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International Environment The international environment is of increasing concern to companies around the world because it is both a major opportunity and a major threat. Threat exists in the presence of international forces that increase uncertainty. Opportunity exists in the huge new markets and resource pools abroad. 1 Choosing a Strategy The three factors that influence the choice of strategy for global expansion are: • Pressures for global integration • Pressures for local responsiveness • Bureaucratic costs 2 Multidomestic Strategy Responds to local pressures and customizes products to suit the needs of customers in each country • Manufacturing, R&D, marketing abroad • Achieve a differentiation advantage • Bureaucratic costs are lowest 3 International Strategy Offers customers in all countries a standardized product and allows foreign divisions to adapt products to local preferences only slightly • Manufacturing abroad • R&D and marketing at home • Bureaucratic costs are low 4 Global Strategy Organization reduces production costs so that it can offer foreign consumers less expensive products than their domestic companies offer Manufacturing at a few low-cost locations, • R&D and marketing at home • Bureaucratic costs are high 5 Transnational Strategy — Simultaneously achieves the advantages of both a global strategy and a multidomestic strategy. • Manufacturing, R&D, marketing abroad • Emphasis on global learning / cost reduction • Bureaucratic costs are highest 6 Understanding Regional Cultures Discuss in small groups led by non-American students: How are Americans seen abroad? What values or beliefs affect behavior in your culture? Consider: Class/status Environment Ethnic ties Governmental issues Religion 7