1. Chp 12:The strategy of
International Business

9. Figure 12.1:Determinants of Enterprise Value
Profitability(#)
Enterprise
Valuation

10. Figure 12.1:Determinants of Enterprise Value
Reduce cost
Profitability(#)
Enterprise
Valuation

11. Figure 12.1:Determinants of Enterprise Value
Reduce cost
Profitability(#)
Add value and
Raise Prices
Enterprise
Valuation

12. Figure 12.1:Determinants of Enterprise Value
Reduce cost
Profitability(#)
Add value and
Raise Prices
Enterprise
Valuation
Profit
Growth(%)

13. Figure 12.1:Determinants of Enterprise Value
Reduce cost
Profitability(#)
Add value and
Raise Prices
Enterprise
Valuation
Sell More in
Existing Markets
Profit
Growth(%)

14. Figure 12.1:Determinants of Enterprise Value
Reduce cost
Profitability(#)
Add value and
Raise Prices
Enterprise
Valuation
Sell More in
Existing Markets
Profit
Growth(%)
Enter New
Market

15. “Manager can increase the profitability of the firm by
pursuing strategies that lower costs or by pursing
strategies that add value to the firm’s products, either of
which enables the firm raise prices.”

18. The way to increase the profitability of a firm is to
create more value!!!

19. The way to increase the profitability of a firm is to
create more value!!!

20. Figure 12.1:Determinants of Enterprise Value
Reduce cost
Profitability(#)
Add value and
Raise Prices
Enterprise
Valuation
Sell More in
Existing Markets
Profit
Growth(%)
Enter New
Market

21. The price a firm charges for a good or service is
typically less than the value the customer places
on that good or service, called consumer surplus

22. The consumer surplus is the amount that
consumers benefit by being able to purchase a
product for a price that is less than they would
be willing to pay.
The producer surplus is the amount that
producers benefit by selling at a market price
mechanism that is higher than they would be
willing to sell for.

23. Figure 12.2
Value Creation
V=Value of Product to
an average consumer
V-P
P=Price per unit
V-C
C=Cost of production
P-C
per unit
V-P=Consumer surplus
C per unit
P-C=Profit per unit sold
V-C=Value created per
unit

24. Company can create more value (V-C) either by
lowering production costs, C, or by making the
product more attractive through superior design,
styling, functionality, features, reliability, after sales
service.
So that consumers place a greater value on it (V
increased) and, consequently, are willing to pay a
higher price (P increase).

25. Value increases
Price increase

26. Low cost strategy-A firm has high profits
when it creates more value for is customers and
does so at a lower cost.
Differentiation strategy-a strategy that
focuses primarily on increasing the attractiveness
of a production.

27. Four seasons
Starwood
Marriott International

31. Figure 12.3 Strategic Choice in The international Hotel Industry
Efficiency Frontier
Increased value/differentiation (V)
Four season
Marriot
Starwood
Strategic Choice in This
Area not Viable in
International Hotel
Industry
Low cost(C)

32. To maximize profitability
a) Pick a position on the efficiency frontier that is
viable in the sense that there is enough demand to
support the choice.
b) configure its internal operations to support
position (manufacturing, marketing, logistics,
information system, human resources).
c) make sure that the firm has the right organization
structure in place to execute its strategy.

33. Operations:
The firm as a value
• Primary Activities
• Support Activities
*To implement its strategy efficiently and position itself on the efficiency
frontier, it must manage these activities effectively and in a manner that
is consistent with it strategy.

35. Primary Activities

36. R&D
Primary Activities

37. R&D Production
Primary Activities

38. Marketing and
R&D Production
Sales
Primary Activities

39. Figure 12.4:The value Chain
Support Activities
Company Infrastructure
Information System Human Resource
Logistics
Marketing and Customer
R&D Production
Sales Service
Primary Activities

