International Issues in
Strategy
Porter’s Determinants of National Advantage
Home country of origin is crucial to
International success
Porter’s Determinants of National Advantage
Home country of origin is crucial to International success
Factor Conditions
Basic Factors
- Land, labor
Advanced Factors
- Highly educated workers
- Digital communications
Generalized Factors
- Capital, infrastructure
Specialized Factors
- Skilled personnel
Porter’s Determinants of National Advantage
Home country of origin is crucial to International success
Factor Conditions
Basic Factors
- Land, labor
Advanced Factors
- Highly educated workers
- Digital communications
Generalized Factors
- Capital, infrastructure
Specialized Factors
- Skilled personnel
Demand
Condition
Home country
s
may support
scale efficient
operations by
itself
Porter’s Determinants of National Advantage
Home country of origin is crucial to International success
Related & Supporting
Industries
- Japanese cameras & copiers
Factor Conditions - Italian shoes & leather
Basic Factors
- Land, labor
Advanced Factors
- Highly educated workers
- Digital communications
Generalized Factors
- Capital, infrastructure
Specialized Factors
- Skilled personnel
Demand
Conditions
Home country may
support scale efficient
operations by itself
Porter’s Determinants of National Advantage
Home country of origin is crucial to International success
Related & Supporting
Industries
Factor Conditions
- Japanese cameras & copiers
- Italian shoes & leather
Basic Factors
- Land, labor
Advanced Factors
- Highly educated workers
- Digital communications
Generalized Factors
- Capital, infrastructure
Specialized Factors
Firm
- Skilled personnel
Demand
Conditions
Home country may
support scale efficient
operations by itself
Strategy, Structure
& Rivalry
Intense rivalry fosters
industry competition
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Three
Corporate
Strategies
Multi-Domestic Strategy
Global Strategy
Transnational Strategy
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Multi-Domestic Strategy
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Multi-Domestic Strategy
Strategy and operating decisions are decentralized
to strategic business units (SBU) in each country
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Multi-Domestic Strategy
Strategy and operating decisions are decentralized
to strategic business units (SBU) in each country
Products and services are tailored to local markets
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Multi-Domestic Strategy
Strategy and operating decisions are decentralized
to strategic business units (SBU) in each country
Products and services are tailored to local markets
Business units in each country are independent of
each other
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Multi-Domestic Strategy
Strategy and operating decisions are decentralized
to strategic business units (SBU) in each country
Products and services are tailored to local markets
Business units in each country are independent of
each other
Assumes markets differ by country or regions
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Multi-Domestic Strategy
Strategy and operating decisions are decentralized
to strategic business units (SBU) in each country
Products and services are tailored to local markets
Business units in each country are independent of
each other
Assumes markets differ by country or regions
Focus on competition in each market
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Global Strategy
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Global Strategy
Products are standardized across national markets
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Global Strategy
Products are standardized across national markets
Decisions regarding business-level strategies are
centralized in the home office
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Global Strategy
Products are standardized across national markets
Decisions regarding business-level strategies are
centralized in the home office
Strategic business units (SBU) are assumed to be
interdependent
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Global Strategy
Products are standardized across national markets
Decisions regarding business-level strategies are
centralized in the home office
Strategic business units (SBU) are assumed to be
interdependent
Emphasizes economies of scale
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Global Strategy
Products are standardized across national markets
Decisions regarding business-level strategies are
centralized in the home office
Strategic business units (SBU) are assumed to be
interdependent
Emphasizes economies of scale
Often lacks responsiveness to local markets
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Global Strategy
Products are standardized across national markets
Decisions regarding business-level strategies are
centralized in the home office
Strategic business units (SBU) are assumed to be
interdependent
Emphasizes economies of scale
Often lacks responsiveness to local markets
Requires resource sharing and coordination across
borders (which also makes it difficult to manage)
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Transnational Strategy
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Transnational Strategy
Seeks to achieve both global efficiency and local
responsiveness
InternationalInternational
Corporate Strategy
Corporate-Level
Strategies
Transnational Strategy
Seeks to achieve both global efficiency and local
responsiveness
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
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
International Corporate Strategy
When is each strategy appropriate?
High
Need for
Global
Integration
Low
Low
High
Need for Local Market Responsiveness
Major Risks of International Diversification
Political Risk
National government instability may create potential
problems for internationally diversified firms
Major Risks of International Diversification
Political Risk
National government instability may create potential
problems for internationally diversified firms
Potential changes in attitudes or regulations
regarding foreign ownership
Major Risks of International Diversification
Political Risk
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
Major Risks of International Diversification
Political Risk
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
Potential for nationalization of private firms’ assets
Major Risks of International Diversification
Economic Risk
Major Risks of International Diversification
Economic Risk
Economic risks are interdependent with political risks
Major Risks of International Diversification
Economic Risk
Economic risks are interdependent with political risks
Differences and fluctuations in international
currencies may affect value of assets and liabilities and
affect prices and ultimately the ability to compete
Major Risks of International Diversification
Economic Risk
Economic risks are interdependent with political risks
Differences and fluctuations in international
currencies may affect value of assets and liabilities and
affect prices and ultimately the ability to compete
Differences in inflation rates may affect internationally
diversified firms’ ability to compete
Stages of International
Development
• Domestic company—some exporting
• Domestic company—export division
• Domestic company—international
division
• Multinational corporation—
multidomestic emphasis
• Multinational corporation—global
emphasis
Geographic Area Structure for a Multinational Corporation
Board of Directors
President
Corporate
Staff
R&D
Operating
Companies
U.S.
Product
Group
A
Operating
Companies
Europe*
Product
Group
B
Operating
Companies
Latin
America
Product
Group
C
Operating
Companies
Africa
Operating
Companies
Asia*
Product
Group
B
Product
Group
D
*Note: Because of space
limitations, product
groups for only Europe
and Asia are shown
here.
Strategy Implementation
Power distance (PD)
Hofstede’s
Dimensions of
National
Culture
Uncertainty avoidance (UA)
Individualism-collectivism (I-C)
Masculinity-femininity (M-F)
Long-term orientation (LT)
Strategy Implementation
International issues in staffing:
– Considerable planning
– Can be very costly
– Cultural differences must be considered
– Experience through international
assignments
Strategy Implementation
International issues in staffing:
– Effective management of foreign
assignments:
• Focus on transferring knowledge and
developing global leadership
• Foreign assignments to people with technical
skills matched or exceeded by cross-cultural
abilities
• Deliberate repatriation at end of assignment
with career guidance and jobs