Internationalization Strategy Selection

Choice of the strategy does not consist merely of a collection of isolated decisions on products, markets, channels, partners and operation modes. These decisions are also core issues of a competitive strategy. Therefore, the choice of a strategy is all about choosing an appropriate framework for the growth and internationalization strategy for the company‘s competitive success. That is, the choice of strategy must be understood within the context of strategic planning.

The strategy of the firm is concerned with matching a firm‘s resources and capabilities to the opportunities and challenges arising from the external environment. This could just as easily be restated as, €•The choice of the growth and internationalization strategy is concerned with matching a firm‘s resources and capabilities to the opportunities and challenges arising from the external environment.

According to the view adopted here: “The central task of strategic planning is defining, building, utilizing, maintaining, and developing a company‘s basis of success that consists of superior customer benefit and superior competences as well as of threshold factors.”

The strategy statement itself consists of the following three components:

  1. Business concept or Business model
  2. Basis for success
  3. Strategic principles and strategic actions

The business concept refers to the types of products the company provides and the types of customers it serves. In other words, the company selects and defines the competitive arena in which it plans to operate. Jay Bourgeois has called this €•domain definition. Business model includes wider issues such as choice of the company‘s position in the industry value chain, outsourcing and cooperation relationships with other players, and earnings model.

Strategic principles and strategic actions: the third part of the strategy definition consists of defining how the company is going to act. The strategy is carried out by business functions wherein the company defines what is special about the way it carries out its functions when compared to its competitors. Each company must determine what strategic actions are required in its particular market and competitive situation. For example, acquisition, a special distribution arrangement or customer service may be strategic choices for some companies, whereas others may treat distribution and service as operative issues.

Choice of the strategy is the preliminary or general part of defining the strategic principles and strategic actions for achieving growth and internationalization. The choice of the strategy depends on the business model, on the basis of success that must lead to a perfect match between the firm‘s resources and capabilities and opportunities and challenges in the external environment.

It would be impossible to present a planning model that would fit all situations. The contents and scope of planning vary in relation to the firm‘s life cycle, internationalization stage, organizational level, scope of planning, and competitive situation. Often, the first question that needs to be asked is: What is the strategic planning situation of the company and what are the special challenges of the company‘s situation?

The following Figure, depicts the main paths related to international growth:

Internationalization Strategy Selection

  • The three archetypes of the starting situation are on the left.
  • Three typical paths through which a firm‘s internationalization process proceeds are presented in the middle.
  • The right-hand column shows some possible outcomes of the internationalization process in relation to existing competition: different types of niche strategies, market specialist strategy (focus) and global generalist strategy.

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