BU491 Chapter 3: Chapter 3 - Developing Transnational Strategies
Chapter 3 – Developing Transnational Strategies
Worldwide Competitive Advantages: worldwide advantages lies in managing the interaction between
the different goals and the different means
Objectives (What)
oGlobal efficiency – lowering costs, while also enhancing revenue
oMultinational flexibility – ability to exploit opportunities and manage risks due to the
diversity and volatility of local differences in a global environment, need to scan and
respond to environment, select most attractive markets, sensing their needs, developing
adaptive responses
Macroeconomic risks – outside the control of MNE, e.g. exchange rate caused
by war
Political risks – policy actions of national government, e.g. interest rates
adjustments
Competitive risks – arising from the uncertainties of competitor’s response
Resource risks – availability of raw materials, capital, or managerial talent
oWorldwide learning – making more profits by exploiting its technology, brand name, or
management capabilities in different countries around the world
Three ways to build global competitive advantages: Means (How)
oEconomies of Scale – higher volume helps a firm exploit benefits with its accumulated
learning, which leads costs to go down as firm moves down its learning curve
oNational differences – Exploiting differences in countries in terms of resources like
labour, materials, AND the emergence of a market, e.g. increase in large middle class
oEconomies of scope – e.g. producing two or more products can be less than the cost of
producing them separately
International, Multinational, Global, and Transnational Strategies
International Strategy – They limit themselves to exploiting home country innovations to
develop their competitive position abroad, e.g. transferring new product, processes, or
strategies developed in the home country to less-advanced overseas markets, sees innovation
to reduce costs, enhances revues or both
Multinational Strategy – differentiating their products and services in response to national
differences in customer preferences, industry characteristics, and government regulations,
depend on local to local innovations, sees differentiation as the primary way to enhance
performance
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Document Summary
Worldwide competitive advantages: worldwide advantages lies in managing the interaction between the different goals and the different means. Macroeconomic risks outside the control of mne, e. g. exchange rate caused by war. Political risks policy actions of national government, e. g. interest rates adjustments. Competitive risks arising from the uncertainties of competitor"s response. Resource risks availability of raw materials, capital, or managerial talent: worldwide learning making more profits by exploiting its technology, brand name, or management capabilities in different countries around the world. Multinational strategy differentiating their products and services in response to national differences in customer preferences, industry characteristics, and government regulations, depend on local to local innovations, sees differentiation as the primary way to enhance performance. Global strategy focuses on global efficiency, use all different means to achieve the best cost and quality position for their products, assumes best cost position is key source of competitiveness.
