Kế hoạch kinh doanh - The four big strategic issuesin competing multinationally

Competing in Foreign MarketsScreen graphics created by:Jana F. Kuzmicki, Ph.D.Troy University-Florida Region The Four Big Strategic Issuesin Competing MultinationallyWhether to customize a company’s offerings in each different country market to match preferences of local buyers or offer a mostly standardized product worldwideWhether to employ essentially the samebasic competitive strategy in all countriesor modify the strategy country by countryWhere to locate a company’s production facilities,distribution centers, and customer service operationsto realize the greatest locational advantagesHow to efficiently transfer a company’s resource strengths and capabilities from one country to another to secure competitive advantageWhy Do Companies Expandinto Foreign Markets?Gain access tonew customersCapitalizeon corecompetenciesAchieve lowercosts and enhance competitivenessSpreadbusiness risk across widermarket baseObtain access to valuable naturalresourcesCultures and lifestyles differ among countriesDifferences in market demographicsand income levelsVariations in manufacturingand distribution costsFluctuating exchange ratesDifferences in host governmenteconomic and political demandsCross-Country Differences in Cultural, Demographic, and Market ConditionsConsumer tastes and preferencesConsumer buying habitsMarket size and growth potentialDistribution channelsDriving forcesCompetitive pressuresOne of the biggest concerns of companies competing in foreignmarkets is whether to customize their product offerings in eachdifferent country market to match the tastes and preferences of local buyers or whether to offer a mostly standardized product worldwide.How Markets Differ from Country to CountryManufacturing costs vary from country to country based onWage ratesWorker productivityInflation ratesEnergy costsTax ratesGovernment regulationsQuality of business environment varies from country to countrySuppliers, trade associations, and makers of complementary products often find it advantageous to cluster their operations in the same general locationDifferent Countries HaveDifferent Locational AppealFluctuating Exchange Rates Affect a Company’s CompetitivenessCurrency exchange rates are unpredictableCompetitiveness of a company’s operationspartly depends on whether exchange ratechanges affect costs favorably or unfavorablyLessons of fluctuating exchange ratesExporters always gain in competitivenesswhen the currency of the country wheregoods are manufactured grows weakerExporters are disadvantaged whenthe currency of the country wheregoods are manufactured grows strongerDifferences in HostGovernment Trade PoliciesLocal content requirementsRestrictions on exportsRegulations on prices of importsImport tariffs or quotasOther regulationsTechnical standardsProduct certificationPrior approval of capital spending projectsWithdrawal of funds from countryOwnership (minority or majority) by local citizensMulti-country CompetitionGlobal CompetitionTwo Primary Patternsof International CompetitionCharacteristics ofMulti-Country CompetitionMarket contest among rivals in one country not closely connected to market contests in other countriesBuyers in different countries areattracted to different product attributesSellers vary from country to countryIndustry conditions and competitive forces ineach national market differ in important respectsRival firms battle for national championships –winning in one country does not necessarily signal the ability to fare well in other countries!Competitive conditions acrosscountry markets are strongly linkedMany of same rivals compete inmany of the same country marketsA true international market existsA firm’s competitive position in one country is affected by its position in other countriesCompetitive advantage is based on a firm’s world-wide operations and overall global standingRival firms in globally competitiveindustries vie for worldwide leadership!Characteristics of Global CompetitionStrategy Options for Competing in Foreign MarketsExportingLicensingFranchising strategyMulti-country strategyGlobal strategyStrategic alliances or joint venturesInvolve using domestic plants as a production base for exporting to foreign marketsExcellent initial strategy to pursue international salesAdvantagesConservative way to test international watersMinimizes both risk and capital requirementsMinimizes direct investments in foreign countriesAn export strategy is vulnerable whenManufacturing costs in home country are higherthan in foreign countries where rivals have plantsHigh shipping costs are involvedAdverse fluctuations in currency exchange ratesExport StrategiesLicensing StrategiesLicensing makes sense when a firmHas valuable technical know-how or a patented product but does not have international capabilities to enter foreign marketsDesires to avoid risks of committing resources to markets which areUnfamiliarPolitically volatileEconomically unstableDisadvantageRisk of providing valuable technical know-how to foreign firms and losing some control over its useFranchising StrategiesOften is better suited to global expansion effortsof service and retailing enterprisesAdvantagesFranchisee bears most of costs andrisks of establishing foreign locationsFranchisor has to expend only theresources to recruit, train, and support franchiseesDisadvantageMaintaining cross-country quality controlFig. 