The Strategy of International Business

7464 Words30 Pages
The Strategy of International Business Chapter Outline OPENING CASE: The Evolving Strategy of Coca-Cola INTRODUCTION STRATEGY AND THE FIRM Value Creation Strategic Positioning Operations: The Firm as a Value Chain Organization: The Implementation of Strategy In Sum: Strategic Fit GLOBAL EXPANSION, PROFITABILITY, AND PROFIT GROWTH Expanding the Market: Leveraging Products and Competencies Location Economies Experience Effects Leveraging Subsidiary Skills Summary COST PRESSURES AND PRESSURES FOR LOCAL RESPONSIVENESS Pressures for Cost Reductions Pressures for Local Responsiveness CHOOSING A STRATEGY…show more content…
Coca Cola wanted to continue its international expansion because it believed that the U.S. market would eventually reach maturity, and that growth prospects were better overseas. For much of its initial expansion, Coca Cola followed a localization strategy, allowing each country unit to manage its own operations. QUESTION 2: Why did Coca Cola change its initial strategy? What strategy did Coca Cola start to pursue in 2000? What were the benefits of this strategy to Coca Cola? What were the drawbacks? ANSWER 2: In the 1980s, Coca Cola changed its strategy from a localization approach where individual country units essentially ran their own operations, to a more centralized approach where key management and marketing activities took place at the company headquarters in Atlanta. The company extended this strategy to include foreign bottlers. By taking equity stakes in the bottlers, Coca Cola was able to exert greater control over them. Coca Cola made the shift to the global standardization strategy because it believed that by doing so, the company could gain significant economies of scale. However, by 2000, the company was ready to change its strategy once again. Coca Cola was losing market share to companies that used a more localized strategy, and under the guidance of its new CEO, Coca Cola began once again to give local managers more decision making power. This time however, while giving country managers the autonomy to tailor product
Open Document