What is International Strategy
The international strategy refers to a strategy that the company tries to create value by transferring core competencies to expand into international markets where local competitors lack those competencies. The company that adopts an international strategy is neither concerned about global integration nor local responsiveness, this results in the company using an international strategy do not need to lower their prices or adapt their product to local preferences.
This is because people in the host company’s country buy a product because it is different from the local product or just want to buy this brand for that differentiation. To put it simply, an international strategy is a strategy that focuses on exporting products from somewhere that the product (or the same product from different plants) is produced to customers around the world.
In the international strategy, the majority of the value chain will be operating in the company headquarter, while subsidiaries in local countries are operating in the marketing, selling, and services with ultimate control by the parent company.
An international strategy is the most common strategy of the four international expansion strategies, often called an exporting strategy since it just exports products to the international market. A good example of the international strategy includes the following brands: Rolex, Harley-Davidson, Ferrari, Pfizer, Lamborghini, Louis Vuitton, Kellogg, and Coca-Cola.
Advantages and Disadvantages of an International Strategy
The advantage of an international strategy is that the facilitates the transferring know-how from the company’s home country to subsidiaries. With this strategy, the company can easily transfer its core competencies to expand into international markets to compete with the local markets around the globe.
On the downside, the disadvantage of the international strategy is that it does not provide economies of scale to compete with cost advantages like a global strategy, or good at adaptation to satisfy the local customer like a multinational strategy. Thus this strategy is good for a company that does not need to compete on cost and does not need to customize a product based on the local preferences.
FAQs
The international strategy refers to a strategy that the company tries to create value by transferring core competencies to expand into the international market. The company that adopts an international strategy is neither concerned about global integration nor local responsiveness.
Easily transfer its know-how from the company’s home country to subsidiaries.
Lack of cost advantages and local adaptation.
