International Strategy: Amrin Khan ..... 17 Harshal Kirtane 24 Samina Mirkar .31 Mary Rayan .37 Swapnil Wani....... 59

International Strategy
Presented by:--
Amrin Khan….....17
Harshal Kirtane…24
Samina Mirkar….31
Mary Rayan…….37
Swapnil Wani.......59
Contents:-
 Identify International Opportunities
 International strategies
 Modes of entry
 Strategic competitive outcomes
 Risk in an International environment
 Managerial problems during international
expansion
8–2
Opportunities & Outcomes of
International Strategy
8–3
International Strategy Opportunities & Outcomes
Identify Explore Use Core Strategic
International Resources & Competence Competitiveness
Opportunities Capabilities Outcomes
International Modes of Management
Strategies Entry Problems, Risk,
and First Steps
Increased International Exporting
Market Size Bus.-Level
Strategy Higher
Return on Licensing
Performance
Investment Multidomestic Returns
Strategic
Strategy
Economies Alliances
of Scale and Global
Acquisition Innovation
Learning Strategy
Location Transnational Establishment
Advantage Strategy of New Sub.
Management
Problems, Risk,
and First Steps
9-4
Identifying International
Opportunities
 International strategy
 A strategy through which the firm sells its goods
or services outside its domestic market
 Reasons to having an international strategy
 New market expansion extends product life cycle
 Needed resources can be secured
 Universal product demand
5
International Strategy Benefits
 Benefit 1:
Increased Market Size
 International market can be
opportunity for growth when
domestic market have
limited growth opportunities.
 Large market offer higher
potential returns .
8–6
 Benefit 2:
Return on Investment
 Large market is crucial for earning a return on
significant investment(eg. Plant, R &D.)
 Cost Recovery
 Above-average returns
 Reverse engineering
8–7
 Benefit 3:
Economies of Scale (or Learning)
 It arises when cost per unit falls as output
increases.
 Exploiting core competencies in
international market through resource &
knowledge sharing.
8–8
 Benefit 4:
Location Advantage:
 Firms locate facilities in other countries to lower the basic
costs of goods or services they provide.
 Provides access to:
 low cost labour
 Raw Material
 Transportation
 key customers
8–9
and First Steps
Strategy Higher
Return on Licensing
Performance
Strategic
Strategy
Economies Alliances
of Scale and Global
Learning Strategy
Management
Problems, Risk,
and First Steps
9-10
International Strategies
• International Business-level strategies
• International Corporate-level strategies
8–11
International Business level strategy:
The home country of operation is often the most

important source of competitive advantage.
But as firm continues its growth into multiple

international location, the country of origin is less
important for competitive advantage.
8–12
Michael Porter’s “DIAMOND”
Model:
Source: Adapted with the permission of The Free Press, an imprint of Simon & Schuster Adult Publishing Group,
from Competitive Advantage of Nations, by Michael E. Porter, p. 72. Copyright ©1990, 1998 by Michael E. Porter.
8–13
Determinants of National
Advantage
 Factors of production
 Refers to the inputs necessary to compete in
any industry
• Labour • Land
• Natural resources
• Capital • Infrastructure
 Demand Conditions
 Characterized by the nature and size of
buyers’ needs in the home market for the
industry’s goods or services.
8–14
Determinants of National
Advantage
Related and Supporting Industries
 Supporting services, facilities, and suppliers
are the key factor.
Firm Strategy, Structure and Rivalry

 The pattern of strategy, structure, and rivalry
among firms.
8–15
International Corporate-Level
Strategy
 International corporate level strategy is

required when the firm operates in multiple
industries & multiple countries or regions.
8–16
International Corporate-Level
Strategies
8–17
Multidomestic Strategy
 Product customized for each market.
Multidomestic
 Decentralized control – local decision
strategy
making.
 Effective when large differences exists
between countries.
8–18
Global Strategy
 Products are standardized across all
Global countries.
strategy  centralized control - little decision
making authority on local level.
 Effective when differences between
countries are small.
8–19
Transnational Strategy
 Seeks to achieve both global
Transnational
efficiency and local
strategy responsiveness.
 Difficult to achieve because
of simultaneous
requirements:
 Strong central control and
coordination to achieve
efficiency
 Decentralization to achieve
local market responsiveness
8–20
Environmental Trends
 Liability of Foreignness
 A regional focus allows firms to marshal
their resources to compete effectively in
regional markets rather than spreading
their limited resources across many
international markets.
8–21
 Regionalization
 Focusing on particular region(s) rather than

