International Business

Strategy
Strategy: Actions that manager
takes to attain corporate goals
Benefits of operating internationally
Firms are able to
Expand the market for their domestic product offering
by selling them in international markets
Realize location economies by dispersing individual
value creation chains to attain more efficiency and
effectiveness
Realize greater cost economies by serving an expanded
global market
Earn a greater return by leveraging any valuable skills
developed in foreign operations and transferring them
within firms global network of operations.
Global Expansion -Maximizing
Enterprise Value

Enterprise
Valuation
Profitability
Profit
Growth
R educe
Cost
Add Value
& Raise
Price
Sell More in existing
Markets
Enter New Markets

Global Expansion -Maximizing
Enterprise Value
Value Creation= V C
V= Value
C = Cost
P = Price
V P = Consumer surplus per unit
P C = Profit per unit
V C = Value created per unit
Value Maximizing Strategies
Increased Value/Differentiation Strategy
Low-cost Strategy

Gap between Value and Cost must be greater
than competitors
Tools of Value Maximizing
Operations: The Firm as a value Chain
Expanding the Market: Leveraging the Products
and Competencies
Location Economies-Creating a global web
Leveraging Subsidiary Skills
Experience Effects Learning effects
Economies of Scale


Operations: The Firm as a value
Chain
Primary Activities
R&D
Production
Marketing and Sales
Customer Service
Support Activities Company Infrastructure
Information Systems
Logistics
Human Resources

Expanding the Market: Leveraging
the Products and Competencies
Taking goods or services developed at home
and selling them internationally
Delivering to customers benefits of firms
competitive advantage in technology, design
know-how, management and marketing not
easy to imitate by rivals.
Location Economies-Creating a
global web
Locating/dispersing a value creation activity
in the optimal location which can yield
either
Low cost, or
Product differentiation

Leveraging Subsidiary Skills
Valuable skills developed first at home are
then transferred to foreign operations.
Global marketplace and Types of
competitive pressures
Pressure for Cost Reductions
Pressure for Local Responsiveness
Differences
Customer Taste & Preference
Infrastructure & traditional practices
Distribution channels
Host government demands


Experience EffectsLearning effects
& Economies of scale
Experience effect refers to systematic reduction in product
cost that have been observed to occur in product life cycle.
Learning Effect
Cost saving that come from learning by doing.
Labor production efficiency increased over time as people learn to
know how a job can performed more efficiently
Economies of Scale
Reduction in unit cost achieved by producing a large volume of
output.
Global sale increase size of enterprise, so its bargaining power with
suppliers thereby bring economies of scale in purchasing inputs.

Choosing a Strategy
Global Standardization Strategy
Localization Strategy
Transnational Strategy
International Strategy


The End