1. 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

2. Opportunities and Outcomes of International Strategy: Continued
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

3. International Strategy Life Cycle
Product Demand
Develops and Firm
Exports Products
Foreign
Competition
Begins Production
Selling Products or Services Outside a Firm’s Domestic Market
Firm Introduces
Innovation in
Domestic Market
Firm Begins
Production Abroad
Production Becomes
Standardized and is
Relocated to Low
Cost Countries

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
Firm strategy,
structure, and
rivalry
Demand
conditions
Related and
supporting
industries

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

8. 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

9. 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)

10. 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

11. Global Market Entry: Choice of Entry Mode
Type of Entry
Characteristics
Exporting
High cost, low control
Licensing
Low cost, low risk, little control, low returns
Strategic alliances
Shared costs, shared resources, shared risks, problems of integration
Acquisition
Quick access to new market, high cost, complex negotiations, problems of merging with domestic operations
New wholly owned subsidiary
Complex, often costly, time consuming, high risk, maximum control, potential above-average returns

12. Risks in an International Environment
Political Risks
Political Risks
Economic Risks
Political risks include
instability in national governments
war, both civil and international
potential nationalization of a firm’s resources

13. Risks in an International Environment
Political Risks
Economic Risks
Economic risks are interdependent with political risks and include
differences and fluctuations in the value of different currencies
differences in prevailing wage rates
difficulties in enforcing property rights
unemployment