International strategies opp and out

339 views

Published on

Published in: Education
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
339
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
6
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

International strategies opp and out

  1. 1. 1 Knowledge Objectives • Understand the 4 strategies for foreign expansion • Understand the benefits from foreign expansion
  2. 2. 2 ExportingExporting LicensingLicensing StrategicStrategic alliancesalliances AcquisitionsAcquisitions Establishment ofEstablishment of a new subsidiarya new subsidiary InternationalInternational business-levelbusiness-level strategystrategy MultidomesticMultidomestic strategystrategy Global strategyGlobal strategy TransnationalTransnational strategystrategy Opportunities and Outcomes of International Strategy Increased marketIncreased market sizesize Return onReturn on investmentinvestment Economies ofEconomies of scale and learningscale and learning Advantage inAdvantage in locationlocation Identify InternationalIdentify International OpportunitiesOpportunities Explore ResourcesExplore Resources and Capabilitiesand Capabilities Use CoreUse Core CompetenceCompetence InternationalInternational StrategiesStrategies Modes of EntryModes of Entry
  3. 3. 3 BetterBetter performanceperformance InnovationInnovation Opportunities and Outcomes of International Strategy ExportingExporting LicensingLicensing StrategicStrategic alliancesalliances AcquisitionsAcquisitions EstablishmentEstablishment of a newof a new subsidiarysubsidiary Use CoreUse Core CompetenceCompetence Modes of EntryModes of Entry Management problems and risk Management problems and risk StrategicStrategic CompetitivenessCompetitiveness OutcomesOutcomes
  4. 4. 4 Motivations for International Expansion • Increase Market ShareIncrease Market Share – domestic market may lack the size to supportdomestic market may lack the size to support efficient scale manufacturing facilitiesefficient scale manufacturing facilities • Return on InvestmentReturn on Investment – large investment projects may require globallarge investment projects may require global markets to justify the capital outlaysmarkets to justify the capital outlays – weak patent protection in some countries impliesweak patent protection in some countries implies that firms should expand overseas rapidly in orderthat firms should expand overseas rapidly in order to preempt imitatorsto preempt imitators
  5. 5. 5 Motivations for International Expansion • Economies of Scale or LearningEconomies of Scale or Learning – expanding size or scope of markets helps toexpanding size or scope of markets helps to achieve economies of scale in manufacturing asachieve economies of scale in manufacturing as well as marketing, R & D or distributionwell as marketing, R & D or distribution – can spread costs over a larger sales’ basecan spread costs over a larger sales’ base – increase profit per unitincrease profit per unit • Location AdvantagesLocation Advantages – low cost markets may aid in developinglow cost markets may aid in developing competitive advantagecompetitive advantage – may achieve better access to:may achieve better access to: • Raw materialsRaw materials • Lower cost laborLower cost labor • Key customersKey customers • EnergyEnergy
  6. 6. 6 International Business-Level Strategy: Determinants of National Advantage • Factors of production:Factors of production: the inputs necessary tothe inputs necessary to compete in any industrycompete in any industry – laborlabor – landland – natural resourcesnatural resources – capitalcapital – infrastructureinfrastructure – basic factors include natural and labor resourcesbasic factors include natural and labor resources – advanced factors include digital communicationadvanced factors include digital communication systems and educated workforcesystems and educated workforce
  7. 7. 7
  8. 8. 8 Average Total R&D Expenditure: Top 20 Economies 1997 - 2000 (Bil of International $) Brazil $9.8b China $34.4b Italy $13.7b Spain $6.5b Austria $3.7b Belguim $4.6b Netherlands $7.7b Israel $3.6b United Kingdom $23.9b South Korea $16.2b France $29.6b Germany $47.2b United States $230.8b Japan $90.5b Finland $3.6b Switzerland $5.3b Sweden $7.2b Russia $9.3b Australia $6.7b Canada $13.8b 0 1000 2000 3000 4000 5000 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Average R&D Expenditure (% of GDP) Average Scientists & Engineers in R&D (per mil persons)
  9. 9. 9
  10. 10. 10 International Business-Level Strategy: Determinants of National Advantage • Demand conditions:Demand conditions: characterized by thecharacterized by the nature and size of buyers’ needs in the homenature and size of buyers’ needs in the home market for the industry’s goods or servicesmarket for the industry’s goods or services – size of market segment can lead to scale-efficientsize of market segment can lead to scale-efficient facilitiesfacilities – efficiency can lead to domination of the industry inefficiency can lead to domination of the industry in other countriesother countries – specialized demand may create opportunitiesspecialized demand may create opportunities beyond national boundariesbeyond national boundaries
