OHT 8.1 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004...

OHT 8.1

Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004

International strategic issues

OHT 8.2


The SWOT Matrix

OHT 8.3


Porter’s ‘Five Forces’ analysis

OHT 8.4


The Boston Matrix

OHT 8.5


Ansoff’s product–market matrix

OHT 8.6


Porter’s generic strategies

OHT 8.7


Porter’s Generic Strategies

• Generic strategies - help ‘position’ the firm to best advantage

• Overall cost leadership strategy – seeks to be lowest cost provider

• Differentiation strategy – seeks to create something unique, unmatched by competitors

• Focus strategy – seeks to identify a particular segment within the broader market and to dominate that segment

OHT 8.8


Competitive Advantage

• Porter (1980) identified various areas that strategy might focus upon to give the firm an ‘edge’ over its competitors

• Architecture – set of contractual relationships• Incumbency advantages – brand, scale economies

etc.• Access to strategic assets (raw materials, human

capital etc.)• Innovation (product or process)• Operational efficiency (work organisation)

OHT 8.9


Strategy in a globalised environment

• Prahalad (1999) suggests that strategic approaches must change under globalisation

• Key features of the ‘new approach’ include recognising:– Changes in strategic space– Globalisation impacts– The enhanced importance of timely responses– The enhanced importance of innovation

OHT 8.10


The new view of strategy

OHT 8.11


Value chain

OHT 8.12


Sources of Global Synergies

• Synergy is the ‘2 + 2 > 4’ effect, i.e. whole greater than sum of parts

• Sources of global synergies include:– Localisation on a global scale– Economies of scale– Economies of scope and experience– Non-organic growth on an international scale– Increase in geographical reach of core

competencies

OHT 8.13


Four international strategies

OHT 8.14


International Business Strategies (1)

• Strategy depends on the relative strength of ‘cost pressures’ and ‘local responsiveness pressures’

• Global Strategy – high cost pressures, low local responsiveness pressures. Geographically centralised value chain for standardised products

OHT 8.15



• Transnational Strategy – high cost pressures, high local responsiveness pressures. Geographically dispersed stages of a unified value chain

• Multidomestic Strategy – low cost pressures, high local responsivesness pressures. Geographically dispersed core competencies with extensive local adjustments

OHT 8.16



• International Strategy – low cost pressures, low local responsiveness pressures. Centralised core competencies with minimum local adjustments

OHT 8.17


Integration–responsiveness framework

OHT 8.18


Economies of scale and minimum efficient size (MES)

OHT 8.19


Cross border M & A (1)

• Cost – based synergies– Technical economies of scale– Non-technical economies of scale– Economies of scope– Economies of experience

OHT 8.20


Cross border M & A (2)

• Revenue-based synergies– Price premium– Product – line extension– Increased geographical market coverage – Improved product quality– Reduced time to market– Enhanced R & D capabilities

OHT 8.21


Strategic Alliances

• Alternative to ‘M & A’

• ‘Four Is’ of collaboration will crucially determine whether to enter into an alliance rather than acquire by fdi:– Infeasibility– Information asymmetry– Investment in options– Indigestibility

OHT 8.22


The four ‘Is’ of collaboration

OHT 8.23


Knowledge Management (1)

• At least 4 types of knowledge involved:– Explicit knowledge– Tacit knowledge– Individual knowledge– Collective knowledge

OHT 8.24


The knowledge-creating spiral

OHT 8.25


Knowledge Management (2)

• At least 4 processes involved:– Socialisation– Externalisation– Combination– Internalisation

OHT 8.26


Mechanisms for knowledge creation

• Nonaka and Takeuchi (1995) suggest 5 key mechanisms– Intention– Autonomy– Creative chaos– Redundancy– Requisite variety

OHT 8.27


Game-based Strategies

• Zero and non-zero sum games– Maxi-min decision rule– Mini-max decision rule

• One-shot and repeated games

• Sequential games

• First-mover strategy

• Tit-for-tat strategy

• Dominant strategy and Nash equilibrium

• Prisoner’s dilemma and collusion

OHT 8.1 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004...

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Transcript of OHT 8.1 Wall and Rees: International Business, 2nd edition © Pearson Education Limited 2004...