7.4 Summary
In this chapter we looked at some aspects of the strategy of international businesses. We began with a definition of strategy, looked briefly at the strategic management process and noted that strategy is tied to the purpose of the firm. That purpose is value creation through a series of activities known as the value chain.
We then looked at reasons why firms expand from their domestic base to go international. The reasons relate to size: the international arena has more customers, more opportunities and more resources for exploitation than the domestic arena. It also presents a range of difficulties not encountered domestically: these problems were introduced in Chapter 1.
A range of issues related to 'going international' was discussed. The firms' core competencies, the desire for location economies, the experience curve, and local responsiveness formed the basis of that discussion.
We looked at the taxonomy of strategy and noted that there are more than a dozen 'strategies' and an almost infinite range of combinations of those strategies. However, our principal focus was on Bartlett's and Ghoshal's taxonomy - the three 'traditional' strategies (global, international and multi-domestic) and transnational. The choice of strategy depends on the relative importance of cost pressures and pressures for local responsiveness. The strategy ultimately chosen will be a compromise forced upon the firm by such pressures.
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