International

Competitive Strategy
 International Strategy
International strategy refers to the way firms make
choices about acquiring and using scarce resources in
order to achieve their international objectives
It involves
decisions about which markets to enter with
which products, when and how
all the various functions and activities of the
company and how they interact
ensuring that strategy is consistent across
functions, products, and regional units
a variety of unique demands associated with
operating internationally
 A companys goal is to achieve and maintain a
unique and valuable position both within a
nation and globally

Competitive advantage refers to the ability of

a company to have higher rates of profits than
its competitors
 Competitive Advantage
To create a sustainable competitive advantage, a
company tries to develop skills that
create value for customers
are rare
are difficult to imitate or substitute for
are organized in a way that the company can fully
exploit
Global Strategic Planning Process
The global strategic planning process provides a formal
structure with which managers
1. define companys business and mission
2. analyze the companys internal and external
environments
3. set corporate objectives
4. quantify goals
5. formulate strategies
6. make a tactical plan
 Value Chain Analysis
Value chain analysis of firms activities from raw
materials to end products to final customer
delivery :

Who are the target customers?

What value do we deliver to them?
How will we create this value?
The Value Chain
 Vision and Mission Statements
Broad statements that communicate to the
corporations stakeholders
what the company is
where it is going
the values that will guide the organizations
members behavior
 The mission statement refers to a road
statement that defines the organizations
purpose and scope

The vision statement describes the companys

desired future position if it can acquire the
necessary competencies and successfully
implement its strategy

The values statement is a clear and concise

description of the fundamental values, beliefs,
and priorities of the organizations members
 Set Corporate Objectives
Objectives
Direct the firms course of action
Maintain action within the missions boundaries
Ensure the missions continuing existence

To implement an effective strategy quantifiable

objectives are important
 Formulate Competitive Strategies
Competitive strategies and corresponding action
plans enable organizations to reach their objectives

The strategic planning process will formulate

alternative competitive strategies along with
plausible action plans
Conscious choice of the course to be followed
 Formulate Competitive Strategies
For the International Market Place

Formulation of international strategy must consider

two opposing forces

Reduction of costs: achieved best through

standardization and global integration of
operations

Adaptation to local markets: achieved best

through more local autonomy
 Basic strategy types address pressures for cost
reduction and local adaptation

Home Replication (centralized Product

Development)

Multidomestic (Strong pressure to Adapt Products

to Local Markets- Decentralization)
Regional

Global (Strong Pressure to Reduce cost, low

pressure to adapt locally)

Transnational (Strong Pressure to reduce cost and

to adapt locally)
Cost and Adaptation Pressures and Their
Implications for International Strategies
 Home Replication Strategy
The home replication strategy centralizes product
development functions in the home country
developed products are then transferred to foreign
markets in order to capture additional value
microsoft, mcdonalds

The company has to possess a distinctive competence that

local companies lack

Headquarters maintains control over marketing and product

strategy

Subsidiaries leverage the home country capabilities

 Multidomestic Strategy
The multidomestic strategy is used when there is
strong pressure for adaptation to local market

Decision making is decentralized, allowing for

quick change

Leads to an increased cost structure

Excessive adaptation may take away from

products distinctiveness

Cost and complexity of coordination can be

substantial
 Global Strategy
The global strategy is used when a company faces strong
pressure to reduce costs and limited pressure to adapt
products for local markets

Strategy and decision making centralized

Company offers standardized products and services

Value chain activities are in only one or a few areas

Limited ability to adjust to meet customer needs

Higher transportation costs for physical products

 Transnational Strategy
The transnational strategy is used when pressures for
cost effectiveness and local adaptation are equally
important

Company locates activities where most beneficial for the

firm globally
Upstream value chain activities will be more
centralized
Downstream activities will be more localized

Achieving an optimal balance is challenging

Strategic decisions, structures and systems will be

complex