Chapter 9 - International Competitive Strategy

Companies competing internationally confront two opposing forces

(1) reduction of costs (2) adaptation to local markets.

Analyze the company's internal environment

- Includes a situational analysis and a forecast. - The committee wants to know where the company is heading, what are its strengths and weaknesses, etc

Tatical plans

- spell out in detail how the objectives will be reached - Very specific, short-term means for achieving goals

Intel objective

1) extend our silicon technology and manufacturing leadership 2) deliver unrivaled microprocessors and platforms 3) grow profitability worldwide 4) excel in customer orientation

To create long-term competitive advantage, a company must develop competencies that

1. create value 2. are rare 3. are difficult to inmate 4. allow the firm to be organized

The process of strategic planning provides a formal structure in which managers address the following steps

1.Analyze the company's external environments, 2.Analyze the company's internal environment, 3.Define the company's business and mission, 4.Set corporate objectives, 5.Quantify goals, 6.Formulate strategies, and 7.Make tactical plans.

The process of strategic planning provides a formal structure in which managers address the following steps:

1.Analyze the company's external environments, 2.Analyze the company's internal environment, 3.Define the company's business and mission, 4.Set corporate objectives, 5.Quantify goals, 6.Formulate strategies, and 7.Make tactical plans.

Steps to successful scenario planning

1.Determine the area, scope, and timing of the decisions with greatest relevance to or impact on your organization. 2.Research existing conditions and trends in a wide variety of areas (including those areas you might not typically consider). 3.Examine the drivers or key factors that will likely determine the outcome of the stories you are beginning to build. 4.Construct multiple stories of what could happen next. 5.Play out what the impact of each of these possible futures might be for your business or organization. 6.Examine your answers and look for those actions or decisions you'd make that were common to all two or three of the stories you built. 7.Monitor what does develop so as to trigger your early response system

Management often conducts a value chain analysis, which considers three key questions:

1.Who are the company's target customers? 2.What value does the company want to deliver to these customers? 3.How will this customer value be created?

Companies pursuing a global strategy •A. usually have low operating costs and high efficiency. •B. often have decentralized decision making and quick response to changes in local competition. •C. have loose headquarters control over product strategy. •D. have low levels of transportation and tariff costs. •E. have high levels of local market customization.

A

Managers of international companies that are attempting to develop a competitive advantage face a formidable challenge because •A. time, talent, and money are scarce. •B. resources are seldom scarce. •C. there are few or no alternative ways to use the company's scarce resources. •D. without planning, we cannot make decisions that make good sense. •E. the company's mission is constantly changing.

A

Mission Statement

A broad statement that defines the organization's purpose and scope

Value Statement

A clear, concise description of the fundamental values, beliefs, and priorities expected of the organization's members. - Communicate to stakeholders what the company is and where it expects to go.

International company

A company with operations in multiple nations. Export and imports

Vision Statement

A description of the company's desired future position if it can acquire the necessary competencies and successfully implement its strategy

Transnational company

A global corporation or world wide enterprise is an organization that owns or controls production of goods or services in one or more countries other than their home country.

International Strategy

A plan that guides the way firms make choices about developing and deploying scarce resources to achieve their international objectives

Value Chain

A set of interlinked activities that adds value to the final product or service

home replication strategy

A strategy that emphasizes the duplication of home country-based competencies in foreign countries.

Value Chain Analysis

An assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations, intended to determine where and to what extent value is added to the final product or service

Global company

An international company that centralizes management and other decisions in the home country.

A broad statement that defines the organization's purpose and scope is known as a •A. strategic plan. •B. mission statement. •C. vision statement. •D. values statement. •E. value chain.

B

International firms have found it necessary to institute formal global planning •A. to eliminate the practice of informal planning. •B. to provide top management with a means to identify threats and opportunities worldwide. •C. to promote different courses of action among the firm's managers worldwide. •D. to serve as an input for scenario building.

B

International firms have found it necessary to institute formal globalplanning A. to eliminate the practice of informal planning B. to provide top management with a means to identify threats and opportunitiesworldwide. C. to promote different courses of action among the firm's managers worldwide. D. to serve as an input for scenario building.International firms have found it necessary to institute formal globalplanning

B

When there is strong pressure for a company to adapt its products or services for local markets, it should tend to use a •A. global strategy. •B. multidomestic strategy. •C. transitional strategy. •D. differentiation strategy. •E. home replication strategy.

B

An assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations, intended to determine where and to what extent value is added to the final product or service is known as •A. economic value added. •B. internal analysis. •C. value chain analysis. •D. SWOT analysis. •E. competitive advantage assessment.

C

Historically, more aspects of _______ have been standardized and coordinated worldwide by companies than has been the case for other value chain activities such as _______. •A. research and development; manufacturing •B. marketing; manufacturing •C. manufacturing; marketing •D. marketing; research and development •E. human resources; marketing

C

The process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals is known as •A. value chain analysis. •B. scenario analysis. •C. strategic planning. •D. international strategy. •E. competitive advantage.

C

Step 6: Formulate the Competitive Strategies

Competitive strategies: action plan to enable organization to reach their objectives. Scenario: multiple, plausible stories about the future - Contingency plans: plans for the best - or worst case scenario

The practices that organizations and their managers use for identifying, creating, acquiring, developing, dispersing, and exploiting competitively valuable knowledge is known as •A. competitive advantage. •B. international strategy. •C. value analysis. •D. knowledge management. •E. internalization.

D

Which of the following is not correct regarding the skills or competencies a company must develop to achieve a sustainable competitive advantage? A. They create value for which customers are willing to pay. B. They are rare. C. They are difficult to imitate or substitute for. D. They can be copyrighted or patented. E. They allow the company to exploit their competitive value.

D

When a company faces relatively weak pressures for local responsiveness and cost reductions, it should tend to use a •A. global strategy. •B. multidomestic strategy. •C. transnational strategy. •D. differentiation strategy. •E. home replication strategy.

E

Tacit knowledge

Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulas and is therefore difficult to transmit to others

Explicit knowledge

Knowledge that is easy to communicate to others via words, pictures, formulas, or other means

Analyze the company's external environments

Managers must know what the present force values are andwhere they appear to be going, and to develop and implement appropriate responses to any changes in key environmental forces

Step 4: Set Corporate Objectives

Objectives direct the firm's course of action, maintain it within the boundaries of the stated mission, and ensure its continuing existence

Competitive advantage

The ability of a company to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors

Knowledge management

The practices that organizations and their managers use for identifying, creating, acquiring, developing, dispersing, and exploiting competitively valuable knowledge

Strategic planning

The process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals

VRIO Framework

Value, Rarity, Imitability, Organization

Multinational company

an organization that builds facilities in a number of different countries in an effort to minimize production and distribution costs

The goal of international strategy is to achieve _______ advantage

competitive

multidomestic strategy

customizing products and marketing strategies to specific national conditions

Intel Mission

delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.

Transnational Strategy

seeks efficiencies of global operations with attention to local markets

Global strategy

selling the same standardized product and using the same basic marketing approach in each national market

Step 5: Quantify the Objectives

•While quantifying objectives is preferred, companies frequently do not have these. •Organizations often have non-quantifiable or directional goals. •Objectives tend to become more quantifiable as they get to the operational level.