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Management Strategy > International Strategy > Flashcards

International Strategy Flashcards

1
Q

What is International Strategy?

A

About the range of options for operating outside organisation’s country of origin.
Exploit new market opportunities for growth & development.

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2
Q

What are Drivers of Internationalisation?

A

Market Drivers -
* Similar customer needs
* Global customers
* Transferable market

Cost Drivers -
* Scale economies (R&D)
* Country-specific differences (clothing… manufacture in Bangladesh, design in Paris)
* Favourable logistics (low cost of transporting microchips)

Government Drivers -
* Trade policies (reduce trade barriers in the EU – WTO policies)
* Liberalisation and adoption of free markets
* Technical standardisation

Competitive Drivers -
* Interdependence (global coordination between subsidiaries in different countries)
* Global competitors (rivals may use profits to cross subsidise aggressive moves)

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3
Q

What are Firm-Specific & Geographic Advantages?

A

Firms new to geographic market normally start with a “liability of foreignness” (e.g. local firms have reputation with customers & suppliers).
Firms must bring competitive and capability advantages to compete.

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4
Q

What are the Detriments of National Competitive Advantage?

A
  • Factor Conditions
  • Demand Conditions
  • Related & Supporting Industries
  • Firm Strategy, Industry Structure & Rivalry
  • International Value System
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5
Q

What are the Detriments, Factor Conditions and Demand Conditions

A

Factor Conditions -
Country creates its own important FoP that are highly specialised to industry’s needs (US movie industry).

Demand Conditions -
Strong, trend setting local market helps firms anticipate global trends. (Swiss = watch, Germans = cars).

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6
Q

What is the Detriment, Related & Supporting Industries?

A

Local “clusters” of related industries = national advantage.
Local supporting industries are internationally competitive, firms enjoy cost effective inputs (Silicon Valley).

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7
Q

What is the Detriment, Firm Strategy, Industry Structure & Rivalry?

A

Source of advantage in shaping how firms operate in activities people admire/depend on.

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8
Q

What is the Detriment, International Value System?

A

Firms expanding overseas seek advantage via international configuration of their value systems.
Raises global sourcing and locational choices to secure advantage, like:

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9
Q

Advantages for Firms from International Value Systems:

A
  • Cost advantages – labour costs, transportation, tax, investment incentives, etc…
  • Unique local capabilities – clusters of excellence
  • National market characteristics – enable differentiated product offerings for different markets/segments
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10
Q

What are the Different Types of International Strategies?

A
  • Export Strategy
  • Multi-Domestic Strategy
  • Global Strategy
  • Transnational Strategy
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11
Q

What is Export Strategy?

A

Leverages home country capabilities and products in foreign markets.

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12
Q

When Should Export Strategy be Used?

A

When there’s pressure from global integration & local responsiveness is low.
Suitable for companies with distinctive capabilities and strong brands (Google).

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13
Q

What are the Risks with Export Strategy?

A

Limits of home country-centred view in contrast to skilled local rivals who have better understanding of local wants and needs.

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14
Q

What is a Multi-Domestic Strategy?

A

Maximise local responsiveness with different product for each country based on local market conditions.

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15
Q

When Should Multi-Domestic Strategy be Used?

A

Organisation requires low level of international coordination.
Relatively independent units, in market-orientated companies (e.g. food).

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16
Q

What are the Risks with Multi-Domestic Strategy?

A

Manufacturing inefficiency and brand dilution.

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17
Q

What is Global Strategy?

A

Maximise global integration with standardised products deemed to suit all markets.

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18
Q

When is Global Strategy Used?

A

Company is large and well-integrated.
EoS.
Operations are centrally controlled from headquarters.

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19
Q

What are the Risks with Global Strategy?

A

Standardised product do not satisfy the needs of locals.
Reduced flexibility.

20
Q

What is Transnational Strategy?

A

Seeks to maximise local responsiveness and global coordination.
Exploit learning & knowledge exchange between dispersed units.

21
Q

When is Transnational Strategy Used?

A

Efficient, complex operations.
Company must be well integrated.

22
Q

What are the Risks with Transnational Strategies?

A

Very complex, hard to achieve, expensive.

23
Q

What are Opposing Measures to Developing International Strategies?

A

Strategies overlap, so difficult to produce a product that is standardised across national boundaries, but also needs to see the requirement of specific, different, national markets.

24
Q

What is the Role of Regional Strategy?

A

Enables some economic efficiency, treating regions as homogeneous markets and concentrating value chain activities within region.
Enables some local adaptation to products at the level of the broader region, not the country.

