STRATEGIES FOR STRATEGIES FOR INTERNATIONAL INTERNATIONAL COMPETITIONCOMPETITION

MACROENVIRONMENTAL FACILITATORS OF MACROENVIRONMENTAL FACILITATORS OF INTERNATIONALIZATIONINTERNATIONALIZATION

* Government and Political forces* Government and Political forces* Technological Forces* Technological Forces

* Market Forces* Market Forces* Competitive Forces* Competitive Forces

Analytical hierarchy approach to International ExpansionAnalytical hierarchy approach to International Expansion

STRATEGICALLY EXPANDING OVERSEASSTRATEGICALLY EXPANDING OVERSEAS

1. Identify the company’s objective in its foreign market entry2. Preliminary country screening3. 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 the strengths and weakness on the key success factors?

6. Should the company enter the target, and how?

7. Compare and rank the targeted countries.

STRATEGIC PLANNING FOR FOREIGN MARKET STRATEGIC PLANNING FOR FOREIGN MARKET ENTRY MODEENTRY MODE

• HOST COUNTRY ATTRACTIVENESS VERSUS HOST COUNTRY ATTRACTIVENESS VERSUS COMPETITIVE –STRENGHT MATRIXCOMPETITIVE –STRENGHT MATRIX

• THE INTERNATIONAL RISK VERSUS RETURN THE INTERNATIONAL RISK VERSUS RETURN PORTFOLIOPORTFOLIO

MANAGING A PORTFOLIO OF COUNTRY MANAGING A PORTFOLIO OF COUNTRY SUBSIDIARIESSUBSIDIARIES

Dipersal and Reintegration of Value Chain Activities

• „Companies will not compete,their supply chains will“.

(Ralph Drayer, chief logistics officer at Procter & Gamble)

Dipersal and Reintegration of Value Chain Activities

• Factors to desperse different activities• Stand-Alone Strategie• Simple Integration• Complex Integration

Agenda

Dipersal and Reintegration of Value Chain Activities

Dipersal and Reintegration of Value Chain Activities

• Comparative advantage of the country• Gain efficiency• Competitive pressures • Benefits of flexibility and risk reduction• Innovate and learn from cultures• Human, capital and knowledge-based

resources

Factors to disperse different activities

Dipersal and Reintegration of Value Chain Activities

• Foreign affiliate is responsible for value chain• Output mostly in the host country• No integration of value chain activities• No interfere of the parent

Stand-Alone Strategies

Dipersal and Reintegration of Value Chain Activities

• Trade barriers• High tariffs• High transportation

Costs• Communication

barriers• Local content

requirement

• Fast-Food Restaurants

• Advertising agencies• Computer services• Management

consulting• Banks• Insurances

ExamplesReasons

Dipersal and Reintegration of Value Chain Activities

Stand Alone Strategy

MarketingProductionPurchasingFinanceR & D

Dipersal and Reintegration of Value Chain Activities

Simple Integration

• Integration of a few activities in the value chain among some or all affiliates of an internatinal company.

• Unidirectional: “one way”,an affiliate might be responsible for producing components for use in another afiliate.

• Multidirectional: there is independence among the afiliates and between the affiliate and the parent.

Dipersal and Reintegration of Value Chain Activities

Unidirectional

Parent company

F.A

F.A

F.AF.A

F.A

Dipersal and Reintegration of Value Chain Activities

Mulitdirectional

Parent company

FA

FA

FA

FA

FAOUTSOURCING

Dipersal and Reintegration of Value Chain Activities

Simple Integration / Outsourcing

MarketingProductionPurchasingFinanceR & D

Accounting

Components

Dipersal and Reintegration of Value Chain Activities

International companies are transforming their geographically dispersed affiliates and fragmented prodcution, financial, and marketing systems into functionally

integraded regional or global network of affiliates.

Complex Integration

Dipersal and Reintegration of Value Chain Activities

Always a flow of» Goods» Services» Components» Capital» Technology » Information

among Parent company and the affiliates.

Abilitiy of International Companies

Dipersal and Reintegration of Value Chain Activities

• Decreasing Market Barrieres• Liberalization of International Trade• Emergence of Trade Blocs (EU, NAFTA)• Global Telecommunications • Computer Networks (Internet)

Major Changes in the World Economy

Dipersal and Reintegration of Value Chain Activities

• Find right country for the right function• Built a perfect network between parent

company and affiliates• Find standardization for products• Find the best strategy for the whole company

Actions for Complex Integration

Dipersal and Reintegration of Value Chain Activities

Complex Ingetration Strategy

Marketing Marketing

Components

Components

ComponentsPurchasing

Assembly

FinanceR & D

Dipersal and Reintegration of Value Chain Activities

How can I improve my BUSINESS and my VALUE CHAIN

Never stop thinking about: