International Strategy: Creating value in global markets

1
International StrategyCreating value in global
markets

• Good ideas can come from anywhere, and good
  products can be sold anywhere.which means having
  a global attitude.
• --Fred Hassan, Chairman CEO, Schering-Plough

2
Context for growing importance

• World changes in
• Technology
• Politics
• Regulation

3
Context for strategy successPorters Diamond
of national advantage
Competition, collaboration
Domestic Rivalry
Factor Conditions
Demand Conditions
Domestic pressure, global links
Resource quality, flexibility
Related Industries
Supply links, flexibility
4
Advantage from global competition

• Offshoring
• Outsourcing
• Market access
• Resource costs
• Product life cycle
• Regulatory frameworks

5
Problems with global competition

• Risk
• Contractual-legal
• Exchange rate
• Instability
• Cultural gaps
• Cost vs. productivity

6
Always first principles Resource, capability
fits

• Replicability, transfer
• Technology, skill
• Brand, image
• Product appeal
• Complementarity
• Scale economies

7
Competitive strategies

• Global
• Standardization
• Centralization/integration
• Cost reduction
• Multidomestic
• Differentiation
• Decentralization/separation
• Adaptation
• Transnational
• Flexible combination
• Nestle case (397)

8
Entry modes Strategic architecture
INVESTMENT RISK
OWNERSHIP CONTROL

• Export
• Licensing
• Franchising
• Strategic alliance
• Joint venture
• Wholly owned subsidiary

9
For example

• Acutec, Inc.
• Lord Corp.
• The Gap

10
Ethics international business

• Exploitation
• vs. exploitation

• Does it work?
• Valuable assets
• Consumer reputation
• Employee loyalty
• Regulator trust

11
Global problems as business challengeBottom of
the Pyramid

• 5 billion poor 14 trillion purchasing power
• Need energy, clean water, finance, health care
• Challenge innovative
• Products
• Technologies
• Cost structures
• Solutions
• Grameen Bank
• Casas Bahias
• Ondeo

12
Global governance matters

• Drags on profits for all
• rising income gaps
• falling envir. quality resources
• instability

• Perverse incentives for each
• free rider problem
• needed a different WTO-IMF strategy?