on global markets.
 Firms may choose a region of the world
where the markets are more similar and
some coordination and sharing of resources
would be possible.
8–22
and First Steps
Strategy Higher
Return on Licensing
Performance
Strategic
Strategy
Economies Alliances
of Scale and Global
Learning Strategy
Management
Problems, Risk,
and First Steps
9-23
Methods of International Entry
8–24
EXPORTING :
 Exporting can be defined as the
marketing of goods produced in one
country into another.
 It does not require the expense of
establishing operations in the host
country, but exporters must established
some means of marketing and
distributing there products .
 Example : Indian Spices
8–25
LICENSING :
 A Licensing agreement allows a foreign
company to purchase the right to
manufacture and sell the firm’s product
within a host country or set of countries.
8–26
STRATEGIC ALLIANCES
 Strategic alliance allows firms to share
the risks and the resources required to
enter international markets.
 Example : TCS & IBM
8–27
ACQUISITIONS
 The purchase of one corporation by
another, through either the purchase of
its shares , or the purchase of its assets.
 Example : Tata Corus
8–28
NEW WHOLLY OWNED
SUBSIDIARY
 A wholly owned subsidiary is a company
that is totally owned by another
company.
 The establishment of new wholly owned
subsidiary is referred to as a
GREENFIELD VENTURE.
 Example : Reliance communication U.K
ltd, Hongkong, Australia ,Singapore
8–29
Dynamics of Mode of Entry
What’s the best solution?
Situation Optimal Solution
The firm has no foreign Export
manufacturing expertise
and requires investment
only in distribution.
8–30
The firm needs to Licensing
facilitate the product
improvements
necessary to enter
foreign markets.
8–31
The firm needs to Strategic Alliance
reduce its risk through
the sharing of costs.
8–32
The firm wants to enter Acquisition
a market quickly and
their business-level
strategy requires more
control from the home
country.
8–33
The firm’s intellectual Wholly-owned
property rights in an Subsidiary
emerging economy are
not well protected, the
number of firms in the
industry is growing fast,
and the need for global
integration is high.
8–34
STRATEGIC COMPETITIVE
OUTCOMES
8–35
International Diversification and
Returns
 International diversification is a strategy
to which a firm expands the sales of its
goods or services across global regions
and countries and into different
geographic locations or markets.
 It is an attempt to reduce the risk by
investing in more than one nation, often
political risk.
8–36
International Diversification and
Innovation
 Competitors outperform firms that fail to
innovate and to improve their operations
and products.
 Example: Nokia
8–37
Complexity of Managing
Multinational Firms
 Expansion into global operations in
different geographic locations or
markets leads to more complexity -
 Makes implementing international strategy
increasingly complex.
 Can produce greater uncertainty and risk.
 May result in the firm becoming
unmanageable.
 Example: Toyota.
8–38
RISK IN AN INTERNATIONAL ENVIRONMENT
 POLITICAL RISK
Political risks are risks related to instability in national
governments and to war,both civil and international.
These are –
 National government instability may create potential
problems for internationally diversified firms.
 Potential changes in attitudes or regulations regarding foreign
ownership.
 Legal authority obtained from previous administration may
become invalid.
8–39
Economic Risk
• Economic risk are interdependent with

political risk
• Differences and fluctuations in
international currencies may affect value
of assets & liabilities.
(This affects prices & thus ability to
compete.)
• Differences in inflation rates may affect
inter-nationally diversified firms’ ability to
compete.
Limits to International Expansion:
Management Problems
 Cost of coordination across diverse
geographical business units
 Institutional and cultural barriers
 Understanding strategic intent of competitors
 The overall complexity of competition
8–41

International Strategy: Amrin Khan ..... 17 Harshal Kirtane 24 Samina Mirkar .31 Mary Rayan .37 Swapnil Wani....... 59

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

International Strategy: Amrin Khan ..... 17 Harshal Kirtane 24 Samina Mirkar .31 Mary Rayan .37 Swapnil Wani....... 59

Uploaded by

Copyright:

Available Formats

International Strategy

• International Business-level strategies

• International Corporate-level strategies

The home country of operation is often the most

But as firm continues its growth into multiple

Firm Strategy, Structure and Rivalry

 International corporate level strategy is

 Focusing on particular region(s) rather than

• Economic risk are interdependent with

You might also like