Strategies for International Business

OVERVIEW PART-A
• Introduction
• Industry Structure and Change
• Value Creation Process
• Strategic Intent
• Business Level Strategies
• Value Chain

PART-B
• Global Integration VS. Local
Responsiveness
• Factors Effecting Global
Integration and Local
Responsiveness
• Choosing a Strategy
(Transnational, International,
Standardization vs Adaptation)
Introduction
• Both internal and external forces effect business
• Firms decision about the international business
• Its expansion (investment), and contraction
(divestment)
• Based on the investigation and combination of
internal and external factors firm formulate
strategies to engage in different markets in specific
time.
Strategy
• Is the framework that mangers develop and apply to
determine the competitive moves and approaches
effectively to the business.
• Attract new, sustain existing or stop working with
customers
• Operate efficiently and effectively
(gain competitive advantage)
We need to change and respond to the dynamic
business environment by connecting different
factors to work in a specific industry.
 Industry Structure
We need to change and respond to the dynamic
business environment by connecting & integrating
different factors to operate in a specific industry.

Industry- An industry is composed of those companies

who engaged in a particular type of enterprise/ firms.

The idea of industry structure represents the

interdependent relationships among the dimensions of
5 forces model.

• Supplier of Inputs
• Buyers of outputs
• Substitute Products
• Potential New Entrants
• Rivalry Among Competing Firms

The 5 Forces shape the relationship among companies

within the industry.
Technological changes
Alternative products
Product
innovation
Porter Fiver Forces (Porter, 1980)
 Industry Change
Generally, industry structure naturally evolves and
change over time.
Disruptive innovations accelerate the rate of change.

• Product disruptions
• Process disruption
• Political disruption
• Economic disruption
• Social disruption
• Technological disruption
• Fad and fashion
• Consumer preferences
• Innovation

HOW TO DEAL WITH INDUSTRY CHANGE?

https://www.youtube.com/watch?v=cdgQpa1pUUE
 Strategic Intent

• Strategic Intent helps managers assess the company’s present

situation, identify its future direction, and determine how it
will get there.

• Companies must develop a compelling value proposition (a

unique way of selling products and services-why a customer
should buy its goods or use its services).

• Nation-by-nation, Region-by-region, or worldwide basis,

requires managers to make and sell products that exceed
customers’ value expectations.

• Firms should committed-to excellence, subject to industry

conditions.
• Coca-Cola, strategic intent has been to put a Coke within
“arm’s reach” of every consumer in the world.

Creating Competitive Advantage/Value

 Business Level Strategic
How firms create value or gain
competitive advantage?

• Making products at lower costs than its

competitors (the strategy of cost leadership)

• Making products for which consumers

willingly pay a premium price (the strategy
of differentiation).

• Producing products and services that fulfill the

needs of small groups of consumers (the Focus
strategy).

• Making offerings that fulfill the needs of a narrow

segment at a premium price. (Differentiation
Focus)
Value Chain

• The value chain is the integration of activities (set of interlinked

activities and operations) the company performs to design,
produce, market, distribute, and support products and services
across international markets.
Global Integration VS. Local Responsiveness
• International firms face different pressure for the
value creation (efficiency & effectiveness) at
different point in time.
• Global integration (globalism) VS
Local responsiveness (localism)

Global Integration
• Global integration is the process of combining
differentiated parts into a standardized whole.
• Produce and sale the same product, services and
processes through similar methods at global level.
• The higher the pressure for global integration, the
greater the need to concentrate configuration and
standardize coordination.
• The convergence of national markets,
standardization of business, and efficiency push
MNEs to integrate activities.
Global Integration VS. Local Responsiveness

Local responsiveness is the process of

disaggregating a standardized whole into
differentiated parts according to the need of
specific region or market.

• Differences in local consumers’

preferences- due to cultural predisposition,
historical legacy, and endemic nationalism.

• Conversely, the higher the pressure for local

responsiveness, the greater the need to
disperse configuration and adapt
coordination.
International Strategies
International
Strategies
 Pressure
Pressure for Global for Local Responsiveness
Integration
LOW HIGH
LOW HIGH
Lets Discuss and Review