INTERNATIONAL

STRATEGY
Telkom University Dosen : Tri Djatmiko

Why
Why Companies
Companies Expand
Expand into
into Foreign
Foreign
Markets
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 .

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Strategy
Strategy for
for Entering
Entering and
and
Competing
Competing in
in
Foreign
Foreign Market
Market
1.

Maintain a national (one country)production base and

export goods to foreign market.

2.

License foreign firm to use the companys technology or to

produce and distribute the companys product

3.

Employ a franchising strategy

4.

Follow a multi country strategy

5.

Follow a global strategy

6.

Use strategic alliance or Joint Venture with foreign

company as the primary vehicles for entering foreign
market

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Dealing
Dealing with
with Cross-Country
Cross-Country
Variations
Variations
Strategic
Posturing Options

Think local,
Act local

Think Global,
Act global

Think Global,
Act Local

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.
Employ same strategy :
Pursue the same basic competitive strategy theme (lowcost, 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
Employ a combination global-local strategy :
Employ essentially the same basic competitive strategy
theme (low-cost, 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 toTelkom
accommodate
local buyer
Economic
and Business

Localized
Multicountry
Strategy

Country
A

Country
B

Country
D

Strategy
varies
somewhat
across nations

Global
Strategy

Country
C

Country E

Country
A

Country
B

Country
D

Country
C

Country E

Consistent
Strategy for
Each country

Using
Using Location
Location to
to Build
Build
Competitive
Competitive
Advantage
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. Whether to concentrate each activity it performs in a few select countries or
to disperse performance of the activities to many nations
2. 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.
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Strategy
Strategy Options
Options for
for EmergingEmergingCountry
Country
Markets
Markets
Prepare to compete on the basis of low-price
Be prepared to modify aspect of the companys
business models or strategy to accommodate local
circumstances (but not so much that the company loses
the advantage of global scale and global branding)
Try to change the local market to better match the way
the company does business elsewhere
Stay away from those emerging markets where it is
impractical or uneconomic to modify the companys
business models to accommodate local circumstances

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Defending
Defending against
against Global
Global Giants
Giants ::
Strategies
Strategies for
for
Local
Local Companies
Companies in
in Emerging
Emerging Markets
Markets
Develop business models that exploit shortcoming in
local distribution networks or infrastructure
Utilize keen understanding of local customers needs
and preferences to create customized products or
services
Take advantage of low cost labor and other
competitively important local work-forces quality
Use acquisition and rapid growth strategies to better
defend against expansion-minded multinationals
Transfer companys expertise to cross border markets
and initiate action to contend on a global level

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Profit Sanctuary

Domestic-only
Company

Home
Market

Multi country
Company

Home
Market

Country B

Country D
A domestic-only company has only
one profit sanctuary

Country C

Country
E

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.

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Profit
Profit Sanctuary
Sanctuary in
in Global
Global
Company
Company
Global
Company

Home
Market

Country B

Country G

Country C

Country H

Country D

Country I

Country E

Country J

Country F

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.

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Five
Five Largest
Largest Companies
Companies in 10 Countries
Countries
Britain :

BP
HSBC Holding
Lloyd Banking
Aviva
Royal Bank of
Scotland

Australia :

BHP Billiton
Wesfarmers
Woolworth
Commonwealth
Bank
National Australian
Bnk

USA :

Wall Mart Stores

Exon Mobil
Chevron
General Electric
Bank of America
11

India :

Indian Oil
Reliance Industries
State Bank of India
Bharat Petroleum
Hindustan
Petroleum

INDONESIA

Brazil :
Petrobras
ASTRA
ItausaINTERNASIONAL
Investmentos
Banco
Bradesco
TELKOM
Banco do Brasil
HM
SAMPOERNA
Vale
BANK BRI
BANK MANDIRI
Canada :
(Fortune
Manulife 100,
Financial
2012)
Royal Bank of
Canada
Power Corp of
Canada
George Weston
Sun Life Financial

Japan :

Toyota Motor
Japan Post
Holding
Nippon TeleG &
TeleP
Hitachi
Honda Motor

China :

Sinopec
State Grid
China National
Petroleum
China Mobile Comm
Ind & Comm Bank of
China

Germany :
Volswagen
Allianz
E. ON
Daimier
Siemens

Cross
Cross Border
Border Strategic
Strategic Alliance
Alliance and
and JV
JV
Five
Five High
High Profile
Profile Example
Example
1. Cisco, the worldwide leader in networking components, enter into
strategic alliance with the Finish telecomm firm Nokia-Siemens Network
to develop ..
2. Verio, a subsidiary of Japan-based NTT Comm and one of the leading
global provider of Webhosting services and IP data transporty operate
.
3. A 2003 strategic alliance between British oil producer BP and Russian oil
and gas producer Alfa, Access, Renova (AAR) has produced Russias third
largest crude oil producer.
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
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Economic and
Business S
exclusive supply source for wide-chord blades
for commercial
jet engine

The Principles of
of Strategic Alliance
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.

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INDUSTRY PRESSURES TO
GLOBALIZE

Strategy
Strategy Options
Options for
for Local
Local Companies
Companies
in
in Competing
Competing against
against Global
Global
Companies.
Companies.

High

Low

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

Contend on
a global
level

Defend by
using home
field
advantage
s

Transfer
company
expertise
to cross
border
markets

Tailored for
home
market

Transferable
to other
countries

RESOURCES AND COMPETITIVE

CAPABILITIES

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