1. 1 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright STRATEGIES FOR COMPETING IN GLOBALIZING MARKETS CHAPTER 6

2. “You do not choose to become global. The market chooses for you; it forces your hand.” Alain Gomez “Quote” © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright “... there’s no purely domestic industry anymore.” Robert Pelosky and Morgan Stanley

3. 3 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Chapter Outline  Why Companies Expand into Foreign Markets  Cross-Country Differences  Strategy Options for Entering and Competing in Foreign Markets  Pursuing Competitive Advantage by Competing Multinationally  Profit Sanctuaries, Cross-Market Subsidization, and Global Offensives  Strategic Alliances and Joint Ventures with Foreign Partners  Competing in Emerging Foreign Markets  Strategies for Local Companies in Emerging Markets

4. 4 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Why is the World Economy Globalizing?  Define global economy.  What conditions make it possible to have a global economy?  What are some of the market differences a firm could consider when pursuing a foreign market?  What are some possible advantages of foreign markets?

5. 5 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Strategy Options for International Markets  What are some possible modes of entry for international expansion?  Which of the modes of entry does not require operations in other countries?  Which of the modes of entry is the most costly?  Which of the modes of entry allows firms to share risks?

6. 6 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Strategy Options for International Markets  Which of the modes of entry may lead to a loss of technology?  Which of the modes of entry is associated with high transportation costs?  Which of the modes of entry is associated with less product customization?

7. 7 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Types of International Competition  What are two types of international competition?  Which of the two types of international competition looks at each country as an independent market?  Which type of competition would have the same rivals competing in different countries?  Which type of competition views national leadership as important?  Name an industry that has competition based upon multi-country competition? Global?

8. 8 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Types of International Strategy  Which international strategy would likely have a firm offering standardized products across national markets?  Which strategy would likely be best suited for competition where there are a variety of cultures and different preferences in the international markets?  Which international strategy would likely involve decentralized decisions at the individual countries?

9. 9 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Competitive Strategy Principle A global strategy works best in markets that are globally competitive or beginning to globalize! A multi-country strategy is appropriate for industries where multi-country competition dominates!

10. 10 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Types of International Strategy Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

11. 11 © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Copyright Pursuing Competitive Advantage  How can a multi-country strategy be used to gain a competitive advantage?  How can a global strategy be used to achieve competitive advantage?