You must have javascript enabled to view this website. Please change your browser preferences to enable javascript, and reload this page. Most issues in competitive strategy that apply to domestic companies apply also to companies that compete internationally.

But there are four strategic issues unique to competing across national boundaries:.

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Strategy options for competing in world markets include maintaining a national one-country production base and exporting goods to foreign markets, licensing foreign firms to use the company's technology or produce and distribute the company's products, employing a franchising strategy, using strategic alliances or other collaborative partnerships to enter a foreign market or strengthen a firm's competitiveness in world markets, following a multicountry strategy, or follow a global strategy.

Strategic alliances with foreign partners have appeal from several angles: Multicountry competition refers to situations where competition in one national market is largely independent of competition in another national market—there is no "international market," just a collection of self-contained country or maybe regional markets. Global competition exists when competitive conditions across national markets are linked strongly enough to form a true world market and when leading competitors compete head-to-head in many different countries.

Once a company has chosen to establish international operations, it has three basic options: A think-local, act-local strategy is appropriate for industries where multicountry competition dominates; a localized approach to strategy making calls for a company to vary its product offering and competitive approach from country to country in order to accommodate differing buyer preferences and market conditions.

A think-global, act-global approach works best in markets that are globally competitive or beginning to globalize; global strategies involve employing the same basic competitive approach low-cost, differentiation, best-cost, focused in all country markets and marketing essentially the same products under the same brand names in all countries where the company operates.

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A think-global, act-local approach can be used when it is feasible for a company to employ essentially the same basic competitive strategy in all markets but still customize its product offering and some aspect of its operations to fit local market circumstances.

There are three ways in which a firm can gain competitive advantage or offset domestic disadvantages in global markets.

Strategies for Competing in Foreign Markets

One way involves locating various value chain activities among nations in a manner that lowers costs or achieves greater product differentiation. A second way involves efficient and effective transfer of competitively valuable competencies and capabilities from its domestic markets to foreign markets. A third way draws on a multinational or global competitor's ability to deepen or broaden its resource strengths and capabilities and to coordinate its dispersed activities in ways that a domestic-only competitor cannot.

Companies racing for global leadership have to consider competing in emerging markets like China, India, Brazil, Indonesia, and Mexico—countries where the business risks are considerable but the opportunities for growth are huge.

And there may be times when a company should simply stay away from certain emerging markets until conditions for entry are better suited to its business model and strategy.

Local companies in emerging country markets can seek to compete against multinational companies by 1 developing business models that exploit shortcomings in local distribution networks or infrastructure, 2 utilizing understanding of local customer needs and preferences to create customized products or services, 3 taking advantage of low-cost labor and other competitively important qualities of the local workforce, 4 using economies of scope and scale to better defend against expansion-minded multinationals, or 5 transferring company expertise to cross-border markets and taking initiatives to compete on a global level themselves.

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the generic strategic options for competing in foreign markets include

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the generic strategic options for competing in foreign markets include

Premium Content on this OLC includes: Narrated Slides Chapter Content 2. Video Chapter Content 4. Case Videos Course-wide Content Key Points Most issues in competitive strategy that apply to domestic companies apply also to companies that compete internationally. But there are four strategic issues unique to competing across national boundaries: Whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers or offer a mostly standardized product worldwide.

Whether to employ essentially the same basic competitive strategy in all countries or modify the strategy country by country to fit the specific market conditions and competitive circumstances it encounters. Where to locate the company's production facilities, distribution centers, and customer service operations so as to realize the greatest locational advantages.

How to efficiently transfer the company's resource strengths and capabilities from one country to another in an effort to secure competitive advantage.

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Change in a global marketplace

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