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Strategic Management in Global Environments Assignment
10/4/21
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How to formulate strategies?
INTERNATIONAL-LEVEL
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Objectives: Understand how information about external and internal
environments affects formulated strategies
Learn and synthesize strategy across levels: business, corporate, international
How do business leaders formulate strategies for improved performance and competitive advantage?
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What is strategy
formulation
Process by which an organization chooses courses of action to achieve its defined goals
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Inputs Resources Capabilities Competencies
Outcomes Accounting, Shareholder, Stakeholder returns
Internal processes Strategy formulation & implementation
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Inputs Resources Capabilities Competencies
Outcomes Accounting, Shareholder, Stakeholder returns
Internal processes Strategy formulation & implementation
Develop
vision, m ission, core
values
Set objectives Craft strategy
to achieve objectives
Execute
strategy
Evaluate &
adjust
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Strategy levels
BUSINESS CORPORATE INTERNATIONAL
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International strategies: key questions
How to grow market outside domestic borders
How to enter foreign markets
How to design global supply and value chains
How to manage political and economic risks in global markets
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Why go international? Global opportunities
Increased market size
Return on investment
Economies of scale and learning
Location advantage
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Where do you internationalize?
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Where do you internationalize?
How about Mexico?
San Diego—Tijuana (Tecate)
an international transborder agglomeration
Largest binational conurbation between US and Mexico
Population over 5 million
Economic sectors: maritime, manufacturing, tech, tourism, etc.
Governed by NAFTA/USMCA
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Where do you internationalize?
How about Mexico?
San Diego—Tijuana—Tecate trade opportunities
https://www.sandiego.gov/economic- development/sandiego/trade/mexico
USA Trade Guide: https://usa.think.global/utg2017/utg17/ index.html#1
Foreign Direct Investment Intelligence: https://www.fdiintelligence.com/
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Porter’s Diamond of National Advantage
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Hofstede’s cultural dimensions Framework for cross-cultural
communication.
Culture is defined as the
collective mental programming
of the human mind which
distinguishes one group of
people from another
Describes the effects of a
society’s culture on the values
of its members, and how these
values relate to behavior. S ou rce: H ofsted e, 1 9 8 4 Learn m ore: h ttp s://w w w.h ofsted e-in sigh ts.com /p rod u ct/com p are-cou n tries/
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U.S.A.
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Strategies & entry modes Explore your capabilities
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International entry modes
Export
License / Franchise
Strategic alliance
Acquire
Greenfield venture / new subsidiary
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Export
Common way to enter international markets
No need to establish own operations in other nations
Can enter multiple markets quickly
A lot of government support and resources for trade initiatives
Cost significantly influenced by transportation, tariffs
Difficult to customize product and to maintain control over marketing and
distribution
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License
Authorize another firm to manufacture
and/or sell your products
Receive royalty on each unit produced/sold
Licensee bears the risk
Least risky way to enter foreign market
Licensor loses control over product quality, distribution, etc.
Relatively low profit potential
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Alliance
Partners share risks and resources
Joint ventures (JVs) typically involve foreign co with product or tech and a host co with
access to distribution and marketing
Integration of cultures is an issue
Strategic intent differences can lead to
divergent goals
Preferred entry mode for most SMEs
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Acquisition
Most rapid expansion mode
Can be very costly
Regulatory requirements may present barriers to foreign ownership
Complex and costly negotiations
Corporate culture differences
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Greenfield venture
New wholly owned subsidiary
Most complex & costly of entry alternatives
Greatest degree of control
Potentially most profitable, if successful
Requires expertise & knowledge relevant to
host country
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OLI/Eclectic Paradigm Objective: help
m anagem ent choose
between several foreign
m arket entry-m ode
strategies
To engage in FDI, com pany
needs three advantages.
Source: Dunning, 1979
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Paradigms for international strategies
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International strategies
S ou rce: Leh m an n , 2 0 1 0
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Strategies
Multidomestic: strategy and operational decisions are decentralized to SBU in each country to tailor products to the local market
Global: assumes more standardization of products across country markets
Transnational: seeks to achieve both global efficiency and local responsiveness
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International risks Political:
government instability
changes in local attitudes or regulation
regarding foreign ownership
legal authority obtained from previous
administration may change
nationalization of firms’ assets
Economic:
interdependent of political risks
trade wars and tariffs
fluctuations in currency rate
inflation rates differences
interest rates change and different national bank policies
enforcement of property rights and other
regulations
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Doing business database https://www.doingbusiness.org/
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