4-1 1 34 competitiv e outcomes opportunities & benefits international bus. level strategy...

4-1134

Competitive

Outcomes

Opportunities & Benefits

International Bus. Level Strategy

International Corp. Level Strategy

International Entry Modes

Cultural Dimensions

Concerns & Risks

Problems & 1st Steps

Chapter Three:

The External Environment

Chapter Three:

The External Environment

© 2 0 0 9

Hitt, Ireland, Hoskission, Rowe & Sheppard

Strategic Management

N o

t e sChapter Nine:

International Strategy

Competitiveness & Globalization

4-2234

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


The Strategic Management Process

Chapter 5: Bus.-Level Strategy

Chapter 6:Competitive Dynamics

Chapter 7:Corp.-Level

Strategy

Chapter 8:Acquisition & Restructuring

Chapter 9:International

Strategy

Chapter 10:Cooperative

Strategy

Strategy Formulation

Chapter 11:Corporate

Governance

Ch. 12: Org. Structure & Controls

Chapter 13:Strategic

Leadership

Chapter 14:Org. Renewal & Innovation

Strategy Implementation

StrategicActions

Ch. 1: Strat. Mgmt. & Com-petitiveness

Ch. 2: Strat. Mgmt . &

Performance

Chapter 3:The External Environment

Chapter 4:The Internal Environment

Strategic Competitiveness

Strategic Mission & Strategic Intent

Strategic Objectives & Inputs


Strategy

4-3334

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Strategy

Knowledge Objectives

1. Explain traditional & emerging motives for pursuing international diversification.

2. Note 4 factors leading to international b-level strat.s.3. Define the 3 international corp. level strategies:

multidomestic, global, and transnational.4. Discuss environmental trends affecting international

strategy, e.g. liability of foreignness & regionalization.5. Describe the 5 international market entry modes. 6. Describe 2 major risks of international diversification.

4-4434

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Strategy Opportunities & Benefits

Better Performance

Innovation

StrategicallyCompetitiveOutcomes

Use Core Competence

Modes of Entry

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

ExploreResources & Capabilities

International Strategies

Concerns & Risks

Problems& 1st Steps

Identify International

Opportunities

IncreasedMarket Size

Return on Investment

Economies of Scale & Learning

Location Advantage


Multidomestic,Transnational, & Global Strategy


Influences of National Advantage


Opportunities




Location Advantage


4-5534

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Strategy Opportunities & Benefits• Increased market size.

• Greater returns on major capital investments or new products or processes.

• Greater economies of scale, scope or learning.• A competitive advantage through location.


4-6634

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Business & Corporate Level Strategies

Better Performance

Innovation


Use Core Competence

Modes of Entry

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition



Concerns & Risks

Problems& 1st Steps


Opportunities




Location Advantage






Opportunities




Location Advantage







4-7734

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Bus. Level Strategies• Each business must develop a competitive

strategy focused on its own domestic market.• The home country of operation is often the most

important source of competitive advantage.– Resources & capabilities established in the home

country frequently allow a firm to pursue the strategy into markets located in other countries.

• Factors determining International B-Level Strat.s:– Factors of Production;– Demand Conditions;– Related & Supporting Industries;– Firm Strategy Structure & Rivalry.

Porter’s Determinants of National Advantage

SEE NEXT PAGE


4-8834

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Bus. Level StrategiesDeterminants of National Advantage

Factors of ProductionBasic Factors - Land, laborAdvanced Factors - Education / CommunicationGeneralized Factors - Capital, infrastructureSpecialized Factors - Skilled personnel

Demand Conditions

Nature & size of buyers needs in the home market(some with special demands like the Swiss & Drilling Equip.)

Related & Supporting IndustriesIndustries in which the target country is considered the leader Japan: Cameras CopiersItaly: Leather work Shoes

Firm Strategy, Structure & Rivalry

Local intense rivalry may create tough competitors.

Japan’s car makers faced tough local competition.


4-9934

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Type of Corp. Strategy selected will have an impact on the selection and implementation of business-level strategies.

Some Corp. strategies provide individual country units with flexibility to choose their own strategies.

Others dictate bus.-level strategies from home office & coordinate resource sharing across units.

Three Corporate Strategies

Global Strategy

Transnational Strategy

Multi-Domestic Strategy

Corp.-Level International Strategies


4-101034

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Focus on competition in each market.

Prominent strategy with European firms due to broad variety of cultures & markets in Europe.

Assumes markets differ by country or regions.

Business units in each country are independent of each other.

Products & services are tailored to local markets.

Strategy & operating decisions are decentralized to strategic business units (SBU) in each country.

Multi-Domestic Strategy



4-111134

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Firm often lacks responsiveness to local markets.

Requires resource sharing & coordination across borders (which also makes it difficult to manage).

Emphasizes economies of scale.

