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1、Chapter 8Chapter 8International StrategyInternational StrategyInternational Strategy Opportunities and OutcomesIdentify Identify International International OpportunitiesOpportunitiesExploreExploreResources and Resources and CapabilitiesCapabilitiesUse Core Use Core CompetenceCompetenceStrategicStra
2、tegicCompetitivenessCompetitivenessOutcomesOutcomesInternational International StrategiesStrategiesModes of Modes of EntryEntryIncreasedIncreasedMarket SizeMarket SizeReturn on Return on InvestmentInvestmentEconomies of Economies of Scale and Scale and LearningLearningLocation Location AdvantageAdva
3、ntageInternationalInternationalBusiness-LevelBusiness-LevelStrategyStrategyMultidomestic Multidomestic StrategyStrategyGlobalGlobalStrategyStrategyTransnational Transnational StrategyStrategyExportingExportingEstablishment of Establishment of New SubsidiaryNew SubsidiaryExportingExportingStrategicSt
4、rategicAlliancesAlliancesAcquisitionAcquisitionManagement Management Problems Problems and Riskand RiskManagement Management Problems Problems and Riskand RiskHigher Higher Performance Performance ReturnsReturnsInnovationInnovationIncreasedIncreasedMarket SizeMarket SizeReturn on Return on Investmen
5、tInvestmentEconomies of Economies of Scale and Scale and LearningLearningLocation Location AdvantageAdvantageSelling Products or Services Outside a Firms Domestic MarketSelling Products or Services Outside a Firms Domestic MarketInternational Strategy LifecycleInternational Strategy LifecycleFirm In
6、troduces Firm Introduces Innovation in Innovation in Domestic MarketDomestic Market1 1Product Demand Product Demand Develops and Develops and Firm Exports Firm Exports ProductsProducts2 2Foreign Foreign CompetitionCompetitionBegins ProductionBegins Production3 3Firm Begins Firm Begins Production Abr
7、oadProduction Abroad4 4Production Becomes Production Becomes Standardized and is Standardized and is Relocated to Low Cost Relocated to Low Cost CountriesCountries5 5Example: Example: Aircraft manufacturers Boeing or AirbusAircraft manufacturers Boeing or AirbusExample: Example: Japanese electronics
8、 or Japanese electronics or automobile manufacturersautomobile manufacturersMotivations for International ExpansionMotivations for International ExpansionIncrease Market ShareDomestic market may lack the size to support efficient Domestic market may lack the size to support efficient scale manufactu
9、ring facilitiesscale manufacturing facilitiesLarge investment projects may require global markets to justify Large investment projects may require global markets to justify the capital outlaysthe capital outlaysReturn on InvestmentReturn on InvestmentMotivations for International ExpansionMotivation
10、s for International ExpansionEconomies of Scale or LearningExpanding size or scope of markets helps to achieve Expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, economies of scale in manufacturing as well as marketing, R & D or distribution
11、R & D or distribution- - Can spread costs over a larger sales baseCan spread costs over a larger sales base- - Increase profit per unitIncrease profit per unitMay achieve better access to:May achieve better access to:- - Raw materialsRaw materials- - Lower cost laborLower cost labor- - Key suppliers
12、Key suppliers- - Key customersKey customers- - EnergyEnergy- - Natural resourcesNatural resourcesLocation AdvantagesLow cost markets may aid in developing Low cost markets may aid in developing competitive advantagecompetitive advantageFactor ConditionsFactor ConditionsBasic FactorsBasic Factors- -
13、Land, laborLand, laborAdvanced FactorsAdvanced Factors- - Highly educated workersHighly educated workers- Digital communications- Digital communicationsGeneralized FactorsGeneralized Factors- - Capital, Capital, infrastructureinfrastructureSpecialized FactorsSpecialized Factors- - Skilled personnelS
14、killed personnelDemand Demand ConditionsConditionsHome country may Home country may support scale efficient support scale efficient operations by itselfoperations by itselfRelated & Supporting Related & Supporting IndustriesIndustries- - Japanese cameras & copiersJapanese cameras & copiers- Italian
15、shoes & leather- Italian shoes & leatherFirm Strategy, Structure & Firm Strategy, Structure & Firm Strategy, Structure & RivalryRivalryRivalryIntense rivalry fosters Intense rivalry fosters Intense rivalry fosters industry competitionindustry competitionindustry competitionPorters Determinants of Na
16、tional AdvantageHome Country Home Country of Origin Is Crucial to International Successof Origin Is Crucial to International SuccessInternational Strategy Opportunities and OutcomesIdentify Identify International International OpportunitiesOpportunitiesExploreExploreResources and Resources and Capab
17、ilitiesCapabilitiesUse Core Use Core CompetenceCompetenceStrategicStrategicCompetitivenessCompetitivenessOutcomesOutcomesInternational International StrategiesStrategiesModes of Modes of EntryEntryIncreasedIncreasedMarket SizeMarket SizeReturn on Return on InvestmentInvestmentEconomies of Economies
18、of Scale and Scale and LearningLearningLocation Location AdvantageAdvantageInternationalInternationalBusiness-LevelBusiness-LevelStrategyStrategyMultidomestic Multidomestic StrategyStrategyGlobalGlobalStrategyStrategyTransnational Transnational StrategyStrategyExportingExportingEstablishment of Esta
