Different global strategies for competing in the global marketplace.

Identify and choose the different global strategies for competing in the global marketplace.

©McGraw-Hill Education.

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What drives firms to go global

– Profit Maximization & Growth

©McGraw-Hill Education.

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Strategy and the Firm 1 of 7

Learning Objective 13-1 Explain the concept of global strategy.

What Is Strategy?

A firm’s strategy refers to the actions that managers take to attain the goals of the firm

Firms need to pursue strategies that increase profitability and profit growth

Profitability is the rate of return the firm makes on its invested capital

Profit growth is the percentage increase in net profits over time

To increase profitability and profit growth , firms can

add value

lower costs

sell more in existing markets

expand internationally

©McGraw-Hill Education.

Strategy refers to actions that managers take to attain the goals of the firm.

Profitability is a rate of return concept.

Profit growth is the percentage increase in net profits over time.

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Figure 13.1 Determinants of enterprise value

Jump to long description in appendix

©McGraw-Hill Education.

Profit= Price- Cost

=100-95

= 5

Profitability= (Profit/Price)x100

= 5/100×100

= 5%

Total Profit= 1 Million

Profit Growth= 1 million to 2 millions

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Strategy and the Firm 2 of 7

Value Creation

Measured by the difference between a firm’s costs of production and the quality that consumers perceive in its products

The more value customers place on a firm’s products, the higher the price the firm can charge for those products.

Measured by the difference between V (value) and C (cost)

Two strategies: low cost and differentiation

©McGraw-Hill Education.

Value creation refers to performing activities that increase the value of goods or services to customers.

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Strategy and the Firm 3 of 7

Strategic Positioning

Porter

A firm should be explicit about its choice of strategic emphasis with regard to value creation (differentiation) and low cost.

A firm should configure its internal operations to support that strategic emphasis.

Efficiency frontier

Diminishing returns

©McGraw-Hill Education.

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Strategy and the Firm 4 of 7

Strategic Positioning continued

To maximize profitability, a firm must:

Pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice

Configure its internal operations, such as manufacturing, marketing, logistics, information systems, human resources, and so on, so that they support that position

Sample Solution

advertisements were deliberately sending to identify possible ways in which they could be fuelling discriminatory/offensive behaviours. In order to ensure that learners were not locked out from accessing the powerful knowledge, examples were used of advertisement/businesses that were relatable to the learners in the classroom (Wheelahans, 2007).

The next activity planned for the lesson was for students to watch the infamous Iceland advert which was banned from being televised regarding the politically driven palm oil claims. The basic concerns regarding the advertisement where given to the students as well as eliciting from them the obvious positives – however, students were then to construct a debate arguing whether or not the ad was appropriate or not. This provided the students to consider both sides of the argument and develop their critical thinking skills to matters beyond those which they would have personally experienced. Through the debate it was intended for students to be able to articulate their opinions and logically analyse the appropriateness of the advert and unethical marketing – with what ‘unethical’ is being a matter of contention. As they were preparing their thoughts, I was then able to support particular students in their thinking, who due to personal experiences or different contextual reasons, may have been unable to access the knowledge.

In order to gain an insight as to whether or not students have received this powerful knowledge it is important to effectively use assessment. For this lesson the powerful knowledge was assessed through students having to apply the concept of business marketing and ethical considerations of society to different adverts. From receiving feedback and listening to student responses it becomes clear whether they have grasped the concept and able to look beyond the campaigns to consider any ethical issues which they may infringe upon. For example, students were able to identify from seemingly harmless campaigns how they could be misinterpreted and have an inflammatory response from particular groups from within society e.g United Colours of Benetton ‘World leaders’ campaign, Co-Op’s ‘Easter Egg for daughters’ campaign and Pepsi’s Kendall Jenner advertising faux pas. These aren’t necessarily ethical issues encountered by students explicitly and therefore sought to take them beyond their everyday experiences. They gained a knowledge not just in general social issues but how these issues can be found in business practice. Conclusions were drawn that business’ have a role in dealing with societies woes, however understanding that these conclusions are open to challenge

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