INTERNATIONAL STRATEGIES

Strategic Management.
 CONTENT

1. Identifying International Opportunities .

2. International Strategies.

3. International access mode Election.

4. Surrounding Trends.

5. International Environment Risks.

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1. Opportunities and results of International strategy.

Explore
resources
Use core
Identify and
competences Strategic competiveness
International capabilities of
Modes of entry. Results
opportunities International
strategies

Market size Exporting. Management

growth. International risks and Better
Licensing problems.
business-level Performance
Return on strategy.
investment. Strategic
International Alliances.
Economies of Corporate level
Scale and strategies Acquisitions.
learning. -Multidomestic
- Global St. Establishment Management
Location - Multinational of New risks and Innovation
advantages. subsidiary. problems.
1. International Strategies Opportunities and Results

International Strategy:
Strategy used by the company to
sell their goods and services outside its
domestic market.

BENEFITS
Market size increase:
Firms can expand the size of their
potential markets – sometimes
dramatically- by moving into
international markets
1. International Strategies Opportunities and Results

BENEFITS
Return 0n Investment:
international expansion is attractive
because of more probabilities of better returns.

Economies of Scale and knwoledge acquisition:

As long as a company can standardize
their products abroad and use the same facility ,
it will achieve economies of scale.

Location advantages:
Basic costs reduction, access to cheap
labor, cheap energy and cheaper resources.

To spread business risk across a wider base

Business level International Strategy
Determinants of National Advantage
2. International Corporate-level Strategy

International corporate strategies

High

Need for Global Integration

Low
Low High
Local Responsiveness
 Home Replication Strategy

• The firm views international business as separate from, and

secondary to, its domestic business.
• International business typically pursued to generate
additional sales for domestic products
• Products are designed with domestic customers in mind;
i.e., not adapted for foreign markets.
• The firm expects little knowledge flows from foreign
operations.
• Usually based on simple exporting

International Business: Strategy, Management,

10
and the New Realities
2. International Corporate-level Strategy

Multidomestic Strategy:
Operating and strategic decisions are
decentralized to the strategic business unit in
each country in order to taylor products to the
local market.

Global Strategy:
Standardized products are offered
across country markets and the competitive
strategy is dictated by the home office

Transnational strategy:
Seeks to achieve both global efficiency
and local responsiveness

exercise
 International Strategies
• Multidomestic
• Tailor products to each local market
• Strategic & operating decisions are decentralized to the strategic
business-unit (SBU) in each country
• Focuses on competition within each country
• Assumes that markets differ and are segmented by country
boundaries
• Customized products to meet local customers’ specific needs and
preferences
• Deals with uncertainty due to differences across markets
• Different competitive/business strategy in each market
• Think local and act local
• Addresses need for local responsiveness

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International Strategies
• Global
• Firm offers standardized products across country markets
• Competitive strategy dictated by the home office
• Emphasizes economies of scale
• Strategic & operating decisions centralized at home office
• Involves interdependent SBUs operating in each country
• Home office attempts to achieve integration across SBUs, adding
management complexity
• Produces lower risk
• Is less responsive to local market opportunities
• Same competitive/business strategy in all markets
• Think global and act global
• Addresses need for global integration

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International Strategies

• Transnational
• Firm seeks to achieve both global efficiency and local
responsiveness – these can be competing goals!
• Requires both global coordination and local responsiveness
• Flexible Coordination
• Challenging, but becoming increasingly necessary to compete in
international markets
• Growing number of global competitors increases need to lower
costs while greater information flow and desire for specialized
products pressures firms to differentiate and even customize
products
• Tailor strategy where needed
• Think global and act local
• Increasingly used as a strategy - Toyota

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 IKEA Applies a Transnational Strategy

• Some 90% of the product line is identical across more than

two dozen countries. IKEA modifies some of its furniture to
suit individual countries.

• IKEA’s marketing is centrally developed at company

headquarters, but implemented with local adjustments
(e.g., to suit language differences in catalogs).

International Business: Strategy, Management,

15
and the New Realities
3. Environmental Trends

The disadvantage of being a global

foreign corporation:
Companies that concentrate in
global markets with disregard to regional
adaptation might face a disadvantage.
Four-distances:Cultural,
administrative, economic and geographic

Regionalization:
The location of a company affects
its strategic competiveness.
A company must decide if it will
compete in all world markets or to
concentrate on a particular region(s).
 Exporting

-Must establish some means of marketing and

distributing their products
-High costs of transportation and possible tariffs
-Less control over the marketing and distribution of its
products in the host country
-Good for small businesses
-Exchange rates are important to manage
-Requires expertise
Licensing.-
-Arragement that allows a foreing firm to purchase
the right to manufacture and sell the firm´s
products within a host country the licensee takes
the risk of investing in facilities for manufacturing,
marketing and distributing
-The licensor is paid a royalty fo each unit produced
or sold
-Licensee learns the know-how and can produce
after license is expired
Strategic Alliances.

-Most are made with host country firms

that know and understand the
competitive conditions of the country
-Each partner in the alliance brings
knowledge or resources to the
partnership
-Acquisitions

Cross border acquisitions have been increasing significantly: Coca Cola

buys Inka Kola or Cencosud acquiring Wong

-New, fully owned subsidiary

Referred to as a greenfield venture
4. International Entry Selection Method
5. Strategic Competitiveness Results

International Diversification(Markets):
Strategy throught which a firm
expands the sales of its products across
the borders of global regions and countries
into different geographic markets.

International Diversification and

innovation:
I.S. Provides the potential to
companies to obtain better returns on its
innovations while lowering research and
development investment risks.
6. Risks in the International Environment

Political Risks:
Risks related to governments political
stability related to domestic or international
turmoil. Instability creates a number of
problems creating risks to investments.

Economic risks:
Difference and fluctuation of exchange rates
Intellectual property is another issue
Manage key cultural differences:
Uncertainty
Individualism
Masculinity
 International Strategy Exercise
• Taking into account all concepts studied in class , design
an International strategy for a Peruvian Restaurant.
• 1. Make an outline of the project
• 2. Unfold the outline
 References
1. Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson-
Strategic Management_ Concepts_ Competitiveness and
Globalization -South-Western College Pub (2011).pdf
Chapter 8.
2. Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic
management Theory: An integrated approach. Cengage Learning.
Chapter 8
CONCLUSIONES

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Thank You