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Core Concepts
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Companies with manufacturing facilities in a particular country are more cost-competitive in exporting goods to world markets when the local currency is weak (or declines in value relative to other currencies); their competitiveness erodes when the local currency grows stronger relative to the currencies of the countries to which the locally made goods are being exported.

Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.

Exporters win when the currency of the country where goods are being manufactured grows weaker, and they lose when the currency grows stronger. Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the countries where the imported goods are being made.

Multicountry competition exists when competition in one national market is not closely connected to competition in another national market—there is no global or world market, just a collection of self-contained country markets.

Global competition exists when competitive conditions across national markets are linked strongly enough to forma true international market and when leading competitors compete head to head in many different countries.

A localized or multicountry strategy is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions.

A global strategy is one where a company employs the same basic competitive approach in all countries where it operates, sells much the same products everywhere, strives to build global brands, and coordinates its actions worldwide.

Companies that compete multinationally can pursue competitive advantage in world markets by locating their value chain activities in whatever nations prove most advantageous.

Companies with large, protected profit sanctuaries have competitive advantage over companies that don't have a protected sanctuary. Companies with multiple profit sanctuaries have a competitive advantage over companies with a single sanctuary.

Cross-market subsidization —supporting competitive offensives in one market with resources and profits diverted from operations in other markets—is a powerful competitive weapon.

Three strategy offensives that are particularly suitable for competing in foreign markets involve (1) attacking a foreign rival's profit sanctuaries, (2) employing cross-market subsidization, and (3) dumping.

Cross-border alliances have proved to be popular and viable vehicles for companies to edge their way into the markets of foreign countries.

Cross-border alliances enable a growth-minded company to widen its geographic coverage and strengthen its competitiveness in foreign markets while, at the same time, offering flexibility and allowing a company to retain some degree of autonomy and operating control.

Strategic alliances are more effective in helping establish a beachhead of new opportunity in world markets than in achieving and sustaining global leadership.

Profitability in emerging markets rarely comes quickly or easily—new entrants have to adapt their business models and strategies to local conditions and be patient in earning a profit.

 








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