International Business in English

1. International Business in English BUS 460

2. CHAPTER 5 INTERNATIONAL STRATEGY

3. Introduction: • The end of product of strategic decisions is deceptively simple; a combination of products and markets is selected for the firm. • How companies begin to decide which products to sell overseas, and which markets to target? • As commercial organization the driving force will be the need to increase profits and the market value of the company, • And so care must be made taken to avoid expensive mistakes.

4. Introduction: • One way of minimizing the risk of making a strategic mistake is construct a detailed matrix of alternative product and market combinations, • And to formally assess each alternative. • The criteria for assessment will reflect management’s attitude to risk, their priorities, and their understanding of current market and competitive conditions. • The final selection that is made at board level represents t he strategy for the organization.

6. Stages in the Strategic Planning Process • The strategic planning process shows that strategies need to be developed at a number of different levels within a company. • It is therefore helpful to begin consideration of international strategy with a clarification of the different levels of strategy within any organization.

7. Levels of Strategy • It is the responsibility of senior management to ensure strategic consistency across different sections of a company. • Consequently, it is helpful to understand the distinction between corporate, business and functional strategies.

8. Levels of Strategy • 1- Corporate Strategy : asks the question: what should be our portfolio of business. • 2- Business Strategy: asks the question:how do we compete? • 3- Functional Strategy: asks the question: how does this function, e.g. marketing need to be organized so that business and corporate strategies are fulfilled?

9. Is International Strategy Any Different? • Yes and No. • Yes, because it involves analysis of a more complex environment. • No, because ultimately is still has the same aim – identification of a competitive advantage. • Let us look at each of these issues in a little more detail. • The product / market choice at an international level is made more complex because of the greater level of information required to make informed decisions.

10. Is International Strategy Any Different? • The different geographic regions of the world exhibit political, cultural, legal and economic differences all of which have both strategic and operational implications. • Good background research is required by companies to ensure that they understand the new market they are entering.

11. Is International Strategy Any Different? • Differences between international and domestic operations which may have strategic implications include: • 1- Cost structure of operations: • Wage rates in Germany are higher than in the UK, which means that the cost structure of overheads: direct costs will not be the same for the German and UK plant of BMW / Rover, even though they may be producing the same motors.

12. Is International Strategy Any Different? • 2- Competitive strategies: • Local forms of competition may vary. • Example: it is suggested that penetration of Japanese markets is very difficult because of difficulty of accessing distribution outlets for consumer goods: • Control of competition takes the form of access to customers.

13. Is International Strategy Any Different? • 3- Organizational structure and control systems: • Companies may need to be more flexible in specifying performance measures for international operations than it would be in the domestic environment.

14. Going International – Why Bother? • So far we have reached a point at which it is possible to conclude: • 1- Strategy is concerned with competitive advantage. • 2- Functional and general strategies need to be fully integrated. • 3- Formulation of an international strategy can present additional challenges to management. • 4- The extent of variations in strategies across national boundaries is dependent upon the type of product / service.

16. Reasons for Internalisation • All companies are different, and so the precise reasons for internationalizing will vary across organizations to reflect their individual circumstances. • Nonetheless, a number of common themes emerge, which highlight a mix of factors seen as influencing the decision to sell or produce internationally. • Table 5.2 summarized factors influencing the internationalization of a company

19. تم بحمد الله • THE END