Understanding Business Strategy Concepts & Cases

1. Understanding Business StrategyConcepts & Cases Part 3: Strategy Chapter 8: Competing Across Borders

2. Chapter 8: Competing Across Borders • Reading and studying this chapter should enable you to: • 1. Explain four reasons why firms pursue international strategies. • 2. Understand the two major pressures lead ing to three dominant international strategies. • 3. Describe the four basic alternative contractual modes for entering international markets and explain the trade -offs of using each.

3. Chapter 8: Competing Across Borders • Reading and studying this chapter should enable you to: • 4. Discuss how three types of advantages affect the decision about which mode of entering international markets to use. • 5. Explain the three alternative types of foreign direct investment and the strategic basis for each one. • 6. Describe the organizational structures that are used to implement each of the international strategies.

4. Chapter 8: Competing Across Borders • The increase in globalization is based on historical events • Tariffs and quotas on imported goods after World War I • Foreign direct investment after World War II • GATT • WTO • NAFTA • The Internet • BRIC

5. Chapter 8: Competing Across Borders • As a result of these events managers must develop global mind-sets • The costs and risks of doing business outside a firm’s domestic market can be significant – the liability of foreignness

7. Motives for International Strategies • Use of current resources and access to new resources • Seeking to expand or develop new markets • Competitive rivalry • Leveraging core competencies and learning

8. International Strategies • Firms consider two important and potentially competing issues when choosing an international strategy: the need for global efficiencies and the need to customize a good or service for a particular host country market

10. The Multidomestic Strategy • Firm establishes a relatively independent set of operating subsidiaries in which each subsidiary develops specific products for a particular domestic market • Customize to local market • Considerable power and authority resides in host country subsidiary managers • Overcomes cultural and language difficulties

11. The Global Strategy • A firm uses a central divisional office to develop, produce, and sell its standardized products throughout the world • Production and marketing strategies are usually centralized with decisions made at a division headquarters • Because of the importance of a particular location for access to critical customers and markets or access to financial resources, a firm may move its headquarters to a foreign setting

12. The Transnational Strategy • The firm attempts to combine the benefits of global scale efficiencies with the advantages of being locally responsive in a country or geographic region • Requires both centralization and decentralization simultaneously • Most effective for facilitating learning because culture created promotes transfer of knowledge and organizational practices

13. The Transnational Strategy • The multidomestic strategy uses a decentralized authority structure • The global strategy, on the other hand, centralizes decision making, which hampers new knowledge development

14. Modes of International Market Entry • Exporting • Licensing • Franchising • Contract manufacturing • Turnkey projects • Foreign direct investment

16. Foreign Direct Investments • International Strategic Alliances and Joint Ventures • Greenfield Venture • International Acquisition

17. Factors Affecting Selection • Firm-specific resources advantages • Country-specific or location advantages • Internal coordination or administrative advantages

18. Implementing Multidomestic Strategy

19. Implementing Global Strategy

20. Implementing Transnational Strategy