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

2. 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

3. 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.

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

5. 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.

6. 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.

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

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

15. 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

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

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

18. 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

19. 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.

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

21. Levels of International Strategy
Copyright © 2015 Pearson Education