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Strategy: Analysis and Practice
Slide 1 ©The McGraw-Hill Companies, 2005
11. Global strategies and international advantage
Strategy: Analysis and Practice
Slide 2 ©The McGraw-Hill Companies, 2005
Outline● Terminology of International Business● The Context of International Strategy● National Competitive Advantage● The Internationalization Process● From International to Global Strategies● The Drivers of Globalization
Strategy: Analysis and Practice
Slide 3 ©The McGraw-Hill Companies, 2005
Outline (continued)
● Global vs. Local● Strategic Choices● The Best of Both Worlds● Strategy and Organization● Managing International Organisation
Strategy: Analysis and Practice
Slide 4 ©The McGraw-Hill Companies, 2005
The Terminology of International Business
● International Business: Transactions across national borders.
● International Trade: exporting and importing● Foreign Direct Investment: capital invested in
other nations by firms through their control of foreign subsidiaries and affiliates.
● Multinational Enterprises: Companies with subsidiaries located in more than one country, normally restricted to the largest international firms.
Strategy: Analysis and Practice
Slide 5 ©The McGraw-Hill Companies, 2005
World Trade 2000
Strategy: Analysis and Practice
Slide 6 ©The McGraw-Hill Companies, 2005
USA: Inward and Outward FDI 1999
Strategy: Analysis and Practice
Slide 7 ©The McGraw-Hill Companies, 2005
Determinants of National Competitive Advantage
Strategy: Analysis and Practice
Slide 8 ©The McGraw-Hill Companies, 2005
The Internationalization Process
Strategy: Analysis and Practice
Slide 9 ©The McGraw-Hill Companies, 2005
Determinants of Globalization
Strategy: Analysis and Practice
Slide 10 ©The McGraw-Hill Companies, 2005
From International to Global Strategy
Multidomestic Strategy
• Competition in one country is independent of competition elsewhere.
• Markets in each country have different consumer behaviour.
• Product diversity.• Portfolio of
independent subsidiaries
Global Strategy• Competition in one
country influenced by competition elsewhere.
• Markets and consumer behaviour broadly similar in all countries.
• Product standardisation
• International coordination and integration.
Strategy: Analysis and Practice
Slide 11 ©The McGraw-Hill Companies, 2005
Drivers of Globalization
Strategy: Analysis and Practice
Slide 12 ©The McGraw-Hill Companies, 2005
Strategic Choices
Strategy: Analysis and Practice
Slide 13 ©The McGraw-Hill Companies, 2005
Transnational Strategies“Exploit experience-based cost economies and location economies, transfer distinctive competences within the company, and at the same time pay attention to pressures for local responsiveness”(Bartlett and Ghoshal, 1989)
Strategy: Analysis and Practice
Slide 14 ©The McGraw-Hill Companies, 2005
Alternative Organizational Solutions
Strategy: Analysis and Practice
Slide 15 ©The McGraw-Hill Companies, 2005
The Flagship Firm
Strategy: Analysis and Practice
Slide 16 ©The McGraw-Hill Companies, 2005
The Matrix StructureAdvantages
• Combines product specialisation with geographical market knowledge.
• Overcomes silos and duplication by direct contact.
• Effective when there is clarity, continuity and consistency through the organization.
Disadvantages• Extends decision-
making time.• Dual reporting can
confuse responsibilities and priorities.
• May engender conflict.• May make
performance assessment ambiguous.
Strategy: Analysis and Practice
Slide 17 ©The McGraw-Hill Companies, 2005
Evolution of International Structure
Strategy: Analysis and Practice
Slide 18 ©The McGraw-Hill Companies, 2005
Concluding Remarks● International strategy is a significant
extension of the logic of competitive advantage.
● International trade and national competitive advantage are key parts of the business environment– International trade underpinning
internationalization.– Globalization promoting international
standardization.
Strategy: Analysis and Practice
Slide 19 ©The McGraw-Hill Companies, 2005
Concluding Remarks (continued)● International business strategy
involves the management of standardization and differentiation.
● Attempts to gain the ‘best of both worlds’ have involved– Transnational strategy– The matrix structure– The flagship firm