Lecture 12 - (Content of Strategy) Corporate Level Strategy - Internationalisation Flashcards
Define international strategy
A range of options for operating outside an organisation’s county of origin
Define global strategy
High coordination of extensive activities dispersed geographically in many countries around the world
In international strategy, an organisation’s relate primarily to
The home market
In international strategy, an organisation’s competitive advantage is developed mainly
In the home market
In global strategy, competitive advantage
…is developed separately for each country
What is the global-local dilemma?
The extent to which products/services may be standardised across national boundaries or need to be adapted to meet the requirements of specific national markets
Name 3 market drivers for internationalisation
Similar customer needs
Global customers
Transferable marketing
Name 3 government drivers for internationalisation
Trade policies
Technical standards
Host government policies
Name 3 cost drivers for internationalisation
Scale economies
Country-specific differences
Favourable logistics
Name 2 competitive drivers for internationalisation
Interdependence between countries
Competitors’ global strategies
Name 2 geographic advantages for international strategy
Exploitation of particular locational advantages in the company’s home country
Sourcing advantages overseas via international value networks
What does Porter’s Diamond explain?
Why some locations tend to produce firms with sustained competitive advantages in some industries more than others
What are the 4 drivers in Porter’s Diamond?
Local factor conditions
Local demand conditions
Local related and supporting industries
Local firm strategy structure and rivalry
What is global sourcing?
Purchasing services and components from the most appropriate suppliers around the world regardless of their location
What is the staged international expansion mode’?
A sequential process
Companies gradually increase their commitment to newly entered markets, as they build market knowledge and capabilities
4 advantages of exporting
Easier mode of entry
No need for operational facilities in host country
Economies of scale in the home country
Internet can facilitate exporting marketing opportunities
5 disadvantages of exporting
Lose any location advantages in the host country
Dependence on export intermediaries
Exposure to trade barriers
Transportation costs
Unfamiliarity with the market
4 advantages of FDI
Full control
Integration and coordination possible
Rapid market entry through acquisitions
Greenfield investments are possible and may be subsidized
3 disadvantages of FDI
Substantial investment and commitment
Acquisitions may create integration/ coordination issues
Greenfield investments are time consuming and unpredictable
3 advantages of joint ventures/alliances
Shared investment risk
Complementary resources
Maybe required for market entry
4 disadvantages of joint ventures/alliances
Difficult to find good partner
Relationship management
Loss of competitive advantage
Difficult to integrate and coordinate
2 phenomena that challenge the staged international expansion model
‘Born-global’ firms
- new girls that internationalise rapidly (usually in new technologies)
Emerging country multinationals
- building unique capabilities in the home market but exploiting them in international markets very quickly
Which four elements of the PESTEL framework are important for comparing countries for entry?
Political
Economic (GDP, disposable income)
Social (lifestyle, culture)
Legal (wide-ranging regimes)
What is the CAGE framework?
Cultural distance
Administrative/political distance
Geographic distance
Economic/wealth distance
