Abstract
This chapter explores the different strategic paths that international firms can follow when they enter host markets. Strategy is meant as the result of the external and internal analysis, and through the empirical evidences, we highlight the challenges and new trends connected to the different paths: expansion, diversification, downsizing, and re-focusing. To be competitive, firms need to find the right balance between standardization and adaptation, which is connected also to the kind of coordination international firms develop to guarantee the survival of the system they build cross-countries.
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- 1.
The modes are more appropriately to be framed in the company’s organizational sphere, in that they describe the logical frameworks guiding the choices on “how” to penetrate into a market, depending on the comparative advantages that descend from these choices (collaborative or competitive modes, mercantile internationalization, or direct investment or FDI, exporting or licensing, “make or buy”).
- 2.
Although it bears noting that often, the concepts that refer to internationalization strategies overlap with those describing their modes of implementation. In fact, certain studies and research efforts on these issues have recurrently found that, in the intent to discuss paradigms and theories of foreign development strategies, which is to say the models explaining the logic to be followed to identify “what” is to be done, the scholars’ attention had instead concentrated on the modes for implementing the strategies.
- 3.
Over the last decade, these problems have led Italian manufacturing companies to offshore production to Romania, not only for its geographic proximity but also above all due to the reduced language difficulties (Italian is widely spoken in that country) and for the inheritance from the past, which is to say an aptitude Romanians have for working in industries on commission for foreign—particularly Austrian—operators.
- 4.
Consider, for example, the cases of productive reconversion induced by community restrictions that have at times led companies in certain sectors (steel, agro-industrial) to crises of survival and of radical strategic repositioning.
- 5.
As early as the 1980s, Itami (1987) stated that the knowledge possessed by the company acts both as a constraint, by limiting operation in the short term and the strategic actions that may be adopted, and as an opportunity, where knowledge—scientific, technological, and market—takes on a pervasive nature and is used as a springboard for entering new businesses.
- 6.
Hymer, in casting light on the motivations underlying companies’ decisions to expand abroad, emphasizes the role played by possession of “ownership advantage,” which is to say of those advantages over which the company wishes to maintain direct control in order to exploit them better. These advantages, oligopolistic in nature, which permit the formation of additional profits to be invested in international operations, derive from the knowledge the company possesses on its specific characteristics and on the sector in which it operates.
- 7.
For example, contributing to Coca-Cola’s worldwide success were the development of complete local infrastructures in the various countries where the company penetrated, the deliberate on-site introduction of the pillars of the commercial system, and activity performed by the parent company to stimulate local demand.
- 8.
Even Coca-Cola, which offers a product considered universal in the collective imagination, had to revise its strategies, which until a few years ago were to be considered “global”; currently, the parent company’s guiding principles are “think local and act local,” which the company has implemented by increasing the decision-making power of peripheral managers; and through multipoint marketing, aimed at affirming Coca-Cola brands on regional and local bases (in addition to numerous non-profit activities differentiated for individual settings, that can only reinforce the company’s aim to be accepted by local communities as an internal operator). This was the case with Gillette, which, after its reorganization in 1988, segmented the global market into homogenous areas and created divisions with decision-making power in each segment, thereby managing to integrate into each macro-area in which it operates (Moss Kanter and Dretler 1998).
- 9.
It bears noting that the alliance between Lufthansa and United Airlines neither caused the two airlines to lose their national identities nor significantly changed the strategy pursued by Lufthansa on the domestic market. Conversely, examination of actual situations has also shown that, through a careful marketing activity, some companies have been able to spread, internationally, products affirmed precisely by exploiting the image of the country of origin perceived by the local mass media: examples of this are the famous “Marlboro Man” or the American chain of “French hockey-style cafes.”
- 10.
Orton and Weick also stressed that weakly connectedsystems—a classification that can include schools, hospitals, law enforcement organizations and judicial systems—are not failed bureaucracies but diverse organizational forms that, while not characterized by coherence, allow the highest degree of efficiency possible in an unstable and complex environment to be achieved.
- 11.
Including Siemens and Volvo.
- 12.
The reasons leading a country to be defined as “difficult” involve the currency, regulatory, economic, and sociocultural difficulties companies must face in order to implement business relationships the creation of ingenious intertwinements of transactional and collaborative relationships, often involving several actors and countries. In this sense, the following countries may be defined as “difficult”: countries in Eastern Europe and Asia, Latin America, and the area of non-EU States bordering on the Mediterranean referred to as “Mediterranean Non-Member Countries.”
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Calvelli, A., Cannavale, C. (2019). International Strategy. In: Internationalizing Firms. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-91551-7_2
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DOI: https://doi.org/10.1007/978-3-319-91551-7_2
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