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Chapter 11 - 1International Business 4e© Prentice Hall, 2008
Chapter 11 Chapter 11 International International Strategy and Strategy and OrganizationOrganization
International Business 4e Chapter 11 - 2© Prentice Hall, 2008
Chapter PreviewChapter Preview
• Define core competency and value-chain analysis
• Explain multinational and global strategies
• Describe the four corporate-level strategies
• Discuss the three business-level strategies
• Identify what influences organizational structure
• Describe each type of international organizational
structure
International Business 4e Chapter 11 - 3© Prentice Hall, 2008
Planning and StrategyPlanning and Strategy
Planning Strategy
Identifying and selecting objectives and deciding how to achieve those objectives
Set of planned actions thatmanagers take to help a
company meet its objectives
International Business 4e Chapter 11 - 4© Prentice Hall, 2008
Strategy-Formulation ProcessStrategy-Formulation Process
International Business 4e Chapter 11 - 5© Prentice Hall, 2008
Identify Mission and GoalsIdentify Mission and Goals
Mission statements must consider:
Company activitiesBusiness objectivesStakeholdersStockholdersCustomersResidentsEnvironment
and much more…
International Business 4e Chapter 11 - 6© Prentice Hall, 2008
Identify Core CompetencyIdentify Core CompetencyIdentify Core CompetencyIdentify Core Competency
Special ability of a company thatSpecial ability of a company thatcompetitors find extremely difficultcompetitors find extremely difficult
or impossible to equalor impossible to equal
Special ability of a company thatSpecial ability of a company thatcompetitors find extremely difficultcompetitors find extremely difficult
or impossible to equalor impossible to equal
Coordination of multiple skillsCoordination of multiple skills
Lengthy period to developLengthy period to develop
Difficult to teachDifficult to teach
International Business 4e Chapter 11 - 7© Prentice Hall, 2008
Value-Chain AnalysisValue-Chain Analysis
Each activity isa source of either
strength or weakness
Insights gained are fed into the strategy formulation process
Divide company activities into primary and support activities and identify those
that create value for customers
Chapter 11 - 8© Prentice Hall, 2008
Value Chain ComponentsValue Chain Components
International Business 4e Chapter 11 - 9© Prentice Hall, 2008
Business EnvironmentBusiness Environment
National differences are inherent in analyzing a
company’s unique abilities
Cultural differences
Political processes
Legal matters
Economic systems
Labor issues
Consumer forces
and much more…
International Business 4e Chapter 11 - 10© Prentice Hall, 2008
Small Firm StrategySmall Firm Strategy
Be sure company is ready to go international
Thoroughly understand your product
Examine your company’s internal activities
Ask important questions of strategy
Finally, create the strategic plan
International Business 4e Chapter 11 - 11© Prentice Hall, 2008
Multinational StrategyMultinational Strategy
Adapting products andtheir marketing strategies
in each national marketto suit local preferences
– Difficult to exploit economies of scale
+ Respond quickly to buyer preferences
International Business 4e Chapter 11 - 12© Prentice Hall, 2008
Global StrategyGlobal Strategy
Offering the sameproducts using the same
marketing strategy inall national markets
– May overlook varying buyer preferences
+ Cost savings from standardization
International Business 4e Chapter 11 - 13© Prentice Hall, 2008
Levels of Company StrategyLevels of Company Strategy
International Business 4e Chapter 11 - 14© Prentice Hall, 2008
Growth StrategyGrowth Strategy
Internally generated growth
Mergers and acquisitions
Joint ventures
Strategic alliances
Increase the scale (size of activities)or scope (kinds of activities) of operations
International Business 4e Chapter 11 - 15© Prentice Hall, 2008
Retrenchment StrategyRetrenchment Strategy
Reduce the scale or scopeof a corporation’s businesses
Conditions Actions
Poor economic conditions
Increased competition
Lay off workers
Close inefficient factories
Sell unprofitable businesses
International Business 4e Chapter 11 - 16© Prentice Hall, 2008
Stability StrategyStability Strategy
Guard against change and avoidgrowth or retrenchment
Guard against change and avoidgrowth or retrenchment
No opportunities or
threats
Strengths fully exploited
Weaknesses fully
protected
Stated objectives are
met
