HI6006

Competitive Strategy
Tutorial week 8:
International Strategy
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Learning objectives
Master title style

 Define the three international corporate-level strategies:

multi-domestic, global and transnational.
 Discuss the environmental trends affecting international
strategy,
 Name and describe the five alternative modes for entering
international markets.
 Name and describe two major risks of international
diversification.
 Explain why the positive outcomes from international
expansion may be limited.

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 Click to edit Master
International corporate-level
title stylestrategies

 International strategy

• A strategy through which the firm

sells its goods or services outside
its domestic market.

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 Click to edit Master
International corporate-level
title stylestrategies

MULTI-DOMESTIC

• The strategy is required when the firm

operates in:
– multiple industries
– multiple countries or regions.
– Example – Coca Cola

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 Click to edit Master
International corporate-level
title stylestrategies

GLOBAL strategy
• Strategic and operating decisions are centralised at
the home office
• Requires resource sharing and coordination across
borders (hard to manage)
• Offers less effective learning processes (pressure to
conform and standardize)
• Example – Unilever (Lipton, Dove, Knorr, Lux,
Sunsilk, Rexona, Magnum, Omo etc)

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 Click to edit Master
International corporate-level
title stylestrategies

TRANSNATIONAL strategy

• The strategy seeks to achieve both global efficiency

and local responsiveness, which are competing
goals.
• It requires both:
– centralization – global coordination and control
– decentralization – local flexibility.
– Example - McDonald
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 International
Click to edit corporate-level
Master title stylestrategies strategy

 Identify examples of companies using

each of the three international
strategies. Which company do you
think is best positioned to compete in
international markets?

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 Environmental
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trendstitle
affecting
style international
strategy
 Liability of foreignness

 Regionalisation

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 Environmental
Click to edit Master
trendstitle
affecting
style international
strategy
 Liability of foreignness
 increased emphasis on local requirements – e.g.,
customisation to meet government regulations within
particular countries or to fit customer tastes and
preferences.
 Most multinational firms desire coordination and
sharing of resources across country markets to hold
down costs.
 Some products and industries may be more suited than
others for standardisation across country borders.

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 Environmental
Click to edit Master
trendstitle
affecting
style international
strategy
Liability of foreignness
• It also involves overcoming and coordinating
four types of distances:
– cultural
– administrative (unfamiliar operating
environments)
– geographic (challenges of distance
coordination)
– economic.
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 Environmental
Click to edit Master
trendstitle
affecting
style international
strategy
Regionalisation
 A firm competing in international markets must decide
whether to compete in all (or many) world markets or to
focus its efforts on a specific region or regions.
 A regional focus may enable the firm to better understand
cultures, legal and social norms in achieving strategic
competitiveness.
 Regional strategies also are being promoted by groups of
countries that have developed trade agreements to
enhance the economic power of a region. Ex – EU, NAFTA,
ASEAN, OAS, APEC
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 Risks
Click in
to an
editinternational
Master title environment
style
strategy
Question

Identify the challenges Fitbit need to

overcome affecting their implementation
of international strategy

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 INTERNATIONAL
Click to edit Master STRATEGY
title stylelimitations:
•
strategy
geographic dispersion across country borders increases the costs
of coordination between units and the distribution of products.
• Trade barriers, logistical costs, cultural diversity and other
differences by country.
• Institutional and cultural factors can present strong barriers to the
transfer of a firm’s competitive advantages from one country to
another.
• Marketing programs often have to be redesigned and new
distribution networks established when firms expand into new
countries.
• Firms may encounter different labour costs and capital charges.

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 Choice
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international
Master titleentry
stylemode
:
 exporting
strategy
 licensing
 strategic alliances
 acquisition
 wholly owned subsidiary.

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 Risks
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to an
editinternational
Master title environment
style
strategy

QUESTION

 Identify and discuss 3 international entry

mode Fitbit can choose from when
entering the world’s leading emerging
market economies.

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 Risks
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to an
editinternational
Master title environment
style
strategy
2 Risks
 Political risks - are those related to instability in
national governments and to war, civil or international.

 Economic risks - are interdependent with political

risks; however, some economic risks are specific to
international diversification. For example, differences and
fluctuations in the value of the different currencies are
a primary concern to internationally diversified firms.

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 Risks
Click in
to an
editinternational
Master title environment
style
strategy
QUESTION

 Fitbit international expansion can

be difficult to implement and
manage, identify and discuss the
risks involved.

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