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Chapter 11:InternationalStrategic Management

International Business, 4th Edition

Griffin & Pustay

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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

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Chapter Objectives_2

Describe the international strategic management process

Identify and characterize the levels of international strategies

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International Strategic Management

Comprehensive and ongoingmanagement planning process aimed at

formulating and implementingstrategies that enable a firm to compete

effectively internationally

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Fundamental Questions

What products and/or services does the firm intend to sell?

Where and how will it make those products or services?

Where and how will it sell them? Where and how will it acquire the necessary

resources? How does it expect to outperform its

competitors?

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Factors Affecting International Strategic Management for U.S. Firms

Language Culture Politics Economy Governmental

interference Labor Labor relations

Financing Market research Advertising Money Transportation/

communication Control Contracts

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Sources of Competitive Advantage for International Businesses

Global efficiencies Multinational flexibility Worldwide learning

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Japanese MNC Matsushita has location efficiencies by producing microwaves in Shanghai to take advantage of

China’s low labor costs

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Strategic Alternatives

Home replication strategy Multidomestic strategy Global strategy Transnational strategy

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Figure 11.1 Strategic Alternatives

Global StrategyThe firm views the world assingle marketplace. Primarygoal is to create standardizedproducts

Home ReplicationThe firm uses the core com-petency or firm-specific advantage it developed athome

Multidomestic StrategyThe firm operates as a collection of relativelyindependent Subsidiariesfocusing on domestic market

Transnational StrategyThe firm attempts to combinethe benefits of global scaleefficiencies with the benefitsof local responsiveness

Low HighPressures for Local Responsiveness and Flexibility

Pre

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or G

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High

Low

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Components of International Strategy

Distinctive competence Scope of operations Resource deployment Synergy

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Distinctive Competence

Answers the question– What do we do exceptionally well,

especially as compared to our competitors?

Represents important resource to the firm

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Scope of Operations

Answers the question– Where are we going to conduct business?

May be defined by– Geographical region

– Market or product niches within regions

– Specialized market niches

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Resource Deployment

Answers the question– Given that we are going to compete in

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

May be specified by– Product lines

– Geographical lines

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Synergy

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

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The Internet makes business through virtual markets possible anytime and anywhere!

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Figure 11.2 Steps in International Strategy Formulation

Develop a Mission Statement

Perform a SWOT Analysis

Set Strategic Goals

Develop TacticalGoals and Plans

Develop a Control Framework

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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

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Mission Statements

Hershey Foods– No. 1 confectionary company in North

America, moving toward worldwide confectionary market share leadership

Carpenter Technology– Major, profitable, and growing international

producer and distributor of specialty alloys, materials, and components

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Environmental Scanning

Environmental scan: systematic collection of data about all elements of the firm’s external and internal environments– Markets– Regulatory issues– Competitors’ actions– Production costs– Labor productivity

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SWOT Analysis

Strengths Weaknesses Opportunities Threats

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Control Framework

Set of managerial and organizational processes that keep firm moving toward its strategic goals

Feedback loop prompts revisions in earlier steps in strategy formulation process

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Figure 11.3 The Value Chain

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Levels of International Strategy

Corporate Strategy Business Strategy Functional Strategy

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Corporate Strategy

Single-Business Strategy Related Diversification Unrelated Diversification

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Business Strategy

Differentiation Overall Cost Leadership Focus

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Functional Strategies

Financial Marketing Operations Human Resource R&D