- When technological changes are rapid and competition

requires the introduction of these technological changes.

5/3/5/3 Focus Strategies:

This strategy focuses on a limited part, and within this
limited part, it tries to achieve a cost advantage or achieve the
best value, considering that the best way to meet the needs of
the group is to focus on it completely.

The company that uses the focus strategy often enjoys a

high degree of customer loyalty, and this great loyalty does not
encourage other companies to enter into direct competition with
it.

Because companies that follow concentration strategies

operate in a narrow market, they deal with a small amount and
thus have limited bargaining power with suppliers. However,
companies that follow focused strategies based on
differentiation may be able to pass the higher cost on customers
due to the lack of alternative products close to them.

Companies that follow focus strategies are able to develop

the strengths of a large number of products in a tailored manner
to the relatively narrow market space that these companies have
become so familiar with.

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 Some of the risks of concentration strategies include the
possibility of imitation and changes that occur in the target
market segments. In addition, it may be very easy for a cost-
leading firm in an expanding market to adapt itself to compete
directly. Finally, other companies that pursue strategies of focus
may carve out and better serve sub-segments of the market.

It can be said that the application of this strategy is

effective in the following cases:

-When the target market is profitable and has a high growth rate.

- When the leading organizations are not interested in a certain

market segment.

- When leading organizations find that meeting the needs and

desires of a target segment of the market is costly.

- When the industry has different sectors of consumers, and

therefore it is possible to focus on one of them (1).

- When there are no competitors for the organization, or there is

limited competition in the target sector.

5/3/6 Strategies for dealing with international markets:

Strategies for entering international markets mean the
method followed by the organization to market its products in

1- Like the mobile phone market, we find some companies focusing on interactive
mobile devices such as the iPhone produced by Apple.
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foreign markets in order to achieve its strategic objectives,
whether it is finding permanent markets for its products abroad
or achieving advanced competitive positions compared to
competing companies in the markets of those countries.

In light of the analysis of the international marketing

environment, and all the variables associated with it, and the
analysis of barriers to entry into the international markets, and
the incentives for international marketing, the organization
chooses one of the following strategies:

-Foreign Direct Investment (FDI)

-Exporting

-Licensing contracts

-Management contracts

-Joint Venture

-Manufacturing contracts

-Assembly Operations

- Complete operations (turnkey operations).

- Acquisition

- Strategic alliances

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Below is an overview of each strategy:

5/3/6/1 Foreign direct investment:

In the light of economic theory, the transfer of capital can
achieve better rates of return. Consequently, investments
diversify, which constitutes an addition to the capital-owning
country's resources. This is helped at the present time by the
availability of financial markets, economic cooperation between
countries, and the availability of generally accepted accounting
principles.

Foreign direct investment, in addition to capital, requires

an influx of human and administrative cadres and raw materials,
and it is clear that this strategy is more complex, and perhaps
risky, than all other strategies. Experience indicates that direct
foreign investment has helped the investment-hosting countries
achieve rapid growth rates.

The recognized fact is that the developed countries are the

most receiving countries for foreign investment, and at the same
time they are the most countries as a source of foreign
investment. This phenomenon is evident in countries such as the
United States and Japan, which receive 71% of foreign direct
investment and provide foreign investment in other countries by
82%.Table (5/1) shows the largest countries in the field of direct

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foreign investment, and Table (5/2) shows foreign investment
flows from different regions of the world.

Foreign investment flows from different regions of the world.

seirtnuoC eulav tnemtsevnI gnitropxe seirtnuoc eulav tnemtsevnI
ngierof gniviecer )srallod noillib( tnemtsevni ngierof )srallod noillib(
tnemtsevni
etatS detinU 281 modgnik detinU 250
ynamreG 176 ecnarF 173
modgnik detinU 130 etatS detinU 139
muigleB 87 muigleB 83
gnoK gnoH 64 dnalaeZ weN 73
adanaC 63 gnoK gnoH 63
dnalaeZ weN 55 niapS 54
ecnarF 44 ynamreG 49
anihC 41 adanaC 44
niapS 37 dnalreztiwS 40

Source: International Monetary Fund (IMF) Report, 2008.

