Strategy: Analysis and Practice Slide 1 ©The McGraw-Hill Companies, Global strategies and international advantage

Strategy: Analysis and Practice Slide 2 ©The McGraw-Hill Companies, 2005 Outline ● Terminology of International Business ● The Context of International Strategy ● National Competitive Advantage ● The Internationalization Process ● From International to Global Strategies ● The Drivers of Globalization

Strategy: Analysis and Practice Slide 3 ©The McGraw-Hill Companies, 2005 Outline (continued) ● Global vs. Local ● Strategic Choices ● The Best of Both Worlds ● Strategy and Organization ● Managing International Organisation

Strategy: Analysis and Practice Slide 4 ©The McGraw-Hill Companies, 2005 The Terminology of International Business ● International Business: Transactions across national borders. ● International Trade: exporting and importing ● Foreign Direct Investment: capital invested in other nations by firms through their control of foreign subsidiaries and affiliates. ● Multinational Enterprises: Companies with subsidiaries located in more than one country, normally restricted to the largest international firms.

Strategy: Analysis and Practice Slide 5 ©The McGraw-Hill Companies, 2005 World Trade 2000

Strategy: Analysis and Practice Slide 6 ©The McGraw-Hill Companies, 2005 USA: Inward and Outward FDI 1999

Strategy: Analysis and Practice Slide 7 ©The McGraw-Hill Companies, 2005 Determinants of National Competitive Advantage

Strategy: Analysis and Practice Slide 8 ©The McGraw-Hill Companies, 2005 The Internationalization Process

Strategy: Analysis and Practice Slide 9 ©The McGraw-Hill Companies, 2005 Determinants of Globalization

Strategy: Analysis and Practice Slide 10 ©The McGraw-Hill Companies, 2005 From International to Global Strategy Multidomestic Strategy Competition in one country is independent of competition elsewhere. Markets in each country have different consumer behaviour. Product diversity. Portfolio of independent subsidiaries Global Strategy Competition in one country influenced by competition elsewhere. Markets and consumer behaviour broadly similar in all countries. Product standardisation International coordination and integration.

Strategy: Analysis and Practice Slide 11 ©The McGraw-Hill Companies, 2005 Drivers of Globalization

Strategy: Analysis and Practice Slide 12 ©The McGraw-Hill Companies, 2005 Strategic Choices

Strategy: Analysis and Practice Slide 13 ©The McGraw-Hill Companies, 2005 Transnational Strategies “Exploit experience-based cost economies and location economies, transfer distinctive competences within the company, and at the same time pay attention to pressures for local responsiveness” (Bartlett and Ghoshal, 1989)

Strategy: Analysis and Practice Slide 14 ©The McGraw-Hill Companies, 2005 Alternative Organizational Solutions

Strategy: Analysis and Practice Slide 15 ©The McGraw-Hill Companies, 2005 The Flagship Firm

Strategy: Analysis and Practice Slide 16 ©The McGraw-Hill Companies, 2005 The Matrix Structure Advantages Combines product specialisation with geographical market knowledge. Overcomes silos and duplication by direct contact. Effective when there is clarity, continuity and consistency through the organization. Disadvantages Extends decision-making time. Dual reporting can confuse responsibilities and priorities. May engender conflict. May make performance assessment ambiguous.

Strategy: Analysis and Practice Slide 17 ©The McGraw-Hill Companies, 2005 Evolution of International Structure

Strategy: Analysis and Practice Slide 18 ©The McGraw-Hill Companies, 2005 Concluding Remarks ● International strategy is a significant extension of the logic of competitive advantage. ● International trade and national competitive advantage are key parts of the business environment – International trade underpinning internationalization. – Globalization promoting international standardization.

Strategy: Analysis and Practice Slide 19 ©The McGraw-Hill Companies, 2005 Concluding Remarks (continued) ● International business strategy involves the management of standardization and differentiation. ● Attempts to gain the ‘best of both worlds’ have involved – Transnational strategy – The matrix structure – The flagship firm