CHAPTER 8International Strategy.ppt

CHAPTER 8International Strategy KNOWLEDGE OBJECTIVES Explain traditional and emerging motives for firms to pursue international diversification. Explore the four factors that lead to a basis for international business-level strategies. Define the three international corporate-level strategies: multidomestic, global, and transnational. Discuss the environmental trends affecting international strategy, especially liability of foreignness and regionalization. KNOWLEDGE OBJECTIVES (cont’d) Name and describe the five alternative modes for entering international markets. Explain the effects of international diversification on firm returns and innovation. Name and describe two major risks of international diversification. Explain why the positive outcomes from international expansion are limited. FIGURE 8.1 Opportunities and Outcomes of International Strategy Identifying International Opportunities International Strategy A strategy through which the firm sells its goods or services outside its domestic market. Reasons to having an international strategy International markets yield potential new opportunities. New market expansion extends product life cycle. Needed resources can be secured. Greater potential product demand. Classic Rationale for International Diversification: Extend a Product’s Life Cycle International Strategy Benefits Increased Market Size Domestic market may lack the size to support efficient scale manufacturing facilities. Return on Investment Large investment projects may require global markets to justify the capital outlays. Weak patent protection in some countries implies that firms should expand overseas rapidly in order to preempt imitators. International Strategy Benefits (cont’d) Economies of Scale (or Learning) Expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, RD or distribution. Can spread costs over a larger sales base. Can increase profit per unit. International Strategy Benefits (c