{"id":388,"date":"2014-05-13T17:54:57","date_gmt":"2014-05-13T17:54:57","guid":{"rendered":"http:\/\/opentextbc.ca\/strategicmanagement\/?post_type=part&p=388"},"modified":"2019-07-02T22:57:21","modified_gmt":"2019-07-02T22:57:21","slug":"chapter-7","status":"publish","type":"part","link":"https:\/\/opentextbc.ca\/strategicmanagement\/part\/chapter-7\/","title":{"raw":"Chapter 7: Competing in International Markets","rendered":"Chapter 7: Competing in International Markets"},"content":{"raw":"
\r\n

Learning Objectives<\/p>\r\n\r\n<\/header>\r\n

\r\n\r\nAfter reading this chapter, you should be able to\u00a0understand and answer the following questions:\r\n
    \r\n \t
  1. What are the main benefits and risks of competing in international markets?<\/li>\r\n \t
  2. What is the \u201cdiamond model,\u201d and how does it help explain why some firms compete better in international markets than others?<\/li>\r\n \t
  3. What are the various global strategies that firms can adopt?<\/li>\r\n \t
  4. What forms of involvement are available to firms that seek to compete in international markets?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n

    Kia Picks Up Speed<\/h2>\r\n[caption id=\"attachment_1484\" align=\"aligncenter\" width=\"400\"]\"Kia<\/a> Figure 7.1: Kia is enjoying accelerated growth within the global automobile industry.[\/caption]\r\n\r\nOn June 2, 2011, South Korean automaker Kia announced plans for a major expansion of its American production facility. Capacity at Kia Motors Manufacturing Georgia Inc. (KMMG) was slated to expand 20 percent from 300,000 to 360,000 vehicles per year. In addition to the crossover utility vehicle Sorento, the plant would begin making a sedan named the Optima in September 2011. The expansion of the plant was estimated to cost $100 million and was expected to create 1,000 new jobs (The Newsmarket.com, 2011).\r\n\r\nThis ambitious growth was made possible by Kia\u2019s superb performance in the U.S. market. KMMG had started building vehicles less than two years earlier after being constructed for a cost of $1 billion. In 2010, yearly sales in the United States climbed above 350,000 vehicles. Kia\u2019s overall share of the U.S. market increased in 2010 for the sixteenth consecutive year. In May 2011, Kia sold more than 48,000 cars and trucks in United States, an increase of more than 53 percent from May 2010 sales levels. The Optima led the way with a whopping 210 percent increase in sales.\r\n\r\nKia was not the only beneficiary of its success. KMMG\u2019s location of West Point, Georgia, had been economically devastated when its homegrown textile company, WestPoint Home, shut down its local factories to take advantage of lower labor prices overseas. Following a fierce competition with towns in Mississippi, Kentucky, and other states, West Point was selected in 2006 as the site of Kia\u2019s first U.S. manufacturing facility. To win the plant, state and local authorities offered Kia more than $400 million worth of incentives, including tax breaks, free land, and infrastructure creation.\r\n\r\nGeorgia\u2019s return on this investment included 2,000 new jobs at the plant as well as hundreds of jobs at suppliers that set up shop to support KMMG. The neighboring state of Alabama benefited from KMMG\u2019s success too. As of June 2011, nearly sixty companies spread across twenty-three Alabama counties supplied parts or services to KMMG (Kent, 2011).\r\n\r\nThe name \u201cKia\u201d means to arise or come up out of Asia (Kia.ca, 2014).\u00a0This name is very appropriate; Kia rose from humble beginnings as a maker of bicycle parts in 1944 to become a global player in the automobile industry. As of 2011, Kia was producing more than 2.1 million vehicles per year in eight countries. Kias were sold in 172 countries. By 2102, Kia had sold 500,000 vehicles in Canada.\u00a0 Kia employed more than 44,000 people and enjoyed annual revenues in excess of $20 billion. Fellow South Korean automaker Hyundai owned just over 33 percent of Kia, and the two firms strengthened each other through collaboration. When taking all of these facts into consideration, Kia\u2019s slogan\u2014The Power to Surprise\u2014had to make its rivals wonder what surprises the Korean upstart might have in store for them next.\r\n\r\n[caption id=\"attachment_1485\" align=\"aligncenter\" width=\"400\"]\"Kia<\/a> Figure 7.2: Workers in Georgia build Sorentos for South Korea\u2013based Kia.[\/caption]\r\n

    References<\/h1>\r\nKent, D. (2011, June 19). Kia production in Georgia helping companies across Alabama<\/em>.<\/a>\u00a0Retrieved from http:\/\/blog.al.com\/businessnews\/2011\/06\/kia_production_in_georgia_help.html\r\n\r\nKia.ca. (2014).\u00a0Frequently\u00a0asked questions.<\/a><\/em>\u00a0 Retrieved from http:\/\/www.kia.ca\/our-history\r\n\r\nThe Newsmarket.com.\u00a0 (2011, June).\u00a0 Kia Motors Manufacturing in Georgia Begins Expansion Projects ot Support Increased Volume Beginning in 2012.<\/a>\u00a0 Kia Motors Corporation.\u00a0 Retrieved from http:\/\/www.kmmgusa.com\/2011\/06\/kia-motors-manufacturing-georgia- begins-expansion-projects-to-support-increased-volume-beginning -in-2012\/","rendered":"
    \n
    \n

