

• Concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation.

Focus Strategy


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Control in Multinational Enterprise

The firm must

create a control

structure

The basic intent of controls is to have managers define goals clearly, observe weathered those goals are being

achieved

Financial reporting & managerial reporting

Personnel evaluation

Government relations

Dealing with rivals

Strategic variety-strategic flexibility basis for thinking


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MUCHAS GRACIAS!!!