After studying this chapter, you should have a good understanding of: The importance of international expansion as a viable diversification strategy; the sources of national advantage that is, why an industry in a given country is more (or less) successful than the same industry in another country; the motivations (or benefits) and the risks associated with international expansion, including the emerging trend for greater offshoring and outsourcing activity;. | Chapter Seven International Strategy: Creating Value in Global Markets After studying this chapter, you will have a good understanding of: The importance of international expansion as a viable diversification strategy The sources of national advantage, that is, why an industry in a given country is more (or less) successful than the same industry in another country The motivations (or benefits) and the risks associated with international expansion The two opposing forces—cost reduction and adaptation to local markets—that firms face when entering international markets The advantages and disadvantages associated with each of the three basic international strategies—global, multidomestic, and transnational The four basic types of entry strategies and their relative benefits and risks that are associated with each of them Learning Objectives TRANSPARENCY-60 Engardio, P. & Belton, C. 2000. Global Capitalism: Can it be made to work better? Business Week, November 6: 72-98. Exhibit . | Chapter Seven International Strategy: Creating Value in Global Markets After studying this chapter, you will have a good understanding of: The importance of international expansion as a viable diversification strategy The sources of national advantage, that is, why an industry in a given country is more (or less) successful than the same industry in another country The motivations (or benefits) and the risks associated with international expansion The two opposing forces—cost reduction and adaptation to local markets—that firms face when entering international markets The advantages and disadvantages associated with each of the three basic international strategies—global, multidomestic, and transnational The four basic types of entry strategies and their relative benefits and risks that are associated with each of them Learning Objectives TRANSPARENCY-60 Engardio, P. & Belton, C. 2000. Global Capitalism: Can it be made to work better? Business Week, November 6: 72-98. Exhibit The Extremes of Global Capitalism: One Size Does Not Fit All TRANSPARENCY-61 EXPORTS HAVE SURGED FOR TWO DECADES. . . EASTERN EUROPE/CENTRAL ASIA 0 100 200 300 400 500 EAST ASIA LATIN AMERICA SOUTH ASIA SUB-SAHARAN AFRICA BILLIONS OF DOLLARS MERCHANDISE EXPORTS 1980 1998 . . . WHILE FOREIGN INVESTMENT HAS EXPANDED. . . 0 15 30 45 60 EASTERN EUROPE/CENTRAL ASIA EAST ASIA LATIN AMERICA SOUTH ASIA SUB-SAHARAN AFRICA BILLIONS OF DOLLARS FOREIGN DIRECT INVESTMENT 1990 1998 . . . BUT GROWTH HAS BEEN UNEVEN. . . . . . AND POVERTY IS STILL WIDESPREAD 0 EASTERN EUROPE/CENTRAL ASIA EAST ASIA LATIN AMERICA SOUTH ASIA SUB-SAHARAN AFRICA 0 10 20 30 40 50 EASTERN EUROPE/CENTRAL ASIA EAST ASIA LATIN AMERICA SOUTH ASIA SUB-SAHARAN AFRICA PERCENT AVERAGE ANNUAL GDP GROWTH 1980-90 1990-98 PERCENT PERCENT OF POPULATION MAKING UNDER $1 A DAY 1990 1998 PERCENT India’s Virtual Diamond in Software Domestic rivalry No regulatory barriers to entry or startup; 800 firms, mostly small, in fierce
