1. Geographical advantage
   1. geographic location of the original business
   2. the international configuration of their value network
2. 1. International strategy
   1. International strategy framework
      1. 2. Internationalisation drivers.
         1. Yip’s globalisation framework
         2. market drivers
         3. similar customer needs and tastes
         4. Visa
         5. presence of global customers
         6. Toyota or Ford
         7. standardised components for all their factories
         8. transferable marketing
         9. Coca-Cola
         10. marketed in very similar ways across the world
         11. Cost drivers
         12. increasing volume give scale economies
         13. on the production side
         14. in purchasing of supplies
         15. important in industries with high product-development costs
         16. aircraft industry
         17. country-specific differences
         18. locate the manufacture of clothing in China or Africa
         19. labour is cheaper
         20. keep design activities in cities such as New York, Paris, Milan or London,
         21. favourable logistics
         22. Government drivers
         23. facilitate or inhibit internationalisation
         24. sensitive
         25. agriculture and high-tech industries related to defence
         26. Competitive drivers
         27. interdependence between country operations
         28. presence of globalised competitors
         29. increases the pressure to adopt a global strategy
         30. Cross Subsidization
         31. Outside-in approach:
      2. 3. Geographic sources of advantage
         1. Porter’sDiamond (domestic)
         2. Factor conditions
         3. factors of production
         4. i.e.: linguistic ability of the Swiss has provided a significant advantage to their banking industry
         5. Home demand conditions
         6. Dealing with sophisticated and demanding customers at home helps train a company to be effective overseas
         7. ex: Japanese customers’ high expectations of electrical and electronic equipment
         8. Japan, leading to global dominance of those sectors
         9. ex: Sophisticated local customers in France and Italy
         10. local fashion industries at the leading edge
         11. Related and supporting industries
         12. regionally based
         13. ex: Italy
         14. leather footwear industry
         15. the leatherworking machinery industry
         16. design services
         17. Firm strategy, industry structure and rivalry
         18. Inside-out approach (international)
         19. used by governments
         20. increase the competitive advantage of their local industries
         21. rivalry can be positive：
         22. major policy shift in many countries towards encouraging local competition rather than protecting home-based industries
         23. foster local industries by raising safety or environmental standards
         24. i.e. creating sophisticated demand conditions
         25. encouraging cooperation between suppliers and buyers on a domestic level
         26. For individual organisations
         27. identify the extent to which they can build on home-based advantages to create competitive advantage in relation to others on a global front
         28. The international value network
         29. types:
         30. foreign direct investments
         31. joint ventures
         32. global sourcing
         33. locational advantages
         34. Cost advantages
         35. labour costs
         36. transportation
         37. communications costs
         38. taxation and investment incentives
         39. Unique local capabilities
         40. not only about exploiting an organisation’s existing capabilities in new national markets
         41. but about developing strategic capabilities by drawing on capabilities found elsewhere in the world
         42. i.e: pharmaceuticals company collaborated with local univercities
         43. National market characteristics
         44. enable organisations to develop differentiated product offerings aimed at different market segments
         45. i.e.: American guitar-maker Gibson
         46. often similar, lower-cost alternatives produced in South Korea
         47. Gibson’s high-end guitars
         48. still being ‘made in the USA’
      3. 4. International strategies
         1. The global–local dilemma：
            1. relates to the extent to which products and services may be standardised across national boundaries
            2. or need to be adapted to meet the requirements of specific national markets
         2. 4 basic international strategies
            1. Simple export
            2. Objective: optimize location advantage
            3. chosen by organisations with a strong locational advantage
            4. marketing loosely coordinated overseas
            5. concentration of activities (particularly manufactur- ing) in one country
            6. the country of the organisation’s origin
            7. handled by independent sales agents in different markets
            8. Pricing, packaging, distribution and even branding policies be determined locally
            9. Multidomestic
            10. Objectives: build the go-to-market strategy on maximizing international drivers of host countries
            11. decentralized to strategic business units (SBU) in each country
            12. Focus on firm’s competitive advantage in each market
            13. loosely coordinated internationally
            14. Products and services are tailored to local markets
            15. goods and services are produced locally in each national market
            16. Each market is treated independently, with the needs of each local domestic market
            17. attractive in professional services, where local relationships are critical
            18. it carries risks towards brand and reputation if national practices become too diverse
            19. Complex export
            20. Objective: optimize location advantage
            21. location of most activities in a single country
            22. but builds on more coordinated marketing
            23. common stage for companies from emerging economies
            24. retain some locational advantages from their home country
            25. but seek to build a stronger brand and network overseas
            26. branding and pricing opportunities are more systematically managed
            27. i.e.Huawei
            28. Global strategy
            29. Objective: select countries of operations on the basis of their specific location advantage and then, sum-up all competitive advantaegs
            30. the most mature international strategy
            31. international value networks to the full
            32. geographical location is chosen according to the specific locational advantage for each activity
            33. Business-level strategies are centralized in the home office
            34. Products are standardized across national markets
            35. SBU) are interdependent
            36. Emphasizes economies of scale
