International Management

Modern companies are trying to gain an advantage over their competitors. Most
of them are finding that a good way to gain such an advantage is through the
complex process of going global. By doing so, enterprises can extend their
product lines to other countries and cultures. They can also save money on
labour costs by taking advantage of the lower standard of living in some
countries. Global expansion enables a company to add value by transferring
core skills overseas, using global volume to cover product development costs,
realizing economies of scale from global volume, and configuring value-creation
functions in locations where value added is maximized. Companies pursuing
global strategies can gain cost economies by integrating manufacturing,
marketing, and competitive strategies across national boundaries, but they must
give up a certain degree of responsiveness to national conditions.
This study looks at the strategies companies adopt when they expand outside
their domestic marketplace and start to compete on a global basis.
The first chapter starts with a discussion how global expansion creates
important values for companies.
The second chapter examines different strategies which companies can pursue
in the global arena. These four different strategies are reviewed in detail - the
international strategy, the multidomestic strategy, the global strategy, and last
but not least the transnational strategy. Furthermore the pros and cons of each
of these strategies are debated. In addition the link between the
appropriateness of different strategies and the pressures of cost reductions and
local responsiveness is made.
In the next section the various basic options a company has for entering a
foreign market - exporting, licensing, strategic alliances, joint ventures,
franchising, turnkey projects, foreign direct investment, acquisitions and the
establishment of a wholly owned subsidiary as well as e-Commerce - are
reviewed in detail. Finally, the last section gives a brief summary with important
concluding remarks.