The document discusses various export and multinational strategies. It describes four broad multinational strategies - multidomestic, transnational, international, and regional - that companies can use to address the global-local responsiveness dilemma. It also discusses factors to consider in choosing between participation strategies like exporting, licensing, strategic alliances, and foreign direct investment to enter international markets.

1. Export Strategy
• MULTINATIONAL STRATEGIES AND THE GLOBAL - DILEMMA
• The local responsiveness solution
• The global integration solution
• LOCAL SOLUTIONS
• Customize organizations and products to country or
regional differences
• GLOBAL INTEGRATION
• Reduce costs with worldwide standardized products,
uniform promotional strategies and distribution channels
• Seek lower costs or higher quality anywhere in the value
chain and in the world
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2. FOUR BROAD MULTINATIONAL
STRATEGIES
• Solutions to the global--local
responsiveness dilemma
• multidomestic
• transnational
• international
• regional
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3. MULTIDOMESTIC AND
TRANSNATIONAL STRATEGY
MULTI DOMESTIC:
•Gives top priority to local responsiveness issues
•A form of the differentiation strategy
•Not limited to large multinationals
TRANSNATIONAL
•Gives two goals top priority:
• seek location advantages
• global platforms
• gain economic efficiencies from worldwide networks
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4. INTERNATIONAL & REGIONAL STRATEGY
INTERNATIONAL:
•A compromise approach
•Global products, similar marketing techniques
worldwide
•Upstream and support activities remain concentrated
at home country
REGIONAL
•A compromise strategy
•Attempts to gain economic advantages from regional
network
•Attempts to gain local adaptation advantages from
regional adaptation
REGIONAL TRADING BLOCK:
•Encourage regional strategies
•Reduce differences in government and industry
required specifications for products
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5. EXHIBIT 6.1 MULTINATIONAL STRATEGY CONTENT
Content Transnational International Multidomestic Regional
Worldwide
markets
Yes Yes No No
Worldwide
location of
separate
value chain
activities
Yes No No No
Global
products
Yes Yes No No
Global
marketing
Yes Yes No No
Global
competitive
moves
Resources
from any
country used
to attack or
defend
Attacks and
defenses in all
countries -
resources HQ
No,
competitive
moves planned
and financed
by country
units
No, but
resources from
region can be
used
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6. MIXED STRATEGIES & COMPETITION
• Seldom do companies adopt pure forms
• Different strategies for each business
• Different strategies for product differences
• COMPETITION
• Successful strategies of competitors
• Volume of imports and exports in industry
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7. THE LOCAL-GLOBAL DILEMMA: DIAGNOSTIC
QUESTIONS FOR STRATEGY FORMULATION
• The KEY question:
• how global is the industry?
• What makes an industry global
• Globalization drivers
• four categories of global drivers:
• markets, costs, governments, and competition
• GLOBAL MARKETS AND CUSTOMERS:
• Are there?
• common customer needs?
• global customers?
• Can you transfer marketing?
• What is the volume of imports and exports in the
industry
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8. WHAT MAKES AN INDUSTRY
GLOBAL?
• COSTS?
• Are there?
• global economies of scale?
• global sources of low cost raw materials?
• cheaper sources of high skilled labor?
• high product development costs?
• GOVERNMENTS?
• Do the targeted countries have favorable
trade policies?
• Do the target countries have regulations that
restrict operations?www.StudsPlanet.com

9. COMPETITIVE ADVANTAGE IN THE
VALUE CHAIN
• Upstream advantages
• favor transnational strategy or an
international strategy
• Downstream advantages
• favor multidomestic strategy
MIXED CONDITIONS:
• Competitive strength downstream in industry
with strong globalization drivers
• Competitive strength upstream in industries
with local adaptation pressures
• both favor regional strategieswww.StudsPlanet.com

