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MNC/GlobalStrategy

InternationalCorporateLevelStrategy
Focusesonthescopeofoperations:
Productdiversification
Geographicdiversification

Requiredwhenthefirmoperatesin:
Multipleindustries,and
Multiplecountriesorregions

Headquartersunitguidesthestrategy
Butbusinessorcountrylevelmanagerscanhave
substantialstrategicinput
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SelectinganInternationalCorporate
LevelStrategy
Thetypeofcorporatestrategyselectedwillhaveanimpacton
theselectionandimplementationofthebusinesslevel
strategies
Somestrategiesprovideindividualcountryunitswiththe
flexibilitytochoosetheirownstrategies
Othersdictatebusinesslevelstrategiesfromthehome
officeandcoordinateresourcesharingacrossunits

PressuresforCostReductions
(NeedforIntegration)
Whencompaniesproducecommodityproducts
Wheredifferentiationonnonpricefactorsisdifficult
andpriceisthemaincompetitiveweapon
Wherecompetitorsarebasedinlowcostlocations
Wherethereispersistentexcesscapacity
Whereconsumersarepowerfulandfacelow
switchingcosts
Theliberalizationoftheworldtradeandinvestment
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PressuresforLocalResponsiveness
Differencesincustomertastesandpreferences
Differencesininfrastructureandtraditional
practices
Differencesindistributionchannels
Hostgovernmentdemands

FourBasicStrategies

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Internationalstrategy
Creatingvaluebytransferringcompetenciesand
productstoforeignmarketswhereindigenous
competitorslackthosecompetenciesand
products
Makessenseifacompanyhasavaluable
competencethatindigenouscompetitorsin
foreignmarketslackandifitfacesweakpressure
forlocalresponsivenessandcostreductions

MultidomesticStrategy
Developingabusinessmodelthatallowsacompanyto
achievemaximumlocalresponsiveness
Productsandservicesaretailoredtolocalmarketsand
focusonthelocalcompetition
Makessensewhentherearehighpressuresforlocal
responsivenessandlowpressuresforcostreductions
Companiesmaybecometoodecentralizedandlosethe
abilitytotransferskillsandproducts
Businessunitsinonecountryareindependentofeach
other
ProminentstrategyamongEuropeanfirmsduetobroad
varietyofculturesandmarketsinEurope
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GlobalStrategy
Focusingonincreasingprofitabilitybyreapingcostreductions
thatcomefromexperiencecurveeffectsandlocation
economies;pursuingalowcoststrategyonaglobalscale
Emphasizeseconomiesofscale
Productsarestandardizedacrossnationalmarkets
Decisionsregardingbusinesslevelstrategiesarecentralizedin
thehomeofficeOftenlacksresponsivenesstolocalmarkets
Strategicbusinessunits(SBU)areassumedtobeinterdependent
requiresresourcesharingandcoordinationacrossborders(hard
tomanage)
Makessensewhentherearestrongpressuresforcostreductions
anddemandforlocalresponsivenessisminimal
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TransnationalStrategy
Simultaneouslyseekingtolowercosts,belocally
responsive,andtransfercompetenciesinaway
consistentwithgloballearning
Difficulttoachievebecauseofsimultaneous
requirements:
Strongcentralcontrolandcoordinationto
achieveefficiency
Decentralizationtoachievelocalmarket
responsiveness
Mustpursueorganizationallearningtoachieve
competitiveadvantage
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AdvantagesandDisadvantagesofDifferent
StrategiesforCompetingGlobally