Chapter 9: International Competitive Strategy
This chapter provides an overview of strategic considerations that international companies must take into account when competing within an international business environment. In the global marketplace, a company must be able to quickly identify and exploit opportunities wherever they may occur. To do this effectively, managers must fully understand why, how, and where they intend to do business, now and over time. Managers need to have a clear understanding of their company’s mission and vision and an understanding of how they plan to compete with other companies. In order to meet these challenges, managers need to understand their company’s strengths and weaknesses along with those of their competitors. They must also be able to identify opportunities and threats. Strategic planning provides valuable tools for helping managers address these global challenges.
International strategy is concerned with the way firms make fundamental choices about developing and deploying scarce resources internationally. The international strategy involves decisions that deal with all of the various functions and activities of a company, not merely a single area such as marketing or production. To be effective, a company’s international strategy needs to be consistent among the various functions, products, and regional units of the company as well as with the demands of the international competitive environment. The goal of international strategy is to achieve and maintain a unique and valuable competitive position, both in a nation as well as globally, a position that has been termed “competitive advantage.” This suggests that the international company either must perform different activities than its competitors, or else perform the same activities but in different ways. In attempting to develop competitive advantage, a company’s managers are forced to make choices regarding what to do, and what not to do, now and over time. Different companies make different choices, and these choices have implications for each company’s ability to meet the needs of customers and to create a defensible competitive position internationally. Without adequate planning, managers are more likely to make decisions that do not make good sense competitively, and the company’s international competitiveness may be harmed. Many global and multinational companies have instituted formal worldwide strategic planning to identify opportunities and threats, formulate strategies to handle them, and stipulate the means to finance them. Global strategic planning provides a formal structure in which managers analyze the firm’s external environments, analyze the firm’s internal environments, define the company’s business and mission, set objectives, quantify goals, and formulate strategies and tactics to achieve them. Operating managers do the planning and with the assistance of their planning staff.
PLEASE REVIEW THE KEY TERMS IN THE CHAPTER.
DISCUSSION QUESTIONS: PLEASE CITE YOUR RESPONSES
1. What is an international strategy? Do you think it is useful for companies to take the time and effort to prepare international strategies if they are in rapidly changing competitive situations with high levels of uncertainty? Why or why not?
2. Why don’t companies use the same strategic planning processes for their international business activities as for their domestic operations?
3. If predictions are difficult to make accurately when there are high levels of uncertainty and change, why would scenario analysis have value? Aren’t scenarios likely to be inaccurate under such circumstances?
4. Your firm has used bottom-up planning for years, but its subsidiaries’ plans take different approaches to goals and assumptions-even their time frames are different. How can you, the CEO, get them to agree on these points and still solicit their individual input?