International business strategy
Introduction
This chapter addresses the strategies used by international firms. International strategy formulation requires the firm to deal not only with the 'normal' strategic considerations of markets, technology and competition, but also with national sovereignty and international political relationships. There is considerable potential for conflict between the firm and the nation because firms want to develop strategies and allocate resources rationally to maximise profits while nations want maximum contributions to their development and future prosperity. The result can be mutual advantage through cooperation, or intense conflict. To minimise conflict, strategies must be flexible enough to adapt to environments of countries that are diverse.
In international business, as in domestic business, the appropriate strategy for a firm is largely determined by the environment in which the firm must compete. This environment is not static and, indeed, one of the factors causing change in the operating environment is the strategies pursued by international firms.
Topics
The following is the outline of the topics covered in this chapter.
- 7.1 Strategy: definition and purpose
- 7.2 Advantages of going international
- 7.3 Strategic options
- 7.4 Summary
Learning outcomes
The objectives for this chapter have been carefully constructed to reflect the most significant concepts and ideas we are going to cover and to provide a focus for your work during the chapter. After completing the work you should be able to:
- define the concepts of value creation and the value chain
- describe location economies and scale economies
- explain experience curve effects
- describe local responsiveness
- differentiate between global, international, multi-domestic, and transnational strategies.
