Use this framework to develop an international or global strategy
George Yip is Emeritus Professor of Marketing and Strategy at Imperial College Business School. He argues that a core strategy for a company is first developed in the home country before working out a strategy for international expansion. (See Yip, G.S., Total Global Strategy: Managing for Worldwide Competitive Advantage, 2012, and Yip, G.S., ‘Global Strategy...In a World of Nations?’, Sloan Management Review, 1989). This book is considered a seminal work in the field of global strategy. It addresses the challenges and opportunities of competing on a global scale, emphasizing the need for a holistic and integrated approach to global business.
In a shrinking world companies with ambitions to grow will want to look beyond their national boundaries for expansion. The likelihood is that a company will identify customers outside its country that are natural targets for its products. In the first instance, exports from the home base may be the optimum way of supplying these.
As the company develops a greater knowledge of its overseas markets it may decide to set up businesses in different countries tailoring products to local needs.
In a small to medium-size company the limited financial resources may favour a piecemeal approach in which attractive markets are picked off one by one. This international strategy becomes a multi-domestic strategy in that the different operations in each country aren't necessarily tied to each other or benefiting from global cost savings; there are effectively lots of domestic strategies.
Eventually a company will arrive at a size in which a global strategy is relevant. This involves the integration of manufacturing across the different countries. A standardised product and a global brand is offered with cost manufacturing advantages. However, a significant investment may be required to set this up. Think Boeing where the engines may be made in the UK, the wings in Japan, the wing tips in South Korea, and bits of the fuselage in the US, Italy, and Japan. It requires a large and mature organisation to bring together a value chain of this type in order to achieve cost and marketing advantages.
The key to the strategy is understanding international markets. The recent threats of tariff wars could easily change the benefits of an international strategy and so flexibility and speed of response to changes is critical.
Some things to think about:
Ask yourself the questions outlined in the above diagram. Start by considering your domestic strategy. Can it (and should it) move to an international strategy? Can it (and should it) move to a global strategy?
And, if the answer is yes, to any of these questions, where could you manufacture your product to best competitive advantage?