Strategic Management Chapter 6
Strategic Management
Chapter 6 – Questions
1. Plot the position of the following companies on figure 6.3 and justify your answer: * Procter & Gamble: P&G sells more that 300 brands to consumers in more that 150 countries and therefore faces strong pressures for local responsiveness as different countries and cultures prefer different cleaning materials for example. P&G also faces pressures for cost reduction due to the large number of competitors in that sphere of the market. Also the global retailers P&G uses as distributors demanded price discounts which also resulted in increasing pressure for cost reduction. This places P&G in a transnational strategy. * IBM: IBM does not face extreme cost pressure in its computer services core business (low pressures for cost reduction), but it does have high pressure for local responsiveness so it is most likely to be positioned as a localization strategy. * Coca- Cola: faces pressures to be locally responsive, particularly in marketing, while on the other hand faces low cost pressures as they are a big Oligopoly. Coca Cola is most likely to be positioned in the localization strategy sphere. * Dow Chemicals: Produces commodity type products, where price competition is very intense meaning that there is a high pressure for cost reduction, while on the other hand local differentiation is not seen as important. Dow Chemicals is most likely to be found the Global Standardization Strategy area. * Pfizer: Pharmaceutical companies have low pressures for local responsiveness as their products serve universalistic needs. Cost pressures on the other hand are intense therefore the most appropriate strategy is a Global one. * McDonalds: Faces a huge pressure to be locally responsive because different cultures and countries prefer significant tastes. People in India for example prefer vegetarian options, which led McDonalds to open up an all-vegetarian branch. In the US on the
Chapter 6 – Questions
1. Plot the position of the following companies on figure 6.3 and justify your answer: * Procter & Gamble: P&G sells more that 300 brands to consumers in more that 150 countries and therefore faces strong pressures for local responsiveness as different countries and cultures prefer different cleaning materials for example. P&G also faces pressures for cost reduction due to the large number of competitors in that sphere of the market. Also the global retailers P&G uses as distributors demanded price discounts which also resulted in increasing pressure for cost reduction. This places P&G in a transnational strategy. * IBM: IBM does not face extreme cost pressure in its computer services core business (low pressures for cost reduction), but it does have high pressure for local responsiveness so it is most likely to be positioned as a localization strategy. * Coca- Cola: faces pressures to be locally responsive, particularly in marketing, while on the other hand faces low cost pressures as they are a big Oligopoly. Coca Cola is most likely to be positioned in the localization strategy sphere. * Dow Chemicals: Produces commodity type products, where price competition is very intense meaning that there is a high pressure for cost reduction, while on the other hand local differentiation is not seen as important. Dow Chemicals is most likely to be found the Global Standardization Strategy area. * Pfizer: Pharmaceutical companies have low pressures for local responsiveness as their products serve universalistic needs. Cost pressures on the other hand are intense therefore the most appropriate strategy is a Global one. * McDonalds: Faces a huge pressure to be locally responsive because different cultures and countries prefer significant tastes. People in India for example prefer vegetarian options, which led McDonalds to open up an all-vegetarian branch. In the US on the