Table 5/2 - Foreign direct investment flows in the world

noigeR )srallod noillib( eulav tnemtsevnI

seirtnuoc decnavda 510

seirtnuoc gnipoleveD 225

acirfA 10

naebbiraC eht dna aciremA nitaL 80

noiger cificaP eht dna aisA 125

aisA tsaehtuoS dna ,tsaE ,htuoS 120

eporuE nretsaE dna lartneC 25

Source: International Monetary Fund (IMF) Report, 2008.

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 We may notice clearly, the correlation of economic
progress with the rates of foreign direct investment, which
provides evidence of the benefits of international marketing
through the operations of companies in foreign markets.

We also note that some countries have been able to attract

foreign direct investments with huge financial values, such as
the United States and European countries, while the continent of
Africa enjoyed the lowest volume of direct foreign investment,
and the International Monetary Fund report attributes the
reasons for this to the political instability in most African
countries. , the lack of clarity of monetary and financial policies
related to investment, the complexity of direct investment
procedures, and the existence of some aspects of administrative
corruption associated with these procedures(1)

5/3/6/2 Export
The export strategy is that strategy according to which the
organization exports products from the mother country, without
the presence of international marketing and production
operations, and in most cases the product exported abroad is
similar to the domestic product.

1- For more IMF reports, you can refer to the Fund's website http://www.imf.org
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 The export strategy is that strategy according to which the
organization exports products from the mother country, without
the presence of international marketing and production
operations, and in most cases the product exported abroad is
similar to the domestic product.

The main advantage of the export strategy is its ease of

implementation, and the risks are as low as possible because the
company exports the surplus of its production capacity, and this
is done when it receives a notification from the external
importer. Therefore, international marketing efforts when using
this strategy are minimal, and this may represent the greatest
possibility of why this strategy is used by small companies to
enter international markets.

It is preferable to use the export strategy when the

organization wants to get acquainted with the international
markets and not enter extensively for fear of expected risks.

This strategy was followed by some American companies

when entering the Japanese market for the first time, and it was
then called the “Catalog of Catalogs”, where companies send
catalogs that include information about the characteristics of the
products, and the consumer determines what he wants from
them, then the goods are sent together.

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 The export strategy is not considered the ideal strategy in
all cases, as while maintaining the production processes without
fundamental modifications, the marketing strategy becomes
inflexible and therefore unable to face the international markets.

The export strategy faces a problem that limits its

effectiveness in entering international markets, in the case of the
strength of the local currency. The practical reality proves this.
In the seventies, the Swiss franc was very strong against the
dollar, which made it difficult for Swiss companies to export to
the United States, forcing these companies to resort to investing
abroad in order to limit the problems of the strength of the
national currency. American companies also faced difficulty in
marketing their products during the term of President (Reagan)
as a result of the dollar achieving gains that supported its
position in the currency market, in addition to competing with
products imported from other countries, which became - with
the rise in the price of the dollar - less expensive. Likewise, in
1995 AD, when the Japanese yen rose 20% against the dollar,
which reflected negatively on the exports of Japanese
companies. Therefore, we can say that the high price of the
national currency causes difficulties in the export process.

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5/3/6/3 Licensing Contracts:
When the organization faces a situation in which it finds
that export is ineffective, and does not want direct investment,
the licensing strategy is the appropriate alternative. A license is
an agreement that allows a foreign company to use industrial
property (patents, trademarks, and copyrights), technical
expertise and skills, feasibility studies, architectural expertise,
engineering design, or a combination of the above in the foreign
market.

Basically, the licensing strategy allows the organization to

produce and sell the product in the licensed country, or in
specific markets. There are many examples of applying this
strategy in international markets, for example, 50% of food
products in the Japanese market are manufactured under an
Under License from American food companies, and they can
also be used to provide services.