40. te r
r in
P P
H

41. Assignment
Jan 12,2009
Explain The Value Chain by using
MNC and submit to me by email before
mid-night(GMT+07:00)

42. Quiz 1 and Mid-term exam
Number Name Surname
Quiz 1(7.5%) Mid-term(30%) Total(37.5%)
1 Ms.Sarinrat Woranit 1.5 15 16.5
2 Mr.Kaitisak Nithitheerakant 2 20.5 22.5
3 Ms.Mutita Jantrikun 3.5 22 25.5
4 Ms.Suphattra Maya 6.5 26 32.5
5 Mr.Sivakorn Thavonwan 1 25 26
6 Ms.Paphawarin Suwannarach 4.25 21.5 25.75
7 Ms.Wanchanok Yapan 1.25 11 12.25
8 Mr.Kriangkrai Siangwong 1 8.5 9.5
9 Mr.Benno Vollmann 4.5 26 30.5
10 Mr.Bartos Majda 7 28 35
11 Ms.Padhanan Bussapakes 4 22.5 26.5
12 Mr.Phumasit Patcharaviphakkij 1 3.5 4.5
13 Ms.Wariya Chupinitsakulwong 1 8 9
14 Ms.Prapaporn Khumprasert 1 12.5 13.5
15 Ms.Atchara Sairat 2 6.5 8.5
16 Ms.Chayanee Thongyam 1 7 8
17 Ms.Bunyanuch Siriwattanapornkul 2.5 21.5 24
18 Ms.Thanattha Somboon 2.25 11.5 13.75
19 Ms.Wunlaya Mungcharoen 4.25 17.5 21.75
20 Ms.Puttiporn Kittikot 2 8.5 10.5
21 Ms.Supitchaya Asawa-ananta 6.75 27 33.75
22 Ms.Yaowanart Kongrod 2.75 7 9.75
23 Ms.Ratima Khrueawongnoi 1.5 22.5 24
24 Ms.Nawarat Prommi 1 1 2
25 Ms.Puntarika Hongpanich 3 22 25
Mean 18.82
*Those student who have score less than 10% Max 35
(Red and Green color) need to see me after class Min 2

43. Figure 12.4:The value Chain
Support Activities
Company Infrastructure
Information System Human Resource
Logistics
Marketing and Customer
R&D Production
Sales Service
Primary Activities

45. Figure 12.5
B The experience Curve
Unit cost
A
Cumulative Output

46. Figure 12.5
B The experience Curve
Unit cost
A
Cumulative Output

47. Figure 12.5
B The experience Curve
Unit cost
A
Cumulative Output

48. Figure 12.5
B The experience Curve
Unit cost
A
Cumulative Output

49. Figure 12.5
B The experience Curve
Unit cost
A
Cumulative Output

51. Figure 12.6:
Pressure for cost Reductions
and Local Responsiveness
High
Pressures for Cost Reduction
Low
Low High
Pressures for Local Responsiveness

52. Figure 12.6:
Pressure for cost Reductions
and Local Responsiveness
High
Pressures for Cost Reduction
Firm A
Low
Low High
Pressures for Local Responsiveness

53. Figure 12.6:
Pressure for cost Reductions
and Local Responsiveness
High
Pressures for Cost Reduction
Firm A
Firm B
Low
Low High
Pressures for Local Responsiveness

54. Figure 12.6:
Pressure for cost Reductions
and Local Responsiveness
High
Pressures for Cost Reduction
Firm A Firm C
Firm B
Low
Low High
Pressures for Local Responsiveness

55. Figure 12.6:
Pressure for cost Reductions
and Local Responsiveness
High
Pressures for Cost Reduction
Firm A Firm C
Firm B
Low
Low High
Pressures for Local Responsiveness

57. Figure 12.7:
Four basic Strategies
High
Pressures for Cost Reduction
Low
Low High
Pressures for Local Responsiveness

58. Figure 12.7:
Four basic Strategies
High
Pressures for Cost Reduction
Global
Standardization
Strategy
Low
Low High
Pressures for Local Responsiveness

59. Figure 12.7:
Four basic Strategies
High
Pressures for Cost Reduction
Global
Standardization
Strategy
Localization
Strategy
Low
Low High
Pressures for Local Responsiveness

60. Figure 12.7:
Four basic Strategies
High
Pressures for Cost Reduction
Global
Standardization
Strategy
International Localization
Strategy Strategy
Low
Low High
Pressures for Local Responsiveness

61. Figure 12.7:
Four basic Strategies
High
Pressures for Cost Reduction
Global
Transactional
Standardization
Strategy
Strategy
International Localization
Strategy Strategy
Low
Low High
Pressures for Local Responsiveness

62. Figure 12.8:
Four basic Strategies
High
Pressures for Cost Reduction Global
Standardization Transactional
Strategy Strategy
International Localization
Strategy Strategy
Low
Low High
Pressures for Local Responsiveness

63. Figure 12.8:
Four basic Strategies
High
Pressures for Cost Reduction Global
Standardization Transactional
Strategy Strategy
International Localization
Strategy Strategy
Low
Low High
Pressures for Local Responsiveness
As competitions emerge
these strategies become less
viable

64. Figure 12.8:
Four basic Strategies
High
Pressures for Cost Reduction Global
Standardization Transactional
Strategy Strategy
International Localization
Strategy Strategy
Low
Low High
Pressures for Local Responsiveness
As competitions emerge
these strategies become less
viable

65. Figure 12.8:
Four basic Strategies
High
Pressures for Cost Reduction Global
Standardization Transactional
Strategy Strategy
International Localization
Strategy Strategy
Low
Low High
Pressures for Local Responsiveness
As competitions emerge
these strategies become less
viable