STRATEGIC MANAGEMENT

GROUP 6

Members:
MARK H. BUENCUCHILLO
MARICEL M.MARIÑAS
JEZZA MAE M. PALMA
HENDRIX GRUTA
RENZ CARL MASIAD

CHAPTER 6: GLOBALIZATION AND IT'S INTERNATIONAL STRATEGY

The benefits of global strategy

A global strategy benefits a company by accessing new markets, achieving economies of scale,
lowering costs, diversifying risk, enhancing brand recognition, and potentially gaining a
competitive advantage.

Key benefits of a global strategy:

Increased Revenue:
Accessing new markets and customer bases can significantly boost sales and revenue.

Economies of Scale:
Operating on a larger scale across multiple countries can lead to cost reductions through
efficient production and distribution.

Market Diversification:
By entering different markets, a company can mitigate risk associated with economic
fluctuations in a single region.

Competitive Advantage:
A well-executed global strategy can position a company ahead of local competitors by
leveraging international expertise and innovation.

Brand Recognition:
Expanding globally can significantly improve brand awareness and reputation across
international markets.
Cost Reduction:
Access to lower-cost labor and materials in different countries can lead to operational cost
savings.

Talent Acquisition:
Companies can tap into a wider pool of skilled talent across the globe.

Improved Flexibility:
Adapting operations to different market conditions can enhance a company's ability to respond
to changing circumstances.

Innovation Potential:
Exposure to diverse markets and cultures can foster creativity and drive product development.

Opportunities in the global Market

- access to a larger customer base,potential for cost savings through cheaper labor and
materials,diversification of revenue streams,exposure to new technologies and
innovations,economies of scale,and the ability to leverage global trends to expand market reach

-while potentially gaining a competitive advantage over companies operating solely within their
domestic markets.

Key points about global market opportunities:

Market Expansion:
Entering new markets beyond your home country allows you to reach a wider customer base
and increase potential sales.

Cost Advantages:
Access to lower labor costs in certain regions can significantly reduce production expenses.

Resource Optimization:
Sourcing raw materials or components from countries with lower production costs can lead to
cost savings.

Innovation Access:
Exposure to different cultures and markets can spark new ideas and technological
advancements.

Risk Diversification:
By operating in multiple markets, a company can mitigate risks associated with economic
fluctuations in a single region.

Economies of Scale:
Producing larger quantities for a global market can lead to lower unit costs due to operational
efficiencies.

Brand Recognition:
Building a global brand presence can enhance brand awareness and reputation worldwide.
Examples of global market opportunities:

E-commerce:
Selling products online to customers across the globe.

Outsourcing services:
Hiring skilled workers in other countries to perform specific tasks at a lower cost.

Developing niche markets:

Identifying unique customer needs in different regions and tailoring products to meet them.

Leveraging emerging technologies:

Capitalizing on new technologies that are rapidly adopted in certain regions.
Important Considerations:

Cultural Understanding:
Adapting marketing and business practices to suit different cultural contexts.

Legal and Regulatory Compliance: Navigating complex legal requirements in different countries

Political Risks:
Assessing potential political instability in target markets

Currency Fluctuations:
Managing the impact of exchange rate variations on profitability.

business-level strategy in the global market

-The international business strategy has some unique features that differentiates it from the
local strategic actions implemented in the local business scenario.In the Global scenario,the
home country of operation is often the most important source of competitive advantage.The
resources and capabilities established in the home country frequently allow the firm to pursue
strategies into the market located in another country.
•Additional,Business-level strategy in the global market refers to the actions and decisions taken
by a company to achieve a competitive advantage and succeed in the global marketplace.It
involves developing and implementing strategies that enable the company to create
value,differentiate itself from competitors,and adapt to changing global market conditions.

the firm's resources and capabilities are duplicated and transferred into the country of operation
that capitalizes on the following factors:

1.Factors of Production :
this dimension refers to the inputs necessary to compete in any industry.

This factors of production are important considerations in cost of competitive advantage as it

has something to do with the following:

A.The cost of labor

it is one important component in the production of goods and services as no international
business would locate their operations where the labor cost is more than it's domestic operation
of most japanese and american companies in the Philippines is due to our lower labor cost and
competent manpower resources.

B.Cost of land construction of facilities

corporate expansion of plants and
C.Natural recoursees of the country operation
The Philippines is rich in natural resources, which could be transformed into finished product for
export to other countries.

D.Infrastructure development
the opening of more infrastructures like the expressways and development of more road system
are factors that would encourage multinational corporations to locate their facilities into the
country.

2.The size of market demand

it is the characteristics of the nature and size of the buyers needs in the home market for the
industry's goods and services.the sheer size of a market segment can produce the demand
necessary to create scale efficient facilities.