19、blishment of New SubsidiaryNew SubsidiaryExportingExportingStrategicStrategicAlliancesAlliancesAcquisitionAcquisitionManagement Management Problems Problems and Riskand RiskManagement Management Problems Problems and Riskand RiskHigher Higher Performance Performance ReturnsReturnsInnovationInnovatio
20、nInternational DifferentiationCountries with advanced or specialized factor Countries with advanced or specialized factor conditions most likely to use this strategyconditions most likely to use this strategyExample:Example: Japan, Germany, U.S. Japan, Germany, U.S.International Low CostUsually loca
21、ted in home countryUsually located in home countryExport to international marketsExport to international marketsLow value added operations in foreign countriesLow value added operations in foreign countriesHigh value added operations in home countryHigh value added operations in home countryBusiness
22、-Level International StrategiesBusiness-Level International StrategiesInternational Focus StrategiesInternational Integrated Low Cost/DifferentiationCan be most effective in dealing with diverse marketsCan be most effective in dealing with diverse marketsOften relies upon flexible manufacturing, tot
23、al quality Often relies upon flexible manufacturing, total quality management or rapid communication networksmanagement or rapid communication networksTechnologically advanced firms follow focused Technologically advanced firms follow focused low cost strategylow cost strategyFocused differentiation
24、 firms compete on the Focused differentiation firms compete on the basis of image & designbasis of image & designThird group competes on low price by imitatingThird group competes on low price by imitatingBusiness-Level International StrategiesBusiness-Level International StrategiesThree Corporate S
25、trategiesGlobal StrategyTransnational StrategyMulti-Domestic StrategyCorporate-Level International StrategiesCorporate-Level International StrategiesType of Corporate Strategy selected will have an Type of Corporate Strategy selected will have an impact on the selection and implementation of the imp
26、act on the selection and implementation of the business-level strategiesbusiness-level strategiesSome Corporate strategies provide individual country Some Corporate strategies provide individual country units with flexibility to choose their own strategiesunits with flexibility to choose their own s
27、trategiesOthers dictate business-level strategies from the home Others dictate business-level strategies from the home office and coordinate resource sharing across unitsoffice and coordinate resource sharing across unitsMulti-Domestic StrategyBusiness units in each country are independent Business
28、units in each country are independent of each other of each other Assumes markets differ by country or regionsAssumes markets differ by country or regionsFocus on competition in each marketFocus on competition in each marketProminent strategy among European firms due to Prominent strategy among Euro
29、pean firms due to broad variety of cultures and markets in Europebroad variety of cultures and markets in EuropeStrategy and operating decisions are decentralized Strategy and operating decisions are decentralized to strategic business units (SBU) in each countryto strategic business units (SBU) in
30、each countryProducts and services are tailored to local marketsProducts and services are tailored to local marketsCorporate-Level International StrategiesCorporate-Level International StrategiesProducts are standardized across national marketsProducts are standardized across national marketsDecision
31、s regarding business-level strategies are Decisions regarding business-level strategies are centralized in the home officecentralized in the home officeStrategic business units (SBU) are assumed to be Strategic business units (SBU) are assumed to be interdependentinterdependentEmphasizes economies o
32、f scaleEmphasizes economies of scaleOften lacks responsiveness to local marketsOften lacks responsiveness to local marketsRequires resource sharing and coordination across Requires resource sharing and coordination across borders (which also makes it difficult to manage)borders (which also makes it
33、difficult to manage)Global StrategyCorporate-Level International StrategiesCorporate-Level International StrategiesSeeks to achieve both global efficiency and local Seeks to achieve both global efficiency and local responsivenessresponsivenessDifficult to achieve because of simultaneous Difficult to
34、 achieve because of simultaneous requirements for strong central control and requirements for strong central control and coordination to achieve efficiency and local coordination to achieve efficiency and local flexibility and decentralization to achieve local flexibility and decentralization to ach
35、ieve local market responsivenessmarket responsivenessMust pursue organizational learning to achieve Must pursue organizational learning to achieve competitive advantagecompetitive advantageTransnational StrategyCorporate-Level International StrategiesCorporate-Level International StrategiesInternati
