International Business Level Strategies

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Chapter 8

International Strategy
Hitt, Ireland, and Hoskisson

Increase in international strategies 

Use of international strategies is increasing


Traditional motives






extending the product life cycle securing key resources having access to low-cost labor

Emerging motives




integration of the Internet and mobile telecommunications, which facilitates global transactions. demand for commodities becomes borderless

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Benefits of international strategy 




Increased market size
Earning a return on large investments
Economies of scale and learning
Advantages of location

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Porter’s model


International business-level strategies are usually grounded in one or more home-country advantages, as Porter’s model suggests.

Source: Adapted with the permission of The Free Press, an imprint of Simon & Schuster Adult Publishing Group, from Competitive Advantage of Nations, by Michael E. Porter, p. 72. Copyright ©1990, 1998 by Michael E. Porter.

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International corporate-level strategies 

Multidomestic strategy




Global strategy




Focuses on competition within each country in which the firm competes. Decentralizes strategic and operating decisions to the business units operating in each country so each unit can tailor its goods and services to the local market.
Assumes more standardization of products across country boundaries – so competitive strategy is centralized and controlled by the home office.

Transnational strategy


Integrates characteristics of multi-domestic and global strategies to emphasize both local responsiveness and global integration and coordination. This strategy is difficult to implement, requiring an integrated network and a culture of individual commitment.

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Influence of environmental trends 



Although the transnational strategy’s implementation is a challenge, environmental trends are causing many multinational firms to consider the need for both global efficiency and local responsiveness.
Many large multinational firms, particularly those with many diverse products, use a multidomestic strategy with some product lines and a global strategy with others.
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International risks


Liability of foreignness






The threat of wars and terrorist attacks increase the risks and costs of international strategies.
Furthermore, research suggests that the liability of foreignness is more difficult to overcome than once thought.

Regionalization


Some firms decide to compete only in certain regions of the world. This allows them to focus their learning on specific markets, cultures, locations, resources, and other factors.
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Market entry


Forms of international expansion






Exporting
Licensing
Strategic alliances
Acquisitions
New
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