Professional Documents
Culture Documents
Presented by:--
Amrin Khan….....17
Harshal Kirtane…24
Samina Mirkar….31
Mary Rayan…….37
Swapnil Wani.......59
Contents:-
Identify International Opportunities
International strategies
Modes of entry
Strategic competitive outcomes
Risk in an International environment
Managerial problems during international
expansion
8–2
Opportunities & Outcomes of
International Strategy
8–3
International Strategy Opportunities & Outcomes
Identify Explore Use Core Strategic
International Resources & Competence Competitiveness
Opportunities Capabilities Outcomes
International Modes of Management
Strategies Entry Problems, Risk,
and First Steps
Increased International Exporting
Market Size Bus.-Level
Strategy Higher
Return on Licensing
Performance
Investment Multidomestic Returns
Strategic
Strategy
Economies Alliances
of Scale and Global
Acquisition Innovation
Learning Strategy
Location Transnational Establishment
Advantage Strategy of New Sub.
Management
Problems, Risk,
and First Steps
9-4
Identifying International
Opportunities
International strategy
A strategy through which the firm sells its goods
or services outside its domestic market
Reasons to having an international strategy
New market expansion extends product life cycle
Needed resources can be secured
Universal product demand
5
International Strategy Benefits
Benefit 1:
Increased Market Size
International market can be
opportunity for growth when
domestic market have
limited growth opportunities.
Large market offer higher
potential returns .
8–6
Benefit 2:
Return on Investment
Large market is crucial for earning a return on
significant investment(eg. Plant, R &D.)
Cost Recovery
Above-average returns
Reverse engineering
8–7
International Strategy Benefits
Benefit 3:
Economies of Scale (or Learning)
It arises when cost per unit falls as output
increases.
Exploiting core competencies in
international market through resource &
knowledge sharing.
8–8
International Strategy Benefits
Benefit 4:
Location Advantage:
Firms locate facilities in other countries to lower the basic
costs of goods or services they provide.
Provides access to:
low cost labour
Raw Material
Transportation
key customers
8–9
International Strategy Opportunities & Outcomes
Identify Explore Use Core Strategic
International Resources & Competence Competitiveness
Opportunities Capabilities Outcomes
International Modes of Management
Strategies Entry Problems, Risk,
and First Steps
Increased International Exporting
Market Size Bus.-Level
Strategy Higher
Return on Licensing
Performance
Investment Multidomestic Returns
Strategic
Strategy
Economies Alliances
of Scale and Global
Acquisition Innovation
Learning Strategy
Location Transnational Establishment
Advantage Strategy of New Sub.
Management
Problems, Risk,
and First Steps
9-10
International Strategies
8–11
International Business level strategy:
8–12
Michael Porter’s “DIAMOND”
Model:
Source: Adapted with the permission of The Free Press, an imprint of Simon & Schuster Adult Publishing Group,
from Competitive Advantage of Nations, by Michael E. Porter, p. 72. Copyright ©1990, 1998 by Michael E. Porter.
8–13
Determinants of National
Advantage
Factors of production
Refers to the inputs necessary to compete in
any industry
• Labour • Land
• Natural resources
• Capital • Infrastructure
Demand Conditions
Characterized by the nature and size of
buyers’ needs in the home market for the
industry’s goods or services.
8–14
Determinants of National
Advantage
Related and Supporting Industries
Supporting services, facilities, and suppliers
are the key factor.
8–15
International Corporate-Level
Strategy
8–16
International Corporate-Level
Strategies
8–17
Multidomestic Strategy
Product customized for each market.
Multidomestic
Decentralized control – local decision
strategy
making.
Effective when large differences exists
between countries.
8–18
Global Strategy
Products are standardized across all
Global countries.
strategy centralized control - little decision
making authority on local level.
Effective when differences between
countries are small.
8–19
Transnational Strategy
Seeks to achieve both global
Transnational
efficiency and local
strategy responsiveness.