            37. lacks responsiveness to local markets
            38. Requires resource sharing and coordination across borders (which also makes it difficult to manage)
            39. Strong organizational routines and culture
      4. 5. Market selection and entry
         1. 5.1 Market characteristics
            1. 4 elements of the PESTEL
            2. Political
            3. Economic
            4. potential size of the market
            5. Gross Domestic Product
            6. disposable income
            7. currency risk
            8. Social
            9. availability of a well-trained workforce
            10. the size of demographic market segments
            11. Cultural variations
            12. Legal
            13. contracts
            14. intellectual property
            15. corruption
            16. CAGE framework
            17. Cultural distance
            18. • Different languages, ethnicities, religions, social norms
            19. consumer tastes
            20. managerial behaviours
            21. affects
            22. high linguistic content (TV)
            23. Related to national identity (foods)
            24. Carrying country- specific quality associations (wines)
            25. Administrative and political distance
            26. incompatible administrative, political or legal traditions
            27. affects
            28. staples (electricity)
            29. building national reputations (aerospace)
            30. national security (telecommunications)
            31. Geographical distance
            32. size
            33. sea-access
            34. the quality of communications infrastructure
            35. Economic
            36. huge disparities in wealth
            37. Different consumer incomes
            38. Different costs and quality of natural, financial, and human Resources
            39. Different information or Knowledge
         2. 5.2 Competitive characteristics
            1. Porter’s five forces framework
            2. Market attractiveness to the new entrant
            3. PESTEL
            4. CAGE
            5. five forces analyses
            6. Defender’s reactiveness
            7. Defender’s clout
            8. power that the defender is able to muster in order to fight back
         3. 5.3 Entry modes
            1. staged international expansion model
            2. a sequential process whereby companies gradually increase their commitment to newly entered markets, as they build market knowledge and capabilities.
            3. challenged by 2 phenomena
            4. ‘Born-global firms’
            5. new small firms that internationalise rapidly (usually in new technologies)
            6. Emerging-country multinationals
            7. develop unique capabilities in their home market
            8. rolled out quickly worldwide before competitors catch up
            9. 2 fundamental principles
            10. Transferability competitive advantage
            11. Tradability
            12. the ability to rely on trading relationships
            13. determined by 2 factors
            14. ease of transport from home country to target country
            15. the quality of legal protection in the target country
            16. broad guidelines
            17. Export
            18. are easily transported from country to country
            19. Advantages:
            20. No need for operations facilities in host country
            21. Economies of scale in the home country
            22. Internet can facilitate exporting marketing opportunities (economies of scope)
            23. Disadvantages :
            24. Lose location advantage in the host country if inappropriate selection
            25. Dependence on export intermediaries
            26. Exposure to trade barriers
            27. Logistics hurdles/ costs
            28. License or franchise
            29. where competitive advantages are too narrow
            30. good legal environment
            31. Advantages:
            32. Contractual source of income
            33. Limited economic and financial exposure
            34. Disadvantages:
            35. Difficult to identify good partner
            36. Loss of competitive advantage
            37. Limited benefits from host nation
            38. Loss of brand advantage (luxury, beauty, ...)
            39. Joint ventures
            40. where competitive advantages are narrow
            41. local licensees or franchisees cannot be trusted
            42. Advantages :
            43. Shared investment risk
            44. Complementary resources
            45. May be required for market entry (to avoid Liability Of Foreignness)
            46. Disadvantages:
            47. Difficult to find the good partner
            48. Relationship management
            49. Loss of intrinsic competitive advantage of each partner
            50. Difficult to integrate and coordinate
            51. Wholly owned subsidiary
            52. competitive advantages are sufficient
            53. not to depend on local partners
            54. transport difficulties rule out simple export
            55. greenfield
            56. Advantages:
            57. Full control
            58. Integration and coordination possible
            59. Rapid market entry through acquisitions
            60. Incentives for Greenfield investments
            61. Disadvantages:
            62. Substantial investment and commitment
            63. Acquisitions may create integration/ coordination issues
            64. Greenfield investments are time consuming and unpredictable
      5. If drivers and advantages are sufficiently strong to merit an international strategy
         1. International strategy
            1. Market selection
            2. economic
            3. cultural
            4. political
            5. Entry mode
            6. export
            7. licensing
            8. franchising
            9. joint-venture
            10. wholly owned subsidiary alternatives
            11. range of options for operating outside an organisation’s country of origin
            12. Global strategy
            13. high coordination of extensive activities dispersed geographically in many countries
3. Key terms
   1. CAGE framework p. 278
   2. Global–local dilemma p. 274
   3. Global sourcing p. 272
   4. Global strategy p. 266
   5. International strategy p. 266
   6. Porter’s Diamond p. 271
   7. Staged international expansion model p. 282
   8. Yip’s globalisation framework
   9. p. 268
4. Learning outcomes
   1. Assess the internationalisation potential of different markets.
   2. Identify sources of competitive advantage in international strategy, through both global sourcing and exploitation of local factors.
   3. Distinguish between four main types of international strategy.
   4. Rank markets for entry or expansion, taking into account attractiveness, cultural and other forms of distance and competitor retaliation threats.
   5. Assess the relative merits of different market entry modes, including joint ventures, licensing and foreign direct investment.