Question

Cost Reductions and Local Responsiveness

 Choosing the most appropriate strategy for a firm in international business involves two essential dimensions. The firm must examine ways to reduce costs, which can be done in a number of ways. Standardization of products and components plays a very important part. Customers, however, don't always want standardized products, even if it means they will pay more 

The balance a firm seeks between the pressures for cost reduction and local responsiveness is one of the most essential determinants of the firm's strategy. 

Pressures for local responsiveness imply that it may not be possible for a firm to realize the full benefits from economies of scale, learning effects, and location economies. The need to customize a product offering may work against a strategy of producing a standardized product made in a single, low-cost location. Customization may bring benefits but it limits the ability of a firm to realize significant scale and location economies. In addition, pressures for local responsiveness imply that it may not be possible to leverage skills and products associated with a firm's core competencies from country to country without additional changes nsnational, and international-varies 

The appropriateness of the four main strategic postures-global standardization, localization, tra with the extent of the pressures for cost reductions and local responsiveness

As the balance between cost reduction and local responsiveness affects strategy you must know each thoroughly. Roll over each box on the left to read a description. Determine if it represents a pressure for cost reductions or local responsiveness and drag it to the correct box on the chart. 

ressures Pressures for Differences in Infrastructure Differences in Preferences Responsiveness Reductions Outsourcing Universal Needs Distribution Channels Optimal Location Host Government Demands Experience Curve

Answer 1

Pressure of cost reduction and local responsiveness are the two major pressure that the business faces when it tries to reach globally.Both of these pressures will be conflicting to each other.The demands for both will be contrasting to each other . As in cost reduction the company will focus more on standardizing the product and reducing the extra cost elements, where as local responsiveness will address the diverse demands that arise from national differences in customers traditions , taste ,behaviour etc.

In the given question :

Pressure of Cost reduction :

1. Outsourcing
2. Experience curve
3. Optimal location
4. Universal neeeds

Pressure of local responsiveness:

1. Host Government Demands
2. Differences in preferences
3. Differences in Infrastructure
4. Distribution Channels