Summary International
Business Awareness
AVANS UNIVERSITY OF APPLIED SCIENCES Y3Q1
SIMONE SNEPVANGERS
,Table of Contents
Chapter 12 ‘Strategies for International Business’.................................................................................2
Strategy in the MNE............................................................................................................................2
Making sense to make strategy..........................................................................................................2
The role of resource, capabilities and competencies..........................................................................3
The quest to create value...................................................................................................................3
Organizing value creation: the value chain.........................................................................................4
Global integration versus local responsiveness..................................................................................5
International corporate-level strategies.............................................................................................6
Chapter 13 Evaluation of countries for operations.................................................................................7
The importance of location................................................................................................................7
Comparing countries through scanning..............................................................................................8
Opportunity and Risk Variables..........................................................................................................8
Sources and shortcoming of comparative country information.......................................................10
Alternatives for allocating resources among locations.....................................................................10
Chapter 14 Modes of Trading Internationally.......................................................................................11
Exporting: Principles and Practices...................................................................................................11
Export: Start-Up and Expansion........................................................................................................12
Importing: Principles and Practices..................................................................................................13
Chapter 15 Forms and Ownership of Foreign Production....................................................................14
Why Export and Import May Not Be Sufficient.................................................................................14
Chapter 11 Ethics and Social Responsibility..........................................................................................20
Foundation of ethical behaviour.......................................................................................................21
Ethics and the environment..............................................................................................................23
Chapter 16 The Organization and Governance of Foreign Operations.................................................24
Classical Organization Structures......................................................................................................25
Coordination systems.......................................................................................................................29
Control systems................................................................................................................................30
Organizational culture......................................................................................................................30
Chapter 20 Global Management of Human Resources.........................................................................31
Expatriate selection..........................................................................................................................32
Types of compensation plans...........................................................................................................33
1
,Chapter 12 ‘Strategies for International Business’
Strategy in the MNE
Strategy = an integrated and coordinated set of commitments that reflects the company’s present
situation, identifies the direction it should go, and determine how it will get there.
- Strategy maps an MNE’s plan to create value
- Strategy specifies what an MNE will do and what it will not do
Superior performance requires managers to plan for the opportunities and threats in the global
business environment.
Strategy starts with a vision & mission
- Vision = the idealization of what an MNE firm wants to be. The expression of its ultimate goal
- Mission = defines the business, its objectives and its approach to achieve them
Together, it defines its purpose, values, goals and direction.
MNE’s that are easily understood, plainly communicate, and collectively share their vision and
mission, outperform those without them.
Strategic Planning = a comprehensive process that determines how the firm can be best achieve its
goals
1. Identifying potential product markets and assess each for opportunities and threats
2. Assess the preferences of targeted customer segments
3. Analyse internal strengths and weaknesses relative to customers’ expectations and
competitors’ competencies
4. Formulate a strategy
5. Set clear and compelling objectives
6. Formalize programs, policies and tactics
7. Acquire resources, create capabilities, and develop competencies
8. Monitor threshold and adjust standards given change in performance, rivals or markets
Making sense to make strategy
Sensemaking is a collaborative process to promote a shared understanding.
It involves; studying shifting markets, competitors’ initiatives and changing consumer behaviour in
order to determine how economics, politics, culture, trade and industry influences the company’s
plans.
These insights help to determine the correlation of success and the catalysts of failure.
Industrial Organization (IO); sets the external environment as the primary determinant of an MNE’s
strategic plan. It emphasizes the determinism of industry structure, which represents the
interdependent relationships among;
- Suppliers of inputs
- Buyers of output
- Substitute products
- Potential new entrants
- Rivalry among competing firms
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, Great by Choice outlook = refers to the choices a company makes regarding research, manufacturing,
marketing, distribution, and the like that influence its profitability
- Some firms find ways to exploit market imperfections to sustain success in spite of industry
conditions
The role of resource, capabilities and competencies
An MNE’s strategy organizes its resource accumulation, capability development and core
competencies development
Resources = the inputs into an MNE production process
- Tangible; physical resources that are observable and measurable
- Intangible; resources that lack physical form
Capabilities = the capacity for resources to perform an activity in an integrated manner
To create a core competency, bundle resources and capabilities
Core competency = the special outlook, skills or technology that, by synthesizing links between
resources and capabilities, sets and sustains the firm’s capacity to create superior value
The quest to create value
Value = the difference between the cost of making a product and the price that customers are willing
to pay for it.
- The greater the ability to make and sell products that exceed customer’s value expectations,
the higher the price it can charge & the more value it creates
MNE’s create value by developing a compelling value proposition (WHY) that specifies the targeted
markets (WHO)
1. The cost leadership strategy
The cost leadership strategy aims to make a product at a given level of quality for a cost below those
of competitors
Requires;
- maximizing efficiency
- selling standardized products to the broadest customer segment
- acquire resources and develop capabilities that reduce its costs relative to rivals
Product innovation; new designs, enhanced materials, etc
Process innovation; lean production, six sigma, etc
Risks of the cost leadership strategy
- Disruptive technology
- Change efficiency standards
- Customer’s needs change
- Cheaper, better products from rivals
2. The differentiation strategy
The differentiation strategy aims to develop products that customers value and that rivals find hard
or impossible to match/copy
- Continuous improvement as the basis for sustainable value creation
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