Chapter 8 International strategy
Knowledge objectives 1 Explain traditional and emerging motives for firms to pursue international diversification 2 Explore the four factors that lead to a basis for international business-level strategies 3 Define the three international corporate-level strategies: multi-domestic, global and transnational 4 Discuss the environmental trends affecting international strategy, especially liability of foreignness and regionalisation
Knowledge objectives 5 Name and describe the five alternative modes for entering international markets 6 Explain the effects of international diversification on firm returns and innovation 7 Name and describe two major risks of international diversification 8 Explain why the positive outcomes from international expansion may be limited
International strategy Definition A strategy through which the firm sells its goods or services outside its domestic market
Incentives to use an international strategy Traditional • Extend the product life cycle • Secure key resources • Provide access to low-cost labour Emerging • Use of Internet and telecommunications for global transactions • High potential global demand for consumer products and services
Opportunities and outcomes of international strategy
Incentives to use an international strategy Four basic benefits 1 Increased market size 2 Greater returns on major capital investments 3 Economies of scale, scope and learning 4 Competitive advantages of location
Incentives to use an international strategy Increased market size Firm expands into larger international markets Return on investment Firm recovers investments in plant, capital equipment and R&D from the larger international market
Incentives to use an international strategy Economies of scale and learning Firm achieves optimal economies of scale and exploits core competencies through resource and knowledge sharing Location advantages Firm lowers basic costs of goods and services and gains access to critical supplies and customers
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- Spring '16
- International Trade, International Diversification, • International