By this we mean that managers evaluate the environment in which they operate and the strengths and weaknesses of their own companies. As a result of this evaluation, they set goals and objectives, and plan activities for the accomplishment of these goals and objectives. With the emergence of a global economy, more and more options are available to firms as they assess opportunities for becoming competitive. The concept of a firm as a value chain, developed by Michael Porter, whose work we met when we discussed trade theories, is a convenient way of thinking of the complex of activities a firm performs. Each of the components of the value chain offers opportunities for firms to enhance their competitiveness.
Management develops strategies by finding and exploiting advantages in each area of the value chain.
Here is an example of a firm that everyone has personal experience with. As this is being written, McDonald's is in 105 countries. The company continues to grow abroad at a time when it is struggling to grow in the domestic market. McDonald's is an excellent example of a company selecting an international strategy when faced with a saturated domestic market. As you read the rest of Chapter 10, take time to be clear on the differences in strategic approaches that companies can take.