International Business Strategies

International Business Strategy

• International business strategies refer to the different approaches companies take when expanding operations globally.
• There are four main international business strategies: International, Multi-Domestic, Global, and Transnational.

International Strategy

• Focuses on a single point of operation in the home market and exports standardized products/services with little adaptation.
• Allows for a recognizable global brand and consolidated operations, but less local responsiveness.
• Examples: Red Bull, Victoria's Secret.

Multi-Domestic Strategy

• Adapts products/services to local market preferences in each country, rather than offering a standardized global offering.
• Allows for high local responsiveness, but less global integration.
• Prioritizes customization over efficiency.
• Examples: Netflix, Heinz.

Global Strategy

• Sacrifices local responsiveness in favor of cost efficiencies and economies of scale by offering largely standardized products/services globally.
• Examples: Microsoft, Procter & Gamble, Intel.

Transnational Strategy

• Balances global integration and local responsiveness, offering standardized core products/services while adapting to local markets.
• Examples: McDonald's, Nike, KFC.

Choosing an International Strategy

• Depends on the company's goals of balancing cost efficiencies and local adaptation.
• Many companies start with an international strategy and evolve to a more complex model as they gain experience and resources.

Increasing Profitability and Profit Growth

• Firms need to pursue strategies that increase profitability and profit growth.
• Profitability: rate of return on invested capital.
• Profit growth: percentage increase in profits over time.
• Ways to increase profitability and profit growth:
  • Add value
  • Lower cost
  • Sell more in existing markets
  • Expand internationally

Strategic Positioning

• Firms need to choose either differentiation or low-cost, and configure internal operations to support the choice.
• Differentiation strategies focus on providing unique, valuable products/services that command a premium price.
• Low-cost strategies aim to be the industry's lowest-cost provider through operational efficiency, high productivity, and economies of scale.

Configured Operations

• A firm's operations are like a value chain composed of a series of distinct value creation activities.

Value Chain Activities

1. Production

• Includes manufacturing, assembly, testing, packaging, and other physical production processes.
• Aims to create products efficiently and with high quality.

2. Marketing

• Encompasses market research, advertising, sales, and customer service.
• Helps create value by understanding customer needs and effectively communicating the product's benefits.

3. Materials Management

• Includes procurement, logistics, inventory management, and distribution.
• Aims to ensure the right materials are available at the right time and place to support production.

4. Research & Development (R&D)

• Involves new product design, process engineering, and technical services.
• Helps create value through innovation and continuous improvement.

5. Human Resources (HR)

• Includes recruiting, training, compensation, and employee relations.
• Helps create value by attracting, developing, and retaining the right talent.

6. Information Systems

• Encompasses data processing, information management, and technology infrastructure.
• Helps create value by enabling efficient operations and effective decision-making.

International Business Strategy

• International business strategies refer to the different approaches companies take when expanding operations globally.
• There are four main international business strategies: International, Multi-Domestic, Global, and Transnational.

International Strategy

• Focuses on a single point of operation in the home market and exports standardized products/services with little adaptation.
• Allows for a recognizable global brand and consolidated operations, but less local responsiveness.
• Examples: Red Bull, Victoria's Secret.

Multi-Domestic Strategy

• Adapts products/services to local market preferences in each country, rather than offering a standardized global offering.
• Allows for high local responsiveness, but less global integration.
• Prioritizes customization over efficiency.
• Examples: Netflix, Heinz.

Global Strategy

• Sacrifices local responsiveness in favor of cost efficiencies and economies of scale by offering largely standardized products/services globally.
• Examples: Microsoft, Procter & Gamble, Intel.

Transnational Strategy

• Balances global integration and local responsiveness, offering standardized core products/services while adapting to local markets.
• Examples: McDonald's, Nike, KFC.

Choosing an International Strategy

• Depends on the company's goals of balancing cost efficiencies and local adaptation.
• Many companies start with an international strategy and evolve to a more complex model as they gain experience and resources.

Increasing Profitability and Profit Growth

• Firms need to pursue strategies that increase profitability and profit growth.
• Profitability: rate of return on invested capital.
• Profit growth: percentage increase in profits over time.
• Ways to increase profitability and profit growth:
  • Add value
  • Lower cost
  • Sell more in existing markets
  • Expand internationally

Strategic Positioning

• Firms need to choose either differentiation or low-cost, and configure internal operations to support the choice.
• Differentiation strategies focus on providing unique, valuable products/services that command a premium price.
• Low-cost strategies aim to be the industry's lowest-cost provider through operational efficiency, high productivity, and economies of scale.

Configured Operations

• A firm's operations are like a value chain composed of a series of distinct value creation activities.

Value Chain Activities

1. Production

• Includes manufacturing, assembly, testing, packaging, and other physical production processes.
• Aims to create products efficiently and with high quality.

2. Marketing

• Encompasses market research, advertising, sales, and customer service.
• Helps create value by understanding customer needs and effectively communicating the product's benefits.

3. Materials Management

• Includes procurement, logistics, inventory management, and distribution.
• Aims to ensure the right materials are available at the right time and place to support production.

4. Research & Development (R&D)

• Involves new product design, process engineering, and technical services.
• Helps create value through innovation and continuous improvement.

5. Human Resources (HR)

• Includes recruiting, training, compensation, and employee relations.
• Helps create value by attracting, developing, and retaining the right talent.

6. Information Systems

• Encompasses data processing, information management, and technology infrastructure.
• Helps create value by enabling efficient operations and effective decision-making.