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Global Strategy Formulation - Texas Tech University

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Strategy A View From the TopChapter 8 – Global Strategy Formulation
LarinSandersIvan SalazarBrian Davis
Clustering – Globalization and Industrial
Natural endowmentsAustralia, United StatesRelative advantageSemiconductor industryDecentralized patternsGE, Whirlpool
“National Diamond”Determinants of National Competitive Advantage
Firm Strategy, structure, and rivalry
Factor Endowments
Related and Supporting Industries
Demand Conditions
Chance
Government
Industry Globalization Drivers
Industry Globalization Potential
Market DriversEvolution of customer needsGlobal customersGlobal channelsTransferability of marketing
Governmental DriversTrade barriersRegulatory climateTechnology/standards
Economic DriversNature of industryEconomies of scale/locationDifferences in country costs
Competitive DriversInterdependence between countries/regionsGlobalization of competitors
Global Strategy Formulation
Global Strategy Formulation
5 Dimensions(1)Market Participation(2)Standardization/ Positioning(3)Activity Concentration(4)Coordination of decision making(5)Nonmarket factors
Global Strategy Formulation
Market ParticipationFew companies can afford to enter all markets open to themA global view of market opportunities requires a multidimensional perspective, in many industries we can distinguish between:Must Markets Vs. Nice-to-be in MarketsStrategic Alliances have made vertical and horizontal integration less importantAlliances boost contribution to fixed cost while expanding a company’s global reach
Global Strategy Formulation
Standardization/PositioningAs globalization advances, many companies seek to standardize core products and servicesHowever, the idea of a fully identical standardized global product is a myth…Ex. SonyAdopting a more global market positioning is another form of standardizationExample of these are Coca Cola, Disney World, Unilever, and IBM
Global Strategy Formulation
Global branding strategy matrixGlobal Mix-both the offer and the message are the sameGlobal Offer-same offerbut different positioning around the worldGlobal Message-offer is different but the message is the sameGlobal Change-both offer and message are adapted to local market circumstances
Global Strategy Formulation
Activity ConcentrationTo enhance global competitiveness, companies continually look at 3 factors(1) which parts of the value-creation process they should do themselves and which to outsource(2)whether they can eliminate duplicate operations and reduce the number of manufacturing sites(3) whether they can relocate value-added activities to more cost effective locationsEx. Eli Lilly with R&D
Global Strategy Formulation
Coordination of Decision MakingThe degree to which decision making is coordinated on a global scale defines the extent to which globalization has been implemented.Leveraging regional cost differentialsSharing key resourcesCross-subsidizing national battles for market sharePursuing global brand and distribution positions
Global Strategy Formulation
Nonmarket DimensionsIncreasingly, success on a global level is influenced by nonmarket factors that are governed by (1) social, (2) political, and (3) legal arrangements.An effective global strategy addresses both elements; market dimensions and nonmarket dimensions
Global Strategy Formulation
Region/Country AnalysisPolitical and social systemsOpennessProduct marketsLabor marketsCapital markets
Global Strategy Formulation
How Wal-Mart Went GlobalGlobal OpportunityDedicated and committed workforceTarget MarketsAmericas vs. European and Asian marketsMode of EntryJoint venture
Global Strategy Formulation
How Wal-Mart Went Global….contGlobal Transfer of SkillsLocal AdaptationRegulations and government policiesLocal CompetitionAcquiring a dominant playerAcquiring a weak playerLaunching a frontal attack on the incumbentGains and Setbacks
Global Strategy Formulation
Global Strategy and RiskTypes of RiskPolitical RiskGlobal and country-specific riskMacro and Micro political riskLegal RiskFoundations of a country’s legal system
Global Strategy Formulation
Global Strategy and Risk….contFinancial/Economic RiskWorking conditions, infrastructure, technological innovation, economic development, etc.Societal /Cultural RiskGlobal StrategyExploiting similarities and differences

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Global Strategy Formulation - Texas Tech University