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International Strategy

International Strategy. 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”?

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International Strategy

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  1. International Strategy

  2. 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?

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

  4. Globalization Drivers • Market Drivers • Cost Drivers • Government Drivers • Competitive Drivers High Global Low Multi-domestic

  5. 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.

  6. 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.

  7. 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

  8. Market Globalization Drivers • Common customer needs • Global customers • Global market channels • Transferable marketing

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

  10. Cost Globalization Drivers • Global scale economies • Sourcing efficiencies • Factor of production differences • High product development costs • Rapidly changing technology

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

  12. Government Globalization Drivers • Unrestrictive trade and investment policies • Compatible technical standards • Common marketing regulations

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

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

  15. Strength of Competitive Drivers Aircraft Pharmaceuticals Computers Toothpaste Automobiles Soft Drinks Retail Banking Baked Goods Low High Multidomestic Global

  16. Driver Market Cost Government Competitive Auto Industry and Globalization Multidomestic Global

  17. 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

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

  19. 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

  20. Barbie is 42 years old Sold in 130 countries National adaptations: Physical features Costumes Activity sets Standardized physique: Scaled to 6’2”, 110 lbs. Barbie

  21. Globalization Drivers • Market Drivers • Cost Drivers • Government Drivers • Competitive Drivers High Global Low Multidomestic

  22. International Strategy:Managing Dual Pressures High Pressures for Global Efficiency Low Low High Pressures for Local Responsiveness

  23. Value ChainLocation and standardization/adaptation Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Service Operations Marketing

  24. Value Chain Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service

  25. Value Chain Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream

  26. Value Chain Headquarters Infrastructure Technology Development Procurement Human Resource Management Profit Margin Inbound Logistics Outbound Logistics Operations Marketing Service Upstream Downstream

  27. 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

  28. Value Chain Configuration • Geographic location of value chain activities • Concentrated/centralized vs. dispersed/decentralized

  29. 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

  30. International Strategy:Managing Dual Pressures High Pressures for Global Efficiency Export Strategy Low Low High Pressures for Local Responsiveness

  31. Export Strategy(same as Export entry mode) Germany U.S. Mexico Malaysia

  32. International Strategy:Managing Dual Pressures High Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness

  33. Multidomestic Strategy Germany U.S. Mexico Malaysia

  34. International Strategy:Managing Dual Pressures High Global Strategy Pressures for Global Efficiency Export Strategy ?? Multidomestic Strategy Low Low High Pressures for Local Responsiveness

  35. Global Strategy(Textbook Variety) Germany U.S. Mexico Malaysia

  36. 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

  37. Transnational Strategy (v.1) Germany U.S. Mexico Malaysia

  38. Transnational Strategy (v.2) Germany U.S. Mexico Malaysia

  39. Transnational Strategy (v.3) Germany Engines U.S. Steel Mexico Final Assembly Malaysia Trim, seats, glass

  40. VW International Strategy - Touareg Japan U.S. Transmission Marketing Slovakia Final Assembly Germany Steel & Engine Hungary Misc.

  41. VW International Strategy - Jetta U.S. Japan Marketing Transmission Mexico Final Assembly Germany Misc. Poland Engine

  42. Procter & GamblePan-European Brand Development

  43. P&G Multidomestic Strategy UK Neth. France Germany Italy

  44. Product Characteristics Map High Washing Temp Enzymatic Stain Removers Fabric Softener Bleach Additives

  45. Product Characteristics Map High Washing Temp Excluded countries Italy Italy Enzymatic Stain Removers Fabric Softener Spain Bleach Additives

  46. P&G “TransEuro” Strategy UK Neth. Zone 1 France Germany Spain Italy Zone 2

  47. Epilogue • VIZIR was precursor to “Liquid Tide” in US • Great irony is: P&G’s struggle to develop “Euro-brand” first found success in another large, integrated market…the U.S. • The VIZIR experience facilitated learning/cross-fertilization w/in P&G worldwide • Developed “world-class” technology and product development capabilities worldwide

  48. No problem taking a sack. I’ll just use Vizir after the game.

  49. Gotta keep these sweaty guys off my clean uniform… I’m out of Vizir.

  50. McDonald’s Identity

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