international strategy f globalization drivers – assess dual pressures: standardization –global...

International Strategy

Globalization drivers – Assess dual pressures:– Global efficiency - standardizationstandardization– National/local responsiveness - adaptationadaptation

Location/configuration of value-creating activities

Integration/coordination of value-creating activities

Strategy and entry

“Forced” Standardization

Coca-Cola in Chinese: “bite the wax tadpole”

Coca-Cola 30 liter bottle??

U.S. carmakers’ left-hand drive cars

Effective Standardization

Coca-Cola’s “transnational polar bears”

McDonald’s “Big Mac”

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 6’2”, 110 lbs.– 38-18-28

Effective Adaptation 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

Cadillac Seville 1997 Asian edition

Right-hand drive, shorter seats, closer pedals, 10” shorter, retractable mirrors

Globalization Drivers

Market Drivers Cost Drivers Government Drivers Competitive Drivers

Low

Multidomestic

High

Global

Strength of Market Drivers

Low High

Baked Goods

Book Publishing

Retail Banking

Toothpaste

Soft Drinks

Automobiles

Computers

Aircraft

Multidomestic Global

Strength of Cost Drivers

Low High

Baked Goods

Retail Banking

Toothpaste

Soft Drinks

Automobiles

Computers

Aircraft

Pharmaceuticals

Multidomestic Global

International Strategy:Managing Dual Pressures

Pre

ssur

es f

or G

loba

l Eff

icie

ncy

Pressures for Local Responsiveness

High

Low

HighLow

Value ChainLocation and standardization/adaptation

Infrastructure

Technology Development

Procurement

Human Resource Management

InboundLogistics Operations

OutboundLogistics Marketing Service

ProfitMargin

Value Chain

InfrastructureInfrastructure

Technology DevelopmentTechnology Development

ProcurementProcurement

Human Resource ManagementHuman Resource Management

InboundLogistics Operations

OutboundLogistics Marketing Service

ProfitMargin

Headquarters

Value Chain

InfrastructureInfrastructure

Technology DevelopmentTechnology Development

ProcurementProcurement

Human Resource ManagementHuman Resource Management

InboundLogistics Operations

OutboundLogistics Marketing Service

ProfitMargin

Upstream

Headquarters

Value Chain

InfrastructureInfrastructure

Technology DevelopmentTechnology Development

ProcurementProcurement

Human Resource ManagementHuman Resource Management

InboundInboundLogisticsLogistics OperationsOperations

OutboundOutboundLogisticsLogistics MarketingMarketing ServiceService

ProfitMargin

Upstream Downstream

Headquarters

Value Chain Sub-functions (Nestles?)InfrastructureInfrastructure

Technology DevelopmentTechnology Development

ProcurementProcurement

Human Resource ManagementHuman Resource Management

InboundInboundLogisticsLogistics OperationsOperations

OutboundOutboundLogisticsLogistics MarketingMarketing ServiceService

ProfitMargin

Advert. Pricing Distrib. Packaging

Value Chain Configuration

Geographic location of value chain activities – Concentrated/centralized vs.

dispersed/decentralized

– Which entry mode?

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

International Strategy:Managing Dual Pressures

Pre

ssur

es f

or G

loba

l Eff

icie

ncy

Pressures for Local Responsiveness

High

Low

HighLow

ExportStrategy

??

Export Strategy(same as Export entry mode)

U.S.

Germany

Mexico

Malaysia

International Strategy:Managing Dual Pressures

Pre

ssur

es f

or G

loba

l Eff

icie

ncy

Pressures for Local Responsiveness

High

Low

HighLow

ExportStrategy

??

MultidomesticStrategy

Multidomestic Strategy

U.S.

Germany

Mexico

Malaysia

Entry?Entry?

International Strategy:Managing Dual Pressures

Pre

ssur

es f

or G

loba

l Eff

icie

ncy

Pressures for Local Responsiveness

High

Low

HighLow

ExportStrategy

??

MultidomesticStrategy

GlobalStrategy

Global Strategy(Textbook Variety)

U.S.

Germany

Mexico

Malaysia

Entry?Entry?

International Strategy:Managing Dual Pressures

Pre

ssur

es f

or G

loba

l Eff

icie

ncy

Pressures for Local Responsiveness

High

Low

HighLow

ExportStrategy

??

MultidomesticStrategy

GlobalStrategy

TransnationalStrategy

Transnational Strategy (v.1)

U.S.

Germany

Mexico

Malaysia

Entry?Entry?

Transnational Strategy (v.2)

U.S.

Germany

Mexico

Malaysia

Entry?Entry?

Transnational Strategy (v.3)

U.S.Germany

Mexico

Malaysia

Engines

Final Assembly

Trim, seats,glass

Steel

Entry?Entry?

Entry Mode Decision Matrix

Hi

Lo

HiLo

Str

ateg

ic I

mpo

rtan

ce

Str

ateg

ic I

mpo

rtan

ce

of C

ount

ryof

Cou

ntry

Stand-alone AttractivenessStand-alone Attractivenessof Countryof Country

Lo

Hi

Resource

s,

Resource

s,

Control,

Control,

RiskRisk

Foreign Market Entry ModesExportLicensingJoint VentureWOS

–Acquisition–Greenfield

Intl. Strategy and Entry Mode

U.S. H.Q.H.Q.

GermanyJVJV

MexicoWOS-GWOS-G

MalaysiaExportExport