International Strategy

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International Strategy
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Industry Globalization

• What is a global industry? Why?
• Which drivers/factors most important?
• How does a global industry compare with a
  multi-domestic one?
• How is the extent of globalization measured?
• What are the implications for firms
  international strategies?

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Global Supply Chain for ___
Country X Engines for __ Transmissions for __
U.S. Customers Assembly for __
Country Y Transmissions for __
Country Z Assembly for __
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Globalization Drivers

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

High Global
Low Multi-domestic
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Definitions

• Multi-domestic
• Many-country view of the international
  marketplace
• Value chain activities are performed in the local
  country-market and are adapted to local tastes,
  preferences, needs, etc.

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Definitions

• Global
• A whole world-level view of the international
  marketplace, the world is the market
• Value chain activities are standardized and are
  performed in country locations according to
  efficiency, favorable policies, knowledge,
  resources, etc.

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Definitions

• Transnational
• A glocal level view of the international
  marketplace has some global, some local
  elements
• Some value chain activities are standardized and
  are performed in country locations others are
  nationally-adapted and performed in the local
  market

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Market Globalization Drivers

• Common customer needs
• Global customers
• Global market channels
• Transferable marketing

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Strength of Market Drivers
Aircraft
Computers
Automobiles
Soft Drinks
Toothpaste
Retail Banking
Book Publishing
Baked Goods
Low
High
Multidomestic
Global
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Cost Globalization Drivers

• Global scale economies
• Sourcing efficiencies
• Factor of production differences
• High product development costs
• Rapidly changing technology

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Strength of Cost Drivers
Pharmaceuticals
Aircraft
Computers
Automobiles
Toothpaste
Retail Banking
Baked Goods
Soft Drinks
Low
High
Multidomestic
Global
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Government Globalization Drivers

• Unrestrictive trade and investment policies
• Compatible technical standards
• Common marketing regulations

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Strength of Government Drivers
Toothpaste
Baked Goods
Soft Drinks
Computers
Automobiles
Pharmaceuticals
Airlines
Retail Banking
Restrictive
Loose
Multidomestic
Global
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Competitive Globalization Drivers

• High two-way trade / cross-border FDI
• Global competitors
• Interdependence among countries
• Trade/Investment Policies
• Role of WTO, etc.

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Strength of Competitive Drivers
Aircraft
Pharmaceuticals
Computers
Toothpaste
Automobiles
Soft Drinks
Retail Banking
Baked Goods
Low
High
Multidomestic
Global
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Auto Industry and Globalization

• Driver
• Market
• Cost
• Government
• Competitive

Global
Multidomestic
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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

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Effective Standardization
Coca-Colas transnational polar bears
McDonalds Big Mac
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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

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Barbie

• Barbie is 42 years old
• Sold in 130 countries
• National adaptations
• Physical features
• Costumes
• Activity sets
• Standardized physique
• Scaled to 62, 110 lbs.

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Globalization Drivers

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

High Global
Low Multidomestic
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International StrategyManaging Dual Pressures
High
Pressures for Global Efficiency
Low
Low
High
Pressures for Local Responsiveness
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Value ChainLocation and standardization/adaptatio
n
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Service
Operations
Marketing
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Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
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Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
Upstream
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Value Chain
Headquarters
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
Upstream
Downstream
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Value Chain Sub-functions (Marketing)
Infrastructure
Technology Development
Procurement
Human Resource Management
Profit Margin
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
Advert.
Distrib.
Packaging
Pricing
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Value Chain Configuration

• Geographic location of value chain activities
• Concentrated/centralized vs. dispersed/decentraliz
  ed

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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

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International StrategyManaging Dual Pressures
High
Pressures for Global Efficiency
Export Strategy
Low
Low
High
Pressures for Local Responsiveness
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Export Strategy(same as Export entry mode)
Germany
U.S.
Mexico
Malaysia
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International StrategyManaging Dual Pressures
High
Pressures for Global Efficiency
Export Strategy ??
Multidomestic Strategy
Low
Low
High
Pressures for Local Responsiveness
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Multidomestic Strategy
Germany
U.S.
Mexico
Malaysia
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International StrategyManaging Dual Pressures
High
Global Strategy
Pressures for Global Efficiency
Export Strategy ??
Multidomestic Strategy
Low
Low
High
Pressures for Local Responsiveness
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Global Strategy(Textbook Variety)
Germany
U.S.
Mexico
Malaysia
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International StrategyManaging Dual Pressures
High
Global Strategy
Transnational Strategy
Pressures for Global Efficiency
Export Strategy ??
Multidomestic Strategy
Low
Low
High
Pressures for Local Responsiveness
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Transnational Strategy (v.1)
Germany
U.S.
Mexico
Malaysia
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Transnational Strategy (v.2)
Germany
U.S.
Mexico
Malaysia
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Transnational Strategy (v.3)
Germany
Engines
U.S.
Steel
Mexico
Final Assembly
Malaysia
Trim, seats, glass
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VW International Strategy - Touareg
Japan
U.S.
Transmission
Marketing
Slovakia
Final Assembly
Germany
Steel Engine
Hungary
Misc.
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VW International Strategy - Jetta
U.S.
Japan
Marketing
Transmission
Mexico
Final Assembly
Germany
Misc.
Poland
Engine
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Procter GamblePan-European Brand Development
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PG Multidomestic Strategy
UK
Neth.
France
Germany
Italy
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Product Characteristics Map
High Washing Temp
Enzymatic Stain Removers
Fabric Softener
Bleach Additives
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Product Characteristics Map
High Washing Temp
Excluded countries
Italy
Italy
Enzymatic Stain Removers
Fabric Softener
Spain
Bleach Additives
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PG TransEuro Strategy
UK
Neth.
Zone 1
France
Germany
Italy
Spain
Zone 2
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Epilogue

• VIZIR was precursor to Liquid Tide in US
• Great irony is PGs struggle to develop
  Euro-brand first found success in another
  large, integrated marketthe U.S.
• The VIZIR experience facilitated
  learning/cross-fertilization w/in PG worldwide
• Developed world-class technology and product
  development capabilities worldwide

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No problem taking a sack. Ill just use Vizir
after the game.
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Gotta keep these sweaty guys off my clean
uniform Im out of Vizir.
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McDonalds Identity
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(No Transcript)
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McDonalds Transnational Menu
US Brazil Canada India Germany
Big Mac ? ? ? ?
French Fries ? ? ? ? ?
Coca-Cola ? ? ? ? ?
McNuggets ? ? ?
McAloo Tikki ?
McRib ?
McBier ? ?
McLobster ?
McCalebresa ?
PitaMac ?
McFarmer ?
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McDonalds Site Selection and Stores
US -- Colorado
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McDonalds Site Selection and Stores
Bangkok, Thailand
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McDonalds Site Selection and Stores
Moscow, Russia
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Hamburger University
Illinois, USA
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Hamburger University Curriculum

• 80 classroom hours
• Topics Fast food the McDonalds way
• Restaurant operations, food preparation
• Crew selection, training and team building
• Marketing and promotion
• Asset management
• Corporate citizenship and ethics
• Leadership, effective supervisory skills

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Hamburger University
Hong- Kong
London
Illinois
Munich
Sydney
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McDonaldsTransnational Strategy
Singapore
U.S.
Greece
Brazil