Strategies for International

Competition
By
DeepaChandrasekar
[email protected]
The Roots of International Strategy
• The three states of mind or attitudes that are
inferred from the managerial practices:
• Ethnocentrism
• Polycentrism
• Geocentrism
 Ethnocentrism
• Strategic decisions are
made at headquarters;
• Limited subsidiary
autonomy;
• Key positions in domestic Ethnocentric
Firm

and foreign operations are

held by headquarters’
personnel;
• PCNs manage subsidiaries.
Polycentrism
• Strategic decisions are
made at headquarters;
• Limited subsidiary
autonomy;
• Key positions in domestic
and foreign operations are
held by headquarters’
Polycentric Firm
personnel;
• PCNs manage
subsidiaries.
Geocentric
• A global approach -
worldwide integration;
• View that each part of the
organization makes a
unique contribution;
• Nationality is ignored in
favor of ability:
• Best person for the job;
• Color of passport does not
matter when it comes to
rewards, promotion and
development.
Strategically Expanding Overseas
• Facilitators of international Expansion

Government &
Political
Forces

Competitive Technological
Forces Internationalization Forces

Market
Forces
Facilitators
• Market Saturation
• Political Reasons
• Cheap Labor.
• Availability of resources
• Technological advancements
• Economies of scale and scope
• Competitive Pressure
Where to Expand Internationally
• Rating factors to evaluate where to expand
• Political Risk
• Cultural Distance
• Geographic Distance
• Economic Environment
• Foreign Exchange Volatility
• Market Size
• Market Growth
• Regulatory Environment
• Firms may then derive
• Measure of country risk from these ratings
• Measure of expected return
Strategic Planning For Foreign Market Entry
1. Identify the company’s objective in its Foreign Market Entry.
2. Preliminary Country Screening
3. What are the Opportunities and Constraints in the Target Market?
4. What Capabilities, Resources, and Skills are needed to succeed in
the Foreign Market?
5. Does the company have the Core Capabilities and Resources to
Score High on the key Success Factors? What are our Strengths and
Weakness on the Key Success Factors?
6. Should the company Enter the target Market, and How?
7. Compare and Rank the Targeted Countries.
Identify the company’s objective in its
Foreign Market Entry.
• Management should be clearly understand the objective
for entering the foreign market

• The objective could be…

• Cheap Labor.
• Availability of resources
• Technological advancements
• Economies of scale and scope
• Competitive Pressure
• Reduce the Risk
Managing Portfolio Of Country Subsidiaries

Two Approaches are

• Host Country Attractiveness Versus Competitive

Strength Matrix

• International Risk Versus Return Portfolio

Host Country Attractiveness Versus Competitive
Strength Matrix

High
Collaborative Growth
Strategies Strategies

Host
Country
Attractiveness

Cross-
Defensive
Subsidization
Strategies
Strategies
Low
Low High

Firm-Level Competitive Strength in Each Host Country

 International Risk Versus Return Portfolio

High
Increase
Resources
Harvest & Divest to Match Risk
Or Licensing or International
Host Selectively Joint Venture
Cou Medium Grow
ntry
risk
Cross-Subsidize Grow Industry Leadership
Low

Negative to Low Medium High

Expected Profits in each host country

 Modern International Strategic Orientations

High

Global Orientation Transnational Orientation

(Chemicals, Heavy Metals (Pharmaceuticals,
Extractive Industries) Telecommunications,
Global
Integration
Financial Services)
&
Coordination
Pressures

International Orientation Multi Domestic Orientation

(Cement, Fabric Mills) (Consumer
Nondurables)

Low

Low Local Responsiveness Pressures High

 Value Chain Configuration & Strategic
Orientations Of Firms
Firm Infrastructure
Eg., Financing , Planning, investor relations
Human Resources Management
Eg., recruiting, training, compensation system
Support
Activities Technology Development
Eg., Product design, testing, process design, material & market research

Procurement
Eg., components, machinery, advertising, services

Inbound Operations
Logistics Outbound Marketing & After Sales
Eg. Component Logistics Sales Service
Incoming Fabrication, Eg. Order Eg., Sales
Material assembly Processing, force,
storage Branch warehousing promotion
operation

