Week 11

martes, 23 de mayo de 2023 12:18 a. m.

A firm's strategy can be defined as the actions that

managers take to attain the goals of the firm

Value Creation
○ V = Value or product to an average consumer Profitability is a rate of
○ P = Price per unit return concept
○ C = Cost of production per unit
○ V-P = Consumer surplus per unit
○ P-C = Profit per unit sold
○ V-C = Value created per unit
Profit Growth is the
percentage increase in net
profits over time.

The efficiency frontier shows all of the

different positions that a firm can
adopt with regard to adding value to
the product (V) and low cost (C)
assuming that its internal operations
are configured efficiently to support a
particular position

The Firm as a Value Chain

Primary activities have to do with the design, creation, and delivery of the product; its marketing; and its support
and after-sale service
Support activities: Provide inputs that allow the primary activities to occur

The experience curve refers to Location economies are economies that “The term core competence refers
systematic reductions in production arise from performing a value creation to skills within the firm that
costs that have been observed to occur activity in the optimal location for that competitors cannot easily match
over the life of a product activity. or imitate”

FOUR BASIC INTERNATIONAL STRATEGIES

Global Standardization Strategy.

-Goal is to pursue low-cost strategy on global scale
-Production, marketing, R&D, and supply chain activities are concentrated in a few favorable
locations.
-Avoids customization

Localization Strategy
-There are substantial differences across nations regarding consumer tastes and preferences
-Cost pressures are not too intense

Transnational Strategy
-Makes most sense when demands for local responsiveness are high but cost pressures are
moderate or low
-Must focus on leveraging subsidiary skills

International Strategy
-For firms with low-cost pressures and low pressures for local responsiveness
-Involves taking products first produced for their domestic market and selling them internationally
with only minimal local customization

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