Despite the common belief that direct investment is the

most Profitable Among the strategies for entering international
markets, licensing offers some advantages, namely:

- Saving the costs of transporting products to international

markets.

- No need for huge capital.

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- It helps to overcome the barriers placed by foreign countries
on export operations.

- Helps the organization to invest its own brand in foreign

markets(1).

- Enables the organization to benefit from development costs if

it decides to withdraw from the market.

- Helps enter distant markets with high transportation costs, such

as the case of licenses granted by Japanese companies to
companies in South Africa.

However, the licensing strategy faces some problems, namely:

- Over time, the licensed company may become a competitor to

the parent company.

- The licensed company's lack of mastery in manufacturing

processes, and this appears in the consumer's keenness to buy
Japanese products manufactured in Japan, and not
manufactured in East Asian countries, or in the Czech
Republic(2), as a result of concern about the risks associated
with the latter's lack of mastery in the industry.

1- The value of the brand as an intangible asset led to an increase in the sales value of
companies, reaching in one case up to 600% of the book value.
2- At the beginning of 2010, the Japanese car manufacturer, Toyota, recalled nearly
9,000 cars of different brands as a result of a defect in the accelerator pedal that made
it stick to the car's upholstery. These cars were manufactured in the Czech Republic
and some Southeast Asian countries.
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- Difficulty supervising the operations of the licensed company.

5/3/6/4 Management contracts

In some cases, and as a result of the presence of some
government restrictions on the part of foreign countries, or in
the event that the company desires to end foreign direct
investment operations, one of the alternatives available to it is to
switch to the strategy of management contracts with the
government or the new owner, and due to the lack of technical
and administrative expertise of the owner New, he needs
technical and administrative support in order to gain the
necessary experience to manage the project, and this support is
provided by the organization through the contract.

In some cases, the strategy of management contracts is

used as a complementary strategy to enter the market with less
risks resulting from political instability, and a limited volume of
investment. It is common to use this strategy in the field of
international hotel management in different countries.

5/3/6/5- Joint Venture:

Joint venture is another alternative for the company to
enter international markets. It is a partnership in ownership and
management, for example France Telecom with the Egyptian

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company Orascom, and McDonald's International restaurants
owning 50% of McDonald's restaurants in Japan.

The appropriateness of this strategy for entering

international markets depends on the company's financial
resources, the conditions of the international environment, and
the company's motives for entering international markets. One
study concluded that companies tend to use the joint investment
strategy to enter international markets in two cases, the first
when entering markets characterized by the presence of strict
legal restrictions, and the second when there is a high degree of
investment risk.

We must note that the joint venture is subject to change

due to its connection to the parent company's decisions. There
are two variables that affect the changes that occur to companies
that deal with this strategy. The first is the natural change that is
not linked to political conditions, which is the case in which the
company enjoys advanced technological development and needs
a local partner who is aware of the conditions and characteristics
of the local market to which it belongs.

The time is either to increase investment and acquire the

joint venture company, or to reduce the investment value, or to
withdraw completely from the market. In any case, the company
participating in the joint investment does not reduce its
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investments as long as the investment is actively operating and
growing continuously. The second variable: is political leverage,
which expresses government pressure or persuasion for the
foreign investor to reduce or maintain his shareholding in the
company within a certain percentage, and therefore the foreign
partner cannot increase his share in the joint venture.

In a study of 8078 joint foreign investment projects in

China, it was concluded that the reasons for the foreign partner
to purchase the share of the local partner and acquire the
company are:

- The strong currency of the home country of the foreign

partner.

- Low cost of borrowing (interest rate on loans).

- High ability to export.

- The absence of political problems in the country hosting the

joint foreign investment.

The commitment of the partners to the joint venture can be

considered as a result of the perceived benefits of the relations
with the local partner, whose source is the satisfaction of the
foreign partner and the economic performance of the company.

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 There are advantages to joint venture that make it
appropriate for some companies to use it as a strategy to enter
international markets and these advantages are:

- The decrease in the value of the funds required from each

partner to establish the company due to its sharing between
the foreign and local partners.

