Cost Pressures and Pressures for Local Responsiveness Firms that compete in the global marketplace typically face two types of competitive pressure that affect their ability to realize location economies and experience effects, and to leverage products and transfer competencies and skills within the enterprise. They face pressures for cost reductions and pressures to be locally responsive (see Figure 13.6).25 These competitive pressures place conflicting demands on a firm. Responding to pres- sures for cost reductions requires that a firm try to minimize its unit costs. But responding to pressures to be locally responsive requires that a firm differentiate its product offering and marketing strategy from country to country in an effort to accommodate the diverse demands arising from national differences in consumer tastes and preferences, business practices, distribution channels, competitive conditions, and government policies. Because differentiation across countries can involve significant duplication and a lack of product standardization, it may raise costs. ה ת ת ת High Firm A Firm C Pressures for Cost Reductions Firm B Low Low High Pressures for Local Responsiveness
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