Strategic Management in International Organizations
Rex C. Mitchell, Ph.D.


You do not choose to become global. The market chooses for you; it forces your hand." Alain Gomez, CEO, Thomson, S.A.

International business is becoming a necessity, rather than an option, for many businesses - especially larger ones. Some of the reasons that companies subject themselves to the complexities of international business:

  • To enter more favorable markets, e.g., faster growing, more profitable, better government climate...
  • To reach new customers
  • To gain access to lower-cost labor markets and/or key/lower-cost raw materials
  • To spread its business risk across a wider market base
  • To gain other advantages inherent in location


  • Multidomestic or multinational - operating in several countries, each with rather independent strategies and processes
  • Global or international - operating in multiple countries, in which there is considerable interdependence and linkage among the countries, resulting in global strategies
  • Transnational - seeks to achieve both global efficiency and local responsiveness (difficult to achieve because of the conflicting goals of global coordination and local flexibility)


  • The "developing nations" distinction is fading
  • Watch growth in Asia and Latin America in 21st century, especially in China, whose economy is expected to grow at over 7% annually for the foreseeable future
  • Regionalization is becoming more common; regional trading blocs are becoming more important


  • Diagnosis
    • Use same general 3-phase process and considerations that we have already studied
    • External environment makes the difference between countries - so is even more important in international organizations
    • Therefore, external scanning & analysis is especially important
    • Can use same 5-force model (by country or region) and same four aspects of general environment
    • Still need SWOT and Critical Issues (may be specific to country or region - in addition to for the total corporation)

  • Formulation - Process
    • Still need to work on three levels: corporate-level, competitive, & other strategies necessary to manage the critical issues
    • Still need to generate and evaluate a rich range of alternatives
    • Likely to need different strategies in each nation or region
    • Can use extended GE Business Screen to consider country attractiveness (can do 3D matrix with country attractiveness, industry attractiveness, competitive strength to help make decisions re portfolio strategy)
    • Note that vertical integration has more disadvantages for international corporations
    • A vital consideration is that partners are needed
    • May have suppliers in other countries, even if not in that market
    • Need to decentralize more, but this creates problems

  • Formulation - Major Corporate-Level Strategy Alternatives
    • Global strategies
    • Transnational strategies
    • Multidomestic strategies

  • Formulation - Major Business-Level or Entry Strategy Alternatives (listed in approximate increasing order of involvement, commitment, and risk):
    • Licensing
    • Exporting
    • Franchising
    • Management contracts
    • Turnkey and BOT contracts
    • Production sharing
    • Joint ventures
    • Strategic alliances and joint ventures
    • Acquisitions or mergers
    • New wholly owned subsidiary (green-field development)

  • Implementation
    • The usual implementation considerations to generate an effective set of action steps are still appropriate
      • Resources (financial, human, physical, technological) - what is necessary to get those we need and don't have?
      • Support (obtaining and sustaining sufficient support to allow successful implementation) ...consider key "stakeholders" and what matters to them.
      • Reward systems (don't be surprised when you "get what you reward"). When you want different behaviors, changing the reward system is often a key point of leverage, and an important part of implementation
      • Timing (especially sequencing of action steps and constraints on when things have to happen)
      • How to monitor and control the implementation to produce the desired results (how will we know how successful we are?)
      • Organization structure (often given too much attention, but sometimes needs changes)
      • Leadership (do we have what is needed?)
    • Need to deal with the need for partners again (choice and relationships are critical)
    • Organizing (decentralization vs. centralization is a key issue)
    • Staffing
    • Some key cultural differences that have to be managed:
      1. Power distance
      2. Uncertainty avoidance
      3. Individualism-collectivism
      4. Masculinity-femininity
      5. Time orientation
    • Increased need for information & good financial measures to maintain control
    • Importance and often difficulty of maintaining good host country relationships


  • Political risks: e.g., related to government changes, instability, conflicts and war within and between countries, nationalization of assets
  • Economic risks: interdependent with political risks, primary are differences and fluctuations in exchange rates, inflation

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Last modified July 31, 2009 Copyright 1985-2009 Rex Mitchell