INTL REGIONAL STRATEGIES

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INTL REGIONAL STRATEGIES

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• Why do companies develope international regional
  strategies?
• Strategic options for national players
• What is international regional strategy?
• International regional co-ordination of key
  business functions

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Worldwide
International regional
Internationalisation
Retrenchment
International market entry and development
Restricted national market scope
Phase 1
Phase 2
Phase 3
Phase 4
Restricted national market scope
International market entry and development
International regional
Worldwide competitor
Figure 7.1. The phase model of international
business development
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What is International Regional Strategy

• Focus on a given geographical area
• Market entry and selection not simply on a
  country by country basis
• Network of interlinked international markets
• Economic integrations
• NAFTA dominated by USA
• EU collection of national states

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Figure 7.2 Forms of economic integration
Free Trade Area
Customs Union
Common Market
Economic Union
Political Union
FEATURE
Removal X X X X X of
internal tariffs Common X X X
X external tariffs Unrestricted X
X X movement of capital and labour Convergence
X X of economic policies Political
X integration
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Examine three conditions

• (1) Extent of operations, applying and leveraging
  knowledge, resources
• regional exporter
• (2) Production facilities, value-adding
  activities located outside?
• (1)(2) fragmented intl reg. strategy
• (3) Business functions organized on the needs of
  the region?
• Co-ordinated strategy

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Why to Develope Intl Regional Strategy?

• EXTERNAL TRIGGERS
• metatrends,
• competitive forces
• Standardization opportunities
• Emergence of cross-border customers, distributors
• Competitive interdependencies
• Reducing product life cycles

• INTERNAL TRIGGERS
• Past operating
• Vision/mindset
• Core competence
• Organizational learning
• Administrative heritage

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External triggers
Move to next phase of international business
development
Previous phase of international business
development
International regional strategy
Retreat to previous phase of international
business development
Internal triggers
Figure 7.3 The development of an international
regional strategy
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Strategic Options for National Players

• Not too easy to respond
• Depends on individual context
• Bipolarization possible choices
• Defendable national niche
• Developing to be international
• Not all national players able to cross borders!!!
• Niche occupied
• Unable to find alternative markets
• Fewer company serves regional markets more
  absorbed or replaced!!

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Product range
Narrow
Broad
Restricted national market scope

• National broad-based strategy
• Company A

National niche strategy
Geographical scope

• Company C

• Company B

Interna-tional region
Regional niche strategy
Regional broad-based strategy
Key
Zone of transition
Figure 7.4 Product-market grid
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Options for Company A

• STRATEGIC OPTIONS
• Do nothing
• Develope broad-based regional strategy
• Retreat to niche
• Withdraw

• STRATEGIC
• IMPERATIVES
• Cease trading
• Extend scope, configure functions to regional
  market
• Refocus business to niche
• Sell business, exit

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Options for Company B

• STRATEGIC OPTIONS
• Do nothing
• Retreat to national niche
• Withdraw

• STRATEGIC
• IMPERATIVES
• Cease trading
• Find niche and refocus business
• Sell business, exit

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Options for Company C

• STRATEGIC OPTIONS
• Do nothing

• STRATEGIC
• IMPERATIVES
• May be able to continue to develope its intl
  presence
• Could be vulnerable from broad-based suppliers or
  niche players

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Product range
Narrow
Broad
Restricted national market scope

• National broad-based strategy
• Company A

National niche strategy

• Company C

• Company B

Geographical scope
Interna-tional region
Regional niche strategy
Regional broad-based strategy
Key
Zone of transition
Figure 7.5 Product-market options available for
Companies A and B in the face of the need to
operate with a regional strategy in their
existing markets
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Co-ordination of Key Business Functions

• Considerable challenge
• To completing market coverage
• Developing single strategy to all markets
• To manage the transition
• TASKS
• Centralized decentralized to
• into a hub national operations
• (Co-ordination) (no co-ordination)
• Balance changed between tasks!

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All functions undertaken by the region. No
national structures
High
Complete centralisation
Regional managers able to exert authority over
national subsidiaries
Regional centre directs
Regional centre co-ordinates
Regional staff operates to influence and
co-ordinate national managers
Level of international co-operation
Formal co-ordinating mechanisms
Formal committee structures and systems
Meeting to share information and ideas
Informal co-operation
Complete decentralisation
No co-ordination between national subsidiaries
Low
Figure 7.6 Centralisation versus decentralisation
of key business functions
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Concern accompanying co-ordinated regional
strategy

• Contact with national market will be diluted
• Take steps to minimise the likelyhood!!

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Co-ordinate functions

• Marketing
• Human resources
• Operations
• Logistics
• Finance

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(i) Logistics functions organised on a country by
country basis
Country A
Country B
Country C
Country D
Figure 7.7 Changing patterns of distribution for
international regions
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(ii)Develop. of a pan-regional logistics function
for a reg. exporter
Country A
Country B
Regional exporter
Country C
Country D
Figure 7.7 Changing patterns of distribution for
international regions
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(iii) Development of a pan-regional logistics
function for a co-ordinated international
regional strategy
Country A
Country B
Country C
Country D
Figure 7.7 Changing patterns of distribution for
international regions
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Table C7.1 Network consolidation, 1989-94