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Topics Covered
- Foreign market entry
- Transactions
- Direct investment
- Resources
- Capabilities
- Proprietary resources
- Integration
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Talk Citation
Grant, R. (2022, April 27). Internationalization decisions [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved October 6, 2024, from https://doi.org/10.69645/BWAC9881.Export Citation (RIS)
Publication History
Other Talks in the Series: Key Concepts: Introduction to Strategy
Transcript
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0:00
Hello and welcome to this series
of introductory talks
on business strategy.
My name is Robert Grant.
I'm a professor of
strategic management at
Bocconi University
in Milan, Italy.
I'm also the author of
'Contemporary Strategy Analysis',
a leading strategic
management textbook
used in business programmes
throughout the world.
0:23
In this talk,
we shift out attention
to the global arena
and ask what happens to strategy
and to strategy analysis
when we view the firm within
a broader geographical context.
The short answer is
that it makes strategy
and its analysis more complex.
At the level of the industry it
means the industries
are now global,
widening the range of market
opportunities available
to the firm and increasing
the number of competitors
the firm must contend with.
A global perspective
also widens the range of
resources and capabilities
that a firm has access to.
My goals for this talk are
for you to become more
competent in two types of
internationalisation decision.
First, where to locate
business activities.
Second, how to enter
foreign markets.
In terms of the
structure of this talk,
I shall begin with the analysis
of international location.
I shall then consider foreign
market entry decisions.
1:18
In the case of
locational decisions,
we need to consider the
resources and capabilities
that the product needs and
where these are most available.
If we want to grow corn then we need
temperate climate and rich soil.
The United States, Brazil, and Ukraine
tend to be the most favorable locations.
If we want to produce T-shirts,
our key resource we require
is low cost labour.
Bangladesh, Vietnam and Honduras are
all major producers of T-shirts.
If we want to make
semiconductors,
engineering skills and capital
are going to be most important.
The United States, Taiwan,
South Korea and China
tend to be the
leading producers.
There are also the
proprietary resources
and capabilities of the firm.
What are they and
are they mobile?
In the case of diamonds,
De Beers is the world's
leading producer.
The key resource that is
required is diamond deposits.
These are very immobile.
De Beers need to produce where
the dimaond deposits are,
primarily in South Africa.
McDonald's on the other hand,
its capabilities are
its business system.
It can replicate those
almost anywhere,
so that McDonald's
is able to produce
its hamburger restaurants
anywhere in the world.
A third consideration is whether
the product itself is mobile.
If the product is mobile,
it can be produced in
the optimal location
and then exported to users.
As in the case of airplanes.
If it is immobile,
then the production needs to be
co-located with the consumption,
as is the case of virtually
all service industries.
Finally, there is the need for
integration across the value chain.
If there is a low
need for integration,
then we can globally
fragment the value chain
having each activity where
it is best to produce it.
For example, Apple's iPhone.
But if there is a high
integration need,
all the stages of the value
chain need to be co-located,
as is the case with
Steinway pianos.
Let us turn to international
market entry decisions.