Prezi logo
Log in
Loading content…

6

CC

Chien-An Chen

Transcript

Global Dimensions of Business

Dr. Roberto Gamarra

November 4, 2019

Chapter 13:

The Strategy of International Business

Chien-An Chen

Brynn Schmidt

Haokun Yang

Cost Pressures and Pressures for Local Responsiveness

THEORY A

Firms competing in the global marketplace face two types of competitive pressure that affect their ability to realize location economies and experience effects and to leverage products and transfer competencies and skills within the enterprise(see Figure 1):

  • Pressures for cost reductions
  • Pressures to be locally responsive

Figure 1

PRESSURES

  • In competitive global markets, international businesses often face pressures for cost reductions. Responding to pressures for cost reduction requires a firm to try to lower the costs of value creation.

  • Pressures for local responsiveness arise from national differences in consumer tastes and preferences, infrastructure, accepted business practices, and distribution channels, and from host-government demands.

Pressures for local responsiveness:

  • Differences in customer tastes & preferences
  • Differences in infrastructure & traditional practices
  • Differences in distribution
  • Host-Government demands
  • Rise of regionalism

Firms facing these pressures need to differentiate their products and marketing strategy in each country.

THEORY B

Differences in Customer Tastes and Preferences

Strong pressures for local responsiveness emerge when customer tastes and preferences differ significantly between countries, as they often do for deeply embedded historic or cultural reasons.

#1

Differences in Infrastructure and Traditional Practices

Pressures for local responsiveness arise from differences in infrastructure or traditional practices among countries, creating a need to customize products accordingly.

#2

Differences in Distribution

A firm’s marketing strategies may have to be responsive to differences in distribution channels among countries, which may necessitate the delegation of marketing functions to national subsidiaries.

#3

Host-Government Demands

#4

Economic and political demands imposed by host-country governments may require local responsiveness.

Rise of Regionalism

#5

There is a tendency toward the convergence of tastes, preferences, infrastructure, distribution channels, and host-government demands with a broader region that is composed of two or more nations.

  • The United States and Canada
  • The European Union
  • Russia, Belarus, and the Ukraine
  • Latin America
  • Middle Eastern countries

Video

PRACTICE

Ray Kroc wanted to build a restaurant system that would be famous for providing food of consistently high quality and uniform methods of preparation.

  • Goal: serve burgers, fries and beverages that tasted just the same in Alaska as they did in Alabama.

He persuaded both franchisees and suppliers to work not for McDonald’s, but for themselves, together with McDonald’s.

  • His slogan: “In business for yourself, but not by yourself.”

His philosophy was based on the simple principle of a 3-legged stool: one leg was McDonald’s franchisees; the second, McDonald’s suppliers; and the third, McDonald’s employees.

THEORY APPLICATION

Differences in customer tastes and preferences:

  • France
  • Germany

PRACTICE #1

JOBS/ INTERNSHIPS

https://careers.mcdonalds.com/main/us/corporate/university

PRACTICE #2

BENEFITS

https://www.mcdonalds.com/ca/en-ca/careers/training-and-benefits.html

PRACTICE #3

KAHOOT!

https://create.kahoot.it/details/globalization-chapter-13/e2a646ce-9433-47bf-a22d-2d90169be13f

LEARNING FUN