SMGT T7 (Ch7): Strategies for competing in international markets

The 'Diamond of National Competitive Adavantage' - Four factors: (181)

Five reasons to enter foreign markets: (179)

  1. Gain access to low-cost inputs of production
  1. Further exploit their core competencies
  1. Achieve lower costs through economies of scale

5. Gain access to resources and capabilities located in foreign markets

1. Gain access to new customers

  1. Related and supporting industries (183)
  1. Form strategy, structure, and rivalry (183)
  1. Factor conditions (182)
  1. Demand conditions (181)

Key questions:

  1. What is your competitive advantage based on?
  1. Is that translatable to a new foreign market?

Five primary strategic models for international expansion: (188)

Export (188)

Licensing (189)

Franchising (189)

Wholly owned foreign subsidiary (190)

Strategic alliance or joint venture (191)

Three strategic approaches to international expansion: (193)

Global strategy (195)

Transnational strategy (196)

Multidomestic strategy (194)

Think local, act local

Company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer needs and to address divergent local-market conditions

Think global, act global

Company employs the same basic competitive approach in all countries where it operates, sells standardized products globally, strives to build global brands, and coordinates its actions worldwide with strong headquarters control

Think global, act local

Incorporates elements of both multidomestic and global strategies

Gaining and retaining competitive advantage

Concentrated or dispersed?

Dispersing risk

Why to locate, and what?

Developing countries: (204)

Four specific strategic options

Five defensive strategies

Prepare to compete on the basis of low price.

Modify aspects of the company’s business model or strategy to accommodate unique local circumstances.

Try to change the local market to better match the way the company does business elsewhere.

Stay away from developing markets where it is impractical or uneconomic to modify the company’s business model to accommodate local circumstances.

Develop business models that exploit shortcomings in local distribution.

Utilise keen understanding of local customer needs and preferences.

Take advantage of aspects of the local workforce (with which large international companies may be unfamiliar).

Use acquisition and rapid-growth strategies.

Transfer company expertise to cross-border markets and initiate actions to contend on an international level.

Pros/Cons

Govt policies and economic conditions in host countries (184)

Adverse exchange rate shifts (185)

Location based advantages (183)

Cross-country differences (187)

Demographic

Cultural

Market conditions

HELPFUL

Fig 7.2 (194)

Table 7.1 pros/cons (197)

Defending against global companies in your local environment (206)

Competitive advantage (199)

When to disperse activities (200)

Sharing and transferring resources (200)

When to concentrate activities (199)

Cross-boarder strategic moves (202)