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Chapter 8
Multinational strategy
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.2
Multinational strategy
• Objectives
• Introduction
• Strategic orientations
• Strategic formulation
• Strategic implementation
• Control and evaluation.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.3
Objectives
• Define the term strategic planning and discuss
the strategic orientations that affect this planning
process.
• Explain how strategy is formulated, giving
particular emphasis to external and internal
environmental assessment.
• Describe how strategy is implemented, with
particular attention to location, ownership
decisions and functional area implementation.
• Discuss the ways in which MNEs control and
evaluate their strategies.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.4
Introduction
• The FSA and CSA framework is related to the
special nature of strategic management.
– Cell 1 will build competitive advantages due to its
home country CSAs.
– Cell 4 can best be described by the resource-
based view (RBV) of strategy.
– Cell 3 is where country and firm effects are
combined requiring the integration of firm and
country advantages in a sustainable and long-
run manner.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.5
Introduction (Continued)
• Strategic planning: the process of evaluating
the enterprise’s environment and its internal
strengths, identifying long- and short-range
objectives and implementing a plan of action for
attaining these goals.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.6
Strategic orientations
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.7
Strategic orientations
• Ethnocentric predisposition: the tendency of a
manager or multinational company to rely on the
values and interests of the parent company in
formulating and implementing the strategic plan.
• Polycentric predisposition: the tendency of a
multinational to tailor its strategic plan to meet the
needs of the local culture.
• Regiocentric predisposition: the tendency of a
multinational to use a strategy that addresses
both local and regional needs.
• Geocentric predisposition: the tendency of a
multinational to construct its strategic plan with a
global view of operations.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.8
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.9
Strategic formulation
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.10
Strategy formulation
• Strategic formulation: the process of evaluating
the enterprise’s environment (opportunities) and
its internal strengths (resources).
• External environmental assessment:
– information gathering;
– information assessment.
• Internal environmental assessment:
– physical resources and personnel competencies;
– value chain analysis.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.11
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.13
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.14
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.15
Physical resources
and personnel competencies
• The physical resources are the assets the MNE
will use to carry out its strategic plan.
• The degree of integration that exists within the
operating units of the MNE.
– Vertical integration: To obtain control over the
supply and to reduce costs.
– Virtual integration: A networking strategy based on
cooperation.
• Personnel competencies are the abilities and
talents of the people.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.16
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.17
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.18
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.19
Strategy implementation
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.20
Strategy implementation
• Strategy implementation is the process of
attaining goals by using the organizational
structure to execute the formulated strategy
properly.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.21
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.23
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.24
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009
Slide 8.25
Alan M Rugman and Simon Collinson, International Business, 5th Edition, © Pearson Education Limited 2009