36、onal Corporate StrategyInternational Corporate StrategyWhen is each strategy appropriate?When is each strategy appropriate?Need for Need for Global Global IntegrationIntegrationNeed for Local Market ResponsivenessNeed for Local Market ResponsivenessLowHighLowHighMulti-Multi-DomesticDomesticInternati
37、onal Corporate StrategyInternational Corporate StrategyWhen is each strategy appropriate?When is each strategy appropriate?Need for Need for Global Global IntegrationIntegrationNeed for Local Market ResponsivenessNeed for Local Market ResponsivenessLowHighLowHighMulti-Multi-DomesticDomesticGlobalGlo
38、balStrategyStrategyInternational Corporate StrategyInternational Corporate StrategyWhen is each strategy appropriate?When is each strategy appropriate?Need for Need for Global Global IntegrationIntegrationNeed for Local Market ResponsivenessNeed for Local Market ResponsivenessLowHighLowHighMulti-Mul
39、ti-DomesticDomesticGlobalGlobalStrategyStrategyTrans-Trans-nationalnationalInternational Strategy Opportunities and OutcomesIdentify Identify International International OpportunitiesOpportunitiesExploreExploreResources and Resources and CapabilitiesCapabilitiesUse Core Use Core CompetenceCompetence
40、StrategicStrategicCompetitivenessCompetitivenessOutcomesOutcomesInternational International StrategiesStrategiesModes of Modes of EntryEntryIncreasedIncreasedMarket SizeMarket SizeReturn on Return on InvestmentInvestmentEconomies of Economies of Scale and Scale and LearningLearningLocation Location
41、AdvantageAdvantageInternationalInternationalBusiness-LevelBusiness-LevelStrategyStrategyMultidomestic Multidomestic StrategyStrategyGlobalGlobalStrategyStrategyTransnational Transnational StrategyStrategyExportingExportingEstablishment of Establishment of New SubsidiaryNew SubsidiaryExportingExporti
42、ngStrategicStrategicAlliancesAlliancesAcquisitionAcquisitionManagement Management Problems Problems and Riskand RiskManagement Management Problems Problems and Riskand RiskHigher Higher Performance Performance ReturnsReturnsInnovationInnovationCommon way to enter new international marketsCommon way
43、to enter new international marketsNo need to establish operations in other countriesNo need to establish operations in other countriesMay have high transportation costsMay have high transportation costsMay have less control on marketing and distributionMay have less control on marketing and distribu
44、tionMay encounter high import tariffsMay encounter high import tariffsDifficult to customize productsDifficult to customize productsEstablish distribution channels through contractual Establish distribution channels through contractual relationshipsrelationshipsChoice of International Entry ModeChoi
45、ce of International Entry ModeExportingChoice of International Entry ModeChoice of International Entry ModeLicensingFirm authorizes another firm to manufacture and Firm authorizes another firm to manufacture and sell its productssell its productsLicensing firm is paid a royalty on each unit Licensin
46、g firm is paid a royalty on each unit produced and soldproduced and soldLicensee takes risks in manufacturing investmentsLicensee takes risks in manufacturing investmentsLeast risky way to enter a foreign marketLeast risky way to enter a foreign marketLicensing firm loses control over product qualit
47、y Licensing firm loses control over product quality and distributionand distributionRelatively low profit potentialRelatively low profit potentialA significant risk is that licensee learns technology A significant risk is that licensee learns technology and competes when license expiresand competes
48、when license expiresChoice of International Entry ModeChoice of International Entry ModeStrategic AlliancesEnable firms to shares risks and resources to expand into Enable firms to shares risks and resources to expand into international venturesinternational venturesMost joint ventures (JVs) involve
49、 a foreign company Most joint ventures (JVs) involve a foreign company with a new product or technology and a host company with a new product or technology and a host company with access to distribution or knowledge of local with access to distribution or knowledge of local customs, norms or politic
50、s customs, norms or politics May experience difficulties in merging disparate May experience difficulties in merging disparate culturesculturesMay not understand the strategic intent of partners or May not understand the strategic intent of partners or experience divergent (experience divergent (分歧的
51、分歧的) ) goalsgoalsChoice of International Entry ModeChoice of International Entry ModeAcquisitionsEnable firms to make most rapid international Enable firms to make most rapid international expansionexpansionCan be very costlyCan be very costlyLegal and regulatory requirements may present Legal and r
52、egulatory requirements may present barriers to foreign ownershipbarriers to foreign ownershipUsually require complex and costly negotiationsUsually require complex and costly negotiationsPotentially disparate corporate culturesPotentially disparate corporate culturesNew Wholly-Owned SubsidiaryChoice
53、 of International Entry ModeChoice of International Entry ModeMost costly and complex of entry alternativesMost costly and complex of entry alternativesAchieves greatest degree of controlAchieves greatest degree of controlPotentially most profitable, if successfulPotentially most profitable, if succ
