6-1 Copyright 2014 Pearson Education, Inc. Chapter Learning

6-1 Copyright 2014 Pearson Education, Inc. Chapter Learning

6-1 Copyright 2014 Pearson Education, Inc. Chapter Learning Goals 1. Understand why companies engage in international business. 2. Learn the steps in global strategic planning and the models available to direct the analysis and decision making involved. 3. Appreciate the techniques of

environmental assessment, internal and competitive analysis, and how those results can be used to judge the relative opportunities and threats to be considered in international strategic plans. 6-2 Copyright 2014 Pearson Education, Inc. Chapter Learning Goals 4. Profile the types of strategies available to international

managersboth on a global level and on the level of specific entry strategies for different markets. 5. Gain insight into the issues managers face when strategic planning for the emerging market. 6-3 Copyright 2014 Pearson Education, Inc. Opening Profile: Global Companies Take Advantage of Opportunities in

South Africa Acer Africa Alcatel General Electric 6-4 Copyright 2014 Pearson Education, Inc. Chapter Learning Goals Understand why

companies engage in international business. 6-5 Copyright 2014 Pearson Education, Inc. Strategic Planning and Strategy 6-6 Copyright 2014 Pearson Education, Inc. Reasons for Going

International Reactive/Defensive Globalization of 6-7 competitors Trade barriers Regulations and restrictions Customer

demands Copyright 2014 Pearson Education, Inc. Proactive/Aggressive Economies of scale Growth opportunities Resource access and cost savings Incentives Management in Action:

Mexicos Cemex Until 2009, aggressively grew through acquisitions; Rinker Group in Australia, RMC in Britain From expansion cost-cutting and retrenchment Selling assets, negotiating with creditors, cutting workforce As of August 2011, Cemex had secured a $15 billion restructuring deal and cut 11% of its workforce worldwide 6-8

Copyright 2014 Pearson Education, Inc. Strategic Management Process EXHIBIT 6-1 6-9 The Strategic Management Process Copyright 2014 Pearson Education, Inc. Chapter Learning Goals

Learn the steps in global strategic planning and the models available to direct the analysis and decision making involved. 6-10 Copyright 2014 Pearson Education, Inc. Steps in Developing International and Global Strategies

6-11 Copyright 2014 Pearson Education, Inc. Step 1: Establish Mission and Objectives 6-12 Copyright 2014 Pearson Education, Inc. Step 1: Establish Mission and Objectives

6-13 Copyright 2014 Pearson Education, Inc. Chapter Learning Goals 6-14 Appreciate the techniques of environmental assessment, internal and competitive analysis, and how those results can be

used to judge the relative opportunities and threats to be considered in Copyright 2014 Pearson Education, Inc. Step 2: Assess External Environment 6-15 Copyright 2014 Pearson Education, Inc.

Environmental Scanning Variables 6-16 Copyright 2014 Pearson Education, Inc. Institutional Effects on International Competition 6-17 Copyright 2014 Pearson Education, Inc.

Institutional Effects on International Competition 6-18 Copyright 2014 Pearson Education, Inc. Step 3: Analyze Internal Factors Internal Analysis Key Success Factors: Technological

Competitive Analysis Distinctive competencies capability: Apple Distribution channels: WalMart SWOT analysis Comparative

advantage Promotion capabilities: Disney 6-19 Copyright 2014 Pearson Education, Inc. E-Business

Strategic Decision-Making Models EXHIBIT 6-6 6-20 A Hierarchical Model of Strategic Decision Making Copyright 2014 Pearson Education, Inc. Step 4: Evaluate Global and International Strategic Alternatives

6-21 Copyright 2014 Pearson Education, Inc. Pressures to Globalize Increasing competitive clout resulting from regional trading blocs Declining tariffs Information Technology explosion

6-22 Copyright 2014 Pearson Education, Inc. Regionalization/Localization Local markets are linked together within a region, allowing local responsiveness. The impetus: Unique consumer preferences Domestic subsidies

New production technologies 6-23 Copyright 2014 Pearson Education, Inc. Cage Distances Between Countries Cultural Distance Administrative Distance Geographical Distance Economic Distance 6-24

Copyright 2014 Pearson Education, Inc. Chapter Learning Goals Profile the types of strategies available to international managers both on a global level and on the level of specific entry strategies for different markets. 6-25

Copyright 2014 Pearson Education, Inc. Global Integrative Strategies Full vertical and horizontal integration Example: Dell Factories in Ireland, Brazil, China, and so on Assembly and delivery system from 47 locations around the world

Little inventory, ability to change operations quickly 6-26 Copyright 2014 Pearson Education, Inc. E-Business for Global Expansion EXHIBIT 6-7 6-27 Benefits of B2B

Copyright 2014 Pearson Education, Inc. E-Global or E-Local? E-Global When: Trade is global in scope. Business does not involve delivering orders. When the business model can be easily hijacked by local competitors.

6-28 Copyright 2014 Pearson Education, Inc. E-Local When: Production and consumption are regional in scope. Customer behavior and market structures differ across regions, but are similar within a

region. Supply-chain management is very important to success. Step 5: Evaluate Entry Strategy Alternatives 6-29 Copyright 2014 Pearson Education, Inc. Chapter Learning Goals

Gain insight into the issues managers face when strategic planning for the emerging market. 6-30 Copyright 2014 Pearson Education, Inc. Comparative Management in Focus: Strategic Planning for Emerging Markets Increasing business

opportunities for companies wanting to set up operations in or export to emerging markets Different countries are at different levels of development and have different risk/return profiles Usually entails higher risk 6-31 Copyright 2014 Pearson Education, Inc.

Emerging Market Attractiveness for Retail Strategies Country 2011Rank 2010 Rank Brazil 1 Uruguay 2 Chile 3 6 India 4

3 Kuwait 5 China 6 Saudi Arabia Peru 8 9 U.A.E. 9 Turkey 10 Russia 14

6-32 Copyright 2014 Pearson Education, Inc. 5 8 7 2 1 7 18 10

4 Comparative Management in Focus: Strategic Planning for Emerging Markets One size does not fit all: different infrastructure, socioeconomic and regulatory challenges, different environmental and geographic constraints Potential for innovation, not just new customers

6-33 Copyright 2014 Pearson Education, Inc. Top Three Strategic Objectives 6-34 Copyright 2014 Pearson Education, Inc. Number of Functions 6-35

Copyright 2014 Pearson Education, Inc. New Strategies for Emerging Markets 6-36 Copyright 2014 Pearson Education, Inc. Operating Model for Emerging Markets 6-37

Copyright 2014 Pearson Education, Inc. Disconnected Governance Model 6-38 Copyright 2014 Pearson Education, Inc. The Influence of Culture on Strategic Choice and Timing Entry China and Japan have longer-term

time horizons than the United States. High uncertainty avoidance cultures (e.g., Latin American, African countries) prefer nonequity modes of entry. High power distance cultures (e.g., Arab countries and Japan) tend to use more equity modes of entry abroad. 6-39 Copyright 2014 Pearson Education, Inc. Conclusion

Proactive and reactive reasons 6-40 for going international Rational planning; mission and objectives; threats and opportunities; internal strengths and weaknesses; entry strategies Competitive analysis Globalization vs. regionalization Copyright

2014 Pearson Education, Inc. E-business All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright 2014 Pearson Education, Inc. 41

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