1. Knowledge Objectives Understand the 4 strategies for foreign expansion
Understand the benefits from foreign expansion

2. Opportunities and Outcomes of International Strategy
Identify International Opportunities
Explore Resources and Capabilities
Use Core Competence
International Strategies
Modes of Entry
Increased market size
Return on investment
Economies of scale and learning
Advantage in location
International business-level strategy
Multidomestic strategy
Global strategy
Transnational strategy
Exporting
Licensing
Strategic alliances
Acquisitions
Establishment of a new subsidiary

3. Opportunities and Outcomes of International Strategy
Use Core Competence
Strategic Competitiveness Outcomes
Management
problems and
risk
Modes of Entry
Better performance
Exporting
Licensing
Strategic alliances
Acquisitions
Establishment of a new subsidiary
Innovation

4. Motivations for International Expansion
Increase Market Share
domestic market may lack the size to support efficient scale manufacturing facilities
Return on Investment
large investment projects may require global markets to justify the capital outlays
weak patent protection in some countries implies that firms should expand overseas rapidly in order to preempt imitators

5. Motivations for International Expansion
Economies of Scale or Learning
expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R & D or distribution
can spread costs over a larger sales’ base
increase profit per unit
Location Advantages
low cost markets may aid in developing competitive advantage
may achieve better access to:
Raw materials
Lower cost labor
Key customers
Energy

6. International Business-Level Strategy: Determinants of National Advantage
Factors of production: the inputs necessary to compete in any industry
labor
land
natural resources
capital
infrastructure
basic factors include natural and labor resources
advanced factors include digital communication systems and educated workforce

10. International Business-Level Strategy: Determinants of National Advantage
Demand conditions: characterized by the nature and size of buyers’ needs in the home market for the industry’s goods or services
size of market segment can lead to scale-efficient facilities
efficiency can lead to domination of the industry in other countries
specialized demand may create opportunities beyond national boundaries

11. International Business-Level Strategy: Determinants of National Advantage
Related and supporting industries: supporting services, facilities, suppliers and so on
support in design
support in distribution
related industries as suppliers and buyers

12. International Business-Level Strategy: Determinants of National Advantage
Firm strategy, structure, and rivalry: the pattern of strategy, structure, and rivalry among firms
common technical training
methodological product and process improvement
cooperative and competitive systems

14. Source: MIT Sloan

15. Source: MIT Sloan

16. Source: MIT Sloan

17. International Corporate-Level Strategy
Global
strategy
Transnational
strategy
High
Need for Global Integration
Multidomestic
strategy
Low
Low
High
Need for Local Responsiveness

19. International Corporate-Level Strategy: Multidomestic Strategy
Strategy and operating decisions are decentralized to strategic business units (SBU) in each country
Products and services are tailored to local markets
Business units in one country are independent of each other
Assumes markets differ by country or regions
Focus on competition in each market
Prominent strategy among European firms due to broad variety of cultures and markets in Europe

20. International Corporate-Level Strategy: Global Strategy
Products are standardized across national markets
Decisions regarding business-level strategies are centralized in the home office
Strategic business units (SBU) are assumed to be interdependent
Emphasizes economies of scale
Often lacks responsiveness to local markets
Requires resource sharing and coordination across borders (which also makes it difficult to manage)

21. International Corporate-Level Strategy: Transnational Strategy
Seeks to achieve both global efficiency and local responsiveness
Difficult to achieve because of simultaneous requirements
strong central control and coordination to achieve efficiency
decentralization to achieve local market responsiveness
Must pursue organizational learning to achieve competitive advantage

22. Strategic Competitiveness Outcomes: Returns
International diversification and returns: firm expands the sales of its goods or services across the borders of global regions and countries into different geographic locations or markets
may increase a firm’s returns
such firms usually achieve the most positive stock returns
firm may achieve economies of scale and experience, location advantages, increased market size and opportunity to stabilize returns

23. Strategic Competitiveness Outcomes: Innovation
International diversification and innovation: firm expands the sales of its goods or services across the borders of global regions and countries into different geographic locations or markets
potentially greater returns on innovations (larger markets)
generate additional resources for investment in innovation
exposed to new products and processes in international markets, generates additional knowledge leading to innovations