Study sheet: International Strategic Management Introduction

📋 Course Outline

1. Strategic Management Vocabulary
2. Competitive Advantage Through Chess
3. Internationalization Definition and Scope
4. Market and Capability Drivers
5. Efficiency and Strategic Asset Drivers
6. Internationalization Opportunities and Risks

📖 1. Strategic Management Vocabulary

🔑 Key Concepts & Definitions

• Economies of scale : cost advantages obtained when production becomes more efficient, lowering the cost per unit
• Business model : the framework for how a company creates, delivers, and captures value
• Merger strategy : a plan to join two separate companies into a single new legal entity
• Blue ocean strategy : creates a new, uncontested market space where competition is irrelevant
• VRIO analysis : a framework for evaluating a firm's resources through Value, Rarity, Imitability, and Organization

📖 2. Competitive Advantage Through Chess

★ Must-know

📌 Competitive advantage means doing better than any other competitor can do, while strategy is how the firm plans to win the game.

• The chess analogy presents five business strategy principles:

  • control the center
  • develop the pieces
  • castle
  • do not waste moves
  • connect the pieces

• Areas where value is created include:

  • customer relationships
  • distribution channels
  • data
  • talent
  • intellectual property

Further detail

• Developing the pieces means building capabilities by investing in skilled people, technology, organizational processes, and partnerships.

• Protection involves:

  • managing financial risk
  • cybersecurity
  • legal protection
  • succession planning
  • operational resilience

📌 A chess sacrifice represents deliberate business tradeoffs made because the firm expects a better position, greater initiative, or eventual success.

💡 Memory Hook

Control, develop, castle, focus, connect — then sacrifice when the position improves.

📖 3. Internationalization Definition and Scope

🔑 Key Concepts & Definitions

• Internationalization : the process of expanding business operations beyond domestic borders and has become a strategic imperative for many firms
• Key drivers : the primary factors or motivating forces influencing a firm's decision to expand operations beyond domestic borders

★ Must-know

• The four categories are:
  • Market
  • Resources and Capabilities
  • Efficiency
  • Strategic Assets

Further detail

• A fast food company can internationalize to access new markets and benefit from economies of scale, a car manufacturer can locate plants in different countries to cut costs and move closer to customers, and a technology company can launch products worldwide to reinforce its position as world leader and access new markets.

📖 4. Market and Capability Drivers

★ Must-know

• Market drivers operate by:

  • expanding the customer base
  • diversifying revenue streams
  • following customers into foreign markets

• Internationalization can provide access to raw materials or components that are scarce or more cost-effective abroad, as well as access to new technologies, research, and skilled labor.

Further detail

• Firms may lower production costs by locating facilities in countries with lower labor costs or more favorable tax regimes.

💡 Memory Hook

M-R-C: Markets, Resources, Capabilities.

📖 5. Efficiency and Strategic Asset Drivers

🔑 Key Concepts & Definitions

• Joint venture : collaboration with local partners that can provide insights into foreign markets and help mitigate risks

📝 Essential Points

• Efficiency drivers include: achieving economies of scale, optimizing the value chain, exploiting competitive advantages on a global scale

• Firms may use mergers and acquisitions to gain access to foreign markets, technologies, or brands.

💡 Memory Hook

Efficiency improves how the firm operates, whereas strategic assets strengthen what the firm can access or control.

📖 6. Internationalization Opportunities and Risks

★ Must-know

• Firms should assess:
  • markets
  • resources and capabilities
  • strategic choices

Further detail

• Firms should consider the challenges and risks they may face when internationalizing.

• Firms should evaluate future opportunities that may arise when entering a new market.

📊 Synthesis Tables

Four Driver Categories

Category	Main mechanisms	Illustrative focus
Market	Expand customers, diversify revenue, follow customers	New customer segments and foreign clients
Resources and Capabilities	Access inputs, knowledge, technology, skilled labor, and lower-cost locations	Raw materials and production capabilities
Efficiency	Achieve scale, optimize the value chain, exploit competitive advantages	Lower average costs and global operations
Strategic Assets	Use joint ventures, mergers, and acquisitions	Markets, technologies, brands, and local insights