REPORT

THE LEVEL OF CORPORATE STRATEGY IN INTERNATIONAL OPERATIONS
The strategy is based on the type of market conditions in the country of operation. Some
multinational corporation give individuals country units the authority to develop their own business
level strategy to tailor fit their operations according to the needs and problems prevailing in the country.
Product and geographic diversification(holding securities from different regions You don't want
all of your money in a single country or region for the same reason you don't want it all in a single stock.)
is the usual focus and scope of international corporate level strategy as they operate in multiple
industries and in multiple countries. The corporate headquarters, usually the United States or Japan, or
any European multinational corporation guide the strategic actions in the country of operations.
Consultants and executives of the mother company are stationed in the host country to oversee
operations. (when we say corporate level strategy ito yung top level, kung papalakihin ba yung business
mag eexpand ba)
THE LEVELS OF CORPORATE LEVEL STRATEGIES
1. MULTI-DOMESTIC STRATEGY
It i the process of decentralizing operating decisions to tailor fit the product according to
the needs and wants of the consumer in the particular country. The focus is competition within
each country and assumes that the market needs and desires need segmentation according to
the buying behavior of the market.
This strategy operates effectively as the firm customizes its product to meet the specific
needs and preferences of the local consumers. It further focuses on industry conditions, the
political and legal requirements, the social norms and values prevailing in the host country. The
firm must therefore maximize the competitive response to the idiosyncratic(unusual)
requirements of the market.
THE ADVANTAGES OF MULTI-DOMESTIC STRATEGY
a. Satisfaction of local consumer needs and wants
b. Expansion of market share
c. Presence of quality products
d. Lower price due to competition
e. Presence of branded products in international market.
THE DISADVANTAGES OF MULTI-DOMESTIC STRATEGY
a. Corporate uncertainty of the future due to competition

b. The economies of scale is limited to local market
c. Decentralization of operation entails additional cost due to higher salaries and allowances of
assigned executives.
d. Difficulty in adapting to local conditions
2. THE GLOBAL STRATEGY THROUGH STANDARDIZATION
This strategy focuses on the development of more standardized products across country
markets as operation is more controlled by the central office in the home country. While each
country nits operate independently, the home office attempts to achieve integration of
operation though standardized products through competitive strategy in the economies of
scale.
ADVANTAGES OF THE GLOBAL STRATEGY
a. Utilizes the economies of scale

b. Reduced cost I product development research
c. More control of the home office
d. Standardized products
DISADVANTAGES OF THE GLOBAL STRATEGY
a. It requires sharing of resources

b. Foregoing growth opportunities in local market
c. Needs effective coordination and control
d. Product adaptation to local market
3. TRANSNATIONAL STRATEGIC IMPLEMENTATION
It is an international strategy through which the firm seeks to achieve global efficiency
and local responsiveness. It requires close global coordination and local flexibility as it needs to
build and implement shared vision and individual commitment through a network of common
objectives.
ADVANTAGES OF THE TRANSNATIONAL STRATEGY
a. Produces higher performance level

b. Product standardization in the international market
c. Efficiency produces economies of scale
d. Improves competitiveness in international market
DISADVANTAGES OF THE TRANSNATIONAL STRATEGY
a. Difficulty in coordination and control

b. Strict compliance to standards and specifications
c. Marketing and pricing strategy differs across country
d. Government requirements of increased local content
THE MODE OF ENTRY IN INTERNATIONAL OPERATIONS
1. EXPORTING
It is the process of establishing marketing and distributing of the products to a foreign

country through distributors or chain of retailers on contractual arrangements. Exporting is most
advantageous when the mother corporation is nearest the foreign market due to the
transportation cost or where facilities are available in bringing the product to other countries
are put in place.
ADVANTAGES OF EXPORTING
a. Low capital requirement in establishing office

b. Ease in operation as distributors handle marketing
c. Less risk as it is passes on distributors
d. Immediate in increasing sales at low investments
e. Small and medium enterprises could penetrate export market through the internet
DISADVANTAGES OF EXPORTING
a. Higher cost of products

