International Strategy: Context, Concepts and Implications

PART TWO Conceptual Framework: What is Different about International Strategy?

If we answered the question of why the firm should extend its presence internationally, we now have to understand how the firm should extend its presence around the world. This is the domain of international strategy.

Part Two lays out the conceptual frameworks underpinning the book's treatment of international strategy. First, it introduces the Rule of Four to highlight the unique factors that arise when competition crosses borders, and so explains what is different between international and domestic strategy. It then introduces a set of generic international strategies that provide direction to the multinational and ensure the consistent alignment of every difficult choice such firms confront.

Since the firm itself does not change dramatically when it becomes multinational – no phase change occurs when it ventures outside its domestic market – why do we need international strategy as a separate discipline with a new set of concepts and analytical techniques? The answer is that when a firm enters a new country, whether to sell or locate activities, it has, for the first time, to balance the challenges with the advantages of integrating activity across differentiated markets. On the one hand, multinationals seek to capitalize on differences among markets to create value by arbitraging factor or product market differences and their variation over time. On the other hand, the presence of those differences ...