25
Q

How to Choose Which Markets to Enter?

A

For macro-environment issues, use PESTEL.
For industry competition issues, use Porter’s 5 Forces.

26
Q

What 4 Elements of the PESTEL Framework are Particularly Relevant?

A
  • Political environments vary widely. Countries stability and priorities.
  • Economic, compare GDP and disposable income indicating potential size of the market.
  • Social factors like population characteristics (age demographic), lifestyle, tastes, and cultural differences.
  • Variation in legal regimes that support regulation, contract enforcement, etc…
27
Q

What is the CAGE Distance Framework?

A

Helps firm gauge distance & difference between target and home country on four dimensions.
Greater distance or difference = more risk and less opportunity for success.

28
Q

What are the 4 CAGE Distance Framework Dimensions?

A
  • Cultural -
    Differences in social norms, language, ethnicity, religion, etc…
  • Administrative -
    Compatibility of admin, politics, law (e.g. emerging economies lack the regulatory/legal framework of home country)
  • Geographic -
    Size, access to sea, cost of transport, quality of comms
  • Economic -
    Wealth and income differences
29
Q

How Competitive Characteristics are Assessed when Joining a Market?

A
  • Market attractiveness to new entrant (based on PESTEL & CAGE, 5 Forces analysis).
  • Defenders’ reactiveness, based on attractiveness of market and importance to it.
  • Defenders’ clout – relative power of defenders to fight back (market share and established relationships with gov/distributors).
30
Q

How to Would a Company Enter an International Market?

A

Resource commitment and extent of operational involvement differs.
Increased commitment to new markets, building market knowledge & capabilties.

31
Q

Strategies for Entering New Markets:

A
  • Gradualism of International Expansion
  • “Born global firms:” -
    New, small firms internationalise rapidly from inception (tech industries).
  • Emerging-country multinationals -
    Building unique capabilities in home market that are rapidly exploited in international markets.
32
Q

What are the Advantages of Exporting?

A
  • No need for operational facilities in host country
  • EoS in home country
  • Internet can facilitate export marketing opportunities
33
Q

What are the Disadvantages of Exporting?

A
  • Lose any location advantages in the host country
  • Dependence on export intermediaries
  • Exposure to trade barriers
  • Transportation costs
34
Q

What are the Advantages of Licensing & Franchising?

A
  • Contractual source of income
  • Limited economic and financial exposure
35
Q

What are the Disadvantages of Licensing & Franchising?

A
  • Difficult to identify good partner
  • Loss of competitive advantage
  • Limited benefits from host nation
36
Q

What is Licensing & Franchising?

A

Local partners based on contractual agreement. Local firms receive right to exploit tech/business concepts commercially for free during specified time period.

37
Q

What are Joint Ventures?

A

Involves the establishment of jointly owned businesses with local companies.
Direct investment.
Shares assets, equity, and risk.

38
Q

What are the Advantages of Joint Ventures?

A
  • Shared investment risk
  • Complementary resources
  • Maybe a requirement for market entry
39
Q

What are the Disadvantages of Joint Ventures?

A
  • Difficult to find good partners
  • Relationship management issues
  • Loss of competitive advantage
  • Difficult to integrate and coordinate
40
Q

What are Wholly Owned Subsidiaries?

A

100% control by either direct investment in greenfield operations or acquiring a local firm.
Method of entry entails the highest level of resource commitment.

41
Q

Methods of Entry into a Market:

A
  • Exporting
  • Licensing or Franchising
  • Joint Ventures
  • Wholly Owned Subsidiaries
42
Q

What are the Advantages of Wholly Owned Subsidiaries?

A
  • Full control
  • Integration and coordination possible
  • Rapid market entry through acquisition
  • Greenfield investments are possible and may be subsidised
43
Q

What are the Advantages of Wholly Owned Subsidiaries?

A
  • Full control
  • Integration and coordination possible
  • Rapid market entry through acquisition
  • Greenfield investments are possible and may be subsidised
44
Q

What are the Disdvantages of Wholly Owned Subsidiaries?

A
  • Substantial investment and commitment
  • Acquisitions may create integration/coordination issues
  • Greenfield investments are time consuming and unpredictable
45
Q

What is the Relationship Between Internationalism and Financial Performance?

A

Inverted-U-Curve, warns against over internationalisation due to costs & challenges of complexity.

46
Q

What is the Global-Local Dilemma.

A

Best way forward is to “think globally, act locally”.
Globalise where you can, but remain sensitive to local conditions.

Management Strategy (8 decks)

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