The Internationalization Strategy of The Firms: International Management

INTERNATIONAL
MANAGEMENT
The
internationalization
strategy of the firms
1. The stages of an internationalization strategic
analysis:
- internationalization factors
- the investigation of the international
environment
- the diagnosis of the firm
2. The analysis of the strategic alternatives for

internationalization :
- the forms of international involvement

- the ways of adapting to the international market
- the segmentation of the international markets
3. The internationalization strategy of the firm:
- instruments for taking the decision

- the evolution of the internationalization
configurations
DETERMINING AN INTERNATIONALIZATION
STRATEGY
Step 1: The analysis of the external factors and company’s
potential:
THE STATE AND EVOLUTION THE DIAGNOSIS OF THE
OF THE INTERNATIONAL COMPANY
ENVIRONMENT
(Opportunities and Threats) (Strengths and weaknesses)
Looking for relevant information

-The firm’s aspirations
-The analysis of the needs and
-The available resources (surplus or
the real demand
usable capacities)
-The analysis of the competitors
- Specific advantages regarding:
- products
-Determining the entry barriers
- markets
to the market
- technologies
- science (know-how)
-Evaluating the country’s risk
The typology of the foreign

The competence profile of the
markets;
company
Degrees of attractiveness
Step 2: Determining the international
objectives of the company
-The turnover that should be achieved: the market sectors (divisions)
internationally aimed
- The targeted development rate
- The profitability (internal rate of return) of the invested capital.
Step 3: The analysis of the

strategic alternatives
- Direct or indirect export
- FDI (Foreign Direct Investment)
- Strategic alliances and forms of cooperation.
Steps 4-6: The implementation of the

internationalization program
Budget Execution Control

1. THE STAGES (STEPS) OF
AN
INTERNATIONALIZATION
STRATEGIC ANALYSIS
1.1. Factors of internationalization:
A. Environment factors:
- facility of entry to the market
- favorable evolution of the market (demand)
- moderate political risk
- good circumstances of working
- the quality of reception
- the existence of a free – trade area
- the quality of the local resources
- the monetary parities.
B. Company’s strategic reasons:

- surplus productive capacity, low local demand or
saturated internal market
- growing credibility of the firm
- possibility of external growth
- facilitating economies of scale
- the prolongation of the product’s life.
1.2 The international environment
investigation
A. The essential elements that should

be detected:
- The needs and the real demand
- The competition and the sectors with
state monopoly
- The entry barriers on the market
- The political instability and the risk
of the country
- The existent technological level.
B. The difficulties of catching relevant

information:
-The variety and the high number of
the international environment
components
- The dynamics of these components
- The quality of the information: is
high dependent on the personal
presence in the aimed country.
1.3. The diagnosis of the firm
A. Methods of evaluating the internal resources of

the company:
- the diagnosis could be accomplished by an external
team or by an internal team from the company
- the diagnosis could be a permanent or a
circumstantial one
- the diagnosis could be only a quantitative one or
also a qualitative one
- the diagnosis could emphasize the present situation
or the prospective aspects
- the result of the diagnosis is external subjected to
the effect of the prism.
B. The components of evaluating the company’s

potential:
- flows
- structures
- capacities.
2. THE ANALYSIS OF THE
INTERNATIONALIZATION
STRATEGIC
ALTERNATIVES
(OPTIONS)
2.1. The forms of international involvement
- The strategy of direct or indirect export

- FDI (Foreign Direct Investment)
- The cooperation
2.2. The ways of adapting to the international

markets
- Standardization (Normalization)
- Selective Adaptation
- Differentiation
2.3. The division of the international markets
The division criterions used in international trade:

- social and economical variables
- cultural factors
- geographical and geopolitical variables
- behavioral variables.
3. THE DECISION OF THE
INTERNATIONALIZATION OF
THE COMPANY
3.1. Instruments for taking the decision
A. Evaluation instruments
Variables Weight Countries
I II III IV V
I. Environment main factors

Acceptable (A) or Unacceptable
(U):
1. Observing the propriety rights / U A A A A
2. The opening of the market
/ A A A A A
II. The profitability of the
operation
(high numbers = favorable rank)
0-5 / 4 3 3 3
1. The invested capital 0-3 / 3 1 2 2
2. Direct costs 0-2 / 2 1 2 2
3. The turnover tax 0-4 / 3 2 4 1
4. The present dimension of the 0-3 / 2 1 3 1
market
5. The dimension of the market (3 0-2 / 2 1 2 1
– 10 years)
6. The market division: 0-2 / 2 1 2 0
- potential (0-2 years)
- future (3 years)
TOTAL / 18 10 18 10
III. Risk
(low numbers = favorable rank)
1. Losses in the market division 0-4 / 2 1 3 2

2. International trade problems 0-3 / 0 0 3 3
3. Political instability 0-3 / 0 1 2 3
4. Legislation and regulations 0-4 / 1 0 4 3
5. Perspectives of regulation (3 – 0-2 / 0 1 2 2
10 years).
TOTAL / 3 3 14 13


B. The matrix method
BCG Matrix (Boston Consulting Group) uses
two types of variables:
- the market position
- the growth rate.
McKinsey’s Matrix
- the competitiveness
- the long term attractiveness.
A.D.Little’s Model ("Business Profile

Matrix"):
- the position between the competitors
- the level of the industrial maturity.
BALL - LORANGE’s Model:

- the level of predicting the
environmental factors
- the possibility of reacting to random
events.
3.2. The evolution of the internationalization
configurations:
Step I - Direct or indirect export
Step II - Workshops or joint-ventures
Step III - Local premises and research

laboratories
Step IV - Re-concentration and local

extension.

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INTERNATIONAL

2. The analysis of the strategic alternatives for

- the forms of international involvement

3. The internationalization strategy of the firm:

- instruments for taking the decision

(Opportunities and Threats) (Strengths and weaknesses)

Looking for relevant information

The typology of the foreign

Step 3: The analysis of the

Steps 4-6: The implementation of the

Budget Execution Control

B. Company’s strategic reasons:

A. The essential elements that should

B. The difficulties of catching relevant

A. Methods of evaluating the internal resources of

B. The components of evaluating the company’s

- The strategy of direct or indirect export

2.2. The ways of adapting to the international

2.3. The division of the international markets

The division criterions used in international trade:

I. Environment main factors

1. Losses in the market division 0-4 / 2 1 3 2

A.D.Little’s Model ("Business Profile

BALL - LORANGE’s Model:

Step I - Direct or indirect export

Step II - Workshops or joint-ventures

Step III - Local premises and research

Step IV - Re-concentration and local

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