strategic choices 8: international strategy. exploring corporate strategy 8e, © pearson education...
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Strategic Choices8: International Strategy
8-2Exploring Corporate Strategy 8e, © Pearson Education 2008
Learning Outcomes (1)
Assess the internationalisation potential of different markets, sensitive to variations over time
Identify sources of competitive advantage in international strategy, both through global sourcing and exploitation of local factors embodied in Porter’s Diamond
Distinguish between four main types of international strategy
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Learning Outcomes (2)
Rank markets for entry or expansion, taking into account attractiveness, cultural, and other forms of distance and competitor retaliation threats
Assess the relative merits of different market entry modes, including joint ventures, licensing, and foreign direct investment
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Exhibit 8.1 International Strategy Framework
Internationalstrategy
Internationalisationdrivers
Sources of competitive advantage
Marketselection
Mode of entry
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Exhibit 8.2 Drivers of Internationalisation
Internationalstrategies
Government drivers
Market drivers
Costdrivers
Competitive drivers
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Deutsche Post’s International Diversity
What were the internationalisation drivers associated with DPWN’s strategy?
Evaluate the pros and cons of both a multidomestic strategy and a global strategy for DPWN.
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What is Porter’s Diamond?
Porter’s Diamond suggests that there are inherent reasons why
some nations are more competitive than others, and why some
industries within nations are more competitive than others.
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Exhibit 8.3 Porter’s Diamond
Firm strategy, structure and rivalry
Demandconditions
Related andsupporting industries
Factorconditions
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What is Global Sourcing?
Global sourcing refers to purchasing services and components from the most appropriate suppliers around the world regardless of their
location.
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Locational Advantages of Global Sourcing
Cost advantages
Unique capabilities
National characteristics
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Illustration 8.3 Boeing’s Global R&D Network
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Market Characteristics and the PESTEL Framework
Political Economic
Social Legal
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The CAGE Framework
Cultural distance
Administrative and political distance
Geographic distance
Economic/ wealthdistance
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SABMiller’s International Markets
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Hindustan Lever Ltd
What challenges are faced by multinationals in developing global brands while encouraging local responsiveness?
What are your views on the ethical dimensions to Hindustan Lever’s activities?
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Modes of Entry
Exporting
Joint ventures and alliances
Licensing
Foreign direct investment
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Exporting
Advantages
No need for operational facilities in host country
Economies of scale
Internet facilitates exporting opportunities
Disadvantages
Lost location advantages
Dependence on export intermediaries
Exposure to trade barriers
Transportation costs
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Joint Ventures and Alliances
Advantages
Shared investment risk
Complementary resources
May be required for market entry
Disadvantages
Difficult to find good partner
Relationship management
Loss of competitive advantage
Difficult to integrate and coordinate
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Licensing
Advantages
Contractual source of income
Limited economic and financial exposure
Disadvantages
Difficult to identify good partner
Loss of competitive advantage
Limited benefits from host nation
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Foreign Direct Investment
Advantages
Full control
Integration and coordination possible
Rapid market entry through acquisitions
Greenfield investments
Disadvantages
Substantial investment and commitment
Acquisitions may create integration/ coordination issues
Greenfield investments are time consuming and unpredictable
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Internationalisation and Performance
Inverted U-curve
Service sector disadvantages
Internationalisation and product diversity
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Case Example: Lenovo Computers
In the light of the CAGE framework, comment on Lenovo’s entry into the American market.
What type of generic international strategy should Lenovo pursue now?