INTERNATIONAL

MANAGEMENT

The
internationalization
strategy of the firms

1.

The stages of an internationalization strategic

analysis:
- the investigation of the international
environment
- the diagnosis of the firm
- internationalization factors

2. The analysis of the strategic alternatives for

internationalization :
- the forms of international involvement
- the ways of adapting to the international market
- the segmentation of the international markets

3. The internationalization strategy of the firm:

- instruments for taking the decision
- the evolution of the internationalization
configurations

DETERMINING AN INTERNATIONALIZATION
STRATEGY
Step 1: The analysis of the external factors and companys
potential:
THE STATE AND EVOLUTION
OF THE INTERNATIONAL
ENVIRONMENT

THE DIAGNOSIS OF THE

COMPANY

(Opportunities and Threats)

(Strengths and weaknesses)

Looking for relevant information

-The analysis of the needs and
the real demand
-The analysis of the competitors

-Determining the entry barriers

to the market
-Evaluating the countrys risk

The typology of the foreign

markets;
Degrees of attractiveness

-The firms aspirations

-The available resources (surplus or
usable capacities)
- Specific advantages regarding:
- products
- markets
- technologies
- science (know-how)

The competence profile of the

company

Step 2: Determining the international

objectives of the company
-The turnover that should be achieved: the market sectors (divisions)
internationally aimed
- The targeted development rate
- The profitability (internal rate of return) of the invested capital.

Step 3: The analysis of the

strategic alternatives
- Direct or indirect export
- FDI (Foreign Direct Investment)
- Strategic alliances and forms of cooperation.

Steps 4-6: The implementation of the

internationalization program
Budget

Execution

Control

1.

THE STAGES (STEPS) OF

AN
INTERNATIONALIZATION
STRATEGIC ANALYSIS

1.1 The international environment

investigation
A. The essential elements that should
be detected:
- The needs and the real demand
- The competition and the sectors with
state monopoly
- The entry barriers on the market
- The political instability and the risk
of the country
- The existent technological level.
B. The difficulties of catching relevant
information:
-The variety and the high number of
the international environment
components
- The dynamics of these components
- The quality of the information: is
high dependent on the personal
presence in the aimed country.

1.2. The diagnosis of the firm

A. Methods of evaluating the internal resources of
the company:
- the diagnosis could be accomplished by an external
team or by an internal team from the company
- the diagnosis could be a permanent or a
circumstantial one
- the diagnosis could be only a quantitative one or
also a qualitative one
- the diagnosis could emphasize the present situation
or the prospective aspects
- the result of the diagnosis is external subjected to
the effect of the prism.

B. The components of evaluating the companys

potential:
- flows
- structures
- capacities.

1.3. Factors of internationalization:

A. Environment factors:
- facility of entry to the market
- favorable evolution of the market (demand)
- moderate political risk
- good circumstances of working
- the quality of reception
- the existence of a free trade area
- the quality of the local resources
- the monetary parities.
B. Companys strategic reasons:
- surplus productive capacity, low local demand or
saturated internal market
- growing credibility of the firm
- possibility of external growth
- facilitating economies of scale
- the prolongation of the products life.

2. THE ANALYSIS OF THE

INTERNATIONALIZATION
STRATEGIC
ALTERNATIVES
(OPTIONS)

2.1. The forms of international involvement

- The strategy of direct or indirect export
- FDI (Foreign Direct Investment)
- The cooperation

2.2. The ways of adapting to the international

markets
- Standardization (Normalization)
- Selective Adaptation
- Differentiation
2.3. The division of the international markets
The division criterions used in international trade:
- social and economical variables
- cultural factors
- geographical and geopolitical variables
- behavioral variables.

3. THE DECISION OF THE

INTERNATIONALIZATION OF
THE COMPANY

3.1. Instruments for taking the decision

A. Evaluation instruments
Variables

Weight

Countries
I

I. Environment main factors

Acceptable (A) or Unacceptable
(U):
1. Observing the propriety rights
2. The opening of the market

II

III

IV

U A

A A

0-5
0-3
0-2
0-4
0-3

/
/
/
/
/

4
3
2
3
2

3
1
1
2
1

3
2
2
4
3

3
2
2
1
1

0-2

0-2

18 10

18

10

/
/
/
/
/

2
0
0
1
0

1
0
1
0
1

3
3
2
4
2

2
3
3
3
2

14

13

II. The profitability of the

operation
(high numbers = favorable rank)
1. The invested capital
2. Direct costs
3. The turnover tax
4. The present dimension of the
market
5. The dimension of the market (3
10 years)
6. The market division:
- potential (0-2 years)
- future (3 years)
TOTAL
III. Risk
(low numbers = favorable rank)
1. Losses in the market division
2. International trade problems
3. Political instability
4. Legislation and regulations
5. Perspectives of regulation (3
10 years).
TOTAL

0-4
0-3
0-3
0-4
0-2

B. The matrix method

BCG Matrix (Boston Consulting Group) uses
two types of variables:
- the market position
- the growth rate.
McKinseys

Matrix:
- the competitiveness
- the long term attractiveness.

A.D.Littles

Model ("Business Profile

Matrix"):
- the position between the competitors
- the level of the industrial maturity.

- LORANGEs Model:
- the level of predicting the
environmental factors
- the possibility of reacting to random
events.

BALL

3.2. The evolution of the internationalization

configurations:
Step I

- Direct or indirect export

Step II

- Workshops or join-ventures

Step III

- Local premises and research

laboratories

Step IV

- Re-concentration and local

extension.