Professional Documents
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AV I O L I A P U T R I
INGGRID
M A RC E L L A D E N A D A
CHAPTER 11 - 12
INTERNATIONAL STRATEGIC
MANAGEMENT
Strategic planning
Similarities:
What products and/or services does the firm
intend to sell?
Where and how will it make those products or
services?
Where and how will it sell them
Where and how will it acquire the necessary
resources?
How does it expect to outperform its
competitors?
International Strategy
Multiple governments
One currency
Multiple currencies
Multiple accounting
systems
Single language
Variety languages
Relatively homogenous
culture
Variety cultures
Multinational flexibility
Respond to a change in one country by implementing a
change in another country
Worldwide learning
Learn from the operating environments in one country and
transfer this learning to its operations in other countries
STRATEGIC ALTERNATIVES
Home replication strategy
A firm utilizes the core competency or firm-specific
advantage it developed at home as its main competitive
weapon in the foreign markets that it enters
Takes what firm does exceptionally well in its home market
and duplicate it in foreign markets
Multidomestic strategy
Multidomestic corporation is free to customize its
products, its marketing campaigns, its operations
techniques to best meet the needs of its local customers
Assumption: customers are fundamentally different
Effective if there are:
Clear differences among national markets
Economies of scale are low
Cost of coordination is high
STRATEGIC ALTERNATIVES
Global strategy
Global corporation views the world as a single
marketplace and has as its primary goal the creation of
standardized goods and services that will address the
needs of customers worldwide.
Assumption: customers are fundamentally the same
Aim: capture economies of scale
Power and decision-making responsibility concentrated at
HQ
STRATEGIC ALTERNATIVES
Transnational strategy
Combine the benefits of global efficiencies
with the benefits and advantages of local
responsiveness
Carefully assigns responsibility for various
organizational tasks to achieve the dual goals
of efficiency and flexibility
HIG
H
LOW
GLOBAL
STRATEGY
TRANSNATIONA
L STRATEGY
HOME
REPLICATION
STRATEGY
MULTIDOMESTI
C STRATEGY
LOW
HIG
H
COMPONENTS OF AN INTERNATIONAL
STRATEGY
Distinctive Competence
What do we do exceptionally well, especially as compared
to our competitors?
E.g. : cutting-edge technology, efficient distribution
networks, superior organizational practices, well-respected
brand names
Scope of Operations
Where are we going to conduct business?
Geographical regions, e.g.: countries, regions within a
country, and/or clusters of countries
Market or product niches within one or more regions, e.g.:
premium-quality market niche, low-cost market niche, other
specialized market niches
COMPONENTS OF AN INTERNATIONAL
STRATEGY
Resource Deployment
Given that we are going to compete in these markets,
how should we allocate our resources to them?
Specified along product lines, geographical lines, or both
Synergy
How can different elements of our business benefit each
other?
Goal: create a situation in which the whole is greater than
the sum of the parts
DEVELOPING INTERNATIONAL
STRATEGIES
STRATEGY MANAGEMENT
STRATEGY
FORMULATION
STRATEGY
IMPLEMENTATI
ON
MISSION STATEMENT
Clarifies the organizations purpose, values, and
directions
Used as a way of communicating with internal
and external parties
Ex: Carpenter Technology satisfy customers
while consistently earning in excess of our cost
and capital and to be the best supplier worlwide
for the specialty material needs of our customers
SWOT
Strengths skills, resources, other advantage
Weaknesses reflect deficiencies or
shortcomings in skills, resources, or other factors
that hinder the market
Opportunites and Threats economic, financial,
political, legal, social, and competitive changes
Value chain breakdown of a firm into its
important activities to enable its strategists to
identify its competitive advantages and
disadvantages
Primary
activities
Manufacturin
g
Marketing &
Sales
Services
Support
activities
Company Infrastructure
Information Systems
Human Resources
Research and Development
Sourcing & Logistics
STRATEGIC GOALS
The major objectives the firm wants to
accomplish through pursuing a particular
course of action
Should be measureable, feasible, and
time-limited
Ex: Disneyland Paris projected
attendance
TACTICS
Usually involve middle managers and focus on
the details of implementing the firms strategic
goals
Ex: Grand Metropolitan abd Guinness merged to
create Diageo PLC, one of the worlds largest
consumer products companies
CONTROL FRAMEWORK