3.Related supporting industries

the manufacturing of goods is not monopoly of one company.

4.Firm strategy, structure and Rivalry

the foster of growth in certain industries varies among firms in the global market.This dimension
refers to the technical competencies of the firm along the areas of their expertise.
5.The government policy of the country of operation
The government policy in which the multi-national company operated also affects the success
and failure of international expansion and operation.

Key aspects of a business level strategy in the global market such as:

Market Analysis:Understanding global market trends,customer needs,and competitor activity.

Competitive Advantage: Developing unique strengths to outperform competitors,or a

combination of both depending on the market dynamics.

Value Creation: Offering products or services that meet customer needs and create value.

Differentiation: Distinguishing the company from competitors through unique products, services,
or branding.

Global Adaptation: Adapting strategies to accommodate different cultural, economic, and

regulatory environments.

Cost Management: Managing costs effectively to maintain profitability in diverse global markets.

Innovation: Encouraging innovation to stay ahead of competitors and respond to changing

market conditions.

Two variables:

1.competitive advantage
2.competitive scope

Two types of competitive advantage firms must choose between:

•cost
•uniqueness

Two types of competitive scope firms must choose between:

•Narrow target
•Broad target

Types of business-level strategy

1.Cost Leadership:It must offer relatively standardized products with features or characteristics
that are acceptable to customers to the lowest competitive price.

2.Differentiation:competing by using a product or service with entirely unique features.

3.Focus:Concentrate & targeting on a specific market segment or niche with a low-cost strategy.

Factors to consider when developing a global business-level strategy:

•Political and regulatory environment:

Understanding local laws and regulations in different countries

•Economic conditions:
Analyzing market size, purchasing power, and economic stability in target markets

•Cultural differences:
Adapting marketing and product offerings to different cultures and consumer behaviors

•Competition analysis:
Identifying and assessing key competitors in each market

•Technology and infrastructure:

Evaluating the availability and accessibility of technology in different regions

•Global value chain management:

Optimizing operations across different countries to minimize costs and maximize efficiency,
including sourcing raw materials, production, and distribution.

THE LEVEL OF CORPORATE STRATEGY IN INTERNATIONAL OPERATIONS

The corporate strategy level is a high-level decision-making process in international

operations,involving market entry,resource allocation,and global operations management, often
involving multidomestic,global,or transnational strategies.

Key points about corporate strategy in international operations.

Scope:
It dictates the overall direction of the company's international activities,considering factors like
market entry strategies,geographic expansion,and potential partnerships across different
countries.

Decision-making:
Decisions at this level are made by top management and involve long-term strategic planning
for the entire organization's international footprint.

Key considerations:
Local responsiveness: How much to adapt products and marketing strategies to meet the
specific needs of each local market.

Global efficiency:
How to leverage economies of scale by standardizing operations across different countries to
achieve cost advantages.

Risk management: Assessing potential political,economic,and regulatory risks in different

international markets.

Example international corporate strategies:

Multidomestic strategy:
Tailoring products and marketing to each local market, emphasizing local responsiveness.

Global strategy:
Standardizing products and operations across markets to achieve economies of scale,
prioritizing global efficiency.

Transnational strategy:
Balancing local responsiveness with global efficiency by leveraging core competencies across
different regions while adapting to local needs.

A "mode of entry" in international operations

- refers to the strategy a company chooses to use when entering a new foreign market,
determining how they will sell their products or services there, ranging from simply exporting
goods to establishing a fully owned subsidiary, each with varying levels of investment and
control depending on the chosen method

Key aspects of the "mode of entry" concept:

Level of commitment:
How much investment and resources a company is willing to dedicate to entering a new
market.

Control level:
The degree of influence a company has over its operations in the foreign market.

Market access:
How the company will reach customers in the target market.
Examples of different modes of entry:
Exporting:

Selling domestically produced goods directly to customers in a foreign market, often through
distributors or intermediaries.

Licensing:
Granting another company the right to produce and sell a product using the licensor's
intellectual property (like patents or trademarks) in exchange for royalties.

Franchising:
Similar to licensing, but involves transferring not only intellectual property but also the business
model and operational procedures, often requiring more ongoing support from the franchisor.

Joint venture:
Creating a new company in partnership with a local entity in the target market, sharing
ownership, resources, and risks.

Factors influencing the choice of entry mode:

Market size and potential:

The size and growth potential of the target market

Political and economic stability:

The risks associated with the foreign country's political and economic environment

Competition level:
The presence and strength of existing competitors in the market

Company resources and capabilities: The financial and managerial resources available to the
company