Principles of Strategic Management: Global Strategy - International Strategies, Global Standardisation, Localization, Transnational, International

What This Is

International strategies refer to the approaches companies use to compete globally, balancing standardization and adaptation to local markets. Effective international strategies are crucial for companies seeking to expand their reach and increase revenue. For instance, Apple's global expansion strategy has been successful due to its ability to adapt its products to local markets while maintaining a consistent brand image.

Key Frameworks & Tools

• Global Standardization: A strategy where a company offers the same products and services in all markets, often with a standardized marketing approach. This approach is suitable for companies with a strong brand image and a product that appeals to a wide audience, such as McDonald's.
• Localization: A strategy where a company adapts its products and services to meet the specific needs of local markets. This approach is suitable for companies that want to establish a strong presence in a particular market, such as Toyota in Japan.
• Transnational Strategy: A strategy that combines elements of standardization and localization, allowing companies to adapt to local markets while maintaining a consistent brand image. This approach is suitable for companies that want to balance global efficiency with local responsiveness, such as Coca-Cola.
• International Strategy: A strategy that focuses on exporting products and services to foreign markets, often with minimal adaptation to local conditions. This approach is suitable for companies that have a strong brand image and a product that appeals to a wide audience, such as Nike.
• Global Diversification: A strategy that involves expanding into new markets and industries, often through acquisitions or joint ventures. This approach is suitable for companies that want to reduce their dependence on a single market or industry, such as General Electric.
• Ansoff Matrix: A framework that helps companies evaluate their growth options, including market penetration, market development, product development, and diversification. This framework is useful for companies that want to assess their growth opportunities and develop a strategy to achieve their goals.
• BCG Matrix: A framework that helps companies evaluate their product portfolio and allocate resources accordingly. This framework is useful for companies that want to assess their product portfolio and develop a strategy to achieve their goals.
• Porter's Five Forces: A framework that helps companies evaluate the competitive landscape of an industry, including the threat of new entrants, buyer power, supplier power, threat of substitutes, and rivalry. This framework is useful for companies that want to assess their competitive position and develop a strategy to achieve their goals.
• VRIO Framework: A framework that helps companies evaluate their resources and capabilities, including their value, rarity, imitability, and organization. This framework is useful for companies that want to assess their resources and capabilities and develop a strategy to achieve their goals.

Step-by-Step Application

1. Conduct a Global Standardization Analysis: Identify the company's products and services that can be standardized across markets, and assess the potential benefits and challenges of standardization.
2. Develop a Localization Strategy: Identify the local market needs and preferences, and adapt the company's products and services to meet those needs.
3. Create a Transnational Strategy: Combine elements of standardization and localization to balance global efficiency with local responsiveness.
4. Evaluate International Strategy Options: Assess the potential benefits and challenges of exporting products and services to foreign markets, and identify the most suitable markets and products for international expansion.
5. Develop a Global Diversification Strategy: Identify new markets and industries to expand into, and assess the potential benefits and challenges of diversification.
6. Use the Ansoff Matrix: Evaluate growth options and develop a strategy to achieve growth goals.
7. Use the BCG Matrix: Evaluate the company's product portfolio and allocate resources accordingly.
8. Use Porter's Five Forces: Evaluate the competitive landscape of an industry and develop a strategy to achieve competitive advantage.
9. Use the VRIO Framework: Evaluate the company's resources and capabilities and develop a strategy to leverage those resources and capabilities.

Common Mistakes

• Mistake: Confusing industry attractiveness with competitive position.
• Correction: Industry attractiveness refers to the overall attractiveness of an industry, while competitive position refers to the company's position within that industry. A company can have a strong competitive position in an unattractive industry, or a weak competitive position in an attractive industry.
• Mistake: Using the wrong level of strategy.
• Correction: Companies should use the appropriate level of strategy, such as corporate, business unit, or functional strategy, depending on the scope and goals of the strategy.
• Mistake: Failing to consider the cultural and regulatory differences between markets.
• Correction: Companies should consider the cultural and regulatory differences between markets when developing their international strategy, and adapt their products and services accordingly.

Case Interview / Exam Tips

• Common question patterns: Companies often ask questions about the competitive landscape of an industry, the company's position within that industry, and the potential benefits and challenges of different growth options.
• Tricky distinctions: Companies often ask questions that require the ability to distinguish between different concepts, such as differentiation vs low cost, blue ocean vs red ocean, and related vs unrelated diversification.
• Framing answers: Companies often ask questions that require the ability to frame answers in a specific way, such as using a particular framework or model to analyze the situation.

Quick Practice Scenario

A company has low market share in a high-growth industry – where does it sit on the BCG matrix?

Answer: The company sits in the "question mark" quadrant of the BCG matrix, indicating that it has a high growth potential but low market share.

Last-Minute Cram Sheet

• Global Standardization: A strategy where a company offers the same products and services in all markets.
• Localization: A strategy where a company adapts its products and services to meet the specific needs of local markets.
• Transnational Strategy: A strategy that combines elements of standardization and localization.
• International Strategy: A strategy that focuses on exporting products and services to foreign markets.
• Global Diversification: A strategy that involves expanding into new markets and industries.
• Ansoff Matrix: A framework that helps companies evaluate their growth options.
• BCG Matrix: A framework that helps companies evaluate their product portfolio.
• Porter's Five Forces: A framework that helps companies evaluate the competitive landscape of an industry.
• VRIO Framework: A framework that helps companies evaluate their resources and capabilities.
• "Stuck in the middle" means trying to do both cost leadership and differentiation without achieving either – not a valid hybrid strategy unless operational excellence is present.