TUTORIAL WEEK 8
INTERNATIONALISATION
Part 1
WEEK IN REVIEW
WEEK IN REVIEW
Reasons for international expansions
How to internationalise and grow: joint ventures, mergers, acquisitions, strategic alliances
How to analyse locational advantages
Globalisation vs localisation: the internationalisation dilemma
Implications for strategic decision-making
Ways to grow internationally
Key factors in choosing the method of strategy
development:
• Urgency – organic development is slowest.
Alliances accelerate the process, but
acquisitions are quickest.
• Uncertainty – an alliance means risks and costs
are shared and thus a failure means these
costs are shared.
• Type of capabilities – acquisitions work best
with ‘hard’ resources (e.g. production units)
rather than ‘soft’ resources (e.g. people).
Culture clash is the big issue.
• Modularity of capabilities – if the needed
capabilities can be clearly separated from the
rest of the organisation an alliance may be
best.
Globalisation or localisation?
• Levitt (1983) The globalisation of markets
• The demand for globalisation
– Global convergence - ease, low cost and frequency of international
communication, transport and travel. Technology has created a ‘global village’
in which goods, services and ideas are easily exchanged.
– Growing similarity between countries offers opportunities for leveraging
resources and sharing activities across borders.
– Suppliers, buyers and competitors can operate as if there are no borders.
– Demands of standardisation, centralisation and coordination require a global
firm with a strong centre responsible for global strategy.
Globalisation or localisation?
• Douglas and Wind (1986) The Myth of Globalisation
• The demand for local responsiveness
• Companies must remain attuned to the specific demands of each
national market. Many differences, eg differences in:
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–
–
–
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culture - language, customs, religion, ethnicities, tastes
government regulations.
political systems, laws, trading blocks, currency.
geography - physical distance, lack of land border, time zones, climate
economy - income levels, wage costs, infrastructure.
• http://www.youtube.com/watch?v=kemtDbTBwpo
Ghemawat (2003, 2017)
• Regional strategies
• Triple A triangle
• Seeks to strike a balance between
responsiveness and economies of scale
• Adaptation (localisation)
• Aggregation (merging and standardising)
• Arbitrage (exploiting difference between markets)
Part 2
EXERCISE
Q1 – P114
The myth of a borderless world has come crashing down. Traditional pillars of open
markets—the United States and the UK—are wobbling, and China is positioning itself as
globalization’s staunchest defender. In June 2016, the Brexit vote stunned the European
Union, and the news coverage about globalization turned increasingly negative in the U.S. as
the presidential election campaign progressed.
Q2 – P114
it would be a mistake to talk about the end of globalization: The “rewind” button on a tape
recorder shouldn’t be confused with the “off” button.
P116
If global trade didn’t screech to a halt in the 1930s, it’s reasonably safe to say that it won’t in
the 2020s, either (lots more on P116)
Discuss in groups and with your tutor the following questions:
Q3 – P115
… perceptions about the depth of globalization— that is, how much activity is international versus domestic— [are exaggerated]… [people] who overestimate the intensity of globalization are more likely
to believe erroneous statements about international business strategy and public
policy [and]
they tend to underestimate the need to understand and respond to differences across countries when
Ghemawat
(2017)
operating abroad…leaders tend to underestimate the potential gains from additional globalization and to overestimate its harmful consequences for society.
People also underestimate the breadth of globalization—that is, the extent to which international activity is distributed globally rather than narrowly focused [more on P116]
Q4 – P118
Organizing according to region allows companies to take advantage of similarities between neighboring countries. An analysis of 29 distance variables shows that in almost all cases countries from the
same region average higher similarity scores than countries from different regions—and often by very wide margins. The (partial) caveat is that two vital regional agreements, the EU and NAFTA, are
subject to considerable strains as of this writing. Question – this was written in 2017. What has happened since?
ACADEMIC
PAPERS
1.
What does he say about the notion of a world without borders?
Q5 – P119
e-commerce is still significantly less internationalized than off-line commerce. And […] this seems like a particularly inauspicious time to think that one can go global just by setting up a website or joining
an online platform.
2.
Has globalisation come to an end?
3.
What are his views in relation to the issue of depth and breadth in
globalisation?
4.
Why might a regional strategy be appropriate in some cases?
5.
Is it possible to become a global company simply by setting up an online
platform or a website?
6.
What is the Triple A triangle?
Q6 – P121
ADAPTATION boosts revenues and market share by tailoring
products and services to suit local tastes and needs.
AGGREGATION delivers economies of scale by expanding
operations into regional or global markets.
ARBITRAGE exploits differences in labor costs, tax regimes, and
other factors between national and regional markets.
Part 3: Assignment
ORGANISATIONAL STRATEGY
ASSESSMENT
BRIEF
•
You are required to undertake a critical strategic analysis of an organisation
and produce a written report outlining your findings and an assessment of
their implications.
•
You will be provided with four case studies. You must choose ONE of these
to explore in your assignment
•
You therefore have lots of time to explore these in detail. Read them. Bring
them to lectures. Write on them – relate lecture content to the case. Use
your time – do not leave everything until the last minute.
•
Submission deadline: 9pm UK time on Friday 5th January 2024
ASSESSMENT
BRIEF
Executive Summary (no more than 150 words. Not included in word
count)
Contents page (not included in word count)
1. Introduction and corporate purpose (200 words)
2. Organisational structure, corporate strategy, identify SBU where
appropriate (300 words)
ASSESSMENT
BRIEF
3. External analysis of the industry. You MUST use Porter’s Five Forces
(1000 words)
4. Internal analysis of the organisation or an SBU (1000 words). You
MUST use EITHER:
• VRIO, or
• Value Chain plus Porter’s Generic Strategies, or
• Value Chain plus Bowman’s Clock
5. Internationalisation of the organisation or an SBU (500 words)
6. Strategic plan for the organisation, with future suggestions. This will
involve evaluation, conclusion, and recommendations (2000
words). You MUST use EITHER Rumelt or SAFe to structure your
evaluation.
Appendices (not included in word count. These are not normally
necessary, but if you are going to include them, use them sparingly)
In groups, pick a case study company from the list
• Is it following a global or a local approach, or has it chosen a
middle ground?
TASK
• Justify your answer with reference to the case study and your
own research
• Given the current climate (eg wars, post-Brexit, Covid-19, the
rise of AI, etc), what strategies should be pursued by your
assignment SBU if they wish to trade internationally in the next
5 years?
Lecture = Strategic planning 2: Evaluation of strategy
NEXT WEEK
Tutorial = Strategic planning 1: Change
Don't forget to go through the lecture materials and
look at Michels and Murphy (2021) AND the case study
on page 473 of the text book (La Redoute) before the
sessions 