The set of managerial and organizational
processes that keep the firm moving
toward its strategic goals
Ex: Disneyland Paris increased its
advertising
LEVELS OF INTERNATIONAL
STRATEGY
LEVELS OF INTERNATIONAL
STRATEGIES
CORPORAT
E
STRATEGY
BUSINESS
STRATEGY
FUNCTION
AL
STRATEGY
CORPORATE STRATEGY
Attempts to define the domain of businesses in
which the firm intends to operate
SingleBusiness
Strategy
Related
Diversification
Unrelated
Diversification
SINGLE-BUSINESS STRATEGY
Calls for a firm to rely on a single business,
product,or service for all its revenue
Advantage firm can concentrate all its
resources and expertise on that one product or
service
Disadvantages increase firms vulnerability to
its competition and to changes in the external
environment
RELATED DIVERSIFICATION
Calls for the firm to operate in several different
but fundamentally related business, industries, or
markets at the same time
Advantages firm depends less on a single
product/service, may produce economies of scale,
may allow a firm to use technology or expertise
developed in one market to enter a second
market more cheaply and easily
Disadvantages the cost of coordinating the
operations, possibility that all the firms business
units may be affected simulateneously
UNRELATED DIVERSIFICATION
A firm operates in several unrelated industries
and markets
Conglomerates the term used for firms
comprising unrelated businesses
Advantages the corporate parent may be able
to raise capital more easily, overall riskiness may
be reduced, firm is less vulnerable to competitive
threats, a firm can more easily shed unprofitable
operations
Disadvantages lack of potential synergy, no
one operation can regularly sustain the others,
difficult for staffs to manage
BUSINESS STRATEGY
Focus on specific businesses, subsidiaries,
or operating units within the firm
Strategic Business Units (SBUs)
Helps the firm to improve its distinctive
competence for that business or unit
Differentiation
Overall Cost
Leadership
Focus
DIFFERENTIATION
Attempts to establish and maintain the
image that the SBUs products or services
are fundamentally unique from other
products or services in the same market
segment
FOCUS
Calls for a firm to target specific
types of products for certain
customer groups or regions
FUNCTIONAL STRATEGIES
International
International
International
International
financial strategy
marketing strategy
operations strategy
human resource strategy
CHAPTER 12
S T R AT E G I E S F O R A N A LY Z I N G A N D
ENTERING FOREIGN MARKETS
Market Potential.
Levels of competition
Legal and Political Environment
Sociocultural influences
MODES OF ENTRY
Decision Factors
Ownership Advantages: the tangible or intangible
resources owned by a firm that grant it a competitive
advantage over industry rivals.
Location Advantages: those factors that affect the
desirability of host country production.
Internalization Advantages: factors that affect the
desirability of a firm producing a good or service itself
rather than relying on an existing local firm to handle
production.
Other Factors
Need for Control
Availability of Resources
Overall Global Strategy
ADVANTAGES OF EXPORTING
Proactive
(Pull)
Reactive
(Push)
motivations
Control
Financial
Exposure
Enter
Markets
Gradually
FORMS OF EXPORTING
Indirect exporting
Direct exporting
Intracorporate transfer
Other Intermediaries
Manufactures Agents
Manufactures Export Agents
Export and Import Brokers
Freight Forwarders
INTERNATIONAL LICENSING
Firm (licensor) leases the right to use its
intellectual propertytechnology, work methods,
patents, copyrights, brand names, or trademarks
to another firm (licensee) in return for a fee.
BASIC ISSUES
Setting the
agreements
boundaries
Determining
compensation rates
Establishing rights,
privileges, and
constraints
Specifying the
duration of the
agreement
Disadvantages
INTERNATIONAL FRANCHISING
Agreement allows an independent entrepreneur or
organization (franchisee) to operate a business under
the name of another (franchisor) in return for a fee.
Provides more control and support than the licensing
strategy
BASIC ISSUES
Does a
differential
advantage exist
in the domestic
market?
Are these
success factors
transferable to
foreign locations?
Has franchising
been a
successful
domestic
strategy?
Disadvantages
Limited market
opportunities/profits
Dependence on licensee
Potential conflicts with
licensee
Possibility of creating
future competitor
Management
Contract
Turnkey
Project
Disadvantages
High financial and
managerial investments
Higher exposure to
political risk
Vulnerability to restrictions
on foreign investment
Greater managerial
complexity
TYPE OF FDI
Greenfiel
d
Strategy
Acquisiti
on
Strategy
Joint
Ventures