TAILIEUCHUNG - Lecture Crafting and executing strategy: Chapter 7 - Thompson, Peteraf, Gamble, Strickland
Chapter 7 - Strategies for competing in international markets. In this chapter you will learn: Develop an understanding of the primary reasons companies choose to compete in international markets, learn how and why differing market conditions across countries influence a company's strategy choices in international markets, learn about the five major strategic options for entering foreign markets,. | CHAPTER 7 STRATEGIES FOR COMPETING IN INTERNATIONAL MARKETS STUDENT VERSION To further exploit core competencies To spread business risk across a wider market base To gain access to new customers To achieve lower costs through economies of scale, experience, and increased purchasing power To gain access to resources and capabilities located in foreign markets WHY COMPANIES DECIDE TO ENTER FOREIGN MARKETS WHY COMPETING ACROSS NATIONAL BORDERS MAKES STRATEGY-MAKING MORE COMPLEX 1. Different countries have different home-country advantages in different industries 2. Location-based value chain advantages for certain countries 3. Differences in government policies, tax rates, and economic conditions 4. Currency exchange rate risks 5. Differences in buyer tastes and preferences for products and services THE DIAMOND FRAMEWORK Answers important questions about competing on an international basis by: Predicting where new foreign entrants are likely to come from and their strengths. Highlighting foreign market opportunities where rivals are weakest. Identifying the location-based advantages of conducting certain value chain activities of the firm in a particular country. 7–4 REASONS FOR LOCATING VALUE CHAIN ACTIVITIES ADVANTAGEOUSLY Lower wage rates Higher worker productivity Lower energy costs Fewer environmental regulations Lower tax rates Lower inflation rates Proximity to suppliers and technologically related industries Proximity to customers Lower distribution costs Available\unique natural resources THE IMPACT OF GOVERNMENT POLICIES AND ECONOMIC CONDITIONS IN HOST COUNTRIES Positives Tax incentives Low tax rates Low-cost loans Site location and development Worker training Negatives Environmental regulations Subsidies and loans to domestic competitors Import restrictions Tariffs and quotas Local-content requirements Regulatory approvals Profit repatriation limits Minority ownership limits THE RISKS OF ADVERSE EXCHANGE RATE SHIFTS Effects of Exchange Rate Shifts: .
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