International Strategy

1
International Strategy

• Globalization drivers Assess dual pressures
• Global efficiency - standardization
• National/local responsiveness - adaptation
• Location/configuration of value-creating
  activities
• Integration/coordination of value-creating
  activities
• Strategy and entry

2
Forced Standardization

• Coca-Cola in Chinese bite the wax tadpole
• Coca-Cola 30 liter bottle??
• U.S. carmakers left-hand drive cars

3
Effective Standardization
Coca-Colas transnational polar bears
McDonalds Big Mac
4
Barbie The All-American Girl Goes Overseas

• Barbie is 41 years old
• Sold in 130 countries
• National adaptations
• Physical features
• Costumes
• Activity sets
• Standardized physique
• Scaled to 62, 110 lbs.
• 38-18-28

5
Effective Adaptation

• McMutton Pie in Australia
• Wendys shrimp sandwich in Japan
• Campbells non-condensed soups in the UK
• Coca-Colas 175 ml containers in Japan

• Cadillac Seville
• 1997 Asian edition
• Right-hand drive, shorter seats, closer pedals,
  10 shorter, retractable mirrors

6
Globalization Drivers

• Market Drivers
• Cost Drivers
• Government Drivers
• Competitive Drivers

Low Multidomestic
High Global
7
Strength of Market Drivers
Aircraft
Computers
Automobiles
Soft Drinks
Toothpaste
Retail Banking
Book Publishing
Baked Goods
Low
High
Multidomestic
Global
8
Strength of Cost Drivers
Pharmaceuticals
Aircraft
Computers
Automobiles
Toothpaste
Retail Banking
Baked Goods
Soft Drinks
Low
High
Multidomestic
Global
9
International StrategyManaging Dual Pressures
High
Pressures for Global Efficiency
Low
Low
High
Pressures for Local Responsiveness
10
Value ChainLocation and standardization/adaptatio
n
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Service
Operations
Marketing
11
Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
12
Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
Upstream
13
Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
Upstream
Downstream
14
Value Chain Sub-functions (Nestles?)
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
Advert.
Distrib.
Packaging
Pricing
15
Value Chain Configuration

• Geographic location of value chain activities
• Concentrated/centralized vs. dispersed/decentraliz
  ed
• Which entry mode?

16
Value Chain Coordination

• Cross-border linkages between dispersed
  value-creating units
• Coordination Flows of
• Product (finished and intermediate)
• Technology
• People
• Information (market data, strategic direction,
  etc.)
• Highly coordinated vs. only money flows

17
International StrategyManaging Dual Pressures
High
Pressures for Global Efficiency
Export Strategy ??
Low
Low
High
Pressures for Local Responsiveness
18
Export Strategy(same as Export entry mode)
Germany
U.S.
Mexico
Malaysia
19
International StrategyManaging Dual Pressures
High
Pressures for Global Efficiency
Export Strategy ??
Multidomestic Strategy
Low
Low
High
Pressures for Local Responsiveness
20
Multidomestic Strategy
Germany
U.S.
Mexico
Malaysia
Entry?
21
International StrategyManaging Dual Pressures
High
Global Strategy
Pressures for Global Efficiency
Export Strategy ??
Multidomestic Strategy
Low
Low
High
Pressures for Local Responsiveness
22
Global Strategy(Textbook Variety)
Germany
U.S.
Mexico
Malaysia
Entry?
23
International StrategyManaging Dual Pressures
High
Global Strategy
Transnational Strategy
Pressures for Global Efficiency
Export Strategy ??
Multidomestic Strategy
Low
Low
High
Pressures for Local Responsiveness
24
Transnational Strategy (v.1)
Germany
U.S.
Mexico
Malaysia
Entry?
25
Transnational Strategy (v.2)
Germany
U.S.
Mexico
Malaysia
Entry?
26
Transnational Strategy (v.3)
Germany
Engines
U.S.
Steel
Mexico
Final Assembly
Malaysia
Trim, seats, glass
Entry?
27
Entry Mode Decision Matrix
Hi
Strategic Importance of Country
Lo
Hi
Resources, Control, Risk
Lo
Hi
Lo
Stand-alone Attractiveness of Country
28
Foreign Market Entry Modes

• Export
• Licensing
• Joint Venture
• WOS
• Acquisition
• Greenfield

29
Intl. Strategy and Entry Mode
Germany JV
U.S. H.Q.
Mexico WOS-G
Malaysia Export