Difficult to achieve because
of simultaneous
requirements:
Strong central control and
coordination to achieve
efficiency
Decentralization to achieve
local market responsiveness
8–20
Environmental Trends
Liability of Foreignness
A regional focus allows firms to marshal
their resources to compete effectively in
regional markets rather than spreading
their limited resources across many
international markets.
8–21
Regionalization
8–22
International Strategy Opportunities & Outcomes
Identify Explore Use Core Strategic
International Resources & Competence Competitiveness
Opportunities Capabilities Outcomes
International Modes of Management
Strategies Entry Problems, Risk,
and First Steps
Increased International Exporting
Market Size Bus.-Level
Strategy Higher
Return on Licensing
Performance
Investment Multidomestic Returns
Strategic
Strategy
Economies Alliances
of Scale and Global
Acquisition Innovation
Learning Strategy
Location Transnational Establishment
Advantage Strategy of New Sub.
Management
Problems, Risk,
and First Steps
9-23
Methods of International Entry
8–24
EXPORTING :
Exporting can be defined as the
marketing of goods produced in one
country into another.
It does not require the expense of
establishing operations in the host
country, but exporters must established
some means of marketing and
distributing there products .
Example : Indian Spices
8–25
LICENSING :
A Licensing agreement allows a foreign
company to purchase the right to
manufacture and sell the firm’s product
within a host country or set of countries.
8–26
STRATEGIC ALLIANCES
Strategic alliance allows firms to share
the risks and the resources required to
enter international markets.
Example : TCS & IBM
8–27
ACQUISITIONS
The purchase of one corporation by
another, through either the purchase of
its shares , or the purchase of its assets.
Example : Tata Corus
8–28
NEW WHOLLY OWNED
SUBSIDIARY
A wholly owned subsidiary is a company
that is totally owned by another
company.
The establishment of new wholly owned
subsidiary is referred to as a
GREENFIELD VENTURE.
Example : Reliance communication U.K
ltd, Hongkong, Australia ,Singapore
8–29
Dynamics of Mode of Entry
What’s the best solution?
Situation Optimal Solution
The firm has no foreign Export
manufacturing expertise
and requires investment
only in distribution.
8–30
Dynamics of Mode of Entry
What’s the best solution?
Situation Optimal Solution
The firm needs to Licensing
facilitate the product
improvements
necessary to enter
foreign markets.
8–31
Dynamics of Mode of Entry
What’s the best solution?
Situation Optimal Solution
The firm needs to Strategic Alliance
reduce its risk through
the sharing of costs.
8–32
Dynamics of Mode of Entry
What’s the best solution?
Situation Optimal Solution
The firm wants to enter Acquisition
a market quickly and
their business-level
strategy requires more
control from the home
country.
8–33
Dynamics of Mode of Entry
What’s the best solution?
Situation Optimal Solution
The firm’s intellectual Wholly-owned
property rights in an Subsidiary
emerging economy are
not well protected, the
number of firms in the
industry is growing fast,
and the need for global
integration is high.
8–34
STRATEGIC COMPETITIVE
OUTCOMES
8–35
International Diversification and
Returns
International diversification is a strategy
to which a firm expands the sales of its
goods or services across global regions
and countries and into different
geographic locations or markets.
It is an attempt to reduce the risk by
investing in more than one nation, often
political risk.
8–36
International Diversification and
Innovation
Competitors outperform firms that fail to
innovate and to improve their operations
and products.
Example: Nokia
8–37
Complexity of Managing
Multinational Firms
Expansion into global operations in
different geographic locations or
markets leads to more complexity -
Makes implementing international strategy
increasingly complex.
Can produce greater uncertainty and risk.
May result in the firm becoming
unmanageable.
Example: Toyota.
8–38
RISK IN AN INTERNATIONAL ENVIRONMENT
POLITICAL RISK
Political risks are risks related to instability in national
governments and to war,both civil and international.
These are –
National government instability may create potential
problems for internationally diversified firms.
Potential changes in attitudes or regulations regarding foreign
ownership.
Legal authority obtained from previous administration may
become invalid.
8–39
Economic Risk
8–41