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Competing in Foreign Markets


Any company that aspires to industry leadership in the 21st century must think in terms of global, not domestic, market leadership. The world economy is globalizing at an accelerating pace as countries previously closed to foreign companies open up their markets, as the Internet shrinks the importance of geographic distance, and as ambitious growth-minded companies race to build stronger competitive positions in the markets of more and more countries. Companies in industries that are already globally competitive or in the process of becoming so are under the gun to come up with a strategy for competing successfully in foreign markets. This chapter focuses on strategy options for expanding beyond domestic boundaries and competing in the markets of either a few or a great many countries. The spotlight will be on four strategic issues unique to competing multinationally:

1. Whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers or to offer a mostly standardized product worldwide.

2. Whether to employ essentially the same basic competitive strategy in all countries or modify the strategy country by country.

3. Where to locate the company's production facilities, distribution centers, and customer service operations so as to realize the greatest location advantages.

4. How to efficiently transfer the company's resource strengths and capabilities from one country to another in an effort to secure competitive advantage.

In the process of exploring these issues, we will introduce a number of core concepts— multi-country competition, global competition, profit sanctuaries, and cross-market subsidization. The chapter includes sections on cross-country differences in cultural, demographic, and market conditions; strategy options for entering and competing in foreign markets; the growing role of alliances with foreign partners; the importance of locating operations in the most advantageous countries; and the special circumstances of competing in such emerging markets as China, India, Brazil, Russia, and Eastern Europe.

 











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