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International Strategy

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.

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International Strategy

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  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. Coca-Cola in Chinese: “bite the wax tadpole” Coca-Cola 30 liter bottle?? U.S. carmakers’ left-hand drive cars “Forced” Standardization

  3. Effective Standardization Coca-Cola’s “transnational polar bears” McDonald’s “Big Mac”

  4. Barbie is 41 years old Sold in 130 countries National adaptations: Physical features Costumes Activity sets Standardized physique: Scaled to 6’2”, 110 lbs. 38-18-28 Barbie: The “All-American” Girl Goes Overseas

  5. McMutton Pie in Australia Wendy’s shrimp sandwich in Japan Campbell’s non-condensed soups in the UK Coca-Cola’s 175 ml containers in Japan Effective Adaptation 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 Strategy:Managing Dual Pressures High Pressures for Global Efficiency Low Low High Pressures for Local Responsiveness

  10. Value ChainLocation and standardization/adaptation 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/decentralized • 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 Strategy:Managing 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 Strategy:Managing 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 Strategy:Managing 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 Strategy:Managing 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 Lo Hi 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

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