7-2
7-3
effects.
Consumer tastes
and preferences
Consumer
purchasing power
Consumer
buying habits
Demographic
Differences
Demands for
localized products
Strength of local
competitive rivalry
7-6
7-7
Worker
productivity
Environmental
regulations
Location-Based
Cost Advantages
Energy
costs
Tax
rates
Inflation
rates
Access to
resources
7-8
7-9
7-11
Environmental
regulations
Customs requirements,
tariffs and quotas
Negative
impact of host
government
policies
Locally produced
content requirements
Local ownership or
partner requirements
Subsidies for
domestic companies
Require prior approval of
capital spending projects
7-12
7-13
CORE CONCEPT
Political
Political risks
risks stem
stem from
from instability
instability or
or weak-ness
weak-ness
in national
national governments
governments and
and hostility
hostility to
to foreign
foreign
business;
business; economic
economic risks
risks stem
stem from
from the
the
instability
instability of
of aa countrys
countrys monetary
monetary system,
system,
changes
changes in
in economic
economic and regulatory policies, and
the lack
lack of
of property
property rights protections.
7-14
7-15
Export Strategies
Exporting involves using domestic plants as a
production base for exporting to foreign markets.
Advantages:
Conservative way to test international waters.
Minimizes both risk and capital investment requirements.
high.
3. Rapid adverse shifts can occur in currency exchange rates.
7-16
Licensing Strategies
Licensing makes sense when a firm:
Has valuable technical know-how or a patented
Disadvantage of licensing:
Difficulty in maintaining control over the use of
Franchising Strategies
Is often better suited to the global expansion
efforts of service and retailing enterprises
Advantages:
Franchisee bears many of the costs and risks of
Disadvantages:
Maintaining quality control in franchisee operations.
Allowing franchisees discretion in adapting product
7-19
7-20
access to customers
Attacking of mutual rivals and providing for mutual assistance
Building of working relationships with local political and host-
7-21
7-22
Concepts &
Connections 7.1
7-23
International Strategy:
The Three Principal Options
Choosing between localized multicountry
strategies or a global strategy
Deciding upon the degree to vary a firms
competitive approach country by country to
fit the specific market conditions and buyer
preferences in each host country when
operating in two or more foreign markets.
7-25
International Strategy:
The Three Principal Options
Options for tailoring
a companys
international strategy
Multidomestic
strategy
Transnational
strategy
Global
Strategy
More
Localization
Localization
Less
7-26
CORE CONCEPT
A companys international
international strategy is its
strategy for competing
competing in
in two or more countries
simultaneously.
7-27
FIGURE 7.1
7-28
Useful When:
Significant country-to-country differences exist in
7-29
CORE CONCEPT
A multidomestic
multidomestic strategy
strategy calls
calls for varying
varying a
companys
companys product
product offering
offering and
and competitive
competitive
approach from country
country to country in an effort
effort to
to
be responsive
responsive to
to significant cross-country
differences
differences in
in customer
customer preferences,
preferences, buyer
buyer
purchasing
purchasing habits,
habits, distribution channels,
channels, or
marketing
marketing methods.
methods. Think
Think local, act local
strategy-making
strategy-making approaches are also essential
when host-government regulations or trade
policies preclude
preclude aa uniform,
uniform, coordinated
coordinated
worldwide
worldwide market
market approach.
approach.
7-30
7-31
worldwide.
Promotes establishing an identifiably uniform brand
image and reputation from country to country.
Focuses the firms full resources on securing a
sustainable low-cost or differentiation-based
competitive advantage over both domestic rivals and
global rivals.
7-32
CORE CONCEPT
Global strategies
strategies employ
employ the
the same
same basic
basic
competitive
competitive approach
approach in
in all countries where
where a
company operates and
and are
are best
best suited
suited to
to
industries
industries that
that are
are globally
globally standardized
standardized in
in terms
terms
of customer preferences, buyer
buyer purchasing
habits,
habits, distribution
distribution channels,
channels, or
or marketing
marketing
methods.
methods. This
This is
is the
the think
think global, act global
strategic
strategic theme.
7-33
7-34
CORE CONCEPT
A transnational strategy is
is aa think
think global,
global, act
act
local approach
approach to
to strategy
strategy making
making that
that involves
involves
employing
employing essentially
essentially the
the same
same strategic
strategic theme
theme
(low-cost,
(low-cost, differentiation,
differentiation, focused, best-cost) in all
country markets, while allowing some country-tocountry customization to fit
fit local
local market
market
conditions.
conditions.
7-35
product differentiation.
2. Using cross-border coordination in ways that a
domestic-only competitor cannot.
7-36
7-37
performing an activity.
Certain locations offer superior resources, allow
buyers.
High transportation costs, diseconomies of large size,
7-39
7-40
Concepts &
Connections 7.2
7-41