International Firm Management: Strategies and Processes

Posted on Mar 25, 2025 in Commerce and Marketing

Managing International Firms: An Integrative Approach

Key ratios in international firm management include the foreign-to-domestic ratio and the foreign-to-total operations ratio. These contribute to the internationalization profile, index, and degree.

Perlmutter’s Orientations

Perlmutter identified four orientations: ethnocentric, polycentric, regiocentric, and geocentric.

Bartlett and Ghoshal’s Strategies

Bartlett and Ghoshal outlined several strategies:

  • International: Focus on innovation.
  • Multinational: Focus on localization.
  • Global: Focus on globalization.
  • Transnational: Balances localization needs.

Objectives for Internationalization

  • Resource Seeking: Access resources not available domestically or better labor costs.
  • Market Seeking: Access markets with high volume.
  • Efficiency Seeking: Achieve economies of scale and scope.
  • Strategic Asset Seeking: Access foreign networks.

Internationalization Process (Uppsala Model)

The Uppsala model describes internationalization as an incremental process driven by the permanent interaction of static and dynamic factors. The company develops gradually, increasing its international involvement.

Internationalization Pattern

The pattern typically follows this sequence:

  1. No regular export activities.
  2. Export sales subsidiaries.
  3. Production or manufacturing subsidiaries (Psychic Distance Chain).

Internationalization Model

This model considers market commitment (state aspects) and current activities (change aspects). Increased commitment leads to greater internationalization.

International Network Perspective

  • Inter-organizational: Relationships between the company and foreign companies.
  • Intra-organizational: Relationships between the company and its foreign branches.

Advantages: Process-oriented, empirical evidence, model of organizational learning.

Limitations: Focus on the establishment chain.

Porter’s Diamond

Porter’s Diamond includes:

  • Chance
  • Strategy, structure, and rivalry
  • Demand conditions
  • Government
  • Related and supporting industries
  • Factor endowments

Advantages: Clusters and industry-specific view on internationalization.

Forms of International Business

These include:

  • Foreign Trade
  • International Transfer of Resources (contract manufacturing, licensing, franchising, management contracting)
  • International Cooperation (consortium, strategic alliance, joint venture)
  • Foreign Direct Investment (foreign branch, minority stake, subsidiary, international merger, greenfield)

Market Presence Strategy

Strategies include concentration or diversification. Location can be concentric (neighbor markets) or insular.

Selection Strategy

Based on attractiveness, risks, and entry barriers. Techniques include checklist techniques, score evaluation, or portfolio analysis.

Segmentation Strategy

  • Intra-national: Each country is treated as a separate market segment.
  • Integral market segmentation: Same segment across different countries.

Timing Strategy

Pioneer (first mover) or follower (late mover). Sequential strategy or parallel strategy for entering multiple markets.

International Allocation Strategy

Centralization of activities in one corporate unit or decentralization of activities.

Customization Strategy

Standardization or adaptation of products.

Coordination Strategy

Can be structural (based on divisions/departments), technocratic (based on rules/plans), or personal (based on commands/visits).

Structure of the International Firm

Structures can be unspecific, segregated (international division separate), integrated (divisions have both domestic and international components), or integrated multi-dimensional (matrix regions/products).

GLOBE Study

The GLOBE study examines cultural dimensions:

  1. Power distance
  2. Uncertainty avoidance
  3. Institutional collectivism
  4. In-group collectivism
  5. Gender egalitarianism
  6. Assertiveness
  7. Future orientation
  8. Performance orientation
  9. Humane orientation

Leadership styles include charismatic, team-oriented, participative, humane-oriented, autonomous, and self-protective.

The convergence or divergence thesis explores whether cultural differences will increase or decrease over time.