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Final

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Department
Administrative Studies
Course
ADMS 3960
Professor
Leigh Lampert
Semester
Winter

Description
Chapter 11The Strategy of International BusinessFiveForces Modelhelp managers access the dimensiontheir dynamics that determine the attractiveness of an industrymaps the relationship among companies within an industryhighlighting how competitors new entrants suppliers buyerssubstitute products affect potential profitabilityfirm performance is a function of its strategy which determined by industry factors that shape the corresponding pattern of competitionway to interpret industry structure which forces have the greatest impact on its strategyBig changes in the following areas redefine the forces thereby disrupting the structure of industry1 Competitors2 Products3 Process4 PoliticsEvents includingChange in the longterm growth rate for an industryNew technologies like containerization wireless communications or smart phonesNew consumer purchaseusage patterns eg streaming movies onlineManufacturing innovations that revise costefficiency frontiers eg Six Sigma lean production programsDiffusion of business executivetechnical expertise across countriesChange in government regulation eg privatization of state assets government involvement in capital marketsEntryexit of firms2 Prominent Models of StrategyThey define the perspectivestools that an MNE applies to deal with industry structure optimally allocate resourcessteadfastly progress toward objectivesIndustry Organization ParadigmDesign strategy based on emphasizing industry structure in the belief that it directly influences a companys profitabilityPresuming markets demonstrate perfect competition Perfect Competition many buyerssellers no one affects pricequantity perfect information for both producersconsumers only a few barriers to market entryexit full mobility of resources perfect knowledge among firmsbuyers riskadjusted rates of return is constantGreat by ChoiceManagers create values to their productsservices in a way that are not easily matchedcheaply copiedWays to Create Values1 Cost Leadership accelerates production efficiency of the countryTo sustain a competitive advantage and create value by improving process efficienciesgaining unique access to a large source of lower cost materialsmaking optimal outsourcingvertical integration decisionsavoiding some costs altogether and sell its products below the average industry prices to gain market share while competing firms are unable to lower their cost by a similar amountVital advantages in highly competitive industrieseg airline steel mortgage white goods package delivery marketsInternal Strengths that firm must have in order to become successfulAccess to capital required to make a significant investment in productionSkill in designing products for efficient manufacturingHigh level of expertise in manufacturing process engineeringEfficient distribution channelsCan be achieved by doing Economic of scaleLearning how to use cheap materials instead of the expensive onesLocation move factories to lower labour cost countriesnot efficienteffective can be duplicatedExternal factors that avoid you from becoming cost leaderCompetitors ImitateDuplicateTechnology ChangesNew Products take over the marketCost focusers from other segments achieve even lower costs that you2 Differentiation accelerates innovation of the countrydevelop productsservices that offer unique attributes which are valued by the value added of the product allow the firm to charge a premium price since customers cannot find substitute products easilyInternal Strengths that firm must have in order to become successfulAccess to leading scientific researchHighly skilledcreative product development teamStrong sales team with the ability to successfully communicate the perceived strengths of productCorporate reputation for qualityinnovationExternal factors that avoid you from performing differentiationCompetitors ImitateDuplicateBases for differentiation becomes less important to buyers changes in customer tastesCost proximity is lost more expensiveCompeting firms pursue focus strategies may be able to achieve greater differentiation in their market segmentsValue Chainevery firm is a collection of discrete activities performed to do business that occur within the scope of the firmIdentifies the formatinteractions between its various activitiesIdentifies the sequence of functions that company would add values to their productsservices those functions calledPrimary Activitiescore business functions product design operations outbound logistics marketing serviceSupporting Activities secondary processes that apply to each primary activities activities that help implementing primary a eg service materialsequipment HRM systemssolutions infrastructureConfigurationthe action of distributing value activities around the worldConcentratedperforming all value chain activities in one locationcountryDispersedperforming different value chain activities in different locationsFactors that influence the configuration of a valuechain Business Environment Quality location economic political legalcultural conditions Innovation Context location with policies that improve the environment for innovation Resource Costs wage rates worker productivity resources availability Logistics obtain produceexchange materialsservices in the proper placein proper quantities Digitization
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