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International Strategy BUSI 7130/7136 Chris Shook, Ph.D.
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AGENDA u Lecture u BRL Hardy
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Drivers of Globalization Increased similarity of lifestylesIncreased similarity of lifestyles Global communicationsGlobal communications Fast communicationFast communication Pressures to reduce costsPressures to reduce costs
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Motivators u Increase Market Size u Achieve Acceptable ROI u Achieve Economies of Scale u Achieve Location Advantage
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Choice of Entry Mode u Exporting u Licensing u Franchising u Joint Ventures u Acquisition of Wholly-Owned Subsidiary u Development of Wholly-Owned Subsidiary
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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
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Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Demand Conditions Size and Nature of Home Country’s Demand Porter’s Determinants of National Advantage Home country of origin is crucial to International success
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Demand Conditions Size and Nature of Home Country’s Demand Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Related & Supporting Industries - Japanese cameras & copiers - Italian shoes & leather Home country of origin is crucial to International success Porter’s Determinants of National Advantage
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Demand Conditions Size and Nature of Home Country’s Demand Factor Conditions Basic Factors - Land, labor Advanced Factors - Highly educated workers - Digital communications - Highly educated workers - Digital communications Generalized Factors - Capital, infrastructure Specialized Factors - Skilled personnel Firm Strategy, Structure & Rivalry Intense rivalry fosters industry competition Porter’s Determinants of National Advantage Related & Supporting Industries - Japanese cameras & copiers - Italian shoes & leather - Japanese cameras & copiers - Italian shoes & leather Home country of origin is crucial to International success
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Advice from Porter u Create pressures for innovation u Seek out competitors as motivators u Establish early warning systems u Improve national diamond u Welcome rivalry u Globalize to tap selectively into sources of other nations u Locate home base to support competitive advantage
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International Corporate Strategy Corporate-Level International Strategies Three Corporate Strategies Global Strategy Transnational Strategy Multi-Domestic Strategy
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International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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International Corporate Strategy When is each strategy appropriate? Need for Global Integration Need for Local Market Responsiveness Low High LowHigh
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Do you REALLY have a global strategy ? u Global strategy –cross subsidization of national market share battles in pursuit of global brand and distribution positions
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Do you REALLY have a global strategy ? u Why? –Loose bricks F Necessity of understanding competitor’s strategic intent –Labor and scale advantages are not sustainable –Domestic competitors are NEVER safe
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Do you REALLY have a global strategy ? u Implications –Broader corporate concept of a product line –Don’t allocate resources by SBUs –Don’t allocate resources by country
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