10.6 Internationalisation as a strategic option

Question 1

“International strategy” refers to the options that can be considered bu an o_________ when it wants to operate outside its c______ of origin.

Answer 1

organisation

country

Question 2

“Global strategy” is a specific type of international strategy concerned with the coordination of g_______ dispersed a_______.

Answer 2

Geographical

Activites

Question 3

There are a number of recognised forces that drive international strategy:

1) M_____ drivers - potential customer reach of expanding to other countries.
2) C____ drivers - operational costs may decrease by expanding overseas.
3) G______ drivers - the government will often provide support for companies operating internationally.
4) C________ drivers - the development and maintenance of competitive advantage might require an organisation to develop its markets.
5) Porter’s d_______ - Porter (1990) introduced the diamond model that shows four interacting factors to approach internationalism.

Answer 3

Market
Cost
Government
Competition
Porter's Diamond

Question 4

There are four factors set out in Porter’s diamond model to help organisations determine the optimal approach to internationalism:
1 Firm s_______, structure and rivalry - will build a more resilient approach when trading internationally
2 D______ conditions - conditions in the home market could help an organisation become more sophisticated internationally.
3 F_______ conditions - what gives a product a competitive advantage?
4 Related and supporting i_________ - local supporting industry will provide cost and logistics advantages.

Answer 4

Firm strategy, structure and rivalry
Demand conditions
Factor conditions
Related and supporting industries.

Question 5

Pankaj Ghemawat identified four types of distance that can manifest itself between two countries. What are these

Answer 5

Cultural
Administrative
Geographic
Economic

Question 6

List four key drivers of internationalisation.

Answer 6

1 Market drivers - potential to reach more customers (e.g. operating in a new country)

2 Cost drivers - the potential to achieve cost savings (e.g. synergy where a company already sources raw material in a foreign country)

3 Government drivers - aid provides by the government to enable international operation.

4 Competition drivers - beating the competition

Question 7

What is the purpose of Porter’s diamond?

Answer 7

Helps to understand why some countries produce firms with sustained competitive advantage in some industries.

Question 8

What are the four elements of Porter’s diamond?

Answer 8

Firm structure, strategy and rivalry
Demand conditions
Factor conditions
Related and supporting industries

Question 9

What are the axis of Porter’s “international strategies” model?

Answer 9

X - Activity configuration (dispersed vs concentrated)

Y - Activity concentration (low vs high)

Question 10

What are the four strategies in Porter’s “international strategies” model?

Answer 10

1 Simple export - most activities in country of origin with some products exported

2 Multi-domestic - range of activities outside the country of origin to maximise efficiency

3 Complex export - most activities in one country, but might not be the country of origin (e.g. many UK brands have their production in other countries

4 Global strategy - highly coordinated activities dispersed around the world.