Transcript Corporate Strategy08 - Microsoft Personal Web Server

Strategic Choices
8: International Strategy
Learning Outcomes (1)
Assess the internationalisation potential of
different markets, sensitive to variations
over time
Identify sources of competitive advantage
in international strategy, both through
global sourcing and exploitation of local
factors embodied in Porter’s Diamond
Distinguish between four main types of
international strategy
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Learning Outcomes (2)
Rank markets for entry or expansion,
taking into account attractiveness, cultural,
and other forms of distance and competitor
retaliation threats
Assess the relative merits of different
market entry modes, including joint
ventures, licensing, and foreign direct
investment
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Exhibit 8.1 International
Strategy Framework
Internationalisation
drivers
Sources of
competitive advantage
International
strategy
Market
selection
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Mode of entry
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Exhibit 8.2 Drivers of
Internationalisation
Market
drivers
Government
drivers
International
strategies
Cost
drivers
Competitive
drivers
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Deutsche Post’s
International Diversity
What were the internationalisation drivers
associated with DPWN’s strategy?
Evaluate the pros and cons of both a
multidomestic strategy and a global
strategy for DPWN.
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What is
Porter’s Diamond?
Porter’s Diamond suggests that
there are inherent reasons why
some nations are more competitive
than others, and why some
industries within nations are more
competitive than others.
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Exhibit 8.3 Porter’s Diamond
Firm strategy,
structure
and rivalry
Factor
conditions
Demand
conditions
Related and
supporting
industries
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What is Global Sourcing?
Global sourcing refers to
purchasing services and components
from the most appropriate suppliers
around the world regardless of their
location.
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Locational Advantages
of Global Sourcing
Cost advantages
Unique capabilities
National characteristics
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Illustration 8.3 Boeing’s
Global R&D Network
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Market Characteristics and the
PESTEL Framework
Political
Economic
Social
Legal
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The CAGE Framework
Cultural
distance
Geographic
distance
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Administrative and
political distance
Economic/ wealth
distance
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SABMiller’s
International Markets
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Hindustan Lever Ltd
What challenges are faced by
multinationals in developing global brands
while encouraging local responsiveness?
What are your views on the ethical
dimensions to Hindustan Lever’s
activities?
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Modes of Entry
Exporting
Joint ventures and alliances
Licensing
Foreign direct investment
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Exporting
Advantages
Disadvantages
 No need for
operational facilities in
host country
 Lost location
advantages
 Economies of scale
 Internet facilitates
exporting
opportunities
 Dependence on
export intermediaries
 Exposure to trade
barriers
 Transportation costs
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Joint Ventures and Alliances
Advantages
Disadvantages
 Shared investment
risk
 Difficult to find good
partner
 Complementary
resources
 Relationship
management
 May be required for
market entry
 Loss of competitive
advantage
 Difficult to integrate
and coordinate
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Licensing
Advantages
Disadvantages
Contractual source
of income
Difficult to identify
good partner
Limited economic
and financial
exposure
Loss of competitive
advantage
Limited benefits
from host nation
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Foreign Direct Investment
Advantages
Disadvantages
 Full control
 Substantial
investment and
commitment
 Integration and
coordination possible
 Rapid market entry
through acquisitions
 Greenfield
investments
 Acquisitions may
create integration/
coordination issues
 Greenfield
investments are time
consuming and
unpredictable
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Internationalisation and Performance
Inverted U-curve
Service sector disadvantages
Internationalisation and product diversity
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Case Example:
Lenovo Computers
In the light of the CAGE framework,
comment on Lenovo’s entry into the
American market.
What type of generic international strategy
should Lenovo pursue now?
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