International Business Strategy

Expanding globally allows firms to increase their profitability and profit growth by entering new markets where indigenous competitors lack similar competencies, by lowering costs and adding value to their product offering through the attainment of location economies, by exploiting experience curve effects, and by transferring valuable skills between their global networks of subsidiaries. In another word, the strategies which increase profitability may also expand a firm’s business and thus enable it to attain a higher rate of profit growth (Hill, 2009). When a company plan to compete in the international environment there are two crucial factors affect the firm’s choice of strategy which are strength of pressures for cost reductions versus those for local responsiveness. Firms typically choose among four main strategic postures to response these two factors when competing internationally. These can characterized as global standardization strategy, localization strategy, transnational strategy and international strategy which have been illustrated as figure 1. In this report, as a management consultant, the two cases from our client will be brief introduced firstly. Then, we will examine these four main strategies related the cases which delegated by our client and recommend to each of them one optimal choice of the basic strategies to compete in the international environment. Finally, we will highlight the impacts of the recommendation for each company’s organizational architecture.

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We have two clients which from both media industry and manufacturing industry. One is a media company from the US. It wants to sell the newspaper that it designed for New York City in Shanghai. The second client is a European producer of commercial aircraft. It wants to sell its airplanes in China. Both of them want to compete in the international environment by one of the basic strategies, we will examine each strategy for these two company on the grounds of these own