international
strategic management
international business, 5th edition
chapter 11
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
11-2
Chapter Objectives 2
• Describe the international strategic
management process
• Identify and characterize the levels
of international strategies
11-3
International Strategic Management
International strategic management
is a comprehensive and ongoing
management planning process aimed
at formulating and implementing
strategies that enable a firm to
compete effectively internationally.
11-4
Strategic Planning
The process of developing a particular
international strategy is often referred
to as strategic planning.
11-5
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?
11-6
Factors Affecting International
Strategic Management
11-7
• Language
• Financing
• Culture
• Market research
• Politics
• Advertising
• Economy
• Money
• Governmental
interference
• Transportation/
communication
• Labor
• Control
• Labor relations
• Contracts
Sources of Competitive Advantage
Global
efficiencies
Multinational
flexibility
Worldwide
learning
11-8
Global Efficiencies
Location
efficiencies
Economies
of scale
11-9
Economies
of scope
Location Efficiencies
Mercedes-Benz
has achieved
economies of
scale by focusing
production of its
M-class at its
assembly plant in
Vance, Alabama.
11-10
Strategic Alternatives
Home replication strategy
Multidomestic strategy
Global strategy
Transnational strategy
11-11
Pressures for Global Efficiencies
Figure 11.1 Strategic Alternatives
11-12
High
Global Strategy
Firm views the world as
single marketplace. Goal
is to create standardized
products.
Low
Home Replication
Firm uses core
competency or firmspecific advantage
Transnational Strategy
Firm combines benefits
of global scale
efficiencies with benefits
of local responsiveness
Multidomestic Strategy
Firm operates as a
collection of relatively
independent subsidiaries
Low
High
Pressures for Local Responsiveness/Flexibility
Components of International Strategy
11-13
Distinctive
competence
Scope of
operations
Resource
deployment
Synergy
Distinctive Competence
• Answers the question
– What do we do exceptionally well,
especially as compared to our
competitors?
• Represents important resource to
the firm
11-14
Scope of Operations
• Answers the question
– Where are we going to conduct
business?
• Aspects of scope
– Geographical region
– Market or product niches within regions
– Specialized market niches
11-15
Resource Deployment
• Answers the question
– Given that we are going to compete in
these markets, how will we allocate
our resources to them?
• Resource specifics
– Product lines
– Geographical lines
11-16
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
11-17
Developing International Strategies
Strategy
formulation
Strategy
implementation
11-18
Figure 11.2 Steps in International
Strategy Formulation
Develop a mission statement
Perform a SWOT analysis
Set strategic goals
Develop tactical goals and plans
Develop a control framework
11-19
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
11-20
Mission Statements
• Wells Fargo
– Satisfy all our customers’ financial needs,
help them succeed financially, be known as
one of America’s great companies and the
number-one financial services provider in
each of our markets
• Carpenter Technology
– Major, profitable, and growing international
producer and distributor of specialty alloys,
materials, and components
11-21
SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
11-22
Environmental Scanning
An environmental scan is a
systematic collection of data about all
elements of the firm's external and
internal environments, including
markets, regulatory issues,
competitors' actions, production costs,
and labor productivity.
11-23
Figure 11.3 The Value Chain
11-24
Strategic Goals
Strategic goals are the major
objectives the firm wants to
accomplish through pursuing a
particular course of action.
11-25
Tactical Goals and Plans
• Middle
management
issues
• Details of
implementation
11-26
• Examples
– Hiring
– Compensation
– Career paths
– Distribution and
logistics
Control Framework
A control framework is the set of
managerial and organizational
processes that keep the firm moving
toward its strategic goals.
11-27
Figure 11. 4 Levels of
International Strategy
11-28
Corporate Strategy
• Single-Business Strategy
• Related Diversification
• Unrelated Diversification
11-29
Advantages of Related Diversification
• Less dependence on single product
• Greater economies of scale
• Entry into additional markets more
efficient and effective
11-30
Business Strategy
Differentiation
Overall cost leadership
Focus
11-31
Functional Strategies
Financial
11-32
Human
resources
Marketing
R&D
Operations