international level strategy what are the risk in enter the international business for the corporate and limits of expansion of business internationally

1. Vikas kumar
1st m.com

2. An action a company takes to attain
superior performance by allocation of
resources.
The determination of the long run goals
and objectives of an enterprise , and
the adoption of courses of action and
the allocation of resources necessary
for carrying out these goals

3.  Increase market size and share
- domestic market may lack the size to
support efficient scale manufacturing
facilities.
Return on investment
-large investment project may require global
market to justify the capital outlays

4.  Economies of scale or learning
- expanding size or scope of market helps to
achieve economies of scale in manufacturing as
well as marketing , R & D or distribution .
- can spread costs over a larger sales’ base
- increase profit per unit
Location advantages
- low cost market may aid in developing
competitive advantage
- may achieve better access to:
1. raw materials
2. lower cost labor
3. key customers

6.  Strategy and operating decisions are
decentralized to strategic business units
(SBU) in each country
 Products and service are tailored to local
markets
 Business units in one country are
independent of each other
 Assumes markets differ by country or regions
 Focus on competition in each market

7.  Products are standardized across national
markets
 Decisions regarding business – level strategies
are centralized in the home office
 Strategic business units (SBU) are assumed to
be interdependent
 Often lacks responsiveness to local markets .

8.  Seeks to achieve both global efficiency and
local responsiveness
 Difficult to achieve because of simultaneous
requirement
- strong central control and coordination to
achieve efficiently
- decentralization to achieve local market
responsiveness

10. Types of entry Characteristics
Exporting
Licensing
Strategic alliance
Acquisition
Subsidiary
High cost , low control
Low cost , low risk, little control, low
returns
Shared cost , shared resources , shared
risk
Quick access to new market , high cost
, complex in merging with domestic
operation
Complex , costly , time consuming ,
high risk ,maximum control

11.  International diversification and returns: firm
expand the sales of its goods or service
across the borders of global regions and
countries into different geographic location
or markets
- may increase a firm’s returns
- such firms usually achieve the most
positive stock returns

12.  International diversification and innovation:
firm expands the sales of its goods or service
across the border of global regions and
countries into different geographic location.
- potentially greater returns on
innovation (larger market)
- generate additional resource for
investment in innovation
- exposed to new products and process in
international markets, generates additional
knowledge leading to innovations

13.  Political risks include
-instability in national government
- war, both civil and international
- potential nationalization of a firm’s
resources

14. Economic risks are interdependent with
political risks and include
 Differences and fluctuation in the value of
different currencies
 Differences in prevailing wage rates
 Difficulties in enforcing property rights
 unemployment

15.  Cost of coordination across diverse geographical
business units
 Institutional and cultural barriers
 Understanding strategic internet of competitors
 The overall complexity of competition