Understanding International Management: Motivations, Strategies, Success Factors, Slides of International Management

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Motivations and Mentalities

of IB and MNCs

Multinational Strategies.

Why is International Management Different

• Multiple operating environments
  • Diverse pattern of consumer preferences, distribution channels, legal frameworks, cultural characteristics, and financial infrastructures
• Political demands and risks
  • Mesh corporate strategy with host country industrial development policies— always the potential for conflict
• Global competitive game
  • Multiple market access and various global scale economics allow

companies new competitive strategic options.

• Currency fluctuation risks
  • Economic performance is measured in multiple currencies which

result in accounting and economic exposure

Mentalities and Motivations for International Expansion

. Resource Seeking

• Sales/Market Expansion
• Economies of Scale/Scope e.g. MNCs from Europe
• Diversification

Mentalities and Motivations for International

Expansion

• To exploit competitive capability
  • (Product Cycle Theory)
• To defend competitive capability
  • (Oligopolistic Behaviour Theory)
  • Oligopoly – market in which the actions of an individual firm materially affect the industry price level
• To build competitive capability
  • (Location and Oligopolistic Theories)
  • (Institutional theory)

Multinational Strategies

• International Approach
  • Domestic companies with foreign appendages
  • Opportunistic approach to FDI
  • Portfolio approach to management of foreign operations

Multinational Strategies

• Multi-national Approach
  • AKA: Multidomestic
  • Increased realization of importance of international markets
  • Manage overseas operations as a federation of independent companies

Multinational Strategies

• Transnational Approach:
  • Need to respond to host country pressures and global competitive demand simultaneously
  • Management challenge to coordinate responsive national units in a globally efficient system
  • Developing capability for Worldwide Learning.

Process of Internationalization

• Learning Model of Internationalization
  • Market Knowledge
  • Commitment Decisions
  • Current Activities
  • Market Commitment
• Level Of Commitment/Level of Control
  • Indirect Export, Direct Export, Licensing, Franchising, Joint Venture, Wholly Owned FDI

Conditions for Success in Global market

• Overseas/location specific advantages e.g... govt.. incentives, raw materials
• Strategic competency to overcome disadvantages
• Organizational capability to leverage strategic assets
• Transnational mentality i.e. responsiveness to local needs while maintaining global scale efficiency (as opposed to International, Multinational and Global mentalities)