International Strategy Flashcards
Advantages of going International
- Access to new customers
- Lowering costs
3.Diversification of business risk
Disadvantages of going international
Political, economical and cultural risk
Drivers of Success & Failure (Porter’s Diamond
Model)
4 types of strategy being linked with each other ( Firm strategy, structure and rivalry -> demand conditions, related-> supported industries -> factor (input) conditions
Types of international strategy (Bartlett & Goshal)
Global, Trans-national, export, multi-domestic strategy
Export/International strategy
The pressure for local responsiveness: LOW
Pressure for global integration: LOW
Leverages home country capabilities, innovations
and products in foreign markets, i.e. little product
adaptation.
* Suitable for companies with strong brands.
* Key risk: home country-centred view in contrast to
skilled local rivals.
EXAMPLES: AMAZON, GOOGLE
Multi-domestic strategy
Pressure for local responsiveness: HIGH
Pressure for global integration: LOW
Maximises local responsiveness - different product offeringsfor different countries.
* A low level of international coordination.
* Organisation is like a collection of relatively independent units.
* Commonly found in marketing-orientated companies (e.g.
food companies).
* Key risk: manufacturing inefficiencies & brand dilution.
EXAMPLES: NESTLE AND HEINZ
Global strategy
Pressure for local responsiveness: LOW
Pressure for global integration: HIGH
Standardised products are deemed to suit allmarkets and efficient production is emphasisedthrough economies of scale.
* Geographically dispersed activities are centrallycontrolled from headquarters.
* Key risk: highly dependent on the HQ & little sharing oflocal expertise.
EXAMPLES: INTEL AND IKEA
Transnational strategy
Pressure for local responsiveness: HIGH
Pressure for global integration: HIGH
Aim is to maximise local responsiveness but also to gainbenefits from global integration
* Aims to maximise learning and knowledge exchangebetween dispersed units
* Efficient operations but products/services adapted to localconditions
* Key risk: hard to achieve due to complexity
EXAMPLES: COCA-COLA, UNILEVER AND STARBUCKS
Phases of evolution of MNC (Multinational Corporation)
- EXPORTING Selling abroad due to foreign inquiry (e.g. can be the via internet) or
export from abroad (e.g. foreign distributors). You just blindly export your products
abroad. - SALES OFFICE An office in the foreign country, mainly dealing with marketing &
sales of the products or services. No production or other operations. - OPERTAIONS CONTRACTING This stages includes manufacturing products or
services directly in foreign countries. You start manufacturing there. - WHOLLY OWNED SUBSIDIARY: Building or acquiring a complete local subsidiary.
- OPERATIONS THROUGH ALLIANCES Building the business through international
Merger & Acquisition, alliances, consortia, work together and profit and benefit by
sharing knowledge and resources.
Merger
A Merger is the combination of 2 previously separate organisations in order to form a new company.
Acquisitions
An Acquisition is achieved by purchasing a majority of shares in a target company.
Alliances
A Strategic Alliance is where two or more organizations share resources and activities to pursue a common strategy.
Strategic choices to compete in international
markets
Exporting - simply exporting products;
subsidiary - wholly owned such as Facebook and instagram; licensing - License to a 3rd party to produce/sell in
a foreign market such as monopoly;
joint venture - 2 or more companies create a new
company with shared ownership franchising such as CARADIGM;
franchasing -Annual fee to use a successful
formula such as McDonalds
