Strategy In Global Market

Question 1

How can a companies spot cost economies from global volume

Answer 1

• spreading fixed costs and setting up production facilities
• utilising production facilities more intensively when serving global market
• bargaining down costs of key inputs with suppliers
• increasing sales volume more rapidly

Question 2

Discuss ways in which managers can leverage skills of global subsidiaries

Answer 2

Managers must:

• note that valuable skills can arise from anywhere within firms global network
• create incentive system that encourages local employees to gain new competencies
• process for identifying valuable new skills
• help transfer skills within firm

Question 3

List different entry modes into global market

Answer 3

Exporting
Licensing
Franchising
Joint venture
 Wholly owned subsidiary

Question 4

What are the pressures for cost reduction and entry mode

Answer 4

• Companies prefer wholly owned subsidiary for larger span of control on dispersed value chain tighter
• Control over local operation
• utilises profits in one branch to improve another

Question 5

Discuss global strategic alliances

Answer 5

Coop agreement from two firms that are potential competitors

• Advantage:
• share costs of developing new products or processes
• facilitate entry into foreign markets
• combine skills and assets that cannot be developed alone
• establish technological standards for industry that will benefit firm
• Disadvantages
• give competitors low-cost route to new tech and markets
• Success dependent on:
• partner selection
• structure- alliance agreement guarding risks of opportunism
• managing the alliance: building strong relationship with partner (relational capital)

Question 6

What attributes determine national competitive advantage in global market

Answer 6

Factor endowments
Local demand conditions
Related and supporting industries
Firm strategy, structure, and rivalry