BUS 460
INTERNATIONAL STRATEGY
Introduction:
 The end of product of strategic decisions is deceptively
simple; a combination of products and markets is
selected for the firm.
 How companies begin to decide which products to sell
overseas, and which markets to target?
 As commercial organization, the driving force will be
the need to increase profits and the market value of
the company,
 And so care must be made taken to avoid expensive
mistakes.
Introduction:
 One way of minimizing the risk of making a strategic
mistake is construct a detailed matrix of alternative
product and market combinations,
 And to formally assess each alternative.
 The criteria for assessment will reflect management’s
attitude to risk, their priorities, and their
understanding of current market and competitive
conditions.
 The final selection that is made at board level
represents t he strategy for the organization.
Stages in the Strategic Planning
Process
 The strategic planning process shows that strategies
need to be developed at a number of different levels
within a company.
 It is therefore helpful to begin consideration of
international strategy with a clarification of the
different levels of strategy within any organization.
Levels of Strategy
 It is the responsibility of senior management to ensure
strategic consistency )‫ (توافق‬across different sections of
a company.
 Consequently, it is helpful to understand the
distinction between corporate, business and
functional strategies.
Levels of Strategy
 1- Corporate Strategy : asks the question: what
should be our portfolio of business.
 2- Business Strategy: asks the question: how do we
compete?
 3- Functional Strategy: asks the question: how does
this function, e.g. marketing need to be organized so
that business and corporate strategies are fulfilled?
Is International Strategy Any
Different?
 Yes and No.
 Yes, because it involves analysis of a more complex
environment.
 No, because ultimately is still has the same aim –
identification of a competitive advantage.
 Let us look at each of these issues in a little more
detail.
 The product / market choice at an international level
is made more complex because of the greater level of
information required to make informed decisions.
Is International Strategy Any
Different?
 The different geographic regions of the world exhibit
political, cultural, legal and economic differences all of
which have both strategic and operational
implications.
 Good background research is required by companies
to ensure that they understand the new market they
are entering.
Is International Strategy Any
Different?
 Differences between international
and domestic
operations which may have strategic implications
include:
 1- Cost structure of operations:
 Wage rates in Germany are higher than in the UK,
which means that the cost structure of overheads:
direct costs will not be the same for the German and
UK plant of BMW / Rover, even though they may be
producing the same motors.
Is International Strategy Any
Different?
 2- Competitive strategies:
 Local forms of competition may vary.
 Example: it is suggested that penetration of Japanese
markets is very difficult because of difficulty of
accessing distribution outlets for consumer goods:
 Control of competition takes the form of access to
customers.
Is International Strategy Any
Different?
 3- Organizational structure and control systems:
 Companies may need to be more flexible in specifying
performance measures for international operations
than it would be in the domestic environment.
Going International – Why Bother?
 So far we have reached a point at which it is possible to
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conclude:
1- Strategy is concerned with competitive advantage.
2- Functional and general strategies need to be fully
integrated.
3- Formulation of an international strategy can present
additional challenges to management.
4- The extent of variations in strategies across national
boundaries is dependent upon the type of product /
service.
Reasons for Internalisation
 All companies are different, and so the precise reasons
for internationalizing will vary across organizations to
reflect their individual circumstances.
 Nonetheless, a number of common themes emerge,
which highlight a mix of factors seen as influencing
the decision to sell or produce internationally.
 Table 5.2 summarized factors influencing the
internationalization of a company
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‫‪THE END‬‬
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