JOHNSON AND JOHNSON

enterprises. The success of firms that expand internationally depends on the goods or

services they sell, as well as on their core competencies.

International firms additionally gain access to location economies, the economies that

arise from performing a value creation activity in the optimal location for that activity.

Experience effects are systematic reductions in production costs over the life of the

product. The speed with which a firm moves down the experience curve will determine

how much advantage it has over its competitors.

A singular advantage of a global corporation is that it can find vital skills developed in

one foreign subsidiary and leverage them in another part of the world. In order to take

Construction of Cost Competitiveness for the 21

st

Century, or CCC

21

in an effort to cut

costs globally and remain competitive. For example, in its plant in Georgetown,

Kentucky, a group of workers have the sole purpose of cutting down on costs. These

employees, for example, changed the production process by removing the radiator

support base until the last stage of assembly. This process has been replicated in other

Toyota plants and improved efficiency and lowered costs.

In Canada, the Cambridge plant introduced Circle L stations where workers double and

triple-check parts that have received past consumer complaints. This process has since

standardization, (2) localization, (3) transnational, and (4) international.

The global standardization strategy focuses on increasing profitability and profit growth

by reaping the cost reductions that come from economies of scale, learning effects, and

location economies.

The localization strategy focuses on increasing profitability by customizing the firm’s

goods or services so that they provide a good match to tastes and preferences in

different national markets.

The transnational strategy tries to simultaneously achieve low costs, differentiate the

product offering across geographic markets, and foster a multidirectional flow of skills

between different locations.

The international strategy involves taking products first produced for the domestic

market and then selling them internationally with only minimal local customization.

Managers must always keep in mind that strategy is an evolutionary process and that

firms need to change their strategic approach as the environment changes (refer to the

Coca-Cola case below) (Links to an external site.)Links to an external site. .

Example: Coca-Cola: A Global and Local Strategy

 Northwest Europe;

 Iberia;

 Mediterranean;

 Germany and Nord