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Flashcards in 2.5 Allocation strategies Deck (6)
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1
Q

Different allocation strategies

Draw tree

A
  1. Configuration strategies : centralization and decentralization
  2. Customization strategies : Standardization and Differentiation
2
Q

Allocation strategies - Configuration

A
  • Decentralization (geographical dispersion) vs. centralization
    (concentration) of value added activities
  • Ports value chain (pilen med primary and supportive activites)
  • Map what value chain and identify activites in each country/market

Ex. BMW: Combined strategies, Decentralization less risk, must assembly in china pga regulations (JV), R&D more centralization (core)

3
Q

Types of configuration strategies

A
  1. Concentration /Centralization: Everything in home country, no duplication

PRO

  • Reach critical mass gives ec of scale
  • learning benefits
  • easy and fast coordination
  1. Combines strategy: Different on differnet markets, connected toe eachother, some duplication
  2. Decentralization: All part of value chain in each market, lots of duplication

PRO

  • flexibility and risk distribution
  • exploiting resource differences (cost, know-how)
  • Higher acceptance in each country (local appearence)
4
Q

Allocation strategies - Customization strategies

A
  • the extent of standardization or differentiation of firm’s goods or
    services that are offered worldwide
  1. Standardization
  2. Differentiation
  • Map Ex design, quality, price etc and each country with standard or adaption
  • Ex. IKEA cataloga same everywhere
5
Q

Standardization VS differentiation

A

Standardization: Offer identical in all foreign markets Ex. Pringels

PRO:

  • lower costs, ec of scale in maketing
  • lower price->higher sales
  • creating brand with global appeal

Differentiation: Differnent in various markets Ex. iPod, Coke Classic different in different countries to locally adopt.

PRO

  • Better response to local need
  • higher willingness to pay
  • create brand with local appeal
6
Q

Decision between standard or differentiation

A
  1. Market conditions:
    - Potential ec of scale
    - cross country demand homogeneity and globalization degree
    - cross country price elasticy
  2. Internal firm conditions and strategy
    - Product features
    - competative strategy
    - Global VS multinational strategy