Internationalization
& Growth Strategies

The internationalization of companies is a complex operation which raises multiple strategic questions. It is an operation which must be prepared carefully and rigorously: an error of assessment or analysis can have disastrous consequences.

Several strategies should be taken into consideration as an indication: Global Business Strategies, Porter’s Generic Strategies, value positions of Treacy & Wiersema, Ansoff and his growth strategy, BCG Matrix and more… you can also consider disruptive strategies and create your own market space by using ocean blue strategy for example.

The implementation of these strategies requires experience, expertise but also a lot of ingenuity and innovation.

A major concern for managers deciding on a global business strategy is the tradeoff between global integration and local responsiveness. Global integration is the degree to which the company is able to use the same products and methods in other countries. Local responsiveness is the degree to which the company must customize their products and methods to meet conditions in other countries. The two dimensions result in four basic global business strategies: export, standardization, multidomestic, and transnational.

Porter’s Generic Strategies is an answer to one of two central questions underlying the choices companies have with regard to competitive strategy. The first question is about the attractiveness of industries for long-term profitability and how to choose which industry to enter as a company. The second question is about the determinants of a company’s relative competitive position in an industry after a certain industry is chosen to enter. Because, in order to be a successful company, being active in an attractive industry alone is not enough: you will need to acquire a dominant competitive position by choosing among three generic strategies: Differentiation, Cost Leadership and Focus.

Value positions allow a company to distinguish itself from competitors and determine its strategy. Treacy & Wiersema described the value positions in 1995. An important part of the model is that you as a company focus on one of the three value positions, which should result in you excelling in one of the three points.

The three value positions of Treacy & Wiersema: Cost leadership, Product leadership and Customer partnership.

Value position one, according to Treacy & Wiersema, cost leadership has to do with operational excellence. Your company works more efficiently than the competitors and can, therefore, offer the product for a lower price.

Value position two, according to Treacy & Wiersema, you achieve product leadership through innovation. This means that the focus within these types of companies is often on R&D. By offering better, more beautiful or more intuitive products than the competition, these types of organizations distinguish themselves from the rest of the pack.

Value position three, customer partnership, is companies that are very service-oriented. The customer is central to these types of organizations. According to Treacy & Wiersema, excellent service or offering customized solutions distinguishes these types of companies from their competitors. This is also called customer intimacy.

The Ansoff matrix can be used to determine the growth strategy of a company. It answers the question that a company should focus on.

According to the Ansoff matrix, as a company you can choose from four growth strategies, namely: Market penetration, Product development, Market development and Diversification.

The matrix distinguishes between developing new products and deploying existing products in a different way. In addition, it makes you think about whether you want to get more out of existing customers, or whether you can better focus on new customers.

The Ansoff matrix is a model that can help strategic decision makers within a company determine the course of a company. It is typically a model that is used when the most important products of a company reach the maturity stage of the product lifecycle. The Ansoff matrix is also good to use when you want to start a business. Models related to the Ansoff matrix are the Value positions of Treacy & Wiersema and the Generic strategies of Michael Porter.

According to the Blue Ocean Strategy principles, companies should not only try to compete in existing markets (Red Oceans), but also find or create new markets where competition does not yet exist (Blue Oceans). In these unexplored and untapped markets, there is ample opportunity for growth that is both profitable and rapid. In addition, competition is irrelevant because the rules of the game are waiting to be set. Where Red Ocean Strategy is a zero-sum game that is all about splitting up the pie between rivals, Blue Ocean Strategy is about creating the pie and/or enlarging it.

Red oceans are all the industries in existence today – the known market space. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here, companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, profits and growth are reduced. Products become commodities, leading to cutthroat or ‘bloody’ competition.

Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space. A blue ocean is vast, deep, and powerful in terms of profitable growth.