- It allows entry to markets that have barriers to entry for foreign

companies, or that take central planning such as China.

- Benefiting from the local partner's expertise, especially its

ability to conform to the prevailing customs and traditions in
its society, and employing it for the benefit of the company in
distribution, sale and promotion operations.

- Possibility of entering the markets of countries whose political

conditions require the presence of a local partner.

As for the problems associated with the joint venture

strategy as a means of entering international markets, they
are:

- The absence of clear rules for decision-making, and decision-

making requires review by each partner, and the decision-
making process becomes slow.

- Differences between the foreign and local partner in culture,

goals and divergence of vision in the implementation of
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 production and marketing strategies that must be followed,
and studies indicate in this regard that organizational cultural
differences have a greater impact than cultural differences
related to the countries themselves.

- Management problems related to the ownership percentage of

the partners. In the event that there is a percentage of 50% for
each partner, decision-making becomes complicated, and in
some cases it may be difficult to reach a decision. If one of
the partners exceeds 50%, he can control the joint venture
company.

5/3/6/6- Manufacturing contracts:

This strategy is used to carry out manufacturing operations
for all products or some of their parts in foreign countries, for
example IBM has (16) factories in the United States compared to
more than (18) factories in other countries, and manufacturing
can be done by establishing a factory in the host country Not in
order to sell its production in this country, but rather to export it
to another country or to the mother country of the company, and
this method is called sourcing.

One of the studies showed that the motivating factors for

using this strategy to enter the international markets are: tax
incentives, the absence of restrictions on financial transfers from

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the host country to the mother country, and guarantees against
expropriation of the project.

From the perspective of the host countries, the advantages

of manufacturing contracts are as follows:

- Creating a job opportunity within the host country, which

contributes to reducing unemployment among those wishing
to work.

- Providing advanced technology and management expertise

within the local manufacturing sectors.

- The possibility of benefiting from Backward Vertical

Integration processes by obtaining the raw materials needed
for manufacturing operations.

- Low cost human resources.

- Obtaining low-cost production facilities (water-electricity). For

example, Hoover Company was able to reduce costs by
transferring manufacturing operations to France, as well as
most Japanese and American companies that transferred most
or all of manufacturing operations to China, Taiwan and
South Korea.

- Reducing transportation costs. Through manufacturing

contracts around the world, the British Publishing Company

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 was able to save between 25-40% of transportation and
shipping costs to other countries.

- Assisting the company in implementing a competitive pricing

policy, by getting rid of the company's financial burdens that
limit its ability to offer a competitive price. For example, the
Japanese company Honda established a factory in Ohio, USA.

This strategy faces a problem related to the mental image

of the product, where the consumer perceives products made in
other than the mother country as being of lower quality.
Venezuela, that consumers prefer cigarettes made in the United
States - although they are more expensive than the same
cigarettes made in Venezuela - because they believe that
cigarettes manufactured in Venezuela differ in specifications and
quality of tobacco, from the same cigarettes manufactured in the
United States.

This strategy also faces the problem of increasing wage

rates in the host countries for manufacturing operations, and if
wage rates change exponentially quickly, this limits the
effectiveness of this strategy. Steadily.

We have to point out that the pursuit of cheap workers’

wages has bad consequences. One study showed that some
Japanese companies transferred manufacturing operations for

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some products from Singapore and Korea to Mexico due to the
low wages of the Mexican worker. The result was lower quality
products, and an increase in the percentage of poor products.
Therefore, the promiscuity of a cheap worker must be viewed in
the light of the skills required for work.

5/3/6/7 Product assembly operations:

Product assembly processes refer to the production of
different parts of the product in different countries to obtain
comparative advantages in each country, provided that they are
assembled in a specific country, for example, the Laptop where
the processor is manufactured in the United States, and the parts
are manufactured in different countries according to The nature
of the part and the availability of manufacturing capabilities at
an appropriate cost, and then it is often assembled in China.

