‡ Expected
Value
‡ Duration
‡ Transaction
‡ Risks
Costs
‡ Product
Life Cycle
‡ Evolutionary
Model
Modes of Crossing Borders
Delegate
Invest
Control
Integrated
Subsidiary
Minority
Investment
Joint Venture
Turnkey
Factory
Local-forlocal subsidiary
Strategic alliance
Licensing
Do Not
Invest
Export agent
Sales
subsidiary
Franchise
Distributor
Management
Contract
Porter’s National Diamond
Government
Firm Strategy,
Structure, & Rivalry
Input Factor
Conditions
Demand
Conditions
Related &
Supporting
Industries
Chance
Integration/Responsiveness Grid
Pressures for H
Cross-border
Integration
L
L
H
Pressures for Local Responsiveness
Key Issues and Frameworks -Location
‡
Issues
„
„
Do firms based in a particular country have
and advantage/disadvantage in a particular
industry?
What competitive advantages can a firm
gain by locating certain activities in
different countries
‡ Framework
„ Dynamics
of location-specific advantages
(Porter’s diamond, “virtual” diamond)
I-R (Integration - Responsiveness) Framework
‡
Pressures for Global Operational Integration:
„
„
„
‡
Pressures for Global Strategic Integration:
„
„
„
‡
Technology intensity, scale economies
Pressures for cost reduction
Homogenous needs/tastes
Importance of multinational customers
Importance of multinational competitors
Investment intensity
Pressures for Local Responsiveness
„
„
„
„
Differences in customer needs/tastes
Differences in distribution systems
Needs for substitutes (regulations)
Host government requirements
Key Issues and Frameworks--Industry
‡ Issues
„ Is
globalization an imperative, an
opportunity, or a trap in an industry?
„ What
changes will intensify the degree of
global competition in an industry?
‡ Framework
„ Forces
for Globalization and Local Responsiveness (I-R grid)
Benefits of internationalization Efficiency
Global economics of scale
Comparative advantage of location
Knowledge
leverage
Use people and
ideas globally,
create knowledge
via multinational scope
Responsiveness
to customers,
key stakeholders
What are the key challenges in
international business?
‡
Where do we do what, and how?
‡
How does (or might) operating in a
different location affect our competitive
advantage?
‡
How does (or might) operating across
locations affect our competitive
advantage?