1314 Y3u2 IBO IBUS Week 6 Closing Lecture Recap

15/12/2013
International
Business
Environments & Operations
14e Global Edition
Daniels Radebaugh Sullivan
Recap
By
Ramon Mannie
& Roel Groen
Copyright 2013 Pearson Education
11-1
Introduction
Structure
Per week: chapter book Lecture and training sessions
Weeks 2 - 4 - 5 - 6: a Project.
Week
Week
Week
Week
Week
Week
1:
2:
3:
4:
5:
6:
Recap year 1 + 11. International Strategies

12. Country evaluation and selection + Project Apparel Ind.
13. Export and Import
14. Collaborative Strategies + Project Coffee
15. The organization. /20. HRM + Project Car Ind.
Trends (Project HRM : skipped)
Book: 9780273766957; International Business, Global Edition, 14/E;

Daniels, Radebaugh, Sullivan
Chapters 11, 12, 13, 14, 15, 20
11-2
15/12/2013
Introduction
Prerequisite: Level year 1
Theory (book) is basis

Self study, input for classes (Qs)
Apply theory via cases/projects
Some additional aspects added (i.e. trends)
What did we know already,

And what do we know now??
11-3
Introduction
Before companies make (new)
International moves,
what do they need to do first?!
1. Look at:
internal organization: S,W, core competencies,
Value Chain
the external environment > Industry analysis
> SWOT
2. (Re-) formulate strategy!!
11-4
15/12/2013
Creating Value
Value
the measure of a firms capability of selling what it makes for

more than the costs incurred to make it
Create value using
A cost leadership strategy

A differentiation strategy
make products for which consumers are willing to pay a premium price
11-5
Industry Change
Industry structure changes because of

Competitor moves
Government policies
Shifting preferences
Technological developments
If changes are significant, firms may have to

reassess their strategy.
11-6
15/12/2013
Change and the Value Chain
The configuration and coordination of a

value chain responds to changes in
customers, competitors, industries, and
environments
Even a well configured and coordinated value chain can

become obsolete
So, designing and delivering a strategy should be an
ongoing process
* Configuration: distributing value chain activities around the world

concentrated or dispersed location economies
11-7
Global Integration vs.

Local Responsiveness
Firms face two conflicting pressures:
Pressures for global integration
the process of combining differentiated parts

into a standardized whole
maximize efficiency
Pressures for local responsiveness
the process of disaggregating a standardized

whole into differentiated parts
optimize effectiveness
11-8
15/12/2013
Important slide!
When Pressures Interact

Integration/Responsiveness (I/R) Grid
BOEING
WHIRLPOOL
E&Y
DSM
11-9
Types of Strategy
Learning Objective 5:
To profile the types of strategies firms use in
international business
Characteristics of the Strategy Type Used by MNEs :
International
Multi-domestic
Global
Transnational
11-10
15/12/2013
Introduction
Recent developments
What struck you in the news

last weeks??!!
Check
http://www.ibtimes.com/companies
11-11
Country evaluation and selection

Chapter 12
15/12/2013
15/12/2013
15/12/2013
15/12/2013
Exporting
Entry mode is influenced by
Ownership advantages
Location advantages
the firms core competencies

the combination of sales opportunity and
investment risk that creates favorable
locations in foreign markets
Internalization advantages
reflect companies response to market

imperfections that often create uncertainties
13-20
10
15/12/2013
When Is Export Appropriate?
Low trade barriers
Home location has cost advantage
Customization not crucial
13-21
Going it Alone: Export

Advantages
Low initial investment

Reach customers
quickly
Complete control over
production
Benefit of learning for
future expansion
Disadvantages
Potential costs of
trade barriers
Transportation cost
Tariffs and quotas
Foregoes potential
location economies
Difficult to respond to
customer needs well
11
15/12/2013
Why Export?
Main reasons to export include

Profits
Plus:
Reasons to export
Productivity
To serve markets where the firm has no or
limited production facilities
Diversification
To satisfy a host governments requirement
(of activities)
that the local subsidiary have exports

To remain price-competitive in the home
market
To test foreign markets and foreign
competition inexpensively
To offset domestic markets cyclical sales

To achieve additional sales
To extend a products life cycle
To respond strategically to foreign
competitors
To achieve the success the firms
management has seen others achieve
To improve the efficiency of manufacturing
13-23
equipment
14-24
12
15/12/2013
Market entry alternatives

