L9 - International Business Strategies

What is strategy and why do managers develop international strategies?

A planned set of actions that. anagers take to make the best use of the firm’s resources and core competencies to gain a competitive advantage

• Allocate scarce resources

• Implement valuable partnerships abroad

How do firms create value through profitability?

• Reduced costs

• Add value and raise prices

• Maintain existing customers

How do firms create value through profit growth?

• Sell more in existing markets

• Enter new markets

Why does value matter for strategy?

• It provides a framework for decision-making

• Guides employee behaviour

• Creates a unified purpose that aligns the entire organisation

What is a value chain?

• The sequence of activities a firm performs to deliver value to customers

• Each step adds value and incurs cost

• VC shows where and how a firm creates competitive advantage

• Strategy decides which activities to perform differently pr more efficiently than competitors

What are upstream and downstream operations in a value chain?

• Upstream: All the activities that occur before manufacturing, such as sourcing raw materials and working with suppliers

• Downstream: All the activites that occur after manufacting, such as getting the finished products to end consumers

Explain the feedback loop of strategy-value chain-competitive advantage

• Foundation of Execution: Strategy defines what a firm aims to achieve; the value chain defines how it gets done.

• Strategic Fit: Competitive advantage relies on the total alignment between chosen strategy and value chain design.

• Global Complexity: Operating internationally introduces location-specific and cross-border coordination requirements that directly impact value chain configuration.

• Continuous Agility: Maintaining superior long-term performance requires continuous iteration across analysis, planning, implementation, and feedback-driven refinement.

What are the 3 objectives to gain global competitive advantages?

Efficiency

• Lowering the cost of the firm’s operation and activities on a global scale

• MNEs pay attention to R&D, manufacturing, sourcing, marketing, customer service

• E.g. low cost production of automotives in China
  
  

Flexibility

• Flexibility provides the ability to accommodate diverse country-specific risks and opportunities.

• Firms should tap into local resources and exploit local opportunities

• E.g. Develop relationship with certain suppliers and distributors, adapt marketing and HR practices to suit unique country conditions

Learning

• Firms must learn from operating in international environments and exploit the learning through knowledge transfer on a global scale

• New technical and managerial know-how

• New product ideas

• R&D capabilities

• Partnering skills

• Surviving in unfamiliar environments

What is global integration?

The coordination of the firm’s value-chain activities across multiple countries to achieve efficiency, synergy, and cross-fertilisation to take advantage of similarities between countries

What are the pressures for global integration?

• Seek cost reduction through economies of scale.

• Capitalize on converging consumer trends and universal needs.

• Provide uniform service to global customers.

• Conduct global sourcing of raw materials, components, energy, and labour.

• Monitor and respond to global competitors.

• Take advantage of global media.

What is local responsiveness?

The management of the firm’s value-chain activities on a country-by-country basis to address diverse opportunities and risks

What are the pressures for local responsiveness?

• Leverage natural endowments available to the firm

• Cater to local customer needs

• Accommodate differences in distribution channels

• Respond to local competition

• Adjust to cultural differences

• Meet host government requirements and regulations

Explain the Bartlett & Ghoshal IR Framework, provide details about the four quadrants

Vertical Axis: Pressure for global integration (Low to High)
Horizontal Axis: Pressure for local responsiveness (Low to High)

Home replication (International) strategy: Low pressure for global integration and Low pressure for local responsiveness

Global (standardisation) strategy: High pressure for global integration and low pressure for local responsiveness

Multidomestic (Localisation) strategy: Low pressure for global integration and high pressure for local responsiveness

Transnational strategy: High pressure for global integration and high pressure for local responsiveness

Explainn the Home replication (International strategy)

• Products with universal needs

• Low pressure to reduce costs and local adaptation

• Produce products for domestic market → Sell them internaationally with minimal customisation

Explain the Multidomestic (Multilocal) strategy

• ‘Locally responsive’, local tastes and needs

• Focusing on sensitivity and responsiveness to national differences

• Modified/adapted profucts and services

• High degree of autonomy to subsidiaries

Explain the Global (Standardisation) strategy

• Maximise efficiency on global scale

• Global production of standardised products

• Small number of global competitors

• Focuses on capturing scale ecoomies, cross-national learning effects, and lowering operational costs

• High control from HQ

Explain the Transnational strategy

• Sufficient control and relatively responsive to local needs

• Standardise where feasible; adapt where appropriate

• Facilitate global learning via transfer of knowledge

• Leveraging subsidiary skills and competences

What is digitalisatiion?

‘The process of rendering an organisation’s products, services, and processes, along with the information associated with them, for marketing, sales, and distribution internet compatible’ - Banalieva and Dhanaraj

How has technology changed IB strategy internally?

• Disintermediation - The process of removing intermediaries from a process, supply chain, or transaction to allow for more direct contact between the producer and consumer

How has technology changed IB strategy externally?

• New opportunites to deliver digital technology-based solutions

• Change in government laws and regualtions

• Changes in buying behaviours

• Encompassing wide area of purchasing, production, marketing, logistics, and communications across national-borders

How does digitalisaiton drive cost leadership and differentiation?

Cost Leadership

• Automation drives cost reductions

• Data analytics → Supply chain

• Digital platforms → Reduced transactions
  
  

Differentiation

• Data & algorithms allows for personalisation

• Digital tools → Enhanced customer experience

• Integraiton of products, services, and digital