Strategies for Competing in Globalizing Markets

7/31/2019 Strategies for Competing in Globalizing Markets

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Welcome To The Presentation

STRATEGIES FOR

COMPETING INGLOBALIZING MARKETS



Previously closed national economies are openingup their markets to foreign companies

Importance of geographic distance is shrinkingdue to the Internet

Growth-minded companies are racing to stake outpositions in the markets of more and more

countries

Why is the World Economy Globalizing?



What is the Motivation

for Competing Internationally?

Gain access tonew customers

Capitalizeon resource

strengths and

competencies

Helpachieve

lower costs

Spreadbusiness riskacross widermarket base

Obtain access tovaluable natural

resources



Cross-Country Differences in Cultural,

Demographic, and Market Conditions

Cultures and lifestyles differ among countries

Differences in market demographics

Variations in manufacturing and distributioncosts

Fluctuating exchange rates

Differences in host government trade policies



Two Primary Patterns

of International Competition

Multi-country

Competition

GlobalCompetition



Characteristics of

Multi-Country Competition

Each country market is self-contained

Competition in one country market isindependent of competition in other country

marketsRivals competing in one country market differ

from set of rivals competing in anothercountry market

Rivals strive for national market leadership

No “international” market, just a collection ofcountry markets



Characteristics of Global Competition

Competitive conditions across country markets arestrongly linked together

Many of same rivals compete in many of the samecountry markets

Rivals strive for worldwide leadership

A true international market exists

A firm’s competitive position in one country is affected by its position in other countries

Competitive advantage (or disadvantage) is based ona firm’s world-wide operations and overall globalstanding



Strategy Options for International Markets

Exporting

Licensing

Franchising

Global strategy based onLow cost

Differentiation

Best-costFocusing

Strategic alliances or joint ventures



Export Strategies

Involves using domestic plants as a production base forexporting to foreign markets

Advantages

Minimizes both risk and capital requirements

Conservative way to test international waters

Minimizes direct investments in foreign countries

An export strategy is vulnerable when

Manufacturing costs in home country are higher thanin foreign countries where rivals have plants

High shipping costs are involved



Licensing Strategies

Licensing makes sense when a firm

Has valuable technical know-how or a patentedproduct but does not have international capabilities orresources to enter foreign markets

Desires to avoid risks of competing in the marketswhich

Are unfamiliar

Present economic uncertainty

Are politically volatile Disadvantage

Risk of providing valuable technical know-how toforeign firms and losing some control over its use



Franchising Strategies

Often is better suited to global expansion effortsof service and retailing enterprises

Advantages

Franchisee bears most of costs and risks ofestablishing foreign locations

Franchisor has to expend only the resourcesto recruit, train, and support franchisees

Disadvantage

Maintaining cross-country quality control



Global Strategy



Competitive Strategy Principle

A global strategy is one where a

Company employs the same basiccompetitive approach in all countries

where it operates

A multi-country strategy is Onewhere a company varies its

product offering & competitive approachfrom country to country to meet

buyer preference

Think Local,Act Local

Think Global,Act Global



Pursuing Competitive Advantage

Three ways to gain competitive advantage

1. Locating activities among nations to lower costsor achieve greater product differentiation

2. Efficient/effective transfer of competitivelyvaluable competencies and capabilities fromdomestic to foreign markets

3. Coordinating dispersed activities in ways adomestic-only competitor cannot



Cooperative agreements / strategic alliances

Cooperative agreements / strategic alliances withforeign companies are a means to

Enter a foreign market or

Strengthen a firm’s competitiveness in world markets

Purpose of alliances

Joint research efforts

Technology-sharing

Joint use of production or distribution facilitiesMarketing / promoting one another’s products



Benefits of Strategic Alliances

Gain scale economies in production and/ormarketing

Fill gaps in technical expertise or knowledge of

local marketsShare distribution facilities and dealer networks

Direct combined competitive energies toward

defeating mutual rivals



Pitfalls of Strategic Alliances

Becoming too dependent on another firm for essentialexpertise over the long-term

Different motives and conflicting objectives

Time consuming; slows decision-making

Language and cultural barriers

Mistrust when collaborating in competitively sensitive

areas

Clash of egos and company cultures



THANK YOU…………….!!!!!!

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Strategies for Competing in Globalizing Markets