INTERNATIONAL STRATEGIC

IMT Bandung

Dosen : Drs. HA. ROMADLON, MM, CTP

Why Companies Expand into Foreign Markets

There are four major reasons :

1. To gain access to new Customers offers increase revenue and profit

2. To achieve lower cost and enhance the firms competitiveness

3. To capitalized on its core competences

4. To spread its business risk across a wider market base

Competing Internationally : Entering just one or may be a

select a few foreign markets.

Competing Globally : Competing on truly global, company has establish operations an several continents .

Strategy for Entering and Competing in Foreign Market

1.

Maintain a national (one country)production base and export goods to foreign market.
License foreign firm to use the companys technology or to produce and distribute the companys product Employ a franchising strategy Follow a multi country strategy Follow a global strategy

2.

3. 4. 5.

6.

Use strategic alliance or Joint Venture with foreign company as the primary vehicles for entering foreign market

Dealing with Cross-Country Variations

Strategic Posturing Options Ways to deal with cross-country variations in Buyer Preferences and Market Conditions
Employ localized strategic-one for each country market : Tailor the companys competitive approach and product offering to fit specific market conditions and buyer preferences in each host country. Delegate strategy making to local managers with firsthand knowledge of local conditions.

Think local, Act local

Think Global, Act global

Employ same strategy : Pursue the same basic competitive strategy theme (low-cost, differentiation, best cost, or focused) in all country markets-global strategy. Offer the same product worldwide, with only very minor deviation from one country to another when local market conditions so dictate. Utilize the same capabilities, distribution channels, and marketing approaches worldwide. Coordinate strategic actions from central

Think Global, Act Local

Employ a combination global-local strategy : Employ essentially the same basic competitive strategy theme (lowcost, differentiation, best cost or focused) in all country market Develop the capability to customize product offering and sell different product versions in different country. Give local managers the altitude to adapt the global approach as needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.

Using Location to Build Competitive Advantage

Companies that compete multi national, can pursue competitive advantage in world market by locating their value chain activities in whatever nations prove most advantageous. Company must consider two issues :
1.
2.

Whether to concentrate each activity it performs in a few select countries or to disperse performance of the activities to many nations In which countries to locate particular activities.

Companies tend to concentrate their activities in a limited number of locations in the following circumstances : 1. When the cost of manufacturing or other activities are significantly lower in some geographic locations than in other. (much of the worlds footwear is manufactured in Asia (Indonesia, China, Korea) 2. When there are significant scale economic. (Japanese makers of VCRs, TVs and DVD player have use their large manufacturing share to establish a low cost advantage. 3. When there is a steep learning curve associated with performing an activity in a single location. 4. When certain locations have superior resources, allow better coordination of related activities or offer other valuable advantage.

Profit Sanctuary

Domestic-only Company

Multi country Company

Home Market

Home Market
Country D

Country B

Country C

Country E

A domestic-only company has only one profit sanctuary A multi country competitor usually has a profit sanctuary in its home market and may have other sanctuary in those countries (in this case E) where it has a strong position and market share.

Profit Sanctuary in Global Company

Global Company

Home Market

Country B

Country C

Country D

Country E

Country F

Country G

Country H

Country I

Country J

Country K

A globally competitive company generally has a profit sanctuary in its home market and frequently has several other profit sanctuaries in those countries (in this case D,F,J) where it is a market leaders and enjoys a strong competitive position.

Cross Border Strategic Alliance and JV Five High Profile Example

1. Two auto firm , Renault of France and Nissan of Japan, form a broad-ranging global partnership in 1999 and then strengthened and expanded the alliance in 2002 the initial objective . 2. Verizon Wireless one of the two largest Cell phone carriers in the United State, is a joint venture between Verizon Communication and Vodafone AirTouch PLC (Europe) .. 3. Microsoft and Fujitsu entered into an alliance in 2004 to collaborate on (1) the development of Fujitsu servers base on Intels Itanium processors and (2) Microsoft Windows server 2003 and next-generation operating system (code named Longhorn) the objective to improve interoperability between their respective software applications. 4. Toyota and First Automotive Works, Chinas biggest automaker, entered into alliance in 2002 to make luxury sedans, sport utility vehicles, and mini vehicles for the chinas market. 5. General Electric (GE) and SNECMA, a French maker of jet engines, have had a long standing 50-50 partnership in two ventures, one called CFM International, which make jet engine to power aircraft made by Boeing and Airbus industry, and a second called CFAN , which function as the exclusive supply source for wide-chord blades for commercial jet engine made by GE.

The Principles of Strategic Alliance

1. Picking a good partner 2. Being sensitive to cultural differences 3. Recognizing that the alliance must benefit both side

4. Ensuring that both parties live up to their commitments

5. Structuring the decision-making process so that actions can be

taken swiftly when needed

6. Managing the learning process and then adjusting the alliance

agreement over time to fit new circumstances.

Strategy Options for Local Companies in Competing against Global Companies.

INDUSTRY PRESSURES TO GLOBALIZE

High

Dodge rivals by shifting to a new business model or market niche

Contend on a global level

Low

Defend by using home field advantages

Tailored for home market

Transfer company expertise to cross border markets

Transferable to other countries

RESOURCES AND COMPETITIVE CAPABILITIES

Tugas 1
Perhatikan Case yang anda pelajari sesuai dengan pembagian kelompok. 2. Lakukan identifikasi apakah perusahaan tersebut menjalankan Strategi Internasional? 3. Identifikasi Strategy for entering and competing to the foreign market 4. Apakah ada pemanfaatan lokasi di luar untuk membangun Competitive Advantage nya ? 5. Tambahkan komentar2 anda berkaitan dengan strategy internasional nya 6. Tugas dikerjakan mulai sekarang dan dikumpulkan Hard Copy paling lambat di akhir mata kuliah hari ini.
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