Dynamics of International Business

GEO 330 - Dynamics of International Business Study Notes

Aimed at responsiveness to local market requirements, sacrificing efficiency.
Key Characteristics:
- Products customized for local needs.
- Emphasizes local responsiveness over economies of scale.
- Industries affected include: Food, personal care, furniture, cutlery, and railroads.
Examples:
- MTV: Customizes programming in countries like New Zealand, Pakistan, and India.
- Yum!: Offers different products in various countries; similar to McDonald's.

Focuses on cost-saving through standardization of products and marketing strategies across national markets.
Key Characteristics:
- Products are standardized, concentrating on economies of scale.
- May overlook regional buyer preferences.
Examples:
- Apple’s cohesive global branding and product offering.

Multidomestic Strategy:
- Decentralized approach.
- Highly customized products.
- Not focused on economies of scale, but gains more local market shares at a higher cost due to research expenses.
Global Strategy:
- Centralized approach.
- Standardized products designed for economies of scale.
- Less focus on local market share, and comparatively cheaper.
- Industries involved include media, communications, entertainment, engineering, and aircraft.

Low-Cost Strategy:
- Strives for the lowest cost structure in the industry.
- Leverages economies of scale to create a barrier against new entrants.
- May result in lower customer loyalty.
Differentiation Strategy:
- Designs products perceived as unique across the industry.
- Ensures better quality and brand image, leading to price premiums and customer loyalty.
- Examples:
  - Amazon (operational excellence)
  - Ritz-Carlton Hotels (customer intimacy)
  - 3M (product leadership)
Focus Strategy:
- Concentrates on a narrow market segment with low-cost or differentiation strategies.
- Must cater to specific sub-segments requiring distinctive products and services.
- Examples:
  - Toms (socially responsible)
  - Frog Box (environmentally friendly)
  - In-N-Out Burger (regional focus, not-so-fast food)
  - Banks for overseas Chinese.

Aim for specific growth objectives by increasing firm’s operations, leading to:
- Increase in sales revenue.
- Rise in earnings or profits.
- Other performance measures.
Example of Implementation:
- Dropbox: Stored files in the cloud; achieved one million users by April 2009 using viral loops.
- Process: users try the product, share with a network for incentives, creating a cycle that brings in new users.

Involve reducing the scale or scope of business for financial stability.
Methods:
- Scaling Down Activities:
- Close factories.
- Lay off workers.
- Reducing Scope:
- Sell unprofitable or unrelated businesses.
Example:
- StarHub (Singapore): Laid off around 300 employees due to intense market competition and restructuring.
  - Emphasis on CEO statement regarding competition, voice revenues, and content costs necessitating efficiency.

Organizations maintain current size and operations, avoiding growth or retrenchment in stable conditions.
Rationale:
- Exploiting strengths and protecting weaknesses while meeting stated objectives.

Push Strategy:
- Designed to create buyer demand by directly promoting products.
- Key questions: What are relevant examples?
Pull Strategy:
- Aims to draw consumer interest organically.
- Key questions: What are relevant examples?

Distribution System:
- Push may be difficult with powerful distributors.
Mass Media Access:
- Pull strategies can be restricted in some markets with limited media outlets.
Product Type:
- Pull is effective for brands needing loyalty; push suits inexpensive goods better.

Product/Communications Extension (Dual Extension):
- Extends the same product and marketing promotion to target markets.
- Simplest form and easier with globalization; best for brand-conscious consumers.
Product Extension/Communications Adaptation:
- Extends the same product but alters promotion to suit different buyers based on various factors.
Product Adaptation/Communications Extension:
- Adjusts the product to meet international market needs but retains original marketing communication.
Product/Communications Adaptation:
- Adapts both product and marketing communication for local relevance.
- Can be costly, but essential if a large profitable market exists.

Degree of Exposure:
- Exclusive Channel: Grants sales rights to limited resellers; requires consumer effort.
- Intensive Channel: Products sold by many resellers; fosters competition and convenience.
- Consider products that require luxury handling.
Value Density:
- Describes product value relative to weight and volume.
- Lower value density correlates with a need for localized distribution systems.

Worldwide Pricing:
- Establishes a single selling price for all international markets; challenging due to different production costs and market dynamics.
Dual Pricing:
- Different selling price in export markets, with potential price escalation leading to higher prices abroad than at home.
- Investigate reasons for price disparities.

Similar to divisional structure, organized geographically (North America, East Asia, etc.).
Each division functions autonomously, benefiting operations in diverse regions but suffering overlaps.

Promotes managerial knowledge accumulation on products and improves value chain responsibility for product lines.

Employees report to multiple managers based on project needs, enhancing knowledge sharing but potentially leading to role confusion.

Provide an example of a multidomestic or global product/service. Evaluate the appropriateness of the selected strategy.