• International business strategies are a normal part of doing
business no matter where your business is located in the
• Global businesses will compete with you, do business with
you, and even put you out of business if you aren't careful
• Businesses, large and small, must formulate international
business strategies to function in the global economy.
• Global business activity is just as normal today as doing
business in your local community was 50 years ago
Build a broader customer base.
Prevent adverse effects of
seasonal business swings.
Utilize excess manufacturing
capacity sitting idle at home.
Lower production costs by
using lower priced labour
A global strategy requires significant
coordination between the activities of
the centre and those of subsidiaries.
An international strategy does not require
strong coordination from the centre
The global strategy assumes that the
centre should standardize its operations
and products in all the different countries.
An international strategy assumes that the
subsidiary should respond to local business
The global strategy plans and executes
competitive battles on a global scale
The international strategy gives
subsidiaries the independence to plan and
execute competitive moves independently
A global strategy takes ‘an integrated
An international strategy treats
competition on a ‘stand-alone basis’
GLOBAL STRATEGY INTERNATIONAL
Companies go international for a
variety of reasons but the typical
goal is company growth or
Overseas operations are often
attractive to executives seeking to
reduce their budgets
The majority of an industry's
business may shift overseas,
making global expansion all the
Economic ‘globalization’ is a historical
Refers to the increasing integration of
economies around the world.
As globalization accelerates there will be
increased opportunities for collaboration
between nations, multinational corporations
How does globalization relate to strategy,
especially in large companies?
Two prime characteristics:
It involves growing
It is multi-faceted with many
different business aspects.
There can be no doubt that both
world trade and foreign direct
investment have been growing over
the last twenty years:
World trade exports amounted to
US$ 4,261 billion in 1990, US$
7,036 billion in year 2000 and US$
12,461 billion in 2005
Foreign direct investment outflows
were US$ 230 billion in 1992 and
US$ 779 billion in 2005
• The multifaceted nature of
• This case study analyses how IKEA adapted its strategies to
expand and become profitable in China. It also assesses some
lessons the company learnt in China that might be useful in
• What did IKEA do? It innovated to stay in business. It learnt
how to design its own furniture, bought raw material from
suppliers in Poland, and created its own exhibitions. Today,
IKEA is the world's largest furniture retail chain and has more
than 300 stores globally.
• IKEA identified the strategic challenges and made attempts to
overcome them. One of the main problems for IKEA was that its
prices, considered low in Europe and North America, were higher
than the average in China.
• IKEA built a number of factories in China which resolved the problem
of high import taxes in China. The company also started performing
local quality inspections closer to manufacturing to save on repair
• Since 1999, IKEA has been working on becoming
more eco-friendly. It has been charging for plastic
bags, asking suppliers for green products, and
increasing the use of renewable energy in its stores.
All this proved difficult to implement in China.
Price-sensitive Chinese consumers seem to be
annoyed when asked to pay extra for plastic bags
and they did not want to bring their own shopping
• International Business Strategy is a homework any firms
aiming to expand international market must take seriously.
• After carefully scaling the pressures for cost reduction and
local responsiveness, firms are to finely position their
international business strategy.
• Globalization of business has led to the emergence of global
• The firm with the choice of an effective global strategy that
takes into consideration its strengths and weaknesses in the
face of the opportunities and threats in the environment, will