Instructor's Notes: Sprinkles Cupcakes: A Case Study of Creating a Successful Internationalization Strategy

Importance of an Internationalization StrategyBusiness professors and instructors are very often interested in providing their students valuable and useful tools to help fill their business toolbox - tools which can assist these future business managers and executives in creating value for their businesses. In the field of international business, one such tool is the ability to create an effective internationalization strategy.Developing an effective internationalization strategy can help guide businesses to successful growth outside of their domestic markets. An effective internationalization strategy can help organizations focus their limited resources into the markets and countries where they can create the most value. An effective internationalization strategy can also help guide internal functions and departments to work effectively together to meet the business' vision, mission, and goals.Figure 1 depicts a model of internationalization strategy that some of the authors have employed in the instruction of MBA students. Figure one is a combination of strategies collected from previous research (Bartlett and Ghoshal, 2002; Yip, 1989) and leads the decision maker through the various steps that are required in developing an internationalization strategy.The need for such a framework is evident as many multinational firms have failed to effectively manage their international expansions, due in part to the lack of a well-developed internationalization strategy (Phan, 2005; Chandrasekhar and Dawar, 2009). Such failures may have been in any one or more of the areas discussed within the internationalization framework, FROM NOT having a clear corporate mission/vision, from conducting incomplete country analyses and from poor execution of operational decisions.An Effective Internationalization StrategyThe internationalization strategy illustrated in Figure 1 consists of eight distinct areas, each of which will be discussed in further detail: 1. Corporate Mission/Vision, 2. Internationalization Motivation and Objectives, 3. Business Analysis, 4. Country Analysis, 5. Industry Globalization Drivers, 6. Internationalization Strategy, 7. Entry Strategy, and 8. Operational Decisions. Each of these sections is an important part to an effective internationalization strategy, and no one part should take priority over another, nor should any one part be eliminated.Corporate Mission/VisionAll effective strategies start with the corporate mission and vision. An effective internationalization strategy should be structured to support the corporate mission and vision. Any lack of clarity in the corporate mission and vision will only amplify itself throughout the internationalization strategy process.Resources are available on how to develop a corporate mission/vision, and therefore this activity will not be covered in detail within this note. However, effective internationalization strategy must start with a clear and effective corporate mission/vision.Researchers consistently assert that management commitment is critical to successful internationalization. Without commitment from the top, middle and lower-level managers are not likely to have the resource support to carry through with international projects, and senior managers are likely to pull out of such projects at the first sign of trouble (i.e., limited market share, recurring financial losses, foreign government interference, etc.).Strategy exists at both the corporate and business unit level. Corporate strategy generally involves the choice of what businesses the organization competes in and how the various businesses units contribute value to the overall corporate profile. Although there are certainly international considerations at the corporate strategy level, the focus of this note and generally of graduate-level international business classes is at the business unit level. Therefore, our model is structured around internationalization at the strategic business unit level. …