Strategic Management -5

Internationalization Strategies
International trade and investment have grown dramatically since the end of WW-II Major drivers have been: Technology Lowering of trade barriers Communication Has led to globalization of production and markets

Competitive advantage of nations

Porters diamond Four determinants of competitive advantage are: i) Firm strategy, structure and rivalry-conditions determining how firms are created, organised and the nature of competition ii)Related and supporting industries-existence of supporting industries to the ones in which a nation excels iii)Factor conditions- special resources/ factors that a country is endowed with Iv) Demand conditions-nature and size of the domestic market

Types of international strategies

Two dimensions:

A) Cost pressures
B)Pressures for local responsiveness

Pressures

Global

Transnational

For cost reduction

International
Pressures for

Multidoemstic
Local responsiveness

Strategic decisions
Which markets to enter When to enter Scale of entry Mode of entry

Expansion through internationalization

Advantages: Realizing economies of scale Economies of scope Expansion and extension of markets Location economies Access o overseas resources

Expansion through internationalization

Disadvantages: High risk Difficulty in managing cultural diversity High bureaucratic costs Higher distribution costs Trade barriers

Firm strategy, structure

Factor conditions

Demand conditions

Related and supporting industries

Cooperative strategies
Mergers and acquisitions JV strategies Alliances

Digitalisation
Has been a progressive force within organizations Initially confined to computerisation existing processes But the process of digitisation can be developed into a competitive advantage through Business Process Reengineering

 E Business patterns E Business models E Business designs