International Strategy Globalization drivers – Assess dual pressures: – Global efficiency - standardization standardization – National/local responsiveness - adaptation adaptation Location/configuration of value- creating activities Integration/coordination of value-creating activities Strategy and entry
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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 BankingToothpaste
Soft Drinks
AutomobilesComputers
Aircraft
Multidomestic Global
Strength of Cost Drivers
Low High
Baked Goods
Retail BankingToothpaste
Soft Drinks
Automobiles
Computers
Aircraft
Pharmaceuticals
Multidomestic Global
International Strategy:Managing Dual Pressures
Pres
sure
s for
Glo
bal E
ffic
ienc
y
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 Outbound
Logistics Marketing Service
ProfitMargin
Headquarters
Value Chain
InfrastructureInfrastructure
Technology DevelopmentTechnology Development
ProcurementProcurement
Human Resource ManagementHuman Resource Management
InboundLogistics Operations Outbound
Logistics Marketing Service
ProfitMargin
Upstream
Headquarters
Value Chain
InfrastructureInfrastructure
Technology DevelopmentTechnology Development
ProcurementProcurement
Human Resource ManagementHuman Resource Management
InboundInboundLogisticsLogistics OperationsOperations OutboundOutbound
LogisticsLogistics MarketingMarketing ServiceService
ProfitMargin
Upstream Downstream
Headquarters
Value Chain Sub-functions (Nestles?)InfrastructureInfrastructure
Technology DevelopmentTechnology Development
ProcurementProcurement
Human Resource ManagementHuman Resource Management
InboundInboundLogisticsLogistics OperationsOperations OutboundOutbound
LogisticsLogistics 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
Pres
sure
s for
Glo
bal E
ffic
ienc
y
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
Pres
sure
s for
Glo
bal E
ffic
ienc
y
Pressures for Local Responsiveness
High
Low
HighLow
ExportStrategy
??
MultidomesticStrategy
Multidomestic Strategy
U.S.
Germany
Mexico
Malaysia
Entry?Entry?
International Strategy:Managing Dual Pressures
Pres
sure
s for
Glo
bal E
ffic
ienc
y
Pressures for Local Responsiveness
High
Low
HighLow
ExportStrategy
??
MultidomesticStrategy
GlobalStrategy
Global Strategy(Textbook Variety)
U.S.
Germany
Mexico
MalaysiaEntry?Entry?
International Strategy:Managing Dual Pressures
Pres
sure
s for
Glo
bal E
ffic
ienc
y
Pressures for Local Responsiveness
High
Low
HighLow
ExportStrategy
??
MultidomesticStrategy
GlobalStrategy
TransnationalStrategy
Transnational Strategy (v.1)
U.S.
Germany
Mexico
MalaysiaEntry?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
HiLoStra
tegi
c Im
porta
nce
Stra
tegi
c Im
porta
nce
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
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