10. Global/
Local
Pressures
Primary Source of Competitive
Advantage in Value Chain
Upstream Downstream
High
Pressures
for
Global-
ization
Transnational
Strategy or
International
Strategy
Regional
Strategy
Compromise
High
Pressures
for Local
Responsive
-ness
Regional
Strategy
Compromise
Multidometic
Strategy
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11. SELECT AN INTERNATIONAL
STRATEGY OVER A TRANSNATIONAL
WHEN:
• Cost savings of centralization offset the lower
costs or higher quality raw materials or labor
available from worldwide locations
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12. PARTICIPATION STRATEGIES
• The choice of how to enter each international
market
• exporting, licensing, strategic alliances, and foreign
direct investment
• EXPORTING
• The easiest
• Passive exporting
• Active export strategies
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13. EXPORT STRATEGIES
• Indirect exporting
• uses intermediaries
• Direct exporting
Export Management and Trading Companies (EMCs
and ETCs)
• Specialize in products, countries or regions
• Provide ready-made access to markets
• Have networks of foreign distributors
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14. DIRECT EXPORTING
• More aggressive
• Requires more contact with foreign
companies
• Uses foreign sales representatives,
distributors, or retailers
• May require branch offices in
foreign countries
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15. CHANNELS IN DIRECT EXPORTING
• Sales representatives: use the company's
promotional literature and samples
• Foreign distributors: resell the products
• Sell directly to foreign retailers or end users
LICENSING
• International licensing is a contractual
agreement between a domestic licensor and
a foreign licensee
OTHER CONTRACTUAL AGREEMENTS:
• International franchising
• Contract manufacturing
• Turnkey opera
•
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16. THE INTERNATIONAL STRATEGIC
ALLIANCE
• Cooperative agreements between two
or more firms from different countries to
participate in a business activity
TWO BASIC TYPES
• Equity international joint ventures (IJV)
• International cooperative alliance (ICA)
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17. FOREIGN DIRECT INVESTMENT (FDI)
• FDI means that companies own and control
directly a foreign operation
• symbolizes the highest stage of internationalization
• Mergers and acquisitions versus greenfield
REASONS FOR FDI ABROAD;
• To extract raw materials
• To find low cost sources of labor, components,
parts, or finished goods
• To penetrate new markets, the major motivation
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18. DECIDING ON AN EXPORT STRATEGY
• Assess control needs for: sales, customer credit, and
the eventual sale of the product
• Assess financial and human resources capabilities
• to manage export operations
• to design/execute international promotional activities
• to support extensive international travel or possibly an
expatriate sales force
• to develop overseas contacts and networks
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19. WHEN SHOULD COMPANIES LICENSE?
• Based on three factors
1. characteristics of the product
2. characteristics of the target country
3. nature of the licensing company
DISADVANTAGES OF LICENSING;
• Gives up control
• May create new competitors
• Often generates only low revenues
• Opportunity costs (barriers to other
participation strategies
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20. WHY SEEK STRATEGIC ALLIANCES?
• Partner’s different capabilities
• Partner's knowledge of the market
• Government requirements
• To share risks
• To share technology
• Economies of scale
• Low cost raw materials or labor
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21. KEY CONSIDERATIONS FOR
ALLIANCES
• Pick partners carefully
• Seek win-win ventures-last much longer
• Assess need for the alliance
• Estimate ability to succeed Plan for design and
management
• WHICH TYPE IS BETTER?
• IJV probably more secure
• ICA probably more flexible and less visible
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22. ADVANTAGES & DISADVANTAGES OF FDI
ADVANTAGES
•Greater control
•Lower costs of supplying host country
•Avoid import quotas
•Greater opportunity to adapt product to the local
markets
•Better local image of the product
DISADVANTAGES
•Increased capital investment
•Increased investment of managerial and other
resources
•Greater exposure of the investment to political and
financial risks
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23. STRATEGIC INTENT & COMPANY
CAPABILITY
• Immediate profit, or..
• Other goals
• e.g., being first in a market with potential or
learning a new technology
• Company Capability
• What can a company afford?
• Human resources
• Production capabilities
• Commitment to using resources
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24. LOCAL GOVERNMENT REGULATIONS
• Import or export tariffs, duties, or restrictions
• Laws regarding foreign ownership
• Other legal and regulatory issues
• patent, consumer protection, labor, and tax laws
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25. CHARACTERISTICS OF THE TARGET
PRODUCT /MARKET (E.G.S)
• Products that spoil quickly or are
difficult to transport
• poor candidates for exporting
• Products that need little local
adaptation
• good candidates for licensing,
joint ventures, or FDI
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26. GEOGRAPHIC AND CULTURAL
DISTANCE
• Transportation costs
• Management of FDI and equity strategic alliances
more difficult
• CULTURAL DISTANCE;
• With very different cultures, direct investment more
risky
• Joint ventures, licensing and exporting
• local partners deal with local cultural issues
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27. RISK & KEY CONCERNS
• Financial risk
• Economic risk
• currencies, markets, etc.
• Political risk
• governments change
• policies regarding foreign firms change
• Key areas for concern
• product quality in the manufacturing
process, product price, advertising and
other promotional activities, where the
product is sold, and after market servic
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28. THE CONTROL VERSUS RISK
TRADEOFF
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29. High
Low
Risk
Control
Direct
Export
Indirect
Export
Licensing
Strategic
Alliances
FDI
Low High
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30. MULTINATIONAL AND PARTICIPATION
STRATEGIES
• What is the strategic reason to be in the market?
• location advantages versus market penetration
• e.g., source of raw materials, R&D, production, etc.
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31. CONCLUSIONS
• Dealing with the global--local
responsiveness dilemma
• Four strategies
• multidomestic
• transnational
• international
• regional
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