Chapter Discussion

Understand international strategy, competencies, and international competitive advantage.
International strategy is concerned with the way in which firms make fundamental choices about developing and deploying scarce resources internationally. The goal of international strategy is to create a competitive advantage that is sustainable over time. To do this, the international company should try to develop skills, or competencies, that are valuable, rare, and difficult to imitate and which the organization is able to exploit fully.

Describe the steps in the global strategic planning process.
Global strategic planning provides a formal structure in which mangers (1) analyze the company’s external environment, (2) analyze the company’s internal environment, (3) define the company’s business and mission, (4) set corporate objectives, (5) quantify goals, (6) formulate strategies, and (7) make tactical plans.

Understand the purpose of mission statements, objectives, quantified goals, and strategies.
Statements of the corporate business, vision, and mission communicate to the firm’s stakeholders what the company is and where it is going. A firm’s objectives direct its course of action, and its strategies enable management to reach its objectives.

Describe the new directions in strategic planning.
Operating managers, not planners, now do the planning. Firms use less structured formats and much shorter documents. Managers are more concerned with issues, strategies, and implementation.

Discuss the various organizational forms.
Companies may (1) have an international division, (2) be organized by product, function, or region, or (3) have mixture of them (hybrid form). To attain a balance between product and regional expertise, some managements have tried at matrix form of organization. Its disadvantages, however, have caused many managements to put a matrix overlay over traditional product, regional, or functional form instead of using the matrix.

Understanding the concept of the virtual corporation.
A virtual corporation enables companies to come together quickly to take advantage of a specific marketing opportunity. Because each member concentrates on what it does best, a virtual corporation can have capabilities superior to those of any member. Once the opportunity ends, the virtual corporation normally will disband.

Explain why decisions are made where they are among parent and subsidiary units of an international company (IC).
Several considerations govern where decisions are made in an IC family of organizations. They include desirability of standardizing products as opposed to differentiating them for different markets, the competence of organization managements, the size and age of the IC, the benefit of one part of the family to the detriment of another, and building the confidence or avoiding frustration of management.

Understand how an IC can maintain control of a joint venture or of a company in which the IC owns less than 50 percent of the voting stock.
Control can be maintained over a joint venture or a company in which the IC owns less than 50 percent of the voting stock by several devices, including a management contract, control of the finances, control of the technology, and putting people from the IC in key executive positions.

List the types of information an IC needs to have reported to it by its units around the world.
Subsidiaries should report to the IC information about financial conditions, technological developments, market opportunities and developments, and economic and political conditions.