International Management

Seminar paper from the year 2006 in the subject Business economics - Business Management, Corporate Governance, grade: 1,7, Pforzheim University, course: International Management, language: English, abstract: Modern companies are trying to gain an advantage over their competitors. Most

of them are finding that a good way to gain such an advantage is through the

complex process of going global. By doing so, enterprises can extend their

product lines to other countries and cultures. They can also save money on

labour costs by taking advantage of the lower standard of living in some

countries. Global expansion enables a company to add value by transferring

core skills overseas, using global volume to cover product development costs,

realizing economies of scale from global volume, and configuring value-creation

functions in locations where value added is maximized. Companies pursuing

global strategies can gain cost economies by integrating manufacturing,

marketing, and competitive strategies across national boundaries, but they must

give up a certain degree of responsiveness to national conditions.

This study looks at the strategies companies adopt when they expand outside

their domestic marketplace and start to compete on a global basis.

The first chapter starts with a discussion how global expansion creates

important values for companies.

The second chapter examines different strategies which companies can pursue

in the global arena. These four different strategies are reviewed in detail - the

international strategy, the multidomestic strategy, the global strategy, and last

but not least the transnational strategy. Furthermore the pros and cons of each

of these strategies are debated. In addition the link between the

appropriateness of different strategies and the pressures of cost reductions and

local responsiveness is made.

In the next section the various basic options a company has for entering a

foreign market - exporting, licensing, strategic alliances, joint ventures,

franchising, turnkey projects, foreign direct investment, acquisitions and the

establishment of a wholly owned subsidiary as well as e-Commerce - are

reviewed in detail. Finally, the last section gives a brief summary with important

concluding remarks.