Chapter 5The Global Environment
To understand the strategic planning options available to a corporation, its managers need torecognize that different types of industry-based competition exist. Specifically, they mustidentify the position of their industry along the global versus multidomestic continuum andthen consider the implications of that position for their firm.The differences between global and multidomestic industries about the location andcoordination of functional corporate activities necessitate the differences in strategicemphasis. As an industry becomes global, managers of firms within that industry mustincrease the coordination and concentration of functional activities.As a starting point for global expansion, the firm’s mission statement needs to be reviewedand revised. As global operations fundamentally alter the direction and strategic capabilitiesof a firm, its mission statement, if originally developed from a domestic perspective, must beglobalized. Lastly, movement of a firm toward globalization often follows a systematic pattern of development. Commonly, businesses begin their foreign nation involvements progressively through niche market exporting, license-contract manufacturing, franchising, joint ventures, foreign branching, and foreign subsidiaries.
1.Explain the importance of a company’s decision to globalize.2.Describe the four main strategic orientations of global firms.3.Understand the complexity of the global environment and the control problems thatare faced by global firms.4.Discuss major issues in global strategic planning, including the differences for multinational and global firms.5.Describe the market requirements and product characteristics in global competition.6.Evaluate the competitive strategies for firms in foreign markets, including nichemarket exporting, licensing and contract manufacturing, franchising, joint ventures,foreign branching, private equity, and wholly owned subsidiaries.
refers to the strategy of approaching worldwide markets withstandardized products.1.Such markets are most commonly created by end consumers that prefer lower-priced, standardized products over high-priced, customized productsand by global corporations that use their worldwide operations to compete inlocal markets.