    Learning Objectives<\/p>\n<\/header>\n

    \n

    After reading this chapter, you should be able to\u00a0understand and answer the following questions:<\/p>\n

      \n
    1. What are the main benefits and risks of competing in international markets?<\/li>\n
    2. What is the \u201cdiamond model,\u201d and how does it help explain why some firms compete better in international markets than others?<\/li>\n
    3. What are the various global strategies that firms can adopt?<\/li>\n
    4. What forms of involvement are available to firms that seek to compete in international markets?<\/li>\n<\/ol>\n<\/div>\n<\/div>\n

      Kia Picks Up Speed<\/h2>\n
      \"Kia<\/a>
      Figure 7.1: Kia is enjoying accelerated growth within the global automobile industry.<\/figcaption><\/figure>\n

      On June 2, 2011, South Korean automaker Kia announced plans for a major expansion of its American production facility. Capacity at Kia Motors Manufacturing Georgia Inc. (KMMG) was slated to expand 20 percent from 300,000 to 360,000 vehicles per year. In addition to the crossover utility vehicle Sorento, the plant would begin making a sedan named the Optima in September 2011. The expansion of the plant was estimated to cost $100 million and was expected to create 1,000 new jobs (The Newsmarket.com, 2011).<\/p>\n

      This ambitious growth was made possible by Kia\u2019s superb performance in the U.S. market. KMMG had started building vehicles less than two years earlier after being constructed for a cost of $1 billion. In 2010, yearly sales in the United States climbed above 350,000 vehicles. Kia\u2019s overall share of the U.S. market increased in 2010 for the sixteenth consecutive year. In May 2011, Kia sold more than 48,000 cars and trucks in United States, an increase of more than 53 percent from May 2010 sales levels. The Optima led the way with a whopping 210 percent increase in sales.<\/p>\n

      Kia was not the only beneficiary of its success. KMMG\u2019s location of West Point, Georgia, had been economically devastated when its homegrown textile company, WestPoint Home, shut down its local factories to take advantage of lower labor prices overseas. Following a fierce competition with towns in Mississippi, Kentucky, and other states, West Point was selected in 2006 as the site of Kia\u2019s first U.S. manufacturing facility. To win the plant, state and local authorities offered Kia more than $400 million worth of incentives, including tax breaks, free land, and infrastructure creation.<\/p>\n

      Georgia\u2019s return on this investment included 2,000 new jobs at the plant as well as hundreds of jobs at suppliers that set up shop to support KMMG. The neighboring state of Alabama benefited from KMMG\u2019s success too. As of June 2011, nearly sixty companies spread across twenty-three Alabama counties supplied parts or services to KMMG (Kent, 2011).<\/p>\n

      The name \u201cKia\u201d means to arise or come up out of Asia (Kia.ca, 2014).\u00a0This name is very appropriate; Kia rose from humble beginnings as a maker of bicycle parts in 1944 to become a global player in the automobile industry. As of 2011, Kia was producing more than 2.1 million vehicles per year in eight countries. Kias were sold in 172 countries. By 2102, Kia had sold 500,000 vehicles in Canada.\u00a0 Kia employed more than 44,000 people and enjoyed annual revenues in excess of $20 billion. Fellow South Korean automaker Hyundai owned just over 33 percent of Kia, and the two firms strengthened each other through collaboration. When taking all of these facts into consideration, Kia\u2019s slogan\u2014The Power to Surprise\u2014had to make its rivals wonder what surprises the Korean upstart might have in store for them next.<\/p>\n

      \"Kia<\/a>
      Figure 7.2: Workers in Georgia build Sorentos for South Korea\u2013based Kia.<\/figcaption><\/figure>\n

      References<\/h1>\n

      Kent, D. (2011, June 19). Kia production in Georgia helping companies across Alabama<\/em>.<\/a>\u00a0Retrieved from http:\/\/blog.al.com\/businessnews\/2011\/06\/kia_production_in_georgia_help.html<\/p>\n

      Kia.ca. (2014).\u00a0Frequently\u00a0asked questions.<\/a><\/em>\u00a0 Retrieved from http:\/\/www.kia.ca\/our-history<\/p>\n

      The Newsmarket.com.\u00a0 (2011, June).\u00a0 Kia Motors Manufacturing in Georgia Begins Expansion Projects ot Support Increased Volume Beginning in 2012.<\/a>\u00a0 Kia Motors Corporation.\u00a0 Retrieved from http:\/\/www.kmmgusa.com\/2011\/06\/kia-motors-manufacturing-georgia- begins-expansion-projects-to-support-increased-volume-beginning -in-2012\/<\/p>\n

      Media Attributions<\/h2>