54、essfulMaintain control over technology, marketing Maintain control over technology, marketing and distributionand distributionMay need to acquire expertise and knowledge May need to acquire expertise and knowledge that is relevant to host countrythat is relevant to host countryCould require hiring h
55、ost country Could require hiring host country nationals or consultants at high costnationals or consultants at high costInternational Strategy Opportunities and OutcomesIdentify Identify International International OpportunitiesOpportunitiesExploreExploreResources and Resources and CapabilitiesCapab
56、ilitiesUse Core Use Core CompetenceCompetenceStrategicStrategicCompetitivenessCompetitivenessOutcomesOutcomesInternational International StrategiesStrategiesModes of Modes of EntryEntryIncreasedIncreasedMarket SizeMarket SizeReturn on Return on InvestmentInvestmentEconomies of Economies of Scale and
57、 Scale and LearningLearningLocation Location AdvantageAdvantageInternationalInternationalBusiness-LevelBusiness-LevelStrategyStrategyMultidomestic Multidomestic StrategyStrategyGlobalGlobalStrategyStrategyTransnational Transnational StrategyStrategyExportingExportingEstablishment of Establishment of
58、 New SubsidiaryNew SubsidiaryExportingExportingStrategicStrategicAlliancesAlliancesAcquisitionAcquisitionManagement Management Problems Problems and Riskand RiskManagement Management Problems Problems and Riskand RiskHigher Higher Performance Performance ReturnsReturnsInnovationInnovationStrategic C
59、ompetitiveness OutcomesStrategic Competitiveness OutcomesInternational diversification facilitates innovation in International diversification facilitates innovation in the firmthe firmProvides larger market to gain more and faster returns Provides larger market to gain more and faster returns form
60、investments in innovationform investments in innovationMay generate resources necessary to sustain a large-May generate resources necessary to sustain a large-scale R&D programscale R&D programGenerally related to above-average returns, assuming Generally related to above-average returns, assuming e
61、ffective implementation and management of effective implementation and management of international operationsinternational operationsInternational diversification provides greater International diversification provides greater economies of scope and learningeconomies of scope and learningInternation
62、al Strategy Opportunities and OutcomesIdentify Identify International International OpportunitiesOpportunitiesExploreExploreResources and Resources and CapabilitiesCapabilitiesUse Core Use Core CompetenceCompetenceStrategicStrategicCompetitivenessCompetitivenessOutcomesOutcomesInternational Internat
63、ional StrategiesStrategiesModes of Modes of EntryEntryIncreasedIncreasedMarket SizeMarket SizeReturn on Return on InvestmentInvestmentEconomies of Economies of Scale and Scale and LearningLearningLocation Location AdvantageAdvantageInternationalInternationalBusiness-LevelBusiness-LevelStrategyStrate
64、gyMultidomestic Multidomestic StrategyStrategyGlobalGlobalStrategyStrategyTransnational Transnational StrategyStrategyExportingExportingEstablishment of Establishment of New SubsidiaryNew SubsidiaryExportingExportingStrategicStrategicAlliancesAlliancesAcquisitionAcquisitionManagement Management Prob
65、lems Problems and Riskand RiskManagement Management Problems Problems and Riskand RiskHigher Higher Performance Performance ReturnsReturnsInnovationInnovationPolitical RiskMajor Risks of International DiversificationMajor Risks of International DiversificationRebel fighting in Chechnya (Russia) and
66、Rebel fighting in Chechnya (Russia) and Liberia (Africa) and most recently in Liberia (Africa) and most recently in AfghanistanAfghanistanContinual warfare among Middle Eastern nationsContinual warfare among Middle Eastern nationsPotential renationalization of privatized enterprises Potential renati
67、onalization of privatized enterprises in Russiain RussiaFailure of European Community in quest for Failure of European Community in quest for economic superpower status because of intercountry economic superpower status because of intercountry disagreementsdisagreementsEconomic RiskMajor Risks of In
68、ternational DiversificationMajor Risks of International DiversificationMexicos effect on world trade with low wages and high Mexicos effect on world trade with low wages and high quality but strong currency risksquality but strong currency risksChinas difficulty in enforcing intellectual property ri
69、ghts Chinas difficulty in enforcing intellectual property rights on CDs, software, etc. on CDs, software, etc. Germanys struggle with high unemployment, high Germanys struggle with high unemployment, high interest rates, sagging competitiveness, and cuts in social interest rates, sagging competitive
70、ness, and cuts in social programsprogramsUSs trade policies and emergence of trade USs trade policies and emergence of trade protectionism (e.g., 8-30% imp tariff on steel products)protectionism (e.g., 8-30% imp tariff on steel products)Management ProblemsLimits To International ExpansionLimits To International ExpansionCost of Coordination across diverse geographical business unitsInstitutional and cultural barriersUnderstanding strategic intent of competitorsThe overall complexity of competition
