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Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-1
International Business
Environments and Operations
Part Five
Global Strategy, Structure, and Implementation
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-2
Chapter 11
The Strategy of
International Business
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-3
The Idea of Industry Structure:
Five Forces Model
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-4
Strategy and Value
• Creating Value
– Cost Leadership
– Differentiation
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-5
The Firm as Value Chain
• Using the value chain
– Configuration
– Macro Cost Factors
– Cluster Effects
– Logistics
– Digitization
– Economies of Scale
– Business Environment
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-6
Global Integration versus Local Responsiveness
Standardization vs. Adaptation
• Pressures for Global Integration
– Globalization of Markets
– Efficiency Gains of Standardization
• Pressures for Local Responsiveness
– Consumer Divergence
– Host Government Policies
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-7
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
11-8
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-9
Chapter 12
Country
Evaluation
and
Selection
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-10
Introduction
Because all companies have limited resources,
they must be careful in making the following decisions:
1. In which countries to locate sales, production, and administrative and auxiliary services
2. The sequence for entering different countries
3. The amount of resources and efforts to allocate to each country where they operate
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-11
Location Decisions Affecting International Operations
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-12
Scanning versus Detailed Analysis
Without scanning, a company may:
• Overlook opportunities and risks
• Examine too many or too few possibilities
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-13
What Information is Important: Examining Economic and Demographic Variables
• Prices
• Income elasticity
• Substitution
• Income Inequality
• Cultural Factors
• Trading Blocs
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-14
What Information is Important:Cost Considerations of Resource
Acquisition• Labor
• Infrastructure
• Ease of Transportation and Communications
• Government Incentives and Disincentives
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-15
Analyzing Risk• Political Risk:
– Analyzing Past Patterns
– Analyzing Opinions
– Examining Social and Economic Conditions
• Monetary Risk
– Exchange Rate Changes
– Mobility of Funds (Liquidity)
• Competitive Risk
– Making Operations Compatible
– Following Competitors of Customers
– Heading Off Competition
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
12-16
Country Comparison Tools
• Grids
– May depict acceptable or unacceptable conditions
– Rank countries by important variables
• Matrices allow companies to:
– Decide on indicators and weight them
– Evaluate each country on the weighted indicators