7.1: A Company’s Strategic Options for Dealing withCross-Country Variations in Buyer Preferences and Market ConditionsWhat Is a “Think-Local, Act-Local” Approach to Strategy Making?A company varies its product offerings and basic competitive strategy from country to country in an effort to be responsive to differing buyer preferences and market conditions.Fig. 7.2: How a Localized or Multicountry Strategy Differs from a Global StrategyThe Quest for CompetitiveAdvantage in Foreign MarketsThree ways to gain competitive advantage1. Locating activities among nations in ways that lowercosts or achieve greater product differentiation2. Efficient/effective transfer of competitivelyvaluable competencies and capabilities fromcompany operations in one country to company operations in another country3. Coordinating dispersed activities in ways a domestic-only competitor cannotWhat Are Profit Sanctuaries?Profit sanctuaries are countrymarkets where a firmHas a strong, protected marketposition and Derives substantial profitsGenerally, a firm’s most strategicallycrucial profit sanctuary is its home marketProfit sanctuaries are a valuablecompetitive asset in global industries!Fig. 7.3: Profit Sanctuary Potential of Domestic-Only,International, and Global CompetitorsInvolves supporting competitive offensives in one market with resources/profits diverted from operations in other marketsCompetitive power of cross-market subsidization results from a global firm’s ability toDraw upon its resources and profits in other country markets to mount an attack on single-market or one-country rivals andTry to lure away their customers with Lower pricesDiscount promotionsHeavy advertisingOther offensive tacticsWhat Is Cross-Market Subsidization?Global Strategic OffensivesAttack a foreign rival’s profit sanctuaries Approach places a rival on the defensive, forcing it toSpend more on marketing/advertisingTrim its pricesBoost product innovation effortsTake actions raising its costs and eroding its profitsEmploy cross-market subsidizationAttractive offensive strategy for companies competing in multiple country markets with multiple productsDump goods at cut-rate pricesApproach involves a company selling goods in foreign markets at pricesWell below prices at which it sells in its home market orWell below its full costs per unitThree OptionsAchieving GlobalCompetitiveness via CooperationCooperative agreements with foreign companies are a means toEnter a foreign market orStrengthen a firm’s competitivenessin world marketsPurpose of alliancesJoint research effortsTechnology-sharingJoint use of production or distribution facilitiesMarketing / promoting one another’s productsStrategic Appeal of Strategic AlliancesGain better access to attractive country markets from host country’s government to import and market products locallyCapture economies of scale in production and/or marketingFill gaps in technical expertise or knowledge of local marketsShare distribution facilities and dealer networksDirect combined competitive energiestoward defeating mutual rivalsTake advantage of partner’s local marketknowledge and working relationships withkey government officials in host country Useful way to gain agreement onimportant technical standardsPitfalls of Strategic AlliancesOvercoming language and cultural barriersDealing with diverse or conflicting operating practicesTime consuming for managers in terms of communication, trust-building, and coordination costsMistrust when collaborating in competitively sensitive areas Clash of egos and company culturesDealing with conflicting objectives, strategies, corporate values, and ethical standardsBecoming too dependent on another firm for essential expertise over the long-term Strategic Options: How to Competein Emerging Country Markets Prepare to compete on the basis of low priceBe prepared to modify aspects ofthe company’s business model toaccommodate local circumstancesTry to change the local market to better match the way the company does business elsewhereStay away from those emerging markets where it is impractical or uneconomic to modify the company’s business model to accommodate local circumstancesFig. 7.4: Strategy Options for Local Companiesin Competing Against Global Challengers