b. Low control in operation and distribution
c. Difficulty in marketing competitive products
d. Presence of more competing products
2. LICENSING ARRANGEMENT WITH FOREIGN PARTNERS
It is the process of allowing a foreign firm to purchase the right to manufacture the
firms’ product within the host country. It is a form of organizational network being practiced by
smaller firms. Under these arrangements, the firm allows the use of its right to use the brand
name of the product, its features and specifications is paid a royalty for every product produced
and distributed. Ex: Suppose Company A, a manufacturer and seller of Baubles, was based in the
US and wanted to expand to the Chinese market with an international business license. They can
enter the agreement with a Chinese firm, allowing them to use their product patent and giving
other resources, in return for a payment.
ADVANTAGES OF LICENSING
a. It is less costly in terms of investments

b. Less risky for the licenser
c. Enhancement of brand in foreign market
DISADVANTAGES OF LICENSING
a. Less control in the operation of the licensee

b. Low return as profit is shared by the licenser and licensee
c. Risk in technology transfer after contract expires
d. Inflexibility in different ownership arrangement.
3. INTERNATIONAL STRATEGIC ALLIANCE
Strategic alliance has become the popular arrangement in international expansion as it

allows the partner firms to share and risk their common resources. This arrangement could be
favorable to both partners as it can facilitate the development of core competencies that
contribute to the firm’s future strategic competitiveness. The partnership could be brought by
common understanding of both values in management and trust in its capability to sustain
profitable operation. Ex: 1. Uber and Spotify Uber’s partnership with Spotify lets Uber riders
easily stream their Spotify playlists whenever they take a ride. This makes the Uber experience
feel more personalized, and encourages Uber riders to subscribe to Spotify Premium (for more
control of their tunes both inside and outside Uber). Uber’s rivals don’t have a similar
personalized music experience, so this gives the rideshare giant a competitive advantage over
Lyft and other similar services. And since not all Uber riders have Spotify, and not all Spotify
users ride with Uber, both brands gain access to new, broad audiences in this business alliance.
ADVANTAGES OF INTERNATIONAL STRATEGIC ALLIANCE
a. Development of competitive strategies

b. Share cost in facilities and resources
c. Share risk in production and marketing
d. Technology transfer to host country
e. Learning new corporate strategies and capabilities
DISADVANTAGES OF INTERNATIONAL STRATEGIC ALLIANCE
a. Problems of cultural integration

b. Difference in work values and perceptions
c. Incompatibility in management styles may cause conflict in decision making
d. Difficulty in management due to language barriers especially in none English communicating
countries
e. Trust of partners is critical
4. ACQUISITIONS OF EXISTING LOCAL FIRM
The free trade mania in the last decade continues to expand in the global market. In the
same manner, big multi-national corporations, which have the resources and capital, would like
to expand their operations by buying out none performing firms in some countries where they
would like to penetrate the growing market needs. The multi-national corporations believe that
it is the easiest way to penetrate the international market for their product or services.
Example # 3 – Microsoft and LinkedIn
Microsoft acquired LinkedIn for $196 per share to a $26 billion deal and fought with its
competitor Salesforce.com, Inc. The shares of LinkedIn rose 64% after the announcement was
made. It was an all-cash deal and included all of LinkedIn’s net cash
. It represents a 50% premium to LinkedIn’s last closing price, and the total amounted to
$9 billion. In addition, Microsoft bought LinkedIn at a lower price by 25% than its all-time high.
Microsoft financed this deal with the issuance of new indebtedness. As a result, the deal
is expected to dilute ~1% to the non-GAAP EPS.
This deal is mainly the 433 million LinkedIn subscribers and professional clouds. The
core idea was primarily to boost data productivity.
ADVANTAGES IN ACQISITIONS
a. Easy access to foreign market

b. Control of operations is the hands of investors
c. More products could be marketed in the foreign markets.
d. Technology transfer to local firm
DISADVANTAGES IN ACQISITIONS
a. It require big investments debt financing

