3. Internationalization

Question 1

What means internationalization for strategy?

Answer 1

• Profitability
• Competition
• Industry Structure

Question 2

The four basic global strategies

Answer 2

• Dimensions = Y-Achse Pressure for Cost Reduction (Global Efficieny)/ X-Achse Pressure for Responsiveness (Local Responsiveness)
• 1. International Strategy (PCR low/ PRP low)/ Export everywhere with only a few locations
• 2. Global Standardization Strategy (PCR high/ PRP low)/ Competing through prices/ E.g. Chips or Raw materials/ Concentrating on cheap locations that can produce large quantities/ Treats world as single market
• 3. Localization Strategy (PCR low/ PRP high)/ Products that have to adapt to external conditions between countries
• 4. Transnational Strategy (PCR high/ PRP high)/ Most complexed situation/ Produce cheaply and adapted locally/ Think local act global
• Bartlett & Ghoshal Framework applicable for firm-based resources and capabilities/ Country-based resources

Question 3

AAA Triangle

Answer 3

• Three distinct types of international strategy
• Adaption = Boost revenues and market share by maximizing local relevance
• Aggregation = Deliver EOS with regional or global operations
• Arbitrage = Exploit disparities (Ungleichheiten= between national and regional markets/ Often by locating different parts of the supply chain in different places/ E.g. French vine higher value in Germany)

Question 4

Competitive Advantage in an international context

Answer 4

• National Environment = Ressource supplies (Comparative Advantage)/ Factors that influence development of resources and capabilities
• Industry environment = Key success factors
• Firm resources & capabilities + Industry environment + National environment = Potential for competitive Advantage

Question 5

Comparative Advantage

Answer 5

• Country has CA products that make intensive use of resources that are abundant within that country

Question 6

Porters’s diamond model

Answer 6

• 1. Factor Conditions (Power of Suppliers/ Endowments of resources and infrastructure)
• 2. Demand Conditions (Power of Buyers)/ Specific characteristics of demand
• 3. Related and Supporting Industries (Leadership in related and supporting industries)
• 4. Strategy, Structure and Rivalry (Price rivalry)/ Number and intensity of competition
• Similar to Porters 5-Forces

Question 7

Porter’s diamond model pros

Answer 7

• Identifying potential sources of competition
• Understanding your own competitive advantages
• Location decisions
• Co-creating a supportive ecosystem

Question 8

CAGE Framework

Answer 8

• X-Achse = Cultural Differences/ Administrative Differences/ Geographic Differences/ Economic Differences
• Y-Achse = Bilateral Measures/ Unilateral Measures

Question 9

The optimal location of value chain activities

Answer 9

• Optimal location of activity X considered independently -> 1. Optimal in terms of cost and availability of inputs/ 2. Government incentives or penalties/ 3. Internal resources and capabilities possessed by a firm
• Importance of links between activity X and other activities -> 1. What’s the firm’s business strategy? / 2. How great are the coordination benefits from collocating activities?

Question 10

Modes of overseas market entry

Answer 10

• Transactions = Exporting/ Licensing
• Direct investment = Joint Venture/ Wholly owned subsidiary
• Exporting -> Spot sales/ Foreign agent/ Long-term contract

Question 11

7 Characteristics of Firms that Win Globally

Answer 11

• Attitude (Prioritizes global expansion)
• Aptitude (Knowledge and skills)
• Magnitude (Aligns scale and scope of opportunity with goals and capabilities/ Wins survey with 90%)
• Latitude (Adapt marketing to opportunity)
• Rectitude (Maintain corporate compliance with legal and ethical practices overseas)
• Exactitude (Corporate can cope with financial and market uncertainty)
• Fortitude (Committed to global initatives even if setbacks)