1. International Strategy BUSI 7130/7136 Chris Shook, Ph.D.

2. AGENDA u Lecture u BRL Hardy

3. Drivers of Globalization Increased similarity of lifestylesIncreased similarity of lifestyles Global communicationsGlobal communications Fast communicationFast communication Pressures to reduce costsPressures to reduce costs

4. Motivators u Increase Market Size u Achieve Acceptable ROI u Achieve Economies of Scale u Achieve Location Advantage

5. Choice of Entry Mode u Exporting u Licensing u Franchising u Joint Ventures u Acquisition of Wholly-Owned Subsidiary u Development of Wholly-Owned Subsidiary

6. Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Porter’s Determinants of National Advantage Home country of origin is crucial to International success

7. Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Demand Conditions Size and Nature of Home Country’s Demand Porter’s Determinants of National Advantage Home country of origin is crucial to International success

8. Demand Conditions Size and Nature of Home Country’s Demand Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Related & Supporting Industries - Japanese cameras & copiers - Italian shoes & leather Home country of origin is crucial to International success Porter’s Determinants of National Advantage

9. Demand Conditions Size and Nature of Home Country’s Demand Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Firm Strategy, Structure & Rivalry Intense rivalry fosters industry competition Porter’s Determinants of National Advantage Related & Supporting Industries - Japanese cameras & copiers - Italian shoes & leather - Japanese cameras & copiers - Italian shoes & leather Home country of origin is crucial to International success

10. Advice from Porter u Create pressures for innovation u Seek out competitors as motivators u Establish early warning systems u Improve national diamond u Welcome rivalry u Globalize to tap selectively into sources of other nations u Locate home base to support competitive advantage

11. International Corporate Strategy Corporate-Level International Strategies Three Corporate Strategies Global Strategy Transnational Strategy Multi-Domestic Strategy

12. International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

13. International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

14. International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

15. International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

16. International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

17. International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

18. International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh

19. Do you REALLY have a global strategy ? u Global strategy –cross subsidization of national market share battles in pursuit of global brand and distribution positions

20. Do you REALLY have a global strategy ? u Why? –Loose bricks F Necessity of understanding competitor’s strategic intent –Labor and scale advantages are not sustainable –Domestic competitors are NEVER safe

21. Do you REALLY have a global strategy ? u Implications –Broader corporate concept of a product line –Don’t allocate resources by SBUs –Don’t allocate resources by country