11. Global strategies and international advantage

1
11. Global strategies and international advantage
2
Outline

• Terminology of International Business
• The Context of International Strategy
• National Competitive Advantage
• The Internationalization Process
• From International to Global Strategies
• The Drivers of Globalization

3
Outline (continued)

• Global vs. Local
• Strategic Choices
• The Best of Both Worlds
• Strategy and Organization
• Managing International Organisation

4
The Terminology of International Business

• International Business Transactions across
  national borders.
• International Trade exporting and importing
• Foreign Direct Investment capital invested in
  other nations by firms through their control of
  foreign subsidiaries and affiliates.
• Multinational Enterprises Companies with
  subsidiaries located in more than one country,
  normally restricted to the largest international
  firms.

5
World Trade 2000
6
USA Inward and Outward FDI 1999
7
Determinants of National Competitive Advantage
8
The Internationalization Process
9
Determinants of Globalization
10
From International to Global Strategy

• Multidomestic Strategy
• Competition in one country is independent of
  competition elsewhere.
• Markets in each country have different consumer
  behaviour.
• Product diversity.
• Portfolio of independent subsidiaries

• Global Strategy
• Competition in one country influenced by
  competition elsewhere.
• Markets and consumer behaviour broadly similar in
  all countries.
• Product standardisation
• International coordination and integration.

11
Drivers of Globalization
12
Strategic Choices
13
Transnational Strategies
Exploit experience-based cost economies and
location economies, transfer distinctive
competences within the company, and at the same
time pay attention to pressures for local
responsiveness (Bartlett and Ghoshal, 1989)
14
Alternative Organizational Solutions
15
The Flagship Firm
16
The Matrix Structure

• Advantages
• Combines product specialisation with geographical
  market knowledge.
• Overcomes silos and duplication by direct
  contact.
• Effective when there is clarity, continuity and
  consistency through the organization.

• Disadvantages
• Extends decision-making time.
• Dual reporting can confuse responsibilities and
  priorities.
• May engender conflict.
• May make performance assessment ambiguous.

17
Evolution of International Structure
18
Concluding Remarks

• International strategy is a significant extension
  of the logic of competitive advantage.
• International trade and national competitive
  advantage are key parts of the business
  environment
• International trade underpinning
  internationalization.
• Globalization promoting international
  standardization.

19
Concluding Remarks (continued)

• International business strategy involves the
  management of standardization and
  differentiation.
• Attempts to gain the best of both worlds have
  involved
• Transnational strategy
• The matrix structure
• The flagship firm