Global economic

STRATEGY
Value Creation
(Total Value) = Cost + Profit + C/S
- Value added is all value above cost
- Profit = TR - TC
- C/S = all value in excess of price

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Consumer surplus | <-- Consumer is willing to pay
============ <-- Price (retail)
Profit
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Cost
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Strategies (Porter)
1) Low cost (brutal)
2) Differentiation strategy (sweet spot)


Efficiency frontier

Core competency- something u'r good at, other have difficulty & copy, customer value it.


Lowering Cost
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Experience curve:
Learning effect:
Economy scale:
Return to Specialization


4 Strategic choices

1. International Strategy
-Centralized product development (at home)
-Mfg+mkt in host country (control at home)
-Export core competency
-High Mfg cost due to duplication

2. Localization Strategy
-Maximum local responsiveness
-Customized product + marketing (each reason)
-Production + R&D at each major market
-Poor core competency leverage
-Very high cost structure
-Decentralize autonomous units
3. Global model
-Low cost strategy
-Utilize location economies and curve effect
-Very little or none customization
-Standardization
-Very low Pricing
4. Transnational model
-Must exploit economies of scale (were big)
-Must exploit location economies (low cost)
-Must transfer core competency
-Responsive to local market