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, 29 entries in the bibliography, 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.