Strategic business units (SBUs) are assumed to be interdependent.

Strategic decisions are centralized in the home office.

Products are standardized across markets.

Global Strategy



4-121234

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Seeks to achieve both global efficiency and local responsiveness.

• Central control & coordination for efficiency & • Local flexibility & decentralization to achieve local market responsiveness.

Pursues organizational learning to achieve competitive advantage.

Transnational Strategy


Pursues organizational learning to achieve competitive advantage.

Hard to achieve because of concurrent need for:


4-131334

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


When is each strategy appropriate?

Need for Global Integration

Low

High

Need for Local Market ResponsivenessLow High



4-141434

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


• Multi-domestic Strategy– Strategic & operating decisions

are decentralized to the strategic business unit in each country.

– Products tailored to the local market.

• Global Strategy– Assumes more standardization of

products across country markets.

• Transnational Strategy– The firm seeks to achieve both global

efficiency and local responsiveness.



4-151534

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Entry Mode Choice

Better Performance

Innovation


Use Core Competence

Modes of Entry

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition


Concerns & Risks

Problems& 1st Steps


Opportunities




Location Advantage












Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition


4-161634

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Exporting

No need to establish operations in other nations. Establish distribution channels through contractual relationships. May have high transportation costs. May encounter high import tariffs. May have less control of marketing & distribution. Difficult to customize product.

Common way to enter new international markets.



4-171734

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Licensing

Licensing firm is paid a royalty on each unit produced and sold. Licensee takes investment risk in manufacturing. Least risky way to enter a foreign market. Licensing firm loses control over product quality & distribution. Relatively low profit potential.

Firm authorizes another firm to manufacture & sell its products.



4-181834

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Strategic Alliances

Most joint ventures involve a foreign corp. with a new product or technology & a host firm with distribution access or knowledge of local customs, norms, politics. May experience difficulties in merging disparate cultures.

May not understand strategic intent of partners or experience divergent goals.

Enable firms to shares risks and resources to expand into international ventures.



4-191934

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Can be very costly. Legal and regulatory requirements may

present barriers to foreign ownership. Usually require complex & costly negotiations. Potentially disparate corporate cultures.

Enable firms to make most rapid international expansion.

Acquisitions



4-202034

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


New Wholly Owned Subsidiary

Most costly & complex of entry alternatives. Achieves greatest degree of control.

Potentially most profitable, if successful.

Maintain control over technology, mktg. & dist. May need to acquire expertise & knowledge that is relevant to host country.

• May require hiring host country nationals or consultants at a high cost.



4-212134

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Strategy Competitive Outcomes

Better Performance

Innovation


Use Core Competence

Modes of Entry

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Concerns & Risks

Problems& 1st Steps


Opportunities




Location Advantage







Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Use Core Competence

Modes of Entry

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Better Performance

Innovation


Competitive

Outcomes

4-222234

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International diversification facilitates innovation in the firm.

May generate resources necessary to sustain a large-scale R&D program.

Generally related to above-average returns, assuming effective implementation and management of international operations.

Provides larger market to gain more and faster returns from innovation.

International diversification provides greater economies of scope and learning.

Strategic Competitiveness Outcomes

Competitive

Outcomes

4-232334

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Strategy Concerns, Risks, Problems & First Steps

Better Performance

Innovation


Use Core Competence

Modes of Entry

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Concerns & Risks

Problems& 1st Steps


Opportunities




Location Advantage







Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Use Core Competence

Modes of Entry

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Exporting

Establish New Sub.

Licensing

StrategicAlliances

Acquisition

Better Performance

Innovation


Better Performance

Innovation


Better Performance

Innovation


Concerns & Risks

Problems& 1st Steps

Concerns & Risks

4-242434

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


National government instability may create problems for internationally diversified firms.

Legal authority obtained from previous administration may become invalid.

Potential changes in attitudes or regulations regarding foreign ownership.

Potential for nationalization of firms’ assets.

International Diversification Risks Political Risks

Concerns & Risks

4-252534

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Econ. risks are interdependent with political risks.

Differences in inflation rates may affect inter-nationally diversified firms’ ability to compete.

Differences and fluctuations in international currencies may affect value of assets & liabilities;

This affects prices & thus ability to compete.

Enforcing intellectual property rights on copyrights; CDs, software, etc.

International Diversification Risks

Economic Risks

Concerns & Risks

4-262634

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


International Environment Risks

Economic Risks

Political Risks

Political instability in Korea may create trade market uncertainty.

Conflict between the Palestinians & Israel and may drive oil prices up.

Debates between parties in the U.S. create market uncertainties.

Uncertainties regarding Euro debt & the Euro may impact demand.

Accusations of Chinese currency manipulation may raise tariffs.

U.S. / Canada $ fluctuations impact ability to price long term contracts.

