Name of Institution

Global Environment Strategic Consideration for Firms to go Globalize

Name of Institution

Why do firms Globalize

Coverage in the module

Name of Institution

Whether to customize the offerings in each different market to match the taste and preferences of local buyers OR to offer standardize product all over. Whether to employ essentially the same strategy all over or modify one by one. Where to locate companys production facilities, distribution centers and customer operations to realize greatest locational advantages. How to efficiently transfer companys resources, assets from one company to another in order to secure competitive advantage.
3

Why Companies Globalize/Expand

To gain access to new customers To achieve lower cost and enhance firms competitive - Sales volume from one country is not enough to fully capture manufacturing economies of scale. To capitalize on its core competencies-company with a competitively valuable competency or capability might be able to leverage themselves and make this competency work in a foreign market, too. To spread its business risk across a wider base.

Name of Institution

Why companies go Global

Name of Institution

CONCERN: Should we customize our offerings indifferent countries market to match the tastes and preferences of local buyers or whether to offer a mostly standardized product worldwide? This is one of the biggest strategic issues of competing in foreign markets. "shorter production runs vs. achieving economies of scale

The Potential for Locational Advantages Stemming from Country-to-Country Cost Variations

Why companies go global

Name of Institution

The quality of a countrys business environment Perks by Govt. clustering of suppliers of components and capital equipment, infrastructure suppliers, trade associations and makers of complementary products in the geographic area. Fluctuating Exchange rates
6

Factors to go Global

Name of Institution

Push Factors Saturation in Domestic Market Spreading of Risk Consolidation of buying power Public Policy Constraints Economic Conditions Maturity of Format

Facilitators
Use of surplus Capital Entrepreneurial vision encouragement from supplier to enter new market Removal of barriers of entry Low tariffs

Pull Factors Unexploited markets Pre-emption of rivals High Profit Margins Access to new markets

Two Primary Patterns of International Competition

Multicountry Competition
Global Competition

Name of Institution

Difference Competing internationally Vs Competing Globally Name of Institution Competing internationally International competing means presence may be even in 2-3 countries with products Market presence of products Strategy changes from market to market Competing Globally Establish Operations, racing against rivals for better products Operations in the host country is vital component

Multicountry Competition

Name of Institution

Multicountry competition is , self-contained Competition in one country market is independent of competition in other country markets

Rivals competing in one country market differ from set of rivals competing in another country market Rivals compete for national market leadership No international - Industry conditions vary from market to market e.g.- Banking , Insurance, apparel, food products, metal fabrication
10

Multicountry examples
Microsoft in PC Software Localizes PC software to reflect local languages Products localized into more than 30 languages Nestle in Instant Coffee

Name of Institution

Produces 200 types of coffees From light blend for the US market to dark roast for the Latin American market

McDonalds in Fast Food

Different hamburgers for different markets

11

Global Competition

Name of Institution

Prices and competitive conditions across country markets are strongly linked together. The term international or global market has true meaning. A companys competitive position in one country both affects and is affected by its position in other countries. The firms overall competitive advantage grows out of its entire worldwide operations. A global competitors strength is directly proportional to its portfolio of country based competitive advantages.

Global competition exists in automobiles, television sets, tires, telecommunications equipment, copiers, watches and commercial aircraft.

Individual industries can have segments that are globally competitive and segments where competition is country by country.

12

Features of global Competition

Name of Institution

firms competitive advantage comes from its entire worldwide operations. capability to serve customers who also have operations in multiple countries. (Reduces logistics) ability to set up plants in low-wage countries. transfer expertise from country to country Global competition tends to exist in industries that are not affected by differences in consumer taste. Examples of these industries include motor vehicles, televisions, cell phones, tires, and bicycles. Food Products- Taste changes but Chains compete globally to adapt menu Industry can have both segment- Hotel Industry-low cost, International Brands- Marriot, Hyat Compete globally Transition from Multicountry to Global ( By acquiring local brands)

13