INTERNATIONAL

BUSINESS STRATEGY
702069

Presented by
Mcomm. Nguyen Thi Hong Hanh
Department of International Business
 Session outline

– Internationalization drivers
– Geographic sources of advantage
– International strategies
– Subsidiary roles in an international portfolio
– Internationalization and Performance

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 Internationalization Drivers

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 Walmart’s international failure

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 Session outline

– Internationalization drivers
– Geographic sources of advantage
– International strategies
– Mode of entry
– Subsidiary roles in an international portfolio
– Internationalization and Performance

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 Porter’s Diamond of National Advantages

Organization can improve the configuration of its value

chain and system by taking advantage of country-specific or
geographic advantages

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 Porter’s Diamond of National Advantages

• Underline the environmental conditions

and structural attributes of nations and
their regions that contribute to their
competitive advantage
• Used by government to increase the
competitiveness of local industries
• Positive rivalry -> policy shift to
encourage local competitors rather than
protecting home-based competition
• Individual organization: to identify the
extent to which they can build on home-
based advantages to create competitive
advantages to others internationally
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 International value system

Sources of geographic advantage

are not purely domestic.
✔ Advantages of international
companies need to be drawn from
the international configuration of
their value system.

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 Locational Advantages

1. Cost advantage: labour, transportation, communication,

tax, investment incentives.
2. Unique local capabilities: value-creating & innovative
activities.
3. National market characteristics: enable organization to
develop differentiated products/services aimed at
different market segments.

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 Session outline

– Internationalization drivers
– Geographic sources of advantage
– International strategies
– Mode of entry
– Subsidiary roles in an international portfolio
– Internationalization and Performance

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 4 International Strategies

Global Integration VS Local Responsiveness

Coordinate organization’s Meet the specific needs in

activities cross diverse each individual country
countries to gain efficient
operations.

GLOBAL – LOCAL DILEMMA

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 4 International Strategies

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 4 International Strategies
1. Export strategy: leverage home country
capabilities, innovations and products in
different foreign countries.
2. Multi-domestic strategy: maximize local
responsiveness = collection of independent
units with value chain activities adapted to
specific local conditions.
3. Global strategy: maximize global integration
(a marketplace with standardized products)
4. Transnational strategy: maximize both local
responsiveness and integration (maximize
learning and knowledge exchange between
dispersed units
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 Market Selection and Entry
• Country and market characteristics: PESTLE
• Match between country and company: CAGE

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 Session outline

– Internationalization drivers
– Geographic sources of advantage
– International strategies
– Mode of Entry
– Subsidiary roles in an international portfolio
– Internationalization and Performance

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 Mode of entry

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 Session outline

– Internationalization drivers
– Geographic sources of advantage
– International strategies
– Mode of Entry
– Subsidiary roles in an international portfolio
– Internationalization and Performance

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 Subsidiary roles in multinational firms

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 Session outline

– Internationalization drivers
– Geographic sources of advantage
– International strategies
– Subsidiary roles in an international portfolio
– Internationalization and Performance

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 Internationalization and performance

1. An inverted U-curve
2. Service-sector disadvantages: tightly regulated and restricted in
many countries; intangible nature of services; require significant
local presence and reduce scope for the exploitation of economies
of scale in production compared to manufacturing firms.
3. Internationalization and product diversity: product-diversified
firms are better at international expansion but comes with excessive
cost (coordination and control)=> poor performance

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 Reading for next week

Merger, Acquisition and Alliances

• Exploring Strategy: Chapter 11;
• Global Strategy: Chapter 9 (page 282-284)

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 Homework

1. Tata Motors acquisition Jaguar Land Rover (Acquisition)

2. IKEA acquire TaskRabbit (Acquisition)
3. Qingdao Haier’s M&A GE Appliances (M&A)
4. Time Warner-AOL (Merger)

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