1. OHT 8.1 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 International strategic issues

2. OHT 8.2 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 The SWOT Matrix

3. OHT 8.3 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Porter’s ‘Five Forces’ analysis

4. OHT 8.4 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 The Boston Matrix

5. OHT 8.5 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Ansoff’s product–market matrix

6. OHT 8.6 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Porter’s generic strategies

7. OHT 8.7 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Porter’s Generic Strategies Generic strategies - help ‘position’ the firm to best advantage Overall cost leadership strategy – seeks to be lowest cost provider Differentiation strategy – seeks to create something unique, unmatched by competitors Focus strategy – seeks to identify a particular segment within the broader market and to dominate that segment

8. OHT 8.8 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Competitive Advantage Porter (1980) identified various areas that strategy might focus upon to give the firm an ‘edge’ over its competitors Architecture – set of contractual relationships Incumbency advantages – brand, scale economies etc. Access to strategic assets (raw materials, human capital etc.) Innovation (product or process) Operational efficiency (work organisation)

9. OHT 8.9 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Strategy in a globalised environment Prahalad (1999) suggests that strategic approaches must change under globalisation Key features of the ‘new approach’ include recognising: –Changes in strategic space –Globalisation impacts –The enhanced importance of timely responses –The enhanced importance of innovation

10. OHT 8.10 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 The new view of strategy

11. OHT 8.11 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Value chain

12. OHT 8.12 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Sources of Global Synergies Synergy is the ‘2 + 2 > 4’ effect, i.e. whole greater than sum of parts Sources of global synergies include: –Localisation on a global scale –Economies of scale –Economies of scope and experience –Non-organic growth on an international scale –Increase in geographical reach of core competencies

13. OHT 8.13 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Four international strategies

14. OHT 8.14 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 International Business Strategies (1) Strategy depends on the relative strength of ‘cost pressures’ and ‘local responsiveness pressures’ Global Strategy – high cost pressures, low local responsiveness pressures. Geographically centralised value chain for standardised products

15. OHT 8.15 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 International Business Strategies (2) Transnational Strategy – high cost pressures, high local responsiveness pressures. Geographically dispersed stages of a unified value chain Multidomestic Strategy – low cost pressures, high local responsivesness pressures. Geographically dispersed core competencies with extensive local adjustments

16. OHT 8.16 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 International Business Strategies (3) International Strategy – low cost pressures, low local responsiveness pressures. Centralised core competencies with minimum local adjustments

17. OHT 8.17 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Integration–responsiveness framework

18. OHT 8.18 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Economies of scale and minimum efficient size (MES)

19. OHT 8.19 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Cross border M & A (1) Cost – based synergies –Technical economies of scale –Non-technical economies of scale –Economies of scope –Economies of experience

20. OHT 8.20 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Cross border M & A (2) Revenue-based synergies –Price premium –Product – line extension –Increased geographical market coverage –Improved product quality –Reduced time to market –Enhanced R & D capabilities

21. OHT 8.21 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Strategic Alliances Alternative to ‘M & A’ ‘Four Is’ of collaboration will crucially determine whether to enter into an alliance rather than acquire by fdi: –Infeasibility –Information asymmetry –Investment in options –Indigestibility

22. OHT 8.22 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 The four ‘Is’ of collaboration

23. OHT 8.23 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Knowledge Management (1) At least 4 types of knowledge involved: –Explicit knowledge –Tacit knowledge –Individual knowledge –Collective knowledge

24. OHT 8.24 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 The knowledge-creating spiral

25. OHT 8.25 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Knowledge Management (2) At least 4 processes involved: –Socialisation –Externalisation –Combination –Internalisation

26. OHT 8.26 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Mechanisms for knowledge creation Nonaka and Takeuchi (1995) suggest 5 key mechanisms –Intention –Autonomy –Creative chaos –Redundancy –Requisite variety

27. OHT 8.27 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004 Game-based Strategies Zero and non-zero sum games –Maxi-min decision rule –Mini-max decision rule One-shot and repeated games Sequential games First-mover strategy Tit-for-tat strategy Dominant strategy and Nash equilibrium Prisoner’s dilemma and collusion