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Date Submitted: 12/22/2011 10:08 AM

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International Strategy Benefits

International strategy

– A strategy through which the firm sells its goods or services outside its domestic market • Reasons to having an international strategy – International markets yield potential new opportunities

– New market expansion extends product life cycle – Needed resources can be secured

– Greater potential product demand


International Strategy Benefits

• Increase market share

– Domestic market may lack the size to support efficient scale manufacturing facilities

• Return on investment

– Large investment projects may require global markets to justify the capital outlays

– Weak patent protection in some countries implies that firms should expand overseas rapidly in order to preempt imitators


International Strategy Benefits

• Economies of scale or learning – Expanding size or scope of markets helps to achieve economies of scale in manufacturing as well as marketing, R&D or distribution – Can spread costs over a larger sales base – Can increase profit per unit

Competitive advantage through location Low cost markets aid in developing competitive advantage by providing access to:

• Raw materials

• Lower cost labor

• Key customers

• Energy


International Strategy Framework

Internationalisation drivers

Sources of competitive advantage

International strategy

Market selection

Mode of entry


What is Porter’s Diamond?

Porter’s Diamond suggests that there are inherent reasons why some nations are more competitive than others, and why some industries within nations are more competitive than others


Porter’s Diamond

Firm strategy, structure and rivalry Factor conditions Demand conditions

Related and supporting industries


Determinants of National Advantage

• Factors of production: the inputs necessary to compete in any industry

• • • • • Labor Land Natural resources Capital Infrastructure

• Basic factors include natural and labor...