Global Strategy Formulation

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 “Going

Global”  Global Strategies are rare  Coca-Cola  McDonalds  Other companies

 Key

factors that drive industry globalization  Formulation of global strategies at the microeconomic, corporate, level.  Unique risks associated with operating on a global scale and how to mitigate those risks.

 Some

regions are more efficient than others in producing goods
• Industry Advantages • Other Industries

 Clustering

is the natural outcome of economic forces.
• Semiconductor industry

 Factor


• Natural vs. Created
 Demand

• Size
 Related

and Supporting Industries  Competitiveness in the Home Industry • Porters 5 Forces (chapter 3)

 Public

Policy (government)

• deregulation • Local, regional, national
 Chance

• Outside the control of the firm

 Forces

that push companies to think more globally to challenge competition  Regional or global similarity in product or service calls for a global product. • Ex. Coca Cola and adapting to local markets
 Global

Branding and Marketing important to success

 Minimum

sales volume required for cost efficiency no longer available in one country  Economies of Scale have become critical for Global success. This creates need for critical mass in different parts of the value chain • Ex. Pharmaceutical companies and R&D

 Globalization

potential of an industry influenced by competitive drivers such as: • (1)High levels of trade • (2)Competitor’s Diversity • (3) Interdependence created between competitive

 Useful Questions: • Do we face the same principle competitors in


different parts of the world? • How many competitive arenas does our company compete in?

 Some

Industries regulated more than others
• Ex. Steel Industry and barriers

 Companies

paying attention to nonmarket dimensions  Leads to companies trying to shape the global competitive environment to their advantage

 There

are Five additional Dimensions which are: (1) Market Participation (2) Standardization/Positioning (3)Activity Concentration (4) Coordination of Decision Making, and (5) Nonmarket Factors.

 Few

companies can afford to enter all markets open to them.  Distinguish between “must” markets and “nice-to–be-in” markets • Must: compete in to realize global ambitions

 Pace

of international expansion is dictated by customer demand
• Ex. Toyota Prius release date in Japan and U.S.

(Volume perspective) • Nice-to-be-in: participation is desirable but not critical

 Primary

motivations for standardization: Reducing cost and enhancing quality  Adopt a more global market positioning

• Not necessarily mean standardizing all elements of

 The

use of global branding helps build in brand recognition, enhance customer preference and reduce worldwide marketing cost • Ex: Nestle, Coca-cola, Ford, IBM and Disney

the marketing mix, but by applying a global cost benefit approach to formulate the market strategy and seek balance flexibility with uniformity



Global Mix

Global Offer

OFFER Global Message TAILORED Global Change

 Global

(Marketing) Mix: Strategy under which both the offer and the message are the same • Are relatively rare because only a few industries are

truly global • This applies when: Product's usage patterns and brand potential are homogeneous on a global scale, when scale and scope cost advantages substantially outweigh the benefits of partial or full adaptation, and when competitive circumstance are such that a long-term sustainable advantage can be secured using a standardize approach

Global Offer: strategy characterized by and identical offer but different positioning around the world • Applies when fixed costs associated with the offer are

high, when key core benefits offered are identical, and when there are natural market boundaries •...
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