1. Chapter 8: International Strategy
Key Points
Chapter 8: International Strategy
Some general environmental factors are magnified
Political risks, economic risks, cultural differences
Understand how the determinants of national advantage affect a firm’s ability to compete internationally
Conflicting pressures for global integration and local responsiveness
Variety of strategies and modes of entry

2. Risks Associated with International Expansion
Political risks
Government instability
Attitudes or regulations regarding foreign ownership
Potential nationalization of private firm assets
Economic risks
Interdependent with political risks
Currency fluctuations
Differences in inflation
Cultural differences

3. Motivations for International Expansion

4. Related and supporting
Figure 8.3: Determinants of National Advantage
Factors of production
Basic and advanced
Generalized and specialized
Firm strategy,
Structure, and rivalry
Cooperation
Competition
Demand conditions
Nature of needs
Size of demand
Related and supporting
industries

5. The Strategic Imperatives of
Global Competition
The need to achieve efficiency by exploiting global economies of scale and scope (global integration)
The need to respond to national environments (local responsiveness)
The need to learn and to transfer knowledge and expertise throughout an organization

6. Examples of Forces Causing the Need for Global Integration
Universal tastes, preferences, or needs
Asset and/or technology intensity
Global competitors
Global suppliers and customers

7. Examples of Forces Causing the Need for Local Responsiveness
Differing local tastes, preferences, or needs
Differing distribution channels
Government intervention
Economics of flexible manufacturing technologies

8. High Global Strategy Transnational Strategy Multidomestic Strategy Low
Integration
Multidomestic
Strategy
Low
Low
High
Local Responsiveness

9. High
Global
Integration
Low
Low
High
Local Responsiveness

10. Table 8.1: Entry Modes Type of Entry Characteristics
Exporting high cost, low control
Licensing low cost, low financial risk, little control, low returns
Strategic alliances shared costs, shared resources, shared risks, integration problems (e.g., different corporate cultures)
Acquisition quick access to new market, high cost, complex negotiations, problems merging with domestic operations
New wholly owned complex, most costly, time consuming, high risk,
Subsidiary (greenfield maximum control, potential above-average returns
venture)