International Strategic Management

1
Chapter 11

• International Strategic Management

2
Questions Asked in International Strategic
Planning

• What products/services will be sold?
• Where and how will they be produced?
• Where and how will they be sold?
• Where and how will inputs/resources be acquired?
• How will products/services be distributed?
• How can the company outperform competitors?

3
What Kinds of Competitive Advantages Can Firms
Gain by Doing Business Internationally?

• Global Efficiencies
• Cost reductions from global operations
• Locational Efficiencies where production costs
  or distrib. costs are low
• Economies of scale
• Plant specific
• Firm specific
• Economies of Scope

4
What Kinds of Competitive Advantages Can Firms
Gain by Doing Business Internationally?

• Multinational Flexibility
• Not limited in responding to political, economic,
  legal, cultural changes in a country by making
  changes in that country
• Worldwide Learning
• Benefit from learning about techniques that have
  been successful in various parts of the world
• Attempts to achieve these competitive advantages
  can conflict with eachother

5
Four General International Strategic Philosophies

• Home Replication Strategy
• Use firm specific advantage developed
  domestically to expand internationally
• No need to tailor to spec. markets
• No need to create a prod/service that serves
  entire global marketplace
• Global Strategy
• The world is a single marketplace
  prods/services designed for worldwide market
• Signif opportunities for scale econ in
  prod/mkting
• No need to tailor to spec. markets

6
Four General International Strategic Philosophies

• Multidomestic Strategy
• Firm views itself as a collection of independent
  subsidiaries, each focusing on a specific
  domestic market
• Scale econ in prod/dist/mkting are low
• Clear diffs among national markets
• High coordination costs
• Transnational strategy
• Combination of global strategy and multidomestic
  strategy
• Scale econ are high in some aspect of bus. are
  high
• Need for local responsiveness
• Worldwide learning is the biggest advantage

7
Next Steps 4 Basic Components of Developing a
Strategy

• 1. Where are we going to gain a competitive
  advantage? distinctive competence
• 2. What markets will our operations encompass?
  scope of operations
• 3. Where will we distribute resources to serve
  these markets? resource deployment
• 4. How can we design a strategy so each
  component of our business helps other components?
  -- synergy

8
Specific Steps in Formulating an International
Strategy

• 1. Develop a mission statement
• Clarify, purpose, values, and direction
• 2. Perform a SWOT analysis
• Examine internal and external environments
• Internal
• Strengths
• What skills, resources, and/or other advantages
  does our firm have relative to others
• Weaknesses
• What shortcomings does our firm have that may
  limit its competitiveness

9
Specific Steps in Formulating an International
Strategy

• 2. SWOT (continued)
• External
• Opportunities
• Threats
• 3. Develop Strategic Goals
• Use SWOT and Mission Statement to develop
  measurable and realistic objectives for firm
• 4. Tactics
• What methods will the firm use to reach these
  goals?
• 5. Control Framework
• Continually monitor progress in achieving goals,
  change directions to meet these goals, and change
  goals themselves

10
Levels of International Strategy

• Corporate Strategy entire firm
• Single Business Strategy
• Advantages
• Disadvantages
• Related Diversification Strategy
• Advantages
• Disadvantages
• Unrelated Diversification Strategy
• Advantages
• Disadvantages

11
Levels of International Strategy

• Business Strategy specific operating units or
  strategic business units
• Differentiation
• Cost leadership
• Focus
• Functional Strategy specific business functions
• Marketing, Human Resources, Research and
  Development, etc.