Concerns & Risks

4-272734

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Taking the 1st International Step: Challenges of going to the U.S.

Failure to recognize Market differences.

- Keg Portions in the U.S. need to be larger.Customer Expectations.

Regional Differences.- Couche-Tard stocks & lays out each region differently. Failure to recognize Competitive differences.

- Manulife’s purchase of John Hancock.Risk Preferences differ.

Failure to see differences in attitudes & values.

- E.D. Smith’s product goals required a culture of

dedication that was lacking in its U.S. facilities.

Worker Attitudes differ.

Failure to recognize Market differences.

- Keg Portions in the U.S. need to be larger.Customer Expectations.

Regional Differences.- Couche-Tard stocks & lays out each region differently.

Failure to recognize Competitive differences.

- Manulife’s purchase of John Hancock.Risk Preferences differ.


4-282834

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Taking the 1st International Step: Basic Advice about going to the U.S.

• E.g., again Keg Restaurants larger U.S. portions.

Subtle cultural differences need attention.

• Provide a good product at a fair price.

Remember the basics:

• What local competitors are doing,

• What works and does not work.

• What customers expect,Move quickly, get involved in details & discover:

• Be close to your customers to know what will keep them happy.


4-292934

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Hofstede’s Cultural DimensionsB

O

N

U

S

1. Power distance: extent to which less powerful institutional members accept & expect that power is unequally distributed.

2. Individualism vs. Collectivism: the degree to which individuals are integrated into groups.

Latin America U.S. Canada Northern Europe

Accepting of power distance Not accepting of power distance

U.S. Canada Japan Guatemala

Individualist Collectivist

Cultural Dimensions

A really good site that maps out a lot of countries (for fun) is: http://www.kwintessential.co.uk/intercultural/dimensions.html

4-303034

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


3. Uncertainty avoidance: The extent to which rules are used to reduce uncertainty.

4. Masculinity: Extent to which traditional gender roles, and competitive relations dominate over more equal & cooperative interpersonal relationships.

Hofstede’s Cultural Dimensions

Sweden India Canada Belgium Portugal

Lesser Use of Rules Greater Use of Rules

Japan U.S. Canada Sweden

Masculine Feminine

B

O

N

U

S

Cultural Dimensions

4-313134

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


5. Foundational Depth (Long term orientation): • Floating Foundations (long term) stress the future

and traits of persistence, adaptation & saving.• Deep Foundations (short term) stress the past, social

obligation, saving face, tradition, stability & reciprocity.

6. Indulgence versus restraint: The extent to which people try to control their desires & impulses.

Latin America Western Europe China

Long Term (floating) Short Term (deep)

East Asia Latin America

Restraint Indulgence

Hofstede’s Cultural DimensionsB

O

N

U

S

Cultural Dimensions

4-323234

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Kluckhohn & Strodbeck’s Cultural ValuesB

O

N

U

S Individual Collective Lineal / Hierarchical

• People’s Relationship with one another?

Good Mutable / Immutable Evil

• What is the innate nature of people?

Mastery Harmony Subjugation

• What are People’s Relation to Nature?

Cultural Dimensions

Some useful points here:http://academic2.american.edu/~zaharna/kluckhohn.htm

http://www.jflory.org/soc205/val_orie.htm

4-333334

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


Kluckhohn & Strodbeck’s Cultural ValuesB

O

N

U

S

Past Present Future

• What are People’s Time Orientation?

Being Becoming Doing (Spontaneous) (Self Development) (Work / Action)

• What is the Nature of Human Activity

Cultural Dimensions

See: http://alangutterman.typepad.com/files/cms---kluckhohn-strodtbeck-cultural-dimensions.pdf

• What are People’s Privacy of Space?

Public Private

4-343434

Competitive

Outcomes





Cultural Dimensions

Concerns & Risks


The Strategic Management Process

Chapter 5: Bus.-Level Strategy

Chapter 6:Competitive Dynamics

Chapter 7:Corp.-Level

Strategy

Chapter 8:Acquisition & Restructuring


Strategy

Chapter 10:Cooperative

Strategy

Strategy Formulation

Chapter 11:Corporate

Governance

Ch. 12: Org. Structure & Controls

Chapter 13:Strategic

Leadership

Chapter 14:Org. Renewal & Innovation

Strategy Implementation

StrategicActions

Ch. 1: Strat. Mgmt. & Com-petitiveness

Ch. 2: Strat. Mgmt . &

Performance

Chapter 3:The External Environment

Chapter 4:The Internal Environment

Strategic Competitiveness

Strategic Mission & Strategic Intent

Strategic Objectives & Inputs


Strategy

4-1 1 34 competitiv e outcomes opportunities & benefits international bus. level strategy...

Documents

international strategy

international strategy

international opportunities

level strategy chapter

level strategy multidomestic

international blevel

steps chapter

level strategies