OVERVIEW

 The term international business denotes all international dealings of a country that
pertain to the exchange of goods, services and information for commercial purposes and
money.
 International business begins with the exchange of goods among nations.
 Its second stage is reached with the partial exchange of the physical corporate assets of one
company for the capital assets of another.
 The third stage evolves with the acquisition of an entire company or the establishment of
productive facilities owned and managed by a firm with economic interests in more than
one country.
 International business finally reaches its apex with the multinational corporation, which is
involved in all three modes of international business: international trade, portfolio
investment, and foreign direct investment
CHOOSING A STRATEGY
Firms typically choose among four main strategic postures when competing
internationally, which are depicted as follows.

Global Localization
Standardizatio Strategy
n strategy

Transnational International
strategy strategy
GLOBAL STANDARDIZATION
STRATEGY

 Focuses on increase of profitability and profit growth by looking to reduce

costs. Utilizes the help of economies of scale.
 Production, Marketing and R&d of firm is concentrated to fewer locations.
 Firms make an attempt not to customize the product offering and marketing
strategy to local conditions.
 Focus on standardized product.
 Works well for companies offering products that serve universal needs.
 Extremely helpful for companies that are bound by cost pressures.
Ex:MOTOROLA
INTEL,
TEXAS INSTRUMENTS.
LOCALIZATION STRATEGY
 Ideally focuses on customizing the firm s goods in an effort to match the
tastes and preferences of the people of the location.
 Extremely practical where substantial differences across nations with
regard to consumer tastes and preferences are vast.
 Strategy attempts to increase the demand for the product.
 The downside of this strategy, revolves around the fact that firm s ability
to capture cost reductions associated with mass productions cannot be
realized.
 Exploits the presence of local responsiveness for the product.
Ex:KFC in China.
TRANSNATIONAL STRATEGY
 According to Christopher bartlett and Sumatra ghoshal,international
business firms should pursue low cost leadership-cum-local responsive or
customization strategy due to intensive global competitions.
 Firms can achieve this strategy by exploiting experience based economies
and location based economies. Firms should transfer experience based core
competencies and also customise their operations/product to the local
requirements.
 For example
 Caterpillar learned greater cost economies when it faced the sever competition from
Komastu and Hitachi during 1980’s.
INTERNATIONAL STRATEGY

 Ideally followed by firms that find themselves in the fortunate position

where they have lower cost pressures and lower pressure for local
responsiveness.
 Products produced in the domestic market are sold internationally with
localization held back to a minimum.
 The products serve a universal need. The requirement to localize is
eliminated.
 Works better when the number of competitors are less.
 Product development functions like R&D are centralized while production
is established in the place of business.
 Products are generally well known and have a reputation, with its fair share
of loyal customers.
THE DECISIONS CONFRONTING
THE INTERNATIONAL MANAGER
 Should the firm enter a new country?
 What type of entry should it undertake : exporting, licensing, direct investments,
management contracts.
 What are the opportunities / risks in various countries of different modes of
entry?
 In what region or countries and when should the company expand its
international commitments in funds, techno logy, management, knowhow, and
personnel.
 Should the firm go into joint ventures with other private firms or government
enterprises abroad , and under what conditions.
 Where should it raise funds for its worldwide operations
 What product adaptations should it make and what new products should it
introduce in various countries.
 To what extent should it change its marketing and product mixes in different
countries
 Should it disinvest or phase out business in certain countries