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Strategic Management/ Business Policy

Strategic Management/ Business Policy. Power Point Set #11: International Strategy. Questions Concerning International Strategy. What is the economic value of international strategies, according to Richard Caves of Harvard University?

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Strategic Management/ Business Policy

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  1. Strategic Management/ Business Policy Power Point Set #11: International Strategy

  2. Questions Concerning International Strategy • What is the economic value of international strategies, according to Richard Caves of Harvard University? • Why are some countries more competitive than others in international competition? • How do companies diversify internationally? • How do you organize an international company?

  3. Value of International Strategies • Gain Access to Low-Cost Factors of Production • For example, achieving global economies of scale such as can be observed in the automobile industry. • Leverage Core Competencies • E.g., We saw earlier in the semester Honda developing and leveraging its competencies in producing motors for motorcycles, automobiles, snow blowers and lawn mowers

  4. Value of International Strategies • Managing Corporate Risk • As global capital markets become more efficient over time, the benefit provided by this corporate strategy diminishes. • “Stretching” to Develop New Core Competencies • E.g., Learning new skills in international markets • Gain Access to New Customers for Current Products or Services • Disneyland Tokyo, and Euro Disney

  5. Corporate-level International Strategies • Global Strategy (cost leadership strategy) • Products are standardized across national markets; • Emphasizes economies of scale; • Lacks responsiveness to local markets; and • Requires resource sharing and coordination across borders

  6. Corporate-level International Strategies • Multi-Domestic Strategy(product differentiation strategy) • Decentralized strategy; • Products and services tailored to local markets; • Focus on competition in each market; and is a: • Prominent strategy among European firms due to broad variety of cultures and markets in Europe

  7. Corporate-level International Strategies • Transnational Strategy • Seeks to achieve both global efficiency (cost leadership) and local responsiveness (product differentiation) • Difficult to achieve because of simultaneous requirements for strong central control and coordination to achieve efficiency and local flexibility and decentralization to achieve local market responsiveness.

  8. Types of Corporate-Level Strategic Alliances • Diversifying Alliances • e.g., Samsung Group joins with Nissan to build new automobiles • Synergistic Alliances • e.g., Sony shares developments with many small firms • Franchising • e.g., Century 21 or McDonald’s

  9. How Should We Enter A Foreign Country?

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