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Lecture Crafting and executing strategy: The quest for competitive advantage - Concepts and cases (18/e) - Chapter 7

Chapter 7 - Strategies for competing in international markets. In this chapter, the following content will be discussed: Why companies expand into foreign markets, factors that shape strategy choices in foreign markets, the concepts of multicountry competition and global competition, strategy options for entering and competing in foreign markets, the quest for competitive advantage in foreign markets, strategies to compete in the markets of emerging countries. | CHAPTER 7 STRATEGIES FOR COMPETING IN INTERNATIONAL MARKETS Student Version McGraw-Hill/Irwin Copyright ®2012 The McGraw-Hill Companies, Inc. To exploit core competencies To spread business risk across a wider market base To gain access to new customers To achieve lower costs and economies of scale To access resources and capabilities in foreign markets WHY COMPANIES DECIDE TO ENTER FOREIGN MARKETS WHY COMPETING ACROSS NATIONAL BORDERS MAKES STRATEGY MAKING MORE COMPLEX 1. Industry competitiveness factors that vary from country to country 2. Location-based advantages for certain countries 3. Differences in government policies and economic conditions 4. Currency exchange rate risks 5. Differences in cultural, demographic, and market conditions Political and Economic Risks Political Risks Stem from instability or weaknesses in national governments and hostility to foreign business. Economic Risks Stem from the stability of a country’s monetary system, economic and regulatory policies, lack of property rights protections, and risks due to exchange rate fluctuation. The Risks of Adverse Exchange Rate Shifts Effects of Exchange Rate Shifts: Exporters experience a rising demand for their goods whenever their currency grows weaker relative to the importing country’s currency. Exporters experience a falling demand for their goods whenever their currency grows stronger relative to the importing country’s currency. Cross-Country Differences in Demographic, Cultural, and Market Conditions To pursue a strategy of offering a mostly standardized product worldwide. To customize offerings in each country market to match the tastes and preferences of local buyers Key Strategic Considerations THE CONCEPTS OF MULTIDOMESTIC COMPETITION AND GLOBAL COMPETITION Multidomestic Competition Exists when competition in each country market is localized and not closely connected to competition in other country markets. Global Competition Exists when competitive conditions and prices are . | CHAPTER 7 STRATEGIES FOR COMPETING IN INTERNATIONAL MARKETS Student Version McGraw-Hill/Irwin Copyright ®2012 The McGraw-Hill Companies, Inc. To exploit core competencies To spread business risk across a wider market base To gain access to new customers To achieve lower costs and economies of scale To access resources and capabilities in foreign markets WHY COMPANIES DECIDE TO ENTER FOREIGN MARKETS WHY COMPETING ACROSS NATIONAL BORDERS MAKES STRATEGY MAKING MORE COMPLEX 1. Industry competitiveness factors that vary from country to country 2. Location-based advantages for certain countries 3. Differences in government policies and economic conditions 4. Currency exchange rate risks 5. Differences in cultural, demographic, and market conditions Political and Economic Risks Political Risks Stem from instability or weaknesses in national governments and hostility to foreign business. Economic Risks Stem from the stability of a country’s monetary system, economic and regulatory policies, .