Professional Documents
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STRATEGY
ENVIRONMENT PERSPECTIVE
KNOWLEDGE OBJECTIVES
1. Identifying International Opportunities: Incentives to use an
International strategy
2. Explore the four factors that lead to a basis for international
business-level strategies.
3. Define the three international corporate-level strategies:
multidomestic, global, and transnational.
4. Choices of International Entry Mode
5. Strategic Competitive outcomes
6. Risks in an International Environments
WHAT IS INTERNATIONAL
STRATEGY?
An international strategy is a
strategy through which the firm sells
its goods or services outside its
domestic market" (Hill 378). One of
the primary reasons for
implementing an international
strategy (as opposed to a strategy
focused on the domestic market) is
that international markets yield
potential new opportunities
Identify
Internationa
l
Opportunitie
s
Explore
Resources
&
Capabilities
Use Core
Competenc
e
Internatio
nal
Modes of
Entry
Increased
Market
Size
Return on
Investmen
t
Economies
of Scale
and
Learning
Location
Advantage
Strategies
Internation
al
Bus.-Level
Strategy
Multidomes
tic Strategy
Exporting
Global
Strategy
Transnation
al Strategy
Licensing
Strategic
Alliances
Strategic
Competitive
ness
Outcomes
Management
Problems,
Risk,and First
Steps
Higher
Performanc
e Returns
Acquisitio
Innovatio
n
n
Establishme
nt of New
Sub.
Management
Problems,
Risk,
and
First Steps
IDENTIFY INTERNATIONAL
OPPORTUNITIES
Mainly for three reasons firms go international
1. Lower Production cost
2. RETURN ON INVESTMENT
Large markets needs heavy
investment
Ex.: R&D, Plant and capital
Reverse Engineering
Above average return on
Investments
4. LOCATION ADVANTAGES
Lower the basic costs of the goods
and services
Lower labour cost, energy and
natural resources
Access to critical suppliers and to
customers
Help to earn positive returns.
Ex.: GM- Asia
Help in differentiation of products from
competitors
Explore
Resources
&
Capabilities
Internatio
nal
Strategies
Internation
al
Bus.-Level
Strategy
Multidomes
tic Strategy
Global
Strategy
Transnation
al Strategy
Use Core
Competenc
e
Modes of
Entry
Exporting
Licensing
Strategic
Alliances
Acquisitio
n
Establishme
nt of New
Sub.
Strategic
Competitive
ness
Outcomes
Management
Problems, Risk,
and First Steps
Higher
Performanc
e Returns
Innovatio
n
Management
Problems,
Risk,
and
First Steps
International Strategies
International Business Level
Strategies
International Corporate Level
Strategies
Multi-domestic Strategy
Global Strategy
Transnational Strategy
International Differentiation
Countries with advanced or specialized factor
conditions most likely to use this strategy
Three
Corpora
te
Strategi
Multi-Domestic
Strategy
Global Strategy
Transnational
Multi-domestic Strategy
Global Strategy
Transnational Strategy
Seeks to achieve both global efficiency and
local responsiveness
Difficult to achieve because of simultaneous
requirements for strong central control and
coordination to achieve efficiency and local
flexibility and decentralization to achieve
local market responsiveness
Eg.FORD
Advantages
Disadvantages
International
Multidomestic
Global
Transnational
HIGH
NEED FOR
GLOBAL
INTEGRATIO
N
MULTIDOM
-ESTIC
STRATEGY
LOW
LOW
HIGH
NEED FOR LOCAL RESPONSIVENESS
HIGH
NEED FOR
GLOBAL
INTEGRATIO
N
MULTIDOM
-ESTIC
STRATEGY
LOW
LOW
HIGH
NEED FOR LOCAL RESPONSIVENESS
HIGH
NEED FOR
GLOBAL
INTEGRATIO
N
TRANSNAT
I-ONAL
STRATEGY
MULTIDOM
-ESTIC
STRATEGY
LOW
LOW
HIGH
NEED FOR LOCAL RESPONSIVENESS
nternational
nternational Strategy
Strategy Opportunities
Opportunities &
& Outcomes
Outcome
Identify
Internationa
l
Opportunitie
s
Explore
Resources
&
Capabilities
Use Core
Competenc
e
Internatio
nal
Modes of
Entry
Increased
Market
Size
Return on
Investmen
t
Economies
of Scale
and
Learning
Location
Advantage
Strategies
Internation
al
Bus.-Level
Strategy
Multidomes
tic Strategy
Exporting
Global
Strategy
Transnation
al Strategy
Licensing
Strategic
Alliances
Strategic
Competitiveness
Outcomes
Management
Problems,
Risk,and First
Steps
Higher
Performanc
e Returns
Acquisitio
Innovatio
n
n
Establishme
nt of New
Sub.
Management
Problems,
Risk,
and
First Steps
Exporting
Common way to enter new international
markets.
No need to establish operations in other nations.
Establish distribution channels through
contractual relationships.
May have high transportation costs.
May encounter high import tariffs.
May have less control on marketing and
distribution.
Difficult to customize product.
Advantages
Disadvantages
Exporting
Licensing
Franchising
Joint
ventures
Wholly owned
subsidiaries
Protection of technology
Ability to engage in global strategic
coordination
Ability to realize location and
experience-curve economies
Political Risk
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.
Potential for nationalization of firms
assets.
Economic Risk
POLITICAL RISK
Chinas
difficulty
in enforcing
status
because
of inter-country
intellectual
property rights on
disagreements
CDs software,etc.,
ECONOMIC RISK