9 BS6100 International Stakeholders S

Strategic Management
International Strategy
Stakeholders
Lecture 9
Mark Anderson

International Strategy
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Internationalisation Drivers
International Corporate Level Strategy
International Market Selection
International Modes of Entry

Internationalisation

Yip: Drivers of Internationalisation

G. Yip (2003) Total Global Strategy

International Corporate Level
Strategy

International Competitive Advantage
• Adaptation v standardisation?
– Should all products be the same - global?
(Levitt)

• Local v global?
– To what extent should local differences be recognised? (Douglas & Wind)

• Responsiveness v cost reduction?

International Corporate Structure

International Corporate Structure
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Domestic
International
Multinational (or Multidomestic)
Global
Transnational?

Domestic Structure

Benefits
If low global competitive pressures
Highly specific products or services
Know your customer
Need to build a strong home base

Firm A competes in country x

Risks
All eggs in one basket – vulnerable to market changes
Reduced access to valuable inputs, higher production costs
Reduced opportunities for learning

International
• Principal operations in one country
• Subsidiary activities in other countries
• Controlled from centre – little local autonomy • Orientation principally ethnocentric
• Emphasis on domestic core competences Export Structure
Firm A operates in country x and exports to country y

y

Main focus of the firm is on the domestic strategy.
Firms are not directly involved in the management of the exported
Product – relying on agents and other channel intermediaries.
Benefits – increase revenue/begin to learn about new markets.
Risks – Possible lack of local responsiveness.
No scale advantages or value inputs.
Lack of control over management of products.

Multinational
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Multinational (MNC) or Multidomestic (MDC)
Operations in many regions
Responding to local demand
Limited co-ordination from centre
Overall control from centre – considerable local operational autonomy
• Polycentric
• Emphasis on meeting local requirements

Multinational Structure
Subsidiary 2

Subsidiary 1

Headquarters
Subsidiary 3

Subsidiary 4

Independent operations by country via international subsidiaries
Benefits
• Ability to customise product offerings and marketing in accordance with local responsiveness Risks
• Inability to realise scale cost advantages
• Failure to transfer distinctive competencies to foreign markets

Global
• Operations around the world
• Centre principally responsible for coordination
• Knowledge, experience & resources in constant movement
• Emphasis on achieving scale and/or scope economies

Global Structure
Market 2

Market 1

HQ

Market 4

Market 3
Market 5

Single strategy for entire network with standardised global products & brands
Aim is to produce scale efficiencies & other sources of low cost due to globalisation Transfer of resources & competencies; leveraging technology & learning;
Exposed to developments in all key markets.
May reduce sensitivity to local markets.
Requires sophisticated co-ordination.
Centralized decision making.

Transnational
• Inter-dependant operations around the world • Centre principally responsible for coordination
• Requires considerable integration
• Attempts to achieve multidimensional strategy – local responsiveness and global efficiency and learning

International Market Selection

International Market Selection
Market Characteristics
•Political
– Stability, open markets, promoting trade

•Economic
– Growing economy (GDP), disposable income, currency risk

•Social
– Demographics, education, skills

•Legal
– Corporate law, governance, security

International Market Selection
Country ‘fit’: CAGE framework
•Cultural distance
– Language, ethnicity, religion, social norms

•Administrative and political distance
– Compatible legal, political, administrative traditions

•Geographical distance
– Ease of access and travel

•Economic distance
– Wealth/income disparities
Ghemawat, P. (2001) ‘Distance still matters’ Harvard Business Review September 2001

International Market Entry Modes

International Market Entry Modes

Stakeholder Management

Stakeholders & Strategy

Stakeholders are individuals and groups that can affect or are affected by an organisation (Freeman 1984)

Stakeholders
Internal
Employee Groups
Managers
Directors

External
Shareholders
Customers
Suppliers
Local Community
Special Interest Groups
Regulatory Authorities
Competitors
Media

The Strategic Importance of
Stakeholders
• Strategic plans should address and take into account the interests of key stakeholders – Who will be deciding the success of the organisation? – Who is needed to successfully implement strategies? Prioritising Stakeholders
• Stakeholders can place conflicting expectations on organisations
• Stakeholders need to be prioritised
– Level of Interest
– Level of Influence/Power

Sources of Influence
• Hierarchy
– Formal power

• Influence
– Informal power

• Control of strategic resource
• Knowledge or skills
• Control of the environment
– Network links

• Involvement in strategy implementation
– Change agent

Stakeholder Categories

Stakeholder Analysis
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Not simply a list
Prioritise stakeholders
Identify the expectations of key stakeholders
Identify stakeholders level and source of influence • Who are key blockers and facilitators of a strategy? • Is repositioning of stakeholders desirable or feasible? Reading
International Strategy
Johnson, Whittington & Scholes (2012)
Fundamentals of Strategy, 2nd edition, Chapter 7, p160-171
Porter, M. E., (1990) The Competitive Advantage of Nations, Harvard
Business Review, March – April p73-93
Levitt, T (1983) The Globalisation of Markets Harvard Business Review,
61 p92-102
Douglas, S. P. & Wind, Y. (1987) The myth of globalisation, Columbia
Journal of World Business 22, p19-29
Stakeholders
Johnson, Whittington & Scholes (2012), Fundamentals of Strategy (2nd ed), chapter 4, p89 - 94