advantages _ disadvantages of globalization

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					       International Strategy
• Advantages
    • Firm try to create value by transferring valuable
      skills and products to foreign markets where
      indigenous competitors lack those skills and
      products.
    • They tend to centralize product development
      functions at home.
• Disadvantages
    • Due to the duplication of manufacturing facilities,
      firm that pursue an international strategy tend to
      suffer from high opreating costs. This makes the
      strategy inappropriate in manufacturing industries
      where cost presures are high
       Multidomestic Strategy
• Advantages
     • Multidomestic firm extensively customize both their product
       offering and their marketing strategy to math differ national
       conditions.
     • They also tend to establish a complete set of value creation
       activities, including production, marketing, and R&D, in each
       major national market in which they do business.
• Disadvantages
     • Many multidomestic firm have a high costs structure. They
       also tend to do a relatively poor job of leveraging core
       competencies within the firm.
     • Many multidomestic firms have developed into decentralized
       federation in which each national subsidiary functions in a
       largely autonomous manner.
                 Global Strategy
• Advantages
     • Global strategy focus on increasing profitability by reaping
       the cost reductions that come from experience curve effects
       and location economies. That is, they are pursuing a low-cost
       strategy.
     • Global firm prefer to merket a standardized product
       worldwide so they can reap the maximum benefits from the
       economies of scale that underline the experience curve.
       They may also use their cost advantage to support
       aggressive pricing in world markets.
• Disadvantages
     • These conditions are not found in many consumer goods
       markets, where demand for local responsiveness remain
       high ( e.g., processed food products ).
     • This strategy in inappropriate when demands for local
       responsiveness are high.
      Transnational Strategy
• Advantages
    • Firm with a transnational strategy was confronted
      with significant pressures for cost reductions and
      for local responsiveness.
    • Firm realized many of the benefits of global
      manufacturing while also responding to pressures
      for local responsiveness by differentiating its
      product among national markets.
• Disadvantages
    • Pressures for local responsiveness and cost
      reductions place conflicting demands on a firm;
      being locally responsive raises costs.

				
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