Strategic Choices 8: International Strategy. Exploring Corporate Strategy 8e, © Pearson Education...
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Transcript of Strategic Choices 8: International Strategy. Exploring Corporate Strategy 8e, © Pearson Education...
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
8-3Exploring Corporate Strategy 8e, © Pearson Education 2008
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
8-4Exploring Corporate Strategy 8e, © Pearson Education 2008
Exhibit 8.1 International Strategy Framework
Internationalstrategy
Internationalisationdrivers
Sources of competitive advantage
Marketselection
Mode of entry
8-5Exploring Corporate Strategy 8e, © Pearson Education 2008
Exhibit 8.2 Drivers of Internationalisation
Internationalstrategies
Government drivers
Market drivers
Costdrivers
Competitive drivers
8-6Exploring Corporate Strategy 8e, © Pearson Education 2008
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.
8-7Exploring Corporate Strategy 8e, © Pearson Education 2008
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.
8-8Exploring Corporate Strategy 8e, © Pearson Education 2008
Exhibit 8.3 Porter’s Diamond
Firm strategy, structure and rivalry
Demandconditions
Related andsupporting industries
Factorconditions
8-9Exploring Corporate Strategy 8e, © Pearson Education 2008
What is Global Sourcing?
Global sourcing refers to purchasing services and components from the most appropriate suppliers around the world regardless of their
location.
8-10Exploring Corporate Strategy 8e, © Pearson Education 2008
Locational Advantages of Global Sourcing
Cost advantages
Unique capabilities
National characteristics
8-11Exploring Corporate Strategy 8e, © Pearson Education 2008
Illustration 8.3 Boeing’s Global R&D Network
8-12Exploring Corporate Strategy 8e, © Pearson Education 2008
Market Characteristics and the PESTEL Framework
Political Economic
Social Legal
8-13Exploring Corporate Strategy 8e, © Pearson Education 2008
The CAGE Framework
Cultural distance
Administrative and political distance
Geographic distance
Economic/ wealthdistance
8-14Exploring Corporate Strategy 8e, © Pearson Education 2008
SABMiller’s International Markets
8-15Exploring Corporate Strategy 8e, © Pearson Education 2008
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?
8-16Exploring Corporate Strategy 8e, © Pearson Education 2008
Modes of Entry
Exporting
Joint ventures and alliances
Licensing
Foreign direct investment
8-17Exploring Corporate Strategy 8e, © Pearson Education 2008
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
8-18Exploring Corporate Strategy 8e, © Pearson Education 2008
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
8-19Exploring Corporate Strategy 8e, © Pearson Education 2008
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
8-20Exploring Corporate Strategy 8e, © Pearson Education 2008
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
8-21Exploring Corporate Strategy 8e, © Pearson Education 2008
Internationalisation and Performance
Inverted U-curve
Service sector disadvantages
Internationalisation and product diversity
8-22Exploring Corporate Strategy 8e, © Pearson Education 2008
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?