International Strategic Management Chapter 8 International Strategic Management Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education Learning Objectives Characterize the challenges of international strategic management Assess the basic strategic alternatives available to firms Distinguish and analyze the components of international strategy Describe the international strategic management process Identify and characterize the levels of international strategies Copyright © 2015 Pearson Education

International Strategic Management International strategic management is a comprehensive, ongoing management planning process aimed at formulating and implementing strategies that enable a firm to compete effectively in the global marketplace. Strategic management is usually the responsibility of top-level executives at corporate headquarters and senior managers in domestic and foreign companies. Copyright © 2015 Pearson Education, Inc.

International Strategic Management Compete Effectively in the Global Marketplace Strategies Management Planning Process Copyright © 2015 Pearson Education

Challenges of International Strategic Management There are many similarities between developing a strategy for competing in a single country and developing a strategy for competing in multiple countries. In both cases, the firm’s strategic planners must answer the same 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? Copyright © 2015 Pearson Education, Inc.

Challenges of International Strategic Management developing an international strategy is far more complex than developing a domestic one. Managers developing an international strategy must understand and deal with multiple governments, currencies, accounting systems, political systems, and legal systems, as well as a variety of languages and cultures. They must also implement strategic plans among business units located in different parts of the world, as well as monitor and control strategic outcomes. Copyright © 2015 Pearson Education, Inc.

Challenges of International Strategic Management (Cont.) Fundamental Questions Complexities What products and services to sell? Where and how to make them? Where and how to sell them? Where and how to get resources? How to outperform the competition? Understand and Deal with Multiple: Governments Currencies Accounting Systems Political Systems Legal Systems Languages Cultures Acceptable Trade-offs Copyright © 2015 Pearson Education

Components of an International Strategy Distinctive Competence : “What do we do exceptionally well, especially as compared to our competitors?” Scope of Operations: “Where are we going to conduct business?” Resource Distribution: “Given that we are going to compete in these markets, how should we allocate our resources to them?” Synergy: “How can different elements of our business benefit each other?” Copyright © 2015 Pearson Education

Distinctive Competences A firm’s distinctive competences may be Cutting-Edge Technology Efficient Distribution Networks Superior Organizational Practices Well-Respected Brand Names This distinctive competence represents an important resource to the firm. Therefore, the international strategy implemented by a company reflects the interaction between its distinctive competences and the business opportunities available in different countries. Copyright © 2015 Pearson Education

Copyright © 2015 Pearson Education Scope of Operations The second component, scope of operations, answers the question: “Where are we going to conduct business?” Geographic Regions: Countries, regions within a country, or groups of countries Market or Product Places: quality Market Place, Low-Cost or Other Specialized Market Places. Copyright © 2015 Pearson Education

Resource Distribution Resource distribution answers the question: “Given that we are going to compete in these markets, how should we allocate our resources to them?” Resource distribution might be specified along : Product Lines Geographical Lines Combination (Product ,Geographic) Copyright © 2015 Pearson Education

Copyright © 2015 Pearson Education Synergy Synergy is the fourth component of international strategy. It answers the question: “How can different elements of our business benefit each other?” The goal of synergy is to create a situation in which the whole is greater than the sum of the parts. The whole is greater than the sum of the parts. Copyright © 2015 Pearson Education

Developing International Strategies Stages : Strategy Formulation: Develop Mission Statement Perform SWOT Analysis Set Strategic Goals Strategy Implementation: Develop Tactical Goals and Plans Develop Control Framework Copyright © 2015 Pearson Education

Developing International Strategies (Cont.) Copyright © 2015 Pearson Education

Copyright © 2015 Pearson Education Mission Statement Organization’s Purpose, Values, and Directions Firm’s Target Customers and Markets Principal Products or Services Core Technologies Concerns for Survival Plans for Growth and Profitability Basic Philosophy Desired Public Image Copyright © 2015 Pearson Education

Environmental Scanning and the SWOT Analysis External Opportunities Threats Internal Strengths Weaknesses Copyright © 2015 Pearson Education

Copyright © 2015 Pearson Education Strategic Goals Major objectives the firm wants to accomplish , they should be : Measurable Achievable Time-Limited Copyright © 2015 Pearson Education

Copyright © 2015 Pearson Education Tactics Specific tactical goals and plans Tactics usually involve middle managers Focus on the details of implementing the firm’s strategic goals Copyright © 2015 Pearson Education

Copyright © 2015 Pearson Education, Inc. Control Framework The final aspect of strategy formulation is the development of a control framework, the set of managerial and organizational processes that keep the firm moving toward its strategic goals. Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education Control Framework Managerial Processes Organizational Processes Strategic Goals Copyright © 2015 Pearson Education

Levels of International Strategy Copyright © 2015 Pearson Education