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Pressure for Cost reductions
Industries producing commodity goods. Differentiation on non price factors is difficult and price is the main competitive weapon.
Competitors may now be based in low cost locations, excess capacity and consumers face low switching costs.
Liberalization of world trade has facilitated greater world competition
Pressure for local Responsiveness
Different consumer tastes and preferences
Differences in infrastructure and traditional practices
Differences in distribution methods
Differences in host government demands
Is this really happening or is there a merging of consumer tastes worldwide?
May want to delegate to a different country…When would you set up there?
Pharmaceutical companies are subject to local testing, registration and pricing restrictions.
Implication of Pressure for local Responsiveness
May not be able to get exp.. curve and global economies
May not be able to transfer what’s learned in one country to another.