b. Complicated and complex in operation due cultural differences
c. Difficult to negotiate agreements
d. Difficulty in merging operational system due to differences in management style
5. THE GREENFIELD VENTURE OPERATION
It is the establishment of a wholly owned new subsidiary in a foreign country. While the
process is complex and potentially costly, it affords the maximum operating control and has the
potential of getting the above average return on investments. This potential is especially true of
firms with strong intangible capabilities that have strong leverage in entering a country with
opportunities for investments in green-field ventures.
ADVANTAGES OF GREENFIELD VENTURE OPERATION
a. Technology transfer to the new country

b. Generation of employment opportunities
c. Operational control and management
d. New product development for new market
DISADVANTAGES OF GREENFIELD VENTURE OPERATION
a. Costly on initial investments

b. Government requirements and regulations
c. Risky in competitive advantage over local firms with the similar product
THE RISK INTERNATIONAL ENVIRONMENT
Firms’ expanding in the international environment carry multiple risks as it is difficult to

implement and manage. Highly diversified firms are accustomed to market conditions yielding
competitive situations that differ from what was predicted. The international environment is full of
opportunities for growth and expansion yet the turbulent scenario still lingers as risk investment.
Several risks are involved with multinational operations. Foremost among them, these risks are the
following:
1. The Political Environment
It is related to instability in government where the firm intends to operate. Insurgency,

civil wars and changes in national leadership are risks that are difficult to predict and therefore
pose as congruent risk in business operation. Changes in political leadership and type of
governance may create new regulations of business operation for multinational firms such as
tariff and taxes, legal requirements, and the possible nationalization of private assets.
Government instability and conflicts should be studied very carefully before investing in foreign
country.
2. The Economic Risk
The economic situation in the country may look very positive during the initial operation
of the multinational firm, yet the turbulent environment in terms of difference and fluctuation
on the valve of different currencies which could be partly due to the political risk. The firms
competitive advantage could be affected when the value of the currencies in the country of
operation fluctuates eroding the possible gain in operation. Recession in the country of
operation affects multinational operations.

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THE LEVEL OF CORPORATE STRATEGY IN INTERNATIONAL OPERATIONS

THE LEVELS OF CORPORATE LEVEL STRATEGIES

THE DISADVANTAGES OF MULTI-DOMESTIC STRATEGY

a. Corporate uncertainty of the future due to competition

ADVANTAGES OF THE GLOBAL STRATEGY

a. Utilizes the economies of scale

DISADVANTAGES OF THE GLOBAL STRATEGY

a. It requires sharing of resources

ADVANTAGES OF THE TRANSNATIONAL STRATEGY

a. Produces higher performance level

DISADVANTAGES OF THE TRANSNATIONAL STRATEGY

a. Difficulty in coordination and control

THE MODE OF ENTRY IN INTERNATIONAL OPERATIONS

It is the process of establishing marketing and distributing of the products to a foreign

a. Low capital requirement in establishing office

a. Higher cost of products

a. It is less costly in terms of investments

a. Less control in the operation of the licensee

Strategic alliance has become the popular arrangement in international expansion as it

ADVANTAGES OF INTERNATIONAL STRATEGIC ALLIANCE

a. Development of competitive strategies

DISADVANTAGES OF INTERNATIONAL STRATEGIC ALLIANCE

a. Problems of cultural integration

Example # 3 – Microsoft and LinkedIn

a. Easy access to foreign market

a. It require big investments debt financing

ADVANTAGES OF GREENFIELD VENTURE OPERATION

a. Technology transfer to the new country

DISADVANTAGES OF GREENFIELD VENTURE OPERATION

a. Costly on initial investments

THE RISK INTERNATIONAL ENVIRONMENT

Firms’ expanding in the international environment carry multiple risks as it is difficult to

1. The Political Environment

It is related to instability in government where the firm intends to operate. Insurgency,

2. The Economic Risk

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