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Chapter 7

Chapter 7.docx

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Administrative Studies
Course Code
ADMS 4900
Kelly Thomson

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Mar.06/2014 Lecture 7 Chapter 7—International Strategy: Creating Value in Global Markets Factors Affecting a Nation’s Competiveness - the diamond of national advantage attributes that determine the playing field that each nation establishes and operates for its industries ~ factor endowment — nation’s position in factors of production necessary to compete in given industry ~ demand conditions—nature of home-market demand for the industry’s product or service ~ related and supporting industries—presence/absence in the nation of supplier industries and other related industries that are internationally competitive ~ firm strategy, structure, and rivalry—conditions in the nation governing how companies are created, organized and managed as well as the nature of domestic rivalry Concluding Comments on Factors Affecting a Nation’s Competitiveness - competitive advantage for global firm comes from continuing improvement, innovation and change - government acts as either facilitators or inhibitors International Expansion: A Company’s Motivations and Risks Motivations for International Expansion - increase size of potential market - expanding global presence automatically increases scale of operations, providing larger revenues and asset base ~ economies of scale - arbitrage opportunities buying something in one place where it is cheap and selling it in another place for a higher price - can extend life cycle of product - optimize physical location for every activity to take place ~ performance enhancement ~ cost reduction ~ risk reduction Potential Risks of International Expansion - political and economic risk—military, terrorism, boycotts, piracy issues - currency risks—monitor exchange rates - management risks—culture, customs, language, customer preferences Achieving Competitive Advantage in Global Markets - opposing forces: cost reduction and adapting to local markets - standardize goods/services for worldwide market - difficult because firms also want to cater to the needs to the local consumers ~ differentiating their offerings Opposing Pressures and Four Strategies Strategy Strengths Limitations International
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