The assembly strategy is based on the manufacture of

capital-intensive parts in developed countries, given the
availability of capital, provided that labor-intensive parts are
manufactured in less developed countries, where suitable wage
labor is available. And now electrical appliances companies
follow this strategy.

American clothing companies tracking such as Warnaco

and Interco follow this strategy, as they design the models and

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cut the fabrics automatically in the United States, and then send
them to Honduras and Costa Rica, which have low wage rates
and are labor intensive, where sewing operations are performed
on machines that are It is labor intensive, and then returns to the
US ready to be machine repackaged.

The strategy of assembling products allows entering

international markets without incurring customs tariffs, or
exposure to quotas problems that some countries set on some
products.

One of the problems facing the assembly strategy to enter

the international markets is that most countries require a certain
percentage of the product to be manufactured in the host country
for the assembly operations. In general, the greater the
percentage of the local component in the final product, the less
the advantages of the assembly strategy, because the locally
manufactured parts are often loaded with fees or indirect taxes,
and then the prices of the final product rise and the company’s
ability to provide a competitive price decreases.

Another problem with the bundling strategy is the need to

balance obtaining lower wages for labor or exposure to tariffs.
For example, some countries require that the percentage of the
local component reach a certain percentage, otherwise it is
considered an imported product and is subject to tax. At the
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same time, if the percentage of the local component is increased
to obtain customs or tax exemption, - as we explained before -
the profits are eroded and the company's ability to provide the
price decreases. Competitive, for example, the company
(Honda) assembles some of its cars in the United Kingdom, and
the percentage of the local component in the car is 45%, and
despite that, according to the rules of the European Union, it is
considered an imported Japanese car, because the European
Union requires that the percentage of the local component be not
less than 50%. . Therefore, when following this strategy,
continuous monitoring of the price level and its relationship to
the percentage of the local component in the final product is
required.

5/3/6/8 Complete operations (TURNKEY OPERATIONS):

Complete operations, or as it is commonly called

(turnkey), refers to an agreement between the seller and the
buyer whereby the seller provides the buyer with all production
facilities ready to be operated by the buyer. This method is
commonly used in fast-food franchising, where the franchisor
selects a location, builds and equips the restaurant, and trains the
staff.

In the field of international marketing, this strategy is used

in the case of implementing huge projects for governments, or
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implementing huge projects for government-owned companies.
These projects require high technologies and huge infrastructure
operations, such as the establishment of a petrochemical plant, a
nuclear power plant, and mobile communications networks.

Given that turnkey projects are huge, the return on them to

the seller is remunerative, so the offer submitted by the seller
must be an encouraging offer for governments to take the
decision to establish the project. Among these factors that
encourage governments to accept the offer is the use of modern
technology and the provision of payment facilities.

It should be noted that European and Japanese companies

are distinguished by providing financing facilities,
commissioning trial services, personnel training services, and
maintenance services, in a way that is better than American
companies.

5/3/6/9- Acquisition:
When the company wants to quickly enter, through direct
investment, into the international markets, the acquisition
strategy is the appropriate strategy. The reasons for using this
strategy are to diversify products, markets, or management, and
to invest the time spent on licensing, construction, and operation

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of the project. As an example, Ford Motor Company acquired
Volvo Cars in 1999, and Jaguar Cars in 1989.

The cost of acquisitions is affected by the currency value

of the country to which the acquirer belongs, so if the value of
the currency of the country to which the acquirer (the buyer)
belongs is low, then the value of the transaction is high, and this
may make him think of other alternatives, and the reverse case is
true, and we mean that if The value of the currency of the
country to which the buyer belongs is high, so the value of the
acquisition process is low, and thus it is attractive and
encourages the completion of the deal. For example, the German
chemical giant Hoechst was able to acquire the American
company Marion Merrell Dow for $702 billion, saving an
amount of $250 million, because the value of the dollar at that
time was low.

The variables of international acquisitions and mergers are

complex, costly, and risky operations that must be dealt with
carefully and cautiously. Among these variables are the
following:

- Finding the right company to acquire.

