Develop competitive advantage Global-scale efficiency Ability to develop innovations and leverage knowledge building global-scale efficiency Manage

nage specific risk and opportunities

Increase in value of output (revenue),decrease the value of input (cost) Efficiency improvemenr lead to revenue enhancement Focus on objective of global efficiency

Theodore Levitt effective global strategy was not a bag of many tricks but the succesful practice of just one product standirzation. According to him, the core of a global strategy lay in developing standardized product to be produced and sold the same way througout the world

Efficiency benefits from global integration

Consumer electronic Automobiles Packaged foods Telecom Toyota Ford Fiat Cement

Differentiation benefits from national responsiveness

TNC engage in diversified activities Consumer goods and serives GM, Toyota,Ford revenue excess than $100b Fiat pursuit classical strategy helping establishing national auto industry through joint venture partnership and host government support in Spain, Yugoslavia and Poland. Carrefour has more than 300 stores in 18 countries Globally integrated activity-in the form of strategic alliances,joint venture and merging National responsiveness cater domestic market tastes,distribution system and government regulation

Operating diversified and volatile environment Manage risk and opportunity arise from diversity and volatility Macroeconomic outside control

Price, wages,ex-rate, national calamities

Resource risk
availability of new material, capital or management talent

TNC configure each activity that has least cost R&D, production, marketing use different cost advantage R&D-Uk. Production plant-Taiwan TNC configure each activity that has least cost Government regulation Promotion strategy

Provide cost reduction Higher volume provide firm exploit scale benefits as experience of learning higher Accumulation of lerning lead to cost reduction Korean electronic firms able to match scale of experience of Japanese competition

Cost of joining more than 2 products less than producing them separately Diversified firms ability to share investment and cost across the same or different value chain

Different mean use to achieve best cost and quality positions for their products. Approach used by Japanese company Concentrate on manufacturing to capture global scale inter country product shipment Difficult in leverage R&D

Firm goes abroad to extract additional revenues from internalized capabilities Exploit its technology, brand name and management capabilities in different countries Exploit profits through exposure to multiple stimuli

Manage cost and revenue Exploit efficiency, flexibility and learning Global company tends to concentrate all its resources either in home country or in low cost location Configuration-excentralization

Worl scale production plants built in low-

wage country Advance state- technology R&D located in developed country

Decentralization deinvestment of the resources

GEMS- GE Medical System Reconfigure its worlwide resources in 1997 Basic research remained in US development and engineering activitiesconcentrated Ain- reduce material cost and labor cost Developed COE (Centre of Excellence) Outsource supplier from low cost country

China- global source for CT scanner Korean COE- x-ray machines US- high end equipments GEMS can leverage more of the ways to build competitive advantage through complex configurations

Emerge from small national player to major competitive worlwide Dell, Elextrolux, cemex Dell cost advantage and logistic capibilities direct selling business model customer responsive

Local companies face aggressive and larger competition THREE broad alternatives Defend against the competitors global advantage influence consumer demand tying up key disrribution channels

Second strategic option lobby government assistance tariff protection government funding- R&D, export, financing capital investment

Third strategy linking up coalition /alliance with global economy share the risk and cost of operating hig risk global environmnt pooling resources defense against global giants Siemens-agreement and joint projects with Fujitsu in 1980,against dominant competitor

Prelimanary report showed the world largest manufacturer of EME Best financial result in 1981 Sales in 1981- $9.2 billion 70% sales come from construction equipment

The market Worlwide demand between 1973 and 1980 Profit margins derived from parts of machines User 1980- Us accounted for word new construction

Distribution-EME Sales through dealers who provide direct and after sales service Rule of thumb-60 years economic life Require service and parts equal to initial cost Dealer relationship is important

Suppliers Rather than high tech breakthroughfocus on constant improvement of existing product Spent 4.9% sales on R&D Competition 7 major competitor Komatsu, John deere, Cat

Quality control Quality circle- assembly line workers to form group analyse problem and recommended solution 1979 Union went throug strike

Lad to walkout by 40,00 worker 1980-company laid off 5,600 worker- soaring

management-worker r/s