Strategic alliances:
control and
Fo
reign market presence
high
low
Mgt contracts
Co-Production
Co-Marketing
Co-R&D
Other
joint
ventures
Non-Equity
acquisition /
wholly-owned
subsidiary
franchising
direct
exporting
licensing
Equity (FDI)
indirect
exporting
production in the
home market
low
production abroad
resource deployment
high
14-26
13
15/12/2013
Why Companies Collaborate
To understand the major motives that guide managers when

choosing a collaborative arrangement for international business
14-27
Remember..
Boeing
Whirlpool
DSM
E&
Y
14
15/12/2013
Geocentric
All nations are equal

Collaboration to identify,
transfer
and diffuse best practices.
Ethnocentric
Headquarters strategy:
superior
Headquarters take key
decisions
Foreign subsidiaries follow
Geocentric
All nations are equal

Collaboration to identify,
transfer
and diffuse best practices.
Polycentric
Adapts to difference
between
Home and host country
Broad HQ decisions are
adapted
To their marketplace.
Trends in International Business.

International Business is changing rapidly.
According to Ernst and Young the 3 main drivers are:
1.demographic shifts (population growth, urbanisation,
the divide between countries with a young population- so

called tigers like Vietnam (the quickly aging populationWOPs- and the rapidly growing middle class)
2.reshaped global power structure (the rise of
relationships between the public and private sector has

shifted the balance of global power also due to the
recession (from Triad to BRI(I)CS, new rules for
international banking, the ENRON bankruptcy and IFRS)
3.Disruptive innovations (emerging markets are
hotbeds of innovation in order to reach the growing

middle income an low-income consumers (trading
downwards to good enough products)
15
15/12/2013
Introduction
TRENDS
1.Social everything:
New generations and their digital world stepping forward
2.Redefining value:
The consumer is winning the fight to own the new consumer
3.Distributed everything:
Mobility in production and consumption
4.The next industrial revolution:
Robots and smart machines reshaping work
11-31
Introduction
And one more
TRENDS
9.Information is power:
The security challenge
10.Who needs banks anyway?
Reshaping the financial system
Check (reading):
http://www.economist.com/blogs/theworldin2013/2012/11/global-trends-2013
http://www.youtube.com/watch?v=vdvo5FlRqmM
11-32
16
15/12/2013
Introduction
TRENDS
5.The new space race:

Pushing the frontiers of technology once again?
6.Geopolitical wars:
The fight to control the future (BRICS and more).
And CULTURAL adaptation required?
7.Resource wars escalating:

From a world of abundance to shortage
8.Business stepping up:
From profit to purpose
11-33
Emerging Economies
Six emerging economies
Rise of the
Developing World
May 17
By 2025, six major emerging

economies China, India,
Brazil, Indonesia, South Korea
and Russia will account for
more than half of global
growth, and the international
monetary system will no
longer be dominated by a
single currency, a report says.
And the rest

Which countries?
WB Timeline 2011:
http://www.worldbank.org/wb/timeline/2011.htm
11-34
17
15/12/2013
Finally
Good luck with
preparing
for your exams!
Thank you for your attention

11-35
18

1314 Y3u2 IBO IBUS Week 6 Closing Lecture Recap

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15/12/2013

Copyright 2013 Pearson Education

Recap year 1 + 11. International Strategies

Book: 9780273766957; International Business, Global Edition, 14/E;

Copyright 2013 Pearson Education

Prerequisite: Level year 1

Theory (book) is basis

Some additional aspects added (i.e. trends)

What did we know already,

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

the measure of a firms capability of selling what it makes for

Create value using

A cost leadership strategy

Copyright 2013 Pearson Education

Industry structure changes because of

If changes are significant, firms may have to

Copyright 2013 Pearson Education

Change and the Value Chain

The configuration and coordination of a

Even a well configured and coordinated value chain can

* Configuration: distributing value chain activities around the world

Copyright 2013 Pearson Education

Global Integration vs.

the process of combining differentiated parts

Pressures for local responsiveness

the process of disaggregating a standardized

Copyright 2013 Pearson Education

When Pressures Interact

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

What struck you in the news

Copyright 2013 Pearson Education

Country evaluation and selection

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

the firms core competencies

reflect companies response to market

Copyright 2013 Pearson Education

When Is Export Appropriate?

Low trade barriers

Home location has cost advantage

Customization not crucial

Copyright 2013 Pearson Education

Going it Alone: Export

Low initial investment

Copyright 2013 Pearson Education

Main reasons to export include

Copyright 2013 Pearson Education

that the local subsidiary have exports

To offset domestic markets cyclical sales

Copyright 2013 Pearson Education

Market entry alternatives

Copyright 2013 Pearson Education

Copyright 2013 Pearson Education

Why Companies Collaborate

To understand the major motives that guide managers when