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International Strategies

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INTERNATIONAL STRATEGIES
(Jay B Barney)

Summary
International Strategies can be seen as a special case of diversification strategies. Firms implement international strategies when they pursue business opportunities that cross country borders. Like all diversification strategies, international strategies must exploit real economies of scope that outside investors find too costly to exploit on their own in order to be valuable. Five potentially valuable economies of scope in international strategies are:
1. To gain access to new customers for a firm’s current products or services
2. To gain access to low-cost factors of production,
3. To develop new core competencies
4. To leverage current core competencies in new ways and
5. To manage corporate risk. To be a source of sustained competitive advantage, a firm’s international strategies must be valuable, rare and costly to imitate and the firm must be organized to realize the full potential of its international strategies, these strategies can still be rare, for at least two reasons :
1. Given the broad range of international opportunities, firms may not compete head to head with other firm pursuing the same international strategies that they are pursuing and
2. Firms may bring valuable and rare resources and capabilities to the international strategies they pursue.
Both direct duplication and substitution can affect the imitability of a firm’s international strategy. Direct duplication is not likely when firms bring valuable, rare and costly to imitate recources and capabilities to bear in their international strategies. Several substituts for international strategies exist, including some strategic alliances, vertical integration, diversification and mergers and acquisitions, especially if these strategies are pursued in a large and diverse single country market. However, some potential economies of…...

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