THE INTERNATIONAL STAGETHE INTERNATIONAL STAGE

6-1

Opening Profile: Global Companies Take Advantage of Opportunities in

South Africa

Opening Profile: Global Companies Take Advantage of Opportunities in

South Africa

Acer Africa

Alcatel

General Electric

Acer Africa

Alcatel

General Electric

6-2

Strategic Planning and StrategyStrategic Planning and Strategy

6-3

Reasons for Going International

Reasons for Going International

Reactive/Defensive Proactive/Aggressive

6-4

Globalization of competitors

Trade barriers Regulations and

restrictions Customer

demands

Globalization of competitors

Trade barriers Regulations and

restrictions Customer

demands

Economies of scaleGrowth

opportunitiesResource access

and cost savingsIncentives

Economies of scaleGrowth

opportunitiesResource access

and cost savingsIncentives

Management Focus: Mexico’s Cemex

Management Focus: Mexico’s Cemex

Is aggressively growing via worldwide acquisitions

Bid $12.8 billion in 2006 for the Rinker Group of Australia

Has operations on five continents with 2005 sales of $15.3 billion

Is aggressively growing via worldwide acquisitions

Bid $12.8 billion in 2006 for the Rinker Group of Australia

Has operations on five continents with 2005 sales of $15.3 billion

6-5

Strategic Formulation ProcessStrategic Formulation Process

6-6

EXHIBIT 6-1 The Strategic Management Process

Steps in Developing International

and Global Strategies

Steps in Developing International

and Global Strategies

6-7

Mission and ObjectivesMission and Objectives

6-8

Mission and ObjectivesMission and Objectives

6-9

Environmental AssessmentEnvironmental Assessment

6-10

The process of gathering information

and forecasting trends, competitive actions,

and circumstances that will affect operations

Environmental Scanning Variables

Environmental Scanning Variables

6-11

Institutional Effects on International Competition

Institutional Effects on International Competition

6-12

Institutional Effects on International Competition

Institutional Effects on International Competition

6-13

Sources of Environmental Information

Sources of Environmental Information

Internal AnalysisInternal Analysis Competitive Analysis

6-14

Key Success Factors:Technological

capability: Microsoft

Distribution channels: Wal-Mart

Promotion capabilities: Disney

Key Success Factors:Technological

capability: Microsoft

Distribution channels: Wal-Mart

Promotion capabilities: Disney

Distinctive competencies

SWOT analysis

Comparative advantage

Distinctive competencies

SWOT analysis

Comparative advantage

Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall

Strategic Decision-Making Models

Strategic Decision-Making Models

6-15

EXHIBIT 6-5 A Hierarchical Model of Strategic Decision Making

Global and International Strategic Alternatives

Global and International Strategic Alternatives

6-16

Global StrategyGlobal Strategy

Treating the world as an undifferentiated worldwide marketplace

The impetus:Regional trading blocksDeclining tariffsInformation technology explosion

Treating the world as an undifferentiated worldwide marketplace

The impetus:Regional trading blocksDeclining tariffsInformation technology explosion

6-17

Regionalization/LocalizationRegionalization/Localization

Local markets are linked together within a region, allowing local responsiveness.

The impetus:Unique consumer preferencesDomestic subsidiesNew production technologies

Local markets are linked together within a region, allowing local responsiveness.

The impetus:Unique consumer preferencesDomestic subsidiesNew production technologies

6-18

Global Integrative StrategiesGlobal Integrative Strategies

Full vertical and horizontal integration

Example: DellFactories in Ireland, Brazil, China, and so on

Assembly and delivery system from 47 locations around the world

Little inventory, ability to change operations quickly

Full vertical and horizontal integration

Example: DellFactories in Ireland, Brazil, China, and so on

Assembly and delivery system from 47 locations around the world

Little inventory, ability to change operations quickly

6-19

E-Business for Global ExpansionE-Business for Global Expansion

6-20

EXHIBIT 6-6 Benefits of B2B

E-Global or E-Local?E-Global or E-Local?

E-Global When:E-Global When: E-Local When:E-Local When:

Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall 6-21

Trade is global in scope.

Business does not involve delivering orders.

When the business model can be easily hijacked by local competitors.

Trade is global in scope.

Business does not involve delivering orders.

When the business model can be easily hijacked by local competitors.

Production and consumption are regional in scope.

Customer behavior and market structures differ across regions, but are similar within a region.

Supply-chain management is very important to success.

Production and consumption are regional in scope.

Customer behavior and market structures differ across regions, but are similar within a region.

Supply-chain management is very important to success.

Entry Strategy AlternativesEntry Strategy Alternatives

6-22Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall

Comparative Management in Focus: Strategic Planning for

the EU Market

Comparative Management in Focus: Strategic Planning for

the EU MarketThe European countries

dominate in 2009–2010 Global Competitiveness Index (GCI) rankings of the World Economic Forum

EU include: 27-nation unified market400 million peopleGreat business opportunities

The European countries dominate in 2009–2010 Global Competitiveness Index (GCI) rankings of the World Economic Forum

EU include: 27-nation unified market400 million peopleGreat business opportunities

6-23

Comparative Management in Focus: Strategic Planning for

the EU Market

Comparative Management in Focus: Strategic Planning for

the EU Market

In 2004 and 2007 the EU added 12 new countries.

The euro eliminates currency risk, but cultures and tastes remain varied.

In 2004 and 2007 the EU added 12 new countries.

The euro eliminates currency risk, but cultures and tastes remain varied.

6-24

Comparative Management in Focus: Strategic Planning for

the EU Market

Comparative Management in Focus: Strategic Planning for

the EU Market

Some believe the EU will adversely affect U.S. organizations by limiting access and/or demanding reciprocal access to the United States.

Others feel the EU provides considerable opportunity and many U.S. companies are well-established in Europe.

Some believe the EU will adversely affect U.S. organizations by limiting access and/or demanding reciprocal access to the United States.

Others feel the EU provides considerable opportunity and many U.S. companies are well-established in Europe.

6-25

Comparative Management in Focus: Strategic Planning for

the EU Market

Comparative Management in Focus: Strategic Planning for

the EU Market

Many companies use joint ventures to deal with the EU strategic dilemma.

Nonetheless, operating in Western Europe can be cost prohibitive.

Many companies use joint ventures to deal with the EU strategic dilemma.

Nonetheless, operating in Western Europe can be cost prohibitive.

6-26

The Influence of Culture on Strategic Choice and Timing

Entry

The Influence of Culture on Strategic Choice and Timing

EntryChina and Japan have longer-

term time horizons than the United States.

High uncertainty avoidance cultures (e.g., Latin American, African countries) prefer non-equity modes of entry.

High power distance cultures (e.g., Arab countries and Japan) tend to use more equity modes of entry abroad.

China and Japan have longer-term time horizons than the United States.

High uncertainty avoidance cultures (e.g., Latin American, African countries) prefer non-equity modes of entry.

High power distance cultures (e.g., Arab countries and Japan) tend to use more equity modes of entry abroad.

6-27