Internationalisation as a strategic option

International strategy: refers to the options that can be considered by an organisation when it wants to operate outside of its country of origin

Global strategy: is a specific type of international strategy concerned with the co-ordination of geographically dispersed activities

Drivers of internationalisation

Market drivers

The potential customer reach of taking a successful product or service to different counteis

This needs handling with caution strategically as different countries operate from diverse cultural and behavioural positions

Cost drivers

Operational costs could be reduced by operating internationally, particularly if an organisation is already sourcing input products from outside the UK

Many of the fixed UK costs will not change and therefore the overhead can be spread over a wider market potential

Government drivers

Government will often provide support and funding to enable companies to operate internationally

If used and targeted in an optimal manner, this can sometimes be the leverage that takes a company out of its home-based comfort zone and opens up new market potential

Competition drivers

The development and maintenance of competitive advantage might require a organisation to develop its markets. If it is dealing with international customers, then it is likely that it will need to also develop an international strategy

Porter's diamond

Factor conditions

what is it that goes into the making of a product or service that can give a competitive advantage?

Demand conditions

Within the original home market can help a company to become a more sophisticated operator when trading internationally

Related and supporting industries

that are based in the same geographical locations can lead to cost and logistics advantage

Firm strategy, structure and rivalry

in the domestic market will build a more resilient approach to trading internationally

International strategies

Simple export

The majority of activities remain concentrated in the domestic country of origin with an approach being taken to generally export finished products with only marginally adapted international variants such as packaging and language

Multi-domestic

A range of activities are strategically placed outside of the domestic country of origin to maximise local efficiency and resources

Often local products are then produced locally within different internal centres

Complex export

Most activities are located in a single country but that might not be the domestic country of origin

Marketing in particular is focused and co-ordinated to ensure that products and/or services are driven into a linked range of appropriate destinations

Global strategy

This is the most mature of Porter's internal strategies with highly co-ordinated activities dispersed around different countries of the world often producing replicated entire business in different countries but sometimes locating different activities in countries offering the best cost advantage