2.4 International Corporate and Business Strategies

This section deals with the bases for developing international strategies, driving forces for international business strategy and international corporate strategies, and Porter's model of international strategies.

2.4.1 Bases for Developing International Strategies

Expanding business in other countries depends on the capability of a firm and resources it can make use of, as well as the market capacity for its products or services. A multinational company may adopt a variety of strategies to internationalize its operations. Among these strategies, one that is to gain key resources is called resource-based strategy, while the other one that is to secure market is called market-based strategy. Resources and markets are bases for internationalizing the business and corporate strategies of a company.

A resource-based strategy defines the firm not in terms of the products or services it markets, or in terms of the needs it seeks to satisfy, but in terms of what it is capable of. Knowledge is recognized as one of the key resources of the firm. There are hard knowledge, i.e., technology and soft knowledge, i.e. organizational skills and management, marketing skills in developing effectiveness of 4Ps （abbreviations for product, place, price and promotion）, international marketing experience, and product adaptation （Hitt, 2005）. To create competitive advantage, each strategy must realize a core competence based on difficult-to-duplicate resources and capabilities. When an international business strategy is adopted, the home country of operation is often the most important source of competitive advantage. However, as a firm continues its growth into multiple international locations, the country of origin diminishes in importance as the dominant factor.

A market-based strategy focuses on competitive advantages in the marketplace. These competitive advantages are determined by competitive pressure caused by“Five Forces”as described in previous section. To develop a competitive strategy the top managers have to identify five sources of competitive pressures on the firm. However, Porter's five-force model separates domestic competitors from foreign ones and overlooks the effect of trade barriers or regional treaties. So it is necessary to combine a marketing-oriented perspective with a resource-based perspective when developing a global marketing strategy and an international strategy in international context （Hitt, 2005）.

In summary, the bases for developing international strategies are external market, internal resource, knowledge and capability, and perfect competition among firms. All these factors can develop a firm's specific advantages in global markets.

2.4.2 Driving Forces for International Strategies

International strategies are developed to sell products in markets outside of the firm's domestic market. A primary reason that firms implement an international strategy is to take advantage of new, potentially profitable opportunities to expand the market for their products. There are mainly two theories on driving forces to adopt international strategies. First is Michael Porter's four factor model. According to Michael Porter, the resources and capabilities established in a firm's home country often enable the firm to pursue its strategy beyond the domestic market. Porter specifies a model that describes four factors contributing to the advantage of firms in a dominant global industry and associated with a specific country or regional environment. The first factor is factors of production, such as labor, land, capital, and infrastructure. The second factor is demand conditions, or the nature and size of the buyers' needs in the home market for the industry's products or services reflected either by segment size, which enables a firm to achieve economies of scale, or specialized demand, which enables the firm to develop a higher level of competency in producing products or services. The third factor is related and supporting industries, or the presence of other industries in the home market that either is related to or support the primary industry. The fourth factor is firm strategy, structure, and rivalry interrelated as patterns of strategies that impact （and are impacted by） industry structure, which in turn affect and are affected by competitive rivalry （Hitt, 2005）.

The second theory on driving forces for international strategies is Vernon's concept of the product life cycle, which is formulated to explain internationalization. When a firm introduces an innovation （new product） in its domestic market, the product demand develops in other countries and exports are provided from domestic operations. As demand increases, foreign competitors may begin to produce the product. In response, firms justify investing in production abroad. As products become standardized, firms relocate production to low-cost countries （Hitt, 2005）.

In sum, driving forces that are causing firms to expand internationally are to gain access to larger markets, to extend the product life cycle, to secure key resources, and to access low-cost factors of production, to achieve global integration and to satisfy local responsiveness.

2.4.3 Porter's Model of International Strategies

Porter defines the model of international strategy as follows: First is country-focused strategy, in which the full range of the value chain activities is located in each country with little or no coordination between the various subsidiaries. This is typical forms of many areas of food manufacturing and retailing. It is also applied in service industries like insurance, advertising agencies, banking, and management consultancy. Second is high foreign investment with extensive coordination among subsidiaries. This usually involves a number of costs. For example, transaction costs of coordinating highly dispersed activities, costs of language and other cultural barriers. The trend in the pharmaceutical industry, for instance, is for R&D facilities to be spread across a number of countries with an advanced technology base. This increase in dispersion, however, calls for a increase in global coordination of R&D activities to minimize waste and overlap, and to maximize the utility of a firm's intellectual property rights. Third is export-based strategy with decentralized marketing. This is perhaps the simplest form of international strategy, and is widely used by newly internationalizing companies. Fourth is purest global strategy. In this case there is a high degree of coordination with significant concentration of activities （Taggart & McDermott, 1997）.

The ideology developed in Porter's model of international strategies share some commonality with those of corporate and business international strategies.Therefore, the author takes business and corporate international strategies as essentials of strategies which initiate the cross cultural business communication. The discussions in subsequent parts start with the implications of both types of strategies on cross cultural business communication.