bisnal meeting 9 international competitive strategy

Arief Budiman, IMSMEs

International Competitive Strategy

Strategi berkaitan dengan keputusan “besar” yang dihadapi organisasi dalam melakukan bisnis, berkaitan dengan perilaku yang konsisten, dan seharusnya mampu menciptakan keunggulan kompetitif perusahaan

Strategi sangat penting untuk menentukan kesuksesan organisasi, sehingga inilah yang menjadi alasan mengapa mempelajari strategi menjadi amat bermanfaat dan menjanjikan

MENGAPA MEMPELAJARI STRATEGI:Definisi dan Alasan

Coca-Cola in Chinese: “bite the wax tadpole”

Coca-Cola 30 liter bottle??

U.S. carmakers’ left-hand drive cars

“Forced” Standardization

Effective Standardization

Coca-Cola’s “transnational polar

bears”McDonald’s “Big Mac”

Barbie is 41 years old

Sold in 130 countries

National adaptations:

•Physical features•Costumes•Activity setsStandardized physique:

•Scaled to 6’2”, 110 lbs.•38-18-28

Barbie: The “All-American” Girl Goes Overseas

McMutton Pie in Australia

Wendy’s shrimp sandwich in Japan

Campbell’s non-condensed soups in the UK

Coca-Cola’s 175 ml containers in Japan

Effective Adaptation

Cadillac Seville 1997 Asian edition

Right-hand drive, shorter seats, closer pedals, 10” shorter, retractable mirrors

The way firms make choices about acquiring and using scarce resources in order to achieve their international objectives

Involves decisions that deal with all the various functions, products and regional unit activities of a company

International Strategy

Porter’s Five Forces in Competitive Advantage

Firms that operate internationally can

1. Expand the market for their domestic product offerings by selling those products in international markets• Success depends on the type of goods and services,

and the firm’s core competencies (skills within the firm that competitors cannot easily match or imitate)

2. Realize location economies by dispersing individual value creation activities to locations around the globe where they can be performed most efficiently and effectively• In order to realize location economies, firms should

locate value creation activities where economic, political, and cultural conditions are most conducive to the performance of that activity

Global Expansion, Profitability and Profit Growth

3. Realize greater cost economies from experience effects by serving an expanded global market from a central location, thereby reducing the costs of value creation• The experience curve refers to the systematic

reductions in production costs that have been observed to occur over the life of a product

• Learning effects are cost savings that come from learning by doing

• Economies of scale refer to the reductions in unit cost achieved by producing a large volume of a product

4. Earn a greater return by leveraging any valuable skills developed in foreign operations and transferring them to other entities within the firm’s global network of operations

Global Expansion, Profitability and Profit Growth

To create a sustainable competitive advantage, a company tries to develop skills that

•Create value for customers•Are rare•Are difficult to imitate or substitute for•Are organized in a way that the company can fully exploit

Global Strategic Planning

Provides a means for top management to• Identify opportunities and threats

• Formulate strategies to handle them

• Stipulate how to finance and manage the strategies’ implementation

• Provides consistency of action

• Provides a thorough, systematic foundation for making decisions

Global Strategic Planning Process

The process of strategic planning provides a formal structure in which managers

Global Planning Process

Situational analysis• Forecast• Value Chain Analysis• Who are the target customers?• What value do we deliver?• How will customer value be created?

Analyze Corporate Controllable Variables

The Value Chain by Porter

ANALISIS RANTAI NILAI PORTER

Value Chain Sub-functions Infrastructure

Technology Development

Procurement

Human Resource Management

InboundLogistics Operations

OutboundLogistics Marketing Service

ProfitMargin

Advert. Pricing Distrib. Packaging

13-18

Cost and Adaptation Pressures and Their Implications for International Strategies

Used when companies typically centralize product development functions in their home country• Then transferred to foreign markets in order to capture additional value

• Microsoft, McDonald’s

13-19

Home Replication Strategy

Home Replication/Export Strategy(same as Export entry mode)

U.S.

Germany

Mexico

Malaysia

Used when there is strong pressure for adaptation to local market• Decision making decentralized to allow for quick change• Increases cost structure• Too much adaptation may take away from product• Cost and complexity of coordination can be substantial• Schneider Electric

13-21

Multidomestic Strategy

Multidomestic Strategy

U.S.

Germany

Mexico

Malaysia

Entry?

Used when a company faces strong pressure to reduce costs and limited pressure to adapt products for local markets• Strategy and decision making centralized• Company offers standardized products and services• Value chain activities in only one or a few areas• Results in limited ability to adjust to meet customer needs and higher transportation costs• Intel, Boeing

13-23

Global Strategy

Global Strategy(Textbook Variety)

U.S.

Germany

Mexico

MalaysiaEntry?

Used when a company confronts pressures for both cost effectiveness and local adaptation• Company locations based on where most beneficial for each activity•Upstream value chain activities will be more centralized•Downstream activities will be more decentralized

• Achieving an optimal balance is challenging• Strategic decisions, structures and systems will be complex

13-25

Transnational Strategy

Transnational Strategy (v.1)

U.S.

Germany

Mexico

MalaysiaEntry?

Transnational Strategy (v.2)

U.S.

Germany

Mexico

Malaysia

Entry?

Transnational Strategy (v.3)

U.S.Germany

Mexico

Malaysia

Engines

Final Assembly

Trim, seats,glass

Steel

Entry?

Global Entry Strategy

It depends on:

•Vision•Attitude toward risk•How much investment capital is available•How much control is desired

Which strategy should be used?

A contractual agreement whereby one company (the licensor) makes an asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation• Patent• Trade secret• Brand name• Product formulations

Licensing

Provides additional profitability with little initial investment

Provides method of circumventing tariffs, quotas, and other export barriers

Attractive ROI

Low costs to implement

Advantages to Licensing

Limited participation

Returns may be lost

Lack of control

Licensee may become competitor

Licensee may exploit company resources

Disadvantages to Licensing

Contract manufacturing• Company provides technical specifications to a

subcontractor or local manufacturer• Allows company to specialize in product design while

contractors accept responsibility for manufacturing facilities

Franchising• Contract between a parent company-franchisor and a

franchisee that allows the franchisee to operate a business developed by the franchisor in return for a fee and adherence to franchise-wide policies

Special Licensing Arrangements

Will local consumers buy your product? How tough is the local competition? Does the government respect trademark and franchiser rights? Can your profits be easily repatriated? Can you buy all the supplies you need locally? Is commercial space available and are rents affordable? Are your local partners financially sound and do they understand the basics of franchising?

Franchising Questions

Partial or full ownership of operations outside of home country

•Foreign Direct InvestmentForms• Joint ventures

• Minority or majority equity stakes

• Outright acquisition

Foreign Direct Investment

Entry strategy for a single target country in which the partners share ownership of a newly-created business entity

Joint Ventures

Disadvantages• Requires more investment

than a licensing agreement• Must share rewards as well

as risks• Requires strong

coordination• Potential for conflict among

partners• Partner may become a

competitor

Advantages• Allows for sharing of risk

(both financial and political)• Provides opportunity to

learn new environment• Provides opportunity to

achieve synergy by combining strengths of partners• May be the only way to

enter market given barriers to entry

Joint Ventures

Start-up of new operations• Greenfield operations or

• Greenfield investment

Merger with an existing enterprise

Acquisition of an existing enterprise

Investment via Ownership or Equity Stake

Possible terms:• Collaborative agreements

• Strategic alliances

• Strategic international alliances

• Global strategic partnerships

Global Strategic Partnerships