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International strategy Presented by Saurav sharmaRajendra yadavVaibhav mishraSandeep mishraS ravi kumarDefinitionAninternational strategymeans thatinternationallyscattered subsidiaries act independently and operate as if they were local companies, with minimum coordination from the parent company.Global strategyleads to a wide variety of businessstrategies, and a high level of adaptation to the local business environment.International strategy framework

International v global strategyInternational strategy refers to a range of options for operating outside an organisations country of origin.

Global strategy involves high coordination of extensive activities dispersed geographically in many countries around the world.

N.B. Global strategy is just one kind of international strategy.

Internationalisation drivers

Location advantages: Porters diamond (1) Porters Diamond explains why some locations tend to produce firms with sustained competitive advantages in some industries more than others.The four drivers in Porters Diamond stem from: local factor conditionslocal demand conditionslocal related and supporting industrieslocal firm strategy structure and rivalry.

Location advantages: Porters diamond (2)

Porters Diamond the determinants of national advantagesInternational strategies

The CAGE frameworkModes of entry ExportingJoint ventures and alliancesLicensingForeign direct investmentExportingAdvantagesNo need for operational facilities in host countryEconomies of scale in the home countryInternet can facilitate exporting marketing opportunities DisadvantagesLose any location advantages in the host countryDependence on export intermediariesExposure to trade barriersTransportation costsJoint ventures and alliancesAdvantagesShared investment risk Complementary resourcesMaybe required for market entryDisadvantagesDifficult to find good partnerRelationship managementLoss of competitive advantageDifficult to integrate and coordinate

LicensingAdvantagesContractual source of incomeLimited economic and financial exposureDisadvantagesDifficult to identify good partnerLoss of competitive advantageLimited benefits from host nationForeign direct investmentAdvantagesFull controlIntegration and coordination possibleRapid market entry through acquisitionsGreenfield investments are possible and may be subsidisedDisadvantagesSubstantial investment and commitmentAcquisitions may create integration/ coordination issuesGreenfield investments are time consuming and unpredictable