- Determine the fair price.

- Dealing with debts owed by the company.

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- Merging or changing the management of the company.

- Language and culture differences.

- Worker's dissatisfaction, or their feeling of job anxiety, which

affects their performance.

- The geographical distance between the buyer's country and the

company to be acquired.

Sometimes the right decision may be to abandon the idea

of acquisition, if the following conditions are present:

- The high price.

- Lack of agreement on addressing the role of government

intervention in the company.

- The inefficiency of the company's current management, and

the failure to develop a strategy to achieve the company's goals.

- The presence of some problems in the local environment in the

project (such as the opposition of the local public to the
project(1).

- Some international agreements that prevent dealing with the

state (such as international bans on commercial activity with
some countries).

1-"Shell" Petroleum has faced such opposition in some of its projects in

Nigeria.
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- The presence of some unclear obligations on the shoulders of
the company.

- Possible legal problems as a result of the company not

fulfilling its previous obligations.

- Uncertainty about the tax aspects related to the company's

activity.

If governments welcome direct investment, as a means of

international marketing because it helps to increase job
opportunities available within society, as well as expand the tax
base, and therefore it is sometimes called Greenfield Enterprise,
as for acquisitions, they cannot achieve this, as they are merely
transferring ownership from local owners to owners. On this
basis, it is viewed unwelcome by governments, and is often
faced with rejection or obstacles on the part of these
governments.

5/3/6/10- Strategic Alliances:

In this strategy, the company that aims to work in
international marketing chooses another organization or a group
of organizations through which it forms a union or alliance for
commercial work in the international field.

There is no clear and precise definition of strategic

alliances, as a result of the multiplicity of methods through
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which these alliances are made. The strategic alliance may be
the result of mergers, acquisitions, joint venture, or licensing
agreements.

Some believe that joint venture is in its nature a strategic

alliance, but not every strategic alliance is a joint venture. If the
joint venture requires a number of partners or a group of them to
create the independent entity of the company, then the strategic
alliance does not require an independent legal entity, and instead
of joint ownership of the venture, the strategic alliance is
centered on contractual arrangements according to which two or
more parties agree to cooperate together using common
resources and expertise. to penetrate a particular market.

An example of strategic alliances is America Online's

strategic alliances with Bertelsmann and Sun Micro Systems to
expand its market through the resources and expertise of these
two companies.

Airlines are a good example of international strategic

alliances, and most international airlines are a member of one or
more of the industry's three strategic groups, namely the STAR
Alliance, the Skey Team Alliance, and the Oneworld Alliance.
EgyptAir is part of the Star Alliance, which is the largest
strategic alliance in the aviation services industry in the world,
which includes Air Canada, Singapore, Australia and Saudi
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Airlines. These companies grant seats and services at airports to
passengers on all flights of the alliance companies, so that the
traveler travels through the lines of the companies that are
members of the alliance as if he is dealing with one company.

Companies enter into strategic alliance relationships for

several reasons, including benefiting from the mutual use of
resources and reducing risks and costs. However, these alliances
must be built on mutual trust and commitment between
companies.

There are three types of strategic alliances: shared

distribution, manufacturing licensing, and research and
development.

An example of a strategic alliance for shared distribution is

the alliance between Chrysler's and Mitsubishi to distribute the
cars produced by the second company in the American market.

While Matshushita's producing computers for IBM is an

example of Licensed Manufacturing, and finally the alliance
between Sony and Philips to develop DVDs is an example of a
Research and Development alliance.

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Conclusion:
In this chapter, we have dealt with management strategies
through which long-term goals can be achieved.

We focused on the importance of management by

objectives, and we thought it wrong to manage the organization
in any way other than management by objectives.

For this chapter, we presented many strategies, whether

forward integration, backward integration, market penetration,
market development, product development, related and
unrelated diversification, shrinkage strategies, abstraction, and
liquidation.

We also offered strategies for entering international

markets. In each strategy we have identified the conditions or
factors that make it most effective.

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