Primary Activities
 Primary activities
• Primary activities are purchasing raw materials , transporting to
the factory , production , operations, marketing and sales.
• Ex : Inbound Logistics .,Incoming Material storage
• Operations Component Fabrication, assembly, Branch operation
• Outbound LogisticsEg. Order Processing, warehousing
• Marketing & SalesEg., Sales force, promotion
Supporting Activities in value chain
• Firm activities which are required to enhance the
efficiency and effectiveness of the primary activities are
known as support activities.
• Examples
• Firm Infrastructure
• Eg., Financing , Planning, investor relations
• Human Resources Management
• Eg., recruiting, training, compensation system
• Technology Development
• Eg., Product design, testing, process design, material & market
research
• Procurement Eg., components, machinery, advertising, services
 Down Stream Activities

Activities which are closely associated with the customers

Are known as down stream activities

Example: Advertisement in the newspaper , sales promotion , delivery,

Supplying the products to the shops , retailers and wholesalers
 Upstream Activities

Activities which are uncoupled from the customers are

up stream activities .

Examples: purchasing the materials , Production , operations

 Worldwide Dispersal & Reintegration
• The Functional Scope Of Value Chain Dispersal & Integration
Strategies
• The Dispersion of companies various activities and functions of the value
chain and their locations in different parts of the world to take advantage of
the national differences.
• Factors
• Comparative advantage of the country
• Efficiency gains from Economies of Scope and Scale
• Opportunity to innovate and learn from diverse culture
• Competitive pressure from domestic and foreign based companies
• Benefits of flexibility and risk reduction
Reintegration of activities & Functions
• Levels of Integration
• Stand alone integration

• Simple Integration
• Complex Integration
Stand alone integration

France –
VCR’s

Televisio
ns

Tape
Germany -
Recorders - Camcorders
Brazil
Simple Integration

• Uni-directional • Multi- Directional

Complex Integration
• Complex integration strategy are characterized by
dispersal of the value chain into discrete functions
– component production, assembly, finance, R &
D, distribution and so on.
• Example- Production Chain Manufacture the
Electric Fan might be
• Purchasing @ France
• Manufacturing of Frame @ Mexico
• Manufacturing of Blades @ India
• Manufacturing of Motor @ Germany
• Assembling in Singapore
• Marketing in North America
 Firm Level Strategies For International
Competitiveness

• Core Competency Leveraging

• Counter Attack
• Glocalization
Core Competency Leveraging

• Strategy used by companies that are gaining prominence

in a variety of businesses.
• Core Competence – distinctive ability to excel in a key
area, upon which a company can build a variety of
businesses and develop new generations.
• Core Products – Intermediate linkages between core
competencies and end products
 Core Competency of Honda
Engines & power-train technology
• Core Product

• End Product
 Core Competency - Canon
Imaging

• Core Product • End Product

• Imaging
 Core Competency
Semiconductors & Digital Display
 Counter Attack

Japan companies “attacked “ U.S Market

Lower Costs derived from the cheap labor

U.S Companies “counter attacked”

Offshore assembly &manufacturing sites
in Asia to lower their production cost
Glocalization

Glocalization of Management

Glocalization of Foreign Affiliates

Glocalization of Exports

Glocalization of Prodcuts

Glocalization of Production
Glocalization of Management

Levi’s allows the local managers to make

decisions about adapting products to suit
locals
Glocalization of Foreign Affiliates

GEARING UP: Stefan Krause, CFO of BMW,

in front of the car that is to be assembled at
its proposed facility at Maraimalainagar
Glocalization of Exports

• Using foreign production plants as export bases to third

party country market is yet another way to become a
“local” company in a foreign country.
• Example :
• Japanese have been exporting U.S Made Cars to Japan
and Europe
• Opening plant in developing country and exporting to
other part of the world.
Glocalization of Prodcuts

• local favorites
• McItaly burger in
Italy,
• Maharaja Mac in
India,
• The McLobster in
Canada
• The Ebi Filit-O in
Japan.
Glocalization of Prodcuts
Thank You
Questions ????????