Strategic Management Internationalization Case Study and Theories

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The paper also provides a brief discussion of Tesco’s strategy and their relation to the company’s mission statement. Lastly, the paper tries to analyze the strategic alliance adopted by Rolls-Royce and their effectiveness. Essentially, this paper explores internationalization in the civil aero engine industry and the global grocery industry, as well as reviewing the commonalities of failures and success in the industries and importance of joint ventures and strategic alliances. The industrial analysis is an integral element in all strategic questions. It involves the assessment of industry’s attractiveness and the potential or actual strengths in the industry, such as share, growth, weaknesses, and strengths compared to other firm. Yip provides a comprehensive discussion on the factors that institute international competition and analyzes into four major categories. Yip presents these factors graphically, with the upper dimension representing market conditions. This factor analyzes the effectiveness of markets in one or geographically defined segments due to their differences or similarities in requirements, channels, tastes, and other elements. The left dimension refers to sources that increase returns to scales in productivity. The right scale represents the competitive or comparative advantage of particular segments, such as dynamic advantages that emerge due to experience (Eleanor and Gupta, 2003:94). Lastly, the lower dimension represents regulatory interventions that bar the geographical scope of the industry, including non-tariff and tariff barriers on trade and cross border investment. Yip’s Internationalization Drivers Consider the globalization drivers for the global grocery and civil aero-engines industry. In general, the commercial aircraft industry is global as far as terms of sales, knowledge advantages, and large economies of scales are concerned. In contrast, the grocery retailing is much lower as far as all these dimensions are concerned, but retail giants such as Wal-Mart and Tesco dominates the industry in sales as well as advertising mastery, rapid knowledge transfer, and financial strength (Rugman, and Richards, 2001:338). However, local players also exist, though with different strategies such as lower price, little advertising, and substitute products. Even for the grocery retailing leaders, the larger percentage of their value added is local. Similar features of the aircraft and grocery retail industries include research, highly internationalized brand name-based companies coupled with firms selling and producing generics that are regional or local in scope (Ghemawat, 2001:141). In this sense, globalization occurs in characteristics depending on the transportation costs and production scale economies, with firms in industries such as civil aero engine companies characterized by highly concentrated production and integrated sales, commonly known as international firms (Yip, 2001:154). On the other hand, companies in the grocery retailing industry and other consumer products often having global brands with high distribution activities and dispersed production, common as multinational firms. According to Yip, the four-globalization drivers for the aircraft industry are competitiveness, market, government, and costs. The industry ranks highest for market internationalization drivers due to the similar needs of customers (airlines) despite the difference in geographical location.