  11. 11. 11 International Business-Level Strategy: Determinants of National Advantage • Related and supporting industries:Related and supporting industries: supportingsupporting services, facilities, suppliers and so onservices, facilities, suppliers and so on – support in designsupport in design – support in distributionsupport in distribution – related industries as suppliers and buyersrelated industries as suppliers and buyers
  12. 12. 12 International Business-Level Strategy: Determinants of National Advantage • Firm strategy, structure, and rivalry:Firm strategy, structure, and rivalry: thethe pattern of strategy, structure, and rivalrypattern of strategy, structure, and rivalry among firmsamong firms – common technical trainingcommon technical training – methodological product and process improvementmethodological product and process improvement – cooperative and competitive systemscooperative and competitive systems
  13. 13. 13
  14. 14. 14 Source: MIT Sloan
  15. 15. 15 Source: MIT Sloan
  16. 16. 16 Source: MIT Sloan
  17. 17. 17 International Corporate-Level Strategy Need for Local ResponsivenessNeed for Local Responsiveness NeedforGlobalIntegrationNeedforGlobalIntegration LowLow HighHigh LowLow HighHigh GlobalGlobal strategystrategy TransnationalTransnational strategystrategy MultidomesticMultidomestic strategystrategy
  18. 18. 18
  19. 19. 19 MultidomesticMultidomestic strategystrategy International Corporate-Level Strategy: Multidomestic Strategy • Strategy and operating decisions areStrategy and operating decisions are decentralized to strategic business unitsdecentralized to strategic business units (SBU) in each country(SBU) in each country • Products and services are tailored to localProducts and services are tailored to local marketsmarkets • Business units in one country areBusiness units in one country are independent of each otherindependent of each other • Assumes markets differ by country orAssumes markets differ by country or regionsregions • Focus on competition in each marketFocus on competition in each market • Prominent strategy among European firmsProminent strategy among European firms due to broad variety of cultures and marketsdue to broad variety of cultures and markets in Europein Europe
  20. 20. 20 International Corporate-Level Strategy: Global Strategy GlobalGlobal strategystrategy • Products are standardized acrossProducts are standardized across national marketsnational markets • Decisions regarding business-levelDecisions regarding business-level strategies are centralized in the homestrategies are centralized in the home officeoffice • Strategic business units (SBU) areStrategic business units (SBU) are assumed to be interdependentassumed to be interdependent • Emphasizes economies of scaleEmphasizes economies of scale • Often lacks responsiveness to localOften lacks responsiveness to local marketsmarkets • Requires resource sharing andRequires resource sharing and coordination across borders (which alsocoordination across borders (which also makes it difficult to manage)makes it difficult to manage)
  21. 21. 21 TransnationalTransnational strategystrategy International Corporate-Level Strategy: Transnational Strategy • Seeks to achieve both globalSeeks to achieve both global efficiency and local responsivenessefficiency and local responsiveness • Difficult to achieve because ofDifficult to achieve because of simultaneous requirementssimultaneous requirements − strong central control andstrong central control and coordination to achieve efficiencycoordination to achieve efficiency − decentralization to achieve localdecentralization to achieve local market responsivenessmarket responsiveness • Must pursue organizational learning toMust pursue organizational learning to achieve competitive advantageachieve competitive advantage
  22. 22. 22 Strategic Competitiveness Outcomes: Returns • International diversification and returnsInternational diversification and returns:: firmfirm expands the sales of its goods or services across theexpands the sales of its goods or services across the borders of global regions and countries into differentborders of global regions and countries into different geographic locations or marketsgeographic locations or markets – may increase a firm’s returnsmay increase a firm’s returns – such firms usually achieve the most positive stocksuch firms usually achieve the most positive stock returnsreturns – firm may achieve economies of scale andfirm may achieve economies of scale and experience, location advantages, increased marketexperience, location advantages, increased market size and opportunity to stabilize returnssize and opportunity to stabilize returns
  23. 23. 23 Strategic Competitiveness Outcomes: Innovation • International diversification and innovationInternational diversification and innovation:: firmfirm expands the sales of its goods or services across theexpands the sales of its goods or services across the borders of global regions and countries into differentborders of global regions and countries into different geographic locations or marketsgeographic locations or markets – potentially greater returns on innovations (largerpotentially greater returns on innovations (larger markets)markets) – generate additional resources for investment ingenerate additional resources for investment in innovationinnovation – exposed to new products and processes inexposed to new products and processes in international markets, generates additionalinternational markets, generates additional knowledge leading to innovationsknowledge leading to innovations
  24. 24. 24

×