International Business 4e Chapter 11 - 17© Prentice Hall, 2008
Combination StrategyCombination Strategy
Invest inpromising units
Retrench forless exposure
Stabilizeother units
Mix of growth, retrenchment, and stability strategies across a corporation’s business
units
International Business 4e Chapter 11 - 18© Prentice Hall, 2008
Business-Level StrategiesBusiness-Level Strategies
International Business 4e Chapter 11 - 19© Prentice Hall, 2008
Low-Cost StrategyLow-Cost StrategyLow-Cost StrategyLow-Cost Strategy
Exploit economies of scale to have the lowestExploit economies of scale to have the lowestcost structure of any competitor in an industrycost structure of any competitor in an industryExploit economies of scale to have the lowestExploit economies of scale to have the lowestcost structure of any competitor in an industrycost structure of any competitor in an industry
Mantra is cutting costsMantra is cutting costsMantra is cutting costsMantra is cutting costs
Quality remains importantQuality remains importantQuality remains importantQuality remains important
Scale is barrier for new entrantsScale is barrier for new entrantsScale is barrier for new entrantsScale is barrier for new entrants
Perhaps low customer loyaltyPerhaps low customer loyaltyPerhaps low customer loyaltyPerhaps low customer loyalty
International Business 4e Chapter 11 - 20© Prentice Hall, 2008
Differentiation StrategyDifferentiation Strategy
DifferentiatorsDifferentiatorsDifferentiatorsDifferentiators
Brand imageBrand imageBrand imageBrand image
Product designProduct designProduct designProduct design
QualityQualityQualityQuality
EffectsEffectsEffectsEffects
Customer loyaltyCustomer loyaltyCustomer loyaltyCustomer loyalty
Portion of market onlyPortion of market onlyPortion of market onlyPortion of market only
Price premiumPrice premiumPrice premiumPrice premium
Design products to be perceived as unique
by buyers throughout an industry
Higher production costs Higher production costs Higher production costs Higher production costs
International Business 4e Chapter 11 - 21© Prentice Hall, 2008
Focus StrategyFocus StrategyFocus StrategyFocus Strategy
Focus on narrowly defined market segment bybeing the low-cost leader, differentiating, or bothFocus on narrowly defined market segment by
being the low-cost leader, differentiating, or both
Many sub-segments todayMany sub-segments todayMany sub-segments todayMany sub-segments today
Need distinctive productNeed distinctive productNeed distinctive productNeed distinctive product
Specific geography, ethnicity, etc.Specific geography, ethnicity, etc.Specific geography, ethnicity, etc.Specific geography, ethnicity, etc.
International Business 4e Chapter 11 - 22© Prentice Hall, 2008
Organizational StructureOrganizational Structure
Centralizeddecision making
Decentralizeddecision making
+ Coordination is paramount+ Financial control and cost savings
+ Local responsiveness is key+ Fast-changing environment
International Business 4e Chapter 11 - 23© Prentice Hall, 2008
International Division International Division StructureStructure
International Business 4e Chapter 11 - 24© Prentice Hall, 2008
International Area StructureInternational Area Structure
International Business 4e Chapter 11 - 25© Prentice Hall, 2008
Global Product StructureGlobal Product Structure
International Business 4e Chapter 11 - 26© Prentice Hall, 2008
Global Matrix StructureGlobal Matrix Structure
International Business 4e Chapter 11 - 27© Prentice Hall, 2008
Self-managedSelf-managedteamteam
Employees from onedepartment take onresponsibilities offormer supervisors
Self-managedSelf-managedteamteam
Employees from onedepartment take onresponsibilities offormer supervisors
Cross-functionalCross-functionalteamteam
Group of employeesfrom similar levels but
different functionaldepartments
Cross-functionalCross-functionalteamteam
Group of employeesfrom similar levels but
different functionaldepartments
GlobalGlobalteamteam
Top managers fromheadquarters andsubsidiaries solvecompany problems
GlobalGlobalteamteam
Top managers fromheadquarters andsubsidiaries solvecompany problems
Work TeamsWork Teams
International Business 4e Chapter 11 - 28© Prentice Hall, 2008
Chapter ReviewChapter Review
• Define core competency and value-chain analysis
• Explain multinational and global strategies
• Describe the four corporate-level strategies
• Discuss the three business-level strategies
• Identify what influences organizational structure
• Describe each type of international organizational
structure