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Henry: Understanding Strategic Management

Henry: Understanding Strategic Management. International Strategy and Globalization (Slides based on Chapter 9). Key concepts we will cover:. Yip’s Globalization Drivers Motives for Internationalisation Ghoshal’s Globalization Framework

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Henry: Understanding Strategic Management

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  1. Henry: Understanding Strategic Management International Strategy and Globalization (Slides based on Chapter 9)

  2. Key concepts we will cover: • Yip’s Globalization Drivers • Motives for Internationalisation • Ghoshal’s Globalization Framework • Types of International Strategy and Entry Mode Strategies • Porter’s Diamond of National Competitive Advantage

  3. International Strategy and Globalization Globalization Globalization refers to the linkages between markets that exist across national borders. These linkages may be economic, financial, social, political, in effect, anything that leads to increased interdependence among nations. This implies that what happens in one county has an impact on occurrences in other countries.

  4. Yip’s Globalization Drivers Market Drivers Industry Globalization Potential Government Drivers Cost Drivers Competitive Drivers Yip G S, (2003), “Total Global Strategy”, Prentice Hall.

  5. Maturity of • domestic • markets • Worldwide • competition • Integration of • international • markets • Falling • trade • barriers Internationalisation • Definition: Expanding participation in foreign markets • Pressure for Internationalisation from…..

  6. International Strategy and Globalization International Strategy Motives for international diversification: Organizational Factors Role of senior management team Firm specific-factors Environmental Factors - Unsolicited proposals - The ‘bandwagon’ effect - Attractiveness of the host country

  7. International Strategy and Globalization A Globalization Framework - Ghoshal (1987) The Goals of a Multinational Corporation: 1. Achieving Efficiency 2. Managing Risks 3. Innovation, Learning and Adaptation

  8. International Strategy and Globalization A Globalization Framework - Ghoshal (1987) The Sources of Competitive Advantage : 1. National Differences 2. Economies of Scale 3. Economies of Scope

  9. International Strategy and Globalization A Globalization Framework - Ghoshal (1987)

  10. International Strategy and Globalization Types of International Strategy When competing in international markets organizations must decide: • To what extent should they produce standardised products for sale in different countries utilising the locational advantages of low cost countries? • To what extent should they produce differentiated products that embody variations in local tastes and preferences but incur greater costs? • This is the debate between globalization and localization

  11. Responsiveness Pressures • Consumer tastes • Logistics • Regulations Driving the Debate…. • Globalisation • Global Standardisation National Adaptation • Multi-Domestic Expansion [ Multi-National ] • Pressures for Cost Reduction • Homogeneous products • competitor cost base • Trade liberalisation

  12. International Strategy and Globalization Types of International Strategy The issue of globalization versus responsiveness to local needs highlights four basic strategies open to the organization: Multidomestic Global International Transnational.

  13. International Strategy and Globalization Types of International Strategy Figure 9.2 International Strategies

  14. International Strategy and Globalization Transnational Strategy - Bartlett & Ghoshal (1989) Figure 9.1 Industry Requirements and Company Capabilities

  15. International Strategy and Globalization Entry Mode Strategies Exporting Licensing Franchising Joint Ventures and Strategic Alliances Wholly owned subsidiaries

  16. International Strategy and Globalization Entry Mode Strategies Figure 9.3 Entry Mode Strategies

  17. International Strategy and Globalization The Diamond of National Advantage – Porter (1990) Four attributes: 1. Factor Conditions 2. Demand Conditions 3. Related and Supporting Industries 4. Firm Strategy, Structure, and Rivalry

  18. International Strategy and Globalization Porter’s Diamond of Competitive Advantage Figure 9.4 Determinants of National Competitive Advantage

  19. International Strategy and Globalization The Myths of Global Strategy Rangan (2000) argues that there are seven common myths about companies considering a global strategy: 1. Any Company With Money Can Go Global 2. Internationalization In Services Is Different 3. Distance And National Borders Don’t Matter Anymore 4. Developing Countries Are Where The Action Is 5. Manufacture Where Labour Costs Are Cheapest 6. Globalization Is Here To Stay 7. Governments Don’t Matter Any More

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