The document discusses various international business strategies that companies can employ when expanding globally, including global, international, multi-domestic, and transnational strategies. It analyzes the pros and cons of each strategy based on the pressures of local responsiveness and cost reduction. Additionally, the document explores concepts like core competencies, economies of scale, and global learning which are important considerations for companies developing international business strategies.

1. INTERNATIONAL BUSINESS STRATEGIES
Dr. Nguyen Hai Ninh - FTU

2.  Ancient concept, long development history but mostly used
in army field
 Initial: way to get success in wars
 Formally noted in Gita (India – 4000 years BC)
 Sun Tzu officially mentioned in the “Art of war” ( year 450
BC)
 Firstly appeared in English dictionary in 1810 and
became a studying subject in late 19th century.
 Now: Being widely applied in many different areas such
as: management, business ..
The history of strategy …

3. What is Strategy?

4. Henry Mintzberg
Strategy is….

5. • Perspective: the certain mindset commonly sharing among corporate members of how to
perceive the world
• A consciously and purposefully developed Plan to achieve to proposed target
• Patterns in a concrete stream of actions in the life cycle of your business
• Position or positioning defined as where the firm ‘locates ’itself within its external and
competitive environments; and by which it positions particular products or services against the
demands of the market segments it serves .
• Ploy to outmaneuver the competitor

6. Vision
Mission
Goals
Strategies
Tactics
Action Plan
Strategies Pyramid

7. Achieving the essential fit between
- Internal strength & Weakness
- External opportunities and threats

8. Mission &
Objectives
Environmental
scanning
Strategy
formulation
Strategy
implementation
Evaluation
& control
Strategy process

9. Differentiators
Vehicles
Arenas
Staging Economic logic
Elements of Strategy

10. Differentiators
Vehicles
Arenas
Staging Economic logic
Elements of Strategy
Where will we be active?
Where will we win in the market place?
What will be our speed
and sequences of moves
Where will we obtain our returns?
How will we get there?

11. International business strategies

12. Corporates challenge with two main pressure:
• Pressures for local responsiveness
• Pressure of cost reduction

13. Why should we adapt the local demands….
• Differences in consumer tastes & preferences
• Differences in infrastructure & traditional practices
• Differences in distribution channels
• Host-Government requirements
 Diversifying product line: design, quality, tastes…

14. Why should we cut the cost….
• Emerging demand of global standardized products
• Major competitors are based in low-cost locations
• Consumers tend to be sensitivity and price elasticity
• Free trade and trade liberalization
 cutting the whole functional costs or some specific functional costs: marketing, r&d…

15. Global
Strategy
International
Strategy
Multi-
domestic
Strategy
Transnational
Strategy
High
Low
HighLow Pressure of Local Responsiveness
PressureofCostreduction
International Business basic strategies

16. International strategy
“Centralize product development function at home (head quarter) and establish
manufacturing, marketing functions in local country but head office exercises tight control
over it”
• Think global – Act global
• First step to enter to global market, mostly use the export mode
• Create value by transferring valuable core competencies to foreign markets that
indigenous competitors lack
• Limit product customization.
• Effective for the first step to enter the global market and if firm faces weak pressures for
local responsive and cost reductions

17. Core competencies
“Skills within the firm that competitors cannot easily match or imitate”
• Earn greater returns by transferring these skills and/or unique product offerings to
foreign markets who lack them. (McDonalds)
• Examples:
– Consumer marketing skills of U.S. firms allowed them to dominate European
consumer product market in 1960s and 70s

18. Activity:
Study some Vietnamese companies:
- Do they have core competencies? (Identify and name if they have)
- Briefly draft some recommendations.

19. Multi-domestic strategy
“Customize product offering, market strategy including production, and R&D and
marketing according to the real national conditions”
• Think local – Act local
• Each market place – each product & service line
• Main aim is maximum local responsiveness
• Generally unable to realize value from experience curve effects and the economies of
scale
• Possess high cost structure
• Effective: where the consumer demands are diversified

20. Global strategy
“Production, marketing, and R&D concentrated in few favorable functions”
• Think global – Act global
• One product & Service for the whole global market place
• Focus is on achieving a low cost strategy by reaping cost reductions that come from
experience curve effects and economies of scale.
• Market standardized product to keep cost’s low
• Effective: where strong pressures for cost reductions and low demand for local
responsiveness

21. Economies of scale
“Refers to reduction in unit cost by producing a large volume of a product”
• Sources:
o Reduces fixed costs by spreading it over a large volume
o Ability of large firms to employ increasingly specialized equipment or personnel

22. Transnational strategy
“To meet competition firms aim to reduce costs, transfer core competencies while
paying attention to pressures for local responsiveness”
• Mixed strategy
• Exploit both the national similarities and differences
• Local Adjusting – Global learning system
• Effective: when MNEs challenge both the pressure of local responsiveness and cost
reduction

23. Global learning
• Valuable skills and knowledge (i.e: R&D) can develop in any of the firm’s world wide
operations (not only in the R&D favorable location or head – quarter)
• Transfer from foreign subsidiary to home country and across other foreign nation
subsidiaries
• Managers must create an environment where incentives are given to take necessary
risks and reward them
• Need a process to identify new skill development
• Need to facilitate transfer of new skills within the firm

24. Pros & Cons of the 4 IB strategies
Strategy Pros Cons
Global - Exploit the experience curve (EC) effects and
the economy of scale (ES)
- Cost effectiveness
- Lack of regional responsiveness
International - Transfer core competencies to foreign
markets
- Lack of regional responsiveness
- Unable to exploit the EC and ES
Multi-
domestic
- Customize products and services along with
the real demands of market
- High cost
Transnational - Exploit the experience curve (EC) effects and
the economy of scale (ES)
- Cost effectiveness
- Customize products and services along with
the real demands of market
- Develop the global learning system
- Require the good – structuring
organization

25. Activity
Study the development history of Coca – Cola and
identify international business strategies which they
already implemented