International Business

Strategy

Michal
Dekel-Malinovitch
 Before we start...

• [email protected]
• Tel: 054-7923920
 Structure

Intro
 Overseas expansions – options and strategy: – Why When and How
 Int’l market analysis
 Motivation
 Entry modes
 FDI and cooperation
 Rules of international trade
 Organizational structures
 Managing organizational functions: production, marketing; R&D; HR

Summary
Guests Case study Hill 8th ed Content Date
C1 Intro 31.12 1
C5 Theories of int’l trade 7.1 2
C2, C3, The decision to expand 14.1 3
C12 overseas
Kobi Absorption and completion 21.1 4
Avidan week - Entry modes
C7 C14 Entry modes and FDI 28.1 5
Baiqian Ikea in C6 Int’l trade rule sand WTO 4.2 6
Bian China
(Rosie)
Ass. #1 C13 Management strategy 11.2 7
Nimrod Dow Organizational structures 18.2 8
Shefer Chemicals
Boaz Ass. #2 C16-C18 Managing company’s 25.2 9
Shnitzer function Int’l business
2023 ?
Ass. # 4 Presentations 3.3 10
Ass. # 3 Presentations 10.3 11
(17.3)
Hill, Charles W. L
International business : competing in the global
marketplace 8 ed.

https://www.emerald.com/insight/content/doi/10.1108/sd
.2008.05624iae.001/full/html
 Final project

Choose a company and offer it to enter a new international market

(where it does not yet operate).
Prepare a review for the board of directors for the proposal
 Assignment 1: Motivations; Market analysis
 Assignment 2: Industry analysis and entry modes
 Assignment 3: Strategy considerations and decision; organizational
structure; final recommendation
 Presentation: 10-15Min + 5 min. Q&A
 Grading
At
 Lectures & ten
an d
 Active participation 10% ce – 80
%
 Reading materials

 Case studies 20%

 Final project - 45%

 Presentation - 25%

GOOD LUCK !
 Int’l Business – Why ?

 Local market is small

 Growth engine
 Duplicate local success - innovation
 Resources – Cost reduction
  Risk diversion
 Demand
 Currency differentials
 Int’l Business – Why not ?

 Gaps – Politics; financials;  Technology

economy; cultures  Knowhow
 Preference for the local  Price
production
 Distance from the  Competitive advantage
management

The Liability of Foreignness

The inherent disadvantage foreign firms experience in

host countries because of their non-native status.
 So…
We need strategy…
 Major changes 20 Century th

• Economic boom
Post WWs. • New technologies
(1950s- • Government
1960s): intervention
•  GATT The General
Agreement on Tariffs
and Trade (1947)

Neo – Geo Digital

liberalism’ Political Revolution
‘80s Changes
(1980s-
1990s):

• Deregulation • The fall of • Internet;

• Privatization USSR • Smartphone
• Free-markets • World Trade s
Organization • e-
1995 commerce
• Emerging of
SEA
’80s – ‘90s - Internationalization

 MNE – Multi–National Entities (IBM; Microsoft; Nestle P&G;

Coca Cola; McDonald’s
 Ownership -subsidiaries ; core business (R&D)
 Control - corporate governance structures
 FDI – Foreign Direct Investment
 Global Branding and Marketing:
 Global value chains,
 “Think Global ; Act Local”

Strategy – Competitive advantage ; Economy of scale ;

 21st Century - Globalization

Globalization – The shift towards a more integrated and interdependent

world economy.
 Markets
 Same taste : Coca Cola; Ikea; Starbucks; Samsung
 The world is a playground
 Products
 Local competitive advantage
 ‘Taking over' entire industries:
 Automotive industry: USA Japanese European  Korean
 Call centers  India

Strategy – Competitive advantage ; Economy of scale ;

less controlled , outsourcing
BOEING
 ?Is Globalization a good thing

11/9/01 9/11/89
Anti -
The fall of
Globalization Globalization The fall of
the twin the Berlin
towers Wall

Exploitation of employment
workers
Damage to the efficient
environment economy
encouraging Low prices
consumption
Cultural Welfare
imperialism
 Flat world – Is it ?
Barriers & Challenges

 High risk  Bureaucracy

 Logistics  Politics
 Hyper competition  Resources
 Culture gaps  infrastructures
 Legal issues
 21st Century – Eco system
Ecosystem - the interconnected network of organizations, stakeholders, and
entities that interact and collaborate within a specific industry or market.

 Interconnectedness & Mutual dependence

 Adaptability & Openness;
 Industry 4.0“ – IOT; Big data; AI
 Coopetition (shared infrastructure; security; research)
 Value Creation

Strategy – Competitive advantage ; Economy of scope ;

“Asset light
strategy”
 21st Century – Eco system

MNE’s Ecosystem
 Control - centralism  Autonomy connections
 Ownership  Networking
 IP ownership  Shared complementary IP
 Response to uncertainty  Management of uncertainty
 Planning  Quick adjustment
 Major changes 21 st
Century
Globalizatio Political Covid-19 De –
n& events - Pandemic Globalization
Ecosystem (2020s):
‘90s -

 11/9/2001 • Challenges & • Decrease of

• Int’l trade &
 Financial crisis solutions in - interdependen
invest.
2001; 2008 • Communication; cy between
• Global financial
• Social distance countries
markets  Brexit – 2016
• Protectionism
• Technology;  Us Vs China – • Supply chain

Communication Trade tension

; Transportation • Russia -
Ukraine War
• 7/10/23 ?

 Nationalism  Nationalism
 Major changes 20- 21
st st Century
Major changes 21 Century
Less trade
barriers
? GATT
?

‘50
?

De- Internatio
globalizat nalization
ion ‘70-’80s
Global
ization2010-
- Eco-
system
Eco- Globaliza
system tion
2000 - ‘90s -
 So…
We definitely need
strategy…
 What is Strategy ?

A comprehensive plan that will lead to a

sustainable competitive advantage, in order
to yield above average returns.

A central, integrated, externally oriented

concept of how the business will achieve
its objectives.
 Strategy includes

• Content What do we want to achieve - Vison, Mission, values)

• Context Where do we act - Business environment

• Process How do we get there – Resources, assets and

challenges

Content

Context Process
 Int’l Strategy

 Content Why Int’l ? What is the company

competitive advantage? Vision & values
compatibility)

 Context Which country? Do we know the culture?

Politics? Economy? Industry position

Content
 Process Entry modes; resource allocation ;
Human resources;
Context Process
 Strategy =

What is the goal The correct Where am I now

Where to.. route for me

1 3 2
Future How do I feel the Current
snapshot gaps? situation
 Company’s Goal: Create Value

For Company For Customer

V
Value
= P-C
Price Cost
V
Value
= Uc - P
Utility Price

V = P-C + Uc - P

V = Uc - C
 V= Uc - C

Low cost
Reduce costs
strategy

Profitability
Add value and Differentiation
raise price strategy
Enterprise
Value Lower price
Sell more in  Low cost
existing strategy
markets
Profit Growth
Enter new Differentiation
markets strategy
 Motivations

• When the
• Exploiting the
local
market is potential of the
small target market
Add value and Cost
Market ROI
raise price expandin expandin reduction
g g

Enter new
markets
Competiti
Economy
ve
of scale
advantage
• Technology; • Production,
knowledge distribution
Add value and , logistics, Cost
raise price marketing reduction