INTERNATIONAL MANAGEMENT The internationalization strategy of the firms

The stages of an internationalization strategic analysis: - internationalization factors - the investigation of the international environment - the diagnosis of the firm 2. The analysis of the strategic alternatives for internationalization : - the forms of international involvement - the ways of adapting to the international market - the segmentation of the international markets 3. The internationalization strategy of the firm: - instruments for taking the decision - the evolution of the internationalization configurations

DETERMINING AN INTERNATIONALIZATION STRATEGY Step 1: The analysis of the external factors and company’s potential: THE STATE AND EVOLUTION OF THE INTERNATIONAL ENVIRONMENT (Opportunities and Threats) THE DIAGNOSIS OF THE COMPANY (Strengths and weaknesses) Looking for relevant information The analysis of the needs and the real demand -The analysis of the competitors Determining the entry barriers to the market -Evaluating the country’s risk -The firm’s aspirations The available resources (surplus or usable capacities) - Specific advantages regarding: - products - markets - technologies - science (know-how) The typology of the foreign markets; Degrees of attractiveness The competence profile of the company

Step 2: Determining the international objectives of the company The turnover that should be achieved: the market sectors (divisions) internationally aimed - The targeted development rate - The profitability (internal rate of return) of the invested capital. Step 3: The analysis of the strategic alternatives - Direct or indirect export - FDI (Foreign Direct Investment) - Strategic alliances and forms of cooperation. Steps 4-6: The implementation of the internationalization program Budget Execution Control

THE STAGES (STEPS) OF AN INTERNATIONALIZATION STRATEGIC ANALYSIS

B. Company’s strategic reasons: 1.1. Factors of internationalization: A. Environment factors: - facility of entry to the market - favorable evolution of the market (demand) - moderate political risk - good circumstances of working - the quality of reception - the existence of a free – trade area - the quality of the local resources - the monetary parities. B. Company’s strategic reasons: - surplus productive capacity, low local demand or saturated internal market - growing credibility of the firm - possibility of external growth - facilitating economies of scale - the prolongation of the product’s life.

1. 2 The international environment investigation A 1.2 The international environment investigation A. The essential elements that should be detected: - The needs and the real demand - The competition and the sectors with state monopoly - The entry barriers on the market - The political instability and the risk of the country - The existent technological level. B. The difficulties of catching relevant information: -The variety and the high number of the international environment components - The dynamics of these components - The quality of the information: is high dependent on the personal presence in the aimed country.

1.3. The diagnosis of the firm A. Methods of evaluating the internal resources of the company: - the diagnosis could be accomplished by an external team or by an internal team from the company - the diagnosis could be a permanent or a circumstantial one - the diagnosis could be only a quantitative one or also a qualitative one - the diagnosis could emphasize the present situation or the prospective aspects - the result of the diagnosis is external subjected to the effect of the prism. B. The components of evaluating the company’s potential: - flows - structures - capacities.

2. THE ANALYSIS OF THE INTERNATIONALIZATION STRATEGIC ALTERNATIVES (OPTIONS)

2. 1. The forms of international involvement 2.1. The forms of international involvement - The strategy of direct or indirect export - FDI (Foreign Direct Investment) - The cooperation 2.2. The ways of adapting to the international markets - Standardization (Normalization) - Selective Adaptation - Differentiation 2.3. The division of the international markets The division criterions used in international trade: - social and economical variables - cultural factors - geographical and geopolitical variables - behavioral variables.

3. THE DECISION OF THE INTERNATIONALIZATION OF THE COMPANY

3.1. Instruments for taking the decision A. Evaluation instruments

BCG Matrix (Boston Consulting Group) uses two types of variables: B. The matrix method BCG Matrix (Boston Consulting Group) uses two types of variables: - the market position - the growth rate. McKinsey’s Matrix - the competitiveness - the long term attractiveness. A.D.Little’s Model ("Business Profile Matrix"): - the position between the competitors - the level of the industrial maturity. BALL - LORANGE’s Model: - the level of predicting the environmental factors - the possibility of reacting to random events.

3.2. The evolution of the internationalization configurations: Step I - Direct or indirect export Step II - Workshops or joint-ventures Step III - Local premises and research laboratories Step IV - Re-concentration and local extension.