International business 5th griffin chapter 11

Chapter Objectives 1• Characterize the challenges of international strategic management • Assess the basic strategic alternatives available to firms • Distinguish and analyze the compone

Chapter Objectives 1

• Characterize the challenges of

international strategic management

• Assess the basic strategic

alternatives available to firms

• Distinguish and analyze the

components of international strategy

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

Strategic Planning

The process of developing a particular international strategy is often referred

to as strategic planning

• Where and how will it sell them?

• Where and how will it acquire the necessary resources?

• How does it expect to outperform its

competitors?

Factors Affecting International

Sources of Competitive Advantage

Global efficiencies

Worldwide learning Multinational flexibility

Global Efficiencies

Location efficiencies

Economies

of scale

Economies

of scope

Strategic Alternatives

Home replication strategy Multidomestic strategy

Global strategy Transnational strategy

Figure 11.1 Strategic Alternatives

Global Strategy

Firm views the world as single marketplace Goal

is to create standardized products.

Home Replication

Firm uses core competency or firm- specific advantage

Multidomestic Strategy

Firm operates as a collection of relatively independent subsidiaries

Transnational Strategy

Firm combines benefits

of global scale efficiencies with benefits

Components of International Strategy

Distinctive competence

Scope of operations Resource

deployment Synergy

Distinctive Competence

• Answers the question

– What do we do exceptionally well,

especially as compared to our competitors?

• Represents important resource to the firm

Scope of Operations

• Answers the question

– Where are we going to conduct

business?

• Aspects of scope

– Geographical region – Market or product niches within regions

Resource Deployment

• Answers the question

– Given that we are going to compete in

these markets, how will we allocate our resources to them?

• Resource specifics

– Product lines – Geographical lines

• Answers the question

– How can different elements of our

business benefit each other?

• Goal is to create a situation where the

whole is greater than the sum of the parts

Developing International Strategies

Strategy formulation Strategy implementation

Figure 11.2 Steps in International

Mission Statements

• Clarifies the organization’s purpose,

values, direction

• Communicates firm’s strategic direction

• Specifies firm’s target customers and

markets, principal products, geographical domain, core technologies, concerns for survival, plans for growth and profitability, basic philosophy, and desired public

image

Mission Statements

• Wells Fargo

– Satisfy all our customers’ financial needs, help them succeed financially, be known as one of America’s great companies and the number-one financial services provider in each of our markets

• Carpenter Technology

– Major, profitable, and growing international producer and distributor of specialty alloys, materials, and components

Environmental Scanning

An environmental scan is a

systematic collection of data about all elements of the firm's external and internal environments, including

markets, regulatory issues, competitors' actions, production costs,

and labor productivity

Figure 11.3 The Value Chain

Strategic Goals

Strategic goals are the major

objectives the firm wants to accomplish through pursuing a particular course of action

Tactical Goals and Plans

• Middle

management issues

• Details of

implementation

• Examples

– Hiring – Compensation – Career paths – Distribution and logistics

Control Framework

A control framework is the set of

managerial and organizational processes that keep the firm moving

toward its strategic goals

Figure 11 4 Levels of International Strategy

Corporate Strategy

• Single-Business Strategy

• Related Diversification

• Unrelated Diversification

Advantages of Related Diversification

• Less dependence on single product

• Greater economies of scale

• Entry into additional markets more

efficient and effective

Business Strategy

Differentiation

Focus Overall cost leadership

Functional Strategies

Financial

Marketing

Operations R&D

Human resources