Strategic Management: Formulation and Implementation


This chapter focuses on strategic management for organizations that are involved in international business. The strategic-management process in international corporations is conceptually the same as in purely domestic firms. However, managers performing management functions across national borders face special problems because many more variables and relationships exists.

The economical, political, social, technological, and competitive opportunities and threats increase with the number of products produced and the number of geographic areas served. Such factors as different national sovereignties (governments), cultural and national differences, variations in business practices, values make environmental analysis for such organizations very complex. Strategy implementation can be more difficult because different cultures have different norms, values, and work ethic.

Moreover, international economic competition has increased dramatically in the past few decades. New pressures have transformed the global competitive game, forcing these companies to rethink their traditional worldwide strategic approaches. The new strategies, have raised questions about the adequacy of the issues of formulation and organization of effective strategy.

The chapter has revealed the conditions under which a global strategy is required, how is required, how it is formed, and when it is implemented by multinational in a competitive environment.

Even within particular industries, international companies have developed very different strategic and organizational responses to changes in their environment. The different international strategic decision alternatives are also associated with varying degrees of international operations.

The internationalization process typically proceeds through a gradual commitment to a local business presence. The operations range form importer to foreign investor. The cost and risk such activities are high, thus a multinational companies should be clear about the objectives and strategy thrust it will pursue, and make sure that internationalization is the best way to pursue them.

When a company reaches the multinational status, it should begin to optimize it strategy through a tradeoff between global economies and local responsiveness. Their mission, goals, and objectives should be closely intertwined with international operations.

The special organizational strategies that have been formulated for multinational corporations include direct investment, licence agreements, joint venture, and importing/exporting.

International structural implementation decision alternatives are function of corporate resources and corporate orientation. The alternatives include export division, international division, matrix organization, and global business units.

The diversity and volatility of international finance have increased due to the growth on foreign financial markets, international mergers and acquisitions, floating exchange rates, and variable government regulations.

However, a major obstacle to successful internationalization is frequently the lack of an appropriate management capability.