International Strategic Management

1
International Strategic Management
International strategic management is a
comprehensive and ongoing management planning
process aimed at formulating and implementing
strategies that enable a firm to compete
effectively internationally.
2
International Strategies

• International strategies are comprehensive
  frameworks for achieving a firms fundamental
  goals.
• A firms strategic planners must answer the same
  fundamental questions
• What products and/or services does the firm
  intend to sell?
• Where and how will it make those products or
  services?
• Where and how will it sell them?
• Where and how will it acquire the necessary
  resources?
• How does it expect to outperform its competitors?

3
International Strategies (cont.)

• International businesses have the ability to
  exploit three sources of competitive advantage
  unavailable to domestic firms
• Global efficiencies
• Multinational flexibility
• Worldwide learning

4
Strategic Alternatives

• Multinational corporations typically adopt one of
  four strategic alternatives in their attempt to
  balance the three goals of global efficiencies,
  multinational flexibility, and worldwide
  learning
• Home replication strategy
• Multidomestic strategy
• Global strategy
• Transnational strategy

5
Home Replication Strategy

• In this approach, a firm utilizes the core
  competency or firm-specific advantage it
  developed at home as its main competitive weapon
  in the foreign markets that it enters. That is,
  it takes what it does exceptionally well in its
  home market and attempts to duplicate it in
  foreign markets.

6
The Multidomestic Strategy

• A multidomestic corporation views itself as a
  collection of relatively independent operating
  subsidiaries, each of which focuses on a specific
  domestic market. In addition, each of these
  subsidiaries is free to customize its products,
  its marketing campaigns, and its operations
  techniques to best meet the needs of its local
  customers.

7
The Global Strategy

• A global corporation views the world as a single
  marketplace and has as its primary goal the
  creation of standardized goods and services that
  will address the needs of customers worldwide.
  The global strategy is almost the exact opposite
  of the multidomestic strategy.

8
The Transnational Strategy

• The transnational corporation attempts to combine
  the benefits of global scale efficiencies, such
  as those pursued by a global corporation, with
  the benefits and advantages of local
  responsiveness, which is the goal of a
  multidomestic corporation.

9
Components of an International Strategy

• Managers who engage in international strategic
  planning need to address the four basic
  components of strategy development
• Distinctive competence
• Scope of operations
• Resource deployment
• Synergy

10
Distinctive Competence

• Distinctive competence answers the question What
  do we do exceptionally well, especially as
  compared to our competitors? A firms
  distinctive competence may be cutting-edge
  technology, efficient distribution networks,
  superior organizational practices, or
  well-respected brand names.

11
Scope of Operations

• The scope of operations answers the question
  Where are we going to conduct business? Scope
  may be defined in terms of geographical regions,
  such as countries, regions within a country,
  and/or clusters of countries. Or it may focus on
  market or product niches within one or more
  regions, such as the premium-quality market
  niche, the low-cost market niche, or other
  specialized market niches.

12
Resource Deployment

• Resource deployment answers the question Given
  that we are going to compete in these markets,
  how will we allocate our resources to them? For
  example, even though Disney will soon have theme
  park operations in four countries, the firm does
  not have an equal resource commitment to each
  market.

13
Synergy

• Synergy answers the question How can different
  elements of our business benefit each other? The
  goal of synergy is to create a situation where
  the whole is greater than the sum of the parts.

14
Developing International Strategies

• Firms generally carry out international strategic
  management in two broad stages
• Strategy formulation
• Strategy implementation

15
Strategy Formulation

• In strategy formulation, the firm establishes its
  goals and the strategic plan that will lead to
  the achievement of those goals. In international
  strategy formulation, managers develop, refine,
  and agree on which markets to enter (or exit) and
  how best to compete in each.

16
Strategy Implementation

• In strategy implementation, the firm develops the
  tactics for achieving the formulated
  international strategies. Disneys decision to
  build Disneyland Paris was part of strategy
  formulation. But deciding which attractions to
  include, when to open, and what to charge for
  admission is part of strategy implementation.

17
SWOT Analysis
A SWOT analysis consists of a firm looking at
its strengths, weaknesses, opportunities, and
threats.
18
Strategic Goals
Strategic goals are the major objectives the
firm wants to accomplish through pursuing a
particular course of action. By definition, they
should be measurable, feasible, and time-limited,
answering the questions how much, how, and by
when?
19
Control Framework
A control framework is the set of managerial and
organizational processes that keep the firm
moving toward its strategic goals.
20
Levels of International Strategy

• Given the complexities of international strategic
  management, many international businesses find it
  useful to develop strategies for three distinct
  levels within the organization
• Corporate
• Business
• Functional

21
Corporate Strategy

• Corporate strategy attempts to define the domain
  of businesses the firm intends to operate. A firm
  might adopt any of three forms of corporate
  strategy
• Single business strategy
• Related diversification strategy
• Unrelated diversification strategy

22
Business Strategy

• Whereas corporate strategy deals with the overall
  organization, business strategy focuses on
  specific businesses, subsidiaries, or operating
  units within the firm. The three basic forms of
  business strategy are
• Differentiation
• Overall cost leadership
• Focus

23
Functional Strategy

• Functional strategies attempt to answer the
  question How will we manage the functions of
  finance, marketing, operations, human resources,
  and research and development in ways consistent
  with our international corporate strategies?

24
Common Functional Strategies

• Some common functional strategies are
• Financial strategy
• Marketing strategy
• Operations strategy
• Human resource strategy
• Research and development strategy