MGT 4090 Management Policy & Strategy - Global Strategy

Outcome 1: Select suitable options to enter foreign markets.
Outcome 2: Apply dynamic capabilities while competing globally.
Outcome 3: Apply Porter’s diamond framework to explain why certain industries are more competitive in some nations than in others.

Exhibit 10.7: Visual representation of modes of foreign-market entry and their implications on investment and control.

Two opposing forces in global competition:
- Cost Reductions: Recognized as a key competitive weapon.
- Local Responsiveness: The necessity to tailor offerings to specific consumer preferences.
Globalization hypothesis: The assertion that consumer needs and preferences are converging globally, with common examples including:
- Food (e.g., McDonald's, Coca-Cola)
- Music (e.g., rock music)
- Movies (e.g., Hollywood films)
- Clothing (e.g., Levi jeans)

Exhibit 10.8: Adapted from C.K. Prahalad and Y.L. Doz (1987), and K. Roth and A.J. Morrison (1991).
Explores balance between globalization strategies and local market needs.

Definition: A company that sells the same products or services in both domestic and foreign markets.
- Key Features:
- Leverages home-based core competencies.
- Maintains identical product offerings domestically and internationally.
Characteristics:
- Commonly adopted by multinational enterprises with:
- Large domestic markets.
- Strong reputations and established brand names.
Examples: Harley Davidson, Rolex, Starbucks.

Characteristics:
- Focus on high-local responsiveness with low-cost reductions.
- Aimed at making local consumers perceive products as local.
Drawbacks:
- Often leads to duplication of business functions across different countries, causing inefficiencies.
Common in industries such as:
- Consumer products industry.
- Food industry.
Examples: Bridgestone, Nestle, Philips.

Characteristics:
- Achieves high-cost reductions while maintaining low-local responsiveness.
- Capitalizes on economies of scale and location economies, utilizing a global division of labor.
Competitive Focus:
- Price as the main weapon in competition.
- Minimal local adaptation of products.
Example: Lenovo.

Definition: Strategy that integrates high-cost reductions and high-local responsiveness.
Principle: "Think globally, act locally."
Strategy focuses on:
- Utilizing best practices and innovations across all markets.
- Innovation diffusion within the company structure.
Challenges:
- Organizational complexity due to potentially duplicated efforts.
Example: Bertelsmann (German multimedia conglomerate).

Exhibit 10.10: Visual representation, highlighting the strategic dynamics in global contexts.

Death of Distance Hypothesis: States that high-performing firms in certain industries are concentrated in specific countries.
Examples of High-Performing Industries in Specific Countries:
- United States: Biotechnology, Software, Internet
- China and Taiwan: Computer Manufacturing
- South Korea and Japan: Consumer Electronics
- Australia: Mining
- India: Business Process Outsourcing
- Germany: Engineering and Cars
- Italy: Fashion
- France: Wine

Exhibit 10.11: A graphical representation of Porter’s framework that identifies factors contributing to a nation's competitive advantage.

Definition: A country's endowments which influence competitive advantage.
- Includes:
- Natural resources.
- Human resources.
- Other critical resources.
Strategic Focus:
- Resource-rich countries should focus on commerce.
- Resource-lacking countries should focus on developing human capital.
Other Important Factors:
- Capital markets, institutional frameworks, research universities.
- Public infrastructure including airports, roads, schools, and healthcare systems.

Observation: Competitive environments enhance overall performance.
Example: The German car industry exhibits:
- Fierce domestic competition.
- High expectations from demanding customers.
- Resulting in superior engineering results.

Definition: Leadership among related and supporting industries fosters additional goods and services that complement a primary product.
- Importance of complementors:
- Increases customer value perception of a firm’s offering.
- Contributes to enhancing national competitive advantage.

Date: April 9
- Deadlines:
- Recorded Presentations due by 12 pm
- Peer Evaluations due by 10 pm

Zahid Rahman
- Position: Assistant Professor of Strategy and Entrepreneurship at University of Lethbridge.